Creating
Possibility
Annual
Report
2022
Financial Highlights
As of or for the year ended December 31,
(in millions, except per share, ratio data and headcount)
2022
2021
2020
Selected income statement data
Total net revenue
Total noninterest expense
Pre-provision profit(a)
Provision for credit losses
Net income
Per common share data
Net income per share:
Basic
Diluted
Book value per share
Tangible book value per share (TBVPS)(a)
Cash dividends declared per share
Selected ratios
Return on common equity
Return on tangible common equity (ROTCE)(a)
Liquidity coverage ratio (average)(b)
Common equity Tier 1 capital ratio(c)
Tier 1 capital ratio(c)
Total capital ratio(c)
Selected balance sheet data (period-end)
Loans
Total assets
Deposits
Common stockholders’ equity
Total stockholders’ equity
Market data
Closing share price
Market capitalization
Common shares at period-end
$ 128,695
$
$
76,140
52,555
6,389
37,676
12.10
12.09
90.29
73.12
4.00
14 %
18
112
13.2
14.9
16.8
$ 1,135,647
3,665,743
2,340,179
264,928
292,332
$ 134.10
393,484
2,934.2
$ 121,649
71,343
50,306
(9,256 )
$ 48,334
$ 119,951
66,656
53,295
17,480
29,131
$
$
15.39
15.36
88.07
71.53
3.80
19 %
23
111
13.1
15.0
16.8
$ 1,077,714
3,743,567
2,462,303
259,289
294,127
$ 158.35
466,206
2,944.1
$
8.89
8.88
81.75
66.11
3.60
12 %
14
110
13.1
15.0
17.3
$1,012,853
3,384,757
2,144,257
249,291
279,354
$
127.07
387,492
3,049.4
255,351
Headcount
293,723
271,025
(a) Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Refer to Explanation and Reconciliation of the
Firm’s Use of Non-GAAP Financial Measures on pages 58–60 for a discussion of these measures.
(b) Refer to Liquidity Risk Management on pages 97-104 for additional information on this measure.
(c) Refer to Capital Risk Management on pages 86-96 for additional information on these measures.
JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm with assets of
$3.7 trillion and operations worldwide. The firm is a leader in investment banking,
financial services for consumers and small businesses, commercial banking, financial
transaction processing and asset management. Under the J.P. Morgan and Chase brands,
the firm serves millions of customers, predominantly in the U.S., and many of the world’s
most prominent corporate, institutional and government clients globally.
Information about J.P. Morgan’s capabilities can be found at jpmorgan.com and about
Chase’s capabilities at chase.com. Information about JPMorgan Chase & Co. is available at
jpmorganchase.com.
1.5 MILLION
LOW-COST CHECKING ACCOUNTS
Opened 1.5 million Chase
Secure BankingSM low-cost
checking accounts since 2019
#1
CORPORATE & INVESTMENT BANK
$40 BILLION
TO SUPPORT VITAL INSTITUTIONS
Generated $15 billion of
net new income on revenue
of $48 billion
Extended $40 billion to support
vital institutions like hospitals, schools
and local governments since 2021
$2.5 TRILLION
SUSTAINABLE DEVELOPMENT TARGET
$10 MILLION
TO SUPPORT UKRAINE
#1
CUSTOMER SATISFACTION
Financed and facilitated
$482 billion toward this target
since 2021
$10 million in humanitarian aid
and philanthropic support
for Ukraine — the largest giving
campaign in the firm’s history
Wealth Management ranked #1 in
J.D. Power 2022 U.S. Wealth
Management Digital Experience Study
210,000+
AFFORDABLE
HOUSING UNITS
Helped create or preserve over
210,000 affordable housing units
and financed $27 billion toward
affordable housing since 2021
TOP 5
MOST ADMIRED COMPANIES
#1
IN DEPOSITS AND FOR
SMALL BUSINESSES
Ranked in the top five on
Fortune magazine’s Most Admired
Companies list for the first time
Named #1 in retail deposit
market share and #1 primary
bank for U.S. small businesses
#1
IN ARTIFICIAL INTELLIGENCE
$1.1 TRILLION
AWM CLIENT ASSET INFLOWS
1 MILLION
NEW CUSTOMERS
Ranked #1 on the Evident AI Index,
the first public benchmark of major
banks on their AI maturity
Over the last five years, Asset & Wealth
Management (AWM) client asset inflows
totaled $1.1 trillion
In its first year, Chase in
the U.K. acquired more than
1 million customers
Dear Fellow Shareholders,
4-3 v6
Jamie Dimon,
Chairman and
Chief Executive
Officer
Across the globe, 2022 was another year of significant challenges: from a terrible
war in Ukraine and growing geopolitical tensions — particularly with China — to a
politically divided America. Almost all nations felt the effects of global economic
uncertainty, including higher energy and food prices, mounting inflation rates
and volatile markets, and, of course, COVID-19’s lingering impacts. While all these
experiences and associated turmoil have serious ramifications on our company,
colleagues, clients and the countries in which we do business, their consequences
on the world at large — with the extreme suffering of the Ukrainian people and
the potential restructuring of the global order — are far more important.
As these events unfold, America remains divided within its borders, and its
global leadership role is being challenged outside of its borders. Nevertheless,
this is the moment when we should put aside our differences and work with other
Western nations to come together in defense of democracy and essential
2
freedoms, including free enterprise. During other times of great crisis, we have
seen America, in partnership with other countries around the globe, unite for a
common cause. This is that moment again, when our country needs to work
across public and private sectors to lead while improving American competitiveness
— which also means re-establishing the American promise of providing equal
access to opportunity for all. JPMorgan Chase, a company that historically has
worked across borders and boundaries, will do its part to ensure the global
economy is safe and secure.
In spite of the unsettling landscape, 2022 was somewhat surprisingly another
strong year for JPMorgan Chase, with the firm generating record revenue for
the fifth year in a row, as well as setting numerous records in each of our lines
of business. We earned revenue in 2022 of $132.3 billion1 and net income of
$37.7 billion, with return on tangible common equity (ROTCE) of 18%, reflecting
strong underlying performance across our businesses. We also maintained our
quarterly common dividend of $1.00 per share and continued to reinforce our
fortress balance sheet. We grew market share in several of our businesses and
continued to make significant investments in products, people and technology
while exercising strict credit discipline. In total, we extended credit and raised
capital of $2.4 trillion for our consumer and institutional clients around the world.
I remain proud of our company’s resiliency and of what our hundreds of thousands
of employees around the world have achieved, collectively and individually.
Throughout these challenging past few years, we never stopped doing all the
things we should be doing to serve our clients and our communities.
Adhering to our basic principles and strategies (see sidebar on Steadfast
Principles on page 5) allows us to drive good organic growth and properly
manage our capital (including dividends and stock buybacks), as we have
1 Represents managed revenue.
3
consistently demonstrated for decades. Our performance results are shown in
the charts on pages 6-12, which illustrate how we have grown our franchises,
how we compare with our competitors and how we look at our fortress balance
sheet. I invite you to peruse them at your leisure. In addition, I urge you to read
the CEO letters in this Annual Report, which will give you more specific details
about our businesses and our plans for the future.
As you know, we are champions of banking’s essential role in a community —
its potential for bringing people together, for enabling companies and individuals
to attain their goals, and for being a source of strength in difficult times. As
I often remind our employees, the work we do matters and has impact. We help
people and institutions finance and achieve their aspirations, lifting up
individuals, homeowners, small businesses, larger corporations, schools,
hospitals, cities and countries in all regions of the world.
4
STEADFAST PRINCIPLES WORTH REPEATING
Looking back on the past two+ decades —
starting from my time as CEO of Bank One
in 2000 — there is one common theme:
our unwavering dedication to help clients,
communities and countries throughout
the world. It is clear that our financial dis-
cipline, constant investment in innovation
and ongoing development of our people
are what enabled us to achieve this con-
sistency and commitment. In addition,
across the firm, we uphold certain stead-
fast tenets that are worth repeating.
First, our work has very real human
impact. While JPMorgan Chase stock is
owned by large institutions, pension
plans, mutual funds and directly by single
investors, in almost all cases the ultimate
beneficiaries are individuals in our com-
munities. More than 100 million people in
the United States own stock; many, in one
way or another, own JPMorgan Chase
stock. Frequently, these shareholders are
veterans, teachers, police officers, fire-
fighters, healthcare workers, retirees or
those saving for a home, education or
retirement. Often, our employees also
bank these shareholders, as well as their
families and their companies. Your man-
agement team goes to work every day
recognizing the enormous responsibility
that we have to all of our shareholders.
Second, shareholder value can be built
only if you maintain a healthy and vibrant
company, which means doing a good job
of taking care of your customers, employ-
ees and communities. Conversely, how
can you have a healthy company if you
neglect any of these stakeholders? As
we have learned over the past few years,
there are myriad ways an institution
can demonstrate its compassion for its
employees and its communities while still
upholding shareholder value.
Third, while we don’t run the company
worrying about the stock price in the
short run, in the long run we consider
our stock price a measure of our prog-
ress over time. This progress is a func-
tion of continual investments in our
people, systems and products, in good
and bad times, to build our capabilities.
These important investments will also
drive our company’s future prospects
and position it to grow and prosper for
decades. Measured by stock perfor-
mance, our progress is exceptional.
For example, whether looking back
10 years or even farther to 2004, when
the JPMorgan Chase/Bank One merger
took place, we have significantly out-
performed the Standard & Poor’s 500
Index and the Standard & Poor’s Finan-
cials Index.
Fourth, we are united behind basic prin-
ciples and strategies (you can see the
How We Do Business principles on our
website) that have helped build this
company and made it thrive — from
maintaining a fortress balance sheet,
constantly investing and nurturing tal-
ent to fully satisfying regulators, contin-
ually improving risk, governance and
controls, and serving customers and
clients while lifting up communities
worldwide. This philosophy is embedded
in our company culture and influences
nearly every role in the firm.
Fifth, we strive to build enduring busi-
nesses, which rely on and benefit from
one another, but we are not a conglomer-
ate. This structure helps generate our
superior returns. Nonetheless, despite
our best efforts, the walls that protect
this company are not particularly high —
and we face extraordinary competition.
I have written about this reality exten-
sively in the past and cover it again in
this letter. We recognize our strengths and
vulnerabilities, and we play our hand as
best we can.
Sixth, we operate with a very important
silent partner — the U.S. government —
noting as my friend Warren Buffett points
out that his company’s success is predi-
cated upon the extraordinary conditions
our country creates. He is right to say to
his shareholders that when they see the
American flag, they all should say thank
you. We should, too. JPMorgan Chase is a
healthy and thriving company, and we
always want to give back and pay our fair
share. We do pay our fair share — and we
want it to be spent well and have the
greatest impact. To give you an idea of
where our taxes and fees go: In the last
10 years, we paid more than $43 billion in
federal, state and local taxes in the United
States and almost $19 billion in taxes out-
side of the United States. We also paid the
Federal Deposit Insurance Corporation
over $10 billion so that it has the resources
to cover failure in the American banking
sector. Our partner — the federal govern-
ment — also imposes significant regula-
tions upon us, and it is imperative that we
meet all legal and regulatory requirements
imposed on our company.
Seventh and finally, we know the founda-
tion of our success rests with our people.
They are the frontline, both individually
and as teams, serving our customers and
communities, building the technology,
making the strategic decisions, managing
the risks, determining our investments
and driving innovation. However you view
the world — its complexity, risks and
opportunities — a company’s prosperity
requires a great team of people with guts,
brains, integrity, enormous capabilities
and high standards of professional excel-
lence to ensure its ongoing success.
5
Earnings, Diluted Earnings per Share and Return on Tangible Common Equity
2004–2022
($ in billions, except per share and ratio data)
Reported
Excluding reserve release/build1
2020
2021
Net income ($B)
$29.1
$48.3
2022
$37.7
2020
2021
2022
$38.4
$39.1
$40.4
Diluted EPS ($)
$8.88
$15.36
$12.09
$11.87
$12.35
$12.99
ROTCE
14.4%
23.0%
17.7%
19.3%
18.5%
19.1%
$48.3
Net income
excluding reserve
release/build
$38.4
(cid:30)
$39.1
$36.4
Adjusted net income2
$32.5
$15.36
$26.9
$10.72
(cid:30)
$29.1
$24.4
$24.7
$24.4
$9.00
(cid:30)
(cid:30)
$8.88
23%
(cid:30)
$6.00
(cid:30)
(cid:30)
13%
$6.19
(cid:30)
(cid:30)
13%
(cid:30)
$6.31
(cid:30)
12%
(cid:30)
19%
(cid:30)
17%
(cid:30)
14%
24%
(cid:30)
22%
(cid:30)
(cid:30)
15%
$14.4
$15.4
(cid:30)
(cid:30)
$4.00
$4.33
(cid:30)
10%
(cid:30)
$4.5
$1.52
$8.5
(cid:30)
$2.35
10%
(cid:30)
$11.7
(cid:30)
$2.26
(cid:30)
6%
$5.6
(cid:30)
$1.35
$21.3
15%
(cid:30)
(cid:30)
$5.19
$17.9
11%
(cid:30)
(cid:30)
$4.34
$21.7
13%
(cid:30)
(cid:30)
$5.29
$19.0
(cid:30)
15%
(cid:30)
$4.48
$17.4
(cid:30)
15%
(cid:30)
$3.96
$37.7
(cid:30)
$12.09
18%
(cid:30)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
(cid:31)(cid:31) Net income (cid:31)(cid:31) Diluted earnings per share (EPS) (cid:31)(cid:31) Return on tangible common equity (ROTCE)
1 Firmwide results excluding reserve release/build are non-GAAP financial measures.
2 Adjusted net income excludes $2.4 billion from net income in 2017 as a result of the enactment of the Tax Cuts and Jobs Act.
Adjusted
ROTCE2
was 13.6%
for 2017
ROTCE excluding
reserve release/build
was 19.3% for 2020
and 18.5% for 2021
GAAP = Generally accepted accounting principles
ROTCE = Return on tangible common equity
An important note to describe why we are showing the table above: The loan loss reserve
accounting rules — which are life-of-loan estimated losses based upon probability-based economic
scenarios — generate huge swings in earnings that can be unrelated to actual credit performance.
This was particularly true for the COVID-19 years when, during the first six months of the pandemic,
we built approximately $16 billion in reserves. Then in the next six quarters, we released essentially
the equivalent number. We did so only because the scenarios used to estimate future credit losses
changed dramatically.
The table above shows reported net income, with and without loan loss reserve changes.
Throughout this period, the credit portfolio was healthy, and charge-offs remained below
pre-pandemic levels. Either way, the company had strong absolute and relative performance.
6
Tangible Book Value1 and Average Stock Price per Share
2004–2022
$155.61
$113.80
$110.72
$106.52
$128.13
$92.01
High: $169.81
Low: $101.28
$47.75
$43.93
$38.70 $36.07
$63.83 $65.62
$58.17
$51.88
$39.83
$35.49
$40.36 $39.36 $39.22
$38.68 $40.72
$51.44 $53.56
$48.13
$44.60
$71.53 $73.12
$66.11
$60.98
$56.33
$15.35
$16.45
$18.88
$21.96 $22.52
$30.12
$27.09
$33.62
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
(cid:31)(cid:31) Tangible book value (cid:31)(cid:31) Average stock price
1 9% compound annual growth rate since 2004.
Stock total return analysis
Performance since becoming CEO of Bank One
(3/27/2000—12/31/2022)1
Compounded annual gain
Overall gain
Performance since the Bank One and JPMorgan Chase & Co. merger
(7/1/2004—12/31/2022)
Compounded annual gain
Overall gain
Performance for the period ended December 31, 2022
Compounded annual gain/(loss)
One year
Five years
Ten years
Bank One
S&P 500 Index
S&P Financials Index
11.3%
1,047.8%
6.1%
287.7%
4.6%
176.1%
JPMorgan Chase & Co.
S&P 500 Index
S&P Financials Index
9.9%
471.6%
(12.6)%
7.7%
14.9%
8.9%
386.8%
(18.1)%
9.4%
12.6%
4.4%
120.0%
(10.5)%
6.4%
12.1%
This chart shows actual returns of the stock, with dividends reinvested, for heritage shareholders of Bank One and JPMorgan Chase & Co. vs. the Standard & Poor’s 500 Index
(S&P 500 Index) and the Standard & Poor’s Financials Index (S&P Financials Index).
1 On March 27, 2000, Jamie Dimon was hired as CEO of Bank One.
7
Client Franchises Built Over the Long Term
Consumer &
Community
Banking
Corporate &
Investment
Bank
Average deposits ($B)1
Deposits market share2
# of top 50 markets where
we are #1 (top 3)
Business Banking primary market
share3
Client investment assets ($B)1
Total payments volume ($T)4
% of digital non-card payments5
Credit card sales ($B)
Debit card sales ($B)
Debit and credit card sales volume ($B)
Credit card sales market share6
Credit card loans ($B, EOP)
Credit card loans market share7
Active mobile customers (M)
# of branches
# of advisors1
Global investment banking fees14
Market share14
Total Markets revenue15
Market share15
FICC15
Market share15
Equities15
Market share15
Assets under custody ($T)
Average client deposits ($B)16
Firmwide Payments revenue ($B)17
Firmwide Payments revenue rank
(share)18
Firmwide average daily security
purchases and sales ($T)
# of top 75 MSAs with dedicated teams
# of bankers
New relationships (gross)23
Average loans ($B)
Average deposits ($B)
Gross investment banking revenue ($B)24
Multifamily lending25
Commercial
Banking
Mutual Funds with a 4/5-star rating28
Client assets ($T)29
Traditional assets ($T)29,30
Alternatives assets ($B)29,31
Deposits ($B)29
Loans ($B)29
# of Global Private Bank client advisors29
Global Private Bank (Euromoney)32
Asset & Wealth
Management
2006
$204
4.4%
2012
$414
7.1%
2021
2022
$1,055
10.3%
$1,163
10.9%
Serve 79M U.S. consumers and 5.7M small
businesses
63M active digital customers8, including 50M
7 (14)
7 (18)
8 (25)
11 (25)
active mobile customers9
5.1%
~$80
NA
<25%
$257
NA
NA
16%
$153
19%
NA
3,079
NM
#2
8.7%
#8
6.3%
#7
7.0%
#8
5.0%
$13.9
$190
$5.0
NA
NA
36
1,203
NA
$53.6
$73.6
$0.7
#28
119
$1.3
$1.2
$100
$52
$30
1,506
#7
6.2%
$159
$1.8
~40%
$381
$205
$586
20%
$128
18%
12.4
5,614
2,963
#1
7.7%
#1
8.6%
#1
9.0%
#3
7.8%
$18.8
$356
$6.7
9.2%
$718
$5.0
75%
$894
$467
$1,361
22%
$154
17%
45.5
4,790
4,725
#1
9.3%
#1
12.1%
#1
12.3%
co-#1
11.8%
$33.2
$715
$9.9
9.3%
$647
$5.6
77%
$1,065
$491
$1,555
22%
$185
17%
49.7
4,787
5,029
#1
8.0%
#1
11.7%
#1
11.0%
#1
13.1%
$28.6
$687
$13.9
NA
#1 (7.2)%
#1 (8.4)%
NA
$2.9
$3.1
52
1,240
NA
$120.1
$195.9
$1.6
#1
66
2,254
2,252
$205.0
$301.5
$5.1
#1
69
2,360
2,277
$223.7
$294.3
$3.0
#1
172
$2.0
$1.7
$177
$141
$79
2,371
#3
206
$4.3
$3.6
$364
$282
$218
2,738
#1
203
$4.0
$3.4
$372
$233
$214
3,137
#1
Primary bank relationships for 78% of consumer
checking accounts
#1 retail deposit share
#1 deposit market share position in each of the
largest banking markets in the country (NYC, LA
and Chicago) while maintaining branch presence
in all contiguous 48 U.S. states
#1 primary bank for U.S. small businesses
#1 U.S. credit card issuer based on sales and
outstandings10
#2 among lenders in the J.D. Power 2022 U.S.
Mortgage Origination Satisfaction Study11
#2 owned mortgage servicer12
#3 bank auto lender13
>90% of Fortune 500 companies do business
with us
Presence in over 100 markets globally
#1 in global investment banking fees for the
14th consecutive year14
Consistently ranked #1 in Markets revenue
since 201115
J.P. Morgan Research ranked as the #1 Global
Research Firm, #1 Global Equity Research Team
and #1 Global Fixed Income Research Team19
#1 in USD payments volume20
#1 in U.S. Merchant transaction processing21
#2 custodian globally22
141 locations across the U.S. and 34 international
locations, with 7 new cities added in 2022
$1.5B revenue from Middle Market expansion
markets, up 26% YoY
Credit, banking and treasury services to ~25K
Commercial & Industrial clients and ~31K real
estate owners and investors
18 specialized industry coverage teams
#1 overall Middle Market Bookrunner in the U.S.26
Over 80,000 incremental affordable housing
units financed in 202227
90% of 10-year JPMAM long-term mutual fund
AUM performed above peer median33
Business with 61% of the world’s largest pension
funds, sovereign wealth funds and central banks
#3 in 5-year cumulative net client asset flows
behind BlackRock and Morgan Stanley34
Positive client asset flows in 2022 across all
regions, with strength in brokerage, equity,
custody and fixed income
$98B in Alternatives fundraising over two years
#2 in Institutional Money Market Funds AUM35
49% of Asset Management AUM managed by
female and/or diverse portfolio managers36
NA = Not available
NM = Not meaningful
AUM = Assets under management
EOP = End of period
FICC = Fixed income, currencies and commodities
JPMAM = J.P. Morgan Asset Management
MSA = Metropolitan statistical area
For footnoted information, refer to page 43 in this Annual Report.
USD = U.S. dollar
YOY = Year-over-year
M = Millions
B = Billions
T = Trillions
K = Thousands
8
New and Renewed Credit and Capital for Our Clients
2008–2022
($ in billions)
$2,496
$2,307
$227
$2,357
$265
$2,044
$233
$399
$2,102
$274
$2,144
$197
$326
$258
$430
$3,186
$288
$331
$2,345
$2,263
$244
$333
$641
$480
$262
$226
$463
$440
$1,926
$2,410
$216
$250
$615
$1,789
$1,693
$1,619
$1,294
$1,346
$1,329
$1,866
$1,820
$252
$222
$1,567
$312
$167
$1,494
$243
$136
$1,577
$252
$167
$275
$309
$368
$281
$1,621
$1,519
$1,443
$1,392
$1,264
$1,088
$1,158
$1,115
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
(cid:31)(cid:31) Corporate clients (cid:31)(cid:31) Small Business, Middle Market and Commercial clients (cid:31)(cid:31) Consumers (cid:31)(cid:31) Government, government-related and nonprofits1
1 Government, government-related and nonprofits available starting in 2019; included in Corporate clients and Small Business, Middle Market
and Commercial clients for prior years.
9
Assets Entrusted to Us by Our Clients
at December 31, 2022
$5,926
$959
$4,820
$4,227
$4,211
$718
$5,926
$1,186
$6,950
$1,148
$6,950
$1,314
$1,148
$6,580
$1,132
$6,580
$1,209
$1,132
$3,617
$464
$3,740 $3,633
$503
$558
$3,802
$618
$660
$679
$784
$792
$959
$844
$4,820
$1,314
$4,488
$4,240
$1,209
$824
$861
$722
$757
$4,227
$4,211
$718
$3,781
$1,186
$3,740 $3,633
$503
$2,376
$861
$558
$2,353
$722
$3,802
$618
$2,427
$757
$660
$2,783
$784
$679
$2,740
$792
$3,258
$844
$3,258
$2,783
$2,740
$4,488
$4,240
$3,781
2014
$2,376
2015
$2,353
$2,427
2016
2017
2018
2019
2020
2021
2022
$3,255
$439
$755
$3,617
$3,255
$464
$2,329
$439
$2,061
$824
$755
2013
2012
$2,329
$2,061
Deposits and client assets1
($ in billions)
$2,681
$365
Deposits and client assets1
$2,424
($ in billions)
$361
$2,811
$372
$558
$573
$3,011
$398
$730
$648
$2,424
$1,415
$361
$648
2008
$2,681
$1,743
$365
$573
$2,811
$1,881
$372
$558
$3,011
$398
$1,883
$730
2009
2010
2011
(cid:31)(cid:31) Client assets (cid:31)(cid:31) Wholesale deposits (cid:31)(cid:31) Consumer deposits
$1,415
$1,883
$1,743
$1,881
2008
Assets under custody2
2009
2010
($ in trillions)
(cid:31)(cid:31) Client assets (cid:31)(cid:31) Wholesale deposits (cid:31)(cid:31) Consumer deposits
2013
2012
2011
2014
$20.5
$20.5
$16.1
$16.9
$18.8
2015
2016
$19.9
$20.5
2017
$23.5
2018
$23.2
2019
$26.8
$14.9
$13.2
Assets under custody2
($ in trillions)
$14.9
2009
$16.1
2010
$16.9
2011
2008
$13.2
$18.8
$20.5
$20.5
$19.9
$20.5
$23.5
$23.2
$26.8
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$31.0
2020
$33.2
2021
$28.6
2022
$33.2
$31.0
$28.6
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
1 Represents assets under management, as well as custody, brokerage, administration and deposit accounts.
2 Represents activities associated with the safekeeping and servicing of assets.
10
Daily Payment Processing and Merchant Acquiring Transactions
($ in trillions and transactions in millions)
55.1
$6.1
62.3
$6.7
72.1
$7.0
82.4
$7.3
90.4
$8.6
113.4
102.4
$9.7
$9.8
2016
2017
2018
2019
2020
2021
2022
(cid:31)(cid:31) Daily payment processing1 ($T) (cid:31)(cid:31) Daily merchant acquiring transactions (M)
1 Based on firmwide data using regulatory reporting guidelines as prescribed by the Federal Reserve Board.
M = Millions
T = Trillions
JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared
with Large Peers and Best-in-Class Peers1
JPMorgan Chase
Consumer &
Community
Banking
Corporate &
Investment
Bank
Commercial
Banking
Asset & Wealth
Management
Efficiency
Overhead ratio2
JPM
BAC
GS
C
MS
WFC
58%
65%
66%
68%
73%
76%
Efficiency
JPM 2022
overhead ratio
Best-in-class peer
overhead ratio3
57%
57%
41%
67%
52%
BAC-CB
55%
GS–IB & GM
37%
TFC
61%
NTRS–WM & ALLIANZ–AM
Returns
ROTCE
JPM
BAC
MS
GS
C
WFC
Returns
JPM 2022
ROTCE
29%
14%
16%
25%
G-SIB = Global systemically important banks
ROTCE = Return on tangible common equity
For footnoted information, refer to page 43 in this Annual Report.
18%
15%
15%
11%
9%
9%
Best-in-class all
banks ROTCE4,6
Best-in-class
G–SIB ROTCE5,6
31%
BAC–CB
31%
BAC–CB
17%
GS–IB & GM
17%
GS–IB & GM
20%
WFC–CB
20%
WFC–CB
41%
UBS–GWM & AM
33%
MS–WM & IM
11
Our Fortress Balance Sheet
Selected data for the year ended December 31, 2022
Tangible Common Equity (Average)
($ in billions)
10.7%
10.7%
$149
$149
10.2%
10.2%
$161
$161
11.6%
11.6%
$170
$170
12.2%
12.2%
$180
$180
12.1%
12.1%
$185
$185
12.0%
12.0%
$183
$183
12.4%
12.4%
$187
$187
13.1%
13.1%
$191
$191
13.1%
13.1%
$203
$203
13.2%
13.2%
$204
$204
2013
2014
2015
2016
(cid:31)(cid:31) Tangible common equity (average) ($B) (cid:31)(cid:31) CET1 (%)1
2016
2014
2013
2015
(cid:31)(cid:31) Tangible common equity (average) ($B) (cid:31)(cid:31) CET1 (%)1
2017
2017
2018
2018
2019
2019
2020
2020
2021
2021
2022
2022
3.5% CAGR
since 2013
106%
106%
110%
110%
129%
129%
119%
119%
115%
115%
Liquid Assets2
($ in billions)
90%
90%
$804
$804
80%
80%
$921
$921
$745
$745
$786
$786
$764
$764
2013
2014
2015
2016
2017
(cid:31)(cid:31) Liquid assets ($B)2 (cid:31)(cid:31) Average loans/Liquid assets (%)
2016
2014
2013
2015
2017
70%
70%
$1,437
$1,437
63%
63%
$1,652
$1,652
77%
77%
$1,427
$1,427
$860
$860
2019
2019
2020
2020
2021
2021
2022
6.6% CAGR
2022
since 2013
$755
$755
2018
2018
(cid:31)(cid:31) Liquid assets ($B)2 (cid:31)(cid:31) Average loans/Liquid assets (%)
Net income applicable to
common stockholders ($B)
Capital returned to common
stockholders ($B)3
ROTCE (%)
$16.6
$20.1
$22.4
$22.6
$22.6
$30.7
$34.6
$27.4
$46.5
$35.9
$9.2
11%
$9.6
13%
$10.8
$14.4
$22.0
$27.9
$34.0
13%
13%
12%
17%
19%
$16.3
14%
$28.5
$13.2
23%
18%
Excellent returns
Huge capital generation (even in a recession)
Dividends
Investment
Stock buyback or
Retain if necessary
CAGR = Compound annual growth rate
CET1 = Common equity Tier 1
ROTCE = Return on tangible common equity
For footnoted information, refer to page 43 in this Annual Report.
12
Within this letter, I discuss the following:
WHY WE ARE PROUD OF JPMORGAN CHASE
• United by principles and purpose
— Our purpose
— Highlighting our diversity, equity and inclusion efforts
— The state of Ohio: How JPMorgan Chase drives community growth
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY
• Climate complexity and planning
• AI, data and our journey to the cloud
• Banking turmoil and regulatory goals
• Adjusting our strategy to the new regulatory reality (Basel III Endgame)
• Keeping an eye on all of our competitors
MANAGEMENT LESSONS
• Building true franchise value
• Learning from Investor Day
• Balancing a customer-centric approach with (excessive) risk
SOME COMMONSENSE PRINCIPLES FOR CORPORATE GOVERNANCE
• Promoting open communication and trust with the board
• Confronting succession planning
• Active engagement with asset managers
EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL
RISKS AHEAD
• The current economy: Pretty good but storm clouds ahead
• Potential trouble brewing from unprecedented fiscal spending,
quantitative tightening and geopolitical tensions
• Preparing for what may be a new and uncertain future
OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND
COMPETENT GOVERNMENT
• Developing effective policy and effective government
— The Wall Street Journal Op-Ed: “The West Needs America’s Leadership”
• Creating a comprehensive global economic strategy
Page 14
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13
Why We Are Proud of
JPMorgan Chase
Our vision is simple and unchanged: We aim to be
the most respected financial services firm in the
world, serving corporations and individuals. To
that end, it is imperative that we run a healthy,
vibrant and responsible company. In addition to
traditional banking, we do a lot to help the com-
munities in which we operate, which, in turn, pro-
vides the foundation for increased opportunity and
prosperity for all. And just to note, while we are
proud of the good things we do every day, we are
also an organization that acknowledges the mis-
takes we make along the way, which is important
to do. And when we do make mistakes, we own up
to them, learn from them and then move on.
results and have greater impact by doing better for
their customers, employees and shareholders. Our
intention in documenting our purpose for ourselves
is to help energize our employees, differentiate our
company from our competitors, and push our orga-
nization to innovate on behalf of our clients, col-
leagues and communities. In addition, we are
launching a new effort — internally and externally
— to showcase how the work we do matters and has
tangible impact locally and around the world.
In detailing the elements of our purpose, shown in
the following sidebar, we have tried to make every
word meaningful.
UNITED BY PRINCIPLES AND PURPOSE
We’ve always had — and published — principles to
guide how we do business, with values embedded
within them, which I described in the preceding
section. These tenets unite our company across
the globe. To complement these guidelines, we
recently developed a clearly stated purpose —
Make dreams possible for everyone, everywhere,
every day — to knit together our values with our
everyday business principles and explain how we
have done business for years.
While our company has a rich history, is proud of
the critical role it plays in powering economic
growth and has done exceptionally well over the
past 200 years, research has shown that pur-
pose-driven companies achieve stronger business
14
WHY WE ARE PROUD OF JPMORGAN CHASE Our Purpose
The impact that JPMC aspires to have
Make Dreams Possible
for everyone, everywhere, every day
Our Vision
The ambition we hold ourselves to
We aim to be the most respected financial services firm
in the world, serving corporations and individuals.
Our Values
The mindsets that unite us all
Service
Heart
Curiosity
Courage
Excellence
We put our customers
first, building with
their needs in mind,
providing world-
class service and
growing to reach
people, businesses
and communities
everywhere.
We take pride in what
we do and care deeply
about our customers,
communities and each
other. We have a culture
of teamwork, trust,
humanity and humility.
We create space for
people to bring their
full selves to work.
We’re distinguished
by our capacity to
imagine and build.
Our innovations are
powered by a deep
understanding of
our customers and
clients. We bring
our capabilities and
experience to bear on
the toughest challenges
in the world.
We lead with expertise,
foresight and fortitude
to deliver exceptional
results. We face facts
and make disciplined
decisions grounded in
data, with a long-term
view. We strive to stand
up for what we believe
in and do the right thing.
Our quality and rigor
at scale are unmatched.
We attract world-class
talent and create an
environment where
they can thrive. We
set high expectations,
commit to strong
performance and hold
ourselves accountable
to the highest standards
of integrity.
Our Principles
The Business Principles that guide how we work
Exceptional
Client Service
Operational
Excellence
A Commitment to
Integrity, Fairness
and Responsibility
A Great Team and
Winning Culture
Our Promises
Our value proposition to employees, customers, communities, and shareholders
We power economic growth,
serving our customers,
clients and communities for
over 200 years.
We uplift communities
around the world, making
tangible impact at scale.
We champion opportunity
and enterprise that unlock
equity, inclusion and
sustainable growth.
We are a great place to work
— an unmatched combination
of humanity and excellence
at scale.
15
WHY WE ARE PROUD OF JPMORGAN CHASE We are also dedicated to corporate responsibility,
and our efforts extend far beyond significant phil-
anthropic contributions (which total more than
$350 million a year globally). For example, at the
local level, we support educational institutions and
work-skills training programs around the world, as
well as finance affordable housing and small busi-
nesses. In addition, we help formulate broad-
based policies that are good for countries on
issues such as healthcare, infrastructure, educa-
tion and employment. Sometimes we promote spe-
cific initiatives; for example, programs that help
individuals with a criminal background get a sec-
ond chance. Lest anyone think that I’ve become a
little soft, rest assured your CEO is a red-blooded,
patriotic, free-enterprise and free-market capital-
ist (properly regulated, of course) and finds noth-
ing inconsistent with the multifaceted ways we use
our capabilities to lift up our communities.
Part of our corporate responsibility efforts are
focused on progress toward diversity, equity and
inclusion (DEI), which is detailed in the sidebar
below. And the sidebar on pages 18 and 19 shows
how our work on the ground translates to a partic-
ular geography, in this case the state of Ohio.
HIGHLIGHTING OUR DIVERSITY, EQUITY AND INCLUSION EFFORTS
We seek to create a company that reflects the
diverse communities that we serve, a workplace
in which all employees feel they belong and are
respected. We believe these efforts not only make
us a positive work environment, but they also
make our company stronger, our business more
profitable and our institution a better global cor-
porate citizen. This objective is integrated into how
we do business every day. Some of our recent
progress is highlighted below:
• We continue to identify ways to support our
military veterans. In 2011, along with 10 other
companies, JPMorgan Chase co-founded the
Veteran Jobs Mission (VJM), a coalition commit-
ted to hiring at least 100,000 veterans by 2020.
Since its founding, more than 300 member com-
panies representing various industries across
the United States have reported over 880,000
veteran hires. In 2022, VJM increased its goal
to 2 million veteran hires and 200,000 military
spouse hires over the next decade. JPMorgan
Chase alone has hired over 18,000 veterans
since 2011 and currently employs approximately
3,000 military spouses.
• We continue to make strides in developing a
diversified workplace. By year-end, women rep-
resented 49% of the firm’s total workforce. Over-
all, Hispanic, Asian and Black representation
grew to 21%, 18% and 14%, respectively. In 2022,
the number of employees who self-identified
as LGBTQ+ increased by 35% year-over-year,
following 50% year-over-year growth in 2021.
• The firm’s Office of Disability Inclusion (ODI) con-
tinues to lead strategy and initiatives aimed at
advancing careers while helping the firm be a
bank of choice for people with disabilities. As
ODI kicked off its business growth and entrepre-
neurship work in 2022, it provided business
coaching to over 225 entrepreneurs with
disabilities and commissioned research with
the National Disability Institute, which identified
unique opportunities and challenges among
small business owners who have a disability.
An update on our $30 billion racial equity
commitment
What began in 2020 as a $30 billion, five-year
commitment is now transforming into a consistent
business practice that our lines of business deliver
each day to support Black, Hispanic, Latino and
other underserved communities.
By the end of 2022, we reported nearly $29 billion
in progress toward our original goal. But our
focus is not on how much money is deployed —
it is on long-term impact and outcomes.
16
WHY WE ARE PROUD OF JPMORGAN CHASE Here are some details on our program’s progress
through 2022:
• Supplier diversity. In 2022, our firm spent
approximately $2.1 billion directly with diverse
suppliers — an increase of 25% over 2021. As a
part of our racial equity commitment, $400
million was spent in 2022 with over 200 Black-,
Hispanic- and Latino-owned businesses — more
than doubling the amount spent in 2021.
• Affordable rental housing. Through our
Affordable Housing Preservation program, we
approved funding of approximately $18 billion in
loans to incentivize the preservation of nearly
170,000 affordable housing rental units across
the United States. Additionally, we financed
approximately $4 billion for the construction
and rehabilitation of affordable rental housing.
• Homeownership. In a rising rate environment,
we continue our efforts to provide homeowner-
ship opportunities for Black, Hispanic and Latino
households across all income levels, including
advocating for policies that reduce barriers to
owning a home. The biggest barriers are upfront
cash for a down payment and closing costs.
In 2022, we expanded our $5,000 Chase Home-
buyer Grant program to include over 11,000
majority Black, Hispanic and Latino communi-
ties. Since our grant program began in 2021,
we have provided about 2,700 grants totaling
$13.5 million. We have also assisted Black,
Hispanic and Latino homeowners with 11,500
incremental home loans together worth over
$4 billion, mainly driven by refinance activity
when rates were low.
• Small business. In 2022, we launched a Special
Purpose Credit Program, the first of its kind
nationally, to expand credit access for small busi-
nesses in majority Black, Hispanic and Latino
communities, which have traditionally been
underserved. When I visited Houston last year,
I met Sherice and Steve Garner, Chase customers
who own a local barbecue business, Southern Q.
They are examples of the types of customers we
want to support. Previously, they had been using
their personal bank account to run their busi-
ness. We helped them secure a small business
loan to purchase their business location. To
assist more families like the Garners, we hired
45 local senior business consultants to provide
one-on-one coaching and host educational
events, community workshops and business
training seminars to support minority entrepre-
neurs across 21 U.S. cities.
• Minority depository institutions (MDI) and
community development financial institutions
(CDFI). We invested more than $100 million in
equity in diverse financial institutions and pro-
vided over $200 million in incremental financing
to CDFIs to support communities that lack access
to traditional financing. We also helped them
build their capacity so they can provide a
greater number of critical services like mort-
gages and small business loans. Additionally,
we do not charge a fee for nearly all our partici-
pating MDI and CDFI customers who make a
withdrawal at a Chase ATM.
• Access to banking. We helped more than
400,000 customers open low-cost checking
accounts; we’ve also opened 13 Community Center
branches (a total of 15 Community Center
branches since 2019), often in areas with larger
Black, Hispanic and Latino populations; and we
hired over 140 Community Managers in under-
served communities to build relationships with
community leaders, nonprofits and small busi-
nesses. These Community Center branches are
unique spaces in the heart of urban communi-
ties with more space than standard bank
branches to host local events, small business
mentoring sessions and financial health semi-
nars. The majority were built with minority
contractors from the community; we hire staff
locally and we engage local artists to help
ensure these locations complement their neigh-
borhood. We have been pleased by the dramatic
positive effect these specialized branches have
had on their communities to date and expect to
expand the program.
By driving inclusive economic growth, we can help
create a brighter future for all, no matter where
people live or the circumstances they’re born into.
We provide regular updates on our corporate web-
site about our progress toward equity and equal-
ity, and I encourage you to read about the mean-
ingful impact we’re making within our firm and
with the people we serve.
17
WHY WE ARE PROUD OF JPMORGAN CHASE THE STATE OF OHIO: HOW JPMORGAN CHASE DRIVES
COMMUNITY GROWTH
When JPMorgan Chase does business in a commu-
nity, we do more than just open branches. We lend
to small, midsized and big businesses; we hire, pay
well and provide great benefits; and we finance
hospitals, schools, grocery stores, homes, automo-
biles and governments. For more than 200 years,
this approach has enabled us to make investments
that have a lasting impact on local economies,
families and neighborhoods while also supporting
them in good and challenging times.
We have been in Ohio since 1812, and our experi-
ence there serves as a great example of how our
resources drive growth on the ground.
Our support to government, higher education,
healthcare and nonprofit organizations:
Our support to local financial firms:
• We have provided nearly $20 billion in credit
and capital over the last five years for financial
institutions such as local banks, insurance
companies, asset managers and securities firms.
• Importantly, we bank 19 of Ohio’s regional,
midsized and community banks, helping them
serve local communities and accomplish their
other goals.
Our support to small businesses:
• By the end of 2022, loan balances for small
business customers in Ohio totaled over $800
million — funds being used to run and grow
companies and create jobs.
• We serve approximately 150 government, higher
— Includes support for distribution of the
education, healthcare and nonprofit clients
throughout the state, and over the last five
years, we provided nearly $9 billion in credit and
capital to them.
• Our clients range from University Hospitals
Health System, Inc. to the Ronald McDonald
House in Columbus and the University of Dayton
in Dayton.
• We are the primary treasury bank for Ohio State
University and the primary bank for the city of
Columbus; we also bank nearly 50 counties,
cities and school districts across the state.
federal government’s Paycheck Protection
Program (PPP) to help small businesses
navigate the pandemic in 2020 and 2021
• In 2022 alone, JPMorgan Chase helped over
160,000 small businesses thrive and grow through
access to customers, capital and networks, giving
us the second largest business banking market
share in the state. We also offered some 106,000
hours of advice and support to small businesses.
Our support to consumer banking needs:
• We operate nearly 225 branches and over
530 ATMs across the state.
Our support to investment and middle market
banking clients:
• Our support includes $120 billion in credit and
capital over the last five years for Commercial &
Industrial clients such as energy, retail and auto
businesses.
• To help Ohioans build wealth and be financially
healthy, we have provided more than 4 million
savings, checking and credit card accounts,
enabling these consumers to gain access to
resources such as free financial health services,
as well as mortgage and auto loans.
• We have over 4,800 large and midsized clients in
Ohio, up over 70% compared with 2019, which
also includes emerging middle market companies
owned by veterans, women, LGBTQ+ individuals
and people of color. This gives us leading market
shares in the state compared with other banks.
— Ranked as the second largest provider of
consumer banking in Ohio with over 2 million
checking and savings accounts and customer
deposits totaling nearly $37 billion in 2022
• In 2022, we oversaw more than $20 billion in
investment and annuity assets for clients.
18
WHY WE ARE PROUD OF JPMORGAN CHASE Our business and community investments:
Our impact as a proud employer in Ohio:
• Today, as the largest private employer in
Columbus, JPMorgan Chase employs over
20,000 Ohioans throughout the state,
including more than 2,000 veterans and
500 people with a criminal background
who deserve a second chance.
• We also support an additional 3,200 jobs for
contractors in our branches and corporate
offices across the state.
• In Ohio, our average salary is $96,000, not
including benefits. Our lowest starting wage is
$41,000 (plus a comprehensive annual benefits
package worth nearly $15,000) compared with
Ohio’s average salary of $35,0001.
• The firm’s national $30 billion racial equity
commitment takes place very specifically on
the ground. Since the program began, we have
committed more than $260 million across the
state, including:
— Over $163 million in loans for Black, Hispanic
and Latino households to purchase or refi-
nance a home
— $54 million financed through investments and
loans for the construction and rehabilitation
of affordable housing
— $14 million in New Markets Tax Credit invest-
ments to support the Ronald McDonald House
Charities in central Ohio
— Over $12 million spent with Black, Hispanic
and Latino suppliers
• We’ve committed $45 million in philanthropic
support across the state since 2018 such as:
— $5 million to support The 614 for Linden, a
CDFI and nonprofit collaborative, in Columbus,
which helped catalyze a $20 million fund for
affordable housing; create or preserve nearly
750 affordable housing units; provide 57
microloans to local entrepreneurs; support
technical assistance for over 100 small busi-
nesses; and increase wraparound services for
prenatal care, as well as facilitate access to
healthy food
1 Ohio per capita income of
$35,000 sourced from 2021
U.S. Census Bureau American
Community Survey data
released December 2022.
19
WHY WE ARE PROUD OF JPMORGAN CHASE Update on Specific Issues Facing
Our Company
CLIMATE COMPLEXITY AND PLANNING
The window for action to avert the costliest
impacts of global climate change is closing. At the
same time, the ongoing war in Ukraine is roiling
trade relations across Europe and Asia and rede-
fining the way countries and companies plan for
energy security. The need to provide energy
affordably and reliably for today, as well as make
the necessary investments to decarbonize for
tomorrow, underscores the inextricable links
between economic growth, energy security and
climate change. We need to do more, and we need
to do so immediately.
To expedite progress, governments, businesses
and non-governmental organizations need to align
across a series of practical policy changes that
comprehensively address fundamental issues that
are holding us back. Massive global investment in
clean energy technologies must be done and must
continue to grow year-over-year.
At the same time, permitting reforms are desper-
ately needed to allow investment to be done in any
kind of timely way. We may even need to evoke
eminent domain — we simply are not getting the
adequate investments fast enough for grid, solar,
wind and pipeline initiatives. Policies like the
Bipartisan Infrastructure Law, the Creating Helpful
Incentives to Produce Semiconductors (CHIPS) and
Science Act, and the Inflation Reduction Act (IRA) —
that hold the potential to unlock over $1 trillion in
clean technology development — need to be imple-
mented effectively. The upside is undeniable: Wide-
spread investing across the private sector will aid
domestic manufacturing, invigorate research and
development in green innovation, help create resil-
ient supply chains, lift up local economies and build
the U.S. clean energy workforce by up to 9 million
jobs over the next decade. While major advances
have been made in the last few years on technology
to help this cause, we are hopeful that the great
American innovation machine (most advancements
will ultimately come from the huge capabilities and
capital of America’s largest companies) will find the
additional technologies that are desperately
needed. There is a downside — massive, inefficient
and malinvestment of capital. I talk more about this
in the last section on public policy.
Polarization, paralysis and basic lack of analysis
cannot keep us from addressing one of the most
complex challenges of our time. Diverse stakehold-
ers need to come together, seeking the best
answers through engagement around our common
interest. Bolstering growth must go hand in hand
with both securing an energy future and meeting
science-based climate targets for future
generations.
AI, DATA AND OUR JOURNEY TO THE
CLOUD
Artificial intelligence (AI) is an extraordinary and
groundbreaking technology. AI and the raw
material that feeds it, data, will be critical to our
company’s future success — the importance of
implementing new technologies simply cannot be
overstated. We already have more than 300 AI
use cases in production today for risk, prospect-
ing, marketing, customer experience and fraud
prevention, and AI runs throughout our payments
processing and money movement systems across
the globe. AI has already added significant value
to our company. For example, in the last few
years, AI has helped us to significantly decrease
risk in our retail business (by reducing fraud and
illicit activity) and improve trading optimization
and portfolio construction (by providing optimal
execution strategies, automating forecasting and
analytics, and improving client intelligence).
We currently have over 1,000 people involved in
data management, more than 900 data scientists
(AI and machine learning (ML) experts who create
new models) and 600 ML engineers (who write the
code to put models in production). This group is
20
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY focused on AI and ML across natural language
processing, time series analysis and reinforcement
learning to name a few. We’re imagining new ways
to augment and empower employees with AI
through human-centered collaborative tools and
workflow, leveraging tools like large language
models, including ChatGPT.
We also have a 200-person, top-notch AI research
group looking at the hardest problems and new
frontiers in finance. We were recently ranked #1 on
the Evident AI Index, the first public benchmark of
major banks on their AI maturity. We take the
responsible use of AI very seriously and have an
interdisciplinary team of ethicists helping us prevent
unintended misuse, anticipate regulation, and pro-
mote trust with our clients, customers and commu-
nities. AI and data use is complex; it must be done
following the laws of the land. But it is an absolute
necessity that we do it both for the benefits I just
described and, equally, for the protection of the
company and the financial system — because you
can be certain that the bad guys will be using it, too.
All of our technology groups firmwide work
together in a flywheel of innovation and deliver
state-of-the-art improvements. We are proud that
our AI teams have contributed top-quality novel
research and compelling solutions that are trans-
forming more and more business cases every day.
AI is inextricably linked with cloud-based systems,
whether public or private, and digital capabilities.
Our company needs the cloud for its on-demand
compute capacity, flexibility, extensibility and
speed. Native cloud-based approaches will ulti-
mately be faster, cheaper and aligned with the
newest AI techniques, and they will give us easy
access to constantly evolving developer tools.
We have spent over $2 billion building new, cloud-
based data centers and are working to modernize
a significant portion of our applications (and their
related databases) to run in both our public and
private cloud environments. To date, we have
migrated approximately 38% of our applications
to the cloud, meaning over 50% of our application
portfolio (this includes third-party, cloud-based
applications) is running on modern environments.
This journey to the cloud is hard work but neces-
sary. Unlocking the full potential of the cloud and
nearly 550 petabytes of data will require replat-
forming (putting data in a cloud-eligible format)
and refactoring (i.e., rewriting) approximately
4,000 applications. This effort will involve not just
the 57,000 employees we have in technology but
the dedicated time of firmwide management teams
to help in the process.
BANKING TURMOIL AND REGULATORY
GOALS
The recent failures of Silicon Valley Bank (SVB) in
the United States and Credit Suisse in Europe, and
the related stress in the banking system, under-
score that simply satisfying regulatory require-
ments is not sufficient. Risks are abundant, and
managing those risks requires constant and vigi-
lant scrutiny as the world evolves. Regarding the
current disruption in the U.S. banking system, most
of the risks were hiding in plain sight. Interest rate
exposure, the fair value of held-to-maturity (HTM)
portfolios and the amount of SVB’s uninsured
deposits were always known — both to regulators
and the marketplace. The unknown risk was that
SVB’s over 35,000 corporate clients — and activity
within them — were controlled by a small number
of venture capital companies that moved their
deposits in lockstep.
It is unlikely that any recent change in regulatory
requirements would have made a difference in
what followed. Instead, the recent rapid rise of
interest rates placed heightened focus on the
potential for rapid deterioration of the fair value of
HTM portfolios and, in this case, the lack of sticki-
ness of certain uninsured deposits. Ironically,
banks were incented to own very safe government
securities because they were considered highly liq-
uid by regulators and carried very low capital
requirements. Even worse, the stress testing based
on the scenario devised by the Federal Reserve
Board (the Fed) never incorporated interest rates
at higher levels. This is not to absolve bank man-
agement — it’s just to make clear that this wasn’t
the finest hour for many players. All of these col-
liding factors became critically important when the
marketplace, rating agencies and depositors
focused on them.
21
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY As I write this letter, the current crisis is not yet
over, and even when it is behind us, there will be
repercussions from it for years to come. But
importantly, recent events are nothing like what
occurred during the 2008 global financial crisis
(which barely affected regional banks). In 2008,
the trigger was a growing recognition that $1 trillion
of consumer mortgages were about to go bad —
and they were owned by various types of entities
around the world. At that time, there was enor-
mous leverage virtually everywhere in the finan-
cial system. Major investment banks, Fannie Mae
and Freddie Mac, nearly all savings and loan insti-
tutions, off-balance sheet vehicles, AIG and banks
around the world — all of them failed. This current
banking crisis involves far fewer financial players
and fewer issues that need to be resolved.
These failures were not good for banks of
any size.
Any crisis that damages Americans’ trust in their
banks damages all banks — a fact that was known
even before this crisis. While it is true that this
bank crisis “benefited” larger banks due to the
inflow of deposits they received from smaller insti-
tutions, the notion that this meltdown was good
for them in any way is absurd.
Let’s be very thoughtful in our reaction to
recent events.
While this crisis will pass, lessons will be learned,
which will result in some changes to the regulatory
system. However, it is extremely important that we
avoid knee-jerk, whack-a-mole or politically moti-
vated responses that often result in achieving the
opposite of what people intended. Now is the time
to deeply think through and coordinate complex
regulations to accomplish the goals we want,
eliminating costly inefficiencies and contradictory
policies. Very often, rules are put in place in one
part of the framework without appreciating their
consequences in combination with other regula-
tions. America has had, and continues to have,
the best and most dynamic financial system in
the world — from various types of investors to its
banks, rule of law, investor protections, transpar-
ency, exchanges and other features. We do not
want to throw the baby out with the bath water.
We should have common goals on how we
want the banking system to work.
• We want to strengthen regional, midsized and
community banks, which are essential to the
American economic system. They fill a critical
role in small communities, offering local knowl-
edge and local relationships that some large
banks simply can’t provide — or can’t provide
cost-effectively. Overall, we want to maintain
the extraordinary strength this tiered system
affords. JPMorgan Chase directly supports this
goal as we are one of the largest bankers in
America to regional and community banks. We
bank approximately 350 of America’s 4,000+
banks across the country. This means we make
loans to them or raise capital for them. In addi-
tion, we process payments for them, finance
some of their mortgage activities, advise them
on acquisitions, provide them with interest rate
swaps and foreign exchange, and buy and sell
securities for them. And we also finance their
local communities (think hospitals, schools and
larger companies) in ways they cannot.
• We need large, complex banks to continue
to play a critical role in the U.S. and global
financial system. And we need to recognize that
they do so in a way regional banks can’t. Large
banks are complex not because they want to be
but because they operate in complex global
markets. Regional banks simply cannot manage
the scale and complexity of transactions in 50 or
60 countries around the world to help some of
America’s best and largest companies accom-
plish their goals. Think of equity, debt, M&A,
research, swaps, foreign exchange, large pay-
ments systems, global custody and so on. It
takes a global workforce with deep expertise
and significant capabilities to provide these ser-
vices. These large global banks finance not just
the world’s largest companies but the world’s
development institutions and even countries.
Having some of the best large, complex banks in
the world is essential to the success of America’s
biggest companies, its economic system and its
global competitiveness, which says nothing
against the importance of having great midsized
and community banks as well. And contrary to
22
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY what some say — to be safe, a global bank needs
both huge economies of scale and the strength
of diversified earnings streams.
• We should want a system in which a bank
failure does not cause undue panic and finan-
cial harm. While you don’t want banks to fail all
the time, it should be allowed to happen, and the
resolution should follow a completely prescribed
process. In almost all bank failures, uninsured
deposits never resulted in lost money — but
the very fear of loss can cause a run on any bank
having characteristics similar to a bank that has
failed. Resolution and recovery regulations did
not work particularly well during the recent
crisis — we should bring clarity and reassurance
to both the unwinding process and measures to
reduce the risk of additional bank runs. It should
also be noted that banks pay for any bank failure
(through fees paid to the Federal Deposit Insur-
ance Corporation) as they pay for the whole
financial regulatory system. And yes, while these
costs are ultimately passed on to their customers
— that is true for all industries — the cost is just
the price of implementing proper regulations.
• We want proper transparency and strong regu-
lations. However, it should be noted that regula-
tions, the supervisory regime and the resolution
regime currently in place did not stop SVB and
Signature Bank from failing — and from causing
systemwide issues. We should not aim for a reg-
ulatory regime that eliminates all failure but one
that reduces the chance of failure and the odds
of contagion. We should carefully study why this
particular situation happened but not overreact.
Strong regulations should not only minimize
bank failures but also help to maintain the
strength of banks as both the guardians of the
financial system and engines that finance the
great American economic machine.
• We should want market makers to have the
ability to effectively intermediate, particularly
in difficult markets, with central banks only step-
ping in during exceptional situations. In the last
few years, we have had many situations in which
disruptions in the market were, in my opinion,
largely caused by certain regulations that did
not improve the safety of the market maker but,
instead, damaged the safety of the whole sys-
tem. In addition, many of the new “shadow
bank” market makers are fair-weather friends —
they do not step in to help clients in tough times.
• We need banks to be there for their clients in
tough times. And they have been. Banks can
flex their capital and provide their clients with
a lot of loans and liquidity when they really need
it. For example, at the beginning of the COVID-19
crisis in March 2020, banks deployed over $500
billion in liquidity for clients and $500 billion in
PPP loans — and this does not include banks’
share of the nearly $2 trillion in loans that
entered forbearance. Banks also play a unique
and fundamental role in the transmission of
monetary policy because deposits in banks can
be loaned out, effectively “creating” money.
Some regulations and some accounting rules
have become too procyclical and make it harder
to do this.
• Regulation, particularly stress testing, should
be more thoughtful and forward looking. It has
become an enormous, mind-numbingly complex
task about crossing t’s and dotting i’s. For exam-
ple, the Fed’s stress test focuses on only one sce-
nario, which is unlikely to happen. In fact, this
may lull risk committee members at any institu-
tion into a false sense of security that the risks
they are taking are properly vetted and can be
easily handled. A less academic, more collabora-
tive reflection of possible risks that a bank faces
would better inform institutions and their regula-
tors about the full landscape of potential risks.
• We should decide a priori what should stay in
the regulatory system and what shouldn’t.
There are reasons for certain choices, and they
should not be the accidental outcome of uncoor-
dinated decision making. Regulatory arbitrage is
already forcing many activities, from certain
types of lending to certain types of trading, out-
side the banking system. Among many questions
that need definitive answers, a few big ones
would be: Do you want the mortgage business,
credit and market making, along with other
essential financial services, inside the banking
23
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY ADJUSTING OUR STRATEGY TO THE NEW
REGULATORY REALITY (BASEL III
ENDGAME)
The Basel III Endgame (called Basel IV by some) —
which, incredibly, has been nearly 10 years in the
making — seems likely to increase, yet again, capi-
tal requirements for banks in general, through
higher operational risk changes, and for trading
and capital markets activity in particular, among
other things. Whether or not we agree with all
these changes (and we’ve discussed these regula-
tions in detail in prior letters), we will simply have
to adjust to them immediately. It’s important we
describe to our shareholders how we will go about
doing that and what it means for banks and, in
particular, our bank.
First and foremost, banks must satisfy all of
their regulators.
We must satisfy all of our regulators, and, remem-
ber, we have regulators all around the world,
including more than 10 in the United States alone.
Regulations include stress testing, reporting, com-
pliance, legal obligations and trading surveillance,
among others. While the business is the first line of
defense on all these issues, we also have 3,700
people in compliance, 7,100 in risk and 1,400
lawyers actively working every day to meet the
letter and the spirit of these rules along with the
final line of defense — audit.
Rules are constantly changing and/or being
enhanced and are sometimes, unfortunately,
driven by political motivations. Relationships with
regulators can often be intense, and, recently, we
have lost some terrific people in our firm because
of this. Regulators know that when banks disagree,
we essentially have no choice — there is no one to
appeal to, and even the act of appealing can make
them angry. We simply ask respectfully to be
heard, but at the end of the day, we will do what
they ask us to do.
system or outside of it? What would be the
long-term effect of that choice? Under the new
scheme, would nonbank credit-providing institu-
tions be able to provide credit when their clients
need them the most? I personally doubt that
many of them could.
• We need banks to be attractive investments.
It is in the interest of the financial system that
banks not become “un-investable” because of
uncertainty around regulations that affect capi-
tal, profitability and long-term investing. Erratic
stress test capital requirements and constant
uncertainty around future regulations damage
the banking system without making it safer.
While it is perfectly reasonable that a bank
refrain from stock buybacks, dividends or
growth under certain circumstances, it would be
far better for the entire banking system if these
rules were clearly enumerated (i.e., stipulate
that a bank needs to reduce its buybacks and
dividend if they breach certain thresholds).
If done properly, banking regulations could be cali-
brated — adding virtually no additional risk — to
make it easier for banks to make loans, intermedi-
ate markets, finance the economy, manage a run
on their bank and fail if need be. When it comes to
political debate about banking regulations, there is
little truth to the notion that regulations have been
“loosened,” at least in the context of large banks.
(To the contrary, our capital requirements have
been increasing for years, as shown on the chart
on page 12.) The debate should not always be about
more or less regulation but about what mix of
regulations will keep America’s banking system
the best in the world, such as capital and leverage
ratios, liquidity and what counts as liquidity, reso-
lution rules, deposit insurance, securitization,
stress testing, proper usage of the discount win-
dow, tailoring and other requirements (including
potential requirements on shadow banks). Because
of the recent problems, we can add to this mix the
review of concentrated customers, uninsured
deposits and potential limitations on the use of
HTM portfolios. Ideally, new rules and regulations
would also make it easier for banks to provide
credit in tougher times.
24
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Size of the Financial Sector/Industry
($ in trillions)
Size of banks
in the financial
system
Shadow banks
Global GDP1
Total U.S. debt and equity market
Total U.S. broker-dealer inventories
U.S. G-SIB market capitalization
U.S. bank loans
U.S. bank liquid assets2
Federal Reserve total assets
Federal Reserve RRP volume
Hedge fund and private equity AUM3
Top 50 sovereign wealth fund AUM4
Total private direct credit5
U.S. money market funds6
U.S. private equity-backed companies (K)7
U.S. publicly listed companies (K)8
Nonbank share of mortgage originations9
Nonbank share of leveraged lending
2010
$ 64.9
$ 57.5
$ 4.1
$ 0.8
$ 6.6
2.8
$
$
2.4
$ <0.1
2.8
$
$
3.6
$ 14.0
3.0
$
6.0
4.2
9%
82%
2022
$ 89.5
$ 123.2
$ 4.4
$
1.2
$ 12.1
7.5
$
$ 8.6
2.6
$
$ 9.0
$ 10.3
$ 22.0
5.2
$
11.2
4.6
62%
75%
1996
7.3
2000
54%
Sources: FactSet, S&P Global Market Intelligence, Assets and Liabilities of Commercial Banks in the United States H.8 data, Financial Accounts of the United States Z.1 data, World Federation of
Exchanges, Pitchbook, Preqin and World Bank
AUM = Assets under management
GDP = Gross domestic product
G-SIB = Global systemically important banks
RRP = Reverse repurchase agreements
K = Thousands
For footnoted information, refer to page 43 in this Annual Report.
Banks will play a smaller role in the global
financial system.
The chart above shows both the decreasing role
and size of U.S. banks relative to the global econ-
omy alongside the increasing role and size of
shadow banks. The data illustrates this dynamic.
We expect this trend to continue for all the reasons
I’ve discussed.
Banks will continue to be guardians of the
financial system.
Properly regulated banks are meant to protect and
enhance the financial system. They are transpar-
ent with regulators, and they strive mightily to
protect the system from terrorism financing and
tax evasion as they implement know your cus-
tomer guidelines and anti-money laundering laws.
They protect clients’ assets and clients’ money in
movement. Banks also help customers — from
protecting their data and minimizing fraud and
cyber risk to providing financial education — and
must abide by social requirements, such as the
Community Reinvestment Act, which requires
banks to extend their services into lower-income
communities. As mentioned previously, unlike the
private market, banks do not always choose when
to provide a product or service but need to be
there for their clients when they need credit or
liquidity the most.
Looking forward, we constantly modify our
strategies to adjust to our market realities.
It’s always best to adjust to new reality quickly. We
really don’t like crying over spilled milk, although
we sometimes do. The new reality is that some
things — for example, holding certain types of
credit — are more efficiently done by a nonbank.
25
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY
Here are some actions we are taking to help our
business succeed in the current and future
environments:
1. First and foremost, we must conclude that hold-
ing certain types of credit, loans or otherwise
has generally become less profitable because
of the high levels of capital that need to be held
against it — generally more than the market
demands. What this means is that some credit
is better held in a nonbank. Increasingly, for a
credit relationship to make sense, banks need
a lot of noncredit-related revenue.
6. We have the ability to add low-capital or
no-capital revenue streams, like providing valu-
able data and analytics in trading, travel and
other relevant offers in the consumer bank,
wealth management and payment services
businesses, among others.
If you review our CEO letters, you will see that we
have many growth opportunities in front of us and
our plans to attack them. We face the future and
the new competition, large and small, with confi-
dence, strength and a dash of humility.
2. Because of various capital requirements, we try
to reduce clients’ nonoperating cash deposits.
KEEPING AN EYE ON ALL OF OUR
COMPETITORS
3. We are seeking to implement much tighter man-
agement and execution of business strategies.
This includes repricing certain businesses, run-
ning off certain unprofitable products, changing
the mix of business for a client, and more rigor-
ously evaluating client selection and resource
optimization applied to clients.
4. We are exploring new capital optimization
strategies, which could include partnerships
and perhaps one day more securitizations,
among other opportunities.
5. Unfortunately, it is becoming increasingly diffi-
cult for banks to stay in the mortgage business,
which ultimately hurts everyday Americans. The
high costs of origination and servicing along with
the complexity of regulations create a costly
business with significant legal, reputational and
operational challenges. In addition, given capital
requirements and the lack of a healthy securiti-
zation market, it barely makes sense for banks
to hold mortgages or mortgage-servicing rights.
Many banks have already reduced much of this
business. We are hanging on, continuing to hope
for meaningful change.
The growing competition to banks from each other,
as well as shadow banks, fintechs and large tech-
nology companies, is intense and clearly contribut-
ing to the diminishing role of banks and public
companies in the United States and the global
financial system. The pace of change and the size
of the competition are extraordinary, and activity
is accelerating. Walmart, for example (with over
200 million in-store customers each week), can
use new digital technologies to efficiently bring
banking-type services to their customers. Apple,
already a strong presence in banking-type services
with Apple Pay and the Apple Card, is actively
moving into other similar services such as payment
processing, credit risk assessment, person-to-
person payment systems, merchant acquiring and
buy-now-pay-later offers. Large tech companies,
already 100% digital, have hundreds of millions of
customers, as well as enormous resources, in data
and proprietary systems — all of which give them
an extraordinary competitive advantage.
We remain confident that as long as we stay
vigilant, hungry, adaptable, fast and disciplined,
we will continue to succeed in building this great
company.
26
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Management Lessons
As recent countries and companies have demon-
strated, great management and leadership are
critical to any large organization’s long-term
success. While providing strong management is a
disciplined and rigorous process — facts, analysis,
detail, rinse and repeat — creating an exceptional
management team is an art, not a science.
In the rest of this section, I talk about some
management lessons — I always enjoy sharing
what I have learned over time by watching others
and through my own successes and failures.
BUILDING TRUE FRANCHISE VALUE
Accounting can distort actual economic
reality.
I have spoken in the past about good and bad reve-
nue and good and bad expenses. Certain expenses,
such as opening well-designed and well-located
branches, actually are long-term investments of
great value. Conversely, poorly underwritten credit
creates revenue that you are bound to regret.
Further, there are accounting practices that may
distort the true value of actions you take. For
example, when we create a new credit card
account, we recognize origination costs over
12 months, but an average account exists for over
eight years. And with the new accounting rules for
loan loss reserves — called the current expected
credit losses standard — you book the expected life
of loan losses on the day you make the loan, while
the revenue comes in over multiple years.
Increasingly in the modern world, many valuable
things are not reflected on our balance sheet in
generally accepted accounting principles — for
example, previously expensed intellectual prop-
erty or extraordinary human capital. At the end of
the day, human capital is the most valuable asset.
Think of a great athlete, a great lawyer or a great
artist. It’s not simply the equipment — it’s the
extraordinary training and talent of those
involved, as we’ve also seen with the U.S. military.
And sometimes it’s not the individual but the
highly coordinated activities of the team that
deliver the championship.
Finally, if any value is based upon models, one
must really test the sensitivity of the outcome
against changes in assumptions. Understanding
the range of potential outcomes may be far more
important than the point estimate created by a
model. In some cases, you can have an excellent
average outcome but with a chance of death.
The point is: Accounting can distort economic real-
ity and can lead one to make the wrong decisions.
Building true franchise value requires an
outcomes-based outlook.
In banking, specific examples illustrate how merely
following accounting and capital rules — without
thinking through the outcomes— can lead one
astray. I’m going to describe just two examples,
but there are hundreds more.
If you buy or create a loan at par and put it on your
balance sheet at par (think of a mortgage) and
internally finance it, even match-funded with 10%
capital, you might believe you have a 12% return.
Many companies subscribe to this interpretation
and simply continue to borrow money to invest in
such a thing. But I would tell you this product has
27
MANAGEMENT LESSONS no franchise value because it is only worth par,
and, in fact, a small change in that value (because
of interest rates and credit spread) could mean
that you have made a huge mistake. If, on the
other hand, you create a loan and sell it at more
than par at a profit, you have created value —
whether or not you keep it on your balance sheet.
And far more important, if you create a loan and at
the same time forge a client relationship — and you
add additional capital-light revenue, such as asset
management and cash management — you have
created something of long-term value that you can
nurture and grow. This is franchise value.
Simply taking interest rate risk (which contributed
to the downfall of SVB) is not a business. Nor is
simply taking credit risk. One person and a com-
puter will suffice — you do not need 290,000
people circling the globe to do that.
Another example relates to any branch-based
business. Let’s say I build a system with well-
designed and well-located branches, staffed by
well-trained personnel who can offer customers
great products and services and who strive to do
every task a little bit better. Then you build a
branch system with outdated sites in poor loca-
tions (often to save money) that have undertrained
and underpaid staff and lower-quality products
and services. Between the two, my branch system
will win every time. One system will have high
franchise value and be self-perpetuating with high
returns. The other enterprise is probably on the
road to eventual failure. If you study the history
of business, you can see this phenomenon play
out in grocery stores, car companies, restaurants,
retailers and various other enterprises.
LEARNING FROM INVESTOR DAY
In February 2021, we did not hold our annual Inves-
tor Day for the obvious reason — COVID-19. When
February 2022 came around, we were somewhat
happy to be relieved of that responsibility again.
Investor Day is a tremendous amount of work. But
from 2020 to 2022, we did a lot of investment
spending and made several acquisitions. Some of
our analysts questioned whether we were being
transparent enough in terms of what we were doing
and why we were doing it. While sometimes we get
frustrated with investor demands — and not all
investors are created equally — all investors should
be treated fairly and with respect. So, in 2022, we
gave it more thought and reversed course with an
extensive Investor Day. Our senior management
team explained in detail our acquisitions and our
investments, answering every question to the best
of their ability. Having to explain your business to
investors, comparing yourself with competitors and
looking at the business as a whole — across sales,
marketing, returns, growth, risks and strategic
opportunities — was a terrific exercise for us.
We learned our lesson!
This also raises another issue. Of course, it is criti-
cally important to analyze your business at the
right disaggregated level — right down to the
branch — inside the company. But it is also import-
ant to have the proper segments reported exter-
nally to the company, properly accounted for and
generally aligned to their relevant competitors.
This actually helps hold managers accountable by
forcing them to accurately assess performance —
the good, the bad and the ugly — without any
attempts to avoid reality through an external
obfuscation of results.
28
MANAGEMENT LESSONS client come to us and request something that
extends beyond what we consider reasonable
for that transaction, we may nonetheless do it.
Perhaps the client is in the middle of an M&A
transaction in difficult markets and simply cannot
get the financing they need — other than from us.
In recent crises, we have often gone the extra
mile for a client at great risks to ourselves, not
to make a profit but to rescue the client from
financial calamity.
Fundamentally, putting the client first means
always providing them with the products and ser-
vices they need (although they may go somewhere
else because of price) and having our whole team
work hard for them — either in the United States or
around the world, reliably and with constancy. One
of the most important things we do for a client,
above all else, is to be a steady hand, providing
financial safety and security at every turn.
BALANCING A CUSTOMER-CENTRIC
APPROACH WITH (EXCESSIVE) RISK
Most businesses, including banks like us, say they
put their customers first. We often go further than
that statement to say that we need to be there for
them, in good times and in bad. However, banking
is a complex industry, and this customer-centric
approach requires a little more explanation.
In our business, we are essentially a financial
partner to a client. While we strive to build great
client relationships based on trust over the long
run, our role has intricacies. For example, we do
not need every transaction to make economic
sense — just the overall client relationship, year
after year. Whatever the transaction, we need to
be properly compensated for the risks we bear,
which can be extraordinary. Very often, a client
will merely look for the lowest price, which we
completely understand; we recognize that some-
times banks are perfectly willing to make a cer-
tain transaction for a client at a loss. There are
also occasions when we need to tell a client that a
specific financial transaction would be imprudent
— maybe for us and the client.
Say, for example, that a very strong client of ours
is simply trying to get the best price for a lever-
aged loan. If we believe the desired price is unwise
and another institution is willing to offer it, we will
advise the client to take that option. For us, this is
pure counterparty risk and not really part of our
core relationship. Conversely, should the same
29
MANAGEMENT LESSONS Some Commonsense Principles
for Corporate Governance
I have written before about the diminishing role of
public companies in the American financial system.
They peaked in 1996 at 7,300 and now total 4,600.
Conversely, the number of private U.S. companies
backed by private equity firms has grown from
1,900 to 11,200 over the last two decades. And this
does not include the increasing number of compa-
nies owned by sovereign wealth funds and family
offices. This migration is serious and worthy of
critical study, and it may very well increase with
more regulation and litigation coming. We really
need to consider: Is this the outcome we want?
There are good reasons for such healthy private
markets, and some good outcomes have resulted
from them as well. The reasons are complex
and may include public market factors such as
onerous reporting requirements, higher litigation
expenses, costly regulations, cookie-cutter board
governance, less compensation flexibility, height-
ened public scrutiny and the relentless pressure
of quarterly earnings.
With intensified public reporting, investors’ grow-
ing needs for environmental, social and gover-
nance information and the universal proxy — which
makes it very easy to put disruptive directors on a
board — the pressure to become a private com-
pany will rise. Corporate governance principles are
becoming more and more templated and formu-
laic, which is a negative trend. For example, some-
times proxy advisors automatically judge board
members unfavorably if they have been on the
board a long time, without a fair assessment of
their actual contributions or experience. And some
simple, sensible governance principles are far bet-
ter than the formulaic ones. The governance of
major corporations is evolving into a bureaucratic
compliance exercise instead of focusing on its rela-
tionship to long-term economic value. Good corpo-
rate governance is critical, and a little common
sense would go a long way.
PROMOTING OPEN COMMUNICATION AND
TRUST WITH THE BOARD
As authorized and coordinated by the board, direc-
tors should have unfettered access to manage-
ment, including those below the CEO’s direct
reports. At every board meeting, to ensure open
and free discussion, the full board should meet in
executive session without the CEO or other mem-
bers of management. The independent directors
should ensure that they have enough time to do
this properly.
This one act would allow the board to have a com-
pletely open conversation and provide candid
feedback to the CEO and management team. Good
CEOs, who are trying to do the best job they can,
should appreciate this important feedback — and
should know how difficult it is to gather in a large
group. This type of quality discussion among and
with board members leads to collaboration and
good succession planning since every meeting
should include a real conversation around this
important topic. Meetings such as these allow
the board to nurture the extraordinary value of
collaboration and trust.
CONFRONTING SUCCESSION PLANNING
Our board is responsible for succession planning,
and it is on the agenda every time board members
meet — both when they are with me and when I am
not in the room. We already have a “hit-by-the-
truck” plan ready to go (not all companies can say
this), and we have multiple successor candidates
who are well-known to the board and to the inves-
tor community. The board believes this is one of its
paramount priorities. You can rest assured that
our board members are on the case and are very
comfortable with where we are.
30
SOME COMMONSENSE PRINCIPLES FOR CORPORATE GOVERNANCE ACTIVE ENGAGEMENT WITH ASSET
MANAGERS
The new universal proxy is likely to create
havoc for companies.
We — companies and investors — need to become
more active and involved in proxy issues each
year to foster better communication between the
investors and the board of the companies they
own. Whether it’s issues around climate risk or
say on pay, it should be appropriate for the man-
agement team or board to actively engage with
investors during proxy season to hear and under-
stand each other’s views on key issues and com-
municate their positions in real time. Investors
should also require proxy advisors to share any
communications they have with a company in real
time before investors make voting decisions. In
my view, too many portfolio managers and inves-
tors have partially ceded critical decisions on key
proxy issues to their internal stewardship groups
or external proxy advisors. Stewardship teams
are also often under pressure to follow proxy
advisors by bureaucratic internal systems at
investment firms that discourage disagreement
and encourage the safety of the herd. Many port-
folio managers have told me that even when they
have the authority to override the internal group,
it is frequently very difficult to do so.
The new universal proxy makes it such that one
investor with one share, who owns it for as little
as one day, can nominate a director for any rea-
son, at relatively low cost. In my view, it is likely
that not just activists but also special interest
groups will nominate directors. Not only would
this be extremely disruptive to the board, but,
almost by their nature, special interest groups
would be counter to shareholders’ interests. While
we fully respect being transparent — protecting
investors and shareholder rights — director elec-
tion processes are becoming too far removed
from shareholder interests.
While there are legitimate complaints against
entrenched boards, good boards often tend to
interview prospective candidates for their brains,
integrity, work ethic, management and collabora-
tion skills, and experience. With this new universal
proxy, it’s easy to envision a time when a proxy
season will be like a political campaign, with inter-
est groups on both sides of an issue trying to elect
a board member. Disruptive boards, which can be
caused by just a single troublesome member, are
an anathema to shareholders’ interests. This is
unlikely to end well.
31
SOME COMMONSENSE PRINCIPLES FOR CORPORATE GOVERNANCE
Evaluating and Managing
the Economic and Geopolitical
Risks Ahead
There has been a lot of market volatility over the
past year, partially, in my opinion, as people
over-extrapolate monthly data, which is highly dis-
torted by inflation, supply chain adjustments, con-
sumer substitution, basically poor assumptions
about housing costs and other factors. But under-
lying all this, consumers have been spending 7% to
9% more than in the prior year and 23% more
than pre-COVID-19. Similarly, their balance sheets
are in great shape as they still have, according to
our own analysis, $1.2 trillion more “excess cash”
in their checking accounts than before the pan-
demic (credit card debt is simply normalizing).
In addition, unemployment is extremely low, and
wages are going up, particularly at the low end.
We’ve had 10 years of home and stock price appre-
ciation, and even if we go into a recession, con-
sumers would enter it in far better shape than
during the great financial crisis. Finally, supply
chains are recovering, businesses are pretty
healthy and credit losses are extremely low.
The failures of SVB and Credit Suisse have signifi-
cantly changed the market’s expectations, bond
prices have recovered dramatically, the stock mar-
ket is down and the market’s odds of a recession
have increased. And while this is nothing like 2008,
it is not clear when this current crisis will end. It
has provoked lots of jitters in the market and will
clearly cause some tightening of financial condi-
tions as banks and other lenders become more
conservative. However, it is unclear whether this
disruption is likely to slow consumer spending (as
of April 1, 2023, spending has been consistently
running higher versus the prior year). Although
higher rates, particularly in mortgages, have
reduced both home sales and prices, do remember
that consumer spending drives more than 65% of
the U.S. economy.
We usually don’t worry about typical economic
fluctuations and often compare economic forecast-
ing with weather forecasting: It is extremely com-
plicated, easy to do in the short term and far more
difficult to do in the long run. It is particularly hard
to forecast true longer-term inflection points in the
economy. Although we don’t want to waste time on
“normal” fluctuations, we do want to be prepared
for economic extremes — we look at multiple pos-
sibilities and probabilities and manage our com-
pany so that we can handle all of them, whether or
not we think they actually will happen. After we
spoke last year about storm clouds, some of those
storms did indeed hit, and, unfortunately, some of
those threatening clouds are still here.
2022 was not normal, economically speaking, and,
in fact, 2022 witnessed several dramatic events —
the Ukraine war began; inflation hit a 40-year high
of 9%; the federal funds rate experienced one of
its most rapid increases, up 425 basis points,
albeit from a low level; stock markets were down
20%; unemployment fell to a 50-year low at 3.5%;
and the U.S. economy was bolstered by frequent
fiscal stimulus and by high and rising government
debt while supply chain issues eased. In addition,
work from home began to raise commercial real
estate challenges, and, finally, long- and short-
term interest rates presented a sharply inverted
yield curve, which is “eight for eight” in terms of
predicting a recession (more on this later). But,
surprisingly, the global economy marched ahead.
THE CURRENT ECONOMY: PRETTY GOOD
BUT STORM CLOUDS AHEAD
Until the collapse of Silicon Valley Bank, the cur-
rent economy was performing adequately, both
here in the United States and remarkably better
than anyone expected in Europe. The “market”
was generally forecasting either a soft landing or a
mild recession, with interest rates peaking at 5%
and then slowly coming down.
32
EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEAD Here & Now
> In Front of Us: Storm Clouds Ahead
Still Good Economy
Abnormal QT & Fiscal Spending
War, Energy Crisis, Trade, China
Healthy consumer
Healthy jobs
Higher wages
Good credit
Home values up over 10 years
Recovering supply chain
Normalized interest rates
Healthy business
Consumer excess savings close to zero
by year-end
Large quantitative tightening (QT)
and other unknowns, reducing liquidity
and triggering higher long-term
interest rates
Higher fiscal spending
Higher climate spending
Lingering effects of fiscal stimulus
Possible persistent inflation, requiring
higher interest rates
Maybe no end in sight
Unpredictable war
Energy and food crisis averted for now
Disproportionate suffering imposed
on poor people and nations
Inflationary trade adjustments
Economic alliances in flux
Potential for rising oil and gas prices
Huge economic and geopolitical strains
While the current crisis has exposed some weak-
nesses in the system, it should not be considered,
as I pointed out, anything like what we experienced
in 2008. Nonetheless, we do have other unique
and complicated issues in front of us, which are
outlined in the chart above.
POTENTIAL TROUBLE BREWING FROM
UNPRECEDENTED FISCAL SPENDING,
QUANTITATIVE TIGHTENING AND
GEOPOLITICAL TENSIONS
Having already confessed to how difficult it is to
predict the future, for planning purposes it still
makes sense to try to assess the environment
ahead by laying out those factors that may be
significantly different from the past.
Fiscal stimulus is still surging through the
system.
In the last three years, partially but not entirely
due to the pandemic, the federal government had
a deficit of $3.1 trillion (2020), $2.8 trillion (2021)
and $1.4 trillion (2022). These are extraordinary
numbers, which ended up in consumers’ pockets,
in states and local municipalities, and even in com-
panies. We pointed out last year that you simply
cannot have this level of spending and say that it’s
not inflationary. It’s also important to point out
that there is a multiplier effect of this stimulus;
that is, one person’s spending is another person’s
income and so on. The deficit for the next three
years is now estimated to be $1.4 trillion to $1.8
trillion per year, which is also an extraordinary
number, with no end in sight. In Europe, fiscal defi-
cits are high — even before the enormous subsidies
given to consumers to counterbalance higher
energy prices. It’s also important to note that
borrowing to invest is fundamentally different
from borrowing to consume — borrowing to con-
sume can only be inflationary.
This is before any additional costs related to future
recessions, the war or any other unforeseeable
events. Offsetting this, by sometime late this year
or early next year, we expect consumers will have
spent the bulk of their remaining excess savings. It
remains to be seen whether this will cause a little
bit of a cliff effect or whether consumer spending
will simply slow down. Either way, this will add to
whatever recessionary pressures there are some-
time in the future.
Today’s quantitative tightening is following
more than a decade of quantitative easing.
In the two years after COVID-19, the Fed bought
$4.5 trillion of U.S. Treasuries and mortgage-
backed securities, bringing its total balance sheet
to $9 trillion. We have experienced almost 12
years of quantitative easing (QE), which drove
interest rates down — so much so that U.S. short-
term rates were virtually zero, and the 10-year
bond hit a low of 0.5%. Amazingly, tens of trillions
of dollars of debt, mostly in Europe, sold at negative
interest rates (we will look back upon this with
total astonishment). This period of QE also led
to extraordinary liquidity (and a surging money
33
EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEAD 2020 to stop the effects of the global pandemic,
the depth and breadth of these interventions will
be studied for years as will the extent to which we
need QT (whose full effect may not be known
immediately). It is unclear how the Fed incorpo-
rated the enormous fiscal spending into both its
forecasts for growth and inflation, as well as its
need to continue QE as it did. And importantly, the
Fed’s ability to reverse course on this strategy (QT)
is somewhat constrained by higher inflation
(though, of course, it can temporarily adjust its
actions to deal with the current bank failure crisis).
War complicates geopolitics and materially
adds risks.
We have not had a major land war in Europe since
1945. The war in Ukraine, already into its second
year, has been particularly devastating in terms of
casualties and damage and has been haunted by
the threat of nuclear weapons. It may very well
last for many more years. Wars are unpredictable,
and at the start, most predictions about how they
will end have been completely wrong.
This war is also affecting global energy and food
supplies, with a disproportionate and negative
effect falling on poor people and poorer nations,
including millions of Ukrainian refugees. There is
still a risk that energy and food supply lines, which
are not secure, will lead to higher prices and the
large migration of people, triggering another level
of geopolitical dislocation.
The tensions of this war are also leading to the
rethinking of many economic alliances, as well
as trade and national security. All these factors
create more risk and potentially higher inflation,
and their confluence (along with inflation and QT)
creates a somewhat unpredictable and dangerous
outcome.
This may be a once-in-a-generation sea
change, with material effect.
Of course, there is always uncertainty. I am often
frustrated when people talk about today’s uncer-
tainty as if it were any different from yesterday’s
uncertainty. However, in this case, I believe it
actually is.
supply) that undoubtedly drove increased prices
across many investment classes — from stocks
and bonds to crypto, meme stocks and real estate,
among others. Importantly, this also increased
bank deposits from $13 trillion to $18 trillion
(and the now-famous uninsured deposits from
$6 trillion to $8 trillion).
QE is now being reversed into quantitative tighten-
ing (QT) as the Fed grapples with inflation. So far,
the Fed has reduced its securities holdings by
approximately $550 billion and is committed to
reducing its holdings by almost $100 billion in
securities each month or over $1 trillion each year.
How all this will unfold is still unknown as the
direction and speed of money have changed sig-
nificantly from prior years. To varying degrees,
banks will compete for money, not only among one
another but also with money market funds, other
investments and the Fed itself. Money market fund
total assets under management have increased
by $650 billion since April 2022, with a significant
portion migrating into the Fed’s reverse repo facil-
ity, thereby draining deposits from the banking
system. So while the Fed’s balance sheet has come
down by approximately $550 billion, deposits at
the banks have come down by $1 trillion, largely
uninsured deposits. Unfortunately, some banks
invested much of these excess deposits in “safe”
Treasuries, which, of course, went down in value as
rates rose faster than most people expected.
It should be noted that an inordinate amount of
attention is focused on short-term interest rates,
which the Fed affects directly. But the Fed does
not completely control long-term rates and liquid-
ity, which are influenced by both supply and
demand (QT) and global investor preferences and
sentiment — importantly, including views on risk
and safety. It is also important to remember that
while the central banks of the world are now sell-
ing instead of buying securities, the governments
of the world have larger debts to finance. The
United States alone needs to sell $2 trillion in
securities, which must be absorbed in the market.
This turn of events is generally true globally.
There has been huge intervention by central banks
around the world over the last decade. While it was
completely necessary in 2008 and 2009 to stop
the worst of the global financial crisis, and again in
34
EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEAD Less predictable geopolitics, in general, and a
complex adjustment to relationships with China
are probably leading to higher military spending
and a realignment of global economic and military
alliances.
Higher fiscal spending, higher debt to gross
domestic product (GDP), higher investment spend
in general (including climate spending), higher
energy costs and the inflationary effect of trade
adjustments all lead me to believe that we may
have gone from a savings glut to scarce capital
and may be headed to higher inflation and higher
interest rates than in the immediate past.
Essentially, we may be moving, as I read some-
where, from a virtuous cycle to a vicious cycle.
PREPARING FOR WHAT MAY BE A NEW
AND UNCERTAIN FUTURE
Of course, we hope that everything turns out okay
and that all of these storm clouds peacefully and
painlessly dissipate – and we need to be prepared
for that outcome. We also need to be prepared for
a new and uncertain future. The new risks (in
addition to the normal ones, like recession) are
higher inflation for longer, the market effects of
QT and growing political risks. Of course, I cannot
be sure this will happen, but I place higher odds
on it than the “market.”
Managing risks is far more than simply
meeting the Fed’s annual stress test.
While it is critical that we meet and pass the Fed’s
Comprehensive Capital Analysis and Review (CCAR)
stress test, managing risk is far more than that –
and we are fairly fanatical when it comes to manag-
ing risk. Our company does hundreds of stress tests
a week, which include market movements reflective
of many past crises (such as volatility resulting
from the Russia-Ukraine conflict and the pandemic
in 2020) and rapidly rising interest rates.
The Fed’s CCAR stress test, by its nature, has fairly
arbitrary results since it uses only one different
and hypothetical scenario each year. This creates
uncertainty around our capital requirements (as I
mentioned, this may damage the value of bank
stocks and the banking system). If I were a share-
holder, I would want to know if my company would
really lose the $44 billion after taxes (over a
nine-quarter period) that the stress test shows.
And the answer is absolutely not.
While I understand why regulators stress test this
way — they are essentially trying to ensure that
banks survive the worst-case scenario (which
assumes multiple problems at a struggling bank
without any benefit from good management or
rapid response) — the methodology clearly does
not result in an accurate forecast of how our com-
pany would perform under adverse circumstances.
I have very little doubt that if the severely adverse
scenario played out, JPMorgan Chase would per-
form far better than the stress test projections.
I believe we would actually make money over the
nine quarters in the Fed’s stress scenario.
Here’s one example that illustrates this. From
March 5 to March 20, 2020, when the stock market
fell 24% and the bond index spread gapped from
191 to 446 basis points prior to major Fed inter-
vention, our actual trading revenue was higher
than normal as we actively made markets for our
clients. By contrast, the hypothetical stress test
had us losing a huge amount of money in market
making, based on the way it is calculated. One
more thing to point out: JPMorgan Chase now has
enough total loss-absorbing capacity to bear out
peak CCAR losses (using the Fed’s numbers) more
than eight times over.
In addition to CCAR testing, we stress test for vari-
ous types of huge market disruptions. For exam-
ple, we stress counterparties — such as hedge
funds, large asset managers or trading houses —
for extremely large market moves, perhaps an
instantaneous 130 basis point move in Treasuries
or 50% to 60% moves in commodities. Our share-
holders should know that regarding any major
international bank, we remain well-collateralized
across all of our exposures. Even if one of those
banks went bankrupt overnight, we would be okay.
While there is always a risk that we won’t receive a
margin call or that some trades may default and
leave us exposed to large market risk, the losses
likely would not be material.
Suffice it to say, our company prepares not only for
various forms of extreme economic risk but for
various forms of geopolitical risk. Later in this letter
I describe how we have enhanced those efforts.
35
EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEAD Don’t underestimate the extreme importance
of interest rates.
Interest rates are extraordinarily important — they
are the cosmological constant, or the mathemati-
cal certainty, that affects all things economic.
Before I comment on that, I want to share some
astounding numbers to illustrate this point:
Net present value (NPV) of $1.00 annuity
Lifetime
NPV
% NPV
in first 10 years
1% interest rate
10% interest rate
$100
$10
9%
61%
When you analyze a stock, you look at many factors:
earnings, cash flow, competition, margins, scenar-
ios, consumer preferences, new technologies and
so on. But the math above is immovable and
affects all.
In a rapidly rising rate environment, any invest-
ment where the cash flows were expected in the
out years would have been dramatically affected —
think venture capital or real estate development,
for example. Any form of carry trade (effectively
borrowing short and investing long) would be
sorely disappointed. Carry trade exists not just in
banks but is embedded and is silently present in
companies, investment vehicles and others, includ-
ing situations that require recurring refinancing.
We are prepared for potentially higher interest
rates, and we may have higher inflation for
longer.
If we have higher inflation for longer, the Fed may
be forced to increase rates higher than people
expect despite the recent bank crisis. Also, QT may
have ongoing impacts that might, over time, be
another force, pushing longer-term rates higher
than currently envisioned. This may occur even if
we have a mild — or not-so-mild — recession, as we
saw in the 1970s and 1980s.
Today’s inverted yield curve implies that we are
going into a recession. As someone once said, an
inverted yield curve like this is “eight for eight”
in predicting a recession in the next 12 months.
However, it may not be true this time because of
the enormous effect of QT. As previously stated,
longer-term rates are not necessarily controlled
by central banks, and it is possible that the inver-
sion we see today is still driven by prior QE and
not the dramatic change in supply and demand
that is going to take place in the future.
We have always looked at the “fat tails” of higher
interest rates, particularly on our own company.
We were premature in thinking about the possibil-
ity of interest rates going to 5%, 6% or 7% — which
still might not happen, but we always want to be
protected against this outcome. For example, we
have spoken about stockpiling cash, not investing
in sovereign debt when rates were low and being
willing to forgo income to protect against rising
rates. Rest assured, our company can handle
significantly higher interest rates no matter how
anyone analyzes capital.
Higher interest rates will obviously have an
important impact, not just for banks but for some
of those who borrow on a floating rate or those
who have to refinance in a higher rate environ-
ment. If this tide goes out, you should assume that
it will expose additional weaknesses in the econ-
omy. However, our company is prepared — not only
for higher rates but for a potential recession that
could arise and related credit losses. That prepara-
tion includes analyzing all of our clients (in particu-
lar our leveraged lending, real estate and other cli-
ents) for what the impact of higher rates may
mean for them. We believe the risks within our
own portfolio are manageable. And we try to ana-
lyze the impact of these factors on companies and
industries away from us. For example, we do
expect that some types of real estate in certain
locations may come under pressure.
Finally, we assume all of these risks and uncertain-
ties will result in volatile markets.
36
EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEAD There are risks and opportunities in the
restructuring of global economic relations.
There is no question that supply chains need to be
restructured for three different reasons:
• For any products or materials that are essential
for national security (think rare earths, 5G and
semiconductors), the U.S. supply chain must be
domestic or only open to completely friendly
allies or partners. We cannot and should not
ever be reliant on processes that can and will be
used against us, especially when we are most
vulnerable. All countries will be protecting their
national security in their own way, tailoring their
strategies as they see fit.
• Countries will also be taking specific action to
protect critical industries (think electric vehicles
(EV), AI and chips) that may not be directly
related to national security but are key to
national competitiveness. This is essentially
what America’s IRA is meant to do.
• Companies will diversify their supply chains
simply to be more resilient.
This restructuring will likely take place over time
and does not need to be excessively disruptive.
There will be winners and losers — some of the
main beneficiaries will be Brazil, Canada, Mexico
and friendly Southeast Asian nations.
For similar national security reasons, activities —
including investment activities — that help create a
national security risk (e.g., sharing critical technol-
ogy with potential adversaries) should be restricted.
While focusing on the risks, it’s also important
not to forget the opportunities. The transition to
a green economy will eventually require $4 trillion
a year in capital expenditures. The IRA, CHIPS Act
and Bipartisan Infrastructure Law combined will
create huge opportunities for companies, investors
and entrepreneurs across virtually every industry
group in the United States. You can rest assured
that our company is organizing to help clients
make the most of these opportunities.
Along with reconfiguring our supply chains, we
must create new trading systems with our allies.
My preference would be to rejoin the Trans-Pacific
Partnership — it is the best geostrategic trade
arrangement possible with allied nations. You can
be certain that our company is closely monitoring
and adjusting to the risks and opportunities cre-
ated by current events.
Believe it or not, inflation and interest rates are
not the things that worry me the most. I’m most
concerned about large geopolitical events, cyber
attacks, nuclear proliferation, large dysfunctional
markets (partially due to poorly calibrated regula-
tions; e.g., the U.K. Gilt and U.S. Treasury markets)
and failure of other critical infrastructure.
We have established a new Security Forum.
The war in Ukraine has exposed the severity, com-
plexity and interconnectivity of threats such as
physical security, the loss of nonbank critical infra-
structure (i.e., communication networks), pandem-
ics, insider threats, trade relations, political risk,
sanctions, data privacy, war, and the impact of
regulatory and governmental actions. All these
factors affect our company, as well as our clients
and countries and their governments. You should
know that we have formed a new Security Forum,
which meets periodically and enables manage-
ment to continually assess the impact of ongoing
threats to our company, our clients and countries
around the globe. These risks — which include mar-
ket risk, credit risk, cyber risk and operational risk,
among others — are also covered at the board level
by our Risk Committee.
Finally, when one talks about risk for too long, it
begins to cloud your judgment. Looking ahead, the
positives are huge. However events play out, it is
likely that 20 years from now, America’s GDP will be
more than twice the size it is today, and hundreds of
millions of people around the world will have been
lifted out of poverty. In the next section, I talk more
about the need for a global economic strategy.
37
EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEAD Our Serious Need for More
Effective Public Policy
and Competent Government
Like most Americans, I get frustrated with the
mediocrity and bureaucracy of the massive admin-
istrative state. We accept it too readily. And it dam-
ages the confidence we have in our own country.
I have enormous respect for the people who work
for the U.S. government, but we simply don’t invest
enough in making it more effective. Some examples
are: antiquated systems at the Federal Aviation
Administration, United States Postal Service and
Internal Revenue Service; inefficient ports and
crumbling infrastructure; an ineffective immigra-
tion policy; policies that prevent affordable housing
and leave apartments vacant; policies that hurt
Puerto Rico; tenure versus merit-based compensa-
tion and promotion; and work rules that dramati-
cally reduce efficiency. We have a vast system with
a lack of accountability and proper reporting. And
usually when reports are issued, they only address
how much money was spent — not, for example,
how many highway miles were built, in what time
period and at what cost. Government, which is 20%
of the economy, seems to be getting less produc-
tive over time, unlike the rest of the economy. In
addition, we have too much litigation — this is the
bureaucratization of America — think Europe.
To be completely fair, I am also frustrated with the
typically shortsighted selfishness of some busi-
nesses, asking for abundant special tax breaks and
often using regulations to protect the incumbent. I
also want to express exasperation with some of my
fellow citizens who don’t pay the taxes they owe on
the order of $600 billion a year, who won’t con-
sider sensible policy measures like a carbon tax to
stem climate change and who sometimes seem to
only like democracy when the voters agree with
them. Democracy by its nature is compromise. One
of the lessons of the past decade is that if major
legislation cannot be done in a bipartisan way,
maybe it should not be done at all.
DEVELOPING EFFECTIVE POLICY AND
EFFECTIVE GOVERNMENT
Theology is not policy. Policy based on falsehood
or oversimplified facts is doomed to failure. Too
often now, policy starts as politics without the
benefit of analytics and experts.
Policy should precede politics — not the other
way around.
Policy should be painstakingly developed based on
facts and analysis (and on information about how
policies were productively developed in other
parts of the world). You can effectively crowd-
source policy expertise. Why were Germany and
Switzerland so successful with apprenticeship pro-
grams? Why were Canada and Singapore so effec-
tive with permitting and infrastructure? All poli-
cies, like education, infrastructure and regulation,
need to start with an agreed-upon goal — and be
comprehensive and coordinated to accomplish it.
After the core of a policy is developed, then, of
course, it will be modified by political leaders — but
it is hoped the core of the policy remains intact. If
those modifications bastardize it in such a way as to
render it inefficient, it should be dropped.
We require a 21st century government.
In a company, you are constantly setting up your
organization for success. We need to find a way to
more rapidly reorganize our government for the
new world. While Congress can often move very
quickly in a crisis, we are unable to move quickly
as a government over the medium term. We need
to move faster, adopt new technologies and retrain
human capital more quickly. Even in a good
company, reorganizing for change can be hard —
business and staff units fight to maintain their
status quo and perceived prerogatives as if their
lives were at stake. I can only imagine how hard
this is in the government, but it will only get worse
if we do not fix this in our fast-changing world.
38
OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENT The West Needs America’s Leadership
How the U.S. can marshal its strengths—not only military but also moral, economic and diplomatic
By Jamie Dimon
R ussia’s invasion of Ukraine punc-
tured many assumptions about the
future of the world and thus was a
pivotal moment in history. America and the
West can no longer maintain a false sense
of security based on the illusion that dicta-
torships and oppressive nations won’t use
their economic and military powers to
advance their aims—particularly against
what they perceive as weak, incompetent
and disorganized Western democracies. In
a troubled world, we are reminded that
national security is and always will be
paramount, even if it seems to recede in
tranquil times.
It should also lay to rest the idea that
America can stand alone. U.S. leaders must
always put America first, but global peace
and order is a vital American interest. Only
America has the full capability to lead and
coalesce the Western world, though we
must do so respectfully and in partnership
with our allies. Without cohesiveness and
unity with our allies, autocratic forces will
divide and conquer the bickering West.
America needs to lead with its strengths—
not only military but also economic, diplo-
matic and moral. Here’s what we can do:
• Rededicate ourselves to the qualities
and principles that made America great.
These principles are life, liberty, the pursuit
of happiness and the idea that all people
are created equal. Democracy and human
freedom are inseparable from freedom of
speech, freedom of religion and free enter-
prise. It would help to educate all Americans
about the sacrifice of those who came before
us for democracy at home and abroad.
We need to acknowledge the critical role
that government plays—and we need
government to be more competent and
accountable. We must build stronger safety
nets to care for the poor, the old and the
disabled, and to cushion adjustment to
economic change, while also maintaining
economic dynamism, individual responsi-
bility and the dignity of work. We must
confront crises and failures of public policy
by developing better policies and by
dealing with realities. We can recognize
the mistakes America has made without
disparaging the nation.
We support global human rights and
stand on the side of liberty, but we also
have to be realistic about the compromises
necessary to accomplish long-term goals.
Remember Franklin D. Roosevelt and
Winston Churchill allied with Stalin against
Hitler’s imminent threat.
• Develop a Marshall Plan for global
energy and food security. This will be
critical both in keeping the Western
alliances together and minimizing the
global suffering caused by starvation.
Global energy and food supply chains are
precarious by their nature. And it should
be self-evident that energy security and
preventing climate change aren’t contra-
dictory: Secure and reliable oil and gas
production is compatible with reducing
CO2 over the long run, and is far better
than burning more coal. It should also
be self-evident that global food and energy
security relies on realistic trade policy and
American military strength.
• Increase military spending, along
with our allies, as much as necessary to
protect the world. Not only is America a
bastion of freedom; it is still the arsenal of
democracy, and economic sanctions are no
substitute for an effective military. “We
know only too well that war comes not
when the forces of freedom are strong, but
when they are weak,” as Ronald Reagan
said in 1980. Military strength needs to
be combined and coordinated with strong
diplomatic and economic aid for the devel-
oping world. Thoughtful policies would
help many nations lift up their people,
develop their human rights and join eco-
nomic unions that are good for all involved.
• Recover our economic dynamism. A
strong economy is the foundation for
American power, and we haven’t focused
enough on economic growth. Between
2000 and 2020, real U.S. GDP grew at an
average rate of only 1.7% a year. Had
we grown at 3% instead, last year’s gross
domestic product per person would have
been $15,000 higher. That would help pay
for much of what we need to do as a nation.
Economic growth will repair the fraying
of the American dream, particularly if we
share the wealth by improving education
and wages for lower-paid citizens. There
are many effective ways to do this, such as
raising minimum wages and expanding the
earned-income tax credit. We must also fix
the immigration policies that are tearing us
apart, dramatically reducing illegal immi-
gration and dramatically increasing legal
immigration. Economic growth will reduce
inflation, reduce the deficit, and make it
easier to afford the strong military we need.
We aren’t going to have the economic
growth we need with the legal, regulatory
and bureaucratic system we have today.
Global trade will necessarily be restruc-
tured so that we don’t rely on potential
adversaries for critical goods and services.
This will require more “industrial plan-
ning” than America is used to—and we
must ensure it is properly done and is not
used for political purposes. Yet America
should also open its arms, through trade
and aid, to all other nations. Most develop-
ing countries would prefer to align eco-
nomically with the West if we help them
solve their problems. We should develop a
new strategic and economic framework to
make ourselves their partner of choice.
• Deal with China thoughtfully and
without fear. America still has an enor-
mously strong hand—plenty of food, water
and energy; peaceful neighbors; and what
is still the most prosperous and dynamic
economy the world has ever seen, with a
per person GDP of over $75,000 a year.
We can have faith that our system will
maintain the economic dynamism we need.
China has done a great job lifting up its
nation and bringing its GDP per person up
to $13,000 a year. Yet any fair assessment
must recognize its challenges—not enough
food, water and energy; a very complex
geopolitical situation with tough neighbors;
a lack of freedom that creates economic
rigidity and malinvestment.
Whether you think it is a competitor or a
potential adversary, we, along with our
allies, should firmly negotiate with China
(where my company and its predecessor
firms have done business for more than a
century). We should acknowledge that we
have common interests in combating
nuclear proliferation, climate change and
terrorism. Tough but thoughtful negotia-
tions over strategic, military and economic
concerns—including unfair competition—
should yield a better situation for all. If
America leads well, China will be better
off forming partnerships with a strong
Western world than with Russia, Iran and
other such nations.
Together, we can ensure America’s lead-
ership for the next 100 years.
Mr. Dimon is Chairman and CEO of
JPMorgan Chase & Co.
Originally published in The Wall Street Journal on January 3, 2023. Reprinted with permission.
CREATING A COMPREHENSIVE GLOBAL
ECONOMIC STRATEGY
Just as we need a comprehensive military strategy,
globally, to deal with future security risks, we need
a comprehensive global economic strategy to deal
with future economic risks. Done properly, this will
help strengthen and coalesce the Western demo-
cratic alliances over an extended period of time.
This strategy has four pillars.
First, we need a U.S. growth strategy.
Between 2000 and 2022, real U.S. GDP grew at an
average rate of only 2% a year. Had we grown at
3% instead, last year’s GDP per person would have
been $15,000 higher. That would help pay for much
of what we need to do as a nation. We simply have
not focused enough on growing the U.S. economy.
In prior letters, we have spoken about how we
need to get public policy right to address a multi-
tude of areas, which span ineffective education
systems, soaring healthcare costs, excessive regu-
lation and bureaucracy, the inability to plan and
build infrastructure efficiently, inequitable taxes, a
capricious and wasteful litigation system, frustrat-
ing immigration policies and reform, inefficient
mortgage markets and housing markets and hous-
ing policy, a partially untrained and unprepared
labor force, excessive student debt, and the lack of
proper federal government budgeting and spend-
ing. I believe that our poor policies have restrained
our growth, and simply improving those policies
would accelerate our growth.
We should also focus on reducing the worker
shortages by allowing both more merit-based
immigration and seasonal immigration. Reducing
trade barriers could also have a rapid effect, and
decreasing regulations and bureaucracy would be
helpful. For example, starting a small business
today generally requires multiple licenses, which
take precious months to get. But it doesn’t end
there. Talk with any small business owner, and that
person will describe the mountains of red tape,
inefficient systems and huge amount of documen-
tation involved to operate the business. We need
to reduce the burdens that are imposed on those
who want to open and run a small business.
By seeking a bold, comprehensive approach, we
increase our ability to positively impact economic
growth and jobs; in fact, this is also the best way to
reduce inflation and the deficit.
Second, an industrial policy, done properly,
could drive growth and also protect our
national security.
The United States has essentially never had an
“industrial policy,” a strategy by which the federal
government, through incentives and policies,
drives American industry. We have done it indi-
rectly through things like the Defense Advanced
Research Projects Agency and NASA’s moon mis-
sion but not generally by favoring industries. More
directly, the IRA and the CHIPS Act provide specific
incentives for EVs, semiconductors, rare earths,
alternative energy sources and others. There are
two reasons we should develop an industrial policy:
1) specifically to safeguard our national security and
2) to counter unfair economic competition, particu-
larly where our national security is directly con-
cerned. For example, making bicycles would not be
part of the second example. But China, using subsi-
dies and its economic muscle to dominate batteries,
rare earths, semiconductors or EVs, could eventu-
ally imperil national security by disrupting our
access to these products and materials. We cannot
cede these important resources and capabilities
to another country.
Crafting an industrial policy should be done properly
and with a tightly restricted scope. If the policy is
politically motivated, it will be used to benefit vari-
ous political benefactors and eventually provoke
extreme misallocation of capital and corruption.
Managing the economy is extremely complex, and
Adam Smith’s invisible hand still prevails — in a
way we can never understand. If the government
starts to micromanage through an industrial policy,
it will not stop, and much of the efficiencies meant
to be created will not be realized. Industrial policy
should come with twins — very strict limitations on
political interference and related comprehensive
policy around factors like permitting require-
ments, which if not drastically improved will inhibit
our ability to make investments and allow infra-
structure to be built.
40
OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENT Third, fixing income inequality will reignite the
American dream.
Of all the policy errors we need to remedy in Amer-
ica, there are two that I believe will have a dramatic
effect on growth and equality — and go a long way
toward repairing the frayed American dream. The
first is providing graduating students and other
individuals with work skills (in fields such as
advanced manufacturing, cyber, data science and
technology, healthcare and so on) that will lead to
better paying jobs. This would be good for growth
and much that ails us. And we know what to do.
High schools and community colleges should
work with local businesses to create specific skills-
training programs, internships and apprenticeships
that prepare graduating students to be job ready —
whether they go on to earn a credential, to work or
to attend college. With 10.8 million job openings
and 5.9 million unemployed workers in the United
States, work-skills training has never been needed
more. Businesses must be involved in this process,
and programs need to be offered locally because
that is where the actual jobs are.
The second step is related to the first: Get more
income to lower-paid workers. The gap between
skilled and unskilled workers has been growing
dramatically — so much so that unskilled labor has
become less and less a “living wage.” Of the 150
million Americans working today, approximately
21 million are paid less than $15 per hour. It is
hard to live on $15 an hour, particularly for fami-
lies (even if two household members are working).
But all jobs should be treated with respect. Jobs
and living wages bring dignity, lead to more
opportunity — in housing, education, childcare,
health and overall well-being — and also help
rebuild communities as that income is used to
improve how people live.
A major step would be to expand the Earned
Income Tax Credit (EITC), which many Democrats
and Republicans already agree upon. Today, the
EITC supplements low- to moderate-income
working individuals and couples, particularly with
children. For example, a single mother with two
children earning $9 an hour (approximately
$20,000 a year) could receive a tax credit of
more than $6,000 at year’s end. Workers without
children receive a very small tax credit — this
should be dramatically expanded, too — and
personally, I would eliminate the child requirement
altogether. Last year, the EITC program cost the
United States about $64 billion, and 31 million
individuals received the credit. We should convert
the EITC to make it more like a negative income
payroll tax, paid monthly. Many people who are
eligible for this benefit do not get it (often because
they do not know about it). Proper reform of this
program could increase benefits where deserved
and reduce fraudulent and improper payments.
Any tax credit income should not be offset by any
other benefits these individuals already receive.
I have little doubt that this would do more than
anything else to lift up lower-income neighbor-
hoods as the money is spent on lifting up their
families. I also have little doubt that this would add
to GDP — because most of this money would, in
fact, be spent.
Fourth, America must take the lead on
devising a comprehensive global economic
strategy.
In an op-ed published by The Wall Street Journal
earlier this year, I wrote: “Only America has the full
capability to lead and coalesce the Western world,
though we must do so respectfully and in partner-
ship with our allies. Without cohesiveness and
unity with our allies, autocratic forces will divide
and conquer the bickering West. America needs to
lead with its strengths—not only military but also
economic, diplomatic and moral.”
41
OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENT Getting military strategy right isn’t sufficient.
We must keep the Western alliances together and
actively appeal to developing nations. A compre-
hensive economic strategy would tighten the
bonds, strengthen our alliances and, importantly,
maximize our economic resources. Furthermore, it
must encompass a global trade and investment
strategy, a holistic plan around energy security
and food security, and far more dynamic develop-
ment finance for emerging markets. Done prop-
erly, the economic strength to emerge from such
collaboration will preserve our alliances, entice
nations such as India into the fold, guarantee the
strength of the U.S. military and preserve the
mighty U.S. dollar as the world’s reserve currency.
Finally, more active diplomacy and more dynamic
communication around the principles that moti-
vate the Western world are required. These princi-
ples are life, liberty, the pursuit of happiness and
the idea that all people are created equal. Democ-
racy and human freedom are inseparable from
freedom of speech, freedom of religion and free
enterprise. We should loudly and proudly sing
these values from the rooftops.
In Closing
I would like to express my deep gratitude and appreciation for the
290,000+ employees, and their families, of JPMorgan Chase. From this letter,
I hope shareholders and all readers gain an appreciation for the tremendous
character and capabilities of our people and how they continue to help
communities around the world. They have faced these times of adversity with
grace and fortitude. I hope you are as proud of them as I am.
Finally, we sincerely hope that all the citizens and countries of the world
return to normal after the pandemic, see an end to the ongoing war in Ukraine,
and see a renaissance of a world on the path to peace and democracy.
Jamie Dimon
Chairman and Chief Executive Officer
April 4, 2023
42
OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENT Footnotes
Client Franchises Built Over the Long Term (page 8)
Note: figures may not sum due to rounding
1 Certain wealth management clients were realigned from Asset & Wealth Management to
Consumer & Community Banking in 4Q20. 2006 and 2012 amounts were not revised in
connection with this realignment.
2 Federal Deposit Insurance Corporation (FDIC) 2022 Summary of Deposits survey per S&P Global
Market Intelligence applies a $1 billion deposit cap to Chase and industry branches for market
share. While many of our branches have more than $1 billion in retail deposits, applying a cap
consistently to ourselves and the industry is critical to the integrity of this measurement.
Includes all commercial banks, savings banks and savings institutions as defined by the FDIC.
3 Barlow Research Associates, Primary Bank Market Share Database as of 4Q22. Rolling 8-quarter
average of small businesses with revenue of more than $100,000 and less than $25 million.
4 Total payment volumes reflect Consumer and Small Business customers’ digital (ACH, BillPay,
PayChase, Zelle, RTP, External Transfers, Digital Wires), Non-digital (Non-digital Wires, ATM,
Teller, Checks) and credit and debit card payment outflows. 2012 is based on internal JPMorgan
Chase estimates.
5 Digital non-card payment transactions include outflows for ACH, BillPay, PayChase, Zelle, RTP,
external transfers, and some wires, excluding credit and debit card sales. 2006 and 2012 are
based on internal JPMorgan Chase estimates.
6 Represents general purpose credit card (GPCC) spend, which excludes private label and
Commercial Card. Based on company filings and JPMorgan Chase estimates.
7 Represents general purpose credit card (GPCC) loans outstanding, which excludes private label,
American Express Company (AXP) Charge Card and Citi Retail Cards, and Commercial Card.
Based on loans outstanding disclosures by peers and internal JPMorgan Chase estimates.
8 Represents users of all web and/or mobile platforms who have logged in within the past 90 days.
9 Represents users of all mobile platforms who have logged in within the past 90 days.
10 Based on 2022 sales volume and loans outstanding disclosures by peers (American Express
Company (AXP), Bank of America Corporation, Capital One Financial Corporation, Citigroup Inc.
and Discover Financial Services) and JPMorgan Chase estimates. Sales volume excludes private
label and Commercial Card. AXP reflects the U.S. Consumer segment and JPMorgan Chase
estimates for AXP’s U.S. small business sales. Loans outstanding exclude private label, AXP
Charge Card, Citi Retail Cards, and Commercial Card.
11 J.D. Power, 2022 U.S. Mortgage Origination Satisfaction Study.
12 Inside Mortgage Finance, Top Owned Mortgage Servicers as of 4Q22.
13 Experian Velocity data as of 4Q22. Reflects financing market share for new and used loan and
lease units at franchised and independent dealers.
14 Dealogic as of January 2, 2023.
15 Coalition Greenwich Competitor Analytics (preliminary for FY22). Market share is based on
JPMorgan Chase’s internal business structure and revenue. Ranks are based on Coalition Index
Banks for Markets. 2006 rank is based on JPMorgan Chase analysis. 2021 excludes the impact of
Archegos.
16 Client deposits and other third-party liabilities pertain to the Payments and Securities Services
businesses.
17 Firmwide Payments revenue metrics exclude the net impact of equity investments
18 Coalition Greenwich Competitor Analytics (preliminary for FY22). Reflects global firmwide
Treasury Services business (CIB and CB). Market share is based on JPMorgan Chase’s internal
business structure, footprint and revenues. Ranks are based on Coalition Index Banks for
Treasury Services.
19 Institutional Investor.
20 Based on third-party data.
21 Nilson, Full Year 2022.
22 Based on Assets Under custody reported in company filings.
23 Prior year new relationship numbers have been revised to conform to current presentation.
24 Includes gross revenues earned by the Firm for investment banking and payments products sold
to CB clients that are subject to a revenue sharing arrangement with the CIB.
25 S&P Global Market Intelligence as of December 31, 2022.
26 Refinitiv LPC, FY22.
27 Aligns with the affordable housing component of the firm’s $30B racial equity commitment.
28 Represents the Nomura “star rating” for Japan-domiciled funds and Morningstar for all other
domiciled funds. Includes only Asset Management retail open-ended mutual funds that have a
rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil- and
Korea-domiciled funds. Mutual fund rating services rank funds based on their risk-adjusted
performance over various periods. A 5-star rating is the best rating and represents the top 10%
of industry-wide ranked funds. A 4-star rating represents the next 22.5% of industry-wide ranked
funds. A 3-star rating represents the next 35% of industry-wide ranked funds. A 2-star rating
represents the next 22.5% of industry-wide ranked funds. A 1-star rating is the worst rating and
represents the bottom 10% of industry-wide ranked funds. The “overall Morningstar rating” is
derived from a weighted average of the performance figures associated with a fund’s three-,
five-and 10-year (if applicable) Morningstar Rating metrics. For U.S.-domiciled funds, separate
star ratings are given at the individual share class level. The Nomura “star rating” is based on
three-year risk-adjusted performance only. Funds with fewer than three years of history are not
rated and hence excluded from this analysis. All ratings and the assigned peer categories used
to derive this analysis are sourced from these fund rating providers as mentioned. Past
performance is not indicative of future results.
29 In the fourth quarter of 2020, the Firm realigned certain wealth management clients from AWM
to CCB. Prior-period amounts have been revised to conform with the current presentation.
30 Traditional assets includes Equity, Fixed Income, Multi-Asset and Liquidity AUM; Brokerage,
Administration and Custody AUS.
31 AUM only for 2006. Prior period amounts have been restated to include changes in product
categorization.
32 Source: Euromoney.
33 All quartile rankings, the assigned peer categories and the asset values used to derive this
analysis are sourced from the fund ranking providers. Quartile rankings are done on the
net-of-fee absolute return of each fund. The data providers re-denominate the asset values into
U.S. dollars. This % of AUM is based on fund performance and associated peer rankings at the
share class level for U.S.-domiciled funds, at a “primary share class” level to represent the
quartile ranking of U.K., Luxembourg and Hong Kong funds, and at the fund level for all other
funds. The “primary share class” is defined as C share class for European funds and Acc share
class for Hong Kong and Taiwan funds. In case the share classes defined are not available, the
oldest share class is used as the primary share class. The performance data could have been
different if all share classes would have been included. Past performance is not indicative of
future results. Effective September 2021, the Firm has changed the peer group ranking source
from Lipper to Morningstar for U.S.-domiciled funds (except for Municipal and Investor Funds)
and Taiwan-domiciled funds, to better align these funds to the providers and peer groups it
believes most appropriately reflects their competitive positioning. This change may positively or
adversely impact, substantially in some cases, the quartile rankings for one or more of these
funds as compared with how they would have been ranked by Lipper for this reporting period or
future reporting periods. The source for determining the rankings for all other funds remains the
same. The classifications in terms of product suites and product engines shown are J.P. Morgan’s
own and are based on internal investment management structures.
34 Source: Company filings and JPMorgan Chase estimates. Rankings reflect publicly traded peer
group as follows: Allianz, Bank of America, Bank of New York Mellon, BlackRock, Charles Schwab,
Credit Suisse, DWS, Franklin Templeton, Goldman Sachs, Invesco, Morgan Stanley, State Street,
T. Rowe Price and UBS. JPMorgan Chase ranking reflects Asset & Wealth Management client
assets, U.S. Wealth Management investments and new-to-firm Chase Private Client deposits.
35 Source: iMoneynet.
36 Represents AUM in a strategy with at least one listed female and/or diverse portfolio manager.
“Diverse” defined as U.S. ethnic minority.
JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared with Large
Peers and Best-in-Class Peers (page 11)
1 Bank of America Corporation (BAC), Citigroup Inc. (C), The Goldman Sachs Group, Inc. (GS),
Morgan Stanley (MS) and Wells Fargo & Company (WFC).
2 Managed overhead ratio = total noninterest expense/managed revenue; revenue for GS
and MS is reflected on a reported basis.
3 Best-in-class peer overhead ratio represents the comparable business segments of
JPMorgan Chase (JPM) peers: Bank of America Consumer Banking (BAC-CB), Goldman Sachs
Investment Banking and Global Markets (GS-IB & GM), Truist Financial Corp (TFC), Northern
Trust Asset Management (NTRS-WM) and Allianz Group (ALLIANZ-AM).
4 Best-in-class all banks ROTCE represents implied net income minus preferred stock dividends
of the comparable business segments of JPM peers when available, or of JPM peers on a
firmwide basis when there is no comparable business segment: Bank of America Consumer
Banking (BAC-CB), and Goldman Sachs Investment Banking and Global Markets (GS-IB & GM),
Wells Fargo & Company Commercial Banking (WFC-CB) and UBS Global Wealth Management
& Asset Management (UBS-GWM & AM).
5 Best-in-class G-SIB ROTCE represents implied net income minus preferred stock dividends
of the comparable business segments of JPM G-SIB peers when available, or of JPM G-SIB
peers on a firmwide basis when there is no comparable business segment: Bank of America
Consumer Banking (BAC-CB), Goldman Sachs Investment Banking and Global Markets
(GS-IB & GM), Wells Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley
Wealth Management and Investment Management (MS-WM & IM). WFC-CB is the only G-SIB peer
to disclose a comparable business segment to Commercial Banking.
6 Given comparisons are at the business segment level, where available; allocation methodologies
across peers may be inconsistent with JPM’s.
Our Fortress Balance Sheet (page 12)
1 Basel III Transitional rules became effective on January 1, 2014; prior period CET1 data is based
on Basel I rules. As of December 31, 2014, the ratios represent the lower of the Standardized or
Advanced approach calculated under the Basel III Fully Phased-In basis.
2
Includes average eligible high-quality liquid assets (HQLA) as defined in the liquidity coverage
ratio rule and unencumbered marketable securities, such as equity and debt securities, that the
firm believes would be available to raise liquidity, including excess eligible HQLA securities at
JPMorgan Chase Bank, N.A., that are not transferable to nonbank affiliates.
3 Capital returned to common stockholders includes common dividends and net repurchases.
Size of the Financial/Sector Industry (page 25)
1 2010 is sourced from WorldBank.org annual GDP publication. 2022 is calculated
using JPM Research forecasts. Figures are represented in 2015 prices.
2 Consists of cash assets and Treasury and agency securities.
3 2022 figure is annualized based on available data through 1Q.
4 Top 50 fund AUM data per Sovereign Wealth Fund Institute, where unavailable 2021 disclosure
was used in place of 2022.
5 Loans held by nonbank entities per the FRB Z.1 Financial Accounts of the United States.
6 U.S. money market fund investment holdings of securities issued by entities worldwide.
7 Methodology updated in 2022, 2010 has been restated.
8 NYSE + NASDAQ; excludes investment funds, exchange-traded funds’ unit trusts and companies
whose business goal is to hold shares of other listed companies; a company with several classes
of shares is only counted once.
9
Inside Mortgage Finance and JPMorgan Chase internal data; consists of Top 50 Originators.
43
Consumer &
Community Banking
We’re proud of the performance of
Consumer & Community Banking (CCB)
in 2022. In a rapidly changing macro
environment, we delivered strong financial
results, drove meaningful growth of our
franchise and continued our disciplined
approach to investing for the future. We
continued to put the customer at the center
of everything we do, across every interac-
tion and line of business. Through the
efforts of more than 135,000 talented CCB
employees, we extended our leadership
positions in retail deposits and credit card
while gaining momentum in our growth
businesses: Wealth Management and
Connected Commerce. Overall, CCB has
grown to serve nearly 80 million consum-
ers and 5.7 million small businesses.
CCB is operating from a position of
strength with our distribution and scale,
exceptional products and highly
respected brand. We take none of this for
granted. We recognize that 2023 remains
uncertain; however, our data-driven
approach to decision making, including
risk management and investing, positions
us well for what lies ahead.
We provide value to customers through
the completeness and interconnectivity of
our products, services, channels and
experiences. We strive to make it easy to
do business with us by engaging custom-
ers in the channel of their choice.
Our strategy has not changed, and we are
focused on a consistent set of strategic
priorities:
1. Delivering financial performance that
is consistently best-in-class
2. Leveraging data and technology to
drive speed to market and deliver
customer value
3. Growing and deepening relationships
by engaging customers with products
and services they love and expanding
our distribution
2020 TO 2022 GROWTH
CONSUMER BANKING
CUSTOMERS
BUSINESS BANKING
CUSTOMERS
WEALTH MANAGEMENT
RELATIONSHIPS1
+8%
+19%
+24%
2020
2021
2022
2020
2021
2022
2020
2021
2022
CREDIT CARD
ACTIVE ACCOUNTS2
AUTO
LOAN AND LEASE
ORIGINATIONS
HOME LENDING
MORTGAGE ORIGINATIONS
+17%
-21%
-43%
2020
2021
2022
2020
2021
2022
2020
2021
2022
44
4. Protecting our customers and the firm
through a strong risk and controls
environment
5. Cultivating talent to build high-
performing, diverse teams where
culture is a competitive advantage
DELIVERING FINANCIAL
PERFORMANCE THAT IS
CONSISTENTLY BEST-IN-CLASS
In 2022, CCB delivered a 29% return on
equity (ROE) on net income of $14.9 billion.
Revenue of $55 billion was up 10% year-
over-year, and our overhead ratio was
57%, down one percentage point.
We take a long-term approach to invest-
ments and focus on delivering sustainable
growth and outperformance. Last year,
we continued to invest in data and tech-
nology, in distribution through our branch
network and marketing, and in our
growth businesses.
Our financial performance should also be
considered in the context of the rapidly
evolving macro environment, which
created both headwinds and tailwinds for
our lines of business. On the strength of
our models to acquire, engage and retain
customer relationships, we continued to
drive core growth in most of our busi-
nesses. However, we acknowledge that
our businesses are not immune to the
macro landscape – Home Lending, in par-
ticular, faced shrinking total market size.
Average deposits of $1.2 trillion were up
10% over 2021, and we extended our
#1 market share in U.S. retail deposits3.
In 2022, the historic speed and magnitude
of rate hikes accelerated the return
toward normalized deposit margins.
CONSUMER & COMMUNITY BANKING Our customers remain on solid footing.
While still elevated, cash buffers4 are
down from their peak, as spending con-
tinued to be strong throughout 2022.
We ended the year with $439 billion
in average loans, up 1%. Credit perfor-
mance across our portfolios remains
strong, and, although net charge-offs
were at historic lows, we continued to
see normalization. In 2022, we built
$1.1 billion in credit reserves.
The diversification of the CCB franchise,
which provides natural hedges and deliv-
ers industry-leading returns through the
cycle, delivered another year exceeding
25% ROE.
LEVERAGING DATA AND
TECHNOLOGY TO DRIVE SPEED TO
MARKET AND DELIVER CUSTOMER
VALUE
Data and technology are key differentia-
tors and competitive advantages for CCB,
enabling us to deliver innovation at scale.
In 2022, our investments focused on two
core categories: technology moderniza-
tion and product development. These
investments allow us to better respond to
the needs of our customers, partners,
1 Unique families with primary and joint account owners
for open and funded accounts.
