Powering
Growth
with Curiosity
and Heart
Annual
Report
2023
Financial Highlights
As of or for the year ended December 31,
(in millions, except per share, ratio data and employees)
2023
2022
2021
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
$ 158,104
$
$
87,172
70,932
9,320
49,552
16.25
16.23
104.45
86.08
4.10
17 %
21
113
15.0
16.6
18.5
$ 1,323,706
3,875,393
2,400,688
300,474
327,878
$ 170.10
489,320
2,876.6
$ 128,695
76,140
52,555
6,389
$ 37,676
$ 121,649
71,343
50,306
(9,256 )
48,334
$
$
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
$
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
271,025
Employees(d)
309,926 (e)
293,723
As of and for the period ended December 31, 2023, the results of the Firm include the impact of First Republic. Refer to Business
Segment Results on page 67 and Note 34 for additional information.
(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 62–64 for a discussion of these measures.
(b) Refer to Liquidity Risk Management on pages 102-109 for additional information on this measure.
(c) Refer to Capital Risk Management on pages 91-101 for additional information on these measures.
(d) This metric, which was formerly Headcount, has been renamed Employees but is otherwise unchanged.
(e) Included approximately 4,500 individuals associated with First Republic who became employees effective July 2, 2023.
JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm with assets of
$3.9 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.
2023 Highlights
#1 BANK
#1
IN DEPOSITS AND FOR SMALL BUSINESSES
CORPORATE & INVESTMENT BANK
Named #1 in retail deposit market share
and #1 primary bank for U.S. small businesses
Generated $14 billion of net income
on revenue of $49 billion
#1
TOP 5
PRIVATE BANK AND ASSET MANAGER
MOST ADMIRED COMPANIES
Named #1 private bank in the world
by Euromoney magazine
and #1 asset manager by active flows
Ranked in the top five on
Fortune magazine’s Most Admired Companies list
for the second year in a row
100%
DISABILITY EQUALITY INDEX
TOP 100
MOST INFLUENTIAL COMPANIES
Scored 100% on the Disability Equality Index
for the ninth consecutive year
Ranked as one of the 100 Most Influential Companies
by Time magazine
#1
MIDDLE MARKET SYNDICATED LENDER
Ranked #1 overall
Middle Market Syndicated Lender
in the U.S.
#1 BANK
IN ARTIFICIAL INTELLIGENCE
Ranked #1 for overall artificial intelligence
capabilities on the Evident AI Index
for the second year in a row
#1
CUSTOMER SATISFACTION
Ranked #1 among self-directed investors
in the J.D. Power 2023 U.S. Wealth
Management Digital Experience Study
1
Dear Fellow Shareholders,
Jamie Dimon,
Chairman and
Chief Executive
Officer
Across the globe, 2023 was yet another year of significant challenges, from the
terrible ongoing wars and violence in the Middle East and Ukraine to mounting
terrorist activity and growing geopolitical tensions, importantly with China. Almost
all nations felt the effects last year of global economic uncertainty, including higher
energy and food prices, inflation rates and volatile markets. While all these events
and associated instability have serious ramifications on our company, colleagues,
clients and countries where we do business, their consequences on the world at large
— with the extreme suffering of the Ukrainian people, escalating tragedy in the Middle
East and the potential restructuring of the global order — are far more important.
As these events unfold, America’s global leadership role is being challenged outside
by other nations and inside by our polarized electorate. We need to find ways to put
aside our differences and work in partnership with other Western nations in the name
of democracy. During this time of great crises, uniting to protect our essential
freedoms, including free enterprise, is paramount. We should remember that
America, “conceived in liberty and dedicated to the proposition that all men are
2
created equal,” still remains a shining beacon of hope to citizens around the world.
JPMorgan Chase, a company that historically has worked across borders and
boundaries, will do its part to ensure that the global economy is safe and secure.
In spite of the unsettling landscape, including last year’s regional bank turmoil, the
U.S. economy continues to be resilient, with consumers still spending, and the
markets currently expect a soft landing. It is important to note that the economy is
being fueled by large amounts of government deficit spending and past stimulus.
There is also a growing need for increased spending as we continue transitioning to
a greener economy, restructuring global supply chains, boosting military expenditure
and battling rising healthcare costs. This may lead to stickier inflation and higher
rates than markets expect. Furthermore, there are downside risks to watch.
Quantitative tightening is draining more than $900 billion in liquidity from the system
annually — and we have never truly experienced the full effect of quantitative
tightening on this scale. Plus the ongoing wars in Ukraine and the Middle East
continue to have the potential to disrupt energy and food markets, migration, and
military and economic relationships, in addition to their dreadful human cost. These
significant and somewhat unprecedented forces cause us to remain cautious.
2023 was another strong year for JPMorgan Chase, with our firm generating record
revenue for the sixth consecutive year, as well as setting numerous records in each
of our lines of business. We earned revenue in 2023 of $162.4 billion1 and net income
of $49.6 billion, with return on tangible common equity (ROTCE) of 21%, reflecting
strong underlying performance across our businesses. We also increased our
quarterly common dividend of $1.00 per share to $1.05 per share in the third quarter
of 2023 — and again to $1.15 per share in the first quarter of 2024 — while continuing
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 risk disciplines.
Throughout the year, we demonstrated the power of our investment philosophy and
guiding principles, as well as the value of being there for clients — as we always are —
in both good times and bad times. The result was continued growth broadly across
the firm. We will highlight a few examples from 2023: Consumer & Community
Banking (CCB) extended its #1 leadership positions and grew share year-over-year in
retail deposits, credit card sales and credit card outstandings (adding close to 3.6
million net new customers to the franchise); the Corporate & Investment Bank (CIB)
1 Represents managed revenue.
3
maintained its #1 rank in both Investment Banking and Markets and gained more
than 100 basis points of Investment Banking market share; Commercial Banking (CB)
added over 5,000 new relationships (excluding First Republic Bank), roughly doubling
the prior year’s achievement; and Asset & Wealth Management (AWM) saw record
client asset net inflows of $490 billion, over 20% higher than its prior record.
In 2023, we continued to play a forceful and essential role in advancing economic
growth. In total, we extended credit and raised capital totaling $2.3 trillion for our
consumer and institutional clients around the world. On a daily basis, we move nearly
$10 trillion in over 120 currencies and more than 160 countries, as well as safeguard
over $32 trillion in assets. By purchasing First Republic Bank, we brought much-
needed stability to the U.S. banking system while allowing us to give a new, secure
home to over half a million First Republic customers.
As always, we hold fast to our commitment to corporate responsibility, including
helping to create a stronger, more inclusive economy — from supporting work skills
training programs around the world to financing affordable housing and small
businesses to making investments in cities like Detroit that show how business and
government leaders can work together to solve problems.
We have achieved our decades-long consistency by adhering to our key principles and
strategies (see sidebar on Steadfast Principles on page 5), which allow us to drive
good organic growth and promote proper management of our capital (including
dividends and stock buybacks). The charts on pages 9–15 show our performance
results and illustrate how we have grown our franchises, how we compare with our
competitors and how we look at our fortress balance sheet. Please peruse them and
the CEO letters in this Annual Report, all of which provide specific details about our
businesses and our plans for the future.
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 have never stopped doing all the things we should
be doing to serve our clients and our communities. 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. I often remind our employees that the work we do matters
4
STEADFAST PRINCIPLES WORTH REPEATING (AND ONE NEW ONE)
Looking back on the past two+ decades —
starting from my time as Chairman and
CEO of Bank One in 2000 — there is one
common theme: our unwavering dedica-
tion to help clients, communities and
countries throughout the world. It is clear
that our financial discipline, constant
investment in innovation and ongoing
development of our people have enabled
us to achieve this consistency and com-
mitment. In addition, across the firm, we
uphold certain steadfast 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 stocks; 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
strengthening 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 progress over time.
This progress is a function of continual
investments in our people, systems and
products, in good and bad times, to build
our capabilities. These important invest-
ments will also drive our company’s future
prospects and position it to grow and
prosper for decades. Measured by stock
performance, 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 outperformed the Standard
& Poor’s 500 Index and the Standard &
Poor’s Financials Index.
Fourth, we are united behind basic princi-
ples and strategies (you can see the prin-
ciples for How We Do Business on our
website and our Purpose statement in my
letter from last year) that have helped
build this company and made it thrive.
These allow us to maintain a fortress bal-
ance sheet, constantly invest and nurture
talent, fully satisfy regulators, continually
improve risk, governance and controls,
and serve 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 conglomerate.
This structure helps generate our superior
returns. Nonetheless, despite our best
efforts, the walls that protect this com-
pany are not particularly high — and we
face extraordinary competition. I have
written about this reality extensively in the
past and cover it again in this letter. We
recognize our strengths and vulnerabili-
ties, and we play our hand as best we can.
Sixth, and this is the new one, we must be
a source of strength, particularly in tough
times, for our clients and the countries in
which we operate. We must take seriously
our role as one of the guardians of the
world’s financial systems.
Seventh, 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 $46 billion in
federal, state and local taxes in the United
States and over $22 billion in taxes outside
of the United States. Additionally, we 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 require-
ments imposed on our company.
Eighth and finally, we know the founda-
tion of our success rests with our people.
They are the front line, 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 capabili-
ties and high standards of professional
excellence to ensure its ongoing success.
5
MAPPING OUR PROGRESS AND MILESTONES
2000
2005
2010
2015
2020
2024
2000
Jamie Dimon joins Bank
One as Chairman and
CEO
Chase Manhattan buys
J.P. Morgan & Co.,
forming J.P. Morgan
Chase & Co.
2004
Bank One merges with
J.P. Morgan Chase & Co.
2006
JPMorgan Chase holds
first Investor Day
Asset & Wealth
Management assets
under management
exceed $1 trillion
2008
JPMorgan Chase acquires
Bear Stearns and
Washington Mutual
The collapse of the housing
and mortgage markets led to
a severe worldwide financial
crisis, the worst since the
Great Depression. JPMorgan
Chase helped stabilize the
markets by acquiring two
failing institutions, Bear
Stearns and Washington
Mutual (WaMu). WaMu
is still the largest failure
of an insured depository
institution in the history of
the FDIC. Importantly, the
WaMu deal expanded the
bank’s network by more
than 2,200 branches,
including gaining a footprint
in California and Florida.
JPMorgan Chase ranks
#1 in investment banking
fees market share for
the first time
2010
JPMorgan Chase
launches Chase Wealth
Management
2011
JPMorgan Chase ranks
#1 in Markets revenue
market share for the
first time
Jamie Dimon holds his
first bus tour from
Seattle to San Diego
JPMorgan Chase
becomes the biggest
U.S. bank by assets
2012
Chase becomes #1
credit card issuer based
on outstandings
2014
JPMorgan Chase makes
historic investment in
Detroit, which reached
$200 million in 2022
JPMorgan Chase
begins using artificial
intelligence and machine
learning for fraud
detection
2016
JPMorgan Chase
becomes the biggest
bank in the world by
market capitalization
2018
Chase credit and debit
card sales volume
surpasses $1 trillion
JPMorgan Chase
announces $30 million
investment in Greater
Paris, followed by $70
million in new commit-
ments in 2023 to create
economic opportunity
across France
JPMorgan Chase
announces branch
expansion initiative
2019
JPMorgan Chase launches
the Second Chance hiring
initiative, helping remove
barriers to employment
opportunities for people
with a criminal record
2020
JPMorgan Chase
announces its $30 billion
Racial Equity Commitment
With the goal of helping
to close the racial
wealth gap and advance
economic inclusion among
historically underserved U.S.
communities, the effort
reported over $30 billion in
progress by the end of 2023.
Jamie Dimon returns to
work in the office in June
Four modern, private
cloud-based North
American data centers
go live
2021
JPMorgan Chase ranks
#1 in retail deposits
market share at 10%
based on FDIC data,
with deposits surpassing
$1 trillion
2022
Chase becomes
the first bank with
nationwide branches
in all lower 48 states
2023
JPMorgan Chase
acquires First Republic
Bank from the FDIC
The purchase of First
Republic helped stabilize
and strengthen the U.S.
financial system in a time
of crisis while allowing
JPMorgan Chase to give a
new, secure home to over
half a million First Republic
customers.
FDIC = Federal Deposit Insurance Corporation
6
and has impact. United by our principles and purpose, 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. What we have accomplished in the 20 years since the Bank One and
JPMorgan Chase merger is evidence of the importance of our values.
CELEBRATING THE 20TH ANNIVERSARY OF THE BANK ONE/JPMORGAN CHASE
MERGER
J.P. Morgan Chase
By 2004, J.P. Morgan Chase already represented the consolidation of four of the 10
largest U.S. banks from 1990: The Chase Manhattan Corp., Manufacturers Hanover,
Chemical Banking Corp. and, most recently, J.P. Morgan & Company. And some of their
predecessor companies stretched back into the 1800s, one even into the late 1700s.
Bank One
Bank One had been even busier on the acquisition front, especially across the United
States. By 1998, then Banc One had more than 1,300 branches in 12 states when it
announced a merger with First Chicago NBD, a Chicago-based bank created just
three years earlier by the merger of First Chicago and Detroit-based NBD. Now
headquartered in Chicago, the new Bank One became the largest bank in the
Midwest, second largest among credit card companies and fourth largest in the
United States. But the merger didn’t go as planned, with Bank One issuing three
different earnings warnings. In March 2000, Bank One reached outside its executive
ranks, and my tenure began as Chairman and CEO, working to overhaul the company
and help bring it back to profitability and growth.
The story begins ... A merger 20 years ago helped transform two giant banks
Fast forward to 2003, and another wave of consolidation was well underway in U.S.
banking. Most of the nation’s larger banks were trying to position themselves to be an
“endgame winner.” In the biggest deal, Bank of America agreed to buy FleetBoston
Financial Corp. for more than $40 billion. Those two banks — already amalgamations
of several predecessor companies — touted the breadth of their combined retail
branch network.
7
But they were hardly alone. In 2003, some 215 deals were announced among
U.S. commercial banks and bank holding companies for a total value of $66 billion,
according to Thomson Financial, which tracks merger data.
In July 2004, J.P. Morgan Chase and Bank One merged — as part of a 225-year
journey — to form this exceptional company of ours: JPMorgan Chase. At its merger
in 2004, the combined bank was the fourth largest bank in the world by market
capitalization. But with patient groundwork over the years — fixing systems and
upgrading technology, managing the notable acquisitions of Bear Stearns and
Washington Mutual (WaMu) and continuing to reinvest, including in our talent —
we have made our company an endgame winner.
In earlier years, banks worried about their survival. While the past two decades have
brought some virtually unprecedented challenges, including the great financial crisis
and a pandemic followed by a global shutdown, they did not stop us from
accomplishing extraordinary things. Our bank has now emerged as the #1 bank by
market capitalization.
Each of our businesses is among the best in the world, with increased market share,
strong financial results and an unwavering focus on serving our clients, communities
and shareholders with distinction and dedication. The strengths that are embedded in
JPMorgan Chase — the knowledge and cohesiveness of our people, our long-standing
client relationships, our technology and product capabilities, our presence in more
than 100 countries and our unquestionable fortress balance sheet — would be hard to
replicate. Crucially, the strength of our company has allowed us to always be there for
clients, governments and communities — in good times and in bad times — and this
strength has enabled us to continually invest in building our businesses for the future.
You can see from the following charts what gains and improvements we have
achieved along the way.
8
24_JD_earnings_diluted_03
4/7/24r1 3:00pm
Earnings, Diluted Earnings per Share and Return on Tangible Common Equity
2005–2023
($ in billions, except per share and ratio data)
DRAFT 3.14.24–TYPESET; 4/4/24; v.24_JD_earnings_diluted_03
$48.3
$49.6
Net income
excluding reserve
release/build1
$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%
$16.23
(cid:30)
$37.7
(cid:30)
$12.09
21%
(cid:30)
18%
(cid:30)
24%
(cid:30)
22%
(cid:30)
(cid:30)
15%
$14.4
$15.4
(cid:30)
(cid:30)
$4.00
$4.33
$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
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(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 Effective January 1, 2020, the Firm adopted the Financial Instruments - Credit Losses accounting guidance. Firmwide results
excluding the net impact of reserve release/(build) of ($9.3) billion and $9.2 billion for the years ending
December 31, 2020 and 2021, respectively, 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.
GAAP = Generally accepted accounting principles
Adjusted
ROTCE2
was 13.6%
for 2017
ROTCE excluding
reserve release/build1
was 19.3% for 2020
and 18.5% for 2021
9
24_JD_TBVPS_03
Tangible Book Value1 and Average Stock Price per Share
2005–2023
4/7/24r1 3:00pm
DRAFT 3.14.24–TYPESET; 4/4/24; v.24_JD_TBVPS_03
$155.61
High: $170.69
Low: $123.11
$144.05
$113.80
$110.72
$106.52
$128.13
$92.01
4/7/24r1 3:00pm
$86.08
24_JD_Stock_Total_Return_03
$63.83 $65.62
$58.17
$51.88
$71.53 $73.12
$66.11
$60.98
$56.33
$47.75
$43.93
$36.07
$39.83
$35.49
$40.36 $39.36 $39.22
$38.68 $40.72
$51.44 $53.56
$48.13
$44.60
$16.45
$18.88
$21.96 $22.52
$30.12
$27.09
$33.62
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(cid:31)(cid:31) Tangible book value (cid:31)(cid:31) Average stock price
1 10% compound annual growth rate since 2005.
