Chase Manhattan

Financial Section Ta b l e o f C o n t e n t s

Management’s Discussion and Analysis: 18 19 19 Overview Management Performance Measurements Lines of Business Results Global Bank National Consumer Services Chase Technology Solutions Corporate Results of Operations Market-Sensitive Revenue Less Market-Sensitive Revenue Noninterest Expense Credit Costs Income Taxes Risk Management Credit Risk Management Credit-Related Portfolio Consumer Loan Portfolio Commercial Loan Portfolio Cross-Border Exposure Derivative and Foreign Exchange Contracts Allowance for Credit Losses Market Risk Management Liquidity Risk Management Liquidity Capital Operating Risk Management EMU Year 2000 Accounting and Reporting Developments Comparison between 1997 and 1996

23

29 29

36 40

41

43 43

Audited Financial Statements: 44 44 45 49 Management’s Report on Responsibility for Financial Reporting Report of Independent Accountants Consolidated Financial Statements Notes to Consolidated Financial Statements

Supplementary Data: 74 75 76 Quarterly Financial Information Selected Financial Data Glossary of Terms

17

M a n a g e m e n t ’s D i s c u s s i o n a n d A n a l y s i s

The Chase Manhattan Corporation

OVERVIEW

For the year ended December 31, (in millions, except per share and ratio data)

1998 $ 19,824 4,016 4.51 18.4% 54 $ 1,406 $ 3,782 4.24 17.3%

1997 $ 17,699 3,849 4.17 19.5% 55 $ 1,393 $ 3,708 4.01 18.7%

Over/(Under) 1997 12% 4 8 (110)bp (100)bp 1% 2% 6 (140)bp

Operating Basis (a) Operating Revenue Operating Earnings Diluted Earnings Per Share Return on Average Common Equity Efficiency Ratio Shareholder Value Added Reported Basis Net Income Diluted Net Income Per Share Return on Average Common Equity

es, which tend to be less market sensitive, grew 12% and 14%, respectively, while the Global Bank’s revenue increased 10%, reflecting Chase’s product diversity even within its lines of business. For example, Global Markets revenues increased 16%...