2 Reflects open accounts that received a statement.
3 Federal Deposit Insurance Corporation (FDIC) 2022
Summary of Deposits survey per S&P Global Market
Intelligence applies a $1 billion deposit cap to Chase
and industry branches for market share. While many
of our branches have more than $1 billion in retail
deposits, applying a cap consistently to ourselves and
the industry is critical to the integrity of this measure-
ment. Includes all commercial banks, savings banks
and savings institutions as defined by the FDIC.
4 Reflects the days of outflow coverage based on
available deposit balances.
5 “Customer” includes both consumers and small busi-
nesses and reflects unique individuals and business
entities that have financial ownership or decision-
making power with respect to accounts. The firm
believes this metric is more representative of its
customer relationships than similar metrics it has
presented in previous public reports.
6 #1 In active users among digital banking mobile apps
based on Data.ai and #1 most-visited banking portal
in the U.S. (Chase.com) based on Similarweb.
7 In 2022, we achieved record high satisfaction in our
branch and digital channels, determined by overall satis-
faction and measured on a scale of 1 to 10. The score is
calculated as the share of “9” and “10” responses as a
percent of total responses. Digital channel includes a
weighted average of monthly active users of Chase.com
and the Chase Mobile app.
employees and regulators — and to deliver
the best of what Chase has to offer, with
greater speed than ever before.
On technology modernization, we are on
a journey to mature our agile model,
focused on our applications, infrastruc-
ture and data, and are already realizing
benefits from this work. Our migration of
all Chase.com customers to the public
cloud is generating higher site availability
and leading to a 50% reduction in run-
time costs. We’re scaling the use of AI/ML
across CCB, which delivered over $500
million in value in 2022 alone, with more
value to unlock in years to come.
On product development, we’re investing
to drive engagement and deliver experi-
ences customers love across channels,
products and platforms. To do so, we
operate in a fully agile product structure
— with close to 100 products and services
delivered by dedicated design, product,
data and technology teams. We’ve
enhanced the Chase Mobile® app and
Chase.com, making it easier for custom-
ers to manage their everyday financial
lives and engage with a richer offering of
products and features. We also improved
our platforms and experiences so cus-
tomers can perform more activities with
ease — such as more seamlessly opening
new accounts.
Data and technology are critical enablers,
driving business value over time. The full
scope of benefits will manifest in a num-
ber of key areas — from reliability and
speed to market to employee satisfaction.
GROWING AND DEEPENING
RELATIONSHIPS BY ENGAGING
CUSTOMERS WITH PRODUCTS
AND SERVICES THEY LOVE AND
EXPANDING OUR DISTRIBUTION
In 2022, we grew our customer base by
nearly 4% across all our lines of business.
Here, our primary measure is customer5
growth because it indicates success as we
strive to be the bank for all and to deepen
and engage customer relationships.
Banking and Wealth Management
Our goal is to grow primary bank relation-
ships with our customers across Banking
and Wealth Management. Core to that
goal is having the right products, experi-
ences and distribution to meet our
customers in their channel of choice
and serve more of their financial needs.
Our strategy is working. We are #1 in U.S.
retail deposit share, driven by growth of
more than $400 billion in deposits over the
past three years. Key to this growth is the
branch — and our branch network is second
to none. We have the right branches in the
right locations to capture a larger customer
base in both legacy and new markets.
Our branches are a local storefront, where
digital engagement comes together with
our bankers and advisors to deliver the
full capabilities of JPMorgan Chase. Last
year, nearly 40 million customers walked
into our almost 5,000 branches. In 2021,
we became the first bank with branches in
all lower 48 states and have delivered on
our commitment of 400 new branches in
25 states and the District of Columbia. Not
only are our seasoned branches delivering
value to our customers, communities and
shareholders, but the investment in new
branches is a key driver to market share
gains over time. Our model’s success gives
us confidence to continue to invest in new
branches in high-opportunity markets
where we still have significant untapped
opportunity.
Beyond our investments in the branch
network, we continue to scale and
improve products that meet the distinct
needs of customers across segments.
Last year, we enhanced our cash flow
management solutions. We launched
early direct deposit for our Secure
BankingSM customers, which allows them
to access their paychecks up to two days
early, and we enhanced Chase Overdraft
AssistSM to provide an extra day before
charging an overdraft fee.
It’s part of our job to make it easy for
customers to have more of their banking
relationship with us. We’re continuing
45
CONSUMER & COMMUNITY BANKING To extend that leadership position, we’re
also investing in our Commerce business.
The strategy here is straightforward: Lean
into what our customers do on our cards
all the time — spend on travel, dining and
shopping — and invest in digital experi-
ences for Chase to win in discovery, book-
ing, paying and borrowing across these
journeys. With our recent acquisitions of
cxLoyalty, FROSCH, Figg and The Infatua-
tion, we now own differentiated assets
and experiences in travel, offers and din-
ing. We’re leveraging our new assets and
talent to build out our two-sided platform,
connecting customers and merchants as
only a company with our scale and digi-
tally engaged customer base can.
Our efforts produced meaningful results
in 2022:
• Chase Travel: Our travel business
delivered ~$8 billion in volume booked
in 2022
• Chase Offers: We drove over $6 billion
in spend to merchants who used our
offers platform
• My Chase Plan®: Two years post-launch,
we’ve opened more than 7 million plans
The Connected Commerce business is
driving impact for Chase by improving
satisfaction, stimulating engagement and
creating capital-light, recurring revenue
streams, all while making the core fran-
chise more resilient long term. As we told
you at Investor Day last year, we expect
to drive more than $30 billion in volume
through our Commerce platforms in the
next few years.
Omnichannel engagement
Earning the right to be the primary
financial partner for consumers and small
businesses requires us to build trust by
delivering experiences our customers
expect — in both major and everyday
moments. The completeness of our
product set can serve all of our custom-
ers’ banking, lending and investing needs.
to invest in natural adjacencies to the
Consumer Banking franchise so we can
deepen and grow Business Banking and
Wealth Management efficiently.
For our Business Banking customers, we
offer products, services and expertise to
make it easier than ever to start, run and
grow their businesses. We made it simpler
to open a checking account, introduced
more convenient methods to pay and get
paid, and created a streamlined digital
lending experience for faster access to
capital when customers need it. We take
pride in helping entrepreneurs go from
idea to IPO and beyond.
For our Wealth Management clients,
we’re growing our advisor base and
developing products and capabilities
to serve clients across the wealth contin-
uum. In 2022, we added more than
300 advisors on our path to 6,000,
launched new products such as Wealth
Plan and Personal Advisors, and
continued to make enhancements to
Self-Directed Investing. Our goal is to
achieve $1 trillion in assets over the next
several years, and we’re on track to do so.
Payments, lending, commerce
We continue to be the #1 credit card
issuer in the United States for both spend
and lend, crossing $1 trillion in sales
volume in 2022. It is our marketing
46
engine that fuels distribution and scale.
Marketing is to Card what bankers,
branches and advisors are to banking:
baseline distribution. Our strategy is
working. In 2022, we drove a 20% year-
over-year increase in new accounts within
our risk appetite. This drove our share of
outstandings to 17.3%, up nearly 75 basis
points — healthy progress toward our goal
of 20% lend share over the long term.
A large part of our Card strategy is to get
the right products into customers’ hands.
Over the last three years, we refreshed
our entire branded card portfolio to
ensure our cards’ value propositions were
best-in-class and set up to perform well.
We also renewed valuable relationships
with our co-brand partners that cover the
vast majority of co-brand spend share to
at least 2027. Beyond consumer cards,
we’re making progress on the opportunity
with business customers, launching Ink
Business PremierSM in the second half of
2022. While it’s early days, the new card
has been well-received, attracting higher-
revenue small businesses that spend mul-
tiples above the average.
Payments remain a center of gravity
for financial relationships. We are a lead-
ing payments franchise in the United
States, enabling our customers to move
more than $5.6 trillion in 2022 across
payment methods.
CONSUMER & COMMUNITY BANKING#1 digital banking platform in the United States6#1 in total combined U.S. credit and debit payments volume #1#1#1 in U.S. retail deposit market share3#1#1#1 primary bank for U.S. small businesses #1 U.S. credit card issuer based on sales and outstandings #1 Our true differentiator is the combination
of delivering award-winning digital capa-
bilities to our 63 million active digital
users, our extensive physical network
spanning all lower 48 states, and our
more than 50,000 local bankers, advi-
sors, business relationship managers and
branch managers, who operate as a local
team of experts to serve customer needs.
We’re building and delivering experiences
our customers love and achieved record-
high customer satisfaction across channels7
in 2022. Although we’re proud of this, we
are never satisfied and recognize there’s
always more to do for our customers. We
prioritize improving activities our custom-
ers do most often in their everyday lives,
such as opening an account, replacing a
card and making a payment. We also help
them with major life milestones, like plan-
ning for their future through goals-based
plans or searching for and buying a car
or a home.
A key part of our engagement strategy is
ensuring we reach historically under-
served populations. We continue to make
meaningful strides in our community
strategy in support of our $30 billion
racial equity commitment announced in
October 2020. Since then, we have:
• Opened 13 Community Center branches
in minority neighborhoods and hired
over 140 Community Managers
• Conducted over 9,000 financial health
sessions with more than 190,000
attendees
• Hired ~160 Community Home Lending
Advisors and expanded our homebuyer
grant program to more than 10,000
minority neighborhoods nationwide
• Provided complimentary one-on-one
coaching to nearly 3,000 small busi-
nesses through dedicated consultants
in 21 U.S. cities and launched a national
special purpose credit program to
improve access to credit for small
business owners in historically under-
served areas
PROTECTING OUR CUSTOMERS
AND THE FIRM THROUGH A
STRONG RISK AND CONTROLS
ENVIRONMENT
Everyone’s top priority in CCB is to pro-
tect our customers and the firm. Having
the proper governance and processes in
place ensures our business is sustainable
and resilient and meets regulatory
requirements. Coupled with our fortress
balance sheet, this strength attracts a
strong, diversified customer base that has
confidence in the safety and security of
banking with Chase.
Through data and analytics, we continue
to enhance our risk management capabil-
ities across CCB. Keeping our credit appe-
tite constant, machine learning is helping
us surgically extend more credit to more
consumers and small businesses. While
fraud is everywhere, we are improving
our ability to protect customers earlier
and more often. Education plays a big
role, too. Bankers, Community Managers
and marketing work together to help
customers build healthy financial habits
and avoid becoming victims of fraud.
CULTIVATING TALENT TO BUILD
HIGH-PERFORMING, DIVERSE
TEAMS WHERE CULTURE IS A
COMPETITIVE ADVANTAGE
Our people continue to be our greatest
asset. We attract the best talent from all
backgrounds who choose to work at
Chase because of the impact we have
on our customers and communities and
the opportunity to grow their career.
We strive to create a culture where every-
one’s voice matters, leading to the best
business outcomes.
Our employees embrace the full spectrum
of career opportunities that Chase offers
— across lines of business, functions and
roles. They grow with us and move across
our businesses to develop unique perspec-
tives that help us solve the most important
and complicated issues across the firm.
Our people work hard every day — with
heart and humanity — to better serve our
customers, communities and each other.
IN CONCLUSION
We’re tremendously confident about the
future of our franchise, yet we approach
our opportunities and challenges with
great humility. We wouldn’t trade our
hand with anyone’s. Our scale, distribu-
tion, brand, products and people position
us well to continue to achieve best-in-
class performance for decades to come.
Marianne Lake
Co-CEO, Consumer & Community Banking
Jennifer Piepszak
Co-CEO, Consumer & Community Banking
47
CONSUMER & COMMUNITY BANKING Corporate &
Investment Bank
2022 was a watershed year for financial
markets.
Tasked with taming inflation and cooling
an overheating economy, the Federal
Reserve raised interest rates seven
times in 2022 to levels not seen in
nearly 15 years.
The end of near-zero interest rates
meant that many young, emerging com-
panies needed to focus on profitability
rather than revenue growth at any cost.
Higher rates also dented investors’
confidence and tested their patience in
assets such as special purpose acquisi-
tion companies and cryptocurrencies,
which benefited so much from excess
capital just a year ago.
Geopolitics dominated headlines and
moved markets. In February, Russia
invaded Ukraine, fomenting a humani-
tarian crisis that worsens even now.
The war disrupted supply chains and
forced countries to rethink their entire
approach to sourcing energy, food and
other critical resources, with every
issue now being viewed through the
lens of national security.
BENEFITS OF BUSINESS DIVERSITY
In recent shareholder letters, I’ve
stressed the key pillars of a strategy we
set years ago: to be global, diversified,
complete and at scale. That strategy has
served us well and continues to serve us
well across the Corporate & Investment
Bank (CIB) and our wholesale busi-
nesses. We and our clients benefit from
our strong, balanced business during
volatile times and market dislocations,
including those we have witnessed in
the last few months.
48
The CIB generated $15 billion in net
income on revenue of $48 billion in
2022, a solid performance following
record net income and revenue in 2021.
$1.7 billion IPO of Corebridge, its retire-
ment solutions and life insurance busi-
ness, and Volkswagen’s €9.4 billion IPO
of Porsche.
Industrywide investment banking fees
fell 42% from the prior year1, and
J.P. Morgan’s fees followed suit, down
48% from 2021. This was not unex-
pected. Industrywide investment
banking fees have averaged about
$80 billion per year from 2015 to 20201
so 2022 was a lighter-than-average
year, more comparable with the
pre-pandemic years of 2018 and 2019.
Even so, we finished the year #1 in
investment banking fees, #1 in equity
capital markets, #1 in debt capital mar-
kets and #2 in mergers and acquisitions1.
In 2022, our M&A franchise advised on
over 350 deals that totaled more than
$900 billion, including some of the
year’s biggest deals, notably in the
healthcare industry for Johnson &
Johnson and Pfizer.
With declining M&A activity and higher
rates slowing refinancings, our debt
underwriting fees declined 43% year-
over-year in 2022. More positively,
we’re proud of the discipline we kept in
underwriting, particularly in our lever-
aged finance business. This puts us in
prime position to help companies when
activity picks up.
Equity capital markets also saw a dra-
matic drop-off in deal activity during
the year. Volatile and uncertain markets
nearly shut down the IPO market,
although J.P. Morgan did help lead two
of the year’s most notable deals: AIG’s
1 Dealogic as of January 2, 2023.
Meanwhile, we have continued to scale
up our regional investment banking
capabilities across the United States.
Working with the Commercial Bank, we
are deepening relationships with middle
market sponsors and aligning coverage
teams to support growth industries,
particularly technology, healthcare and
the green economy.
Our Markets business continues to be
the top-ranked franchise in the world
by revenue2. The business outperformed
even our own expectations in 2022,
generating revenue of $29 billion, just
short of 2020’s record highs, as volatil-
ity persisted.
Interest rate hikes and geopolitical ten-
sions had investors repositioning port-
folios, driving Fixed Income revenue
higher, particularly in our Currencies &
Emerging Markets and Rates trading
businesses. Overall, we reported $18.6
billion in Fixed Income revenue, up 10%
from the previous year, and retained
our top wallet share2. Equities revenue
came in at $10.4 billion. Underscoring
the strides we’ve made in Equities, the
business has grown revenue by more
than 80% since 2017, and market share
has increased by almost 300 basis
points over the same period2. Another
notable success in 2022 was our Global
Research team’s top ranking across all
three of Institutional Investor’s annual
global surveys.
2 Coalition Greenwich Competitor Analytics (preliminary for
FY22). Market share is based on JPMorgan Chase’s internal
business structure and revenue. Ranks are based on Coalition
Index Banks for Markets. Securities Services market share is
based on cumulative growth from FY17 to FY22.
CORPORATE & INVESTMENT BANK INVESTMENT BANKING
Global Investment Banking wallet evolution and J.P. Morgan rankings
($ in billions)
$81
2015–2020 average
J.P. Morgan rank
#1
(all years)
Source: Dealogic as of January 2, 2023
Serving more than 30,000 clients
across the CIB and Commercial Banking
and approximately 300,000 small- and
medium-sized enterprises in the United
States and Canada, the business contin-
ued to win new mandates and deepen
relationships with the world’s largest
and most sophisticated companies.
Over the last five years, the CIB’s new
mandates revenue more than doubled
for both corporate and financial institu-
tion clients.
INNOVATION, TALENT AND
INVESTMENT
I am very proud of our people, our
results and the vital role our business
plays in supporting global economies
and commerce and in maintaining
liquid, orderly markets. That role is
amplified by the close collaboration
across our businesses, which has
allowed us to grow and invest while
still maintaining strong returns for our
shareholders. Innovation and invest-
ment are critical as we work to meet
clients’ evolving needs, as the competi-
tion intensifies and as we look to capi-
talize on several exciting opportunities.
Scale is essential to run a successful
and profitable Markets business, and
the capital required to fuel our global
trading desks has risen significantly
over the last five years. While this
increase has been a headwind, our
business has been disciplined in
deploying capital and continues to
deliver strong returns. With the strate-
gic initiatives we have in place, we’re
confident in our strategy as market
structure evolves.
Our Securities Services business, which
provides essential post-trade services
to our institutional asset-manager
and asset-owner clients, also had a
strong year, reporting record revenue
of $4.5 billion.
Investment over the years has allowed
us to steadily grow revenue and market
share in Securities Services2 while main-
taining a top-tier operating margin.
The scale of our business is remarkable.
We provide safekeeping, settlement and
services for securities in approximately
100 markets around the world, and at
the end of 2022, assets under custody3
exceeded $28 trillion.
Turning to Payments, the business saw
strong growth in 2022, generating
firmwide revenue of nearly $14 billion,
$4 billion more than in 2021, due in
large part to the effect of higher
rates 4. Payments revenue generated
from the CIB alone increased 33%
from the previous year 4.
3 Represents assets held directly or indirectly on behalf
of clients under safekeeping, custody and servicing
arrangements.
4 Firmwide Payments and CIB Payments revenue metrics
exclude the net impact of equity investments.
$133
2021
#1
$77
2022
#1
Capital for the climate
Climate change is one of the most
pressing challenges of our age. With the
introduction of the Inflation Reduction
Act and the need for solutions to
Europe’s energy challenges, a major
opportunity exists in committing capital
and expertise to help clients transition
to the low-carbon economy. In 2022,
the CIB facilitated $164 billion in trans-
actions (toward the firmwide target of
$2.5 trillion by the end of 2030) to fur-
ther sustainable development, including
$1 trillion to support green initiatives.
This predominantly consisted of leading
or participating in environmental, social
and governance (ESG)-related bond
issuances, providing derivative hedging
and advising on M&A deals.
Moving forward, we plan to deepen our
coverage of clients engaged in the
green economy and low-carbon transi-
tion, create new products and allocate
capital to finance ESG objectives. We
will also build on the success of our two
centers of excellence: the Center for
Carbon Transition and ESG Solutions, a
specialist team of investment bankers
who provide ESG-related advice and
transaction support.
49
CORPORATE & INVESTMENT BANK
MARKETS
Markets market share
FIXED INCOME
+10 basis points
10.9%
11.0%
EQUITIES
+300 basis points
13.1%
10.1%
2017
2022
2017
2022
2022 rank
#1
#1
Source: Coalition Greenwich Competitor Analytics (preliminary for FY22); market share is based on JPMorgan Chase’s internal
business structure and revenue; ranks are based on Coalition Index Banks for Markets
Boom in private capital markets
The halo effect in trading
In trading, we believe that being complete
continues to offer huge advantages.
Providing a complete set of trading prod-
ucts creates a halo effect, making it more
attractive for clients to trade with us
across the full range of our products.
Our diversification also provides balance
to our revenue regardless of the macro-
economic environment. For example, in
2021, equities outperformed while in
2022, fixed income macro businesses
were the main growth engines.
We are also committed to providing a
seamless and differentiated experience
across the trade life cycle — from pre-
trade through to execution to post-trade.
For pre-trade, we are the clear leader in
research, offering analysis on more than
5,200 companies and around 80 econo-
mies worldwide. With so much content,
our focus has been on improving the client
experience, ensuring we’re delivering rel-
evant, timely reports in the most accessi-
ble and digestible formats. For post-trade,
our Securities Services business offers
Another opportunity is the rapid growth
in private capital markets. In 2022, we
were involved in nearly 60 deals, raising
$12 billion in proceeds. We also launched
our Capital Connect platform, which
reinvented the traditional private capital
raise, seamlessly connecting investors
with earlier-stage companies. Helping
a client at an early stage can result in a
client-for-life relationship, leading to
opportunities in global corporate and
private banking and potentially an IPO
or sell-side M&A mandate.
Private debt markets have also grown
significantly in the last five years and at
a much faster pace than the syndicated
lending market5. To compete, we have set
up a new direct lending initiative that has
already funded dozens of deals, helping
to deepen relationships, especially with
middle market clients.
5 Private debt market measured by private debt assets under
management. Syndicated lending market measured by
leveraged loans outstanding.
50
comprehensive middle- and back-office
services to complete the full trade life
cycle experience for our clients.
Finally, we want to capitalize on secular
growth trends in the industry. For
instance, over the last five years, the
industry wallet with large institutional cli-
ents has grown more than with other
financial institutions. Increasingly, these
large clients need banks with size, scale
and solutions to manage complex portfo-
lios. Being a reliable, complete counter-
party, our market share with this particu-
lar group of clients has grown more than
350 basis points over the past five years6.
All of our clients continue to embrace
electronic trading. Through the years,
we’ve invested heavily in our electronic
trading capabilities, both in areas that
have been at the forefront of electronifi-
cation, such as equities and foreign
exchange, and in those where the indus-
try has been slower to embrace the trend,
such as credit.
Growth opportunities in data services
In Securities Services, the rising complex-
ity of funds is creating opportunities as
we continue to evolve to meet the chang-
ing needs of our clients. As a result, we
have been modernizing our core custody
and fund accounting infrastructure to cre-
ate scale and efficiency.
We are also investing to expand our capa-
bilities in areas like exchange-traded fund
(ETF) servicing, middle-office outsourcing
and alternatives — all of which are growth
areas for our business.
Looking ahead, clients will increasingly
turn to service providers for help in man-
aging their data. Anticipating this devel-
opment, we launched our Fusion platform
in 2022, and we’re already building strong
brand recognition in the market. Provid-
ing seamless and efficient solutions for
discovering, managing and analyzing data
will unlock new opportunities to deliver
value to our investor clients.
6 Coalition Greenwich Institutional Client Analytics. “Large
Institutional Clients” is a JPM-only categorization that
is defined by share of wallet, product, penetration and
revenue metrics.
CORPORATE & INVESTMENT BANK PAYMENTS AND SECURITIES SERVICES
Firmwide Payments revenue
Securities Services revenue
($ in billions)1
($ in billions)2
+52%
$13.9
$9.1
+17%
$3.8
$4.5
2017
2022
2017
2022
1
2017 Firmwide Payments revenue is predominantly in CIB and CB and excludes the net impact of equity investments;
adjusted down by $0.1 billion for Merchant Services accounting re-class.
2 2017 Securities Services revenue adjusted down by $0.1 billion to exclude the impact of past business simplification,
exit actions and accounting changes.
Software solutions for healthcare and
connected cars
Our Payments business also operates at
tremendous scale and lightning speed,
moving more than $9 trillion each day
across 160 countries and 120 currencies.
We are investing to further scale and
modernize our core payments infra-
structure, as well as to develop the net-
works of the future. From peer-to-peer
blockchain connections to JPM Coin,
programmable money and digitization
of assets, we’re seeking to make sending,
managing and receiving money easier,
faster and more secure.
Connections with other parts of our firm,
including Investment Banking, Commer-
cial Banking, Markets and Retail Banking,
are opening opportunities for Payments,
especially with the 5.8 million small busi-
nesses that already bank with Chase. As
the only bank with end-to-end in-house
acquiring and treasury capabilities, we
have created an ecosystem that provides
merchants with everything from smart
terminals and tap-on-phone solutions to
consumer trends and insights drawn from
issuing and acquiring data.
Another big opportunity exists in
developing data and software-as-a-
service solutions for platform busi-
nesses and industry verticals such as
healthcare and connected cars. For
example, in U.S. healthcare, InstaMed,
which we acquired in 2019, digitizes
interactions between patient, payers
and providers, seamlessly processing
payments and moving healthcare data.
Now connected to approximately 60%
of U.S. healthcare providers, it has
created an extensive network for our
clients. Similar opportunities exist in
the fast-changing mobility industry,
impacting not only the automotive
sector but energy, utilities and
commerce. Through our partnership
with Volkswagen Financial Services
and majority stake in Volkswagen Pay,
we are exploring a future in which cars
will be used as smart payment devices
and commerce platforms.
In this and many other areas, our accel-
erated investments over the past few
years are helping to future-proof our
business. As we compete with banks
and fintechs, we have the best of both:
scale, end-to-end capabilities and direct
relationships with clients of all sizes.
WELL-POSITIONED FOR THE
FUTURE
Global markets have already encountered
significant challenges in the new year —
from interest rate volatility to market and
geopolitical uncertainty.
And with central banks tightening in ways
we haven’t seen before as they wrestle
with ongoing inflationary pressures,
market uncertainty is likely to persist and
weigh on growth in the United States and
other developed economies in 2023.
More positively, we are well-positioned to
help clients in any environment. Our
scale, completeness and culture of collab-
oration are key differentiators as clients
increasingly look to us for solutions that
straddle different business lines.
I am incredibly proud of how our employ-
ees supported clients in 2022. Our per-
formance and the opportunities ahead
show what an amazing hand our busi-
ness has — and give me immense confi-
dence and hope for the future.
Daniel E. Pinto
President and Chief Operating Officer,
JPMorgan Chase & Co., and
CEO, Corporate & Investment Bank
51
CORPORATE & INVESTMENT BANK Commercial Banking
In 2022, Commercial Banking (CB)
remained focused on executing our
long-term strategy — growing our client
franchise, investing in our platform
and capabilities, and empowering and
enabling our teams. We continued to
stand by our clients, delivering capital,
advice and solutions to help them
best navigate an uncertain market
environment.
I’m incredibly proud of our results and
the notable market leadership positions
we achieved last year.
CB reported record revenue of
$11.5 billion, net income of $4.2 billion
and a return on equity of 16%. Our strong
performance was largely driven by adding
clients, expanding into new markets and
maintaining higher deposit margins.
• We had our third-best year for
Investment Banking, with $3 billion
in revenue 1.
• Commercial & Industrial loans increased
by 11% year-over-year2.
• Commercial Real Estate loans grew
7% year-over-year2.
SERVING MORE
EXTRAORDINARY CLIENTS
our services to more local governments
and their residents.
CB’s strategy is anchored on being our
clients’ most important financial partner,
and we do this by delivering the expertise
and capabilities of our global firm locally.
In 2022, we continued to extend and
deepen our reach by growing our U.S.
and international footprint, enabling us
to increase our addressable market and
serve more exceptional clients around
the world.
We expanded to five additional U.S.
states and four new countries:
• In the United States, CB established
a presence in Idaho, Montana, Nevada,
New Mexico and South Carolina and is
now in 78 of the top 100 metropolitan
statistical areas, with a potential to cover
more than 48,000 prospective clients.
• We achieved a significant milestone
in 2022 when we became the first bank
able to accept government deposits in
all 50 U.S. states, allowing us to bring
• Outside the United States, we
expanded into Denmark, Finland,
Norway and Sweden and now have 80
bankers calling on more than 2,000
prospective, non-U.S.-headquartered
clients in 24 countries.
We’re thoughtfully growing our team
to support several high-potential
opportunities:
• We’ve maintained our focus on middle
market companies with revenue less
than $100 million and added bankers
to serve more than 12,000 companies
in this important segment, doubling
our client relationships since 2018.
• Both in the United States and EMEA,
we continued building our Green Econ-
omy and Innovation Economy teams to
provide tailored support to these criti-
cal sectors that are advancing eco-
nomic growth and sustainability. CB is
well-positioned to serve clients from
startup to IPO and beyond, partnering
• Credit performance remained strong,
with net charge-offs of 4 basis points.
($ in billions)
SELECT FINANCIAL HIGHLIGHTS
Our business continues to perform
extremely well in a complex and competi-
tive environment. The sustained invest-
ments we’re making across our franchise
are accelerating our organic growth, and
our success is compounding. This letter will
give you a window into our business and
the tremendous runway that lies ahead.
1 Represents total JPMorgan Chase revenue from investment
banking products provided to CB clients.
2 Commercial & Industrial and Commercial Real Estate
groupings for CB are generally based on client segments
and do not align with regulatory definitions.
52
MIDDLE MARKET EXPANSION
TOTAL PAYMENTS REVENUE
$1.5
$5.9
$1.2
$0.9
$3.8
$3.8
2020
2021
2022
2020
2021
2022
AVERAGE LOANS
INVESTMENT BANKING REVENUE
$218.9
$205.0
$223.7
$5.1
$3.3
$3.0
2020
2021
2022
2020
2021
2022
COMMERCIAL BANKING RECORD RESULTS IN 2022
across the firm to provide a full suite of
capabilities, including capital raising,
strategic advisory and a differentiated
set of digital solutions.
CHAMPIONING OUR CLIENTS’
SUCCESS WITH POWERFUL
SOLUTIONS
• We created a new team of bankers
across 20 U.S. cities that is focused
on understanding and supporting the
unique journeys of diverse, women and
veteran business owners and working to
help their businesses grow and succeed.
The community impact from this team
has been very positive, and we are look-
ing for more ways to serve this import-
ant segment of our economy.
NOTABLE 2022 RECOGNITION
• Multifamily Lender in the United
States3
Our ability to deliver JPMorgan Chase’s
full suite of solutions remains a key com-
petitive advantage. In 2022, we continued
to make significant investments in our
capabilities, innovating to drive even
more value for our clients.
• We’re offering new, simple digital
banking platforms and integrated pay-
ment solutions to help clients run their
businesses more effectively.
• In collaboration with our CIB partners,
we’re providing clients with a more
complete set of financing alternatives
with the addition of our new direct
lending offering.
• We introduced Story by J.P. MorganTM,
our all-in-one property management
tool that offers multifamily property
owners and operators valuable data,
insights and an intuitive rent payments
platform to best manage their real
estate assets.
• Multifamily Lender in New York City
and Washington, D.C.3
INVESTING IN TECHNOLOGY AND
DATA TO OPTIMIZE OUR BUSINESS
• Primary Bank Market Share in
Middle Market 4
• In Middle Market syndicated
lending 5
3 Home Mortgage Disclosure Act data, United States
Consumer Financial Protection Bureau.
4 Barlow Research.
5 Refinitiv.
We continue to make excellent progress
in building a truly data-driven business,
using our unique assets to enhance our
operating processes and deliver valuable
insights to both our teams and clients.
The impact from this effort has been
quite exciting, and the investments we
are making will drive tremendous benefit
for years to come.
• CB continued to scale and optimize
our cloud-based data platform and
expanded our team of data scientists to
help unlock even more value and embed
business intelligence into all we do.
• Our robust customer relationship
management platform and
collaboration tools promote connectiv-
ity across the firm, enabling us to serve
clients with greater precision and
foster new relationships.
• Using insights from our operating
data, we markedly improved client
satisfaction scores by enhancing and
streamlining both our onboarding
process and client service experience.
DEEPENING OUR FOCUS ON
COMMUNITY IMPACT
While growth and innovation are essen-
tial to CB’s success, perhaps just as
important is our focus on being a pur-
pose-driven business. Our firm has long
championed the essential role of bank-
ing in a community, a concept that is
deeply woven into the strategy and cul-
ture of our franchise. In CB, we are using
the power of our business — doing what
we do best every day — to drive real
outcomes in our communities.
Across our local markets, our teams
deliver critical resources, specialized
expertise and tailored solutions to help
communities thrive. Collectively, in 2022
CB financed:
53
COMMERCIAL BANKINGRECORD RESULTS IN 2022$5.9BTOTAL PAYMENTS REVENUE RECOGNIZED AS#1~2,300 CLIENT ACQUISITIONS $11.5B TOTAL REVENUE ~$224BAVERAGE LOAN BALANCES SPOTLIGHT ON WASHINGTON, D.C.
Our work helps strengthen thousands of communities every day, including Washington, D.C. CB currently serves nearly 300
clients in D.C. and has extended more than $1.2 billion in financing to affordable housing developers, vital institutions and local
businesses in the district since 2018.
As Howard University’s primary operating
bank, we’ve helped them increase efficiency,
reduce costs and mitigate risk so they can
focus on providing scholars, staff and the
greater community with access to education
and economic opportunity.
The firm’s multimillion dollar investment
and tailored advice helped City First
Broadway become the largest Black-led
minority depository institution in the country
and extend more loans to underserved
communities.
WASHINGTON, D.C.
• $19 billion in credit to vital institutions
— such as hospitals, schools and gov-
ernments — that are critical to the
health and vibrancy of our communities6
• $12 billion to create or incentivize
the preservation of more than 95,000
affordable units to help thousands of
families access stable housing
• $300 million in New Markets Tax
Credit investments to support projects
such as health clinics, grocery stores
and job training facilities
• $670 million in loans to Green
Economy clients to help accelerate
decarbonization
Together with our exceptional clients
and colleagues across the firm, we’re
working to advance an inclusive
economy, support local and diverse
6 Includes new credit commitment originations and
existing credit commitments that experienced a
major modification during 2022.
businesses, and create a sustainable
future for the places we call home.
LOOKING FORWARD
While we’re incredibly proud of our 2022
results, we aren’t standing still. 2023 is
proving to be another complex year, and
we have a responsibility to be a source of
strength and stability, especially in uncer-
tain times. As such, we remain prepared
for a wide range of economic scenarios
with our core tenets in clear view:
• Partnering across our firm to deliver
value for our clients and communities
• Maintaining our credit discipline and
client selection standards
• Consistently investing in our people,
technology and data
Thus far, 2023 has only reinforced
my confidence in our people, who
have proved that they will rise to any
54
CB has provided local developer Dantes
Partners, a division of Dumas Collective, with
financing to support six affordable housing
communities. In total, Dantes Partners has
closed and financed more than 3,000 luxury
affordable housing units in Washington, D.C.,
with a focus on seniors and low- to moderate-
income residents.
Community of Hope recently opened a Family
Health and Birth Center, the only free-standing
birth center in the city. CB provided a $21
million New Markets Tax Credit-qualified equity
investment to purchase and expand the center,
which has served more than 4,000 patients
since March 2022.
challenge. I’d like to express my sincere
gratitude to the entire CB team, as well
as our partners across the firm for
their dedication, teamwork and client
focus. I’m incredibly proud to work
alongside all of them.
.
Douglas B. Petno
CEO, Commercial Banking
COMMERCIAL BANKINGWARD 1WARD 3WARD 5WARD 7WARD 2WARD 6WARD 8WARD 4MARYLANDVIRGINIA Asset &
Wealth Management
It was an important transition year for
financial markets in 2022 as the world
adjusted to the move from near-zero
interest rates and quantitative easing —
in order to stimulate post-COVID econo-
mies — to rapid interest rate increases
and global quantitative tightening. The
unprecedented speed of this reset caused
significant market dislocations, with
higher discount rates leading to severe
asset repricing. For the first time in more
than 50 years, both stock and bond mar-
kets had negative returns, calling into
question the diversification principles of
asset allocation.
Through it all, J.P. Morgan Asset & Wealth
Management (AWM) drew upon its two
centuries of experience navigating global
markets and providing forward-looking
insights to ensure that our clients had the
planning and investment advice they
needed to sustain a long-term perspective.
Our relentless focus on risk management
90%
INVESTMENT PERFORMANCE
and comprehensive controls over all
our activities has helped us guide and sup-
port our clients throughout the years —
especially during more challenging times.
As fiduciaries for millions of clients, and
with more than $4 trillion of their assets,
we never take for granted the trust and
confidence they place in us, and we work
tirelessly to re-earn it each and every day.
INVESTMENT PERFORMANCE FOR
OUR CLIENTS
For many years, I have written about the
importance of being an active investor,
as the world is constantly evolving —
yesterday’s leading opportunities are
not guaranteed to be tomorrow’s. In
2022, these principles were reinforced,
as actively managed portfolios — an area
in which J.P. Morgan has long excelled —
proved their value in delivering strong
returns for clients.
2022 % of J.P. Morgan Asset Management Long-Term Mutual Fund AUM
Outperforming Peer Median Over 10 Years 1
90%
TOTAL J.P. MORGAN
95%
ASSET MANAGEMENT
90%
77%
90%
EQUITY
95%
95%
FIXED INCOME
MULTI-ASSET SOLUTIONS
& ALTERNATIVES
77%
77%
91%
91%
95%
91%
77%
91%
AWM has one of the industry’s largest
internal research budgets and employs
more than 1,100 investment professionals
who cover over 2,500 companies, span-
ning every asset class and major geogra-
phy. These individuals methodically travel
around the world to uncover compelling
investment opportunities for our clients;
last year alone, they held over 5,000
meetings with companies and manage-
ment teams.
Our durable approach helped us deliver
strong investment performance amid the
historic levels of volatility in 2022, partic-
ularly in our Fixed Income and Equity
platforms, outpacing most of our largest
peers, especially those with more passive
approaches to investing assets. In fact,
across the three-, five- and 10-year time
horizons, our investment performance in
those asset classes has never been stron-
ger. Our long-term mutual fund assets
under management (AUM) outperforming
the peer median over 10 years increased
from a strong 86% in 2021 to an even
better 90% in 2022.
Clients rewarded our consistent and
strong outperformance by entrusting us
with even more of their assets. AWM not
only achieved its 19th consecutive year of
net new inflows, but we also ranked in the
top three of public peers for net client
inflows over the past five years.
FINANCIAL PERFORMANCE FOR
OUR SHAREHOLDERS
With delivering superior investment per-
formance as our guiding principle, our
revenue grew by 5% to reach a record
level. Our results were strong across
regions and channels and benefited from
our fortress balance sheet, the Global
Private Bank’s (GPB) robust deposit
55
ASSET & WEALTH MANAGEMENT franchise, J.P. Morgan Asset Manage-
ment’s (JPMAM) investment prowess,
and a sizable number of new clients turn-
ing to J.P. Morgan for advice and guidance.
While pre-tax income was lower in 2022
than the previous year, it reflected our
purposeful investments in our world-class
talent, cutting-edge technologies and
superior client coverage. With a healthy
pre-tax margin of 33% that is among the
industry’s highest, AWM has continued to
deliver operating leverage to our share-
holders over the past five years.
INVESTING IN THE FUTURE OF OUR
FRANCHISE
One of our most significant investments
has been in our effort to increase our ros-
ter of high-quality GPB advisors. Our
commitment in this area yielded results,
and in 2022, for the first time, we sur-
passed 3,000 GPB advisors. Once hired,
our advisors go through our world-class
training programs to set them on a path
to success and help them grow through
each stage of their career.
We also saw progress in our systematic
efforts to expand our capabilities to meet
client demand. We have invested heavily
in JPMAM’s active exchange-traded fund
(ETF) business, which in just a few years
has grown from two solutions with
$237 million in AUM to 78 U.S. and UCITS
ETFs, representing more than $54 billion
in AUM. With a lineup that includes two of
the industry’s largest and top-performing
active ETFs — JPMorgan Equity Premium
Income ETF (JEPI) and JPMorgan Ultra-
Short Income ETF (JPST) — JPMAM ended
2022 ranked #2 in global active ETF AUM.
In addition to organic growth, AWM has
made several acquisitions in recent years,
each of which is making valuable contri-
butions to our business:
• 55ip, our customized tax-loss harvest-
ing engine, built new, more highly
scalable platforms to handle separate
accounts, along with additional
tax-managed strategies.
56
FINANCIAL PERFORMANCE2
ASSETS UNDER SUPERVISION
REVENUE
PRE-TAX INCOME
+9%
+6%
+10%
$4.0T
$17.7B
$5.8B
$2.7T
$13.2B
$3.6B
2017
2022
2017
2022
2017
2022
GPB ADVISORS
(In thousands)
+1.5x
2.2
2.4
2.4
2.5
2.7
3.1
2017
2018
2019
2020
2021
2022
GROWING ETF BUSINESS
Global Active ETF AUM
($ in billions)3
+228x
$0.2
2017
#20
Rank
$54.1
2022
#2
LAUNCHED
15 NEW ETFs4
GLOBALLY
MANAGED LARGEST
ACTIVE ETFs
(JEPI AND JPST)
AWARDED ETF SUITE
OF THE YEAR
(ACTIVE ETFs)5
1 For footnote, refer to page 43 footnote 33 in this Annual Report.
2 In the fourth quarter of 2020, the firm realigned certain wealth management clients from AWM to CCB.
Prior-period amounts have been revised to conform with the current presentation. Percentage increases
represent compound annual growth rates.
3 Includes U.S.-domiciled ETFs and European-domiciled ETFs with UCITS labels.
4 U.S. and UCITS ETFs, including four ETFs in Australia.
5 Award by With Intelligence in 2022.
6 Sustainable Equity Strategy Assets.
7 Projected by 1H23.
8 Any forecasts, figures and opinions set out are for information purposes only, based on certain
assumptions and current market conditions and are subject to change without prior notice.
ASSET & WEALTH MANAGEMENT • Campbell Global, our timber- and
forestry-focused investment manager,
had notable new investment flows.
Additionally, several other alternative
funds started with newly acquired
teams of experts in their various fields.
• OpenInvest, our customized invest-
ment preference screener, delivered
several new screening capabilities to
our advisors and clients.
• Global Shares, our cloud-based pro-
vider of equity share plan management
to public and private companies, ended
2022 with nearly 1 million employee
participant clients and continues to
onboard new companies and their
respective employees at a record pace.
To ensure we can scale our growth, we
are investing in operational excellence
across all that we do, with a particular
focus on trade processing flows and client
transactions/money movement, strong
controls and protection around client
activities, and ease of interaction. These
investments are part of our ongoing
efforts to streamline our processes and
make it easy for our clients and advisors
to work with us.
DELIVERING VALUE THROUGH M&A
We continue to focus on delivering digital, personalized and ESG solutions to our clients.
7x AUM
SINCE ACQUISITION
15%
GROSS TOTAL RETURN (1Y)
$1.5B6
ALIGNED TO OPENINVEST INSIGHTS
AND CLIENT REPORTING
~1M7
TOTAL CLIENTS
STEPPING UP OUR SUPPORT FOR UKRAINE
OPTIMISTIC FOR THE FUTURE
We know there will always be unexpected
volatility in the broader environment. As
a fiduciary, we constantly stress test port-
folios to prepare clients for those scenar-
ios. Recent events in 2023’s first quarter
have reminded us of those risks. Today’s
financial system is stronger than any time
before, and it will emerge even more
resilient as we apply lessons learned to
the future. As tough as 2022 was on mar-
kets, the good news is the starting point
for the next 10 to 15 years of future
return assumptions has increased nearly
70%, from 4.3% last year to 7.2%8.
I am so proud of the breadth and consis-
tency of our success in delivering value to
our clients and shareholders. We remain
relentlessly focused on being the advisor
of choice to the world’s most prominent
institutions, pension funds, central banks,
individuals and families. Our commitment
to doing first-class business in a first-class
way for these clients is what makes AWM
a special gem inside JPMorgan Chase.
I also take great pride in how we helped
clients and our shareholders navigate the
challenges of 2022 and across past mar-
ket cycles, and I am optimistic about the
opportunities ahead and our role in help-
ing to deliver the best possible outcomes
for all our stakeholders.
J.P. Morgan is the #1 issuer for Ukraine
sovereign debt and has been since 2010,
raising over $25 billion. When the war broke
out in February 2022, we worked swiftly
to give a two-year payment deferral to
help do our part during the conflict. As we
approached the one-year mark of the war,
J.P. Morgan sent a delegation traveling 11 hours
by train into Kyiv to sign a memorandum of
understanding for J.P. Morgan to advise on
rebuilding, financial stabilization, sovereign
credit ratings and economic ties to Europe.
We are committed to helping with the road
map to recovery for Ukraine and its people.
Pictured (clockwise): Volodymyr Zelenskyy, President of Ukraine; Yulia Svyrydenko, First Deputy Prime Minister
of Ukraine and Minister of Economic Development and Trade; Anton Pil, JPMAM Global Head of Alternatives;
Stefan Weiler, JPM Head of Debt Capital Markets in Central and Eastern Europe, the Middle East and Africa;
Vincent La Padula, JPM Head of Workplace; and Rostyslav Shurma, Deputy Head of the Office of the President
of Ukraine. Photo from J.P. Morgan Summit broadcast of meeting in Kyiv (February 10, 2023).
Mary Callahan Erdoes
CEO, Asset & Wealth Management
57
ASSET & WEALTH MANAGEMENT CR 3/30
Corporate Responsibility
Corporate Responsibility at JPMorgan
Chase takes a robust, holistic approach to
driving inclusive economic growth in com-
munities around the world. Combining our
philanthropy, research, policy recommen-
dations and advocacy, while working with
leaders at every level of government and
business, we advance strategies to help
move the needle on significant challenges
affecting the communities we serve, from
closing the racial wealth gap and tackling
the skilled labor shortage to making the
economy and communities more resilient.
At the core of our integrated model is
a focus on outcomes. Bringing together
our resources — including our expertise
and community network — we work to
generate solutions that benefit custom-
ers, communities and the economy at
large. We see this in how JPMorgan
Chase develops banking products,
supports clients and communities,
and powers the economy.
Promoting financial health. Far too many
people lack access to the products and
services they need to improve their finan-
cial health, including checking and savings
accounts. To help close America’s wealth
gap, we looked to consumer data, social
entrepreneurs and our long-standing com-
munity partners for insights, which influ-
enced the design of products like Chase
Secure BankingSM, an affordable and safe
account option serving nearly 1.5 million
customers, and Autosave, a tool used by
1.9 million consumers to simplify and auto-
mate savings. With nonprofits like the
Cities for Financial Empowerment Fund,
we helped establish national standards
for products similar to Secure Banking so
more people can access low-cost banking
services. And with Autosave, we leveraged
insights from the JPMorgan Chase Institute
58
and collaborated with consumer advocates
and community leaders to understand the
most effective strategies to help even
more customers meet their savings goals
and set aside money for unexpected
expenses like car repairs or medical bills.
Increasing access to economic opportu-
nity. We believe that when communities
thrive, businesses thrive. In Seine-Saint-
Denis (SSD), just outside of Paris where
30% of young people live in poverty, we
are putting our model to work to help
spur economic growth. Nearly five years
ago, we made a $30 million philanthropic
commitment to support communities in
Greater Paris, particularly in SSD. We
started by collaborating with government
agencies and nonprofits on skills training
and small business growth, assessing and
updating our strategy along the way. This
effort reached people like Fatou, an
entrepreneur who, with the assistance of
our nonprofit partner Adie, learned how
to win public and private contracts for her
security company. She was able to get
her business off the ground and grow her
client network. Fatou is one of more than
6,700 entrepreneurs and 600 local busi-
nesses who have received such support
in addition to the 23,000 SSD residents
who have received necessary skills train-
ing to advance their careers. We are
continuing to learn from the outcomes
of our work in Greater Paris, coordinating
closely with local policymakers and
organizations as we plan to enhance our
commitment going forward.
Supporting global growth and security.
The war in Ukraine has upended millions
of lives and created a significant shortage
of energy supplies. Over the past year, we
have worked closely with leaders across
our company, clients and policymakers to
navigate these unprecedented social, eco-
nomic and energy security challenges.
Once again, we are taking a comprehen-
sive approach, informing business deci-
sions to advance energy security and scale
clean technology solutions while providing
$10 million in philanthropic capital to
address critical humanitarian needs and
help launch career training and upskilling
programs for Ukrainian refugees in
Poland. And we are thinking toward the
future, advising the Ukrainian government
on its plan for a postwar recovery. This is a
pivotal moment for the global economy,
and we will continue to leverage our wide
range of expertise and insights to navigate
complex global dynamics.
Generating impact is a business impera-
tive. Improving our products, strength-
ening communities, and supporting a
more inclusive and secure global econ-
omy are inextricably tied to the success
of our company. Even as we seek to
manage uncertainty and market distress
to promote a sound financial system, it
remains the responsibility of both the
public and private sectors to come
together to identify solutions that will
lead to greater prosperity.
Demetrios Marantis
Global Head of Corporate Responsibility
CORPORATE RESPONSIBILITY In Corporate Responsibility, we aim to
help strengthen the global financial
system by supporting economic oppor-
tunity that is equitable and accessible.
We help identify solutions to major
global challenges thanks to the invest-
ments we’ve made to build a strong and
sustainable company.
Every day, we apply what we’ve learned
from supporting our customers and
clients to help build more resilient
communities. This approach allows us
to focus on the ingredients essential for
inclusive growth: jobs and skills training,
small business growth, community
development and financial health.
Here are some ways we bring the full
force of the firm — combining our busi-
ness resources, community and govern-
ment engagement, philanthropic capital,
data and expertise — to promote a stron-
ger, more inclusive economy.
Safeguarding sound financial systems
The global economy is only as resilient as
its financial systems. Around the world,
we’re working with policy groups, trade
associations and regulators so we can
extend loans, make capital investments
and provide services that help people
access more opportunities.
In 2020, we joined the Office of the
Comptroller of the Currency’s launch of
Project REACh (Roundtable for Economic
Access and Change), formed to identify
and reduce barriers to full and fair par-
ticipation in the United States’ banking
system and economy. We were the first
major financial institution to launch an
initiative to provide credit to customers
with no credit history, and we have now
approved credit cards for roughly 15,000
new-to-credit customers. This helps
people to build credit scores and access
lower-priced mainstream credit products,
which could eventually include a mort-
gage — one of America’s most important
sources of generational wealth.
Accelerating climate and
sustainability solutions
Across our company, we are taking mea-
sures to respond to the climate challenge
against the backdrop of a global energy
crisis. In December, we issued our
Climate Report outlining how we are
scaling green solutions to support our
clients’ business goals, investing in new
clean energy technology that creates
local economic growth and jobs, meeting
immediate energy needs, and minimizing
our operational impact. In 2022, we
financed and facilitated $197 billion
toward our $2.5 trillion Sustainable
Development Target: $70 billion toward
green, $87 billion toward development
finance and $40 billion toward commu-
nity development. Through 2022, we
have financed and facilitated $482
billion toward this overall target,
including $176 billion toward our
$1 trillion green target.
We also announced 2030 emissions
intensity reduction targets for three new
key sectors: iron and steel, cement and
aviation. The aggregate of these new
sectors, along with the sectors we
announced in 2021, accounts for the
majority of global emissions across both
the supply and demand sides in the
global energy system — a key consider-
ation for advancing overall decarboniza-
tion and the global path to net-zero
emissions.
We recognize that climate change has a
domino effect on communities, with
extreme weather impacting roughly one
in 10 homes in the United States. In
response, we’re supporting programs
that aim to scale climate-resilient afford-
able housing models, particularly in
Black, Hispanic and Latino communities,
including in rural areas. Our most recent
$15 million philanthropic commitment
will help produce or preserve more than
1,400 units of affordable housing, incor-
porating energy-efficient features and
weatherization upgrades that offer
protection against extreme weather
and reduce utility costs.
Driving inclusive economic growth
Investing in the careers of tomorrow
As rapid changes in technology, automa-
tion and artificial intelligence alter
career paths, it is imperative for compa-
nies like ours to transform how we pre-
pare people to compete for well-paying
jobs. Since 2018, we’ve supported the
Dallas County Promise, a program help-
ing Dallas County Public School students
access postsecondary education oppor-
tunities at local colleges and universities.
Today, more than 90,000 high school
seniors in the Dallas area have benefited.
This model is being scaled across the
state, with the potential to serve 5% of
the nation’s high school seniors. It is
even influencing legislation to help
districts prepare students for college
and encourage high schoolers to apply
for federal financial aid before they
graduate. Supporting this impactful
program is part of our five-year, $350
million commitment to equip people
with the skills they need for the future
of work and to meet the growing
demand for qualified workers.
59
CORPORATE RESPONSIBILITY
Supporting small business growth
Catalyzing community development
Small businesses generate jobs and are
vital to driving local economic growth.
In the past year, we have assisted more
than 26,500 small businesses around
the world, helping them create or retain
more than 54,000 jobs and increase
revenue by over $129 million. Our
employees have been central to this
effort, committing 7,000+ volunteer
hours globally through our Founders
Forward small business mentorship pro-
gram. The program pairs entrepreneurs
with JPMorgan Chase team members to
receive consultative support on various
business challenges, covering leader-
ship, financial modeling, e-commerce,
marketing and more.
We also help entrepreneurs succeed
through our support of Ascend, a nation-
wide program focused on developing
customized growth strategies for small
businesses. Eighty-nine percent of partic-
ipating businesses are owned by people
of color, and this year these businesses
surpassed $2 billion in contracts. As a
result of Ascend’s specialized approach,
participating entrepreneurs are able to
focus on trainings most relevant to them.
In New York City, for example, Salsa
Hospitality CEO Daniel Garcia learned
how to grow his executive team, plan
for long-term business expansion and
purchase a new facility to accommodate
business growth, ultimately increasing
sales by 56% in 2022.
60
Economic opportunity is deeply rooted in
neighborhoods. We saw this firsthand in
Syracuse, New York, where a declining
manufacturing sector contributed to an
economic downturn, job loss and popula-
tion decrease. As one of the inaugural
winners of our annual AdvancingCities
Challenge, a yearly competition that
promotes community-driven solutions
to advance local inclusive growth, we
provided $3 million over three years
and ongoing coaching to help drive
technological development in the city’s
workforce, neighborhoods and small
businesses and to boost its economy.
With our support, the city of Syracuse
piloted and evolved its Community
Investment Framework, ultimately
attracting significant public and private
sector investments. According to the city,
these investments are creating nearly
50,000 jobs, generating almost $600
million in annual tax revenue for New
York state and spurring an additional
$500 million in public and private sector
funding that will help scale opportunities
and create economic growth for resi-
dents in Syracuse’s underserved
communities.
Promoting financial health and wealth
creation
Policies, programs and products aimed
at improving financial health are key to
creating more inclusive economies.
Through our support of innovative, inclu-
sive fintech accelerators — the Financial
Inclusion Lab, the Financial Solutions Lab
and the Catalyst Fund — we are helping
advance the financial well-being of
underserved low- and middle-income
populations. The Labs provide capital,
mentorship and additional assistance to
create scalable fintech solutions that
enable communities to build wealth, save
money and reduce debt.
In India, the Financial Inclusion Lab has
supported 50 early-stage startups,
serving more than 30 million consumers
who need access to savings, credit and
insurance services and raising over $80
million in follow-up funding to continue
their work. In the United States, Financial
Solutions Lab participants have helped
more than 33 million consumers. And
in emerging markets like Nigeria, the
Catalyst Fund has supported 61 startups,
helping more than 14 million customers
build savings, learn to invest and more
easily access credit.
Extending support in times of crisis
We show up for the communities we
serve in both good and tough times. Over
the last three years, we’ve contributed
more than $33 million for disaster relief
through corporate donations and
employee personal donations. We’ve
provided support to communities through
hardships of all kinds, from catastrophic
earthquakes in Haiti, Türkiye and Syria
to the cost-of-living crisis in the United
Kingdom and tragic violence in neighbor-
hoods spanning the United States.
But in many cases, impacted communi-
ties need more than financial support.
When Jackson, Mississippi, a city with
more than 140,000 residents, experi-
enced periodic water shutdowns and boil
orders due to burst pipes and high lead
levels, our team worked closely with
community organizations responding
to the crisis, hosting a local training for
nonprofits working on recovery plans
while also distributing resources like
bottled water. This is just one example
of how we’re bringing our expertise and
resources to Mississippi as our business
in the state continues to grow.
CORPORATE RESPONSIBILITY
Table of contents
Financial:
44 Three-Year Summary of Consolidated Financial
Highlights
Audited financial statements:
45 Five-Year Stock Performance
155 Management’s Report on Internal Control Over
Financial Reporting
156 Report of Independent Registered Public Accounting
Management’s discussion and analysis:
Firm
46 Introduction
47 Executive Overview
159 Consolidated Financial Statements
164 Notes to Consolidated Financial Statements
51 Consolidated Results of Operations
55 Consolidated Balance Sheets and Cash Flows Analysis
58 Explanation and Reconciliation of the Firm’s Use of
Non-GAAP Financial Measures
61 Business Segment Results
Supplementary information:
292 Distribution of assets, liabilities and stockholders’
equity; interest rates and interest differentials
81 Firmwide Risk Management
297 Glossary of Terms and Acronyms
85 Strategic Risk Management
86 Capital Risk Management
97 Liquidity Risk Management
106 Credit and Investment Risk Management
131 Market Risk Management
139 Country Risk Management
141 Climate Risk Management
142 Operational Risk Management
149 Critical Accounting Estimates Used by the Firm
153 Accounting and Reporting Developments
154 Forward-Looking Statements
Note:
The following pages from JPMorgan Chase & Co.’s 2022
Form 10-K are not included herein: 1-42, 304
JPMorgan Chase & Co./2022 Form 10-K
43
Financial
THREE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
As of or for the year ended December 31,
(in millions, except per share, ratio, headcount data and where otherwise noted)
Selected income statement data
Total net revenue
Total noninterest expense
Pre-provision profit(a)
Provision for credit losses
Income before income tax expense
Income tax expense
Net income
Earnings per share data
Net income: Basic
Diluted
Average shares: Basic
Diluted
Market and per common share data
Market capitalization
Common shares at period-end
Book value per share
Tangible book value per share (“TBVPS”)(a)
Cash dividends declared per share
Selected ratios and metrics
Return on common equity (“ROE”)(b)
Return on tangible common equity (“ROTCE”)(a)(b)
Return on assets (“ROA”)(a)
Overhead ratio
Loans-to-deposits ratio
Firm Liquidity coverage ratio (“LCR”) (average)(c)
JPMorgan Chase Bank, N.A. LCR (average)(c)
Common equity Tier 1 (“CET1”) capital ratio(d)
Tier 1 capital ratio(d)
Total capital ratio(d)
Tier 1 leverage ratio(c)(d)
Supplementary leverage ratio (“SLR”)(c)(d)
Selected balance sheet data (period-end)
Trading assets
Investment securities, net of allowance for credit losses
Loans
Total assets
Deposits
Long-term debt
Common stockholders’ equity
Total stockholders’ equity
Headcount
Credit quality metrics
Allowances for loan losses and lending-related commitments
Allowance for loan losses to total retained loans
Nonperforming assets
Net charge-offs
Net charge-off rate
2022
2021
2020
$
$
$
$
$
$
$
128,695
76,140
52,555
6,389
46,166
8,490
37,676
12.10
12.09
2,965.8
2,970.0
393,484
2,934.2
90.29
73.12
4.00
14 %
18
0.98
59
49
112
151
13.2
14.9
16.8
6.6
5.6
453,799
631,162
1,135,647
3,665,743
2,340,179
295,865
264,928
292,332
293,723
22,204
1.81 %
7,247
2,853
0.27 %
$
$
$
$
$
$
$
121,649
71,343
50,306
(9,256)
59,562
11,228
48,334
15.39
15.36
3,021.5
3,026.6
466,206
2,944.1
88.07
71.53
3.80
19 %
23
1.30
59
44
111
178
13.1
15.0
16.8
6.5
5.4
433,575
672,232
1,077,714
3,743,567
2,462,303
301,005
259,289
294,127
271,025
18,689
1.62 %
8,346
2,865
0.30 %
$
$
$
$
$
$
$
119,951
66,656
53,295
17,480
35,815
6,684
29,131
8.89
8.88
3,082.4
3,087.4
387,492
3,049.4
81.75
66.11
3.60
12 %
14
0.91
56
47
110
160
13.1
15.0
17.3
7.0
6.9
503,126
589,999
1,012,853
3,384,757
2,144,257
281,685
249,291
279,354
255,351
30,815
2.95 %
10,906
5,259
0.55 %
(a) Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Tangible common equity (“TCE”) is also a non-GAAP financial measure.
Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 58-60 for a discussion of these measures.
(b) Quarterly ratios are based upon annualized amounts.
(c) For the years ended December 31, 2022, 2021 and 2020, the percentage represents average ratios for the three months ended December 31, 2022,
2021 and 2020.
(d) As of December 31, 2022, 2021 and 2020, the capital metrics reflect the relief provided by the Federal Reserve Board in response to the COVID-19
pandemic, including the Current Expected Credit Losses ("CECL") capital transition provisions. As of December 31, 2020, the SLR reflected the temporary
exclusions of U.S. Treasury securities and deposits at Federal Reserve Banks, which became effective April 1, 2020 and remained in effect through March
31, 2021. Refer to Capital Risk Management on pages 86-96 for additional information.
44
JPMorgan Chase & Co./2022 Form 10-K
FIVE-YEAR STOCK PERFORMANCE
The following table and graph compare the five-year cumulative total return for JPMorgan Chase & Co. (“JPMorgan Chase” or
the “Firm”) common stock with the cumulative return of the S&P 500 Index, the KBW Bank Index and the S&P Financials Index.
The S&P 500 Index is a commonly referenced equity benchmark in the United States of America (“U.S.”), consisting of leading
companies from different economic sectors. The KBW Bank Index seeks to reflect the performance of banks and thrifts that are
publicly traded in the U.S. and is composed of leading national money center and regional banks and thrifts. The S&P
Financials Index is an index of financial companies, all of which are components of the S&P 500. The Firm is a component of all
three industry indices.
The following table and graph assume simultaneous investments of $100 on December 31, 2017, in JPMorgan Chase common
stock and in each of the above indices. The comparison assumes that all dividends were reinvested.
December 31,
(in dollars)
JPMorgan Chase
KBW Bank Index
S&P Financials Index
S&P 500 Index
December 31,
(in dollars)
2017
$ 100.00
100.00
100.00
100.00
2018
$ 93.35
82.29
86.96
95.61
2019
$ 137.48
112.01
114.87
125.70
2020
$ 129.89
100.47
112.85
148.82
2021
$ 165.91
138.99
152.20
191.49
2022
$ 145.01
109.25
136.17
156.81
JPMorgan Chase & Co./2022 Form 10-K
45
JPMorgan ChaseKBW BankS&P FinancialsS&P 50020172018201920202021202275100125150175200
Management’s discussion and analysis
The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan
Chase for the year ended December 31, 2022. The MD&A is included in both JPMorgan Chase’s Annual Report for the year ended
December 31, 2022 (“Annual Report”) and its Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form
10-K” or “Form 10-K”) filed with the Securities and Exchange Commission (“SEC”). Refer to the Glossary of terms and acronyms on
pages 297-303 for definitions of terms and acronyms used throughout the Annual Report and the 2022 Form 10-K.
This Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management, speak
only as of the date of this Form 10-K and are subject to significant risks and uncertainties. Refer to Forward-looking Statements on
page 154 and Part 1, Item 1A: Risk factors in this Form 10-K on pages 9-32 for a discussion of certain of those risks and
uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and
uncertainties. There is no assurance that actual results will be in line with any outlook information set forth herein, and the Firm
does not undertake to update any forward-looking statements.
INTRODUCTION
JPMorgan Chase & Co. (NYSE: JPM), a financial holding
company incorporated under Delaware law in 1968, is a
leading financial services firm based in the United States of
America (“U.S.”), with operations worldwide. JPMorgan
Chase had $3.7 trillion in assets and $292.3 billion in
stockholders’ equity as of December 31, 2022. The Firm is a
leader in investment banking, financial services for
consumers and small businesses, commercial banking,
financial transaction processing and asset management.
Under the J.P. Morgan and Chase brands, the Firm serves
millions of customers, predominantly in the U.S., and many
of the world’s most prominent corporate, institutional and
government clients globally.
JPMorgan Chase’s principal bank subsidiary is JPMorgan
Chase Bank, National Association (“JPMorgan Chase Bank,
N.A.”), a national banking association with U.S. branches in
48 states and Washington, D.C. JPMorgan Chase’s principal
nonbank subsidiary is J.P. Morgan Securities LLC (“J.P.
Morgan Securities”), a U.S. broker-dealer. The bank and
non-bank subsidiaries of JPMorgan Chase operate
nationally as well as through overseas branches and
subsidiaries, representative offices and subsidiary foreign
banks. The Firm’s principal operating subsidiaries outside
the U.S. are J.P. Morgan Securities plc and J.P. Morgan SE
(“JPMSE”), which are subsidiaries of JPMorgan Chase Bank,
N.A. and are based in the United Kingdom (“U.K.”) and
Germany, respectively.
For management reporting purposes, the Firm’s activities
are organized into four major reportable business
segments, as well as a Corporate segment. The Firm’s
consumer business is the Consumer & Community Banking
(“CCB”) segment. The Firm’s wholesale business segments
are the Corporate & Investment Bank (“CIB”), Commercial
Banking (“CB”), and Asset & Wealth Management (“AWM”).
Refer to Business Segment Results on pages 61-80, and
Note 32 for a description of the Firm’s business segments,
and the products and services they provide to their
respective client bases.
The Firm’s website is www.jpmorganchase.com. JPMorgan
Chase makes available on its website, free of charge, annual
reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, as
soon as reasonably practicable after it electronically files or
furnishes such material to the U.S. Securities and Exchange
Commission (the “SEC”) at www.sec.gov. JPMorgan Chase
makes new and important information about the Firm
available on its website at https://www.jpmorganchase.com,
including on the Investor Relations section of its website at
https://www.jpmorganchase.com/ir. Information on the
Firm's website is not incorporated by reference into this
2022 Form 10-K or the Firm’s other filings with the SEC.
46
JPMorgan Chase & Co./2022 Form 10-K
EXECUTIVE OVERVIEW
This executive overview of the MD&A highlights selected
information and does not contain all of the information that is
important to readers of this 2022 Form 10-K. For a complete
description of the trends and uncertainties, as well as the
risks and critical accounting estimates affecting the Firm, this
2022 Form 10-K should be read in its entirety.
Financial performance of JPMorgan Chase
Year ended December 31,
(in millions, except per share
data and ratios)
Selected income statement
data
Noninterest revenue
Net interest income
Total net revenue
Total noninterest expense
Pre-provision profit
Provision for credit losses
Net income
Diluted earnings per share
Selected ratios and metrics
Return on common equity
Return on tangible common
equity
Tangible book value per share
Capital ratios(a)
CET1 capital
Tier 1 capital
Total capital
Memo:
NII excluding Markets(b)
NIR excluding Markets(b)
Markets(b)
Total net revenue - managed
basis
2022
2021
Change
$
$
61,985
66,710
$
$
69,338
52,311
$ 128,695
$ 121,649
76,140
52,555
6,389
37,676
12.09
71,343
50,306
(9,256)
48,334
15.36
(11) %
28 %
6 %
7
4
NM
(22)
(21)
14 %
19 %
18
73.12
23
88.07
71.53
3
2
13.2 %
13.1 %
14.9
16.8
15.0
16.8
$
62,355
$
44,498
40,938
28,984
53,412
27,394
$ 132,277
$ 125,304
40
(23)
6
6
Book value per share
$
90.29
$
(a) The ratios reflect the CECL capital transition provisions. Refer to
Capital Risk Management on pages 86-96 for additional information.
(b) NII and NIR refer to net interest income and noninterest revenue,
respectively. Markets consists of CIB's Fixed Income Markets and
Equity Markets businesses.
Comparisons noted in the sections below are for the full year
of 2022 versus the full year of 2021, unless otherwise
specified.
Firmwide overview
JPMorgan Chase reported net income of $37.7 billion for
2022, down 22%, earnings per share of $12.09, ROE of
14% and ROTCE of 18%.
• Total net revenue was $128.7 billion, up 6%, reflecting:
– Net interest income of $66.7 billion, up 28%, driven by
higher rates and loan growth, partially offset by lower
Markets net interest income. Net interest income
excluding Markets was $62.4 billion, up 40%.
– Noninterest revenue of $62.0 billion, down 11%,
driven by lower Investment Banking fees, $2.4 billion
of net investment securities losses in Treasury and CIO,
lower net production revenue in Home Lending and
lower auto operating lease income, largely offset by
higher CIB Markets revenue and a $914 million gain on
the sale of Visa Class B common shares (“Visa B
shares”) in Corporate.
• Noninterest expense was $76.1 billion, up 7%, driven by
higher structural expense and continued investments in
the business, including compensation, technology and
marketing, partially offset by lower volume- and revenue-
related expense.
• The provision for credit losses was $6.4 billion,
reflecting:
– a net addition of $3.5 billion to the allowance for credit
losses, consisting of $2.3 billion in wholesale and $1.2
billion in consumer, driven by loan growth and
deterioration in the Firm’s macroeconomic outlook,
partially offset by a reduction in the allowance related
to a decrease in uncertainty associated with borrower
behavior as the effects of the pandemic gradually
recede, and
– $2.9 billion of net charge-offs.
The prior year provision was a net benefit of $9.3 billion,
reflecting a net reduction to the allowance for credit
losses of $12.1 billion.
• The total allowance for credit losses was $22.2 billion at
December 31, 2022. The Firm had an allowance for loan
losses to retained loans coverage ratio of 1.81%,
compared with 1.62% in the prior year.
• The Firm’s nonperforming assets totaled $7.2 billion at
December 31, 2022, a net decrease of $1.1 billion,
predominantly driven by lower consumer nonaccrual
loans, reflecting improved credit performance and loan
sales.
• Firmwide average loans of $1.1 trillion were up 6%,
driven by higher loans across the LOBs.
• Firmwide average deposits of $2.5 trillion were up 5%,
reflecting:
– growth in CCB from existing and new accounts, and net
inflows in AWM resulting from the residual effects of
certain government actions, partially offset by the
impact of growth in customer spending in CCB and
migration into investments in AWM, and
– reductions in CIB and CB due to attrition driven by the
rising interest rate environment.
Selected capital and other metrics
• CET1 capital was $219 billion, and the Standardized and
Advanced CET1 ratios were 13.2% and 13.6%,
respectively.
• SLR was 5.6%.
• TBVPS grew by 2%, ending 2022 at $73.12.
JPMorgan Chase & Co./2022 Form 10-K
47
Credit provided and capital raised
JPMorgan Chase continues to support consumers,
businesses and communities around the globe. The Firm
provided new and renewed credit and raised capital for
wholesale and consumer clients during 2022, consisting of:
$2.4
trillion
Total credit provided and capital raised
(including loans and commitments)(a)
$250
billion
$33
billion
$1.1
trillion
Credit for consumers
Credit for U.S. small businesses
Credit for corporations
$1.0
trillion
Capital raised for corporate clients and
non-U.S. government entities
$65
billion
Credit and capital raised for nonprofit and
U.S. government entities(a)
(a) Includes states, municipalities, hospitals and universities.
Management’s discussion and analysis
• As of December 31, 2022, the Firm had average eligible
High Quality Liquid Assets (“HQLA”) of approximately
$733 billion and unencumbered marketable securities
with a fair value of approximately $694 billion, resulting
in approximately $1.4 trillion of liquidity sources. Refer
to Liquidity Risk Management on pages 97-104 for
additional information.
Refer to Consolidated Result of Operations and
Consolidated Balance Sheets Analysis on pages 51-54 and
pages 55-56, respectively, for a further discussion of the
Firm's results.
Pre-provision profit, ROTCE, TCE, TBVPS, NII and NIR
excluding Markets, and total net revenue on a managed
basis are non-GAAP financial measures. Refer to
Explanation and Reconciliation of the Firm’s Use of Non-
GAAP Financial Measures on pages 58-60 for a further
discussion of each of these measures.
Business segment highlights
Selected business metrics for each of the Firm’s four LOBs
are presented below for the full year of 2022.
• Average deposits up 10%; client investment
assets down 10%
• Average loans up 1%; Card Services net
charge-off rate of 1.47%
• Debit and credit card sales volume(a) up 14%
• Active mobile customers(b) up 9%
• #1 ranking for Global Investment Banking
fees with 8.0% wallet share for the year
• Total Markets revenue of $29.0 billion, up
6%, with Fixed Income Markets up 10% and
Equity Markets down 2%
• Gross Investment Banking revenue of $3.0
billion, down 42%
• Average deposits down 2%; average loans up
9%
• Assets under management (“AUM”) of $2.8
trillion, down 11%
• Average deposits up 14%; average loans up
9%
CCB
ROE
29%
CIB
ROE
14%
CB
ROE
16%
AWM
ROE
25%
(a) Excludes Commercial Card.
(b) Users of all mobile platforms who have logged in within the past 90
days.
Refer to the Business Segment Results on pages 61-62 for a
detailed discussion of results by business segment.
48
JPMorgan Chase & Co./2022 Form 10-K
Recent events
• On January 20, 2023, JPMorgan Chase announced that
J.P. Morgan Asset Management had received regulatory
approval from the China Securities Regulatory
Commission to complete its acquisition of China
International Fund Management Co., Ltd.
• On January 17, 2023, JPMorgan Chase announced that
Alicia Boler Davis had been elected as a director of the
Firm, effective March 20, 2023. Ms. Davis serves as Chief
Executive Officer of Alto Pharmacy.
Outlook
These current expectations are forward-looking statements
within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements are based on
the current beliefs and expectations of JPMorgan Chase’s
management, speak only as of the date of this Form 10-K,
and are subject to significant risks and uncertainties. Refer to
Forward-Looking Statements on page 154, and the Risk
Factors section on pages 9-32 of this Form 10-K for a further
discussion of certain of those risks and uncertainties and the
other factors that could cause JPMorgan Chase’s actual
results to differ materially because of those risks and
uncertainties. There is no assurance that actual results in
2023 will be in line with the outlook information set forth
below, and the Firm does not undertake to update any
forward-looking statements.
JPMorgan Chase’s current outlook for full-year 2023 should
be viewed against the backdrop of the global and U.S.
economies, financial markets activity, the geopolitical
environment, the competitive environment, client and
customer activity levels, and regulatory and legislative
developments in the U.S. and other countries where the
Firm does business. Each of these factors will affect the
performance of the Firm. The Firm will continue to make
appropriate adjustments to its businesses and operations in
response to ongoing developments in the business,
economic, regulatory and legal environments in which it
operates.
Full-year 2023
• Management expects net interest income to be
approximately $73 billion, market dependent.
• Management expects net interest income excluding
Markets to be approximately $74 billion, market
dependent.
• Management expects adjusted expense to be
approximately $81 billion, market dependent.
• Management expects the net charge-off rate in Card
Services to be approximately 2.6%.
Net interest income excluding Markets and adjusted
expense are non-GAAP financial measures. Refer to
Explanation and Reconciliation of the Firm’s Use of Non-
GAAP Financial Measures on pages 58-60.
JPMorgan Chase & Co./2022 Form 10-K
49
Management’s discussion and analysis
Business Developments
War in Ukraine
The duration and potential outcomes of the war in Ukraine
remain uncertain. The Firm has taken and continues to take
steps to close positions and reduce certain of its business
activities and exposures connected with the war, and to
assist clients with fulfilling any pre-existing obligations and
managing their Russia-related risks.
The Firm’s exposure to Russia and Russia-associated clients
and counterparties is not material to its financial condition
or results of operations. However, the Firm continues to
monitor potential secondary impacts of the war, including
increased market volatility, inflationary pressures and the
effects of financial and economic sanctions imposed by
various governments, that could have adverse effects on the
Firm’s businesses.
The Firm also continues to monitor and manage the
operational risks associated with the war, including
compliance with the financial and economic sanctions and
the increased risk of cyber attacks.
Refer to Wholesale Credit Portfolio on pages 116-126,
Allowance for Credit Losses on pages 127-129, Market Risk
Management on pages 131-138, Country Risk Management
on pages 139-140 and Operational Risk Management on
pages 142-144 for additional information.
For purposes of this Form 10-K, “Russia” refers to exposure
to clients and counterparties of the Firm for which the
largest proportion of their assets is located, or the largest
proportion of their revenue is derived, in Russia, based on
the Firm’s internal country risk management framework; and
“Russia-associated” refers to exposure to clients and
counterparties of the Firm with respect to which economic or
financial sanctions relating to the war in Ukraine have been
imposed or which have close association with Russia.
Interbank Offered Rate (“IBOR”) transition
The Firm and other market participants are preparing for the
final stages of the transition from the use of the London
Interbank Offered Rate (“LIBOR”) and other IBORs in
accordance with the International Organization of Securities
Commission’s standards for transaction-based benchmark
rates. The cessation of the publication of the remaining
principal tenors of U.S. dollar LIBOR (i.e., overnight, one-
month, three-month, six-month and 12-month LIBOR)
(“LIBOR Cessation”) is scheduled for June 30, 2023.
As of December 31, 2022, the Firm had significantly reduced
the notional amount of its exposure to contracts that
reference U.S. dollar LIBOR, including in derivatives, bilateral
and syndicated loans, securities, and debt and preferred
stock issuances, and is on-track to meet both its internal
milestones for contract remediation as well as the industry
milestones and recommendations published by National
Working Groups, including the Alternative Reference Rates
Committee in the U.S. The Firm also continues to engage
with clients to assist them with transitioning their U.S. dollar
LIBOR-linked contracts to replacement rates in anticipation
of LIBOR Cessation. The majority of the Firm’s remaining
LIBOR exposure is to derivative contracts. The Firm will be
participating in initiatives by the principal central
counterparties (“CCPs”) to convert cleared derivatives
contracts linked to U.S. dollar LIBOR in the second quarter of
2023 which will remediate approximately 40% of the Firm’s
remaining U.S. dollar LIBOR derivatives exposure. The Firm
expects that the majority of the remaining derivatives
exposure will be remediated predominantly through
contractual fallback provisions.
On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act
(“LIBOR Act”) was signed into law in the U.S. The LIBOR Act
provides a framework for replacing U.S. dollar LIBOR as the
reference rate in legacy financial contracts that may not
otherwise transition to a replacement rate upon LIBOR
Cessation. In addition, the U.K. Financial Conduct Authority is
proposing that the administrator of LIBOR be required to
continue to publish the one-month, three-month and six-
month tenors of U.S. dollar LIBOR on a “synthetic” basis
which would allow market participants to use such rates
through September 30, 2024. This proposal would apply to
contracts that are outside the scope of the LIBOR Act,
including U.S. dollar LIBOR-linked contracts that are not
governed by U.S. law. Both the LIBOR Act and the proposed
publication of “synthetic” LIBOR are intended to facilitate,
and reduce the risks associated with, the transition from
LIBOR, including the potential for disputes or litigation.
The Firm continues to make necessary changes to its risk
management systems in connection with the transition from
LIBOR, including modifications to its operational systems and
models. In addition, the Firm continues to monitor and
evaluate client, industry, market, regulatory and legislative
developments relating to the transition from LIBOR. Refer to
Part 1, Item 1A: Risk Factors on pages 9-32 of the 2022
Form 10-K and to Accounting and Reporting Developments
on page 153 for additional information.
50
JPMorgan Chase & Co./2022 Form 10-K
CONSOLIDATED RESULTS OF OPERATIONS
This section provides a comparative discussion of JPMorgan
Chase’s Consolidated Results of Operations on a reported
basis for the two-year period ended December 31, 2022,
unless otherwise specified. Refer to Consolidated Results of
Operations on pages 52-54 of the Firm’s Annual Report on
Form 10-K for the year ended December 31, 2021 (the
“2021 Form 10-K”) for a discussion of the 2021 versus 2020
results. Factors that relate primarily to a single business
segment are discussed in more detail within that business
segment’s results. Refer to pages 149-152 for a discussion of
the Critical Accounting Estimates Used by the Firm that affect
the Consolidated Results of Operations.
Revenue
Year ended December 31,
(in millions)
2022
2021
2020
Investment banking fees
$
6,686 $ 13,216 $
9,486
Principal transactions
19,912
16,304
18,021
Lending- and deposit-related fees
Asset management, administration
and commissions
7,098
7,032
6,511
20,677
21,029
18,177
Investment securities gains/(losses)
(2,380)
(345)
Mortgage fees and related income
Card income
Other income(a)
Noninterest revenue
Net interest income
Total net revenue
1,250
4,420
4,322
61,985
66,710
2,170
5,102
4,830
69,338
52,311
802
3,091
4,435
4,865
65,388
54,563
$ 128,695 $ 121,649 $ 119,951
(a) Included operating lease income of $3.7 billion, $4.9 billion and $5.5
billion for the years ended December 31, 2022, 2021 and 2020,
respectively. Also includes losses on tax-oriented investments. Refer to
Note 6 for additional information.
2022 compared with 2021
Investment banking fees decreased in CIB, as volatile
market conditions resulted in:
• lower equity and debt underwriting fees due to lower
issuance activity, and
• lower advisory fees driven by a lower level of announced
deals.
Refer to CIB segment results on pages 67-72 and Note 6 for
additional information.
Principal transactions revenue increased, reflecting:
• higher net revenue in Fixed Income Markets, driven by a
strong performance in the macro businesses amid volatile
market conditions, particularly Currencies & Emerging
Markets and Rates, partially offset by lower revenue in
Securitized Products and Credit, and
• higher revenue associated with Equity Derivatives and
Prime Finance in Equity Markets,
largely offset by
• a loss of $836 million in Credit Adjustments & Other in
CIB, compared with a gain of $250 million in the prior
year. The loss in the current year reflected funding
spread widening and, to a lesser extent, losses on
exposures relating to commodities and Russia and Russia-
associated counterparties,
• net markdowns recorded in the second quarter of 2022
on held-for-sale positions, primarily unfunded
commitments, in the bridge financing portfolio in CIB and
CB,
• higher net losses on certain legacy private equity
investments in Corporate, and
• net losses in Treasury and CIO related to cash deployment
transactions, which were more than offset by the related
net interest income earned on those transactions.
Principal transactions revenue in CIB may in certain cases
have offsets across other revenue lines, including net
interest income. The Firm assesses the performance of its
CIB Markets business on a total revenue basis.
Refer to CIB, CB and Corporate segment results on pages
67-72, pages 73-75 and pages 79-80, respectively, and
Note 6 for additional information.
Lending- and deposit-related fees increased due to higher
service fee volume in CCB, predominantly offset by lower
cash management fees in CB and CIB due to a higher level
of credits earned by clients and applied against such fees.
Refer to CCB, CIB and CB segment results on pages 63-66,
pages 67-72 and pages 73-75, respectively, and Note 6 for
additional information.
Asset management, administration and commissions
revenue decreased driven by:
• lower asset management fees in AWM resulting from
lower average market levels, predominantly offset by the
removal of most money market fund fee waivers, and net
long-term inflows,
• lower custody fees in Securities Services, primarily
associated with lower average market values of assets
under custody, and
• lower brokerage commissions, largely in AWM, reflecting
reduced volumes,
partially offset by
• higher commissions on travel-related services and
annuity sales in CCB.
Refer to CCB, CIB and AWM segment results on pages
63-66, pages 67-72 and pages 76-78, respectively, and
Note 6 for additional information.
JPMorgan Chase & Co./2022 Form 10-K
51
Net interest income increased driven by higher rates and
loan growth, partially offset by lower Markets NII.
The Firm’s average interest-earning assets were $3.3
trillion, up $133 billion, and the yield was 2.78%, up 97
basis points (“bps”). The net yield on these assets, on an
FTE basis, was 2.00%, an increase of 36 bps. The net yield
excluding Markets was 2.60%, up 69 bps.
Refer to the Consolidated average balance sheets, interest
and rates schedule on pages 292-296 for further
information. Net yield excluding Markets is a non-GAAP
financial measure. Refer to Explanation and Reconciliation
of the Firm’s Use of Non-GAAP Financial Measures on pages
58-60 for a further discussion of Net yield excluding
Markets.
Management’s discussion and analysis
Investment securities gains/(losses) reflected higher net
losses on sales of U.S. GSE and government agency MBS and
U.S. Treasuries, associated with repositioning the
investment securities portfolio in Treasury and CIO. Refer to
Corporate segment results on pages 79-80 and Note 10 for
additional information.
Mortgage fees and related income decreased driven by
Home Lending, reflecting:
• lower production revenue due to lower margins and
volume,
largely offset by
• higher net mortgage servicing revenue, reflecting
– the absence of a net loss in MSR risk management in
the prior year primarily driven by updates to model
inputs related to prepayment expectations, and
– higher operating revenue due to a higher level of third-
party loans serviced.
Refer to CCB segment results on pages 63-66, Note 6 and
15 for further information.
Card income decreased driven by higher amortization
related to new account origination costs, partially offset by
higher annual fees in CCB, and higher payments revenue on
volume growth in commercial cards in CIB and CB.
Refer to CCB, CIB and CB segment results on pages 63-66,
pages 67-72 and pages 73-75, respectively, and Note 6 for
further information.
Other income decreased reflecting:
• lower auto operating lease income in CCB as a result of a
decline in volume, and
• net losses on certain investments in CIB and AWM,
compared with net gains in the prior year,
partially offset by
• an increase in Other Corporate from:
– a gain of $914M on the sale of Visa B shares,
– higher net gains related to certain other investments,
and
– proceeds from an insurance settlement in the first
quarter of 2022,
• a gain on an equity-method investment received in partial
satisfaction of a loan in CB,
• the impact of movements in foreign exchange rates
related to net investment hedges in Treasury and CIO,
primarily as a result of the strengthening of the U.S.
dollar, and
• the absence of weather-related write-downs recorded in
the prior year on certain renewable energy investments
in CIB.
Refer to Note 2 for additional information on Visa B shares.
52
JPMorgan Chase & Co./2022 Form 10-K
Net charge-offs were $2.9 billion, flat compared with 2021,
and included:
• a $309 million decrease in Card Services, reflecting the
ongoing financial strength of U.S. consumers. However,
median deposit balances declined in the second half of
2022, impacted by the growth in consumer spending,
offset by
• a $190 million increase in net charge-offs in Auto and
Banking & Wealth Management (“BWM”) as net charge-
offs in the prior year benefited from government stimulus
and payment assistance programs, and an increase of
$76 million in CIB.
Refer to the segment discussions of CCB on pages 63-66,
CIB on pages 67-72, CB on pages 73-75, AWM on pages
76-78, the Allowance for Credit Losses on pages 127-129,
and Notes 1, 10 and 13 for further discussion of the credit
portfolio and the allowance for credit losses.
Provision for credit losses
Year ended December 31,
(in millions)
2022
2021
2020
Consumer, excluding credit card
$
506 $ (1,933) $ 1,016
Credit card
Total consumer
Wholesale
Investment securities
3,353
3,859
2,476
54
(4,838)
10,886
(6,771)
11,902
(2,449)
5,510
(36)
68
Total provision for credit losses
$ 6,389 $ (9,256) $ 17,480
2022 compared with 2021
The provision for credit losses was $6.4 billion, reflecting a
net addition of $3.5 billion to the allowance for credit
losses and $2.9 billion of net charge-offs. The net addition
to the allowance for credit losses consisted of:
• $2.3 billion in wholesale, driven by deterioration in the
Firm’s macroeconomic outlook, and loan growth
predominantly in CB and CIB, and
• $1.2 billion in consumer, predominantly driven by Card
Services, reflecting higher outstanding balances and
deterioration in the Firm’s macroeconomic outlook,
partially offset by a reduction in the allowance related to
a decrease in uncertainty associated with borrower
behavior as the effects of the pandemic gradually recede.
The prior year included a $12.1 billion net reduction in the
allowance for credit losses.
Deterioration in the Firm’s macroeconomic outlook included
both updates to the central scenario in the fourth quarter of
2022, which now reflects a mild recession, as well as the
impact of the increased weight placed on the adverse
scenarios beginning in the first quarter of 2022 due to the
effects associated with higher inflation, changes in
monetary policy, and geopolitical risks, including the war in
Ukraine.
JPMorgan Chase & Co./2022 Form 10-K
53
Management’s discussion and analysis
Noninterest expense
Year ended December 31,
(in millions)
2022
2021
2020
Income tax expense
Year ended December 31,
(in millions, except rate)
Compensation expense
$ 41,636 $ 38,567 $ 34,988
Income before income tax
expense
Income tax expense
Effective tax rate
2022
2021
2020
$ 46,166
$ 59,562
$ 35,815
8,490
11,228
6,684
18.4 %
18.9 %
18.7 %
2022 compared with 2021
The effective tax rate decreased driven by income tax
benefits compared with income tax expense in the prior
year related to tax audit settlements, largely offset by other
tax adjustments and a change in the level and mix of
income and expenses subject to U.S. federal and state and
local taxes. Refer to Note 25 for further information.
Noncompensation expense:
Occupancy
Technology, communications and
equipment(a)
Professional and outside services
Marketing
Other(b)
4,696
4,516
4,449
9,358
9,941
10,338
10,174
3,911
6,365
9,814
3,036
5,469
8,464
2,476
5,941
Total noncompensation expense
34,504
32,776
31,668
Total noninterest expense
$ 76,140 $ 71,343 $ 66,656
(a) Includes depreciation expense associated with auto operating lease
assets.
(b) Included Firmwide legal expense of $266 million, $426 million and
$1.1 billion for the years ended December 31, 2022, 2021 and 2020,
respectively.
2022 compared with 2021
Compensation expense increased driven by additional
headcount, primarily in technology and operations, as well
as front office, and the impact of inflation, partially offset
by lower revenue-related compensation in CIB.
Noncompensation expense increased as a result of:
• higher investments in the business, including marketing
and technology, and
• higher structural expense, including travel and
entertainment; regulatory assessments; occupancy
expense associated with higher utilities and exit costs of
certain leases; and other employee-related expense,
partially offset by
• lower volume-related expense, reflecting lower
depreciation expense on lower Auto lease assets; and
lower distribution fees in AWM, partially offset by higher
operating losses and outside services, both in CCB; and
• lower legal expense.
The prior year included a $550 million contribution to the
Firm's Foundation.
54
JPMorgan Chase & Co./2022 Form 10-K
CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Consolidated balance sheets analysis
The following is a discussion of the significant changes between December 31, 2022 and 2021.
Selected Consolidated balance sheets data
December 31, (in millions)
Assets
Cash and due from banks
Deposits with banks
Federal funds sold and securities purchased under resale agreements
Securities borrowed
Trading assets
Available-for-sale securities
Held-to-maturity securities
Investment securities, net of allowance for credit losses
Loans
Allowance for loan losses
Loans, net of allowance for loan losses
Accrued interest and accounts receivable
Premises and equipment
Goodwill, MSRs and other intangible assets
Other assets
Total assets
Cash and due from banks and deposits with banks
decreased primarily as a result of lower deposits across the
LOBs and loan growth. Deposits with banks reflect the Firm’s
placement of its excess cash with various central banks,
including the Federal Reserve Banks.
Federal funds sold and securities purchased under resale
agreements increased, reflecting:
• the impact of a lower level of netting on client-driven
market-making activities and on collateral requirements in
Markets,
• higher demand for securities to cover short positions in
Fixed Income Markets, and
• an increase in the deployment of cash in Treasury and CIO.
Securities borrowed decreased driven by Markets, reflecting
lower client-driven activities and lower demand for securities
to cover short positions in Equity Markets.
Refer to Note 11 for additional information on securities
purchased under resale agreements and securities borrowed.
Trading assets increased due to:
• higher derivative receivables, primarily in foreign
exchange, as a result of market movements, and
• an increase in the deployment of cash in Treasury and CIO.
Refer to Notes 2 and 5 for additional information.
Investment securities decreased, driven by lower available-
for-sale (“AFS”) securities, partially offset by higher held-to-
maturity (“HTM”) securities, which includes the impact of the
transfer of $78.3 billion of securities from AFS to HTM in
2022, for capital management purposes.
• The decrease in AFS securities was also due to paydowns,
as well as unrealized losses, which are recognized in
accumulated other comprehensive income (“AOCI”),
2022
2021
Change
$
27,697
$
26,438
5 %
539,537
315,592
185,369
453,799
205,857
425,305
631,162
714,396
261,698
206,071
433,575
308,525
363,707
672,232
1,135,647
1,077,714
(19,726)
(16,386)
1,115,921
1,061,328
125,189
27,734
60,859
182,884
102,570
27,070
56,691
181,498
(24)
21
(10)
5
(33)
17
(6)
5
20
5
22
2
7
1
$ 3,665,743
$ 3,743,567
(2) %
largely offset by net purchases, and
• the increase in HTM securities also reflected purchases
partially offset by paydowns.
Refer to Corporate segment results on pages 79-80,
Investment Portfolio Risk Management on page 130 and
Notes 2 and 10 for additional information on investment
securities.
Loans increased, reflecting:
• higher balances in Card Services driven by higher
consumer spending and net new originations,
• higher originations and revolver utilization in CB, and
• higher wholesale loans in CIB,
partially offset by
• lower mortgage warehouse loans in Home Lending as sales
outpaced originations due to higher interest rates, and
• the impact from PPP loan forgiveness in BWM.
The allowance for loan losses increased, reflecting a net
addition of $3.3 billion to the allowance for loan losses,
consisting of:
• $2.1 billion in wholesale, resulting from deterioration in
the Firm’s macroeconomic outlook, and loan growth
predominantly in CB and CIB, and
• $1.2 billion in consumer, predominantly driven by Card
Services, reflecting higher outstanding balances, and
deterioration in the Firm’s macroeconomic outlook,
partially offset by a reduction in the allowance related to a
decrease in uncertainty associated with borrower behavior
as the effects of the pandemic gradually recede.
There was also a $121 million addition to the allowance for
lending-related commitments recognized in other liabilities
JPMorgan Chase & Co./2022 Form 10-K
55
Management’s discussion and analysis
on the Consolidated balance sheets, and a $54 million
addition to the allowance for investment securities.
Refer to Credit and Investment Risk Management on pages
106-130, and Notes 1, 2, 3, 12 and 13 for further discussion
of loans and the allowance for loan losses.
Accrued interest and accounts receivable increased due to
higher client receivables related to client-driven activities in
Markets, as well as higher receivables in Payments related to
the timing of payment activities, with December 31, 2022
falling on a weekend.
Premises and equipment, refer to Note 16 and 18 for
additional information.
Goodwill, MSRs and other intangibles increased reflecting:
• higher MSRs as a result of higher market interest rates and
net additions, partially offset by the realization of expected
cash flows, and
• additions to goodwill associated with the acquisitions of
Renovite Technologies, Inc. in the fourth quarter of 2022,
Global Shares PLC and Figg, Inc. in the third quarter of
2022, and Frosch Travel Group, LLC and Volkswagen
Payments S.A. in the second quarter of 2022.
Refer to Note 15 for additional information.
Other assets increased predominantly due to the impact of
securities financing activities in Markets, offset by lower auto
operating lease assets in CCB.
Selected Consolidated balance sheets data
December 31, (in millions)
Liabilities
Deposits
Federal funds purchased and securities loaned or sold under repurchase agreements
Short-term borrowings
Trading liabilities
Accounts payable and other liabilities
Beneficial interests issued by consolidated variable interest entities (“VIEs”)
Long-term debt
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Deposits decreased reflecting:
• attrition in CB and CIB, particularly non-operating deposits
in CB, partially offset by net issuances of structured notes
in Markets,
• net outflows into investments in AWM amid the rising
interest rate environment, and
• a decline in balances in existing accounts in CCB due to
higher customer spending, predominantly offset by net
inflows into new accounts.
Federal funds purchased and securities loaned or sold
under repurchase agreements increased due to:
• higher secured financing of trading assets in Markets,
partially offset by
• lower secured financing of AFS investment securities in
Treasury and CIO.
Short-term borrowings decreased predominantly as a result
of lower financing requirements in Markets.
Refer to Liquidity Risk Management on pages 97-104 for
additional information on deposits, federal funds purchased
and securities loaned or sold under repurchase agreements,
and short-term borrowings; and also to Notes 2 and 17 for
deposits and Note 11 for federal funds purchased and
securities loaned or sold under repurchase agreements.
Trading liabilities increased due to client-driven market-
making activities, which resulted in higher levels of short
positions in Markets. Refer to Notes 2 and 5 for additional
information.
2022
2021
Change
$ 2,340,179
$ 2,462,303
202,613
44,027
177,976
300,141
12,610
295,865
194,340
53,594
164,693
262,755
10,750
301,005
3,373,411
3,449,440
292,332
294,127
(5)
4
(18)
8
14
17
(2)
(2)
(1)
$ 3,665,743
$ 3,743,567
(2) %
Accounts payable and other liabilities increased due to
higher client payables related to client-driven activities in
Markets, including Prime Finance, as well as higher payables
in Payments related to the timing of payment activities, with
December 31, 2022 falling on a weekend. Refer to Note 19
for additional information.
Beneficial interests issued by consolidated VIEs increased
driven by higher issuance of commercial paper as a result of
an increase in loan balances in the Firm-administered multi-
seller conduits. Refer to Liquidity Risk Management on pages
97-104; and Notes 14 and 28 for additional information on
Firm-sponsored VIEs and loan securitization trusts.
Long-term debt decreased driven by:
• fair value hedge accounting adjustments in Treasury and
CIO as a result of higher rates, and a decline in the fair
value of structured notes in Markets,
largely offset by
• net issuances of senior debt in Treasury and CIO and
structured notes in Markets. Refer to Liquidity Risk
Management on pages 97-104 and Note 20 for additional
information.
Stockholders’ equity reflects net unrealized losses in AOCI,
predominantly driven by the impact of higher interest rates
on the AFS portfolio and cash flow hedges in Treasury and
CIO. Refer to Consolidated Statements of Changes in
Stockholders’ Equity on page 162, Capital Actions on page
94, and Note 24 for additional information.
56
JPMorgan Chase & Co./2022 Form 10-K
Consolidated cash flows analysis
The following is a discussion of cash flow activities during
the years ended December 31, 2022 and 2021. Refer to
Consolidated cash flows analysis on page 57 of the Firm’s
2021 Form 10-K for a discussion of the 2020 activities.
(in millions)
2022
2021
2020
Year ended December 31,
Net cash provided by/(used in)
Operating activities
Investing activities
Financing activities
Effect of exchange rate
changes on cash
Net increase/(decrease) in
cash and due from banks and
deposits with banks
$ 107,119 $ 78,084 $ (79,910)
(137,819)
(129,344)
(261,912)
(126,257)
275,993
596,645
(16,643)
(11,508)
9,155
$ (173,600) $ 213,225 $ 263,978
Operating activities
JPMorgan Chase’s operating assets and liabilities primarily
support the Firm’s lending and capital markets activities.
These assets and liabilities can vary significantly in the
normal course of business due to the amount and timing of
cash flows, which are affected by client-driven and risk
management activities and market conditions. The Firm
believes that cash flows from operations, available cash and
other liquidity sources, and its capacity to generate cash
through secured and unsecured sources, are sufficient to
meet its operating liquidity needs.
• In 2022, cash provided resulted from higher accounts
payable and other liabilities, lower securities borrowed,
and net proceeds from sales, securitizations, and
paydowns of loans held-for-sale, partially offset by higher
trading assets.
• In 2021, cash provided resulted from lower trading
assets and higher accounts payable and other liabilities,
partially offset by higher securities borrowed and lower
trading liabilities.
Investing activities
The Firm’s investing activities predominantly include
originating held-for-investment loans, investing in the
investment securities portfolio and other short-term
instruments.
• In 2022, cash used resulted from net originations of
loans and higher securities purchased under resale
agreements, partially offset by net proceeds from
investment securities.
• In 2021, cash used resulted from net purchases of
investment securities and higher net originations of
loans, partially offset by lower securities purchased under
resale agreements.
Financing activities
The Firm’s financing activities include acquiring customer
deposits and issuing long-term debt and preferred stock.
• In 2022, cash used reflected lower deposits, partially
offset by net proceeds from long- and short-term
borrowings.
• In 2021, cash provided reflected higher deposits and net
proceeds from long- and short-term borrowings, partially
offset by a decrease in securities loaned or sold under
repurchase agreements.
• For both periods, cash was used for repurchases of
common stock and cash dividends on common and
preferred stock.
* * *
Refer to Consolidated Balance Sheets Analysis on pages
55-56, Capital Risk Management on pages 86-96, and
Liquidity Risk Management on pages 97-104, and the
Consolidated Statements of Cash Flows on page 163 for a
further discussion of the activities affecting the Firm’s cash
flows.
JPMorgan Chase & Co./2022 Form 10-K
57
Management’s discussion and analysis
EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures
The Firm prepares its Consolidated Financial Statements in
accordance with U.S. GAAP; these financial statements
appear on pages 159-163. That presentation, which is
referred to as “reported” basis, provides the reader with an
understanding of the Firm’s results that can be tracked
consistently from year-to-year and enables a comparison of
the Firm’s performance with the U.S. GAAP financial
statements of other companies.
In addition to analyzing the Firm’s results on a reported
basis, management reviews Firmwide results, including the
overhead ratio, on a “managed” basis; these Firmwide
managed basis results are non-GAAP financial measures.
The Firm also reviews the results of the LOBs on a managed
basis. The Firm’s definition of managed basis starts, in each
case, with the reported U.S. GAAP results and includes
certain reclassifications to present total net revenue for the
Firm (and each of the reportable business segments) on an
FTE basis. Accordingly, revenue from investments that
receive tax credits and tax-exempt securities is presented in
the managed results on a basis comparable to taxable
investments and securities. These financial measures allow
management to assess the comparability of revenue from
year-to-year arising from both taxable and tax-exempt
sources. The corresponding income tax impact related to
tax-exempt items is recorded within income tax expense.
These adjustments have no impact on net income as
reported by the Firm as a whole or by the LOBs.
Management also uses certain non-GAAP financial
measures at the Firm and business-segment level because
these other non-GAAP financial measures provide
information to investors about the underlying operational
performance and trends of the Firm or of the particular
business segment, as the case may be, and therefore
facilitate a comparison of the Firm or the business segment
with the performance of its relevant competitors. Refer to
Business Segment Results on pages 61-80 for additional
information on these non-GAAP measures. Non-GAAP
financial measures used by the Firm may not be
comparable to similarly named non-GAAP financial
measures used by other companies.
The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
2022
2021
2020
Year ended
December 31,
(in millions, except ratios)
Fully taxable-
equivalent
adjustments(a)
Managed
basis
Reported
Fully taxable-
equivalent
adjustments(a)
Managed
basis
Fully taxable-
equivalent
adjustments(a)
Managed
basis
Reported
Reported
Other income
$ 4,322
$
3,148
$ 7,470
$ 4,830
$
3,225
$ 8,055
$ 4,865
$
2,560 $ 7,425
Total noninterest revenue
Net interest income
Total net revenue
Total noninterest expense
Pre-provision profit
Provision for credit losses
61,985
66,710
128,695
76,140
52,555
6,389
3,148
65,133
69,338
3,225
72,563
65,388
434
67,144
52,311
430
52,741
54,563
3,582
132,277
121,649
3,655
125,304
119,951
NA 76,140
71,343
NA 71,343
66,656
2,560
67,948
418
54,981
2,978
122,929
NA 66,656
3,582
56,137
50,306
3,655
53,961
53,295
2,978
56,273
NA 6,389
(9,256)
NA (9,256)
17,480
Income before income tax expense
46,166
3,582
49,748
59,562
3,655
63,217
35,815
Income tax expense
Net income
Overhead ratio
8,490
$ 37,676
3,582
12,072
11,228
3,655
14,883
6,684
NA $ 37,676
$ 48,334
NA $ 48,334
$ 29,131
59 %
NM
58 %
59 %
NM
57 %
56 %
NM
54 %
NA 17,480
2,978
38,793
2,978
9,662
NA $ 29,131
(a) Predominantly recognized in CIB, CB and Corporate.
58
JPMorgan Chase & Co./2022 Form 10-K
Net interest income, net yield, and noninterest revenue
excluding CIB Markets
In addition to reviewing net interest income, net yield, and
noninterest revenue on a managed basis, management also
reviews these metrics excluding CIB Markets, as shown
below. CIB Markets consists of Fixed Income Markets and
Equity Markets. These metrics, which exclude CIB Markets,
are non-GAAP financial measures. Management reviews
these metrics to assess the performance of the Firm’s
lending, investing (including asset-liability management)
and deposit-raising activities, apart from any volatility
associated with CIB Markets activities. In addition,
management also assesses CIB Markets business
performance on a total revenue basis as offsets may occur
across revenue lines. Management believes that these
measures provide investors and analysts with alternative
measures to analyze the revenue trends of the Firm.
Calculation of certain U.S. GAAP and non-GAAP financial measures
Certain U.S. GAAP and non-GAAP financial measures are calculated as
follows:
Book value per share (“BVPS”)
Common stockholders’ equity at period-end /
Common shares at period-end
Overhead ratio
Total noninterest expense / Total net revenue
ROA
Reported net income / Total average assets
ROE
Net income* / Average common stockholders’ equity
ROTCE
Net income* / Average tangible common equity
TBVPS
Tangible common equity at period-end / Common shares at period-end
* Represents net income applicable to common equity
In addition, the Firm reviews other non-GAAP measures
such as
• Adjusted expense, which represents noninterest expense
excluding Firmwide legal expense, and
Year ended December 31,
(in millions, except rates)
Net interest income –
reported
Fully taxable-equivalent
adjustments
Net interest income –
managed basis(a)
Less: Markets net interest
income(b)
Net interest income
excluding Markets(a)
Average interest-earning
assets
Less: Average Markets
interest-earning assets(b)
Average interest-earning
assets excluding Markets
Net yield on average
interest-earning assets –
managed basis
Net yield on average
Markets interest-earning
assets(b)
Net yield on average
interest-earning assets
excluding Markets
Noninterest revenue –
reported
Fully taxable-equivalent
adjustments
Noninterest revenue –
managed basis
Less: Markets noninterest
revenue(b)
Noninterest revenue
excluding Markets
Memo: Total Markets net
revenue(b)
2022
2021
2020
$ 66,710
$ 52,311
$ 54,563
• Pre-provision profit, which represents total net revenue
less total noninterest expense.
Management believes that these measures help investors
understand the effect of these items on reported results
and provide an alternative presentation of the Firm’s
performance.
The Firm also reviews the allowance for loan losses to
period-end loans retained excluding trade finance and
conduits, a non-GAAP financial measure, to provide a more
meaningful assessment of CIB’s allowance coverage ratio.
434
430
418
$ 67,144
$ 52,741
$ 54,981
4,789
8,243
8,374
$ 62,355
$ 44,498
$ 46,607
$ 3,349,079 $ 3,215,942 $ 2,779,710
953,195
888,238
751,131
$ 2,395,884 $ 2,327,704 $ 2,028,579
2.00 %
1.64 %
1.98 %
0.50
0.93
1.11
2.60 %
1.91 %
2.30 %
$
61,985 $
69,338 $
65,388
3,148
3,225
2,560
$
65,133 $
72,563
67,948
24,195
19,151
21,109
$
40,938 $
53,412 $
46,839
$
28,984 $
27,394 $
29,483
(a) Interest includes the effect of related hedges. Taxable-equivalent
amounts are used where applicable.
(b) Refer to pages 70-71 for further information on CIB Markets.
JPMorgan Chase & Co./2022 Form 10-K
59
Management’s discussion and analysis
TCE, ROTCE and TBVPS
TCE, ROTCE and TBVPS are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e.,
total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related
deferred tax liabilities. ROTCE measures the Firm’s net income applicable to common equity as a percentage of average TCE.
TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. TCE, ROTCE and TBVPS are utilized by
the Firm, as well as investors and analysts, in assessing the Firm’s use of equity.
The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
(in millions, except per share and ratio data)
Common stockholders’ equity
Less: Goodwill
Less: Other intangible assets
Add: Certain deferred tax liabilities(a)
Tangible common equity
Return on tangible common equity
Tangible book value per share
Period-end
Average
Dec 31,
2022
Dec 31,
2021
Year ended December 31,
2022
2021
2020
$ 264,928 $ 259,289
$ 253,068
$ 250,968
$ 236,865
51,662
50,315
50,952
49,584
47,820
1,224
2,510
882
2,499
1,112
2,505
876
2,474
781
2,399
$ 214,552 $ 210,591
$ 203,509
$ 202,982
$ 190,663
NA
NA
$
73.12 $
71.53
18 %
NA
23 %
NA
14 %
NA
(a) Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted
against goodwill and other intangibles when calculating TCE.
60
JPMorgan Chase & Co./2022 Form 10-K
BUSINESS SEGMENT RESULTS
The Firm is managed on an LOB basis. There are four major reportable business segments – Consumer & Community Banking,
Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate
segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they
reflect the manner in which financial information is evaluated by the Firm’s Operating Committee. Segment results are
presented on a managed basis. Refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures, on
pages 58-60 for a definition of managed basis.
Consumer Businesses
Wholesale Businesses
JPMorgan Chase
Consumer & Community Banking
Corporate & Investment Bank
Commercial
Banking
Asset & Wealth
Management
Banking &
Wealth Management(a)
Home Lending
Card Services &
Auto(b)
Banking
Markets &
Securities Services
• Consumer
Banking
• J.P. Morgan
Wealth
Management
• Business
Banking
• Home
Lending
Production
• Home
Lending
Servicing
• Real Estate
Portfolios
• Card Services
• Auto
• Investment
Banking
• Payments
• Lending
• Fixed
Income
Markets
• Equity
Markets
• Securities
Services
• Credit
Adjustments
& Other
• Asset
Management
• Global
Private Bank
• Middle
Market
Banking
• Corporate
Client
Banking
• Commercial
Real Estate
Banking
(a) In the fourth quarter of 2022, Consumer & Business Banking was renamed Banking & Wealth Management (“BWM”).
(b) In the fourth quarter of 2022, Card & Auto was renamed Card Services & Auto.
Description of business segment reporting methodology
Results of the business segments are intended to present
each segment as if it were a stand-alone business. The
management reporting process that derives business
segment results includes the allocation of certain income
and expense items. The Firm also assesses the level of
capital required for each LOB on at least an annual basis.
The Firm periodically assesses the assumptions,
methodologies and reporting classifications used for
segment reporting, and further refinements may be
implemented in future periods. The Firm’s LOBs also
provide various business metrics which are utilized by the
Firm and its investors and analysts in assessing
performance.
Revenue sharing
When business segments join efforts to sell products and
services to the Firm’s clients and customers, the
participating business segments may agree to share
revenue from those transactions. Revenue is generally
recognized in the segment responsible for the related
product or service, with allocations to the other segment(s)
involved in the transaction. The segment results reflect
these revenue-sharing agreements.
Expense Allocation
Where business segments use services provided by
corporate support units, or another business segment, the
costs of those services are allocated to the respective
business segments. The expense is generally
allocated based on the actual cost and use of services
provided. In contrast, certain costs and investments related
to corporate support units, technology and operations that
are not currently utilized by any LOB, are not allocated to
the business segments and are retained in Corporate.
Expense retained in Corporate generally includes costs that
would not be incurred if the segments were stand-alone
businesses, and other items not aligned with a particular
business segment.
Funds transfer pricing
Funds transfer pricing (“FTP”) is the process by which the
Firm allocates interest income and expense to the LOBs and
Other Corporate and transfers the primary interest rate risk
and liquidity risk to Treasury and CIO.
The funds transfer pricing process considers the interest
rate and liquidity risk characteristics of assets and liabilities
and off-balance sheet products. Periodically, the
methodology and assumptions utilized in the FTP process
are adjusted to reflect economic conditions and other
factors, which may impact the allocation of net interest
income to the segments.
As a result of the rising interest rate environment, the cost
of funds for assets and the credits earned for liabilities have
generally increased, impacting the business segments’ net
interest income. During the period ended December 31,
2022, this has resulted in higher cost of funds for loans and
contributed to margin expansion on deposits.
JPMorgan Chase & Co./2022 Form 10-K
61
Management’s discussion and analysis
Foreign exchange risk
Foreign exchange risk is transferred from the LOBs and
Other Corporate to Treasury and CIO for certain revenues
and expenses. Treasury and CIO manages these risks
centrally and reports the impact of foreign exchange rate
movements related to the transferred risk in its results.
Refer to Market Risk Management on page 137 for
additional information.
Debt expense and preferred stock dividend allocation
As part of the funds transfer pricing process, almost all of
the cost of the credit spread component of outstanding
unsecured long-term debt and preferred stock dividends is
allocated to the reportable business segments, while the
balance of the cost is retained in Corporate. The
methodology to allocate the cost of unsecured long-term
debt and preferred stock dividends to the business
segments is aligned with the relevant regulatory capital
requirements and funding needs of the LOBs, as applicable.
The allocated cost of unsecured long-term debt is included
in a business segment’s net interest income, and net income
is reduced by preferred stock dividends to arrive at a
business segment’s net income applicable to common
equity.
Refer to Capital Risk Management on pages 86-96 for
additional information.
Capital allocation
The amount of capital assigned to each business segment is
referred to as equity. The Firm’s allocation methodology
incorporates Basel III Standardized Risk-weighted assets
(“RWA”), Basel III Advanced RWA, the global systemically
important banks (“GSIB”) surcharge, and a simulation of
capital in a severe stress environment. At least annually,
the assumptions, judgments and methodologies used to
allocate capital are reassessed and, as a result, the capital
allocated to the LOBs may change. As of January 1, 2023,
the Firm has changed its line of business capital allocations
primarily as a result of updates to the Firm’s capital
requirements and changes in RWA for each LOB.
Refer to Line of business equity on page 93 for additional
information on capital allocation.
Segment Results – Managed Basis
The following tables summarize the Firm’s results by segment for the periods indicated.
Year ended December 31,
Consumer & Community Banking
Corporate & Investment Bank
Commercial Banking
(in millions, except ratios)
2022
2021
2020
2022
2021
2020
2022
2021
2020
Total net revenue
$ 55,017 $ 50,073 $ 51,268
$ 47,899
$ 51,749 $ 49,284
$ 11,533
$ 10,008 $ 9,313
Total noninterest expense
31,471
29,256
27,990
27,087
25,325
23,538
Pre-provision profit/(loss)
23,546
20,817
23,278
20,812
26,424
25,746
Provision for credit losses
3,813
(6,989)
12,312
1,158
(1,174)
2,726
Net income/(loss)
14,871
20,930
8,217
14,970
21,134
17,094
4,719
6,814
1,268
4,213
Return on equity (“ROE”)
29 %
41 %
15 %
14 %
25 %
20 %
16 %
Year ended December 31,
Asset & Wealth Management
Corporate
3,798
5,515
2,113
2,578
11 %
4,041
5,967
(947)
5,246
21 %
Total
(in millions, except ratios)
2022
2021
2020
2022
2021
2020
2022
2021
2020
Total net revenue
$ 17,748
$ 16,957 $ 14,240
$
80 $ (3,483) $ (1,176)
$ 132,277 $ 125,304 $ 122,929
Total noninterest expense
11,829
10,919
Pre-provision profit/(loss)
Provision for credit losses
Net income/(loss)
5,919
128
4,365
6,038
(227)
4,737
Return on equity (“ROE”)
25 %
33 %
9,957
4,283
263
2,992
28 %
1,034
1,802
1,373
76,140
71,343
66,656
(954)
(5,285)
(2,549)
56,137
53,961
56,273
22
81
66
6,389
(9,256)
17,480
(743)
(3,713)
(1,750)
37,676
48,334
29,131
NM
NM
NM
14 %
19 %
12 %
Selected Firmwide Metrics
The following tables present key metrics for Wealth Management, which consists of the Global Private Bank in AWM and J.P.
Morgan Wealth Management in CCB; and total revenue and key metrics for J.P. Morgan Payments, which consists of payments
activities in CIB and CB. This presentation is intended to provide investors with additional information concerning Wealth
Management and J.P. Morgan Payments, each of which consists of similar business activities conducted across LOBs to serve
different types of clients and customers.
Selected metrics - Wealth Management
Selected metrics - J.P. Morgan Payments
Year ended December 31,
Client assets (in billions)(a)
Number of client advisors
2022
2021
2020
(in millions, except where otherwise noted)
$ 2,438 $ 2,456 $ 2,020
Year ended December 31,
8,166
7,463
6,879
Total net revenue
2022
2021
2020
$ 13,909 $ 9,861 $ 9,599
(a) Consists of Global Private Bank in AWM and client investment assets in
J.P. Morgan Wealth Management in CCB.
Merchant processing volume (in billions)
2,158.4
1,886.7
1,597.3
Average deposits (in billions)
779
800
651
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the years ended
December 31, 2022 and 2021.
62
JPMorgan Chase & Co./2022 Form 10-K
CONSUMER & COMMUNITY BANKING
Consumer & Community Banking offers products and
services to consumers and small businesses through
bank branches, ATMs, digital (including mobile and
online) and telephone banking. CCB is organized into
Banking & Wealth Management (including Consumer
Banking, J.P. Morgan Wealth Management and Business
Banking), Home Lending (including Home Lending
Production, Home Lending Servicing and Real Estate
Portfolios) and Card Services & Auto. Banking & Wealth
Management offers deposit, investment and lending
products, cash management, payments and services.
Home Lending includes mortgage origination and
servicing activities, as well as portfolios consisting of
residential mortgages and home equity loans. Card
Services issues credit cards and offers travel services.
Auto originates and services auto loans and leases.
Selected income statement data
Year ended December 31,
(in millions, except ratios)
Revenue
Lending- and deposit-related
fees
Asset management,
administration and
commissions
Mortgage fees and related
income
Card income
All other income(a)
Noninterest revenue
Net interest income
Total net revenue
2022
2021
2020
$ 3,316
$ 3,034
$ 3,166
3,754
3,514
2,780
1,236
2,679
4,104
15,089
39,928
55,017
2,159
3,563
5,016
17,286
32,787
50,073
3,079
3,068
5,647
17,740
33,528
51,268
Provision for credit losses
3,813
(6,989)
12,312
Noninterest expense
Compensation expense
Noncompensation expense(b)
Total noninterest expense
Income before income tax
expense
Income tax expense
Net income
13,092
18,379
31,471
12,142
17,114
29,256
11,014
16,976
27,990
19,733
4,862
$ 14,871
27,806
6,876
$ 20,930
10,966
2,749
$ 8,217
Revenue by line of business
Banking & Wealth Management(c) $ 30,262
3,674
Home Lending
Card Services & Auto(d)
21,081
$ 23,980
5,291
20,802
$ 22,955
6,018
22,295
Mortgage fees and related
income details:
Production revenue
Net mortgage servicing
revenue(e)
Mortgage fees and related
income
Financial ratios
Return on equity
Overhead ratio
497
2,215
2,629
739
(56)
450
$ 1,236
$ 2,159
$ 3,079
29 %
57
41 %
58
15 %
55
(a) Included operating lease income of $3.6 billion, $4.8 billion and $5.4
billion for the years ended December 31, 2022, 2021 and 2020,
respectively.
(b) Included depreciation expense on leased assets of $2.4 billion, $3.3
billion and $4.2 billion for the years ended December 31, 2022, 2021
and 2020, respectively.
(c) In the fourth quarter of 2022, Consumer & Business Banking was
renamed Banking & Wealth Management.
(d) In the fourth quarter of 2022, Card & Auto was renamed Card Services
& Auto.
(e) Included MSR risk management results of $93 million, $(525) million
and $(18) million for the years ended December 31, 2022, 2021 and
2020, respectively.
JPMorgan Chase & Co./2022 Form 10-K
63
Management’s discussion and analysis
2022 compared with 2021
Net income was $14.9 billion, down 29%, reflecting a net
increase in the provision for credit losses compared with a
net benefit in the prior year.
Net revenue was $55.0 billion, an increase of 10%.
Net interest income was $39.9 billion, up 22%,
predominantly driven by:
• margin expansion on higher rates as well as growth in
deposits in Banking & Wealth Management (“BWM”), and
higher revolving loans in Card Services,
partially offset by
• lower NII associated with PPP loan forgiveness in BWM,
and tighter loan spreads in Home Lending.
Noninterest revenue was $15.1 billion, down 13%,
reflecting:
• lower production revenue from lower margins and
volume in Home Lending,
• lower auto operating lease income as a result of a decline
in volume, and
• lower card income reflecting higher amortization related
to new account origination costs partially offset by higher
annual fees in Card Services, while net interchange
income was relatively flat,
partially offset by
• higher net mortgage servicing revenue, reflecting the
absence of a net loss in MSR risk management in the prior
year primarily driven by updates to model inputs related
to prepayment expectations, as well as higher operating
revenue on a higher level of third-party loans serviced,
• higher commissions reflecting travel-related services in
Card Services and increased annuity sales in BWM, and
• higher deposit-related fees due to higher service fee
volume in BWM.
Refer to Note 6 for additional information on card income
and asset management, administration and commissions.
Refer to Note 15 for further information regarding changes
in the value of the MSR asset and related hedges, and
mortgage fees and related income.
Noninterest expense was $31.5 billion, up 8%, reflecting:
• investments in the business and higher structural
expenses, predominantly driven by compensation,
technology and marketing,
partially offset by
• lower volume- and revenue-related expenses,
predominantly driven by lower depreciation expense on
lower auto lease assets, partially offset by higher
operating losses.
The provision for credit losses was $3.8 billion, driven by:
• net charge-offs of $2.7 billion, down from $2.8 billion in
the prior year and included
– a $309 million decrease in Card Services, reflecting the
ongoing financial strength of U.S. consumers. However,
median deposit balances declined in the second half of
2022, impacted by the growth in consumer spending,
largely offset by
– a $190 million increase in net charge-offs in Auto and
BWM as net charge-offs in the prior year benefited
from government stimulus and payment assistance
programs, and
• a $1.1 billion net addition to the allowance for credit
losses driven by
– $950 million in Card Services, reflecting higher
outstanding balances, and deterioration in the Firm’s
macroeconomic outlook, partially offset by a reduction
in the allowance related to a decrease in uncertainty
associated with borrower behavior as the effects of the
pandemic gradually recede, and
– $175 million in Home Lending.
The prior year included a $9.8 billion reduction in the
allowance for credit losses across CCB.
Refer to Credit and Investment Risk Management on pages
106-130 and Allowance for Credit Losses on pages
127-129 for a further discussion of the credit portfolios
and the allowance for credit losses.
64
JPMorgan Chase & Co./2022 Form 10-K
Selected metrics
As of or for the year ended
December 31,
(in millions, except
headcount)
Selected balance sheet data
(period-end)
Total assets
Loans:
Banking & Wealth
Management (a)
Home Lending(b)
Card Services
2022
2021
2020
$ 514,085
$ 500,370
$ 496,705
29,008
35,095
48,810
172,554
180,529
182,121
185,175
154,296
144,216
Auto
68,191
69,138
66,432
Total loans
454,928
439,058
441,579
Deposits
Equity
1,131,611
1,148,110
958,706
50,000
50,000
52,000
Selected balance sheet data
(average)
Total assets
Loans:
Banking & Wealth
Management
Home Lending(c)
Card Services
$ 497,263
$ 489,771
$ 501,584
31,545
44,906
43,064
176,285
181,049
197,148
163,335
140,405
146,633
Auto
68,098
67,624
61,476
Total loans
439,263
433,984
448,321
Deposits
Equity
Headcount
1,162,680
1,054,956
851,390
50,000
50,000
52,000
135,347
128,863
122,894
(a) At December 31, 2022, 2021 and 2020, included $350 million, $5.4
billion and $19.2 billion of loans, respectively, in Business Banking
under the PPP. Refer to Credit Portfolio on pages 108-109 for a
further discussion of the PPP.
(b) At December 31, 2022, 2021 and 2020, Home Lending loans held-
for-sale and loans at fair value were $3.0 billion, $14.9 billion and
$9.7 billion, respectively.
(c) Average Home Lending loans held-for sale and loans at fair value were
$7.3 billion, $15.4 billion and $11.1 billion for the years ended
December 31, 2022, 2021 and 2020, respectively.
Selected metrics
As of or for the year ended
December 31,
(in millions, except ratio data)
Credit data and quality statistics
Nonaccrual loans(a)(b)
Net charge-offs/(recoveries)
2022
2021
2020
$ 3,899
(f) $ 4,875
(f) $ 5,492
Banking & Wealth Management
Home Lending
Card Services
Auto
370
(229)
2,403
144
289
(275)
2,712
35
263
(169)
4,286
123
Total net charge-offs/
(recoveries)
Net charge-off/(recovery) rate
Banking & Wealth Management(c)
Home Lending
Card Services
Auto
Total net charge-off/
(recovery) rate
30+ day delinquency rate
Home Lending(d)(e)
Card Services
Auto
90+ day delinquency rate - Card
Services
Allowance for loan losses
$ 2,688
$ 2,761
$ 4,503
1.17%
0.64%
0.61%
(0.14)
1.47
0.21
(0.17)
1.94
0.05
(0.09)
2.93
0.20
0.62%
0.66%
1.03%
0.83%
1.45
1.01
1.25%
1.04
0.64
1.15%
1.68
0.69
0.68%
0.50%
0.92%
Banking & Wealth Management
Home Lending
Card Services
Auto
$ 722
867
11,200
715
$ 697
660
10,250
733
$ 1,372
1,813
17,800
1,042
Total allowance for loan
losses
$ 13,504
$ 12,340
$ 22,027
(a) At December 31, 2022, 2021 and 2020, nonaccrual loans excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $187 million, $342 million and $558 million,
respectively. These amounts have been excluded based upon the
government guarantee. In addition, the Firm’s policy is generally to
exempt credit card loans from being placed on nonaccrual status as
permitted by regulatory guidance.
(b) At December 31, 2022, 2021 and 2020, generally excludes loans that
were under payment deferral programs offered in response to the
COVID-19 pandemic. Refer to Credit Portfolio on pages 108-109 for
further information on consumer assistance. Includes loans to
customers that have exited COVID-19 related payment deferral
programs and are 90 or more days past due, predominantly all of which
were considered collateral-dependent at time of exit.
(c) At December 31, 2022, 2021 and 2020, included $350 million, $5.4
billion and $19.2 billion of loans, respectively, in Business Banking
under the PPP. The Firm does not expect to realize material credit
losses on PPP loans because the loans are guaranteed by the SBA. Refer
to Credit Portfolio on pages 108-109 for a further discussion of the PPP.
(d) At December 31, 2022, 2021 and 2020, the principal balance of loans
under payment deferral programs offered in response to the COVID-19
pandemic was $449 million, $1.1 billion and $9.1 billion in Home
Lending, respectively. Loans that are performing according to their
modified terms are generally not considered delinquent. Refer to Credit
Portfolio on pages 108-109 for further information on consumer
assistance.
(e) At December 31, 2022, 2021 and 2020, excluded mortgage loans
insured by U.S. government agencies of $258 million, $405 million and
$744 million, respectively, that are 30 or more days past due. These
amounts have been excluded based upon the government guarantee.
(f) At December 31, 2022 and 2021, nonaccrual loans excluded $101
million and $506 million of PPP loans 90 or more days past due and
guaranteed by the SBA, respectively.
JPMorgan Chase & Co./2022 Form 10-K
65
Management’s discussion and analysis
Selected metrics
As of or for the year ended
December 31,
(in billions, except ratios
and where otherwise noted)
Business Metrics
CCB households (in millions)
Number of branches
Active digital customers
(in thousands)(a)
Active mobile customers
(in thousands)(b)
Debit and credit card
sales volume
Total payments transaction
volume (in trillions)(c)
2022
2021
2020
69.3
4,787
66.3
4,790
63.4
4,908
63,136
58,857
55,274
49,710
45,452
40,899
$ 1,555.4
$ 1,360.7
$ 1,081.2
5.6
5.0
4.0
Banking & Wealth Management
Average deposits
Deposit margin
Business Banking average
loans
Business Banking
origination volume
Client investment assets(d)
Number of client advisors
$
$ 1,145.7
$ 1,035.4
$ 832.5
1.71 %
1.27 %
1.58 %
22.3
$ 37.5
$ 37.9
4.3
647.1
5,029
(f)
13.9
718.1
4,725
26.6
590.2
4,417
(f)
Home Lending
Mortgage origination
volume by channel
Retail
Correspondent
Total mortgage origination
volume(e)
Third-party mortgage loans
serviced (period-end)
MSR carrying value
(period-end)
Card Services
Sales volume, excluding
commercial card
Net revenue rate
Net yield on average loans
New accounts opened
(in millions)
Auto
Loan and lease
origination volume
Average auto
operating lease assets
$
38.5
26.9
$ 91.8
70.9
$ 72.9
40.9
$
65.4
$ 162.7
$ 113.8
$ 584.3
$ 519.2
$ 447.3
8.0
5.5
3.3
$ 1,064.7
$ 893.5
$ 702.7
9.87 % 10.51 %
9.77
9.88
10.92 %
10.42
9.6
8.0
5.4
$
30.4
$ 43.6
$ 38.4
14.3
19.1
22.0
(a) Users of all web and/or mobile platforms who have logged in within the
past 90 days.