Stock total return analysis
Performance since becoming CEO of Bank One
(3/27/2000—12/31/2023)1
Compounded annual gain
Overall gain
Performance since the Bank One and JPMorgan Chase merger
(7/1/2004—12/31/2023)
Compounded annual gain
Overall gain
Performance for the period ended December 31, 2023
Compounded annual gain
One year
Five years
Ten years
DRAFT 3/13/24 — TYPESET; 4/4/24 v. 24_JD_Stock_Total_Return_03
Bank One
S&P 500 Index
S&P Financials Index
12.1%
1,400.7%
6.9%
389.7%
4.9%
209.7%
JPMorgan Chase
S&P 500 Index
S&P Financials Index
10.9%
647.3%
30.7%
15.2%
14.4%
9.8%
514.7%
26.3%
15.7%
12.0%
4.7%
146.7%
12.1%
12.0%
10.0%
This chart shows actual returns of the stock, with dividends reinvested, for heritage shareholders of Bank One and JPMorgan Chase vs. the Standard & Poor’s
500 Index (S&P 500 Index) and the Standard & Poor’s Financials Index (S&P Financials Index).
1 On March 27, 2000, Jamie Dimon was hired as CEO of Bank One.
10
24_JD_client franchises_08
Client Franchises Built Over the Long Term
4/8/24r1 1:00pm
DRAFT 03/29/24, TYPESET; 4/9/24r1 v. 24_JD_client franchises_08
Consumer &
Community
Banking
Corporate &
Investment
Bank
Average deposits ($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
Total Markets revenue13
Market share13
FICC13
Market share
Equities13
Market share
13
13
Global investment banking fees14
Market share14
Assets under custody (AUC) ($T)
Average client deposits ($B)15
Firmwide Payments revenue ($B)16
Firmwide Payments revenue rank
(share)17
Firmwide average daily security
purchases and sales ($T)
# of top 75 MSAs with dedicated teams23
# of bankers
New relationships (gross)24
Average loans ($B)
Average deposits ($B)
Gross investment banking revenue ($B)25
Multifamily lending26
Commercial
Banking
2005
2013
2022
2023
$187
4.5%
$453
7.5%
$1,163
10.9%
$1,127
11.3%
6 (12)
7 (22)
11 (25)
12 (26)
4.0%
NA
NA
~20%
$225
NA
NA
15%
$142
19%
NA
2,641
NM
2006
#8
6.3%
#7
7.0%
#8
5.0%
#2
8.7%
$10.7
$155
$4.9
NA
NA
36
1,208
NA
$48.1
$66.1
$0.6
#29
6.8%
$189
$1.4
45%
$419
$224
$664
21%
$128
17%
15.6
5,630
3,044
#1
9.0%
#1
9.6%
#3
7.9%
#1
8.7%
$20.5
$384
$7.8
9.3%
$647
$5.6
77%
$1,065
$491
$1,555
22%
$185
17%
49.7
4,787
5,029
#1
11.5%
#1
10.8%
#1
12.9%
#1
7.8%
$28.6
$687
$13.9
9.5%
$951
$5.9
79%
$1,164
$515
$1,679
23%
$211
17%
53.8
4,897
5,456
#1
11.4%
#1
11.0%
#2
12.3%
#1
8.8%
$32.4
$645
$18.2
NA
#1 (8.1%)
Co-#1 (9.0%)
NA
$3.1
$3.0
52
1,242
NA
$132.0
$198.4
$1.7
#1
69
2,360
2,277
$223.7
$294.2
$3.0
#1
72
2,888
4,940
$268.3
$267.8
$3.4
#1
Serve 82 million U.S. consumers and 6.4 million
small businesses
67 million active digital customers8, including
54 million active mobile customers9
Primary bank relationships for ~80% of
consumer checking accounts
#1 retail deposit share
#1 deposit market share position in 4 out of the
5 largest banking markets in the country (NY, LA,
Chicago, and San Francisco), 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
#1 owned mortgage servicer11
#1 bank auto lender12
>90% of Fortune 500 companies do business
with us
Presence in over 100 markets globally
#1 in global investment banking fees for the 15th
consecutive year14
Consistently ranked #1 in Markets revenue since
201113
J.P. Morgan Research ranked as the #1 Global
Research Firm, #2 Global Equity Research Team
and #1 Global Fixed Income Research Team18
#1 in USD payments volume19
27.1% USD SWIFT market share20
#1 in U.S. Merchant volume processing21
#3 Custodian globally by revenue22
151 locations across the U.S. and 39 international
locations, with 16 new cities added in 2023
$2.2B revenue from Middle Market expansion
markets, up 45% YoY
Credit, banking and treasury services to ~34K
Commercial & Industrial clients and ~36K real
estate owners and investors
18 specialized industry coverage teams
#1 overall Middle Market Bookrunner in the U.S.27
Approximately 28,000 incremental affordable
housing units financed in 202328
JPMAM LT funds AUM performed
above peer median (10Y)29
Client assets ($T)30
Traditional assets ($T)30,31
Alternatives assets ($B)30,32
Average deposits ($B)30
Average loans ($B)30
# of Global Private Bank client advisors30
Global Private Bank (Euromoney)33
NA
$1.1
$1.0
$74
$42
$27
1,484
#5
80%
$2.3
$1.9
$207
$135
$83
2,512
#3
90%
$4.0
$3.4
$372
$261
$216
3,137
#1
Asset & Wealth
Management
83%
$5.0
$4.4
$411
$216
$220
3,515
#1
166 funds with a 4/5 star rating34
Business with 59% of the world’s largest pension
funds, sovereign wealth funds and central banks
#2 in 5-year cumulative net client asset flows35
Positive client asset flows in 2023 across all
regions and channels, with strength in liquidity,
fixed income, equity, custody and brokerage
#2 in Active ETF AUM and flows
#1 in Institutional Money Market Funds AUM36
54% of Asset Management AUM managed by
female and/or diverse portfolio managers37
NA = Not available
NM = Not meaningful
AUM = Assets under management
EOP = End of period
FICC = Fixed income, currencies and commodities
JPMAM = J.P. Morgan Asset Management
MSA = Metropolitan statistical area
For footnoted information, refer to pages 60-61 in this Annual Report.
USD = U.S. dollar
YoY = Year-over-year
M = Millions
B = Billions
T = Trillions
K = Thousands
11
24_JD_new_renew_04
New and Renewed Credit and Capital for Our Clients
2005–2023
($ in billions)
4/7/24r1 3:00pm
DRAFT 3/4/24–TYPESET; 4/4/24 v. 24_JD_new_renew_04
~$1,900 estimated
$1,866
$1,820
$3,186
$288
$331
$2,496
$2,357
$265
$2,044
$233
$399
$2,307
$227
$2,263
$2,345
$244
$333
$641
$480
$262
$226
$258
$430
$2,102
$274
$2,144
$197
$326
$2,410
$216
$2,265
$250
$615
$205
$239
$590
$252
$222
$1,567
$1,494
$312
$167
$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
$463
$440
$1,926
$1,789
$1,693
$1,619
$1,294
$1,346
$1,329
$1,231
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(cid:31)(cid:31) Corporate clients (cid:31)(cid:31) Small Business, Middle Market and Commercial clients (cid:31)(cid:31) Consumers (cid:31)(cid:31) Government, government-related and nonprofits1
1 Government, government-related and nonprofits available starting in 2019; included in Corporate clients and Small Business, Middle Market and Commercial clients for prior years.
12
24_JD_assets entrusted_03.eps
Assets Entrusted to Us by Our Clients
2005–2023
Deposits and client assets1
($ in billions)
$2,681
$365
$573
$2,811
$372
$558
$2,254
$221
$2,424
$361
$520
$648
$1,935
$214
$425
$1,662
$191
$364
4/7/24r1 3:00pm
DRAFT 3/4/24 TYPESET; 4/4/24 v. 24_JD_assets entrusted_03
$7,693
$1,095
$6,950
$1,148
$6,580
$1,132
$1,306
$7,693
$1,209
$1,095
$5,292
$1,306
$6,580
$1,132
$4,240
$1,209
$1,314
$6,950
$1,148
$4,488
$1,314
$5,292
$4,488
$4,240
$5,926
$959
$4,820
$4,227
$4,211
$718
$1,186
$844
$5,926
$4,820
$3,258
$718
$844
$959
$3,781
$1,186
$3,781
$4,227
$2,783
$4,211
$2,740
$660
$679
$784
$792
2017
$2,783
2018
$3,258
2019
2020
2021
2022
2023
$2,740
$3,617 $3,740 $3,633
$503
$464
$558
$3,802
$618
$824
$861
$722
$757
$660
$679
$784
$792
$3,255
$439
$755
$3,011
$398
$730
$1,107
$1,296
$1,513
$1,415
$1,743
$2,254
$221
2007
$2,424
2008
$361
$2,681
$365
2009
$573
$1,935
2006
$214
2005
$1,662
$191
(cid:31)(cid:31) Client assets (cid:31)(cid:31) Wholesale deposits (cid:31)(cid:31) Consumer deposits
$648
2010
$558
$520
$730
2011
$1,881
$2,811
$372
$1,883
$3,011
$398
$425
$364
$1,107
$1,296
$1,513
$1,415
$1,743
$1,881
$1,883
$3,617 $3,740 $3,633
$2,329
$2,376
$2,353
$2,061
$503
$3,255
$464
$558
$3,802
$2,427
$618
$439
$755
2012
$824
$861
$722
$757
2013
2014
2015
2016
$2,329
$2,061
$2,376
$2,353
$2,427
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
(cid:31)(cid:31) Client assets (cid:31)(cid:31) Wholesale deposits (cid:31)(cid:31) Consumer deposits
Assets under custody2
($ in trillions)
$13.9
$10.7
$14.9
$13.2
$15.9
$16.1
$16.9
$18.8
$20.5
$20.5
$19.9
$20.5
$23.5
$23.2
$31.0
2020
$33.2
2021
$32.4
2023
2022
$28.6
2019
$26.8
2005
2006
2007
2008
2009
2010
2011
$15.9
$13.9
$14.9
$13.2
$16.1
$16.9
$10.7
2012
$18.8
2013
$20.5
2014
$20.5
2015
$19.9
2016
$20.5
$23.5
2017
$23.2
2018
$26.8
2019
$33.2
$31.0
$32.4
$28.6
2020
2021
2022
2023
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
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.
13
24_JD_daily payment_05.eps
4/7/24r1 3:00pm
DRAFT 4/5/24: TYPESET 4/6/24r2 v. 24_JD_daily payment_05
Daily Payment Volume1
(# in millions, average)
Daily Merchant Acquiring Transactions
(# in millions, average)
$9.7T1 average daily
value processed
56.6
56.6
52.6
52.6
49.2
49.2
45.7
45.7
39.3
39.3
37.4
37.4
34.6
34.6
32.7
32.7
124.8
124.8
113.4
113.4
102.4
102.4
More than
double 2010
90.1
90.1
82.4
82.4
72.1
72.1
62.3
62.3
55.0
55.0
4/8/24r1 1:00pm
24_JD_best-in-class_peers_07
2017
2017
2016
2016
2018
2018
2019
2019
2020
2020
2021
2021
2022
2022
2023
2023
2016
2016
2017
2017
2018
2018
2019
2019
2020
2020
2021
2021
2022
2022
2023
2023
1 Based on Firmwide data using regulatory reporting guidelines prescribed by the Federal Reserve for US Title 1 planning purposes; includes internal
settlements, global payments to and through third-party processors and banks, and other internal transfers.
T = Trillions
DRAFT 4/5/24 – TYPESET: 4/8/24r1 v. 24_JD_best-in-class_peers_07
JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared
with Large Peers and Best-in-Class Peers1
JPMorgan Chase
Consumer &
Community
Banking
Corporate &
Investment
Bank
Commercial
Banking
Asset & Wealth
Management
Efficiency
Overhead ratio2
JPM
WFC
BAC
C
GS
MS
54%
66%
67%
72%
75%
77%
Efficiency
JPM 2023
overhead ratio
Best-in-class peer
overhead ratio3
50%
59%
35%
64%
50%
COF-DC & CB
55%
BAC-GB & GM
39%
FITB
63%
NTRS-WM & ALLIANZ-AM
Returns
ROTCE
JPM
BAC
WFC
MS
GS
C
Returns
JPM 2023
ROTCE
38%
13%
20%
31%
GSIB = Global systemically important banks
ROTCE = Return on tangible common equity
For footnoted information, refer to page 61 in this Annual Report.
14
**FOOTNOTES –MOVED TO BACK PAGE
21%
13%
13%
13%
8%
5%
Best-in-class all
banks ROTCE4,6
Best-in-class
GSIB ROTCE5,6
28%
BAC–CB
28%
BAC–CB
16%
BAC-GB & GM
16%
BAC-GB & GM
19%
WFC–CB
19%
WFC–CB
58%
MS-WM & IM
58%
MS-WM & IM
Tangible Common Equity (Average) 1
Tangible Common Equity (Average) 1
($ in trillions)
($ in trillions)
24_JD_fortress balance_10
Our Fortress Balance Sheet
2005–2023
Tangible Common Equity (Average)1
($ in billions)
4/10/24r1 3:45pm
DRAFT 3/4/24 – TYPESET: 4/7/24r1 v. 24_JD_fortress balance_10
9.8%
10.1%
11.0% 10.7%
10.2%
8.8%
12.2% 12.1% 12.0% 12.4%
11.6%
13.1% 13.1% 13.2%
15.0%
$230
7.0%
7.3% 7.0% 7.0%
$111
$95
$80
$49
$56
$63
$149
$136
$124
$161 $170 $180 $185 $183 $187
$203
$204
$191
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(cid:31)(cid:31) Tangible common equity (average) ($B) (cid:31)(cid:31) CET1 (%) 2
9.0% CAGR
since 2005
Liquid Assets3
($ in billions)
387%
350%
311%
159%
192%
152%
136%
132%
90%
80%
106% 110% 118% 129% 115%
70% 63% 77%
86%
$1,652
$1,437
$1,430
$1,447
$450
$371
$366
$510
$547
$106
$146
$137
$921
$804
$745 $786 $768 $755
$860
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(cid:31)(cid:31) Cash, deposits with banks, and investment securities ($B)4
(cid:31)(cid:31) Average loans/Cash, deposits with banks, and investment securities (%)
(cid:31)(cid:31) Liquid assets ($B)
(cid:31)(cid:31) Average loans/Liquid assets (%)
Net income applicable to common
stockholders ($B)
Capital returned to common
stockholders ($B)5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
$8.5 $14.4 $14.9 $4.7 $8.8 $15.8 $17.6 $19.9 $16.6 $20.1 $22.4 $22.6 $22.6 $30.7 $34.6 $27.4 $46.5 $35.9 $47.8
$6.3 $5.0 $9.5 ($11.8) ($6.4) $1.1 $10.8 $4.5 $9.2 $9.6 $10.8 $14.4 $22.0 $27.9 $34.0 $16.3 $28.5 $13.2 $19.8
ROTCE (%)
15% 24% 22% 6% 10% 15% 15% 15% 11% 13% 13% 13% 12% 17% 19% 14% 23% 18% 21%
CAGR = Compound annual growth rate
CET1 = Common equity Tier 1
ROTCE = Return on tangible common equity
For footnoted information, refer to page 61 in this Annual Report.
**FOOTNOTES –MOVED TO BACK PAGE
15
Within this letter, I discuss the following:
INTRODUCTION
• Summary of our 2023 results and the principles that guide us
— Steadfast principles worth repeating (and one new one)
— Mapping our progress and milestones
• Celebrating the 20th anniversary of the Bank One/JPMorgan Chase merger
• Financial performance
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY
• The critical impact of artificial intelligence
• Our journey to the cloud
• Acquiring First Republic Bank and its customers
• Navigating in a complex and potentially dangerous world
• Our extensive community outreach efforts, including diversity, equity and inclusion
— What we learned: A five-point action plan to move forward on the climate challenge
— Powering economic growth in Florida
• Giving the bank regulatory and supervisory process a serious review
• Protecting the essential role of market making (trading)
STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS
• The pressure of quarterly earnings compounded by bad accounting and bad decisions
• The hijacking of annual shareholder meetings
• The undue influence of proxy advisors
• The benefits and risks of private credit
• A bank’s strength: Providing flexible capital
MANAGEMENT LESSONS:
THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART
• Benefiting from the OODA loop
• Decision making and acting (have a process)
• The secret sauce of leadership (have a heart)
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD:
STRATEGY AND POLICY MATTER
• Coalescing the Western world — A uniquely American task
• Strengthening our position with a comprehensive, global economic security strategy
• Providing strong leadership globally and effective policymaking domestically
— Manager’s Journal: “A Politician’s Dream Is a Businessman’s Nightmare”
• Out of the labyrinth, with focus and resolve
— We should have more faith in the amazing power of our freedoms
— How we can help lift up our low-income citizens and mend America’s torn social fabric
16
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Page 57
Update on Specific Issues Facing
Our Company
Each year, I try to update you on some of the most
important issues facing our company. First and
foremost may well be the impact of artificial intel-
ligence (AI).
While we do not know the full effect or the precise
rate at which AI will change our business — or how
it will affect society at large — we are completely
convinced the consequences will be extraordinary
and possibly as transformational as some of the
major technological inventions of the past several
hundred years: Think the printing press, the steam
engine, electricity, computing and the Internet,
among others.
THE CRITICAL IMPACT OF ARTIFICIAL
INTELLIGENCE
Since the firm first started using AI over a decade
ago, and its first mention in my 2017 letter to
shareholders, we have grown our AI organization
materially. It now includes more than 2,000 AI/
machine learning (ML) experts and data scientists.
We continue to attract some of the best and
brightest in this space and have an exceptional
firmwide AI/ML and Research department with
deep expertise.
We have been actively using predictive AI and ML
for years — and now have over 400 use cases in
production in areas such as marketing, fraud and
risk — and they are increasingly driving real busi-
ness value across our businesses and functions.
We’re also exploring the potential that generative
AI (GenAI) can unlock across a range of domains,
most notably in software engineering, customer
service and operations, as well as in general
employee productivity. In the future, we envision
GenAI helping us reimagine entire business work-
flows. We will continue to experiment with these
AI and ML capabilities and implement solutions in
a safe, responsible way.
While we are investing more money in our AI capa-
bilities, many of these projects pay for themselves.
Over time, we anticipate that our use of AI has the
potential to augment virtually every job, as well as
impact our workforce composition. It may reduce
certain job categories or roles, but it may create
others as well. As we have in the past, we will
aggressively retrain and redeploy our talent to
make sure we are taking care of our employees
if they are affected by this trend.
Finally, as a global leader across businesses and
regions, we have large amounts of extraordinarily
rich data that, together with AI, can fuel better
insights and help us improve how we manage risk
and serve our customers. In addition to making
sure our data is high quality and easily accessible,
we need to complete the migration of our analyti-
cal data estate to the public cloud. These new data
platforms offer high-performance compute power,
which will unlock our ability to use our data in
ways that are hard to contemplate today.
Recognizing the importance of AI to our
business, we created a new position called
Chief Data & Analytics Officer that sits on our
Operating Committee.
Elevating this new role to the Operating Committee
level — reporting directly to Daniel Pinto and me —
reflects how critical this function will be going for-
ward and how seriously we expect AI to influence
our business. This will embed data and analytics
into our decision making at every level of the com-
pany. The primary focus is not just on the technical
aspects of AI but also on how all management can
— and should — use it. Each of our lines of business
has corresponding data and analytics roles so we
can share best practices, develop reusable solutions
that solve multiple business problems, and continu-
ously learn and improve as the future of AI unfolds.
17
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Clearly, AI comes with many risks, which need
to be rigorously managed.
We have a robust, well-established risk and control
framework that helps us proactively stay in front
of AI-related risks, particularly as the regulatory
landscape evolves. And we will, of course, continue
to work hard with our regulators, clients and sub-
ject matter experts to make sure we maintain the
highest ethical standards and are transparent in
how AI helps us make decisions; e.g., to counter
bias among other things.
You may already be aware that there are bad
actors using AI to try to infiltrate companies’ sys-
tems to steal money and intellectual property or
simply to cause disruption and damage. For our
part, we incorporate AI into our toolset to counter
these threats and proactively detect and mitigate
their efforts.
We invested approximately $2 billion to build four
new, modern, private cloud-based, highly reliable
and efficient data centers in the United States (we
have 32 data centers globally). To date, about 50%
of our applications run a large part of their pro-
cessing in the public or private cloud. Approxi-
mately 70% of our data is now running in the pub-
lic or private cloud. By the end of 2024, we aim to
have 70% of applications and 75% of data moved
to the public or private cloud. The new data cen-
ters are around 30% more efficient than our exist-
ing legacy data centers. Going to the public cloud
can provide 30% additional efficiency if done cor-
rectly (efficiency improves when your data and
applications have been modified, or “refactored,”
to enable new cloud services). We have been con-
stantly updating most of our global data centers,
and by the end of this year, we can start closing
some that are larger, older and less efficient.
OUR JOURNEY TO THE CLOUD
Getting our technology to the cloud — whether the
public cloud or the private cloud — is essential to
fully maximize all of our capabilities, including the
power of our data. The cloud offers many benefits:
1) it accelerates the speed of delivery of new ser-
vices; 2) it simultaneously reduces the cost of com-
pute power and enables, when needed, an extraor-
dinary amount of compute capability — called
burst computing; 3) it provides that compute capa-
bility across all of our data; and 4) it allows us to
be able to constantly and quickly adopt new tech-
nologies because updated cloud services are con-
tinually being added — more so in the public cloud,
where we benefit from the innovation that all
cloud providers create, than in the private cloud,
where innovation is only our own.
Of course, we are learning a lot along the way.
For example, we know we should carefully pick
which applications and which data go to the public
cloud versus the private cloud because of the
expense, security and capabilities required. In
addition, it is critical that we eventually use multi-
ple clouds to avoid lock-in. And we intend to main-
tain our own expertise so that we’re never reliant
on the expertise of others even if that requires
additional money.
ACQUIRING FIRST REPUBLIC BANK AND
ITS CUSTOMERS
The purchase of First Republic Bank was not some-
thing that we would have done just for ourselves.
But the regulators relied on us to step forward (we
worked hand in hand with the Federal Reserve, the
Federal Deposit Insurance Corporation (FDIC) and
the U.S. Treasury), and the purchase of First
Republic helped stabilize and strengthen the U.S.
financial system in a time of crisis.
The acquisition of a major company entails a lot of
complexity. People tend to focus on the financial
and economic outcomes, which is a reasonable
thing to do. And in the case of First Republic,
the numbers look rather good. We recorded an
accounting gain of $3 billion on the purchase, and
we told the world we expected to add more than
$500 million to earnings annually, which we now
believe will be closer to $2 billion. However, these
results mask some of the true costs. First, approxi-
mately one-third of the incremental earning was
simply deploying excess capital and liquidity, which
doesn’t require purchasing a $300 billion bank —
we simply could have bought $300 billion of
assets. Second, as soon as the deal was
announced, approximately 7,600 of our employees
went from working on tasks that would benefit the
future of JPMorgan Chase to working on the
18
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY merger integration. Overall, the integration
involves effectively combining more than 165
systems (e.g., statement, deposit, accounting and
human resources) and consolidating policies, risk
reporting, and other various rules and procedures.
We hope to have most of the integration done by
the middle of 2024.
Fortunately, we were very familiar and comfort-
able with all of the assets we were acquiring from
First Republic. What we didn’t take on was First
Republic’s excessive interest rate exposure — one
of the reasons it failed — which we effectively
hedged within days of the acquisition.
Our people did a great job of respectfully manag-
ing this transition, knowing that circumstances
were particularly tough for our new colleagues,
whom we tried to welcome with open arms. We did
everything we could to redeploy individuals whose
jobs were lost because of the merger (we directly
hired over 5,000 people). Our approach has always
been to go into an acquisition knowing we can
learn things from other teams, and in this case,
we did: First Republic had done an outstanding job
serving high-net-worth clients and venture capital-
ists, and we are developing what is effectively a
new business for us following First Republic’s ser-
vicing model. We will serve these high-net-worth
clients through a single point of contact, supported
by a concierge service model, across our distribu-
tion channels — including more than 20 new
J.P. Morgan branded branches.
NAVIGATING IN A COMPLEX AND
POTENTIALLY DANGEROUS WORLD
In the policy section, we talk about how we may be
entering one of the most treacherous geopolitical
eras since World War II. And I have written in the
past about high levels of debt, fiscal stimulus,
ongoing deficit spending and the unknown effects
of quantitative tightening (which I am more wor-
ried about than most) so I won’t repeat those
views here. However, the impacts of these geopo-
litical and economic forces are large and some-
what unprecedented; they may not be fully under-
stood until they have completely played out over
multiple years. In any case, JPMorgan Chase must
be prepared for the various potential impacts and
outcomes on our company and our people.
We remain wary of economic prognosticating.
While all companies essentially budget on a base
case forecast, we are very careful not to run our
business that way. Instead, we look at a range of
potential outcomes for which we need to be pre-
pared. Geopolitical and economic forces have an
unpredictable timetable — they may unfold over
months, or years, and are nearly impossible to put
into a one-year forecast. They also have an unpre-
dictable interplay: For example, the geopolitical
situation may end up having virtually no effect on
the world’s economy or it could potentially be its
determinative factor.
We have ongoing concerns about persistent
inflationary pressures and consider a wide
range of outcomes to manage interest rate
exposure and other business risks.
Many key economic indicators today continue
to be good and possibly improving, including
inflation. But when looking ahead to tomorrow,
conditions that will affect the future should be
considered. For example, there seems to be a large
number of persistent inflationary pressures, which
may likely continue. All of the following factors
appear to be inflationary: ongoing fiscal spending,
remilitarization of the world, restructuring of
global trade, capital needs of the new green econ-
omy, and possibly higher energy costs in the future
(even though there currently is an oversupply of
gas and plentiful spare capacity in oil) due to a lack
of needed investment in the energy infrastructure.
In the past, fiscal deficits did not seem to be
closely related to inflation. In the 1970s and early
1980s, there was a general understanding that
inflation was driven by “guns and butter”; i.e.,
fiscal deficits and the increase to the money
supply, both partially driven by the Vietnam War,
led to increased inflation, which went over 10%.
The deficits today are even larger and occurring in
boom times — not as the result of a recession —
and they have been supported by quantitative
easing, which was never done before the great
financial crisis. Quantitative easing is a form of
increasing the money supply (though it has many
offsets). I remain more concerned about quantita-
tive easing than most, and its reversal, which has
never been done before at this scale.
19
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Equity values, by most measures, are at the high
end of the valuation range, and credit spreads are
extremely tight. These markets seem to be pricing
in at a 70% to 80% chance of a soft landing —
modest growth along with declining inflation and
interest rates. I believe the odds are a lot lower
than that. In the meantime, there seems to be an
enormous focus, too much so, on monthly inflation
data and modest changes to interest rates. But the
die may be cast — interest rates looking out a year
or two may be predetermined by all of the factors
I mentioned above. Small changes in interest rates
today may have less impact on inflation in the
future than many people believe.
Therefore, we are prepared for a very broad range
of interest rates, from 2% to 8% or even more,
with equally wide-ranging economic outcomes —
from strong economic growth with moderate infla-
tion (in this case, higher interest rates would result
from higher demand for capital) to a recession
with inflation; i.e., stagflation. Economically, the
worst-case scenario would be stagflation, which
would not only come with higher interest rates but
also with higher credit losses, lower business
volumes and more difficult markets. Under these
many different scenarios, our company would
continue to perform at least okay. Importantly,
being prepared means we can continue to help our
clients no matter what the future portends.
The mini banking crisis of 2023 is over, but
beware of higher rates and recession — not
just for banks but for the whole economy.
When we purchased First Republic in May 2023
following the failure of two other regional banks,
Silicon Valley Bank (SVB) and Signature Bank, we
thought that the current banking crisis was over.
Only these three banks were offsides in having
the toxic combination of extreme interest rate
exposure, large unrealized losses in the
held-to-maturity (HTM) portfolio and highly
concentrated deposits. Most of the other regional
banks did not have these problems. However, we
stipulated that the crisis was over provided that
interest rates didn’t go up dramatically and we
didn’t experience a serious recession. If long-end
rates go up over 6% and this increase is accompa-
nied by a recession, there will be plenty of stress —
not just in the banking system but with leveraged
companies and others. Remember, a simple 2
percentage point increase in rates essentially
reduced the value of most financial assets by 20%,
and certain real estate assets, specifically office
real estate, may be worth even less due to the
effects of recession and higher vacancies. Also
remember that credit spreads tend to widen,
sometimes dramatically, in a recession.
Finally, we should also consider that rates have
been extremely low for a long time — it’s hard to
know how many investors and companies are truly
prepared for a higher rate environment.
We seek to be engaged globally and carefully
manage complex countries and geopolitical
issues.
JPMorgan Chase does business in more than 100
countries, and we have people on the ground in
over 60 countries. In almost all those locations, we
do research on their economy, their markets and
their companies; we bank their government insti-
tutions and their companies; and we bank multina-
tional corporations, including the U.S. multina-
tional corporations within their borders. This is a
critical role — not only in helping those countries
grow and improve but also in expanding the global
economy.
Many of these countries are quite complex with dif-
ferent laws, customs and regulations. We are occa-
sionally asked why we bank certain companies and
even certain countries, particularly when countries
have some laws and customs that are counter to
many of the values held in the United States.
Here’s why:
• The U.S. government sets foreign policy. And
when it does, we salute. Wherever we do busi-
ness, we follow the law of the United States, as it
applies in that country (in addition to the laws of
the country itself), in all respects. Think of trade
rules, sanctions, anti-money laundering and the
Foreign Corrupt Practices Act, among others. By
and large, these things help improve those coun-
tries. In most cases, the U.S. government does
not want us to leave because it agrees, gener-
ally, that the engagement of American business
enhances our relationships with other countries
and helps those countries themselves.
20
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY • Engagement makes the world a better place.
We all should want the world to continue to
improve. Isolation and lack of engagement do
not accomplish that goal. While we believe that
it makes sense for the United States to push for
constant improvement around the world — from
advocating for human rights to fighting corrup-
tion — this is rarely accomplished through coer-
cion, and, in fact, is enhanced by engagement.
• We need to be prepared for emerging
challenges and position ourselves to under-
stand them. We created a new role — Head of
Asia Pacific Policy and Strategic Competitiveness
— to focus specifically on key policy issues
critical to the firm’s (and, in fact, the country’s)
competitiveness, such as trade restrictions,
supply chains and infrastructure. We also cre-
ated a new strategic security forum to focus on
emerging and evolving risks, including trade
wars, pandemics, cybersecurity and actual
wars, to name just a few.
OUR EXTENSIVE COMMUNITY
OUTREACH EFFORTS, INCLUDING
DIVERSITY, EQUITY AND INCLUSION
JPMorgan Chase makes an extraordinary effort as
part of our “normal” day-to-day outreach to
engage with individual clients, small and midsized
businesses, large and multinational firms, govern-
ment officials, regulators and the press in cities all
around the world. This dialogue is part of the nor-
mal course of business but it is also part of build-
ing trust and putting down roots in a community.
We believe that companies, and banks in particu-
lar, must earn the trust of the communities and
countries in which they operate. We believe — and
we are unashamed about this — that it is our obliga-
tion to help lift up the communities and countries in
which we do business. We believe that doing so
enhances business and the general economic
well-being of those communities and countries and
also enhances long-term shareholder value. JPMor-
gan Chase thrives when communities thrive.
This approach is integral to what we do, in great
scale, around the world — and it works. We are
quite clear that whether our efforts are inspired by
the goodness of our hearts (as philanthropy or
venture-type investing) or good business, we try
to measure the actual outcomes.
It’s also interesting to point out that many of our
efforts were spawned from our work around
Advancing Black Pathways, Military and Veterans
Affairs, and our work in Detroit. While we’ve
banked Detroit for more than 90 years, our $200
million investment in its economic recovery over
the last decade demonstrated that investing in
communities is a smart business strategy. We are
one of the largest banks in Detroit, from consumer
banking to investment banking, and it’s quite clear
that not only did our efforts help Detroit, but they
also helped us gain market share. The extent of
Detroit’s remarkable recovery was recently high-
lighted when Moody’s upgraded the city’s credit
rating to investment grade — an extraordinary
achievement just over 10 years after the city filed
the largest municipal bankruptcy in U.S. history.
For JPMorgan Chase, Detroit was an incubator for
developing models that help us hone how we
deploy our business resources, philanthropic capi-
tal, skilled volunteerism, and low-cost loans and
equity investments, as well as how we identify top
talent to drive successful business and societal
improvements. I hope that, as shareholders, you
are proud of our focus on promoting opportunity
for all, both within and outside our organization,
which includes economic opportunity. Some of our
initiatives are listed below.