(b) Users of all mobile platforms who have logged in within the past 90
days.
(c) Total payments transaction volume includes debit and credit card sales
volume and gross outflows of ACH, ATM, teller, wires, BillPay, PayChase,
Zelle, person-to-person and checks.
(d) Includes assets invested in managed accounts and J.P. Morgan mutual
funds where AWM is the investment manager. Refer to AWM segment
results on pages 76-78 for additional information.
(e) Firmwide mortgage origination volume was $81.8 billion, $182.4
billion and $133.4 billion for the years ended December 31, 2022,
2021 and 2020, respectively.
(f) Included origination volume under the PPP of $10.6 billion and $21.9
billion for the years ended December 31, 2021 and 2020, respectively.
The program ended on May 31, 2021 for new applications.
66
JPMorgan Chase & Co./2022 Form 10-K
Selected income statement data
Year ended December 31,
(in millions, except ratios)
2022
2021
2020
Financial ratios
Return on equity
Overhead ratio
Compensation expense as
percentage of total net
revenue
Revenue by business
14 %
57
25 %
49
20 %
48
29
25
24
Investment Banking
$ 6,510
$ 12,506
$ 8,871
Payments
Lending
Total Banking
7,376
1,377
6,270
1,001
5,560
1,146
15,263
19,777
15,577
Fixed Income Markets
18,617
16,865
20,878
Equity Markets
10,367
10,529
Securities Services
Credit Adjustments & Other(a)
Total Markets & Securities
Services
4,488
(836)
4,328
250
8,605
4,253
(29)
32,636
31,972
33,707
Total net revenue
$47,899
$51,749
$49,284
(a) Consists primarily of centrally managed credit valuation adjustments
("CVA"), funding valuation adjustments ("FVA") on derivatives, other
valuation adjustments, and certain components of fair value option
elected liabilities, which are primarily reported in principal
transactions revenue. Results are presented net of associated hedging
activities and net of CVA and FVA amounts allocated to Fixed Income
Markets and Equity Markets. Refer to Notes 2, 3 and 24 for additional
information.
CORPORATE & INVESTMENT BANK
The Corporate & Investment Bank, which consists of
Banking and Markets & Securities Services, offers a
broad suite of investment banking, market-making,
prime brokerage, lending, and treasury and securities
products and services to a global client base of
corporations, investors, financial institutions,
merchants, government and municipal entities.
Banking offers a full range of investment banking
products and services in all major capital markets,
including advising on corporate strategy and structure,
capital-raising in equity and debt markets, as well as
loan origination and syndication. Banking also includes
Payments, which provides payments services enabling
clients to manage payments and receipts globally, and
cross-border financing. Markets & Securities Services
includes Markets, a global market-maker across
products, including cash and derivative instruments,
which also offers sophisticated risk management
solutions, prime brokerage, and research. Markets &
Securities Services also includes Securities Services, a
leading global custodian which provides custody, fund
accounting and administration, and securities lending
products principally for asset managers, insurance
companies and public and private investment funds.
Selected income statement data
Year ended December 31,
(in millions)
Revenue
2022
2021
2020
Investment banking fees
$ 6,929 $ 13,359 $ 9,477
Principal transactions
19,926
15,764
17,560
Lending- and deposit-related fees
2,419
2,514
2,070
Asset management, administration
and commissions
All other income(a)
Noninterest revenue
Net interest income
Total net revenue(b)
5,065
1,660
5,024
1,548
4,721
1,292
35,999
38,209
35,120
11,900
13,540
14,164
47,899
51,749
49,284
Provision for credit losses
1,158
(1,174)
2,726
Noninterest expense
Compensation expense
13,918
13,096
11,612
Noncompensation expense
13,169
12,229
11,926
Total noninterest expense
27,087
25,325
23,538
Income before income tax
expense
Income tax expense
Net income
19,654
27,598
23,020
4,684
6,464
5,926
$ 14,970 $ 21,134 $ 17,094
(a) Includes card income of $1.0 billion, $910 million and $840 million
for the years ended December 31, 2022, 2021 and 2020,
respectively.
(b) Includes tax-equivalent adjustments, predominantly due to income tax
credits and other tax benefits related to alternative energy
investments; income tax credits and amortization of the cost of
investments in affordable housing projects; and tax-exempt income
from municipal bonds of $3.0 billion, $3.0 billion and $2.4 billion for
the years ended December 31, 2022, 2021 and 2020, respectively.
JPMorgan Chase & Co./2022 Form 10-K
67
Management’s discussion and analysis
2022 compared with 2021
Net income was $15.0 billion, down 29%.
Net revenue was $47.9 billion, down 7%.
Banking revenue was $15.3 billion, down 23%.
• Investment Banking revenue was $6.5 billion, down 48%,
driven by lower Investment Banking fees, which were also
down 48%, as volatile market conditions resulted in
lower fees across products, and $251 million of
markdowns on held-for-sale positions, primarily
unfunded commitments, in the bridge financing portfolio
in the second quarter of 2022. The Firm ranked #1 for
Global Investment Banking fees, according to Dealogic.
– Equity underwriting fees were $1.0 billion, down 74%,
and debt underwriting fees were $2.8 billion, down
43%, due to lower issuance activity.
– Advisory fees were $3.1 billion, down 30%, driven by a
lower level of announced deals.
• Payments revenue was $7.4 billion, up 18%, and
included the net impact of equity investments. Excluding
this net impact, revenue was $7.8 billion, up 33%, driven
by deposit margin expansion on higher rates and growth
in fees on higher volumes.
• Lending revenue was $1.4 billion, up 38%, driven by
higher net interest income primarily on higher loans, as
well as fair value gains on hedges of retained loans,
compared with losses in the prior year.
Markets & Securities Services revenue was $32.6 billion, up
2%. Markets revenue was $29.0 billion, up 6%.
• Fixed Income Markets revenue was $18.6 billion, up
10%, driven by strong performance in the macro
businesses amid volatile market conditions, particularly
in Currencies & Emerging Markets and Rates, partially
offset by lower revenue in Securitized Products.
• Equity Markets revenue was $10.4 billion, down 2%,
driven by lower revenue in Cash Equities, largely offset by
Equity Derivatives.
• Securities Services revenue was $4.5 billion, up 4%,
driven by deposit margin expansion on higher rates and
growth in fees, largely offset by lower average market
values of assets under custody and lower deposits.
• Credit Adjustments & Other was a loss of $836 million,
reflecting funding spread widening, and, to a lesser
extent, losses on exposures relating to commodities and
Russia and Russia-associated counterparties, compared
with a gain of $250 million in the prior year.
Noninterest expense was $27.1 billion, up 7%, driven by
higher structural expense and investments in the business,
including higher compensation, partially offset by lower
revenue-related compensation as well as lower legal
expense.
The provision for credit losses was $1.2 billion,
predominantly driven by a net addition to the allowance for
credit losses, reflecting deterioration in the Firm’s
macroeconomic outlook and loan growth.
The provision for credit losses in the prior year was a net
benefit of $1.2 billion, driven by a net reduction in the
allowance for credit losses.
68
JPMorgan Chase & Co./2022 Form 10-K
Selected metrics
As of or for the year ended
December 31, (in millions,
except headcount)
Selected balance sheet
data (period-end)
Total assets
Loans:
2022
2021
2020
$ 1,334,296 $ 1,259,896 $ 1,095,926
Loans retained(a)
187,642
159,786
133,296
Loans held-for-sale and
loans at fair value(b)
Total loans
42,304
50,386
39,588
229,946
210,172
172,884
Equity
103,000
83,000
80,000
Selected balance sheet
data (average)
Total assets
$ 1,406,250 $ 1,334,518 $ 1,121,942
Trading assets-debt and
equity instruments
Trading assets-derivative
receivables
Loans:
Loans retained(a)
Loans held-for-sale and
loans at fair value(b)
Total loans
Equity
Headcount
405,916
448,099
425,060
77,802
68,203
69,243
172,627
145,137
135,676
46,846
51,072
33,792
219,473
196,209
169,468
103,000
83,000
80,000
73,452
67,546
61,733
(a) Loans retained includes credit portfolio loans, loans held by
consolidated Firm-administered multi-seller conduits, trade finance
loans, other held-for-investment loans and overdrafts.
(b) Loans held-for-sale and loans at fair value primarily reflect lending
related positions originated and purchased in CIB Markets, including
loans held for securitization.
Selected metrics
As of or for the year ended
December 31, (in millions,
except ratios)
Credit data and quality
statistics
Net charge-offs/
(recoveries)
Nonperforming assets:
Nonaccrual loans:
Nonaccrual loans
retained(a)
Nonaccrual loans held-
for-sale and loans at
fair value(b)
Total nonaccrual loans
Derivative receivables
Assets acquired in loan
satisfactions
Total nonperforming
assets
Allowance for credit losses:
Allowance for loan
losses
Allowance for lending-
related commitments
Total allowance for credit
losses
Net charge-off/(recovery)
rate(c)
Allowance for loan losses to
period-end loans
retained
Allowance for loan losses to
period-end loans retained,
excluding trade finance
and conduits(d)
Allowance for loan losses to
nonaccrual loans
retained(a)
Nonaccrual loans to total
period-end loans
2022
2021
2020
$
82
$
6
$
370
718
584
1,008
848
1,566
296
844
1,428
316
87
91
1,662
2,670
56
85
1,949
1,835
2,811
2,292
1,348
2,366
1,448
1,372
1,534
3,740
2,720
3,900
0.05 %
— %
0.27 %
1.22
0.84
1.77
1.67
1.12
2.54
319
0.68
231
0.68
235
1.54
(a) Allowance for loan losses of $104 million, $58 million and $278
million were held against these nonaccrual loans at December 31,
2022, 2021 and 2020, respectively.
(b) At December 31, 2022, 2021 and 2020, nonaccrual loans excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $115 million, $281 million and $316 million,
respectively. These amounts have been excluded based upon the
government guarantee.
(c) Loans held-for-sale and loans at fair value were excluded when
calculating the net charge-off/(recovery) rate.
(d) Management uses allowance for loan losses to period-end loans
retained, excluding trade finance and conduits, a non-GAAP financial
measure, to provide a more meaningful assessment of CIB’s allowance
coverage ratio. Refer to Explanation and Reconciliation of the Firm’s
Use of Non-GAAP Financial Measures on pages 58-60.
JPMorgan Chase & Co./2022 Form 10-K
69
Management’s discussion and analysis
Investment banking fees
(in millions)
Advisory
Equity underwriting
Debt underwriting(a)
Total investment banking fees
(a) Represents long-term debt and loan syndications.
League table results – wallet share
Year ended December 31,
Based on fees(a)
M&A(b)
Global
U.S.
Equity and equity-related(c)
Global
U.S.
Long-term debt(d)
Global
U.S.
Loan syndications
Global
U.S.
Global investment banking fees(e)
Year ended December 31,
2022
2021
2020
3,051 $
4,381 $
1,034
2,844
3,953
5,025
6,929 $
13,359 $
2,368
2,758
4,351
9,477
2022
2021
2020
Rank
Share
Rank
Share
Rank
Share
2
2
1
1
1
1
1
1
1
8.2 % #
9.1
5.8
13.9
7.0
12.2
11.2
12.8
8.0 % #
2
2
2
2
1
1
1
1
1
9.6 % #
10.8
8.8
11.7
8.4
12.1
10.9
12.6
9.3 % #
2
2
2
2
1
1
1
1
1
8.9 %
9.4
8.9
12.1
8.8
12.8
11.1
12.3
9.1 %
$
$
#
#
(a) Source: Dealogic as of January 2, 2023. Reflects the ranking of revenue wallet and market share.
(b) Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.
(c) Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.
(d) Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities ("ABS") and
mortgage-backed securities ("MBS"); and exclude money market, short-term debt, and U.S. municipal securities.
(e) Global investment banking fees exclude money market, short-term debt and shelf securities.
difference between the price at which a market participant
is willing and able to sell an instrument to the Firm and the
price at which another market participant is willing and able
to buy it from the Firm, and vice versa), market liquidity
and volatility. These factors are interrelated and sensitive
to the same factors that drive inventory-related revenue,
which include general market conditions, such as interest
rates, foreign exchange rates, credit spreads, and equity
and commodity prices, as well as other macroeconomic
conditions.
Markets revenue
The following table summarizes selected income statement
data for the Markets businesses. Markets includes both
Fixed Income Markets and Equity Markets. Markets revenue
consists of principal transactions, fees, commissions and
other income, as well as net interest income. The Firm
assesses its Markets business performance on a total
revenue basis, as offsets may occur across revenue line
items. For example, securities that generate net interest
income may be risk-managed by derivatives that are
reflected at fair value in principal transactions revenue.
Refer to Notes 6 and 7 for a description of the composition
of these income statement line items.
Principal transactions reflects revenue on financial
instruments and commodities transactions that arise from
client-driven market-making activity. Principal transactions
revenue includes amounts recognized upon executing new
transactions with market participants, as well as “inventory-
related revenue”, which is revenue recognized from gains
and losses on derivatives and other instruments that the
Firm has been holding in anticipation of, or in response to,
client demand, and changes in the fair value of instruments
used by the Firm to actively manage the risk exposure
arising from such inventory. Principal transactions revenue
recognized upon executing new transactions with market
participants is affected by many factors including the level
of client activity, the bid-offer spread (which is the
70
JPMorgan Chase & Co./2022 Form 10-K
For the periods presented below, the predominant source of principal transactions revenue was the amount recognized upon
executing new transactions.
Year ended December 31,
(in millions, except where
otherwise noted)
Principal transactions
Lending- and deposit-related fees
Asset management,
administration and commissions
All other income
Noninterest revenue
Net interest income
Total net revenue
Loss days(a)
2022
2021
2020
Fixed
Income
Markets
Equity
Markets
Total
Markets
Fixed
Income
Markets
Equity
Markets
Total
Markets
Fixed
Income
Markets
Equity
Markets
Total
Markets
$ 11,682 $
8,846 $ 20,528 $
303
22
325
7,911 $
321
7,519 $ 15,430 $ 11,857 $
17
338
226
6,087 $ 17,944
236
10
2,007
(131)
550
916
13,451
5,166
545
972
9,749
7,116
$ 18,617 $ 10,367 $ 28,984 $ 16,865 $ 10,529 $ 27,394 $ 20,878 $
1,967
(101)
9,402
1,127
411
493
12,987
7,891
2,512
871
19,151
8,243
2,557
785
24,195
4,789
10,744
(377)
(62)
2,087
2,498
431
21,109
8,374
8,605 $ 29,483
8,122
483
7
4
4
(a) Loss days represent the number of days for which CIB Markets, which consists of Fixed Income Markets and Equity Markets, posted losses to total net
revenue. The loss days determined under this measure differ from the measure used to determine backtesting gains and losses. Daily backtesting gains
and losses include positions in the Firm’s Risk Management value-at-risk ("VaR") measure and exclude certain components of total net revenue, which
may more than offset backtesting gains or losses on a particular day. For more information on daily backtesting gains and losses, refer to the VaR
discussion on pages 133-135.
Selected metrics
As of or for the year ended December 31,
(in millions, except where otherwise noted)
Assets under custody ("AUC") by asset class (period-end) (in billions):
Fixed Income
Equity
Other(a)
Total AUC
Merchant processing volume (in billions)(b)
Client deposits and other third party liabilities (average)(c)
2022
2021
2020
$ 14,361 $ 16,098 $
15,840
10,748
3,526
12,962
4,161
11,489
3,651
$ 28,635 $ 33,221 $
30,980
$ 2,158.4 $ 1,886.7 $ 1,597.3
$ 687,391 $ 714,910 $ 610,555
(a) Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b) Represents total merchant processing volume across CIB, CCB and CB.
(c) Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses.
JPMorgan Chase & Co./2022 Form 10-K
71
Management’s discussion and analysis
International metrics
As of or for the year ended December 31,
(in millions, except where otherwise noted)
Total net revenue(a)
Europe/Middle East/Africa
Asia-Pacific
Latin America/Caribbean
Total international net revenue
North America
Total net revenue
Loans retained (period-end)(a)
Europe/Middle East/Africa
Asia-Pacific
Latin America/Caribbean
Total international loans
North America
Total loans retained
Client deposits and other third-party liabilities (average)(b)
Europe/Middle East/Africa
Asia-Pacific
Latin America/Caribbean
Total international
North America
Total client deposits and other third-party liabilities
AUC (period-end)(b)
(in billions)
North America
All other regions
Total AUC
2022
2021
2020
$
15,303 $
13,954 $
7,846
2,239
25,388
22,511
7,555
1,833
23,342
28,407
47,899 $
51,749 $
39,424 $
33,084 $
15,571
8,599
63,594
124,048
14,471
7,006
54,561
105,225
13,872
7,524
1,931
23,327
25,957
49,284
27,659
12,802
5,425
45,886
87,410
187,642 $
159,786 $
133,296
247,203 $
243,867 $
129,134
39,917
132,241
46,045
416,254 $
422,153 $
271,137
292,757
687,391 $
714,910 $
19,219 $
9,416
28,635 $
21,655 $
11,566
33,221 $
211,592
124,145
37,664
373,401
237,154
610,555
20,028
10,952
30,980
$
$
$
$
$
$
$
$
(a) Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking
location, or domicile of the client, as applicable.
(b) Client deposits and other third-party liabilities pertaining to the Payments and Securities Services businesses, and AUC, are based on the domicile of the
client.
72
JPMorgan Chase & Co./2022 Form 10-K
COMMERCIAL BANKING
Commercial Banking provides comprehensive financial
solutions, including lending, payments, investment
banking and asset management products across three
primary client segments: Middle Market Banking,
Corporate Client Banking and Commercial Real Estate
Banking. Other includes amounts not aligned with a
primary client segment.
Middle Market Banking covers small and midsized
companies, local governments and nonprofit clients.
Corporate Client Banking covers large corporations.
Commercial Real Estate Banking covers investors,
developers, and owners of multifamily, office, retail,
industrial and affordable housing properties.
Selected income statement data
Year ended December 31,
(in millions)
2022
2021
2020
Revenue
Lending- and deposit-related fees
All other income(a)
Noninterest revenue
Net interest income
Total net revenue(b)
$ 1,243 $ 1,392 $ 1,187
2,093
3,336
8,197
2,537
3,929
6,079
11,533
10,008
1,880
3,067
6,246
9,313
Provision for credit losses
1,268
(947)
2,113
Noninterest expense
Compensation expense
Noncompensation expense
Total noninterest expense
2,296
2,423
4,719
Income before income tax expense
5,546
1,973
2,068
4,041
6,914
1,668
1,854
1,944
3,798
3,402
824
Income tax expense
Net income
1,333
$ 4,213 $ 5,246 $ 2,578
2022 compared with 2021
Net income was $4.2 billion, down 20%, reflecting a net
increase in the provision for credit losses compared with a
net benefit in the prior year.
Net revenue was $11.5 billion, up 15%. Net interest
income was $8.2 billion, up 35%, driven by deposit margin
expansion on higher rates and growth in loans,
predominantly offset by the impact of higher funding costs
and lower deposits.
Noninterest revenue was $3.3 billion, down 15%, driven by
lower investment banking revenue and net markdowns on
held-for-sale positions, primarily unfunded commitments, in
the bridge financing portfolio. The decreases were partially
offset by a gain on an equity method investment received in
partial satisfaction of a loan.
Noninterest expense was $4.7 billion, up 17%, largely
driven by higher volume-and revenue-related expense, as
well as structural expense, including higher compensation
expense, and expense associated with growth in payments.
The provision for credit losses was $1.3 billion,
predominantly driven by a net addition to the allowance for
credit losses, reflecting deterioration in the Firm’s
macroeconomic outlook and loan growth.
The provision for credit losses in the prior year was a net
benefit of $947 million, driven by a net reduction in the
allowance for credit losses.
(a) Includes card income of $685 million, $624 million and $525 million
for the years ended December 31, 2022, 2021 and 2020,
respectively.
(b) Total net revenue included tax-equivalent adjustments from income
tax credits related to equity investments in designated community
development entities and in entities established for rehabilitation of
historic properties, as well as tax-exempt income related to municipal
financing activities of $322 million, $330 million and $350 million for
the years ended December 31, 2022, 2021 and 2020, respectively.
JPMorgan Chase & Co./2022 Form 10-K
73
Management’s discussion and analysis
CB product revenue consists of the following:
Lending includes a variety of financing alternatives,
which are primarily provided on a secured basis;
collateral includes receivables, inventory, equipment,
real estate or other assets. Products include term loans,
revolving lines of credit, bridge financing, asset-based
structures, leases, and standby letters of credit.
Payments includes revenue from a broad range of
products and services that CB clients use to manage
payments and receipts globally, as well as invest and
manage funds.
Investment banking includes investment banking fees
and markets revenue from a full range of products and
services providing CB clients with advisory, loan
syndications, capital-raising in equity and debt markets,
and risk management solutions.
Other revenue primarily includes tax-equivalent
adjustments generated from Community Development
Banking and activity derived from principal transactions.
Selected income statement data (continued)
Year ended December 31,
(in millions, except ratios)
2022
2021
2020
Revenue by product
Lending
Payments(a)
Investment banking(a)(b)
Other
$ 4,524
$
4,629
$
4,396
5,882
873
254
3,791
1,473
115
3,820
964
133
Total net revenue
$ 11,533
$ 10,008
$
9,313
Investment banking revenue,
gross(c)
Revenue by client segment
$ 2,978
$
5,092
$
3,348
Middle Market Banking
$ 5,134
$
4,004
$
3,640
Selected metrics
As of or for the year
ended December 31, (in
millions, except
headcount)
Selected balance sheet
data (period-end)
Total assets
Loans:
2022
2021
2020
$ 257,106 $ 230,776 $ 228,911
Loans retained
233,879
206,220
207,880
Loans held-for-sale and
loans at fair value
707
2,223
2,245
Total loans
$ 234,586 $ 208,443 $ 210,125
Equity
25,000
24,000
22,000
Period-end loans by
client segment
Middle Market Banking(a)
Corporate Client Banking
Commercial Real Estate
Banking
Other
Total loans(a)
Selected balance sheet
data (average)
Total assets
Loans:
$
72,625 $
61,159 $
61,115
53,840
45,315
47,420
107,999
101,751
101,146
122
218
444
$ 234,586 $ 208,443 $ 210,125
$ 243,108 $ 225,548 $ 233,156
Loans retained
222,388
201,920
217,767
Loans held-for-sale and
loans at fair value
1,350
3,122
1,129
Total loans
$ 223,738 $ 205,042 $ 218,896
Client deposits and other
third-party liabilities
Equity
Average loans by client
294,261
301,502
237,825
25,000
24,000
22,000
Corporate Client Banking
3,918
3,508
3,203
segment
Commercial Real Estate
Banking
Other
2,461
20
2,419
77
2,313
157
Total net revenue
$ 11,533
$ 10,008
$
9,313
Financial ratios
Return on equity
Overhead ratio
16 %
41
21 %
40
11 %
41
(a) In the fourth quarter of 2022, certain revenue from CIB Markets
products was reclassified from investment banking to payments. Prior-
period amounts have been revised to conform with the current
presentation.
(b) Includes CB’s share of revenue from investment banking products sold
to CB clients through the CIB.
(c) Includes gross revenues earned by the Firm for investment banking
and payments products sold to CB clients that are subject to a revenue
sharing arrangement with the CIB. Refer to Business Segment Results
on page 61 for a discussion of revenue sharing.
Middle Market Banking
$
67,830 $
60,128 $
61,558
Corporate Client Banking
50,281
44,361
54,172
Commercial Real Estate
Banking
Other
Total loans
Headcount
105,459
100,331
102,479
168
222
687
$ 223,738 $ 205,042 $ 218,896
14,687
12,902
11,675
(a) At December 31, 2022, 2021 and 2020, total loans included $132
million, $1.2 billion and $6.6 billion of loans under the PPP, of which
$123 million, $1.1 billion and $6.4 billion were in Middle Market
Banking, respectively. Refer to Credit Portfolio on pages 108-109 for a
further discussion of the PPP.
74
JPMorgan Chase & Co./2022 Form 10-K
Selected metrics
As of or for the year ended
December 31, (in millions, except
ratios)
Credit data and quality statistics
2022
2021
2020
Net charge-offs/(recoveries)
$
84
$
71
$ 401
Nonperforming assets
Nonaccrual loans:
Nonaccrual loans retained(a)
766
(c)
740
(c)
1,286
Nonaccrual loans held-for-sale
and loans at fair value
Total nonaccrual loans
Assets acquired in loan
satisfactions
Total nonperforming assets
Allowance for credit losses:
—
766
—
766
—
120
740
1,406
17
757
24
1,430
Allowance for loan losses
3,324
2,219
3,335
Allowance for lending-related
commitments
830
749
651
Total allowance for credit losses
4,154
2,968
3,986
Net charge-off/(recovery) rate(b)
0.04%
0.04%
0.18%
Allowance for loan losses to
period-end loans retained
Allowance for loan losses to
nonaccrual loans retained(a)
Nonaccrual loans to period-end
total loans
1.42
1.08
1.60
434
300
259
0.33
0.36
0.67
(a) Allowance for loan losses of $153 million, $124 million and $273
million was held against nonaccrual loans retained at December 31,
2022, 2021 and 2020, respectively.
(b) Loans held-for-sale and loans at fair value were excluded when
calculating the net charge-off/(recovery) rate.
(c) At December 31, 2022 and 2021, nonaccrual loans excluded $18
million and $114 million, respectively, of PPP loans 90 or more days
past due and guaranteed by the SBA.
JPMorgan Chase & Co./2022 Form 10-K
75
2022 compared with 2021
Net income was $4.4 billion, down 8%.
Net revenue was $17.7 billion, up 5%. Net interest income
was $5.2 billion, up 35%. Noninterest revenue was $12.5
billion, down 4%.
Revenue from Asset Management was $8.8 billion, down
5%, predominantly driven by:
• net investment valuation losses compared to net gains in
the prior year and,
• lower asset management fees reflecting a decline in
market levels and the impact of net liquidity outflows,
predominantly offset by the removal of most money
market fund fee waivers.
Revenue from Global Private Bank was $8.9 billion, up
16%, driven by:
• margin expansion on higher rates and higher average
deposits; and to a lesser extent higher average loans and
wider spreads,
partially offset by
• lower brokerage and placement fees on reduced volume,
and lower management fees.
Noninterest expense was $11.8 billion, up 8%, driven by
higher structural expense and investments in the business,
largely compensation.
The provision for credit losses was $128 million, driven by a
net addition to the allowance for credit losses.
The provision for credit losses in the prior year was a net
benefit of $227 million driven by a net reduction in the
allowance for credit losses.
Management’s discussion and analysis
ASSET & WEALTH MANAGEMENT
Asset & Wealth Management, with client assets of $4.0
trillion, is a global leader in investment and wealth
management.
Asset Management
Offers multi-asset investment management solutions
across equities, fixed income, alternatives and money
market funds to institutional and retail investors
providing for a broad range of clients’ investment needs.
Global Private Bank
Provides retirement products and services, brokerage,
custody, estate planning, lending, deposits and
investment management to high net worth clients.
The majority of AWM’s client assets are in actively
managed portfolios.
Selected income statement data
Year ended December 31,
(in millions, except ratios)
2022
Revenue
Asset management, administration
2021
2020
and commissions
All other income
Noninterest revenue
Net interest income
Total net revenue
$ 12,172
$ 12,333
$ 10,610
335
738
212
12,507
13,071
10,822
5,241
3,886
3,418
17,748
16,957
14,240
Provision for credit losses
128
(227)
263
Noninterest expense
Compensation expense
6,336
5,692
4,959
Noncompensation expense
5,493
5,227
4,998
Total noninterest expense
11,829
10,919
9,957
Income before income tax
expense
5,791
6,265
4,020
Income tax expense
1,426
1,528
1,028
Net income
$ 4,365
$ 4,737
$ 2,992
Revenue by line of business
Asset Management
Global Private Bank
Total net revenue
Financial ratios
Return on equity
Overhead ratio
Pre-tax margin ratio:
Asset Management
Global Private Bank
Asset & Wealth Management
$ 8,818
$ 9,246
$ 7,654
8,930
7,711
6,586
$ 17,748
$ 16,957
$ 14,240
25 %
33 %
67
30
35
33
64
35
39
37
28 %
70
29
27
28
76
JPMorgan Chase & Co./2022 Form 10-K
Asset Management has two high-level measures of its
overall fund performance.
• Percentage of mutual fund assets under management in funds
rated 4- or 5-star: Mutual fund rating services rank funds based on
their risk adjusted performance over various periods. A 5-star rating
is the best rating and represents the top 10% of industry-wide ranked
funds. A 4-star rating represents the next 22.5% of industry-wide
ranked funds. A 3-star rating represents the next 35% of industry-
wide ranked funds. A 2-star rating represents the next 22.5% of
industry-wide ranked funds. A 1-star rating is the worst rating and
represents the bottom 10% of industrywide ranked funds. An overall
Morningstar rating is derived from a weighted average of the
performance associated with a fund’s three-, five and ten- year (if
applicable) Morningstar Rating metrics. For U.S.-domiciled funds,
separate star ratings are provided at the individual share
class level. The Nomura “star rating” is based on three-year risk-
adjusted performance only. Funds with fewer than three years of
history are not rated and hence excluded from these rankings. All
ratings, the assigned peer categories and the asset values used to
derive these rankings are sourced from the applicable fund rating
provider. Where applicable, the fund rating providers redenominate
asset values into U.S. dollars. The percentage of AUM is based on star
ratings at the share class level for U.S.-domiciled funds, and at a
“primary share class” level to represent the star rating of all other
funds, except for Japan, for which Nomura provides ratings at the
fund level. The performance data may have been different if all share
classes had been included. Past performance is not indicative of
future results.
• Percentage of mutual fund assets under management in funds
ranked in the 1st or 2nd quartile (one, three and five years):All
quartile rankings, the assigned peer categories and the asset values
used to derive these rankings are sourced from the fund rating
providers. Quartile rankings are based on the net-of-fee absolute
return of each fund. Where applicable, the fund rating providers
redenominate asset values into U.S. dollars. The percentage of AUM is
based on fund performance and associated peer rankings at the share
class level for U.S.-domiciled funds, at a “primary share class” level to
represent the quartile ranking for U.K., Luxembourg and Hong Kong
SAR funds and at the fund level for all other funds. The performance
data may have been different if all share classes had been included.
Past performance is not indicative of future results.
“Primary share class” means the C share class for European funds and
Acc share class for Hong Kong SAR and Taiwan funds. If these share
classes are not available, the oldest share class is used as the primary
share class.
Selected metrics
As of or for the year ended
December 31,
(in millions, except ranking
data, ratios and headcount)
% of JPM mutual fund assets
rated as 4- or 5-star(a)
% of JPM mutual fund assets
ranked in 1st or 2nd
quartile:(b)
1 year
3 years
5 years
Selected balance sheet data
(period-end)(c)
Total assets
Loans
Deposits
Equity
Selected balance sheet data
(average)(c)
Total assets
Loans
Deposits
Equity
Headcount
2022
2021
2020
73 %
69 %
63 %
65
75
81
53
72
80
63
69
72
$ 232,037
$ 234,425
$ 203,384
214,006
218,271
186,608
233,130
282,052
198,755
17,000
14,000
10,500
$ 232,438
$ 217,187
$ 181,432
215,582
198,487
166,311
261,489
230,296
161,955
17,000
14,000
10,500
26,041
22,762
20,683
Number of Global Private Bank
client advisors
3,137
2,738
2,462
Credit data and quality
statistics(c)
Net charge-offs/(recoveries)
$
(7)
$
26
$
(14)
Nonaccrual loans
459
708
964
Allowance for credit losses:
Allowance for loan losses
$
494
$
365
$
598
Allowance for lending-related
commitments
Total allowance for credit
losses
20
18
38
$
514
$
383
$
636
Net charge-off/(recovery) rate
— %
0.01 %
(0.01) %
Allowance for loan losses to
period-end loans
Allowance for loan losses to
nonaccrual loans
Nonaccrual loans to period-end
loans
0.23
0.17
0.32
108
52
62
0.21
0.32
0.52
(a) Represents the Morningstar Rating for all domiciled funds except for
Japan domiciled funds which use Nomura. Includes only Asset
Management retail open-ended mutual funds that have a rating.
Excludes money market funds, Undiscovered Managers Fund, and
Brazil domiciled funds.
(b) Quartile ranking sourced from Morningstar, Lipper and Nomura based
on country of domicile. Includes only Asset Management retail open-
ended mutual funds that are ranked by the aforementioned sources.
Excludes money market funds, Undiscovered Managers Fund, and
Brazil domiciled funds.
(c) Loans, deposits and related credit data and quality statistics relate to
the Global Private Bank business.
JPMorgan Chase & Co./2022 Form 10-K
77
Management’s discussion and analysis
Client assets
2022 compared with 2021
Client assets were $4.0 trillion, a decrease of 6%. Assets
under management were $2.8 trillion, a decrease of 11%
driven by lower market levels and net outflows from
liquidity products, partially offset by continued net inflows
into long term products.
Client assets
December 31,
(in billions)
Assets by asset class
Liquidity
Fixed income
Equity
Multi-asset
Alternatives
2022
2021
2020
$
654 $
708 $
638
670
603
201
693
779
732
201
641
671
595
656
153
Total assets under management
2,766
3,113
2,716
International metrics
Year ended December 31,
(in billions, except where otherwise
noted)
Total net revenue (in millions)(a)
Europe/Middle East/Africa
Asia-Pacific
2022
2021
2020
$ 3,240 $ 3,571 $ 2,956
1,836
2,017
1,665
Latin America/Caribbean
967
886
782
Total international net revenue
6,043
6,474
5,403
North America
Total net revenue
11,705
10,483
8,837
$ 17,748 $ 16,957 $ 14,240
Assets under management
Europe/Middle East/Africa
$
487 $
561 $
Asia-Pacific
Latin America/Caribbean
Total international assets under
management
218
69
254
79
517
224
70
774
894
811
1,282
1,182
936
North America
1,992
2,219
1,905
$ 4,048 $ 4,295 $ 3,652
Total assets under management
$ 2,766 $ 3,113 $ 2,716
Client assets
Europe/Middle East/Africa
$
610 $
687 $
Asia-Pacific
Latin America/Caribbean
331
189
381
195
622
330
166
Total international client assets
1,130
1,263
1,118
North America
Total client assets
2,918
3,032
2,534
$ 4,048 $ 4,295 $ 3,652
(a) Regional revenue is based on the domicile of the client.
Custody/brokerage/
administration/deposits
Total client assets(a)
Assets by client segment
Private Banking
Global Institutional
Global Funds
$
751 $
805 $
689
1,252
1,430
1,273
763
878
754
Total assets under management $ 2,766 $ 3,113 $ 2,716
Private Banking
Global Institutional
Global Funds
Total client assets(a)
$ 1,964 $ 1,931 $ 1,581
1,314
1,479
1,311
770
885
760
$ 4,048 $ 4,295 $ 3,652
(a) Includes CCB client investment assets invested in managed accounts
and J.P. Morgan mutual funds where AWM is the investment manager.
Client assets (continued)
Year ended December 31,
(in billions)
Assets under management
rollforward
Beginning balance
Net asset flows:
Liquidity
Fixed income
Equity
Multi-asset
Alternatives
Market/performance/other
impacts
2022
2021
2020
$ 3,113 $ 2,716 $ 2,328
(55)
13
35
(9)
8
68
36
85
17
26
104
48
33
5
6
(339)
165
192
Ending balance, December 31
$ 2,766 $ 3,113 $ 2,716
Client assets rollforward
Beginning balance
Net asset flows
Market/performance/other
impacts
$ 4,295 $ 3,652 $ 3,089
49
389
(296)
254
276
287
Ending balance, December 31
$ 4,048 $ 4,295 $ 3,652
78
JPMorgan Chase & Co./2022 Form 10-K
CORPORATE
The Corporate segment consists of Treasury and Chief
Investment Office (“CIO”) and Other Corporate.
Treasury and CIO is predominantly responsible for
measuring, monitoring, reporting and managing the
Firm’s liquidity, funding, capital, structural interest
rate and foreign exchange risks.
Other Corporate includes staff functions and expense
that is centrally managed as well as certain Firm
initiatives and activities not aligned to a specific LOB.
The major Other Corporate functions include Real
Estate, Technology, Legal, Corporate Finance, Human
Resources, Internal Audit, Risk Management,
Compliance, Control Management, Corporate
Responsibility and various Other Corporate groups.
Selected income statement and balance sheet data
Year ended December 31,
(in millions, except
headcount)
Revenue
Principal transactions
187 $
(227)
2021
2022
$
$
2020
(2,380)
809
(1,798)
1,878
80
22
1,034
(345)
226
68
(3,551)
(3,483)
81
1,802
245
795
159
1,199
(2,375)
(1,176)
66
1,373
Investment securities
gains/(losses)
All other income
Noninterest revenue
Net interest income
Total net revenue(a)
Provision for credit losses
Noninterest expense
Income/(loss) before
income tax expense/
(benefit)
(976)
(5,366)
(2,615)
$
(233)
(743)
(439)
519
80
Income tax expense/
(benefit)
Net income/(loss)
Total net revenue
Treasury and CIO
Other Corporate
Total net revenue
Net income/(loss)
(197)
Treasury and CIO
(546)
Other Corporate
Total net income/(loss)
(743)
Total assets (period-end) $ 1,328,219
2,181
Loans (period-end)
14,203
Deposits
44,196
Headcount
$
$
(1,653)
(3,713) $
(865)
(1,750)
(3,464)
(19)
(3,483) $
(1,368)
192
(1,176)
$
$
(3,057)
(656)
(3,713) $
(1,403)
(347)
$
(1,750)
$ 1,518,100 $ 1,359,831
1,657
318
38,366
1,770
396
38,952
(b)
(a) Included tax-equivalent adjustments, driven by tax-exempt income
from municipal bonds, of $235 million, $257 million and $241 million
for the years ended December 31, 2022, 2021 and 2020,
respectively.
(b) Predominantly relates to the Firm's international consumer growth
initiatives.
2022 compared with 2021
Net loss was $743 million, compared with a net loss of $3.7
billion in the prior year.
Net revenue was $80 million, compared with a loss of $3.5
billion driven by higher net interest income due to higher
rates, partially offset by lower noninterest revenue.
Noninterest revenue was a loss of $1.8 billion, compared
with a gain of $68 million driven by:
• higher net investment securities losses on sales of U.S.
GSE and government agency MBS, and U.S. Treasuries
associated with repositioning the investment securities
portfolio,
• the impact of movements in foreign exchange on certain
revenues, primarily as result of the U.S. dollar
strengthening,
• net losses related to cash deployment transactions, which
were more than offset by the related net interest income
earned on those transactions,
• net losses, including hedging costs on an equity method
investment related to the Firm's international consumer
growth initiatives, and
• net losses on certain legacy private equity investments
compared with net gains in prior year.
partially offset by
• a gain on the sale of Visa B shares. In connection with the
sale, the Firm entered into a derivative instrument with
the purchaser of the shares under which the Firm retains
the risk associated with changes in the rate at which the
shares are convertible into Visa Class A common shares
(“Visa A shares”). Refer to Note 2 for additional
information,
• higher net gains related to certain Other Corporate
investments, and
• proceeds from an insurance settlement in the first
quarter of 2022.
Noninterest expense was $1.0 billion, down $768 million,
predominantly driven by:
• lower structural expense reflecting the impact of
movements in foreign exchange on certain expenses
primarily as a result of the U.S. dollar strengthening, and
lower retained technology expense, and
• a lower contribution to the Firm’s Foundation.
partially offset by
• higher investments, including the costs associated with
the Firm's international consumer growth initiatives.
The net impact of movements in foreign exchange rates
associated with the foreign exchange risk that is transferred
to Treasury and CIO on certain revenues and expenses was
not material to net income. Refer to Foreign Exchange Risk
on page 62 for additional information.
JPMorgan Chase & Co./2022 Form 10-K
79
Management’s discussion and analysis
Refer to Note 10 and Note 13 for additional information on
the investment securities portfolio and the allowance for
credit losses.
The current period income tax benefit was driven by
benefits related to tax audit settlements as well as other tax
adjustments, partially offset by a change in the level and
mix of income and expenses subject to U.S. federal and
state and local taxes that also impacted the Firm's tax
reserves.
Other Corporate also reflects the Firm's international
consumer growth initiatives, which include Chase U.K., the
Firm's digital retail bank in the U.K.; Nutmeg, a digital
wealth manager in the U.K.; and a 40% ownership stake in
C6 Bank, a digital bank in Brazil, which closed in the first
quarter of 2022.
Treasury and CIO overview
Treasury and CIO is predominantly responsible for
measuring, monitoring, reporting and managing the Firm’s
liquidity, funding, capital, structural interest rate and
foreign exchange risks. The risks managed by Treasury and
CIO arise from the activities undertaken by the Firm’s four
major reportable business segments to serve their
respective client bases, which generate both on- and off-
balance sheet assets and liabilities.
Treasury and CIO seeks to achieve the Firm’s asset-liability
management objectives generally by investing in high-
quality securities that are managed for the longer-term as
part of the Firm’s investment securities portfolio. Treasury
and CIO also uses derivatives to meet the Firm’s asset-
liability management objectives. Refer to Note 5 for further
information on derivatives. In addition, Treasury and CIO
manages the Firm’s cash position primarily through
deposits at central banks and investments in short-term
instruments. Refer to Liquidity Risk Management on pages
97-104 for further information on liquidity and funding
risk. Refer to Market Risk Management on pages 131-138
for information on interest rate and foreign exchange risks.
The investment securities portfolio predominantly consists
of U.S. and non-U.S. government securities, U.S. GSE and
government agency and nonagency mortgage-backed
securities, collateralized loan obligations, obligations of U.S.
states and municipalities and other ABS. At December 31,
2022, the Treasury and CIO investment securities portfolio,
net of the allowance for credit losses, was $629.3 billion,
and the average credit rating of the securities comprising
the portfolio was AA+ (based upon external ratings where
available and, where not available, based primarily upon
internal risk ratings). Refer to Note 10 for further
information on the Firm’s investment securities portfolio
and internal risk ratings.
Selected income statement and balance sheet data
As of or for the year ended
December 31, (in millions)
2021
2022
2020
Investment securities gains/
(losses)
Available-for-sale securities
(average)
Held-to-maturity securities
(average)(a)
Investment securities portfolio
(average)
Available-for-sale securities
(period-end)
Held-to-maturity securities
(period–end)(a)
Investment securities portfolio,
net of allowance for credit
losses (period–end)(b)
$
(2,380) $
(345) $
795
$ 239,924 $ 306,827 $ 413,367
412,180
285,086
94,569
$ 652,104 $ 591,913 $ 507,936
$ 203,981 $ 306,352 $ 386,065
425,305
363,707
201,821
$ 629,286 $ 670,059 $ 587,886
(a) During 2022, 2021 and 2020, the Firm transferred $78.3 billion,
$104.5 billion and $164.2 billion of investment securities,
respectively, from AFS to HTM for capital management purposes.
(b) At December 31, 2022, 2021 and 2020, the allowance for credit
losses on investment securities was $67 million, $42 million and $78
million, respectively.
80
JPMorgan Chase & Co./2022 Form 10-K
FIRMWIDE RISK MANAGEMENT
Risk is an inherent part of JPMorgan Chase’s business
activities. When the Firm extends a consumer or wholesale
loan, advises customers and clients on their investment
decisions, makes markets in securities, or offers other
products or services, the Firm takes on some degree of risk.
The Firm’s overall objective is to manage its business, and
the associated risks, in a manner that balances serving the
interests of its clients, customers and investors, and
protecting the safety and soundness of the Firm.
The Firm believes that effective risk management requires,
among other things:
• Acceptance of responsibility, including identification and
escalation of risks by all individuals within the Firm;
• Ownership of risk identification, assessment, data and
management within each of the LOBs and Corporate;
and
• A Firmwide risk governance and oversight structure.
The Firm follows a disciplined and balanced compensation
framework with strong internal governance and
independent oversight by the Board of Directors (the
“Board”). The impact of risk and control issues is carefully
considered in the Firm’s performance evaluation and
incentive compensation processes.
Risk governance framework
The Firm’s risk governance framework involves
understanding drivers of risks, types of risks, and impacts of
risks.
Drivers of risks are factors that cause a risk to exist. Drivers
of risks include, but are not limited to, the economic
environment, regulatory or government policy, competitor
or market evolution, business decisions, process or
judgment error, deliberate wrongdoing, dysfunctional
markets, and natural disasters.
Types of risks are categories by which risks manifest
themselves. The Firm’s risks are generally categorized in
the following four risk types:
•
•
Strategic risk is the risk to earnings, capital, liquidity or
reputation associated with poorly designed or failed
business plans or inadequate responses to changes in
the operating environment.
Credit and investment risk is the risk associated with the
default or change in credit profile of a client,
counterparty or customer; or loss of principal or a
reduction in expected returns on investments, including
consumer credit risk, wholesale credit risk, and
investment portfolio risk.
• Market risk is the risk associated with the effect of
changes in market factors, such as interest and foreign
exchange rates, equity and commodity prices, credit
spreads or implied volatilities, on the value of assets and
liabilities held for both the short and long term.
• Operational risk is the risk of an adverse outcome
resulting from inadequate or failed internal processes or
systems; human factors; or external events impacting
the Firm’s processes or systems. Operational risk
includes compliance, conduct, legal, and estimations and
model risk.
Impacts of risks are consequences of risks, both quantitative
and qualitative. There may be many consequences of risks
manifesting, including quantitative impacts such as a
reduction in earnings and capital, liquidity outflows, and
fines or penalties, or qualitative impacts such as damage to
the Firm’s reputation, loss of clients and customers, and
regulatory and enforcement actions.
The Firm’s risk governance framework is managed on a
Firmwide basis. The Firm has an Independent Risk
Management (“IRM”) function, which is comprised of Risk
Management and Compliance. The Firm’s Chief Executive
Officer (“CEO”) appoints, subject to approval by the Risk
Committee of the Board of Directors (the “Board Risk
Committee”), the Firm’s Chief Risk Officer (“CRO”) to lead
the IRM function and maintain the risk governance
framework of the Firm. The framework is subject to
approval by the Board Risk Committee through its review
and approval of the Risk Governance and Oversight Policy.
The Firm’s CRO oversees and delegates authority to the
Firmwide Risk Executives (“FREs”), the Chief Risk Officers of
the LOBs and Corporate (“LOB CROs”), and the Firm’s Chief
Compliance Officer (“CCO”), who, in turn, establish Risk
Management and Compliance organizations, develop the
Firm’s risk governance policies and standards, and define
and oversee the implementation of the Firm’s risk
governance framework. The LOB CROs oversee risks that
arise in their LOBs and Corporate, while FREs oversee risks
that span across the LOBs and Corporate, functions and
regions. Each area of the Firm giving rise to risk is expected
to operate within the parameters identified by the IRM
function, and within its own management-identified risk and
control standards.
Three lines of defense
The Firm’s “three lines of defense” are as follows:
The first line of defense consists of each LOB, Treasury and
CIO, and certain Other Corporate initiatives, including their
aligned Operations, Technology and Control Management.
The first line of defense own the identification of risks
within their respective organizations and the design and
execution of controls to manage those risks.
JPMorgan Chase & Co./2022 Form 10-K
81
Management’s discussion and analysis
Responsibilities also include adherence to applicable laws,
rules and regulations and implementation of the risk
governance framework established by IRM, which may
include policies, standards, limits, thresholds and controls.
The second line of defense is the IRM function, which is
separate from, and independently assesses and challenges,
the first line of defense risk management practices. IRM is
also responsible for the identification of risks within its
respective organization, adherence to applicable laws, rules
and regulations and for the development and
implementation of policies and standards with respect to its
own processes.
The third line of defense is Internal Audit, an independent
function that provides objective assessment of the
adequacy and effectiveness of Firmwide processes,
controls, governance and risk management. The Internal
Audit function is headed by the General Auditor, who
reports to the Audit Committee and administratively to the
CEO.
In addition, there are other functions that contribute to the
Firmwide control environment but are not considered part
of a particular line of defense, including Finance, Human
Resources and Legal. These other functions are responsible
for the identification of risks within their respective
organizations, adherence to applicable laws, rules and
regulations and implementation of the risk governance
framework established by IRM.
Risk identification and ownership
The LOBs and Corporate own the identification of risks
within their respective organizations, as well as the design
and execution of controls, including IRM-specified controls,
to manage those risks. To support this activity, the Firm has
a risk identification framework designed to facilitate each
LOB and Corporate’s responsibility to identify material risks
inherent to the Firm’s business and operational activities,
catalog them in a central repository and review material
risks on a regular basis. The IRM function reviews and
challenges the LOB and Corporate’s identified risks,
maintains the central repository and provides the
consolidated Firmwide results to the Firmwide Risk
Committee (“FRC”) and the Board Risk Committee.
Risk appetite
The Firm’s overall appetite for risk is governed by “Risk
Appetite” frameworks for quantitative and qualitative risks.
Periodically the Firm’s risk appetite is set and approved by
senior management (including the CEO and CRO) and
approved by the Board Risk Committee. Quantitative and
qualitative risks are assessed to monitor and measure the
Firm’s capacity to take risk consistent with its stated risk
appetite. Risk appetite results are reported to the Board
Risk Committee.
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JPMorgan Chase & Co./2022 Form 10-K
Risk governance and oversight structure
The independent status of the IRM function is supported by a risk governance and oversight structure that provides channels
for the escalation of risks and issues to senior management, the FRC, and the Board of Directors, as appropriate.
The chart below illustrates the committees of the Board of Directors and key senior management-level committees in the
Firm’s risk governance and oversight structure. In addition, there are other committees, forums and channels of escalation
that support the oversight of risk that are not shown in the chart below or described in this Form 10-K.
The Firm’s Operating Committee, which consists of the
Firm’s CEO, CRO, Chief Financial Officer (“CFO”), General
Counsel, CEOs of the LOBs and other senior executives, is
accountable to and may refer matters to the Firm’s Board of
Directors. The Operating Committee is responsible for
escalating to the Board the information necessary to
facilitate the Board’s exercise of its duties.
Board oversight
The Firm’s Board of Directors actively oversees the business
and affairs of the Firm. This includes monitoring the Firm’s
financial performance and condition and reviewing the
strategic objectives and plans of the Firm. The Board carries
out a significant portion of its oversight responsibilities
through its principal standing committees, each of which
consists solely of independent members of the Board. The
Board Risk Committee is the principal committee that
oversees risk matters. The Audit Committee oversees the
control environment, and the Compensation & Management
Development Committee oversees compensation and other
management-related matters. Each committee of the Board
oversees reputational risks, conduct risks, and ESG matters
within its scope of responsibility.
The JPMorgan Chase Bank, N.A. Board of Directors is
responsible for the oversight of management of the bank,
which it discharges both acting directly and through the
principal standing committees of the Firm’s Board of
Directors. Risk and control oversight on behalf of JPMorgan
Chase Bank N.A. is primarily the responsibility of the Board
Risk Committee and the Audit Committee, respectively, and,
with respect to compensation and other management-
related matters, the Compensation & Management
Development Committee.
The Board Risk Committee assists the Board in its oversight
of management’s responsibility to implement a global risk
management framework reasonably designed to identify,
assess and manage the Firm’s risks. The Board Risk
Committee’s responsibilities include approval of applicable
primary risk policies and review of certain associated
frameworks, analysis and reporting established by
management. Breaches in risk appetite and parameters,
issues that may have a material adverse impact on the Firm,
including capital and liquidity issues, and other significant
risk-related matters are escalated to the Board Risk
Committee, as appropriate.
The Audit Committee assists the Board in its oversight of
management’s responsibility to ensure that there is an
effective system of controls reasonably designed to
safeguard the Firm’s assets and income, ensure the
integrity of the Firm’s financial statements, and maintain
compliance with the Firm’s ethical standards, policies, plans
and procedures, and with laws and regulations. It also
assists the Board in its oversight of the qualifications,
independence and performance of the Firm’s independent
registered public accounting firm, and of the performance
of the Firm’s Internal Audit function.
JPMorgan Chase & Co./2022 Form 10-K
83
Management’s discussion and analysis
The Compensation & Management Development Committee
(“CMDC”) assists the Board in its oversight of the Firm’s
compensation principles and practices. The CMDC reviews
and approves the Firm’s compensation and qualified
benefits programs. The Committee reviews the performance
of Operating Committee members against their goals, and
approves their compensation awards. In addition, the CEO’s
award is subject to ratification by the independent directors
of the Board. The CMDC also reviews the development of
and succession for key executives. As part of the Board’s
role of reinforcing, demonstrating and communicating the
“tone at the top,” the CMDC oversees the Firm’s culture,
including reviewing updates from management regarding
significant conduct issues and any related actions with
respect to employees, including compensation actions.
The Public Responsibility Committee oversees and reviews
the Firm's positions and practices on public responsibility
matters such as community investment, fair lending,
sustainability, consumer practices and other public policy
issues that reflect the Firm's values and character and could
impact the Firm's reputation among its stakeholders. The
Committee also provides guidance on these matters to
management and the Board, as appropriate.
The Corporate Governance & Nominating Committee
exercises general oversight with respect to the governance
of the Board of Directors. It reviews the qualifications of
and recommends to the Board proposed nominees for
election to the Board. The Committee evaluates and
recommends to the Board corporate governance practices
applicable to the Firm. It also reviews the framework for
assessing the Board’s performance and self-evaluation.
Management oversight
The Firm’s senior management-level committees that are
primarily responsible for key risk-related functions include:
The Firmwide Risk Committee (“FRC”) is the Firm’s highest
management-level risk committee. It oversees the risks
inherent in the Firm’s business and provides a forum for
discussion of topics, and issues that are raised or escalated
by its members and other committees.
The Firmwide Control Committee (“FCC”) is an escalation
committee for senior management to review and discuss
the Firmwide operational risk environment including
identified issues, operational risk metrics and significant
events that have been escalated.
Line of Business and Regional Risk Committees are
responsible for overseeing the governance, limits, and
controls that have been established within the scope of
their respective activities. These committees review the
ways in which the particular LOB or the businesses
operating in a particular region could be exposed to
adverse outcomes, with a focus on identifying, accepting,
escalating and/or requiring remediation of matters brought
to these committees.
Line of Business and Corporate Function Control Committees
oversee the operational risk and control environment of
their respective business or function, inclusive of
Operational Risk, Compliance and Conduct Risks. As part of
that mandate, they are responsible for reviewing indicators
of elevated or emerging risks and other data that may
impact the level of operational risk in a business or
function, addressing key operational risk issues, with an
emphasis on processes with control concerns and
overseeing control remediation.
The Asset and Liability Committee (“ALCO”) is responsible for
overseeing the Firm’s asset and liability management
(“ALM”), including the activities and frameworks supporting
management of the balance sheet, liquidity risk, interest
rate risk, and capital risk.
The Firmwide Valuation Governance Forum (“VGF”) is
composed of senior finance and risk executives and is
responsible for overseeing the management of risks arising
from valuation activities conducted across the Firm.
Risk governance and oversight functions
The Firm manages its risk through risk governance and
oversight functions. The scope of a particular function or
business activity may include one or more drivers, types
and/or impacts of risk. For example, Country Risk
Management oversees country risk which may be a driver of
risk or an aggregation of exposures that could give rise to
multiple risk types such as credit or market risk.
The following sections discuss the risk governance and
oversight functions that have been established to manage
the risks inherent in the Firm’s business activities.
Risk governance and oversight functions
Strategic Risk
Capital Risk
Liquidity Risk
Reputation Risk
Consumer Credit Risk
Wholesale Credit Risk
Investment Portfolio Risk
Market Risk
Country Risk
Climate Risk
Operational Risk
Compliance Risk
Conduct Risk
Legal Risk
Estimations and Model Risk
Page
85
86-96
97-104
105
110-115
116-126
130
131-138
139-140
141
142-148
145
146
147
148
84
JPMorgan Chase & Co./2022 Form 10-K
STRATEGIC RISK MANAGEMENT
Strategic risk is the risk to earnings, capital, liquidity or
reputation associated with poorly designed or failed
business plans or inadequate responses to changes in the
operating environment.
Management and oversight
The Operating Committee, together with the senior
leadership of each LOB and Corporate, is responsible for
managing the Firm’s most significant strategic risks. IRM
engages regularly in strategic business discussions and
decision-making, including participation in relevant
business reviews and senior management meetings, risk
and control committees and other relevant governance
forums, and acquisition and new business initiative reviews.
The Board of Directors oversees management’s strategic
decisions, and the Board Risk Committee oversees IRM and
the Firm’s risk governance framework.
In the process of developing business plans and strategic
initiatives, LOB and Corporate senior management identify
the associated risks that are incorporated into the Firmwide
Risk Identification framework and their impact on risk
appetite.
In addition, IRM conducts a qualitative assessment of the
LOB and Corporate strategic initiatives to assess their
impact on the risk profile of the Firm.
The Firm’s strategic planning process, which includes the
development of the Firm’s strategic plan and other strategic
initiatives, is one component of managing the Firm’s
strategic risk. The strategic plan outlines the Firm’s
strategic framework and initiatives, and includes
components such as budget, risk appetite, capital, earnings
and asset-liability management objectives. Guided by the
Firm’s How We Do Business Principles, the Operating
Committee and senior management teams in each LOB and
Corporate review and update the strategic plan periodically,
including evaluating the strategic framework and
performance against prior-year initiatives, assessing the
operating environment, refining existing strategies and
developing new strategies.
The Firm’s strategic plan, together with IRM’s assessment,
are provided to the Board as part of its review and approval
of the Firm’s strategic plan, and the plan is also reflected in
the Firm's budget.
The Firm’s balance sheet strategy, which focuses on risk-
adjusted returns, strong capital and robust liquidity, is also
a component in the management of strategic risk. Refer to
Capital Risk Management on pages 86-96 for further
information on capital risk. Refer to Liquidity Risk
Management on pages 97-104 for further information on
liquidity risk. Refer to Reputation Risk Management on page
105 for further information on reputation risk.
JPMorgan Chase & Co./2022 Form 10-K
85
Management’s discussion and analysis
CAPITAL RISK MANAGEMENT
Capital risk is the risk the Firm has an insufficient level or
composition of capital to support the Firm’s business
activities and associated risks during normal economic
environments and under stressed conditions.
A strong capital position is essential to the Firm’s business
strategy and competitive position. Maintaining a strong
balance sheet to manage through economic volatility is
considered a strategic imperative of the Firm’s Board of
Directors, CEO and Operating Committee. The Firm’s
fortress balance sheet philosophy focuses on risk-adjusted
returns, strong capital and robust liquidity. The Firm’s
capital risk management strategy focuses on maintaining
long-term stability to enable the Firm to build and invest in
market-leading businesses, including in highly stressed
environments. Senior management considers the
implications on the Firm’s capital prior to making significant
decisions that could impact future business activities. In
addition to considering the Firm’s earnings outlook, senior
management evaluates all sources and uses of capital with
a view to ensuring the Firm’s capital strength.
Capital risk management
The Firm has a Capital Risk Management function whose
primary objective is to provide independent oversight of
capital risk across the Firm.
Capital Risk Management’s responsibilities include:
• Defining, monitoring and reporting capital risk metrics;
•
Establishing, calibrating and monitoring capital risk
limits and indicators, including capital risk appetite;
• Developing a process to classify, monitor and report
capital limit breaches;
• Performing an assessment of the Firm’s capital
management activities, including changes made to the
Contingency Capital Plan described below; and
•
Conducting assessments of the Firm's regulatory capital
framework intended to ensure compliance with
applicable regulatory capital rules.
Capital management
Treasury and CIO is responsible for capital management.
The primary objectives of the Firm’s capital management
are to:
• Maintain sufficient capital in order to continue to build
and invest in the Firm’s businesses through the cycle
and in stressed environments;
• Retain flexibility to take advantage of future investment
opportunities;
• Promote the Firm’s ability to serve as a source of
strength to its subsidiaries;
•
Ensure the Firm operates above the minimum regulatory
capital ratios as well as maintain “well-capitalized”
status for the Firm and its insured depository institution
(“IDI”) subsidiaries at all times under applicable
regulatory capital requirements;
• Meet capital distribution objectives; and
• Maintain sufficient capital resources to operate
throughout a resolution period in accordance with the
Firm’s preferred resolution strategy.
The Firm addresses these objectives through:
•
Establishing internal minimum capital requirements and
maintaining a strong capital governance framework. The
internal minimum capital levels consider the Firm’s
regulatory capital requirements as well as an internal
assessment of capital adequacy, in normal economic
cycles and in stress events;
• Retaining flexibility in order to react to a range of
potential events; and
• Regular monitoring of the Firm’s capital position and
following prescribed escalation protocols, both at the
Firm and material legal entity levels.
Governance
Committees responsible for overseeing the Firm’s capital
management include the Capital Governance Committee,
the Firmwide ALCO and LOB and regional ALCOs, and the
CIO, Treasury and Corporate (“CTC”) Risk Committee. In
addition, the Board Risk Committee periodically reviews the
Firm’s capital risk tolerance. Refer to Firmwide Risk
Management on pages 81-84 for additional discussion of
the Firmwide ALCO and other risk-related committees.
Capital planning and stress testing
Comprehensive Capital Analysis and Review
The Federal Reserve requires large Bank Holding
Companies (“BHCs”), including the Firm, to submit at least
annually a capital plan that has been reviewed and
approved by the Board of Directors. The Federal Reserve
uses Comprehensive Capital Analysis and Review (“CCAR”)
and other stress testing processes to ensure that large BHCs
have sufficient capital during periods of economic and
financial stress, and have robust, forward-looking capital
assessment and planning processes in place that address
each BHC’s unique risks to enable it to absorb losses under
certain stress scenarios. Through CCAR, the Federal Reserve
evaluates each BHC’s capital adequacy and internal capital
adequacy assessment processes (“ICAAP”), as well as its
plans to make capital distributions, such as dividend
payments or stock repurchases. The Federal Reserve uses
results under the severely adverse scenario from its
supervisory stress test to determine each firm’s Stress
Capital Buffer (“SCB”) requirement for the coming year.
On June 27, 2022, the Firm announced that it had
completed the Federal Reserve's 2022 CCAR stress test
process. On August 4, 2022, the Federal Reserve affirmed
the Firm's 2022 SCB requirement of 4.0% (up from 3.2%),
and the Firm’s Standardized CET1 capital ratio requirement,
including regulatory buffers, of 12.0% (up from 11.2%).
The 2022 SCB requirement became effective on October 1,
2022, and will remain in effect until September 30, 2023.
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JPMorgan Chase & Co./2022 Form 10-K
Refer to Capital actions on page 94 for information on
actions taken by the Firm’s Board of Directors.
Internal Capital Adequacy Assessment Process
Annually, the Firm prepares the ICAAP, which informs the
Board of Directors of the ongoing assessment of the Firm’s
processes for managing the sources and uses of capital as
well as compliance with supervisory expectations for capital
planning and capital adequacy. The Firm’s ICAAP integrates
stress testing protocols with capital planning. The Firm’s
Audit Committee is responsible for reviewing and approving
the capital planning framework.
Stress testing assesses the potential impact of alternative
economic and business scenarios on the Firm’s earnings
and capital. Economic scenarios, and the parameters
underlying those scenarios, are defined centrally and
applied uniformly across the businesses. These scenarios
are articulated in terms of macroeconomic factors, which
are key drivers of business results; global market shocks,
which generate short-term but severe trading losses; and
idiosyncratic operational risk events. The scenarios are
intended to capture and stress key vulnerabilities and
idiosyncratic risks facing the Firm. In addition to CCAR and
other periodic stress testing, management also considers
tailored stress scenarios and sensitivity analyses, as
necessary.
Contingency Capital Plan
The Firm’s Contingency Capital Plan establishes the capital
management framework for the Firm and specifies the
principles underlying the Firm’s approach towards capital
management in normal economic conditions and in stressed
environments. The Contingency Capital Plan defines how
the Firm calibrates its targeted capital levels and meets
minimum capital requirements, monitors the ongoing
appropriateness of planned capital distributions, and sets
out the capital contingency actions that are expected to be
taken or considered at various levels of capital depletion
during a period of stress.
Regulatory capital
The Federal Reserve establishes capital requirements,
including well-capitalized standards, for the consolidated
financial holding company. The OCC establishes similar
minimum capital requirements and standards for the Firm’s
IDI subsidiaries, including JPMorgan Chase Bank, N.A. The
U.S. capital requirements generally follow the Capital
Accord of the Basel Committee, as amended from time to
time.
Basel III Overview
The capital rules under Basel III establish minimum capital
ratios and overall capital adequacy standards for large and
internationally active U.S. BHCs and banks, including the
Firm and its IDI subsidiaries, including JPMorgan Chase
Bank, N.A. The minimum amount of regulatory capital that
must be held by BHCs and banks is determined by
calculating RWA, which are on-balance sheet assets and off-
balance sheet exposures, weighted according to risk. Two
comprehensive approaches are prescribed for calculating
RWA: a standardized approach (“Basel III Standardized”),
and an advanced approach (“Basel III Advanced”). For each
of the risk-based capital ratios, the capital adequacy of the
Firm is evaluated against the lower of the Standardized or
Advanced approaches compared to their respective
regulatory capital ratio requirements. The Firm’s Basel III
Standardized risk-based ratios are currently more binding
than the Basel III Advanced risk-based ratios.
Basel III establishes capital requirements for calculating
credit risk RWA and market risk RWA, and in the case of
Basel III Advanced, operational risk RWA. Key differences in
the calculation of credit risk RWA between the Standardized
and Advanced approaches are that for Basel III Advanced,
credit risk RWA is based on risk-sensitive approaches which
largely rely on the use of internal credit models and
parameters, whereas for Basel III Standardized, credit risk
RWA is generally based on supervisory risk-weightings
which vary primarily by counterparty type and asset class.
Market risk RWA is calculated on a generally consistent
basis between Basel III Standardized and Basel III Advanced.
In addition to the RWA calculated under these approaches,
the Firm may supplement such amounts to incorporate
management judgment and feedback from its regulators.
Basel III also includes a requirement for Advanced
Approaches banking organizations, including the Firm, to
calculate the SLR. Refer to SLR on page 93 for additional
information.
Key Regulatory Developments
CECL regulatory capital transition.
Until December 31, 2021, the Firm’s capital reflected a two
year delay of the effects of CECL provided by the Federal
Reserve Board in response to the COVID-19 pandemic.
Beginning January 1, 2022, the $2.9 billion CECL capital
benefit is being phased out at 25% per year over a three-
year period. As of December 31, 2022, the Firm’s CET1
capital reflected the remaining $2.2 billion benefit
associated with the CECL capital transition provisions.
Additionally, effective January 1, 2022, the Firm phased
out 25% of the other CECL capital transition provisions
which impacted Tier 2 capital, adjusted average assets,
total leverage exposure and RWA, as applicable.
Refer to Note 1 for further information on the CECL
accounting guidance.
JPMorgan Chase & Co./2022 Form 10-K
87
Management’s discussion and analysis
Standardized Approach for Counterparty Credit Risk. On
January 1, 2022, the Firm adopted “Standardized Approach
for Counterparty Credit Risk” (“SA-CCR”), which replaced
the Current Exposure Method used to measure derivatives
counterparty exposure under the Standardized and
Advanced approach RWA where internal models are not
used, as well as leverage exposure used to calculate the SLR
in the regulatory capital framework. The rule issued by the
U.S. banking regulators in November 2019 applies to Basel
III Advanced Approaches banking organizations, such as the
Firm and JPMorgan Chase Bank, N.A.
The adoption of SA-CCR on January 1, 2022 increased the
Firm’s Standardized RWA by approximately $40 billion
based on the Firm's derivatives exposure as of December
31, 2021, which resulted in a decrease of approximately 30
bps to the Firm's CET1 capital ratio and a modest decrease
in its total leverage exposure. In addition, the adoption of
SA-CCR increased the Firm's Advanced RWA, but to a lesser
extent than Standardized RWA.
88
JPMorgan Chase & Co./2022 Form 10-K
Risk-based Capital Regulatory Requirements
The following chart presents the Firm’s Basel III CET1 capital ratio requirements under the Basel III rules currently in effect.
All banking institutions are currently required to have a
minimum CET1 capital ratio of 4.5% of risk-weighted
assets.
Certain banking organizations, including the Firm, are
required to hold additional levels of capital to serve as a
“capital conservation buffer”. The capital conservation
buffer incorporates a GSIB surcharge, a discretionary
countercyclical capital buffer and a fixed capital
conservation buffer of 2.5% for Advanced regulatory
capital requirements and a variable SCB requirement,
floored at 2.5%, for Standardized regulatory capital
requirements.
Under the Federal Reserve’s GSIB rule, the Firm is required
to assess its GSIB surcharge on an annual basis under two
separately prescribed methods based on data for the
previous fiscal year-end, and is subject to the higher of the
two. “Method 1” reflects the GSIB surcharge as prescribed
by the Basel Committee’s assessment methodology, and is
calculated by the Financial Stability Board (“FSB”) across
five criteria: size, cross-jurisdictional activity,
interconnectedness, complexity and substitutability.
“Method 2”, calculated by the Firm, modifies the Method 1
requirements to include a measure of short-term wholesale
funding in place of substitutability, and introduces a GSIB
score “multiplication factor”.
JPMorgan Chase & Co./2022 Form 10-K
89
Leverage-based Capital Regulatory Requirements
Supplementary leverage ratio
Banking organizations subject to the Basel III Advanced
approach are currently required to have a minimum SLR of
3.0%. Certain banking organizations, including the Firm,
are also required to hold an additional 2.0% leverage
buffer.
The SLR is defined as Tier 1 capital under Basel III divided
by the Firm’s total leverage exposure. Total leverage
exposure is calculated by taking the Firm’s total average
on-balance sheet assets, less amounts permitted to be
deducted for Tier 1 capital, and adding certain off-balance
sheet exposures, such as undrawn commitments and
derivatives potential future exposure.
Failure to maintain an SLR equal to or greater than the
regulatory requirement will result in limitations on the
amount of capital that the Firm may distribute such as
through dividends and common share repurchases, as well
as on certain executive discretionary bonus payments.
Other regulatory capital
In addition to meeting the capital ratio requirements of
Basel III, the Firm and its IDI subsidiaries must also
maintain minimum capital and leverage ratios in order to be
“well-capitalized” under the regulations issued by the
Federal Reserve and the Prompt Corrective Action (“PCA”)
requirements of the FDIC Improvement Act (“FDICIA”),
respectively. Refer to Note 27 for additional information.
Additional information regarding the Firm’s capital ratios,
as well as the U.S. federal regulatory capital standards to
which the Firm is subject, is presented in Note 27. Refer to
the Firm’s Pillar 3 Regulatory Capital Disclosures reports,
which are available on the Firm’s website, for further
information on the Firm’s Basel III measures.
Management’s discussion and analysis
The following table presents the Firm’s effective GSIB
surcharge for the years ended December 31, 2023, 2022
and 2021. For 2023, the Firm’s effective GSIB surcharge
under Method 1 and Method 2 has increased to 2.5% and
4.0%, respectively.
Method 1
Method 2
2023
2.5 %
4.0 %
2022
2.0 %
3.5 %
2021
2.0 %
3.5 %
On November 21, 2022, the FSB released its annual GSIB
list based upon data as of December 31, 2021, which
affirmed the Firm’s Method 1 GSIB surcharge of 2.5% (up
from 2.0%), effective January 1, 2023.
The Firm’s Method 2 surcharge calculated using data as of
December 31, 2021 is 4.5%, which will be effective
January 1, 2024. The Firm’s estimated Method 2 surcharge
calculated using data as of December 31, 2022 is 4.5%.
Accordingly, based on the GSIB rule currently in effect, the
Firm’s effective GSIB surcharge is expected to increase to
4.5% on January 1, 2024.
The U.S. federal regulatory capital standards include a
framework for setting a discretionary countercyclical capital
buffer taking into account the macro financial environment
in which large, internationally active banks function. As of
December 31, 2022, the U.S. countercyclical capital buffer
remained at 0%. The Federal Reserve will continue to
review the buffer at least annually. The buffer can be
increased if the Federal Reserve, FDIC and OCC determine
that systemic risks are meaningfully above normal and can
be calibrated up to an additional 2.5% of RWA subject to a
12-month implementation period.
Failure to maintain regulatory capital equal to or in excess
of the risk-based regulatory capital minimum plus the
capital conservation buffer (inclusive of the GSIB surcharge)
and any countercyclical buffer will result in limitations to
the amount of capital that the Firm may distribute, such as
through dividends and common share repurchases, as well
as certain executive discretionary bonus payments.
Risk-based Capital Targets
The Firm’s current target for its Basel III Standardized CET1
capital ratio is 13.0% for the first quarter of 2023,
increasing to 13.5% for the first quarter of 2024 with
consideration for an increase in the GSIB surcharge in
2024, and assuming no change in the Stress Capital Buffer.
The Firm’s quarterly capital ratios may vary from these
targets dependent on market conditions. These targets are
based on the Basel III capital rules currently in effect.
Total Loss-Absorbing Capacity
The Federal Reserve’s TLAC rule requires the U.S. GSIB top-
tier holding companies, including the Firm, to maintain
minimum levels of external TLAC and eligible long-term
debt (“eligible LTD”). Refer to TLAC on page 95 for
additional information.
90
JPMorgan Chase & Co./2022 Form 10-K
The following tables present the Firm’s risk-based capital metrics under both the Basel III Standardized and Advanced
approaches and leverage-based capital metrics. Refer to Note 27 for JPMorgan Chase Bank, N.A.’s risk-based and leverage-
based capital metrics.
(in millions, except ratios)
Risk-based capital metrics:(a)
CET1 capital
Tier 1 capital
Total capital
Risk-weighted assets
CET1 capital ratio
Tier 1 capital ratio
Total capital ratio
Standardized
Advanced
December 31,
2022
December 31,
2021
Capital ratio
requirements(b)
December 31,
2022
December 31,
2021
Capital ratio
requirements(b)
$ 218,934
$ 213,942
$ 218,934
$ 213,942
245,631
277,769
246,162
274,900
245,631
264,583
246,162
265,796
1,653,538
1,638,900
1,609,773
1,547,920
13.2 %
14.9
16.8
13.1 %
15.0
16.8
12.0 %
13.5
15.5
13.6 %
15.3
16.4
13.8 %
15.9
17.2
10.5 %
12.0
14.0
(a) The capital metrics reflect the CECL capital transition provisions.
(b) Represents minimum requirements and regulatory buffers applicable to the Firm for the period ended December 31, 2022. For the period ended
December 31, 2021, the Basel III Standardized CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 11.2%, 12.7%, and 14.7%,
respectively. Refer to Note 27 for additional information.
Three months ended
(in millions, except ratios)
Leverage-based capital metrics:(a)
Adjusted average assets(b)
Tier 1 leverage ratio
Total leverage exposure
SLR
December 31, 2022
December 31, 2021
Capital ratio
requirements(C)
$
$
3,703,873
$
3,782,035
6.6 %
6.5 %
4,367,092
$
4,571,789
5.6 %
5.4 %
4.0 %
5.0 %
(a) The capital metrics reflect the CECL capital transition provisions.
(b) Adjusted average assets, for purposes of calculating the leverage ratios, includes quarterly average assets adjusted for on-balance sheet assets that are
subject to deduction from Tier 1 capital, predominantly goodwill, inclusive of estimated equity method goodwill, and other intangible assets.
(c) Represents minimum requirements and regulatory buffers applicable to the Firm. Refer to Note 27 for additional information.
JPMorgan Chase & Co./2022 Form 10-K
91
Management’s discussion and analysis
Capital components
The following table presents reconciliations of total
stockholders’ equity to Basel III CET1 capital, Tier 1 capital
and Total capital as of December 31, 2022 and 2021.
Capital rollforward
The following table presents the changes in Basel III CET1
capital, Tier 1 capital and Tier 2 capital for the year ended
December 31, 2022.
$
245,631
$
246,162
December 31, 2022
(in millions)
Total stockholders’ equity
Less: Preferred stock
Common stockholders’ equity
Add:
Certain deferred tax liabilities(a)
Other CET1 capital adjustments(b)
Less:
Goodwill
Other intangible assets
Standardized/Advanced CET1
capital
Add: Preferred stock
Less: Other Tier 1 adjustments(c)
Standardized/Advanced Tier 1
capital
Long-term debt and other
instruments qualifying as Tier 2
capital
Qualifying allowance for credit
losses(d)
Other
Standardized Tier 2 capital
Standardized Total capital
Adjustment in qualifying allowance
for credit losses for Advanced Tier
2 capital(e)
Advanced Tier 2 capital
Advanced Total capital
December 31,
2022
292,332
$
December 31,
2021
294,127
$
27,404
264,928
2,510
6,221
53,501
(f)
1,224
218,934
27,404
707
34,838
259,289
2,499
3,351
50,315
882
213,942
34,838
2,618
$
13,569
$
14,106
19,353
(784)
32,138
277,769
(13,186)
18,952
264,583
$
$
$
$
15,012
(380)
28,738
274,900
(9,104)
19,634
265,796
$
$
$
$
(a) Represents deferred tax liabilities related to tax-deductible goodwill
and to identifiable intangibles created in nontaxable transactions,
which are netted against goodwill and other intangibles when
calculating CET1 capital.
(b) As of December 31, 2022 and 2021, includes a net benefit associated
with cash flow hedges and debit valuation adjustments ("DVA") related
to structured notes recorded in AOCI of $5.2 billion and $1.4 billion
and the benefit from the CECL capital transition provisions of $2.2
billion and $2.9 billion, respectively.
(c) As of December 31, 2021, Other Tier 1 adjustments included $2.0
billion of Series Z preferred stock called for redemption on December
31, 2021 and subsequently redeemed on February 1, 2022.
(d) Represents the allowance for credit losses eligible for inclusion in Tier
2 capital up to 1.25% of credit risk RWA, including the impact of the
CECL capital transition provision with any excess deducted from RWA.
(e) Represents an adjustment to qualifying allowance for credit losses for
the excess of eligible credit reserves over expected credit losses up to
0.6% of credit risk RWA, including the impact of the CECL capital
transition provision with any excess deducted from RWA.
(f) Goodwill deducted from capital includes goodwill associated with
equity method investments in nonconsolidated financial institutions
based on regulatory requirements. Refer to Principal investment risk
on page 130 for additional information.
Year Ended December 31, (in millions)
2022
Standardized/Advanced CET1 capital at December 31, 2021 $ 213,942
Net income applicable to common equity
Dividends declared on common stock
Net purchase of treasury stock
Changes in additional paid-in capital
Changes related to AOCI applicable to capital:
Unrealized gains/(losses) on investment securities
Translation adjustments, net of hedges(a)
Fair value hedges
Defined benefit pension and other postretirement
employee benefit (“OPEB”) plans
Changes related to other CET1 capital adjustments(b)
Change in Standardized/Advanced CET1 capital
Standardized/Advanced CET1 capital at
Standardized/Advanced Tier 1 capital at December 31,
2021
Change in CET1 capital(b)
Redemptions of noncumulative perpetual preferred stock
Other
Change in Standardized/Advanced Tier 1 capital
Standardized/Advanced Tier 1 capital at December 31,
2022
36,081
(11,893)
(1,921)
629
(11,764)
(611)
98
(1,241)
(4,386)
4,992
$ 218,934
$ 246,162
4,992
(5,434)
(89)
(531)
$ 245,631
Standardized Tier 2 capital at December 31, 2021
$ 28,738
Change in long-term debt and other instruments qualifying
as Tier 2
Change in qualifying allowance for credit losses(b)
Other
Change in Standardized Tier 2 capital
(537)
4,341
(404)
3,400
Standardized Tier 2 capital at December 31, 2022
Standardized Total capital at December 31, 2022
$ 32,138
$ 277,769
Advanced Tier 2 capital at December 31, 2021
$ 19,634
Change in long-term debt and other instruments qualifying
as Tier 2
Change in qualifying allowance for credit losses(b)
Other
Change in Advanced Tier 2 capital
(537)
259
(404)
(682)
Advanced Tier 2 capital at December 31, 2022
Advanced Total capital at December 31, 2022
$ 18,952
$ 264,583
(a) Includes foreign currency translation adjustments and the impact of
related derivatives.
(b) Includes the impact of the CECL capital transition provisions.
92
JPMorgan Chase & Co./2022 Form 10-K
RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced approaches for the
year ended December 31, 2022. The amounts in the rollforward categories are estimates, based on the predominant driver of
the change.
Year ended December 31, 2022
(in millions)
Credit risk
RWA(c)
Standardized
Market risk
RWA
Total RWA
Credit risk
RWA(c)
Market risk
RWA
Operational risk
RWA
Total RWA
Advanced
December 31, 2021
Model & data changes(a)
Movement in portfolio levels(b)
Changes in RWA
$ 1,543,452 $
95,448 $ 1,638,900
$ 1,047,042 $
95,506 $
405,372 $ 1,547,920
(7,313)
32,397
25,084
(3,808)
(6,638)
(10,446)
(11,121)
25,759
14,638
966
30,068
31,034
(3,808)
(6,266)
(10,074)
—
40,893
40,893
(2,842)
64,695
61,853
December 31, 2022
$ 1,568,536 $
85,002 $ 1,653,538
$ 1,078,076 $
85,432 $
446,265 $ 1,609,773
(a) Model & data changes refer to material movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance
(exclusive of rule changes).
(b) Movement in portfolio levels (inclusive of rule changes) refers to: for Credit risk RWA, impact of SA-CCR adoption on January 1, 2022, changes in book size
including position rolloffs in legacy portfolios in Home Lending, changes in composition and credit quality, market movements, and deductions for excess
eligible credit reserves not eligible for inclusion in Tier 2 capital; for Market risk RWA, changes in position, market movements, and changes in the Firm’s
regulatory multiplier from Regulatory VaR backtesting exceptions; and for Operational risk RWA, updates to cumulative losses and macroeconomic model
inputs.
(c) As of December 31, 2022 and 2021, the Basel III Standardized Credit risk RWA included wholesale and retail off balance-sheet RWA of $210.1 billion and
$218.5 billion, respectively; and the Basel III Advanced Credit risk RWA included wholesale and retail off balance-sheet RWA of $180.8 billion and $188.5
billion, respectively.
Refer to the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for further
information on Credit risk RWA, Market risk RWA and Operational risk RWA.
Supplementary leverage ratio
The following table presents the components of the Firm’s
SLR.
Three months ended
(in millions, except ratio)
Tier 1 capital
Total average assets
December 31,
2022
December 31,
2021
$ 245,631
$ 246,162
3,755,271
3,831,655
Less: Regulatory capital
adjustments(a)
Total adjusted average assets(b)
Add: Off-balance sheet exposures(c)
Total leverage exposure
SLR
51,398
49,620
3,703,873
3,782,035
663,219
789,754
$ 4,367,092
$ 4,571,789
5.6 %
5.4 %
(a) For purposes of calculating the SLR, includes quarterly average assets
adjusted for on-balance sheet assets that are subject to deduction
from Tier 1 capital, predominantly goodwill, inclusive of estimated
equity method goodwill, other intangible assets and adjustments for
the CECL capital transition provisions.
(b) Adjusted average assets used for the calculation of Tier 1 leverage
ratio.
(c) Off-balance sheet exposures are calculated as the average of the three
month-end spot balances on applicable regulatory exposures during
the reporting quarter. Effective January 1, 2022, includes the impact
of the SA-CCR adoption. Refer to the Firm’s Pillar 3 Regulatory Capital
Disclosures reports for additional information.
Line of business equity
Each business segment is allocated capital by taking into
consideration a variety of factors including capital levels of
similarly rated peers and applicable regulatory capital
requirements. ROE is measured and internal targets for
expected returns are established as key measures of a
business segment’s performance.
The Firm’s allocation methodology incorporates Basel III
Standardized RWA, Basel III Advanced RWA, the GSIB
surcharge, and a simulation of capital in a severe stress
environment. At least annually, the assumptions, judgments
and methodologies used to allocate capital are reassessed
and, as a result, the capital allocated to the LOBs may
change. As of January 1, 2023, the Firm has changed its
line of business capital allocations primarily as a result of
updates to the Firm’s capital requirements and changes in
RWA for each LOB.
The following table presents the capital allocated to each
business segment.
Line of business equity (Allocated capital)
(in billions)
December 31,
January 1,
2023
2022
2021
Consumer & Community Banking
$
52.0 $ 50.0 $ 50.0
Corporate & Investment Bank
108.0
103.0
Commercial Banking
Asset & Wealth Management
Corporate
28.5
16.0
60.4
25.0
17.0
69.9
83.0
24.0
14.0
88.3
Total common stockholders’ equity $
264.9 $ 264.9 $ 259.3
JPMorgan Chase & Co./2022 Form 10-K
93
Management’s discussion and analysis
Capital actions
Common stock dividends
The Firm’s common stock dividends are planned as part of
the Capital Management governance framework in line with
the Firm’s capital management objectives.
The Firm’s quarterly common stock dividend is currently
$1.00 per share. The Firm’s dividends are subject to
approval by the Board of Directors on a quarterly basis.
Refer to Note 21 and Note 26 for information regarding
dividend restrictions.
The following table shows the common dividend payout
ratio based on net income applicable to common equity.
Year ended December 31,
Common dividend payout ratio
2022
33 %
2021
25 %
2020
40 %
Common stock
Effective May 1, 2022, the Firm is authorized to purchase
up to $30 billion of common shares under its common
share repurchase program, which superseded the
previously approved repurchase program under which the
Firm was authorized to purchase up to $30 billion of
common shares.
On July 14, 2022, the Firm announced that it had
temporarily suspended share repurchases in anticipation of
the increase in the Firm's regulatory capital requirements.
The Firm had set a target for achieving CET1 capital of
13.0% by the first quarter of 2023. The Firm met and
exceeded that target in the fourth quarter of 2022, and
resumed repurchasing shares under its common share
repurchase program in the first quarter of 2023.
The following table sets forth the Firm’s repurchases of
common stock for the years ended December 31, 2022,
2021 and 2020.
Year ended December 31, (in millions)
2022
2021(a)
2020(b)
Total number of shares of common
stock repurchased
Aggregate purchase price of common
23.1
119.7
50.0
stock repurchases
$ 3,122 $ 18,448 $ 6,397
(a) As directed by the Federal Reserve, total net repurchases and common
stock dividends in the first and second quarter of 2021 were restricted
and could not exceed the average of the Firm’s net income for the four
preceding calendar quarters. Effective July 1, 2021, the Firm became
subject to the normal capital distribution restrictions provided under
the regulatory capital framework.
(b) On March 15, 2020, in response to the economic disruptions caused
by the COVID-19 pandemic, the Firm temporarily suspended
repurchases of its common stock. Subsequently, the Federal Reserve
directed all large banks, including the Firm, to discontinue net share
repurchases through the end of 2020.
The Board of Directors’ authorization to repurchase
common shares is utilized at management’s discretion, and
the timing of purchases and the exact amount of common
shares that may be repurchased is subject to various
factors, including market conditions; legal and regulatory
considerations affecting the amount and timing of
repurchase activity; the Firm’s capital position (taking into
account goodwill and intangibles); internal capital
generation; and alternative investment opportunities. The
$30 billion common share repurchase program approved
by the Board does not establish specific price targets or
timetables. The repurchase program may be suspended by
management at any time; and may be executed through
open market purchases or privately negotiated
transactions, or utilizing Rule 10b5-1 plans, which are
written trading plans that the Firm may enter into from
time to time under Rule 10b5-1 of the Securities Exchange
Act of 1934 and which allow the Firm to repurchase its
common shares during periods when it may otherwise not
be repurchasing common shares — for example, during
internal trading blackout periods.
Refer to Part II, Item 5: Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities on page 34 of the 2022 Form 10-K for
additional information regarding repurchases of the Firm’s
equity securities.
Refer to capital planning and stress testing on pages 86-87
for additional information.
Preferred stock
Preferred stock dividends declared were $1.6 billion for
each of the years ended December 31, 2022, 2021 and
2020.
During the year ended December 31, 2022, the Firm
redeemed several series of non-cumulative preferred stock.
Refer to Note 21 for additional information on the Firm’s
preferred stock, including the issuance and redemption of
preferred stock.
Subordinated Debt
Refer to Long-term funding and issuance on page 103 and
Note 20 for additional information on the Firm’s
subordinated debt.
94
JPMorgan Chase & Co./2022 Form 10-K
Other capital requirements
Total Loss-Absorbing Capacity
The Federal Reserve’s TLAC rule requires the U.S. GSIB top-
tier holding companies, including the Firm, to maintain
minimum levels of external TLAC and eligible long-term
debt.
The external TLAC requirements and the minimum level of
eligible long-term debt requirements are shown below:
(a) RWA is the greater of Standardized and Advanced compared to their
respective regulatory capital ratio requirements.
Failure to maintain TLAC equal to or in excess of the
regulatory minimum plus applicable buffers will result in
limitations on the amount of capital that the Firm may
distribute, such as through dividends and common share
repurchases, as well as on certain executive discretionary
bonus payments.
The following table presents the eligible external TLAC and
eligible LTD amounts, as well as a representation of these
amounts as a percentage of the Firm’s total RWA and total
leverage exposure applying the impact of the CECL capital
transition provisions as of December 31, 2022 and 2021.
(in billions,
except ratio)
Total eligible
amount
% of RWA
Regulatory
requirements
Surplus/
(shortfall)
% of total
leverage
exposure
Regulatory
requirements
Surplus/
(shortfall)
December 31, 2022
External
TLAC
LTD
December 31, 2021
External
TLAC
LTD
$ 486.0
$ 228.5
$ 464.6
$ 210.4
29.4 %
13.8 %
28.4 %
12.8 %
22.5
9.5
22.5
9.5
$ 114.0
$
71.4
$
95.9
$
54.7
11.1 %
5.2 %
10.2 %
4.6 %
9.5
4.5
9.5
4.5
$
71.2
$
32.0
$
30.3
$
4.6
As of January 1, 2023, the regulatory requirement for TLAC
to RWA and LTD to RWA ratios has increased by 50 bps to
23.0% and 10.0%, respectively, due to the increase in the
Firm’s GSIB requirements. Refer to Risk-based Capital
Regulatory Requirements on pages 89-90 for further
information on the GSIB surcharge.
Refer to Liquidity Risk Management on pages 97-104 for
further information on long-term debt issued by the Parent
Company.
Refer to Part I, Item 1A: Risk Factors on pages 9-32 of the
2022 Form 10-K for information on the financial
consequences to holders of the Firm’s debt and equity
securities in a resolution scenario.
JPMorgan Chase & Co./2022 Form 10-K
95
Effective January 1, 2023, J.P. Morgan Securities plc was
required to meet the minimum leverage capital
requirement established by the PRA of 3.25%, plus
regulatory buffers. As of December 31, 2022, J.P. Morgan
Securities plc was compliant with its leverage requirements.
The following table presents J.P. Morgan Securities plc’s
capital metrics:
December 31, 2022
(in millions, except ratios)
Total capital
CET1 capital ratio
Tier 1 capital ratio
Total capital ratio
Actual
Regulatory
Minimum ratios(a)
$
54,218
22.4 %
25.4 %
32.6 %
4.5 %
6.0 %
8.0 %
(a) Represents minimum Pillar 1 requirements specified by the PRA. J.P.
Morgan Securities plc's capital ratios as of December 31, 2022
exceeded the minimum requirements, including the additional capital
requirements specified by the PRA.
J.P. Morgan SE
JPMSE is a wholly-owned subsidiary of JPMorgan Chase
Bank, N.A. and has authority to engage in banking,
investment banking and markets activities. JPMSE is
regulated by the European Central Bank as well as the local
regulators in each of the countries in which it operates, and
it is subject to EU capital requirements under Basel III.
JPMSE is required by the EU Single Resolution Board to
maintain MREL. As of December 31, 2022, JPMSE was
compliant with its MREL requirements.
The following table presents JPMSE’s capital metrics:
December 31, 2022
(in millions, except ratios)
Total capital
CET1 capital ratio
Tier 1 capital ratio
Total capital ratio
Tier 1 leverage ratio
Actual
Regulatory
Minimum ratios(a)
$
38,879
19.7 %
19.7 %
33.8 %
6.0 %
4.5 %
6.0 %
8.0 %
3.0 %
(a) Represents minimum Pillar 1 requirements specified by the EU CRR.
J.P. Morgan SE’s capital and leverage ratios as of December 31, 2022
exceeded the minimum requirements, including the additional capital
requirements specified by the European Banking Authority.
Management’s discussion and analysis
U.S. broker-dealer regulatory capital
J.P. Morgan Securities
JPMorgan Chase’s principal U.S. broker-dealer subsidiary is
J.P. Morgan Securities. J.P. Morgan Securities is subject to
the regulatory capital requirements of Rule 15c3-1 under
the Securities Exchange Act of 1934 (the “Net Capital
Rule”). J.P. Morgan Securities is also registered as a futures
commission merchant and is subject to regulatory capital
requirements, including those imposed by the SEC, the
Commodity Futures Trading Commission (“CFTC”), the
Financial Industry Regulatory Authority (“FINRA”) and the
National Futures Association (“NFA”).
J.P. Morgan Securities has elected to compute its minimum
net capital requirements in accordance with the
“Alternative Net Capital Requirements” of the Net Capital
Rule.
The following table presents J.P. Morgan Securities’ net
capital:
December 31, 2022
(in millions)
Net Capital
Actual
Minimum
$
24,989 $
5,628
J.P. Morgan Securities is registered with the SEC as a
security-based swap dealer and with the CFTC as a swap
dealer. As a result of additional SEC and CFTC capital and
financial reporting requirements for security-based swap
dealers and swap dealers, J.P. Morgan Securities is subject
to alternative minimum net capital requirements and
required to hold “tentative net capital” in excess of $5.0
billion. J.P. Morgan Securities is also required to notify the
SEC and CFTC in the event that its tentative net capital is
less than $6.0 billion. Tentative net capital is net capital
before deducting market and credit risk charges as defined
by the Net Capital Rule. As of December 31, 2022, J.P.
Morgan Securities maintained tentative net capital in excess
of the minimum and notification requirements.
Non-U.S. subsidiary regulatory capital
J.P. Morgan Securities plc
J.P. Morgan Securities plc is a wholly-owned subsidiary of
JPMorgan Chase Bank, N.A. and has authority to engage in
banking, investment banking and broker-dealer activities.
J.P. Morgan Securities plc is jointly regulated in the U.K. by
the Prudential Regulation Authority (“PRA”) and the
Financial Conduct Authority (“FCA”). J.P. Morgan Securities
plc is subject to the European Union (“EU”) Capital
Requirements Regulation (“CRR”), as adopted in the U.K.,
and the PRA capital rules, each of which have implemented
Basel III and thereby subject J.P. Morgan Securities plc to its
requirements.
The Bank of England requires that U.K. banks, including U.K.
regulated subsidiaries of overseas groups, maintain
minimum requirements for own funds and eligible liabilities
(“MREL”). As of December 31, 2022, J.P. Morgan Securities
plc was compliant with its MREL requirements, which
became fully phased-in on January 1, 2022.
96
JPMorgan Chase & Co./2022 Form 10-K
LIQUIDITY RISK MANAGEMENT
Liquidity risk is the risk that the Firm will be unable to meet
its contractual and contingent financial obligations as they
arise or that it does not have the appropriate amount,
composition and tenor of funding and liquidity to support
its assets and liabilities.
Liquidity risk management
The Firm has a Liquidity Risk Management (“LRM”) function
whose primary objective is to provide independent
oversight of liquidity risk across the Firm. Liquidity Risk
Management’s responsibilities include:
• Defining, monitoring and reporting liquidity risk metrics;
•
Independently establishing and monitoring limits and
indicators, including liquidity risk appetite;
• Developing a process to classify, monitor and report
limit breaches;
• Performing an independent review of liquidity risk
management processes to evaluate their adequacy and
effectiveness based on LRM’s Independent Review
Framework;
• Monitoring and reporting internal Firmwide and legal
entity liquidity stress tests, regulatory defined metrics,
as well as liquidity positions, balance sheet variances
and funding activities; and
• Approving or escalating for review new or updated
liquidity stress assumptions.
Liquidity management
Treasury and CIO is responsible for liquidity management.
The primary objectives of the Firm’s liquidity management
are to:
•
Ensure that the Firm’s core businesses and material
legal entities are able to operate in support of client
needs and meet contractual and contingent financial
obligations through normal economic cycles as well as
during stress events, and
• Manage an optimal funding mix and availability of
liquidity sources.
The Firm addresses these objectives through:
• Analyzing and understanding the liquidity characteristics
of the assets and liabilities of the Firm, LOBs and legal
entities, taking into account legal, regulatory, and
operational restrictions;
• Developing internal liquidity stress testing assumptions;
• Defining and monitoring Firmwide and legal entity-
specific liquidity strategies, policies, reporting and
contingency funding plans;
• Managing liquidity within the Firm’s approved liquidity
risk appetite tolerances and limits;
• Managing compliance with regulatory requirements
related to funding and liquidity risk; and
•
Setting FTP in accordance with underlying liquidity
characteristics of balance sheet assets and liabilities as
well as certain off-balance sheet items.
As part of the Firm’s overall liquidity management strategy,
the Firm manages liquidity and funding using a centralized,
global approach designed to:
•
•
•
•
Optimize liquidity sources and uses;
Monitor exposures;
Identify constraints on the transfer of liquidity between
the Firm’s legal entities; and
Maintain the appropriate amount of surplus liquidity at
a Firmwide and legal entity level, where relevant.
Governance
Committees responsible for liquidity governance include the
Firmwide ALCO as well as LOB and regional ALCOs, the
Treasurer Committee, and the CTC Risk Committee. In
addition, the Board Risk Committee reviews and
recommends to the Board of Directors, for formal approval,
the Firm’s liquidity risk tolerances, liquidity strategy, and
liquidity policy. Refer to Firmwide Risk Management on
pages 81-84 for further discussion of ALCO and other risk-
related committees.
Internal stress testing
Liquidity stress tests are intended to ensure that the Firm
has sufficient liquidity under a variety of adverse scenarios,
including scenarios analyzed as part of the Firm’s resolution
and recovery planning. Stress scenarios are produced for
JPMorgan Chase & Co. (“Parent Company”) and the Firm’s
material legal entities on a regular basis, and other stress
tests are performed in response to specific market events
or concerns. Liquidity stress tests assume all of the Firm’s
contractual financial obligations are met and take into
consideration:
• Varying levels of access to unsecured and secured
funding markets;
•
•
•
Estimated non-contractual and contingent cash
outflows;
Considerations of credit rating downgrades;
Collateral haircuts; and
• Potential impediments to the availability and
transferability of liquidity between jurisdictions and
material legal entities such as regulatory, legal or other
restrictions.
Liquidity outflows are modeled across a range of time
horizons and currency dimensions and contemplate both
market and idiosyncratic stresses.
Results of stress tests are considered in the formulation of
the Firm’s funding plan and assessment of its liquidity
position. The Parent Company acts as a source of funding
for the Firm through equity and long-term debt issuances,
and its intermediate holding company, JPMorgan Chase
Holdings LLC (the “IHC”), provides funding support to the
ongoing operations of the Parent Company and its
subsidiaries. The Firm maintains liquidity at the Parent
Company, the IHC, and operating subsidiaries at levels
sufficient to comply with liquidity risk tolerances and
JPMorgan Chase & Co./2022 Form 10-K
97
Management’s discussion and analysis
minimum liquidity requirements, and to manage through
periods of stress when access to normal funding sources
may be disrupted.
Contingency funding plan
The Firm’s Contingency Funding Plan (“CFP”) sets out the
strategies for addressing and managing liquidity resource
needs during a liquidity stress event and incorporates
liquidity risk limits, indicators and risk appetite tolerances.
The CFP also identifies the alternative contingent funding
and liquidity resources available to the Firm and its legal
entities in a period of stress.
LCR and HQLA
The LCR rule requires that the Firm and JPMorgan Chase
Bank, N.A. maintain an amount of eligible HQLA that is
sufficient to meet their respective estimated total net cash
outflows over a prospective 30 calendar-day period of
significant stress. Eligible HQLA, for purposes of calculating
the LCR, is the amount of unencumbered HQLA that satisfy
certain operational considerations as defined in the LCR
rule. HQLA primarily consist of cash and certain high-quality
liquid securities as defined in the LCR rule.
Under the LCR rule, the amount of eligible HQLA held by
JPMorgan Chase Bank, N.A. that is in excess of its stand-
alone 100% minimum LCR requirement, and that is not
transferable to non-bank affiliates, must be excluded from
the Firm’s reported eligible HQLA.
Estimated net cash outflows are based on standardized
stress outflow and inflow rates prescribed in the LCR rule,
which are applied to the balances of the Firm’s assets,
sources of funds, and obligations. The LCR for both the Firm
and JPMorgan Chase Bank, N.A. is required to be a
minimum of 100%.
The following table summarizes the Firm and JPMorgan
Chase Bank, N.A.’s average LCR for the three months ended
December 31, 2022, September 30, 2022 and
December 31, 2021 based on the Firm’s interpretation of
the LCR framework.
Average amount
(in millions)
December 31,
2022
September 30,
2022
December 31,
2021
Three months ended
JPMorgan Chase & Co.:
HQLA
Eligible cash(a)
Eligible securities(b)(c)
Total HQLA(d)
Net cash outflows
LCR
Net excess eligible
HQLA(d)
$ 542,847
$ 589,158
$ 703,384
190,201
126,913
34,738
$ 733,048
$ 716,071
$ 738,122
$ 652,580
$ 635,072
$ 664,801
112 %
113 %
111 %
$
80,468
$
80,999
$
73,321
JPMorgan Chase Bank, N.A.:
LCR
Net excess eligible
HQLA
151 %
165 %
178 %
$ 356,733
$ 450,260
$ 555,300
(a) Represents cash on deposit at central banks, primarily the Federal
Reserve Banks.
(b) Predominantly U.S. Treasuries, U.S. GSE and government agency MBS,
and sovereign bonds net of applicable haircuts under the LCR rule.
(c) Eligible HQLA securities may be reported in securities borrowed or
purchased under resale agreements, trading assets, or investment
securities on the Firm’s Consolidated balance sheets.
(d) Excludes average excess eligible HQLA at JPMorgan Chase Bank, N.A.
that are not transferable to non-bank affiliates.
JPMorgan Chase Bank, N.A.'s average LCR decreased during
the three months ended December 31, 2022, compared
with the three months ended September 30, 2022
reflecting a decrease in JPMorgan Chase Bank, N.A.’s HQLA,
primarily due to a reduction in cash associated with a
decline in deposits, and loan growth.
JPMorgan Chase Bank, N.A.’s average LCR for the three
months ended December 31, 2022 decreased when
compared with the same period in the prior year, reflecting
a decrease in JPMorgan Chase Bank, N.A.’s HQLA as a result
of a reduction in cash from loan growth and a decline in
deposits as well as lower market values of HQLA-eligible
investment securities. Refer to Note 10 for additional
information on the Firm's investment securities portfolio.
The Firm and JPMorgan Chase Bank, N.A.'s average LCR
fluctuates from period to period due to changes in its
eligible HQLA and estimated net cash outflows as a result of
ongoing business activity. Refer to the Firm’s U.S. LCR
Disclosure reports, which are available on the Firm’s
website, for a further discussion of the Firm’s LCR.
Other liquidity sources
In addition to the assets reported in the Firm’s eligible
HQLA discussed above, the Firm had unencumbered
marketable securities, such as equity and debt securities,
that the Firm believes would be available to raise liquidity.
This includes excess eligible HQLA securities at JPMorgan
Chase Bank, N.A. that are not transferable to non-bank
affiliates. The fair value of these securities was
approximately $694 billion and $914 billion as of
December 31, 2022 and 2021, respectively, although the
amount of liquidity that could be raised at any particular
time would be dependent on prevailing market conditions.
The fair value decreased compared to December 31, 2021,
primarily due to a decrease in excess eligible HQLA
securities at JPMorgan Chase Bank, N.A., as noted above.
The Firm also had available borrowing capacity at the
FHLBs and the discount window at the Federal Reserve
Banks as a result of collateral pledged by the Firm to such
banks of approximately $323 billion and $308 billion as of
December 31, 2022 and 2021, respectively. This borrowing
capacity excludes the benefit of cash and securities
reported in the Firm’s eligible HQLA or other unencumbered
securities that are currently pledged at the Federal Reserve
Banks discount window and other central banks. Available
borrowing capacity increased from December 31, 2021
primarily due to increased credit card receivables pledged
at the Federal Reserve Banks. Although available, the Firm
does not view this borrowing capacity at the Federal
Reserve Banks discount window and the other central banks
as a primary source of liquidity.
98
JPMorgan Chase & Co./2022 Form 10-K
NSFR
The net stable funding ratio (“NSFR”) is a liquidity
requirement for large banking organizations that is
intended to measure the adequacy of “available” stable
funding that is sufficient to meet their “required” amounts
of stable funding over a one-year horizon.
As of December 31, 2022, the Firm and JPMorgan Chase
Bank, N.A. were compliant with the 100% minimum NSFR
requirement, based on the Firm’s current interpretation of
the final rule. The Firm will be required to publicly disclose
its quarterly average NSFR semiannually beginning in the
second half of 2023.
JPMorgan Chase & Co./2022 Form 10-K
99
Management’s discussion and analysis
Funding
Sources of funds
Management believes that the Firm’s unsecured and
secured funding capacity is sufficient to meet its on- and
off-balance sheet obligations, which includes both short-
and long-term cash requirements.
The Firm funds its global balance sheet through diverse
sources of funding including stable deposits, secured and
unsecured funding in the capital markets and stockholders’
equity. Deposits are the primary funding source for
JPMorgan Chase Bank, N.A. Additionally, JPMorgan Chase
Bank, N.A. may access funding through short- or long-term
secured borrowings, through the issuance of unsecured
long-term debt, or from borrowings from the IHC. The
Firm’s non-bank subsidiaries are primarily funded from
long-term unsecured borrowings and short-term secured
borrowings which are primarily securities loaned or sold
under repurchase agreements. Excess funding is invested
by Treasury and CIO in the Firm’s investment securities
portfolio or deployed in cash or other short-term liquid
investments based on their interest rate and liquidity risk
characteristics.
Refer to Note 28 for additional information on off–balance
sheet obligations.
Deposits
The table below summarizes, by LOB and Corporate, the period-end and average deposit balances as of and for the years
ended December 31, 2022 and 2021.
As of or for the year ended December 31,
Average
(in millions)
Consumer & Community Banking
Corporate & Investment Bank
Commercial Banking
Asset & Wealth Management
Corporate
Total Firm
Deposits provide a stable source of funding and reduce the
Firm’s reliance on the wholesale funding markets. A
significant portion of the Firm’s deposits are consumer
deposits and wholesale operating deposits, which are both
considered to be stable sources of liquidity. Wholesale
operating deposits are considered to be stable sources of
liquidity because they are generated from customers that
maintain operating service relationships with the Firm.
The Firm believes that average deposit balances are
generally more representative of deposit trends than
period-end deposit balances. However, during periods of
market disruption those trends could be affected.
Average deposits were higher for the year ended December
31, 2022 compared to the year ended December 31, 2021,
reflecting:
• growth in CCB from existing and new accounts across
both consumer and small business customers, partially
offset by a decline in deposits starting in the second half
of 2022, impacted by growth in customer spending, and
• net inflows in AWM resulting from the residual effects of
certain government actions, partially offset by migration
into investments starting in the second quarter of 2022
as a result of the rising interest rate environment
partially offset by
• lower average deposits in CIB and CB due to attrition, also
as a result of the rising interest rate environment.
2022
2021
2022
2021
$ 1,131,611 $ 1,148,110
$ 1,162,680 $ 1,054,956
689,893
271,342
233,130
14,203
707,791
323,954
282,052
396
739,700
294,180
261,489
9,866
760,048
301,343
230,296
511
$ 2,340,179 $ 2,462,303
$ 2,467,915 $ 2,347,154
Period-end deposits decreased reflecting:
• attrition in CB and CIB, particularly non-operating
deposits in CB, partially offset by net issuances of
structured notes in Markets,
• net outflows into investments in AWM amid the rising
interest rate environment, and
• a decline in balances in existing accounts in CCB due to
higher customer spending, predominantly offset by net
inflows into new accounts.
The increase in deposits for both spot and averages in
Corporate was driven by the Firm's international consumer
growth initiatives.
Refer to the discussion of the Firm’s Consolidated Balance
Sheets Analysis and the Business Segment Results on pages
55-56 and pages 61-80, respectively, for further
information on deposit and liability balance trends.
Certain deposits are covered by insurance protection that
provides additional funding stability and results in a benefit
to the LCR. Deposit insurance protection may be available
to depositors in the countries in which the deposits are
placed. For example, the Federal Deposit Insurance
Corporation (“FDIC”) provides deposit insurance protection
for deposits placed in a U.S. depository institution. At
December 31, 2022 and 2021, the Firmwide estimated
uninsured deposits were $1,383.7 billion and $1,489.6
billion, respectively, primarily reflecting wholesale
operating deposits.
100
JPMorgan Chase & Co./2022 Form 10-K
The table below shows the loan and deposit balances, the
loans-to-deposits ratios, and deposits as a percentage of
total liabilities, as of December 31, 2022 and 2021.
As of December 31,
(in billions except ratios)
Deposits
Deposits as a % of total liabilities
Loans
Loans-to-deposits ratio
$
$
2022
2021
2,340.2
$ 2,462.3
69 %
71 %
1,135.6
$ 1,077.7
49 %
44 %
Total uninsured deposits include time deposits. The table
below presents an estimate of uninsured U.S. and non-U.S.
time deposits, and their remaining maturities. The Firm’s
estimates of its uninsured U.S. time deposits are based on
data that the Firm calculates periodically under applicable
FDIC regulations. For purposes of this presentation, all non-
U.S. time deposits are deemed to be uninsured.
December 31,
2022
December 31,
2021
U.S.
Non-U.S.
U.S.
Non-U.S.
$ 43,513 $ 68,765 $ 29,359 $ 49,342
8,670
3,658
6,235
2,172
(in millions)
Three months or
less
Over three months
but within 6
months
Over six months but
within 12 months
Over 12 months
787
2,634
7,035
2,850
913
526
459
2,562
Total
$ 60,005 $ 77,907 $ 37,033 $ 54,535
The following table provides a summary of the average balances and average interest rates of JPMorgan Chase’s deposits for
the years ended December 31, 2022, 2021, and 2020.
(Unaudited)
Year ended December 31,
Average balances
Average interest rates
(in millions, except interest rates)
2022
2021
2020
2022
2021
2020
U.S. offices
Noninterest-bearing
Interest-bearing
Demand(a)
Savings(b)
Time
$
691,206
$
648,170
(c) $
495,722
NA
NA
NA
Total interest-bearing deposits
1,358,322
Total deposits in U.S. offices
2,049,528
324,512
971,788
62,022
322,122
930,866
(c)
(c)
48,628
1,301,616
1,949,786
269,888
739,916
59,053
1,068,857
1,564,579
0.92 %
0.06 %
0.25 %
0.28
2.07
0.52
0.34
0.06
0.26
0.07
0.05
0.13
1.10
0.21
0.15
Non-U.S. offices
Noninterest-bearing
Interest-bearing
Demand
Time
Total interest-bearing deposits
Total deposits in non-U.S. offices
28,043
26,315
21,805
NA
NA
NA
324,740
65,604
390,344
418,387
313,304
57,749
371,053
397,368
267,545
52,822
320,367
342,172
0.57
1.85
0.78
0.73
(0.10)
(0.09)
(0.10)
(0.09)
—
0.13
0.02
0.02
Total deposits
$ 2,467,915
$ 2,347,154
$ 1,906,751
0.41 %
0.02 %
0.12 %
(a) Includes Negotiable Order of Withdrawal (“NOW”) accounts, and certain trust accounts.
(b) Includes Money Market Deposit Accounts (“MMDAs”).
(c) Prior-period amounts have been revised to conform with the current presentation.
Refer to Note 17 for additional information on deposits.
JPMorgan Chase & Co./2022 Form 10-K
101
Management’s discussion and analysis
The following table summarizes short-term and long-term funding, excluding deposits, as of December 31, 2022 and 2021,
and average balances for the years ended December 31, 2022 and 2021. Refer to the Consolidated Balance Sheets Analysis
on pages 55-56 and Note 11 for additional information.
Sources of funds (excluding deposits)
As of or for the year ended December 31,
(in millions)
Commercial paper
Other borrowed funds
Federal funds purchased
Total short-term unsecured funding
Securities sold under agreements to repurchase(a)
Securities loaned(a)
Other borrowed funds
Obligations of Firm-administered multi-seller conduits(b)
Total short-term secured funding
Senior notes
Subordinated debt
Structured notes(c)
Total long-term unsecured funding
Credit card securitization(b)
FHLB advances
Other long-term secured funding(d)
Total long-term secured funding
Preferred stock(e)
Common stockholders’ equity(e)
2022
2021
2022
2021
Average
$
12,557 $
8,418
1,684
22,659 $
15,108
9,999
1,769
$
26,876
$ 198,382 $ 189,806
2,765
28,487
6,198
2,547
23,052
9,236
$
16,151
12,250
1,567
$
29,968
$ 236,192
5,003
25,211
7,387
$
12,285
12,903
2,197
$
27,385
$ 250,229
6,876
28,138
9,283
$ 233,217 $ 227,256
$ 273,793
$ 294,526
$ 188,025 $ 191,488
$ 189,047
$ 181,290
21,803
70,839
20,531
73,956
20,125
68,656
20,877
75,152
$ 280,667 $ 285,975
$ 277,828
$ 277,319
$
1,999 $
2,397
$
1,950
$
3,156
11,093
4,105
11,110
3,920
$
$
17,197 $
17,427
27,404 $
34,838
$
$
11,103
3,837
16,890
31,893
12,174
4,384
19,714
33,027
$
$
$ 264,928 $ 259,289
$ 253,068
$ 250,968
(a) Primarily consists of short-term securities loaned or sold under agreements to repurchase.
(b) Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.
(c) Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(d) Includes long-term structured notes which are secured.
(e) Refer to Capital Risk Management on pages 86-96, Consolidated statements of changes in stockholders’ equity on page 162, Note 21 and Note 22 for
additional information on preferred stock and common stockholders’ equity.
The Firm’s sources of short-term unsecured funding
primarily consist of issuances of wholesale commercial
paper and other borrowed funds.
The decrease in period-end commercial paper and the
increase in average balances for the year ended
December 31, 2022 compared to the respective prior year
periods, was due to changes in net issuance levels primarily
for short-term liquidity management.
Short-term funding
The Firm’s sources of short-term secured funding primarily
consist of securities loaned or sold under agreements to
repurchase. These instruments are secured predominantly
by high-quality securities collateral, including government-
issued debt and U.S. GSE and government agency MBS.
Securities sold under agreements to repurchase increased
at December 31, 2022, compared with December 31,
2021, due to higher secured financing of trading assets in
Markets, partially offset by lower secured financing of AFS
investment securities in Treasury and CIO.
The balances associated with securities loaned or sold
under agreements to repurchase fluctuate over time due to
investment and financing activities of clients, the Firm’s
demand for financing, the ongoing management of the mix
of the Firm’s liabilities, including its secured and unsecured
financing (for both the investment securities and market-
making portfolios), and other market and portfolio factors.
102
JPMorgan Chase & Co./2022 Form 10-K
Long-term funding and issuance
Long-term funding provides an additional source of stable funding and liquidity for the Firm. The Firm’s long-term funding plan
is driven primarily by expected client activity, liquidity considerations, and regulatory requirements, including TLAC. Long-term
funding objectives include maintaining diversification, maximizing market access and optimizing funding costs. The Firm
evaluates various funding markets, tenors and currencies in creating its optimal long-term funding plan.
The significant majority of the Firm’s long-term unsecured funding is issued by the Parent Company to provide flexibility in
support of the funding needs of both bank and non-bank subsidiaries. The Parent Company advances substantially all net
funding proceeds to its subsidiary, the IHC. The IHC does not issue debt to external counterparties. The following table
summarizes long-term unsecured issuance and maturities or redemptions for the years ended December 31, 2022 and 2021.
Refer to Note 20 for additional information on the IHC and long-term debt.
Long-term unsecured funding
Year ended December 31,
(Notional in millions)
Issuance
Senior notes issued in the U.S. market
Senior notes issued in non-U.S. markets
Total senior notes
Subordinated debt
Structured notes(a)
Total long-term unsecured funding – issuance
Maturities/redemptions
Senior notes
Subordinated debt
Structured notes
2022
2021
2022
2021
Parent Company
Subsidiaries
$
32,600 $
39,500 $
— $
2,752
35,352
3,500
2,535
5,581
45,081
—
—
—
—
4,113
35,577
32,714
$
41,387 $
49,194 $
35,577 $
32,714
$
16,700 $
10,840 $
—
1,594
9
65 $
—
65
—
4,694
25,481
33,023
—
—
—
—
Total long-term unsecured funding – maturities/redemptions
$
18,294 $
15,543 $
25,546 $
33,088
(a) Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
The Firm can also raise secured long-term funding through securitization of consumer credit card loans and FHLB advances.
The following table summarizes the securitization issuance and FHLB advances and their respective maturities or redemptions
for the years ended December 31, 2022 and 2021.
Long-term secured funding
Year ended December 31,
(in millions)
Credit card securitization
FHLB advances
Other long-term secured funding(a)
Total long-term secured funding
Issuance
Maturities/Redemptions
2022
2021
2022
2021
$
999 $
— $
1,400 $
—
476
—
525
14
268
2,550
3,011
741
$
1,475 $
525 $
1,682 $
6,302
(a) Includes long-term structured notes that are secured.
The Firm’s wholesale businesses also securitize loans for client-driven transactions; those client-driven loan securitizations are
not considered to be a source of funding for the Firm and are not included in the table above. Refer to Note 14 for a further
description of client-driven loan securitizations.
JPMorgan Chase & Co./2022 Form 10-K
103
Management’s discussion and analysis
Credit ratings
The cost and availability of financing are influenced by
credit ratings. Reductions in these ratings could have an
adverse effect on the Firm’s access to liquidity sources,
increase the cost of funds, trigger additional collateral or
funding requirements and decrease the number of investors
and counterparties willing to lend to the Firm. The nature
and magnitude of the impact of ratings downgrades
depends on numerous contractual and behavioral factors,
which the Firm believes are incorporated in its liquidity risk
and stress testing metrics. The Firm believes that it
maintains sufficient liquidity to withstand a potential
decrease in funding capacity due to ratings downgrades.
Additionally, the Firm’s funding requirements for VIEs and
other third-party commitments may be adversely affected
by a decline in credit ratings. Refer to liquidity risk and
credit-related contingent features in Note 5 for additional
information on the impact of a credit ratings downgrade on
the funding requirements for VIEs, and on derivatives and
collateral agreements.
The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of December 31, 2022,
were as follows:
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
J.P. Morgan Securities LLC
J.P. Morgan Securities plc
J.P. Morgan SE (a)
December 31, 2022
Moody’s Investors Service
Standard & Poor’s
Fitch Ratings
Long-term
issuer
Short-term
issuer
A1
A-
AA-
P-1
A-2
F1+
Outlook
Stable
Positive
Stable
Long-term
issuer
Short-term
issuer
Aa2
A+
AA
P-1
A-1
F1+
Outlook
Stable
Positive
Stable
Long-term
issuer
Short-term
issuer
Aa3
A+
AA
P-1
A-1
F1+
Outlook
Stable
Positive
Stable
(a) In January 2022, the three rating agencies affirmed the credit ratings of J.P. Morgan SE, which are equivalent to the ratings previously assigned to J.P.
Morgan SE's predecessors, J.P. Morgan Bank Luxembourg S.A. and J.P. Morgan AG.
On September 29, 2022, Moody’s upgraded the Parent
Company’s long-term issuer rating to A1 (previously A2)
and changed the long-term outlook to stable (previously
positive). All other ratings and outlooks of the Parent
Company and those of the Firm's principal bank and non-
bank subsidiaries were affirmed by Moody's.
JPMorgan Chase’s unsecured debt does not contain
requirements that would call for an acceleration of
payments, maturities or changes in the structure of the
existing debt, provide any limitations on future borrowings
or require additional collateral, based on unfavorable
changes in the Firm’s credit ratings, financial ratios,
earnings, or stock price.
Critical factors in maintaining high credit ratings include a
stable and diverse earnings stream, strong capital and
liquidity ratios, strong credit quality and risk management
controls, and diverse funding sources. Rating agencies
continue to evaluate economic and geopolitical trends,
regulatory developments, future profitability, risk
management practices, and litigation matters, as well as
their broader ratings methodologies. Changes in any of
these factors could lead to changes in the Firm’s credit
ratings.
104
JPMorgan Chase & Co./2022 Form 10-K
Governance and oversight
The Reputation Risk Governance policy establishes the
principles for managing reputation risk for the Firm. It is
the responsibility of employees in each LOB and Corporate
to consider the reputation of the Firm when deciding
whether to offer a new product, engage in a transaction or
client relationship, enter a new jurisdiction, initiate a
business process or consider any other activity.
Environmental impacts and social concerns are increasingly
important considerations in assessing the Firm’s reputation
risk, and are a component of the Firm’s reputation risk
governance.
Reputation risk issues that are deemed to be material are
escalated as appropriate.
REPUTATION RISK MANAGEMENT
Reputation risk is the risk that an action or inaction may
negatively impact perception of the Firm’s integrity and
reduce confidence in the Firm’s competence by various
constituents, including clients, counterparties, customers,
investors, regulators, employees, communities or the
broader public.
Organization and management
Reputation Risk Management establishes the governance
framework for managing reputation risk across the Firm’s
LOBs and Corporate. Reputation risk is inherently
challenging to identify, manage, and quantify.
The Firm’s reputation risk management function includes
the following activities:
•
•
Maintaining a Firmwide Reputation Risk Governance
policy and a standard consistent with the reputation
risk framework
Overseeing the governance execution through
processes and infrastructure that support consistent
identification, escalation, management and monitoring
of reputation risk issues Firmwide
The types of events that result in reputation risk are wide-
ranging and may be introduced by the Firm’s employees
and the clients, customers and counterparties with which
the Firm does business. These events could result in
financial losses, litigation, regulatory enforcement actions,
fines, penalties or other sanctions, as well as other harm to
the Firm.
JPMorgan Chase & Co./2022 Form 10-K
105
Management’s discussion and analysis
CREDIT AND INVESTMENT RISK MANAGEMENT
Credit and investment risk is the risk associated with the
default or change in credit profile of a client, counterparty
or customer; or loss of principal or a reduction in expected
returns on investments, including consumer credit risk,
wholesale credit risk, and investment portfolio risk.
Credit risk management
Credit risk is the risk associated with the default or change
in credit profile of a client, counterparty or customer. The
Firm provides credit to a variety of clients and customers,
ranging from large corporate and institutional clients to
individual consumers and small businesses. In its consumer
businesses, the Firm is exposed to credit risk primarily
through its home lending, credit card, auto, and business
banking businesses. In its wholesale businesses, the Firm is
exposed to credit risk through its underwriting, lending,
market-making, and hedging activities with and for clients
and counterparties, as well as through its operating services
activities (such as cash management and clearing
activities), and securities financing activities. The Firm is
also exposed to credit risk through its investment securities
portfolio and cash placed with banks.
Credit Risk Management monitors, measures and manages
credit risk throughout the Firm and defines credit risk
policies and procedures. The Firm’s credit risk management
governance includes the following activities:
• Maintaining a credit risk policy framework
• Monitoring, measuring and managing credit risk across
all portfolio segments, including transaction and
exposure approval
• Setting industry and geographic concentration limits, as
appropriate, and establishing underwriting guidelines
• Assigning and managing credit authorities in connection
with the approval of credit exposure
• Managing criticized exposures and delinquent loans, and
• Estimating credit losses and supporting appropriate
credit risk-based capital management
Risk identification and measurement
To measure credit risk, the Firm employs several
methodologies for estimating the likelihood of obligor or
counterparty default. Methodologies for measuring credit
risk vary depending on several factors, including type of
asset (e.g., consumer versus wholesale), risk measurement
parameters (e.g., delinquency status and borrower’s credit
score versus wholesale risk-rating) and risk management
and collection processes (e.g., retail collection center
versus centrally managed workout groups). Credit risk
measurement is based on the probability of default of an
obligor or counterparty, the loss severity given a default
event and the exposure at default.
Based on these factors and the methodology and estimates
described in Note 13 and Note 10, the Firm estimates credit
losses for its exposures. The allowance for loan losses
reflects estimated credit losses related to the consumer and
wholesale held-for-investment loan portfolios, the
allowance for lending-related commitments reflects
estimated credit losses related to the Firm’s lending-related
commitments and the allowance for investment securities
reflects estimated credit losses related to the investment
securities portfolio. Refer to Note 13, Note 10 and Critical
Accounting Estimates used by the Firm on pages 149-152
for further information.
In addition, potential and unexpected credit losses are
reflected in the allocation of credit risk capital and
represent the potential volatility of actual losses relative to
the established allowances for loan losses and lending-
related commitments. The analyses for these losses include
stress testing that considers alternative economic scenarios
as described below.
Stress testing
Stress testing is important in measuring and managing
credit risk in the Firm’s credit portfolio. The stress testing
process assesses the potential impact of alternative
economic and business scenarios on estimated credit losses
for the Firm. Economic scenarios and the underlying
parameters are defined centrally, articulated in terms of
macroeconomic factors and applied across the businesses.
The stress test results may indicate credit migration,
changes in delinquency trends and potential losses in the
credit portfolio. In addition to the periodic stress testing
processes, management also considers additional stresses
outside these scenarios, including industry and country-
specific stress scenarios, as necessary. The Firm uses stress
testing to inform decisions on setting risk appetite both at a
Firm and LOB level, as well as to assess the impact of stress
on individual counterparties.
106
JPMorgan Chase & Co./2022 Form 10-K
In addition to Credit Risk Management, an independent
Credit Review function is responsible for:
• Independently validating or changing the risk grades
assigned to exposures in the Firm’s wholesale credit
portfolio, and assessing the timeliness of risk grade
changes initiated by responsible business units; and
• Evaluating the effectiveness of the credit management
processes of the LOBs and Corporate, including the
adequacy of credit analyses and risk grading/loss given
default (“LGD”) rationales, proper monitoring and
management of credit exposures, and compliance with
applicable grading policies and underwriting guidelines.
Refer to Note 12 for further discussion of consumer and
wholesale loans.
Risk reporting
To enable monitoring of credit risk and effective decision-
making, aggregate credit exposure, credit quality forecasts,
concentration levels and risk profile changes are reported
regularly to senior members of Credit Risk Management.
Detailed portfolio reporting of industry, clients,
counterparties and customers, product and geography are
prepared, and the appropriateness of the allowance for
credit losses is reviewed by senior management at least on
a quarterly basis. Through the risk reporting and
governance structure, credit risk trends and limit
exceptions are provided regularly to, and discussed with,
risk committees, senior management and the Board of
Directors.
Risk monitoring and management
The Firm has developed policies and practices that are
designed to preserve the independence and integrity of the
approval and decision-making process for extending credit
so that credit risks are assessed accurately, approved
properly, monitored regularly and managed actively at both
the transaction and portfolio levels. The policy framework
establishes credit approval authorities, concentration limits,
risk-rating methodologies, portfolio review parameters and
guidelines for management of distressed exposures. In
addition, certain models, assumptions and inputs used in
evaluating and monitoring credit risk are independently
validated by groups that are separate from the LOBs.
Consumer credit risk is monitored for delinquency and
other trends, including any concentrations at the portfolio
level, as certain of these trends can be addressed through
changes in underwriting policies and portfolio guidelines.