• Business Resource Groups. To deepen our cul-
ture of inclusion in the workplace, we have 10
Business Resource Groups (BRG) across the com-
pany to connect more than 160,000 participat-
ing employees around common interests, as well
as to foster networking and camaraderie.
Groups welcome anyone — allies and those with
shared affinities alike. For example, some of our
largest BRGs are Access Ability (employees with
disabilities and caregivers), Adelante (Hispanic
and Latino employees), BOLD (Black employees),
NextGen (early career professionals), PRIDE
(LGBTQ+ employees) and Women on the Move.
21
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY across the United States and has hired over
900,000 veterans and military spouses. In 2023,
VJM announced the creation of its Advisory
Board, which is composed of 14 corporate lead-
ers, to provide strategic direction and oversight
of VJM as it continues to expand its commitment
to support economic opportunities for veterans
and military spouses, including its goal to hire 2
million veterans and 200,000 military spouses by
2030. JPMorgan Chase alone has hired in excess
of 18,000 veterans since 2011 and currently
employs more than 3,100 military spouses.
• Creating opportunity for people with disabili-
ties. The firm’s Office of Disability Inclusion
continues to lead strategy and initiatives aimed
at advancing economic opportunity for people
with disabilities. In 2023, we joined lawmakers
and business leaders in Washington, D.C., to
show support for passage of the Supplemental
Security Income (SSI) Savings Penalty
Elimination Act. Modernizing the SSI program,
by updating asset limits for the first time in
nearly 40 years, would allow millions of people
with disabilities who receive SSI benefits the
opportunity to build their savings without put-
ting their essential benefits at risk. We also
provided business coaching to more than 370
entrepreneurs with disabilities.
• Virtual call centers. When we sought to expand
our customer service specialists program across
the United States, we turned to Detroit, launch-
ing our first virtual call center in 2022. Invest-
ments in Detroit’s workforce development
infrastructure helped us hire 90 virtual cus-
tomer service specialists for a program that
has outperformed many of our traditional call
centers around the world. Following this suc-
cess, we expanded our hiring efforts and this
virtual program to Baltimore to create new jobs
that jump-start careers. And now we’re evaluat-
ing the possibility of expanding even further.
• Women on the Move. At JPMorgan Chase, they
sure are! Women represent 28% of our firm’s
senior leadership globally. In fact, our major
lines of business — CCB, AWM and CIB, which
would be among Fortune 1000 companies on
their own — are all run by women (one with a
co-head who is male). More than 10 years ago, a
handful of senior women at the company, on
their own, started this global, firmwide, inter-
nally focused organization called Women on the
Move. It was so successful that we expanded the
initiative beyond the company; it now empowers
clients and consumers, as well as women
employees and their allies, to build their
careers, grow their businesses and improve
their financial health. The Women on the Move
BRG has more than 70,000 employees globally.
• Advancing Black Pathways. This comprehensive
program, which just reached the five-year mark,
focuses on strengthening the economic founda-
tion of Black communities because we know that
opportunity is not always created equally. The
program does so by, among other accomplish-
ments, helping to diversify our talent pipeline,
providing opportunities for Black individuals to
enter the workforce and gain valuable experi-
ence, and investing in the financial success of
Black Americans through a focus on financial
health, homeownership and entrepreneurship.
An important part of the program’s work is
achieved through our investment in Historically
Black Colleges and Universities (HBCU). We now
partner with 18 schools across the United States
to boost recruitment connections, expand
career pathways for Black students and other
students, and support their long-term develop-
ment and financial health. As a measure of the
program’s success, in four years we have made
nearly 400 hires into summer and full-time
analyst and associate roles at the firm.
• Military and Veterans Affairs. This firmwide
effort sponsors recruitment, mentorship and
development programs to support the military
members and veterans working at JPMorgan
Chase. Back in 2011, we joined with 10 other com-
panies to launch the Veteran Jobs Mission (VJM),
whose membership has since grown to more than
300 companies representing various industries
22
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY • Entrepreneurs of Color Fund. A critical chal-
lenge we have seen in so many communities is
that traditional lending standards render too
many entrepreneurs — particularly entrepre-
neurs of color and those serving these commu-
nities — ineligible for credit. In response, we
helped launch the Entrepreneurs of Color Fund
(EOCF) in Detroit, a lending program designed to
help aspiring small business owners gain access
to critical resources needed for growth that are
often not equitably available — capital, technical
assistance and mentorship, among others.
These challenges aren’t unique to Detroit so we
worked with community development financial
institutions to replicate the EOCF program in
10 markets across the United States in 2023,
deploying more than 2,900 loans and $176
million in capital to underserved entrepreneurs
across the country.
• Senior business consultants. To help entrepre-
neurs and small businesses make the transition
from community lending to accessing capital
from traditional financial institutions, we created
a new job — senior business consultant — to
provide support. Senior business consultants in
branches that focus on underserved communi-
ties offer coaching and help business owners
with everything from navigating access to credit
to managing cash flow to generating effective
marketing. Since 2020, these consultants have
mentored more than 5,500 business owners,
helping them improve their operations, grow
revenue and network with others in the local
business community.
• AdvancingCities. The organizing principles that
define the business and community investments
we make and how we best achieve an overall
impact in local economies were heavily influ-
enced by our experience in Detroit. Seeing
Detroit’s comeback begin to take shape several
years ago, we created AdvancingCities to repli-
cate this model for large-scale investments to
other cities around the world. From San Fran-
cisco to Paris to Greater Washington, D.C., we’ve
applied what we learned in Detroit to communi-
ties where conditions are opportune for success
and require deeper investments — where com-
munity, civic and business leaders have come
together to solve problems and get results.
• JPMorgan Chase Service Corps. Ten years ago,
we launched the JPMorgan Chase Service Corps
to strengthen the capacity-building of nonprofit
partners. We brought employees from around
the world to Detroit to assist with its recovery —
from creating a scoring model for a nonprofit to
helping prioritize neighborhoods for develop-
ment funding to devising an implementation
plan for an integrated talent management
system. Since that time, the Service Corps has
expanded, with more than 1,500 JPMorgan
Chase employees contributing 100,000 hours
to support over 300 nonprofits globally.
• Community Centers/Branches and Community
Managers. A local bank branch, especially in a
low-income neighborhood, can be successful
only when it fits the community’s needs. That is
why over the last several years we have shifted
our approach to how we offer access to financial
health education, as well as low-cost products
and services to help build wealth. Since 2019,
we have opened 16 Community Center branches,
often in areas with larger Black, Hispanic or
Latino populations, and have plans to open
three more by the end of 2024. These branches
have more space to host grassroots community
events, small business mentoring sessions and
financial health seminars, which have been
well-attended — to date, over 400,000 people
have taken advantage of the financial education
seminars. In each of these Community Center
branches, we hired a Community Manager (who
acts as a local ambassador) to build relation-
ships with community leaders, nonprofits and
small businesses. The Community Manager
concept and practice have become so successful
that we have also placed these managers in
many of our traditional branches in underserved
communities. We now have 149 Community
Managers throughout our branch network.
• Work skills development. Detroit showed us
how talent in communities is often overlooked.
We saw this in the early days of our investment
when we visited our partners at Focus: HOPE, a
training program designed to help Detroiters
develop skills for high-demand jobs. Quickly, it
became clear that the training and education
system in Detroit was disconnected from
23
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY employers and their talent needs. By investing
in programs like Focus: HOPE, we have been
able to help bridge local skills gaps by training
people for in-demand jobs in communities like
Dallas, Miami and Washington, D.C. Between
2019 and 2023, we supported more than 2 mil-
lion people through our extensive learning and
career programming around the world.
• Increasing our rural investment. We are proud
to be the only bank with branches in all 48 con-
tiguous states, which include many rural com-
munities. Nearly 17 million consumers living in
rural areas hold over $100 billion in deposits
with us and $175 billion in loans. We are also a
leading wholesale lender in these communities,
helping to fuel local economies through relation-
ships with local companies, governments, hospi-
tals and universities. Since 2019, we have made
material progress in extending our footprint to
reach more rural Americans, including expand-
ing our branch network into 13 new states with
large rural populations. Now we are raising the
bar. With our new strategy, we have a goal to
have a branch available to serve 50% of a state’s
population within an acceptable driving dis-
tance, including in heavily rural states such as
Alabama and Iowa. This focus is part of our
recently announced plan to build an additional
500 branches and hire 3,500 employees over
the next three years. Through this expansion,
we will partner across lines of business and our
Corporate Responsibility organization to help
advance inclusive economic growth and bring
the full force of the firm to America’s heartland.
We’ve nearly completed our five-year, $30
billion Racial Equity Commitment — it will now
become a permanent part of our business.
What began in 2020 as a five-year, $30 billion
commitment is now transforming into a consistent
business practice for our lines of business in
support of Black, Hispanic, Latino and other
underserved communities. By the end of 2023,
we reported over $30 billion in progress toward
our original goal. However, our focus is not on
how much money is deployed — but on long-term
impact and outcomes. And going forward, these
programs will be embedded in our business-
as-usual operating system.
• Affordable rental housing. Through our
Affordable Housing Preservation program, we
approved program funding to date of approxi-
mately $21 billion in loans to incentivize the
preservation of over 190,000 affordable housing
rental units across the United States. Addition-
ally, we financed approximately $5 billion for the
construction and rehabilitation of affordable
rental housing.
• Homeownership. In 2023, we expanded our
$5,000 Chase Homebuyer Grant program to
include over 15,000 majority Black, Hispanic and
Latino communities — and in January 2024, we
increased our grant amount to $7,500 in select
markets. Since our grant program began in
2021, we have provided about 8,600 grants
totaling $43 million. We also have provided
home purchase and refinance loans in 2023
worth over $4.6 billion for more than 14,000
Black, Hispanic and Latino households across
the economic spectrum.
• Small business. The Business Card Special
Purpose Credit Program, launched in January
2023, has provided over 10,900 cards, totaling
over $43 million in available credit lines to
underserved entrepreneurs and communities
across the United States.
24
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY • Supplier diversity. In 2023, our firm spent
approximately $2.3 billion directly with diverse
suppliers — an increase of 10% over 2022. As a
part of our racial equity commitment, over $450
million was spent in 2023 with more than 190
Black-, Hispanic- and Latino-owned businesses.
• Minority depository institutions and commu-
nity development financial institutions. To
date, we have invested more than $110 million in
equity in diverse financial institutions and pro-
vided over $260 million in incremental financing
to community development financial institutions
to support communities that lack access to tradi-
tional financing. JPMorgan Chase also helped
these institutions build their capacity so they
can provide a greater number of critical services
like mortgages and small business loans.
We’re thoughtfully continuing our diversity,
equity and inclusion efforts.
Of course, JPMorgan Chase will conform as the
laws evolve. We will scour our programs, our words
and our actions to make sure they comply.
That said, we think all the efforts mentioned
above will remain largely unchanged. And, in fact,
around the world, cities and communities where
we do business applaud these efforts. We also
believe our initiatives make us a more inclusive
company and lead to more innovation, smarter
decisions and better financial results for us and
for the economy overall.
We are often asked in particular about “equity”
and what that word means. To us, it means equal
treatment, equal opportunity and equal access …
not equal outcomes. There is nothing wrong with
acknowledging and trying to bridge social and eco-
nomic gaps, whether they be around wealth or
health. We would like to provide a fair chance for
everyone to succeed — regardless of their back-
ground. And we want to make sure everyone who
works at our company feels welcome.
We want to articulate how we weigh in on
social issues and what it means for our
customers.
Before I comment about culture issues, I have a
confession to make: I am a full-throated, red-
blooded, patriotic, free-enterprise (properly regu-
lated, of course) and free-market capitalist. Our
company is frequently asked to take a position on
an issue, rule or legislation that might be consid-
ered “cultural.” When that happens, we take a
deep breath and study the matter. Many of the
laws in question have many specific requirements,
some of which you would agree with but not oth-
ers. But we are being asked to support the entire
law. In cases like these, we simply make our own
statement that reflects our educated view and val-
ues; however, we do not give our voice to others.
We believe in the values of democracy, including
freedom of speech and expression, and are
staunchly against discrimination and hate. We
have not turned away — and will not turn away —
customers because of their political or religious
affiliations nor would we tell customers how they
should spend their money.
Our commitment to these ideals is also reflected in
our employees. The talent at our firm is a vibrant
mix of cultures, beliefs and backgrounds. We are,
of course, fully committed to freedom of speech.
There are things that you can say that would be
permitted under freedom of speech but would not
be allowed under our Code of Conduct. For exam-
ple, we do not allow intimidation, threats or highly
prejudicial behavior or speech. Our Code of Con-
duct clearly stipulates that certain statements and
behavior, while allowed under freedom of speech,
can lead to disciplinary action at our company —
from being reprimanded to being fired.
25
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY WHAT WE LEARNED: A FIVE-POINT ACTION PLAN TO MOVE FORWARD
ON THE CLIMATE CHALLENGE
In May 2023, we gathered with knowledgeable and influential
• Public/private partnerships in scaling bankable projects.
people from the energy industry writ large to the government
Scaling investments needs to happen both for commercially
and financial services arena in Scottsdale, Arizona, for an
proven technologies (e.g., wind and solar) and for emerging
action forum. The goal was to explore various aspects of the
technologies (e.g., green hydrogen, sustainable aviation fuel
climate challenge and try to devise effective solutions that
and carbon capture). Developing “bankable” clean energy
could help lead to meaningful progress. The climate challenge
projects will require the application of smart financial tools,
is immense and complex. Addressing it requires more than
as well as further policy support. It will take public/private
making simplistic statements and rules; rather, energy
partnerships and innovation to create catalytic forms of
systems and global supply chains need to be transformed
capital that can step into these gaps, absorb first-mover
across virtually all industries. And there is also a deep need
risks and provide the necessary funding. The cost of capital
for new research and development. Energy systems and
is too high for some companies — and public funds ought
supply chains provide the foundation of the global economy
to be deployed in a smart way that effectively attracts
and must be treated with care.
private capital.
At the same time, the opportunity here is immense. The
• Public education and engagement. Without question, clients
investment required to meet climate goals — estimated at over
told us that public commitment to and investment in energy-
$5 trillion annually — could generate economywide growth and
related infrastructure is one of the most important parts of
opportunity at a scale the world has not seen since the
combating the climate crisis and running their businesses.
Industrial Revolution.
The task for industry, policymakers and finance is to help
formulate solutions that support the transition to a low-carbon
economy, balancing affordable, reliable access to energy with
generating economic growth.
Supporting the buildout of energy-related infrastructure with
speed and scale is critical. Public acceptance of building and
advancing the infrastructure needed to meet climate goals is
at the heart of progress. While the energy transition is poised
to deliver benefits to communities across the world, securing
acceptance and support to build clean energy infrastructure
To find a way forward, we sought input from diverse
at scale is challenging. Access to job-creating renewable
stakeholders in pursuit of a North Star. In Scottsdale and in
energy projects can help rural communities thrive by
discussions with clients across industries about what’s needed
advancing local economies. Ensuring public support and
to achieve a low-carbon economy, these five action steps and
social license to operate requires better engagement
reforms were top of mind:
• Supportive government policy and leadership to advance
strategies, including widespread stakeholder education about
the benefits of these technologies for local communities.
the transition. Policy that promotes favorable economic
• Communication about concrete successes. Across
conditions to make the transition viable is a critical first step
industries, market participants need to do a better job of
for clients. This includes government leadership via
celebrating and championing concrete successes and
mandates, incentives or subsidies to support jobs and
tangible milestones. This includes highlighting success
investment in the transition; actions on permitting and
stories around emerging technologies and the complex
interconnection reform; and regulatory clarity and
nature of the carbon transition. Stakeholders also should
certainty, especially around long-term investments. As one
better convey the benefits of clean energy — across all
vital example, current grid infrastructure is insufficient to
technologies — to help combat misinformation and foster a
accommodate the growth in renewables.
more informed dialogue.
26
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY • Work skills training. Businesses depend on healthy, thriving
We are engaged but recognize our role: three more
communities so the carbon transition needs to work for
important points.
everyone. This includes helping to ensure that workers are
trained in the skills for the future, such as through improved
engineering schools and job training programs. Work across
the entire supply chain is essential to moving at pace. As one
example, the U.S. Bureau of Labor Statistics estimates we will
need more than 70,000 additional electricians per year
through 2031; it is currently unclear how the market will
meet that demand. If the deployment of heat pumps and
electric vehicle chargers accelerates, demand for electricians
will be even higher. A concerted focus to train electricians
can help the United States meet some of its climate goals
while providing well-paying jobs that do not require a four-
year college degree. Also, broadly speaking, businesses are
in a better position to make investments with confidence
when labor requirements across the value chain — from
First, everyone should understand that conquering the climate
problem needs proper government action, particularly around
taxes, permitting, grids, infrastructure building and proper
coordination of policies — we are not there yet. Second, there is
no known technology that can fill the gap between our
“aspirations” and the current trajectory of the world. We hope
and believe that this will be found (for example, through carbon
capture, improved batteries, hydrogen or other measures). This
new technology will also require proper government research
and development funding, as the effort cannot be accomplished
by private enterprise alone. And third, we are going to use the
word “commitment” much more reservedly in the future,
clearly differentiating between aspirations we are actively
striving toward and binding commitments.
design and manufacturing to installation — are satisfied.