Consumer Risk Management evaluates delinquency and
other trends against business expectations, current and
forecasted economic conditions, and industry benchmarks.
Historical and forecasted economic performance and trends
are incorporated into the modeling of estimated consumer
credit losses and are part of the monitoring of the credit
risk profile of the portfolio.
Wholesale credit risk is monitored regularly at an aggregate
portfolio, industry, and individual client and counterparty
level with established concentration limits that are
reviewed and revised periodically as deemed appropriate
by management. Industry and counterparty limits, as
measured in terms of exposure and economic risk appetite,
are subject to stress-based loss constraints. Wrong-way risk
is the risk that exposure to a counterparty is positively
correlated with the impact of a default by the same
counterparty, which could cause exposure to increase at the
same time as the counterparty’s capacity to meet its
obligations is decreasing.
Management of the Firm’s wholesale credit risk exposure is
accomplished through a number of means, including:
• Loan underwriting and credit approval processes
• Loan syndications and participations
• Loan sales and securitizations
• Credit derivatives
• Master netting agreements, and
• Collateral and other risk-reduction techniques
JPMorgan Chase & Co./2022 Form 10-K
107
Management’s discussion and analysis
CREDIT PORTFOLIO
Credit risk is the risk associated with the default or change
in credit profile of a client, counterparty or customer.
In the following tables, total loans include loans retained
(i.e., held-for-investment); loans held-for-sale; and certain
loans accounted for at fair value. The following tables do
not include loans which the Firm accounts for at fair value
and classifies as trading assets; refer to Notes 2 and 3 for
further information regarding these loans. Refer to Notes
12, 28, and 5 for additional information on the Firm’s
loans, lending-related commitments and derivative
receivables, including the Firm’s related accounting
policies.
Refer to Note 10 for information regarding the credit risk
inherent in the Firm’s investment securities portfolio; and
refer to Note 11 for information regarding credit risk
inherent in the securities financing portfolio. Refer to
Consumer Credit Portfolio on pages 110-115 and Note 12
for further discussions of the consumer credit environment
and consumer loans. Refer to Wholesale Credit Portfolio on
pages 116-126 and Note 12 for further discussions of the
wholesale credit environment and wholesale loans.
Total credit portfolio
December 31,
(in millions)
Loans retained
Loans held-for-sale
Loans at fair value
Credit exposure
Nonperforming(d)(e)
2022
2021
2022
2021
$ 1,089,598 $ 1,010,206
$ 5,837 $ 6,932
3,970
42,079
8,688
58,820
54
829
48
815
Total loans
1,135,647
1,077,714
6,720
7,795
Derivative receivables
70,880
57,081
296
316
Receivables from
customers(a)
Total credit-related
assets
Assets acquired in loan
satisfactions
Real estate owned
Other
Total assets acquired in
loan satisfactions
Lending-related
commitments
Total credit portfolio
Credit derivatives and
credit-related notes
used in credit portfolio
management
activities(b)
Liquid securities and
other cash collateral
held against
derivatives
49,257
59,645
—
—
1,255,784
1,194,440
7,016
8,111
NA
NA
NA
NA
NA
NA
1,326,782
1,262,313
203
28
231
455
213
22
235
764
$ 2,582,566 $ 2,456,753
$ 7,702 $ 9,110
$
(19,330) $
(20,739) (c) $
— $
—
(23,014)
(10,102)
NA
NA
(a) Receivables from customers reflect held-for-investment margin loans
to brokerage clients in CIB, CCB and AWM; these are reported within
accrued interest and accounts receivable on the Consolidated balance
sheets.
(b) Represents the net notional amount of protection purchased and sold
through credit derivatives and credit-related notes used to manage
credit exposures.
(c) Prior-period amount has been revised to conform with the current
presentation.
(d) At December 31, 2022 and 2021, nonperforming assets excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $302 million and $623 million, respectively.
These amounts have been excluded based upon the government
guarantee. In addition, the Firm’s policy is generally to exempt credit
card loans from being placed on nonaccrual status as permitted by
regulatory guidance.
(e) At December 31, 2022, and 2021 nonaccrual loans excluded $119
million and $633 million, respectively, of PPP loans 90 or more days
past due and guaranteed by the SBA.
The following table provides information on Firmwide
nonaccrual loans to total loans.
December 31,
(in millions, except ratios)
Total nonaccrual loans
Total loans
2022
2021
$
6,720
$
7,795
1,135,647
1,077,714
Firmwide nonaccrual loans to total loans
outstanding
0.59 %
0.72 %
The following table provides information about the Firm’s
net charge-offs and recoveries.
Year ended December 31,
(in millions, except ratios)
Net charge-offs
Average retained loans
Net charge-off rates
2022
2021
$
2,853
$
2,865
1,044,765
965,271
0.27 %
0.30 %
108
JPMorgan Chase & Co./2022 Form 10-K
Customer and client assistance
The Firm provided various forms of assistance to customers
and clients impacted by the COVID-19 pandemic, including
payment deferrals and covenant modifications. Assistance
provided in response to the COVID-19 pandemic could delay
the recognition of delinquencies, nonaccrual status, and net
charge-offs for those customers and clients who would have
otherwise moved into past due or nonaccrual status. Refer
to Notes 12 and 13 for further information on the Firm’s
accounting policies for loan modifications and the
allowance for credit losses.
Paycheck Protection Program (“PPP”)
The PPP, implemented by the Small Business
Administration (“SBA”), provided the Firm with delegated
authority to process and originate PPP loans. When certain
criteria are met, PPP loans are subject to forgiveness and
the Firm will receive payment of the forgiveness amount
from the SBA. The PPP ended for new applications on May
31, 2021.
At December 31, 2022 and 2021, the Firm had $490
million and $6.7 billion, respectively, of PPP loans,
including $350 million and $5.4 billion, respectively, in
consumer, and $140 million and $1.3 billion, respectively,
in wholesale.
At December 31, 2022 and 2021, $119 million and $633
million, respectively, of PPP loans 90 or more days past due
have been excluded from the Firm’s nonaccrual loans as
they are guaranteed by the SBA. Refer to Note 12 for
additional information.
JPMorgan Chase & Co./2022 Form 10-K
109
Management’s discussion and analysis
CONSUMER CREDIT PORTFOLIO
The Firm’s retained consumer portfolio consists primarily of
residential real estate loans, credit card loans, scored auto
and business banking loans, as well as associated lending-
related commitments. The Firm’s focus is on serving
primarily the prime segment of the consumer credit market.
Originated mortgage loans are retained in the residential
real estate portfolio, securitized or sold to U.S. government
agencies and U.S. government-sponsored enterprises; other
types of consumer loans are typically retained on the
balance sheet. Refer to Note 12 for further information on
the consumer loan portfolio. Refer to Note 28 for further
information on lending-related commitments.
110
JPMorgan Chase & Co./2022 Form 10-K
The following tables present consumer credit-related information with respect to the scored credit portfolio held in CCB, AWM,
CIB and Corporate.
Consumer credit portfolio
December 31,
(in millions)
Consumer, excluding credit card
Residential real estate(a)
Auto and other(b)(c)(d)
Total loans - retained
Loans held-for-sale
Loans at fair value(e)
Total consumer, excluding credit card loans
Lending-related commitments(f)
Total consumer exposure, excluding credit card
Credit card
Loans retained(g)
Total credit card loans
Lending-related commitments(f)(h)
Total credit card exposure(h)
Total consumer credit portfolio(h)
Credit-related notes used in credit portfolio management activities(i)
(in millions, except ratios)
Consumer, excluding credit card
Residential real estate
Auto and other
Total consumer, excluding credit card - retained
Credit card - retained
Total consumer - retained
Credit exposure
Nonaccrual loans(j)(k)(l)
2022
2021
2022
2021
$
237,561 $
224,795
$
3,745 $
129
3,874
28
423
4,325
4,759
119
4,878
—
472
5,350
NA
NA
63,192
300,753
618
10,004
311,375
33,518
344,893
185,175
185,175
821,284
1,006,459
70,761
295,556
1,287
26,463
323,306
45,334
368,640
154,296
154,296
730,534
884,830
$
$
1,351,352 $
1,253,470
$
4,325 $
5,350
(1,187) $
(2,028)
Year ended December 31,
Net charge-offs/(recoveries)
Average loans - retained
Net charge-off/(recovery) rate(m)
2022
2021
2022
2021
2022
2021
$
(226) $
(275) $
233,454 $
220,914
(0.10) %
(0.12) %
495
269
2,403
286
11
2,712
65,955
299,409
163,335
$
2,672 $
2,723
$
462,744 $
77,900
298,814
139,900
438,714
0.75
0.09
1.47
0.37
—
1.94
0.58 %
0.62 %
(a) Includes scored mortgage and home equity loans held in CCB and AWM, and scored mortgage loans held in Corporate.
(b) At December 31, 2022 and 2021, excluded operating lease assets of $12.0 billion and $17.1 billion, respectively. These operating lease assets are included
in other assets on the Firm’s Consolidated balance sheets. Refer to Note 18 for further information.
(c) Includes scored auto and business banking loans and overdrafts.
(d) At December 31, 2022 and 2021, included $350 million and $5.4 billion of loans, respectively, in Business Banking under the PPP. The Firm does not expect
to realize material credit losses on PPP loans because the loans are guaranteed by the SBA. Refer to Credit Portfolio on pages 108-109 for a further
discussion of the PPP.
(e) Includes scored mortgage loans held in CCB and CIB.
(f) Credit card, home equity and certain business banking lending-related commitments represent the total available lines of credit for these products. The Firm
has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card commitments, and if certain
conditions are met, home equity commitments and certain business banking commitments, the Firm can reduce or cancel these lines of credit by providing
the borrower notice or, in some cases as permitted by law, without notice. Refer to Note 28 for further information.
(g) Includes billed interest and fees.
(h) Also includes commercial card lending-related commitments primarily in CB and CIB.
(i) Represents the notional amount of protection obtained through the issuance of credit-related notes that reference certain pools of residential real estate and
auto loans in the retained consumer portfolio.
(j) At December 31, 2022 and 2021, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $302
million and $623 million, respectively. These amounts have been excluded from nonaccrual loans based upon the government guarantee. In addition, the
Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status, as permitted by regulatory guidance.
(k) Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic.
(l) At December 31, 2022 and 2021, nonaccrual loans excluded $101 million and $506 million, respectively, of PPP loans 90 or more days past due and
guaranteed by the SBA.
(m) Average consumer loans held-for-sale and loans at fair value were $17.4 billion and $29.1 billion for the years ended December 31, 2022 and 2021,
respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.
JPMorgan Chase & Co./2022 Form 10-K
111
Management’s discussion and analysis
Maturities and sensitivity to changes in interest rates
The table below sets forth loan maturities by scheduled repayments, by class of loan and the distribution between fixed and
floating interest rates based on the stated terms of the loan agreements. Effective December 31, 2022, the Firm revised its
methodology from contractual maturities to scheduled repayments. The Firm estimated the principal repayment amounts for
both the residential real estate and auto and other loan classes by calculating the weighted-average loan balance and interest
rates for loan pools based on remaining loan term.
December 31, 2022
(in millions)
Consumer, excluding credit card
Residential real estate
Auto and other
Total consumer, excluding credit
card loans
Total credit card loans
Total consumer loans
Loans due after one year at fixed interest rates
Residential real estate
Auto and other
Credit card
Loans due after one year at variable interest rates(a)
Residential real estate
Auto and other
Total consumer loans
Within
1 year(b)
1-5
years
5-15
years
After 15
years
Total
$
15,709
$
22,984
$
81,946
$ 127,282
$ 247,921
17,380
(c)
42,727
3,342
5
63,454
$
33,089
$ 184,681
$ 217,770
$
$
$
65,711
(a)
494
66,205
$
$
$
85,288
$ 127,287
$ 311,375
—
$
—
$ 185,175
85,288
$ 127,287
$ 496,550
$
17,266
$
50,589
$
77,189
42,652
494
2,716
—
5
—
$
5,718
$
31,357
$
50,093
75
626
—
$
66,205
$
85,288
$ 127,287
(a) Credit card loans with maturities greater than one year represent TDRs and are at fixed interest rates. There are no credit card loans due after one year at
variable interest rates.
(b) Includes loans held-for-sale and loans at fair value.
(c) Includes overdrafts.
112
JPMorgan Chase & Co./2022 Form 10-K
Consumer, excluding credit card
Portfolio analysis
Loans decreased from December 31, 2021 driven by
residential real estate loans at fair value and auto and other
loans, largely offset by higher retained residential real
estate loans.
The following discussions provide information concerning
individual loan products. Refer to Note 12 for further
information about this portfolio, including information
about delinquencies, loan modifications and other credit
quality indicators.
Residential real estate: The residential real estate
portfolio, including loans held-for-sale and loans at fair
value, predominantly consists of prime mortgage loans and
home equity lines of credit.
Retained loans increased compared to December 31, 2021
reflecting originations, net of paydowns. Retained
nonaccrual loans decreased from December 31, 2021
reflecting improved credit performance and loan sales. Net
recoveries were lower for the year ended December 31,
2022 compared to the prior year driven by lower
prepayments due to higher interest rates, partially offset by
lower gross charge-offs.
Loans at fair value decreased from December 31, 2021, as
warehouse loan sales in Home Lending outpaced
originations due to higher interest rates and loan sales in
CIB outpaced loan purchase activity. Nonaccrual loans at
fair value decreased from December 31, 2021 driven by
net portfolio activity in CIB.
The carrying value of home equity lines of credit
outstanding was $15.7 billion at December 31, 2022. This
amount included $5.1 billion of HELOCs that have recast
from interest-only to fully amortizing payments or have
been modified and $5.0 billion of interest-only balloon
HELOCs, which primarily mature after 2030. The Firm
manages the risk of HELOCs during their revolving period by
closing or reducing the undrawn line to the extent
permitted by law when borrowers are exhibiting a material
deterioration in their credit risk profile.
At December 31, 2022 and 2021, the carrying value of
interest-only residential mortgage loans were $36.3 billion
and $30.0 billion, respectively. These loans have an
interest-only payment period generally followed by an
adjustable-rate or fixed-rate fully amortizing payment
period to maturity and are typically originated as higher-
balance loans to higher-income borrowers, predominantly
in AWM. The interest-only residential mortgage loan
portfolio reflected net recoveries for the year ended
December 31, 2022. The credit performance of this
portfolio is comparable with the performance of the
broader prime mortgage portfolio.
The following table provides a summary of the Firm’s
residential mortgage portfolio insured and/or guaranteed
by U.S. government agencies, predominantly loans held-for-
sale and loans at fair value. The Firm monitors its exposure
to certain potential unrecoverable claim payments related
to government-insured loans and considers this exposure in
estimating the allowance for loan losses.
(in millions)
Current
30-89 days past due
90 or more days past due
December 31,
2022
December 31,
2021
$
659 $
136
302
689
135
623
Total government guaranteed loans
$
1,097 $
1,447
Geographic composition and current estimated loan-to-
value ratio of residential real estate loans
At December 31, 2022, $152.7 billion, or 64% of the total
retained residential real estate loan portfolio, excluding
mortgage loans insured by U.S. government agencies, were
concentrated in California, New York, Florida, Texas and
Illinois, compared with $145.5 billion, or 65% at
December 31, 2021.
Average current estimated loan-to-value (“LTV”) ratios
were relatively flat.
Refer to Note 12 for information on the geographic
composition and current estimated LTVs of the Firm’s
residential real estate loans.
Modified residential real estate loans
The following table presents information relating to
modified retained residential real estate loans for which
concessions have been granted to borrowers experiencing
financial difficulty, which include both TDRs and modified
PCD loans not accounted for as TDRs. The following table
does not include loans with short-term or other insignificant
modifications that are not considered concessions and,
therefore, are not TDRs. Refer to Note 12 for further
information on modifications for the years ended
December 31, 2022 and 2021.
(in millions)
December 31,
2022
December 31,
2021
Retained loans
Nonaccrual retained loans(a)
$
11,579 $
3,300
13,251
3,938
(a) At both December 31, 2022 and 2021, nonaccrual loans included
$2.7 billion of TDRs for which the borrowers were less than 90 days
past due. Refer to Note 12 for additional information about loans
modified in a TDR that are on nonaccrual status.
JPMorgan Chase & Co./2022 Form 10-K
113
Management’s discussion and analysis
Auto and other: The auto and other loan portfolio,
including loans at fair value consists of prime-quality scored
auto and business banking loans, as well as overdrafts. The
portfolio decreased when compared with December 31,
2021 due to paydowns of scored Auto loans and PPP loan
forgiveness in Business Banking predominantly offset by
originations of scored Auto loans. Net charge-offs for the
year ended December 31, 2022 increased compared to the
prior year due to higher scored Auto and overdraft charge-
offs, as the prior year benefited from government stimulus
and payment assistance programs. The scored Auto net
charge-off rates were 0.24% and 0.04% for the years
ended December 31, 2022 and 2021, respectively.
Nonperforming assets
The following table presents information as of
December 31, 2022 and 2021, about consumer, excluding
credit card, nonperforming assets.
Nonperforming assets(a)
December 31, (in millions)
Nonaccrual loans
Residential real estate(b)
Auto and other(c)
Total nonaccrual loans
4,196 $
5,231
5,350
4,325
2021
2022
119
129
$
Assets acquired in loan satisfactions
Real estate owned
Other
Total assets acquired in loan satisfactions
129
28
157
112
22
134
Total nonperforming assets
$
4,482 $
5,484
(a) At December 31, 2022 and 2021, nonperforming assets excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $302 million and $623 million, respectively.
These amounts have been excluded based upon the government
guarantee.
(b) Generally excludes loans under payment deferral programs offered in
response to the COVID-19 pandemic.
(c) At December 31, 2022 and 2021, nonaccrual loans excluded $101
million and $506 million, respectively, of PPP loans 90 or more days
past due and guaranteed by the SBA.
Nonaccrual loans
The following table presents changes in consumer,
excluding credit card, nonaccrual loans for the years ended
December 31, 2022 and 2021.
Nonaccrual loan activity
Year ended December 31,
(in millions)
Beginning balance
Additions:
Reductions:
Principal payments and other(a)
Charge-offs
Returned to performing status
Foreclosures and other liquidations
Total reductions
Net changes
Ending balance
$
2022
5,350 $
2,196
2021
6,467
2,956
1,393
255
1,405
168
3,221
(1,025)
2,018
229
1,716
110
4,073
(1,117)
$
4,325 $
5,350
(a) Other reductions include loan sales.
Refer to Note 12 for further information about the
consumer credit portfolio, including information about
delinquencies, other credit quality indicators, loan
modifications and loans that were in the process of active or
suspended foreclosure.
Purchased credit deteriorated (“PCD”) loans
The following tables provide credit-related information for
PCD loans which are reported in residential real estate.
(in millions, except ratios)
Loan delinquency(a)
December 31,
2022
December 31,
2021
Current
$
10,910
$
12,746
30-149 days past due
150 or more days past due
347
277
331
664
Total PCD loans
$
11,534
$
13,741
% of 30+ days past due to total
retained PCD loans
5.41 %
7.24 %
Nonaccrual loans
$
1,200
$
1,616
Year ended December 31,
(in millions, except ratios)
2022
Net charge-offs/(recoveries)
$
(11) $
2021
15
Net charge-off/(recovery) rate
(0.09) %
0.10 %
(a) At December 31, 2022 and 2021, loans under payment deferral
programs offered in response to the COVID-19 pandemic which are
still within their deferral period and performing according to their
modified terms are generally not considered delinquent.
114
JPMorgan Chase & Co./2022 Form 10-K
Credit card
Total credit card loans increased from December 31, 2021
driven by growth in balances on higher consumer spending
and net new originations. The December 31, 2022 30+ and
90+ day delinquency rates of 1.45% and 0.68%,
respectively, increased compared to the December 31,
2021 30+ and 90+ day delinquency rates of 1.04% and
0.50%, but remain below pre-pandemic levels. Net charge-
offs decreased for the year ended December 31, 2022
compared to the prior year. Delinquency and net charge-off
rates continue to benefit from the ongoing financial
strength of U.S. consumers. However, median deposit
balances declined in the second half of 2022, impacted by
the growth in consumer spending.
Consistent with the Firm’s policy, all credit card loans
typically remain on accrual status until charged off.
However, the Firm’s allowance for loan losses includes the
estimated uncollectible portion of accrued and billed
interest and fee income.
Geographic and FICO composition of credit card loans
At December 31, 2022, $85.4 billion, or 46% of the total
retained credit card loan portfolio, was concentrated in
California, Texas, New York, Florida and Illinois, compared
with $70.5 billion, or 46%, at December 31, 2021.
Modifications of credit card loans
At December 31, 2022, the Firm had $796 million of credit
card loans outstanding that have been modified in TDRs,
compared to $1.0 billion at December 31, 2021. These
TDRs do not include loans with short-term or other
insignificant modifications that are not considered TDRs.
Refer to Note 12 for further information about this
portfolio, including information about delinquencies,
geographic and FICO composition, and modifications.
JPMorgan Chase & Co./2022 Form 10-K
115
Management’s discussion and analysis
WHOLESALE CREDIT PORTFOLIO
In its wholesale businesses, the Firm is exposed to credit
risk primarily through its underwriting, lending, market-
making, and hedging activities with and for clients and
counterparties, as well as through various operating
services (such as cash management and clearing activities),
securities financing activities and cash placed with banks. A
portion of the loans originated or acquired by the Firm’s
wholesale businesses is generally retained on the balance
sheet. The Firm distributes a significant percentage of the
loans that it originates into the market as part of its
syndicated loan business and to manage portfolio
concentrations and credit risk. The wholesale portfolio is
actively managed, in part by conducting ongoing, in-depth
reviews of client credit quality and transaction structure,
inclusive of collateral where applicable, and of industry,
product and client concentrations. Refer to the industry
discussion on pages 118-121 for further information.
The Firm’s wholesale credit portfolio includes exposure held
in CIB, CB, AWM, and Corporate, as well as the risk-rated
BWM and auto dealer exposure held in CCB, for which the
wholesale methodology is applied when determining the
allowance for loan losses.
In 2022, wholesale credit continued to perform well with
charge-offs remaining low.
As of December 31, 2022, retained loans increased by
$43.3 billion driven by CIB and CB, including higher
revolver utilization, partially offset by a decline in AWM.
Lending-related commitments decreased $14.5 billion,
driven by net portfolio activity in CIB, including a decrease
in held-for-sale positions in the bridge financing portfolio,
largely offset by net portfolio activity in AWM and CB.
As of December 31, 2022, the investment-grade
percentage of the portfolio remained relatively flat at 70%,
while criticized exposure decreased by $6.9 billion from
$38.2 billion to $31.3 billion. As of December 31, 2022,
nonperforming exposure decreased by $406.0 million
driven by a decline in lending-related commitments in CIB
and loans in AWM as a result of client-specific upgrades,
paydowns and cancelled commitments, largely offset by
client-specific downgrades in CIB including downgrades to
certain Russia and Russia-associated clients in the first
quarter of 2022. Refer to Business Developments on page
50 and Country Risk on pages 139-140 for additional
information. Refer to Wholesale credit exposure – industry
exposures on pages 118-121 for additional information.
Wholesale credit portfolio
December 31,
(in millions)
Credit exposure
2022
2021
Nonperforming
2022
2021
Loans retained
$ 603,670 $ 560,354
$ 1,963 $ 2,054
Loans held-for-sale
3,352
7,401
Loans at fair value
32,075
32,357
26
406
48
343
Loans
639,097
600,112
2,395
2,445
Derivative receivables
70,880
57,081
296
316
Receivables from
customers(a)
Total wholesale
credit-related
assets
Assets acquired in
loan satisfactions
Real estate owned
Other
Total assets acquired
in loan satisfactions
Lending-related
commitments
Total wholesale
credit portfolio
Credit derivatives and
credit-related notes
used in credit
portfolio
management
activities(b)
Liquid securities and
other cash collateral
held against
derivatives
49,257
59,645
—
—
759,234
716,838
2,691
2,761
NA
NA
NA
NA
NA
NA
74
—
74
101
—
101
471,980
486,445
455
764
$ 1,231,214 $ 1,203,283
$ 3,220 $ 3,626
$ (18,143) $ (18,711) (c) $
— $
—
(23,014)
(10,102)
NA
NA
(a) Receivables from customers reflect held-for-investment margin loans
to brokerage clients in CIB, CCB and AWM; these are reported within
accrued interest and accounts receivable on the Consolidated balance
sheets.
(b) Represents the net notional amount of protection purchased and sold
through credit derivatives and credit-related notes used to manage
both performing and nonperforming wholesale credit exposures; these
derivatives do not qualify for hedge accounting under U.S. GAAP. Refer
to Credit derivatives on page 126 and Note 5 for additional
information.
(c) Prior-period amounts have been revised to conform with the current
presentation.
116
JPMorgan Chase & Co./2022 Form 10-K
Wholesale credit exposure – maturity and ratings profile
The following tables present the maturity and internal risk ratings profiles of the wholesale credit portfolio as of
December 31, 2022 and 2021. The Firm generally considers internal ratings with qualitative characteristics equivalent to
BBB-/Baa3 or higher as investment grade, and takes into consideration collateral and structural support when determining
the internal risk rating for each credit facility. Refer to Note 12 for further information on internal risk ratings.
Maturity profile(e)
Ratings profile
Total derivative receivables, net of collateral
13,508
14,880
19,478
47,866
36,231
Lending-related commitments
101,083
347,456
23,441
471,980
327,168
11,635
144,812
December 31, 2022
(in millions, except ratios)
Loans retained
Derivative receivables
Less: Liquid securities and other cash collateral
held against derivatives
Subtotal
Loans held-for-sale and loans at fair value(a)
Receivables from customers
Total exposure – net of liquid securities and other
cash collateral held against derivatives
Credit derivatives and credit-related notes used in
credit portfolio management activities(b)(c)(d)
1 year or
less
After 1 year
through
5 years
After 5
years
Total
Investment-
grade
Noninvestment-
grade
Total
Total %
of IG
$ 204,761 $ 253,896 $ 145,013 $ 603,670
$ 425,412
$
178,258
$ 603,670
70 %
70,880
(23,014)
70,880
(23,014)
47,866
471,980
76
69
70
319,352
616,232
187,932
1,123,516
788,811
334,705
1,123,516
35,427
49,257
$ 1,208,200
35,427
49,257
$ 1,208,200
$
(2,817) $
(13,530) $
(1,796) $
(18,143) $
(15,115)
$
(3,028)
$
(18,143)
83 %
Maturity profile(e)
Ratings profile
December 31, 2021
(in millions, except ratios)
Loans retained
Derivative receivables
Less: Liquid securities and other cash collateral
held against derivatives
1 year or
less
After 1 year
through
5 years
After 5
years
Total
Investment-
grade
Noninvestment-
grade
Total
Total %
of IG
$ 214,064 $ 218,176 $ 128,114 $ 560,354
$ 410,011 $
150,343
$ 560,354
73 %
57,081
(10,102)
57,081
(10,102)
Total derivative receivables, net of collateral
13,648
12,814
20,517
46,979
Lending-related commitments
120,929
340,308
25,208
486,445
348,641
571,298
173,839
1,093,778
31,934
331,116
773,061
15,045
46,979
155,329
486,445
320,717
1,093,778
68
68
71
Subtotal
Loans held-for-sale and loans at fair value(a)
Receivables from customers
Total exposure – net of liquid securities and
other cash collateral held against derivatives
Credit derivatives and credit-related notes used in
credit portfolio management activities(b)(c)(d)
39,758
59,645
39,758
59,645
$ 1,193,181
$ 1,193,181
$
(7,472) $
(9,750) $
(1,489) $
(18,711)
$
(15,012) $
(3,699) $
(18,711)
80 %
(a) Loans held-for-sale are primarily related to syndicated loans and loans transferred from the retained portfolio.
(b) These derivatives do not qualify for hedge accounting under U.S. GAAP.
(c) The notional amounts are presented on a net basis by underlying reference entity and the ratings profile shown is based on the ratings of the reference
entity on which protection has been purchased. Predominantly all of the credit derivatives entered into by the Firm where it has purchased protection used
in credit portfolio management activities are executed with investment-grade counterparties. In addition, the Firm obtains credit protection against
certain loans in the retained loan portfolio through the issuance of credit-related notes.
(d) Prior-period amounts have been revised to conform with the current presentation.
(e) The maturity profile of retained loans, lending-related commitments and derivative receivables is generally based on remaining contractual
maturity. Derivative contracts that are in a receivable position at December 31, 2022, may become payable prior to maturity based on their cash flow
profile or changes in market conditions.
JPMorgan Chase & Co./2022 Form 10-K
117
Management’s discussion and analysis
Wholesale credit exposure – industry exposures
The Firm focuses on the management and diversification of its industry exposures, and pays particular attention to industries
with actual or potential credit concerns.
Exposures that are deemed to be criticized align with the U.S. banking regulators’ definition of criticized exposures, which
consist of the special mention, substandard and doubtful categories. Total criticized exposure, excluding loans held-for-sale
and loans at fair value, was $31.3 billion at December 31, 2022 and $38.2 billion at December 31, 2021, representing
approximately 2.7% and 3.5% of total wholesale credit exposure, respectively. Criticized exposure decreased driven by net
portfolio activity and client-specific upgrades concentrated in Consumer & Retail, Technology, Media & Telecommunications
and Real Estate, largely offset by client-specific downgrades. Of the $31.3 billion of criticized exposure at December 31, 2022,
approximately half was undrawn and $28.6 billion was performing.
The table below summarizes by industry the Firm’s exposures as of December 31, 2022 and 2021. The industry of risk
category is generally based on the client or counterparty’s primary business activity. Refer to Note 4 for additional information
on industry concentrations.
Wholesale credit exposure – industries(a)
Noninvestment-grade
Credit
exposure(f)(g)
Investment-
grade
Noncriticized
Criticized
performing
Criticized
nonperforming
Selected metrics
30 days or
more past
due and
accruing
loans(i)
Net charge-
offs/
(recoveries)
Credit
derivative
hedges and
credit-
related
notes(h)
Liquid securities
and other cash
collateral held
against
derivative
receivables
$ 170,857 $ 129,866 $
36,945 $
3,609 $
437 $
543 $
19 $
(113) $
130,815
112,006
120,555
60,781
18,104
51,871
360
7,295
95,656
78,925
16,665
61
72,483
39,052
30,500
2,809
72,286
62,613
51,816
38,668
36,218
33,847
33,287
21,045
20,030
19,095
15,915
15,009
8,066
4,962
39,199
43,839
27,811
20,547
25,981
33,191
23,908
15,468
12,134
18,698
8,825
6,497
4,235
4,525
25,689
17,117
22,994
17,616
9,294
529
8,839
5,396
7,103
362
6,863
6,862
3,716
437
123,307
105,284
17,555
7,096
1,479
961
474
807
126
416
181
744
35
222
1,574
115
—
223
345
608
5
122
302
178
50
31
136
1
124
—
49
—
5
76
—
—
245
1,038
321
15
282
62
43
36
57
21
36
198
1
10
—
7
24
—
—
4
1
49
—
(1,157)
—
—
—
(1)
—
(8,278)
44
(1,258)
39
27
—
(6)
15
—
(2)
—
3
10
(1)
2
(13)
—
(1,766)
(1,055)
(262)
(414)
(607)
(9)
(513)
(273)
(298)
(4,591)
(27)
(339)
(26)
—
—
—
—
(994)
—
(1)
(5)
—
(7,296)
—
(677)
(4)
—
(2,811)
—
(5)
(5,435)
(2,948)
As of or for the year ended
December 31, 2022
(in millions)
Real Estate
Individuals and Individual Entities(b)
Consumer & Retail
Asset Managers
Industrials
Technology, Media &
Telecommunications
Healthcare
Banks & Finance Cos
Oil & Gas
Utilities
State & Municipal Govt(c)
Automotive(c)
Insurance
Chemicals & Plastics
Central Govt
Metals & Mining
Transportation
Securities Firms
Financial Markets Infrastructure
All other(d)
Subtotal
$ 1,146,530 $ 810,772 $
304,457 $
28,587 $
2,714 $
2,698 $
181 $ (18,143) $
(23,014)
Loans held-for-sale and loans at fair
value
Receivables from customers
Total(e)
35,427
49,257
$ 1,231,214
118
JPMorgan Chase & Co./2022 Form 10-K
As of or for the year ended
December 31, 2021
(in millions)
Credit
exposure(f)(g)
Investment-
grade
Noncriticized
Criticized
performing
Criticized
nonperforming
Noninvestment-grade
Selected metrics
30 days or
more past
due and
accruing
loans
Net charge-
offs/
(recoveries)
Credit
derivative
hedges
and credit-
related
notes (h)
Liquid
securities
and other
cash
collateral
held against
derivative
receivables
Real Estate
$ 155,069
$ 120,174 $
29,642
$
4,636 $
617 $
394 $
6 $
(185)
(i) $
Individuals and Individual
Entities(b)
Consumer & Retail
141,973
122,789
122,606
59,622
18,797
53,317
Asset Managers
81,228
68,593
12,630
Industrials
Technology, Media &
Telecommunications
Healthcare
Banks & Finance Cos
Oil & Gas
Utilities
State & Municipal Govt(c)
Automotive
Insurance
Chemicals & Plastics
Central Govt
Metals & Mining
Transportation
Securities Firms
Financial Markets
Infrastructure
All other(d)
66,974
36,953
26,957
84,070
59,014
54,684
42,606
33,203
33,216
34,573
13,926
17,660
11,317
16,696
14,635
4,180
4,377
111,690
49,610
42,133
29,732
20,698
25,069
32,522
24,606
9,943
11,319
11,067
7,848
6,010
2,599
3,987
97,537
25,540
15,136
23,809
20,222
7,011
586
9,446
3,887
5,817
250
8,491
5,983
1,578
390
13,580
99
9,445
—
2,895
8,595
1,686
1,138
1,558
914
101
399
96
518
—
294
2,470
—
—
471
405
5
169
325
59
5
128
209
7
122
—
6
—
63
172
3
—
1,450
288
8
428
58
204
9
4
11
74
95
—
7
—
27
21
—
—
—
(1)
—
—
(3,900)
32
2
—
13
(1)
(4)
9
60
6
—
—
(352)
(i)
(586)
(900)
(490)
(503)
(564)
(367)
—
(3)
(463)
—
—
—
7
20
—
—
(25)
(89)
(6,961)
(15)
(100)
(47)
—
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(1)
(12)
(174)
(810)
—
(4)
(14)
—
(2,366)
—
(72)
(4)
(24)
(217)
—
205
368
242
(5)
(7,064)
(i)
(2,503)
Subtotal
$ 1,103,880
$ 782,628 $
283,069
$
35,049 $
3,134 $
3,320 $
142 $ (18,711)
$
(10,102)
Loans held-for-sale and loans
at fair value
Receivables from customers
Total(e)
39,758
59,645
$ 1,203,283
(a) The industry rankings presented in the table as of December 31, 2021, are based on the industry rankings of the corresponding exposures at
December 31, 2022, not actual rankings of such exposures at December 31, 2021.
(b) Individuals and Individual Entities predominantly consists of Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB, and
includes exposure to personal investment companies and personal and testamentary trusts.
(c) In addition to the credit risk exposure to states and municipal governments (both U.S. and non-U.S.) at December 31, 2022 and 2021, noted above, the
Firm held: $6.6 billion and $7.1 billion, respectively, of trading assets; $6.8 billion and $15.9 billion, respectively, of AFS securities; and $19.7 billion and
$14.0 billion, respectively, of HTM securities, issued by U.S. state and municipal governments. Refer to Note 2 and Note 10 for further information.
(d) All other includes: SPEs and Private education and civic organizations, representing approximately 95% and 5%, respectively, at December 31, 2022 and
94% and 6%, respectively, at December 31, 2021 .
(e) Excludes cash placed with banks of $556.6 billion and $729.6 billion, at December 31, 2022 and 2021, respectively, which is predominantly placed with
various central banks, primarily Federal Reserve Banks.
(f) Credit exposure is net of risk participations and excludes the benefit of credit derivatives and credit-related notes used in credit portfolio management
activities held against derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
(g) Credit exposure includes held-for-sale and fair value option elected lending-related commitments.
(h) Represents the net notional amounts of protection purchased and sold through credit derivatives and credit-related notes used to manage the credit
exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. The All other category includes purchased credit protection on certain
credit indices.
(i) Prior-period amounts have been revised to conform with the current presentation.
JPMorgan Chase & Co./2022 Form 10-K
119
Management’s discussion and analysis
Presented below is additional detail on certain of the Firm’s industry exposures.
Real Estate
Real Estate exposure was $170.9 billion as of December 31, 2022. Criticized exposure decreased by $1.2 billion from
$5.3 billion at December 31, 2021 to $4.0 billion at December 31, 2022, driven by client-specific upgrades and net portfolio
activity largely offset by client-specific downgrades.
(in millions, except ratios)
Multifamily(a)
Industrial
Office
Services and Non Income Producing
Other Income Producing Properties(b)
Retail
Lodging
Total Real Estate Exposure(c)
(in millions, except ratios)
Multifamily(a)
Industrial
Office
Services and Non Income Producing
Other Income Producing Properties(b)
Retail
Lodging
December 31, 2022
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
$
$
99,555
15,928
14,917
13,968
12,701
10,192
3,347
17
1
25
10
150
8
38
$
99,572
15,929
14,942
13,978
12,851
10,200
3,385
% Investment-
grade
82 %
% Drawn(d)
87 %
72
74
65
70
75
6
71
73
48
62
68
37
$
170,608
$
249
$
170,857
76 %
77 %
December 31, 2021
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
$
$
89,032
11,546
16,409
11,512
13,018
9,580
2,859
122
66
234
24
498
106
63
$
89,154
11,612
16,643
11,536
13,516
9,686
2,922
% Investment-
grade
84 %
% Drawn(d)
89 %
75
75
63
77
61
5
64
71
50
55
69
33
Total Real Estate Exposure
$
153,956
$
1,113
$
155,069
77 %
77 %
(a) Multifamily exposure is largely in California.
(b) Other Income Producing Properties consists of clients with diversified property types or other property types outside of categories listed in the table above
(c) Real Estate exposure is approximately 79% secured; unsecured exposure is approximately 77% investment-grade.
(d) Represents drawn exposure as a percentage of credit exposure.
120
JPMorgan Chase & Co./2022 Form 10-K
Consumer & Retail
Consumer & Retail exposure was $120.6 billion as of December 31, 2022. Criticized exposure decreased by $1.9 billion from
$9.9 billion at December 31, 2021 to $7.9 billion at December 31, 2022, driven by net portfolio activity and client-specific
upgrades largely offset by client-specific downgrades.
(in millions, except ratios)
Retail(a)
Food and Beverage
Business and Consumer Services
Consumer Hard Goods
Leisure(b)
Total Consumer & Retail(c)
(in millions, except ratios)
Retail(a)
Food and Beverage
Business and Consumer Services
Consumer Hard Goods
Leisure(b)
Total Consumer & Retail
December 31, 2022
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
$
$
33,891
31,706
31,256
13,879
8,173
309
736
384
172
49
$
34,200
32,442
31,640
14,051
8,222
% Investment-
grade
50 %
% Drawn(d)
33 %
59
50
51
21
39
40
39
45
$
118,905
$
1,650
$
120,555
50 %
38 %
December 31, 2021
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
% Investment-
grade
$
$
32,872
30,434
32,159
17,035
7,620
1,152
957
347
111
102
$
34,024
31,391
32,506
17,146
7,722
$
120,120
$
2,669
$
122,789
50 %
59
46
46
17
49 %
% Drawn(d)
31 %
33
33
30
34
32 %
(a) Retail consists of Home Improvement & Specialty Retailers, Restaurants, Supermarkets, Discount & Drug Stores, Specialty Apparel and Department Stores.
(b) Leisure consists of Gaming, Arts & Culture, Travel Services and Sports & Recreation. As of December 31, 2022, approximately 90% of the noninvestment-
grade Leisure portfolio is secured.
(c) Consumer & Retail exposure is approximately 58% secured; unsecured exposure is approximately 80% investment-grade.
(d) Represents drawn exposure as a percent of credit exposure.
Oil & Gas
Oil & Gas exposure was $38.7 billion as of December 31, 2022. Criticized exposure decreased by $1.2 billion from $1.7 billion
at December 31, 2021 to $505 million at December 31, 2022, driven by net portfolio activity and client-specific upgrades
partially offset by client-specific downgrades.
(in millions, except ratios)
December 31, 2022
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
% Investment-
grade
Exploration & Production ("E&P") and Oil field Services
Other Oil & Gas(a)
Total Oil & Gas(b)
$
$
17,729
15,818
33,547
$
$
4,666
455
5,121
$
$
22,395
16,273
38,668
50 %
57
53 %
(in millions, except ratios)
December 31, 2021
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
% Investment-
grade
Exploration & Production ("E&P") and Oil field Services
Other Oil & Gas(a)
Total Oil & Gas
$
$
17,631
18,941
36,572
$
$
5,452
582
6,034
$
$
23,083
19,523
42,606
39 %
60
49 %
% Drawn(c)
25 %
25
25 %
% Drawn(c)
26 %
26
26 %
(a) Other Oil & Gas includes Integrated Oil & Gas companies, Midstream/Oil Pipeline companies and refineries.
(b) Oil & Gas exposure is approximately 41% secured, over half of which is reserve-based lending to the Exploration & Production sub-sector; unsecured
exposure is approximately 61% investment-grade.
(c) Represents drawn exposure as a percent of credit exposure.
JPMorgan Chase & Co./2022 Form 10-K
121
Management’s discussion and analysis
Loans
In its wholesale businesses, the Firm provides loans to a
variety of clients, ranging from large corporate and
institutional clients to high-net-worth individuals. Refer to
Note 12 for a further discussion on loans, including
information about delinquencies, loan modifications and
other credit quality indicators.
The following table presents the change in the nonaccrual
loan portfolio for the years ended December 31, 2022 and
2021. Since December 31, 2021, nonaccrual loan exposure
decreased by $50 million driven by Individuals and
Individual Entities and Transportation due to client-specific
upgrades and net portfolio activity, largely offset by
Consumer & Retail due to client-specific downgrades.
Wholesale nonaccrual loan activity
Year ended December 31, (in millions)
Beginning balance
Additions
Reductions:
Paydowns and other
Gross charge-offs
Returned to performing status
Sales
Total reductions
Net changes
Ending balance
2022
2021
$ 2,445 $ 4,106
2,119
2,909
1,329
213
594
33
2,169
2,676
268
1,106
520
4,570
(50)
(1,661)
$ 2,395 $ 2,445
The following table presents net charge-offs/recoveries,
which are defined as gross charge-offs less recoveries, for
the years ended December 31, 2022 and 2021. The
amounts in the table below do not include gains or losses
from sales of nonaccrual loans recognized in noninterest
revenue.
Wholesale net charge-offs/(recoveries)
Year ended December 31,
(in millions, except ratios)
2022
2021
Loans
Average loans retained
$ 582,021
$ 526,557
Gross charge-offs
Gross recoveries collected
Net charge-offs/(recoveries)
322
(141)
181
283
(141)
142
Net charge-off/(recovery) rate
0.03 %
0.03 %
122
JPMorgan Chase & Co./2022 Form 10-K
Maturities and sensitivity to changes in interest rates
The table below sets forth wholesale loan maturities and the distribution between fixed and floating interest rates based on the
stated terms of the loan agreements by loan class. Effective December 31, 2022, the Firm revised its methodology from
contractual maturities to scheduled repayments. Refer to Note 12 for further information on loan classes.
December 31, 2022
(in millions, except ratios)
Wholesale loans:
Secured by real estate
Commercial and industrial
Other
Total wholesale loans
Loans due after one year at fixed interest rates
Secured by real estate
Commercial and industrial
Other
Loans due after one year at variable interest rates
Secured by real estate
Commercial and industrial
Other
Total wholesale loans
(a) Includes loans held-for-sale, demand loans and overdrafts.
After 1
year
through 5
years
After 5
years
through
15 years
1 year or
less(a)
After 15
years
Total
$ 9,275
54,408
166,967
$ 230,650
$ 43,060
115,823
122,062
$ 280,945
$ 41,234
8,493
32,291
$ 82,018
$ 41,277
193
4,014
$ 45,484
$ 134,846
178,917
325,334
$ 639,097
$ 6,087
5,432
23,303
$ 6,387
1,107
14,792
$
724
4
2,786
$ 36,972
110,391
98,760
$ 280,945
$ 34,847
7,387
17,498
$ 82,018
$ 40,553
189
1,228
$ 45,484
The following table presents net charge-offs/recoveries, average retained loans and net charge-off/recovery rate by loan class
for the year ended December 31, 2022 and 2021.
Secured by real estate
Commercial
and industrial
Other
Total
Year ended December 31,
(in millions, except ratios)
Net charge-offs/(recoveries)
Average retained loans
Net charge-off/(recovery) rate
2022
2021
2022
2021
2022
2021
2022
2021
$
6
$
13
$ 145
$ 105
$
30
$
24
$ 181
$ 142
122,904
118,417
160,611
138,015
298,506
270,125
582,021
526,557
— %
0.01 %
0.09 %
0.08 %
0.01 %
0.01 %
0.03 %
0.03 %
JPMorgan Chase & Co./2022 Form 10-K
123
Management’s discussion and analysis
Lending-related commitments
The Firm uses lending-related financial instruments, such as
commitments (including revolving credit facilities) and
guarantees, to address the financing needs of its clients. The
contractual amounts of these financial instruments
represent the maximum possible credit risk should the
clients draw down on these commitments or when the Firm
fulfills its obligations under these guarantees, and the
clients subsequently fail to perform according to the terms
of these contracts. Most of these commitments and
guarantees have historically been refinanced, extended,
cancelled, or expired without being drawn upon or a default
occurring. As a result, the Firm does not believe that the
total contractual amount of these wholesale lending-related
commitments is representative of the Firm’s expected
future credit exposure or funding requirements. Refer to
Note 28 for further information on wholesale lending-
related commitments.
Receivables from customers
Receivables from customers reflect held-for-investment
margin loans to brokerage clients in CIB, CCB and AWM that
are collateralized by assets maintained in the clients’
brokerage accounts (e.g., cash on deposit, and liquid and
readily marketable debt or equity securities). Because of
this collateralization, no allowance for credit losses is
generally held against these receivables. To manage its
credit risk, the Firm establishes margin requirements and
monitors the required margin levels on an ongoing basis,
and requires clients to deposit additional cash or other
collateral, or to reduce positions, when appropriate. These
receivables are reported within accrued interest and
accounts receivable on the Firm’s Consolidated balance
sheets.
Derivative contracts
Derivatives enable clients and counterparties to manage
risk, including credit risk and risks arising from fluctuations
in interest rates, foreign exchange and equities and
commodities prices. The Firm makes markets in derivatives
in order to meet these needs and uses derivatives to
manage certain risks associated with net open risk positions
from its market-making activities, including the
counterparty credit risk arising from derivative receivables.
The Firm also uses derivative instruments to manage its own
credit risk and other market risk exposure. The nature of the
counterparty and the settlement mechanism of the
derivative affect the credit risk to which the Firm is exposed.
For OTC derivatives, the Firm is exposed to the credit risk of
the derivative counterparty. For exchange-traded
derivatives (“ETD”), such as futures and options, and
cleared over-the-counter (“OTC-cleared”) derivatives, the
Firm can also be exposed to the credit risk of the relevant
CCP. Where possible, the Firm seeks to mitigate its credit
risk exposures arising from derivative contracts through the
use of legally enforceable master netting arrangements and
collateral agreements. The percentage of the Firm’s OTC
derivative transactions subject to collateral agreements —
excluding foreign exchange spot trades, which are not
typically covered by collateral agreements due to their short
maturity and centrally cleared trades that are settled daily —
was approximately 87% and 88% at December 31, 2022
and 2021, respectively. Refer to Note 5 for additional
information on the Firm’s use of collateral agreements and
further discussion of derivative contracts, counterparties
and settlement types.
The fair value of derivative receivables reported on the
Consolidated balance sheets were $70.9 billion and $57.1
billion at December 31, 2022 and 2021, respectively. The
increase was primarily driven by higher foreign exchange as
a result of market movements. Derivative receivables
represent the fair value of the derivative contracts after
giving effect to legally enforceable master netting
agreements and the related cash collateral held by the
Firm.
In addition, the Firm held liquid securities and other cash
collateral that may be used as security when the fair value
of the client’s exposure is in the Firm’s favor. For these
purposes, the definition of liquid securities is consistent with
the definition of high quality liquid assets as defined in the
LCR rule.
In management’s view, the appropriate measure of current
credit risk should also take into consideration other
collateral, which generally represents securities that do not
qualify as high quality liquid assets under the LCR rule. The
benefits of these additional collateral amounts for each
counterparty are subject to a legally enforceable master
netting agreement and limited to the net amount of the
derivative receivables for each counterparty.
The Firm also holds additional collateral (primarily cash, G7
government securities, other liquid government agency and
guaranteed securities, and corporate debt and equity
securities) delivered by clients at the initiation of
transactions, as well as collateral related to contracts that
have a non-daily call frequency and collateral that the Firm
has agreed to return but has not yet settled as of the
reporting date. Although this collateral does not reduce the
balances and is not included in the tables below, it is
available as security against potential exposure that could
arise should the fair value of the client’s derivative contracts
move in the Firm’s favor. Refer to Note 5 for additional
information on the Firm’s use of collateral agreements.
The following tables summarize the net derivative
receivables and the internal ratings profile for the periods
presented.
Derivative receivables
December 31, (in millions)
Total, net of cash collateral
Liquid securities and other cash
collateral held against derivative
receivables
Total, net of liquid securities and
other cash collateral
Other collateral
held against derivative receivables
2022
2021
$
70,880 $
57,081
(23,014)
(10,102)
$
47,866 $
46,979
(1,261)
(1,544)
Total, net of collateral
$
46,605 $
45,435
124
JPMorgan Chase & Co./2022 Form 10-K
Ratings profile of derivative receivables
December 31,
(in millions, except ratios)
Investment-grade
Noninvestment-grade
Total
2022
2021
Exposure net of
collateral
% of exposure net
of collateral
Exposure net of
collateral
% of exposure net
of collateral
$
$
35,097
11,508
46,605
75 % $
25
100 % $
30,278
15,157
45,435
67 %
33
100 %
management process for derivatives exposures takes into
consideration the potential impact of wrong-way risk, which
is broadly defined as the risk that exposure to a
counterparty is positively correlated with the impact of a
default by the same counterparty, which could cause
exposure to increase at the same time as the counterparty’s
capacity to meet its obligations is decreasing. Many factors
may influence the nature and magnitude of these
correlations over time. To the extent that these correlations
are identified, the Firm may adjust the CVA associated with
a particular counterparty’s AVG. The Firm risk manages
exposure to changes in CVA by entering into credit
derivative contracts, as well as interest rate, foreign
exchange, equity and commodity derivative contracts.
The below graph shows exposure profiles to the Firm’s
current derivatives portfolio over the next 10 years as
calculated by the Peak, DRE and AVG metrics. The three
measures generally show that exposure will decline after
the first year, if no new trades are added to the portfolio.
Exposure profile of derivatives measures
December 31, 2022
(in billions)
While useful as a current view of credit exposure, the net
fair value of the derivative receivables does not capture the
potential future variability of that credit exposure. To
capture the potential future variability of credit exposure,
the Firm calculates, on a client-by-client basis, three
measures of potential derivatives-related credit loss: Peak,
Derivative Risk Equivalent (“DRE”), and Average exposure
(“AVG”). These measures all incorporate netting and
collateral benefits, where applicable.
Peak represents a conservative measure of potential
derivative exposure, including the benefit of collateral, to a
counterparty calculated in a manner that is broadly
equivalent to a 97.5% confidence level over the life of the
transaction. Peak is the primary measure used by the Firm
for setting credit limits for derivative contracts, senior
management reporting and derivatives exposure
management.
DRE exposure is a measure that expresses the risk of
derivative exposure, including the benefit of collateral, on a
basis intended to be equivalent to the risk of loan
exposures. DRE is a less extreme measure of potential
credit loss than Peak and is used as an input for
aggregating derivative credit risk exposures with loans and
other credit risk.
Finally, AVG is a measure of the expected fair value of the
Firm’s derivative exposure, including the benefit of
collateral, at future time periods. AVG over the total life of
the derivative contract is used as the primary metric for
pricing purposes and is used to calculate credit risk capital
and CVA, as further described below.
The fair value of the Firm’s derivative receivables
incorporates CVA to reflect the credit quality of
counterparties. CVA is based on the Firm’s AVG to a
counterparty and the counterparty’s credit spread in the
credit derivatives market. The Firm believes that active risk
management is essential to controlling the dynamic credit
risk in the derivatives portfolio. In addition, the Firm’s risk
JPMorgan Chase & Co./2022 Form 10-K
125
AVGDREPeak1 year2 years5 years10 years020406080100120140
Management’s discussion and analysis
Credit derivatives
The Firm uses credit derivatives for two primary purposes:
first, in its capacity as a market-maker, and second, as an
end-user to manage the Firm’s own credit risk associated
with various exposures.
Credit portfolio management activities
Included in the Firm’s end-user activities are credit
derivatives used to mitigate the credit risk associated with
traditional lending activities (loans and lending-related
commitments) and derivatives counterparty exposure in the
Firm’s wholesale businesses (collectively, “credit portfolio
management activities”). Information on credit portfolio
management activities is provided in the table below.
The Firm also uses credit derivatives as an end-user to
manage other exposures, including credit risk arising from
certain securities held in the Firm’s market-making
businesses. These credit derivatives are not included in
credit portfolio management activities.
Credit derivatives and credit-related notes used in credit
portfolio management activities
December 31, (in millions)
Credit derivatives and credit-related notes
used to manage:
Notional amount of
protection
purchased and sold(a)
2021
2022
Loans and lending-related commitments
$
6,422 $
4,138
Derivative receivables
11,721
14,573
(b)
Credit derivatives and credit-related notes
used in credit portfolio management
activities
$ 18,143 $ 18,711
(a) Amounts are presented net, considering the Firm’s net protection
purchased or sold with respect to each underlying reference entity or
index.
(b) Prior-period amount has been revised to conform with the current
presentation
The credit derivatives used in credit portfolio management
activities do not qualify for hedge accounting under U.S.
GAAP; these derivatives are reported at fair value, with
gains and losses recognized in principal transactions
revenue. In contrast, the loans and lending-related
commitments being risk-managed are accounted for on an
accrual basis. This asymmetry in accounting treatment,
between loans and lending-related commitments and the
credit derivatives used in credit portfolio management
activities, causes earnings volatility that is not
representative, in the Firm’s view, of the true changes in
value of the Firm’s overall credit exposure.
The effectiveness of credit default swaps (“CDS”) as a hedge
against the Firm’s exposures may vary depending on a
number of factors, including the named reference entity
(i.e., the Firm may experience losses on specific exposures
that are different than the named reference entities in the
purchased CDS); the contractual terms of the CDS (which
may have a defined credit event that does not align with an
actual loss realized by the Firm); and the maturity of the
Firm’s CDS protection (which in some cases may be shorter
than the Firm’s exposures). However, the Firm generally
seeks to purchase credit protection with a maturity date
that is the same or similar to the maturity date of the
exposure for which the protection was purchased, and
remaining differences in maturity are actively monitored
and managed by the Firm. Refer to Credit derivatives in
Note 5 for further information on credit derivatives and
derivatives used in credit portfolio management activities.
126
JPMorgan Chase & Co./2022 Form 10-K
The Firm’s central case assumptions reflected U.S.
unemployment rates and U.S. real GDP as follows:
Assumptions at December 31, 2022
2Q23
4Q23
2Q24
U.S. unemployment rate(a)
YoY growth in U.S. real GDP(b)
3.8 %
1.5 %
4.3 %
0.4 %
5.0 %
— %
Assumptions at December 31, 2021
2Q22
4Q22
2Q23
U.S. unemployment rate(a)
YoY growth in U.S. real GDP(b)
4.2 %
3.1 %
4.0 %
2.8 %
3.9 %
2.1 %
(a) Reflects quarterly average of forecasted U.S. unemployment rate.
(b) The year over year growth in U.S. real GDP in the forecast horizon of
the central scenario is calculated as the percentage change in U.S. real
GDP levels from the prior year.
Subsequent changes to this forecast and related estimates
will be reflected in the provision for credit losses in future
periods.
Refer to Critical Accounting Estimates Used by the Firm on
pages 149-152 for further information on the allowance for
credit losses and related management judgments.
Refer to Consumer Credit Portfolio on pages 110-115,
Wholesale Credit Portfolio on pages 116-126 for additional
information on the consumer and wholesale credit
portfolios.
ALLOWANCE FOR CREDIT LOSSES
The Firm’s allowance for credit losses represents
management's estimate of expected credit losses over the
remaining expected life of the Firm's financial assets
measured at amortized cost and certain off-balance sheet
lending-related commitments. The Firm’s allowance for
credit losses comprises:
• the allowance for loan losses, which covers the Firm’s
retained loan portfolios (scored and risk-rated) and is
presented separately on the Consolidated balance sheets,
• the allowance for lending-related commitments, which is
reflected in accounts payable and other liabilities on the
Consolidated balance sheets, and
• the allowance for credit losses on investment securities,
which is reflected in investment securities on the
Consolidated balance sheets.
Discussion of changes in the allowance
The allowance for credit losses as of December 31, 2022
was $22.2 billion, reflecting a net addition of $3.5 billion
from December 31, 2021, consisting of:
• $2.3 billion in wholesale, driven by deterioration in the
Firm’s macroeconomic outlook and loan growth,
predominantly in CB and CIB, and
• $1.2 billion in consumer, predominantly driven by Card
Services, reflecting higher outstanding balances and
deterioration in the Firm’s macroeconomic outlook,
partially offset by a reduction in the allowance related to
a decrease in uncertainty associated with borrower
behavior as the effects of the pandemic gradually recede.
Deterioration in the Firm’s macroeconomic outlook included
both updates to the central scenario in the fourth quarter of
2022, which now reflects a mild recession, as well as the
impact of the increased weight placed on the adverse
scenarios beginning in the first quarter of 2022 due to the
effects associated with higher inflation, changes in
monetary policy, and geopolitical risks, including the war in
Ukraine.
The Firm's allowance for credit losses is estimated using a
weighted average of five internally developed
macroeconomic scenarios. The adverse scenarios
incorporate more punitive macroeconomic factors than the
central case assumptions provided in the table below,
resulting in a weighted average U.S. unemployment rate
peaking at 5.6% in the second quarter of 2024, and a
1.2% lower U.S. real GDP exiting the second quarter of
2024.
JPMorgan Chase & Co./2022 Form 10-K
127
Management’s discussion and analysis
Allowance for credit losses and related information
Year ended December 31,
(in millions, except ratios)
Allowance for loan losses
2022
2021
Consumer,
excluding
credit card
Credit card
Wholesale
Total
Consumer,
excluding
credit card
Credit card
Wholesale
Total
Beginning balance at January 1,
$ 1,765
$ 10,250
$ 4,371
$
16,386
$ 3,636
$ 17,800
$ 6,892
$ 28,328
Gross charge-offs
Gross recoveries collected
Net charge-offs
Provision for loan losses
Other
812
(543)
269
543
1
3,192
(789)
2,403
3,353
—
322
(141)
181
2,293
3
4,326
(1,473)
2,853
6,189
4
630
(619)
11
3,651
(939)
2,712
283
(141)
142
(1,858)
(4,838)
(2,375)
(2)
—
(4)
4,564
(1,699)
2,865
(9,071)
(6)
Ending balance at December 31,
$ 2,040
$ 11,200
$ 6,486
$
19,726
$ 1,765
$ 10,250
$ 4,371
$ 16,386
Allowance for lending-related
commitments
Beginning balance at January 1,
$
113
$
Provision for lending-related commitments
Other
Ending balance at December 31,
$
(37)
—
76
$
—
—
—
—
$ 2,148
$
2,261
$
187
$
157
1
120
1
(75)
1
$ 2,306
$
2,382
$
113
$
—
—
—
—
$ 2,222
$
2,409
(74)
—
(149)
1
$ 2,148
$
2,261
Impairment methodology
Asset-specific(a)
Portfolio-based
$
(624)
$
223
$
467
$
66
$
(665) $
313
$
263
$
(89)
2,664
10,977
6,019
19,660
2,430
9,937
4,108
16,475
Total allowance for loan losses
$ 2,040
$ 11,200
$ 6,486
$
19,726
$ 1,765
$ 10,250
$ 4,371
$ 16,386
Impairment methodology
Asset-specific
Portfolio-based
Total allowance for lending-related
commitments
Total allowance for investment securities
Total allowance for credit losses(b)
Memo:
$
$
—
76
$
76
$
—
—
—
$
90
$
90
$
—
$
2,216
2,292
113
$ 2,306
$
2,382
$
113
$
—
—
—
$
167
$
167
1,981
2,094
$ 2,148
$
2,261
NA
NA
NA $
96
NA
NA
NA $
42
$ 2,116
$ 11,200
$ 8,792
$
22,204
$ 1,878
$ 10,250
$ 6,519
$ 18,689
Retained loans, end of period
$ 300,753
$ 185,175
$ 603,670
$ 1,089,598
$ 295,556
$ 154,296
$ 560,354
$ 1,010,206
Retained loans, average
299,409
163,335
582,021
1,044,765
298,814
139,900
526,557
965,271
Credit ratios
Allowance for loan losses to retained loans
0.68 %
6.05 %
1.07 %
1.81 %
0.60 %
6.64 %
0.78 %
1.62 %
Allowance for loan losses to retained
nonaccrual loans(c)
Allowance for loan losses to retained
nonaccrual loans excluding credit card
Net charge-off rates
53
53
0.09
NM
NM
1.47
330
330
0.03
338
146
0.27
36
36
—
NM
NM
1.94
213
213
0.03
236
89
0.30
(a) Includes collateral dependent loans, including those considered TDRs and those for which foreclosure is deemed probable, modified PCD loans, and non-
collateral dependent loans that have been modified or are reasonably expected to be modified in a TDR. Also includes risk-rated loans that have been
placed on nonaccrual status for the wholesale portfolio segment. The asset-specific credit card allowance for loan losses modified or reasonably expected
to be modified in a TDR is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates.
(b) At December 31, 2022, excludes an allowance for credit losses associated with certain accounts receivable in CIB of $21 million.
(c) The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.
128
JPMorgan Chase & Co./2022 Form 10-K
Allocation of allowance for loan losses
The table below presents a breakdown of the allowance for loan losses by loan class. Refer to Note 12 for further information
on loan classes.
December 31,
(in millions, except ratios)
Residential real estate
Auto and other
Consumer, excluding credit card
Credit card
Total consumer
Secured by real estate
Commercial and industrial
Other
Total wholesale
Total
2022
2021
Allowance for loan losses
Percent of retained loans
to total retained loans
Allowance for loan losses
Percent of retained loans
to total retained loans
$
$
1,070
970
2,040
11,200
13,240
1,782
3,507
1,197
6,486
19,726
22 % $
6
28
17
45
12
15
28
55
100 % $
817
948
1,765
10,250
12,015
1,495
1,881
995
4,371
16,386
22 %
7
29
15
45
12
14
29
55
100 %
JPMorgan Chase & Co./2022 Form 10-K
129
Management’s discussion and analysis
INVESTMENT PORTFOLIO RISK MANAGEMENT
Investment portfolio risk is the risk associated with the loss
of principal or a reduction in expected returns on
investments arising from the investment securities portfolio
or from principal investments. The investment securities
portfolio is predominantly held by Treasury and CIO in
connection with the Firm's balance sheet and asset-liability
management objectives. Principal investments are
predominantly privately-held financial instruments and are
managed in the LOBs and Corporate. Investments are
typically intended to be held over extended periods and,
accordingly, the Firm has no expectation for short-term
realized gains with respect to these investments.
Investment securities risk
Investment securities risk includes the exposure associated
with a default in the payment of principal and interest. This
risk is mitigated given that the investment securities
portfolio held by Treasury and CIO predominantly consists
of high-quality securities. At December 31, 2022, the
Treasury and CIO investment securities portfolio, net of the
allowance for credit losses, was $629.3 billion, and the
average credit rating of the securities comprising the
portfolio was AA+ (based upon external ratings where
available, and where not available, based primarily upon
internal risk ratings). Refer to Corporate segment results on
pages 79-80 and Note 10 for further information on the
investment securities portfolio and internal risk ratings.
Refer to Liquidity Risk Management on pages 97-104 for
further information on related liquidity risk. Refer to Market
Risk Management on pages 131-138 for further
information on the market risk inherent in the portfolio.
Governance and oversight
Investment securities risks are governed by the Firm’s Risk
Appetite framework, and reviewed at the CTC Risk
Committee with regular updates provided to the Board Risk
Committee.
The Firm’s independent control functions are responsible
for reviewing the appropriateness of the carrying value of
investment securities in accordance with relevant policies.
Approved levels for investment securities are established
for each risk category, including capital and credit risks.
Principal investment risk
Principal investments are typically privately-held financial
instruments representing ownership interests or other
forms of junior capital. In general, principal investments
include tax-oriented investments and investments made to
enhance or accelerate the Firm’s business strategies and
exclude those that are consolidated on the Firm's balance
sheets. These investments are made by dedicated investing
businesses or as part of a broader business strategy. The
Firm’s principal investments are managed by the LOBs and
Corporate and are reflected within their respective financial
results. The Firm’s investments will continue to evolve in
line with its strategies, including the Firm’s commitment to
support underserved communities and minority-owned
businesses.
The table below presents the aggregate carrying values of
the principal investment portfolios as of December 31,
2022 and 2021.
(in billions)
December 31,
2022
December 31,
2021
Tax-oriented investments,
primarily in alternative energy
and affordable housing
Private equity, various debt and
equity instruments, and real
assets
Total carrying value
$
$
26.2
$
23.2
(a)
10.8
37.0
$
7.3
30.5
(a) Includes the Firm’s 40% ownership in C6 Bank and 49% ownership in
Viva Wallet.
Governance and oversight
The Firm’s approach to managing principal risk is consistent
with the Firm’s risk governance structure. The Firm has
established a Firmwide risk policy framework for all
principal investing activities that includes approval by
executives who are independent from the investing
businesses, as appropriate.
The Firm’s independent control functions are responsible
for reviewing the appropriateness of the carrying value of
investments in accordance with relevant policies. As part of
the risk governance structure, approved levels for
investments are established and monitored for each
relevant business or segment in order to manage the
overall size of the portfolios. The Firm also conducts stress
testing on these portfolios using specific scenarios that
estimate losses based on significant market moves and/or
other risk events.
130
JPMorgan Chase & Co./2022 Form 10-K
Market Risk Management sets limits and regularly reviews
and updates them as appropriate. Senior management is
responsible for reviewing and approving certain of these
risk limits on an ongoing basis. Limits that have not been
reviewed within specified time periods by Market Risk
Management are reported to senior management. The LOBs
and Corporate are responsible for adhering to established
limits against which exposures are monitored and reported.
Limit breaches are required to be reported in a timely
manner to limit approvers, which include Market Risk
Management and senior management. In the event of a
breach, Market Risk Management consults with senior
members of appropriate groups within the Firm to
determine the suitable course of action required to return
the applicable positions to compliance, which may include a
reduction in risk in order to remedy the breach or granting
a temporary increase in limits to accommodate an expected
increase in client activity and/or market volatility. Certain
Firm, Corporate or LOB-level limit breaches are escalated as
appropriate.
Models used to measure market risk are inherently
imprecise and are limited in their ability to measure certain
risks or to predict losses. This imprecision may be
heightened when sudden or severe shifts in market
conditions occur. For additional discussion on model
uncertainty refer to Estimations and Model Risk
Management on page 148.
Market Risk Management periodically reviews the Firm’s
existing market risk measures to identify opportunities for
enhancement, and to the extent appropriate, will calibrate
those measures accordingly over time.
MARKET RISK MANAGEMENT
Market risk is the risk associated with the effect of changes
in market factors such as interest and foreign exchange
rates, equity and commodity prices, credit spreads or
implied volatilities, on the value of assets and liabilities held
for both the short and long term.
Market Risk Management
Market Risk Management monitors market risks throughout
the Firm and defines market risk policies and procedures.
Market Risk Management seeks to manage risk, facilitate
efficient risk/return decisions, reduce volatility in operating
performance and provide transparency into the Firm’s
market risk profile for senior management, the Board of
Directors and regulators. Market Risk Management is
responsible for the following functions:
• Maintaining a market risk policy framework
• Independently measuring, monitoring and controlling
LOB, Corporate, and Firmwide market risk
• Defining, approving and monitoring of limits
• Performing stress testing and qualitative risk
assessments
Risk measurement
Measures used to capture market risk
There is no single measure to capture market risk and
therefore Market Risk Management uses various metrics,
both statistical and nonstatistical, to assess risk including:
• Value-at-risk (VaR)
• Stress testing
• Profit and loss drawdowns
• Earnings-at-risk
• Other sensitivity-based measures
Risk monitoring and control
Market risk exposure is managed primarily through a series
of limits set in the context of the market environment and
business strategy. In setting limits, Market Risk
Management takes into consideration factors such as
market volatility, product liquidity, accommodation of client
business, and management judgment. Market Risk
Management maintains different levels of limits. Firm level
limits include VaR and stress limits. Similarly, LOB and
Corporate limits include VaR and stress limits and may be
supplemented by certain nonstatistical risk measures such
as profit and loss drawdowns. Limits may also be set within
the LOBs and Corporate, as well as at the legal entity level.
JPMorgan Chase & Co./2022 Form 10-K
131
Management’s discussion and analysis
The following table summarizes the predominant business activities and related market risks, as well as positions which give
rise to market risk and certain measures used to capture those risks, for each LOB and Corporate.
In addition to the predominant business activities, each LOB and Corporate may engage in principal investing activities. To the
extent principal investments are deemed market risk sensitive, they are reflected in relevant risk measures and captured in the
table below. Refer to Investment Portfolio Risk Management on page 130 for additional discussion on principal investments.
LOBs and
Corporate
Predominant business
activities
Related market risks
Positions included in Risk
Management VaR
Positions included in
earnings-at-risk
CCB
• Originates and services
mortgage loans
• Originates loans and
takes deposits
• Risk from changes in the
probability of newly
originated mortgage
commitments closing
Interest rate risk and
prepayment risk
•
• Mortgage commitments,
classified as derivatives
• Warehouse loans that are
fair value option elected,
classified as loans – debt
instruments
• Retained loan portfolio
• Deposits
Positions included in other
sensitivity-based measures
• Fair value option elected
liabilities DVA(a)
CIB
• Makes markets and
services clients across
fixed income, foreign
exchange, equities and
commodities
• Originates loans and
takes deposits
• Risk of loss from adverse
movements in market
prices and implied
volatilities across interest
rate, foreign exchange,
credit, commodity and
equity instruments
• Basis and correlation risk
from changes in the way
asset values move
relative to one another
Interest rate risk and
prepayment risk
•
• MSRs
• Hedges of mortgage
•
commitments, warehouse
loans and MSRs, classified
as derivatives
Interest-only and mortgage-
backed securities, classified
as trading assets debt
instruments, and related
hedges, classified as
derivatives
• Fair value option elected
liabilities(a)
• Trading assets/liabilities –
debt and marketable equity
instruments, and
derivatives, including
hedges of the retained loan
portfolio
• Certain securities
purchased, loaned or sold
under resale agreements
and securities borrowed
• Fair value option elected
liabilities(a)
• Certain fair value option
elected loans
• Derivative CVA and
associated hedges
• Marketable equity
investments
CB
• Originates loans and
•
takes deposits
Interest rate risk and
prepayment risk
• Marketable equity
investments(b)
AWM
• Provides initial capital
• Risk from adverse
• Debt securities held in
investments in
products such as
mutual funds and
capital invested
alongside third-party
investors
• Originates loans and
takes deposits
movements in market
factors (e.g., market
prices, rates and credit
spreads)
Interest rate risk and
prepayment risk
•
advance of distribution to
clients, classified as trading
assets - debt instruments(b)
• Retained loan portfolio
• Deposits
• Privately held equity and
other investments
measured at fair value; and
certain real estate-related
fair value option elected
loans
• Derivatives FVA and fair
value option elected
liabilities DVA(a)
• Credit risk component of
CVA and associated hedges
for counterparties with
credit spreads that have
widened to elevated levels
C
• Retained loan portfolio
• Deposits
• Retained loan portfolio
• Deposits
•
Initial seed capital
investments and related
hedges, classified as
derivatives
• Certain deferred
compensation and related
hedges, classified as
derivatives
• Capital invested alongside
third-party investors,
typically in privately
distributed collective
vehicles managed by AWM
(i.e., co-investments)
• Privately held equity and
other investments
measured at fair value
• Foreign exchange exposure
related to Firm-issued non-
USD long-term debt (“LTD”)
and related hedges
Corporate
• Manages the Firm’s
liquidity, funding,
capital, structural
interest rate and
foreign exchange risks
• Structural interest rate
risk from the Firm’s
traditional banking
activities
• Derivative positions
measured through
noninterest revenue in
earnings
• Structural non-USD
foreign exchange risks
• Marketable equity
investments
• Deposits with banks
•
Investment securities
portfolio and related
interest rate hedges
• Long-term debt and
related interest rate
hedges
• Deposits
(a) Reflects structured notes in Risk Management VaR and the DVA on structured notes in other sensitivity-based measures.
(b) The AWM and CB contributions to Firmwide average VaR were not material for the years ended December 31, 2022 and 2021.
132
JPMorgan Chase & Co./2022 Form 10-K
testing, in addition to VaR, to capture and manage its
market risk positions.
The daily market data used in VaR models may be different
than the independent third-party data collected for VCG
price testing in its monthly valuation process. For example,
in cases where market prices are not observable, or where
proxies are used in VaR historical time series, the data
sources may differ. Refer to Valuation process in Note 2 for
further information on the Firm’s valuation process. As VaR
model calculations require daily data and a consistent
source for valuation, it may not be practical to use the data
collected in the VCG monthly valuation process for VaR
model calculations.
The Firm’s VaR model calculations are periodically
evaluated and enhanced in response to changes in the
composition of the Firm’s portfolios, changes in market
conditions, improvements in the Firm’s modeling
techniques and measurements, and other factors. Such
changes may affect historical comparisons of VaR results.
Refer to Estimations and Model Risk Management on page
148 for information regarding model reviews and
approvals.
The Firm calculates separately a daily aggregated VaR in
accordance with regulatory rules (“Regulatory VaR”), which
is used to derive the Firm’s regulatory VaR-based capital
requirements under Basel III capital rules. This Regulatory
VaR model framework currently assumes a ten business-day
holding period and an expected tail loss methodology which
approximates a 99% confidence level. Regulatory VaR is
applied to “covered” positions as defined by Basel III capital
rules, which may be different than the positions included in
the Firm’s Risk Management VaR. For example, credit
derivative hedges of accrual loans are included in the Firm’s
Risk Management VaR, while Regulatory VaR excludes these
credit derivative hedges. In addition, in contrast to the
Firm’s Risk Management VaR, Regulatory VaR currently
excludes the diversification benefit for certain VaR models.
Refer to JPMorgan Chase’s Basel III Pillar 3 Regulatory
Capital Disclosures reports, which are available on the
Firm’s website, for additional information on Regulatory
VaR and the other components of market risk regulatory
capital for the Firm (e.g., VaR-based measure, stressed
VaR-based measure and the respective backtesting).
Value-at-risk
JPMorgan Chase utilizes value-at-risk (“VaR”), a statistical
risk measure, to estimate the potential loss from adverse
market moves in the current market environment. The Firm
has a single VaR framework used as a basis for calculating
Risk Management VaR and Regulatory VaR.
The framework is employed across the Firm using historical
simulation based on data for the previous 12 months. The
framework’s approach assumes that historical changes in
market values are representative of the distribution of
potential outcomes in the immediate future. The Firm
believes the use of Risk Management VaR provides a daily
measure of risk that is closely aligned to risk management
decisions made by the LOBs and Corporate and, along with
other market risk measures, provides the appropriate
information needed to respond to risk events.
The Firm’s Risk Management VaR is calculated assuming a
one-day holding period and an expected tail-loss
methodology which approximates a 95% confidence level.
Risk Management VaR provides a consistent framework to
measure risk profiles and levels of diversification across
product types and is used for aggregating risks and
monitoring limits across businesses. VaR results are
reported to senior management, the Board of Directors and
regulators.
Underlying the overall VaR model framework are individual
VaR models that simulate historical market returns for
individual risk factors and/or product types. To capture
material market risks as part of the Firm’s risk management
framework, comprehensive VaR model calculations are
performed daily for businesses whose activities give rise to
market risk. These VaR models are granular and
incorporate numerous risk factors and inputs to simulate
daily changes in market values over the historical period;
inputs are selected based on the risk profile of each
portfolio, as sensitivities and historical time series used to
generate daily market values may be different across
product types or risk management systems. The VaR model
results across all portfolios are aggregated at the Firm
level.
As VaR is based on historical data, it is an imperfect
measure of market risk exposure and potential future
losses. In addition, based on their reliance on available
historical data, limited time horizons, and other factors,
VaR measures are inherently limited in their ability to
measure certain risks and to predict losses, particularly
those associated with market illiquidity and sudden or
severe shifts in market conditions.
For certain products, specific risk parameters are not
captured in VaR due to the lack of liquidity and availability
of appropriate historical data. The Firm uses proxies to
estimate the VaR for these and other products when daily
time series are not available. It is likely that using an actual
price-based time series for these products, if available,
would affect the VaR results presented. The Firm therefore
considers other nonstatistical measures such as stress
JPMorgan Chase & Co./2022 Form 10-K
133
Management’s discussion and analysis
The table below shows the results of the Firm’s Risk Management VaR measure using a 95% confidence level. VaR can vary
significantly as positions change, market volatility fluctuates, and diversification benefits change.
Total VaR
As of or for the year ended December 31,
(in millions)
CIB trading VaR by risk type
Fixed income
Foreign exchange
Equities
Commodities and other
Diversification benefit to CIB trading VaR
CIB trading VaR
Credit Portfolio VaR
Diversification benefit to CIB VaR
CIB VaR
CCB VaR
Corporate and other LOB VaR
Diversification benefit to other VaR
Other VaR
Diversification benefit to CIB and other VaR
Total VaR
Avg.
2022
Min
Max
Avg.
2021
Min
Max
$ 59
$ 33
$ 82
$ 60
$ 30
$ 153
8
12
15
(43) (a)
51
(b)(c)
16
(10) (a)
57
6
(d)
12
(4) (a)
14
(13) (a)
3
7
10
NM (e)
34
(b)
4
NM (e)
35
2
9
NM (e)
10
NM (e)
15
20
28
NM (e)
69
235
(b)(c)
NM (e)
240
20
(d)
16
NM (e)
24
NM (e)
6
16
19
(49) (a)
52
6
(6) (a)
52
5
(d)
24
(4) (a)
25
(22) (a)
2
8
9
NM (e)
22
4
NM (e)
22
3
14
NM (e)
14
NM (e)
27
38
43
NM (e)
134
12
NM (e)
133
11
(d)
94
NM (e)
94
NM (e)
$ 58
$ 34
$ 242
$ 55
$ 24
$ 153
(a) Diversification benefit represents the difference between the portfolio VaR and the sum of its individual components. This reflects the non-additive nature
of VaR due to imperfect correlation across LOBs, Corporate, and risk types.
(b) In the first quarter of 2022, in line with the Firm's internal model governance, the credit risk component of CVA related to certain counterparties was
removed from Credit Portfolio VaR due to the widening of the credit spreads for those counterparties to elevated levels. The related hedges were also
removed to maintain consistency. This exposure is now reflected in other sensitivity-based measures.
(c) In March 2022, the effects of nickel price increases and the associated volatility in the nickel market resulted in elevated average and maximum Credit
Portfolio VaR.
(d) The decrease in Corporate and other LOB VaR was driven by lower market values for a legacy private equity position in Corporate which is publicly traded.
(e) The maximum and minimum VaR for each portfolio may have occurred on different trading days than the components, and consequently, diversification
benefit is not meaningful.
Average Total VaR increased by $3 million for the year ended December 31, 2022 when compared with the prior year. The
increase was driven by the effects of nickel price increases and the associated volatility in the nickel market observed in March
2022 impacting Credit Portfolio VaR, predominantly offset by a decrease in Corporate and other LOB VaR.
The following graph presents daily Risk Management VaR for the four trailing quarters. The movement in VaR in March 2022
was driven by changes in nickel-related counterparty exposure in the Firm's Credit Portfolio.
Daily Risk Management VaR
First Quarter
2022
Second Quarter
2022
Third Quarter
2022
Fourth Quarter
2022
134
JPMorgan Chase & Co./2022 Form 10-K
$ millions0255075100125150175200225250
VaR backtesting
The Firm performs daily VaR model backtesting, which compares the daily Risk Management VaR results with the daily gains
and losses that are utilized for VaR backtesting purposes. The gains and losses depicted in the chart below do not reflect the
Firm’s reported revenue as they exclude certain components of total net revenue, such as those associated with the execution
of new transactions (i.e., intraday client-driven trading and intraday risk management activities), fees, commissions, other
valuation adjustments and net interest income. These excluded components of total net revenue may more than offset the
backtesting gain or loss on a particular day. The definition of backtesting gains and losses above is consistent with the
requirements for backtesting under Basel III capital rules.
A backtesting exception occurs when the daily backtesting loss exceeds the daily Risk Management VaR for the prior day.
Under the Firm’s Risk Management VaR methodology, assuming current changes in market values are consistent with the
historical changes used in the simulation, the Firm would expect to incur VaR backtesting exceptions five times every 100
trading days on average. The number of VaR backtesting exceptions observed can differ from the statistically expected number
of backtesting exceptions if the current level of market volatility is materially different from the level of market volatility
during the 12 months of historical data used in the VaR calculation.
For the 12 months ended December 31, 2022, the Firm posted backtesting gains on 136 of the 259 days, and observed 17
VaR backtesting exceptions. Firmwide backtesting loss days can differ from the loss days for which Fixed Income Markets and
Equity Markets posted losses, as disclosed in CIB Markets revenue, as the population of positions which compose each metric
are different and due to the exclusion of certain components of total net revenue in backtesting gains and losses as described
above. For more information on CIB Markets revenue, refer to pages 70-71.
The following chart presents the distribution of Firmwide daily backtesting gains and losses for the trailing 12 months and
three months ended December 31, 2022. The daily backtesting losses are displayed as a percentage of the corresponding
daily Risk Management VaR. The count of days with backtesting losses are shown in aggregate, in fifty percentage point
intervals. Backtesting exceptions are displayed within the intervals that are greater than one hundred percent. The results in
the chart below differ from the results of backtesting disclosed in the Market Risk section of the Firm’s Basel III Pillar 3
Regulatory Capital Disclosures reports, which are based on Regulatory VaR applied to the Firm’s covered positions.
Distribution of Daily Backtesting Gains and Losses
JPMorgan Chase & Co./2022 Form 10-K
135
Management’s discussion and analysis
Other risk measures
Stress testing
Along with VaR, stress testing is an important tool used to
assess risk. While VaR reflects the risk of loss due to
adverse changes in markets using recent historical market
behavior, stress testing reflects the risk of loss from
hypothetical changes in the value of market risk sensitive
positions applied simultaneously. Stress testing measures
the Firm’s vulnerability to losses under a range of stressed
but possible economic and market scenarios. The results
are used to understand the exposures responsible for those
potential losses and are measured against limits.
The Firm’s stress framework covers market risk sensitive
positions in the LOBs and Corporate. The framework is used
to calculate multiple magnitudes of potential stress for both
market rallies and market sell-offs, assuming significant
changes in market factors such as credit spreads, equity
prices, interest rates, currency rates and commodity prices,
and combines them in multiple ways to capture an array of
hypothetical economic and market scenarios.
The Firm generates a number of scenarios that focus on tail
events in specific asset classes and geographies, including
how the event may impact multiple market factors
simultaneously. Scenarios also incorporate specific
idiosyncratic risks and stress basis risk between different
products. The flexibility in the stress framework allows the
Firm to construct new scenarios that can test the outcomes
against possible future stress events. Stress testing results
are reported periodically to senior management of the
Firm, as appropriate.
Stress scenarios are governed by the overall stress
framework, under the oversight of Market Risk
Management, and the models to calculate the stress results
are subject to the Firm’s Estimations and Model Risk
Management Policy. The Firmwide Market Risk Stress
Methodology Committee reviews and approves changes to
stress testing methodology and scenarios across the Firm.
Significant changes to the framework are escalated to
senior management, as appropriate.
The Firm’s stress testing framework is utilized in calculating
the Firm’s CCAR and other stress test results, which are
reported periodically to the Board of Directors. In addition,
stress testing results are incorporated into the Firm’s Risk
Appetite framework, and are reported periodically to the
Board Risk Committee.
Profit and loss drawdowns
Profit and loss drawdowns are used to highlight trading
losses above certain levels of risk tolerance. A profit and
loss drawdown is a decline in revenue from its year-to-date
peak level.
Earnings-at-risk
The effect of interest rate exposure on the Firm’s reported
net income is important as interest rate risk represents one
of the Firm’s significant market risks. Interest rate risk
arises not only from trading activities but also from the
Firm’s traditional banking activities, which include
extension of loans and credit facilities, taking deposits,
issuing debt and the investment securities portfolio. Refer
to the table on page 132 for a summary by LOB and
Corporate, identifying positions included in earnings-at-risk.
The CTC Risk Committee establishes the Firm’s structural
interest rate risk policy and related limits, which are subject
to approval by the Board Risk Committee. Treasury and CIO,
working in partnership with the LOBs, calculates the Firm’s
structural interest rate risk profile and reviews it with
senior management, including the CTC Risk Committee. In
addition, oversight of structural interest rate risk is
managed through a dedicated risk function reporting to the
CTC CRO. This risk function is responsible for providing
independent oversight and governance around assumptions
and establishing and monitoring limits for structural
interest rate risk. The Firm manages structural interest rate
risk generally through its investment securities portfolio
and interest rate derivatives.
Structural interest rate risk can arise due to a variety of
factors, including:
• Differences in timing among the maturity or repricing of
assets, liabilities and off-balance sheet instruments
• Differences in the amounts of assets, liabilities and off-
balance sheet instruments that are maturing or repricing
at the same time
• Differences in the amounts by which short-term and long-
term market interest rates change (for example, changes
in the slope of the yield curve)
• The impact of changes in the maturity of various assets,
liabilities or off-balance sheet instruments as interest
rates change
The Firm manages interest rate exposure related to its
assets and liabilities on a consolidated, Firmwide basis.
Business units transfer their interest rate risk to Treasury
and CIO through funds transfer pricing, which takes into
account the elements of interest rate exposure that can be
risk-managed in financial markets. These elements include
asset and liability balances and contractual rates of
interest, contractual principal payment schedules, expected
prepayment experience, interest rate reset dates and
maturities, rate indices used for repricing, and any interest
rate ceilings or floors for adjustable rate products.
One way that the Firm evaluates its structural interest rate
risk is through earnings-at-risk. Earnings-at-risk estimates
the Firm’s interest rate exposure for a given interest rate
scenario. It is presented as a sensitivity to a baseline, which
includes net interest income and certain interest rate
sensitive fees. The baseline uses market interest rates and,
in the case of deposits, pricing assumptions. The Firm
conducts simulations of changes to this baseline for interest
rate-sensitive assets and liabilities denominated in U.S.
dollars and other currencies (“non-U.S. dollar” currencies).
These simulations primarily include retained loans,
136
JPMorgan Chase & Co./2022 Form 10-K
deposits, deposits with banks, investment securities, long-
term debt and any related interest rate hedges, and funds
transfer pricing of other positions in risk management VaR
and other sensitivity-based measures as described on page
132.
Earnings-at-risk scenarios estimate the potential change to
a net interest income baseline over the following 12 months
utilizing multiple assumptions. These scenarios include a
parallel shift involving changes to both short-term and long-
term rates by an equal amount; a steeper yield curve
involving holding short-term rates constant and increasing
long-term rates; and a flatter yield curve involving
increasing short-term rates and holding long-term rates
constant or holding short-term rates constant and
decreasing long-term rates. These scenarios consider many
different factors, including:
• The impact on exposures as a result of instantaneous
changes in interest rates from baseline rates.
• Forecasted balance sheet, as well as modeled
prepayment and reinvestment behavior, but excluding
assumptions about actions that could be taken by the
Firm or its clients and customers in response to
instantaneous rate changes. Mortgage prepayment
assumptions are based on the interest rates used in the
scenarios compared with underlying contractual rates,
the time since origination, and other factors which are
updated periodically based on historical experience.
Deposit forecasts are a key assumption in the Firm’s
earnings-at-risk. The baseline reflects certain
assumptions relating to the reversal of Quantitative
Easing that are highly uncertain and require management
judgment. Therefore, the actual amount of deposits held
by the Firm, at any particular time, could be impacted by
actions the Federal Reserve may take as part of monetary
policy, including through the use of the Reverse
Repurchase Facility. In addition, there are other factors
that impact the amount of deposits held at the Firm such
as the level of loans across the industry and competition
for deposits.
• The pricing sensitivity of deposits, known as deposit
betas, represent the amount by which deposit rates paid
could change upon a given change in market interest
rates. The deposit rates paid in these scenarios differ
from actual deposit rates paid, due to repricing lags and
other factors.
The Firm’s earnings-at-risk scenarios are periodically
evaluated and enhanced in response to changes in the
composition of the Firm’s balance sheet, changes in market
conditions, improvements in the Firm’s simulation and
other factors. The Firm is currently evaluating the modeling
of repricing lags for deposits in its earnings-at-risk
scenarios. Incorporating repricing lags, in the current
environment, would significantly affect the U.S. dollar
interest rate scenarios, with higher interest rate scenarios
expected to result in a positive impact, and lower interest
rate scenarios expected to result in a negative impact, on
the Firm’s earnings-at-risk. While a relevant measure of the
Firm’s interest rate exposure, the earnings-at-risk analysis
does not represent a forecast of the Firm’s net interest
income (Refer to Outlook on page 49 for additional
information).
The Firm’s U.S. dollar sensitivities are presented in the table
below.
December 31,
(in billions)
Parallel shift:
+100 bps shift in rates
-100 bps shift in rates
Steeper yield curve:
+100 bps shift in long-term rates
-100 bps shift in short-term rates
Flatter yield curve:
+100 bps shift in short-term rates
-100 bps shift in long-term rates
2022
2021
$
(2.0) $
2.4
0.8
3.2
(2.8)
(0.9)
5.0
NM (a)
1.8
NM (a)
3.2
NM (a)
(a) Given the level of market interest rates, these scenarios were not
considered to be meaningful as of December 31, 2021.
The change in the Firm’s U.S. dollar sensitivities as of
December 31, 2022 compared to December 31, 2021
reflected updates to the Firm’s baseline for higher interest
rates and higher corresponding modeled deposit betas, as
well as the impact of changes in the Firm’s balance sheet.
As of December 31, 2022, the Firm’s sensitivity to the
+/-100 basis points parallel and short-term shift in rates is
primarily the result of a greater impact from liabilities
repricing compared to the impact of assets repricing, while
a +/-100 basis points shift in long-term rates is primarily
the result of a greater impact from assets repricing
compared to the impact of liabilities repricing.
The Firm’s non-U.S. dollar sensitivities are presented in the
table below.
December 31,
(in billions)
Parallel shift:
+100 bps shift in rates
-100 bps shift in rates
Steeper yield curve:
-100 bps shift in short-term rates
Flatter yield curve:
2022
2021
$
$
$
0.7 $
(0.6)
(0.6)
0.8
NM (a)
NM (a)
+100 bps shift in short-term rates
0.6
0.8
(a) Given the level of market interest rates, these scenarios were not
considered to be meaningful as of December 31, 2021.
The results of the non-U.S. dollar interest rate scenario
involving a steeper/flatter yield curve with long-term rates
increasing/decreasing by 100 basis points and short-term
rates staying at current levels were not material to the
Firm’s earnings-at-risk at December 31, 2022 and 2021.
JPMorgan Chase & Co./2022 Form 10-K
137
Debt and equity(a)
Asset Management activities
Other debt and equity
Credit- and funding-related exposures
Non-USD LTD cross-currency basis
Non-USD LTD hedges foreign currency
(“FX”) exposure
Derivatives – funding spread risk
CVA - counterparty credit risk(b)
Management’s discussion and analysis
Non-U.S. dollar foreign exchange risk
Non-U.S. dollar FX risk is the risk that changes in foreign exchange rates affect the value of the Firm’s assets or liabilities or
future results. The Firm has structural non-U.S. dollar FX exposures arising from capital investments, forecasted expense and
revenue, the investment securities portfolio and non-U.S. dollar-denominated debt issuance. Treasury and CIO, working in
partnership with the LOBs, primarily manage these risks on behalf of the Firm. Treasury and CIO may hedge certain of these
risks using derivatives. Refer to Business Segment Results on page 62 for additional information.
Other sensitivity-based measures
The Firm quantifies the market risk of certain debt and equity and credit and funding-related exposures by assessing the
potential impact on net revenue, other comprehensive income (“OCI”) and noninterest expense due to changes in relevant
market variables. Refer to the predominant business activities that give rise to market risk on page 132 for additional
information on the positions captured in other sensitivity-based measures.
The table below represents the potential impact to net revenue, OCI or noninterest expense for market risk sensitive
instruments that are not included in VaR or earnings-at-risk. Where appropriate, instruments used for hedging purposes are
reported net of the positions being hedged. The sensitivities disclosed in the table below may not be representative of the
actual gain or loss that would have been realized at December 31, 2022 and 2021, as the movement in market parameters
across maturities may vary and are not intended to imply management’s expectation of future changes in these sensitivities.
Gain/(loss) (in millions)
Activity
Description
Sensitivity measure
December 31,
2022
December 31,
2021
Consists of seed capital and related hedges; fund
co-investments(c); and certain deferred
compensation and related hedges(d)
10% decline in
market value
Consists of certain real estate-related fair value
option elected loans, privately held equity and
other investments held at fair value(c)
10% decline in
market value
$
(56) $
(69)
(1,046)
(971)
Represents the basis risk on derivatives used to
hedge the foreign exchange risk on the non-USD
LTD(e)
1 basis point parallel
tightening of cross
currency basis
Primarily represents the foreign exchange
revaluation on the fair value of the derivative
hedges(e)
10% depreciation of
currency
Impact of changes in the spread related to
derivatives FVA(c)
1 basis point parallel
increase in spread
Credit risk component of CVA and associated
hedges
10% credit spread
widening
(12)
(16)
3
(4)
(1)
43
—
—
15
(7)
N/A
41
(3)
3
Fair value option elected liabilities -
funding spread risk
Impact of changes in the spread related to fair
value option elected liabilities DVA(e)
1 basis point parallel
increase in spread
Fair value option elected liabilities –
interest rate sensitivity
Interest rate sensitivity on fair value option
elected liabilities resulting from a change in the
Firm’s own credit spread(e)
1 basis point parallel
increase in spread
Interest rate sensitivity related to risk
management of changes in the Firm’s own credit
spread on the fair value option elected liabilities
noted above(c)
1 basis point parallel
increase in spread
(a) Excludes equity securities without readily determinable fair values that are measured under the measurement alternative. Refer to Note 2 for additional
information.
(b) In the first quarter of 2022, in line with the Firm's internal model governance, the credit risk component of CVA related to certain counterparties was
removed from Credit Portfolio VaR due to the widening of the credit spreads for those counterparties to elevated levels. The related hedges were also
removed to maintain consistency. This exposure is now reflected in other sensitivity-based measures.
(c) Impact recognized through net revenue.
(d) Impact recognized through noninterest expense.
(e) Impact recognized through OCI.
138
JPMorgan Chase & Co./2022 Form 10-K
individual country. The use of different measurement
approaches or assumptions could affect the amount of
reported country exposure.
Under the Firm’s internal country risk measurement
framework:
•
•
• Deposits with banks are measured as the cash balances
placed with central banks, commercial banks, and other
financial institutions
Lending exposures are measured at the total committed
amount (funded and unfunded), net of the allowance for
credit losses and eligible cash and marketable securities
collateral received
Securities financing exposures are measured at their
receivable balance, net of eligible collateral received
• Debt and equity securities are measured at the fair value
of all positions, including both long and short positions
Counterparty exposure on derivative receivables is
measured at the derivative’s fair value, net of the fair
value of the eligible collateral received
Credit derivatives exposure is measured at the net
notional amount of protection purchased or sold for the
same underlying reference entity, inclusive of the fair
value of the derivative receivable or payable, reflecting
the manner in which the Firm manages these exposures
•
•
The Firm’s internal country risk reporting differs from the
reporting provided under the FFIEC bank regulatory
requirements.
COUNTRY RISK MANAGEMENT
The Firm, through its LOBs and Corporate, may be exposed
to country risk resulting from financial, economic, political
or other significant developments which adversely affect
the value of the Firm’s exposures related to a particular
country or set of countries. The Country Risk Management
group actively monitors the various portfolios which may be
impacted by these developments and measures the extent
to which the Firm’s exposures are diversified given the
Firm’s strategy and risk tolerance relative to a country.
Organization and management
Country Risk Management is an independent risk
management function that assesses, manages and monitors
exposure to country risk across the Firm.
The Firm’s country risk management function includes the
following activities:
• Maintaining policies, procedures and standards
consistent with a comprehensive country risk framework
• Assigning sovereign ratings, assessing country risks and
establishing risk tolerance relative to a country
• Measuring and monitoring country risk exposure and
stress across the Firm
• Managing and approving country limits and reporting
trends and limit breaches to senior management
• Developing surveillance tools, such as signaling models
and ratings indicators, for early identification of
potential country risk concerns
• Providing country risk scenario analysis
Sources and measurement
The Firm is exposed to country risk through its lending and
deposits, investing, and market-making activities, whether
cross-border or locally funded. Country exposure includes
activity with both government and private-sector entities in
a country.
Under the Firm’s internal country risk management
approach, attribution of exposure to an individual country is
based on the country where the largest proportion of the
assets of the counterparty, issuer, obligor or guarantor are
located or where the largest proportion of its revenue is
derived, which may be different than the domicile (i.e. legal
residence) or country of incorporation.
Individual country exposures reflect an aggregation of the
Firm’s risk to an immediate default, with zero recovery, of
the counterparties, issuers, obligors or guarantors
attributed to that country. Activities which result in
contingent or indirect exposure to a country are not
included in the country exposure measure (for example,
providing clearing services or secondary exposure to
collateral on securities financing receivables).
Assumptions are sometimes required in determining the
measurement and allocation of country exposure,
particularly in the case of certain non-linear or index
products, or where the nature of the counterparty, issuer,
obligor or guarantor is not suitable for attribution to an
JPMorgan Chase & Co./2022 Form 10-K
139
Management’s discussion and analysis
Stress testing
Stress testing is an important component of the Firm’s
country risk management framework, which aims to
estimate and limit losses arising from a country crisis by
measuring the impact of adverse asset price movements to
a country based on market shocks combined with
counterparty specific assumptions. Country Risk
Management periodically designs and runs tailored stress
scenarios to test vulnerabilities to individual countries or
sets of countries in response to specific or potential market
events, sector performance concerns, sovereign actions and
geopolitical risks. These tailored stress results are used to
inform potential risk reduction across the Firm, as
necessary.
Risk reporting
Country exposure and stress are measured and reported
regularly, and used by Country Risk Management to identify
trends and monitor high usages and breaches against limits.
For country risk management purposes, the Firm may
report exposure to jurisdictions that are not fully
autonomous, including Special Administrative Regions
(“SAR”) and dependent territories, separately from the
independent sovereign states with which they are
associated.
The following table presents the Firm’s top 20 exposures by
country (excluding the U.S.) as of December 31, 2022, and
their comparative exposures as of December 31, 2021. The
selection of countries represents the Firm’s largest total
exposures by individual country, based on the Firm’s
internal country risk management approach, and does not
represent the Firm’s view of any existing or potentially
adverse credit conditions. Country exposures may fluctuate
from period to period due to client activity and market
flows.
The increase in exposure to Germany and the decrease in
exposure to the U.K. were primarily due to changes in cash
placements with the central banks of those countries driven
by balance sheet and liquidity management activities.
The decrease in exposure to Australia was driven by
reductions in cash placed with the central bank of Australia
and government debt securities, due to client-driven
market-making activities and lower client cash deposits
resulting from higher interest rates.
As of December 31, 2022, exposure to Russia was
approximately $500 million. This amount excludes certain
deposits placed on behalf of clients, largely at the Russian
National Settlement Depository. In accordance with
requirements of the Bank of Russia, these deposits were
transferred to the Depository Insurance Agency of Russia on
February 3, 2023.
Top 20 country exposures (excluding the U.S.)(a)
December 31,
(in billions)
2022
2021(f)
Deposits
with
banks(b)
Lending(c)
Trading
and
investing(d) Other(e)
Total
exposure
Total
exposure
Germany
$ 79.5 $ 11.3 $
1.9 $ 0.5 $ 93.2 $ 61.7
United
Kingdom
30.8
23.0
14.5
1.8
70.1
Japan
48.2
Australia
15.9
France
Brazil
Switzerland
Canada
China
South Korea
Singapore
Belgium
India
Saudi Arabia
Netherlands
Spain
Mexico
Luxembourg
Hong Kong
SAR
Sweden
0.4
4.2
8.8
2.6
2.5
1.4
1.2
6.3
1.3
0.7
0.2
0.4
0.5
0.9
2.8
1.1
3.1
6.2
11.4
4.9
3.3
10.2
5.7
3.5
4.6
1.7
4.0
5.6
7.2
4.9
4.4
2.9
0.9
3.1
4.2
0.3
55.8
3.6
—
25.7
2.6
3.7
18.1
8.7
—
17.8
1.6
1.6
15.3
1.5
0.1
14.4
5.5
—
13.7
4.9
0.2
10.0
3.7
0.4
1.2
—
2.8
0.9
1.6
—
(0.8) 0.5
0.5
0.5
1.5
—
—
—
0.7
0.1
0.2
—
9.9
9.2
9.0
7.9
7.1
5.8
5.4
5.3
4.5
4.4
96.4
45.5
39.1
14.0
12.0
20.9
16.9
18.6
8.7
12.3
6.8
14.7
9.1
6.8
10.1
4.9
11.5
5.9
4.4
(a) Country exposures presented in the table reflect 87% and 88% of
total Firmwide non-U.S. exposure, where exposure is attributed to an
individual country, at December 31, 2022 and 2021, respectively.
(b) Predominantly represents cash placed with central banks.
(c) Includes loans and accrued interest receivable, lending-related
commitments (net of eligible collateral and the allowance for credit
losses). Excludes intra-day and operating exposures, such as those
from settlement and clearing activities.
(d) Includes market-making inventory, Investment securities, and
counterparty exposure on derivative and securities financings net of
eligible collateral and hedging. Includes exposure from single
reference entity (“single-name”), index and other multiple reference
entity transactions for which one or more of the underlying reference
entities is in a country listed in the above table.
(e) Includes physical commodities inventory and clearing house guarantee
funds.
(f) The country rankings presented in the table as of December 31, 2021,
are based on the country rankings of the corresponding exposures at
December 31, 2022, not actual rankings of such exposures at
December 31, 2021.
140
JPMorgan Chase & Co./2022 Form 10-K
CLIMATE RISK MANAGEMENT
Climate risk is the risk associated with the impacts of
climate change on the Firm’s clients, customers, operations
and business strategy. Climate change is viewed as a driver
of risk that may impact existing types of risks managed by
the Firm. Climate risk is categorized into physical risk and
transition risk.
Governance and oversight
The Firm’s approach to managing climate risk is consistent
with the Firm’s risk governance structure. The LOBs and
Corporate are responsible for integrating climate risk
management into existing governance frameworks, or
creating new governance frameworks, as appropriate.
The LOBs, Corporate and Climate Risk Management are
responsible for providing the Board Risk Committee with
information on significant climate risks and climate-related
initiatives, as appropriate.
Physical risk refers to economic costs and financial loss
associated with a changing climate. Acute physical risk
drivers include the increased frequency or severity of
climate and weather events, such as floods, wildfires and
tropical storms. Chronic physical risk drivers include more
gradual shifts in the climate, such as rising sea levels,
persistent changes in precipitation levels and increases in
average ambient temperatures.
Transition risk refers to the financial and economic
implications associated with a societal adjustment to a low-
carbon economy. Transition risk drivers include possible
changes in public policy, adoption of new technologies and
shifts in consumer preferences. Transition risks may also be
influenced by changes in the physical climate.
Organization and management
The Firm has a Climate Risk Management function that is
responsible for establishing the Firmwide framework and
strategy for managing climate risk. The Climate Risk
Management function engages across the Firm to help
integrate climate risk considerations into existing risk
management frameworks, as appropriate.
Other responsibilities of Climate Risk Management include:
•
Setting policies, standards, procedures and processes to
support identification, escalation, monitoring and
management of climate risk across the Firm
• Developing metrics, scenarios, and stress testing
mechanisms designed to assess the range of potential
climate-related financial and economic impacts to the
Firm
•
Establishing a Firmwide climate risk data strategy and
the supporting climate risk technology infrastructure
The LOBs and Corporate are responsible for the
identification, assessment and management of climate risks
present in their business activities and for adherence to
applicable climate-related laws, rules and regulations.
JPMorgan Chase & Co./2022 Form 10-K
141
Management’s discussion and analysis
OPERATIONAL RISK MANAGEMENT
Operational risk is the risk of an adverse outcome resulting
from inadequate or failed internal processes or systems;
human factors; or external events impacting the Firm’s
processes or systems. Operational Risk includes
compliance, conduct, legal, and estimations and model risk.
Operational risk is inherent in the Firm’s activities and can
manifest itself in various ways, including fraudulent acts,
business disruptions (including those caused by
extraordinary events beyond the Firm's control), cyber
attacks, inappropriate employee behavior, failure to comply
with applicable laws, rules and regulations or failure of
vendors or other third party providers to perform in
accordance with their agreements. Operational Risk
Management attempts to manage operational risk at
appropriate levels in light of the Firm’s financial position,
the characteristics of its businesses, and the markets and
regulatory environments in which it operates.
Operational Risk Management Framework
The Firm’s Compliance, Conduct, and Operational Risk
(“CCOR”) Management Framework is designed to enable
the Firm to govern, identify, measure, monitor and test,
manage and report on the Firm’s operational risk.
Operational Risk Governance
The LOBs and Corporate are responsible for the
management of operational risk. The Control Management
Organization, which consists of control managers within
each LOB and Corporate, is responsible for the day-to-day
execution of the CCOR Framework.
The Firm’s Global Chief Compliance Officer (“CCO”) and FRE
for Operational Risk and Qualitative Risk Appetite is
responsible for defining the CCOR Management Framework
and establishing the minimum standards for its execution.
The LOB and Corporate aligned CCOR Lead Officers report
to the Global CCO and FRE for Operational Risk and
Qualitative Risk Appetite and are independent of the
respective businesses or functions they oversee. The CCOR
Management Framework is included in the Risk Governance
and Oversight Policy that is reviewed and approved by the
Board Risk Committee periodically.
Operational Risk Identification
The Firm utilizes a structured risk and control self-
assessment process that is executed by the LOBs and
Corporate. As part of this process, the LOBs and Corporate
evaluate the effectiveness of their respective control
environment to assess where controls have failed, and to
determine where remediation efforts may be required. The
Firm’s Operational Risk and Compliance organization
(“Operational Risk and Compliance”) provides oversight of
and challenge to these evaluations and may also perform
independent assessments of significant operational risk
events and areas of concentrated or emerging risk.
Operational Risk Measurement
Operational Risk and Compliance performs an independent
assessment of the operational risks inherent within the
LOBs and Corporate, which includes evaluating the
effectiveness of the control environments and reporting the
results to senior management.
In addition, Operational Risk and Compliance assesses
operational risks through quantitative means, including
operational risk-based capital and estimation of operational
risk losses under both baseline and stressed conditions.
The primary component of the operational risk capital
estimate is the Loss Distribution Approach (“LDA”)
statistical model, which simulates the frequency and
severity of future operational risk loss projections based on
historical data. The LDA model is used to estimate an
aggregate operational risk loss over a one-year time
horizon, at a 99.9% confidence level. The LDA model
incorporates actual internal operational risk losses in the
quarter following the period in which those losses were
realized, and the calculation generally continues to reflect
such losses even after the issues or business activities
giving rise to the losses have been remediated or reduced.
As required under the Basel III capital framework, the
Firm’s operational risk-based capital methodology, which
uses the Advanced Measurement Approach (“AMA”),
incorporates internal and external losses as well as
management’s view of tail risk captured through
operational risk scenario analysis, and evaluation of key
business environment and internal control metrics. The
Firm does not reflect the impact of insurance in its AMA
estimate of operational risk capital.
The Firm considers the impact of stressed economic
conditions on operational risk losses and develops a
forward looking view of material operational risk events
that may occur in a stressed environment. The Firm’s
operational risk stress testing framework is utilized in
calculating results for the Firm’s CCAR and other stress
testing processes.
Refer to Capital Risk Management on pages 86-96 for
information related to operational risk RWA, and CCAR.
Operational Risk Monitoring and testing
The results of risk assessments performed by Operational
Risk and Compliance are used in connection with their
independent monitoring and testing compliance of the LOBs
and Corporate with laws, rules and regulations. Through
monitoring and testing, Operational Risk and Compliance
independently identify areas of heightened operational risk
and tests the effectiveness of controls within the LOBs and
Corporate.
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Management of Operational Risk
The operational risk areas or issues identified through
monitoring and testing are escalated to the LOBs and
Corporate to be remediated through action plans, as
needed, to mitigate operational risk. Operational Risk and
Compliance may advise the LOBs and Corporate in the
development and implementation of action plans.
Operational Risk Reporting
All employees of the Firm are expected to escalate risks
appropriately. Risks identified by Operational Risk and
Compliance are escalated to the appropriate LOB and
Corporate Control Committees, as needed. Operational Risk
and Compliance has established standards designed to
ensure that consistent operational risk reporting and
operational risk reports are produced on a Firmwide basis
as well as by the LOBs and Corporate. Reporting includes
the evaluation of key risk and performance indicators
against established thresholds as well as the assessment of
different types of operational risk against stated risk
appetite. The standards reinforce escalation protocols to
senior management and to the Board of Directors.
Subcategories and examples of operational risks
Operational risk can manifest itself in various ways.
Operational risk subcategories include Compliance risk,
Conduct risk, Legal risk, and Estimations and Model risk.
Refer to pages 145, 146, 147 and 148, respectively for
more information on Compliance, Conduct, Legal, and
Estimations and Model risk. Details on other select
examples of operational risks such as cybersecurity,
business and technology resiliency, payment fraud and
third-party outsourcing are provided below.
War in Ukraine and Sanctions
In response to the war in Ukraine, numerous financial and
economic sanctions have been imposed on Russia and
Russia-associated entities and individuals by various
governments around the world, including the authorities in
the U.S., U.K. and EU. These sanctions are complex and
continue to evolve. The Firm continues to face increased
operational risk associated with addressing these complex
compliance-related matters. To manage this increased risk,
the Firm has implemented controls reasonably designed to
mitigate the risk of non-compliance and to prevent dealing
with sanctioned persons or in property subject to sanctions,
as well as to block or restrict payments as required by the
applicable regulations.
Cybersecurity risk
Cybersecurity risk is the risk of the Firm’s exposure to harm
or loss resulting from misuse or abuse of technology by
malicious actors. Cybersecurity risk is an important and
continuously evolving focus for the Firm. Significant
resources are devoted to protecting and enhancing the
security of computer systems, software, networks, storage
devices, and other technology assets. The Firm’s security
efforts are designed to protect against, among other things,
cybersecurity attacks by unauthorized parties attempting to
obtain access to confidential information, destroy data,
disrupt or degrade service, sabotage systems or cause other
damage.
The Firm has experienced, and expects that it will continue
to experience, a higher volume and complexity of cyber
attacks against the backdrop of heightened geopolitical
tensions. The Firm has implemented precautionary
measures and controls reasonably designed to address this
increased risk, such as enhanced threat monitoring. There
can be no assurance that the measures taken by the Firm
will be successful in defending against cyber attacks.
Ongoing business expansions may expose the Firm to
potential new threats as well as expanded regulatory
scrutiny including the introduction of new cybersecurity
requirements. The Firm continues to make significant
investments in enhancing its cyber defense capabilities and
to strengthen its partnerships with the appropriate
government and law enforcement agencies and other
businesses in order to understand the full spectrum of
cybersecurity risks in the operating environment, enhance
defenses and improve resiliency against cybersecurity
threats. The Firm actively participates in discussions and
simulations of cybersecurity risks both internally and with
law enforcement, government officials, peer and industry
groups, and has significantly increased efforts to educate
employees and certain clients on the topic of cybersecurity
risks.
Third parties with which the Firm does business or that
facilitate the Firm’s business activities (e.g., vendors, supply
chain, exchanges, clearing houses, central depositories, and
financial intermediaries) are also sources of cybersecurity
risk to the Firm. Third party cybersecurity incidents such as
system breakdowns or failures, misconduct by the
employees of such parties, or cyber attacks, including
ransomware and supply-chain compromises, could affect
their ability to deliver a product or service to the Firm or
result in lost or compromised information of the Firm or its
clients. Clients are also sources of cybersecurity risk to the
Firm and its information assets, particularly when their
activities and systems are beyond the Firm’s own security
and control systems. As a result, the Firm engages in
regular and ongoing discussions with certain vendors and
clients regarding cybersecurity risks and opportunities to
improve security. However, where cybersecurity incidents
occur as a result of client failures to maintain the security of
their own systems and processes, clients are responsible for
losses incurred.
To help safeguard the confidentiality, integrity and
availability of the Firm’s infrastructure, resources and
information, the Firm maintains a Information Security
Program designed to prevent, detect, and respond to
cyberattacks. The Board of Directors is periodically
provided with updates on the Firm’s Information Security
Program, recommended changes, cybersecurity policies and
practices, ongoing efforts to improve security, as well as the
Firm’s efforts regarding significant cybersecurity events. In
addition, the Firm has a cybersecurity incident response
JPMorgan Chase & Co./2022 Form 10-K
143
Management’s discussion and analysis
plan (“IRP”) designed to enable the Firm to respond to
attempted cybersecurity incidents, coordinate such
responses with law enforcement and other government
agencies, and notify clients and customers, as applicable.
Among other key focus areas, the IRP is designed to
mitigate the risk of insider trading connected to a
cybersecurity incident, and includes various escalation
points.
The Global Cybersecurity and Technology Controls
organization, working with each of the Firm’s LOBs and
Corporate, is responsible for identifying technology and
cybersecurity risks and is responsible for the controls to
manage threats. The organization consists of business
aligned information security personnel that are supported
within the organization by the following products and
services that execute the Information Security Program for
the Firm:
Cyber Operations
Identity & Access Management
•
•
• Governance, Risk & Controls
• Global Technology Product Security
The Global Cybersecurity and Technology Controls
governance structure is designed to identify, escalate, and
mitigate information security risks. This structure uses key
governance forums to disseminate information and monitor
technology efforts. These forums are established at multiple
levels throughout the Firm. The forums are used to escalate
information security risks or other matters as appropriate.
The IRM function provides oversight of the activities
designed to identify, assess, measure, and mitigate
cybersecurity risk.
The Firm’s Security Awareness Program includes training
that reinforces the Firm's Information Technology Risk and
Security Management policies, standards and practices, as
well as the expectation that employees comply with these
policies. The Security Awareness Program engages
personnel through training on how to identify potential
cybersecurity risks and protect the Firm’s resources and
information. This training is mandatory for all employees
globally on a periodic basis, and it is supplemented by
Firmwide testing initiatives, including periodic phishing
tests. The Firm provides specialized security training for
certain employee roles such as application developers.
Finally, the Firm’s Global Privacy Program requires all
employees to take periodic awareness training on data
privacy. This privacy-focused training includes information
about confidentiality and security, as well as responding to
unauthorized access to or use of information.
Business and technology resiliency risk
Disruptions can occur due to forces beyond the Firm’s
control such as the spread of infectious diseases or
pandemics, severe weather, power or telecommunications
loss, failure of a third party to provide expected services,
cyberattacks and terrorism. The Firmwide Business
Resiliency Program is designed to enable the Firm to
prepare for, adapt to, withstand and recover from business
disruptions including occurrence of an extraordinary event
beyond its control that may impact critical business
functions and supporting assets (i.e., staff, technology,
facilities and third parties). The program includes
governance, awareness training, planning and testing of
recovery strategies, as well as strategic and tactical
initiatives to identify, assess, and manage business
interruption and public safety risks.
Payment fraud risk
Payment fraud risk is the risk of external and internal
parties unlawfully obtaining personal monetary benefit
through misdirected or otherwise improper payment. The
Firm employs various controls for managing payment fraud
risk as well as providing employee and client education and
awareness trainings.
Third-party outsourcing risk
The Firm‘s Third-Party Oversight (“TPO”) and Inter-affiliates
Oversight (“IAO”) frameworks assist the LOBs and
Corporate in selecting, documenting, onboarding,
monitoring and managing their supplier relationships
including services provided by affiliates. The objectives of
the TPO framework are to hold suppliers and other third
parties to a high level of operational performance and to
mitigate key risks, including data loss and business
disruptions. The Corporate Third-Party Oversight group
is responsible for Firmwide training, monitoring, reporting
and standards.
Insurance
One of the ways in which operational risk may be mitigated
is through insurance maintained by the Firm. The Firm
purchases insurance from commercial insurers and
maintains a wholly-owned captive insurer, Park Assurance
Company. Insurance may also be required by third parties
with whom the Firm does business.
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COMPLIANCE RISK MANAGEMENT
Compliance risk, a subcategory of operational risk, is the
risk of failing to comply with laws, rules, regulations or
codes of conduct and standards of self-regulatory
organizations.
Governance and oversight
Operational Risk and Compliance is led by the Firm’s Global
CCO and FRE for Operational Risk and Qualitative Risk
Appetite.
Overview
Each of the LOBs and Corporate hold primary ownership of
and accountability for managing their compliance risk. The
Firm’s Operational Risk and Compliance Organization
(“Operational Risk and Compliance”), which is independent
of the LOBs and Corporate, provides independent review,
monitoring and oversight of business operations with a
focus on compliance with the laws, rules, and regulations
applicable to the delivery of the Firm’s products and
services to clients and customers.
These compliance risks relate to a wide variety of laws,
rules and regulations varying across the LOBs and
Corporate, and jurisdictions, and include risks related to
financial products and services, relationships and
interactions with clients and customers, and employee
activities. For example, compliance risks include those
associated with anti-money laundering compliance, trading
activities, market conduct, and complying with the laws,
rules, and regulations related to the offering of products
and services across jurisdictional borders. Compliance risk
is also inherent in the Firm’s fiduciary activities, including
the failure to exercise the applicable standard of care to act
in the best interest of fiduciary clients and customers or to
treat fiduciary clients and customers fairly.
Other functions provide oversight of significant regulatory
obligations that are specific to their respective areas of
responsibility.
Operational Risk and Compliance implements policies and
standards designed to govern, identify, measure, monitor
and test, manage, and report on compliance risk.
The Firm maintains oversight and coordination of its
compliance risk through the implementation of the CCOR
Management Framework. The Firm’s Global CCO and FRE
for Operational Risk and Qualitative Risk Appetite also
provides regular updates to the Board Risk Committee and
the Audit Committee on significant compliance risk issues,
as appropriate.
Code of Conduct
The Firm has a Code of Conduct (the “Code”) that sets forth
the Firm’s expectation that employees will conduct
themselves with integrity at all times and provides the
principles that govern employee conduct with clients,
customers, shareholders and one another, as well as with
the markets and communities in which the Firm does
business. The Code requires employees to promptly report
any potential or actual violation of the Code, any Firm
policy, or any law or regulation applicable to the Firm’s
business. It also requires employees to report any illegal
conduct, or conduct that violates the underlying principles
of the Code, by any of the Firm’s employees, clients,
customers, suppliers, contract workers, business partners,
or agents. Training is assigned to newly hired employees
upon joining the Firm, and to current employees
periodically on an ongoing basis. Employees are required to
affirm their compliance with the Code annually.
Employees can report any potential or actual violations of
the Code through the Firm’s Conduct Hotline by phone or
the internet. The Hotline is anonymous, except in certain
non-U.S. jurisdictions where laws prohibit anonymous
reporting, and is available at all times globally, with
translation services. It is administered by an outside service
provider. The Code prohibits retaliation against anyone who
raises an issue or concern in good faith. Periodically, the
Audit Committee receives reports on the Code of Conduct
program.
JPMorgan Chase & Co./2022 Form 10-K
145
Management’s discussion and analysis
CONDUCT RISK MANAGEMENT
Conduct risk, a subcategory of operational risk, is the risk
that any action or misconduct by an employee could lead to
unfair client or customer outcomes, impact the integrity of
the markets in which the Firm operates, harm employees or
the Firm, or compromise the Firm’s reputation.
Overview
Each LOB and Corporate is accountable for identifying and
managing its conduct risk to provide appropriate
engagement, ownership and sustainability of a culture
consistent with the Firm’s How We Do Business Principles
(the “Principles”). The Principles serve as a guide for how
employees are expected to conduct themselves. With the
Principles serving as a guide, the Firm’s Code sets out the
Firm’s expectations for each employee and provides
information and resources to help employees conduct
business ethically and in compliance with applicable laws,
rules and regulations everywhere the Firm operates. Refer
to Compliance Risk Management on page 145 for further
discussion of the Code.
Governance and oversight
The Conduct Risk Program is governed by the CCOR
Management policy, which establishes the framework for
governance, identification, measurement, monitoring and
testing, management and reporting conduct risk in the
Firm.
The Firm has a senior forum that provides oversight of the
Firm’s conduct initiatives to develop a more holistic view of
conduct risks and to connect key programs across the Firm
in order to identify opportunities and emerging areas of
focus. This forum is responsible for setting overall program
direction for strategic enhancements to the Firm's
employee conduct framework and reviewing the
consolidated Firmwide Conduct Risk Appetite Assessment.
Conduct risk management encompasses various aspects of
people management practices throughout the employee life
cycle, including recruiting, onboarding, training and
development, performance management, promotion and
compensation processes. Each LOB, Treasury and CIO, and
each designated corporate function completes an
assessment of conduct risk periodically, reviews metrics
and issues which may involve conduct risk, and provides
conduct education as appropriate.
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Legal selects, engages and manages outside counsel for the
Firm on all matters in which outside counsel is engaged. In
addition, Legal advises the Firm’s Conflicts Office which
reviews the Firm’s wholesale transactions that may have
the potential to create conflicts of interest for the Firm.
Governance and oversight
The Firm’s General Counsel reports to the CEO and is a
member of the Operating Committee, the Firmwide Risk
Committee and the Firmwide Control Committee. The Firm’s
General Counsel and other members of Legal report on
significant legal matters to the Firm’s Board of Directors
and to the Audit Committee.
Legal serves on and advises various committees and advises
the Firm’s LOBs and Corporate on potential reputation risk
issues.
LEGAL RISK MANAGEMENT
Legal risk, a subcategory of operational risk, is the risk of
loss primarily caused by the actual or alleged failure to
meet legal obligations that arise from the rule of law in
jurisdictions in which the Firm operates, agreements with
clients and customers, and products and services offered by
the Firm.
Overview
The global Legal function (“Legal”) provides legal services
and advice to the Firm. Legal is responsible for managing
the Firm’s exposure to legal risk by:
• managing actual and potential litigation and
enforcement matters, including internal reviews and
investigations related to such matters
•
•
advising on products and services, including contract
negotiation and documentation
advising on offering and marketing documents and new
business initiatives
• managing dispute resolution
•
•
interpreting existing laws, rules and regulations, and
advising on changes to them
advising on advocacy in connection with contemplated
and proposed laws, rules and regulations, and
• providing legal advice to the LOBs, Corporate and the
Board.
JPMorgan Chase & Co./2022 Form 10-K
147
Management’s discussion and analysis
ESTIMATIONS AND MODEL RISK MANAGEMENT
Estimations and Model risk, a subcategory of operational
risk, is the potential for adverse consequences from
decisions based on incorrect or misused estimation outputs.
The Firm uses models and other analytical and judgment-
based estimations across various businesses and functions.
The estimation methods are of varying levels of
sophistication and are used for many purposes, such as the
valuation of positions and measurement of risk, assessing
regulatory capital requirements, conducting stress testing,
evaluating the allowance for credit losses and making
business decisions. A dedicated independent function,
Model Risk Governance and Review (“MRGR”), defines and
governs the Firm’s policies relating to the management of
model risk and risks associated with certain analytical and
judgment-based estimations, such as those used in risk
management, budget forecasting and capital planning and
analysis.
The governance of analytical and judgment-based
estimations within MRGR’s scope follows a consistent
approach which is used for models, as described in detail
below.
Model risks are owned by the users of the models within the
Firm based on the specific purposes of such models. Users
and developers of models are responsible for developing,
implementing and testing their models, as well as referring
models to MRGR for review and approval. Once models have
been approved, model users and developers are responsible
for maintaining a robust operating environment, and must
monitor and evaluate the performance of the models on an
ongoing basis. Model users and developers may seek to
enhance models in response to changes in the portfolios
and in product and market developments, as well as to
capture improvements in available modeling techniques
and systems capabilities.
Models are tiered based on an internal standard according
to their complexity, the exposure associated with the model
and the Firm’s reliance on the model. This tiering is subject
to the approval of MRGR. In its review of a model, MRGR
considers whether the model is suitable for the specific
purposes for which it will be used. When reviewing a model,
MRGR analyzes and challenges the model methodology and
the reasonableness of model assumptions, and may
perform or require additional testing, including back-testing
of model outcomes. Model reviews are approved by the
appropriate level of management within MRGR based on the
relevant model tier.
Under the Firm’s Estimations and Model Risk Management
Policy, MRGR reviews and approves new models, as well as
material changes to existing models, prior to their use. In
certain circumstances, exceptions may be granted to the
Firm’s policy to allow a model to be used prior to review or
approval. MRGR may also require the user to take
appropriate actions to mitigate the model risk if it is to be
used in the interim. These actions will depend on the model
and may include, for example, limitation of trading activity.
While models are inherently imprecise, the degree of
imprecision or uncertainty can be heightened by the market
or economic environment. This is particularly true when the
current and forecasted environments are significantly
different from the historical environments upon which the
models were developed, as the Firm experienced during the
early stages of the COVID-19 pandemic. This increased
uncertainty may necessitate a greater degree of judgment
and analytics to inform any adjustments that the Firm may
make to model outputs than would otherwise be the case.
Refer to Critical Accounting Estimates Used by the Firm on
pages 149-152 and Note 2 for a summary of model-based
valuations and other valuation techniques.
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CRITICAL ACCOUNTING ESTIMATES USED BY THE FIRM
JPMorgan Chase’s accounting policies and use of estimates
are integral to understanding its reported results. The
Firm’s most complex accounting estimates require
management’s judgment to ascertain the appropriate
carrying value of assets and liabilities. The Firm has
established policies and control procedures intended to
ensure that estimation methods, including any judgments
made as part of such methods, are well-controlled,
independently reviewed and applied consistently from
period to period. The methods used and judgments made
reflect, among other factors, the nature of the assets or
liabilities and the related business and risk management
strategies, which may vary across the Firm’s businesses and
portfolios. In addition, the policies and procedures are
intended to ensure that the process for changing
methodologies occurs in an appropriate manner. The Firm
believes its estimates for determining the carrying value of
its assets and liabilities are appropriate. The following is a
brief description of the Firm’s critical accounting estimates
involving significant judgments.
Allowance for credit losses
The Firm’s allowance for credit losses represents
management’s estimate of expected credit losses over the
remaining expected life of the Firm’s financial assets
measured at amortized cost and certain off-balance sheet
lending-related commitments. The allowance for credit
losses comprises:
• The allowance for loan losses, which covers the Firm’s
retained loan portfolios (scored and risk-rated),
• The allowance for lending-related commitments, and
• The allowance for credit losses on investment securities.
The allowance for credit losses involves significant
judgment on a number of matters including development
and weighting of macroeconomic forecasts, incorporation of
historical loss experience, assessment of risk
characteristics, assignment of risk ratings, valuation of
collateral, and the determination of remaining expected
life. Refer to Note 10 and Note 13 for further information
on these judgments as well as the Firm’s policies and
methodologies used to determine the Firm’s allowance for
credit losses.
One of the most significant judgments involved in
estimating the Firm’s allowance for credit losses relates to
the macroeconomic forecasts used to estimate credit losses
over the eight-quarter forecast period within the Firm’s
methodology. The eight-quarter forecast incorporates
hundreds of macroeconomic variables (“MEVs”) that are
relevant for exposures across the Firm, with modeled credit
losses being driven primarily by a subset of less than twenty
variables. The specific variables that have the greatest
effect on the modeled losses of each portfolio vary by
portfolio and geography.
• Key MEVs for the consumer portfolio include regional U.S.
unemployment rates, HPI and U.S. real GDP.
• Key MEVs for the wholesale portfolio include U.S. real
GDP, U.S. unemployment, U.S. equity prices, U.S. interest
rates, corporate credit spreads, oil prices, commercial
real estate prices and HPI.
Changes in the Firm’s assumptions and forecasts of
economic conditions could significantly affect its estimate of
expected credit losses in the portfolio at the balance sheet
date or lead to significant changes in the estimate from one
reporting period to the next.
It is difficult to estimate how potential changes in any one
factor or input might affect the overall allowance for credit
losses because management considers a wide variety of
factors and inputs in estimating the allowance for credit
losses. Changes in the factors and inputs considered may
not occur at the same rate and may not be consistent across
all geographies or product types, and changes in factors
and inputs may be directionally inconsistent, such that
improvement in one factor or input may offset deterioration
in others.
To consider the impact of a hypothetical alternate
macroeconomic forecast, the Firm compared the modeled
credit losses determined using its central and relative
adverse macroeconomic scenarios, which are two of the five
scenarios considered in estimating the allowances for loan
losses and lending-related commitments. The central and
relative adverse scenarios each included a full suite of
MEVs, but differed in the levels, paths and peaks/troughs of
those variables over the eight-quarter forecast period.
For example, compared to the Firm’s central scenario
shown on page 127 and in Note 13, the Firm’s relative
adverse scenario assumes an elevated U.S. unemployment
rate, averaging approximately 1.9% higher over the eight-
quarter forecast, with a peak difference of approximately
2.8% in the fourth quarter of 2023; lower U.S. real GDP
with a slower recovery, remaining nearly 3.1% lower at the
end of the eight-quarter forecast, with a peak difference of
approximately 3.9% in the fourth quarter of 2023; and
lower national HPI with a peak difference of approximately
8.4% in the third quarter of 2024.
This analysis is not intended to estimate expected future
changes in the allowance for credit losses, for a number of
reasons, including:
• The allowance as of December 31, 2022, reflects credit
losses beyond those estimated under the central scenario
due to the weight placed on the adverse scenarios.
• The impacts of changes in many MEVs are both
interrelated and nonlinear, so the results of this analysis
cannot be simply extrapolated for more severe changes
in macroeconomic variables.
• Expectations of future changes in portfolio composition
and borrower behavior can significantly affect the
allowance for credit losses.
To demonstrate the sensitivity of credit loss estimates to
macroeconomic forecasts as of December 31, 2022, the
JPMorgan Chase & Co./2022 Form 10-K
149
Management’s discussion and analysis
Firm compared the modeled estimates under its relative
adverse scenario to its central scenario. Without
considering offsetting or correlated effects in other
qualitative components of the Firm’s allowance for credit
losses, the comparison between these two scenarios for the
exposures below reflect the following differences:
• An increase of approximately $500 million for residential
real estate loans and lending-related commitments
• An increase of approximately $2.2 billion for credit card
loans
• An increase of approximately $3.9 billion for wholesale
loans and lending-related commitments
This analysis relates only to the modeled credit loss
estimates and is not intended to estimate changes in the
overall allowance for credit losses as it does not reflect any
potential changes in other adjustments to the quantitative
calculation, which would also be influenced by the judgment
management applies to the modeled lifetime loss estimates
to reflect the uncertainty and imprecision of these modeled
lifetime loss estimates based on then-current circumstances
and conditions.
Recognizing that forecasts of macroeconomic conditions are
inherently uncertain, particularly in light of the recent
economic conditions, the Firm believes that its process to
consider the available information and associated risks and
uncertainties is appropriately governed and that its
estimates of expected credit losses were reasonable and
appropriate for the period ended December 31, 2022.
Fair value
JPMorgan Chase carries a portion of its assets and liabilities
at fair value. The majority of such assets and liabilities are
measured at fair value on a recurring basis, including
derivatives, structured note products and certain securities
financing agreements. Certain assets and liabilities are
measured at fair value on a nonrecurring basis, including
certain mortgage, home equity and other loans, where the
carrying value is based on the fair value of the underlying
collateral.
Assets measured at fair value
The following table includes the Firm’s assets measured at
fair value and the portion of such assets that are classified
within level 3 of the fair value hierarchy. Refer to Note 2 for
further information.
December 31, 2022
(in millions, except ratios)
Total assets
at fair value
Total level 3
assets
Federal funds sold and securities
purchased under resale agreements
Securities borrowed
Trading assets:
Trading-debt and equity instruments
Derivative receivables(a)
Total trading assets
AFS securities
Loans
MSRs
Other
$ 311,883
70,041
$
—
—
382,876
70,880
453,756
205,857
42,079
7,973
14,014
2,909
10,682
13,591
239
1,418
7,973
405
Total assets measured at fair value on
a recurring basis
Total assets measured at fair value on a
nonrecurring basis
1,105,603
23,626
2,658
1,979
Total assets measured at fair value
$ 1,108,261
$ 25,605
Total Firm assets
$ 3,665,743
Level 3 assets at fair value as a
percentage of total Firm assets(a)
Level 3 assets at fair value as a
percentage of total Firm assets at fair
value(a)
0.7%
2.3%
(a) For purposes of the table above, the derivative receivables total
reflects the impact of netting adjustments; however, the $10.7 billion
of derivative receivables classified as level 3 does not reflect the
netting adjustment as such netting is not relevant to a presentation
based on the transparency of inputs to the valuation of an asset. The
level 3 balances would be reduced if netting were applied, including
the netting benefit associated with cash collateral.
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Valuation
Details of the Firm’s processes for determining fair value
are set out in Note 2. Estimating fair value requires the
application of judgment. The type and level of judgment
required is largely dependent on the amount of observable
market information available to the Firm. For instruments
valued using internally developed valuation models and
other valuation techniques that use significant
unobservable inputs and are therefore classified within
level 3 of the fair value hierarchy, judgments used to
estimate fair value are more significant than those required
when estimating the fair value of instruments classified
within levels 1 and 2.
In arriving at an estimate of fair value for an instrument
within level 3, management must first determine the
appropriate valuation model or other valuation technique to
use. Second, the lack of observability of certain significant
inputs requires management to assess relevant empirical
data in deriving valuation inputs including, for example,
transaction details, yield curves, interest rates, prepayment
speed, default rates, volatilities, correlations, prices (such
as commodity, equity or debt prices), valuations of
comparable instruments, foreign exchange rates and credit
curves. Refer to Note 2 for a further discussion of the
valuation of level 3 instruments, including unobservable
inputs used.
For instruments classified in levels 2 and 3, management
judgment must be applied to assess the appropriate level of
valuation adjustments to reflect counterparty credit quality,
the Firm’s creditworthiness, market funding rates, liquidity
considerations, unobservable parameters, and for portfolios
that meet specified criteria, the size of the net open risk
position. The judgments made are typically affected by the
type of product and its specific contractual terms, and the
level of liquidity for the product or within the market as a
whole. In periods of heightened market volatility and
uncertainty judgments are further affected by the wider
variation of reasonable valuation estimates, particularly for
positions that are less liquid. Refer to Note 2 for a further
discussion of valuation adjustments applied by the Firm.
Imprecision in estimating unobservable market inputs or
other factors can affect the amount of gain or loss recorded
for a particular position. Furthermore, while the Firm
believes its valuation methods are appropriate and
consistent with those of other market participants, the
methods and assumptions used reflect management
judgment and may vary across the Firm’s businesses and
portfolios.
The Firm uses various methodologies and assumptions in
the determination of fair value. The use of methodologies or
assumptions different than those used by the Firm could
result in a different estimate of fair value at the reporting
date. Refer to Note 2 for a detailed discussion of the Firm’s
valuation process and hierarchy, and its determination of
fair value for individual financial instruments.
Goodwill impairment
Under U.S. GAAP, goodwill must be allocated to reporting
units and tested for impairment at least annually. The
Firm’s process and methodology used to conduct goodwill
impairment testing is described in Note 15.
Management applies significant judgment when testing
goodwill for impairment. The goodwill associated with each
business combination is allocated to the related reporting
units for goodwill impairment testing.
For the year ended December 31, 2022, the Firm reviewed
current economic conditions, estimated market cost of
equity, as well as actual business results and projections of
business performance. Based on such reviews, the Firm has
concluded that goodwill was not impaired as of
December 31, 2022. For each of the reporting units, fair
value exceeded carrying value by at least 10% and there
was no indication of a significant risk of goodwill
impairment based on current projections and valuations.
The projections for the Firm’s reporting units are consistent
with management’s current business outlook assumptions
in the short term, and the Firm’s best estimates of long-
term growth and return on equity in the longer term. Where
possible, the Firm uses third-party and peer data to
benchmark its assumptions and estimates.
Refer to Note 15 for additional information on goodwill,
including the goodwill impairment assessment as of
December 31, 2022.
Credit card rewards liability
JPMorgan Chase offers credit cards with various rewards
programs which allow cardholders to earn rewards points
based on their account activity and the terms and
conditions of the rewards program. Generally, there are no
limits on the points that an eligible cardholder can earn, nor
do the points expire, and the points can be redeemed for a
variety of rewards, including cash (predominantly in the
form of account credits), gift cards and travel. The Firm
maintains a rewards liability which represents the
estimated cost of rewards points earned and expected to be
redeemed by cardholders. The liability is accrued as the
cardholder earns the benefit and is reduced when the
cardholder redeems points. This liability was $11.3 billion
and $9.8 billion at December 31, 2022 and 2021,
respectively, and is recorded in accounts payable and other
liabilities on the Consolidated balance sheets. The increase
in the liability was driven by continued growth in rewards
points earned on increased cardholder spending and
promotional offers outpacing redemptions throughout
2022.
The rewards liability is sensitive to redemption rate (“RR”)
and cost per point (“CPP”) assumptions. The RR assumption
is used to estimate the number of points earned by
customers that will be redeemed over the life of the
account. The CPP assumption is used to estimate the cost of
future point redemptions. These assumptions are evaluated
periodically considering historical actuals, cardholder
redemption behavior and management judgment. Updates
JPMorgan Chase & Co./2022 Form 10-K
151
established. The valuation allowance may be reversed in a
subsequent reporting period if the Firm determines that,
based on revised estimates of future taxable income or
changes in tax planning strategies, it is more likely than not
that all or part of the deferred tax asset will become
realizable. As of December 31, 2022, management has
determined it is more likely than not that the Firm will
realize its deferred tax assets, net of the existing valuation
allowance.
The Firm adjusts its unrecognized tax benefits as necessary
when new information becomes available, including
changes in tax law and regulations, and interactions with
taxing authorities. Uncertain tax positions that meet the
more-likely-than-not recognition threshold are measured to
determine the amount of benefit to recognize. An uncertain
tax position is measured at the largest amount of benefit
that management believes is more likely than not to be
realized upon settlement. It is possible that the
reassessment of JPMorgan Chase’s unrecognized tax
benefits may have a material impact on its effective income
tax rate in the period in which the reassessment occurs.
Although the Firm believes that its estimates are
reasonable, the final tax amount could be different from the
amounts reflected in the Firm’s income tax provisions and
accruals. To the extent that the final outcome of these
amounts is different than the amounts recorded, such
differences will generally impact the Firm’s provision for
income taxes in the period in which such a determination is
made.
The Firm’s provision for income taxes is composed of
current and deferred taxes. The current and deferred tax
provisions are calculated based on estimates and
assumptions that could differ from the actual results
reflected in income tax returns filed during the subsequent
year. Adjustments based on filed returns are generally
recorded in the period when the tax returns are filed and
the global tax implications are known, which could impact
the Firm’s effective tax rate.
Refer to Note 25 for additional information on income
taxes.
Litigation reserves
Refer to Note 30 for a description of the significant
estimates and judgments associated with establishing
litigation reserves.
Management’s discussion and analysis
to these assumptions will impact the rewards liability. As of
December 31, 2022, a combined increase of 25 basis
points in RR and 1 basis point in CPP would increase the
rewards liability by approximately $315 million.
Income taxes
JPMorgan Chase is subject to the income tax laws of the
various jurisdictions in which it operates, including U.S.
federal, state and local, and non-U.S. jurisdictions. These
laws are often complex and may be subject to different
interpretations. To determine the financial statement
impact of accounting for income taxes, including the
provision for income tax expense and unrecognized tax
benefits, JPMorgan Chase must make assumptions and
judgments about how to interpret and apply these complex
tax laws to numerous transactions and business events, as
well as make judgments regarding the timing of when
certain items may affect taxable income in the U.S. and
non-U.S. tax jurisdictions.
JPMorgan Chase’s interpretations of tax laws around the
world are subject to review and examination by the various
taxing authorities in the jurisdictions where the Firm
operates, and disputes may occur regarding its view on a
tax position. These disputes over interpretations with the
various taxing authorities may be settled by audit,
administrative appeals or adjudication in the court systems
of the tax jurisdictions in which the Firm operates.
JPMorgan Chase regularly reviews whether it may be
assessed additional income taxes as a result of the
resolution of these matters, and the Firm records additional
unrecognized tax benefits, as appropriate. In addition, the
Firm may revise its estimate of income taxes due to changes
in income tax laws, legal interpretations, and business
strategies. It is possible that revisions in the Firm’s estimate
of income taxes may materially affect the Firm’s results of
operations in any reporting period.
Deferred taxes arise from differences between assets and
liabilities measured for financial reporting versus income
tax return purposes. Deferred tax assets are recognized if,
in management’s judgment, their realizability is determined
to be more likely than not. Deferred taxes are measured
using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred
taxes of a change in tax rates is recognized within the
provision for income taxes in the period enacted.
The Firm has also recognized deferred tax assets in
connection with certain tax attributes, including net
operating loss (“NOL”) carryforwards and foreign tax credit
(“FTC”) carryforwards. The Firm performs regular reviews
to ascertain whether its deferred tax assets are realizable.
These reviews include management’s estimates and
assumptions regarding future taxable income, including
foreign source income, and may incorporate various tax
planning strategies, including strategies that may be
available to utilize NOLs and FTCs before they expire. In
connection with these reviews, if it is determined that a
deferred tax asset is not realizable, a valuation allowance is
152
JPMorgan Chase & Co./2022 Form 10-K
ACCOUNTING AND REPORTING DEVELOPMENTS
Financial Accounting Standards Board (“FASB”) Standards Adopted since January 1, 2021
Standard
Reference Rate
Reform
Summary of guidance
• Provides optional expedients and exceptions to
current accounting guidance when financial
instruments, hedge accounting relationships, and
other transactions are amended due to reference rate
reform.
Issued March
2020 and updated
January 2021 and
December 2022
• Provides an election to account for certain contract
amendments related to reference rate reform as
modifications rather than extinguishments without
the requirement to assess the significance of the
amendments.
• Allows for changes in critical terms of a hedge
accounting relationship without automatic
termination of that relationship. Provides various
practical expedients and elections designed to allow
hedge accounting to continue uninterrupted during
the transition period.
• Provides a one-time election to transfer securities out
of the held-to-maturity classification if certain criteria
are met.
• The January 2021 update provides an election to
account for derivatives modified to change the rate
used for discounting, margining, or contract price
alignment (collectively “discounting transition”) as
modifications.
• The December 2022 update extends the termination
date of the optional expedients and exceptions to
current accounting guidance to December 31, 2024.
Effects on financial statements
• Issued and effective March 12, 2020. The
January 7, 2021 and December 21, 2022
updates were effective when issued.
• The Firm elected to apply certain of the
practical expedients related to contract
modifications and hedge accounting
relationships, and discounting transition
beginning in the third quarter of 2020. The
discounting transition election was applied
retrospectively. The main purpose of the
practical expedients is to ease the
administrative burden of accounting for
contracts impacted by reference rate reform.
These elections did not have a material impact
on the Consolidated Financial Statements.
Effects on financial statements
• Adopted prospectively on January 1, 2023
and, as permitted by the guidance, in January
2023 the Firm transferred and designated
approximately $7.0 billion of HTM securities
into a closed AFS securities portfolio hedged
under the portfolio layer method.
FASB Standards Issued but Not Adopted as of December 31, 2022
Summary of guidance
Standard
• Expands the current ability to hedge a portfolio of
Derivatives and
Hedging: Fair Value
Hedging – Portfolio
Layer Method
prepayable assets to allow more of the portfolio to be
hedged. Non-prepayable assets can also be included
in the same portfolio, thus increasing the size of the
portfolio and the amount available to be hedged.
• Clarifies the types of derivatives that can be used as
hedges, and the balance sheet presentation and
disclosure requirements for the hedge accounting
adjustments.
Issued March 2022
Financial
Instruments –
Credit Losses:
Troubled Debt
Restructurings and
Vintage Disclosures
Issued March 2022
• Allows a one-time reclassification from HTM to AFS
upon adoption.
• Eliminates existing accounting and disclosure
• Adopted January 1, 2023.
requirements for Troubled Debt Restructurings,
including the requirement to measure the allowance
using a discounted cash flow methodology.
• Requires disclosure of loan modifications for
borrowers experiencing financial difficulty involving
principal forgiveness, interest rate reduction, other-
than-insignificant payment delay, term extension or a
combination of these modifications.
• Requires disclosure of current period loan charge-off
information by origination year.
• May be adopted prospectively, or by using a modified
retrospective method wherein the effect of adoption
is reflected as an adjustment to retained earnings at
the effective date.
• This guidance was adopted using a modified
retrospective method which resulted in a net
decrease to the allowance for credit losses of
approximately $600 million and an increase to
retained earnings of approximately $450
million after-tax, predominantly driven by
residential real estate and credit card. Refer to
Note 1 for further information.
JPMorgan Chase & Co./2022 Form 10-K
153
Management’s discussion and analysis
FORWARD-LOOKING STATEMENTS
From time to time, the Firm has made and will make
forward-looking statements. These statements can be
identified by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements often
use words such as “anticipate,” “target,” “expect,”
“estimate,” “intend,” “plan,” “goal,” “believe,” or other
words of similar meaning. Forward-looking statements
provide JPMorgan Chase’s current expectations or forecasts
of future events, circumstances, results or aspirations.
JPMorgan Chase’s disclosures in this 2022 Form 10-K
contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. The
Firm also may make forward-looking statements in its other
documents filed or furnished with the SEC. In addition, the
Firm’s senior management may make forward-looking
statements orally to investors, analysts, representatives of
the media and others.
All forward-looking statements are, by their nature, subject
to risks and uncertainties, many of which are beyond the
Firm’s control. JPMorgan Chase’s actual future results may
differ materially from those set forth in its forward-looking
statements. While there is no assurance that any list of risks
and uncertainties or risk factors is complete, below are
certain factors which could cause actual results to differ
from those in the forward-looking statements:
•
•
Local, regional and global business, economic and
political conditions and geopolitical events, including the
war in Ukraine;
Changes in laws, rules, and regulatory requirements,
including capital and liquidity requirements affecting the
Firm’s businesses, and the ability of the Firm to address
those requirements;
• Heightened regulatory and governmental oversight and
scrutiny of JPMorgan Chase’s business practices,
including dealings with retail customers;
Changes in trade, monetary and fiscal policies and laws;
Changes in the level of inflation;
Changes in income tax laws, rules, and regulations;
Securities and capital markets behavior, including
changes in market liquidity and volatility;
Changes in investor sentiment or consumer spending or
savings behavior;
•
•
•
•
•
• Ability of the Firm to manage effectively its capital and
•
liquidity;
Changes in credit ratings assigned to the Firm or its
subsidiaries;
• Damage to the Firm’s reputation;
• Ability of the Firm to appropriately address social,
environmental and sustainability concerns that may
arise, including from its business activities;
• Ability of the Firm to deal effectively with an economic
slowdown or other economic or market disruption,
including, but not limited to, in the interest rate
environment;
•
Technology changes instituted by the Firm, its
counterparties or competitors;
The effectiveness of the Firm’s control agenda;
•
• Ability of the Firm to develop or discontinue products
and services, and the extent to which products or
services previously sold by the Firm require the Firm to
incur liabilities or absorb losses not contemplated at
their initiation or origination;
• Acceptance of the Firm’s new and existing products and
services by the marketplace and the ability of the Firm to
innovate and to increase market share;
• Ability of the Firm to attract and retain qualified and
diverse employees;
• Ability of the Firm to control expenses;
•
•
Competitive pressures;
Changes in the credit quality of the Firm’s clients,
customers and counterparties;
• Adequacy of the Firm’s risk management framework,
disclosure controls and procedures and internal control
over financial reporting;
• Adverse judicial or regulatory proceedings;
•
Changes in applicable accounting policies, including the
introduction of new accounting standards;
• Ability of the Firm to determine accurate values of
certain assets and liabilities;
• Occurrence of natural or man-made disasters or
calamities, including health emergencies, the spread of
infectious diseases, epidemics or pandemics, an outbreak
or escalation of hostilities or other geopolitical
instabilities, the effects of climate change or
extraordinary events beyond the Firm’s control, and the
Firm’s ability to deal effectively with disruptions caused
by the foregoing;
• Ability of the Firm to maintain the security of its
financial, accounting, technology, data processing and
other operational systems and facilities;
• Ability of the Firm to withstand disruptions that may be
caused by any failure of its operational systems or those
of third parties;
• Ability of the Firm to effectively defend itself against
cyber attacks and other attempts by unauthorized parties
to access information of the Firm or its customers or to
disrupt the Firm’s systems; and
•
The other risks and uncertainties detailed in Part I, Item
1A: Risk Factors in JPMorgan Chase’s 2022 Form 10-K.
Any forward-looking statements made by or on behalf of the
Firm speak only as of the date they are made, and JPMorgan
Chase does not undertake to update any forward-looking
statements. The reader should, however, consult any further
disclosures of a forward-looking nature the Firm may make
in any subsequent Form 10-Ks, Quarterly Reports on Form
10-Qs, or Current Reports on Form 8-K.
154
JPMorgan Chase & Co./2022 Form 10-K
Management’s report on internal control over financial reporting
Management of JPMorgan Chase & Co. (“JPMorgan Chase”
or the “Firm”) is responsible for establishing and
maintaining adequate internal control over financial
reporting. Internal control over financial reporting is a
process designed by, or under the supervision of, the Firm’s
principal executive and principal financial officers, or
persons performing similar functions, and effected by
JPMorgan Chase’s Board of Directors, management and
other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance
with accounting principles generally accepted in the United
States of America (“U.S. GAAP”).
JPMorgan Chase’s internal control over financial reporting
includes those policies and procedures that (1) pertain to
the maintenance of records, that, in reasonable detail,
accurately and fairly reflect the transactions and
dispositions of the Firm’s assets; (2) provide reasonable
assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance
with U.S. GAAP, and that receipts and expenditures of the
Firm are being made only in accordance with authorizations
of JPMorgan Chase’s management and directors; and (3)
provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or
disposition of the Firm’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate. Management has
completed an assessment of the effectiveness of the Firm’s
internal control over financial reporting as of December 31,
2022. In making the assessment, management used the
“Internal Control — Integrated Framework” (“COSO 2013”)
promulgated by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”).
Based upon the assessment performed, management
concluded that as of December 31, 2022, JPMorgan
Chase’s internal control over financial reporting was
effective based upon the COSO 2013 framework.
Additionally, based upon management’s assessment, the
Firm determined that there were no material weaknesses in
its internal control over financial reporting as of
December 31, 2022.
The effectiveness of the Firm’s internal control over
financial reporting as of December 31, 2022, has been
audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report
which appears herein.
James Dimon
Chairman and Chief Executive Officer
Jeremy Barnum
Executive Vice President and Chief Financial Officer
February 21, 2023
JPMorgan Chase & Co./2022 Form 10-K
155
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of JPMorgan
Chase & Co.:
Opinions on the Financial Statements and Internal Control
over Financial Reporting
We have audited the accompanying consolidated balance
sheets of JPMorgan Chase & Co. and its subsidiaries (the
“Firm”) as of December 31, 2022 and 2021, and the related
consolidated statements of income, comprehensive income,
changes in stockholders’ equity and cash flows for each of
the three years in the period ended December 31, 2022,
including the related notes (collectively referred to as the
“consolidated financial statements”). We also have audited
the Firm’s internal control over financial reporting as of
December 31, 2022, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of the Firm as of December 31, 2022 and
2021, and the results of its operations and its cash flows for
each of the three years in the period ended December 31,
2022 in conformity with accounting principles generally
accepted in the United States of America. Also in our
opinion, the Firm maintained, in all material respects,
effective internal control over financial reporting as of
December 31, 2022, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the
COSO.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial
statements, the Firm changed the manner in which it
accounts for credit losses on certain financial instruments in
2020.
Basis for Opinions
The Firm’s management is responsible for these
consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting, included in the accompanying
Management’s report on internal control over financial
reporting. Our responsibility is to express opinions on the
Firm’s consolidated financial statements and on the Firm’s
internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to
the Firm in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about
whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and
whether effective internal control over financial reporting
was maintained in all material respects.
Our audits of the consolidated financial statements included
performing procedures to assess the risks of material
misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our
audits also included evaluating the accounting principles
used and significant estimates made by management, as
well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and
testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures
as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial
Reporting
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit
preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in
accordance with authorizations of management and
directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
PricewaterhouseCoopers LLP 300 Madison Avenue New York, NY 10017
156
JPMorgan Chase & Co./2022 Form 10-K
Report of Independent Registered Public Accounting Firm
Critical Audit Matters
The critical audit matters communicated below are matters
arising from the current period audit of the consolidated
financial statements that were communicated or required
to be communicated to the audit committee and that (i)
relate to accounts or disclosures that are material to the
consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing
separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.
Allowance for Loan Losses – Portfolio-based component of
Wholesale Loan and Credit Card Loan Portfolios
As described in Note 13 to the consolidated financial
statements, the allowance for loan losses for the portfolio-
based component of the wholesale and credit card loan
portfolios was $17.0 billion on total portfolio-based
retained loans of $785.9 billion at December 31, 2022. The
Firm’s allowance for loan losses represents management’s
estimate of expected credit losses over the remaining
expected life of the Firm's loan portfolios and considers
expected future changes in macroeconomic conditions. The
portfolio-based component of the Firm’s allowance for loan
losses for the wholesale and credit card retained loan
portfolios begins with a quantitative calculation of expected
credit losses over the expected life of the loan by applying
credit loss factors to the estimated exposure at default. The
credit loss factors applied are determined based on the
weighted average of five internally developed
macroeconomic scenarios that take into consideration the
Firm's economic outlook as derived through forecast
macroeconomic variables, the most significant of which are
U.S. unemployment and U.S. real gross domestic product.
This quantitative calculation is further adjusted to take into
consideration model imprecision, emerging risk
assessments, trends and other subjective factors that are
not yet otherwise reflected in the credit loss estimate.
The principal considerations for our determination that
performing procedures relating to the allowance for loan
losses for the portfolio-based component of the wholesale
and credit card loan portfolios is a critical audit matter are
(i) the significant judgment and estimation by management
in the forecast of macroeconomic variables, specifically U.S.
unemployment and U.S. real gross domestic product, as the
Firm’s forecasts of economic conditions significantly affect
its estimate of expected credit losses at the balance sheet
date, (ii) the significant judgment and estimation by
management in determining the quantitative calculation
utilized in their credit loss estimates and the adjustments to
take into consideration model imprecision, emerging risk
assessments, trends and other subjective factors that are
not yet otherwise reflected in the credit loss estimate,
which both in turn led to a high degree of auditor judgment,
subjectivity, and effort in performing procedures and in
evaluating audit evidence obtained relating to the credit
loss estimates and the appropriateness of the adjustments
to the credit loss estimates, and (iii) the audit effort
involved the use of professionals with specialized skill and
knowledge.
Addressing the matter involved performing procedures and
evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements.
These procedures included testing the effectiveness of
controls relating to the Firm’s allowance for loan losses,
including controls over model validation and generation of
macroeconomic scenarios. These procedures also included,
among others, testing management’s process for estimating
the allowance for loan losses, which involved (i) evaluating
the appropriateness of the models and methodologies used
in quantitative calculations; (ii) evaluating the
reasonableness of forecasts of U.S. unemployment and U.S.
real gross domestic product; (iii) testing the completeness
and accuracy of data used in the estimate; and (iv)
evaluating the reasonableness of management’s
adjustments to the quantitative output for the impacts of
model imprecision, emerging risk assessments, trends and
other subjective factors that are not yet otherwise reflected
in the credit loss estimate. These procedures also included
the use of professionals with specialized skill and
knowledge to assist in evaluating the appropriateness of
certain models, methodologies and macroeconomic
variables.
Fair Value of Certain Level 3 Financial Instruments
As described in Notes 2 and 3 to the consolidated financial
statements, the Firm carries $1.1 trillion of its assets and
$453.7 billion of its liabilities at fair value on a recurring
basis. Included in these balances are $13.6 billion of
trading assets and $37.8 billion of liabilities measured at
fair value on a recurring basis, collectively financial
instruments, which are classified as level 3 as they contain
one or more inputs to valuation which are unobservable
and significant to their fair value measurement. The Firm
utilized internally developed valuation models and
unobservable inputs to estimate fair value of the level 3
financial instruments. The unobservable inputs used by
management to estimate the fair value of certain of these
financial instruments include volatility relating to interest
rates, correlation relating to interest rates, equity prices,
credit and foreign exchange rates, and Bermudan switch
values.
The principal considerations for our determination that
performing procedures relating to the fair value of certain
level 3 financial instruments is a critical audit matter are (i)
the significant judgment and estimation by management in
determining the inputs to estimate fair value, which in turn
led to a high degree of auditor judgment, subjectivity, and
effort in performing procedures and in evaluating audit
evidence obtained related to the fair value of these financial
instruments, and (ii) the audit effort involved the use of
professionals with specialized skill and knowledge.
JPMorgan Chase & Co./2022 Form 10-K
157
Report of Independent Registered Public Accounting Firm
Addressing the matter involved performing procedures and
evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements.
These procedures included testing the effectiveness of
controls relating to the Firm’s determination of the fair
value, including controls over models, inputs, and data.
These procedures also included, among others, the
involvement of professionals with specialized skill and
knowledge to assist in developing an independent estimate
of fair value for a sample of these financial instruments and
comparing management’s estimate to the independently
developed estimate of fair value. Developing the
independent estimate involved testing the completeness
and accuracy of data provided by management, developing
independent inputs and, as appropriate, evaluating and
utilizing management’s aforementioned unobservable
inputs.
February 21, 2023
We have served as the Firm’s auditor since 1965.
158
JPMorgan Chase & Co./2022 Form 10-K
JPMorgan Chase & Co.
Consolidated statements of income
Year ended December 31, (in millions, except per share data)
2022
2021
2020
Revenue
Investment banking fees
Principal transactions
Lending- and deposit-related fees
Asset management, administration and commissions
Investment securities gains/(losses)
Mortgage fees and related income
Card income
Other income
Noninterest revenue
Interest income
Interest expense
Net interest income
Total net revenue
Provision for credit losses
Noninterest expense
Compensation expense
Occupancy expense
Technology, communications and equipment expense
Professional and outside services
Marketing
Other expense
Total noninterest expense
Income before income tax expense
Income tax expense
Net income
Net income applicable to common stockholders
Net income per common share data
Basic earnings per share
Diluted earnings per share
Weighted-average basic shares
Weighted-average diluted shares
$
6,686 $
13,216 $
19,912
7,098
20,677
(2,380)
1,250
4,420
4,322
61,985
92,807
26,097
66,710
16,304
7,032
21,029
(345)
2,170
5,102
4,830
69,338
57,864
5,553
52,311
9,486
18,021
6,511
18,177
802
3,091
4,435
4,865
65,388
64,523
9,960
54,563
128,695
121,649
119,951
6,389
(9,256)
17,480
41,636
4,696
9,358
10,174
3,911
6,365
76,140
46,166
8,490
38,567
4,516
9,941
9,814
3,036
5,469
71,343
59,562
11,228
$
$
$
37,676 $
48,334 $
35,892 $
46,503 $
12.10 $
15.39 $
12.09
2,965.8
2,970.0
15.36
3,021.5
3,026.6
34,988
4,449
10,338
8,464
2,476
5,941
66,656
35,815
6,684
29,131
27,410
8.89
8.88
3,082.4
3,087.4
The Notes to Consolidated Financial Statements are an integral part of these statements.
JPMorgan Chase & Co./2022 Form 10-K
159
JPMorgan Chase & Co.
Consolidated statements of comprehensive income
Year ended December 31, (in millions)
Net income
Other comprehensive income/(loss), after–tax
Unrealized gains/(losses) on investment securities
Translation adjustments, net of hedges
Fair value hedges
Cash flow hedges
Defined benefit pension and OPEB plans
DVA on fair value option elected liabilities
Total other comprehensive income/(loss), after–tax
Comprehensive income
2022
2021
2020
$
37,676 $
48,334 $
29,131
(11,764)
(611)
98
(5,360)
(1,241)
1,621
(17,257)
(5,540)
(461)
(19)
(2,679)
922
(293)
(8,070)
$
20,419 $
40,264 $
4,123
234
19
2,320
212
(491)
6,417
35,548
The Notes to Consolidated Financial Statements are an integral part of these statements.
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JPMorgan Chase & Co./2022 Form 10-K
JPMorgan Chase & Co.
Consolidated balance sheets
December 31, (in millions, except share data)
Assets
Cash and due from banks
Deposits with banks
Federal funds sold and securities purchased under resale agreements (included $311,883 and $252,720 at fair value)
Securities borrowed (included $70,041 and $81,463 at fair value)
Trading assets (included assets pledged of $93,687 and $102,710)
Available-for-sale securities (amortized cost of $216,188 and $308,254; included assets pledged of $9,158 and
$18,268)
Held-to-maturity securities
Investment securities, net of allowance for credit losses
Loans (included $42,079 and $58,820 at fair value)
Allowance for loan losses
Loans, net of allowance for loan losses
Accrued interest and accounts receivable
Premises and equipment
Goodwill, MSRs and other intangible assets
Other assets (included $14,921 and $14,753 at fair value and assets pledged of $7,998 and $5,298)
Total assets(a)
Liabilities
Deposits (included $28,620 and $11,333 at fair value)
Federal funds purchased and securities loaned or sold under repurchase agreements (included $151,999 and $126,435
at fair value)
Short-term borrowings (included $15,792 and $20,015 at fair value)
Trading liabilities
Accounts payable and other liabilities (included $7,038 and $5,651 at fair value)
Beneficial interests issued by consolidated VIEs (included $5 and $12 at fair value)
Long-term debt (included $72,281 and $74,934 at fair value)
Total liabilities(a)
Commitments and contingencies (refer to Notes 28, 29 and 30)
Stockholders’ equity
Preferred stock ($1 par value; authorized 200,000,000 shares: issued 2,740,375 and 3,483,750 shares)
Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive losses
Treasury stock, at cost (1,170,676,094 and 1,160,784,750 shares)
Total stockholders’ equity
Total liabilities and stockholders’ equity
2022
2021
$
27,697 $
26,438
539,537
315,592
185,369
453,799
205,857
425,305
631,162
714,396
261,698
206,071
433,575
308,525
363,707
672,232
1,135,647
1,077,714
(19,726)
(16,386)
1,115,921
1,061,328
125,189
27,734
60,859
182,884
102,570
27,070
56,691
181,498
$ 3,665,743 $ 3,743,567
$ 2,340,179 $ 2,462,303
202,613
44,027
177,976
300,141
12,610
295,865
194,340
53,594
164,693
262,755
10,750
301,005
3,373,411
3,449,440
27,404
4,105
89,044
296,456
(17,341)
34,838
4,105
88,415
272,268
(84)
(107,336)
(105,415)
292,332
294,127
$ 3,665,743 $ 3,743,567
(a) The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2022 and 2021. The
assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests do not have recourse to the general
credit of JPMorgan Chase. The assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs and exclude
intercompany balances that eliminate in consolidation. Refer to Note 14 for a further discussion.
December 31, (in millions)
Assets
Trading assets
Loans
All other assets
Total assets
Liabilities
Beneficial interests issued by consolidated VIEs
All other liabilities
Total liabilities
2022
2021
$
$
$
$
2,151 $
34,411
550
2,010
33,024
490
37,112 $
35,524
12,610 $
10,750
279
245
12,889 $
10,995
The Notes to Consolidated Financial Statements are an integral part of these statements.
JPMorgan Chase & Co./2022 Form 10-K
161
JPMorgan Chase & Co.
Consolidated statements of changes in stockholders’ equity
Year ended December 31, (in millions, except per share data)
2022
2021
2020
Preferred stock
Balance at January 1
Issuance
Redemption
Balance at December 31
Common stock
Balance at January 1 and December 31
Additional paid-in capital
Balance at January 1
Shares issued and commitments to issue common stock for employee share-based compensation awards, and
related tax effects
Other
Balance at December 31
Retained earnings
Balance at January 1
Cumulative effect of change in accounting principles
Net income
Dividends declared:
Preferred stock
$ 34,838 $ 30,063 $ 26,993
—
7,350
4,500
(7,434)
(2,575)
(1,430)
27,404
34,838
30,063
4,105
4,105
4,105
88,415
88,394
88,522
629
—
152
(131)
(72)
(56)
89,044
88,415
88,394
272,268
236,990
223,211
—
—
37,676
48,334
(2,650)
29,131
(1,595)
(1,600)
(1,583)
Common stock ($4.00, $3.80 and $3.60 per share for 2022, 2021 and 2020, respectively)
(11,893)
(11,456)
(11,119)
Balance at December 31
Accumulated other comprehensive income/(loss)
Balance at January 1
Other comprehensive income/(loss), after-tax
Balance at December 31
Shares held in restricted stock units (“RSU”) Trust, at cost
Balance at January 1
Liquidation of RSU Trust
Balance at December 31
Treasury stock, at cost
Balance at January 1
Repurchase
Reissuance
Balance at December 31
Total stockholders’ equity
296,456
272,268
236,990
(84)
(17,257)
(17,341)
7,986
(8,070)
(84)
—
—
—
—
—
—
1,569
6,417
7,986
(21)
21
—
(105,415)
(88,184)
(83,049)
(3,122)
(18,448)
(6,397)
1,201
1,217
1,262
(107,336)
(105,415)
(88,184)
$ 292,332 $ 294,127 $ 279,354
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information.
The Notes to Consolidated Financial Statements are an integral part of these statements.
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JPMorgan Chase & Co./2022 Form 10-K
JPMorgan Chase & Co.
Consolidated statements of cash flows
Year ended December 31, (in millions)
Operating activities
Net income
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Provision for credit losses
Depreciation and amortization
Deferred tax (benefit)/expense
Other
Originations and purchases of loans held-for-sale
Proceeds from sales, securitizations and paydowns of loans held-for-sale
Net change in:
Trading assets
Securities borrowed
Accrued interest and accounts receivable
Other assets
Trading liabilities
Accounts payable and other liabilities
Other operating adjustments
Net cash provided by/(used in) operating activities
Investing activities
Net change in:
2022
2021
2020
$ 37,676
$ 48,334
$ 29,131
6,389
7,051
(2,738)
5,174
(9,256)
17,480
7,932
3,748
3,274
8,614
(3,573)
1,649
(149,167)
(347,864)
(166,504)
167,709
336,413
175,490
(31,449)
85,710
(148,749)
20,203
(45,635)
(20,734)
(22,970)
(12,401)
(18,012)
(2,882)
(11,745)
(42,430)
11,170
58,614
2,339
(23,190)
77,198
43,162
(398)
7,415
3,115
107,119
78,084
(79,910)
Federal funds sold and securities purchased under resale agreements
(54,278)
34,473
(47,115)
Held-to-maturity securities:
Proceeds from paydowns and maturities
Purchases
Available-for-sale securities:
Proceeds from paydowns and maturities
Proceeds from sales
Purchases
Proceeds from sales and securitizations of loans held-for-investment
Other changes in loans, net
All other investing activities, net
Net cash (used in) investing activities
Financing activities
Net change in:
Deposits
Federal funds purchased and securities loaned or sold under repurchase agreements
Short-term borrowings
Beneficial interests issued by consolidated VIEs
Proceeds from long-term borrowings
Payments of long-term borrowings
Proceeds from issuance of preferred stock
Redemption of preferred stock
Treasury stock repurchased
Dividends paid
All other financing activities, net
Net cash provided by/(used in) financing activities
Effect of exchange rate changes on cash and due from banks and deposits with banks
Net increase/(decrease) in cash and due from banks and deposits with banks
Cash and due from banks and deposits with banks at the beginning of the period
Cash and due from banks and deposits with banks at the end of the period
Cash interest paid
Cash income taxes paid, net
48,626
50,897
21,360
(33,676)
(111,756)
(12,400)
39,159
50,075
57,675
84,616
162,748
149,758
(126,258)
(248,785)
(397,145)
44,892
35,845
23,559
(128,968)
(91,797)
(50,263)
(11,932)
(11,044)
(7,341)
(137,819)
(129,344)
(261,912)
(136,895)
293,764
602,765
8,455
(20,799)
31,528
(8,984)
7,773
2,205
78,442
(4,254)
82,409
78,686
4,438
1,347
(45,556)
(54,932)
(105,055)
—
7,350
(7,434)
(2,575)
(3,162)
(18,408)
4,500
(1,430)
(6,517)
(13,562)
(12,858)
(12,690)
234
(1,477)
(927)
(126,257)
275,993
596,645
(16,643)
(11,508)
9,155
(173,600)
213,225
263,978
740,834
527,609
263,631
$ 567,234
$ 740,834
$ 527,609
$ 23,143
$
5,142
$ 13,077
4,355
18,737
8,140
The Notes to Consolidated Financial Statements are an integral part of these statements.
JPMorgan Chase & Co./2022 Form 10-K
163
Notes to consolidated financial statements
Note 1 – Basis of presentation
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a
financial holding company incorporated under Delaware law
in 1968, is a leading financial services firm based in the
U.S., with operations worldwide. The Firm is a leader in
investment banking, financial services for consumers and
small businesses, commercial banking, financial transaction
processing and asset management. Refer to Note 32 for a
further discussion of the Firm’s business segments.
The accounting and financial reporting policies of JPMorgan
Chase and its subsidiaries conform to U.S. GAAP.
Additionally, where applicable, the policies conform to the
accounting and reporting guidelines prescribed by
regulatory authorities.
Certain amounts reported in prior periods have been
revised to conform with the current presentation.
Consolidation
The Consolidated Financial Statements include the accounts
of JPMorgan Chase and other entities in which the Firm has
a controlling financial interest. All material intercompany
balances and transactions have been eliminated.
Assets held for clients in an agency or fiduciary capacity by
the Firm are not assets of JPMorgan Chase and are not
included on the Consolidated balance sheets.
The Firm determines whether it has a controlling financial
interest in an entity by first evaluating whether the entity is
a voting interest entity or a variable interest entity.
Voting interest entities
Voting interest entities are entities that have sufficient
equity and provide the equity investors voting rights that
enable them to make significant decisions relating to the
entity’s operations. For these types of entities, the Firm’s
determination of whether it has a controlling interest is
primarily based on the amount of voting equity interests
held. Entities in which the Firm has a controlling financial
interest, through ownership of the majority of the entities’
voting equity interests, or through other contractual rights
that give the Firm control, are consolidated by the Firm.
Investments in companies in which the Firm has significant
influence over operating and financing decisions (but does
not own a majority of the voting equity interests) are
accounted for (i) in accordance with the equity method of
accounting, or (ii) at fair value if the fair value option was
elected. These investments are generally included in other
assets, with income or loss included in noninterest revenue.
Certain Firm-sponsored asset management funds are
structured as limited partnerships or limited liability
companies. For many of these entities, the Firm is the
general partner or managing member, but the non-
affiliated partners or members have the ability to remove
the Firm as the general partner or managing member
without cause (i.e., kick-out rights), based on a simple
majority vote, or the non-affiliated partners or members
have rights to participate in important decisions.
Accordingly, the Firm does not consolidate these voting
interest entities. However, in the limited cases where the
non-managing partners or members do not have
substantive kick-out or participating rights, the Firm
evaluates the funds as VIEs and consolidates the funds if
the Firm is the general partner or managing member and
has both power and a potentially significant interest.
The Firm’s investment companies and asset management
funds have investments in both publicly-held and privately-
held entities, including investments in buyouts, growth
equity and venture opportunities. These investments are
accounted for under investment company guidelines and,
accordingly, irrespective of the percentage of equity
ownership interests held, are carried on the Consolidated
balance sheets at fair value, and are recorded in other
assets, with income or loss included in noninterest revenue.
If consolidated, the Firm retains the accounting under such
specialized investment company guidelines.
Variable interest entities
VIEs are entities that, by design, either (1) lack sufficient
equity to permit the entity to finance its activities without
additional subordinated financial support from other
parties, or (2) have equity investors that do not have the
ability to make significant decisions relating to the entity’s
operations through voting rights, or do not have the
obligation to absorb the expected losses, or do not have the
right to receive the residual returns of the entity.
The most common type of VIE is an SPE. SPEs are commonly
used in securitization transactions in order to isolate certain
assets and distribute the cash flows from those assets to
investors. The basic SPE structure involves a company
selling assets to the SPE; the SPE funds the purchase of
those assets by issuing securities to investors. The legal
documents that govern the transaction specify how the cash
earned on the assets must be allocated to the SPE’s
investors and other parties that have rights to those cash
flows. SPEs are generally structured to insulate investors
from claims on the SPE’s assets by creditors of other
entities, including the creditors of the seller of the assets.
The primary beneficiary of a VIE (i.e., the party that has a
controlling financial interest) is required to consolidate the
assets and liabilities of the VIE. The primary beneficiary is
the party that has both (1) the power to direct the activities
of the VIE that most significantly impact the VIE’s economic
performance; and (2) through its interests in the VIE, the
obligation to absorb losses or the right to receive benefits
from the VIE that could potentially be significant to the VIE.
To assess whether the Firm has the power to direct the
activities of a VIE that most significantly impact the VIE’s
economic performance, the Firm considers all the facts and
circumstances, including its role in establishing the VIE and
its ongoing rights and responsibilities. This assessment
164
JPMorgan Chase & Co./2022 Form 10-K
includes, first, identifying the activities that most
significantly impact the VIE’s economic performance; and
second, identifying which party, if any, has power over
those activities. In general, the parties that make the most
significant decisions affecting the VIE (such as asset
managers, collateral managers, servicers, or owners of call
options or liquidation rights over the VIE’s assets) or have
the right to unilaterally remove those decision-makers are
deemed to have the power to direct the activities of a VIE.
To assess whether the Firm has the obligation to absorb
losses of the VIE or the right to receive benefits from the
VIE that could potentially be significant to the VIE, the Firm
considers all of its economic interests, including debt and
equity investments, servicing fees, and derivatives or other
arrangements deemed to be variable interests in the VIE.
This assessment requires that the Firm apply judgment in
determining whether these interests, in the aggregate, are
considered potentially significant to the VIE. Factors
considered in assessing significance include: the design of
the VIE, including its capitalization structure; subordination
of interests; payment priority; relative share of interests
held across various classes within the VIE’s capital
structure; and the reasons why the interests are held by the
Firm.
The Firm performs on-going reassessments of: (1) whether
entities previously evaluated under the majority voting-
interest framework have become VIEs, based on certain
events, and are therefore subject to the VIE consolidation
framework; and (2) whether changes in the facts and
circumstances regarding the Firm’s involvement with a VIE
cause the Firm’s consolidation conclusion to change.
Refer to Note 14 for further discussion of the Firm’s VIEs.
Revenue recognition
Interest income
The Firm recognizes interest income on loans, debt
securities, and other debt instruments, generally on a level-
yield basis, based on the underlying contractual rate. Refer
to Note 7 for further information.
Revenue from contracts with customers
JPMorgan Chase recognizes noninterest revenue from
certain contracts with customers, in investment banking
fees, deposit-related fees, asset management
administration and commissions, and components of card
income, when the Firm’s related performance obligations
are satisfied. Refer to Note 6 for further discussion of the
Firm’s revenue from contracts with customers.
Principal transactions revenue
JPMorgan Chase carries a portion of its assets and liabilities
at fair value. Changes in fair value are reported primarily in
principal transactions revenue. Refer to Notes 2 and 3 for
further discussion of fair value measurement. Refer to Note
6 for further discussion of principal transactions revenue.
Use of estimates in the preparation of consolidated
financial statements
The preparation of the Consolidated Financial Statements
requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities,
revenue and expense, and disclosures of contingent assets
and liabilities. Actual results could be different from these
estimates.
Foreign currency translation
JPMorgan Chase revalues assets, liabilities, revenue and
expense denominated in non-U.S. currencies into U.S.
dollars using applicable exchange rates.
Gains and losses relating to translating functional currency
financial statements for U.S. reporting are included in the
Consolidated statements of comprehensive income. Gains
and losses relating to nonfunctional currency transactions,
including non-U.S. operations where the functional currency
is the U.S. dollar, are reported in the Consolidated
statements of income.
Offsetting assets and liabilities
U.S. GAAP permits entities to present derivative receivables
and derivative payables with the same counterparty and the
related cash collateral receivables and payables on a net
basis on the Consolidated balance sheets when a legally
enforceable master netting agreement exists. U.S. GAAP
also permits securities sold and purchased under
repurchase agreements and securities borrowed or loaned
under securities loan agreements to be presented net when
specified conditions are met, including the existence of a
legally enforceable master netting agreement. The Firm has
elected to net such balances where it has determined that
the specified conditions are met.
The Firm uses master netting agreements to mitigate
counterparty credit risk in certain transactions, including
derivative contracts, resale, repurchase, securities
borrowed and securities loaned agreements. A master
netting agreement is a single agreement with a
counterparty that permits multiple transactions governed
by that agreement to be terminated or accelerated and
settled through a single payment in a single currency in the
event of a default (e.g., bankruptcy, failure to make a
required payment or securities transfer or deliver collateral
or margin when due). Upon the exercise of derivatives
termination rights by the non-defaulting party (i) all
transactions are terminated, (ii) all transactions are valued
and the positive values of “in the money” transactions are
netted against the negative values of “out of the money”
transactions and (iii) the only remaining payment obligation
is of one of the parties to pay the netted termination
amount. Upon exercise of default rights under repurchase
agreements and securities loan agreements in general (i)
all transactions are terminated and accelerated, (ii) all
values of securities or cash held or to be delivered are
calculated, and all such sums are netted against each other
and (iii) the only remaining payment obligation is of one of
the parties to pay the netted termination amount.
JPMorgan Chase & Co./2022 Form 10-K
165
Notes to consolidated financial statements
Typical master netting agreements for these types of
transactions also often contain a collateral/margin
agreement that provides for a security interest in, or title
transfer of, securities or cash collateral/margin to the party
that has the right to demand margin (the “demanding
party”). The collateral/margin agreement typically requires
a party to transfer collateral/margin to the demanding
party with a value equal to the amount of the margin deficit
on a net basis across all transactions governed by the
master netting agreement, less any threshold. The
collateral/margin agreement grants to the demanding
party, upon default by the counterparty, the right to set-off
any amounts payable by the counterparty against any
posted collateral or the cash equivalent of any posted
collateral/margin. It also grants to the demanding party the
right to liquidate collateral/margin and to apply the
proceeds to an amount payable by the counterparty.
Refer to Note 5 for further discussion of the Firm’s
derivative instruments. Refer to Note 11 for further
discussion of the Firm’s securities financing agreements.
Statements of cash flows
For JPMorgan Chase’s Consolidated statements of cash
flows, cash is defined as those amounts included in cash
and due from banks and deposits with banks on the
Consolidated balance sheets.
Accounting standard adopted January 1, 2023
Financial Instruments – Credit Losses: Troubled Debt
Restructurings (“TDRs”)
The adoption of this guidance eliminates the accounting and
disclosure requirements for TDRs, including the
requirement to measure the allowance using a discounted
cash flow (“DCF”) methodology, and allows the option of a
non-DCF portfolio-based approach for modified loans to
troubled borrowers. If a DCF methodology is still applied for
these modified loans, the discount rate must be the post-
modification effective interest rate, instead of the pre-
modification effective interest rate.
The Firm elected to apply its non-DCF, portfolio-based
allowance approach for modified loans to troubled
borrowers for all portfolios except modified nonaccrual
risk-rated loans which the Firm elected to continue applying
a DCF methodology. See Note 13 for a description of the
portfolio-based allowance approach and the asset-specific
allowance approach.
This guidance was adopted on January 1, 2023 under the
modified retrospective method which resulted in a net
decrease to the allowance for credit losses of approximately
$600 million and an increase to retained earnings of
approximately $450 million, after-tax predominantly driven
by residential real estate and credit card.
Accounting standard adopted January 1, 2020
Financial Instruments – Credit Losses (“CECL”)
The adoption of this guidance established a single
allowance framework for all financial assets measured at
amortized cost and certain off-balance sheet credit
exposures. This framework requires that management’s
estimate reflects credit losses over the instrument’s
remaining expected life and considers expected future
changes in macroeconomic conditions. Prior to the adoption
of the CECL accounting guidance, the Firm’s allowance for
credit losses represented management’s estimate of
probable credit losses inherent in the Firm’s retained loan
portfolios and certain lending-related commitments.
Significant accounting policies
The following table identifies JPMorgan Chase’s other
significant accounting policies and the Note and page where
a detailed description of each policy can be found.
Fair value measurement
Fair value option
Derivative instruments
Noninterest revenue and noninterest
expense
Note 2
page 167
Note 3
page 188
Note 5
page 194
Note 6
page 208
Interest income and Interest expense
Note 7
page 211
Pension and other postretirement
employee benefit plans
Employee share-based incentives
Investment securities
Securities financing activities
Loans
Allowance for credit losses
Variable interest entities
Note 8
page 212
Note 9
page 215
Note 10
page 217
Note 11
page 222
Note 12
page 225
Note 13
page 242
Note 14
page 247
Goodwill and Mortgage servicing rights
Note 15
page 255
Premises and equipment
Leases
Long-term debt
Earnings per share
Income taxes
Off–balance sheet lending-related financial
instruments, guarantees and other
commitments
Litigation
Note 16
page 259
Note 18
page 260
Note 20
page 263
Note 23
page 268
Note 25
page 270
Note 28
page 276
Note 30
page 283
166
JPMorgan Chase & Co./2022 Form 10-K
Note 2 – Fair value measurement
JPMorgan Chase carries a portion of its assets and liabilities
at fair value. These assets and liabilities are predominantly
carried at fair value on a recurring basis (i.e., assets and
liabilities that are measured and reported at fair value on
the Firm’s Consolidated balance sheets). Certain assets,
liabilities and unfunded lending-related commitments are
measured at fair value on a nonrecurring basis; that is, they
are not measured at fair value on an ongoing basis but are
subject to fair value adjustments only in certain
circumstances (for example, when there is evidence of
impairment).
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. Fair value is based on quoted market
prices or inputs, where available. If prices or quotes are not
available, fair value is based on valuation models and other
valuation techniques that consider relevant transaction
characteristics (such as maturity) and use, as inputs,
observable or unobservable market parameters, including
yield curves, interest rates, volatilities, prices (such as
commodity, equity or debt prices), correlations, foreign
exchange rates and credit curves. Valuation adjustments
may be made to ensure that financial instruments are
recorded at fair value, as described below.
The level of precision in estimating unobservable market
inputs or other factors can affect the amount of gain or loss
recorded for a particular position. Furthermore, while the
Firm believes its valuation methods are appropriate and
consistent with those of other market participants, the
methods and assumptions used reflect management
judgment and may vary across the Firm’s businesses and
portfolios.
The Firm uses various methodologies and assumptions in
the determination of fair value. The use of different
methodologies or assumptions by other market participants
compared with those used by the Firm could result in the
Firm deriving a different estimate of fair value at the
reporting date.
Valuation process
Risk-taking functions are responsible for providing fair
value estimates for assets and liabilities carried on the
Consolidated balance sheets at fair value. The Firm’s
Valuation Control Group (“VCG”), which is part of the Firm’s
Finance function and independent of the risk-taking
functions, is responsible for verifying these estimates and
determining any fair value adjustments that may be
required to ensure that the Firm’s positions are recorded at
fair value. In addition, the Firm’s Valuation Governance
Forum (“VGF”), which is composed of senior finance and
risk executives, is responsible for overseeing the
management of risks arising from valuation activities
conducted across the Firm. The Firmwide VGF is chaired by
the Firmwide head of the VCG (under the direction of the
Firm’s Controller), and includes sub-forums covering the
CIB, CCB, CB, AWM and certain corporate functions including
Treasury and CIO.
Price verification process
The VCG verifies fair value estimates provided by the risk-
taking functions by leveraging independently derived
prices, valuation inputs and other market data, where
available. Where independent prices or inputs are not
available, the VCG performs additional review to ensure the
reasonableness of the estimates. The additional review may
include evaluating the limited market activity including
client unwinds, benchmarking valuation inputs to those
used for similar instruments, decomposing the valuation of
structured instruments into individual components,
comparing expected to actual cash flows, reviewing profit
and loss trends, and reviewing trends in collateral
valuation. There are also additional levels of management
review for more significant or complex positions.
The VCG determines any valuation adjustments that may be
required to the estimates provided by the risk-taking
functions. No adjustments to quoted prices are applied for
instruments classified within level 1 of the fair value
hierarchy (refer to the discussion below for further
information on the fair value hierarchy). For other
positions, judgment is required to assess the need for
valuation adjustments to appropriately reflect liquidity
considerations, unobservable parameters, and, for certain
portfolios that meet specified criteria, the size of the net
open risk position. The determination of such adjustments
follows a consistent framework across the Firm:
•
•
Liquidity valuation adjustments are considered where an
observable external price or valuation parameter exists
but is of lower reliability, potentially due to lower
market activity. Liquidity valuation adjustments are
made based on current market conditions. Factors that
may be considered in determining the liquidity
adjustment include analysis of: (1) the estimated bid-
offer spread for the instrument being traded; (2)
alternative pricing points for similar instruments in
active markets; and (3) the range of reasonable values
that the price or parameter could take.
The Firm manages certain portfolios of financial
instruments on the basis of net open risk exposure and,
as permitted by U.S. GAAP, has elected to estimate the
fair value of such portfolios on the basis of a transfer of
the entire net open risk position in an orderly
transaction. Where this is the case, valuation
adjustments may be necessary to reflect the cost of
exiting a larger-than-normal market-size net open risk
position. Where applied, such adjustments are based on
factors that a relevant market participant would
consider in the transfer of the net open risk position,
including the size of the adverse market move that is
likely to occur during the period required to reduce the
net open risk position to a normal market-size.
JPMorgan Chase & Co./2022 Form 10-K
167
Notes to consolidated financial statements
• Uncertainty adjustments related to unobservable
parameters may be made when positions are valued
using prices or input parameters to valuation models
that are unobservable due to a lack of market activity or
because they cannot be implied from observable market
data. Such prices or parameters must be estimated and
are, therefore, subject to management judgment.
Adjustments are made to reflect the uncertainty
inherent in the resulting valuation estimate.
• Where appropriate, the Firm also applies adjustments to
its estimates of fair value in order to appropriately
reflect counterparty credit quality (CVA), the Firm’s own
creditworthiness (DVA) and the impact of funding (FVA),
using a consistent framework across the Firm. Refer to
Credit and funding adjustments on page 184 of this Note
for more information on such adjustments.
Valuation model review and approval
If prices or quotes are not available for an instrument or a
similar instrument, fair value is generally determined using
valuation models that consider relevant transaction terms
such as maturity and use as inputs market-based or
independently sourced parameters. Where this is the case
the price verification process described above is applied to
the inputs in those models.
Under the Firm’s Estimations and Model Risk Management
Policy, MRGR reviews and approves new models, as well as
material changes to existing models, prior to
implementation in the operating environment. In certain
circumstances exceptions may be granted to the Firm’s
policy to allow a model to be used prior to review or
approval. MRGR may also require the user to take
appropriate actions to mitigate the model risk if it is to be
used in the interim. These actions will depend on the model
and may include, for example, limitation of trading activity.
Fair value hierarchy
A three-level fair value hierarchy has been established
under U.S. GAAP for disclosure of fair value measurements.
The fair value hierarchy is based on the observability of
inputs to the valuation of an asset or liability as of the
measurement date. The three levels are defined as follows.
•
•
•
Level 1 – inputs to the valuation methodology are
quoted prices (unadjusted) for identical assets or
liabilities in active markets.
Level 2 – inputs to the valuation methodology include
quoted prices for similar assets and liabilities in active
markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the
full term of the financial instrument.
Level 3 – one or more inputs to the valuation
methodology are unobservable and significant to the fair
value measurement.
A financial instrument’s categorization within the fair value
hierarchy is based on the lowest level of input that is
significant to the fair value measurement.
168
JPMorgan Chase & Co./2022 Form 10-K
The following table describes the valuation methodologies generally used by the Firm to measure its significant products/
instruments at fair value, including the general classification of such instruments pursuant to the fair value hierarchy.
Product/instrument
Securities financing agreements
Valuation methodology
Valuations are based on discounted cash flows, which consider:
• Derivative features: refer to the discussion of derivatives below
Classifications in the fair value
hierarchy
Predominantly level 2
Loans and lending-related
commitments — wholesale
Loans carried at fair value
(trading loans and non-trading
loans) and associated
lending-related commitments
for further information
• Market rates for the respective maturity
• Collateral characteristics
Where observable market data is available, valuations are based on:
Level 2 or 3
• Observed market prices (circumstances are infrequent)
• Relevant broker quotes
• Observed market prices for similar instruments
Where observable market data is unavailable or limited, valuations are
based on discounted cash flows, which consider the following:
• Credit spreads derived from the cost of CDS; or benchmark credit
curves developed by the Firm, by industry and credit rating
• Prepayment speed
• Collateral characteristics
Loans — consumer
Loans carried at fair value —
conforming residential
mortgage loans expected to be
sold
Investment and trading
securities
Fair value is based on observable market prices for mortgage-backed
securities with similar collateral and incorporates adjustments to
these prices to account for differences between the securities and the
value of the underlying loans, which include credit characteristics,
portfolio composition, and liquidity.
Predominantly level 2
Quoted market prices
In the absence of quoted market prices, securities are valued based
on:
Level 1
Level 2 or 3
• Observable market prices for similar securities
• Relevant broker quotes
• Discounted cash flows
In addition, the following inputs to discounted cash flows are used for
the following products:
Mortgage- and asset-backed securities specific inputs:
• Collateral characteristics
• Deal-specific payment and loss allocations
• Current market assumptions related to yield, prepayment speed,
conditional default rates and loss severity
Collateralized loan obligations (“CLOs”) specific inputs:
• Collateral characteristics
• Deal-specific payment and loss allocations
• Expected prepayment speed, conditional default rates, loss
severity
• Credit spreads
• Credit rating data
Physical commodities
Valued using observable market prices or data.
Level 1 or 2
JPMorgan Chase & Co./2022 Form 10-K
169
Notes to consolidated financial statements
Product/instrument
Derivatives
Valuation methodology
Actively traded derivatives, e.g., exchange-traded derivatives, that are
valued using quoted prices.
Derivatives that are valued using models such as the Black-Scholes
option pricing model, simulation models, or a combination of models
that may use observable or unobservable valuation inputs as well as
considering the contractual terms.
The key valuation inputs used will depend on the type of derivative and
the nature of the underlying instruments and may include equity prices,
commodity prices, foreign exchange rates, volatilities, correlations, CDS
spreads, recovery rates and prepayment speed.
In addition, specific inputs used for derivatives that are valued based on
models with significant unobservable inputs are as follows:
Interest rate and FX exotic derivatives specific inputs include:
• Interest rate curve
• Interest rate volatility
• Interest rate spread volatility
• Bermudan switch value
• Interest rate correlation
• Interest rate-FX correlation
• Foreign exchange correlation
Credit derivatives specific inputs include:
• Credit correlation between the underlying debt instruments
Equity derivatives specific inputs include:
• Forward equity price
• Equity volatility
• Equity correlation
• Equity-FX correlation
• Equity-IR correlation
Commodity derivatives specific inputs include:
• Forward commodity price
• Commodity volatility
• Commodity correlation
Mortgage servicing rights
Refer to Mortgage servicing rights in Note 15.
Additionally, adjustments are made to reflect counterparty credit quality
(CVA) and the impact of funding (FVA). Refer to page 184 of this Note.
Classifications in the fair value
hierarchy
Level 1
Level 2 or 3
Level 3
Level 2 or 3
Private equity direct
investments
Fund investments (e.g.,
mutual/collective investment
funds, private equity funds,
hedge funds, and real estate
funds)
Beneficial interests issued by
consolidated VIEs
Fair value is estimated using all available information; the range of
potential inputs include:
• Transaction prices
• Trading multiples of comparable public companies
• Operating performance of the underlying portfolio company
• Adjustments as required, since comparable public companies are
not identical to the company being valued, and for company-specific
issues and lack of liquidity
• Additional available inputs relevant to the investment
Net asset value
• NAV is supported by the ability to redeem and purchase at the NAV
Level 1
level
• Adjustments to the NAV as required, for restrictions on redemption
(e.g., lock-up periods or withdrawal limitations) or where
observable activity is limited
Valued using observable market information, where available.
In the absence of observable market information, valuations are based
on the fair value of the underlying assets held by the VIE.
Level 2 or 3(a)
Level 2 or 3
(a) Excludes certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient.
170
JPMorgan Chase & Co./2022 Form 10-K
Product/instrument
Structured notes (included in
deposits, short-term
borrowings and long-term
debt)
Valuation methodology
Valuations are based on discounted cash flow analyses that consider the
embedded derivative and the terms and payment structure of the note.
The embedded derivative features are considered using models such as
the Black-Scholes option pricing model, simulation models, or a
combination of models that may use observable or unobservable
valuation inputs, depending on the embedded derivative. The specific
inputs used vary according to the nature of the embedded derivative
features, as described in the discussion above regarding derivatives
valuation. Adjustments are then made to this base valuation to reflect
the Firm’s own credit risk (DVA). Refer to page 184 of this Note.
Classification in the fair value
hierarchy
Level 2 or 3
JPMorgan Chase & Co./2022 Form 10-K
171
Notes to consolidated financial statements
The following table presents the assets and liabilities reported at fair value as of December 31, 2022 and 2021, by major
product category and fair value hierarchy.
Assets and liabilities measured at fair value on a recurring basis
Fair value hierarchy
December 31, 2022 (in millions)
Level 1
Level 2
Level 3
Derivative
netting
adjustments(f)
Total fair value
Federal funds sold and securities purchased under resale agreements
$
Securities borrowed
Trading assets:
Debt instruments:
— $
—
311,883
70,041
$
$
—
—
— $
—
311,883
70,041
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
Residential – nonagency
Commercial – nonagency
Total mortgage-backed securities
U.S. Treasury, GSEs and government agencies(a)
Obligations of U.S. states and municipalities
Certificates of deposit, bankers’ acceptances and commercial paper
Non-U.S. government debt securities
Corporate debt securities
Loans
Asset-backed securities
Total debt instruments
Equity securities
Physical commodities(b)
Other
Total debt and equity instruments(c)
Derivative receivables:
Interest rate
Credit
Foreign exchange
Equity
Commodity
Total derivative receivables
Total trading assets(d)
Available-for-sale securities:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
Residential – nonagency
Commercial – nonagency
Total mortgage-backed securities
U.S. Treasury and government agencies
Obligations of U.S. states and municipalities
Non-U.S. government debt securities
Corporate debt securities
Asset-backed securities:
Collateralized loan obligations
Other
Total available-for-sale securities
Loans(e)
Mortgage servicing rights
Other assets(d)
Total assets measured at fair value on a recurring basis
Deposits
Federal funds purchased and securities loaned or sold under repurchase agreements
Short-term borrowings
Trading liabilities:
Debt and equity instruments(c)
Derivative payables:
Interest rate
Credit
Foreign exchange
Equity
Commodity
Total derivative payables
Total trading liabilities
Accounts payable and other liabilities
Beneficial interests issued by consolidated VIEs
Long-term debt
—
—
—
—
61,191
—
—
18,213
—
—
—
79,404
82,483
9,595
—
171,482
3,390
—
169
—
—
3,559
175,041
3
—
—
3
92,060
—
10,591
—
—
—
102,654
—
—
7,544
68,162
2,498
1,448
72,108
8,546
6,608
2,009
48,429
25,626
5,744
2,536
171,606
2,060
16,673
18,146
208,485
292,956
9,722
240,207
57,485
24,982
625,352
833,837
71,500
4,620
1,958
78,078
—
6,786
9,105
118
5,792
3,085
102,964
40,661
—
6,065
$
$
285,239 $
1,365,451
— $
—
—
26,458
151,999
14,391
98,719
28,032
2,643
—
160
—
—
2,803
101,522
5,702
—
—
284,280
9,377
250,647
57,649
22,748
624,701
652,733
1,283
5
48,189
895,058
759
5
7
771
—
7
—
155
463
759
23
2,178
665
2
64
2,909
4,069
607
1,203
4,428
375
10,682
13,591
—
—
—
—
—
—
—
239
—
—
239
1,418
7,973
405
23,626
2,162
—
1,401
84
3,368
594
714
4,812
521
10,009
10,093
53
—
24,092
37,801
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(271,996)
(9,239)
(218,214)
(52,774)
(16,490)
(568,713)
(568,713)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
68,921
2,503
1,455
72,879
69,737
6,615
2,009
66,797
26,089
6,503
2,559
253,188
85,208
26,270
18,210
382,876
28,419
1,090
23,365
9,139
8,867
70,880
453,756
71,503
4,620
1,958
78,081
92,060
6,786
19,696
357
5,792
3,085
205,857
42,079
7,973
14,014
(568,713) $
1,105,603
$
$
— $
—
—
—
(274,321)
(9,217)
(232,665)
(53,657)
(16,512)
(586,372)
(586,372)
—
—
—
28,620
151,999
15,792
126,835
15,970
754
18,856
8,804
6,757
51,141
177,976
7,038
5
72,281
453,711
Total liabilities measured at fair value on a recurring basis
$
107,224 $
$
(586,372) $
172
JPMorgan Chase & Co./2022 Form 10-K
December 31, 2021 (in millions)
Level 1
Level 2
Level 3
Derivative
netting
adjustments(f)
Federal funds sold and securities purchased under resale agreements
$
Securities borrowed
Trading assets:
Debt instruments:
— $
—
252,720
81,463
$
$
—
—
Fair value hierarchy
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
Residential – nonagency
Commercial – nonagency
Total mortgage-backed securities
U.S. Treasury, GSEs and government agencies(a)
Obligations of U.S. states and municipalities
Certificates of deposit, bankers’ acceptances and commercial paper
Non-U.S. government debt securities
Corporate debt securities
Loans
Asset-backed securities
Total debt instruments
Equity securities
Physical commodities(b)
Other
Total debt and equity instruments(c)
Derivative receivables:
Interest rate
Credit
Foreign exchange
Equity
Commodity
Total derivative receivables
Total trading assets(d)
Available-for-sale securities:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
Residential – nonagency
Commercial – nonagency
Total mortgage-backed securities
U.S. Treasury and government agencies
Obligations of U.S. states and municipalities
Non-U.S. government debt securities
Corporate debt securities
Asset-backed securities:
Collateralized loan obligations
Other
Total available-for-sale securities
Loans(e)
Mortgage servicing rights
Other assets(d)
Total assets measured at fair value on a recurring basis
Deposits
Federal funds purchased and securities loaned or sold under repurchase agreements
Short-term borrowings
Trading liabilities:
Debt and equity instruments(c)
Derivative payables:
Interest rate
Credit
Foreign exchange
Equity
Commodity
Total derivative payables
Total trading liabilities
Accounts payable and other liabilities
Beneficial interests issued by consolidated VIEs
Long-term debt
—
—
—
—
68,527
—
—
26,982
—
—
—
95,509
86,904
5,357
—
187,770
1,072
—
134
—
—
1,206
188,976
4
—
—
4
177,463
—
5,430
—
—
—
182,897
—
—
9,558
38,944
2,358
1,506
42,808
9,181
7,068
852
44,581
24,491
7,366
2,668
139,015
1,741
20,788
24,850
186,394
267,493
9,321
168,590
65,139
26,232
536,775
723,169
72,539
6,070
4,949
83,558
—
15,860
10,779
160
9,662
5,448
125,467
56,887
—
4,139
$
$
381,431 $
1,243,845
— $
—
—
9,016
126,435
17,534
$
$
87,831
26,716
981
—
123
—
—
1,104
88,935
5,115
—
—
237,714
10,468
174,349
72,609
26,600
521,740
548,456
467
12
50,560
752,480
$
265
28
10
303
—
7
—
81
332
708
26
1,457
662
—
160
2,279
2,020
518
855
3,492
421
7,306
9,585
—
—
—
—
—
—
—
161
—
—
161
1,933
5,494
306
17,479
2,317
—
2,481
30
2,036
444
1,274
7,118
1,328
12,200
12,230
69
—
24,374
41,471
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(248,611)
(8,808)
(156,954)
(58,650)
(15,183)
(488,206)
(488,206)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
(488,206)
—
—
—
—
(232,537)
(10,032)
(161,649)
(62,494)
(18,216)
(484,928)
(484,928)
—
—
—
Total fair value
$
252,720
81,463
39,209
2,386
1,516
43,111
77,708
7,075
852
71,644
24,823
8,074
2,694
235,981
89,307
26,145
25,010
376,443
21,974
1,031
12,625
9,981
11,470
57,081
433,524
72,543
6,070
4,949
83,562
177,463
15,860
16,209
321
9,662
5,448
308,525
58,820
5,494
14,003
$
$
1,154,549
11,333
126,435
20,015
114,577
8,194
880
14,097
17,233
9,712
50,116
164,693
5,651
12
74,934
403,073
Total liabilities measured at fair value on a recurring basis
$
94,050 $
$
(484,928)
$
(a) At December 31, 2022 and 2021, included total U.S. GSE obligations of $73.8 billion and $73.9 billion, respectively, which were mortgage-related.
(b) Physical commodities inventories are generally accounted for at the lower of cost or net realizable value. “Net realizable value” is a term defined in U.S.
GAAP as not exceeding fair value less costs to sell (“transaction costs”). Transaction costs for the Firm’s physical commodities inventories are either not
applicable or immaterial to the value of the inventory. Therefore, net realizable value approximates fair value for the Firm’s physical commodities
inventories. When fair value hedging has been applied (or when net realizable value is below cost), the carrying value of physical commodities
approximates fair value, because under fair value hedge accounting, the cost basis is adjusted for changes in fair value. Refer to Note 5 for a further
discussion of the Firm’s hedge accounting relationships. To provide consistent fair value disclosure information, all physical commodities inventories have
been included in each period presented.
(c) Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but not yet purchased (short positions).
JPMorgan Chase & Co./2022 Form 10-K
173
Notes to consolidated financial statements
(d) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not required to be
classified in the fair value hierarchy. At December 31, 2022 and 2021, the fair values of these investments, which include certain hedge funds, private
equity funds, real estate and other funds, were $950 million and $801 million, respectively. Included in these balances at December 31, 2022 and 2021,
were trading assets of $43 million and $51 million, respectively, and other assets of $907 million and $750 million, respectively.
(e) At December 31, 2022 and 2021, included $9.7 billion and $26.2 billion, respectively, of residential first-lien mortgages, and $6.8 billion and $8.2
billion, respectively, of commercial first-lien mortgages. Residential mortgage loans include conforming mortgage loans originated with the intent to sell
to U.S. GSEs and government agencies of $2.4 billion and $13.6 billion, respectively.
(f) As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral received and paid
when a legally enforceable master netting agreement exists. The level 3 balances would be reduced if netting were applied, including the netting benefit
associated with cash collateral.
174
JPMorgan Chase & Co./2022 Form 10-K
In the Firm’s view, the input range, weighted and arithmetic
average values do not reflect the degree of input uncertainty
or an assessment of the reasonableness of the Firm’s
estimates and assumptions. Rather, they reflect the
characteristics of the various instruments held by the Firm
and the relative distribution of instruments within the range
of characteristics. For example, two option contracts may
have similar levels of market risk exposure and valuation
uncertainty, but may have significantly different implied
volatility levels because the option contracts have different
underlyings, tenors, or strike prices. The input range and
weighted average values will therefore vary from period-to-
period and parameter-to-parameter based on the
characteristics of the instruments held by the Firm at each
balance sheet date.
Level 3 valuations
The Firm has established well-structured processes for
determining fair value, including for instruments where fair
value is estimated using significant unobservable inputs
(level 3). Refer to pages 167-171 of this Note for further
information on the Firm’s valuation process and a detailed
discussion of the determination of fair value for individual
financial instruments.
Estimating fair value requires the application of judgment.
The type and level of judgment required is largely dependent
on the amount of observable market information available to
the Firm. For instruments valued using internally developed
valuation models and other valuation techniques that use
significant unobservable inputs and are therefore classified
within level 3 of the fair value hierarchy, judgments used to
estimate fair value are more significant than those required
when estimating the fair value of instruments classified
within levels 1 and 2.
In arriving at an estimate of fair value for an instrument
within level 3, management must first determine the
appropriate valuation model or other valuation technique to
use. Second, due to the lack of observability of significant
inputs, management must assess relevant empirical data in
deriving valuation inputs including transaction details, yield
curves, interest rates, prepayment speed, default rates,
volatilities, correlations, prices (such as commodity, equity or
debt prices), valuations of comparable instruments, foreign
exchange rates and credit curves.
The following table presents the Firm’s primary level 3
financial instruments, the valuation techniques used to
measure the fair value of those financial instruments, the
significant unobservable inputs, the range of values for those
inputs and the weighted or arithmetic averages of such
inputs. While the determination to classify an instrument
within level 3 is based on the significance of the unobservable
inputs to the overall fair value measurement, level 3 financial
instruments typically include observable components (that is,
components that are actively quoted and can be validated to
external sources) in addition to the unobservable
components. The level 1 and/or level 2 inputs are not
included in the table. In addition, the Firm manages the risk
of the observable components of level 3 financial instruments
using securities and derivative positions that are classified
within levels 1 or 2 of the fair value hierarchy.
The range of values presented in the table is representative
of the highest and lowest level input used to value the
significant groups of instruments within a product/instrument
classification. Where provided, the weighted averages of the
input values presented in the table are calculated based on
the fair value of the instruments that the input is being used
to value.
JPMorgan Chase & Co./2022 Form 10-K
175
Notes to consolidated financial statements
Level 3 inputs(a)
December 31, 2022
Product/Instrument
Fair value
(in millions)
Principal valuation
technique
Unobservable inputs(g)
Range of input values
Average(i)
Residential mortgage-backed securities and
loans(b)
$
1,649 Discounted cash flows
Yield
Prepayment speed
Conditional default rate
Loss severity
Commercial mortgage-backed securities and
loans(c)
Corporate debt securities
Loans(d)
Non-U.S. government debt securities
423 Market comparables
702 Market comparables
876 Market comparables
155 Market comparables
Price
Price
Price
Price
Net interest rate derivatives
735 Option pricing
Interest rate volatility
Interest rate spread volatility
Bermudan switch value
Interest rate correlation
IR-FX correlation
Net credit derivatives
(34) Discounted cash flows
Prepayment speed
(9) Discounted cash flows
Credit correlation
22 Market comparables
Price
Credit spread
Recovery rate
Net foreign exchange derivatives
577 Option pricing
IR-FX correlation
(88) Discounted cash flows
Prepayment speed
Net equity derivatives
(384) Option pricing
Interest rate curve
Forward equity price(h)
Equity volatility
Equity correlation
Equity-FX correlation
Equity-IR correlation
4%
3%
0%
0%
$0
$0
$0
$6
28bps
23bps
0%
(82)%
(35)%
0%
30%
1bps
10%
$15
(40)%
2%
84%
5%
17%
(86)%
(5)%
15%
11%
5%
110%
$99
$243
$356
$100
7%
8%
0%
3%
$83
$95
$77
$84
674bps
35bps
141bps
26bps
57%
89%
60%
21%
60%
17%
16%
7%
7%
43%
12,107bps
1,057bps
9%
67%
$115
60%
29%
144%
141%
99%
60%
50%
45%
$82
21%
9%
8%
100%
37%
55%
(27)%
23%
Net commodity derivatives
(146) Option pricing
Oil commodity forward
$72 / BBL
$251 / BBL
$162 / BBL
Natural gas commodity forward
$1 / MMBTU
$24 / MMBTU $13 / MMBTU
MSRs
Long-term debt, short-term borrowings, and
deposits(e)
Commodity volatility
Commodity correlation
7,973 Discounted cash flows
Refer to Note 15
26,583 Option pricing
Interest rate volatility
Bermudan switch value
Interest rate correlation
IR-FX correlation
Equity correlation
Equity-FX correlation
Equity-IR correlation
Other level 3 assets and liabilities, net(f)
1,029
1,072 Discounted cash flows
Credit correlation
4%
(45)%
28bps
0%
(82)%
(35)%
17%
(86)%
(5)%
30%
154%
77%
79%
16%
674bps
141bps
57%
89%
60%
99%
60%
50%
60%
17%
16%
7%
55%
(27)%
23%
43%
(a) The categories presented in the table have been aggregated based upon the product type, which may differ from their classification on the Consolidated
balance sheets. Furthermore, the inputs presented for each valuation technique in the table are, in some cases, not applicable to every instrument valued
using the technique as the characteristics of the instruments can differ.
(b) Comprises U.S. GSE and government agency securities of $752 million, nonagency securities of $5 million and non-trading loans of $892 million.
(c) Comprises U.S. GSE and government agency securities of $7 million, nonagency securities of $7 million, trading loans of $40 million and non-trading loans of
$369 million.
(d) Comprises trading loans of $719 million and non-trading loans of $157 million.
(e) Long-term debt, short-term borrowings and deposits include structured notes issued by the Firm that are financial instruments that typically contain
embedded derivatives. The estimation of the fair value of structured notes includes the derivative features embedded within the instrument. The significant
unobservable inputs are broadly consistent with those presented for derivative receivables.
(f) Includes equity securities of $880 million including $216 million in Other assets, for which quoted prices are not readily available and the fair value is
generally based on internal valuation techniques such as EBITDA multiples and comparable analysis. All other level 3 assets and liabilities are insignificant
both individually and in aggregate.
(g) Price is a significant unobservable input for certain instruments. When quoted market prices are not readily available, reliance is generally placed on price-
based internal valuation techniques. The price input is expressed assuming a par value of $100.
(h) Forward equity price is expressed as a percentage of the current equity price.
(i) Amounts represent weighted averages except for derivative related inputs where arithmetic averages are used.
176
JPMorgan Chase & Co./2022 Form 10-K
Prepayment speeds may vary from collateral pool to
collateral pool, and are driven by the type and location of the
underlying borrower, and the remaining tenor of the
obligation as well as the level and type (e.g., fixed or floating)
of interest rate being paid by the borrower. Typically
collateral pools with higher borrower credit quality have a
higher prepayment rate than those with lower borrower
credit quality, all other factors being equal.
Conditional default rate – The conditional default rate is a
measure of the reduction in the outstanding collateral
balance underlying a collateralized obligation as a result of
defaults. While there is typically no direct relationship
between conditional default rates and prepayment speeds,
collateralized obligations for which the underlying collateral
has high prepayment speeds will tend to have lower
conditional default rates. An increase in conditional default
rates would generally be accompanied by an increase in loss
severity and an increase in credit spreads. An increase in the
conditional default rate, in isolation, would result in a
decrease in a fair value measurement. Conditional default
rates reflect the quality of the collateral underlying a
securitization and the structure of the securitization itself.
Based on the types of securities owned in the Firm’s market-
making portfolios, conditional default rates are most typically
at the lower end of the range presented.
Loss severity – The loss severity (the inverse concept is the
recovery rate) is the expected amount of future realized
losses resulting from the ultimate liquidation of a particular
loan, expressed as the net amount of loss relative to the
outstanding loan balance. An increase in loss severity is
generally accompanied by an increase in conditional default
rates. An increase in the loss severity, in isolation, would
result in a decrease in a fair value measurement.
The loss severity applied in valuing a mortgage-backed
security investment depends on factors relating to the
underlying mortgages, including the LTV ratio, the nature of
the lender’s lien on the property and other instrument-
specific factors.
Changes in and ranges of unobservable inputs
The following discussion provides a description of the impact
on a fair value measurement of a change in each
unobservable input in isolation, and the interrelationship
between unobservable inputs, where relevant and significant.
The impact of changes in inputs may not be independent, as a
change in one unobservable input may give rise to a change
in another unobservable input. Where relationships do exist
between two unobservable inputs, those relationships are
discussed below. Relationships may also exist between
observable and unobservable inputs (for example, as
observable interest rates rise, unobservable prepayment
rates decline); such relationships have not been included in
the discussion below. In addition, for each of the individual
relationships described below, the inverse relationship would
also generally apply.
The following discussion also provides a description of
attributes of the underlying instruments and external market
factors that affect the range of inputs used in the valuation of
the Firm’s positions.
Yield – The yield of an asset is the interest rate used to
discount future cash flows in a discounted cash flow
calculation. An increase in the yield, in isolation, would result
in a decrease in a fair value measurement.
Credit spread – The credit spread is the amount of additional
annualized return over the market interest rate that a market
participant would demand for taking exposure to the credit
risk of an instrument. The credit spread for an instrument
forms part of the discount rate used in a discounted cash flow
calculation. Generally, an increase in the credit spread would
result in a decrease in a fair value measurement.
The yield and the credit spread of a particular mortgage-
backed security primarily reflect the risk inherent in the
instrument. The yield is also impacted by the absolute level of
the coupon paid by the instrument (which may not
correspond directly to the level of inherent risk). Therefore,
the range of yield and credit spreads reflects the range of risk
inherent in various instruments owned by the Firm. The risk
inherent in mortgage-backed securities is driven by the
subordination of the security being valued and the
characteristics of the underlying mortgages within the
collateralized pool, including borrower FICO scores, LTV
ratios for residential mortgages and the nature of the
property and/or any tenants for commercial mortgages. For
corporate debt securities, obligations of U.S. states and
municipalities and other similar instruments, credit spreads
reflect the credit quality of the obligor and the tenor of the
obligation.
Prepayment speed – The prepayment speed is a measure of
the voluntary unscheduled principal repayments of a
prepayable obligation in a collateralized pool. Prepayment
speeds generally decline as borrower delinquencies rise. An
increase in prepayment speeds, in isolation, would result in a
decrease in a fair value measurement of assets valued at a
premium to par and an increase in a fair value measurement
of assets valued at a discount to par.
JPMorgan Chase & Co./2022 Form 10-K
177
Notes to consolidated financial statements
Correlation – Correlation is a measure of the relationship
between the movements of two variables. Correlation is a
pricing input for a derivative product where the payoff is
driven by one or more underlying risks. Correlation inputs are
related to the type of derivative (e.g., interest rate, credit,
equity, foreign exchange and commodity) due to the nature
of the underlying risks. When parameters are positively
correlated, an increase in one parameter will result in an
increase in the other parameter. When parameters are
negatively correlated, an increase in one parameter will
result in a decrease in the other parameter. An increase in
correlation can result in an increase or a decrease in a fair
value measurement. Given a short correlation position, an
increase in correlation, in isolation, would generally result in
a decrease in a fair value measurement.
The level of correlation used in the valuation of derivatives
with multiple underlying risks depends on a number of
factors including the nature of those risks. For example, the
correlation between two credit risk exposures would be
different than that between two interest rate risk exposures.
Similarly, the tenor of the transaction may also impact the
correlation input, as the relationship between the underlying
risks may be different over different time periods.
Furthermore, correlation levels are very much dependent on
market conditions and could have a relatively wide range of
levels within or across asset classes over time, particularly in
volatile market conditions.
Volatility – Volatility is a measure of the variability in possible
returns for an instrument, parameter or market index given
how much the particular instrument, parameter or index
changes in value over time. Volatility is a pricing input for
options, including equity options, commodity options, and
interest rate options. Generally, the higher the volatility of
the underlying, the riskier the instrument. Given a long
position in an option, an increase in volatility, in isolation,
would generally result in an increase in a fair value
measurement.
The level of volatility used in the valuation of a particular
option-based derivative depends on a number of factors,
including the nature of the risk underlying the option (e.g.,
the volatility of a particular equity security may be
significantly different from that of a particular commodity
index), the tenor of the derivative as well as the strike price
of the option.
Bermudan switch value – The switch value is the difference
between the overall value of a Bermudan swaption, which can
be exercised at multiple points in time, and its most
expensive European swaption and reflects the additional
value that the multiple exercise dates provide the holder.
Switch values are dependent on market conditions and can
vary greatly depending on a number of factors, such as the
tenor of the underlying swap as well as the strike price of the
option. An increase in switch value, in isolation, would
generally result in an increase in a fair value measurement.
Interest rate curve – represents the relationship of interest
rates over differing tenors. The interest rate curve is used to
set interest rate and foreign exchange derivative cash flows
and is also a pricing input used in the discounting of any
derivative cash flow.
Forward price – Forward price is the price at which the buyer
agrees to purchase the asset underlying a forward contract
on the predetermined future delivery date, and is such that
the value of the contract is zero at inception.
The forward price is used as an input in the valuation of
certain derivatives and depends on a number of factors
including interest rates, the current price of the underlying
asset, and the expected income to be received and costs to be
incurred by the seller as a result of holding that asset until
the delivery date. An increase in the forward can result in an
increase or a decrease in a fair value measurement.
Changes in level 3 recurring fair value measurements
The following tables include a rollforward of the Consolidated
balance sheets amounts (including changes in fair value) for
financial instruments classified by the Firm within level 3 of
the fair value hierarchy for the years ended December 31,
2022, 2021 and 2020. When a determination is made to
classify a financial instrument within level 3, the
determination is based on the significance of the
unobservable inputs to the overall fair value measurement.
However, level 3 financial instruments typically include, in
addition to the unobservable or level 3 components,
observable components (that is, components that are actively
quoted and can be validated to external sources);
accordingly, the gains and losses in the table below include
changes in fair value due in part to observable factors that
are part of the valuation methodology. Also, the Firm risk-
manages the observable components of level 3 financial
instruments using securities and derivative positions that are
classified within level 1 or 2 of the fair value hierarchy; as
these level 1 and level 2 risk management instruments are
not included below, the gains or losses in the following tables
do not reflect the effect of the Firm’s risk management
activities related to such level 3 instruments.
178
JPMorgan Chase & Co./2022 Form 10-K
Fair value measurements using significant unobservable inputs
Fair
value at
January
1, 2022
Total
realized/
unrealized
gains/(losses)
Purchases(g)
Sales
Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2022
Change in
unrealized
gains/(losses)
related to
financial
instruments held
at Dec. 31, 2022
$
— $
—
$
1 $
(1)
$
(1) $
1 $
— $
—
$
—
Year ended
December 31, 2022
(in millions)
Assets:(a)
Federal funds sold and securities
purchased under resale agreements
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government
agencies
Residential – nonagency
Commercial – nonagency
Total mortgage-backed
securities
Obligations of U.S. states and
municipalities
Non-U.S. government debt
securities
Corporate debt securities
Loans
Asset-backed securities
Equity securities
Physical commodities
Other
Total trading assets – debt and
equity instruments
Net derivative receivables:(b)
Interest rate
Credit
Foreign exchange
Equity
Commodity
265
28
10
31
(1)
—
673
(125)
7
—
(5)
(1)
303
30
680
(131)
7
—
—
—
81
332
708
26
(92)
(30)
(51)
5
494
404
652
19
(338)
(178)
(605)
(24)
(84)
(12)
—
(96)
—
(4)
(100)
(230)
(1)
4
—
3
7
—
84
357
925
5
(5)
759
(12)
(5)
5
7
(22)
771
—
7
(70)
(322)
(640)
(7)
155
463
759
23
Total debt instruments
1,457
(138)
2,249
(1,276)
(431)
1,378
(1,061) 2,178
662
(1,036)
473
(377)
(2)
1,066
(121)
665
—
160
(1)
93
3
37
—
—
—
(221)
—
1
—
(6)
2
64
2,279
(1,082) (c)
2,762
(1,653)
(654)
2,445
(1,188) 2,909
(992) (c)
(16) 187
74
226
(419) 726
325
17
215
(483)
(9)
(114)
(3,626) 5,016
1,226
(2,530)
(907) 571
110
(331)
Total net derivative receivables
(4,894) 6,726
(c)
1,893
(3,467)
Available-for-sale securities:
Mortgage-backed securities
Corporate debt securities
Total available-for-sale securities
Loans
Mortgage servicing rights
Other assets
—
161
161
1,933
5,494
—
5
(d)
5
(158) (c)
(e)
2,039
306
194
(c)
—
88
88
568
2,198
50
—
—
—
(261)
(822)
(38)
329
732
(373)
701
(271)
83
96
350
587
—
(15)
(15)
5
3
(656)
5
89
—
—
—
(29)
13
(5)
489
90
56
(384)
3,435
(146)
369
(261)
673
4,765
(c)
—
—
—
—
239
239
(886)
1,053
(831) 1,418
(936)
(103)
—
2
—
7,973
(6)
405
Fair value measurements using significant unobservable inputs
Purchases
Sales
Issuances Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2022
Year ended
December 31, 2022
(in millions)
Liabilities:(a)
Deposits
Short-term borrowings
Fair value
at January
1, 2022
Total realized/
unrealized
(gains)/losses
$ 2,317 $ (292) (c)(f)
(358) (c)(f)
2,481
$
— $
— $
531 $
(114) $
— $
(280) $ 2,162
$
Trading liabilities – debt and equity
instruments
Accounts payable and other liabilities
30
69
Long-term debt
24,374
(31) (c)
(16) (c)
(3,869) (c)(f)
(41)
(37)
—
—
—
3,963
(4,685)
77
42
—
—
—
—
15
57
1
(15) 1,401
(8)
(6)
84
53
—
12,714
(8,876)
793
(1,044) 24,092
29
—
—
29
—
(153)
(48)
(26)
1
(197)
(840)
(1)
46
332
170
459
—
5
(d)
5
(76) (c)
(e)
2,039
191
(c)
Change in
unrealized
(gains)/losses
related to
financial
instruments held
at Dec. 31, 2022
(76) (c)(f)
(c)(f)
90
(c)
101
(16) (c)
(3,447) (c)(f)
JPMorgan Chase & Co./2022 Form 10-K
179
Notes to consolidated financial statements
Fair value measurements using significant unobservable inputs
Fair
value at
January
1, 2021
Total
realized/
unrealized
gains/
(losses)
Purchases(g)
Sales
Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2021
Change in
unrealized
gains/(losses)
related to
financial
instruments held
at Dec. 31, 2021
$
— $
—
$
— $
—
$
— $
— $
— $
—
$
—
449
(28)
28
3
—
5
480
(23)
8
—
182
507
893
28
2,098
476
—
49
(14)
(23)
2
28
(30)
(77)
—
74
21
26
12
59
—
359
404
994
76
(67)
(24)
(7)
(98)
—
(332)
(489)
(669)
(99)
1,892
(1,687)
378
(168)
—
233
—
—
(110)
(5)
(17)
(132)
(1)
(7)
(4)
(287)
(2)
(433)
—
—
(98)
1
4
14
19
—
—
162
648
2
831
164
—
5
(1)
(1)
—
265
28
10
(2)
303
—
7
(107)
(225)
(873)
(7)
81
332
708
26
(1,214) 1,457
(31)
(3)
(2)
(36)
—
(10)
(16)
(20)
(2)
(84)
(111)
662
(335)
—
—
(103)
160
—
31
2,623
(33) (c)
2,503
(1,855)
(531)
1,000
(1,428) 2,279
(388) (c)
Year ended
December 31, 2021
(in millions)
Assets:(a)
Federal funds sold and securities
purchased under resale agreements
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government
agencies
Residential – nonagency
Commercial – nonagency
Total mortgage-backed
securities
Obligations of U.S. states and
municipalities
Non-U.S. government debt
securities
Corporate debt securities
Loans
Asset-backed securities
Total debt instruments
Equity securities
Physical commodities
Other
Total trading assets – debt and
equity instruments
Net derivative receivables:(b)
Interest rate
Credit
Foreign exchange
Equity
Commodity
258
1,789
(224) 130
(434)
(209)
116
(192)
6
(12)
110
(110)
(3,862)
(480)
1,285
(2,813)
(731)
(728)
145
(493)
Total net derivative receivables
(4,993) 502
(c)
1,662
(3,620)
Available-for-sale securities:
Mortgage-backed securities
Corporate debt securities
Total available-for-sale securities
Loans
Mortgage servicing rights
Other assets
—
—
—
2,305
3,276
538
—
(1)
(1) (d)
(87) (c)
(e)
98
(c)
16
—
162
162
612
3,022
9
—
—
—
(439)
(114)
(17)
(2,011)
146
222
1,758
916
1,031
—
—
—
(965)
(788)
(239)
112
34
(12)
315
(4)
445
—
—
—
(88)
(16)
(6)
74
14
(419)
171
(3,626)
(12)
(907)
79
(4,894)
—
—
—
—
161
161
1,301
(794) 1,933
—
—
—
5,494
(1)
306
282
141
13
(155)
(426)
(145) (c)
—
(1)
(1) (d)
(59) (c)
(e)
98
(c)
11
Fair value measurements using significant unobservable inputs
Fair value
at January
1, 2021
Total
realized/
unrealized
(gains)/losses
Purchases
Sales
Issuances Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2021
Change in
unrealized
(gains)/losses
related to
financial
instruments held
at Dec. 31, 2021
Year ended
December 31, 2021
(in millions)
Liabilities:(a)
Deposits
Short-term borrowings
$ 2,913 $
(80) (c)(f) $
2,420
(1,391) (c)(f)
—
—
6,823
(5,308)
— $
— $
431 $
(467) $
2 $
(482) $ 2,317
$
Trading liabilities – debt and equity
instruments
Accounts payable and other liabilities
51
68
(8) (c)
(c)
8
Long-term debt
23,397
369
(c)(f)
(101)
38
1
—
—
—
—
—
—
—
13,505
(12,191)
103
(809) 24,374
9
64
—
(72) 2,481
(14)
(8)
30
69
(77) (c)(f)
(83) (c)(f)
(157) (c)
(c)
8
(c)(f)
87
180
JPMorgan Chase & Co./2022 Form 10-K
Fair value measurements using significant unobservable inputs
Fair
value at
January
1, 2020
Total realized/
unrealized
gains/(losses)
Purchases(g)
Sales
Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2020
Change in
unrealized
gains/(losses)
related to
financial
instruments
held at Dec.
31, 2020
$
— $
—
$
—
$
—
$
—
$
— $
— $
—
$
—
797
(172)
134
(149)
23
4
2
—
15
1
(5)
—
824
(170)
150
(154)
10
155
558
673
37
196
—
232
—
21
(23)
(73)
(3)
(248)
(137)
—
333
—
(1)
281
582
1,112
44
(245)
(205)
(484)
(40)
2,169
(1,129)
412
—
229
(376)
—
(9)
(161)
(4)
(1)
(166)
(1)
(7)
(236)
(182)
(9)
(601)
(1)
—
(497)
—
—
2
2
—
—
411
791
9
—
(3)
(3)
449
(150)
28
3
(1)
—
(6)
480
(151)
—
8
—
(23)
(580)
(944)
(10)
182
507
893
28
11
(25)
(40)
(4)
1,213
(1,563) 2,098
(209)
535
(153)
476
—
6
—
(245)
—
49
(82)
—
268
Year ended
December 31, 2020
(in millions)
Assets:(a)
Federal funds sold and securities
purchased under resale agreements
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government
agencies
Residential – nonagency
Commercial – nonagency
Total mortgage-backed
securities
Obligations of U.S. states and
municipalities
Non-U.S. government debt
securities
Corporate debt securities
Loans
Asset-backed securities
Equity securities
Physical commodities
Other
Total trading assets – debt and
equity instruments
Net derivative receivables:(b)
Total debt instruments
2,257
2,685
(52) (c)
2,810
(1,514)
(1,099)
1,754
(1,961) 2,623
(23) (c)
Interest rate
Credit
Foreign exchange
Equity
Commodity
(332)
2,682
(139)
(212)
(607)
(3,395)
49
(65)
308
73
49
(148)
(154)
(24)
1,664
(2,317)
(16)
(546)
27
(241)
(2,228)
(332)
308
258
325
181
83
1,162
356
59
13
(935)
(310)
(32)
(224)
(110)
3
(434)
116
24
(3,862)
(556)
(1)
(731)
267
Total net derivative receivables
(4,489)
1,908
(c)
2,121
(2,884)
(446)
(1,505)
302
(4,993)
(c)
42
Available-for-sale securities:
Mortgage-backed securities
Corporate debt securities
Total available-for-sale securities
Loans
Mortgage servicing rights
Other assets
1
—
1
516
4,699
917
—
—
—
(243) (c)
(1,540) (e)
(63) (c)
—
—
—
962
1,192
75
—
—
—
(84)
(176)
(104)
(1)
—
(1)
(733)
(899)
(320)
—
—
—
—
—
—
—
—
—
2,571
(684) 2,305
—
40
—
3,276
(7)
538
—
—
—
(18) (c)
(1,540) (e)
(3) (c)
Fair value measurements using significant unobservable inputs
Fair
value at
January
1, 2020
Total realized/
unrealized
(gains)/losses
Purchases
Sales
Issuances
Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2020
Change in
unrealized
(gains)/losses
related to
financial
instruments
held at Dec.
31, 2020
Year ended
December 31, 2020
(in millions)
Liabilities:(a)
Deposits
Short-term borrowings
$ 3,360 $
1,674
(c)(f) $
165
(338) (c)(f)
$
— $
671
$
(605)
$
265 $
(943) $ 2,913
$ 455
—
5,140
(4,115)
(46) 2,420
143
(c)(f)
(c)(f)
Trading liabilities – debt and equity
instruments
41
(2) (c)
Accounts payable and other liabilities
45
Long-term debt
23,339
(c)
(c)(f)
33
40
14
37
—
—
—
(4)
—
9,883
(9,833)
1,250
(1,282) 23,397
1,920
(c)(f)
105
136
47
(8)
(7)
51
68
(1) (c)
(c)
28
—
—
(126)
(87)
—
JPMorgan Chase & Co./2022 Form 10-K
181
Notes to consolidated financial statements
(a) Level 3 assets at fair value as a percentage of total Firm assets at fair value (including assets measured at fair value on a nonrecurring basis) were 2% at both
December 31, 2022 and December 31, 2021 and 1% at December 31, 2020. Level 3 liabilities at fair value as a percentage of total Firm liabilities at fair
value (including liabilities measured at fair value on a nonrecurring basis) were 8%, 10% and 9% at December 31, 2022, 2021 and 2020, respectively.
(b) All level 3 derivatives are presented on a net basis, irrespective of the underlying counterparty.
(c) Predominantly reported in principal transactions revenue, except for changes in fair value for CCB mortgage loans and lending-related commitments
originated with the intent to sell, and mortgage loan purchase commitments, which are reported in mortgage fees and related income.
(d) Realized gains/(losses) on AFS securities are reported in investment securities gains/(losses). Unrealized gains/(losses) are reported in OCI. Realized and
unrealized gains/(losses) recorded on AFS securities were not material for the years ended December 31, 2022, 2021 and 2020.
(e) Changes in fair value for MSRs are reported in mortgage fees and related income.
(f) Realized (gains)/losses due to DVA for fair value option elected liabilities are reported in principal transactions revenue, and were not material for the years
ended December 31, 2022, 2021 and 2020. Unrealized (gains)/losses are reported in OCI, and they were $(529) million, $258 million and $221 million for
the years ended December 31, 2022, 2021 and 2020, respectively.
(g) Loan originations are included in purchases.
(h) Includes financial assets and liabilities that have matured, been partially or fully repaid, impacts of modifications, deconsolidations associated with beneficial
During the year ended December 31, 2022, significant
transfers from level 3 into level 2 included the following:
• $1.2 billion of total debt and equity instruments, largely
due to trading loans, driven by an increase in
observability.
• $1.2 billion of gross interest rate derivative receivables
and $807 million of gross interest rate derivative
payables as a result of an increase in observability and a
decrease in the significance of unobservable inputs.
• $2.2 billion of gross equity derivative receivables and
$2.3 billion of gross equity derivative payables as a result
of an increase in observability and a decrease in the
significance of unobservable inputs.
• $831 million of non-trading loans driven by an increase in
observability.
• $1.0 billion of long-term debt driven by an increase in
observability and a decrease in the significance of
unobservable inputs for structured notes.
During the year ended December 31, 2021, significant
transfers from level 2 into level 3 included the following:
• $1.0 billion of total debt and equity instruments, largely
due to trading loans, driven by a decrease in observability.
• $1.5 billion of gross equity derivative receivables and
$1.2 billion of gross equity derivative payables as a result
of a decrease in observability and an increase in the
significance of unobservable inputs.
• $1.3 billion of non-trading loans driven by a decrease in
observability.
interests in VIEs and other items.
Level 3 analysis
Consolidated balance sheets changes
The following describes significant changes to level 3 assets
since December 31, 2021, for those items measured at fair
value on a recurring basis. Refer to Assets and liabilities
measured at fair value on a nonrecurring basis on page 185
for further information on changes impacting items measured
at fair value on a nonrecurring basis.
For the year ended December 31, 2022
Level 3 assets were $23.6 billion at December 31, 2022,
reflecting an increase of $6.1 billion from December 31,
2021.
The increase for the year ended December 31, 2022 was
predominantly driven by:
• $3.4 billion increase in gross derivative receivables due to
gains and purchases partially offset by settlements.
• $2.5 billion increase in MSRs.
Refer to Note 15 for information on MSRs.
Refer to the sections below for additional information.
Transfers between levels for instruments carried at
fair value on a recurring basis
During the year ended December 31, 2022, significant
transfers from level 2 into level 3 included the following:
• $2.4 billion of total debt and equity instruments,
predominantly due to equity securities of $1.1 billion
driven by a decrease in observability predominantly as a
result of restricted access to certain markets and trading
loans of $925 million driven by a decrease in
observability.
• $1.6 billion of gross interest rate derivative receivables
and $878 million of gross interest rate derivative
payables as a result of a decrease in observability and an
increase in the significance of unobservable inputs.
• $1.6 billion of gross equity derivative receivables and
$2.3 billion of gross equity derivative payables as a result
of a decrease in observability and an increase in the
significance of unobservable inputs.
• $1.1 billion of non-trading loans driven by a decrease in
observability.
• $793 million of long-term debt driven by a decrease in
observability and an increase in the significance of
unobservable inputs for structured notes.
182
JPMorgan Chase & Co./2022 Form 10-K
Gains and losses
The following describes significant components of total
realized/unrealized gains/(losses) for instruments measured
at fair value on a recurring basis for the years ended
December 31, 2022, 2021 and 2020. These amounts
exclude any effects of the Firm’s risk management activities
where the financial instruments are classified as level 1 and 2
of the fair value hierarchy. Refer to Changes in level 3
recurring fair value measurements rollforward tables on
pages 178-182 for further information on these instruments.
2022
• $7.7 billion of net gains on assets, predominantly driven
by gains in net equity derivative receivables due to market
movements and gains in MSRs reflecting lower
prepayment speeds on higher rates.
• $4.6 billion of net gains on liabilities, predominantly
driven by a decline in the fair value of long-term debt due
to market movements.
2021
• $495 million of net gains on assets, driven by gains in net
interest rate derivative receivables due to market
movements, partially offset by losses in net equity
derivative receivables and net commodity derivative
receivables due to market movements.
• $1.1 billion of net gains on liabilities, driven by gains in
short-term borrowings due to market movements.
2020
• $10 million of net gains on assets driven by gains in net
interest rate derivative receivables due to market
movements largely offset by losses in MSRs reflecting
faster prepayment speeds on lower rates.
• $102 million of net gains on liabilities driven by market
movements in short-term borrowings.
Refer to Note 15 for information on MSRs.
During the year ended December 31, 2021, significant
transfers from level 3 into level 2 included the following:
• $1.4 billion of total debt and equity instruments, largely
due to trading loans, driven by an increase in
observability.
• $1.9 billion of gross equity derivative receivables and
$2.1 billion of gross equity derivative payables as a result
of an increase in observability and a decrease in the
significance of unobservable inputs.
• $794 million of non-trading loans driven by an increase in
observability.
• $809 million of long-term debt driven by an increase in
observability and a decrease in the significance of
unobservable inputs for structured notes.
During the year ended December 31, 2020, significant
transfers from level 2 into level 3 included the following:
• $1.8 billion of total debt and equity instruments,
predominantly equity securities and trading loans, driven
by a decrease in observability.
• $2.6 billion of gross equity derivative receivables and
$3.5 billion of gross equity derivative payables as a result
of a decrease in observability and an increase in the
significance of unobservable inputs.
• $880 million of gross interest rate derivative payables as
a result of a decrease in observability and an increase in
the significance of unobservable inputs.
• $2.6 billion of non-trading loans driven by a decrease in
observability.
• $1.2 billion of long-term debt driven by a decrease in
observability and an increase in the significance of
unobservable inputs for structured notes.
During the year ended December 31, 2020, significant
transfers from level 3 into level 2 included the following:
• $2.0 billion of total debt and equity instruments,
predominantly due to corporate debt and trading loans,
driven by an increase in observability
• $2.4 billion of gross equity derivative receivables and
$2.4 billion of gross equity derivative payables as a result
of an increase in observability and a decrease in the
significance of unobservable inputs.
• $943 million of deposits as a result of an increase in
observability and a decrease in the significance of
unobservable inputs.
• $1.3 billion of long-term debt driven by an increase in
observability and a decrease in the significance of
unobservable inputs for structured notes.
All transfers are based on changes in the observability and/or
significance of the valuation inputs and are assumed to occur
at the beginning of the quarterly reporting period in which
they occur.
JPMorgan Chase & Co./2022 Form 10-K
183
Notes to consolidated financial statements
Credit and funding adjustments – derivatives
Derivatives are generally valued using models that use as
their basis observable market parameters. These market
parameters generally do not consider factors such as
counterparty nonperformance risk, the Firm’s own credit
quality, and funding costs. Therefore, it is generally
necessary to make adjustments to the base estimate of fair
value to reflect these factors.
CVA represents the adjustment, relative to the relevant
benchmark interest rate, necessary to reflect counterparty
nonperformance risk. The Firm estimates CVA using a
scenario analysis to estimate the expected positive credit
exposure across all of the Firm’s existing positions with
each counterparty, and then estimates losses based on the
probability of default and estimated recovery rate as a
result of a counterparty credit event considering
contractual factors designed to mitigate the Firm’s credit
exposure, such as collateral and legal rights of offset. The
key inputs to this methodology are (i) the probability of a
default event occurring for each counterparty, as derived
from observed or estimated CDS spreads; and (ii) estimated
recovery rates implied by CDS spreads, adjusted to consider
the differences in recovery rates as a derivative creditor
relative to those reflected in CDS spreads, which generally
reflect senior unsecured creditor risk.
FVA represents the adjustment to reflect the impact of
funding and is recognized where there is evidence that a
market participant in the principal market would
incorporate it in a transfer of the instrument. The Firm’s
FVA framework, applied to uncollateralized (including
partially collateralized) over-the-counter (“OTC”)
derivatives incorporates key inputs such as: (i) the expected
funding requirements arising from the Firm’s positions with
each counterparty and collateral arrangements; and (ii) the
estimated market funding cost in the principal market
which, for derivative liabilities, considers the Firm’s credit
risk (DVA). For collateralized derivatives, the fair value is
estimated by discounting expected future cash flows at the
relevant overnight indexed swap rate given the underlying
collateral agreement with the counterparty, and therefore a
separate FVA is not necessary.
The following table provides the impact of credit and
funding adjustments on principal transactions revenue in
the respective periods, excluding the effect of any
associated hedging activities. The FVA presented below
includes the impact of the Firm’s own credit quality on the
inception value of liabilities as well as the impact of changes
in the Firm’s own credit quality over time.
Year ended December 31,
(in millions)
Credit and funding adjustments:
2022
2021
2020
Derivatives CVA
Derivatives FVA
$
22 $
362 $
(337)
42
47
(64)
Valuation adjustments on fair value option elected
liabilities
The valuation of the Firm’s liabilities for which the fair value
option has been elected requires consideration of the Firm’s
own credit risk. DVA on fair value option elected liabilities
reflects changes (subsequent to the issuance of the liability)
in the Firm’s probability of default and LGD, which are
estimated based on changes in the Firm’s credit spread
observed in the bond market. Realized (gains)/losses due to
DVA for fair value option elected liabilities are reported in
principal transactions revenue. Unrealized (gains)/losses
are reported in OCI. Refer to page 182 in this Note and Note
24 for further information.
184
JPMorgan Chase & Co./2022 Form 10-K
Assets and liabilities measured at fair value on a nonrecurring basis
The following tables present the assets and liabilities held as of December 31, 2022 and 2021, for which nonrecurring fair
value adjustments were recorded during the years ended December 31, 2022 and 2021, by major product category and fair
value hierarchy.
December 31, 2022
(in millions)
Loans
Other assets(a)
Total assets measured at fair value on a nonrecurring basis
Accounts payable and other liabilities
Total liabilities measured at fair value on a nonrecurring basis
December 31, 2021
(in millions)
Loans
Other assets
Total assets measured at fair value on a nonrecurring basis
Accounts payable and other liabilities
Total liabilities measured at fair value on a nonrecurring basis
Fair value hierarchy
Level 1
Level 2
Level 3
Total fair value
$
$
$
$
$
$
—
—
—
—
—
$
$
$
643
36
679
—
—
Fair value hierarchy
Level 1
—
—
—
—
—
$
$
$
Level 2
1,006
4
1,010
—
—
$
$
$
$
$
$
627
(b) $
1,352
1,979
84
84
$
$
1,270
1,388
2,658
84
84
Level 3
Total fair value
856
1,612
2,468
3
3
$
$
$
1,862
1,616
3,478
3
3
(a) Primarily includes equity securities without readily determinable fair values that were adjusted based on observable price changes in orderly transactions
from an identical or similar investment of the same issuer (measurement alternative). Of the $1.4 billion in level 3 assets measured at fair value on a
nonrecurring basis as of December 31, 2022, $1.2 billion related to equity securities adjusted based on the measurement alternative. These equity
securities are classified as level 3 due to the infrequency of the observable prices and/or the restrictions on the shares.
(b) Of the $627 million in level 3 assets measured at fair value on a nonrecurring basis as of December 31, 2022, $83 million related to residential real
estate loans carried at the net realizable value of the underlying collateral (e.g., collateral-dependent loans). These amounts are classified as level 3 as
they are valued using information from broker’s price opinions, appraisals and automated valuation models and discounted based upon the Firm’s
experience with actual liquidation values. These discounts ranged from 9% to 56% with a weighted average of 23%.
Nonrecurring fair value changes
The following table presents the total change in value of
assets and liabilities for which fair value adjustments have
been recognized for the years ended December 31, 2022,
2021 and 2020, related to assets and liabilities held at
those dates.
December 31, (in millions)
2022
2021
2020
Loans
Other assets(a)
Accounts payable and other liabilities
Total nonrecurring fair value gains/
(losses)
$
(55) $
(72) $
(393)
(409)
344
(83)
5
(529)
(11)
$
(547) $
277 $
(933)
(a) Included $(338) million, $379 million and $(134) million for the years
ended December 31, 2022, 2021 and 2020, respectively, of net
gains/(losses) as a result of the measurement alternative.
Refer to Note 12 for further information about the
measurement of collateral-dependent loans.
JPMorgan Chase & Co./2022 Form 10-K
185
Notes to consolidated financial statements
Equity securities without readily determinable fair values
The Firm measures certain equity securities without readily determinable fair values at cost less impairment (if any), plus or
minus observable price changes from an identical or similar investment of the same issuer (i.e., measurement alternative),
with such changes recognized in other income.
In its determination of the new carrying values upon observable price changes, the Firm may adjust the prices if deemed
necessary to arrive at the Firm’s estimated fair values. Such adjustments may include adjustments to reflect the different
rights and obligations of similar securities, and other adjustments that are consistent with the Firm’s valuation techniques for
private equity direct investments.
The following table presents the carrying value of equity securities without readily determinable fair values held as of
December 31, 2022 and 2021, that are measured under the measurement alternative and the related adjustments recorded
during the periods presented for those securities with observable price changes. These securities are included in the
nonrecurring fair value tables when applicable price changes are observable.
As of or for the year ended December 31,
(in millions)
Other assets
Carrying value(a)
Upward carrying value changes(b)
Downward carrying value changes/impairment(c)
2022
2021
$
4,096
$
488
(826)
3,642
432
(53)
(a) The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes.
(b) The cumulative upward carrying value changes between January 1, 2018 and December 31, 2022 were $1.4 billion.
(c) The cumulative downward carrying value changes/impairment between January 1, 2018 and December 31, 2022 were $(918) million.
Included in other assets above is the Firm’s interest in Visa Class B common shares (“Visa B shares”) recorded at a nominal
carrying value. In November 2022, the Firm sold approximately 3 million Visa B shares, resulting in a net pretax gain of
$914 million recorded in other income. Visa B shares are subject to certain transfer restrictions and are convertible into Visa
Class A common shares (“Visa A shares”) at a specified conversion rate upon final resolution of certain litigation matters
involving Visa. In connection with the sale, and consistent with the Firm’s sale of 20 million Visa B shares in 2013, the Firm
entered into a derivative instrument with the purchaser of the shares, under which the Firm retains the risk associated with
changes in the conversion rate.
Under the terms of the derivative instrument, the Firm will (a) make or receive payments based on subsequent changes in the
conversion rate and (b) make periodic interest payments to the purchaser of the Visa B shares. The payments under the
derivative continue as long as the Visa B shares remain subject to transfer restrictions. The derivative is accounted for at fair
value using a discounted cash flow methodology based upon the Firm’s estimate of the timing and magnitude of final
resolution of the litigation matters. The derivative is recorded in trading liabilities and changes in fair value are recognized in
other income. As of December 31, 2022, the Firm held derivative instruments associated with the 23 million Visa B shares
that it has sold, which are all subject to similar terms and conditions.
As of December 31, 2022, the Firm’s remaining interest in Visa B shares was approximately 37 million shares. On January 5,
2023, Visa filed a Current Report on Form 8-K with the SEC indicating that the conversion rate of Visa B shares to Visa A
shares decreased from 1.6059 to 1.5991 effective December 29, 2022. The conversion rate may be further adjusted by Visa
depending on developments related to the litigation matters. The outcome of those litigation matters, and the effect that the
resolution of those matters may have on the conversion rate, is unknown, and accordingly, as of December 31, 2022, there is
significant uncertainty regarding the date of the termination of transfer restrictions and the value of the final conversion rate.
As a result of this, as well as differences in voting rights, Visa B shares are not considered to be similar to Visa A shares, and
they continue to be held at their nominal carrying value.
Additional disclosures about the fair value of financial
instruments that are not carried on the Consolidated
balance sheets at fair value
U.S. GAAP requires disclosure of the estimated fair value of
certain financial instruments, which are included in the
following table. However, this table does not include other
items, such as nonfinancial assets, intangible assets, certain
financial instruments, and customer relationships. In the
opinion of management, these items, in the aggregate, add
significant value to JPMorgan Chase, but their fair value is
not disclosed in this table.
Financial instruments for which carrying value approximates
fair value
Certain financial instruments that are not carried at fair
value on the Consolidated balance sheets are carried at
amounts that approximate fair value, due to their short-
term nature and generally negligible credit risk. These
instruments include cash and due from banks, deposits with
banks, federal funds sold, securities purchased under resale
agreements and securities borrowed, short-term
receivables and accrued interest receivable, short-term
borrowings, federal funds purchased, securities loaned and
sold under repurchase agreements, accounts payable, and
186
JPMorgan Chase & Co./2022 Form 10-K
accrued liabilities. In addition, U.S. GAAP requires that the
fair value of deposit liabilities with no stated maturity (i.e.,
demand, savings and certain money market deposits) be
equal to their carrying value; recognition of the inherent
funding value of these instruments is not permitted.
The following table presents, by fair value hierarchy classification, the carrying values and estimated fair values at
December 31, 2022 and 2021, of financial assets and liabilities, excluding financial instruments that are carried at fair value
on a recurring basis, and their classification within the fair value hierarchy.
December 31, 2022
Estimated fair value hierarchy
December 31, 2021
Estimated fair value hierarchy
Carrying
value
Level 1
Level 2
Level 3
Total
estimated
fair value
Carrying
value
Level 1
Level 2
Level 3
Total
estimated
fair value
(in billions)
Financial assets
Cash and due from banks
$ 27.7 $ 27.7 $
— $
— $
27.7 $ 26.4 $ 26.4
$
539.5
539.3
0.2
—
539.5
714.4
714.1
(b)
—
0.3
(b)
$
— $
26.4
—
714.4
124.7
—
124.6
0.1
124.7
102.1
102.0
0.1
102.1
Deposits with banks
Accrued interest and accounts
receivable
Federal funds sold and
securities purchased under
resale agreements
Securities borrowed
Investment securities, held-to-
maturity
Loans, net of allowance for
loan losses(a)
Other
Financial liabilities
Deposits
Federal funds purchased and
securities loaned or sold
under repurchase
agreements
Short-term borrowings
Accounts payable and other
liabilities
Beneficial interests issued by
consolidated VIEs
Long-term debt
—
—
—
3.7
115.3
—
—
3.7
115.3
425.3
189.1
199.5
—
—
—
3.7
9.0
115.3
124.6
9.0
124.6
388.6
363.7
183.3
179.3
—
—
—
9.0
124.6
362.6
1,073.9
101.2
—
—
194.0
853.9
1,047.9
1,002.5
99.6
1.7
101.3
98.7
$ 2,311.6 $
— $ 2,311.5 $
— $ 2,311.5 $ 2,451.0 $
50.6
28.2
—
—
50.6
28.2
257.5
—
251.2
12.6
223.6
—
—
12.6
216.5
—
—
5.6
—
2.8
50.6
28.2
67.9
33.6
256.8
217.6
12.6
10.7
219.3
226.0
—
—
—
—
—
—
—
—
202.1
821.1
1,023.2
97.4
1.4
98.8
$ 2,451.0
$
— $ 2,451.0
67.9
33.6
212.1
10.8
229.5
—
—
4.9
—
3.1
67.9
33.6
217.0
10.8
232.6
(a) Fair value is typically estimated using a discounted cash flow model that incorporates the characteristics of the underlying loans (including principal,
contractual interest rate and contractual fees) and other key inputs, including expected lifetime credit losses, interest rates, prepayment rates, and
primary origination or secondary market spreads. For certain loans, the fair value is measured based on the value of the underlying collateral. Carrying
value of the loan takes into account the loan’s allowance for loan losses, which represents the loan’s expected credit losses over its remaining expected
life. The difference between the estimated fair value and carrying value of a loan is generally attributable to changes in market interest rates, including
credit spreads, market liquidity premiums and other factors that affect the fair value of a loan but do not affect its carrying value.
(b) Prior-period amounts have been revised to conform with the current presentation.
The majority of the Firm’s lending-related commitments are not carried at fair value on a recurring basis on the Consolidated
balance sheets. The carrying value and the estimated fair value of these wholesale lending-related commitments were as
follows for the periods indicated.
December 31, 2022
Estimated fair value hierarchy
December 31, 2021
Estimated fair value hierarchy
Carrying
value(a)(b)
Level 1
Level 2
Level 3
Total
estimated
fair value
Carrying
value(a)(b)
Level 1
Level 2
Level 3
Total
estimated
fair value
(in billions)
Wholesale lending-
related commitments $
2.3 $
— $
— $
3.2 $
3.2 $
2.1 $
— $
— $
2.9 $
2.9
(a) Excludes the current carrying values of the guarantee liability and the offsetting asset, each of which is recognized at fair value at the inception of the
guarantees.
(b) Includes the wholesale allowance for lending-related commitments.
The Firm does not estimate the fair value of consumer off-balance sheet lending-related commitments. In many cases, the Firm
can reduce or cancel these commitments by providing the borrower notice or, in some cases as permitted by law, without
notice. Refer to page 169 of this Note for a further discussion of the valuation of lending-related commitments.
JPMorgan Chase & Co./2022 Form 10-K
187
Notes to consolidated financial statements
Note 3 – Fair value option
The fair value option provides an option to elect fair value
for selected financial assets, financial liabilities,
unrecognized firm commitments, and written loan
commitments.
The Firm has elected to measure certain instruments at fair
value for several reasons including to mitigate income
statement volatility caused by the differences between the
measurement basis of elected instruments (e.g., certain
instruments that otherwise would be accounted for on an
accrual basis) and the associated risk management
arrangements that are accounted for on a fair value basis,
as well as to better reflect those instruments that are
managed on a fair value basis.
The Firm’s election of fair value includes the following
instruments:
•
Loans purchased or originated as part of securitization
warehousing activity, subject to bifurcation accounting,
or managed on a fair value basis, including lending-
related commitments
•
Certain securities financing agreements
• Owned beneficial interests in securitized financial assets
that contain embedded credit derivatives, which would
otherwise be required to be separately accounted for as
a derivative instrument
•
•
Structured notes and other hybrid instruments, which
are predominantly financial instruments that contain
embedded derivatives, that are issued or transacted as
part of client-driven activities
Certain long-term beneficial interests issued by CIB’s
consolidated securitization trusts where the underlying
assets are carried at fair value
188
JPMorgan Chase & Co./2022 Form 10-K
Changes in fair value under the fair value option election
The following table presents the changes in fair value included in the Consolidated statements of income for the years ended
December 31, 2022, 2021 and 2020, for items for which the fair value option was elected. The profit and loss information
presented below only includes the financial instruments that were elected to be measured at fair value; related risk
management instruments, which are required to be measured at fair value, are not included in the table.
2022
2021
2020
Principal
transactions
All other
income
Total
changes in
fair value
recorded(e)
Principal
transactions
All other
income
Total
changes in
fair value
recorded(e)
Principal
transactions
All other
income
Total
changes in
fair value
recorded(e)
$
(384) $ —
$
(384) $
(112) $ —
$
(112) $
(499)
—
(499)
(200)
—
(200)
12
143
$ —
$
—
12
143
(1,703)
—
(1,703)
(2,171)
(1) (c)
(2,172)
2,587
(1) (c)
2,586
(136)
(59)
—
—
(136)
353
(59)
(8)
—
—
353
135
(8)
(19)
(242)
21
(c)
(1,421) (794) (c)
(6) (d)
—
901
39
(221)
(2,215)
33
901
589
(139)
12
(183)
(7) (c)
2,056 (c)
(26) (d)
—
181
473
43
(1)
(11)
—
—
—
—
—
181
473
43
(1)
(11)
8,990
(c)(d)
98
9,088
69
(366)
7
—
(17)
(980)
—
—
—
—
—
4
—
—
7
3,239
(c)
(c)
(65) (d)
—
—
—
—
—
135
(19)
197
3,709
38
(726)
(6)
294
2
—
582
1,917
(14)
(183)
69
(366)
7
—
190
470
103
(726)
(6)
294
2
—
(c)(d)
(17)
(976)
(94)
(2,120)
—
(1) (c)
(94)
(2,121)
December 31, (in millions)
Federal funds sold and
securities purchased under
resale agreements
Securities borrowed
Trading assets:
Debt and equity
instruments, excluding
loans
Loans reported as trading
assets:
Changes in instrument-
specific credit risk
Other changes in fair
value
Loans:
Changes in instrument-
specific credit risk
Other changes in fair value
Other assets
Deposits(a)
Federal funds purchased and
securities loaned or sold
under repurchase
agreements
Short-term borrowings(a)
Trading liabilities
Beneficial interests issued by
consolidated VIEs
Other liabilities
Long-term debt(a)(b)
(a) Unrealized gains/(losses) due to instrument-specific credit risk (DVA) for liabilities for which the fair value option has been elected are recorded in OCI,
while realized gains/(losses) are recorded in principal transactions revenue. Realized gains/(losses) due to instrument-specific credit risk recorded in
principal transactions revenue were not material for the years ended December 31, 2022, 2021 and 2020.