For JPMorgan Chase to play the right role in tackling the
We recently reconsidered certain memberships.
climate challenge, we have organized a special group around
the green economy and related infrastructure investment.
JPMorgan Chase recently exited Climate Action 100+ and the
This group will coordinate and inform our work across all
Equator Principles. “Why?” we are asked. While we don’t
established industry groups (from auto to real estate, energy,
necessarily disagree with some of the principles many
agriculture and others) and includes hundreds of employees
organizations have, we make our own business decisions. We
devoted to these efforts.
think we have some of the best-in-class environmental, social
and risk standards because we have invested in our own
in-house experts and matured our own risk management
processes over the years. As a result, we are going to go our
own way and make our own independent decisions, gathering
the best learnings of experts in the field, and, of course, we
will follow all legal requirements.
27
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY POWERING ECONOMIC GROWTH IN FLORIDA
From Tallahassee to Miami and from Tampa to Palm Bay,
JPMorgan Chase has been committed to Florida for more than
Our support to government, higher education, healthcare
and nonprofit organizations:
130 years and has enjoyed being the bank for all communities.
• We serve over 150 government, higher education, healthcare
Each year, we contribute billions of dollars to the economy, hire
and nonprofit clients throughout the state, and over the last
and train local residents, help to revitalize neighborhoods and
five years, we have provided more than $20.2 billion in credit
remove barriers to opportunity for Floridians across the state.
and capital to them.
Our partnerships with businesses, nonprofits, government
entities and community organizations have enabled us to drive
sustainable impact and help them achieve their goals. We
couldn’t be more proud to help make opportunity happen
in Florida.
This year, we forged a relationship with Inter Miami CF, one of
the most recognizable sports teams in the world. Through this
partnership and the newly named Chase Stadium, we’re
continuing to contribute to South Florida and its local
communities. In Tampa, home to nearly 6,000 of our
employees, we’re triggering an additional $210 million in
economic activity and creating over 660 local construction jobs
through the renovation of our Highland Oaks campus and
downtown Tampa office. We’re proud that one-third of all
Floridians do business with us through deposits, credit cards or
a mortgage. Through each of our investments across the state,
• Our clients range from the city of Jacksonville to the Orlando
Utilities Commission, the University of South Florida, Broward
Health and the District School Board of Pasco County — a
decades-long client.
• We are the lead treasury bank for the Wounded Warrior
Project, one of the largest veteran service organizations in
the United States. Headquartered in Jacksonville, the
organization caters to wounded veterans and service
members who served in the military on or after 9/11.
Our support to investment and middle-market banking
clients:
• Over the last five years, we have provided in excess of $318
billion in credit and capital to local clients, such as utility,
technology and tourism companies.
we’re ensuring that residents have the resources and tools they
• We have more than 12,500 large and midsized clients across
need to thrive.
the state.
Our support to local financial firms:
• Over the last five years, we have provided more than $24
billion in credit and capital for financial institutions, such as
local banks, insurance companies, asset managers and
securities firms.
• We bank over 50 of Florida’s regional, midsized and
community banks, helping them play an essential role
in maintaining the state’s economy and serve local
communities.
28
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Our support to small business:
Our business and community investments:
• At the end of 2023, balances for loans extended to Florida’s
• Over the last five years, we have committed nearly $65
small businesses totaled more than $1.2 billion — funds being
million in philanthropic support, including:
used to help those businesses scale and grow, contribute to
the economy and create local jobs.
• Across the state, we have over 654,000 small business
customers.
• In 2023, our bankers and senior business consultants spent
more than 375,000 hours advising and supporting Florida
business owners.
— $3 million to The Miami Foundation’s Resilient 305:
Building Prosperity Collaborative to increase access to
quality jobs and develop small businesses through training,
investments and capacity-building.
— $1.6 million to the Community Justice Project, which
empowers community-based legal advocates to help delay
displacement and improve conditions for housing stability
for renters across nine Florida counties.
Our support to consumer banking needs:
• In 2022, we committed $10 million over five years to Tech
• We operate 1,445 ATMs and 410 branches across the state.
Equity Miami to advance equal access to tech skills, careers
• In 2023, we supported more than 6.1 million customers with
and education, including:
mortgages, auto loans and savings, checking and credit card
— A $1 million investment to Florida Memorial University,
accounts, giving JPMorgan Chase one of the largest
consumer banking market shares in the state.
South Florida’s only HBCU, to help traditionally
underresourced students pursue a career in technology.
• We managed more than $70 billion in investment and annuity
Our support as a local employer:
assets for local clients.
• We employ more than 14,000 residents throughout the state,
including nearly 1,900 veterans and over 660 people with a
criminal background who deserve a second chance.
• In Florida, the average salary of our employees is more than
$87,000 (plus a starting comprehensive annual benefits
package worth nearly $17,600) compared with the statewide
per capita income of nearly $40,300.
29
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY GIVING THE BANK REGULATORY AND
SUPERVISORY PROCESS A SERIOUS
REVIEW
The Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank) was finished 14 years
ago, and we believe it accomplished a lot of good
things. But it’s been quite a while since then, and
we’re still debating some very basic issues. It’s
time to take a serious, hard, honest look at what
has been done and what can be improved.
It’s good to remember that the United States has
the best financial system in the world, with diversi-
fied, deep and experienced institutions, from
banks, pension plans, hedge funds and private
equity to individual investors. It has healthy public
and private markets, transparency, rule of law and
deep research. The best banking system in the
world is a critical part of this, and, integrated with
the overall financial system, is foundational to the
proper allocation of capital, innovation and the
fueling of America’s growth engine.
This is not about JPMorgan Chase — we believe we
can manage through whatever is thrown our way.
This is about the impact on all parts of the system
— from smaller banks to larger regional banks that
may not have the resources to handle all of these
regulatory requirements. It’s also about the effect
on the financial markets and the economy from the
rapidly growing shadow banking system, as well as
the ultimate impact on the customers, clients and
communities we serve. This is about what’s right
for the system.
The banking and financial system is
innovative, dynamic and constantly changing.
The banking system is not static: There are startup
banks, mergers, successful upstarts and fintech
banks, and even Apple, which effectively acts as a
bank — it holds money, moves money, lends money
and so on. Nonbanks are competing with tradi-
tional banks, and, in general, this dynamism and
churn are good for innovation and invention — with
success and failure simply part of the robust pro-
cess. Innovation runs across payments systems,
budgeting, digital access, product extensions, risk
and fraud prevention, and other services. Different
institutions play different roles, and, importantly,
30
small banks and big banks serve completely differ-
ent strategic functions. Large banks bank multina-
tional corporations around the world, make
healthy markets, and wield technology and a prod-
uct set that are the best in the world. A small bank
simply cannot bank these same multinational gov-
ernments and safely move the amount of money
and securities that large banks do. Regional and
community banks have exceptional local knowl-
edge and presence and are critical in serving
thousands of towns and certain geographies.
It is also important to recognize that the banking
system as we know it is shrinking relative to pri-
vate markets and fintech, which are growing and
becoming increasingly competitive. And remember
that many of these new players do not have the
same transparency or need to abide by the exten-
sive rules and regulations as traditional banks,
even if they offer similar products — this often
gives them significant advantage.
To deal with this fluid environment, banks of all
sizes develop their own strategies, whether to
specialize, expand geographically or embark on
mergers and acquisitions. There are certain banking
services where economies of scale are a competitive
advantage, but not all banks need to become bigger
to gain this benefit (there are many highly success-
ful banks that are smaller). What is clear is that
banks should be allowed to pursue their individual
strategies, including mergers and acquisitions, as
they see fit. Overall, this process should be allowed
to happen — it’s part of the natural and healthy
course of capitalism — and it can be done without
harming the American taxpayer or economy.
While we all want a strong banking and financial
system, we should step back and assess how all the
regulatory steps we have taken measure up against
the goals we all share. Since Dodd-Frank was signed
into law in 2010, thousands of rules and reporting
requirements written by 10+ different regulatory
bodies in the United States alone have been added.
And it would probably be an understatement to say
that some are duplicative, inconsistent, procyclical,
contradictory, extremely costly, and unnecessarily
painful for both banks and regulators. Many of the
rules have unintended consequences that are not
desirable and have negative impacts, such as
increasing the cost of credit for consumers (hurting
lower-income Americans the most).
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY The whole process, including the Basel III
endgame, could be much more productive,
streamlined, economical, efficient and safe.
Both regulators and banks should want the same
thing — a healthy banking system, serving its cli-
ents and striving for continuous improvement.
We all should also want the enormous benefits that
would come from good collaboration between reg-
ulators and bank management teams and boards.
Over time, these relationships have deteriorated,
and, again, are increasingly less constructive.
There is little real collaboration between practi-
tioners — the banks — and regulators, who gener-
ally have not been practitioners in business. While
we acknowledge the dedication of regulators who
work with banks on a daily basis, management
teams across the industry are putting in
a disproportionate amount of time addressing
requests for extra details, documentation and
processes that extend far beyond the actual rules
— and distract both regulators and management
from more critical work. We should be more
focused on the truly important risks for the safety
of the system. And unfortunately, without collabo-
ration and sufficient analysis, it is hard to be confi-
dent that regulation will accomplish desired out-
comes without undesirable consequences. Instead
of constantly improving the system, we may be
making it worse. A few additional points:
• The Basel III endgame disadvantages
American banks. The Basel III endgame has
been 10 years in the making, and it still has not
been completed. In my view, many of the rules
are flawed and poorly calibrated. If the Basel III
endgame were implemented in its current form,
it would hamper American banks: As proposed,
it would increase our firm’s required capital by
25%, making our requirement 30% higher than
it would be under the equivalent European
Union proposal. That means for every loan and
asset financed in the United States by a major
American bank, that bank would have to hold
30% more capital than any international com-
petitor. The proposed regulations would also
damage market making (see the following sec-
tion). There are many other flaws but suffice it to
say that much of the work being done today to
analyze the effects should have been done
before the proposed rulemaking.
One of the single most important lessons from
the great financial crisis is that there is
enormous value to having a bank that is
well-managed and has diverse revenue sources.
Yet regulation since then both punishes
consolidation and diversification — and punishes
performance — through many features of the
GSIB surcharge.
• Built over many years, the framework is now
full of duplication. The following is only a par-
tial list: American gold-plating and conceptual
inconsistencies among Comprehensive Capital
Analysis and Review (CCAR), recovery and reso-
lution plans, liquidity requirements, global sys-
temically important bank (GSIB) requirements,
and safety and soundness principles. The many
overlapping rules contribute to the bureaucracy
that generates an extraordinary amount of
make-work (an 80,000-page CCAR and shock-
ingly another, coincidentally, 80,000-page
recovery and resolution plan).
• The new rules do virtually nothing to fix what
caused the failure of SVB and First Republic.
For example, they don’t improve certain liquidity
requirements, limit HTM accounting or reduce
allowable interest rate exposure.
• The current regulatory approach to liquidity
might simply run counter to the stated intent.
Regulations should recognize the value and
importance of lending and borrowing against
good collateral and using central bank
resources, such as the discount window.
Adhering to current liquidity requirements per-
manently ties up good liquidity in a way that
makes the system more fragile and more risky.
• It is not clear what the full intent of the Basel
III endgame was — it will have unintended con-
sequences. Without real analysis of expected
outcomes, additional regulation will likely
reduce the number of banks offering certain
services and increase costs for all market partic-
ipants and activity, including loans, market
making and hedging (by farmers, airlines and
countries, among others). And new rules might
even increase consolidation as companies race
to achieve economies of scale in certain prod-
ucts and services.
31
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Unfortunately, some recent regulations are ending
up in court. You can imagine that no one wants to
sue their regulators. Banks would not sue if they did
not think they were right — or if they thought they
had any other recourse — which they effectively do
not. This is definitely not what anyone should want.
A more constructive relationship with regulators
would reduce confusion and uncertainty and would
lead to better outcomes for banks, their sharehold-
ers, and their clients, customers and communities.
Collaboration between banks and regulators
could improve the use of resources and create
better outcomes.
True collaboration could dramatically improve the
banking system. For example:
• Redirect enormous resources from things that
don’t matter to things that do. As mentioned, it
takes 80,000 pages to describe a CCAR test and
80,000 pages to detail recovery and resolution.
The talent and resources at the banks and
regulators could be better used elsewhere.
Such overload is distracting and takes your eye
off the ball on real, emerging risks, including
China, trade, payment systems and cybersecu-
rity, among others.
• Reduce bureaucratic processes that provoke a
tendency to herd mentality. For example, CCAR
is just a point-in-time stress test, and it can lull
you into a false sense of security — for refer-
ence, we do more than 100 stress tests each
week. On interest rate exposure, focusing on
the documentation of details may stop you from
thinking about big interest rate exposure.
Sometimes analyzing “what ifs” and fat tail risks
is better than excessive and rigid models and
documentations.
• Examine risks outside the regulatory system
that are rarely analyzed and largely unad-
dressed. These risks include data and privacy,
as well as consumer banking and payment sys-
tems, which are growing fast in the unregulated
market. In addition, there are potential risks
from private credit markets (which I talk about
later in the next section).
• Let’s imagine what’s possible with real collabo-
ration. Working together, we can improve how
the FDIC manages failing institutions, how to limit
32
contagion and restore confidence to depositors,
how liquidity requirements can create more flexi-
ble funding for banks under stress, how the bank-
ing and Federal Reserve’s payment system can
become more interoperable, how clearinghouse
risk can be reduced, how stress tests can protect
the system from a wider variety of outcomes,
how costs and therefore consumer costs can be
reduced (not increased), how anti-money laun-
dering requirements can be simplified and
improved at the same time, and how financial
products can be brought to the unbanked.
We can fix the housing and mortgage markets.
For example, mortgage regulations around orig-
ination, servicing and securitization could be
simplified, without increasing risk, in a way that
would reduce the average mortgage by 70 or 80
basis points. The Urban Institute estimates that
a reduction like this would increase mortgage
originations by 1 million per year and help
lower-income households, in particular, buy
their first home, thereby starting them on the
best way to build household net worth.
There are many more things that can be improved
— and we really should start working on them.
We need a detailed review and probably a
complete revamp.
I know this might be wishful thinking, but now
would be a good time to step back and have a thor-
ough and candid review of the thousands of new
rules passed since Dodd-Frank. After this review, we
should ask what is it that we really want: Do we
want to try to eliminate the possibility of bank runs?
Do we want to change and create liquidity rules that
would essentially back most uninsured deposits? Do
we want the mortgage business and leveraged lend-
ing business to be inside or outside the banking sys-
tem? Do we want products that are inside and out-
side the banking system to be regulated the same
way? Do we want to reasonably give smaller banks a
leg up in purchasing a failing bank? And while Dodd-
Frank did some good things, shouldn’t we take a
look at the huge overlapping jurisdictions of various
regulators? This overlap creates difficulties, not only
for banks, but for the regulators, too. Any and all of
this is achievable, and, I believe, could be accom-
plished with simpler rules and guidelines and with-
out stifling our critical banking system.
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY PROTECTING THE ESSENTIAL ROLE OF
MARKET MAKING (TRADING)
Before we discuss market making and financial
markets, readers should understand that market
making occurs in almost all businesses. There are
healthy markets in farm animals, foreign prod-
ucts, commodities, energy, logistics, healthcare
and so on. Healthy markets increase customer
choice and reduce cost. They almost always
involve holding inventory and taking some risk,
which is simply a part of the process. America’s
financial markets are the biggest in the world —
U.S. public debt and equity markets total $137
trillion, constituting the biggest “market” in the
world, and are larger than America’s gross
domestic product (GDP) of $27 trillion.
Market participants are not “Wall Street.” They are
large and small, mainly sophisticated, global inves-
tors (pension plans, mutual funds, governments
and individuals) representing retirees, veterans,
individuals, unions, federal workers and others.
They all benefit from our efficient, low-cost and
transparent markets.
Some regulators seem to think that market making
is a speculative, hedge fund-like activity — and this
thinking is what might be leading them to con-
stantly increase capital requirements. The pro-
posed capital rules could fundamentally alter
market-making activities that are critical to a
thriving economy, particularly in difficult markets
when market making is even more important.
The new rules would raise capital requirements
by 50% for major banks — which could undermine
market stability, make banking services costlier
and less accessible, and push even more activity
to a less regulated banking system.
Our financial system and markets are the best
in the world and benefit ALL participants;
exceptionally good market making in the
secondary market makes our primary markets
the best in the world.