(b) Long-term debt measured at fair value predominantly relates to structured notes. Although the risk associated with the structured notes is actively
managed, the gains/(losses) reported in this table do not include the income statement impact of the risk management instruments used to manage such
risk.
(c) Reported in mortgage fees and related income.
(d) Reported in other income.
(e) Changes in fair value exclude contractual interest, which is included in interest income and interest expense for all instruments other than certain hybrid
financial instruments in CIB. Refer to Note 7 for further information regarding interest income and interest expense.
Determination of instrument-specific credit risk for items
for which the fair value option was elected
The following describes how the gains and losses that are
attributable to changes in instrument-specific credit risk,
were determined.
•
Loans and lending-related commitments: For floating-
rate instruments, all changes in value are attributed to
instrument-specific credit risk. For fixed-rate
instruments, an allocation of the changes in value for
the period is made between those changes in value that
are interest rate-related and changes in value that are
credit-related. Allocations are generally based on an
analysis of borrower-specific credit spread and recovery
information, where available, or benchmarking to
similar entities or industries.
•
•
Long-term debt: Changes in value attributable to
instrument-specific credit risk were derived principally
from observable changes in the Firm’s credit spread as
observed in the bond market.
Securities financing agreements: Generally, for these
types of agreements, there is a requirement that
collateral be maintained with a market value equal to or
in excess of the principal amount loaned; as a result,
there would be no adjustment or an immaterial
adjustment for instrument-specific credit risk related to
these agreements.
JPMorgan Chase & Co./2022 Form 10-K
189
Notes to consolidated financial statements
Difference between aggregate fair value and aggregate remaining contractual principal balance outstanding
The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal
balance outstanding as of December 31, 2022 and 2021, for loans, long-term debt and long-term beneficial interests for
which the fair value option has been elected.
2022
2021
Contractual
principal
outstanding
Fair value
Fair value
over/
(under)
contractual
principal
outstanding
Contractual
principal
outstanding
Fair value
Fair value
over/
(under)
contractual
principal
outstanding
December 31, (in millions)
Loans
Nonaccrual loans
Loans reported as trading assets
$
2,517
$
368 $
(2,149) $
3,263
$
546 $
(2,717)
Loans
Subtotal
967
3,484
829
1,197
(138)
(2,287)
918
4,181
797
1,343
(121)
(2,838)
90 or more days past due and government guaranteed
Loans(a)
All other performing loans(b)
Loans reported as trading assets
Loans
Subtotal
Total loans
Long-term debt
Principal-protected debt
Nonprincipal-protected debt(c)
Total long-term debt
Long-term beneficial interests
Nonprincipal-protected debt(c)
Total long-term beneficial interests
124
115
(9)
293
281
(12)
7,823
42,588
50,411
6,135
41,135
47,270
(1,688)
(1,453)
(3,141)
(e)
(e)
8,529
57,490
66,019
7,528
57,742
65,270
(1,001) (e)
(e)
252
(749)
$
54,019
$
48,582 $
(5,437) $
70,493
$
66,894 $
(3,599)
$
41,341
(d) $
31,105 $
(10,236) $
35,957
(d) $
33,799 $
(2,158)
NA
NA
NA
NA
41,176
$
72,281
$
$
5
5
NA
NA
NA
NA
NA
NA
NA
NA
41,135
$
74,934
$
$
12
12
NA
NA
NA
NA
(a) These balances are excluded from nonaccrual loans as the loans are insured and/or guaranteed by U.S. government agencies.
(b) There were no performing loans that were ninety days or more past due as of December 31, 2022 and 2021.
(c) Remaining contractual principal is not applicable to nonprincipal-protected structured notes and long-term beneficial interests. Unlike principal-protected
structured notes and long-term beneficial interests, for which the Firm is obligated to return a stated amount of principal at maturity, nonprincipal-
protected structured notes and long-term beneficial interests do not obligate the Firm to return a stated amount of principal at maturity, but for
structured notes to return an amount based on the performance of an underlying variable or derivative feature embedded in the note. However, investors
are exposed to the credit risk of the Firm as issuer for both nonprincipal-protected and principal-protected notes.
(d) Where the Firm issues principal-protected zero-coupon or discount notes, the balance reflects the contractual principal payment at maturity or, if
applicable, the contractual principal payment at the Firm’s next call date.
(e) Prior-period amounts have been revised to conform with the current presentation.
At December 31, 2022 and 2021, the contractual amount of lending-related commitments for which the fair value option was
elected was $7.6 billion and $11.9 billion, respectively, with a corresponding fair value of $24 million and $10 million,
respectively. Refer to Note 28 for further information regarding off-balance sheet lending-related financial instruments.
190
JPMorgan Chase & Co./2022 Form 10-K
Structured note products by balance sheet classification and risk component
The following table presents the fair value of structured notes, by balance sheet classification and the primary risk type.
(in millions)
Risk exposure
Interest rate
Credit
Foreign exchange
Equity
Commodity
December 31, 2022
December 31, 2021
Long-term
debt
Short-term
borrowings
Deposits
Total
Long-term
debt
Short-term
borrowings
Deposits
Total
$ 31,973 $
260 $ 24,655
$ 56,888
$ 34,127 $
1 $ 4,860
$ 38,988
4,105
2,674
30,864
1,655
170
788
—
50
4,272
3,545
16
(a)
2
4,275
3,512
38,681
1,673
6,352
3,386
858
315
29,317
6,827
405
—
—
1,066
5,125
(a)
3
7,210
4,767
41,269
408
Total structured notes
$ 71,271 $
5,506 $ 28,252
$ 105,029
$ 73,587 $
8,001 $ 11,054
$ 92,642
(a) Excludes deposits linked to precious metals for which the fair value option has not been elected of $602 million and $692 million for the years ended
December 31, 2022 and 2021, respectively.
JPMorgan Chase & Co./2022 Form 10-K
191
The Firm’s wholesale exposure is managed through loan
syndications and participations, loan sales, securitizations,
credit derivatives, master netting agreements, collateral
and other risk-reduction techniques. Refer to Note 12 for
additional information on loans.
The Firm does not believe that its exposure to any
particular loan product or industry segment results in a
significant concentration of credit risk.
Terms of loan products and collateral coverage are included
in the Firm’s assessment when extending credit and
establishing its allowance for loan losses.
Notes to consolidated financial statements
Note 4 – Credit risk concentrations
Concentrations of credit risk arise when a number of clients,
counterparties or customers are engaged in similar
business activities or activities in the same geographic
region, or when they have similar economic features that
would cause their ability to meet contractual obligations to
be similarly affected by changes in economic conditions.
JPMorgan Chase regularly monitors various segments of its
credit portfolios to assess potential credit risk
concentrations and to obtain additional collateral when
deemed necessary and permitted under the Firm’s
agreements. Senior management is significantly involved in
the credit approval and review process, and risk levels are
adjusted as needed to reflect the Firm’s risk appetite.
In the Firm’s consumer portfolio, concentrations are
managed primarily by product and by U.S. geographic
region, with a key focus on trends and concentrations at the
portfolio level, where potential credit risk concentrations
can be remedied through changes in underwriting policies
and portfolio guidelines. Refer to Note 12 for additional
information on the geographic composition of the Firm’s
consumer loan portfolios. In the wholesale portfolio, credit
risk concentrations are evaluated primarily by industry and
monitored regularly on both an aggregate portfolio level
and on an individual client or counterparty basis.
192
JPMorgan Chase & Co./2022 Form 10-K
The table below presents both on–balance sheet and off–balance sheet consumer and wholesale credit exposure by the Firm’s
three credit portfolio segments as of December 31, 2022 and 2021. The wholesale industry of risk category is generally based
on the client or counterparty’s primary business activity.
Credit
exposure(h)
$ 344,893 $ 311,375
Loans
2022
On-balance sheet
Derivatives
Off-balance
sheet(j)
Credit
exposure(h)
2021
On-balance sheet
Loans
Derivatives
(i) $
— $ 33,518 $ 368,640 $ 323,306
(i) $
December 31, (in millions)
Consumer, excluding credit card
Credit card(a)
Total consumer(a)
Wholesale(b)
Real Estate
Individuals and Individual Entities(c)
Consumer & Retail
Asset Managers
Industrials
Technology, Media &
Telecommunications
Healthcare
Banks & Finance Cos
Oil & Gas
Utilities
State & Municipal Govt(d)
Automotive
Insurance
Chemicals & Plastics
Central Govt
Metals & Mining
Transportation
Securities Firms
Financial Markets Infrastructure
All other(e)
Subtotal
1,006,459
185,175
1,351,352
496,550
—
—
821,284
884,830
154,296
854,802
1,253,470
477,602
170,857
131,681
130,815
120,424
120,555
95,656
72,483
72,286
62,613
51,816
38,668
36,218
33,847
33,287
21,045
20,030
19,095
15,915
15,009
8,066
4,962
45,867
40,511
26,960
21,622
22,970
32,172
9,632
9,107
18,147
14,735
2,387
5,771
3,167
5,398
5,005
556
13
123,307
87,545
249
434
1,650
16,397
1,770
2,950
1,683
3,246
5,121
3,269
585
529
8,081
407
12,955
475
567
3,387
3,050
4,075
38,927
9,957
73,038
38,748
43,753
47,714
37,960
16,398
23,915
23,842
15,115
18,023
10,577
13,852
2,973
10,042
9,437
4,123
1,899
155,069
119,753
141,973
130,576
122,789
81,228
66,974
84,070
59,014
54,684
42,606
33,203
33,216
34,573
13,926
17,660
11,317
16,696
14,635
4,180
4,377
39,588
41,031
21,652
17,815
18,587
34,217
11,039
5,969
15,322
11,759
1,303
5,033
2,889
5,696
5,453
469
5
31,687
111,690
72,198
Off-balance
sheet(j)
$ 45,334
730,534
775,868
34,203
10,080
80,532
30,846
44,098
63,615
37,852
16,049
25,533
23,498
16,331
22,094
9,923
12,063
1,591
10,076
8,400
2,451
1,885
35,325
—
—
—
1,113
1,317
2,669
9,351
1,224
2,640
2,575
4,418
6,034
3,736
1,563
720
2,700
564
6,837
924
782
1,260
2,487
4,167
Loans held-for-sale and loans at fair value
Receivables from customers(f)
Total wholesale
Total exposure(g)(h)
1,146,530
603,670
70,880
471,980
1,103,880
560,354
57,081
486,445
35,427
49,257
35,427
—
—
—
—
—
39,758
59,645
39,758
—
—
—
—
1,231,214
639,097
70,880
471,980
1,203,283
600,112
57,081
486,445
$ 2,582,566 $ 1,135,647
$ 70,880 $ 1,326,782 $ 2,456,753 $ 1,077,714
$ 57,081
$ 1,262,313
(a) Also includes commercial card lending-related commitments primarily in CB and CIB.
(b) The industry rankings presented in the table as of December 31, 2021, are based on the industry rankings of the corresponding exposures at
December 31, 2022, not actual rankings of such exposures at December 31, 2021.
(c) Individuals and Individual Entities predominantly consists of Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB, and
includes exposure to personal investment companies and personal and testamentary trusts.
(d) In addition to the credit risk exposure to states and municipal governments (both U.S. and non-U.S.) at December 31, 2022 and 2021, noted above, the
Firm held: $6.6 billion and $7.1 billion, respectively, of trading assets; $6.8 billion and $15.9 billion, respectively, of AFS securities; and $19.7 billion and
$14.0 billion, respectively, of HTM securities, issued by U.S. state and municipal governments. Refer to Note 2 and Note 10 for further information.
(e) All other includes: SPEs and Private education and civic organizations, representing approximately 95% and 5%, respectively, at December 31, 2022 and
94% and 6%, respectively, at December 31, 2021. Refer to Note 14 for more information on exposures to SPEs.
(f) Receivables from customers reflect held-for-investment margin loans to brokerage clients in CIB, CCB and AWM that are collateralized by assets
maintained in the clients’ brokerage accounts (e.g., cash on deposit, liquid and readily marketable debt or equity securities). Because of this
collateralization, no allowance for credit losses is generally held against these receivables. To manage its credit risk the Firm establishes margin
requirements and monitors the required margin levels on an ongoing basis, and requires clients to deposit additional cash or other collateral, or to reduce
positions, when appropriate. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
(g) Excludes cash placed with banks of $556.6 billion and $729.6 billion, at December 31, 2022 and 2021, respectively, which is predominantly placed with
various central banks, primarily Federal Reserve Banks.
(h) Credit exposure is net of risk participations and excludes the benefit of credit derivatives used in credit portfolio management activities held against
derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
(i) At December 31, 2022 and 2021, included $350 million and $5.4 billion of loans in Business Banking under the PPP, respectively. PPP loans are
guaranteed by the SBA. Other than in certain limited circumstances, the Firm typically does not recognize charge-offs, classify as nonaccrual nor record an
allowance for loan losses on these loans.
(j) Represents lending-related financial instruments.
JPMorgan Chase & Co./2022 Form 10-K
193
Notes to consolidated financial statements
Note 5 – Derivative instruments
Derivative contracts derive their value from underlying
asset prices, indices, reference rates, other inputs or a
combination of these factors and may expose
counterparties to risks and rewards of an underlying asset
or liability without having to initially invest in, own or
exchange the asset or liability. JPMorgan Chase makes
markets in derivatives for clients and also uses derivatives
to hedge or manage its own risk exposures. Predominantly
all of the Firm’s derivatives are entered into for market-
making or risk management purposes.
Market-making derivatives
The majority of the Firm’s derivatives are entered into for
market-making purposes. Clients use derivatives to mitigate
or modify interest rate, credit, foreign exchange, equity and
commodity risks. The Firm actively manages the risks from
its exposure to these derivatives by entering into other
derivative contracts or by purchasing or selling other
financial instruments that partially or fully offset the
exposure from client derivatives.
Risk management derivatives
The Firm manages certain market and credit risk exposures
using derivative instruments, including derivatives in hedge
accounting relationships and other derivatives that are used
to manage risks associated with specified assets and
liabilities.
The Firm generally uses interest rate derivatives to manage
the risk associated with changes in interest rates. Fixed-rate
assets and liabilities appreciate or depreciate in market
value as interest rates change. Similarly, interest income
and expense increase or decrease as a result of variable-
rate assets and liabilities resetting to current market rates,
and as a result of the repayment and subsequent
origination or issuance of fixed-rate assets and liabilities at
current market rates. Gains and losses on the derivative
instruments related to these assets and liabilities are
expected to substantially offset this variability.
Foreign currency derivatives are used to manage the
foreign exchange risk associated with certain foreign
currency–denominated (i.e., non-U.S. dollar) assets and
liabilities and forecasted transactions, as well as the Firm’s
net investments in certain non-U.S. subsidiaries or branches
whose functional currencies are not the U.S. dollar. As a
result of fluctuations in foreign currencies, the U.S. dollar–
equivalent values of the foreign currency–denominated
assets and liabilities or the forecasted revenues or expenses
increase or decrease. Gains or losses on the derivative
instruments related to these foreign currency–denominated
assets or liabilities, or forecasted transactions, are expected
to substantially offset this variability.
Commodities derivatives are used to manage the price risk
of certain commodities inventories. Gains or losses on these
derivative instruments are expected to substantially offset
the depreciation or appreciation of the related inventory.
Credit derivatives are used to manage the counterparty
credit risk associated with loans and lending-related
commitments. Credit derivatives compensate the purchaser
when the entity referenced in the contract experiences a
credit event, such as bankruptcy or a failure to pay an
obligation when due. Credit derivatives primarily consist of
CDS. Refer to the Credit derivatives section on pages
205-207 of this Note for a further discussion of credit
derivatives.
Refer to the risk management derivatives gains and losses
table on page 205 and the hedge accounting gains and
losses tables on pages 202-204 of this Note for more
information about risk management derivatives.
Derivative counterparties and settlement types
The Firm enters into OTC derivatives, which are negotiated
and settled bilaterally with the derivative counterparty. The
Firm also enters into, as principal, certain ETD such as
futures and options, and OTC-cleared derivative contracts
with CCPs. ETD contracts are generally standardized
contracts traded on an exchange and cleared by the CCP,
which is the Firm’s counterparty from the inception of the
transactions. OTC-cleared derivatives are traded on a
bilateral basis and then novated to the CCP for clearing.
Derivative clearing services
The Firm provides clearing services for clients in which the
Firm acts as a clearing member at certain exchanges and
clearing houses. The Firm does not reflect the clients’
derivative contracts in its Consolidated Financial
Statements. Refer to Note 28 for further information on the
Firm’s clearing services.
Accounting for derivatives
All free-standing derivatives that the Firm executes for its
own account are required to be recorded on the
Consolidated balance sheets at fair value.
As permitted under U.S. GAAP, the Firm nets derivative
assets and liabilities, and the related cash collateral
receivables and payables, when a legally enforceable
master netting agreement exists between the Firm and the
derivative counterparty. Refer to Note 1 for further
discussion of the offsetting of assets and liabilities. The
accounting for changes in value of a derivative depends on
whether or not the transaction has been designated and
qualifies for hedge accounting. Derivatives that are not
designated as hedges are reported and measured at fair
value through earnings. The tabular disclosures on pages
198-205 of this Note provide additional information on the
amount of, and reporting for, derivative assets, liabilities,
gains and losses. Refer to Notes 2 and 3 for a further
discussion of derivatives embedded in structured notes.
194
JPMorgan Chase & Co./2022 Form 10-K
recorded in OCI and recognized in earnings as the hedged
item affects earnings. Derivative amounts affecting
earnings are recognized consistent with the classification of
the hedged item – primarily noninterest revenue, net
interest income and compensation expense. If the hedge
relationship is terminated, then the change in value of the
derivative recorded in AOCI is recognized in earnings when
the cash flows that were hedged affect earnings. For hedge
relationships that are discontinued because a forecasted
transaction is expected to not occur according to the
original hedge forecast, any related derivative values
recorded in AOCI are immediately recognized in earnings.
JPMorgan Chase uses net investment hedges to protect the
value of the Firm’s net investments in certain non-U.S.
subsidiaries or branches whose functional currencies are
not the U.S. dollar. For qualifying net investment hedges,
changes in the fair value of the derivatives due to changes
in spot foreign exchange rates are recorded in OCI as
translation adjustments. Amounts excluded from the
assessment of effectiveness are recorded directly in
earnings.
Derivatives designated as hedges
The Firm applies hedge accounting to certain derivatives
executed for risk management purposes – generally interest
rate, foreign exchange and commodity derivatives.
However, JPMorgan Chase does not seek to apply hedge
accounting to all of the derivatives associated with the
Firm’s risk management activities. For example, the Firm
does not apply hedge accounting to purchased CDS used to
manage the credit risk of loans and lending-related
commitments, because of the difficulties in qualifying such
contracts as hedges. For the same reason, the Firm does
not apply hedge accounting to certain interest rate, foreign
exchange, and commodity derivatives used for risk
management purposes.
To qualify for hedge accounting, a derivative must be highly
effective at reducing the risk associated with the exposure
being hedged. In addition, for a derivative to be designated
as a hedge, the risk management objective and strategy
must be documented. Hedge documentation must identify
the derivative hedging instrument, the asset or liability or
forecasted transaction and type of risk to be hedged, and
how the effectiveness of the derivative is assessed
prospectively and retrospectively. To assess effectiveness,
the Firm uses statistical methods such as regression
analysis, nonstatistical methods such as dollar-value
comparisons of the change in the fair value of the derivative
to the change in the fair value or cash flows of the hedged
item, and qualitative comparisons of critical terms and the
evaluation of any changes in those terms. The extent to
which a derivative has been, and is expected to continue to
be, highly effective at offsetting changes in the fair value or
cash flows of the hedged item must be assessed and
documented at least quarterly. If it is determined that a
derivative is not highly effective at hedging the designated
exposure, hedge accounting is discontinued.
There are three types of hedge accounting designations: fair
value hedges, cash flow hedges and net investment hedges.
JPMorgan Chase uses fair value hedges primarily to hedge
fixed-rate long-term debt, AFS securities and certain
commodities inventories. For qualifying fair value hedges,
the changes in the fair value of the derivative, and in the
value of the hedged item for the risk being hedged, are
recognized in earnings. Certain amounts excluded from the
assessment of effectiveness are recorded in OCI and
recognized in earnings over the life of the derivative. If the
hedge relationship is terminated, then the adjustment to
the hedged item continues to be reported as part of the
basis of the hedged item, and for benchmark interest rate
hedges, is amortized to earnings as a yield adjustment.
Derivative amounts affecting earnings are recognized
consistent with the classification of the hedged item –
primarily net interest income and principal transactions
revenue.
JPMorgan Chase uses cash flow hedges primarily to hedge
the exposure to variability in forecasted cash flows from
floating-rate assets and liabilities and foreign currency–
denominated revenue and expense. For qualifying cash flow
hedges, changes in the fair value of the derivative are
JPMorgan Chase & Co./2022 Form 10-K
195
Notes to consolidated financial statements
The following table outlines the Firm’s primary uses of derivatives and the related hedge accounting designation or disclosure
category.
Type of Derivative
Use of Derivative
Designation and disclosure
Manage specifically identified risk exposures in qualifying hedge accounting relationships:
Affected
segment or unit
Page
reference
• Interest rate
• Interest rate
Hedge fixed rate assets and liabilities
Hedge floating-rate assets and liabilities
• Foreign exchange
Hedge foreign currency-denominated assets and liabilities
• Foreign exchange
Hedge foreign currency-denominated forecasted revenue and
expense
• Foreign exchange
Hedge the value of the Firm’s investments in non-U.S. dollar
functional currency entities
Fair value hedge
Cash flow hedge
Fair value hedge
Cash flow hedge
Corporate
Corporate
Corporate
Corporate
Net investment hedge
Corporate
202-203
204
202-203
204
204
• Commodity
Hedge commodity inventory
Fair value hedge
CIB, AWM
202-203
Manage specifically identified risk exposures not designated in qualifying hedge accounting relationships:
• Interest rate
Manage the risk associated with mortgage commitments, warehouse
Specified risk management
CCB
loans and MSRs
• Credit
Manage the credit risk associated with wholesale lending exposures
Specified risk management
CIB
• Interest rate and
foreign exchange
Manage the risk associated with certain other specified assets and
liabilities
Specified risk management
Corporate
Market-making derivatives and other activities:
• Various
• Various
Market-making and related risk management
Market-making and other
CIB
Other derivatives
Market-making and other
CIB, AWM,
Corporate
205
205
205
205
205
196
JPMorgan Chase & Co./2022 Form 10-K
Notional amount of derivative contracts
The following table summarizes the notional amount of
free-standing derivative contracts outstanding as of
December 31, 2022 and 2021.
December 31, (in billions)
Interest rate contracts
Swaps
Futures and forwards
Written options
Purchased options
Total interest rate contracts
Credit derivatives(a)
Foreign exchange contracts
Cross-currency swaps
Spot, futures and forwards
Written options
Purchased options
Notional amounts(b)
2022
2021
$
24,491
$
24,075
2,636
3,047
2,992
33,166
1,132
4,196
7,017
775
759
2,520
3,018
3,188
32,801
1,053
4,112
7,679
741
727
Total foreign exchange contracts
12,747
13,259
Equity contracts
Swaps
Futures and forwards
Written options
Purchased options
Total equity contracts
Commodity contracts
Swaps
Spot, futures and forwards
Written options
Purchased options
Total commodity contracts
618
110
636
580
612
139
654
598
1,944
2,003
136
136
117
98
487
185
188
135
111
619
Total derivative notional amounts
$
49,476
$
49,735
(a) Refer to the Credit derivatives discussion on pages 205-207 for more
information on volumes and types of credit derivative contracts.
(b) Represents the sum of gross long and gross short third-party notional
derivative contracts.
While the notional amounts disclosed above give an
indication of the volume of the Firm’s derivatives activity,
the notional amounts significantly exceed, in the Firm’s
view, the possible losses that could arise from such
transactions. For most derivative contracts, the notional
amount is not exchanged; it is simply a reference amount
used to calculate payments.
JPMorgan Chase & Co./2022 Form 10-K
197
Notes to consolidated financial statements
Impact of derivatives on the Consolidated balance sheets
The following table summarizes information on derivative receivables and payables (before and after netting adjustments) that
are reflected on the Firm’s Consolidated balance sheets as of December 31, 2022 and 2021, by accounting designation (e.g.,
whether the derivatives were designated in qualifying hedge accounting relationships or not) and contract type.
Free-standing derivative receivables and payables(a)
December 31, 2022
(in millions)
Trading assets and
liabilities
Interest rate
Credit
Foreign exchange
Equity
Commodity
Total fair value of trading
assets and liabilities
December 31, 2021
(in millions)
Trading assets and
liabilities
Interest rate
Credit
Foreign exchange
Equity
Commodity
Total fair value of trading
assets and liabilities
Gross derivative receivables
Gross derivative payables
Not
designated
as hedges
Designated
as hedges
Total
derivative
receivables
Net
derivative
receivables(b)
Not
designated
as hedges
Designated
as hedges
Total
derivative
payables
Net
derivative
payables(b)
$ 300,411 $
4 $ 300,415 $
28,419
$ 290,291 $
— $ 290,291 $
15,970
10,329
239,946
61,913
23,652
—
10,329
1,633
241,579
—
1,705
61,913
25,357
1,090
23,365
9,139
8,867
9,971
248,911
62,461
20,758
—
9,971
2,610
251,521
—
2,511
62,461
23,269
754
18,856
8,804
6,757
$ 636,251 $
3,342 $ 639,593 $
70,880
$ 632,392 $
5,121 $ 637,513 $
51,141
Gross derivative receivables
Gross derivative payables
Not
designated
as hedges
Designated
as hedges
Total
derivative
receivables
Net
derivative
receivables(b)
Not
designated
as hedges
Designated
as hedges
Total
derivative
payables
Net
derivative
payables(b)
$ 270,562 $
23 $ 270,585 $
21,974
$ 240,731 $
— $ 240,731 $
8,194
9,839
169,186
68,631
21,233
—
393
—
5,420
9,839
169,579
68,631
26,653
1,031
12,625
9,981
11,470
10,912
174,622
79,727
20,837
—
10,912
1,124
175,746
—
7,091
79,727
27,928
880
14,097
17,233
9,712
$ 539,451 $
5,836 $ 545,287 $
57,081
$ 526,829 $
8,215 $ 535,044 $
50,116
(a) Balances exclude structured notes for which the fair value option has been elected. Refer to Note 3 for further information.
(b) As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral receivables and
payables when a legally enforceable master netting agreement exists.
198
JPMorgan Chase & Co./2022 Form 10-K
Derivatives netting
The following tables present, as of December 31, 2022 and 2021, gross and net derivative receivables and payables by
contract and settlement type. Derivative receivables and payables, as well as the related cash collateral from the same
counterparty, have been netted on the Consolidated balance sheets where the Firm has obtained an appropriate legal opinion
with respect to the master netting agreement. Where such a legal opinion has not been either sought or obtained, amounts are
not eligible for netting on the Consolidated balance sheets, and those derivative receivables and payables are shown
separately in the tables below.
In addition to the cash collateral received and transferred that is presented on a net basis with derivative receivables and
payables, the Firm receives and transfers additional collateral (financial instruments and cash). These amounts mitigate
counterparty credit risk associated with the Firm’s derivative instruments, but are not eligible for net presentation:
• collateral that consists of liquid securities and other cash collateral held at third-party custodians, which are shown
separately as "Collateral not nettable on the Consolidated balance sheets" in the tables below, up to the fair value exposure
amount. For the purpose of this disclosure, the definition of liquid securities is consistent with the definition of high quality
liquid assets as defined in the LCR rule;
• the amount of collateral held or transferred that exceeds the fair value exposure at the individual counterparty level, as of
the date presented, which is excluded from the tables below; and
• collateral held or transferred that relates to derivative receivables or payables where an appropriate legal opinion has not
been either sought or obtained with respect to the master netting agreement, which is excluded from the tables below.
December 31, (in millions)
U.S. GAAP nettable derivative receivables
Interest rate contracts:
OTC
OTC–cleared
Exchange-traded(a)
Total interest rate contracts
Credit contracts:
OTC
OTC–cleared
Total credit contracts
Foreign exchange contracts:
OTC
OTC–cleared
Exchange-traded(a)
Total foreign exchange contracts
Equity contracts:
OTC
Exchange-traded(a)
Total equity contracts
Commodity contracts:
OTC
OTC–cleared
Exchange-traded(a)
Total commodity contracts
2022
Gross
derivative
receivables
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
receivables
Gross
derivative
receivables
2021
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
receivables
$ 203,922 $ (178,261)
$ 25,661
$ 251,953
$ (234,283)
$ 17,670
93,800
(93,424)
559
(311)
376
248
14,144
498
(13,839)
(489)
305
9
298,281
(271,996)
26,285
266,595
(248,611)
17,984
8,474
1,746
10,220
(7,535)
(1,704)
(9,239)
939
42
981
8,035
1,671
9,706
(7,177)
(1,631)
(8,808)
858
40
898
237,941
(216,796)
21,145
166,185
(156,251)
9,934
1,461
(1,417)
15
(1)
44
14
789
6
(703)
—
86
6
239,417
(218,214)
21,203
166,980
(156,954)
10,026
30,323
28,467
58,790
(25,665)
(27,109)
(52,774)
14,430
(7,633)
120
9,103
(112)
(8,745)
23,653
(16,490)
4,658
1,358
6,016
6,797
8
358
7,163
25,704
36,095
61,799
15,063
49
8,279
23,391
(23,977)
(34,673)
(58,650)
1,727
1,422
3,149
(6,868)
8,195
(49)
(8,266)
(15,183)
—
13
8,208
Derivative receivables with appropriate legal opinion
630,361
(568,713)
61,648
(d)
528,471
(488,206)
40,265
(d)
Derivative receivables where an appropriate legal
opinion has not been either sought or obtained
Total derivative receivables recognized on the
Consolidated balance sheets
Collateral not nettable on the Consolidated balance
sheets(b)(c)
Net amounts
9,232
9,232
16,816
$ 639,593
$ 70,880
$ 545,287
(23,014)
$ 47,866
JPMorgan Chase & Co./2022 Form 10-K
16,816
$ 57,081
(10,102)
$ 46,979
199
Notes to consolidated financial statements
December 31, (in millions)
U.S. GAAP nettable derivative payables
Interest rate contracts:
OTC
OTC–cleared
Exchange-traded(a)
Total interest rate contracts
Credit contracts:
OTC
OTC–cleared
Total credit contracts
Foreign exchange contracts:
OTC
OTC–cleared
Exchange-traded(a)
Total foreign exchange contracts
Equity contracts:
OTC
Exchange-traded(a)
Total equity contracts
Commodity contracts:
OTC
OTC–cleared
Exchange-traded(a)
Total commodity contracts
2022
Gross
derivative
payables
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
payables
Gross
derivative
payables
2021
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
payables
$ 190,108 $ (176,890)
$ 13,218
$ 223,576
$ (216,757)
$ 6,819
97,417
(97,126)
327
(305)
291
22
15,695
292
(15,492)
(288)
203
4
287,852
(274,321)
13,531
239,563
(232,537)
7,026
8,054
1,674
9,728
(7,572)
(1,645)
(9,217)
482
29
511
9,021
1,679
10,700
(8,421)
(1,611)
(10,032)
600
68
668
246,457
(231,248)
15,209
171,610
(160,946)
10,664
1,488
(1,417)
20
—
71
20
706
7
(703)
—
3
7
247,965
(232,665)
15,300
172,323
(161,649)
10,674
29,833
28,291
58,124
(26,554)
(27,103)
(53,657)
11,954
(7,642)
112
9,021
(112)
(8,758)
21,087
(16,512)
3,279
1,188
4,467
4,312
—
263
4,575
31,379
40,621
72,000
14,874
73
8,954
23,901
(27,830)
(34,664)
(62,494)
3,549
5,957
9,506
(9,667)
5,207
(73)
(8,476)
(18,216)
—
478
5,685
Derivative payables with appropriate legal opinion
624,756
(586,372)
38,384
(d)
518,487
(484,928)
33,559
(d)
Derivative payables where an appropriate legal
opinion has not been either sought or obtained
Total derivative payables recognized on the
Consolidated balance sheets
Collateral not nettable on the Consolidated balance
sheets(b)(c)
Net amounts
12,757
12,757
16,557
$ 637,513
$ 51,141
$ 535,044
(3,318)
$ 47,823
16,557
$ 50,116
(5,872)
$ 44,244
(a) Exchange-traded derivative balances that relate to futures contracts are settled daily.
(b) Includes liquid securities and other cash collateral held at third-party custodians related to derivative instruments where an appropriate legal opinion has
been obtained. For some counterparties, the collateral amounts of financial instruments may exceed the derivative receivables and derivative payables
balances. Where this is the case, the total amount reported is limited to the net derivative receivables and net derivative payables balances with that
counterparty.
(c) Derivative collateral relates only to OTC and OTC-cleared derivative instruments.
(d) Net derivatives receivable included cash collateral netted of $51.5 billion and $67.6 billion at December 31, 2022 and 2021, respectively. Net derivatives
payable included cash collateral netted of $69.2 billion and $64.3 billion at December 31, 2022 and 2021, respectively. Derivative cash collateral relates
to OTC and OTC-cleared derivative instruments.
200
JPMorgan Chase & Co./2022 Form 10-K
Liquidity risk and credit-related contingent features
In addition to the specific market risks introduced by each derivative contract type, derivatives expose JPMorgan Chase to
credit risk — the risk that derivative counterparties may fail to meet their payment obligations under the derivative contracts
and the collateral, if any, held by the Firm proves to be of insufficient value to cover the payment obligation. It is the policy of
JPMorgan Chase to actively pursue, where possible, the use of legally enforceable master netting arrangements and collateral
agreements to mitigate derivative counterparty credit risk inherent in derivative receivables.
While derivative receivables expose the Firm to credit risk, derivative payables expose the Firm to liquidity risk, as the
derivative contracts typically require the Firm to post cash or securities collateral with counterparties as the fair value of the
contracts moves in the counterparties’ favor or upon specified downgrades in the Firm’s and its subsidiaries’ respective credit
ratings. Certain derivative contracts also provide for termination of the contract, generally upon a downgrade of either the
Firm or the counterparty, at the fair value of the derivative contracts. The following table shows the aggregate fair value of net
derivative payables related to OTC and OTC-cleared derivatives that contain contingent collateral or termination features that
may be triggered upon a ratings downgrade, and the associated collateral the Firm has posted in the normal course of
business, at December 31, 2022 and 2021.
OTC and OTC-cleared derivative payables containing downgrade triggers
(in millions)
Aggregate fair value of net derivative payables
Collateral posted
December 31, 2022
December 31, 2021
$
16,023
15,505
$
20,114
19,402
The following table shows the impact of a single-notch and two-notch downgrade of the long-term issuer ratings of JPMorgan
Chase & Co. and its subsidiaries, predominantly JPMorgan Chase Bank, N.A., at December 31, 2022 and 2021, related to OTC
and OTC-cleared derivative contracts with contingent collateral or termination features that may be triggered upon a ratings
downgrade. Derivatives contracts generally require additional collateral to be posted or terminations to be triggered when the
predefined rating threshold is breached. A downgrade by a single rating agency that does not result in a rating lower than a
preexisting corresponding rating provided by another major rating agency will generally not result in additional collateral
(except in certain instances in which additional initial margin may be required upon a ratings downgrade), nor in termination
payment requirements. The liquidity impact in the table is calculated based upon a downgrade below the lowest current rating
of the rating agencies referred to in the derivative contract.
Liquidity impact of downgrade triggers on OTC and OTC-cleared derivatives
(in millions)
Amount of additional collateral to be posted upon downgrade(a)
Amount required to settle contracts with termination triggers upon downgrade(b)
December 31, 2022
December 31, 2021
Single-notch
downgrade
Two-notch
downgrade
Single-notch
downgrade
Two-notch
downgrade
$
128 $
1,293 $
88
925
219 $
98
1,577
787
(a) Includes the additional collateral to be posted for initial margin.
(b) Amounts represent fair values of derivative payables, and do not reflect collateral posted.
Derivatives executed in contemplation of a sale of the underlying financial asset
In certain instances the Firm enters into transactions in which it transfers financial assets but maintains the economic exposure
to the transferred assets by entering into a derivative with the same counterparty in contemplation of the initial transfer. The
Firm generally accounts for such transfers as collateralized financing transactions as described in Note 11, but in limited
circumstances they may qualify to be accounted for as a sale and a derivative under U.S. GAAP. The amount of such transfers
accounted for as a sale where the associated derivative was outstanding was not material at both December 31, 2022 and
2021.
JPMorgan Chase & Co./2022 Form 10-K
201
Notes to consolidated financial statements
Impact of derivatives on the Consolidated statements of income
The following tables provide information related to gains and losses recorded on derivatives based on their hedge accounting
designation or purpose.
Fair value hedge gains and losses
The following tables present derivative instruments, by contract type, used in fair value hedge accounting relationships, as well
as pre-tax gains/(losses) recorded on such derivatives and the related hedged items for the years ended December 31, 2022,
2021 and 2020, respectively. The Firm includes gains/(losses) on the hedging derivative in the same line item in the
Consolidated statements of income as the related hedged item.
Year ended December 31, 2022
(in millions)
Derivatives
Hedged items
Income
statement
impact
Amortization
approach
Changes in fair
value
Gains/(losses) recorded in income
Income statement impact of
excluded components(e)
OCI impact
Derivatives -
Gains/(losses)
recorded in OCI(f)
Contract type
Interest rate(a)(b)
Foreign exchange(c)
Commodity(d)
Total
$
(14,352) $
14,047 $
(305) $
(1,317)
1,423
106
(70)
106
36
$
(15,563) $
15,400 $
(163) $
— $
(528)
—
(528) $
(262) $
106
48
(108) $
—
130
—
130
Year ended December 31, 2021
(in millions)
Derivatives
Hedged items
Income
statement
impact
Amortization
approach
Changes in fair
value
Gains/(losses) recorded in income
Income statement impact of
excluded components(e)
OCI impact
Derivatives -
Gains/(losses)
recorded in OCI(f)
Contract type
Interest rate(a)(b)
Foreign exchange(c)
Commodity(d)
Total
$
(4,323) $
3,765 $
(558) $
— $
(439) $
(1,317)
(9,609)
1,349
9,710
32
101
(286)
—
32
72
$
(15,249) $
14,824 $
(425) $
(286) $
(335) $
—
(26)
—
(26)
Year ended December 31, 2020
(in millions)
Derivatives
Hedged items
Income
statement
impact
Amortization
approach
Changes in fair
value
Gains/(losses) recorded in income
Income statement impact of
excluded components(e)
OCI impact
Derivatives -
Gains/(losses)
recorded in OCI(f)
Contract type
Interest rate(a)(b)
Foreign exchange(c)
Commodity(d)
Total
$
2,962 $
(3,684) $
(722) $
— $
(733) $
793
(619)
(2,507)
2,650
174
143
(457)
—
174
137
$
1,248 $
(1,653) $
(405) $
(457) $
(422) $
—
25
—
25
(a) Primarily consists of hedges of the benchmark (e.g., Secured Overnight Financing Rate (“SOFR”), London Interbank Offered Rate (“LIBOR”)) interest rate
risk of fixed-rate long-term debt and AFS securities. Gains and losses were recorded in net interest income.
(b) Effective January 1, 2022, the Firm updated its presentation in the tables above to include the amortization of income/expense associated with the
inception hedge accounting adjustment applied to the hedged item; prior-period amounts have been revised to conform with the current presentation.
Excludes the accrual of interest on interest rate swaps and the related hedged items.
(c) Primarily consists of hedges of the foreign currency risk of long-term debt and AFS securities for changes in spot foreign currency rates. Gains and losses
related to the derivatives and the hedged items due to changes in foreign currency rates and the income statement impact of excluded components were
recorded primarily in principal transactions revenue and net interest income.
(d) Consists of overall fair value hedges of physical commodities inventories that are generally carried at the lower of cost or net realizable value (net
realizable value approximates fair value). Gains and losses were recorded in principal transactions revenue.
(e) The assessment of hedge effectiveness excludes certain components of the changes in fair values of the derivatives and hedged items such as forward
points on foreign exchange forward contracts, time values and cross-currency basis spreads. Excluded components may impact earnings either through
amortization of the initial amount over the life of the derivative or through fair value changes recognized in the current period.
(f) Represents the change in value of amounts excluded from the assessment of effectiveness under the amortization approach, predominantly cross-
currency basis spreads. The amount excluded at inception of the hedge is recognized in earnings over the life of the derivative.
202
JPMorgan Chase & Co./2022 Form 10-K
As of December 31, 2022 and 2021, the following amounts were recorded on the Consolidated balance sheets related to
certain cumulative fair value hedge basis adjustments that are expected to reverse through the income statement in future
periods as an adjustment to yield.
December 31, 2022
(in millions)
Assets
Investment securities - AFS
Liabilities
Long-term debt
Carrying amount
of the hedged
items(a)(b)
Cumulative amount of fair value hedging adjustments
included in the carrying amount of hedged items:
Active hedging
relationships(d)
Discontinued hedging
relationships(d)(e)
Total
$
$
84,073
(c) $
(4,149) $
(1,542) $
(5,691)
175,257
$
(11,879) $
(3,313) $
(15,192)
Beneficial interests issued by consolidated VIEs
—
—
—
—
December 31, 2021
(in millions)
Assets
Investment securities - AFS
Liabilities
Long-term debt
Beneficial interests issued by consolidated VIEs
Carrying amount
of the hedged
items(a)(b)
Cumulative amount of fair value hedging adjustments
included in the carrying amount of hedged items:
Active hedging
relationships(d)
Discontinued hedging
relationships(d)(e)
Total
$
$
65,746
(c) $
417 $
661 $
1,078
195,642
$
(1,999) $
749
—
8,834 $
(1)
6,835
(1)
(a) Excludes physical commodities with a carrying value of $26.0 billion and $25.7 billion at December 31, 2022 and 2021, respectively, to which the Firm
applies fair value hedge accounting. As a result of the application of hedge accounting, these inventories are carried at fair value, thus recognizing
unrealized gains and losses in current periods. Since the Firm exits these positions at fair value, there is no incremental impact to net income in future
periods.
(b) Excludes hedged items where only foreign currency risk is the designated hedged risk, as basis adjustments related to foreign currency hedges will not
reverse through the income statement in future periods. At December 31, 2022 and 2021, the carrying amount excluded for AFS securities is
$20.3 billion and $14.0 billion, respectively, and for long-term debt is $221 million and $9.7 billion, respectively. Prior-period amount has been revised
to conform with the current presentation.
(c) Carrying amount represents the amortized cost, net of allowance if applicable. Refer to Note 10 for additional information.
(d) Positive (negative) amounts related to assets represent cumulative fair value hedge basis adjustments that will reduce (increase) net interest income in
future periods. Positive (negative) amounts related to liabilities represent cumulative fair value hedge basis adjustments that will increase (reduce) net
interest income in future periods.
(e) Represents basis adjustments existing on the balance sheet date associated with hedged items that have been de-designated from qualifying fair value
hedging relationships.
JPMorgan Chase & Co./2022 Form 10-K
203
Notes to consolidated financial statements
Cash flow hedge gains and losses
The following tables present derivative instruments, by contract type, used in cash flow hedge accounting relationships, and
the pre-tax gains/(losses) recorded on such derivatives, for the years ended December 31, 2022, 2021 and 2020,
respectively. The Firm includes the gains/(losses) on the hedging derivative in the same line item in the Consolidated
statements of income as the change in cash flows on the related hedged item.
Year ended December 31, 2022
(in millions)
Contract type
Interest rate(a)
Foreign exchange(b)
Total
Year ended December 31, 2021
(in millions)
Contract type
Interest rate(a)
Foreign exchange(b)
Total
Year ended December 31, 2020
(in millions)
Contract type
Interest rate(a)
Foreign exchange(b)
Total
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Amounts reclassified
from AOCI to income
Amounts recorded
in OCI
Total change
in OCI for period
$
$
(153)
(267)
(420)
$
$
(7,131)
(342)
(7,473)
$
$
(6,978)
(75)
(7,053)
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Amounts reclassified
from AOCI to income
Amounts recorded
in OCI
Total change
in OCI for period
$
$
1,032
190
1,222
$
$
(2,370)
67
(2,303)
$
$
(3,402)
(123)
(3,525)
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Amounts reclassified
from AOCI to income
Amounts recorded
in OCI
Total change
in OCI for period
$
$
570
—
570
$
$
3,582
41
3,623
$
$
3,012
41
3,053
(a) Primarily consists of hedges of SOFR-indexed and LIBOR-indexed floating-rate assets. Gains and losses were recorded in net interest income.
(b) Primarily consists of hedges of the foreign currency risk of non-U.S. dollar-denominated revenue and expense. The income statement classification of
gains and losses follows the hedged item – primarily noninterest revenue and compensation expense.
The Firm did not experience any forecasted transactions that failed to occur for the years ended 2022, 2021 and 2020.
Over the next 12 months, the Firm expects that approximately $(1.5) billion (after-tax) of net losses recorded in AOCI at
December 31, 2022, related to cash flow hedges will be recognized in income. For cash flow hedges that have been
terminated, the maximum length of time over which the derivative results recorded in AOCI will be recognized in earnings is
approximately seven years, corresponding to the timing of the originally hedged forecasted cash flows. For open cash flow
hedges, the maximum length of time over which forecasted transactions are hedged is approximately seven years. The Firm’s
longer-dated forecasted transactions relate to core lending and borrowing activities.
Net investment hedge gains and losses
The following table presents hedging instruments, by contract type, that were used in net investment hedge accounting
relationships, and the pre-tax gains/(losses) recorded on such instruments for the years ended December 31, 2022, 2021 and
2020.
Year ended December 31,
(in millions)
Foreign exchange derivatives
2022
2021
2020
Amounts
recorded in
income(a)(b)
$(123)
Amounts
recorded in
OCI
$3,591
Amounts
recorded in
income(a)(b)
$(228)
Amounts
recorded in
OCI
$2,452
Amounts
recorded in
income(a)(b)
$(122)
Amounts
recorded in
OCI
$(1,408)
(a) Certain components of hedging derivatives are permitted to be excluded from the assessment of hedge effectiveness, such as forward points on foreign
exchange forward contracts. The Firm elects to record changes in fair value of these amounts directly in other income.
(b) Excludes amounts reclassified from AOCI to income on the sale or liquidation of hedged entities. The Firm reclassified net pre-tax gains of $38 million and
$3 million to other income/expense related to the liquidation of certain legal entities during the years ended December 31, 2022 and 2020, respectively.
The amount reclassified for the year ended December 31, 2021 was not material. Refer to Note 24 for further information.
204
JPMorgan Chase & Co./2022 Form 10-K
Credit derivatives
Credit derivatives are financial instruments whose value is
derived from the credit risk associated with the debt of a
third-party issuer (the reference entity) and which allow
one party (the protection purchaser) to transfer that risk to
another party (the protection seller). Credit derivatives
expose the protection purchaser to the creditworthiness of
the protection seller, as the protection seller is required to
make payments under the contract when the reference
entity experiences a credit event, such as a bankruptcy, a
failure to pay its obligation or a restructuring. The seller of
credit protection receives a premium for providing
protection but has the risk that the underlying instrument
referenced in the contract will be subject to a credit event.
The Firm is both a purchaser and seller of protection in the
credit derivatives market and uses these derivatives for two
primary purposes. First, in its capacity as a market-maker,
the Firm actively manages a portfolio of credit derivatives
by purchasing and selling credit protection, predominantly
on corporate debt obligations, to meet the needs of
customers. Second, as an end-user, the Firm uses credit
derivatives to manage credit risk associated with lending
exposures (loans and unfunded commitments) in its
wholesale and consumer businesses and derivatives
counterparty exposures in its wholesale businesses, and to
manage the credit risk arising from certain financial
instruments in the Firm’s market-making businesses.
Following is a summary of various types of credit
derivatives.
Gains and losses on derivatives used for specified risk
management purposes
The following table presents pre-tax gains/(losses)
recorded on a limited number of derivatives, not designated
in hedge accounting relationships, that are used to manage
risks associated with certain specified assets and liabilities,
including certain risks arising from mortgage commitments,
warehouse loans, MSRs, wholesale lending exposures, and
foreign currency denominated assets and liabilities.
Year ended December 31,
(in millions)
Contract type
Interest rate(a)
Credit(b)
Foreign exchange(c)
Total
Derivatives gains/(losses)
recorded in income
2022
2021
2020
$
(827) $ 1,078 $ 2,994
51
(48)
(94)
94
(176)
43
$
(824) $ 1,078 $ 2,861
(a) Primarily represents interest rate derivatives used to hedge the
interest rate risk inherent in mortgage commitments, warehouse loans
and MSRs, as well as written commitments to originate warehouse
loans. Gains and losses were recorded predominantly in mortgage fees
and related income.
(b) Relates to credit derivatives used to mitigate credit risk associated
with lending exposures in the Firm’s wholesale businesses. These
derivatives do not include credit derivatives used to mitigate
counterparty credit risk arising from derivative receivables, which is
included in gains and losses on derivatives related to market-making
activities and other derivatives. Gains and losses were recorded in
principal transactions revenue.
(c) Primarily relates to derivatives used to mitigate foreign exchange risk
of specified foreign currency-denominated assets and liabilities. Gains
and losses were recorded in principal transactions revenue.
Gains and losses on derivatives related to market-making
activities and other derivatives
The Firm makes markets in derivatives in order to meet the
needs of customers and uses derivatives to manage certain
risks associated with net open risk positions from its
market-making activities, including the counterparty credit
risk arising from derivative receivables. All derivatives not
included in the hedge accounting or specified risk
management categories above are included in this
category. Gains and losses on these derivatives are
primarily recorded in principal transactions revenue. Refer
to Note 6 for information on principal transactions revenue.
JPMorgan Chase & Co./2022 Form 10-K
205
Notes to consolidated financial statements
Credit default swaps
Credit derivatives may reference the credit of either a single
reference entity (“single-name”), broad-based index or
portfolio. The Firm purchases and sells protection on both
single- name and index-reference obligations. Single-name
CDS and index CDS contracts are either OTC or OTC-cleared
derivative contracts. Single-name CDS are used to manage
the default risk of a single reference entity, while index CDS
contracts are used to manage the credit risk associated with
the broader credit markets or credit market segments. Like
the S&P 500 and other market indices, a CDS index consists
of a portfolio of CDS across many reference entities. New
series of CDS indices are periodically established with a new
underlying portfolio of reference entities to reflect changes
in the credit markets. If one of the reference entities in the
index experiences a credit event, then the reference entity
that defaulted is removed from the index. CDS can also be
referenced against specific portfolios of reference names or
against customized exposure levels based on specific client
demands: for example, to provide protection against the
first $1 million of realized credit losses in a $10 million
portfolio of exposure. Such structures are commonly known
as tranche CDS.
For both single-name CDS contracts and index CDS
contracts, upon the occurrence of a credit event, under the
terms of a CDS contract neither party to the CDS contract
has recourse to the reference entity. The protection
purchaser has recourse to the protection seller for the
difference between the face value of the CDS contract and
the fair value of the reference obligation at settlement of
the credit derivative contract, also known as the recovery
value. The protection purchaser does not need to hold the
debt instrument of the underlying reference entity in order
to receive amounts due under the CDS contract when a
credit event occurs.
Credit-related notes
A credit-related note is a funded derivative with a credit risk
component where the issuer of the credit-related note
purchases from the note investor credit protection on a
reference entity or an index. Under the contract, the
investor pays the issuer the par value of the note at the
inception of the transaction, and in return, the issuer pays
periodic payments to the investor, based on the credit risk
of the referenced entity. The issuer also repays the investor
the par value of the note at maturity unless the reference
entity (or one of the entities that makes up a reference
index) experiences a specified credit event. If a credit event
occurs, the issuer is not obligated to repay the par value of
the note, but rather, the issuer pays the investor the
difference between the par value of the note and the fair
value of the defaulted reference obligation at the time of
settlement. Neither party to the credit-related note has
recourse to the defaulting reference entity.
The following tables present a summary of the notional
amounts of credit derivatives and credit-related notes the
Firm sold and purchased as of December 31, 2022 and
2021. Upon a credit event, the Firm as a seller of protection
would typically pay out only a percentage of the full
notional amount of net protection sold, as the amount
actually required to be paid on the contracts takes into
account the recovery value of the reference obligation at
the time of settlement. The Firm manages the credit risk on
contracts to sell protection by purchasing protection with
identical or similar underlying reference entities. Other
purchased protection referenced in the following tables
includes credit derivatives bought on related, but not
identical, reference positions (including indices, portfolio
coverage and other reference points) as well as protection
purchased by CIB through credit-related notes primarily in
its market-making businesses. In addition, the Firm obtains
credit protection against certain loans in the retained
consumer portfolio through the issuance of credit-related
notes. Since these credit-related notes are not part of the
market-making businesses they are not included in the
table below.
206
JPMorgan Chase & Co./2022 Form 10-K
The Firm does not use notional amounts of credit derivatives as the primary measure of risk management for such derivatives,
because the notional amount does not take into account the probability of the occurrence of a credit event, the recovery value
of the reference obligation, or related cash instruments and economic hedges, each of which reduces, in the Firm’s view, the
risks associated with such derivatives.
Total credit derivatives and credit-related notes
December 31, 2022
(in millions)
Credit derivatives
Credit default swaps
Other credit derivatives(a)
Total credit derivatives
Credit-related notes(b)
Total
December 31, 2021
(in millions)
Credit derivatives
Credit default swaps
Other credit derivatives(a)
Total credit derivatives
Credit-related notes(b)
Total
Maximum payout/Notional amount
Protection sold
Protection purchased
with identical
underlyings(c)
Net protection
(sold)/
purchased(d)
Other protection
purchased(e)
$
(495,557)
$
509,846
$
(47,165)
(542,722)
—
65,029
574,875
—
$
14,289
17,864
32,153
—
$
(542,722)
$
574,875
$
32,153
$
2,917
11,746
14,663
7,863
22,526
Maximum payout/Notional amount
Protection sold
Protection purchased
with identical
underlyings(c)
Net protection
(sold)/
purchased(d)
Other protection
purchased(e)
$
(443,481)
$
458,180
$
(56,130)
(499,611)
—
79,586
537,766
—
$
14,699
23,456
38,155
—
$
(499,611)
$
537,766
$
38,155
$
2,269
13,435
15,704
9,437
25,141
(a) Other credit derivatives predominantly consist of credit swap options and total return swaps.
(b) Represents Other protection purchased by CIB, primarily in its market-making businesses.
(c) Represents the total notional amount of protection purchased where the underlying reference instrument is identical to the reference instrument on
protection sold; the notional amount of protection purchased for each individual identical underlying reference instrument may be greater or lower than
the notional amount of protection sold.
(d) Does not take into account the fair value of the reference obligation at the time of settlement, which would generally reduce the amount the seller of
protection pays to the buyer of protection in determining settlement value.
(e) Represents protection purchased by the Firm on referenced instruments (single-name, portfolio or index) where the Firm has not sold any protection on
the identical reference instrument.
The following tables summarize the notional amounts by the ratings, maturity profile, and total fair value, of credit derivatives
as of December 31, 2022 and 2021, where JPMorgan Chase is the seller of protection. The maturity profile is based on the
remaining contractual maturity of the credit derivative contracts. The ratings profile is based on the rating of the reference
entity on which the credit derivative contract is based. The ratings and maturity profile of credit derivatives where JPMorgan
Chase is the purchaser of protection are comparable to the profile reflected below.
Protection sold – credit derivatives ratings(a)/maturity profile
December 31, 2022
(in millions)
Total notional
amount
Fair value of
receivables(b)
Fair value of
payables(b)
Net fair
value
1–5 years
>5 years
<1 year
Risk rating of reference entity
Investment-grade
$ (90,484)
$
(294,791)
$ (30,822)
$
(416,097)
$
Noninvestment-grade
(33,244)
(87,011)
(6,370)
(126,625)
Total
$ (123,728)
$
(381,802)
$ (37,192)
$
(542,722)
$
2,324
1,267
3,591
$
(1,495)
$
829
(3,209)
(1,942)
$
(4,704)
$ (1,113)
December 31, 2021
(in millions)
Risk rating of reference entity
<1 year
1–5 years
>5 years
Total notional
amount
Fair value of
receivables(b)
Fair value of
payables(b)
Net fair
value
Investment-grade
$ (91,155)
$
(255,106)
$ (29,035)
$
(375,296)
$
Noninvestment-grade
(32,175)
(84,851)
(7,289)
(124,315)
Total
$ (123,330)
$
(339,957)
$ (36,324)
$
(499,611)
$
3,645
2,630
6,275
$
(623)
$ 3,022
(2,003)
627
$
(2,626)
$ 3,649
(a) The ratings scale is primarily based on external credit ratings defined by S&P and Moody’s.
(b) Amounts are shown on a gross basis, before the benefit of legally enforceable master netting agreements including cash collateral netting.
JPMorgan Chase & Co./2022 Form 10-K
207
Notes to consolidated financial statements
Note 6 – Noninterest revenue and noninterest expense
Noninterest revenue
The Firm records noninterest revenue from certain
contracts with customers in investment banking fees,
deposit-related fees, asset management, administration,
and commissions, and components of card income. The
related contracts are often terminable on demand and the
Firm has no remaining obligation to deliver future services.
For arrangements with a fixed term, the Firm may commit
to deliver services in the future. Revenue associated with
these remaining performance obligations typically depends
on the occurrence of future events or underlying asset
values, and is not recognized until the outcome of those
events or values are known.
Investment banking fees
This revenue category includes debt and equity
underwriting and advisory fees. As an underwriter, the Firm
helps clients raise capital via public offering and private
placement of various types of debt and equity instruments.
Underwriting fees are primarily based on the issuance price
and quantity of the underlying instruments, and are
recognized as revenue typically upon execution of the
client’s transaction. The Firm also manages and syndicates
loan arrangements. Credit arrangement and syndication
fees, included within debt underwriting fees, are recorded
as revenue after satisfying certain retention, timing and
yield criteria.
The Firm also provides advisory services, by assisting its
clients with mergers and acquisitions, divestitures,
restructuring and other complex transactions. Advisory fees
are recognized as revenue typically upon execution of the
client’s transaction.
The following table presents the components of investment
banking fees.
Year ended December 31,
(in millions)
2022
2021
2020
Underwriting
Equity
Debt
Total underwriting
Advisory
$
975 $ 3,969 $ 2,759
2,732
3,707
2,979
4,853
8,822
4,394
4,362
7,121
2,365
Total investment banking fees
$ 6,686 $ 13,216 $ 9,486
Investment banking fees are earned primarily by CIB. Refer
to Note 32 for segment results.
Principal transactions
Principal transactions revenue is driven by many factors,
including:
• the bid-offer spread, which is the difference between the
price at which a market participant is willing and able to
sell an instrument to the Firm and the price at which
another market participant is willing and able to buy it
from the Firm, and vice versa; and
• realized and unrealized gains and losses on financial
instruments and commodities transactions, including
those accounted for under the fair value option, primarily
used in client-driven market-making activities, and on
private equity investments.
– Realized gains and losses result from the sale of
instruments, closing out or termination of transactions,
or interim cash payments.
– Unrealized gains and losses result from changes in
valuation.
In connection with its client-driven market-making
activities, the Firm transacts in debt and equity
instruments, derivatives and commodities, including
physical commodities inventories and financial instruments
that reference commodities.
Principal transactions revenue also includes realized and
unrealized gains and losses related to:
• derivatives designated in qualifying hedge accounting
relationships, primarily fair value hedges of commodity
and foreign exchange risk;
• derivatives used for specific risk management purposes,
primarily to mitigate credit, foreign exchange and
interest rate risks.
Refer to Note 5 for further information on the income
statement classification of gains and losses from derivatives
activities.
In the financial commodity markets, the Firm transacts in
OTC derivatives (e.g., swaps, forwards, options) and ETD
that reference a wide range of underlying commodities. In
the physical commodity markets, the Firm primarily
purchases and sells precious and base metals and may hold
other commodities inventories under financing and other
arrangements with clients.
The following table presents all realized and unrealized
gains and losses recorded in principal transactions revenue.
This table excludes interest income and interest expense on
trading assets and liabilities, which are an integral part of
the overall performance of the Firm’s client-driven market-
making activities in CIB and fund deployment activities in
Treasury and CIO. Refer to Note 7 for further information
on interest income and interest expense.
Trading revenue is presented primarily by instrument type.
The Firm’s client-driven market-making businesses
generally utilize a variety of instrument types in connection
with their market-making and related risk-management
activities; accordingly, the trading revenue presented in the
table below is not representative of the total revenue of any
individual LOB.
208
JPMorgan Chase & Co./2022 Form 10-K
Year ended December 31,
(in millions)
2022
2021
2020
Trading revenue by
instrument type
Interest rate(a)
Credit(b)
Foreign exchange
Equity
Commodity
$ 3,010
$ 1,646 $ 2,575
1,412
(c)
5,119
8,068
2,348
2,691
2,787
7,773
1,428
2,753
4,253
6,171
2,088
Total trading revenue
19,957
16,325
17,840
Private equity gains/(losses)
(45)
(21)
181
Principal transactions
$ 19,912
$ 16,304 $ 18,021
(a) Includes the impact of changes in funding valuation adjustments on
derivatives.
(b) Includes the impact of changes in credit valuation adjustments on
derivatives, net of the associated hedging activities.
(c) Includes net markdowns on held-for-sale positions, primarily unfunded
commitments, in the bridge financing portfolio.
Principal transactions revenue is earned primarily by CIB.
Refer to Note 32 for segment results.
Lending- and deposit-related fees
Lending-related fees include fees earned from loan
commitments, standby letters of credit, financial
guarantees, and other loan-servicing activities. Deposit-
related fees include fees earned from providing overdraft
and other deposit account services, and from performing
cash management activities. Lending- and deposit-related
fees in this revenue category are recognized over the period
in which the related service is provided.
The following table presents the components of lending-
and deposit-related fees.
Year ended December 31, (in millions)
2022
2021
2020
$ 1,468 $ 1,472 $ 1,271
Lending-related fees
Deposit-related fees
providers are generally recorded in professional and
outside services expense.
The following table presents the components of Firmwide
asset management, administration and commissions.
Year ended December 31,
(in millions)
Asset management fees
Investment management fees(a)
All other asset management fees(b)
Total asset management fees
2022
2021
2020
$ 13,765 $ 14,027 $ 11,694
331
378
338
14,096
14,405
12,032
Total administration fees(c)
2,348
2,554
2,249
Commissions and other fees
Brokerage commissions(d)
All other commissions and fees(e)
Total commissions and fees
2,831
1,402
4,233
3,046
1,024
4,070
2,959
937
3,896
Total asset management,
administration and commissions $ 20,677 $ 21,029 $ 18,177
(a) Represents fees earned from managing assets on behalf of the Firm’s
clients, including investors in Firm-sponsored funds and owners of
separately managed investment accounts.
(b) Represents fees for services that are ancillary to investment
management services, such as commissions earned on the sales or
distribution of mutual funds to clients. These fees are recorded as
revenue at the time the service is rendered or, in the case of certain
distribution fees based on the underlying fund’s asset value and/or
investor redemption, recorded over time as the investor remains in the
fund or upon investor redemption.
(c) Predominantly includes fees for custody, securities lending, funds
services and securities clearance. These fees are recorded as revenue
over the period in which the related service is provided.
(d) Represents commissions earned when the Firm acts as a broker, by
facilitating its clients’ purchases and sales of securities and other
financial instruments. Brokerage commissions are collected and
recognized as revenue upon occurrence of the client transaction. The
Firm reports certain costs paid to third-party clearing houses and
exchanges net against commission revenue.
5,630
5,560
5,240
(e) Includes travel-related and annuity sales commissions, depositary
Total lending- and deposit-related fees $ 7,098 $ 7,032 $ 6,511
Lending- and deposit-related fees are earned by CCB, CIB,
CB, and AWM. Refer to Note 32 for segment results.
Asset management, administration and commissions
This revenue category includes fees from investment
management and related services, custody, brokerage
services and other products. The Firm manages assets on
behalf of its clients, including investors in Firm-sponsored
funds and owners of separately managed investment
accounts. Management fees are typically based on the value
of assets under management and are collected and
recognized at the end of each period over which the
management services are provided and the value of the
managed assets is known. The Firm also receives
performance-based management fees, which are earned
based on exceeding certain benchmarks or other
performance targets and are accrued and recognized when
the probability of reversal is remote, typically at the end of
the related billing period. The Firm has contractual
arrangements with third parties to provide distribution and
other services in connection with its asset management
activities. Amounts paid to these third-party service
receipt-related service fees, as well as other service fees, which are
recognized as revenue when the services are rendered.
Asset management, administration and commissions are
earned primarily by AWM, CIB and CCB. Refer to Note 32 for
segment results.
Mortgage fees and related income
This revenue category reflects CCB’s Home Lending
production and net mortgage servicing revenue.
Production revenue includes fees and income recognized as
earned on mortgage loans originated with the intent to sell,
and the impact of risk management activities associated
with the mortgage pipeline and warehouse loans.
Production revenue also includes gains and losses on sales
and lower of cost or fair value adjustments on mortgage
loans held-for-sale (excluding certain repurchased loans
insured by U.S. government agencies), and changes in the
fair value of financial instruments measured under the fair
value option. Net mortgage servicing revenue includes
operating revenue earned from servicing third-party
mortgage loans, which is recognized over the period in
which the service is provided; changes in the fair value of
MSRs; the impact of risk management activities associated
JPMorgan Chase & Co./2022 Form 10-K
209
income is earned.
The following table presents the components of card income:
Year ended December 31,
(in millions)
Interchange and merchant
processing income
Reward costs and partner
payments
Other card income(a)
Total card income
2022
2021
2020
$ 28,085 $ 23,592 $ 18,563
(22,162)
(17,868)
(13,637)
(1,503)
(622)
(491)
$
4,420 $
5,102 $
4,435
(a) Predominantly represents the amortization of account origination
costs and annual fees, which are deferred and recognized on a
straight-line basis over a 12-month period.
Card income is earned primarily by CCB, CIB and CB. Refer
to Note 32 for segment results.
Other income
This revenue category includes operating lease income, as
well as losses associated with the Firm’s tax-oriented
investments, predominantly alternative energy equity-
method investments in CIB.
The following table presents certain components of other
income:
Year ended December 31,
(in millions)
2022
2021
2020
Operating lease income
$
3,654 $
4,914 $
5,539
Losses on tax-oriented
investments(a)
(1,491)
(1,570)
(1,280)
Gain on sale of Visa B shares
914
—
—
(a) The losses associated with these tax-oriented investments are more
than offset by lower income tax expense from the associated tax
credits.
Refer to Note 2 and 18 for additional information on Visa B
shares and operating leases, respectively.
Noninterest expense
Other expense
Other expense on the Firm’s Consolidated statements of
income included:
Year ended December 31,
(in millions)
2022
2021
2020
Legal expense
$
266 $
426 $
1,115
Notes to consolidated financial statements
with MSRs; and gains and losses on securitization of excess
mortgage servicing. Net mortgage servicing revenue also
includes gains and losses on sales and lower of cost or fair
value adjustments of certain repurchased loans insured by
U.S. government agencies.
Refer to Note 15 for further information on risk
management activities and MSRs.
Net interest income from mortgage loans is recorded in
interest income.
Card income
This revenue category includes interchange and other
income from credit and debit card transactions; and fees
earned from processing card transactions for merchants,
both of which are recognized when purchases are made by
a cardholder and presented net of certain transaction-
related costs. Card income also includes account origination
costs and annual fees, which are deferred and recognized
on a straight-line basis over a 12-month period.
Certain credit card products offer the cardholder the ability
to earn points based on account activity, which the
cardholder can choose to redeem for cash and non-cash
rewards. The cost to the Firm related to these proprietary
rewards programs varies based on multiple factors
including the terms and conditions of the rewards
programs, cardholder activity, cardholder reward
redemption rates and cardholder reward selections. The
Firm maintains a liability for its obligations under its
rewards programs and reports the current-period cost as a
reduction of card income.
Credit card revenue sharing agreements
The Firm has contractual agreements with numerous co-
brand partners that grant the Firm exclusive rights to issue
co-branded credit card products and market them to the
customers of such partners. These partners endorse the co-
brand credit card programs and provide their customer or
member lists to the Firm. The partners may also conduct
marketing activities and provide rewards redeemable under
their own loyalty programs that the Firm will grant to co-
brand credit cardholders based on account activity. The
terms of these agreements generally range from five to ten
years.
The Firm typically makes payments to the co-brand credit
card partners based on the cost of partners’ marketing
activities and loyalty program rewards provided to credit
cardholders, new account originations and sales volumes.
Payments to partners based on marketing efforts
undertaken by the partners are expensed by the Firm as
incurred and reported as marketing expense. Payments for
partner loyalty program rewards are reported as a
reduction of card income when incurred. Payments to
partners based on new credit card account originations are
accounted for as direct loan origination costs and are
deferred and recognized as a reduction of card income on a
straight-line basis over a 12-month period. Payments to
partners based on sales volumes are reported as a
reduction of card income when the related interchange
210
JPMorgan Chase & Co./2022 Form 10-K
Interest income and interest expense includes the current-
period interest accruals for financial instruments measured
at fair value, except for derivatives and financial
instruments containing embedded derivatives that would be
separately accounted for in accordance with U.S. GAAP,
absent the fair value option election; for those instruments,
all changes in fair value including any interest elements, are
primarily reported in principal transactions revenue. For
financial instruments that are not measured at fair value,
the related interest is included within interest income or
interest expense, as applicable. Refer to Notes 12, 10, 11
and 20 for further information on accounting for interest
income and interest expense related to loans, investment
securities, securities financing activities (i.e., securities
purchased or sold under resale or repurchase agreements;
securities borrowed; and securities loaned) and long-term
debt, respectively.
Note 7 – Interest income and Interest expense
Interest income and interest expense are recorded in the
Consolidated statements of income and classified based on
the nature of the underlying asset or liability.
The following table presents the components of interest
income and interest expense:
Year ended December 31,
(in millions)
Interest income
Loans(a)
Taxable securities
Non-taxable securities(b)
Total investment securities(a)
Trading assets - debt instruments
Federal funds sold and securities
purchased under resale
agreements
Securities borrowed(c)
Deposits with banks
All other interest-earning assets(d)
Total interest income
Interest expense
2022
2021
2020
$ 52,736 $ 41,537 $ 43,758
10,372
975
11,347
9,053
6,460
1,063
7,523
6,825
7,843
1,184
9,027
7,832
4,632
2,237
9,039
3,763
958
2,436
(385)
(302)
512
894
749
1,023
$ 92,807 $ 57,864 $ 64,523
Interest bearing deposits
$ 10,082 $
531 $ 2,357
Federal funds purchased and
securities loaned or sold under
repurchase agreements
Short-term borrowings(e)
Trading liabilities - debt and all
other interest-bearing liabilities(f)
Long-term debt
Beneficial interest issued by
consolidated VIEs
3,721
747
3,246
8,075
274
126
257
4,282
1,058
372
195
5,764
226
83
214
Total interest expense
$ 26,097 $ 5,553 $ 9,960
Net interest income
$ 66,710 $ 52,311 $ 54,563
Provision for credit losses
6,389
(9,256) 17,480
Net interest income after provision
for credit losses
$ 60,321 $ 61,567 $ 37,083
(a) Includes the amortization/accretion of unearned income (e.g.,
purchase premiums/discounts and net deferred fees/costs).
(b) Represents securities that are tax-exempt for U.S. federal income tax
purposes.
(c) Negative interest and rates reflect the net impact of interest earned
offset by fees paid on client-driven prime brokerage securities
borrowed transactions.
(d) Includes interest earned on brokerage-related held-for-investment
customer receivables, which are classified in accrued interest and
accounts receivable, and all other interest-earning assets, which are
classified in other assets on the Consolidated balance sheets.
(e) Includes commercial paper.
(f) All other interest-bearing liabilities includes interest expense on
brokerage-related customer payables.
JPMorgan Chase & Co./2022 Form 10-K
211
Notes to consolidated financial statements
Note 8 – Pension and other postretirement
employee benefit plans
The Firm has various defined benefit pension plans and
OPEB plans that provide benefits to its employees in the
U.S. and certain non-U.S. locations. Substantially all the
defined benefit pension plans are closed to new
participants. The principal defined benefit pension plan in
the U.S., which covered substantially all U.S. employees,
was closed to new participants and frozen for existing
participants on January 1, 2020, (and January 1, 2019 for
new hires on or after December 2, 2017). Interest credits
continue to accrue to participants’ accounts based on their
accumulated balances.
The Firm maintains funded and unfunded postretirement
benefit plans that provide medical and life insurance for
certain eligible employees and retirees as well as their
dependents covered under these programs. None of these
plans have a material impact on the Firm’s Consolidated
Financial Statements.
The Firm also provides a qualified defined contribution plan
in the U.S. and maintains other similar arrangements in
certain non-U.S. locations. The most significant of these
plans is the JPMorgan Chase 401(k) Savings Plan (“the
401(k) Savings Plan”), which covers substantially all U.S.
employees. Employees can contribute to the 401(k) Savings
Plan on a pretax and/or Roth 401(k) after-tax basis. The
Firm makes an annual matching contribution as well as an
annual profit-sharing contribution to the 401(k) Savings
Plan on behalf of eligible participants.
The following table presents the pretax benefit obligations, plan assets, the net funded status, and the amounts recorded in
AOCI on the Consolidated balance sheets for the Firm’s significant defined benefit pension and OPEB plans.
As of or for the year ended December 31,
(in millions)
Projected benefit obligations
Fair value of plan assets
Net funded status
Accumulated other comprehensive income/(loss)
Defined benefit
pension and OPEB plans
2022
2021
$
(13,545)
$
(18,046)
19,890
6,345
(1,916)
25,692
7,646
(453)
The weighted-average discount rate used to value the benefit obligations as of December 31, 2022 and 2021, was 5.14% and
2.54%, respectively.
Gains and losses
Gains or losses resulting from changes in the benefit
obligation and the fair value of plan assets are recorded in
OCI. Amortization of net gains or losses are recognized as
part of the net periodic benefit cost over subsequent
periods, if, as of the beginning of the year, the net gain or
loss exceeds 10% of the greater of the projected benefit
obligation or the fair value of the plan assets. Amortization
is generally over the average expected remaining lifetime of
plan participants, given the frozen status of most plans.
During the year ended December 31, 2022, a
remeasurement of the Firm’s U.S. principal defined benefit
plan in the third quarter, was required as a result of a
pension settlement. The remeasurement resulted in a
reduction in the fair value of the Firm’s U.S. principal
defined benefit plan assets, reflecting market conditions at
the time of remeasurement, and a reduction in the plan’s
projected benefit obligation totaling $4.0 billion and $2.6
billion, respectively, resulting in a net decrease of $1.4
billion in pre-tax AOCI. For the year ended December 31,
2021, the net gain was predominantly attributable to
market-driven increases in the fair value of plan assets and
the discount rate.
The following table presents the net periodic benefit costs reported in the Consolidated statements of income for the Firm’s
defined benefit pension, defined contribution and OPEB plans, and in other comprehensive income for the defined benefit
pension and OPEB plans.
Year ended December 31, (in millions)
Total net periodic defined benefit plan cost/(credit)(a)
Total defined contribution plans
Total pension and OPEB cost included in noninterest expense
Total recognized in other comprehensive (income)/loss
Pension and OPEB plans
2022
2021
2020
$
(192)
$
(201) $
(285)
1,408
1,333
1,332
$ 1,216
$ 1,132 $
1,047
$ 1,459
$
(1,129) $
(214)
(a) Includes pension settlement loss of $92 million and $33 million, respectively, for the years ended December 31, 2022 and 2021.
212
JPMorgan Chase & Co./2022 Form 10-K
The following table presents the weighted-average actuarial assumptions used to determine the net periodic benefit costs for
the defined benefit pension and OPEB plans.
Year ended December 31,
Discount rate
Expected long-term rate of return on plan assets
Plan assumptions
The Firm’s expected long-term rate of return is a blended
weighted average, by asset allocation of the projected long-
term returns for the various asset classes, taking into
consideration local market conditions and the specific
allocation of plan assets. Returns on asset classes are
developed using a forward-looking approach and are not
strictly based on historical returns, with consideration given
to current market conditions and the portfolio mix of each
plan.
The discount rates used in determining the benefit
obligations are generally provided by the Firm’s actuaries,
with the Firm’s principal defined benefit pension plan using
a rate that was selected by reference to the yields on
portfolios of bonds with maturity dates and coupons that
closely match each of the plan’s projected cash flows.
Defined benefit pension and OPEB plans
2022
2021
2020
2.54 %
3.68 %
2.17 %
2.97 %
2.93 %
3.91 %
Investment strategy and asset allocation
The assets of the Firm’s defined benefit pension plans are
held in various trusts and are invested in well-diversified
portfolios of equity and fixed income securities, cash and
cash equivalents, and alternative investments. The Firm
regularly reviews the asset allocations and asset managers,
as well as other factors that could impact the portfolios,
which are rebalanced when deemed necessary. The
approved asset allocation ranges by asset class for the
Firm’s principal defined benefit plan are 42-100% debt
securities, 0-40% equity securities, 0-3% real estate, and
0-12% alternatives as of December 31, 2022.
As of December 31, 2022, assets held by the Firm’s defined
benefit pension and OPEB plans do not include securities
issued by JPMorgan Chase or its affiliates, except through
indirect exposures through investments in exchange traded
funds, mutual funds and collective investment funds
managed by third-parties. The defined benefit pension and
OPEB plans hold investments that are sponsored or
managed by affiliates of JPMorgan Chase in the amount of
$1.7 billion and $2.5 billion, as of December 31, 2022 and
2021, respectively.
Fair value measurement of the plans’ assets and liabilities
Refer to Note 2 for information on fair value measurements, including descriptions of level 1, 2, and 3 of the fair value
hierarchy and the valuation methods employed by the Firm.
Pension plan assets and liabilities measured at fair value
December 31,
(in millions)
Assets measured at fair value classified in fair
value hierarchy
Assets measured at fair value using NAV as
practical expedient not classified in fair value
hierarchy
Net defined benefit pension plan payables not
classified in fair value hierarchy
Total fair value of plan assets
Defined benefit pension and OPEB plans
2022
2021
Level 1(a)
Level 2(b)
Level 3(c)
Total fair value
Level 1(a)
Level 2(b)
Level 3(c)
Total fair value
$ 5,308 $
9,617 $ 2,613 $
17,538 $ 6,541 $ 12,315 $ 3,172 $
22,028
2,593
(241)
3,960
(296)
$
19,890
$
25,692
(a) Consists predominantly of equity securities, U.S. federal, state, and local and non-U.S. government debt securities, and cash equivalents.
(b) Consists predominantly of corporate debt securities and U.S. federal, state, and local and non-U.S. government debt securities.
(c) Consists of corporate-owned life insurance policies and participating annuity contracts.
JPMorgan Chase & Co./2022 Form 10-K
213
Notes to consolidated financial statements
Changes in level 3 fair value measurements using
significant unobservable inputs
Investments classified in level 3 of the fair value hierarchy
decreased in 2022 to $2.6 billion, due to $501 million in
unrealized losses and $54 million in settlements, and
increased in 2021 to $3.2 billion, predominantly due to
$332 million in unrealized gains, partially offset by
$94 million in settlements.
Estimated future benefit payments
The following table presents benefit payments expected to
be paid for the defined benefit pension and OPEB plans for
the years indicated.
Year ended December 31,
(in millions)
Defined benefit
pension and OPEB
plans
2023
2024
2025
2026
2027
Years 2028–2032
$
1,022
1,016
1,007
980
977
4,720
214
JPMorgan Chase & Co./2022 Form 10-K
Note 9 – Employee share-based incentives
Employee share-based awards
In 2022, 2021 and 2020, JPMorgan Chase granted long-
term share-based awards to certain employees under its
LTIP, as amended and restated effective May 15, 2018, and
subsequently amended effective May 18, 2021. Under the
terms of the LTIP, as of December 31, 2022, 69 million
shares of common stock were available for issuance
through May 2025. The LTIP is the only active plan under
which the Firm is currently granting share-based incentive
awards. In the following discussion, the LTIP, plus prior Firm
plans and plans assumed as the result of acquisitions, are
referred to collectively as the “LTI Plans,” and such plans
constitute the Firm’s share-based incentive plans.
RSUs are awarded at no cost to the recipient upon their
grant. Generally, RSUs are granted annually and vest at a
rate of 50% after two years and 50% after three years and
are converted into shares of common stock as of the vesting
date. In addition, RSUs typically include full-career eligibility
provisions, which allow employees to continue to vest upon
voluntary termination based on age and/or service-related
requirements, subject to post-employment and other
restrictions. All RSU awards are subject to forfeiture until
vested and contain clawback provisions that may result in
cancellation under certain specified circumstances.
Predominantly all RSUs entitle the recipient to receive cash
payments equivalent to any dividends paid on the
underlying common stock during the period the RSUs are
outstanding.
Performance share units (“PSUs”) are granted annually,
and approved by the Firm’s Board of Directors, to members
of the Firm’s Operating Committee under the variable
compensation program. PSUs are subject to the Firm’s
achievement of specified performance criteria over a three-
year period. The number of awards that vest can range
from zero to 150% of the grant amount. In addition,
dividends that accrue during the vesting period are
reinvested in dividend equivalent share units. PSUs and the
related dividend equivalent share units are converted into
shares of common stock after vesting.
Once the PSUs and dividend equivalent share units have
vested, the shares of common stock that are delivered, after
applicable tax withholding, must be retained for an
additional holding period, for a total combined vesting and
holding period of approximately five to eight years from the
grant date depending on regulations in certain countries.
Under the LTI Plans, stock appreciation rights (“SARs”) and
stock options have generally been granted with an exercise
price equal to the fair value of JPMorgan Chase’s common
stock on the grant date. SARs and stock options generally
expire ten years after the grant date. In 2021, the Firm
awarded its Chairman and CEO and its President and Chief
Operating Officer 1.5 million and 750,000 SARs,
respectively. There were no grants of SARs or stock options
in 2022 and grants in 2020 were not material.
The Firm separately recognizes compensation expense for
each tranche of each award, net of estimated forfeitures, as
if it were a separate award with its own vesting date.
Generally, for each tranche granted, compensation expense
is recognized on a straight-line basis from the grant date
until the vesting date of the respective tranche, provided
that the employees will not become full-career eligible
during the vesting period. For awards with full-career
eligibility provisions and awards granted with no future
substantive service requirement, the Firm accrues the
estimated value of awards expected to be awarded to
employees as of the grant date without giving consideration
to the impact of post-employment restrictions. For each
tranche granted to employees who will become full-career
eligible during the vesting period, compensation expense is
recognized on a straight-line basis from the grant date until
the earlier of the employee’s full-career eligibility date or
the vesting date of the respective tranche.
The Firm’s policy for issuing shares upon settlement of
employee share-based incentive awards is to issue either
new shares of common stock or treasury shares. During
2022, 2021 and 2020, the Firm settled all of its employee
share-based awards by issuing treasury shares.
Refer to Note 23 for further information on the
classification of share-based awards for purposes of
calculating earnings per share.
JPMorgan Chase & Co./2022 Form 10-K
215
Notes to consolidated financial statements
RSUs, PSUs, SARs and stock options activity
Generally, compensation expense for RSUs and PSUs is measured based on the number of units granted multiplied by the stock
price at the grant date, and for SARs and stock options, is measured at the grant date using the Black-Scholes valuation model.
Compensation expense for these awards is recognized in net income as described previously. The following table summarizes
JPMorgan Chase’s RSUs, PSUs, SARs and stock options activity for 2022.
Year ended December 31, 2022
(in thousands, except weighted-average data, and
where otherwise stated)
Outstanding, January 1
Granted
Exercised or vested
Forfeited
Canceled
Outstanding, December 31
Exercisable, December 31
RSUs/PSUs
SARs/Options
Number of
units
Weighted-
average grant
date fair value
Number of
awards
Weighted-
average
exercise
price
Weighted-average
remaining
contractual life
(in years)
Aggregate
intrinsic
value
45,405 $
23,729
(19,517)
(1,891)
126.32
147.17
117.06
141.74
NA
NA
3,369
$ 116.62
—
—
(858)
44.70
—
—
—
—
47,726 $
139.90
2,511
$ 141.19
NA
NA
261
46.58
7.8 $
22,695
0.1
22,695
The total fair value of RSUs that vested during the years ended December 31, 2022, 2021 and 2020, was $3.2 billion, $2.9
billion and $2.8 billion, respectively. The total intrinsic value of options exercised during the years ended December 31, 2022,
2021 and 2020, was $75 million, $232 million and $182 million, respectively.
Tax benefits
Income tax benefits (including tax benefits from dividends
or dividend equivalents) related to share-based incentive
arrangements recognized in the Firm’s Consolidated
statements of income for the years ended December 31,
2022, 2021 and 2020, were $901 million, $957 million
and $837 million, respectively.
Compensation expense
The Firm recognized the following noncash compensation
expense related to its various employee share-based
incentive plans in its Consolidated statements of income.
Year ended December 31, (in millions)
2022
2021
2020
Cost of prior grants of RSUs, PSUs, SARs
and stock options that are amortized
over their applicable vesting periods
Accrual of estimated costs of share-
based awards to be granted in future
periods, predominantly those to full-
career eligible employees
Total noncash compensation expense
related to employee share-based
incentive plans
$ 1,253 $ 1,161 $ 1,101
1,541
1,768
1,350
$ 2,794 $ 2,929 $ 2,451
At December 31, 2022, approximately $1.0 billion
(pretax) of compensation expense related to unvested
awards had not yet been charged to net income. That cost is
expected to be amortized into compensation expense over a
weighted-average period of 1.8 years. The Firm does not
capitalize any compensation expense related to share-
based compensation awards to employees.
216
JPMorgan Chase & Co./2022 Form 10-K
Note 10 – Investment securities
Investment securities consist of debt securities that are
classified as AFS or HTM. Debt securities classified as
trading assets are discussed in Note 2. Predominantly all of
the Firm’s AFS and HTM securities are held by Treasury and
CIO in connection with its asset-liability management
activities.
AFS securities are carried at fair value on the Consolidated
balance sheets. Unrealized gains and losses, after any
applicable hedge accounting adjustments or allowance for
credit losses, are reported in AOCI. The specific
identification method is used to determine realized gains
and losses on AFS securities, which are included in
investment securities gains/(losses) on the Consolidated
statements of income. HTM securities, which the Firm has
the intent and ability to hold until maturity, are carried at
amortized cost, net of allowance for credit losses, on the
Consolidated balance sheets.
For both AFS and HTM securities, purchase discounts or
premiums are generally amortized into interest income on a
level-yield basis over the contractual life of the security.
However, premiums on certain callable debt securities are
amortized to the earliest call date.
During 2022 and 2021, the Firm transferred $78.3 billion
and $104.5 billion of investment securities, respectively,
from AFS to HTM for capital management purposes. AOCI
included pretax unrealized gains/(losses) of $(4.8) billion
and $425 million, respectively, on the securities at the
dates of transfer.
Unrealized gains or losses at the date of transfer of these
securities continue to be reported in AOCI and are amortized
into interest income on a level-yield basis over the
remaining life of the securities. This amortization will offset
the effect on interest income of the amortization of the
premium or discount resulting from the transfer recorded at
fair value.
Transfers of securities from AFS to HTM are non-cash
transactions and are recorded at fair value.
JPMorgan Chase & Co./2022 Form 10-K
217
Notes to consolidated financial statements
The amortized costs and estimated fair values of the investment securities portfolio were as follows for the dates indicated.
2022
2021
Amortized
cost(b)(c)
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
Amortized
cost(b)(c)
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
December 31, (in millions)
Available-for-sale securities
Mortgage-backed securities:
U.S. GSEs and government agencies
$ 77,194 $
479 $ 6,170
$ 71,503 $ 72,800 $
736 $
993
$ 72,543
Residential:
U.S.
Non-U.S.
Commercial
Total mortgage-backed securities
U.S. Treasury and government agencies
Obligations of U.S. states and municipalities
Non-U.S. government debt securities
Corporate debt securities
Asset-backed securities:
Collateralized loan obligations
Other
Total available-for-sale securities
Held-to-maturity securities(a)
Mortgage-backed securities:
1,576
3,176
2,113
84,059
95,217
7,103
20,360
381
5,916
3,152
1
5
—
485
302
86
14
—
1
2
111
27
155
6,463
3,459
403
678
24
125
69
1,466
3,154
1,958
2,128
3,882
4,944
38
25
22
2
1
17
2,164
3,906
4,949
78,081
83,754
821
1,013
83,562
92,060
178,038
668
1,243
177,463
6,786
19,696
357
14,890
16,163
332
5,792
3,085
9,674
5,403
972
92
8
6
47
2
46
19
18
2
15,860
16,209
321
9,662
5,448
216,188
890
11,221
205,857
308,254
2,614
2,343
308,525
U.S. GSEs and government agencies
113,492
35
13,709
99,818
102,556
1,400
U.S. Residential
Commercial
Total mortgage-backed securities
U.S. Treasury and government agencies
10,503
10,361
134,356
207,463
3
10
1,244
734
9,262
9,637
7,316
3,730
1
11
853
106
54
103,103
7,211
3,687
48
15,687
118,717
113,602
1,412
1,013
114,001
—
18,363
189,100
185,204
169
2,103
183,270
Obligations of U.S. states and municipalities
19,747
53
1,080
18,720
13,985
453
Asset-backed securities:
Collateralized loan obligations
Other
61,414
2,325
4
—
1,522
110
59,896
2,215
48,869
2,047
75
1
44
22
7
14,394
48,922
2,041
Total held-to-maturity securities
425,305
105
36,762
388,648
363,707
2,110
3,189
362,628
Total investment securities, net of
allowance for credit losses
$ 641,493 $
995 $ 47,983
$ 594,505 $ 671,961 $
4,724 $ 5,532
$ 671,153
(a) The Firm purchased $33.7 billion, $111.8 billion and $12.4 billion of HTM securities for the years ended December 31, 2022, 2021 and 2020,
respectively.
(b) The amortized cost of investment securities is reported net of allowance for credit losses of $96 million and $42 million at December 31, 2022 and 2021,
respectively.
(c) Excludes $2.5 billion and $1.9 billion of accrued interest receivable at December 31, 2022 and 2021, respectively, included in accrued interest and
accounts receivable on the Consolidated balance sheets. The Firm generally does not recognize an allowance for credit losses on accrued interest
receivable, consistent with its policy to write them off no later than 90 days past due by reversing interest income. The Firm did not reverse through
interest income any accrued interest receivable for the years ended December 31, 2022 and 2021.
At December 31, 2022, the investment securities portfolio
consisted of debt securities with an average credit rating of
AA+ (based upon external ratings where available, and
where not available, based primarily upon internal risk
ratings). Risk ratings are used to identify the credit quality
of securities and differentiate risk within the portfolio. The
Firm’s internal risk ratings generally align with the
qualitative characteristics (e.g., borrower capacity to meet
financial commitments and vulnerability to changes in the
economic environment) defined by S&P and Moody’s,
however the quantitative characteristics (e.g., probability of
default (“PD”) and loss given default (“LGD”)) may differ as
they reflect internal historical experiences and
assumptions. Risk ratings are assigned at acquisition,
reviewed on a regular and ongoing basis by Credit Risk
Management and adjusted as necessary over the life of the
investment for updated information affecting the issuer’s
ability to fulfill its obligations.
218
JPMorgan Chase & Co./2022 Form 10-K
AFS securities impairment
The following tables present the fair value and gross unrealized losses by aging category for AFS securities at December 31,
2022 and 2021. The tables exclude U.S. Treasury and government agency securities and U.S. GSE and government agency
MBS with unrealized losses of $9.6 billion and $2.2 billion, at December 31, 2022 and 2021, respectively; changes in the
value of these securities are generally driven by changes in interest rates rather than changes in their credit profile given the
explicit or implicit guarantees provided by the U.S. government.
December 31, 2022 (in millions)
Fair value
Gross
unrealized losses
Fair value
Gross
unrealized losses
Total fair
value
Total gross
unrealized losses
Available-for-sale securities with gross unrealized losses
Less than 12 months
12 months or more
$
1,187 $
71 $
260 $
40 $
1,447 $
2,848
1,131
5,166
3,051
6,941
150
3,010
2,586
25
74
170
241
321
2
61
51
70
813
1,143
364
3,848
207
2,701
256
2
81
123
162
357
22
64
18
2,918
1,944
6,309
3,415
10,789
357
5,711
2,842
20,904 $
846 $
8,519 $
746 $
29,423 $
1,592
Available-for-sale securities with gross unrealized losses
Less than 12 months
12 months or more
December 31, 2021 (in millions)
Fair value
Gross
unrealized losses
Fair value
Gross
unrealized losses
Total fair
value
Total gross
unrealized losses
Available-for-sale securities
Mortgage-backed securities:
Residential:
U.S.
Non-U.S.
Commercial
Total mortgage-backed securities
Obligations of U.S. states and municipalities
Non-U.S. government debt securities
Corporate debt securities
Asset-backed securities:
Collateralized loan obligations
Other
Total available-for-sale securities with gross
unrealized losses
$
Available-for-sale securities
Mortgage-backed securities:
Residential:
U.S.
Non-U.S.
Commercial
Total mortgage-backed securities
Obligations of U.S. states and municipalities
Non-U.S. government debt securities
Corporate debt securities
Asset-backed securities:
Collateralized loan obligations
Other
Total available-for-sale securities with gross
unrealized losses
$
$
303 $
1 $
45 $
1 $
348 $
133
2,557
2,993
120
5,060
166
8,110
89
1
5
7
2
37
1
18
—
—
349
394
—
510
46
208
178
—
12
13
—
9
18
—
2
133
2,906
3,387
120
5,570
212
8,318
267
16,538 $
65 $
1,336 $
42 $
17,874 $
107
111
27
155
293
403
678
24
125
69
2
1
17
20
2
46
19
18
2
JPMorgan Chase & Co./2022 Form 10-K
219
Notes to consolidated financial statements
AFS securities are considered impaired if the fair value is
less than the amortized cost.
The Firm recognizes impairment losses in earnings if the
Firm has the intent to sell the debt security, or if it is more
likely than not that the Firm will be required to sell the debt
security before recovery of its amortized cost. In these
circumstances the impairment loss is recognized in
investment securities gains/(losses) in the Consolidated
Statements of Income and is equal to the full difference
between the amortized cost (net of allowance if applicable)
and the fair value of the security.
For impaired debt securities that the Firm has the intent
and ability to hold, the securities are evaluated to
determine if a credit loss exists. If it is determined that a
credit loss exists, that loss is recognized as an allowance for
credit losses through the provision for credit losses in the
Consolidated Statements of Income, limited by the amount
of impairment. Any impairment on debt securities that the
Firm has the intent and ability to hold not due to credit
losses is recorded in OCI.
Factors considered in evaluating credit losses include
adverse conditions specifically related to the industry,
geographic area or financial condition of the issuer or
underlying collateral of a security; and payment structure of
the security.
When assessing securities issued in a securitization for
credit losses, the Firm estimates cash flows considering
relevant market and economic data, underlying loan-level
data, and structural features of the securitization, such as
subordination, excess spread, overcollateralization or other
forms of credit enhancement, and compares the losses
projected for the underlying collateral (“pool losses”)
against the level of credit enhancement in the securitization
structure to determine whether these features are sufficient
to absorb the pool losses, or whether a credit loss exists.
For beneficial interests in securitizations that are rated
below “AA” at their acquisition, or that can be contractually
prepaid or otherwise settled in such a way that the Firm
would not recover substantially all of its recorded
investment, the Firm evaluates impairment for credit losses
when there is an adverse change in expected cash flows.
HTM securities – credit risk
Allowance for credit losses
The allowance for credit losses represents expected credit
losses over the remaining expected life of HTM securities.
The allowance for credit losses on HTM obligations of U.S.
states and municipalities and commercial mortgage-backed
securities is calculated by applying statistical credit loss
factors (estimated PD and LGD) to the amortized cost. The
credit loss factors are derived using a weighted average of
five internally developed eight-quarter macroeconomic
scenarios, followed by a single year straight-line
interpolation to revert to long run historical information for
periods beyond the forecast period. Refer to Note 13 for
further information on the eight-quarter macroeconomic
forecast.
The allowance for credit losses on HTM collateralized loan
obligations and U.S. residential mortgage-backed securities
is calculated as the difference between the amortized cost
and the present value of the cash flows expected to be
collected, discounted at the security’s effective interest
rate. These cash flow estimates are developed based on
expectations of underlying collateral performance derived
using the eight-quarter macroeconomic forecast and the
single year straight-line interpolation, as well as considering
the structural features of the security.
The application of different inputs and assumptions into the
calculation of the allowance for credit losses is subject to
significant management judgment, and emphasizing one
input or assumption over another, or considering other
inputs or assumptions, could affect the estimate of the
allowance for credit losses on HTM securities.
Credit quality indicator
The primary credit quality indicator for HTM securities is the
risk rating assigned to each security. At both December 31,
2022 and 2021, all HTM securities were rated investment
grade and were current and accruing, with approximately
98% rated at least AA+.
Allowance for credit losses on investment securities
The allowance for credit losses on investment securities was
$96 million, $42 million and $78 million as of
December 31, 2022, 2021 and 2020, respectively.
Selected impacts of investment securities on the
Consolidated statements of income
Year ended December 31,
(in millions)
Realized gains
Realized losses
Investment securities gains/
(losses)
2022
2021
2020
$ 198
$ 595
$ 3,080
(2,578)
(940)
(2,278)
$ (2,380)
$ (345)
$ 802
Provision for credit losses
$
54
$
(36)
$
68
220
JPMorgan Chase & Co./2022 Form 10-K
Contractual maturities and yields
The following table presents the amortized cost and estimated fair value at December 31, 2022, of JPMorgan Chase’s investment
securities portfolio by contractual maturity.
By remaining maturity
December 31, 2022 (in millions)
Available-for-sale securities
Mortgage-backed securities
Amortized cost
Fair value
Average yield(a)
U.S. Treasury and government agencies
Amortized cost
Fair value
Average yield(a)
Obligations of U.S. states and municipalities
Amortized cost
Fair value
Average yield(a)
Non-U.S. government debt securities
Amortized cost
Fair value
Average yield(a)
Corporate debt securities
Amortized cost
Fair value
Average yield(a)
Asset-backed securities
Amortized cost
Fair value
Average yield(a)
Total available-for-sale securities
Amortized cost
Fair value
Average yield(a)
Held-to-maturity securities
Mortgage-backed securities
Amortized cost
Fair value
Average yield(a)
U.S. Treasury and government agencies
Amortized cost
Fair value
Average yield(a)
Obligations of U.S. states and municipalities
Amortized cost
Fair value
Average yield(a)
Asset-backed securities
Amortized cost
Fair value
Average yield(a)
Total held-to-maturity securities
Amortized cost
Fair value
Average yield(a)
Due in one
year or less
Due after one year
through five years
Due after five years
through 10 years
Due after
10 years(b)
Total
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
14
14
2.21 %
16,335
16,011
1.27 %
18
18
5.03 %
12,803
12,795
3.54 %
125
76
16.22 %
99
95
5.11 %
29,394
29,009
2.34 %
98
96
5.54 %
34,157
33,433
0.57 %
—
—
— %
—
—
— %
34,255
33,529
0.58 %
3,634
3,459
3.58 %
54,936
52,703
3.00 %
47
46
3.96 %
3,228
3,107
2.59 %
272
268
12.07 %
1,517
1,487
3.11 %
63,634
61,070
3.05 %
1,718
1,584
2.23 %
106,325
99,345
0.71 %
106
100
3.39 %
30
29
5.69 %
108,179
101,058
0.74 %
$
$
$
$
$
$
$
$
$
$
$
4,534
4,573
5.25 %
17,749
17,167
3.99 %
215
216
5.24 %
4,329
3,794
1.37 %
13
13
5.78 %
3,665
3,605
4.98 %
30,505
29,368
3.94 %
12,350
10,909
2.56 %
66,981
56,322
1.27 %
2,741
2,710
4.03 %
19,398
19,085
$
$
$
$
$
$
$
$
$
$
$
75,877
70,035
3.62 %
6,197
6,179
6.01 %
6,823
6,506
5.85 %
—
—
— %
—
—
— %
3,787
3,690
5.19 %
92,684
86,410
4.01 %
120,206
106,128
2.93 %
—
—
— %
16,951
15,910
4.24 %
44,311
42,997
$
$
$
$
$
$
$
$
$
$
$
84,059
78,081
3.71 %
95,217
92,060
3.08 %
7,103
6,786
5.81 %
20,360
19,696
2.93 %
410
357
13.14 %
9,068
8,877
4.76 %
216,217
205,857
3.49 %
134,372
118,717
2.89 %
207,463
189,100
0.87 %
19,798
18,720
4.21 %
63,739
62,111
4.80 %
4.74 %
4.76 %
$
101,470
$
181,468
$
425,372
89,026
2.18 %
165,035
388,648
3.50 %
2.25 %
(a) Average yield is computed using the effective yield of each security owned at the end of the period, weighted based on the amortized cost of each security.
The effective yield considers the contractual coupon, amortization of premiums and accretion of discounts, and the effect of related hedging derivatives.
Taxable-equivalent amounts are used where applicable. The effective yield excludes unscheduled principal prepayments; and accordingly, actual
maturities of securities may differ from their contractual or expected maturities as certain securities may be prepaid. However, for certain callable debt
securities, the average yield is calculated to the earliest call date.
(b) Substantially all of the Firm’s U.S. residential MBS and collateralized mortgage obligations are due in 10 years or more, based on contractual maturity. The
estimated weighted-average life, which reflects anticipated future prepayments, is approximately eight years for agency residential MBS, and six years for
both agency residential collateralized mortgage obligations and nonagency residential collateralized mortgage obligations.
JPMorgan Chase & Co./2022 Form 10-K
221
Notes to consolidated financial statements
Note 11 – Securities financing activities
JPMorgan Chase enters into resale, repurchase, securities
borrowed and securities loaned agreements (collectively,
“securities financing agreements”) primarily to finance the
Firm’s inventory positions, acquire securities to cover short
sales, accommodate customers’ financing needs, settle
other securities obligations and to deploy the Firm’s excess
cash.
Securities financing agreements are treated as
collateralized financings on the Firm’s Consolidated balance
sheets. Where appropriate under applicable accounting
guidance, securities financing agreements with the same
counterparty are reported on a net basis. Refer to Note 1
for further discussion of the offsetting of assets and
liabilities. Fees received and paid in connection with
securities financing agreements are recorded over the life
of the agreement in interest income and interest expense
on the Consolidated statements of income.
The Firm has elected the fair value option for certain
securities financing agreements. Refer to Note 3 for further
information regarding the fair value option. The securities
financing agreements for which the fair value option has
been elected are reported within securities purchased
under resale agreements, securities loaned or sold under
repurchase agreements, and securities borrowed on the
Consolidated balance sheets. Generally, for agreements
carried at fair value, current-period interest accruals are
recorded within interest income and interest expense, with
changes in fair value reported in principal transactions
revenue. However, for financial instruments containing
embedded derivatives that would be separately accounted
for in accordance with accounting guidance for hybrid
instruments, all changes in fair value, including any interest
elements, are reported in principal transactions revenue.
Securities financing agreements not elected under the fair
value option are measured at amortized cost. As a result of
the Firm’s credit risk mitigation practices described below,
the Firm did not hold any allowance for credit losses with
respect to resale and securities borrowed arrangements as
of December 31, 2022 and 2021.
Credit risk mitigation practices
Securities financing agreements expose the Firm primarily
to credit and liquidity risk. To manage these risks, the Firm
monitors the value of the underlying securities
(predominantly high-quality securities collateral, including
government-issued debt and U.S. GSEs and government
agencies MBS) that it has received from or provided to its
counterparties compared to the value of cash proceeds and
exchanged collateral, and either requests additional
collateral or returns securities or collateral when
appropriate. Margin levels are initially established based
upon the counterparty, the type of underlying securities,
and the permissible collateral, and are monitored on an
ongoing basis.
In resale and securities borrowed agreements, the Firm is
exposed to credit risk to the extent that the value of the
securities received is less than initial cash principal
advanced and any collateral amounts exchanged. In
repurchase and securities loaned agreements, credit risk
exposure arises to the extent that the value of underlying
securities advanced exceeds the value of the initial cash
principal received, and any collateral amounts exchanged.
Additionally, the Firm typically enters into master netting
agreements and other similar arrangements with its
counterparties, which provide for the right to liquidate the
underlying securities and any collateral amounts exchanged
in the event of a counterparty default. It is also the Firm’s
policy to take possession, where possible, of the securities
underlying resale and securities borrowed agreements.
Refer to Note 29 for further information regarding assets
pledged and collateral received in securities financing
agreements.
222
JPMorgan Chase & Co./2022 Form 10-K
The table below summarizes the gross and net amounts of
the Firm’s securities financing agreements, as of
December 31, 2022 and 2021. When the Firm has obtained
an appropriate legal opinion with respect to a master
netting agreement with a counterparty and where other
relevant netting criteria under U.S. GAAP are met, the Firm
nets, on the Consolidated balance sheets, the balances
outstanding under its securities financing agreements with
the same counterparty. In addition, the Firm exchanges
securities and/or cash collateral with its counterparty to
reduce the economic exposure with the counterparty, but
such collateral is not eligible for net Consolidated balance
sheet presentation. Where the Firm has obtained an
appropriate legal opinion with respect to the counterparty
master netting agreement, such collateral, along with
securities financing balances that do not meet all these
relevant netting criteria under U.S. GAAP, is presented in
the table below as “Amounts not nettable on the
Consolidated balance sheets,” and reduces the “Net
amounts” presented. Where a legal opinion has not been
either sought or obtained, the securities financing balances
are presented gross in the “Net amounts” below. In
transactions where the Firm is acting as the lender in a
securities-for-securities lending agreement and receives
securities that can be pledged or sold as collateral, the Firm
recognizes the securities received at fair value within other
assets and the obligation to return those securities within
accounts payable and other liabilities on the Consolidated
balance sheets.
(in millions)
Assets
December 31, 2022
Amounts netted
on the
Consolidated
balance sheets
Amounts
presented on the
Consolidated
balance sheets
Amounts not
nettable on the
Consolidated
balance sheets(b)
Net amounts(c)
Gross amounts
Securities purchased under resale agreements
$
597,912 $
(282,411) $
315,501 $
(304,120)
$
Securities borrowed
Liabilities
228,279
(42,910)
185,369
(131,578)
11,381
53,791
Securities sold under repurchase agreements
Securities loaned and other(a)
$
480,793 $
(282,411) $
198,382 $
(167,427)
$
30,955
52,443
(42,910)
9,533
(9,527)
6
(in millions)
Assets
December 31, 2021
Amounts netted
on the
Consolidated
balance sheets
Amounts
presented on the
Consolidated
balance sheets
Amounts not
nettable on the
Consolidated
balance sheets(b)
Net amounts(c)
Gross amounts
Securities purchased under resale agreements
$
604,724 $
(343,093) $
261,631 $
(245,588)
$
Securities borrowed
Liabilities
250,333
(44,262)
206,071
(154,599)
16,043
51,472
Securities sold under repurchase agreements
Securities loaned and other(a)
$
532,899 $
(343,093) $
189,806 $
(166,456)
$
23,350
52,610
(44,262)
8,348
(8,133)
215
(a) Includes securities-for-securities lending agreements of $7.0 billion and $5.6 billion at December 31, 2022 and 2021, respectively, accounted for at fair
value, where the Firm is acting as lender.
(b) In some cases, collateral exchanged with a counterparty exceeds the net asset or liability balance with that counterparty. In such cases, the amounts
reported in this column are limited to the related net asset or liability with that counterparty.
(c) Includes securities financing agreements that provide collateral rights, but where an appropriate legal opinion with respect to the master netting
agreement has not been either sought or obtained. At December 31, 2022 and 2021, included $6.0 billion and $13.9 billion, respectively, of securities
purchased under resale agreements; $49.0 billion and $46.4 billion, respectively, of securities borrowed; $29.1 billion and $21.6 billion, respectively, of
securities sold under repurchase agreements. At December 31, 2021 included $198 million of securities loaned and other, and the amount was not
material at December 31, 2022.
JPMorgan Chase & Co./2022 Form 10-K
223
Notes to consolidated financial statements
The tables below present as of December 31, 2022 and 2021 the types of financial assets pledged in securities financing
agreements and the remaining contractual maturity of the securities financing agreements.
December 31, (in millions)
Mortgage-backed securities:
Gross liability balance
2022
2021
Securities sold
under repurchase
agreements
Securities loaned
and other
Securities sold
under repurchase
agreements
Securities loaned
and other
U.S. GSEs and government agencies
$
58,050
$
Residential - nonagency
Commercial - nonagency
U.S. Treasury, GSEs and government agencies
Obligations of U.S. states and municipalities
Non-U.S. government debt
Corporate debt securities
Asset-backed securities
Equity securities
Total
2,414
2,007
191,254
1,735
155,156
37,121
2,981
30,075
$
480,793
$
—
—
—
1,464
5
1,259
461
—
49,254
52,443
$
37,046
$
1,508
1,463
241,578
1,916
174,971
38,180
1,211
35,026
$
532,899
$
—
—
—
358
7
1,572
1,619
—
49,054
52,610
December 31, 2022
(in millions)
Overnight and
continuous
Up to 30 days
30 – 90 days
Greater than
90 days
Total
Total securities sold under repurchase agreements
$
205,235
$
170,696
$
37,120
$
67,742
$
480,793
Total securities loaned and other
50,138
1,285
3
1,017
52,443
Remaining contractual maturity of the agreements
Remaining contractual maturity of the agreements
December 31, 2021
(in millions)
Overnight and
continuous
Up to 30 days
30 – 90 days
Greater than
90 days
Total
Total securities sold under repurchase agreements
$
195,035
$
231,171
$
47,201
$
59,492
$
532,899
Total securities loaned and other
50,034
1,701
—
875
52,610
Transfers not qualifying for sale accounting
At December 31, 2022 and 2021, the Firm held $692 million and $440 million, respectively, of financial assets for which the
rights have been transferred to third parties; however, the transfers did not qualify as a sale in accordance with U.S. GAAP.
These transfers have been recognized as collateralized financing transactions. The transferred assets are recorded in trading
assets and loans, and the corresponding liabilities are recorded predominantly in short-term borrowings on the Consolidated
balance sheets.
224
JPMorgan Chase & Co./2022 Form 10-K
Note 12 – Loans
Loan accounting framework
The accounting for a loan depends on management’s
strategy for the loan. The Firm accounts for loans based on
the following categories:
• Originated or purchased loans held-for-investment (i.e.,
“retained”)
•
•
Loans held-for-sale
Loans at fair value
The following provides a detailed accounting discussion of
the Firm’s loans by category:
Loans held-for-investment
Originated or purchased loans held-for-investment,
including PCD, are recorded at amortized cost, reflecting
the principal amount outstanding, net of the following:
unamortized deferred loan fees, costs, premiums or
discounts; charge-offs; collection of cash; and foreign
exchange. Credit card loans also include billed finance
charges and fees.
Interest income
Interest income on performing loans held-for-investment is
accrued and recognized as interest income at the
contractual rate of interest. Purchase price discounts or
premiums, as well as net deferred loan fees or costs, are
amortized into interest income over the contractual life of
the loan as an adjustment of yield.
The Firm classifies accrued interest on loans, including
accrued but unbilled interest on credit card loans, in
accrued interest and accounts receivables on the
Consolidated balance sheets. For credit card loans, accrued
interest once billed is then recognized in the loan balances,
with the related allowance recorded in the allowance for
credit losses. Changes in the allowance for credit losses on
accrued interest on credit card loans are recognized in the
provision for credit losses and charge-offs are recognized
by reversing interest income. For other loans, the Firm
generally does not recognize an allowance for credit losses
on accrued interest receivables, consistent with its policy to
write them off no later than 90 days past due by reversing
interest income.
Nonaccrual loans
Nonaccrual loans are those on which the accrual of interest
has been suspended. Loans (other than credit card loans
and certain consumer loans insured by U.S. government
agencies) are placed on nonaccrual status and considered
nonperforming when full payment of principal and interest
is not expected, regardless of delinquency status, or when
principal and interest has been in default for a period of 90
days or more, unless the loan is both well-secured and in
the process of collection. A loan is determined to be past
due when the minimum payment is not received from the
borrower by the contractually specified due date or for
certain loans (e.g., residential real estate loans), when a
monthly payment is due and unpaid for 30 days or more.
Finally, collateral-dependent loans are typically maintained
on nonaccrual status.
On the date a loan is placed on nonaccrual status, all
interest accrued but not collected is reversed against
interest income. In addition, the amortization of deferred
amounts is suspended. Interest income on nonaccrual loans
may be recognized as cash interest payments are received
(i.e., on a cash basis) if the recorded loan balance is
deemed fully collectible; however, if there is doubt
regarding the ultimate collectibility of the recorded loan
balance, all interest cash receipts are applied to reduce the
carrying value of the loan (the cost recovery method). For
consumer loans, application of this policy typically results in
the Firm recognizing interest income on nonaccrual
consumer loans on a cash basis.
A loan may be returned to accrual status when repayment is
reasonably assured and there has been demonstrated
performance under the terms of the loan or, if applicable,
the terms of the restructured loan.
As permitted by regulatory guidance, credit card loans are
generally exempt from being placed on nonaccrual status;
accordingly, interest and fees related to credit card loans
continue to accrue until the loan is charged off or paid in
full.
Allowance for loan losses
The allowance for loan losses represents the estimated
expected credit losses in the held-for-investment loan
portfolio at the balance sheet date and is recognized on the
balance sheet as a contra asset, which brings the amortized
cost to the net carrying value. Changes in the allowance for
loan losses are recorded in the provision for credit losses on
the Firm’s Consolidated statements of income. Refer to
Note 13 for further information on the Firm’s accounting
policies for the allowance for loan losses.
Charge-offs
Consumer loans are generally charged off or charged down
to the lower of the amortized cost or the net realizable
value of the underlying collateral (i.e., fair value less
estimated costs to sell), with an offset to the allowance for
loan losses, upon reaching specified stages of delinquency
in accordance with standards established by the FFIEC.
Residential real estate loans, unmodified credit card loans
and scored business banking loans are generally charged
off no later than 180 days past due. Scored auto and
modified credit card loans are charged off no later than 120
days past due.
Certain consumer loans are charged off or charged down to
their net realizable value earlier than the FFIEC charge-off
standards in the following circumstances:
•
•
Loans modified in a TDR that are determined to be
collateral-dependent.
Loans to borrowers who have experienced an event that
suggests a loss is either known or highly certain are
subject to accelerated charge-off standards (e.g.,
JPMorgan Chase & Co./2022 Form 10-K
225
Notes to consolidated financial statements
residential real estate and auto loans are charged off or
charged down within 60 days of receiving notification of
a bankruptcy filing).
• Auto loans upon repossession of the automobile.
Other than in certain limited circumstances, the Firm
typically does not recognize charge-offs on the government-
guaranteed portion of loans.
Wholesale loans are charged off when it is highly certain
that a loss has been realized. The determination of whether
to recognize a charge-off includes many factors, including
the prioritization of the Firm’s claim in bankruptcy,
expectations of the workout/restructuring of the loan and
valuation of the borrower’s equity or the loan collateral.
When a loan is charged down to the lower of its amortized
cost or the estimated net realizable value of the underlying
collateral, the determination of the fair value of the
collateral depends on the type of collateral (e.g., securities,
real estate). In cases where the collateral is in the form of
liquid securities, the fair value is based on quoted market
prices or broker quotes. For illiquid securities or other
financial assets, the fair value of the collateral is generally
estimated using a discounted cash flow model.
For residential real estate loans, collateral values are based
upon external valuation sources. When it becomes likely
that a borrower is either unable or unwilling to pay, the
Firm utilizes a broker’s price opinion, appraisal and/or an
automated valuation model of the home based on an
exterior-only valuation (“exterior opinions”), which is then
updated at least every 12 months, or more frequently
depending on various market factors. As soon as practicable
after the Firm receives the property in satisfaction of a debt
(e.g., by taking legal title or physical possession), the Firm
generally obtains an appraisal based on an inspection that
includes the interior of the home (“interior appraisals”).
Exterior opinions and interior appraisals are discounted
based upon the Firm’s experience with actual liquidation
values as compared with the estimated values provided by
exterior opinions and interior appraisals, considering state-
specific factors.
For commercial real estate loans, collateral values are
generally based on appraisals from internal and external
valuation sources. Collateral values are typically updated
every six to twelve months, either by obtaining a new
appraisal or by performing an internal analysis, in
accordance with the Firm’s policies. The Firm also considers
both borrower- and market-specific factors, which may
result in obtaining appraisal updates or broker price
opinions at more frequent intervals.
Loans held-for-sale
Loans held-for-sale are measured at the lower of cost or fair
value, with valuation changes recorded in noninterest
revenue. For consumer loans, the valuation is performed on
a portfolio basis. For wholesale loans, the valuation is
performed on an individual loan basis.
Interest income on loans held-for-sale is accrued and
recognized based on the contractual rate of interest.
Loan origination fees or costs and purchase price discounts
or premiums are deferred in a contra loan account until the
related loan is sold. The deferred fees or costs and
discounts or premiums are an adjustment to the basis of the
loan and therefore are included in the periodic
determination of the lower of cost or fair value adjustments
and/or the gain or loss recognized at the time of sale.
Because these loans are recognized at the lower of cost or
fair value, the Firm’s allowance for loan losses and charge-
off policies do not apply to these loans. However, loans
held-for-sale are subject to the nonaccrual policies
described above.
Loans at fair value
Loans for which the fair value option has been elected are
measured at fair value, with changes in fair value recorded
in noninterest revenue.
Interest income on these loans is accrued and recognized
based on the contractual rate of interest. Changes in fair
value are recognized in noninterest revenue. Loan
origination fees are recognized upfront in noninterest
revenue. Loan origination costs are recognized in the
associated expense category as incurred.
Because these loans are recognized at fair value, the Firm’s
allowance for loan losses and charge-off policies do not
apply to these loans. However, loans at fair value are
subject to the nonaccrual policies described above.
Refer to Note 3 for further information on the Firm’s
elections of fair value accounting under the fair value
option. Refer to Note 2 and Note 3 for further information
on loans carried at fair value and classified as trading
assets.
226
JPMorgan Chase & Co./2022 Form 10-K
Foreclosed property
The Firm acquires property from borrowers through loan
restructurings, workouts, and foreclosures. Property
acquired may include real property (e.g., residential real
estate, land, and buildings) and commercial and personal
property (e.g., automobiles, aircraft, railcars, and ships).
The Firm recognizes foreclosed property upon receiving
assets in satisfaction of a loan (e.g., by taking legal title or
physical possession). For loans collateralized by real
property, the Firm generally recognizes the asset received
at foreclosure sale or upon the execution of a deed in lieu of
foreclosure transaction with the borrower. Foreclosed
assets are reported in other assets on the Consolidated
balance sheets and initially recognized at fair value less
estimated costs to sell. Each quarter the fair value of the
acquired property is reviewed and adjusted, if necessary, to
the lower of cost or fair value. Subsequent adjustments to
fair value are charged/credited to noninterest revenue.
Operating expense, such as real estate taxes and
maintenance, are charged to other expense.
Loan classification changes
Loans in the held-for-investment portfolio that
management decides to sell are transferred to the held-for-
sale portfolio at the lower of cost or fair value on the date
of transfer. Credit-related losses are charged against the
allowance for loan losses; non-credit related losses such as
those due to changes in interest rates or foreign currency
exchange rates are recognized in noninterest revenue.
In the event that management decides to retain a loan in
the held-for-sale portfolio, the loan is transferred to the
held-for-investment portfolio at amortized cost on the date
of transfer. These loans are subsequently assessed for
impairment based on the Firm’s allowance methodology.
Refer to Note 13 for a further discussion of the
methodologies used in establishing the Firm’s allowance for
loan losses.
Loan modifications
The Firm seeks to modify certain loans in conjunction with
its loss mitigation activities. Through the modification,
JPMorgan Chase grants one or more concessions to a
borrower who is experiencing financial difficulty in order to
minimize the Firm’s economic loss and avoid foreclosure or
repossession of the collateral, and to ultimately maximize
payments received by the Firm from the borrower. The
concessions granted vary by program and by borrower-
specific characteristics, and may include interest rate
reductions, term extensions, payment delays, principal
forgiveness, or the acceptance of equity or other assets in
lieu of payments. Such modifications are accounted for and
reported as TDRs. Loans with short-term and other
insignificant modifications that are not considered
concessions are not TDRs.
Loans, except for credit card loans, modified in a TDR are
generally placed on nonaccrual status, although in many
cases such loans were already on nonaccrual status prior to
modification. These loans may be returned to performing
status (the accrual of interest is resumed) if the following
criteria are met: (i) the borrower has performed under the
modified terms for a minimum of six months and/or six
payments, and (ii) the Firm has an expectation that
repayment of the modified loan is reasonably assured based
on, for example, the borrower’s debt capacity and level of
future earnings, collateral values, LTV ratios, and other
current market considerations. In certain limited and well-
defined circumstances in which the loan is current at the
modification date, such loans are not placed on nonaccrual
status at the time of modification.
Loans modified in TDRs are generally measured for
impairment using the Firm’s established asset-specific
allowance methodology, which considers the expected re-
default rates for the modified loans. A loan modified in a
TDR generally remains subject to the asset-specific
component of the allowance throughout its remaining life,
regardless of whether the loan is performing and has been
returned to accrual status. Refer to Note 13 for further
discussion of the methodology used to estimate the Firm’s
asset-specific allowance.
JPMorgan Chase & Co./2022 Form 10-K
227
Notes to consolidated financial statements
Loan portfolio
The Firm’s loan portfolio is divided into three portfolio segments, which are the same segments used by the Firm to determine
the allowance for loan losses: Consumer, excluding credit card; Credit card; and Wholesale. Within each portfolio segment the
Firm monitors and assesses the credit risk in the following classes of loans, based on the risk characteristics of each loan class.
Consumer, excluding
credit card
• Residential real estate(a)
• Auto and other(b)
Credit card
Wholesale(c)(d)
• Credit card loans
• Secured by real estate
• Commercial and industrial
• Other(e)
(a) Includes scored mortgage and home equity loans held in CCB and AWM, and scored mortgage loans held in CIB and Corporate.
(b) Includes scored auto and business banking loans and overdrafts.
(c) Includes loans held in CIB, CB, AWM, Corporate, as well as risk-rated BWM and auto dealer loans held in CCB, for which the wholesale methodology is
applied when determining the allowance for loan losses.
(d) The wholesale portfolio segment's classes align with loan classifications as defined by the bank regulatory agencies, based on the loan's collateral,
purpose, and type of borrower.
(e) Includes loans to financial institutions, states and political subdivisions, SPEs, nonprofits, personal investment companies and trusts, as well as loans to
individuals and individual entities (predominantly Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB). Refer to Note
14 for more information on SPEs.
The following tables summarize the Firm’s loan balances by portfolio segment.
December 31, 2022
(in millions)
Retained
Held-for-sale
At fair value
Total
December 31, 2021
(in millions)
Retained
Held-for-sale
At fair value
Total
Consumer, excluding
credit card
Credit card
Wholesale
$ 300,753
$ 185,175
$ 603,670
618
10,004
—
—
3,352
32,075
Total(a)(b)
$ 1,089,598
3,970
42,079
$ 311,375
$ 185,175
$ 639,097
$ 1,135,647
Consumer, excluding
credit card
Credit card
Wholesale
$ 295,556
$ 154,296
$ 560,354
1,287
26,463
—
—
7,401
32,357
Total(a)(b)
$ 1,010,206
8,688
58,820
$ 323,306
$ 154,296
$ 600,112
$ 1,077,714
(a) Excludes $5.2 billion and $2.7 billion of accrued interest receivable at December 31, 2022 and 2021, respectively. The Firm wrote off accrued interest
receivable of $39 million and $56 million for the years ended December 31, 2022 and 2021, respectively.
(b) Loans (other than those for which the fair value option has been elected) are presented net of unamortized discounts and premiums and net deferred loan
fees or costs. These amounts were not material as of December 31, 2022 and 2021.
The following tables provide information about the carrying value of retained loans purchased, sold and reclassified to held-
for-sale during the periods indicated. Loans that were reclassified to held-for-sale and sold in a subsequent period are
excluded from the sales line of this table.
Year ended December 31,
(in millions)
Purchases
Sales
Retained loans reclassified to held-for-sale(a)
Consumer, excluding
credit card
Credit card
Wholesale
Total
2022
(b)(c)
$
$
1,625
2,884
229
$
1,088
$
41,934
1,055
2,713
44,818
1,284
—
—
—
2021
Year ended December 31,
(in millions)
Purchases
Sales
Retained loans reclassified to held-for-sale(a)
Consumer, excluding
credit card
Credit card
Wholesale
Total
(b)(c)
$
$
515
799
1,225
—
—
—
$
1,122
31,022
2,178
$
1,637
31,821
3,403
228
JPMorgan Chase & Co./2022 Form 10-K
Year ended December 31,
(in millions)
Purchases
Sales
Retained loans reclassified to held-for-sale(a)
352
2,084
Consumer, excluding
credit card
Credit card
Wholesale
Total
2020
$
3,474
(b)(c)
$
—
—
787
$
1,159
17,916
1,580
$
4,633
18,268
4,451
(a) Reclassifications of loans to held-for-sale are non-cash transactions.
(b) Predominantly includes purchases of residential real estate loans, including the Firm’s voluntary repurchases of certain delinquent loans from loan pools
as permitted by Government National Mortgage Association (“Ginnie Mae”) guidelines for the years ended December 31, 2022, 2021 and 2020. The Firm
typically elects to repurchase these delinquent loans as it continues to service them and/or manage the foreclosure process in accordance with applicable
requirements of Ginnie Mae, FHA, RHS, and/or VA.
(c) Excludes purchases of retained loans of $12.4 billion, $25.8 billion and $16.3 billion for the years ended December 31, 2022, 2021 and 2020,
respectively, which are predominantly sourced through the correspondent origination channel and underwritten in accordance with the Firm’s standards.
The amount of purchases of retained loans at December 31, 2020 has been revised to conform with the current presentation.
Gains and losses on sales of loans
Net gains/(losses) on sales of loans and lending-related commitments (including adjustments to record loans and lending-
related commitments held-for-sale at the lower of cost or fair value) recognized in noninterest revenue was $(186) million for
the year ended December 31, 2022 of which $(48) million was related to loans. Net gains/(losses) on sales of loans and
lending-related commitments was $261 million for the year ended December 31, 2021 of which $253 million was related to
loans. Net losses on sales of loans was $(36) million for the year ended December 31, 2020. In addition, the sale of loans may
also result in write downs, recoveries or changes in the allowance recognized in the provision for credit losses.