We should recognize that the United States has the
biggest, deepest and most liquid capital markets in
the world. For these markets to function, it is
critical for transparency and liquidity to be in the
secondary market. Market making provides this,
promoting the flow of capital to real economy
investments and supporting all sectors of the
economy, including companies, state and local
governments, universities, hospitals, pension plans
and overall job creation. Without market making in
the secondary market, it would be extremely diffi-
cult for companies to raise capital through the
primary market — equity and debt offerings —
which have totaled approximately $3.6 trillion on
average over the past few years. The incredible
strength of these markets enables companies of
all sizes to grow and expand especially during times
of volatility and stress. It also enables consumers to
access cheaper credit and governments (local, state
and federal) to reduce their borrowing costs.
It takes enormous resources to properly
support the Markets business.
JPMorgan Chase spends $700 million per year in
extensive research coverage of nearly 5,200
companies across 83 countries. This massive effort
continuously educates investors and decision
makers around the world and often leads to
improved governance and management. It also
critically complements the firm’s market-making
activities and further promotes transparency,
enabling investors to make thoughtful choices
around investing in capital markets.
I would also like our shareholders to know that
our market making is backed by approximately
$7 billion in support expenses, including over
$2 billion in technology spend alone each year.
This investment allows us to maintain global
trading systems and constantly improve upon risk
management and efficiency.
JPMorgan Chase deploys approximately $70 billion
in capital to maintain our Markets franchise. This
capital supports $500 billion in securities inven-
tory (largely hedged) — and this inventory allows
us to buy and sell $2 trillion (notional) in securities
daily for our clients.
Market making entails risk but is not
particularly speculative.
The main objective of market makers is to continu-
ously quote prices and diligently manage an inven-
tory to transact at those prices, which includes
assuming certain risks to support heavy volumes
and orderly trading. Market makers have a moral
obligation to try to make markets in good times
33
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY third, in the worst quarter ever in the markets fol-
lowing the 2008 failure of Lehman Brothers, we lost
$1.7 billion, but we made $5.6 billion in Markets rev-
enue for the full year. The firm as a whole did not
lose money in any quarter that year. In 2009, there
was a complete recovery in Markets, and we made
$22 billion in Markets revenue.
You can see that our actual performance under
extreme stress isn’t even close to the hypothetical
losses of the stress test.
Another major fallacy is that derivatives are
objects of financial destruction. In reality, deriva-
tives are an essential part of managing financial
risk and are used by investors, corporations, farm-
ers, businesses, countries, governments and oth-
ers to manage their risks. And more than 85% of
derivatives are fairly basic forms of foreign
exchange or interest rate swaps.
One last fallacy is that the repo markets are all
about speculation. While it’s true that repo is used
by certain investors to leverage up their positions,
about 75% of repo is essential to normal money
market functioning, i.e., is done by broker-dealers
financing their actual inventory positions, money
market funds investing their cash backed by highly
rated collateral and clients hedging their positions.
Market makers add confidence, liquidity and
transparency to U.S. capital markets — market
making helps stabilize markets and can reduce
volatility.
In addition, more liquidity, not less liquidity, will be
needed to maintain market stability. Large banks
keep an inventory of securities they can deploy in
times of stress to help soothe markets; however,
with the implementation of new regulations, banks
now hold 70% as much inventory in securities as
they did before the 2008 financial crisis, while the
total size of the market has almost tripled. Higher
capital requirements will accelerate this trend
even further, impacting banks’ ability to deliver
support to clients and markets in times when it is
needed the most.
and in bad. Part of our brand promise is to stand
ready as the willing buyer and seller. In this, we
have never failed. In addition, in most cases
regarding government debt, where we serve as a
government securities dealer, we are legally obli-
gated to make markets. This constant visibility into
prices provided by market makers fosters investor
confidence, keeps fees low and promotes economic
growth by attracting more investors.
Many large market participants — for example,
hedge funds and high-frequency traders, among
others — have no obligation to make markets. In
fact, many of these market participants often “step
out” of the markets and dramatically reduce liquid-
ity specifically when market conditions are difficult.
Market making is not particularly speculative since
market makers generally hedge their positions, as
you will see from some real life examples of the
economics and risks. We earn revenue of approxi-
mately $100 million on a typical day. In the aver-
age year, the total is nearly $30 billion. On our
$2 trillion in notional daily trading, this amounts to
only one hundredth of a cent charged to the inves-
tor for these services — an extraordinarily low cost
compared with any other market in the world.
Now let’s take a look at the actual risk and results
versus the hypothetical risk and results. The hypo-
thetical global market shock of the CCAR stress
test has us losing $18 billion in a single day and
never recovering any of it. Let’s compare that to
actual losses under real, actual market stress.
Now consider these historical data points: First,
over the last 10 years, the firm’s market-making
business has never had a quarterly loss and has
lost money on only 30 trading days. These loss days
represent only 1% of total trading days, and the
average loss on those days was $90 million. Second,
when markets completely collapsed during the
COVID-19 pandemic (from March 2 through March
31, 2020, the stock market fell 16%, and bond
spreads gapped out dramatically), J.P. Morgan’s
market-making activities made money every day
prior to the Federal Reserve’s major interventions,
which stabilized the markets. During that entire
month, we lost money on only two days but made
$2.5 billion in Markets revenue for the month. And
34
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Washington’s Basel III endgame proposal
damages market making, hurts Americans
and drives activity to less transparent, less
regulated markets.
If this proposal is enacted as drafted:
• Everyday consumer goods could be impacted.
Households contending with inflation could also
feel the effects of higher capital requirements
on market-making activities when they shop.
From beverage companies that need to manage
aluminum costs to farms that need to protect
against environmental risks, if the cost of hedg-
ing those risks increases, it could be reflected in
what consumers pay for everything from a can
of soda to meat products.
• Mortgages and small business loans will be
more expensive. Consumers seeking a mort-
gage — including first-time homebuyers and his-
torically underserved, low- to moderate-income
borrowers with smaller down payments — will
face higher interest rates or will have a tougher
time accessing one. This will occur not only
because the cost of originating and holding
these loans is higher but also because the cost
of securitizing them will rise for banks, non-
banks and government agencies. Not only that,
but the proposal will likely lead to reductions in
the size of unfunded credit card lines, which will
put pressure on FICO scores and thereby make it
more difficult for some people to access other
forms of retail credit such as mortgages. Again,
this will have the greatest impact on low- to
moderate-income borrowers who rely most
heavily on credit cards for day-to-day spending
and to build their credit history. It could even be
argued that existing regulations go too far and
that there is an opportunity to help underserved
communities by dialing down regulations that
lead to higher borrowing costs. This should be
studied and the pros and cons analyzed. The
same can be said for small business loans, which
will become more expensive and less accessible.
• Saving for retirement or college will be harder.
The cost of products that families count on to
save for retirement or college will go up as a
result of this proposal. Asset managers, money
market funds and pension funds all buy, sell
and safekeep securities and other financial
instruments for American investors. Under the
proposed rules, the cost of banking products
used on behalf of clients each day — including
brokerage, advisory, clearing and custody
services — will go up and feed through to
customers. That will lead to lower returns on
retirement accounts, college funds and other
long-term savings.
• Government infrastructure projects and cor-
porate development will become more expen-
sive. Federal, state and local governments, as
well as corporations and other institutions, rely
on large banks for access to U.S. capital markets
to fund development. If accessing capital mar-
kets becomes more expensive, it will have a rip-
ple effect on the hiring of American workers,
investment in research and development, and
funding to build hospitals, roads and bridges,
including the planned infrastructure projects
from the Inflation Reduction Act (IRA).
More market activity will move to unregulated
institutions, out of sight from regulators and with-
out the same level of consumer protections that
Americans expect from their banks. Other market
participants that don’t have holistic client relation-
ships are less likely to provide liquidity to help
stabilize markets.
In volatile times, banks have been able to interme-
diate to help their clients and to work with the reg-
ulators. With new regulations, they may be less
able to do so. There have been several times in the
past few years where banks had ample liquidity
and capital but were unable to rapidly increase
their intermediation in the markets due to very
rigid liquidity and capital requirements. Finally,
the proposed rules increase the chance that the
Federal Reserve will have to step in again — and
this is not something they should want to do on a
regular basis but only in an extreme emergency.
35
UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Staying Competitive in the
Shrinking Public Markets
In previous letters, I have described the diminish-
ing role of public companies in the American finan-
cial system. From their peak in 1996 at 7,300,
U.S. public companies now total 4,300 — the total
should have grown dramatically, not shrunk.
Meanwhile, the number of private U.S. companies
backed by private equity firms — which does not
include the rising number of companies owned by
sovereign wealth funds and family offices — has
grown from 1,900 to 11,200 over the last two
decades. This trend is serious and may very well
increase with more regulation and litigation
coming. Along with a frank assessment of the
regulation landscape, we really need to consider:
Is this the outcome we want?
There are good reasons for private markets, and
some good outcomes result from them. For exam-
ple, companies can stay private longer if they wish
and raise more and different types of capital with-
out going to the public markets. However, taking a
wider view, I fear we may be driving companies
from the public markets. The reasons are complex
and may include factors such as intensified report-
ing requirements (including investors’ growing
needs for environmental, social and governance
information), higher litigation expenses, costly
regulations, cookie-cutter board governance,
shareholder activism, less compensation flexibility,
less capital flexibility, heightened public scrutiny
and the relentless pressure of quarterly earnings.
Along with the universal proxy — which makes it
easier to put poorly qualified directors on a board
— the pressures to retreat from the public market
are mounting. In addition, corporate governance
principles are becoming more and more templated
and formulaic, a negative trend. For example,
proxy advisors may automatically judge directors
unfavorably if they have a long tenure on the
board, without a fair assessment of their actual
contributions or experience. Another example is
the constant battle by some proxy advisors who try
to split the chairman and CEO role when there is no
evidence this makes a company better off — in fact,
36
today, lead directors generally hold most of the
authorities previously assigned to the chairman.
The governance of major corporations is evolving
away from guidance by governance principles that
focus on a company’s relationship to long-term
economic value toward a bureaucratic compliance
exercise. Good corporate governance is critical, and
a little common sense would go a long way.
THE PRESSURE OF QUARTERLY
EARNINGS COMPOUNDED BY BAD
ACCOUNTING AND BAD DECISIONS
There is something very positive about detailed
and disciplined quarterly financial and operating
reporting. But company CEOs and boards of direc-
tors should resist the undue pressure of quarterly
earnings, and it is clearly somewhat their fault
when they don’t. However, it is naïve to think that
the pressure doesn’t exist because companies that
“disappoint” can face extensive criticism, particu-
larly those with a new or young CEO. It’s possible
for companies to take short-term actions to
increase earnings, such as selling more product
cheaply at the end of a quarter, cutting certain
investments that may be terrific but can show
accounting losses in the first year or two, or just
deploying more aggressive accounting methods at
times. Once shortcuts like this begin, people all
over the company understand that it is okay to
“stretch” to meet your numbers. This could put you
on a treadmill to ruin. Obviously, a company should
not resort to these tactics, but it does happen in
the public markets — and it’s probably less likely in
the private markets.
THE HIJACKING OF ANNUAL
SHAREHOLDER MEETINGS
One of the reasons it is less desirable to be a public
company is because of the spiraling frivolousness of
the annual shareholder meeting, which has
devolved into mostly a showcase of grandstanding
and competing special interest groups. We should
STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS treat shareholders with tremendous respect — and
we do. At JPMorgan Chase, we are constantly talking
with our investors — our directors, our lead director
and our corporate governance experts visit most of
our major investors whether they be direct owners
or asset managers who manage the money for oth-
ers. Meeting with your shareholders and investors is
critical, but the annual shareholder meeting itself
has become ineffective. We should try to come up
with a far more constructive alternative.
THE UNDUE INFLUENCE OF PROXY
ADVISORS
There are essentially two main proxy advisors in
the United States. One is called Institutional
Shareholder Services (ISS), and the second is
called Glass Lewis. These proxy advisors started
out providing reams of data from companies to
help their institutional investor clients vote on
proxy matters (information on executive compen-
sation, stock returns, detail on directors, policies
and so on). However, they soon also began to pro-
vide advice on how shareholders should vote on
proxy matters. And, in fact, institutional investors
generally execute their voting on an ISS or Glass
Lewis platform, which often includes a clear state-
ment of the advisory service’s position.
I should also point out, because it may be relevant,
that ISS is owned by Deutsche Boerse, a German
company, and Glass Lewis is owned by Peloton
Capital, a Canadian private equity firm. I question
whether American corporate governance should be
determined by for-profit international institutions
that may have their own strong feelings about what
constitutes good corporate governance.
While asset managers and institutional
investors have a fiduciary responsibility to
make their own decisions, it is increasingly
clear that proxy advisors have undue
influence.
Asset managers (who manage money on behalf of
others) and institutional investors (e.g., pension
plans and endowments) may rely on a variety of
information sources to support their valuation
decision-making process. While data and recom-
mendations may form pieces of the information
mosaic, their votes should ultimately be based on
an independent application of their own voting
guidelines and policies. To the extent they use rec-
ommendations from proxy advisors in their deci-
sion-making processes, they should disclose that
they do so and should be satisfied that the infor-
mation upon which they are relying is accurate and
relevant. However, many companies would argue
that this information is frequently not balanced,
not representative of the full view and not accu-
rate. In addition, companies complain that they
often cannot get the data corrected, and, there-
fore, a vote may go uncorrected.
Almost all asset managers receive proxy advisor
data and recommendations; while some asset man-
agers vote completely independently of this infor-
mation, the majority do not. Most asset managers
have formed corporate governance or stewardship
committees that are responsible for their voting,
and these committee positions are often held not by
portfolio managers and research analysts (i.e., the
people buying and analyzing the individual securi-
ties) but by stewardship experts. While it is good to
have stewardship experts, the reality is that many
of these committees default large portions of what
they do to proxy advisors and, more troubling, make
it harder for actual portfolio managers to override
this decision making.
Some have argued that it’s too hard and too expen-
sive to review the large number of proxies and proxy
proposals — this is both lazy and wrong. If issues are
important to a company, they should be important
to the shareholder — for the most part, only a hand-
ful of proposals are important to companies.
We are making enhancements to J.P. Morgan
Asset Management’s proxy voting processes to
amplify the role of portfolio managers and to
address the perception of asset managers’
reliance on third-party advisor voting
recommendations.
Enhancements to the firm’s internal proxy voting
process will include:
37
STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS • More portfolio manager participation in proxy
committee decision making. The firm has sig-
nificantly expanded the representation of port-
folio managers on its North American Proxy
Committee in an effort to increase the diversity
of viewpoints represented on the committee. As
part of this change, and in recognition that port-
folio managers, as fiduciaries, may differ in their
views on how to vote on particular proposals
depending on a mandate’s investment strategy
and guidelines, we are broadening our capabili-
ties to support voting results that may vary
across our platform.
• Diminished role of proxy advisor recommenda-
tions. J.P. Morgan Asset Management makes its
own independent proxy voting decisions (based
on deep fundamental research) and stands
behind the depth and rigor of its processes and
historical information advantage. In most cases,
the firm will only use proxy advisory firms for
research, data and technical mechanics of vote
transmission and not for outsourced recommen-
dations. By the end of 2024, J.P. Morgan Asset
Management generally will have eliminated
third-party proxy advisor voting recommenda-
tions from its internally developed voting sys-
tems. Additionally, the firm will work with third-
party proxy voting advisors to remove their
voting recommendations from research reports
they provide to J.P. Morgan Asset Management
by the 2025 proxy season.
• Other enhancements. We are working to give a
company and its management even greater
access to the ultimate decision makers; to raise
critical issues to a company as early as possible
in a constructive and proactive way; and to be
willing to tell companies how we have voted
once our decision is made rather than waiting
until votes are finally counted.
Taken together, these steps are designed to
respond to a growing perception (and, I believe,
reality) that the asset management industry gen-
erally places undue reliance on proxy advisors in
how proxies are voted. We believe these actions
will strengthen our relationships with our clients
and with companies while helping to build trust
among shareholders, investors and companies.
38
THE BENEFITS AND RISKS OF
PRIVATE CREDIT
I have already mentioned some of the benefits of
private credit, and I’ll now mention some more.
Many people in the private credit arena are very
smart and creative and want to help the compa-
nies they invest in navigate through market shoals.
They can move quickly, discreetly and flexibly.
Most generally understand that bad accounting
drives bad decisions, and their goal is to make the
right decisions for the future of the company.
On the other hand, not all players are that good.
And problems in the private credit market caused
by the bad players can leak onto the good ones,
even though private credit money is locked up for
years. If investors feel mistreated, they will cry
foul, and the government will respond by putting
a laser focus on the business. It’s a reasonable
assumption that at some point regulations will
focus on the private markets as they do on the
public markets.
This scrutiny will include a look at how private
credit values its assets, which isn’t as transparent
as public market valuations. In addition, private
market loans commonly lack liquidity in the sec-
ondary market and are not generally supported by
in-depth market research.