JPMorgan Chase & Co./2022 Form 10-K
229
Notes to consolidated financial statements
Consumer, excluding credit card loan portfolio
Consumer loans, excluding credit card loans, consist
primarily of scored residential mortgages, home equity
loans and lines of credit, auto and business banking loans,
with a focus on serving the prime consumer credit market.
The portfolio also includes home equity loans secured by
junior liens, prime mortgage loans with an interest-only
payment period, and certain payment-option loans that may
result in negative amortization.
The following table provides information about retained
consumer loans, excluding credit card, by class.
December 31, (in millions)
Residential real estate
Auto and other(a)
Total retained loans
2022
2021
$ 237,561 $ 224,795
63,192
70,761
•
$ 300,753 $ 295,556
(a) At December 31, 2022 and 2021, included $350 million and $5.4
billion of loans, respectively, in Business Banking under the PPP.
Delinquency rates are the primary credit quality indicator
for consumer loans. Loans that are more than 30 days past
due provide an early warning of borrowers who may be
experiencing financial difficulties and/or who may be
unable or unwilling to repay the loan. As the loan continues
to age, it becomes more clear whether the borrower is likely
to be unable or unwilling to pay. In the case of residential
real estate loans, late-stage delinquencies (greater than
150 days past due) are a strong indicator of loans that will
ultimately result in a foreclosure or similar liquidation
transaction. In addition to delinquency rates, other credit
quality indicators for consumer loans vary based on the
class of loan, as follows:
For residential real estate loans, the current estimated
LTV ratio, or the combined LTV ratio in the case of junior
lien loans, is an indicator of the potential loss severity in
the event of default. Additionally, LTV or combined LTV
ratios can provide insight into a borrower’s continued
willingness to pay, as the delinquency rate of high-LTV
loans tends to be greater than that for loans where the
borrower has equity in the collateral. The geographic
distribution of the loan collateral also provides insight as
to the credit quality of the portfolio, as factors such as
the regional economy, home price changes and specific
events such as natural disasters, will affect credit
quality. The borrower’s current or “refreshed” FICO
score is a secondary credit quality indicator for certain
loans, as FICO scores are an indication of the borrower’s
credit payment history. Thus, a loan to a borrower with a
low FICO score (less than 660) is considered to be of
higher risk than a loan to a borrower with a higher FICO
score. Further, a loan to a borrower with a high LTV
ratio and a low FICO score is at greater risk of default
than a loan to a borrower that has both a high LTV ratio
and a high FICO score.
•
For scored auto and business banking loans, geographic
distribution is an indicator of the credit performance of
the portfolio. Similar to residential real estate loans,
geographic distribution provides insights into the
portfolio performance based on regional economic
activity and events.
230
JPMorgan Chase & Co./2022 Form 10-K
Residential real estate
The following tables provide information on delinquency, which is the primary credit quality indicator for retained residential
real estate loans.
Term loans by origination year(d)
Revolving loans
December 31, 2022
(in millions, except ratios)
Loan delinquency(a)(b)
2022
2021
2020
2019
2018
Prior to
2018
Within the
revolving
period
Converted to
term loans
Total
Current
$ 39,934
$ 66,072
$ 43,315
$ 15,397
$ 6,339
$ 49,632
$ 5,589
$ 9,685
$ 235,963
30–149 days past due
150 or more days past due
29
1
11
1
14
6
20
10
20
7
597
480
15
4
208
175
914
684
Total retained loans
$ 39,964
$ 66,084
$ 43,335
$ 15,427
$ 6,366
$ 50,709
$ 5,608
$ 10,068
$ 237,561
% of 30+ days past due to
total retained loans(c)
0.08 %
0.02 %
0.05 %
0.19 %
0.42 %
2.07 %
0.34 %
3.80 %
0.66 %
Term loans by origination year(d)
Revolving loans
December 31, 2021
(in millions, except ratios)
Loan delinquency(a)(b)
2021
2020
2019
2018
2017
Prior to
2017
Within the
revolving
period
Converted to
term loans
Total
Current
$ 68,742
$ 48,334
$ 18,428
$ 7,929
$ 11,684
$ 49,147
$ 6,392
$ 11,807
$ 222,463
30–149 days past due
150 or more days past due
13
—
23
11
27
21
27
25
22
33
578
1,069
11
6
182
284
883
1,449
Total retained loans
$ 68,755
$ 48,368
$ 18,476
$ 7,981
$ 11,739
$ 50,794
$ 6,409
$ 12,273
$ 224,795
% of 30+ days past due to
total retained loans(c)
0.02 %
0.07 %
0.26 %
0.65 %
0.47 %
3.18 %
0.27 %
3.80 %
1.02 %
(a) Individual delinquency classifications include mortgage loans insured by U.S. government agencies which were not material at December 31, 2022 and
2021.
(b) At December 31, 2022 and 2021, loans under payment deferral programs offered in response to the COVID-19 pandemic which are still within their
deferral period and performing according to their modified terms are generally not considered delinquent.
(c) Excludes mortgage loans that are 30 or more days past due insured by U.S. government agencies which were not material at December 31, 2022 and
2021. These amounts have been excluded based upon the government guarantee.
(d) Purchased loans are included in the year in which they were originated.
Approximately 37% of the total revolving loans are senior lien loans; the remaining balance are junior lien loans. The lien
position the Firm holds is considered in the Firm’s allowance for credit losses. Revolving loans that have been converted to
term loans have higher delinquency rates than those that are still within the revolving period. That is primarily because the
fully-amortizing payment that is generally required for those products is higher than the minimum payment options available
for revolving loans within the revolving period.
JPMorgan Chase & Co./2022 Form 10-K
231
Notes to consolidated financial statements
Nonaccrual loans and other credit quality indicators
The following table provides information on nonaccrual and other credit quality indicators for retained residential real estate
loans.
(in millions, except weighted-average data)
Nonaccrual loans(a)(b)(c)(d)(e)
Current estimated LTV ratios(f)(g)(h)
Greater than 125% and refreshed FICO scores:
Equal to or greater than 660
Less than 660
101% to 125% and refreshed FICO scores:
Equal to or greater than 660
Less than 660
80% to 100% and refreshed FICO scores:
Equal to or greater than 660
Less than 660
Less than 80% and refreshed FICO scores:
Equal to or greater than 660
Less than 660
No FICO/LTV available
U.S. government-guaranteed
Total retained loans
Weighted average LTV ratio(f)(i)
Weighted average FICO(g)(i)
Geographic region(j)
California
New York
Florida
Texas
Illinois
Colorado
Washington
New Jersey
Massachusetts
Connecticut
All other
Total retained loans
December 31, 2022
December 31, 2021
$
$
3,745
$
4,759
$
2
—
174
6
12,034
184
2
2
37
15
2,701
89
215,096
209,295
8,659
1,360
46
9,658
2,930
66
$
237,561
$
224,795
51 %
769
50 %
765
$
73,111
$
34,469
18,868
14,961
11,293
9,968
9,059
7,106
6,379
5,432
46,915
$
237,561
$
71,383
32,545
16,182
13,865
11,565
8,885
8,292
6,832
6,105
5,242
43,899
224,795
(a) Includes collateral-dependent residential real estate loans that are charged down to the fair value of the underlying collateral less costs to sell. The Firm
reports, in accordance with regulatory guidance, residential real estate loans that have been discharged under Chapter 7 bankruptcy and not reaffirmed
by the borrower (“Chapter 7 loans”) as collateral-dependent nonaccrual TDRs, regardless of their delinquency status. At December 31, 2022,
approximately 5% of Chapter 7 residential real estate loans were 30 days or more past due.
(b) Nonaccrual loans exclude mortgage loans insured by U.S. government agencies which were not material at December 31, 2022 and 2021.
(c) Generally, all consumer nonaccrual loans have an allowance. In accordance with regulatory guidance, certain nonaccrual loans that are considered
collateral-dependent have been charged down to the lower of amortized cost or the fair value of their underlying collateral less costs to sell. If the value of
the underlying collateral improves subsequent to charge down, the related allowance may be negative.
(d) Interest income on nonaccrual loans recognized on a cash basis was $175 million and $172 million for the years ended December 31, 2022 and 2021,
respectively.
(e) Generally excludes loans under payment deferral programs offered in response to the COVID-19 pandemic.
(f) Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a
minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the
extent available and forecasted data where actual data is not available. Current estimated combined LTV for junior lien home equity loans considers all
available lien positions, as well as unused lines, related to the property.
(g) Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
(h) Includes residential real estate loans, primarily held in LLCs in AWM that did not have a refreshed FICO score. These loans have been included in a FICO
band based on management’s estimation of the borrower’s credit quality.
(i) Excludes loans with no FICO and/or LTV data available.
(j) The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2022.
232
JPMorgan Chase & Co./2022 Form 10-K
Loan modifications
Modifications of residential real estate loans, where the
Firm grants concessions to borrowers who are experiencing
financial difficulty are generally accounted for and reported
as TDRs. Loans with short-term or other insignificant
modifications that are not considered concessions are not
TDRs. The carrying value of new TDRs was $362 million,
$866 million and $819 million for the years ended
December 31, 2022, 2021 and 2020, respectively. There
were no additional commitments to lend to borrowers
whose residential real estate loans have been modified in
TDRs.
Year ended December 31,
Number of loans approved for a trial modification
Number of loans permanently modified
Concession granted:(a)
Interest rate reduction
Term or payment extension
Principal and/or interest deferred
Principal forgiveness
Other(b)
Nature and extent of modifications
The Firm’s proprietary modification programs as well as
government programs, including U.S. GSE programs,
generally provide various concessions to financially
troubled borrowers including, but not limited to, interest
rate reductions, term or payment extensions and delays of
principal and/or interest payments that would otherwise
have been required under the terms of the original
agreement. The following table provides information about
how residential real estate loans were modified in TDRs
under the Firm’s loss mitigation programs described above
during the periods presented. This table excludes Chapter 7
loans where the sole concession granted is the discharge of
debt and loans with short-term or other insignificant
modifications that are not considered concessions.
2022
3,902
4,182
54 %
67
10
1
37
2021
6,246
4,588
74 %
53
23
2
36
2020
5,522
6,850
50 %
49
14
2
66
(a) Represents concessions granted in permanent modifications as a percentage of the number of loans permanently modified. The sum of the percentages
exceeds 100% because predominantly all of the modifications include more than one type of concession. Concessions offered on trial modifications are
generally consistent with those granted on permanent modifications.
(b) Includes variable interest rate to fixed interest rate modifications and payment delays that meet the definition of a TDR.
Financial effects of modifications and redefaults
The following table provides information about the financial effects of the various concessions granted in modifications of
residential real estate loans under the loss mitigation programs described above and about redefaults of certain loans
modified in TDRs for the periods presented. The following table presents only the financial effects of permanent modifications
and do not include temporary concessions offered through trial modifications. This table also excludes Chapter 7 loans where
the sole concession granted is the discharge of debt and loans with short-term or other insignificant modifications that are not
considered concessions.
Year ended December 31,
(in millions, except weighted - average data)
Weighted-average interest rate of loans with interest rate reductions – before TDR
Weighted-average interest rate of loans with interest rate reductions – after TDR
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – before TDR
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – after TDR
Charge-offs recognized upon permanent modification
Principal deferred
Principal forgiven
Balance of loans that redefaulted within one year of permanent modification(a)
2022
4.75 %
3.35
22
38
1
16
2
$
2021
4.54 %
2.92
23
38
—
28
1
$
2020
5.09 %
3.28
22
39
5
16
5
147
$
160
$
199
$
$
(a) Represents loans permanently modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred
within one year of the modification. The dollar amounts presented represent the balance of such loans at the end of the reporting period in which such
loans defaulted. For residential real estate loans modified in TDRs, payment default is deemed to occur when the loan becomes two contractual payments
past due. In the event that a modified loan redefaults, it will generally be liquidated through foreclosure or another similar type of liquidation transaction.
Redefaults of loans modified within the last twelve months may not be representative of ultimate redefault levels.
At December 31, 2022, the weighted-average estimated remaining lives of residential real estate loans permanently modified
in TDRs were six years. The estimated remaining lives of these loans reflect estimated prepayments, both voluntary and
involuntary (i.e., foreclosures and other forced liquidations).
JPMorgan Chase & Co./2022 Form 10-K
233
Notes to consolidated financial statements
Active and suspended foreclosure
At December 31, 2022 and 2021, the Firm had residential real estate loans, excluding those insured by U.S. government
agencies, with a carrying value of $565 million and $619 million, respectively, that were not included in REO, but were in the
process of active or suspended foreclosure.
Auto and other
The following tables provide information on delinquency, which is the primary credit quality indicator for retained auto and
other consumer loans.
Term loans by origination year
Revolving loans
December 31, 2022
(in millions, except ratios)
2022
2021
2020
2019
2018
Prior to
2018
Within the
revolving
period
Converted
to term
loans
Total
Loan delinquency
Current
$ 22,187
$ 20,212
(b) $ 11,401
(b) $ 3,991
$ 1,467
$
578
$ 2,342
$
118
$ 62,296
30–119 days past due
120 or more days past due
263
—
308
53
100
24
68
—
33
—
17
1
12
2
10
5
811
85
Total retained loans
$ 22,450
$ 20,573
$ 11,525
$ 4,059
$ 1,500
$
596
$ 2,356
$
133
$ 63,192
% of 30+ days past due to total
retained loans(a)
1.17 %
1.15 %
0.83 %
1.68 %
2.20 %
3.02 %
0.59 % 11.28 %
1.18 %
Term loans by origination year
Revolving loans
December 31, 2021
(in millions, except ratios)
2021
2020
2019
2018
2017
Prior to
2017
Within the
revolving
period
Converted
to term
loans
Total
Loan delinquency
Current
30–119 days past due
120 or more days past due
$ 35,323
(c) $ 18,324
(c) $ 7,443
$ 3,671
$ 1,800
$ 666
$ 2,242
$ 120
$ 69,589
192
—
720
35
88
—
53
—
31
1
21
1
12
5
6
7
1,123
49
Total retained loans
$ 35,515
$ 19,079
$ 7,531
$ 3,724
$ 1,832
$ 688
$ 2,259
$ 133
$ 70,761
% of 30+ days past due to total
retained loans(a)
0.54 %
0.47 %
1.17 %
1.42 %
1.75 %
3.20 %
0.75 %
9.77 %
0.71 % (d)
(a) At December 31, 2022 and 2021, auto and other loans excluded $153 million and $667 million, respectively, of PPP loans guaranteed by the SBA that
are 30 or more days past due. These amounts have been excluded based upon the SBA guarantee.
(b) Includes $252 million of loans originated in 2021 and $98 million of loans originated in 2020 in Business Banking under the PPP. PPP loans are
guaranteed by the SBA. Other than in certain limited circumstances, the Firm typically does not recognize charge-offs, classify as nonaccrual nor record an
allowance for loan losses on these loans.
(c) Includes $4.4 billion of loans originated in 2021 and $1.0 billion of loans originated in 2020 in Business Banking under the PPP.
(d) Prior-period amount has been revised to conform with the current presentation.
234
JPMorgan Chase & Co./2022 Form 10-K
Loan modifications
Certain auto and other loan modifications are considered
to be TDRs as they provide various concessions to
borrowers who are experiencing financial difficulty. Loans
with short-term or other insignificant modifications that
are not considered concessions are not TDRs.
The impact of these modifications, as well as new TDRs,
were not material to the Firm for the years ended
December 31, 2022, 2021 and 2020. Additional
commitments to lend to borrowers whose loans have been
modified in TDRs as of December 31, 2022 and 2021
were not material.
Nonaccrual and other credit quality indicators
The following table provides information on nonaccrual and
other credit quality indicators for retained auto and other
consumer loans.
(in millions)
Nonaccrual loans(a)(b)(c)
Geographic region(d)
California
Texas
Florida
New York
Illinois
New Jersey
Pennsylvania
Georgia
Ohio
Louisiana
All other
Total retained loans
Total Auto and other
December
31, 2022
December
31, 2021
$
129 $
119
$
9,689 $
11,163
7,216
4,847
4,345
2,839
2,219
1,822
1,708
1,603
1,576
7,859
4,901
5,848
2,930
2,355
2,004
1,748
1,843
1,801
25,328
28,309
$
63,192 $
70,761
(a) At December 31, 2022 and 2021, nonaccrual loans excluded $101
million and $506 million, respectively, of PPP loans 90 or more days
past due and guaranteed by the SBA, of which $76 million and $35
million, respectively, were no longer accruing interest based on the
guidelines set by the SBA. Typically the principal balance of the loans is
insured and interest is guaranteed at a specified reimbursement rate
subject to meeting the guidelines set by the SBA. There were no loans
that were not guaranteed by the SBA that are 90 or more days past
due and still accruing interest at December 31, 2022 and 2021.
(b) Generally, all consumer nonaccrual loans have an allowance. In
accordance with regulatory guidance, certain nonaccrual loans that
are considered collateral-dependent have been charged down to the
lower of amortized cost or the fair value of their underlying collateral
less costs to sell. If the value of the underlying collateral improves
subsequent to charge down, the related allowance may be negative.
(c) Interest income on nonaccrual loans recognized on a cash basis was
not material for the years ended December 31, 2022 and 2021.
(d) The geographic regions presented in this table are ordered based on
the magnitude of the corresponding loan balances at December 31,
2022.
JPMorgan Chase & Co./2022 Form 10-K
235
Notes to consolidated financial statements
Credit card loan portfolio
The credit card portfolio segment includes credit card loans
originated and purchased by the Firm. Delinquency rates
are the primary credit quality indicator for credit card loans
as they provide an early warning that borrowers may be
experiencing difficulties (30 days past due); information on
those borrowers that have been delinquent for a longer
period of time (90 days past due) is also considered. In
addition to delinquency rates, the geographic distribution of
the loans provides insight as to the credit quality of the
portfolio based on the regional economy.
While the borrower’s credit score is another general
indicator of credit quality, the Firm does not view credit
scores as a primary indicator of credit quality because the
borrower’s credit score tends to be a lagging indicator. The
distribution of such scores provides a general indicator of
credit quality trends within the portfolio; however, the score
does not capture all factors that would be predictive of
future credit performance. Refreshed FICO score
information, which is obtained at least quarterly, for a
statistically significant random sample of the credit card
portfolio is indicated in the following table. FICO is
considered to be the industry benchmark for credit scores.
The Firm generally originates new credit card accounts to
prime consumer borrowers. However, certain cardholders’
FICO scores may decrease over time, depending on the
performance of the cardholder and changes in the credit
score calculation.
The following tables provide information on delinquency, which is the primary credit quality indicator for retained credit card
loans.
(in millions, except ratios)
Loan delinquency
Current and less than 30 days past due
and still accruing
30–89 days past due and still accruing
90 or more days past due and still accruing
Total retained loans
Loan delinquency ratios
% of 30+ days past due to total retained loans
% of 90+ days past due to total retained loans
(in millions, except ratios)
Loan delinquency
Current and less than 30 days past due
and still accruing
30–89 days past due and still accruing
90 or more days past due and still accruing
Total retained loans
Loan delinquency ratios
% of 30+ days past due to total retained loans
% of 90+ days past due to total retained loans
(a) Represents TDRs.
Within the revolving period
December 31, 2022
Converted to term loans(a)
Total
$
$
181,793
$
696
$
1,356
1,230
64
36
184,379
$
796
$
1.40 %
0.67
12.56 %
4.52
Within the revolving period
December 31, 2021
Converted to term loans(a)
Total
182,489
1,420
1,266
185,175
1.45 %
0.68
$
$
151,798
$
901
$
152,699
770
741
59
27
829
768
153,309
$
987
$
154,296
0.99 %
0.48
8.71 %
2.74
1.04 %
0.50
236
JPMorgan Chase & Co./2022 Form 10-K
Other credit quality indicators
The following table provides information on other credit quality indicators for retained credit card loans.
(in millions, except ratios)
Geographic region(a)
California
Texas
New York
Florida
Illinois
New Jersey
Ohio
Pennsylvania
Colorado
Arizona
All other
December 31, 2022
December 31, 2021
$
28,154
$
19,171
15,046
12,905
10,089
7,643
5,792
5,517
5,493
4,487
70,878
23,030
15,879
12,652
10,412
8,530
6,367
4,923
4,708
4,573
3,668
59,554
154,296
Total retained loans
$
185,175
$
Percentage of portfolio based on carrying value with estimated refreshed FICO scores
Equal to or greater than 660
Less than 660
No FICO available
86.8 %
13.0
0.2
88.5 %
11.3
0.2
(a) The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2022.
Loan modifications
The Firm may offer loan modification programs granting
concessions to credit card borrowers who are experiencing
financial difficulty. The Firm grants concessions for most of
the credit card loans under long-term programs. These
modifications involve placing the customer on a fixed
payment plan, generally for 60 months, and typically
include reducing the interest rate on the credit card.
Substantially all modifications under the Firm’s long-term
programs are considered to be TDRs. Loans with short-term
or other insignificant modifications that are not considered
concessions are not TDRs.
If the cardholder does not comply with the modified
payment terms, then the credit card loan continues to age
and will ultimately be charged-off in accordance with the
Firm’s standard charge-off policy. In most cases, the Firm
does not reinstate the borrower’s line of credit.
Financial effects of modifications and redefaults
The following table provides information about the financial
effects of the concessions granted on credit card loans
modified in TDRs and redefaults for the periods presented.
For all periods disclosed, new enrollments were less than
1% of total retained credit card loans.
Year ended December 31,
(in millions, except
weighted-average data)
Balance of new TDRs(a)
Weighted-average interest rate of
loans – before TDR
Weighted-average interest rate of
loans – after TDR
2022
2021
2020
$ 418
$ 393
$ 818
19.86 % 17.75 % 18.04 %
4.13
5.14
4.64
Balance of loans that redefaulted
within one year of modification(b) $
34
$
57
$ 110
(a) Represents the outstanding balance prior to modification.
(b) Represents loans modified in TDRs that experienced a payment default
in the periods presented, and for which the payment default occurred
within one year of the modification. The amounts presented represent
the balance of such loans as of the end of the quarter in which they
defaulted.
For credit card loans modified in TDRs, payment default is
deemed to have occurred when the borrower misses two
consecutive contractual payments. Defaulted modified
credit card loans remain in the modification program and
continue to be charged off in accordance with the Firm’s
standard charge-off policy.
JPMorgan Chase & Co./2022 Form 10-K
237
Notes to consolidated financial statements
Wholesale loan portfolio
Wholesale loans include loans made to a variety of clients,
ranging from large corporate and institutional clients to
high-net-worth individuals.
The primary credit quality indicator for wholesale loans is
the internal risk rating assigned to each loan. Risk ratings
are used to identify the credit quality of loans and
differentiate risk within the portfolio. Risk ratings on loans
consider the PD and the LGD. The PD is the likelihood that a
loan will default. The LGD is the estimated loss on the loan
that would be realized upon the default of the borrower and
takes into consideration collateral and structural support
for each credit facility.
Management considers several factors to determine an
appropriate internal risk rating, including the obligor’s debt
capacity and financial flexibility, the level of the obligor’s
earnings, the amount and sources for repayment, the level
and nature of contingencies, management strength, and the
industry and geography in which the obligor operates. The
Firm’s internal risk ratings generally align with the
qualitative characteristics (e.g., borrower capacity to meet
financial commitments and vulnerability to changes in the
economic environment) defined by S&P and Moody’s,
however the quantitative characteristics (e.g., PD and LGD)
may differ as they reflect internal historical experiences and
assumptions. The Firm generally considers internal ratings
with qualitative characteristics equivalent to BBB-/Baa3 or
higher as investment grade, and these ratings have a lower
PD and/or lower LGD than non-investment grade ratings.
Noninvestment-grade ratings are further classified as
noncriticized and criticized, and the criticized portion is
further subdivided into performing and nonaccrual loans,
representing management’s assessment of the collectibility
of principal and interest. Criticized loans have a higher PD
than noncriticized loans. The Firm’s definition of criticized
aligns with the U.S. banking regulatory definition of
criticized exposures, which consist of special mention,
substandard and doubtful categories.
Risk ratings are reviewed on a regular and ongoing basis by
Credit Risk Management and are adjusted as necessary for
updated information affecting the obligor’s ability to fulfill
its obligations.
As noted above, the risk rating of a loan considers the
industry in which the obligor conducts its operations. As
part of the overall credit risk management framework, the
Firm focuses on the management and diversification of its
industry and client exposures, with particular attention paid
to industries with an actual or potential credit concern.
Refer to Note 4 for further detail on industry
concentrations.
238
JPMorgan Chase & Co./2022 Form 10-K
The following tables provide information on internal risk rating, which is the primary credit quality indicator for retained
wholesale loans.
December 31,
(in millions, except ratios)
Loans by risk ratings
Secured by real estate
Commercial and industrial
Other(b)
Total retained loans
2022
2021
2022
2021
2022
2021
2022
2021
Investment-grade
$
99,552
$
92,369
$
76,275
$
75,783
$ 249,585
$ 241,859
$ 425,412
$ 410,011
Noninvestment- grade:
Noncriticized
23,272
22,495
Criticized performing
Criticized nonaccrual(a)
3,662
246
3,645
326
Total noninvestment- grade
27,180
26,466
81,393
8,974
1,018
91,385
62,039
6,900
969
69,908
57,888
1,106
699
59,693
52,440
162,553
136,974
770
759
13,742
1,963
11,315
2,054
53,969
178,258
150,343
Total retained loans
$ 126,732
$ 118,835
$ 167,660
$ 145,691
$ 309,278
$ 295,828
$ 603,670
$ 560,354
% of investment-grade to
total retained loans
% of total criticized to total
retained loans
% of criticized nonaccrual to
total retained loans
78.55 %
77.73 %
45.49 %
52.02 %
80.70 %
81.76 %
70.47 %
73.17 %
3.08
0.19
3.34
0.27
5.96
0.61
5.40
0.67
0.58
0.23
0.52
0.26
2.60
0.33
2.39
0.37
(a) At December 31, 2021 nonaccrual loans excluded $127 million of PPP loans 90 or more days past due and guaranteed by the SBA, predominantly in
commercial and industrial. At December 31, 2022 the amount excluded was not material.
(b) Includes loans to financial institutions, states and political subdivisions, SPEs, nonprofits, personal investment companies and trusts, as well as loans to
individuals and individual entities (predominantly Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB). Refer to Note
14 for more information on SPEs.
Secured by real estate
December 31, 2022
Term loans by origination year
Revolving loans
2022
2021
2020
2019
2018
Prior to 2018
Within the
revolving
period
Converted to
term loans
Total
(in millions)
Loans by risk ratings
Investment-grade
$
24,134 $
22,407 $
14,773 $
14,666 $
5,277 $
17,289
$
1,006 $
Noninvestment-grade
6,072
5,602
3,032
3,498
2,395
5,659
920
Total retained loans
$
30,206 $
28,009 $
17,805 $
18,164 $
7,672 $
22,948
$
1,926 $
—
2
2
$
99,552
27,180
$
126,732
Secured by real estate
December 31, 2021
Term loans by origination year
Revolving loans
(in millions)
2021
2020
2019
2018
2017
Prior to 2017
Loans by risk ratings
Within the
revolving
period
Converted to
term loans
Total
Investment-grade
$
23,346 $
16,030 $
17,265 $
8,103 $
7,325 $
19,066
$
1,226 $
Noninvestment-grade
5,364
3,826
4,564
3,806
2,834
5,613
458
Total retained loans
$
28,710 $
19,856 $
21,829 $
11,909 $
10,159 $
24,679
$
1,684 $
8
1
9
$
92,369
26,466
$
118,835
JPMorgan Chase & Co./2022 Form 10-K
239
Notes to consolidated financial statements
Commercial and industrial
December 31, 2022
Term loans by origination year
(in millions)
Loans by risk ratings
2022
2021
2020
2019
2018
Prior to 2018
Revolving loans
Within the
revolving
period
Converted
to term
loans
Total
Investment-grade
$
21,072 $
8,338 $
3,045 $
1,995 $
748 $
989
$
40,087 $
Noninvestment-grade
24,088
12,444
3,459
2,506
525
1,014
47,267
Total retained loans
$
45,160 $
20,782 $
6,504 $
4,501 $
1,273 $
2,003
$
87,354 $
1
82
83
$
76,275
(a)
91,385
$ 167,660
Commercial and industrial
December 31, 2021
Term loans by origination year
Revolving loans
(in millions)
2021
2020
2019
2018
2017
Loans by risk ratings
Prior to
2017
Within the
revolving
period
Converted to
term loans
Total
Investment-grade
$
21,342 $
6,268 $
3,609 $
1,269 $
1,108 $
819
$
41,367 $
Noninvestment-grade
19,314
7,112
4,559
2,177
930
430
35,312
Total retained loans
$
40,656 $
13,380 $
8,168 $
3,446 $
2,038 $
1,249
$
76,679 $
1
74
75
$
75,783
(b)
69,908
$ 145,691
(a) At December 31, 2022, $139 million of the $140 million total PPP loans in the wholesale portfolio were commercial and industrial. Of the $139 million,
$58 million were originated in 2021, and $81 million were originated in 2020. PPP loans are guaranteed by the SBA and considered investment-grade.
Other than in certain limited circumstances, the Firm typically does not recognize charge-offs, classify as nonaccrual nor record an allowance for loan
losses on these loans.
(b) At December 31, 2021, $1.1 billion of the $1.3 billion total PPP loans in the wholesale portfolio were commercial and industrial. Of the $1.1 billion,
$698 million were originated in 2021 and $396 million were originated in 2020.
Other(a)
December 31, 2022
Term loans by origination year
Revolving loans
2022
2021
2020
2019
2018
Prior to 2018
Within the
revolving
period
Converted to
term loans
Total
(in millions)
Loans by risk ratings
Investment-grade
$
32,121 $
15,864 $
13,015 $
4,529 $
2,159 $
7,251
$
171,049 $
3,597
$
249,585
Noninvestment-grade
16,829
7,096
1,821
699
451
475
32,240
82
59,693
Total retained loans
$
48,950 $
22,960 $
14,836 $
5,228 $
2,610 $
7,726
$
203,289 $
3,679
$
309,278
Other(a)
December 31, 2021
Term loans by origination year
Revolving loans
(in millions)
2021
2020
2019
2018
2017
Prior to 2017
Loans by risk ratings
Within the
revolving
period
Converted to
term loans
Total
Investment-grade
$
26,782 $
17,829 $
6,125 $
2,885 $
3,868 $
7,651
$
176,118 $
601
$
241,859
Noninvestment-grade
16,905
2,399
1,455
935
218
467
31,585
5
53,969
Total retained loans
$
43,687 $
20,228 $
7,580 $
3,820 $
4,086 $
8,118
$
207,703 $
606
$
295,828
(a) Includes loans to financial institutions, states and political subdivisions, SPEs, nonprofits, personal investment companies and trusts, as well as loans to
individuals and individual entities (predominantly Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB). Refer to Note
14 for more information on SPEs.
240
JPMorgan Chase & Co./2022 Form 10-K
The following table presents additional information on retained loans secured by real estate within the Wholesale portfolio,
which consists of loans secured wholly or substantially by a lien or liens on real property at origination. Multifamily lending
includes financing for acquisition, leasing and construction of apartment buildings. Other commercial lending largely includes
financing for acquisition, leasing and construction, largely for office, retail and industrial real estate. Included in secured by
real estate loans is $6.4 billion and $5.7 billion as of December 31, 2022 and 2021, respectively, of construction and
development loans made to finance land development and on-site construction of commercial, industrial, residential, or farm
buildings.
December 31,
(in millions, except ratios)
Multifamily
Other Commercial
Total retained loans secured
by real estate
2022
2021
2022
2021
2022
2021
Retained loans secured by real estate
$ 79,139
$ 73,801
$ 47,593
$ 45,034
$ 126,732
$ 118,835
Criticized
1,916
1,671
1,992
2,300
3,908
3,971
% of criticized to total retained loans secured by real estate
2.42 %
2.26 %
4.19 %
5.11 %
3.08 %
3.34 %
Criticized nonaccrual
$
51
$
91
$
195
$
235
$
246
$
326
% of criticized nonaccrual loans to total retained loans secured by real estate
0.06 %
0.12 %
0.41 %
0.52 %
0.19 %
0.27 %
Geographic distribution and delinquency
The following table provides information on the geographic distribution and delinquency for retained wholesale loans.
December 31,
(in millions)
Loans by geographic distribution(a)
Total U.S.
Total non-U.S.
Total retained loans
Loan delinquency
Secured by real estate
Commercial
and industrial
Other
Total
retained loans
2022
2021
2022
2021
2022
2021
2022
2021
$ 123,740 $ 115,732
$ 125,324 $ 106,449
$ 230,525 $ 215,750
$ 479,589 $ 437,931
2,992
3,103
42,336
39,242
78,753
80,078
124,081
122,423
$ 126,732 $ 118,835
$ 167,660 $ 145,691
$ 309,278 $ 295,828
$ 603,670 $ 560,354
Current and less than 30 days past due and still accruing $ 126,083 $ 118,163
$ 165,415 $ 143,459
$ 307,511 $ 293,358
$ 599,009 $ 554,980
30–89 days past due and still accruing
90 or more days past due and still accruing(b)
Criticized nonaccrual(c)
402
1
246
331
15
326
1,127
100
1,018
1,193
1,015
1,590
70
969
53
699
121
759
2,544
154
1,963
3,114
206
2,054
Total retained loans
$ 126,732 $ 118,835
$ 167,660 $ 145,691
$ 309,278 $ 295,828
$ 603,670 $ 560,354
(a) The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
(b) Represents loans that are considered well-collateralized and therefore still accruing interest.
(c) At December 31, 2021 nonaccrual loans excluded $127 million of PPP loans 90 or more days past due and guaranteed by the SBA, predominantly in
commercial and industrial. At December 31, 2022 the amount excluded was not material.
Nonaccrual loans
The following table provides information on retained wholesale nonaccrual loans.
December 31,
(in millions)
Nonaccrual loans
Secured by real estate
Commercial
and industrial
Other
Total
retained loans
2022
2021
2022
2021
2022
2021
2022
2021
With an allowance
Without an allowance(a)
Total nonaccrual loans(b)
$
$
172 $
254
$
74
72
686 $
332
604
$
365
246 $
326
$
1,018 $
969
$
487 $
212
699 $
286
$
1,345
$
473
618
759
$
1,963
$
1,144
910
2,054
(a) When the discounted cash flows or collateral value equals or exceeds the amortized cost of the loan, the loan does not require an allowance. This typically
occurs when the loans have been partially charged off and/or there have been interest payments received and applied to the loan balance.
(b) Interest income on nonaccrual loans recognized on a cash basis were not material for the years ended December 31, 2022 and 2021.
Loan modifications
Certain loan modifications are considered to be TDRs as they provide various concessions to borrowers who are experiencing
financial difficulty. Loans with short-term or other insignificant modifications that are not considered concessions are not TDRs
nor are loans for which the Firm has elected to suspend TDR accounting guidance under the option provided by the CARES Act.
New TDRs during the years ended December 31, 2022, 2021 and 2020 were $801 million, $881 million and $734 million,
respectively. New TDRs during the years ended December 31, 2022, 2021 and 2020 reflected the extension of maturity dates,
covenant waivers, receipt of assets in partial satisfaction of the loan and deferral of principal and interest payments,
predominantly in the Commercial and Industrial and Other loan classes. The impact of these modifications resulting in new
TDRs was not material to the Firm for the years ended December 31, 2022, 2021 and 2020.
The carrying value of TDRs was $936 million and $607 million as of December 31, 2022 and 2021, respectively.
JPMorgan Chase & Co./2022 Form 10-K
241
Notes to consolidated financial statements
Note 13 – Allowance for credit losses
The Firm’s allowance for credit losses represents
management's estimate of expected credit losses over the
remaining expected life of the Firm's financial assets
measured at amortized cost and certain off-balance sheet
lending-related commitments. The allowance for credit
losses comprises:
• the allowance for loan losses, which covers the Firm’s
retained loan portfolios (scored and risk-rated) and is
presented separately on the Consolidated balance sheets,
• the allowance for lending-related commitments, which is
presented on the Consolidated balance sheets in accounts
payable and other liabilities, and
• the allowance for credit losses on investment securities,
which is reflected in investment securities on the
Consolidated balance sheets.
The income statement effect of all changes in the allowance
for credit losses is recognized in the provision for credit
losses.
Determining the appropriateness of the allowance for credit
losses is complex and requires significant judgment by
management about the effect of matters that are inherently
uncertain. At least quarterly, the allowance for credit losses
is reviewed by the CRO, the CFO and the Controller of the
Firm. Subsequent evaluations of credit exposures,
considering the macroeconomic conditions, forecasts and
other factors then prevailing, may result in significant
changes in the allowance for credit losses in future periods.
The Firm’s policies used to determine its allowance for loan
losses and its allowance for lending-related commitments
are described in the following paragraphs. Refer to Note 10
for a description of the policies used to determine the
allowance for credit losses on investment securities.
Methodology for allowances for loan losses and lending-
related commitments
The allowance for loan losses and allowance for lending-
related commitments represents expected credit losses
over the remaining expected life of retained loans and
lending-related commitments that are not unconditionally
cancellable. The Firm does not record an allowance for
future draws on unconditionally cancellable lending-related
commitments (e.g., credit cards). Expected losses related to
accrued interest on credit card loans are considered in the
Firm’s allowance for loan losses. However, the Firm does
not record an allowance on other accrued interest
receivables, due to its policy to write these receivables off
no later than 90 days past due by reversing interest
income.
The expected life of each instrument is determined by
considering its contractual term, expected prepayments,
cancellation features, and certain extension and call
options. The expected life of funded credit card loans is
generally estimated by considering expected future
payments on the credit card account, and determining how
much of those amounts should be allocated to repayments
of the funded loan balance (as of the balance sheet date)
versus other account activity. This allocation is made using
an approach that incorporates the payment application
requirements of the Credit Card Accountability
Responsibility and Disclosure Act of 2009, generally paying
down the highest interest rate balances first.
The estimate of expected credit losses includes expected
recoveries of amounts previously charged off or expected to
be charged off, even if such recoveries result in a negative
allowance.
Collective and Individual Assessments
When calculating the allowance for loan losses and the
allowance for lending-related commitments, the Firm
assesses whether exposures share similar risk
characteristics. If similar risk characteristics exist, the Firm
estimates expected credit losses collectively, considering
the risk associated with a particular pool and the probability
that the exposures within the pool will deteriorate or
default. The assessment of risk characteristics is subject to
significant management judgment. Emphasizing one
characteristic over another or considering additional
characteristics could affect the allowance.
• Relevant risk characteristics for the consumer portfolio
include product type, delinquency status, current FICO
scores, geographic distribution, and, for collateralized
loans, current LTV ratios.
• Relevant risk characteristics for the wholesale portfolio
include risk rating, delinquency status, tenor, level and
type of collateral, LOB, geography, industry, credit
enhancement, product type, facility purpose, and
payment terms.
The majority of the Firm’s credit exposures share risk
characteristics with other similar exposures, and as a result
are collectively assessed for impairment (“portfolio-based
component”). The portfolio-based component covers
consumer loans, performing risk-rated loans and certain
lending-related commitments.
If an exposure does not share risk characteristics with other
exposures, the Firm generally estimates expected credit
losses on an individual basis, considering expected
repayment and conditions impacting that individual
exposure (“asset-specific component”). The asset-specific
component covers modified PCD loans, loans modified or
reasonably expected to be modified in a TDR, collateral-
dependent loans, as well as, risk-rated loans that have been
placed on nonaccrual status.
Portfolio-based component
The portfolio-based component begins with a quantitative
calculation that considers the likelihood of the borrower
changing delinquency status or moving from one risk rating
to another. The quantitative calculation covers expected
credit losses over an instrument’s expected life and is
estimated by applying credit loss factors to the Firm’s
estimated exposure at default. The credit loss factors
incorporate the probability of borrower default as well as
loss severity in the event of default. They are derived using
242
JPMorgan Chase & Co./2022 Form 10-K
recognized (for recoveries of prior charge-offs associated
with improvements in the fair value of collateral).
The asset-specific component of the allowance for loans
that have been or are expected to be modified in TDRs
incorporates the effect of the modification on the loan’s
expected cash flows (including forgone interest, principal
forgiveness, as well as other concessions), and also the
potential for redefault. For residential real estate loans
modified in or expected to be modified in TDRs, the Firm
develops product-specific probability of default estimates,
which are applied at a loan level to compute expected
losses. In developing these probabilities of default, the Firm
considers the relationship between the credit quality
characteristics of the underlying loans and certain
assumptions about housing prices and unemployment,
based upon industry-wide data. The Firm also considers its
own historical loss experience to-date based on actual
redefaulted modified loans. For credit card loans modified
in or expected to be modified in TDRs, expected losses
incorporate projected delinquencies and charge-offs based
on the Firm’s historical experience by type of modification
program. For wholesale loans modified or expected to be
modified in TDRs, expected losses incorporate
management’s expectation of the borrower’s ability to
repay under the modified terms.
Estimating the timing and amounts of future cash flows is
highly judgmental as these cash flow projections rely upon
estimates such as loss severities, asset valuations, default
rates (including redefault rates on modified loans), the
amounts and timing of interest or principal payments
(including any expected prepayments) or other factors that
are reflective of current and expected market conditions.
These estimates are, in turn, dependent on factors such as
the duration of current overall economic conditions,
industry, portfolio, or borrower-specific factors, the
expected outcome of insolvency proceedings as well as, in
certain circumstances, other economic factors. All of these
estimates and assumptions require significant management
judgment and certain assumptions are highly subjective.
a weighted average of five internally developed
macroeconomic scenarios over an eight-quarter forecast
period, followed by a single year straight-line interpolation
to revert to long run historical information for periods
beyond the eight-quarter forecast period. The five
macroeconomic scenarios consist of a central, relative
adverse, extreme adverse, relative upside and extreme
upside scenario, and are updated by the Firm’s central
forecasting team. The scenarios take into consideration the
Firm’s macroeconomic outlook, internal perspectives from
subject matter experts across the Firm, and market
consensus and involve a governed process that incorporates
feedback from senior management across LOBs, Corporate
Finance and Risk Management.
The quantitative calculation is adjusted to take into
consideration model imprecision, emerging risk
assessments, trends and other subjective factors that are
not yet reflected in the calculation. These adjustments are
accomplished in part by analyzing the historical loss
experience, including during stressed periods, for each
major product or model. Management applies judgment in
making this adjustment, including taking into account
uncertainties associated with the economic and political
conditions, quality of underwriting standards, borrower
behavior, credit concentrations or deterioration within an
industry, product or portfolio, as well as other relevant
internal and external factors affecting the credit quality of
the portfolio. In certain instances, the interrelationships
between these factors create further uncertainties.
The application of different inputs into the quantitative
calculation, and the assumptions used by management to
adjust the quantitative calculation, are subject to significant
management judgment, and emphasizing one input or
assumption over another, or considering other inputs or
assumptions, could affect the estimate of the allowance for
loan losses and the allowance for lending-related
commitments.
Asset-specific component
To determine the asset-specific component of the
allowance, collateral-dependent loans (including those
loans for which foreclosure is probable) and larger,
nonaccrual risk-rated loans in the wholesale portfolio
segment are generally evaluated individually, while smaller
loans (both scored and risk-rated) are aggregated for
evaluation using factors relevant for the respective class of
assets.
The Firm generally measures the asset-specific allowance as
the difference between the amortized cost of the loan and
the present value of the cash flows expected to be collected,
discounted at the loan’s original effective interest rate.
Subsequent changes in impairment are generally
recognized as an adjustment to the allowance for loan
losses. For collateral-dependent loans, the fair value of
collateral less estimated costs to sell is used to determine
the charge-off amount for declines in value (to reduce the
amortized cost of the loan to the fair value of collateral) or
the amount of negative allowance that should be
JPMorgan Chase & Co./2022 Form 10-K
243
Notes to consolidated financial statements
Allowance for credit losses and related information
The table below summarizes information about the allowances for credit losses, and includes a breakdown of loans and
lending-related commitments by impairment methodology. Refer to Note 10 for further information on the allowance for
credit losses on investment securities.
(Table continued on next page)
Year ended December 31,
(in millions)
Allowance for loan losses
Beginning balance at January 1,
Cumulative effect of a change in accounting principle(a)
Gross charge-offs
Gross recoveries collected
Net charge-offs
Provision for loan losses
Other
Ending balance at December 31,
Allowance for lending-related commitments
Beginning balance at January 1,
Cumulative effect of a change in accounting principle(a)
Provision for lending-related commitments
Other
Ending balance at December 31,
Total allowance for investment securities
Total allowance for credit losses(b)
Allowance for loan losses by impairment methodology
Asset-specific(c)
Portfolio-based
Total allowance for loan losses
Loans by impairment methodology
Asset-specific(c)
Portfolio-based
Total retained loans
Collateral-dependent loans
Net charge-offs
Loans measured at fair value of collateral less cost to sell
Allowance for lending-related commitments by impairment methodology
Asset-specific
Portfolio-based
Total allowance for lending-related commitments(d)
Lending-related commitments by impairment methodology
Asset-specific
Portfolio-based(e)
Total lending-related commitments
2022
Consumer,
excluding
credit card
Credit card
Wholesale
Total
$
1,765
$
10,250
$
4,371
$
16,386
NA
812
(543)
269
543
1
NA
3,192
(789)
2,403
3,353
—
NA
322
(141)
181
2,293
3
NA
4,326
(1,473)
2,853
6,189
4
2,040
$
11,200
$
6,486
$
19,726
113
$
NA
(37)
—
76
NA
2,116
$
$
—
NA
—
—
—
NA
11,200
(624)
$
2,664
2,040
$
223
10,977
11,200
$
2,148
$
2,261
NA
157
1
2,306
NA
8,792
467
6,019
6,486
$
$
$
$
$
NA
120
1
2,382
96
22,204
66
19,660
19,726
$
$
$
$
$
$
$
$
$
$
$
11,978
$
796
$
2,189
$
14,963
288,775
184,379
601,481
1,074,635
$
300,753
$
185,175
$
603,670
$ 1,089,598
$
$
$
$
$
(33)
$
3,585
—
76
76
—
20,423
20,423
$
$
$
$
—
—
—
—
—
—
—
—
$
$
$
$
16
464
90
2,216
2,306
$
$
$
(17)
4,049
90
2,292
2,382
455
$
455
461,688
482,111
$
462,143
$
482,566
(a) Represents the impact to allowance for credit losses upon the adoption of CECL on January 1, 2020. Refer to Note 1 for further information.
(b) At December 31, 2022 excludes an allowance for credit losses associated with certain accounts receivable in CIB of $21 million.
(c) Includes collateral dependent loans, including those considered TDRs and those for which foreclosure is deemed probable, modified PCD loans and non-
collateral dependent loans that have been modified or are reasonably expected to be modified in a TDR. Also includes risk-rated loans that have been
placed on nonaccrual status for the wholesale portfolio segment. The asset-specific credit card allowance for loans modified, or reasonably expected to be
modified, in a TDR is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates.
(d) The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(e) At December 31, 2022, 2021 and 2020, lending-related commitments excluded $13.1 billion, $15.7 billion and $19.5 billion, respectively, for the
consumer, excluding credit card portfolio segment; $821.3 billion, $730.5 billion and $658.5 billion, respectively, for the credit card portfolio segment;
and $9.8 billion, $32.1 billion and $25.3 billion, respectively, for the wholesale portfolio segment, which were not subject to the allowance for lending-
244
JPMorgan Chase & Co./2022 Form 10-K
related commitments. Prior-period amount for wholesale lending-related commitments, including the amount not subject to allowance, has been revised
to conform with the current presentation.
(table continued from previous page)
2021
2020
Consumer,
excluding
credit card
Credit card
Wholesale
Total
Consumer,
excluding
credit card
Credit card
Wholesale
Total
$
3,636
$
17,800
$
6,892
$
28,328
$
2,538
$
NA
630
(619)
11
(1,858)
(2)
1,765
187
NA
(75)
1
113
NA
1,878
$
$
$
$
(665)
$
2,430
1,765
NA
3,651
(939)
2,712
(4,838)
—
10,250
—
NA
—
—
—
NA
10,250
313
9,937
NA
283
(141)
142
(2,375)
(4)
4,371
2,222
NA
(74)
—
2,148
NA
6,519
263
4,108
4,371
$
$
$
$
$
$
$
NA
4,564
(1,699)
2,865
(9,071)
(6)
297
805
(631)
174
974
1
16,386
$
3,636
2,409
$
NA
(149)
1
2,261
$
42
12
133
42
—
187
NA
18,689
$
3,823
$
$
$
$
(89) $
(7)
$
16,475
16,386
$
3,643
3,636
$
$
$
$
$
$
$
$
10,250
$
$
$
$
$
$
5,683
5,517
5,077
(791)
4,286
10,886
—
17,800
—
—
—
—
—
NA
17,800
633
17,167
17,800
$
4,902
$
13,123
(1,642)
954
(155)
799
4,431
—
6,892
1,179
(35)
1,079
(1)
2,222
NA
9,114
682
6,210
6,892
$
$
$
$
$
$
$
4,172
6,836
(1,577)
5,259
16,291
1
28,328
1,191
98
1,121
(1)
2,409
78
30,815
1,308
27,020
28,328
$
$
$
$
$
$
$
13,919
$
987
$
2,255
$
17,161
$
16,648
$
1,375
$
3,606
$
21,629
281,637
153,309
558,099
993,045
285,479
142,057
511,341
938,877
$
295,556
$
154,296
$
560,354
$ 1,010,206
$
302,127
$
143,432
$
514,947
$
960,506
$
$
$
$
$
33
$
4,472
—
113
113
—
29,588
29,588
$
$
$
$
—
—
—
—
—
—
—
—
$
$
$
$
38
617
167
1,981
2,148
$
$
$
71
$
133
$
5,089
4,956
167
$
2,094
2,261
$
—
187
187
764
$
764
$
453,571
483,159
$
454,335
$
483,923
$
—
37,783
37,783
—
—
—
—
—
—
—
—
$
$
$
$
76
188
114
2,108
2,222
$
$
$
209
5,144
114
2,295
2,409
577
$
577
423,993
461,776
$
424,570
$
462,353
$
$
$
$
JPMorgan Chase & Co./2022 Form 10-K
245
Notes to consolidated financial statements
Discussion of changes in the allowance
The allowance for credit losses as of December 31, 2022
was $22.2 billion, reflecting a net addition of $3.5 billion
from December 31, 2021, consisting of:
• $2.3 billion in wholesale, driven by deterioration in the
Firm’s macroeconomic outlook and loan growth,
predominantly in CB and CIB, and
• $1.2 billion in consumer, predominantly driven by Card
Services, reflecting higher outstanding balances and
deterioration in the Firm’s macroeconomic outlook,
partially offset by a reduction in the allowance related to
a decrease in uncertainty associated with borrower
behavior as the effects of the pandemic gradually recede.
Deterioration in the Firm’s macroeconomic outlook included
both updates to the central scenario in the fourth quarter of
2022, which now reflects a mild recession, as well as the
impact of the increased weight placed on the adverse
scenarios beginning in the first quarter of 2022 due to the
effects associated with higher inflation, changes in
monetary policy, and geopolitical risks, including the war in
Ukraine.
The Firm's allowance for credit losses is estimated using a
weighted average of five internally developed
macroeconomic scenarios. The adverse scenarios
incorporate more punitive macroeconomic factors than the
central case assumptions provided in the table below,
resulting in a weighted average U.S. unemployment rate
peaking at 5.6% in the second quarter of 2024, and a
1.2% lower U.S. real GDP exiting the second quarter of
2024.
The Firm’s central case assumptions reflected U.S.
unemployment rates and U.S. real GDP as follows:
Assumptions at December 31, 2022
2Q23
4Q23
2Q24
U.S. unemployment rate(a)
YoY growth in U.S. real GDP(b)
3.8 %
1.5 %
4.3 %
0.4 %
5.0 %
— %
Assumptions at December 31, 2021
2Q22
4Q22
2Q23
U.S. unemployment rate(a)
YoY growth in U.S. real GDP(b)
4.2 %
3.1 %
4.0 %
2.8 %
3.9 %
2.1 %
(a) Reflects quarterly average of forecasted U.S. unemployment rate.
(b) The year over year growth in U.S. real GDP in the forecast horizon of
the central scenario is calculated as the percentage change in U.S. real
GDP levels from the prior year.
Subsequent changes to this forecast and related estimates
will be reflected in the provision for credit losses in future
periods.
Refer to Critical Accounting Estimates Used by the Firm on
pages 149-152 for further information on the allowance for
credit losses and related management judgments.
Refer to Consumer Credit Portfolio on pages 110-115,
Wholesale Credit Portfolio on pages 116-126 for additional
information on the consumer and wholesale credit
portfolios.
246
JPMorgan Chase & Co./2022 Form 10-K
Note 14 – Variable interest entities
Refer to Note 1 on page 164 for a further description of JPMorgan Chase’s accounting policies regarding consolidation of VIEs.
The following table summarizes the most significant types of Firm-sponsored VIEs by business segment. The Firm considers a
“Firm-sponsored” VIE to include any entity where: (1) JPMorgan Chase is the primary beneficiary of the structure; (2) the VIE
is used by JPMorgan Chase to securitize Firm assets; (3) the VIE issues financial instruments with the JPMorgan Chase name;
or (4) the entity is a JPMorgan Chase–administered asset-backed commercial paper conduit.
Line of Business
Transaction Type
Activity
2022 Form 10-K
page references
Credit card securitization trusts
Securitization of originated credit card receivables
pages 247-248
CCB
CIB
Mortgage securitization trusts
Mortgage and other securitization trusts
Multi-seller conduits
Servicing and securitization of both originated and
purchased residential mortgages
Securitization of both originated and purchased
residential and commercial mortgages, and other
consumer loans
Assisting clients in accessing the financial markets in
a cost-efficient manner and structuring transactions
to meet investor needs
pages 248-250
pages 248-250
page 250
Municipal bond vehicles
Financing of municipal bond investments
pages 250-251
The Firm’s other business segments are also involved with VIEs (both third-party and Firm-sponsored), but to a lesser extent,
as follows:
• Asset & Wealth Management: AWM sponsors and manages certain funds that are deemed VIEs. As asset manager of the
funds, AWM earns a fee based on assets managed; the fee varies with each fund’s investment objective and is competitively
priced. For fund entities that qualify as VIEs, AWM’s interests are, in certain cases, considered to be significant variable
interests that result in consolidation of the financial results of these entities.
•
•
Commercial Banking: CB provides financing and lending-related services to a wide spectrum of clients, including certain
third-party-sponsored entities that may meet the definition of a VIE. CB does not control the activities of these entities and
does not consolidate these entities. CB’s maximum loss exposure, regardless of whether the entity is a VIE, is generally
limited to loans and lending-related commitments which are reported and disclosed in the same manner as any other third-
party transaction.
Corporate: Corporate is involved with entities that may meet the definition of VIEs; however these entities are generally
subject to specialized investment company accounting, which does not require the consolidation of investments, including
VIEs. In addition, Treasury and CIO invest in securities generally issued by third parties which may meet the definition of
VIEs (e.g., issuers of asset-backed securities). In general, the Firm does not have the power to direct the significant
activities of these entities and therefore does not consolidate these entities. Refer to Note 10 for further information on the
Firm’s investment securities portfolio.
In addition, CIB also invests in and provides financing and other services to VIEs sponsored by third parties. Refer to pages
251-252 of this Note for more information on consolidated VIE assets and liabilities as well as the VIEs sponsored by third
parties.
Significant Firm-sponsored variable interest entities
Credit card securitizations
CCB’s Card Services business may securitize originated
credit card loans, primarily through the Chase Issuance
Trust (the “Trust”). The Firm’s continuing involvement in
credit card securitizations includes servicing the
receivables, retaining an undivided seller’s interest in the
receivables, retaining certain senior and subordinated
securities and maintaining escrow accounts.
The Firm consolidates the assets and liabilities of its
sponsored credit card trusts as it is considered to be the
primary beneficiary of these securitization trusts based on
the Firm’s ability to direct the activities of these VIEs
through its servicing responsibilities and other duties,
including making decisions as to the receivables that are
transferred into those trusts and as to any related
modifications and workouts. Additionally, the nature and
extent of the Firm’s other continuing involvement with the
trusts, as indicated above, obligates the Firm to absorb
losses and gives the Firm the right to receive certain
benefits from these VIEs that could potentially be
significant.
The underlying securitized credit card receivables and other
assets of the securitization trusts are available only for
payment of the beneficial interests issued by the
securitization trusts; they are not available to pay the Firm’s
other obligations or the claims of the Firm’s creditors.
The agreements with the credit card securitization trusts
require the Firm to maintain a minimum undivided interest
in the credit card trusts (generally 5%). As of
December 31, 2022 and 2021, the Firm held undivided
interests in Firm-sponsored credit card securitization trusts
of $6.1 billion and $7.1 billion, respectively. The Firm
maintained an average undivided interest in principal
JPMorgan Chase & Co./2022 Form 10-K
247
Notes to consolidated financial statements
receivables owned by those trusts of approximately 62%
and 57% for the years ended December 31, 2022 and
2021, respectively. The Firm did not retain any senior
securities and retained $1.5 billion of subordinated
securities in certain of its credit card securitization trusts at
both December 31, 2022 and 2021. The Firm’s undivided
interests in the credit card trusts and securities retained are
eliminated in consolidation.
Firm-sponsored mortgage and other securitization trusts
The Firm securitizes (or has securitized) originated and
purchased residential mortgages, commercial mortgages
and other consumer loans primarily in its CCB and CIB
businesses. Depending on the particular transaction, as well
as the respective business involved, the Firm may act as the
servicer of the loans and/or retain certain beneficial
interests in the securitization trusts.
The following tables present the total unpaid principal amount of assets held in Firm-sponsored private-label securitization
entities, including those in which the Firm has continuing involvement, and those that are consolidated by the Firm. Continuing
involvement includes servicing the loans, holding senior interests or subordinated interests (including amounts required to be
held pursuant to credit risk retention rules), recourse or guarantee arrangements, and derivative contracts. In certain
instances, the Firm’s only continuing involvement is servicing the loans. The Firm’s maximum loss exposure from retained and
purchased interests is the carrying value of these interests.
Principal amount outstanding
Total assets
held by
securitization
VIEs
Assets
held in
consolidated
securitization
VIEs
Assets held in
nonconsolidated
securitization
VIEs with
continuing
involvement
JPMorgan Chase interest in securitized assets in
nonconsolidated VIEs(c)(d)(e)
Trading
assets
Investment
securities
Other
financial
assets
Total
interests
held by
JPMorgan
Chase
December 31, 2022
(in millions)
Securitization-related(a)
Residential mortgage:
Prime/Alt-A and option ARMs
$
55,362 $
754 $
37,058
$
744 $
1,918 $
— $
2,662
Subprime
Commercial and other(b)
Total
9,709
164,915
—
—
1,743
127,037
10
888
—
5,373
—
670
10
6,931
$
229,986 $
754 $
165,838
$
1,642 $
7,291 $
670 $
9,603
Principal amount outstanding
Total assets
held by
securitization
VIEs
Assets
held in
consolidated
securitization
VIEs
Assets held in
nonconsolidated
securitization
VIEs with
continuing
involvement
JPMorgan Chase interest in securitized assets in
nonconsolidated VIEs(c)(d)(e)
Trading
assets
Investment
securities
Other
financial
assets
Total
interests
held by
JPMorgan
Chase
December 31, 2021
(in millions)
Securitization-related(a)
Residential mortgage:
Prime/Alt-A and option ARMs
$
55,085 $
942 $
42,522
(f) $
974 $
684 $
95 $
1,753
Subprime
Commercial and other(b)
Total
10,966
150,694
27
—
10,115
93,698
2
671
—
3,274
—
506
$
216,745 $
969 $
146,335
$
1,647 $
3,958 $
601 $
2
4,451
6,206
(a) Excludes U.S. GSEs and government agency securitizations and re-securitizations, which are not Firm-sponsored.
(b) Consists of securities backed by commercial real estate loans and non-mortgage-related consumer receivables.
(c) Excludes the following: retained servicing; securities retained from loan sales and securitization activity related to U.S. GSEs and government agencies;
interest rate and foreign exchange derivatives primarily used to manage interest rate and foreign exchange risks of securitization entities; senior securities
of $134 million and $145 million at December 31, 2022 and 2021,respectively, and subordinated securities which were not material at both
December 31, 2022 and 2021, which the Firm purchased in connection with CIB’s secondary market-making activities.
(d) Includes interests held in re-securitization transactions.
(e) As of December 31, 2022 and 2021, 84% and 79%, respectively, of the Firm’s retained securitization interests, which are predominantly carried at fair
value and include amounts required to be held pursuant to credit risk retention rules, were risk-rated “A” or better, on an S&P-equivalent basis. The
retained interests in prime residential mortgages consisted of $2.6 billion and $1.6 billion of investment-grade retained interests at December 31, 2022
and 2021, respectively, and $131 million of noninvestment-grade retained interests at December 31, 2021; noninvestment-grade retained interests were
not material at December 31, 2022. The retained interests in commercial and other securitization trusts consisted of $5.8 billion and $3.5 billion of
investment-grade retained interests, and $1.1 billion and $929 million of noninvestment-grade retained interests at December 31, 2022 and 2021,
respectively.
(f) Prior-period amount has been revised to conform with the current presentation.
248
JPMorgan Chase & Co./2022 Form 10-K
The following table presents the principal amount of
securities transferred to re-securitization VIEs.
Year ended December 31,
(in millions)
Transfers of securities to VIEs
U.S. GSEs and government
agencies
2022
2021
2020
$ 16,128 $ 53,923 $ 46,123
Most re-securitizations with which the Firm is involved are
client-driven transactions in which a specific client or group
of clients is seeking a specific return or risk profile. For
these transactions, the Firm has concluded that the
decision-making power of the entity is shared between the
Firm and its clients, considering the joint effort and
decisions in establishing the re-securitization trust and its
assets, as well as the significant economic interest the client
holds in the re-securitization trust; therefore the Firm does
not consolidate the re-securitization VIE.
The Firm did not transfer any private label securities to re-
securitization VIEs during 2022, 2021 and 2020, and
retained interests in any such Firm-sponsored VIEs as of
December 31, 2022 and 2021 were not material.
Additionally, the Firm may invest in beneficial interests of
third-party-sponsored re-securitizations and generally
purchases these interests in the secondary market. In these
circumstances, the Firm does not have the unilateral ability
to direct the most significant activities of the re-
securitization trust, either because it was not involved in
the initial design of the trust, or the Firm was involved with
an independent third-party sponsor and demonstrated
shared power over the creation of the trust; therefore, the
Firm does not consolidate the re-securitization VIE.
Residential mortgage
The Firm securitizes residential mortgage loans originated
by CCB, as well as residential mortgage loans purchased
from third parties by either CCB or CIB. CCB generally
retains servicing for all residential mortgage loans it
originated or purchased, and for certain mortgage loans
purchased by CIB. For securitizations of loans serviced by
CCB, the Firm has the power to direct the significant
activities of the VIE because it is responsible for decisions
related to loan modifications and workouts. CCB may also
retain an interest upon securitization.
In addition, CIB engages in underwriting and trading
activities involving securities issued by Firm-sponsored
securitization trusts. As a result, CIB at times retains senior
and/or subordinated interests (including residual interests
and amounts required to be held pursuant to credit risk
retention rules) in residential mortgage securitizations at
the time of securitization, and/or reacquires positions in the
secondary market in the normal course of business. In
certain instances, as a result of the positions retained or
reacquired by CIB or held by Treasury and CIO or CCB, when
considered together with the servicing arrangements
entered into by CCB, the Firm is deemed to be the primary
beneficiary of certain securitization trusts.
The Firm does not consolidate residential mortgage
securitizations (Firm-sponsored or third-party-sponsored)
when it is not the servicer (and therefore does not have the
power to direct the most significant activities of the trust)
or does not hold a beneficial interest in the trust that could
potentially be significant to the trust.
Commercial mortgages and other consumer securitizations
CIB originates and securitizes commercial mortgage loans,
and engages in underwriting and trading activities involving
the securities issued by securitization trusts. CIB may retain
unsold senior and/or subordinated interests (including
amounts required to be held pursuant to credit risk
retention rules) in commercial mortgage securitizations at
the time of securitization but, generally, the Firm does not
service commercial loan securitizations. Treasury and CIO
may choose to invest in these securitizations as well. For
commercial mortgage securitizations the power to direct
the significant activities of the VIE generally is held by the
servicer or investors in a specified class of securities
(“controlling class”). The Firm generally does not retain an
interest in the controlling class in its sponsored commercial
mortgage securitization transactions.
Re-securitizations
The Firm engages in certain re-securitization transactions in
which debt securities are transferred to a VIE in exchange
for new beneficial interests. These transfers occur in
connection with both U.S. GSEs and government agency
sponsored VIEs, which are backed by residential mortgages.
The Firm’s consolidation analysis is largely dependent on
the Firm’s role and interest in the re-securitization trusts.
JPMorgan Chase & Co./2022 Form 10-K
249
Notes to consolidated financial statements
The following table presents information on the Firm's
interests in nonconsolidated re-securitization VIEs.
December 31,
(in millions)
U.S. GSEs and government agencies
Nonconsolidated
re-securitization VIEs
2022
2021
Interest in VIEs
$
2,580 $
1,947
As of December 31, 2022 and 2021, the Firm did not
consolidate any U.S. GSE and government agency re-
securitization VIEs or any Firm-sponsored private-label re-
securitization VIEs.
Multi-seller conduits
Multi-seller conduit entities are separate bankruptcy
remote entities that provide secured financing,
collateralized by pools of receivables and other financial
assets, to customers of the Firm. The conduits fund their
financing facilities through the issuance of highly rated
commercial paper. The primary source of repayment of the
commercial paper is the cash flows from the pools of assets.
In most instances, the assets are structured with deal-
specific credit enhancements provided to the conduits by
the customers (i.e., sellers) or other third parties. Deal-
specific credit enhancements are generally structured to
cover a multiple of historical losses expected on the pool of
assets, and are typically in the form of overcollateralization
provided by the seller. The deal-specific credit
enhancements mitigate the Firm’s potential losses on its
agreements with the conduits.
To ensure timely repayment of the commercial paper, and
to provide the conduits with funding to provide financing to
customers in the event that the conduits do not obtain
funding in the commercial paper market, each asset pool
financed by the conduits has a minimum 100% deal-
specific liquidity facility associated with it provided by
JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, N.A. also
provides the multi-seller conduit vehicles with uncommitted
program-wide liquidity facilities and program-wide credit
enhancement in the form of standby letters of credit. The
amount of program-wide credit enhancement required is
based upon commercial paper issuance and approximates
10% of the outstanding balance of commercial paper.
The Firm consolidates its Firm-administered multi-seller
conduits, as the Firm has both the power to direct the
significant activities of the conduits and a potentially
significant economic interest in the conduits. As
administrative agent and in its role in structuring
transactions, the Firm makes decisions regarding asset
types and credit quality, and manages the commercial
paper funding needs of the conduits. The Firm’s interests
that could potentially be significant to the VIEs include the
fees received as administrative agent and liquidity and
program-wide credit enhancement provider, as well as the
potential exposure created by the liquidity and credit
enhancement facilities provided to the conduits.
In the normal course of business, JPMorgan Chase makes
markets in and invests in commercial paper issued by the
Firm-administered multi-seller conduits. The Firm held
$13.8 billion and $13.7 billion of the commercial paper
issued by the Firm-administered multi-seller conduits at
December 31, 2022 and 2021, respectively, which have
been eliminated in consolidation. The Firm’s investments
reflect the Firm’s funding needs and capacity and were not
driven by market illiquidity. Other than the amounts
required to be held pursuant to credit risk retention rules,
the Firm is not obligated under any agreement to purchase
the commercial paper issued by the Firm-administered
multi-seller conduits.
Deal-specific liquidity facilities, program-wide liquidity and
credit enhancement provided by the Firm have been
eliminated in consolidation. The Firm or the Firm-
administered multi-seller conduits provide lending-related
commitments to certain clients of the Firm-administered
multi-seller conduits. The unfunded commitments were
$10.6 billion and $13.4 billion at December 31, 2022 and
2021, respectively, and are reported as off-balance sheet
lending-related commitments in other unfunded
commitments to extend credit. Refer to Note 28 for more
information on off-balance sheet lending-related
commitments.
Municipal bond vehicles
Municipal bond vehicles or tender option bond (“TOB”)
trusts allow institutions to finance their municipal bond
investments at short-term rates. In a typical TOB
transaction, the trust purchases highly rated municipal
bond(s) of a single issuer and funds the purchase by issuing
two types of securities: (1) puttable floating-rate
certificates (“floaters”) and (2) inverse floating-rate
residual interests (“residuals”). The floaters are typically
purchased by money market funds or other short-term
investors and may be tendered, with requisite notice, to the
TOB trust. The residuals are retained by the investor
seeking to finance its municipal bond investment. TOB
transactions where the residual is held by a third-party
investor are typically known as customer TOB trusts, and
non-customer TOB trusts are transactions where the
Residual is retained by the Firm. Customer TOB trusts are
sponsored by a third party. The Firm serves as sponsor for
all non-customer TOB transactions. The Firm may provide
various services to a TOB trust, including remarketing
agent, liquidity or tender option provider, and/or sponsor.
J.P. Morgan Securities LLC may serve as a remarketing
agent on the floaters for TOB trusts. The remarketing agent
is responsible for establishing the periodic variable rate on
the floaters, conducting the initial placement and
remarketing tendered floaters. The remarketing agent may,
but is not obligated to, make markets in floaters. Floaters
held by the Firm were not material during 2022 and 2021.
JPMorgan Chase Bank, N.A. or J.P. Morgan Securities LLC
often serves as the sole liquidity or tender option provider
for the TOB trusts. The liquidity provider’s obligation to
perform is conditional and is limited by certain events
250
JPMorgan Chase & Co./2022 Form 10-K
(“Termination Events”), which include bankruptcy or failure
to pay by the municipal bond issuer or credit enhancement
provider, an event of taxability on the municipal bonds or
the immediate downgrade of the municipal bond to below
investment grade. In addition, the liquidity provider’s
exposure is typically further limited by the high credit
quality of the underlying municipal bonds, the excess
collateralization in the vehicle, or, in certain transactions,
the reimbursement agreements with the Residual holders.
Holders of the floaters may “put,” or tender, their floaters
to the TOB trust. If the remarketing agent cannot
successfully remarket the floaters to another investor, the
liquidity provider either provides a loan to the TOB trust for
the TOB trust’s purchase of the floaters, or it directly
purchases the tendered floaters.
TOB trusts are considered to be variable interest entities.
The Firm consolidates non-customer TOB trusts because as
the Residual holder, the Firm has the right to make
decisions that significantly impact the economic
performance of the municipal bond vehicle, and it has the
right to receive benefits and bear losses that could
potentially be significant to the municipal bond vehicle.
Consolidated VIE assets and liabilities
The following table presents information on assets and liabilities related to VIEs consolidated by the Firm as of December 31,
2022 and 2021.
December 31, 2022
(in millions)
VIE program type
Assets
Liabilities
Trading
assets
Loans
Other(c)
Total
assets(d)
Beneficial
interests in
VIE assets(e)
Other(f)
Total
liabilities
Firm-sponsored credit card trusts
$
— $
9,699
$
100 $
9,799 $
1,999 $
2 $
Firm-administered multi-seller conduits
—
22,819
Municipal bond vehicles
Mortgage securitization entities(a)
Other
2,089
—
62
—
781
1,112
(b)
170
7
10
263
22,989
2,096
791
1,437
9,236
1,232
143
—
39
10
67
161
2,001
9,275
1,242
210
161
Total
$
2,151 $
34,411
$
550 $
37,112 $
12,610 $
279 $
12,889
December 31, 2021
(in millions)
VIE program type
Assets
Liabilities
Trading assets
Loans
Other(c)
Total
assets(d)
Beneficial
interests in
VIE assets(e)
Other(f)
Total
liabilities
Firm-sponsored credit card trusts
$
— $
11,108
$
102 $
11,210 $
2,397 $
1 $
Firm-administered multi-seller conduits
1
19,883
Municipal bond vehicles
Mortgage securitization entities(a)
Other
2,009
—
—
—
955
1,078
(b)
71
2
32
283
19,955
2,011
987
1,361
6,198
1,976
179
—
41
—
85
118
2,398
6,239
1,976
264
118
Total
$
2,010 $
33,024
$
490 $
35,524 $
10,750 $
245 $
10,995
(a) Includes residential mortgage securitizations.
(b) Primarily includes purchased supply chain finance receivables and purchased auto loan securitizations in CIB.
(c) Includes assets classified as cash and other assets on the Consolidated balance sheets.
(d) The assets of the consolidated VIEs included in the program types above are used to settle the liabilities of those entities. The assets and liabilities include
third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation.
(e) The interest-bearing beneficial interest liabilities issued by consolidated VIEs are classified in the line item on the Consolidated balance sheets titled,
“Beneficial interests issued by consolidated VIEs”. The holders of these beneficial interests generally do not have recourse to the general credit of
JPMorgan Chase. Included in beneficial interests in VIE assets are long-term beneficial interests of $2.1 billion and $2.6 billion at December 31, 2022 and
2021, respectively.
(f) Includes liabilities classified as accounts payable and other liabilities on the Consolidated balance sheets.
JPMorgan Chase & Co./2022 Form 10-K
251
Loan securitizations
The Firm has securitized and sold a variety of loans,
including residential mortgages, credit card receivables,
commercial mortgages and other consumer loans. The
purposes of these securitization transactions were to satisfy
investor demand and to generate liquidity for the Firm.
For loan securitizations in which the Firm is not required to
consolidate the trust, the Firm records the transfer of the
loan receivable to the trust as a sale when all of the
following accounting criteria for a sale are met: (1) the
transferred financial assets are legally isolated from the
Firm’s creditors; (2) the transferee or beneficial interest
holder can pledge or exchange the transferred financial
assets; and (3) the Firm does not maintain effective control
over the transferred financial assets (e.g., the Firm cannot
repurchase the transferred assets before their maturity and
it does not have the ability to unilaterally cause the holder
to return the transferred assets).
For loan securitizations accounted for as a sale, the Firm
recognizes a gain or loss based on the difference between
the value of proceeds received (including cash, beneficial
interests, or servicing assets received) and the carrying
value of the assets sold. Gains and losses on securitizations
are reported in noninterest revenue.
Notes to consolidated financial statements
VIEs sponsored by third parties
The Firm enters into transactions with VIEs structured by
other parties. These include, for example, acting as a
derivative counterparty, liquidity provider, investor,
underwriter, placement agent, remarketing agent, trustee
or custodian. These transactions are conducted at arm’s-
length, and individual credit decisions are based on the
analysis of the specific VIE, taking into consideration the
quality of the underlying assets. Where the Firm does not
have the power to direct the activities of the VIE that most
significantly impact the VIE’s economic performance, or a
variable interest that could potentially be significant, the
Firm generally does not consolidate the VIE, but it records
and reports these positions on its Consolidated balance
sheets in the same manner it would record and report
positions in respect of any other third-party transaction.
Tax credit vehicles
The Firm holds investments in unconsolidated tax credit
vehicles, which are limited partnerships and similar entities
that own and operate affordable housing, energy, and other
projects. These entities are primarily considered VIEs. A
third party is typically the general partner or managing
member and has control over the significant activities of the
tax credit vehicles, and accordingly the Firm does not
consolidate tax credit vehicles. The Firm generally invests in
these partnerships as a limited partner and earns a return
primarily through the receipt of tax credits allocated to the
projects. The maximum loss exposure, represented by
equity investments and funding commitments, was $30.2
billion and $26.8 billion, of which $10.6 billion and $9.4
billion was unfunded at December 31, 2022 and 2021,
respectively. The Firm assesses each project and to reduce
the risk of loss, may withhold varying amounts of its capital
investment until the project qualifies for tax credits. Refer
to Note 25 for further information on affordable housing
tax credits and Note 28 for more information on off-balance
sheet lending-related commitments.
Customer municipal bond vehicles (TOB trusts)
The Firm may provide various services to customer TOB
trusts, including remarketing agent, liquidity or tender
option provider. In certain customer TOB transactions, the
Firm, as liquidity provider, has entered into a
reimbursement agreement with the Residual holder. In
those transactions, upon the termination of the vehicle, the
Firm has recourse to the third-party Residual holders for
any shortfall. The Firm does not have any intent to protect
Residual holders from potential losses on any of the
underlying municipal bonds. The Firm does not consolidate
customer TOB trusts, since the Firm does not have the
power to make decisions that significantly impact the
economic performance of the municipal bond vehicle.
The Firm’s maximum exposure as a liquidity provider to
customer TOB trusts at December 31, 2022 and 2021, was
$5.8 billion and $6.8 billion, respectively. The fair value of
assets held by such VIEs at December 31, 2022 and 2021
was $8.2 billion and $10.5 billion respectively.
252
JPMorgan Chase & Co./2022 Form 10-K
Securitization activity
The following table provides information related to the Firm’s securitization activities for the years ended December 31, 2022,
2021 and 2020, related to assets held in Firm-sponsored securitization entities that were not consolidated by the Firm, and
where sale accounting was achieved at the time of the securitization.
2022
2021
2020
Year ended December 31,
(in millions)
Principal securitized
All cash flows during the period:(a)
Proceeds received from loan sales as financial
instruments(b)(c)
Servicing fees collected
Cash flows received on interests
Residential
mortgage(d)
$
10,218 $
Commercial
and other(e)
9,036
Residential
mortgage(d)
$
23,876 $
Commercial
and other(e)
14,917
Residential
mortgage(d)
$
Commercial
and other(e)
7,103 $
6,624
$
9,783 $
8,921
$
24,450 $
15,044
$
7,321 $
6,865
62
489
2
285
153
578
1
273
211
801
1
239
(a) Excludes re-securitization transactions.
(b) Predominantly includes Level 2 assets.
(c) The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale.
(d) Represents prime mortgages. Excludes loan securitization activity related to U.S. GSEs and government agencies.
(e) Includes commercial mortgage and other consumer loans.
Key assumptions used to value retained interests originated
during the year are shown in the table below.
Year ended December 31,
2022
2021
2020
Residential mortgage retained interest:
Weighted-average life (in years)
10.8
3.9
4.7
Weighted-average discount rate
4.0 % 3.3 % 8.2 %
Commercial mortgage retained interest:
Weighted-average life (in years)
5.9
6.0
6.9
Weighted-average discount rate
2.9 % 1.2 % 3.0 %
Loans and excess MSRs sold to U.S. government-
sponsored enterprises and loans in securitization
transactions pursuant to Ginnie Mae guidelines
In addition to the amounts reported in the securitization
activity tables above, the Firm, in the normal course of
business, sells originated and purchased mortgage loans
and certain originated excess MSRs on a nonrecourse basis,
predominantly to U.S. GSEs. These loans and excess MSRs
are sold primarily for the purpose of securitization by the
U.S. GSEs, who provide certain guarantee provisions (e.g.,
credit enhancement of the loans). The Firm also sells loans
into securitization transactions pursuant to Ginnie Mae
guidelines; these loans are typically insured or guaranteed
by another U.S. government agency. The Firm does not
consolidate the securitization vehicles underlying these
transactions as it is not the primary beneficiary. For a
limited number of loan sales, the Firm is obligated to share
a portion of the credit risk associated with the sold loans
with the purchaser. Refer to Note 28 for additional
information about the Firm’s loan sales- and securitization-
related indemnifications and Note 15 for additional
information about the impact of the Firm’s sale of certain
excess MSRs.
JPMorgan Chase & Co./2022 Form 10-K
253
Notes to consolidated financial statements
The following table summarizes the activities related to
loans sold to the U.S. GSEs, and loans in securitization
transactions pursuant to Ginnie Mae guidelines.
Year ended December 31,
(in millions)
2022
2021
2020
Carrying value of loans sold
$ 48,891 $ 105,035 $ 81,153
Proceeds received from loan
sales as cash
Proceeds from loan sales as
securities(a)(b)
$
22 $
161 $
45
48,096
103,286
80,186
Total proceeds received from
loan sales(c)
Gains/(losses) on loan sales(d)(e) $
$ 48,118 $ 103,447 $ 80,231
(25) $
9 $
6
(a) Includes securities from U.S. GSEs and Ginnie Mae that are generally
sold shortly after receipt or retained as part of the Firm’s investment
securities portfolio.
(b) Included in level 2 assets.
(c) Excludes the value of MSRs retained upon the sale of loans.
(d) Gains/(losses) on loan sales include the value of MSRs.
(e) The carrying value of the loans accounted for at fair value
approximated the proceeds received upon loan sale.
Options to repurchase delinquent loans
In addition to the Firm’s obligation to repurchase certain
loans due to material breaches of representations and
warranties as discussed in Note 28, the Firm also has the
option to repurchase delinquent loans that it services for
Ginnie Mae loan pools, as well as for other U.S. government
agencies under certain arrangements. The Firm typically
elects to repurchase delinquent loans from Ginnie Mae loan
pools as it continues to service them and/or manage the
foreclosure process in accordance with the applicable
requirements, and such loans continue to be insured or
guaranteed. When the Firm’s repurchase option becomes
exercisable, such loans must be reported on the
Consolidated balance sheets as a loan with a corresponding
liability. Refer to Note 12 for additional information.
The following table presents loans the Firm repurchased or
had an option to repurchase, real estate owned, and
foreclosed government-guaranteed residential mortgage
loans recognized on the Firm’s Consolidated balance sheets
as of December 31, 2022 and 2021. Substantially all of
these loans and real estate are insured or guaranteed by
U.S. government agencies.
December 31,
(in millions)
Loans repurchased or option to repurchase(a)
Real estate owned
Foreclosed government-guaranteed residential
mortgage loans(b)
2022
2021
$
839 $ 1,022
10
27
5
36
(a) Predominantly all of these amounts relate to loans that have been
repurchased from Ginnie Mae loan pools.
(b) Relates to voluntary repurchases of loans, which are included in
accrued interest and accounts receivable.
Loan delinquencies and liquidation losses
The table below includes information about components of and delinquencies related to nonconsolidated securitized financial
assets held in Firm-sponsored private-label securitization entities, in which the Firm has continuing involvement as of
December 31, 2022 and 2021.
As of or for the year ended December 31,
(in millions)
Securitized assets
2022
2021
90 days past due
2022
2021
Net liquidation losses /
(recoveries)
2022
2021
Securitized loans
Residential mortgage:
Prime/ Alt-A & option ARMs
$
37,058 $
42,522
(a) $
511 $
1,937
(a) $
Subprime
Commercial and other
Total loans securitized
1,743
127,037
10,115
93,698
212
948
$ 165,838 $ 146,335
$
1,671 $
1,609
1,456
5,002
$
(29) $
(1)
50
20 $
(a)
16
16
288
320
(a) Prior-period amounts have been revised to conform with the current presentation.
254
JPMorgan Chase & Co./2022 Form 10-K
Note 15 – Goodwill and Mortgage servicing rights
Goodwill
Goodwill is recorded upon completion of a business
combination as the difference between the purchase price
and the fair value of the net assets acquired, and can be
adjusted up to one year from the acquisition date as more
information is obtained about the fair value of assets
acquired and liabilities assumed. Subsequent to initial
recognition, goodwill is not amortized but is tested for
impairment during the fourth quarter of each fiscal year, or
more often if events or circumstances, such as adverse
changes in the business climate, indicate that there may be
an impairment.
The goodwill associated with each business combination is
allocated to the related reporting units, which are generally
determined based on how the Firm’s businesses are
managed and how they are reviewed. The following table
presents goodwill attributed to the reportable business
segments and Corporate.
December 31, (in millions)
2022
2021
2020
Consumer & Community Banking
$ 32,121 $ 31,474 $ 31,311
Corporate & Investment Bank
Commercial Banking
Asset & Wealth Management
Corporate(a)
Total goodwill
8,008
7,906
7,913
2,985
2,986
2,985
7,902
7,222
7,039
646
727
—
$ 51,662 $ 50,315 $ 49,248
(a) For goodwill in Corporate acquired in the third quarter of 2021, the
Firm elected to perform a qualitative impairment assessment, as
permitted under U.S. GAAP.
The following table presents changes in the carrying
amount of goodwill.
Year ended December 31, (in
millions)
2022
2021
2020
Balance at beginning of period
$ 50,315 $ 49,248
$ 47,823
Changes during the period from:
Business combinations(a)
Other(b)
1,426
(79)
1,073
(c)
(6) (c)
1,412
13
Balance at December 31,
$ 51,662 $ 50,315
$ 49,248
(a) For 2022, represents estimated goodwill associated with the
acquisitions of Global Shares PLC in AWM, Frosch Travel Group, LLC
and Figg, Inc. in CCB, and Renovite Technologies, Inc. and Volkswagen
Payments S.A. in CIB. For 2021, represents goodwill associated with
the acquisitions of Nutmeg in Corporate, OpenInvest and Campbell
Global in AWM, and Frank and The Infatuation in CCB. For 2020,
represents goodwill associated with the acquisitions of cxLoyalty in
CCB and 55ip in AWM.
(b) Predominantly foreign currency adjustments.
(c) Prior-period amounts have been revised to conform with the current
presentation.
Goodwill impairment testing
The Firm’s goodwill was not impaired at December 31,
2022, 2021 and 2020.
The goodwill impairment test is generally performed by
comparing the current fair value of each reporting unit with
its carrying value. If the fair value is in excess of the
carrying value, then the reporting unit’s goodwill is
considered not to be impaired. If the fair value is less than
the carrying value, then an impairment charge is recognized
for the amount by which the reporting unit’s carrying value
exceeds its fair value, up to the amount of goodwill
allocated to that reporting unit.
The Firm uses the reporting units’ allocated capital plus
goodwill and other intangible assets as a proxy for the
carrying values of equity for the reporting units in the
goodwill impairment testing. Reporting unit equity is
determined on a similar basis as the allocation of capital to
the LOBs which takes into consideration a variety of factors
including capital levels of similarly rated peers and
applicable regulatory capital requirements. Proposed LOB
capital levels are incorporated into the Firm’s annual
budget process, which is reviewed by the Firm’s Board of
Directors and Operating Committee. Allocated capital is
further reviewed at least annually and updated as needed.
The primary method the Firm uses to estimate the fair value
of its reporting units is the income approach. This approach
projects cash flows for the forecast period and uses the
perpetuity growth method to calculate terminal values.
These cash flows and terminal values, which are based on
the reporting units’ annual budgets and forecasts are then
discounted using an appropriate discount rate. The discount
rate used for each reporting unit represents an estimate of
the cost of equity for that reporting unit and is determined
considering the Firm’s overall estimated cost of equity
(estimated using the Capital Asset Pricing Model), as
adjusted for the risk characteristics specific to each
reporting unit (for example, for higher levels of risk or
uncertainty associated with the business or management’s
forecasts and assumptions). To assess the reasonableness
of the discount rates used for each reporting unit,
management compares the discount rate to the estimated
cost of equity for publicly traded institutions with similar
businesses and risk characteristics. In addition, the
weighted average cost of equity (aggregating the various
reporting units) is compared with the Firm’s overall
estimated cost of equity to ensure reasonableness. The
valuations derived from the discounted cash flow analysis
are then compared with market-based trading and
transaction multiples for relevant competitors. Trading and
transaction comparables are used as general indicators to
assess the overall reasonableness of the estimated fair
values, although precise conclusions generally cannot be
drawn due to the differences that naturally exist between
the Firm’s businesses and competitor institutions.
The Firm also takes into consideration a comparison
between the aggregate fair values of the Firm’s reporting
units and JPMorgan Chase’s market capitalization. In
evaluating this comparison, the Firm considers several
factors, including (i) a control premium that would exist in a
market transaction, (ii) factors related to the level of
execution risk that would exist at the Firmwide level that do
not exist at the reporting unit level and (iii) short-term
market volatility and other factors that do not directly
affect the value of individual reporting units.
JPMorgan Chase & Co./2022 Form 10-K
255
Notes to consolidated financial statements
Unanticipated declines in business performance, increases
in credit losses, increases in capital requirements, as well as
deterioration in economic or market conditions, adverse
regulatory or legislative changes or increases in the
estimated market cost of equity, could cause the estimated
fair values of the Firm’s reporting units to decline in the
future, which could result in a material impairment charge
to earnings in a future period related to some portion of the
associated goodwill.
Mortgage servicing rights
MSRs represent the fair value of expected future cash flows
for performing servicing activities for others. The fair value
considers estimated future servicing fees and ancillary
revenue, offset by estimated costs to service the loans, and
generally declines over time as net servicing cash flows are
received, effectively amortizing the MSR asset against
contractual servicing and ancillary fee income. MSRs are
either purchased from third parties or recognized upon sale
or securitization of mortgage loans if servicing is retained.
As permitted by U.S. GAAP, the Firm has elected to account
for its MSRs at fair value. The Firm treats its MSRs as a
single class of servicing assets based on the availability of
market inputs used to measure the fair value of its MSR
asset and its treatment of MSRs as one aggregate pool for
risk management purposes. The Firm estimates the fair
value of MSRs using an option-adjusted spread (“OAS”)
model, which projects MSR cash flows over multiple interest
rate scenarios in conjunction with the Firm’s prepayment
model, and then discounts these cash flows at risk-adjusted
rates. The model considers portfolio characteristics,
contractually specified servicing fees, prepayment
assumptions, delinquency rates, costs to service, late
charges and other ancillary revenue, and other economic
factors. The Firm compares fair value estimates and
assumptions to observable market data where available,
and also considers recent market activity and actual
portfolio experience.
256
JPMorgan Chase & Co./2022 Form 10-K
The fair value of MSRs is sensitive to changes in interest
rates, including their effect on prepayment speeds. MSRs
typically decrease in value when interest rates decline
because declining interest rates tend to increase
prepayments and therefore reduce the expected life of the
net servicing cash flows that comprise the MSR asset.
Conversely, securities (e.g., mortgage-backed securities),
and certain derivatives (e.g., those for which the Firm
receives fixed-rate interest payments) increase in value
when interest rates decline. JPMorgan Chase uses
combinations of derivatives and securities to manage the
risk of changes in the fair value of MSRs. The intent is to
offset any interest-rate related changes in the fair value of
MSRs with changes in the fair value of the related risk
management instruments.
The following table summarizes MSR activity for the years ended December 31, 2022, 2021 and 2020.
As of or for the year ended December 31, (in millions, except where otherwise noted)
2022
2021
2020
Fair value at beginning of period
MSR activity:
Originations of MSRs
Purchase of MSRs
Disposition of MSRs(a)
Net additions/(dispositions)
Changes due to collection/realization of expected cash flows
Changes in valuation due to inputs and assumptions:
Changes due to market interest rates and other(b)
Changes in valuation due to other inputs and assumptions:
Projected cash flows (e.g., cost to service)
Discount rates
Prepayment model changes and other(c)
Total changes in valuation due to other inputs and assumptions
Total changes in valuation due to inputs and assumptions
Fair value at December 31,
Change in unrealized gains/(losses) included in income related to MSRs held at December 31,
Contractual service fees, late fees and other ancillary fees included in income
Third-party mortgage loans serviced at December 31, (in billions)
Servicer advances, net of an allowance for uncollectible amounts, at December 31, (in billions)(d)
$
5,494 $
3,276 $
4,699
798
1,400
(822)
1,376
1,659
1,363
(114)
2,908
944
248
(176)
1,016
(936)
(788)
(899)
2,022
404
(1,568)
14
—
3
17
2,039
109
—
(415)
(306)
98
(54)
199
(117)
28
(1,540)
$
$
7,973 $
5,494 $
3,276
2,039 $
98 $
(1,540)
1,535
1,298
1,325
584
0.8
520
1.6
448
1.8
(a) Includes excess MSRs transferred to agency-sponsored trusts in exchange for stripped mortgage backed securities (“SMBS”) for the years ended December
31, 2022 and 2020. In each transaction, a portion of the SMBS was acquired by third parties at the transaction date; the Firm acquired the remaining
balance of those SMBS as trading securities.
(b) Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and
expected prepayments.
(c) Represents changes in prepayments other than those attributable to changes in market interest rates.
(d) Represents amounts the Firm pays as the servicer (e.g., scheduled principal and interest, taxes and insurance), which will generally be reimbursed within a
short period of time after the advance from future cash flows from the trust or the underlying loans. The Firm’s credit risk associated with these servicer
advances is minimal because reimbursement of the advances is typically senior to all cash payments to investors. In addition, the Firm maintains the right
to stop payment to investors if the collateral is insufficient to cover the advance. However, certain of these servicer advances may not be recoverable if
they were not made in accordance with applicable rules and agreements.
JPMorgan Chase & Co./2022 Form 10-K
257
Notes to consolidated financial statements
The following table presents the components of mortgage
fees and related income (including the impact of MSR risk
management activities) for the years ended December 31,
2022, 2021 and 2020.
Year ended December 31,
(in millions)
CCB mortgage fees and related
income
2022
2021
2020
Production revenue
$ 497 $ 2,215 $ 2,629
Net mortgage servicing revenue:
Operating revenue:
Loan servicing revenue
1,582
1,257
1,367
Changes in MSR asset fair value
due to collection/realization of
expected cash flows
(936)
(788)
(899)
Total operating revenue
646
469
468
Changes in fair value based on variations in assumptions
generally cannot be easily extrapolated, because the
relationship of the change in the assumptions to the change
in fair value are often highly interrelated and may not be
linear. In the following table, the effect that a change in a
particular assumption may have on the fair value is
calculated without changing any other assumption. In
reality, changes in one factor may result in changes in
another, which would either magnify or counteract the
impact of the initial change.
The table below outlines the key economic assumptions
used to determine the fair value of the Firm’s MSRs at
December 31, 2022 and 2021, and outlines the
sensitivities of those fair values to immediate adverse
changes in those assumptions, as defined below.
2,022
404
(1,568)
Weighted-average prepayment speed
assumption (constant prepayment rate)
December 31,
(in millions, except rates)
2022
2021
6.12 %
9.90 %
Impact on fair value of 10% adverse change $ (183)
$ (210)
Impact on fair value of 20% adverse change
(356)
(404)
Weighted-average option adjusted spread(a)
5.77 %
6.44 %
Impact on fair value of 100 basis points
adverse change
Impact on fair value of 200 basis points
adverse change
$ (341)
$ (225)
(655)
(433)
(a) Includes the impact of operational risk and regulatory capital.
Risk management:
Changes in MSR asset fair value
due to market interest rates
and other(a)
Other changes in MSR asset fair
value due to other inputs and
assumptions in model(b)
Change in derivative fair value
and other
17
(306)
28
(1,946)
(623)
1,522
Total risk management
93
(525)
(18)
Total net mortgage servicing
revenue
739
(56)
450
Total CCB mortgage fees and related
income
All other
1,236
2,159
3,079
14
11
12
Mortgage fees and related income
$ 1,250 $ 2,170 $ 3,091
(a) Represents both the impact of changes in estimated future
prepayments due to changes in market interest rates, and the
difference between actual and expected prepayments.
(b) Represents the aggregate impact of changes in model inputs and
assumptions such as projected cash flows (e.g., cost to service),
discount rates and changes in prepayments other than those
attributable to changes in market interest rates (e.g., changes in
prepayments due to changes in home prices).
258
JPMorgan Chase & Co./2022 Form 10-K
Note 16 – Premises and equipment
Premises and equipment, including leasehold
improvements, are carried at cost less accumulated
depreciation and amortization. JPMorgan Chase computes
depreciation using the straight-line method over the
estimated useful life of an asset. For leasehold
improvements, the Firm uses the straight-line method
computed over the lesser of the remainder of the lease
term, or estimated useful life of the improvements.
JPMorgan Chase capitalizes certain costs associated with
the acquisition or development of internal-use software.
Once the software is ready for its intended use, these costs
are amortized on a straight-line basis over the software’s
expected useful life.
Impairment is assessed periodically when events or changes
in circumstances indicate that the carrying value of an asset
may not be fully recoverable.
Note 17 – Deposits
At December 31, 2022 and 2021, noninterest-bearing and
interest-bearing deposits were as follows.
December 31, (in millions)
2022
2021
U.S. offices
Noninterest-bearing (included $26,363
and $8,115 at fair value)(a)
Interest-bearing (included $586 and
$629 at fair value)(a)
Total deposits in U.S. offices
Non-U.S. offices
Noninterest-bearing (included $1,398
and $2,420 at fair value)(a)
Interest-bearing (included $273 and
$169 at fair value)(a)
Total deposits in non-U.S. offices
Total deposits
$ 644,902 $ 711,525
(b)
1,276,346
1,359,932
(b)
1,921,248
2,071,457
27,005
26,229
391,926
364,617
418,931
390,846
$ 2,340,179 $ 2,462,303
(a) Includes structured notes classified as deposits for which the fair value
option has been elected. Refer to Note 3 for further discussion.
(b) Prior-period amounts have been revised to conform with the current
presentation.
At December 31, 2022 and 2021, time deposits in
denominations that met or exceeded the insured limit were
as follows.
December 31, (in millions)
U.S. offices
Non-U.S. offices(a)
Total
2022
2021
$ 64,622 $ 38,970
77,907
54,535
$ 142,529 $ 93,505
(a) Represents all time deposits in non-U.S. offices as these deposits
typically exceed the insured limit.
At December 31, 2022, the remaining maturities of
interest-bearing time deposits were as follows.
December 31, 2022
(in millions)
2023
2024
2025
2026
2027
After 5 years
Total
U.S.
Non-U.S.
Total
$ 75,606 $ 75,088 $ 150,694
1,335
300
178
131
572
358
17
30
897
109
1,693
317
208
1,028
681
$ 78,122 $ 76,499 $ 154,621
JPMorgan Chase & Co./2022 Form 10-K
259
Notes to consolidated financial statements
Note 18 - Leases
Firm as lessee
At December 31, 2022, JPMorgan Chase and its
subsidiaries were obligated under a number of
noncancellable leases, predominantly operating leases for
premises and equipment used primarily for business
purposes. These leases generally have terms of 20 years or
less, determined based on the contractual maturity of the
lease, and include periods covered by options to extend or
terminate the lease when the Firm is reasonably certain
that it will exercise those options. All leases with lease
terms greater than twelve months are reported as a lease
liability with a corresponding right-of-use (“ROU”) asset.
None of these lease agreements impose restrictions on the
Firm’s ability to pay dividends, engage in debt or equity
financing transactions or enter into further lease
agreements. Certain of these leases contain escalation
clauses that will increase rental payments based on
maintenance, utility and tax increases, which are non-lease
components. The Firm elected not to separate lease and
non-lease components of a contract for its real estate
leases. As such, real estate lease payments represent
payments on both lease and non-lease components.
Operating lease liabilities and ROU assets are recognized at
the lease commencement date based on the present value
of the future minimum lease payments over the lease term.
The future lease payments are discounted at a rate that
estimates the Firm’s collateralized borrowing rate for
financing instruments of a similar term and are included in
accounts payable and other liabilities. The operating lease
ROU asset, included in premises and equipment, also
includes any lease prepayments made, plus initial direct
costs incurred, less any lease incentives received. Rental
expense associated with operating leases is recognized on a
straight-line basis over the lease term, and generally
included in occupancy expense in the Consolidated
statements of income.
The following tables provide information related to the
Firm’s operating leases:
December 31,
(in millions, except where otherwise noted)
Right-of-use assets
Lease liabilities
2022
2021
$
7,782 $
7,888
8,183
8,328
Weighted average remaining lease term (in
years)
Weighted average discount rate
8.4
8.5
3.55 %
3.40 %
Supplemental cash flow information
Cash paid for amounts included in the
measurement of lease liabilities - operating
cash flows
Supplemental non-cash information
$
1,613 $
1,656
Right-of-use assets obtained in exchange
for operating lease obligations
$
1,435 $
1,167
Year ended December 31,
(in millions)
Rental expense
Gross rental expense
Sublease rental income
Net rental expense
2022
2021
$
$
2,079 $
2,086
(119)
(129)
1,960 $
1,957
The following table presents future payments under
operating leases as of December 31, 2022:
Year ended December 31, (in millions)
2023
2024
2025
2026
2027
After 2027
Total future minimum lease payments
Less: Imputed interest
Total
$ 1,572
1,433
1,273
1,034
887
3,382
9,581
(1,398)
$ 8,183
In addition to the table above, as of December 31, 2022,
the Firm had additional future operating lease
commitments of $588 million that were signed but had not
yet commenced. These operating leases will commence
between 2023 and 2026 with lease terms up to 21 years.
260
JPMorgan Chase & Co./2022 Form 10-K
Firm as lessor
The Firm provides auto and equipment lease financing to its
customers through lease arrangements with lease terms
that may contain renewal, termination and/or purchase
options. The Firm’s lease financings are predominantly auto
operating leases. These assets subject to operating leases
are recognized in other assets on the Firm’s Consolidated
balance sheets and are depreciated on a straight-line basis
over the lease term to reduce the asset to its estimated
residual value. Depreciation expense is included in
technology, communications and equipment expense in the
Consolidated statements of income. The Firm’s lease
income is generally recognized on a straight-line basis over
the lease term and is included in other income in the
Consolidated statements of income.
On a periodic basis, the Firm assesses leased assets for
impairment, and if the carrying amount of the leased asset
exceeds the undiscounted cash flows from the lease
payments and the estimated residual value upon disposition
of the leased asset, an impairment loss is recognized.
The risk of loss on auto and equipment leased assets
relating to the residual value of the leased assets is
monitored through projections of the asset residual values
at lease origination and periodic review of residual values,
and is mitigated through arrangements with certain
manufacturers or lessees.
The following table presents the carrying value of assets
subject to leases reported on the Consolidated balance
sheets:
December 31,
(in millions)
Carrying value of assets subject to
operating leases, net of accumulated
depreciation
Accumulated depreciation
2022
2021
$
12,302 $
17,553
4,282
5,737
The following table presents the Firm’s operating lease
income and the related depreciation expense on the
Consolidated statements of income:
Year ended December 31,
(in millions)
2022
2021
Operating lease income
$
3,654 $
4,914 $
Depreciation expense
2,475
3,380
2020
5,539
4,257
The following table presents future receipts under
operating leases as of December 31, 2022:
Year ended December 31, (in millions)
2023
2024
2025
2026
2027
After 2027
$ 2,172
1,181
389
39
10
15
Total future minimum lease receipts
$ 3,806
JPMorgan Chase & Co./2022 Form 10-K
261
Notes to consolidated financial statements
Note 19 – Accounts payable and other liabilities
Accounts payable and other liabilities consist of brokerage
payables, which include payables to customers and
payables related to security purchases that did not settle, as
well as other accrued expenses, such as compensation
accruals, credit card rewards liability, operating lease
liabilities, income tax payables, and litigation reserves.
The following table details the components of accounts
payable and other liabilities.
December 31, (in millions)
Brokerage payables
Other payables and liabilities(a)
Total accounts payable and other
liabilities
2022
2021
$ 188,692 $ 169,172
111,449
93,583
$ 300,141 $ 262,755
(a) Includes credit card rewards liability of $11.3 billion and $9.8 billion
at December 31, 2022 and 2021, respectively.
262
JPMorgan Chase & Co./2022 Form 10-K
Note 20 – Long-term debt
JPMorgan Chase issues long-term debt denominated in various currencies, predominantly U.S. dollars, with both fixed and
variable interest rates. Included in senior and subordinated debt below are various equity-linked or other indexed instruments,
which the Firm has elected to measure at fair value. Changes in fair value are recorded in principal transactions revenue in the
Consolidated statements of income, except for unrealized gains/(losses) due to DVA which are recorded in OCI. The following
table is a summary of long-term debt carrying values (including unamortized premiums and discounts, issuance costs,
valuation adjustments and fair value adjustments, where applicable) by remaining contractual maturity as of December 31,
2022.
By remaining maturity at
December 31,
(in millions, except rates)
Parent company
Senior debt:
Subordinated debt:
Subsidiaries
Federal Home Loan Banks
advances:
Senior debt:
Subordinated debt:
Total long-term debt(a)(b)(c)
Long-term beneficial
interests:
Total long-term beneficial
interests(d)
2022
Under 1 year
1-5 years
After 5 years
Total
2021
Total
Fixed rate
$
6,770
$
78,821
$ 108,924
$ 194,515
$
202,370
Variable rate
Interest rates(e)
Fixed rate
Variable rate
Interest rates(e)
604
2.64 %
8,053
2.67 %
2,908
3.41 %
11,565
3.06 %
13,343
2.67 %
$
1,982
$
8,809
$
8,902
$
19,693
$
18,269
—
3.38 %
—
4.54 %
—
4.69 %
—
4.50 %
—
4.24 %
Subtotal $
9,356
$
95,683
$ 120,734
$ 225,773
$
233,982
Fixed rate
$
4
$
43
$
7,000
4.36 %
4,000
4.22 %
$
2,358
$
6,743
$
$
13,445
4.12 %
—
—
— %
—
—
— %
—
Variable rate
Interest rates(e)
Fixed rate
Variable rate
Interest rates(e)
Fixed rate
Variable rate
Interest rates(e)
Variable rate
Interest rates(e)
Subtotal $
$
$
Fixed rate
Variable rate
Interest rates(e)
46
—
6.08 %
6,282
5,499
1.63 %
—
—
— %
11,827
550
925
$
93
11,000
4.32 %
$
15,383
41,506
2.02 %
262
—
8.25 %
68,244
550
1,298
$
$
$
$
$
$
$
$
110
11,000
0.23 %
15,504
38,147
2.09 %
287
—
8.25 %
65,048
678
1,297
22,562
4.85 %
262
—
8.25 %
33,610
—
373
$
$
$
$
$
$
5.03 %
6.67 %
6.33 %
3.20 %
$
373
$
1,475
32,163
$ 129,666
$ 134,036
$
1,848
$ 295,865
$
(f)(g) $
1,975
301,005
1,000
$
—
1.53 %
999
—
$
—
143
3.97 %
3.60 %
$
1,999
$
143
2.81 %
1,747
829
1.57 %
Junior subordinated debt:
Fixed rate
$
Subtotal $
22,807
$
1,000
$
999
$
143
$
2,142
$
2,576
(a) Included long-term debt of $13.8 billion and $14.1 billion secured by assets totaling $208.3 billion and $170.6 billion at December 31, 2022 and 2021,
respectively. The amount of long-term debt secured by assets does not include amounts related to hybrid instruments.
(b) Included $72.3 billion and $74.9 billion of long-term debt accounted for at fair value at December 31, 2022 and 2021, respectively.
(c) Included $10.3 billion and $15.8 billion of outstanding zero-coupon notes at December 31, 2022 and 2021, respectively. The aggregate principal amount
of these notes at their respective maturities is $45.3 billion and $46.4 billion, respectively. The aggregate principal amount reflects the contractual
principal payment at maturity, which may exceed the contractual principal payment at the Firm’s next call date, if applicable.
(d) Included on the Consolidated balance sheets in beneficial interests issued by consolidated VIEs. Also included $5 million and $12 million accounted for at
fair value at December 31, 2022 and 2021, respectively. Excluded short-term commercial paper and other short-term beneficial interests of $10.5 billion
and $8.2 billion at December 31, 2022 and 2021, respectively.
(e) The interest rates shown are the weighted average of contractual rates in effect at December 31, 2022 and 2021, respectively, including non-U.S. dollar
fixed- and variable-rate issuances, which excludes the effects of the associated derivative instruments used in hedge accounting relationships, if
applicable. The interest rates shown exclude structured notes accounted for at fair value.
(f) At December 31, 2022, long-term debt in the aggregate of $194.9 billion was redeemable at the option of JPMorgan Chase, in whole or in part, prior to
maturity, based on the terms specified in the respective instruments.
(g) The aggregate carrying values of debt that matures in each of the five years subsequent to 2022 is $32.2 billion in 2023, $40.1 billion in 2024, $34.3
billion in 2025, $32.5 billion in 2026 and $22.8 billion in 2027.
JPMorgan Chase & Co./2022 Form 10-K
263
Notes to consolidated financial statements
The weighted-average contractual interest rates for total
long-term debt excluding structured notes accounted for at
fair value were 3.26% and 2.67% as of December 31,
2022 and 2021, respectively. In order to modify exposure
to interest rate and currency exchange rate movements,
JPMorgan Chase utilizes derivative instruments, primarily
interest rate and cross-currency interest rate swaps, in
conjunction with some of its debt issuances. The use of
these instruments modifies the Firm’s interest expense on
the associated debt. The modified weighted-average
interest rates for total long-term debt, including the effects
of related derivative instruments, were 4.89% and 1.43%
as of December 31, 2022 and 2021, respectively.
JPMorgan Chase & Co. has guaranteed certain long-term
debt of its subsidiaries, including structured notes. These
guarantees rank on parity with the Firm’s other unsecured
and unsubordinated indebtedness. The amount of such
guaranteed long-term debt and structured notes was $28.2
billion and $16.4 billion at December 31, 2022 and 2021,
respectively.
The Firm’s unsecured debt does not contain requirements
that would call for an acceleration of payments, maturities
or changes in the structure of the existing debt, provide any
limitations on future borrowings or require additional
collateral, based on unfavorable changes in the Firm’s
credit ratings, financial ratios, earnings or stock price.
264
JPMorgan Chase & Co./2022 Form 10-K
Note 21 – Preferred stock
At December 31, 2022 and 2021, JPMorgan Chase was authorized to issue 200 million shares of preferred stock, in one or
more series, with a par value of $1 per share. In the event of a liquidation or dissolution of the Firm, JPMorgan Chase’s
preferred stock then outstanding takes precedence over the Firm’s common stock with respect to the payment of dividends
and the distribution of assets.
The following is a summary of JPMorgan Chase’s non-cumulative preferred stock outstanding as of December 31, 2022 and
2021, and the quarterly dividend declarations for the years ended December 31, 2022, 2021 and 2020.
Shares(a)
Carrying value
(in millions)
Dividend declared per share(d)
December 31,
December 31,
2022
2021
2022
2021
Issue date
Contractual rate
in effect at
December 31,
2022
Earliest
redemption
date(b)
Floating
annualized
rate(c)
Year ended December 31,
2022
2021
2020
Fixed-rate:
Series Y
Series AA
—
—
Series BB
—
Series DD 169,625
Series EE
185,000
—
—
—
$
— $
—
—
—
—
—
2/12/2015
6/4/2015
7/29/2015
— % 3/1/2020
—
—
9/1/2020
9/1/2020
169,625
1,696
1,696
9/21/2018
5.750
12/1/2023
185,000
1,850
1,850
1/24/2019
6.000
3/1/2024
90,000
90,000
900
900
11/7/2019
4.750
12/1/2024
150,000
1,500
1,500
3/17/2021
4.550
6/1/2026
185,000
1,850
1,850
5/20/2021
4.625
6/1/2026
200,000
2,000
2,000
7/29/2021
4.200
9/1/2026
Series GG
Series JJ
150,000
Series LL
185,000
Series MM 200,000
Fixed-to-floating-rate:
NA
NA
NA
NA
NA
NA
NA
NA
NA
$
— $
— $ 153.13
—
—
305.00
610.00
307.50
615.00
575.00
575.00
575.00
600.00
600.00
600.00
475.00
475.00
506.67
(e)
455.00
321.03
462.52
245.39
420.00
142.33
NA (e)
NA (e)
NA (e)
Series I
Series Q
Series R
Series S
Series U
Series V
Series X
Series Z
Series CC
Series FF
—
293,375
$
— $ 2,934
4/23/2008
—
4/30/2018 LIBOR + 3.47% $ 375.03 $ 370.38 $ 428.03
150,000
150,000
150,000
150,000
200,000
200,000
100,000
100,000
1,500
1,500
2,000
1,000
1,500
4/23/2013
5.150
5/1/2023
LIBOR + 3.25
515.00
515.00
515.00
1,500
7/29/2013
6.000
8/1/2023
LIBOR + 3.30
600.00
600.00
600.00
2,000
1/22/2014
6.750
2/1/2024
LIBOR + 3.78
675.00
675.00
675.00
1,000
3/10/2014
6.125
4/30/2024
LIBOR + 3.33
612.50
612.50
612.50
—
250,000
—
2,500
6/9/2014
—
7/1/2019
LIBOR + 3.32
340.91
353.65
436.85
160,000
160,000
1,600
1,600
9/23/2014
6.100
10/1/2024
LIBOR + 3.33
610.00
610.00
610.00
—
200,000
—
2,000
4/21/2015
—
5/1/2020
LIBOR + 3.80
—
401.44
453.52
125,750
125,750
1,258
1,258
10/20/2017
LIBOR + 2.58 11/1/2022
LIBOR + 2.58
526.27
462.50
462.50
(f)
225,000
225,000
2,250
2,250
7/31/2019
5.000
8/1/2024
SOFR + 3.38
500.00
500.00
500.00
Series HH 300,000
300,000
3,000
3,000
1/23/2020
4.600
2/1/2025
SOFR + 3.125
460.00
460.00
470.22
Series II
150,000
150,000
1,500
1,500
2/24/2020
4.000
4/1/2025
SOFR + 2.745
400.00
400.00
341.11
(e)
(e)
Series KK 200,000
Total
preferred
stock
2,740,375
200,000
2,000
2,000
5/12/2021
3.650
6/1/2026
CMT + 2.85
365.00
201.76
NA (e)
3,483,750
$ 27,404 $ 34,838
(a) Represented by depositary shares.
(b) Fixed-to-floating rate notes convert to a floating rate at the earliest redemption date.
(c) Floating annualized rate includes three-month LIBOR, three-month term SOFR or five-year Constant Maturity Treasury ("CMT") rate, as applicable, plus the
spreads noted above.
(d) Dividends on preferred stock are discretionary and non-cumulative. When declared, dividends are declared quarterly. Dividends are payable quarterly on
fixed-rate preferred stock. Dividends are payable semiannually on fixed-to-floating-rate preferred stock while at a fixed rate, and payable quarterly after
converting to a floating rate.
(e) The initial dividend declared is prorated based on the number of days outstanding for the period. Dividends were declared quarterly thereafter at the
contractual rate.
(f) The dividend rate for Series CC preferred stock became floating and payable quarterly starting on November 1, 2022; prior to which the dividend rate was
fixed at 4.625% or $231.25 per share payable semiannually.
Each series of preferred stock has a liquidation value and redemption price per share of $10,000, plus accrued but unpaid
dividends. The aggregate liquidation value was $27.7 billion at December 31, 2022.
JPMorgan Chase & Co./2022 Form 10-K
265
Notes to consolidated financial statements
Redemptions
On October 31, 2022, the Firm redeemed all $2.93 billion of its fixed to floating rate non-cumulative perpetual preferred
stock, Series I.
On October 3, 2022, the Firm redeemed all $2.5 billion of its fixed-to-floating rate non-cumulative preferred stock, Series V.
On February 1, 2022, the Firm redeemed all $2.0 billion of its fixed-to-floating rate non-cumulative preferred stock, Series Z.
On June 1, 2021, the Firm redeemed all $1.43 billion of its 6.10% non-cumulative preferred stock, Series AA and all
$1.15 billion of its 6.15% non-cumulative preferred stock, Series BB.
Redemption rights
Each series of the Firm’s preferred stock may be redeemed on any dividend payment date on or after the earliest redemption
date for that series. All outstanding preferred stock series may also be redeemed following a “capital treatment event,” as
described in the terms of each series. Any redemption of the Firm’s preferred stock is subject to non-objection from the Board
of Governors of the Federal Reserve System (the “Federal Reserve”).
266
JPMorgan Chase & Co./2022 Form 10-K
Note 22 – Common stock
At December 31, 2022 and 2021, JPMorgan Chase was
authorized to issue 9.0 billion shares of common stock with
a par value of $1 per share.
Common shares issued (reissuances from treasury) by
JPMorgan Chase during the years ended December 31,
2022, 2021 and 2020 were as follows.
Year ended December 31,
(in millions)
Total issued – balance at
January 1
2022
2021
2020
4,104.9
4,104.9
4,104.9
Treasury – balance at January 1
(1,160.8) (1,055.5) (1,020.9)
Repurchase
Reissuance:
Employee benefits and
compensation plans
Employee stock purchase
plans
Total reissuance
Total treasury – balance at
December 31
(23.1)
(119.7)
(50.0)
12.0
13.5
14.2
1.2
13.2
0.9
14.4
1.2
15.4
(1,170.7) (1,160.8) (1,055.5)
Outstanding at December 31
2,934.2
2,944.1
3,049.4
Effective May 1, 2022, the Firm is authorized to purchase
up to $30 billion of common shares under its common
share repurchase program, which superseded the
previously approved repurchase program under which the
Firm was authorized to purchase up to $30 billion of
common shares. In the second half of 2022, as a result of
the expected increases in regulatory capital requirements,
the Firm temporarily suspended share repurchases. In the
first quarter of 2023, the Firm resumed repurchasing
shares under its common share repurchase program.
The following table sets forth the Firm’s repurchases of
common stock for the years ended December 31, 2022,
2021 and 2020.
Year ended December 31,
(in millions)
Total number of shares of common
stock repurchased
Aggregate purchase price of
common stock repurchases
2022
2021(a) 2020(b)
23.1
119.7
50.0
$ 3,122 $ 18,448 $ 6,397
(a) As directed by the Federal Reserve, total net repurchases and common
stock dividends in the first and second quarter of 2021 were restricted
and could not exceed the average of the Firm’s net income for the four
preceding calendar quarters. Effective July 1, 2021, the Firm became
subject to the normal capital distribution restrictions provided under
the regulatory capital framework.
(b) On March 15, 2020, in response to the economic disruptions caused
by the COVID-19 pandemic, the Firm temporarily suspended
repurchases of its common stock. Subsequently, the Federal Reserve
directed all large banks, including the Firm, to discontinue net share
repurchases through the end of 2020.
The Board of Directors’ authorization to repurchase
common shares is utilized at management’s discretion, and
the timing of purchases and the exact amount of common
shares that may be repurchased is subject to various
factors, including market conditions; legal and regulatory
considerations affecting the amount and timing of
repurchase activity; the Firm’s capital position (taking into
account goodwill and intangibles); internal capital
generation; and alternative investment opportunities. The
$30 billion common share repurchase program approved
by the Board does not establish specific price targets or
timetables. The repurchase program may be suspended by
management at any time; and may be executed through
open market purchases or privately negotiated
transactions, or utilizing Rule 10b5-1 plans, which are
written trading plans that the Firm may enter into from
time to time under Rule 10b5-1 of the Securities Exchange
Act of 1934 and which allow the Firm to repurchase its
common shares during periods when it may otherwise not
be repurchasing common shares — for example, during
internal trading blackout periods.
As of December 31, 2022, approximately 58.9 million
shares of common stock were reserved for issuance under
various employee incentive, compensation, option and
stock purchase plans, and directors’ compensation plans.
JPMorgan Chase & Co./2022 Form 10-K
267
Notes to consolidated financial statements
Note 23 – Earnings per share
Basic earnings per share (“EPS”) is calculated using the
two-class method. Under the two-class method, all earnings
(distributed and undistributed) are allocated to common
stock and participating securities. JPMorgan Chase grants
RSUs under its share-based compensation programs,
predominantly all of which entitle recipients to receive
nonforfeitable dividends during the vesting period on a
basis equivalent to dividends paid to holders of the Firm’s
common stock. These unvested RSUs meet the definition of
participating securities based on their respective rights to
receive nonforfeitable dividends, and they are treated as a
separate class of securities in computing basic EPS.
Participating securities are not included as incremental
shares in computing diluted EPS; refer to Note 9 for
additional information.
Diluted EPS incorporates the potential impact of
contingently issuable shares, including awards which
require future service as a condition of delivery of the
underlying common stock. Diluted EPS is calculated under
both the two-class and treasury stock methods, and the
more dilutive amount is reported. For each of the periods
presented in the table below, diluted EPS calculated under
the two-class method was more dilutive.
The following table presents the calculation of net income
applicable to common stockholders and basic and diluted
EPS for the years ended December 31, 2022, 2021 and
2020.
Year ended December 31,
(in millions,
except per share amounts)
Basic earnings per share
2022
2021
2020
Net income
$ 37,676 $ 48,334 $ 29,131
Less: Preferred stock dividends
1,595
1,600
1,583
Net income applicable to common
equity
Less: Dividends and undistributed
earnings allocated to participating
securities
Net income applicable to common
stockholders
36,081
46,734
27,548
189
231
138
$ 35,892 $ 46,503 $ 27,410
Total weighted-average basic shares
outstanding
2,965.8
3,021.5
3,082.4
Net income per share
$ 12.10 $ 15.39 $
8.89
Diluted earnings per share
Net income applicable to common
stockholders
Total weighted-average basic shares
outstanding
Add: Dilutive impact of SARs and
employee stock options, unvested
PSUs and nondividend-earning
RSUs
Total weighted-average diluted
shares outstanding
$ 35,892 $ 46,503 $ 27,410
2,965.8
3,021.5
3,082.4
4.2
5.1
5.0
2,970.0
3,026.6
3,087.4
Net income per share
$ 12.09 $ 15.36 $
8.88
268
JPMorgan Chase & Co./2022 Form 10-K
Note 24 – Accumulated other comprehensive income/(loss)
AOCI includes the after-tax change in unrealized gains and losses on investment securities, foreign currency translation
adjustments (including the impact of related derivatives), fair value changes of excluded components on fair value hedges,
cash flow hedging activities, net gain/(loss) related to the Firm’s defined benefit pension and OPEB plans, and fair value
option-elected liabilities arising from changes in the Firm’s own credit risk (DVA).
Year ended December 31,
(in millions)
Balance at December 31, 2019
Net change
Balance at December 31, 2020
Net change
Unrealized
gains/(losses)
on investment
securities
Translation
adjustments
, net of
hedges
Fair value
hedges
Cash flow
hedges
Defined benefit
pension and OPEB
plans
DVA on fair value
option elected
liabilities
$ 4,057
$
(707) $
(131) $
63
$
(1,344)
4,123
$ 8,180
(5,540)
(a)
(a)
234
19
2,320
212
$
(473) $
(112) $ 2,383
$
(1,132)
(461)
(19)
(2,679)
922
$
$
(369)
(491)
(860)
(293)
Accumulated
other
comprehensive
income/(loss)
$
$
$
1,569
6,417
7,986
(8,070)
(84)
(17,257)
Balance at December 31, 2021
$ 2,640
Net change
Balance at December 31, 2022
(11,764)
$ (9,124) (a)
$
(934) $
(131) $
(296)
$
(210)
$
(1,153)
(611)
98
(5,360)
(1,241)
1,621
$ (1,545) $
(33) $ (5,656)
$
(1,451)
$
468
$
(17,341)
(a) Includes after-tax net unamortized unrealized gains/(losses) of $(1.3) billion, $2.4 billion, and $3.3 billion related to AFS securities that have been
transferred to HTM for the years ended 2022, 2021 and 2020, respectively. Refer to Note 10 for further information.
The following table presents the pre-tax and after-tax changes in the components of OCI.
Year ended December 31, (in millions)
Pre-tax
Unrealized gains/(losses) on investment securities
2022
Tax
effect
After-tax
Pre-tax
2021
Tax
effect
After-tax
Pre-tax
2020
Tax
effect
After-tax
Net unrealized gains/(losses) arising during the period
$ (17,862) $ 4,290 $ (13,572) $ (7,634) $ 1,832 $ (5,802) $ 6,228 $ (1,495) $ 4,733
Reclassification adjustment for realized (gains)/losses
included in net income(a)
Net change
Translation adjustments(b)
Translation
Hedges
Net change
Fair value hedges, net change(c)
Cash flow hedges
2,380
(572)
1,808
345
(83)
262
(802)
192
(610)
(15,482)
3,718
(11,764)
(7,289)
1,749
(5,540)
5,426
(1,303)
4,123
(3,574)
265
(3,309)
(2,447)
125
(2,322)
1,407
(103)
1,304
3,553
(21)
130
(855)
(590)
(32)
2,698
2,452
(591)
1,861
(1,411)
341
(1,070)
(611)
98
5
(466)
(461)
(26)
7
(19)
(4)
25
238
(6)
234
19
Net unrealized gains/(losses) arising during the period
(7,473)
1,794
(5,679)
(2,303)
553
(1,750)
3,623
(870)
2,753
Reclassification adjustment for realized (gains)/losses
included in net income(d)
420
(101)
319
(1,222)
293
(929)
(570)
137
(433)
Net change
(7,053)
1,693
(5,360)
(3,525)
846
(2,679)
3,053
(733)
2,320
Defined benefit pension and OPEB plans, net change(e)
DVA on fair value option elected liabilities, net
change
(1,459)
218
(1,241)
1,129
(207)
922
214
(2)
212
2,141
(520)
1,621
(393)
100
(293)
(648)
157
(491)
Total other comprehensive income/(loss)
$ (21,744) $ 4,487 $ (17,257) $ (10,099) $ 2,029 $ (8,070) $ 8,066 $ (1,649) $ 6,417
(a) The pre-tax amount is reported in Investment securities gains/(losses) in the Consolidated statements of income.
(b) Reclassifications of pre-tax realized gains/(losses) on translation adjustments and related hedges are reported in other income/expense in the
Consolidated statements of income. During the year ended December 31, 2022, the Firm reclassified a net pre-tax loss of $8 million to other expense and
other revenue related to the liquidation of certain legal entities, $38 million related to the net investment hedge gains and $46 million loss related to
cumulative translation adjustment. During the year ended December 31, 2021, the Firm reclassified a net pre-tax loss of $7 million. During the year
ended December 31, 2020, the Firm reclassified net pre-tax gain of $6 million.
(c) Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment
of hedge effectiveness and recorded in other comprehensive income. The initial cost of cross-currency basis spreads is recognized in earnings as part of
the accrual of interest on the cross-currency swap.
(d) The pre-tax amounts are primarily recorded in noninterest revenue, net interest income and compensation expense in the Consolidated statements of
income.
(e) During the year ended December 31, 2022, a remeasurement of the Firm’s U.S. principal defined benefit plan in the third quarter, was required as a result
of a pension settlement. The remeasurement resulted in a net decrease of $1.4 billion in pre-tax AOCI. Refer to Note 8 for further information.
JPMorgan Chase & Co./2022 Form 10-K
269
Notes to consolidated financial statements
Note 25 – Income taxes
JPMorgan Chase and its eligible subsidiaries file a
consolidated U.S. federal income tax return. JPMorgan
Chase uses the asset and liability method to provide for
income taxes on all transactions recorded in the
Consolidated Financial Statements. This method requires
that income taxes reflect the expected future tax
consequences of temporary differences between the
carrying amounts of assets or liabilities for book and tax
purposes. Accordingly, a deferred tax asset or liability for
each temporary difference is determined based on the tax
rates that the Firm expects to be in effect when the
underlying items of income and expense are realized.
JPMorgan Chase’s expense for income taxes includes the
current and deferred portions of that expense. A valuation
allowance is established to reduce deferred tax assets to
the amount the Firm expects to realize.
Due to the inherent complexities arising from the nature of
the Firm’s businesses, and from conducting business and
being taxed in a substantial number of jurisdictions,
significant judgments and estimates are required to be
made. Agreement of tax liabilities between JPMorgan Chase
and the many tax jurisdictions in which the Firm files tax
returns may not be finalized for several years. Thus, the
Firm’s final tax-related assets and liabilities may ultimately
be different from those currently reported.
Effective tax rate and expense
The following table presents a reconciliation of the
applicable statutory U.S. federal income tax rate to the
effective tax rate.
Effective tax rate
Year ended December 31,
2022
2021
2020
Statutory U.S. federal tax rate
21.0 %
21.0 % 21.0 %
Increase/(decrease) in tax rate
resulting from:
U.S. state and local income
taxes, net of U.S. federal
income tax benefit
Tax-exempt income
Non-U.S. earnings
Business tax credits
Other, net
Effective tax rate
3.5
(0.9)
0.4
(5.4)
(0.2)
3.0
(0.9)
0.1
(4.2)
(0.1)
2.5
(1.6)
1.4
(5.4)
0.8
18.4 %
18.9 % 18.7 %
The following table reflects the components of income tax
expense/(benefit) included in the Consolidated statements
of income.
Income tax expense/(benefit)
Year ended December 31,
(in millions)
Current income tax expense/
(benefit)
U.S. federal
Non-U.S.
U.S. state and local
Total current income tax expense/
(benefit)
Deferred income tax expense/
(benefit)
U.S. federal
Non-U.S.
U.S. state and local
Total deferred income tax
expense/(benefit)
2022
2021
2020
$
5,606 $ 2,865 $ 5,759
2,992
2,630
2,718
2,705
1,897
1,793
11,228
7,480
10,257
(2,004)
3,460
(2,776)
(154)
(580)
(101)
389
(126)
(671)
(2,738)
3,748
(3,573)
Total income tax expense
$
8,490 $ 11,228 $ 6,684
Total income tax expense includes $331 million of tax
benefits in 2022, $69 million of tax expenses in 2021, and
$72 million of tax benefits in 2020, resulting from the
resolution of tax audits.
Tax effect of items recorded in stockholders’ equity
The preceding table does not reflect the tax effect of certain
items that are recorded each period directly in
stockholders’ equity. The tax effect of all items recorded
directly to stockholders’ equity resulted in a decrease of
$4.5 billion in 2022, an increase of $2.0 billion in 2021,
and a decrease of $827 million in 2020.
Results from U.S. and non-U.S. earnings
The following table presents the U.S. and non-U.S.
components of income before income tax expense.
Year ended December 31,
(in millions)
U.S.
Non-U.S.(a)
Income before income tax
expense
2022
2021
2020
$ 34,626 $ 50,126 $ 27,312
11,540
9,436
8,503
$ 46,166 $ 59,562 $ 35,815
(a) For purposes of this table, non-U.S. income is defined as income
generated from operations located outside the U.S.
The Firm will recognize any U.S. income tax expense it may
incur on global intangible low tax income as income tax
expense in the period in which the tax is incurred. At
December 31, 2022 the income tax expense incurred was
not material.
270
JPMorgan Chase & Co./2022 Form 10-K
Affordable housing tax credits
The Firm recognized $1.8 billion of tax credits and other tax
benefits associated with investments in affordable housing
projects within income tax expense for the year ended
2022, and $1.7 billion and $1.5 billion for the years ended
2021 and 2020, respectively. The amount of amortization
of such investments reported in income tax expense was
$1.4 billion, $1.3 billion and $1.2 billion, respectively. The
carrying value of these investments, which are reported in
other assets on the Firm’s Consolidated balance sheets, was
$12.1 billion and $10.8 billion at December 31, 2022 and
2021, respectively. The amount of commitments related to
these investments, which are reported in accounts payable
and other liabilities on the Firm’s Consolidated balance
sheets, was $5.4 billion and $4.6 billion at December 31,
2022 and 2021, respectively.
Deferred taxes
Deferred income tax expense/(benefit) results from
differences between assets and liabilities measured for
financial reporting purposes versus income tax return
purposes. Deferred tax assets are recognized if, in
management’s judgment, their realizability is determined to
be more likely than not. If a deferred tax asset is
determined to be unrealizable, a valuation allowance is
established. The significant components of deferred tax
assets and liabilities are reflected in the following table.
December 31, (in millions)
2022
2021
Deferred tax assets
Allowance for loan losses
$
5,193 $
Employee benefits
Accrued expenses and other
Non-U.S. operations
Tax attribute carryforwards
Gross deferred tax assets
Valuation allowance
1,342
8,577
1,148
365
16,625
(198)
4,345
987
3,955
900
615
10,802
(378)
Deferred tax assets, net of valuation
allowance
Deferred tax liabilities
Depreciation and amortization
Mortgage servicing rights, net of
$
$
hedges
Leasing transactions
Other, net
16,427 $
10,424
2,044 $
3,289
1,864
2,843
3,801
2,049
4,227
4,459
Gross deferred tax liabilities
10,552
14,024
Net deferred tax (liabilities)/assets
$
5,875 $
(3,600)
JPMorgan Chase has recorded deferred tax assets of $365
million at December 31, 2022, in connection with U.S.
federal and non-U.S. NOL carryforwards and other tax
attributes, FTC carryforwards, and state and local capital
loss carryforwards. At December 31, 2022, total U.S.
federal NOL carryforwards were $648 million, non-U.S. NOL
carryforwards were $308 million, FTC carryforwards were
$81 million, state and local capital loss carryforwards were
$1.0 billion, and other U.S. federal tax attributes were
$256 million. If not utilized, a portion of the U.S. federal
NOL carryforwards and other U.S. federal tax attributes will
expire between 2026 and 2037 whereas others have an
unlimited carryforward period. Similarly, certain non-U.S.
NOL carryforwards will expire between 2026 and 2039
whereas others have an unlimited carryforward period. The
FTC carryforwards will expire between 2029 and 2030, and
the state and local capital loss carryforwards will expire in
2026.
The valuation allowance at December 31, 2022, was due to
the state and local capital loss carryforwards, FTC
carryforwards, and certain non-U.S. deferred tax assets,
including NOL carryforwards.
JPMorgan Chase & Co./2022 Form 10-K
271
Tax examination status
JPMorgan Chase is continually under examination by the
Internal Revenue Service, by taxing authorities throughout
the world, and by many state and local jurisdictions
throughout the U.S. The following table summarizes the
status of significant income tax examinations of JPMorgan
Chase and its consolidated subsidiaries as of December 31,
2022.
Periods under
examination
JPMorgan Chase – U.S.
2011 – 2013
JPMorgan Chase – U.S.
2014 - 2018
Status
Field examination of
amended returns
Field examination of
original and amended
returns
JPMorgan Chase – New
2012 - 2014
Field Examination
York State
JPMorgan Chase – New
2015 - 2017
Field Examination
York City
JPMorgan Chase – U.K.
2011 – 2020
Field examination of
certain select entities
Notes to consolidated financial statements
Unrecognized tax benefits
At December 31, 2022, 2021 and 2020, JPMorgan Chase’s
unrecognized tax benefits, excluding related interest
expense and penalties, were $5.0 billion, $4.6 billion and
$4.3 billion, respectively, of which $3.8 billion, $3.4 billion
and $3.1 billion, respectively, if recognized, would reduce
the annual effective tax rate. Included in the amount of
unrecognized tax benefits are certain items that would not
affect the effective tax rate if they were recognized in the
Consolidated statements of income. These unrecognized
items include the tax effect of certain temporary
differences, the portion of gross state and local
unrecognized tax benefits that would be offset by the
benefit from associated U.S. federal income tax deductions,
and the portion of gross non-U.S. unrecognized tax benefits
that would have offsets in other jurisdictions. JPMorgan
Chase evaluates the need for changes in unrecognized tax
benefits based on its anticipated tax return filing positions
as part of its U.S. federal and state and local tax returns. In
addition, the Firm is presently under audit by a number of
taxing authorities, most notably by the Internal Revenue
Service, as summarized in the Tax examination status table
below. The evaluation of unrecognized tax benefits as well
as the potential for audit settlements make it reasonably
possible that over the next 12 months the gross balance of
unrecognized tax benefits may increase or decrease by as
much as approximately $1.0 billion. The change in the
unrecognized tax benefit would result in a payment or
income statement recognition.
The following table presents a reconciliation of the
beginning and ending amount of unrecognized tax benefits.
Year ended December 31,
(in millions)
Balance at January 1,
Increases based on tax positions
related to the current period
Increases based on tax positions
related to prior periods
Decreases based on tax positions
related to prior periods
2022
2021
2020
$ 4,636 $ 4,250 $ 4,024
1,234
798
685
123
393
362
(824)
(657)
(705)
Decreases related to cash settlements
with taxing authorities
(126)
(148)
(116)
Balance at December 31,
$ 5,043 $ 4,636 $ 4,250
After-tax interest expense/(benefit) and penalties related
to income tax liabilities recognized in income tax expense
were $141 million, $174 million and $147 million in 2022,
2021 and 2020, respectively.
At December 31, 2022 and 2021, in addition to the liability
for unrecognized tax benefits, the Firm had accrued $1.3
billion and $1.1 billion, respectively, for income tax-related
interest and penalties.
272
JPMorgan Chase & Co./2022 Form 10-K
Note 26 – Restricted cash, other restricted
assets and intercompany funds transfers
Restricted cash and other restricted assets
Certain of the Firm’s cash and other assets are restricted as
to withdrawal or usage. These restrictions are imposed by
various regulatory authorities based on the particular
activities of the Firm’s subsidiaries.
The business of JPMorgan Chase Bank, N.A. is subject to
examination and regulation by the OCC. The Bank is a
member of the U.S. Federal Reserve System, and its
deposits in the U.S. are insured by the FDIC, subject to
applicable limits.
The Firm is required to maintain cash reserves at certain
non-US central banks.
The Firm is also subject to rules and regulations established
by other U.S. and non U.S. regulators. As part of its
compliance with the respective regulatory requirements,
the Firm’s broker-dealer activities are subject to certain
restrictions on cash and other assets.
The following table presents the components of the Firm’s
restricted cash:
December 31, (in billions)
Segregated for the benefit of securities and cleared
derivative customers
Cash reserves at non-U.S. central banks and held for
other general purposes
Total restricted cash(a)
2022
2021
18.7
14.6
8.1
5.1
$ 26.8 $ 19.7
(a) Comprises $25.4 billion and $18.4 billion in deposits with banks, and
$1.4 billion and $1.3 billion in cash and due from banks on the
Consolidated balance sheets as of December 31, 2022 and 2021,
respectively.
Also, as of December 31, 2022 and 2021, the Firm had the
following other restricted assets:
• Cash and securities pledged with clearing organizations
for the benefit of customers of $42.4 billion and $47.5
billion, respectively.
• Securities with a fair value of $31.7 billion and $30.0
billion, respectively, were also restricted in relation to
customer activity.
Intercompany funds transfers
Restrictions imposed by U.S. federal law prohibit JPMorgan
Chase Bank, N.A., and its subsidiaries, from lending to
JPMorgan Chase & Co. (“Parent Company”) and certain of
its affiliates unless the loans are secured in specified
amounts. Such secured loans provided by any banking
subsidiary to the Parent Company or to any particular
affiliate, together with certain other transactions with such
affiliate (collectively referred to as “covered transactions”),
must be made on terms and conditions that are consistent
with safe and sound banking practices. In addition, unless
collateralized with cash or US Government debt obligations,
covered transactions are generally limited to 10% of the
banking subsidiary’s total capital, as determined by the risk-
based capital guidelines; the aggregate amount of covered
transactions between any banking subsidiary and all of its
affiliates is limited to 20% of the banking subsidiary’s total
capital.
The Parent Company’s two principal subsidiaries are
JPMorgan Chase Bank, N.A. and JPMorgan Chase Holdings
LLC, an intermediate holding company (the “IHC”). The IHC
generally holds the stock of JPMorgan Chase’s subsidiaries
other than JPMorgan Chase Bank, N.A. and its subsidiaries.
The IHC also owns other assets and provides intercompany
loans to the Parent Company. The Parent Company is
obligated to contribute to the IHC substantially all the net
proceeds received from securities issuances (including
issuances of senior and subordinated debt securities and of
preferred and common stock).
The principal sources of income and funding for the Parent
Company are dividends from JPMorgan Chase Bank, N.A.
and dividends and extensions of credit from the IHC. In
addition to dividend restrictions set forth in statutes and
regulations, the Federal Reserve, the OCC and the FDIC have
authority under the Financial Institutions Supervisory Act to
prohibit or to limit the payment of dividends by the banking
organizations they supervise, including the Parent Company
and its subsidiaries that are banks or bank holding
companies, if, in the banking regulator’s opinion, payment
of a dividend would constitute an unsafe or unsound
practice in light of the financial condition of the banking
organization. The IHC is prohibited from paying dividends or
extending credit to the Parent Company if certain capital or
liquidity “thresholds” are breached or if limits are otherwise
imposed by the Parent Company’s management or Board of
Directors.
At January 1, 2023, the Parent Company’s banking
subsidiaries could pay, in the aggregate, approximately $34
billion in dividends to their respective bank holding
companies without the prior approval of their relevant
banking regulators. The capacity to pay dividends in 2023
will be supplemented by the banking subsidiaries’ earnings
during the year.
JPMorgan Chase & Co./2022 Form 10-K
273
Notes to consolidated financial statements
Note 27 – Regulatory capital
The Federal Reserve establishes capital requirements,
including well-capitalized requirements, for the
consolidated financial holding company. The Office of the
Comptroller of the Currency (“OCC”) establishes similar
minimum capital requirements and standards for the Firm’s
principal IDI subsidiary, JPMorgan Chase Bank, N.A.
The capital rules under Basel III establish minimum capital
ratios and overall capital adequacy standards for large and
internationally active U.S. bank holding companies and
banks, including the Firm and its IDI subsidiaries, including
JPMorgan Chase Bank, N.A. Two comprehensive approaches
are prescribed for calculating RWA: a standardized
approach (“Basel III Standardized”), and an advanced
approach (“Basel III Advanced”). For each of the risk-based
capital ratios, the capital adequacy of the Firm and
JPMorgan Chase Bank, N.A. is evaluated against the lower of
the Standardized or Advanced approaches compared to
their respective regulatory capital ratio requirements.
The three components of regulatory capital under the Basel
III rules are as illustrated below:
Under the risk-based capital and leverage-based guidelines
of the Federal Reserve, JPMorgan Chase is required to
maintain minimum ratios for CET1 capital, Tier 1 capital,
Total capital, Tier 1 leverage and the SLR. Failure to meet
these minimum requirements could cause the Federal
Reserve to take action. IDI subsidiaries are also subject to
these capital requirements established by their respective
primary regulators.
The following table presents the risk-based regulatory
capital ratio requirements and well-capitalized ratios to
which the Firm and its IDI subsidiaries were subject as of
December 31, 2022 and 2021.
Standardized capital
ratio requirements
IDI(c)
BHC(a)(b)
Advanced capital
ratio requirements
IDI(c)
BHC(a)
Well-capitalized
ratios
BHC(d)
IDI(e)
Risk-based capital ratios
CET1 capital
12.0 %
7.0 % 10.5 %
7.0 %
NA
6.5 %
Tier 1
capital
Total capital
13.5
15.5
8.5
10.5
12.0
14.0
8.5
6.0 % 8.0
10.5
10.0
10.0
Note: The table above is as defined by the regulations issued by the
Federal Reserve, OCC and FDIC and to which the Firm and its IDI
subsidiaries are subject.
(a) Represents the regulatory capital ratio requirements applicable to the
Firm. The CET1, Tier 1 and Total capital ratio requirements each
include a respective minimum requirement plus a GSIB surcharge of
3.5% as calculated under Method 2; plus a 4.0% SCB for Basel III
Standardized ratios and a fixed 2.5% capital conservation buffer for
Basel III Advanced ratios. The countercyclical buffer is currently set to
0% by the federal banking agencies.
(b) For the period ended December 31, 2021, the CET1, Tier 1, and Total
capital ratio requirements under Basel III Standardized applicable to
the Firm were 11.2%, 12.7% and 14.7%, respectively. SCB for Basel
III Standardized ratio for 2021 was 3.2%.
(c) Represents requirements for JPMorgan Chase’s IDI subsidiaries. The
CET1, Tier 1 and Total capital ratio requirements include a fixed capital
conservation buffer requirement of 2.5% that is applicable to the IDI
subsidiaries. The IDI subsidiaries are not subject to the GSIB surcharge.
(d) Represents requirements for bank holding companies pursuant to
regulations issued by the Federal Reserve.
(e) Represents requirements for IDI subsidiaries pursuant to regulations
issued under the FDIC Improvement Act.
The following table presents the leverage-based regulatory
capital ratio requirements and well-capitalized ratios to
which the Firm and its IDI subsidiaries were subject as of
December 31, 2022 and 2021.
Capital ratio
requirements(a)
IDI
BHC
Well-capitalized
ratios
BHC(b)
IDI
Leverage-based capital ratios
Tier 1 leverage
SLR
4.0 % 4.0 %
5.0
6.0
NA
NA
5.0 %
6.0
Note: The table above is as defined by the regulations issued by the
Federal Reserve, OCC and FDIC and to which the Firm and its IDI
subsidiaries are subject.
(a) Represents minimum SLR requirement of 3.0%, as well as
supplementary leverage buffer requirements of 2.0% and 3.0% for
BHC and IDI subsidiaries, respectively.
(b) The Federal Reserve's regulations do not establish well-capitalized
thresholds for these measures for BHCs.
274
JPMorgan Chase & Co./2022 Form 10-K
CECL regulatory capital transition
Until December 31, 2021, the Firm’s capital reflected a two
year delay of the effects of CECL provided by the Federal
Reserve Board in response to the COVID-19 pandemic.
Additionally, effective January 1, 2022, the Firm phased
out 25% of the other CECL capital transition provisions
which impacted Tier 2 capital, adjusted average assets,
total leverage exposure and RWA, as applicable.
Beginning January 1, 2022, the $2.9 billion CECL capital
benefit is being phased out at 25% per year over a three-
year period. As of December 31, 2022, the Firm’s CET1
capital reflected the remaining $2.2 billion benefit
associated with the CECL capital transition provisions.
Refer to Note 1 for further information on the CECL
accounting guidance.
The following tables present risk-based capital metrics under both the Basel III Standardized and Basel III Advanced
approaches and leverage-based capital metrics for JPMorgan Chase and JPMorgan Chase Bank, N.A. As of December 31, 2022
and 2021, JPMorgan Chase and JPMorgan Chase Bank, N.A. were well-capitalized and met all capital requirements to which
each was subject.
December 31, 2022
(in millions, except ratios)
Risk-based capital metrics:(a)
CET1 capital
Tier 1 capital
Total capital
Risk-weighted assets
CET1 capital ratio
Tier 1 capital ratio
Total capital ratio
December 31, 2021
(in millions, except ratios)
Risk-based capital metrics:(a)
CET1 capital
Tier 1 capital
Total capital
Risk-weighted assets
CET1 capital ratio
Tier 1 capital ratio
Total capital ratio
Basel III Standardized
Basel III Advanced
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
$
218,934
$
269,668
$
218,934
$
245,631
277,769
269,672
288,433
245,631
264,583
269,668
269,672
275,255
1,653,538
1,597,072
1,609,773
1,475,602
13.2 %
14.9
16.8
16.9 %
16.9
18.1
13.6 %
15.3
16.4
18.3 %
18.3
18.7
Basel III Standardized
Basel III Advanced
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
$
213,942
$
266,907
$
213,942
$
246,162
274,900
266,910
281,826
246,162
265,796
266,907
266,910
272,299
1,638,900
1,582,280
1,547,920
1,392,847
13.1 %
15.0
16.8
16.9 %
16.9
17.8
13.8 %
15.9
17.2
19.2 %
19.2
19.5
(a) The capital metrics reflect the CECL capital transition provisions.
Three months ended
(in millions, except ratios)
Leverage-based capital metrics:(a)
Adjusted average assets(b)
Tier 1 leverage ratio
Total leverage exposure
SLR
December 31, 2022
December 31, 2021
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
$
$
3,703,873
$
3,249,912
6.6 %
8.3 %
4,367,092
$
3,925,502
$
$
3,782,035
$
3,334,925
6.5 %
8.0 %
4,571,789
$
4,119,286
5.6 %
6.9 %
5.4 %
6.5 %
(a) The capital metrics reflect the CECL capital transition provisions.
(b) Adjusted average assets, for purposes of calculating the leverage ratios, includes quarterly average assets adjusted for on-balance sheet assets that are
subject to deduction from Tier 1 capital, predominantly goodwill, inclusive of estimated equity method goodwill, and other intangible assets.
JPMorgan Chase & Co./2022 Form 10-K
275
Notes to consolidated financial statements
Note 28 – Off–balance sheet lending-related
financial instruments, guarantees, and
other commitments
JPMorgan Chase provides lending-related financial
instruments (e.g., commitments and guarantees) to address
the financing needs of its customers and clients. The
contractual amount of these financial instruments
represents the maximum possible credit risk to the Firm
should the customer or client draw upon the commitment
or the Firm be required to fulfill its obligation under the
guarantee, and should the customer or client subsequently
fail to perform according to the terms of the contract. Most
of these commitments and guarantees have historically
been refinanced, extended, cancelled, or expired without
being drawn or a default occurring. As a result, the total
contractual amount of these instruments is not, in the
Firm’s view, representative of its expected future credit
exposure or funding requirements.
To provide for expected credit losses in wholesale and
certain consumer lending-related commitments, an
allowance for credit losses on lending-related commitments
is maintained. Refer to Note 13 for further information
regarding the allowance for credit losses on lending-related
commitments. The following table summarizes the
contractual amounts and carrying values of off-balance
sheet lending-related financial instruments, guarantees and
other commitments at December 31, 2022 and 2021. The
amounts in the table below for credit card and home equity
lending-related commitments represent the total available
credit for these products. The Firm has not experienced,
and does not anticipate, that all available lines of credit for
these products will be utilized at the same time. The Firm
can reduce or cancel credit card lines of credit by providing
the borrower notice or, in some cases as permitted by law,
without notice. In addition, the Firm typically closes credit
card lines when the borrower is 60 days or more past due.
The Firm may reduce or close HELOCs when there are
significant decreases in the value of the underlying
property, or when there has been a demonstrable decline in
the creditworthiness of the borrower.
276
JPMorgan Chase & Co./2022 Form 10-K
Off–balance sheet lending-related financial instruments, guarantees and other commitments
Expires
after
1 year
through
3 years
Expires in
1 year or
less
Contractual amount
2022
Expires
after
3 years
through
5 years
Expires
after 5
years
Carrying value(i)
2021
2022
2021
Total
Total
$ 5,156 $
3,500 $
6,542 $ 6,089 $ 21,287 $ 32,996
10,642
15,798
821,284
837,082
1
—
3,501
6,542
1,588
7,677
12,231
33,518
12,338
45,334
—
—
—
821,284
730,534
3,501
6,542
7,677
854,802
775,868
75
—
75
—
75
100
2
102
—
102
By remaining maturity at December 31,
(in millions)
Lending-related
Consumer, excluding credit card:
Residential Real Estate(a)
Auto and other
Total consumer, excluding credit card
Credit card(b)
Total consumer(c)
Wholesale:
Other unfunded commitments to extend credit(d)
83,832
132,237
201,921
22,417
440,407
453,467
2,328
(h)
2,037
Standby letters of credit and other financial
guarantees(d)
Other letters of credit(d)
Total wholesale(c)
Total lending-related
Other guarantees and commitments
Securities lending indemnification agreements
and guarantees(e)
Derivatives qualifying as guarantees
Unsettled resale and securities borrowed
agreements
Unsettled repurchase and securities loaned
agreements
Loan sale and securitization-related
indemnifications:
Mortgage repurchase liability
Loans sold with recourse
Exchange & clearing house guarantees and
commitments(f)
Other guarantees and commitments (g)
13,559
8,272
4,585
1,023
27,439
28,530
4,448
3,692
486,445
101,083
$ 938,165 $ 144,353 $ 213,146 $ 31,118 $ 1,326,782 $ 1,262,313
4,134
471,980
98
206,604
343
140,852
1
23,441
408
6
2,742
$ 2,817
476
9
2,522
$ 2,624
$ 283,386 $
— $
— $
— $ 283,386 $ 337,770
$
—
$
—
5,082
466
12,632
41,000
59,180
55,730
649
475
116,260
65,873
NA
NA
191,068
4,856
715
534
NA
NA
—
723
—
—
NA
NA
—
116,975
103,681
—
66,407
74,263
NA
NA
NA
820
NA
827
—
209
—
191,068
182,701
2,846
8,634
10,490
(2)
(7)
76
28
—
53
1
—
61
19
—
69
(a) Includes certain commitments to purchase loans from correspondents.
(b) Also includes commercial card lending-related commitments primarily in CB and CIB.
(c) Predominantly all consumer and wholesale lending-related commitments are in the U.S.
(d) At December 31, 2022 and 2021, reflected the contractual amount net of risk participations totaling $71 million and $44 million, respectively, for other
unfunded commitments to extend credit; $8.2 billion and $7.9 billion, respectively, for standby letters of credit and other financial guarantees; and $512
million and $451 million, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk
participations.
(e) At December 31, 2022 and 2021, collateral held by the Firm in support of securities lending indemnification agreements was $298.5 billion and $357.4
billion, respectively. Securities lending collateral primarily consists of cash, G7 government securities, and securities issued by U.S. GSEs and government
agencies.
(f) At December 31, 2022 and 2021, includes guarantees to the Fixed Income Clearing Corporation under the sponsored member repo program and
commitments and guarantees associated with the Firm’s membership in certain clearing houses.
(g) At December 31, 2022 and 2021, primarily includes unfunded commitments related to certain tax-oriented equity investments, unfunded commitments
to purchase secondary market loans, and other equity investment commitments.
(h) At December 31, 2022, includes net markdowns on held-for-sale positions related to unfunded commitments in the bridge financing portfolio.
(i) For lending-related products, the carrying value represents the allowance for lending-related commitments and the guarantee liability; for derivative-
related products, and lending-related commitments for which the fair value option was elected, the carrying value represents the fair value.
JPMorgan Chase & Co./2022 Form 10-K
277
Notes to consolidated financial statements
Other unfunded commitments to extend credit
Other unfunded commitments to extend credit generally
consist of commitments for working capital and general
corporate purposes, extensions of credit to support
commercial paper facilities and bond financings in the event
that those obligations cannot be remarketed to new
investors, as well as committed liquidity facilities to clearing
organizations. The Firm also issues commitments under
multipurpose facilities which could be drawn upon in
several forms, including the issuance of a standby letter of
credit.
Guarantees
U.S. GAAP requires that a guarantor recognize, at the
inception of a guarantee, a liability in an amount equal to
the fair value of the obligation undertaken in issuing the
guarantee. U.S. GAAP defines a guarantee as a contract that
contingently requires the guarantor to pay a guaranteed
party based upon: (a) changes in an underlying asset,
liability or equity security of the guaranteed party; or (b) a
third party’s failure to perform under a specified
agreement. The Firm considers the following off–balance
sheet arrangements to be guarantees under U.S. GAAP:
standby letters of credit and other financial guarantees,
securities lending indemnifications, certain indemnification
agreements included within third-party contractual
arrangements, certain derivative contracts and the
guarantees under the sponsored member repo program.
As required by U.S. GAAP, the Firm initially records
guarantees at the inception date fair value of the non-
contingent obligation assumed (e.g., the amount of
consideration received or the net present value of the
premium receivable). For these obligations, the Firm
records this fair value amount in other liabilities with an
offsetting entry recorded in cash (for premiums received),
or other assets (for premiums receivable). Any premium
receivable recorded in other assets is reduced as cash is
received under the contract, and the fair value of the
liability recorded at inception is amortized into income as
lending and deposit-related fees over the life of the
guarantee contract. The lending-related contingent
obligation is recognized based on expected credit losses in
addition to, and separate from, any non-contingent
obligation.
Non-lending-related contingent obligations are recognized
when the liability becomes probable and reasonably
estimable. These obligations are not recognized if the
estimated amount is less than the carrying amount of any
non-contingent liability recognized at inception (adjusted
for any amortization). Examples of non-lending-related
contingent obligations include indemnifications provided in
sales agreements, where a portion of the sale proceeds is
allocated to the guarantee, which adjusts the gain or loss
that would otherwise result from the transaction. For these
indemnifications, the initial liability is amortized to income
as the Firm’s risk is reduced (i.e., over time or when the
indemnification expires).
The contractual amount and carrying value of guarantees
and indemnifications are included in the table on page 277.
For additional information on the guarantees, see below.
Standby letters of credit and other financial guarantees
Standby letters of credit and other financial guarantees are
conditional lending commitments issued by the Firm to
guarantee the performance of a client or customer to a
third party under certain arrangements, such as commercial
paper facilities, bond financings, acquisition financings,
trade financings and similar transactions.
The following table summarizes the contractual amount and carrying value of standby letters of credit and other financial
guarantees and other letters of credit arrangements as of December 31, 2022 and 2021.
Standby letters of credit, other financial guarantees and other letters of credit
December 31,
(in millions)
Investment-grade(a)
Noninvestment-grade(a)
Total contractual amount
Allowance for lending-related commitments
Guarantee liability
Total carrying value
Commitments with collateral
2022
2021
Standby letters of credit and
other financial guarantees
Other letters
of credit
Standby letters of credit and
other financial guarantees
Other letters
of credit
$
$
$
$
$
19,205
8,234
27,439
82
326
408
15,296
$
$
$
$
$
3,040
1,094
4,134
6
—
6
795
$
$
$
$
$
19,998
8,532
28,530
123
353
476
14,511
$
$
$
$
$
3,087
1,361
4,448
9
—
9
999
(a) The ratings scale is based on the Firm’s internal risk ratings. Refer to Note 12 for further information on internal risk ratings.
278
JPMorgan Chase & Co./2022 Form 10-K
Securities lending indemnifications
Through the Firm’s securities lending program,
counterparties’ securities, via custodial and non-custodial
arrangements, may be lent to third parties. As part of this
program, the Firm provides an indemnification in the
lending agreements which protects the lender against the
failure of the borrower to return the lent securities. To
minimize its liability under these indemnification
agreements, the Firm obtains cash or other highly liquid
collateral with a market value exceeding 100% of the value
of the securities on loan from the borrower. Collateral is
marked to market daily to help assure that collateralization
is adequate. Additional collateral is called from the
borrower if a shortfall exists, or collateral may be released
to the borrower in the event of overcollateralization. If a
borrower defaults, the Firm would use the collateral held to
purchase replacement securities in the market or to credit
the lending client or counterparty with the cash equivalent
thereof.
The cash collateral held by the Firm may be invested on
behalf of the client in indemnified resale agreements,
whereby the Firm indemnifies the client against the loss of
principal invested. To minimize its liability under these
agreements, the Firm obtains collateral with a market value
exceeding 100% of the principal invested.
Derivatives qualifying as guarantees
The Firm transacts in certain derivative contracts that have
the characteristics of a guarantee under U.S. GAAP. These
contracts include written put options that require the Firm
to purchase assets upon exercise by the option holder at a
specified price by a specified date in the future. The Firm
may enter into written put option contracts in order to meet
client needs, or for other trading purposes. The terms of
written put options are typically five years or less.
Derivatives deemed to be guarantees also includes stable
value contracts, commonly referred to as “stable value
products”, that require the Firm to make a payment of the
difference between the market value and the book value of
a counterparty’s reference portfolio of assets in the event
that market value is less than book value and certain other
conditions have been met. Stable value products are
transacted in order to allow investors to realize investment
returns with less volatility than an unprotected portfolio.
These contracts are typically longer-term or may have no
stated maturity, but allow the Firm to elect to terminate the
contract under certain conditions.
The notional value of derivative guarantees generally
represents the Firm’s maximum exposure. However,
exposure to certain stable value products is contractually
limited to a substantially lower percentage of the notional
amount.
The fair value of derivative guarantees reflects the
probability, in the Firm’s view, of whether the Firm will be
required to perform under the contract. The Firm reduces
exposures to these contracts by entering into offsetting
transactions, or by entering into contracts that hedge the
market risk related to the derivative guarantees.
The following table summarizes the derivatives qualifying
as guarantees as of December 31, 2022 and 2021.
(in millions)
Notional amounts
Derivative guarantees
Stable value contracts with
contractually limited exposure
Maximum exposure of stable
value contracts with
contractually limited exposure
Fair value
Derivative payables
December 31,
2022
December 31,
2021
$
59,180 $
55,730
31,820
29,778
2,063
2,882
649
475
In addition to derivative contracts that meet the
characteristics of a guarantee, the Firm is both a purchaser
and seller of credit protection in the credit derivatives
market. Refer to Note 5 for a further discussion of credit
derivatives.
Unsettled securities financing agreements
In the normal course of business, the Firm enters into resale
and securities borrowed agreements. At settlement, these
commitments result in the Firm advancing cash to and
receiving securities collateral from the counterparty. The
Firm also enters into repurchase and securities loaned
agreements. At settlement, these commitments result in the
Firm receiving cash from and providing securities collateral
to the counterparty. Such agreements settle at a future
date. These agreements generally do not meet the
definition of a derivative, and therefore, are not recorded
on the Consolidated balance sheets until settlement date.
These agreements predominantly have regular-way
settlement terms. Refer to Note 11 for a further discussion
of securities financing agreements.
Loan sales- and securitization-related indemnifications
Mortgage repurchase liability
In connection with the Firm’s mortgage loan sale and
securitization activities with U.S. GSEs the Firm has made
representations and warranties that the loans sold meet
certain requirements, and that may require the Firm to
repurchase mortgage loans and/or indemnify the loan
purchaser if such representations and warranties are
breached by the Firm.
Private label securitizations
The liability related to repurchase demands associated with
private label securitizations is separately evaluated by the
Firm in establishing its litigation reserves.
Refer to Note 30 for additional information regarding
litigation.
Loans sold with recourse
The Firm provides servicing for mortgages and certain
commercial lending products on both a recourse and
nonrecourse basis. In nonrecourse servicing, the principal
credit risk to the Firm is the cost of temporary servicing
advances of funds (i.e., normal servicing advances). In
recourse servicing, the servicer agrees to share credit risk
with the owner of the mortgage loans, such as Fannie Mae
JPMorgan Chase & Co./2022 Form 10-K
279
Notes to consolidated financial statements
or Freddie Mac or a private investor, insurer or guarantor.
Losses on recourse servicing predominantly occur when
foreclosure sales proceeds of the property underlying a
defaulted loan are less than the sum of the outstanding
principal balance, plus accrued interest on the loan and the
cost of holding and disposing of the underlying property.
The Firm’s securitizations are predominantly nonrecourse,
thereby effectively transferring the risk of future credit
losses to the purchaser of the mortgage-backed securities
issued by the trust. The unpaid principal balance of loans
sold with recourse as well as the carrying value of the
related liability that the Firm has recorded in accounts
payable and other liabilities on the Consolidated balance
sheets, which is representative of the Firm’s view of the
likelihood it will have to perform under its recourse
obligations, are disclosed in the table on page 277.
Other off-balance sheet arrangements
Indemnification agreements – general
In connection with issuing securities to investors outside the
U.S., the Firm may agree to pay additional amounts to the
holders of the securities in the event that, due to a change
in tax law, certain types of withholding taxes are imposed
on payments on the securities. The terms of the securities
may also give the Firm the right to redeem the securities if
such additional amounts are payable. The Firm may also
enter into indemnification clauses in connection with the
licensing of software to clients (“software licensees”) or
when it sells a business or assets to a third party (“third-
party purchasers”), pursuant to which it indemnifies
software licensees for claims of liability or damages that
may occur subsequent to the licensing of the software, or
third-party purchasers for losses they may incur due to
actions taken by the Firm prior to the sale of the business or
assets. It is difficult to estimate the Firm’s maximum
exposure under these indemnification arrangements, since
this would require an assessment of future changes in tax
law and future claims that may be made against the Firm
that have not yet occurred. However, based on historical
experience, management expects the risk of loss to be
remote.
Merchant charge-backs
Under the rules of payment networks, in its role as a
merchant acquirer, the Firm’s Merchant Services business
in CIB Payments, retains a contingent liability for disputed
processed credit and debit card transactions that result in a
charge-back to the merchant. If a dispute is resolved in the
cardholder’s favor, the Firm will (through the cardholder’s
issuing bank) credit or refund the amount to the cardholder
and will charge back the transaction to the merchant. If the
Firm is unable to collect the amount from the merchant, the
Firm will bear the loss for the amount credited or refunded
to the cardholder. The Firm mitigates this risk by
withholding future settlements, retaining cash reserve
accounts or obtaining other collateral. In addition, the Firm
recognizes a valuation allowance that covers the payment
or performance risk related to charge-backs.
For the years ended December 31, 2022, 2021 and 2020,
the Firm processed an aggregate volume of $2,158.4
billion, $1,886.7 billion, and $1,597.3 billion, respectively.
Clearing Services – Client Credit Risk
The Firm provides clearing services for clients by entering
into securities purchases and sales and derivative contracts
with CCPs, including ETDs such as futures and options, as
well as OTC-cleared derivative contracts. As a clearing
member, the Firm stands behind the performance of its
clients, collects cash and securities collateral (margin) as
well as any settlement amounts due from or to clients, and
remits them to the relevant CCP or client in whole or part.
There are two types of margin: variation margin is posted
on a daily basis based on the value of clients’ derivative
contracts and initial margin is posted at inception of a
derivative contract, generally on the basis of the potential
changes in the variation margin requirement for the
contract.
As a clearing member, the Firm is exposed to the risk of
nonperformance by its clients, but is not liable to clients for
the performance of the CCPs. Where possible, the Firm
seeks to mitigate its risk to the client through the collection
of appropriate amounts of margin at inception and
throughout the life of the transactions. The Firm can also
cease providing clearing services if clients do not adhere to
their obligations under the clearing agreement. In the event
of nonperformance by a client, the Firm would close out the
client’s positions and access available margin. The CCP
would utilize any margin it holds to make itself whole, with
any remaining shortfalls required to be paid by the Firm as
a clearing member.
The Firm reflects its exposure to nonperformance risk of the
client through the recognition of margin receivables from
clients and margin payables to CCPs; the clients’ underlying
securities or derivative contracts are not reflected in the
Firm’s Consolidated Financial Statements.
It is difficult to estimate the Firm’s maximum possible
exposure through its role as a clearing member, as this
would require an assessment of transactions that clients
may execute in the future. However, based upon historical
experience, and the credit risk mitigants available to the
Firm, management believes it is unlikely that the Firm will
have to make any material payments under these
arrangements and the risk of loss is expected to be remote.
Refer to Note 5 for information on the derivatives that the
Firm executes for its own account and records in its
Consolidated Financial Statements.
280
JPMorgan Chase & Co./2022 Form 10-K
counterparties. The obligations of the subsidiaries are
included on the Firm’s Consolidated balance sheets or are
reflected as off-balance sheet commitments; therefore, the
Parent Company has not recognized a separate liability for
these guarantees. The Firm believes that the occurrence of
any event that would trigger payments by the Parent
Company under these guarantees is remote.
The Parent Company has guaranteed certain long-term debt
and structured notes of its subsidiaries, including JPMorgan
Chase Financial Company LLC (“JPMFC”), a 100%-owned
finance subsidiary. All securities issued by JPMFC are fully
and unconditionally guaranteed by the Parent Company and
no other subsidiary of the parent company guarantees
these securities. These guarantees, which rank on a parity
with the Firm’s unsecured and unsubordinated
indebtedness, are not included in the table on page 277 of
this Note. Refer to Note 20 for additional information.
Exchange & Clearing House Memberships
The Firm is a member of several securities and derivative
exchanges and clearing houses, both in the U.S. and other
countries, and it provides clearing services to its clients.
Membership in some of these organizations requires the
Firm to pay a pro rata share of the losses incurred by the
organization as a result of the default of another member.
Such obligations vary with different organizations. These
obligations may be limited to the amount (or a multiple of
the amount) of the Firm’s contribution to the guarantee
fund maintained by a clearing house or exchange as part of
the resources available to cover any losses in the event of a
member default. Alternatively, these obligations may also
include a pro rata share of the residual losses after applying
the guarantee fund. Additionally, certain clearing houses
require the Firm as a member to pay a pro rata share of
losses that may result from the clearing house’s investment
of guarantee fund contributions and initial margin,
unrelated to and independent of the default of another
member. Generally a payment would only be required
should such losses exceed the resources of the clearing
house or exchange that are contractually required to
absorb the losses in the first instance. In certain cases, it is
difficult to estimate the Firm’s maximum possible exposure
under these membership agreements, since this would
require an assessment of future claims that may be made
against the Firm that have not yet occurred. However,
based on historical experience, management expects the
risk of loss to the Firm to be remote. Where the Firm’s
maximum possible exposure can be estimated, the amount
is disclosed in the table on page 277, in the Exchange &
clearing house guarantees and commitments line.
Sponsored member repo program
The Firm acts as a sponsoring member to clear eligible
overnight and term resale and repurchase agreements
through the Government Securities Division of the Fixed
Income Clearing Corporation (“FICC”) on behalf of clients
that become sponsored members under the FICC’s rules.
The Firm also guarantees to the FICC the prompt and full
payment and performance of its sponsored member clients’
respective obligations under the FICC’s rules. The Firm
minimizes its liability under these guarantees by obtaining a
security interest in the cash or high-quality securities
collateral that the clients place with the clearing house;
therefore, the Firm expects the risk of loss to be remote.
The Firm’s maximum possible exposure, without taking into
consideration the associated collateral, is included in the
Exchange & clearing house guarantees and commitments
line on page 277. Refer to Note 11 for additional
information on credit risk mitigation practices on resale
agreements and the types of collateral pledged under
repurchase agreements.
Guarantees of subsidiaries
In the normal course of business, the Parent Company may
provide counterparties with guarantees of certain of the
trading and other obligations of its subsidiaries on a
contract-by-contract basis, as negotiated with the Firm’s
JPMorgan Chase & Co./2022 Form 10-K
281
Collateral
The Firm accepts financial assets as collateral that it is
permitted to sell or repledge, deliver or otherwise use. This
collateral is generally obtained under resale and other
securities financing agreements, prime brokerage-related
held-for-investment customer receivables and derivative
contracts. Collateral is generally used under repurchase and
other securities financing agreements, to cover short sales,
and to collateralize derivative contracts and deposits.
The following table presents the fair value of collateral
accepted.
December 31, (in billions)
2022
2021
Collateral permitted to be sold or
repledged, delivered, or otherwise used
Collateral sold, repledged, delivered or
otherwise used
$ 1,346.9 $ 1,471.3
1,019.4
1,111.0
Notes to consolidated financial statements
Note 29 – Pledged assets and collateral
Pledged assets
The Firm pledges financial assets that it owns to maintain
potential borrowing capacity at discount windows with
Federal Reserve banks, various other central banks and
FHLBs. Additionally, the Firm pledges assets for other
purposes, including to collateralize repurchase and other
securities financing agreements, to cover short sales and to
collateralize derivative contracts and deposits. Certain of
these pledged assets may be sold or repledged or otherwise
used by the secured parties and are parenthetically
identified on the Consolidated balance sheets as assets
pledged.
The following table presents the Firm’s pledged assets.
December 31, (in billions)
2022
2021
Assets that may be sold or repledged or
otherwise used by secured parties
Assets that may not be sold or repledged or
otherwise used by secured parties
Assets pledged at Federal Reserve banks and
FHLBs
Total pledged assets
$ 110.8 $ 126.3
114.8
112.0
567.6
476.4
$ 793.2 $ 714.7
Total pledged assets do not include assets of consolidated
VIEs; these assets are used to settle the liabilities of those
entities. Refer to Note 14 for additional information on
assets and liabilities of consolidated VIEs. Refer to Note 11
for additional information on the Firm’s securities financing
activities. Refer to Note 20 for additional information on the
Firm’s long-term debt. The significant components of the
Firm’s pledged assets were as follows.
December 31, (in billions)
Investment securities
Loans
Trading assets and other
Total pledged assets
2022
2021
$ 104.4 $
80.1
485.9
202.9
428.5
206.1
$ 793.2 $ 714.7
282
JPMorgan Chase & Co./2022 Form 10-K
Note 30 – Litigation
Contingencies
As of December 31, 2022, the Firm and its subsidiaries and
affiliates are defendants or respondents in numerous legal
proceedings, including private, civil litigations, government
investigations or regulatory enforcement matters. The
litigations range from individual actions involving a single
plaintiff to class action lawsuits with potentially millions of
class members. Investigations and regulatory enforcement
matters involve both formal and informal proceedings, by
both governmental agencies and self-regulatory
organizations. These legal proceedings are at varying stages
of adjudication, arbitration or investigation, and involve
each of the Firm’s lines of business and several geographies
and a wide variety of claims (including common law tort
and contract claims and statutory antitrust, securities and
consumer protection claims), some of which present novel
legal theories.
The Firm believes the estimate of the aggregate range of
reasonably possible losses, in excess of reserves
established, for its legal proceedings is from $0 to
approximately $1.2 billion at December 31, 2022. This
estimated aggregate range of reasonably possible losses
was based upon information available as of that date for
those proceedings in which the Firm believes that an
estimate of reasonably possible loss can be made. For
certain matters, the Firm does not believe that such an
estimate can be made, as of that date. The Firm’s estimate
of the aggregate range of reasonably possible losses
involves significant judgment, given:
•
•
•
•
the number, variety and varying stages of the
proceedings, including the fact that many are in
preliminary stages,
the existence in many such proceedings of multiple
defendants, including the Firm, whose share of liability
(if any) has yet to be determined,
the numerous yet-unresolved issues in many of the
proceedings, including issues regarding class
certification and the scope of many of the claims, and
the uncertainty of the various potential outcomes of
such proceedings, including where the Firm has made
assumptions concerning future rulings by the court or
other adjudicator, or about the behavior or incentives of
adverse parties or regulatory authorities, and those
assumptions prove to be incorrect.
In addition, the outcome of a particular proceeding may be
a result which the Firm did not take into account in its
estimate because the Firm had deemed the likelihood of
that outcome to be remote. Accordingly, the Firm’s
estimate of the aggregate range of reasonably possible
losses will change from time to time, and actual losses may
vary significantly.
Set forth below are descriptions of the Firm’s material legal
proceedings.
1MDB Litigation. J.P. Morgan (Suisse) SA was named as a
defendant in a civil litigation filed in May 2021 in Malaysia
by 1Malaysia Development Berhad (“1MDB”), a Malaysian
state-owned and controlled investment fund. J.P. Morgan
(Suisse) SA was served in August 2022. The claim alleges
“dishonest assistance” against J.P. Morgan (Suisse) SA in
relation to payments of $300 million and $500 million,
from 2009 and 2010, respectively, received from 1MDB
and paid into an account at J.P. Morgan Suisse (SA) held by
1MDB PetroSaudi Limited, a joint venture company
between 1MDB and PetroSaudi Holdings (Cayman) Limited.
In September 2022, the Firm filed an application
challenging the validity of service and the Malaysian court’s
jurisdiction to hear the claim.
Amrapali. India’s Enforcement Directorate (“ED”) is
investigating J.P. Morgan India Private Limited in
connection with investments made in 2010 and 2012 by
two offshore funds formerly managed by JPMorgan Chase
entities into residential housing projects developed by the
Amrapali Group (“Amrapali”). In 2017, numerous creditors
filed civil claims against Amrapali, including petitions
brought by home buyers relating to delays in delivering or
failure to deliver residential units. The home buyers’
petitions have been overseen by the Supreme Court of India
and are ongoing. In August 2021, the ED issued an order
fining J.P. Morgan India Private Limited approximately
$31.5 million. The Firm is appealing the order and the fine.
Relatedly, in July 2019, the Supreme Court of India issued
an order making preliminary findings that Amrapali and
other parties, including unspecified JPMorgan Chase entities
and the offshore funds that had invested in the projects,
violated certain currency control and money laundering
provisions, and ordering the ED to conduct a further inquiry
under India’s Prevention of Money Laundering Act (“PMLA”)
and Foreign Exchange Management Act (“FEMA”). In May
2020, the ED attached approximately $25 million from J.P.
Morgan India Private Limited in connection with the
criminal PMLA investigation. The Firm is responding to and
cooperating with the PMLA investigation.
Federal Republic of Nigeria Litigation. JPMorgan Chase Bank,
N.A. operated an escrow and depository account for the
Federal Government of Nigeria (“FGN”) and two major
international oil companies. The account held
approximately $1.1 billion in connection with a dispute
among the clients over rights to an oil field. Following the
settlement of the dispute, JPMorgan Chase Bank, N.A. paid
out the monies in the account in 2011 and 2013 in
accordance with directions received from its clients. In
November 2017, the Federal Republic of Nigeria (“FRN”)
commenced a claim in the English High Court for
approximately $875 million in payments made out of the
accounts. The FRN alleged that the payments were
JPMorgan Chase & Co./2022 Form 10-K
283
Notes to consolidated financial statements
instructed as part of a complex fraud not involving
JPMorgan Chase Bank, N.A., but that JPMorgan Chase Bank,
N.A. was or should have been on notice that the payments
may be fraudulent. A trial was held between February and
April 2022. In June 2022, the Court decided the case in
favor of JPMorgan Chase Bank, N.A. and dismissed it in full.
In November 2022, the Court refused permission to the
FRN to appeal the dismissal, and the matter was concluded.
Foreign Exchange Investigations and Litigation. The Firm
previously reported settlements with certain government
authorities relating to its foreign exchange (“FX”) sales and
trading activities and controls related to those activities.
Among those resolutions, in May 2015, the Firm pleaded
guilty to a single violation of federal antitrust law. The
Department of Labor ("DOL") granted the Firm exemptions
that permit the Firm and its affiliates to continue to rely on
the Qualified Professional Asset Manager exemption under
the Employee Retirement Income Security Act (“ERISA”)
through the ten-year disqualification period following the
antitrust plea. The only remaining FX-related governmental
inquiry is a South Africa Competition Commission matter
which is currently pending before the South Africa
Competition Tribunal.
With respect to civil litigation matters, in August 2018, the
United States District Court for the Southern District of New
York granted final approval to the Firm’s settlement of a
consolidated class action brought by U.S.-based plaintiffs,
which principally alleged violations of federal antitrust laws
based on an alleged conspiracy to manipulate foreign
exchange rates and also sought damages on behalf of
persons who transacted in FX futures and options on
futures. Although certain members of the settlement class
filed requests to the Court to be excluded from the class, an
agreement to resolve their claims was reached in December
2022. A putative class action remains pending against the
Firm and other foreign exchange dealers on behalf of
certain consumers who purchased foreign currencies at
allegedly inflated rates. In addition, some FX-related
individual and putative class actions based on similar
alleged underlying conduct have been filed outside the U.S.,
including in the U.K., Israel, the Netherlands, Brazil and
Australia. An agreement to resolve one of the UK actions
was reached in December 2022. In a putative class action
pending before the U.K. Competition Appeal Tribunal,
proposed class representatives have appealed the tribunal's
denial of a request for class certification on an opt-out
basis. In Israel, a settlement in principle has been reached
in the putative class action, which remains subject to court
approval.
Interchange Litigation. Groups of merchants and retail
associations filed a series of class action complaints alleging
that Visa and Mastercard, as well as certain banks,
conspired to set the price of credit and debit card
interchange fees and enacted related rules in violation of
antitrust laws. In 2012, the parties initially settled the cases
for a cash payment, but that settlement was reversed on
appeal and remanded to the United States District Court for
the Eastern District of New York.
The original class action was divided into two separate
actions, one seeking primarily monetary relief and the other
seeking primarily injunctive relief. In September 2018, the
parties to the monetary class action finalized an agreement
which amends and supersedes the prior settlement
agreement. Pursuant to this settlement, the defendants
collectively contributed an additional $900 million to the
approximately $5.3 billion previously held in escrow from
the original settlement. In December 2019, the amended
settlement agreement was approved by the District Court.
Certain merchants appealed the District Court’s approval
order, and those appeals are pending. Based on the
percentage of merchants that opted out of the amended
class settlement, $700 million has been returned to the
defendants from the settlement escrow in accordance with
the settlement agreement. The injunctive class action
continues separately, and in September 2021, the District
Court granted plaintiffs’ motion for class certification in
part, and denied the motion in part.
Of the merchants who opted out of the amended damages
class settlement, certain merchants filed individual actions
raising similar allegations against Visa and Mastercard, as
well as against the Firm and other banks. While some of
those actions remain pending, the defendants have reached
settlements with the merchants who opted out representing
over half of the combined Mastercard-branded and Visa-
branded payment card sales volume.
Jeffrey Epstein Litigation. JPMorgan Chase Bank, N.A. is
named as a defendant in two lawsuits filed in the United
States District Court for the Southern District of New York
which allege that JPMorgan Chase Bank, N.A. knowingly
facilitated Jeffrey Epstein’s sex trafficking and other
unlawful conduct by providing banking services to Epstein
until 2013. One case, which was filed in November 2022, is
a putative class action filed by an alleged sex-trafficking
victim of Epstein, and the other case, which was filed in
December 2022, was brought on behalf of the government
of the United States Virgin Islands and also alleges certain
Virgin Islands statutory claims. JPMorgan Chase Bank, N.A.
has moved to dismiss both complaints.
LIBOR and Other Benchmark Rate Investigations and
Litigation. JPMorgan Chase has responded to inquiries from
various governmental agencies and entities around the
world relating primarily to the British Bankers Association’s
(“BBA”) London Interbank Offered Rate (“LIBOR”) for
various currencies and the European Banking Federation’s
Euro Interbank Offered Rate (“EURIBOR”). The Swiss
Competition Commission’s investigation relating to
EURIBOR, to which the Firm and one other bank remain
subject, continues. In December 2016, the European
Commission issued a decision against the Firm and other
banks finding an infringement of European antitrust rules
relating to EURIBOR. The Firm has filed an appeal of that
284
JPMorgan Chase & Co./2022 Form 10-K
decision with the European General Court, and that appeal
is pending.
In addition, the Firm has been named as a defendant along
with other banks in various individual and putative class
actions related to benchmark rates, including U.S. dollar
LIBOR. In actions related to U.S. dollar LIBOR during the
period that it was administered by the BBA, the Firm has
obtained dismissal of certain actions and resolved certain
other actions, and others are in various stages of litigation.
The United States District Court for the Southern District of
New York has granted class certification of antitrust claims
related to bonds and interest rate swaps sold directly by the
defendants, including the Firm. A consolidated putative
class action related to the period that U.S. dollar LIBOR was
administered by ICE Benchmark Administration has been
dismissed. In addition, a group of individual plaintiffs filed a
lawsuit asserting antitrust claims, alleging that the Firm and
other defendants were engaged in an unlawful agreement
to set U.S. dollar LIBOR and conspired to monopolize the
market for LIBOR-based consumer loans and credit cards. In
September 2022, the Court dismissed plaintiffs' complaint
in its entirety, and plaintiffs filed an amended complaint
asserting similar antitrust claims, which defendants have
moved to dismiss. The Firm’s settlements of putative class
actions related to the Singapore Interbank Offered Rate and
the Singapore Swap Offer Rate, and the Australian Bank Bill
Swap Reference Rate received final court approval in
November 2022, while the settlement related to Swiss
franc LIBOR remains subject to court approval.
Securities Lending Antitrust Litigation. JPMorgan Chase
Bank, N.A., J.P. Morgan Securities LLC, J.P. Morgan Prime,
Inc., and J.P. Morgan Strategic Securities Lending Corp. are
named as defendants in a putative class action filed in the
United States District Court for the Southern District of New
York. The complaint asserts violations of federal antitrust
law and New York State common law in connection with an
alleged conspiracy to prevent the emergence of anonymous
exchange trading for securities lending transactions.
Defendants’ motion to dismiss the complaint was denied.
Plaintiffs have moved to certify a class in this action, which
defendants are opposing.
Shareholder Litigation. Several shareholder putative class
actions, as well as shareholder derivative actions purporting
to act on behalf of the Firm, have been filed against the
Firm, its Board of Directors and certain of its current and
former officers.
Certain of these shareholder suits relate to historical
trading practices by former employees in the precious
metals and U.S. treasuries markets and related conduct
which were the subject of the Firm’s resolutions with the
DOJ, CFTC and SEC in September 2020, and fiduciary
activities that were separately the subject of a resolution
between JPMorgan Chase Bank, N.A. and the OCC in
November 2020. One of these shareholder derivative suits
was filed in the Supreme Court of the State of New York in
May 2022, asserting breach of fiduciary duty and unjust
enrichment claims relating to the historical trading
practices and related conduct and fiduciary activities which
were the subject of the resolutions described above. In
December 2022, the court granted defendants’ motion to
dismiss this action in full. A second shareholder derivative
action was filed in the United States District Court for the
Eastern District of New York in December 2022 relating to
the historical trading practices and related conduct, which
asserts breach of fiduciary duty and contribution claims and
alleges that the shareholder is excused from making a
demand to commence litigation because such a demand
would have been futile. In addition, a consolidated putative
class action is pending in the United States District Court for
the Eastern District of New York on behalf of shareholders
who acquired shares of JPMorgan Chase common stock
during the putative class period, alleging that certain SEC
filings of the Firm were materially false or misleading
because they did not disclose certain information relating to
the historical trading practices and conduct. Defendants
have moved to dismiss the amended complaint in this
action.
A separate shareholder derivative suit was filed in March
2022 in the United States District Court for the Eastern
District of New York asserting breaches of fiduciary duty
and violations of federal securities laws based on the
alleged failure of the Board of Directors to exercise
adequate oversight over the Firm’s compliance with records
preservation requirements which were the subject of
resolutions between certain of the Firm’s subsidiaries and
the SEC and the CFTC. Defendants’ motion to dismiss the
amended complaint is pending.
* * *
In addition to the various legal proceedings discussed
above, JPMorgan Chase and its subsidiaries are named as
defendants or are otherwise involved in a substantial
number of other legal proceedings. The Firm believes it has
meritorious defenses to the claims asserted against it in its
currently outstanding legal proceedings and it intends to
defend itself vigorously. Additional legal proceedings may
be initiated from time to time in the future.
The Firm has established reserves for several hundred of its
currently outstanding legal proceedings. In accordance with
the provisions of U.S. GAAP for contingencies, the Firm
accrues for a litigation-related liability when it is probable
that such a liability has been incurred and the amount of
the loss can be reasonably estimated. The Firm evaluates its
outstanding legal proceedings each quarter to assess its
litigation reserves, and makes adjustments in such reserves,
upward or downward, as appropriate, based on
management’s best judgment after consultation with
counsel. The Firm’s legal expense was $266 million, $426
million and $1.1 billion for the years ended December 31,
2022, 2021 and 2020, respectively. There is no assurance
that the Firm’s litigation reserves will not need to be
adjusted in the future.
JPMorgan Chase & Co./2022 Form 10-K
285
Notes to consolidated financial statements
In view of the inherent difficulty of predicting the outcome
of legal proceedings, particularly where the claimants seek
very large or indeterminate damages, or where the matters
present novel legal theories, involve a large number of
parties or are in early stages of discovery, the Firm cannot
state with confidence what will be the eventual outcomes of
the currently pending matters, the timing of their ultimate
resolution or the eventual losses, fines, penalties or
consequences related to those matters. JPMorgan Chase
believes, based upon its current knowledge and after
consultation with counsel, consideration of the material
legal proceedings described above and after taking into
account its current litigation reserves and its estimated
aggregate range of possible losses, that the other legal
proceedings currently pending against it should not have a
material adverse effect on the Firm’s consolidated financial
condition. The Firm notes, however, that in light of the
uncertainties involved in such proceedings, there is no
assurance that the ultimate resolution of these matters will
not significantly exceed the reserves it has currently
accrued or that a matter will not have material reputational
consequences. As a result, the outcome of a particular
matter may be material to JPMorgan Chase’s operating
results for a particular period, depending on, among other
factors, the size of the loss or liability imposed and the level
of JPMorgan Chase’s income for that period.
286
JPMorgan Chase & Co./2022 Form 10-K
Note 31 – International operations
The following table presents income statement and balance
sheet-related information for JPMorgan Chase by major
international geographic area. The Firm defines
international activities for purposes of this footnote
presentation as business transactions that involve clients
residing outside of the U.S., and the information presented
below is based predominantly on the domicile of the client,
the location from which the client relationship is managed,
booking location or the location of the trading desk.
However, many of the Firm’s U.S. operations serve
international businesses.
As the Firm’s operations are highly integrated, estimates
and subjective assumptions have been made to apportion
revenue and expense between U.S. and international
operations. These estimates and assumptions are consistent
with the allocations used for the Firm’s segment reporting
as set forth in Note 32.
The Firm’s long-lived assets for the periods presented are
not considered by management to be significant in relation
to total assets. The majority of the Firm’s long-lived assets
are located in the U.S.
As of or for the year ended December 31,
(in millions)
Revenue(b)
Expense(c)
Income before
income tax
expense
Net income
Total assets
2022
Europe/Middle East/Africa
Asia-Pacific
Latin America/Caribbean
Total international
North America(a)
Total
2021
Europe/Middle East/Africa
Asia-Pacific
Latin America/Caribbean
Total international
North America(a)
Total
2020
Europe/Middle East/Africa
Asia-Pacific
Latin America/Caribbean
Total international
North America(a)
Total
$
18,765
$
11,754 $
7,011 $
5,158
$
558,430
10,025
3,178
31,968
96,727
6,763
1,697
20,214
62,315
3,262
1,481
11,754
34,412
2,119
1,156
8,433
281,479
78,673
918,582
29,243
2,747,161
$
128,695
$
82,529 $
46,166 $
37,676
$ 3,665,743
$
16,561
$
10,833 $
5,728 $
4,202 $
517,904
(d)
(d)
9,654
2,756
28,971
92,678
6,372
1,589
18,794
43,293
3,282
1,167
10,177
49,385
2,300
878
7,380
277,897
65,040
(e)
860,841
40,954
2,882,726
(e)
$
121,649
$
62,087 $
59,562 $
48,334 $ 3,743,567
$
16,566
$
10,987 $
5,579 $
3,868 $
530,687
(d)
9,289
2,740
28,595
91,356
5,558
1,590
18,135
66,001
3,731
1,150
10,460
25,355
2,630
837
7,335
252,553
63,853
(e)
847,093
21,796
2,537,664
(e)
$
119,951
$
84,136 $
35,815 $
29,131 $ 3,384,757
(a) Substantially reflects the U.S.
(b) Revenue is composed of net interest income and noninterest revenue.
(c) Expense is composed of noninterest expense and the provision for credit losses.
(d) Total assets for the U.K. were approximately $357 billion, $365 billion and $353 billion at December 31, 2022, 2021 and 2020, respectively.
(e) Prior-period amounts have been revised to conform with the current presentation.
JPMorgan Chase & Co./2022 Form 10-K
287
Notes to consolidated financial statements
Note 32 – Business segments
The Firm is managed on an LOB basis. There are four major
reportable business segments – Consumer & Community
Banking, Corporate & Investment Bank, Commercial
Banking and Asset & Wealth Management. In addition, there
is a Corporate segment. The business segments are
determined based on the products and services provided, or
the type of customer served, and they reflect the manner in
which financial information is evaluated by the Firm’s
Operating Committee. Segment results are presented on a
managed basis. Refer to Segment results of this footnote
for a further discussion of JPMorgan Chase’s business
segments.
The following is a description of each of the Firm’s business
segments, and the products and services they provide to
their respective client bases.
Consumer & Community Banking
Consumer & Community Banking offers products and
services to consumers and small businesses through bank
branches, ATMs, digital (including mobile and online) and
telephone banking. CCB is organized into Banking & Wealth
Management (including Consumer Banking, J.P. Morgan
Wealth Management and Business Banking), Home Lending
(including Home Lending Production, Home Lending
Servicing and Real Estate Portfolios) and Card Services &
Auto. Banking & Wealth Management offers deposit,
investment and lending products, cash management,
payments and services. Home Lending includes mortgage
origination and servicing activities, as well as portfolios
consisting of residential mortgages and home equity loans.
Card Services issues credit cards and offers travel services.
Auto originates and services auto loans and leases.
Corporate & Investment Bank
The Corporate & Investment Bank, which consists of
Banking and Markets & Securities Services, offers a broad
suite of investment banking, market-making, prime
brokerage, lending, and treasury and securities products
and services to a global client base of corporations,
investors, financial institutions, merchants, government and
municipal entities. Banking offers a full range of investment
banking products and services in all major capital markets,
including advising on corporate strategy and structure,
capital-raising in equity and debt markets, as well as loan
origination and syndication. Banking also includes
Payments, which provides payments services enabling
clients to manage payments and receipts globally, and
cross-border financing. Markets & Securities Services
includes Markets, a global market-maker across products,
including cash and derivative instruments, which also offers
sophisticated risk management solutions, prime brokerage,
and research. Markets & Securities Services also includes
Securities Services, a leading global custodian which
provides custody, fund accounting and administration, and
securities lending products principally for asset managers,
insurance companies and public and private investment
funds.
Commercial Banking
Commercial Banking provides comprehensive financial
solutions, including lending, payments, investment banking
and asset management products across three primary client
segments: Middle Market Banking, Corporate Client Banking
and Commercial Real Estate Banking. Other includes
amounts not aligned with a primary client segment.
Middle Market Banking covers small and midsized
companies, local governments and nonprofit clients.
Corporate Client Banking covers large corporations.
Commercial Real Estate Banking covers investors,
developers, and owners of multifamily, office, retail,
industrial and affordable housing properties.
Asset & Wealth Management
Asset & Wealth Management, with client assets of $4.0
trillion, is a global leader in investment and wealth
management.
Asset Management
Offers multi-asset investment management solutions across
equities, fixed income, alternatives and money market
funds to institutional and retail investors providing for a
broad range of clients’ investment needs.
Global Private Bank
Provides retirement products and services, brokerage,
custody, estate planning, lending, deposits and investment
management to high net worth clients.
The majority of AWM’s client assets are in actively managed
portfolios.
Corporate
The Corporate segment consists of Treasury and Chief
Investment Office (“CIO”) and Other Corporate. Treasury
and CIO is predominantly responsible for measuring,
monitoring, reporting and managing the Firm’s liquidity,
funding, capital, structural interest rate and foreign
exchange risks.
Other Corporate includes staff functions and expense that is
centrally managed as well as certain Firm initiatives and
activities not aligned to a specific LOB. The major Other
Corporate functions include Real Estate, Technology, Legal,
Corporate Finance, Human Resources, Internal Audit, Risk
Management, Compliance, Control Management, Corporate
Responsibility and various Other Corporate groups.
288
JPMorgan Chase & Co./2022 Form 10-K
Segment results
The following table provides a summary of the Firm’s
segment results as of or for the years ended December 31,
2022, 2021 and 2020, on a managed basis. The Firm’s
definition of managed basis starts with the reported U.S.
GAAP results and includes certain reclassifications to
present total net revenue for the Firm (and each of the
reportable business segments) on an FTE basis.
Accordingly, revenue from investments that receive tax
credits and tax-exempt securities is presented in the
managed results on a basis comparable to taxable
investments and securities. This allows management to
assess the comparability of revenue from year-to-year
arising from both taxable and tax-exempt sources. The
corresponding income tax impact related to tax-exempt
items is recorded within income tax expense/(benefit).
These adjustments have no impact on net income as
reported by the Firm as a whole or by the LOBs.
Segment results and reconciliation(a)
(Table continued on next page)
Capital allocation
Each business segment is allocated capital by taking into
consideration a variety of factors including capital levels of
similarly rated peers and applicable regulatory capital
requirements. ROE is measured and internal targets for
expected returns are established as key measures of a
business segment’s performance.
The Firm’s allocation methodology incorporates Basel III
Standardized RWA, Basel III Advanced RWA, the GSIB
surcharge, and a simulation of capital in a severe stress
environment. At least annually, the assumptions, judgments
and methodologies used to allocate capital are reassessed
and, as a result, the capital allocated to the LOBs may
change.
As of or for the year
ended
December 31,
(in millions, except ratios)
Noninterest revenue
Net interest income
Total net revenue
Consumer & Community Banking
Corporate & Investment Bank
Commercial Banking
Asset & Wealth Management
2022
2021
2020
2022
2021
2020
2022
2021
2020
2022
2021
2020
$ 15,089
$ 17,286
$ 17,740
$ 35,999
$ 38,209
$ 35,120
$ 3,336
$ 3,929
$ 3,067
$ 12,507
$ 13,071
$ 10,822
39,928
32,787
33,528
11,900
13,540
14,164
8,197
6,079
6,246
5,241
3,886
3,418
55,017
50,073
51,268
47,899
51,749
49,284
11,533
10,008
9,313
17,748
16,957
14,240
Provision for credit losses
3,813
(6,989)
12,312
1,158
(1,174)
2,726
1,268
(947)
2,113
128
(227)
263
Noninterest expense
Income/(loss) before
income tax expense/
(benefit)
Income tax expense/
(benefit)
Net income/(loss)
Average equity
Total assets
Return on equity
Overhead ratio
31,471
29,256
27,990
27,087
25,325
23,538
4,719
4,041
3,798
11,829
10,919
9,957
19,733
27,806
10,966
19,654
27,598
23,020
5,546
6,914
3,402
5,791
6,265
4,020
4,862
6,876
2,749
4,684
6,464
5,926
1,333
1,668
824
1,426
1,528
1,028
$ 14,871
$ 20,930
$ 8,217
$ 14,970
$ 21,134
$ 17,094
$ 4,213
$ 5,246
$ 2,578
$ 4,365
$ 4,737
$ 2,992
$ 50,000
$ 50,000
$ 52,000
$ 103,000 $ 83,000
$ 80,000
$ 25,000
$ 24,000
$ 22,000
$ 17,000
$ 14,000
$ 10,500
514,085
500,370
496,705
1,334,296
1,259,896
1,095,926
257,106
230,776
228,911
232,037
234,425
203,384
29 %
41 %
15 %
14 %
25 %
57
58
55
57
49
20 %
48
16 %
21 %
11 %
25 %
33 %
41
40
41
67
64
28 %
70
JPMorgan Chase & Co./2022 Form 10-K
289
Notes to consolidated financial statements
(Table continued from previous page)
Corporate
Reconciling Items(a)
Total
As of or for the year ended
December 31,
(in millions, except ratios)
Noninterest revenue
Net interest income
Total net revenue
Provision for credit losses
Noninterest expense
Income/(loss) before income
tax expense/(benefit)
Income tax expense/(benefit)
Net income/(loss)
Average equity
Total assets
Return on equity
Overhead ratio
2022
2021
2020
2022
2021
2020
2022
2021
2020
$
(1,798) $
68
$
1,199
$
(3,148) $
(3,225)
$
(2,560)
$ 61,985
$ 69,338
$ 65,388
1,878
(3,551)
(2,375)
(434)
(430)
(418)
66,710
52,311
54,563
(3,483)
(1,176)
(3,582)
(3,655)
(2,978)
128,695
121,649
119,951
80
22
81
1,034
1,802
66
1,373
—
—
—
—
(976)
(5,366)
(2,615)
(3,582)
(3,655)
(233)
(1,653)
(865)
(3,582)
(3,655)
$
$
(743) $
(3,713)
58,068 $
79,968
$
$
(1,750) $
72,365
$
1,328,219
1,518,100
1,359,831
NM
NM
NM
NM
NM
NM
— $
— $
NA
NM
NM
$
$
—
—
NA
NM
NM
—
—
(2,978)
(2,978)
—
—
NA
NM
NM
6,389
(9,256)
17,480
76,140
71,343
66,656
46,166
59,562
35,815
8,490
11,228
6,684
$ 37,676
$ 48,334
$ 29,131
$ 253,068
$ 250,968
$ 236,865
3,665,743
3,743,567
3,384,757
14 %
59
19 %
59
12 %
56
(a) Segment results on a managed basis reflect revenue on a FTE basis with the corresponding income tax impact recorded within income tax expense/
(benefit). These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results.
290
JPMorgan Chase & Co./2022 Form 10-K
Note 33 – Parent Company
The following tables present Parent Company-only financial
statements.
Statements of income and comprehensive income
Year ended December 31,
(in millions)
2022
2021
2020
Income
Dividends from subsidiaries and
affiliates:
Statements of cash flows
Year ended December 31,
(in millions)
Operating activities
Net income
Less: Net income of subsidiaries
and affiliates
Parent company net loss
Cash dividends from subsidiaries
and affiliates
2022
2021
2020
$ 37,676 $ 48,334 $ 29,131
44,699
51,252
33,631
(7,023)
(2,918)
(4,500)
40,500
10,000
6,000
Bank and bank holding company
$ 40,500 $ 10,000 $
6,000
Other operating adjustments
(23,747)
(12,677)
15,357
Non-bank
Interest income from subsidiaries
Other income/(expense) from
subsidiaries:
—
498
—
32
—
63
Bank and bank holding company
(3,497)
Non-bank
Other income/(expense)
Total income
Expense
Interest expense/(income) to
subsidiaries and affiliates(a)
Other interest expense/(income)(a)
Noninterest expense
Total expense
Income before income tax benefit
and undistributed net income of
subsidiaries
Income tax benefit
Equity in undistributed net income
of subsidiaries
Net income
Other comprehensive income/
(loss), net
335
5,271
43,107
859
366
1,137
12,394
2,019
(569)
205
7,718
22,731
5,353
(8,830)
(14,658)
(1,349)
14,150
2,817
10,890
32,217
1,260
2,637
6,641
5,753
1,329
2,222
7,542
176
1,324
4,199
41,252
27,631
$ 37,676 $ 48,334 $ 29,131
Net cash provided by/(used in)
operating activities
Investing activities
Net change in:
Advances to and investments in
subsidiaries and affiliates, net
All other investing activities, net
Net cash provided by/(used in)
investing activities
Financing activities
Net change in:
Borrowings from subsidiaries
and affiliates
Short-term borrowings
Proceeds from long-term
borrowings
Payments of long-term
borrowings
Proceeds from issuance of
preferred stock
9,730
(5,595)
16,857
—
31
31
(3,000)
(2,663)
31
24
(2,969)
(2,639)
(4,491)
2,647
1,425
—
—
(20)
41,389
49,169
37,312
(18,294)
(15,543)
(34,194)
—
7,350
4,500
Redemption of preferred stock
(7,434)
(2,575)
(1,430)
Treasury stock repurchased
(3,162)
(18,408)
(6,517)
(17,257)
(8,070)
6,417
Dividends paid
(13,562)
(12,858)
(12,690)
Comprehensive income
$ 20,419 $ 40,264 $ 35,548
All other financing activities, net
(1,205)
(1,238)
(1,080)
Balance sheets
December 31, (in millions)
Assets
2022
2021
Cash and due from banks
$
41 $
36
Deposits with banking subsidiaries
Trading assets
Advances to, and receivables from, subsidiaries:
Bank and bank holding company
Non-bank
Investments (at equity) in subsidiaries and
affiliates:
9,806
2,727
6,809
2,293
136
46
431
50
Bank and bank holding company
532,759
545,635
Net cash provided by/(used in)
financing activities
Net increase/(decrease) in cash
and due from banks and deposits
with banking subsidiaries
Cash and due from banks and
deposits with banking
subsidiaries at the beginning of
the year
Cash and due from banks and
deposits with banking
subsidiaries at the end of the
year
Cash interest paid
Cash income taxes paid, net(d)
(6,759)
8,544
(12,694)
3,002
(20)
1,524
6,845
6,865
5,341
$ 9,847 $ 6,845 $ 6,865
$ 7,462 $ 4,065 $ 5,445
6,941
15,259
5,366
Non-bank
Other assets
Total assets
Liabilities and stockholders’ equity
Borrowings from, and payables to, subsidiaries
and affiliates
Short-term borrowings
Other liabilities
Long-term debt(b)(c)
Total liabilities(c)
Total stockholders’ equity
1,064
9,108
1,007
12,220
$ 555,687 $ 568,481
$ 24,164 $ 28,039
1,130
10,440
1,018
9,340
227,621
235,957
263,355
274,354
292,332
294,127
(a) Includes interest expense for intercompany derivative hedges on the
Firm’s LTD and related fair value adjustments, which is predominantly
offset by related amounts in Other interest expense/(income).
(b) At December 31, 2022, long-term debt that contractually matures in
2023 through 2027 totaled $9.4 billion, $23.5 billion, $26.8 billion,
$28.2 billion, and $17.5 billion, respectively.
(c) Refer to Notes 20 and 28 for information regarding the Parent
Company’s guarantees of its subsidiaries’ obligations.
(d) Represents payments, net of refunds, made by the Parent Company to
various taxing authorities and includes taxes paid on behalf of certain
of its subsidiaries that are subsequently reimbursed. The
reimbursements were $11.3 billion, $13.9 billion, and $8.3 billion for
the years ended December 31, 2022, 2021 and 2020, respectively.
Total liabilities and stockholders’ equity
$ 555,687 $ 568,481
JPMorgan Chase & Co./2022 Form 10-K
291
Supplementary Information: Distribution of assets, liabilities and stockholders’ equity; interest rates
and interest differentials
Consolidated average balance sheets, interest and rates
Provided below is a summary of JPMorgan Chase’s
consolidated average balances, interest and rates on a
taxable-equivalent basis for the years 2020 through 2022.
Income computed on a taxable-equivalent basis is the
income reported in the Consolidated statements of income,
adjusted to present interest income and rates earned on
assets exempt from income taxes (i.e., federal taxes) on a
basis comparable with other taxable investments. The
incremental tax rate used for calculating the taxable-
equivalent adjustment was approximately 24% in 2022,
2021 and 2020.
(Table continued on next page)
(Unaudited)
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)
Average
balance
Assets
Deposits with banks
Federal funds sold and securities purchased under resale agreements
Securities borrowed
Trading assets – debt instruments
Taxable securities
Non-taxable securities(a)
Total investment securities
Loans
All other interest-earning assets(b)
Total interest-earning assets
Allowance for loan losses
Cash and due from banks
Trading assets – equity and other instruments
Trading assets – derivative receivables
Goodwill, MSRs and other intangible assets
All other noninterest-earning assets
Total assets
Liabilities
Interest-bearing deposits
$
$
$
670,773
307,150
205,516
283,108
626,122
27,863
653,985
1,100,318
128,229
3,349,079
(17,399)
27,601
140,778
78,606
59,467
215,408
3,853,540
2022
Interest(g)
$
9,039
4,632
2,237
9,097
10,372
1,224
11,596
52,877
3,763
93,241
(h)
Rate
1.35 %
1.51
1.09
3.21
1.66
4.39
1.77
4.81
2.93
2.78
(i)
1,748,666
$
10,082
0.58 %
Federal funds purchased and securities loaned or sold under repurchase agreements
Short-term borrowings(c)
Trading liabilities – debt and all other interest-bearing liabilities(d)(e)
Beneficial interests issued by consolidated VIEs
Long-term debt
Total interest-bearing liabilities
Noninterest-bearing deposits
Trading liabilities – equity and other instruments(e)
Trading liabilities – derivative payables
All other liabilities, including the allowance for lending-related commitments
Total liabilities
Stockholders’ equity
Preferred stock
Common stockholders’ equity
Total stockholders’ equity
Total liabilities and stockholders’ equity
Interest rate spread
3,721
747
3,246
226
8,075
26,097
242,762
46,063
268,019
11,208
250,080
2,566,798
719,249
39,155
57,388
185,989
3,568,579
31,893
253,068
284,961
(f)
$
3,853,540
Net interest income and net yield on interest-earning assets
$
67,144
1.53
1.62
1.21
2.02
3.23
1.02
1.76 %
2.00
(a) Represents securities that are tax-exempt for U.S. federal income tax purposes.
(b) Includes brokerage-related held-for-investment customer receivables, which are classified in accrued interest and accounts receivable, and all other
interest-earning assets, which are classified in other assets on the Consolidated Balance Sheets.
(c) Includes commercial paper.
(d) All other interest-bearing liabilities include brokerage-related customer payables.
Within the Consolidated average balance sheets, interest and rates summary, the principal amounts of nonaccrual loans have
been included in the average loan balances used to determine the average interest rate earned on loans. Refer to Note 12 for
additional information on nonaccrual loans, including interest accrued.
292
JPMorgan Chase & Co./2022 Form 10-K
Rate
0.07 %
0.36
(0.20)
2.42
1.15
4.33
1.31
4.02
0.73
1.81
(j)
(i)
(Table continued from previous page)
Average
balance
2021
Interest(g)
$
512
958
(385)
6,856
6,460
1,336
7,796
41,663
894
58,294
(h)
719,772
269,231
190,655
283,829
563,147
30,830
593,977
1,035,399
123,079
3,215,942
(22,179)
26,776
172,822
69,101
55,003
207,737
3,725,202
$
$
$
531
274
126
257
83
4,282
5,553
0.03 %
0.11
0.28
0.11
0.57
1.71
0.22
1,672,669
(k)
$
259,302
44,618
241,431
14,595
250,378
2,482,993
674,485
(k)
36,656
60,318
186,755
3,441,207
33,027
250,968
283,995
(f)
Average
balance
2020
Interest(g)
Rate
749
2,436
(302)
7,869
7,843
1,437
9,280
(h)
43,886
1,023
64,941
(j)
(i)
0.17 %
0.88
(0.21)
2.44
1.65
4.32
1.82
4.37
1.30
2.34
2,357
1,058
372
195
214
5,764
9,960
0.17 %
0.41
0.96
0.10
1.12
2.27
0.46
$
$
$
$
444,058
275,926
143,472
322,936
476,650
33,287
509,937
1,004,597
78,784
2,779,710
(25,775)
22,241
120,878
73,749
51,934
(k)
(k)
179,413
3,202,150
1,389,224
$
255,421
38,853
205,255
19,216
254,400
2,162,369
517,527
32,628
61,593
161,269
2,935,386
29,899
236,865
266,764
(f)
$
3,202,150
$
3,725,202
$
52,741
1.59 %
1.64
$
54,981
1.88 %
1.98
(e) The combined balance of trading liabilities – debt and equity instruments was $138.1 billion, $128.2 billion and $106.5 billion for the years ended
December 31, 2022, 2021 and 2020, respectively.
(f) The ratio of average stockholders’ equity to average assets was 7.4%, 7.6% and 8.3% for the years ended December 31, 2022, 2021 and 2020,
respectively. The return on average stockholders’ equity, based on net income, was 13.2%, 17.0% and 10.9% for the years ended December 31, 2022,
2021 and 2020, respectively.
(g) Interest includes the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(h) Fees and commissions on loans included in loan interest amounted to $1.8 billion, $1.9 billion and $1.0 billion for the years ended December 31, 2022,
2021 and 2020.
(i) The annualized rate for securities based on amortized cost was 1.75%, 1.33% and 1.85% for the years ended December 31, 2022, 2021 and 2020,
respectively, and does not give effect to changes in fair value that are reflected in AOCI.
(j) Negative interest and rates reflect the net impact of interest earned offset by fees paid on client-driven prime brokerage securities borrowed transactions.
(k) Prior-period amounts have been revised to conform with the current presentation.
JPMorgan Chase & Co./2022 Form 10-K
293
Interest rates and interest differential analysis of net interest income – U.S. and non-U.S.
Presented below is a summary of interest and rates segregated between U.S. and non-U.S. operations for the years 2020
through 2022. The segregation of U.S. and non-U.S. components is based on the location of the office recording the
transaction.
(Table continued on next page)
(Unaudited)
Year ended December 31,
(Taxable-equivalent interest and rates; in millions, except rates)
Interest-earning assets
Deposits with banks:
U.S.
Non-U.S.
Federal funds sold and securities purchased under resale agreements:
U.S.
Non-U.S.
Securities borrowed:(a)
U.S.
Non-U.S.
Trading assets – debt instruments:
U.S.
Non-U.S.
Investment securities:
U.S.
Non-U.S.
Loans:
U.S.
Non-U.S.
All other interest-earning assets, predominantly U.S.
Total interest-earning assets
Interest-bearing liabilities
Interest-bearing deposits:
U.S.
Non-U.S.
Federal funds purchased and securities loaned or sold under repurchase agreements:
U.S.
Non-U.S.
Trading liabilities – debt, short-term and all other interest-bearing liabilities:(b)
U.S.
Non-U.S.
Beneficial interests issued by consolidated VIEs, predominantly U.S.
Long-term debt:
U.S.
Non-U.S.
Total interest-bearing liabilities
Noninterest-bearing liabilities(c)
Total investable funds
Net interest income and net yield:
U.S.
Non-U.S.
Percentage of total assets and liabilities attributable to non-U.S. operations:
Assets
Liabilities
2022
Average balance
Interest
Rate
$
456,366 $
214,407
130,213
176,937
142,736
62,780
170,975
112,133
623,285
30,700
985,187
115,131
128,229
3,349,079
1,358,322
390,344
173,016
69,746
194,570
119,512
11,208
246,670
3,410
2,566,798
782,281
3,349,079 $
$
$
7,418
1,621
2,191
2,441
1,811
426
5,414
3,683
10,994
602
48,953
3,924
3,763
93,241
7,026
3,056
3,083
638
2,384
1,609
226
8,026
49
26,097
26,097
67,144
58,950
8,194
1.63 %
0.76
1.68
1.38
1.27
0.68
3.17
3.28
1.76
1.96
4.97
3.41
2.93
2.78
0.52
0.78
1.78
0.91
1.23
1.35
2.02
3.25
1.44
1.02
0.78 %
2.00 %
2.27
1.09
24.9
20.6
(a) Negative interest and rates reflect the net impact of interest earned offset by fees paid on client-driven prime brokerage securities borrowed transactions.
(b) Includes commercial paper.
(c) Represents the amount of noninterest-bearing liabilities funding interest-earning assets.
Refer to the “Net interest income” discussion in Consolidated Results of Operations on pages 51-54 for further information.
294
JPMorgan Chase & Co./2022 Form 10-K
(Table continued from previous page)
2021
2020
Average balance
Interest
Rate
Average balance
Interest
Rate
0.13 %
(0.09)
$
294,669 $
149,389
$
527,340 $
192,432
114,406
154,825
137,752
52,903
158,793
125,036
563,109
30,868
924,713
110,686
123,079
3,215,942
1,301,616
371,053
199,220
60,082
176,466
109,583
14,595
244,850
5,528
2,482,993
732,949
3,215,942 $
$
$
693
(181)
299
659
(319)
(66)
3,530
3,326
7,399
397
39,215
2,448
894
58,294
901
(370)
222
52
(345)
728
83
4,229
53
5,553
5,553
52,741
46,622
6,119
768
(19)
1,341
1,095
(305)
3
5,056
2,813
8,703
577
41,708
2,178
1,023
64,941
141,409
134,517
100,026
43,446
216,025
106,911
475,832
34,105
909,850
94,747
78,784
2,779,710
1,068,857
320,367
2,288
69
204,958
50,463
151,120
92,988
19,216
247,623
6,777
2,162,369
617,341
2,779,710 $
$
$
863
195
(30)
597
214
5,704
60
9,960
9,960
54,981
49,242
5,739
0.26
0.43
(0.23)
(0.12)
2.22
2.66
1.31
1.29
4.24
2.21
0.73
1.81
0.07
(0.10)
0.11
0.09
(0.20)
0.66
0.57
1.73
0.96
0.22
0.17 %
1.64 %
1.86
0.87
24.6
20.4
0.26 %
(0.01)
0.95
0.81
(0.30)
0.01
2.34
2.63
1.83
1.69
4.58
2.30
1.30
2.34
0.21
0.02
0.42
0.39
(0.02)
0.64
1.12
2.30
0.89
0.46
0.36 %
1.98 %
2.25
0.97
23.5
20.9
JPMorgan Chase & Co./2022 Form 10-K
295
Changes in net interest income, volume and rate analysis
The table below presents an attribution of net interest income between volume and rate. The attribution between volume and rate
is calculated using annual average balances for each category of assets and liabilities shown in the table and the corresponding
annual rates (refer to pages 292-296 for more information on average balances and rates). In this analysis, when the change
cannot be isolated to either volume or rate, it has been allocated to volume. The annual rates include the impact of changes in
market rates, as well as the impact of any change in composition of the various products within each category of asset or liability.
This analysis is calculated separately for each category without consideration of the relationship between categories (for example,
the net spread between the rates earned on assets and the rates paid on liabilities that fund those assets). As a result, changes in
the granularity or groupings considered in this analysis would produce a different attribution result, and due to the complexities
involved, precise allocation of changes in interest rates between volume and rates is inherently complex and judgmental.
(Unaudited)
2022 versus 2021
2021 versus 2020
Increase/(decrease) due
to change in:
Increase/(decrease) due
to change in:
Year ended December 31,
(On a taxable-equivalent basis; in millions)
Volume
Rate
Net
change
Volume
Rate
Net
change
Interest-earning assets
Deposits with banks:
U.S.
Non-U.S.
Federal funds sold and securities purchased under resale
agreements:
U.S.
Non-U.S.
Securities borrowed:(a)
U.S.
Non-U.S.
Trading assets – debt instruments:
U.S.
Non-U.S.
Investment securities:
U.S.
Non-U.S.
Loans:
U.S.
Non-U.S.
All other interest-earning assets, predominantly U.S.
Change in interest income
Interest-bearing liabilities
Interest-bearing deposits:
U.S.
Non-U.S.
Federal funds purchased and securities loaned or sold under
repurchase agreements:
U.S.
Non-U.S.
Trading liabilities – debt, short-term and all other interest-bearing
liabilities:(b)
U.S.
Non-U.S.
Beneficial interests issued by consolidated VIEs, predominantly
U.S.
Long-term debt:
U.S.
Non-U.S.
Change in interest expense
Change in net interest income
$
(1,185) $
166
7,910 $
1,636
6,725
1,802
$
308 $
(42)
(383) $
(120)
(75)
(162)
267
311
64
69
375
(418)
1,061
(2)
2,988
148
161
4,005
1,625
1,471
2,066
423
1,509
775
2,534
207
6,750
1,328
2,708
1,892
1,782
2,130
492
1,884
357
3,595
205
9,738
1,476
2,869
(66)
75
(84)
(13)
(976)
(511)
(1,042)
(436)
70
(56)
(14)
(69)
(1,267)
481
(259)
32
(1,526)
513
1,170
(44)
(2,474)
(136)
(1,304)
(180)
600
355
320
(3,093)
(85)
(449)
(2,493)
270
(129)
30,942
34,947
1,793
(8,440)
(6,647)
268
161
5,857
3,265
6,125
3,426
109
(55)
(1,496)
(384)
(1,387)
(439)
(466)
93
3,327
493
2,861
586
(6)
8
(635)
(151)
(641)
(143)
206
125
2,523
756
2,729
881
(43)
112
(272)
19
(315)
131
(69)
212
143
(27)
(104)
(131)
75
(31)
362
3,722
27
3,797
(4)
20,182
20,544
(64)
(12)
22
(1,411)
5
(4,429)
(1,475)
(7)
(4,407)
$
3,643 $ 10,760 $ 14,403
$
1,771 $
(4,011) $
(2,240)
(a) Negative interest and rates reflect the net impact of interest earned offset by fees paid on client-driven prime brokerage securities borrowed transactions.
(b) Includes commercial paper.
296
JPMorgan Chase & Co./2022 Form 10-K
Glossary of Terms and Acronyms
2022 Form 10-K: Annual report on Form 10-K for the year
ended December 31, 2022, filed with the U.S. Securities
and Exchange Commission.
CEO: Chief Executive Officer
CET1 Capital: Common equity Tier 1 capital
ABS: Asset-backed securities
AFS: Available-for-sale
ALCO: Asset Liability Committee
Amortized cost: Amount at which a financing receivable or
investment is originated or acquired, adjusted for accretion
or amortization of premium, discount, and net deferred fees
or costs, collection of cash, charge-offs, foreign exchange,
and fair value hedge accounting adjustments. For AFS
securities, amortized cost is also reduced by any
impairment losses recognized in earnings. Amortized cost is
not reduced by the allowance for credit losses, except
where explicitly presented net.
AOCI: Accumulated other comprehensive income/(loss)
ARM: Adjustable rate mortgage(s)
AUC: Assets under custody
AUM: “Assets under management”: Represent assets
managed by AWM on behalf of its Private Banking,
Institutional and Retail clients. Includes “Committed capital
not Called.”
Auto loan and lease origination volume: Dollar amount of
auto loans and leases originated.
AWM: Asset & Wealth Management
Beneficial interests issued by consolidated VIEs:
Represents the interest of third-party holders of debt,
equity securities, or other obligations, issued by VIEs that
JPMorgan Chase consolidates.
Benefit obligation: Refers to the projected benefit
obligation for pension plans and the accumulated
postretirement benefit obligation for OPEB plans.
BHC: Bank holding company
BWM: Banking & Wealth Management
CB: Commercial Banking
CCAR: Comprehensive Capital Analysis and Review
CCB: Consumer & Community Banking
CCO: Chief Compliance Officer
CCP: “Central counterparty” is a clearing house that
interposes itself between counterparties to contracts traded
in one or more financial markets, becoming the buyer to
every seller and the seller to every buyer and thereby
ensuring the future performance of open contracts. A CCP
becomes a counterparty to trades with market participants
through novation, an open offer system, or another legally
binding arrangement.
CDS: Credit default swaps
CECL: Current Expected Credit Losses
CFO: Chief Financial Officer
CFP: Contingency funding plan
CFTC: Commodity Futures Trading Commission
Chase Bank USA, N.A.: Chase Bank USA, National
Association
CIB: Corporate & Investment Bank
CIO: Chief Investment Office
Client assets: Represent assets under management as well
as custody, brokerage, administration and deposit accounts.
Client deposits and other third-party liabilities: Deposits,
as well as deposits that are swept to on-balance sheet
liabilities (e.g., commercial paper, federal funds purchased
and securities loaned or sold under repurchase
agreements) as part of client cash management programs.
Client investment assets: Represent assets under
management as well as custody, brokerage and annuity
accounts, and deposits held in investment accounts.
CLO: Collateralized loan obligations
CLTV: Combined loan-to-value
CMT: Constant Maturity Treasury
Collateral-dependent: A loan is considered to be collateral-
dependent when repayment of the loan is expected to be
provided substantially through the operation or sale of the
collateral when the borrower is experiencing financial
difficulty, including when foreclosure is deemed probable
based on borrower delinquency.
Commercial Card: provides a wide range of payment
services to corporate and public sector clients worldwide
through the commercial card products. Services include
procurement, corporate travel and entertainment, expense
management services, and business-to-business payment
solutions.
Credit derivatives: Financial instruments whose value is
derived from the credit risk associated with the debt of a
third-party issuer (the reference entity) which allow one
party (the protection purchaser) to transfer that risk to
another party (the protection seller). Upon the occurrence
of a credit event by the reference entity, which may include,
among other events, the bankruptcy or failure to pay its
obligations, or certain restructurings of the debt of the
reference entity, neither party has recourse to the
reference entity. The protection purchaser has recourse to
the protection seller for the difference between the face
value of the CDS contract and the fair value at the time of
settling the credit derivative contract. The determination as
to whether a credit event has occurred is generally made by
the relevant International Swaps and Derivatives
Association (“ISDA”) Determinations Committee.
JPMorgan Chase & Co./2022 Form 10-K
297
Glossary of Terms and Acronyms
Criticized: Criticized loans, lending-related commitments
and derivative receivables that are classified as special
mention, substandard and doubtful categories for
regulatory purposes.
CRO: Chief Risk Officer
CRR: Capital Requirements Regulation
CTC: CIO, Treasury and Corporate
Custom lending: Loans to AWM’s Global Private Bank
clients, including loans to private investment funds and
loans that are collateralized by nontraditional asset types,
such as art work, aircraft, etc.
CVA: Credit valuation adjustment
Debit and credit card sales volume: Dollar amount of card
member purchases, net of returns.
Deposit margin/deposit spread: Represents net interest
income expressed as a percentage of average deposits.
Distributed denial-of-service attack: The use of a large
number of remote computer systems to electronically send
a high volume of traffic to a target website to create a
service outage at the target. This is a form of cyberattack.
Dodd-Frank Act: Wall Street Reform and Consumer
Protection Act
DVA: Debit valuation adjustment
EC: European Commission
Eligible HQLA: Eligible high-quality liquid assets, for
purposes of calculating the LCR, is the amount of
unencumbered HQLA that satisfy certain operational
considerations as defined in the LCR rule.
Eligible LTD: Long-term debt satisfying certain eligibility
criteria
Embedded derivatives: are implicit or explicit terms or
features of a financial instrument that affect some or all of
the cash flows or the value of the instrument in a manner
similar to a derivative. An instrument containing such terms
or features is referred to as a “hybrid.” The component of
the hybrid that is the non-derivative instrument is referred
to as the “host.” For example, callable debt is a hybrid
instrument that contains a plain vanilla debt instrument
(i.e., the host) and an embedded option that allows the
issuer to redeem the debt issue at a specified date for a
specified amount (i.e., the embedded derivative). However,
a floating rate instrument is not a hybrid composed of a
fixed-rate instrument and an interest rate swap.
EPS: Earnings per share
ERISA: Employee Retirement Income Security Act of 1974
ETD: “Exchange-traded derivatives”: Derivative contracts
that are executed on an exchange and settled via a central
clearing house.
EU: European Union
298
Expense categories:
• Volume- and/or revenue-related expenses generally
correlate with changes in the related business/
transaction volume or revenue. Examples include
commissions and incentive compensation within the
LOBs, depreciation expense related to operating lease
assets, and brokerage expense related to trading
transaction volume.
• Investments in the business include expenses associated
with supporting medium- to longer-term strategic plans
of the Firm. Examples include front office growth, market
expansion, initiatives in technology (including related
compensation), marketing, and acquisitions.
• Structural expenses are those associated with the day-to-
day cost of running the Firm and are expenses not
included in the above two categories. Examples include
employee salaries and benefits, certain other incentive
compensation, and costs related to real estate.
Fannie Mae: Federal National Mortgage Association
FASB: Financial Accounting Standards Board
FCA: Financial Conduct Authority
FCC: Firmwide Control Committee
FDIC: Federal Deposit Insurance Corporation
Federal Reserve: The Board of the Governors of the Federal
Reserve System
FFIEC: Federal Financial Institutions Examination Council
FHA: Federal Housing Administration
FHLB: Federal Home Loan Bank
FICC: The Fixed Income Clearing Corporation
FICO score: A measure of consumer credit risk provided by
credit bureaus, typically produced from statistical models
by Fair Isaac Corporation utilizing data collected by the
credit bureaus.
FINRA: Financial Industry Regulatory Authority
Firm: JPMorgan Chase & Co.
Forward points: Represents the interest rate differential
between two currencies, which is either added to or
subtracted from the current exchange rate (i.e., “spot
rate”) to determine the forward exchange rate.
FRC: Firmwide Risk Committee
Freddie Mac: Federal Home Loan Mortgage Corporation
Free standing derivatives: a derivative contract entered
into either separate and apart from any of the Firm’s other
financial instruments or equity transactions. Or, in
conjunction with some other transaction and is legally
detachable and separately exercisable.
FSB: Financial Stability Board
FTE: Fully taxable equivalent
JPMorgan Chase & Co./2022 Form 10-K
Glossary of Terms and Acronyms
FVA: Funding valuation adjustment
LLC: Limited Liability Company
FX: Foreign exchange
LOB: Line of business
G7: Group of Seven nations: Countries in the G7 are
Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
G7 government bonds: Bonds issued by the government of
one of the G7 nations.
Ginnie Mae: Government National Mortgage Association
GSIB: Global systemically important banks
HELOC: Home equity line of credit
Home equity – senior lien: Represents loans and
commitments where JPMorgan Chase holds the first
security interest on the property.
Home equity – junior lien: Represents loans and
commitments where JPMorgan Chase holds a security
interest that is subordinate in rank to other liens.
Households: A household is a collection of individuals or
entities aggregated together by name, address, tax
identifier and phone number.
HQLA: “High-quality liquid assets” consist of cash and
certain high-quality liquid securities as defined in the LCR
rule.
HTM: Held-to-maturity
IBOR: Interbank Offered Rate
ICAAP: Internal capital adequacy assessment process
IDI: Insured depository institutions
IHC: JPMorgan Chase Holdings LLC, an intermediate holding
company
Investment-grade: An indication of credit quality based on
JPMorgan Chase’s internal risk assessment. The Firm
considers ratings of BBB-/Baa3 or higher as investment-
grade.
IPO: Initial public offering
ISDA: International Swaps and Derivatives Association
JPMorgan Chase: JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.: JPMorgan Chase Bank,
National Association
JPMorgan Chase Foundation or the Firm’s Foundation: A
not-for-profit organization that makes contributions for
charitable and educational purposes.
JPMorgan Securities: J.P. Morgan Securities LLC
JPMSE: J.P. Morgan SE
LCR: Liquidity coverage ratio
LDA: Loss Distribution Approach
LGD: Loss given default
LOB CROs: Line of Business and CTC Chief Risk Officers
LTIP: Long-term incentive plan
LTV: “Loan-to-value”: For residential real estate loans, the
relationship, expressed as a percentage, between the
principal amount of a loan and the appraised value of the
collateral (i.e., residential real estate) securing the loan.
Origination date LTV ratio
The LTV ratio at the origination date of the loan. Origination
date LTV ratios are calculated based on the actual
appraised values of collateral (i.e., loan-level data) at the
origination date.
Current estimated LTV ratio
An estimate of the LTV as of a certain date. The current
estimated LTV ratios are calculated using estimated
collateral values derived from a nationally recognized home
price index measured at the metropolitan statistical area
(“MSA”) level. These MSA-level home price indices consist
of actual data to the extent available and forecasted data
where actual data is not available. As a result, the
estimated collateral values used to calculate these ratios do
not represent actual appraised loan-level collateral values;
as such, the resulting LTV ratios are necessarily imprecise
and should therefore be viewed as estimates.
Combined LTV ratio
The LTV ratio considering all available lien positions, as well
as unused lines, related to the property. Combined LTV
ratios are used for junior lien home equity products.
Macro businesses: the macro businesses include Rates,
Currencies and Emerging Markets, Fixed Income Financing
and Commodities in CIB's Fixed Income Markets.
Managed basis: A non-GAAP presentation of Firmwide
financial results that includes reclassifications to present
revenue on a fully taxable-equivalent basis. Management
also uses this financial measure at the segment level,
because it believes this provides information to enable
investors to understand the underlying operational
performance and trends of the particular business segment
and facilitates a comparison of the business segment with
the performance of competitors.
Markets: consists of CIB’s Fixed Income Markets and Equity
Markets businesses.
Master netting agreement: A single agreement with a
counterparty that permits multiple transactions governed
by that agreement to be terminated or accelerated and
settled through a single payment in a single currency in the
event of a default (e.g., bankruptcy, failure to make a
required payment or securities transfer or deliver collateral
or margin when due).
MBS: Mortgage-backed securities
LIBOR: London Interbank Offered Rate
MD&A: Management’s discussion and analysis
JPMorgan Chase & Co./2022 Form 10-K
299
Glossary of Terms and Acronyms
Measurement alternative: Measures equity securities
without readily determinable fair values at cost less
impairment (if any), plus or minus observable price changes
from an identical or similar investment of the same issuer.
requirements, including prescriptive requirements related
to income and overall debt levels. New prime mortgage
borrowers provide full documentation and generally have
reliable payment histories.
Merchant Services: offers merchants payment processing
capabilities, fraud and risk management, data and analytics,
and other payments services. Through Merchant Services,
merchants of all sizes can accept payments via credit and
debit cards and payments in multiple currencies.
MEV: Macroeconomic variable
Moody’s: Moody’s Investor Services
Mortgage origination channels:
Retail – Borrowers who buy or refinance a home through
direct contact with a mortgage banker employed by the
Firm using a branch office, the Internet or by phone.
Borrowers are frequently referred to a mortgage banker by
a banker in a Chase branch, real estate brokers, home
builders or other third parties.
Correspondent – Banks, thrifts, other mortgage banks and
other financial institutions that sell closed loans to the Firm.
Mortgage product types:
Alt-A
Alt-A loans are generally higher in credit quality than
subprime loans but have characteristics that would
disqualify the borrower from a traditional prime loan. Alt-A
lending characteristics may include one or more of the
following: (i) limited documentation; (ii) a high CLTV ratio;
(iii) loans secured by non-owner occupied properties; or (iv)
a debt-to-income ratio above normal limits. A substantial
proportion of the Firm’s Alt-A loans are those where a
borrower does not provide complete documentation of his
or her assets or the amount or source of his or her income.
Option ARMs
The option ARM real estate loan product is an adjustable-
rate mortgage loan that provides the borrower with the
option each month to make a fully amortizing, interest-only
or minimum payment. The minimum payment on an option
ARM loan is based on the interest rate charged during the
introductory period. This introductory rate is usually
significantly below the fully indexed rate. The fully indexed
rate is calculated using an index rate plus a margin. Once
the introductory period ends, the contractual interest rate
charged on the loan increases to the fully indexed rate and
adjusts monthly to reflect movements in the index. The
minimum payment is typically insufficient to cover interest
accrued in the prior month, and any unpaid interest is
deferred and added to the principal balance of the loan.
Option ARM loans are subject to payment recast, which
converts the loan to a variable-rate fully amortizing loan
upon meeting specified loan balance and anniversary date
triggers.
Prime
Prime mortgage loans are made to borrowers with good
credit records who meet specific underwriting
Subprime
Subprime loans are loans that, prior to mid-2008, were
offered to certain customers with one or more high risk
characteristics, including but not limited to: (i) unreliable or
poor payment histories; (ii) a high LTV ratio of greater than
80% (without borrower-paid mortgage insurance); (iii) a
high debt-to-income ratio; (iv) an occupancy type for the
loan is other than the borrower’s primary residence; or (v)
a history of delinquencies or late payments on the loan.
MREL: Minimum requirements for own funds and eligible
liabilities
MSA: Metropolitan statistical areas
MSR: Mortgage servicing rights
Multi-asset: Any fund or account that allocates assets under
management to more than one asset class.
NA: Data is not applicable or available for the period
presented.
NAV: Net Asset Value
Net Capital Rule: Rule 15c3-1 under the Securities
Exchange Act of 1934.
Net charge-off/(recovery) rate: Represents net charge-
offs/(recoveries) (annualized) divided by average retained
loans for the reporting period.
Net interchange income includes the following
components:
• Interchange income: Fees earned by credit and debit
card issuers on sales transactions.
• Reward costs: The cost to the Firm for points earned by
cardholders enrolled in credit card rewards programs
generally tied to sales transactions.
• Partner payments: Payments to co-brand credit card
partners based on the cost of loyalty program rewards
earned by cardholders on credit card transactions.
Net mortgage servicing revenue: Includes operating
revenue earned from servicing third-party mortgage loans,
which is recognized over the period in which the service is
provided; changes in the fair value of MSRs; the impact of
risk management activities associated with MSRs; and gains
and losses on securitization of excess mortgage servicing.
Net mortgage servicing revenue also includes gains and
losses on sales and lower of cost or fair value adjustments
of certain repurchased loans insured by U.S. government
agencies.
Net revenue rate: Represents Card Services net revenue
(annualized) expressed as a percentage of average loans
for the period.
300
JPMorgan Chase & Co./2022 Form 10-K
Glossary of Terms and Acronyms
Net yield on interest-earning assets: The average rate for
interest-earning assets less the average rate paid for all
sources of funds.
NFA: National Futures Association
NM: Not meaningful
NOL: Net operating loss
Nonaccrual loans: Loans for which interest income is not
recognized on an accrual basis. Loans (other than credit
card loans and certain consumer loans insured by U.S.
government agencies) are placed on nonaccrual status
when full payment of principal and interest is not expected,
regardless of delinquency status, or when principal and
interest have been in default for a period of 90 days or
more unless the loan is both well-secured and in the
process of collection. Collateral-dependent loans are
typically maintained on nonaccrual status.
Nonperforming assets: Nonperforming assets include
nonaccrual loans, nonperforming derivatives and certain
assets acquired in loan satisfaction, predominantly real
estate owned and other commercial and personal property.
NOW: Negotiable Order of Withdrawal
NSFR: Net Stable Funding Ratio
OAS: Option-adjusted spread
OCC: Office of the Comptroller of the Currency
OCI: Other comprehensive income/(loss)
OPEB: Other postretirement employee benefit
Over-the-counter (“OTC”) derivatives: Derivative contracts
that are negotiated, executed and settled bilaterally
between two derivative counterparties, where one or both
counterparties is a derivatives dealer.
Over-the-counter cleared (“OTC-cleared”) derivatives:
Derivative contracts that are negotiated and executed
bilaterally, but subsequently settled via a central clearing
house, such that each derivative counterparty is only
exposed to the default of that clearing house.
Overhead ratio: Noninterest expense as a percentage of
total net revenue.
Parent Company: JPMorgan Chase & Co.
Participating securities: Represents unvested share-based
compensation awards containing nonforfeitable rights to
dividends or dividend equivalents (collectively,
“dividends”), which are included in the earnings per share
calculation using the two-class method. JPMorgan Chase
grants RSUs to certain employees under its share-based
compensation programs, which entitle the recipients to
receive nonforfeitable dividends during the vesting period
on a basis equivalent to the dividends paid to holders of
common stock. These unvested awards meet the definition
of participating securities. Under the two-class method, all
earnings (distributed and undistributed) are allocated to
each class of common stock and participating securities,
based on their respective rights to receive dividends.
PCA: Prompt corrective action
PCAOB: Public Company Accounting Oversight Board
PCD: “Purchased credit deteriorated” assets represent
acquired financial assets that as of the date of acquisition
have experienced a more-than-insignificant deterioration in
credit quality since origination, as determined by the Firm.
PD: Probability of default
Pillar 1: The Basel framework consists of a three “Pillar”
approach. Pillar 1 establishes minimum capital
requirements, defines eligible capital instruments, and
prescribes rules for calculating RWA.
Pillar 3: The Basel framework consists of a three “Pillar”
approach. Pillar 3 encourages market discipline through
disclosure requirements which allow market participants to
assess the risk and capital profiles of banks.
PPP: Paycheck Protection Program under the Small
Business Association (“SBA”)
PRA: Prudential Regulation Authority
Pre-provision profit/(loss): Represents total net revenue
less noninterest expense. The Firm believes that this
financial measure is useful in assessing the ability of a
lending institution to generate income in excess of its
provision for credit losses.
Pre-tax margin: Represents income before income tax
expense divided by total net revenue, which is, in
management’s view, a comprehensive measure of pretax
performance derived by measuring earnings after all costs
are taken into consideration. It is one basis upon which
management evaluates the performance of AWM against
the performance of their respective competitors.
Principal transactions revenue: Principal transactions
revenue is driven by many factors, including:
• the bid-offer spread, which is the difference between the
price at which a market participant is willing and able to
sell an instrument to the Firm and the price at which
another market participant is willing and able to buy it
from the Firm, and vice versa; and
• realized and unrealized gains and losses on financial
instruments and commodities transactions, including
those accounted for under the fair value option, primarily
used in client-driven market-making activities, and on
private equity investments.
– Realized gains and losses result from the sale of
instruments, closing out or termination of transactions,
or interim cash payments.
– Unrealized gains and losses result from changes in
valuation.
In connection with its client-driven market-making
activities, the Firm transacts in debt and equity
instruments, derivatives and commodities, including
JPMorgan Chase & Co./2022 Form 10-K
301
Glossary of Terms and Acronyms
physical commodities inventories and financial instruments
that reference commodities.
Principal transactions revenue also includes realized and
unrealized gains and losses related to:
• derivatives designated in qualifying hedge accounting
relationships, primarily fair value hedges of commodity
and foreign exchange risk;
• derivatives used for specific risk management purposes,
primarily to mitigate credit, foreign exchange and
interest rate risks.
Production revenue: Includes fees and income recognized
as earned on mortgage loans originated with the intent to
sell, and the impact of risk management activities
associated with the mortgage pipeline and warehouse
loans. Production revenue also includes gains and losses on
sales and lower of cost or fair value adjustments on
mortgage loans held-for-sale (excluding certain
repurchased loans insured by U.S. government agencies),
and changes in the fair value of financial instruments
measured under the fair value option.
PSUs: Performance share units
Regulatory VaR: Daily aggregated VaR calculated in
accordance with regulatory rules.
REO: Real estate owned
Reported basis: Financial statements prepared under U.S.
GAAP, which excludes the impact of taxable-equivalent
adjustments.
Retained loans: Loans that are held-for-investment (i.e.,
excludes loans held-for-sale and loans at fair value).
Revenue wallet: Proportion of fee revenue based on
estimates of investment banking fees generated across the
industry (i.e., the revenue wallet) from investment banking
transactions in M&A, equity and debt underwriting, and loan
syndications. Source: Dealogic, a third-party provider of
investment banking competitive analysis and volume-based
league tables for the above noted industry products.
RHS: Rural Housing Service of the U.S. Department of
Agriculture
ROA: Return on assets
ROE: Return on equity
ROTCE: Return on tangible common equity
ROU assets: Right-of-use assets
RSU(s): Restricted stock units
RWA: “Risk-weighted assets”: Basel III establishes two
comprehensive approaches for calculating RWA (a
Standardized approach and an Advanced approach) which
include capital requirements for credit risk, market risk, and
in the case of Basel III Advanced, also operational risk. Key
differences in the calculation of credit risk RWA between
the Standardized and Advanced approaches are that for
Basel III Advanced, credit risk RWA is based on risk-sensitive
approaches which largely rely on the use of internal credit
models and parameters, whereas for Basel III Standardized,
credit risk RWA is generally based on supervisory risk-
weightings which vary primarily by counterparty type and
asset class. Market risk RWA is calculated on a generally
consistent basis between Basel III Standardized and Basel III
Advanced.
S&P: Standard and Poor’s 500 Index
SA-CCR: Standardized Approach for Counterparty Credit
Risk
SAR as it pertains to Hong Kong: Special Administrative
Region
SAR(s) as it pertains to employee stock awards: Stock
appreciation rights
SCB: Stress Capital Buffer
Scored portfolios: Consumer loan portfolios that
predominantly include residential real estate loans, credit
card loans, auto loans to individuals and certain small
business loans.
SEC: Securities and Exchange Commission
Securities financing agreements: Include resale,
repurchase, securities borrowed and securities loaned
agreements
Seed capital: Initial JPMorgan capital invested in products,
such as mutual funds, with the intention of ensuring the
fund is of sufficient size to represent a viable offering to
clients, enabling pricing of its shares, and allowing the
manager to develop a track record. After these goals are
achieved, the intent is to remove the Firm’s capital from the
investment.
Shelf securities: Securities registered with the SEC under a
shelf registration statement that have not been issued,
offered or sold. These securities are not included in league
tables until they have actually been issued.
Single-name: Single reference-entities
SLR: Supplementary leverage ratio
SMBS: Stripped mortgage-backed securities
SOFR: Secured Overnight Financing Rate
SPEs: Special purpose entities
Structural interest rate risk: Represents interest rate risk
of the non-trading assets and liabilities of the Firm.
Structured notes: Structured notes are financial
instruments whose cash flows are linked to the movement
in one or more indexes, interest rates, foreign exchange
rates, commodities prices, prepayment rates, underlying
reference pool of loans or other market variables. The notes
typically contain embedded (but not separable or
detachable) derivatives. Contractual cash flows for
principal, interest, or both can vary in amount and timing
throughout the life of the note based on non-traditional
302
JPMorgan Chase & Co./2022 Form 10-K
VGF: Valuation Governance Forum
VIEs: Variable interest entities
Warehouse loans: Consist of prime mortgages originated
with the intent to sell that are accounted for at fair value
and classified as loans.
Glossary of Terms and Acronyms
indexes or non-traditional uses of traditional interest rates
or indexes.
Taxable-equivalent basis: In presenting results on a
managed basis, the total net revenue for each of the
business segments and the Firm is presented on a tax-
equivalent basis. Accordingly, revenue from investments
that receive tax credits and tax-exempt securities is
presented in managed basis results on a level comparable
to taxable investments and securities; the corresponding
income tax impact related to tax-exempt items is recorded
within income tax expense.
TBVPS: Tangible book value per share
TCE: Tangible common equity
TDR: “Troubled debt restructuring” is deemed to occur
when the Firm modifies the original terms of a loan
agreement by granting a concession to a borrower that is
experiencing financial difficulty. Loans with short-term and
other insignificant modifications that are not considered
concessions are not TDRs.
TLAC: Total loss-absorbing capacity
U.K.: United Kingdom
Unaudited: Financial statements and/or information that
have not been subject to auditing procedures by an
independent registered public accounting firm.
U.S.: United States of America
U.S. GAAP: Accounting principles generally accepted in the
U.S.
U.S. government agencies: U.S. government agencies
include, but are not limited to, agencies such as Ginnie Mae
and FHA, and do not include Fannie Mae and Freddie Mac
which are U.S. government-sponsored enterprises (“U.S.
GSEs”). In general, obligations of U.S. government agencies
are fully and explicitly guaranteed as to the timely payment
of principal and interest by the full faith and credit of the
U.S. government in the event of a default.
U.S. GSE(s): “U.S. government-sponsored enterprises” are
quasi-governmental, privately-held entities established or
chartered by the U.S. government to serve public purposes
as specified by the U.S. Congress to improve the flow of
credit to specific sectors of the economy and provide
certain essential services to the public. U.S. GSEs include
Fannie Mae and Freddie Mac, but do not include Ginnie Mae
or FHA. U.S. GSE obligations are not explicitly guaranteed as
to the timely payment of principal and interest by the full
faith and credit of the U.S. government.
U.S. Treasury: U.S. Department of the Treasury
VA: U.S. Department of Veterans Affairs
VaR: “Value-at-risk” is a measure of the dollar amount of
potential loss from adverse market moves in an ordinary
market environment.
VCG: Valuation Control Group
JPMorgan Chase & Co./2022 Form 10-K
303
Board of Directors
Linda B. Bammann2, 4
Retired Deputy Head of Risk
Management
JPMorgan Chase & Co.
(Financial services)
Stephen B. Burke2, 3
Retired Chairman and
Chief Executive Officer
NBCUniversal, LLC
(Television and entertainment)
Todd A. Combs2, 3
Investment Officer
Berkshire Hathaway Inc.;
President and
Chief Executive Officer
GEICO
(Conglomerate and insurance)
James S. Crown4, 5
Chairman and
Chief Executive Officer
Henry Crown and Company
(Diversified investments)
Alicia Boler Davis
Chief Executive Officer
Alto Pharmacy, LLC
(Digital pharmacy)
James Dimon
Chairman and
Chief Executive Officer
JPMorgan Chase & Co.
(Financial services)
Timothy P. Flynn 1
Retired Chairman and
Chief Executive Officer
KPMG
(Professional services)
Alex Gorsky4
Retired Chairman and
Chief Executive Officer
Johnson & Johnson
(Healthcare)
Operating Committee
Member of:
1 Audit Committee
2 Compensation & Management
Development Committee
3 Corporate Governance &
Nominating Committee
4 Risk Committee
5 Public Responsibility Committee
Mellody Hobson4, 5
Co-CEO and President
Ariel Investments, LLC
(Investment management)
Michael A. Neal 1, 5
Retired Vice Chairman
General Electric Company;
Retired Chairman and
Chief Executive Officer
GE Capital
(Industrial and financial services)
Phebe N. Novakovic 1
Chairman and
Chief Executive Officer
General Dynamics
(Aerospace and defense)
Virginia M. Rometty 2, 3
Retired Executive Chairman
and Chief Executive Officer
International Business Machines
Corporation
(Technology)
James Dimon
Chairman and Chief Executive Officer
Jeremy Barnum
Chief Financial Officer
Teresa A. Heitsenrether
Global Head of Securities Services
Jennifer A. Piepszak
Co-CEO, Consumer & Community
Banking
Daniel E. Pinto
President and Chief Operating Officer;
CEO, Corporate & Investment Bank
Lori A. Beer
Chief Information Officer
Marianne Lake
Co-CEO, Consumer & Community
Banking
Troy L. Rohrbaugh
Head of Global Markets
Ashley Bacon
Chief Risk Officer
Marc K. Badrichani
Head of Global Sales & Research
Mary Callahan Erdoes
CEO, Asset & Wealth Management
Stacey Friedman
General Counsel
Takis T. Georgakopoulos
Head of Payments
Robin Leopold
Head of Human Resources
Peter L. Scher
Vice Chairman
Douglas B. Petno
CEO, Commercial Banking
Sanoke Viswanathan
CEO, International Consumer Banking
Other Corporate Officers
Joseph M. Evangelisti
Corporate Communications
Elena A. Korablina
Firmwide Controller
John H. Tribolati
Secretary
Mikael Grubb
Investor Relations
Lou Rauchenberger
General Auditor
304
JPMorgan Chase & Co./2022 Annual Report
Regional Chief Executive Officers
Asia Pacific
Europe/Middle East/Africa
Latin America/Canada
Filippo Gori
Viswas Raghavan
Alfonso Eyzaguirre
Senior Country Officers and Location Heads
Asia Pacific
Europe/Middle East/Africa
Latin America/Caribbean
Saudi Arabia
Bader A. Alamoudi
Sub-Saharan Africa
Kevin G. Latter
Switzerland
Reinnout Böttcher
Türkiye
Mustafa Bagriacik
United Arab Emirates
Majed Al Mesmari
Andean, Caribbean and Central
America
Moises Mainster
Argentina
Facundo D. Gómez Minujin
Brazil
Daniel Darahem
Chile
Andres Errazuriz
Colombia
Angela M. Hurtado
Mexico
Felipe García-Moreno
North America
Canada
David E. Rawlings
Australia and New Zealand
Robert P. Bedwell
China
Mark C.M. Leung
Hong Kong
Harshika Patel
Japan
Steve Teru Rinoie
Korea
Howard Kim
Southeast Asia
Sudhir Goel
India
Madhav Kalyan
Indonesia
Gioshia Ralie
Malaysia
Hooi Ching Wong
Austria
Anton J. Ulmer
Belgium
Tanguy A. Piret
France
Kyril Courboin
Germany
Stefan P. Povaly
Iberia
Ignacio de la Colina
Ireland
Marc Hussey
Israel
Roy Navon
Italy
Francesco Cardinali
Luxembourg
Pablo Garnica
Philippines
Carlos Ma. G Mendoza
Middle East and North Africa
Khaled Hobballah
Singapore
Edmund Y. Lee
Thailand
Marco Sucharitkul
Taiwan
Carl K. Chien
Vietnam
Van Bich Phan
The Netherlands
Cassander Verwey
Poland
Michal Szwarc
Russia, Kazakhstan and
Central Asia
Yan L. Tavrovsky
JPMorgan Chase Vice Chairs
Mark S. Garvin
Vittorio U. Grilli
David Mayhew
Peter L. Scher
305
JPMorgan Chase & Co./2022 Annual Report J.P. Morgan International Council
As of March 1, 2023
Rt. Hon. Tony Blair
Chairman of the Council
Executive Chairman
Tony Blair Institute for Global Change
Former Prime Minister of
Great Britain and Northern Ireland
London, United Kingdom
The Hon. Robert M. Gates
Vice Chairman of the Council
Principal
Rice, Hadley, Gates & Manuel LLC
Washington, District of Columbia
Paul Bulcke
Chairman of the Board of Directors
Nestlé S.A.
Vevey, Switzerland
Aliko Dangote
Group President and Chief Executive
Dangote Group
Lagos, Nigeria
Jamie Dimon*
Chairman and Chief Executive Officer
JPMorgan Chase & Co.
New York, New York
John Elkann
Executive Director and Chairman
Stellantis
Turin, Italy
Ignacio S. Galán
Executive Chairman
Iberdrola, S.A.
Madrid, Spain
Marcos Galperin
Chief Executive Officer
Mercado Libre
Montevideo, Uruguay
Armando Garza Sada
Chairman of the Board
ALFA, S.A.B. of C.V.
San Pedro Garza García, Mexico
Alex Gorsky
Retired Chairman and
Chief Executive Officer
Johnson & Johnson
New Brunswick, New Jersey
The Hon. Carla A. Hills
Chair and Chief Executive Officer
Hills & Company International
Consultants
Washington, District of Columbia
The Hon. John Howard OM AC
Former Prime Minister of Australia
Sydney, Australia
Joe Kaeser
Chairman of the Supervisory Board
Siemens Energy AG and
Daimler Truck Holding AG
Munich, Germany
The Hon. Henry A. Kissinger
Chairman
Kissinger Associates, Inc.
New York, New York
Nassef Sawiris
Executive Chair
OCI N.V.
London, United Kingdom
Ratan Naval Tata
Chairman Emeritus
Tata Sons Ltd
Mumbai, India
Joseph C. Tsai
Executive Vice Chairman
Alibaba Group
Hong Kong, China
The Hon. Tung Chee Hwa GBM
Vice Chairman
National Committee of the Chinese
People’s Political Consultative Conference
Hong Kong, China
Jaime Augusto Zobel de Ayala
Chairman
Ayala Corporation
Makati City, Philippines
Nancy McKinstry
Chief Executive Officer and
Chair of the Executive Board
Wolters Kluwer
Alphen aan den Rijn, The Netherlands
Carlo Messina
Managing Director and
Chief Executive Officer
Intesa Sanpaolo
Turin, Italy
Amin H. Nasser
President and Chief Executive Officer
Saudi Aramco
Dhahran, Saudi Arabia
The Hon. Condoleezza Rice
Principal
Rice, Hadley, Gates & Manuel LLC
Stanford, California
Paolo Rocca
Chairman and Chief Executive Officer
Tenaris
Buenos Aires, Argentina
*Ex-officio
306
JPMorgan Chase & Co./2022 Annual Report Corporate headquarters
383 Madison Avenue
New York, NY 10179-0001
Telephone: 212-270-6000
jpmorganchase.com
Annual Report on Form 10-K
The Annual Report on Form 10-K of
JPMorgan Chase & Co. as filed with the
U.S. Securities and Exchange Commission
will be made available without charge
upon request to:
Office of the Secretary
JPMorgan Chase & Co.
383 Madison Avenue, 39th Floor
New York, NY 10179-0001
corporate.secretary@jpmchase.com
Stock listing
New York Stock Exchange
The New York Stock Exchange ticker
symbol for the common stock of
JPMorgan Chase & Co. is JPM.
Financial information about JPMorgan
Chase & Co. can be accessed by visiting our
website at jpmorganchase.com and clicking
on “Investor Relations.” Additional
questions should be addressed to:
Investor Relations
JPMorgan Chase & Co.
277 Park Avenue
New York, NY 10172-0001
Telephone: 212-270-2479
JPMCinvestorrelations@jpmchase.com
Directors
To contact any of the Board members or
committee chairs, the Lead Independent
Director or the non-management directors
as a group, please mail correspondence to:
JPMorgan Chase & Co.
Attention (Board member(s))
Office of the Secretary
383 Madison Avenue, 39th Floor
New York, NY 10179-0001
corporate.secretary@jpmchase.com
The Corporate Governance Principles, the
charters of the principal standing Board
committees, the Code of Conduct, the Code
of Ethics for Finance Professionals and other
governance information can be accessed by
visiting our website at jpmorganchase.com
and clicking on “Governance” under the
“Who We Are” tab.
Transfer agent and registrar
Computershare
150 Royall Street, Suite 101
Canton, MA 02021-1031
United States
Telephone: 800-758-4651
www.computershare.com/investor
Investor Services Program
JPMorgan Chase & Co.’s Investor Services
Program offers a variety of convenient,
low-cost services to make it easier to
reinvest dividends and buy and sell shares
of JPMorgan Chase & Co. common stock.
A brochure and enrollment materials may
be obtained by contacting the Program
Administrator, Computershare, by calling
800-758-4651, by writing to the address
indicated above or by visiting its website at
www-us.computershare.com/investor.
Direct deposit of dividends
For information about direct deposit of
dividends, please contact Computershare.
Stockholder inquiries
Contact Computershare:
By telephone:
Within the United States, Canada and
Puerto Rico: 800-758-4651
(toll free)
From all other locations:
201-680-6862 (collect)
TDD service for the hearing impaired
within the United States, Canada and
Puerto Rico: 800-231-5469
(toll free)
All other locations:
201-680-6610 (collect)
By regular mail:
Computershare
P.O. Box 43078
Providence, RI 02940-3078
United States
By overnight delivery:
Computershare
150 Royall Street, Suite 101
Canton, MA 02021-1031
United States
Duplicate mailings
If you receive duplicate mailings because
you have more than one account listing
and you wish to consolidate your
accounts, please write to Computershare
at the address above.
Independent registered public
accounting firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
“JPMorgan Chase,” “J.P. Morgan,” “Chase,” the Octagon
symbol and other words or symbols in this report that
identify JPMorgan Chase services are service marks
of JPMorgan Chase & Co. Other words or symbols in this
report that identify other parties’ goods or services may
be trademarks or service marks of those other parties.
This Annual Report is printed on paper made
from well-managed forests and other controlled
sources. The paper is independently certified by
Bureau Veritas Quality International according to
Forest Stewardship Council ® standards.
© 2023 JPMorgan Chase & Co.
All rights reserved. Printed in the U.S.A.
We believe that building a
strong, vibrant company –
one that stands the test
of time – benefits not only
our shareholders but
also everyone we touch.
It enables us to lift up our
communities and to focus
on issues that are universally
important, including
economic development,
education and employment.
jpmorganchase.com