New financial products that grow extremely rap-
idly often become an area of unexpected risk in
the markets. Frequently, the weaknesses of new
products, in this case private credit loans, may
only be seen and exposed in bad markets, which
private credit loans have not yet faced. When
credit spreads gap out, when interest rates go up
and when some leveraged companies suffer in the
recession, we will find out how those loans survive
stress testing. In addition, they can create a little
bit of a “credit crunch” for borrowers since it
might be hard for private creditors to roll over
loans under those conditions. Under stress condi-
tions, private creditors would have to charge exor-
bitant prices that companies simply cannot afford
in order to book the new loan at par. Banks are in a
slightly different position.
STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS A BANK’S STRENGTH: PROVIDING
FLEXIBLE CAPITAL
24_JD_size of financial sector_08
Banks generally try to be there for their borrowers
in difficult times — striving to roll over loans, rene-
gotiate terms and raise additional capital. Banks
do this for multiple reasons: They normally feel an
obligation to help their clients, they have long-
term relationships and they can commonly earn
other sources of revenue from client-driven trans-
actions. Banks can also flex their capital and lend-
ing base as needed by their clients. This is because
a bank can and should make decisions to help com-
panies through good times and bad, seeking to
retain them as long-term clients across many
areas of the bank. They can and do take “losses”
that help the client maintain the franchise. But an
asset manager must act as a “fiduciary” of other
people’s money and cannot lend based on a moral
obligation or potential future relationship.
4/7/24r1 3:00pm
Recently, we have been witnessing a convergence
between the public and private markets. But it’s
too soon to say how this ultimately will play out,
particularly if we go through a recessionary cycle.
DRAFT 3/27/24TYPESET; 4/7/24r1 v. 24_JD_size of financial sector_08
Size of the Financial Sector/Industry
($ in trillions)
Banks in the
financial system
Shadow banks
Global GDP1
Total U.S. debt and equity market
Total U.S. broker-dealer inventories
U.S. GSIB 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
Loans held by nonbanks5
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 lending10
Global private credit AUM10
1996
7.3
2007
2010
2023
$ 61.7
$ 54.2
$ 6.2
$ 0.9
$ 6.5
$ 1.4
$ 0.9
–
$ 3.1
$ 2.7
$ 15.8
$ 3.1
4.9
4.6
12%
44%
$ 0.2
$ 65.0
$ 55.9
$ 4.1
$ 0.8
$ 6.6
$ 2.8
$ 2.4
$ <0.1
$ 2.8
$ 4.1
$ 14.3
$ 3.0
6.0
4.2
9%
54%
$ 0.3
$ 92.4
$ 137.2
$ 4.9
$ 1.4
$ 12.4
$ 7.6
$ 7.7
$ 1.0
$ 9.7
$ 12.0
$ 23.2
$ 6.4
11.3
4.3
69%
70%
$ 1.6
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
GSIB = Global systemically important banks
RRP = Reverse repurchase agreements
K = Thousands
For footnoted information, refer to page 61 in this Annual Report.
**FOOTNOTES –MOVED TO BACK PAGE
39
STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS
Management Lessons: Thinking,
Deciding and Taking Action –
Deliberately and with Heart
I always enjoy sharing what I’ve learned from
watching others, reading and experiencing through
my own journey.
BENEFITING FROM THE OODA LOOP
The military, which often operates in extreme
intensity of life and death and in the fog and
uncertainty of war, uses the term “OODA loop”
(Observe, Orient, Decide, Act — repeat), a strategic
process of constant review, analysis, decision
making and action. One cannot overemphasize the
importance of observation and a full assessment
— the failure to do so leads to some of the greatest
mistakes, not only in war but also in business and
government.
A full assessment is critical.
To properly manage any business situation, you
need to perform a full and complete assessment
of it. In business, you have to understand your
competitors, their distribution, their economics,
their innovations, and their strengths and weak-
nesses. You also need to understand customers
and their changing preferences, along with your
own costs, your people and their skills. Then
there’s knowing how other factors fit in, like tech-
nology, risk, motivations … hope you get the point.
For countries, you need a thorough grasp of their
economies, strengths and weaknesses, population
and education, access to raw materials, laws and
regulations, history and culture. Research, data
and analytics should be at a very detailed level and
constantly reassessed. Only after you complete
this diligent study can you start to make plans with
a high degree of success.
Get on the road — it builds knowledge and
culture.
I have frequently wondered about all the nonstop
road trips, client meetings, briefings, greetings,
bus trips, and visits to call centers, operating
centers and branches, regulators and government
officials, among others: Did they make a differ-
ence? The answer is absolutely yes because they
enabled a process of constant learning, assess-
ment and modification of best practices — gaining
insights from employees to clients to competitors.
Employees will tell you what you are doing well or
poorly if you simply ask them, and they know you
want to hear the real answer. Curiosity is a form
of humility — acknowledging that you don’t know
everything. Responding to curiosity allows other
people to speak freely. Facts and details matter
and inform a deeper and deeper analysis that
allows you to continually revise and update your
plans. This, of course, also means that you are
constantly admitting prior mistakes.
You need to shed sacred cows, seek out blind
spots and challenge the status quo.
Very often companies or individuals develop nar-
ratives based upon beliefs that are very hard to
dislodge but are often wrong — and they can lead
to terrible mistakes. A few examples will suffice.
Stripe, Inc. built a payments business by working
with developers — something we never would
have imagined but might have figured out if we
had tried to seek out what others were doing in
this area. Branches were being closed, both at
Bank One and Chase, because the assumption
was that they would not be needed in the future.
We underinvested for years in the wealth man-
agement business because we were always
focused on the value of deposits versus invest-
ments. Question everything.
40
MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART Use your brains to figure out the truth — not to
justify what you already think.
It’s often hard to change your own attitudes and
beliefs, especially those you may have held on to
for some time. But you must be open to it. When
you learn something that is different from what
you thought, it may affect many conclusions you
have, not just one. Try not to allow yourself to
become rigid or “weaponized,” where other
employees or interest groups jazz you up so much
that you become a weapon on their behalf. This
makes it much harder to see things clearly for
yourself. When people disagree with you, seek
out where they may be partially right. This opens
the door for a deeper understanding and avoids
binary thinking.
It’s hard to see certain long-term trends, but
you must try.
There is too much emphasis on short-term,
monthly data and too little on long-term trends
and on what might happen in the future that would
influence long-term outcomes. For example, today
there is tremendous interest in monthly inflation
data, although it seems to me that every long-term
trend I see increases inflation relative to the last
20 years. Huge fiscal spending, the trillions needed
each year for the green economy, the remilitariza-
tion of the world and the restructuring of global
trade — all are inflationary. I’m not sure models
could pick this up. And you must use judgment if
you want to evaluate impacts like these.
Also, a block of time as short as one year is an arti-
ficial framework for judging the impact of long-
term trends that could easily play out over years.
A helpful exercise is to think “future back,” in
which you imagine different future outcomes,
including the ones you want, and then work back-
ward to events that are happening today (or that
might happen or that you cause to happen), closely
examining the connections between those events
and your projected or desired outcomes. Those
connections inform your risk and R&D planning.
Similarly, when companies compare the attributes
of their products and services with their competi-
tors, they usually only consider where they are
versus their competitors. But nothing is static —
they should consider where their competitors will
be in the future. Conditions are always changing,
crises are always emerging. When analyzing the
playing field, it is better to assume that your com-
petitors are strong and are already in the process
of improving and innovating. This minimizes the
chance of arrogance leading to complacency.
DECISION MAKING AND ACTING
(HAVE A PROCESS)
There is a time for an individual to decide
and act.
Sometimes you should take the time to measure
twice and cut once. And then sometimes making a
quick decision is better than delaying. You should
try to distinguish between the two. For example,
with decisions that are hard to reverse, it’s usually
better to go slow. With other decisions where you
can test, learn, probe and change direction, it’s
often better to go fast. It’s been my experience
that it’s hard for some people to actually decide
and act. This could be from analysis paralysis, lack
of “perfect” information, fear of failure or the feel-
ing that full consensus is needed before a decision
can be reached. But whatever it is, it can slow
down and possibly seriously damage a company.
To get people to think like decision makers and
take a strong point of view, we like to ask, “What
would you do if you were king or queen for a day?”
It helps shift the direction to individual decision
making. We also ask questions like, “What would
41
MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART you wish for if you knew X was going to happen?”
(for example, higher interest rates). Decision
making takes a mix of courage, grit and guts.
One exercise that I find useful (and sometimes
painful) is to draw up a list of important decisions
that need to be made — the ones I often avoid con-
fronting. So I take time every Sunday to think
about these tough issues and almost always make
progress. Progress doesn’t always mean that you
come to the final conclusion — sometimes it’s just a
very rational next step that can put you on a path
to the final decision.
Try to have a good decision-making process.
Try to give yourself the time to decide. Make sure
you speak with the right people and make sure the
right people are in the room. Information should
be fully shared. People should be made very com-
fortable with open debate. Quite often, the “right”
answer is simply waiting to be found — you don’t
have to guess.
Crowdsourcing, compromise, consensus and
committees have benefits and risks.
There are huge benefits to crowdsourcing intelli-
gence. It is a form of full assessment, a strategy
for getting the best ideas and challenging the sta-
tus quo. We should do this for almost every major
decision. It is perfectly fine on some occasions to
compromise and gain consensus, particularly on
decisions that are not critical and can easily be
reversed. Often people spend too much time
debating issues that are simply not that import-
ant; it’s better to decide and move on. Also,
before you compromise, you should know exactly
what you want to achieve and the consequences
of any tradeoffs. However, sometimes compro-
mise and consensus cannot work and only lead to
a feel-good decision that is probably wrong — this
could be the road to ruin.
The use of committees can be good when done
properly. For example, if our risk committees
could do a full assessment and crowdsource all
potential risks, that would lead to better decision
making. I will give one very personal and painful
example, which is when we had a major trading
scandal, called The London Whale. The scandal
was not caused by the complexity of the trade but
rather the failure to go to the proper Risk com-
mittee for a thorough review, which should have
happened but didn’t. I have no doubt that had the
trade been raised there, the flaws would have
been exposed immediately, thereby dramatically
reducing or eliminating the problem. On the other
hand, the opposite can happen when a commit-
tee, with everyone staring at each other, devolves
into herd-like behavior with people looking for
confirmation and ending up with a compromise
that is a poor choice.
Good leadership involves great observation and
the ability to act, but there is more …
THE SECRET SAUCE OF LEADERSHIP
(HAVE A HEART)
You need to earn trust and respect with your
employees.
You can be great at assessment, you can be bril-
liant and you may often be willing to act. But all of
that is not good enough for “complete” leadership.
To become a true leader, you need to be trusted
and you must earn your respect, every day. People
have to know that you do not have ulterior motives
and that you’re trying to do the right thing — not
trying to burnish your personal reputation. Good
people want to work for people they respect, and
they will not respect people who take all the credit
and share all the blame. People need to know that
even when you make mistakes, you’re willing to
admit them and take corrective action. And there
is more …
42
MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART came to see me over the objection of my manage-
ment team.) The reason we were saving money is
because the healthcare benefits were cut in half
for the guards and their family members (currently
worth approximately $15,000 a year), and the sav-
ings were split with us. This was a heartless thing
to do — and the second I found out, I reversed the
decision. JPMorgan Chase’s success will not be
built off the backs of our guards — it will be the
result of fair treatment of all of our employees —
and we’re thankful that many of those guards are
still with our company today.
You know heart and soul when you see it in effect
on sports teams or with “the boys in the boat” —
it’s a beautiful thing to watch. It’s not as obvious,
but it happens in business, too.
It’s essential to build trust with your
customers, constituencies and, yes, even
competitors.
Of course, I’m not bringing this up as a matter of
corporate governance or a corporation’s purpose:
A business should, over the long run, try to maxi-
mize shareholder value. It is completely obvious
that running a decent business —treating everyone
ethically and earning trust and respect in all your
communities — is not only fundamental to share-
holder value but also to a healthy society.
The importance of vision, communication and
inspiration.
The reason I’ve always hesitated to talk about
“vision” is because often it is the basic BS of
corporate speak — that somehow if you impart
your vision to people, they will take the mountain.
What it really is all about is this: After you’ve done
your full assessment and decision making, you can
then continuously educate, explain, train, simplify,
propel and fight. But this only works if people
know you are in the trenches with them, if they
understand the mission and if they are there side
by side with your effort.
We know that bureaucracy can lead to politics,
corporate stasis and terrible decisions. So you can
communicate your vision about how to fight
bureaucracy by telling stories about the silly things
we do — but with a smile — and then by showing
people that you will actually fix the problems.
Finally, your vision needs to be clear, coherent and
consistent. Within an organization, people very
quickly pick up the pattern of management saying
one thing but doing another. Because if words and
actions are inconsistent (for example, and I could
give many, when we say we want employees to be
treated with respect, but we allow a jerk to be their
boss), confidence in leadership will be eroded.
Heart cannot be overstated.
Heart matters. And it makes a difference when
people know and see that you actually care. One
example: Many years ago when I was new to
JPMorgan Chase, I learned that the company’s
security guards had been outsourced — to save
money. Since after outsourcing, when the same
guards continued coming to work every day at the
same salary, I wondered, “How could this be?”
(FYI, this was brought to my attention by the head
of the Service Employees International Union, who
43
MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART A Pivotal Moment for America
and the Free Western World:
Strategy and Policy Matter
In past years, I have written extensively about pub-
lic policy issues. It is important to engage in these
conversations, particularly around domestic
economic policy because policy matters. While
JPMorgan Chase can execute specific plans to
improve outcomes for customers and communi-
ties, there is no replacement for effective govern-
ment policies that add to the general well-being of
the country. A stronger and more prosperous
country will make us a stronger company.
As CEO of this company, every year I visit numer-
ous countries around the globe. I meet with for-
eign government leaders, presidents and prime
ministers, business leaders, and civic and aca-
demic experts, which allows me to learn a signifi-
cant amount about how public policy is executed
around the world. It also reinforces some of the
critical values and virtues that are essential to a
healthy country.
Every time I see the American flag, it reminds me
of the values and virtues of this country and its
founding principles conceived in liberty and dedi-
cated to the notion that all men and women are
created equal. Talk with someone who has recently
become a naturalized citizen or watch a ceremony
where groups of people take the oath to America,
and you will see extraordinary joy and newfound
pride. They now live free, with individual rights
protected by the Constitution and with their life
and the well-being of their family and community
protected by the U.S. military. As Americans, we
have much to be grateful for and much to defend.
If you read the newspaper from virtually any day
of any year since World War II, there is abundant
coverage on wars — hot and cold — inflation, reces-
sion, polarized politics, terrorist attacks, migration
and starvation. As appalling as these events have
been, the world was generally on a path to becom-
ing stronger and safer. When terrible events
happen, we tend to overestimate the effect they
will have on the global economy. Recent events,
however, may very well be creating risks that could
eclipse anything since World War II — we should
not take them lightly.
February 24, 2022 is another day in history that
will live in infamy. On that day, 190,000 Russian
soldiers invaded a free and democratic European
country — importantly, somewhat protected by the
threat of nuclear blackmail. Russia’s invasion of
Ukraine and the subsequent abhorrent attack on
Israel and ongoing violence in the Middle East
should have punctured many assumptions about
the direction of future safety and security, bringing
us to this pivotal time in history. America and the
free Western world 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 para-
mount, even if its importance seems to recede in
tranquil times.
The fallout from these events should also lay to
rest the idea that America can stand alone. Of
course, U.S. leaders must always put America
first, but global peace and order are vital to
American interests. 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 democracies. America
needs to lead with its strengths — not only its
44
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER military but also its economic, diplomatic and
moral forces. And now we must do so as America’s
leadership is being challenged around the world.
There is nothing more important.
Policy and strategy matter, and it’s important
to be engaged.
In our increasingly complex world, there is a vital
interrelationship between domestic and foreign
economic policy, particularly around trade, invest-
ment, national security and other issues. And, of
course, while American voters and leadership set
U.S. foreign policy, being a constructive part of the
global conversation has become more important
than ever.
If you doubt how important public policy is for the
health of a country, you need to look no further
than the recent history of Greece, Ireland or
Singapore. Each of these countries, starting from
deeply challenging places, implemented effective
government and policies that have done a great
job of lifting up their people when many thought it
wasn’t possible. Sweden is another great example
of a country with good broad-based policies that
have succeeded at precisely what we all may want
— a dynamic, innovative, free-market economy
(Sweden actually has fewer government-owned
enterprises than America) and safety nets that
work. Conversely, you need to look no further than
North Korea or Venezuela to see the complete
destruction and havoc that terrible public policies
(often in the name of the people) can cultivate.
Strategy by its nature must be comprehensive. In
the rest of this section, I try to answer the question:
What must we do to ensure that the world stays
safe, not only for America but for freedom and
democracy? A comprehensive strategy entails four
important pillars, and we must succeed at each:
1. Maintain American leadership (including
military).
2. Achieve long-term economic success with
our allies.
3.
Strengthen our nation domestically.
4. Deepen focus and resolve on addressing
our most pressing challenges.
COALESCING THE WESTERN WORLD — A
UNIQUELY AMERICAN TASK
Only America has the full capabilities of military
might, economic power and the principles that
most people around the world yearn for — based
on “liberty and justice for all” and the proposition
that all people are created equal. America
remains the bastion of freedom and the arsenal
of democracy.
There is no alternative to American leadership.
In the free and democratic Western world, and, in
fact, for many other countries, there is no real or
good alternative to America. The only other poten-
tial superpower is China. Other nations know they
can rely on the founding principles of America. If
we reach out our hand, most nations will happily
take that hand. America is still the most prosper-
ous nation on the planet, which not only can guar-
antee our military strength but also positions us to
help our allies develop and grow their nations
(though we should minimize the “our way or the
highway” type of behavior). This leadership is
needed today to help Ukraine stay free in its battle
with Russia.
Most of the world wants American leadership.
America continues to be the envy of much of the
world, and as we’ve seen with the challenges at
our borders, there is a reason people want to
come here and not to autocratic nations. If you
opened America’s borders to the rest of the world,
I have little doubt that hundreds of millions of
people would want to move here. By contrast, not
many would want to emigrate to autocratic
nations. Also, I have little doubt that if most inves-
tors across the globe could only invest in one coun-
try, they would choose the United States. Beyond
our country’s borders, people and nations around
the world understand the role that America has
played in promoting world peace — known as Pax
Americana. For the most part, Pax Americana has
kept the world relatively peaceful since World War
II and helped lead to enormous global economic
prosperity, which has helped lift 1.3 billion people
out of poverty.
45
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER The American public ought to hear more about
why this is so important.
International isolationism has run through
American foreign policy throughout our history,
frequently with good reason. The chant, “Don’t get
involved in foreign wars” was often right. That
said, the American public should remember that
even after the Revolutionary War, we did, in fact,
have British and French armies on our soil. The
sinking of American merchant and passenger ships
during World War I and the surprise attack on
Pearl Harbor in World War II brought isolationism
to a close for a time. America is never far from
being dragged into terrible conflicts. Global wars
come to our shores whether we like it or not — we
need to stay engaged.
In perilous periods of history when our allies and
other democracies were under serious assault,
great American leaders have inspired the Ameri-
can people — through words and actions — to
stand up to help and defend them. Staying on the
sidelines during battles of autocracy and democ-
racy, between dictatorship and freedom, is simply
not an option for America today. Ukraine is the
front line of democracy. If the war goes badly
for Ukraine, you may see the splintering of Pax
Americana, which would be a disaster for the
whole free world. Ukraine’s struggle is our strug-
gle, and ensuring their victory is ensuring America
first. It is imperative that our national leaders
explain to the American people what is at stake
and make a powerful case – with energy, consis-
tency and clarity – for our strong enduring com-
mitment to Ukraine’s survival for as long as it
takes (and it could take years).
One last point: Ukraine needs our help immediately,
but it’s important to understand that much of the
money that America is directing to Ukraine is for
purchasing weapons and equipment, most of which
will be built in America. Not only is our aid helping
Ukraine, but it is going directly to American manu-
facturers, and it is helping the country rebuild our
military industrial capacity for the next generation.
Modern America does not engage in economic
coercion or foreign wars to steal land or treasure.
The fact that some of our foreign excursions might
have been misguided does not negate this. We
helped rebuild Europe and Japan after the devas-
tation of World War II, and we, with our allies, have
helped create global institutions to maintain
peace. We are still trusted.
First and foremost, the Western world needs
unquestioned military might — peace through
strength.
“We know only too well that war comes not when
the forces of freedom are strong, but when they
are weak,” said Ronald Reagan in 1980.
So far, the Western world has done a good job in
strengthening military alliances in response to the
war in Ukraine. Ukraine is essentially the front line
that needs immediate support. Providing that sup-
port is the best way to counter autocratic forces
that would seek to weaken the Western world, par-
ticularly America. But the ongoing wars in Ukraine
and the Middle East could become far worse and
spread in unpredictable ways. Most important, the
specter of nuclear weapons — probably still the
greatest threat to mankind — hovers as the ultimate
decider, which should strike deep fear in all our
hearts. The best protection starts with an unyield-
ing resolve to do whatever we need to do to main-
tain the strongest military on the planet — a com-
mitment that is well within our economic capability.
American leadership requires not only the
military but also the full “symphony of power.”
Former Secretary of Defense Robert Gates, in his
book Exercise of Power, writes extensively in the
first chapter about “the symphony of power.” He
makes the critical point that America has often
overused and misused military power and has
massively underused other muscles — diplomacy,
intelligence, communication (explaining to the
world the benefits of democracy and free enter-
prise) and comprehensive economic policy.
America has the most extensive group of partners,
friends and allies — both military and economic —
that the world has probably ever seen. We should
put this to better use.
46
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER STRENGTHENING OUR POSITION WITH
A COMPREHENSIVE, GLOBAL
ECONOMIC SECURITY STRATEGY
Sustaining America’s economic strength is a bed-
rock for our long-term military strength. There are
many things we need to do to strengthen the U.S.
economy, and I talk about that later in this section.
This discussion is about foreign economic policies
— the economic battlefield.
The whole Western world is rethinking and
reimagining its military strategies and alliances.
We need to do the same for our economic strate-
gies and alliances, but we should be guided by a
comprehensive global strategy that deals with
critical issues. Done properly, such a strategy
would help strengthen, coalesce and possibly be
the glue that holds together Western democratic
alliances over decades.
Foreign economic policy involves trade and invest-
ment, export controls, secure and resilient supply
chains, and the execution of sanctions and any
related industrial policies. It must also include
development finance — think of the “Belt and Road”
efforts in China — which are critical to most develop-
ing nations. This framework should tell us not only
how to deal with our allies but also how to work with
nonaligned nations around the world. These strate-
gies should not be aimed against any one country
(such as China) but rather be focused on keeping
the world safe for democracy and free enterprise.
Economic national security is paramount —
both for the United States and for our allies.
It is a valid point that the Western world — both
government and business — essentially underesti-
mated the growing strength and potential threat of
China. It’s also true that China has been compre-
hensively and strategically focused on these eco-
nomic issues, all while we slept. But let’s not cry
over spilled milk — let’s just fix it.
We missed the potential threat from three vantage
points. The first is companies’ overreliance on
China as the sole link in their supply chain, which
can create vulnerabilities and reduces resiliency.
But to the extent this involves everyday items, like
clothes, sneakers, vaccine compounds and con-
sumer goods, this dependency is not as critical or
complex and will eventually be sorted out.
The second is the most critical. The United States
cannot rely on any potential adversaries for mate-
rials essential to our national security — think rare
earths, 5G and semiconductors, penicillin and
materials critical to essential pharmaceuticals,
among others. We also cannot be sharing vital
technologies that can enhance an adversary’s
military capabilities. The United States should
properly and narrowly define these issues and
then act unilaterally, if necessary, to fix them.
The third is also complex, which is countering
unfair competition or “mercantilist” behavior in
critical industries; think electric vehicles, renew-
able energy and AI, among others. Examples of
this would be where a state, any state, uses gov-
ernment powers, capital, subsidies or other means
to dominate critical industries and deeply damage
the economic position of other nations. Weakening
a country economically can render it a virtual
“vassal state,” reliant on potential adversaries for
essential goods and services, which also weakens
it militarily. We cannot cede our important
resources and capabilities to potential adversaries.
All these issues can be resolved, though they will
take time and need devoted effort.
Every nation will have different national security
issues. For example, Europe in general and coun-
tries like India, Japan and Korea need reliable,
affordable and secure energy; many nations would
put food security as their top concern. This means
that we must work with our allies to accomplish
our own goals and to help them accomplish theirs.
We have extraordinary common interests in our
joint security: We must hang together — because if
we don’t, we will assuredly hang separately.
We already engage in trade — improving it is
good economics and great geopolitics.
We must have a better understanding of trade.
As a nation, we refuse to get into genuine trade
discussions, but this ignores the complete and
obvious truth — we already have trade relation-
ships with all these countries. Approximately 92%
47
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER of the world’s consumers live outside the United
States. Increased trade allows our workers and
farmers to access those markets. We should nego-
tiate trade agreements that can achieve more,
economically, for ourselves and our allies, as well
as meet all of our national security needs. While it
is appropriate to use trade to continue to nudge
allies in the right direction around human rights
and climate, this objective should be subordinated
to our national interests of long-term security.
Negotiating must be done in concert with our allied
nations so as not to cause a fissure in economic
relations. This is critical — strong economic bonds
will help ensure strong military alliances. The Infla-
tion Reduction Act has much good in it (more on this
later), but it angered many of our allies. To them,
the bill was by America and for America, and, sub-
sequently, they felt a need to match it so their busi-
nesses would not be disadvantaged. The terms of
the legislation could have been better negotiated
with our allies in mind, strengthening our economic
ties with the free world.
We should also immediately re-enter, if possible,
the prior negotiated Trans-Pacific Partnership
agreement. Not only is it good for the economy,
but it also could be a brilliant, strategic, economic
security move — an economic alliance that binds
us with 11 other important countries (including
Australia, Chile, Japan, Malaysia, Mexico, Singa-
pore and Vietnam). Geopolitically and strategically,
this might be one of the most important moves to
counter China. While this is a challenging step, our
political leaders need to explain and lead — and
not be afraid of dealing with the tough issues. We
also need to acknowledge that there have been
real negative job impacts as a result of trade,
which are usually concentrated around certain
areas and businesses. So any new trade policy
should be combined with a greatly enhanced Trade
Adjustment Assistance program, which provides
retraining, income assistance and relocation for
those workers directly impacted by trade.
Trade is realpolitik, and the recent cancellation of
future liquified natural gas (LNG) projects is a good
example of this fact. The projects were delayed
mainly for political reasons — to pacify those who
believe that gas is bad and that oil and gas proj-
ects should simply be stopped. This is not only
wrong but also enormously naïve. One of the best
ways to reduce CO2 for the next few decades is to
use gas to replace coal. When oil and gas prices
skyrocketed last winter, nations around the world —
wealthy and very climate-conscious nations like
France, Germany and the Netherlands, as well as
lower-income nations like Indonesia, the Philippines
and Vietnam that could not afford the higher cost —
started to turn back to their coal plants. This high-
lights the importance of safe, secure and affordable
energy. Second, the export of LNG is a great eco-
nomic boon for the United States. But most import-
ant is the realpolitik goal: Our allied nations that
need secure and affordable energy resources,
including critical nations like Japan, Korea and most
of our European allies, would like to be able to
depend on the United States for energy. This now
puts them in a difficult position — they may have to
look elsewhere for such supplies, turning to Iran,
Qatar, the United Arab Emirates or maybe even
Russia. We need to minimize anything that can tear
at our economic bonds with our allies.
The strength of our domestic production of energy
gives us a “power advantage” — cheaper and more
reliable energy, which creates economic and geo-
political advantages.
Industrial policy is now necessary, but it
should be carefully constructed and limited.
In some cases, industrial policy (using government
resources to subsidize investments to help make
businesses more competitive) may be the only
solution for quickly building up the industries we
need (rare earths and semiconductors, among
others) to guarantee resilient national security.
The IRA and CHIPS Act are good examples of this
and government has to get it right.
Such policy can also be used to help combat unfair
competitive policies of nations that are using state
capitalism and state control to dominate critical
industries. However, when crafting industrial policy,
the function of government needs to be narrowly
defined and kept simple; i.e., governmental jurisdic-
tion should be limited to very specific products and
48
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER probably to what we know works, such as tax cred-
its and, to a lesser extent, loan guarantees. And
industrial policy should include twin provisions:
1) strict limitations on political interference, like
social policies, and 2) specific permitting require-
ments, which, if not drastically improved, will badly
inhibit our ability to make investments and allow
infrastructure to be built. Adding social policy, poli-
tics and matters other than simple tax credits dra-
matically reduces the economic efficiency of indus-
trial policy and creates conditions for corporate
America to feed at the trough of government
largess. We should quickly address how we can
improve on already executed legislation. We do not
want to look back and have great regrets about how
so much of this policy work failed.
There are those who argue that the U.S. govern-
ment needs much more far-reaching industrial
policy to be able to micromanage and accomplish
its many ambitious objectives. To those I say, read
further in this section about how ineffective so
many government policies have been.
We should be tough, but we should engage
with China.
Over the last 20 years, China has been executing
a more comprehensive economic strategy than we
have. The country’s leaders have successfully
grown their nation and, depending on how you
measure it, have the first or second largest econ-
omy in the world. That said, many question the
current economic focus of China’s leadership as
they don’t have everything figured out. While
China has become the largest trading partner to
many countries around the world, its own GDP per
person is $13,000. And the country continues to be
beset by many economic and domestic issues.
China has its own national security concerns. The
country is located in a very politically complex part
of the world, and many of China’s actions have
caused its neighbors (e.g., Japan, Korea, Philippines,
among others) to start to re-arm and, in fact, draw
closer to the United States. It also surprises many
Americans to hear that while our country is 100%
energy sufficient, China needs to import 10 million
barrels of oil a day. It is clear that China’s new lead-
ership has set a different course, with a much more
intense focus on national security, military capabil-
ity and internal development. That is their right, and
we simply need to adjust to it.
America still has an enormously strong hand —
plenty of food, water and energy; peaceful neigh-
bors; and what remains the most prosperous and
dynamic economy the world has ever seen, with
a per person GDP of over $80,000 a year. Most
important, our nation is blessed with the benefit of
true freedom and liberty. See the sidebar on the
amazing power of freedom later in this section.
While we may always have a complex relationship
with China (made all the more complicated and
serious by ongoing wars), the country’s vast size
and importance to so many other nations requires
us to stay engaged — thoughtfully and without
fear. At the same time, we need to build and exe-
cute our own long-term, comprehensive economic
security strategy to keep our position safe and
secure. I believe that respectful, strong and consis-
tent engagement would be best for both our coun-
tries and the rest of the world.
We need to strengthen and rebuild the
international order — we may need a new
Bretton Woods.
The international rules-based order established by
the Western world after World War II is clearly
under attack by outside forces, somewhat weak-
ened by its own failures and inability to keep up
with the increasingly complex world. This interna-
tional order relies on a web of military alliances,
trade agreements (e.g., World Trade Organization),
development finance (e.g., International Monetary
Fund and the World Bank) and related global tax
and investment policies and diplomacy organiza-
tions (e.g., United Nations), which have evolved
into a confusing and overlapping regime of poli-
cies. You can now add to it the new issues of cyber
warfare, digital trade and privacy, and global
taxes, among others.
49
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER It might be a good idea to convene a group of like-
minded leaders to build and improve upon what
already exists. The time may be right for a reimag-
ined Bretton Woods — and by this, I mean revitaliz-
ing our global architecture. Since too many parts
of the world have been neglected, any new system
has to take into account and properly address the
needs of all nations, including areas of concen-
trated poverty.
In the sidebar, I also explain how two policies (a
large expansion of the Earned Income Tax Credit
and focus on work skills and job outcomes at high
schools, community colleges and colleges) would
not only dramatically increase both the income
and employment opportunities for many of those
left behind but would also have the virtue of actu-
ally growing the workforce. The combined effect of
all of this would be quite a boon to our GDP.
I believe that many affected Americans are not
angry at hardworking, law-abiding immigrants
and, in fact, acknowledge the critical role immi-
grants continue to play in building this wonderful
country. Rather, they are angry that America has
not implemented proper border control and immi-
gration policies. It is astounding that many in
Congress know what to do and want to do it but
are simply unable to pass legislation because of
partisan politics. Congress did come close on a
few occasions — and I hope they keep trying.
Deliberate policies meant to drive healthy
growth are needed.
For over two decades, since 2000, America has
grown at an anemic rate of 2%. We should have
strived for and achieved 3% growth. Had we done
so, GDP per person today would be $16,000
higher, which would, in turn, have paid for better
healthcare, childcare, education and other
services. Importantly, the best way to handle
our excess deficit and debt issues is to maximize
economic growth.
Growth policies include (the list could be very
long so I’ll just mention a few):
• Consistent tax policies, conducive to both
employment and capital investment. Capital
investment is the primary driver of innovation,
productivity and, therefore, growth in America.
Tax policies change too frequently, which causes
uncertainty and complicates long-term capital
investment decision making (I won’t bore you
with the details here). A bipartisan committee of
Congress is probably required to fix this — and
the sooner the better.
While we hope the wars in Ukraine and in the
Middle East will end eventually (and, we hope, suc-
cessfully from the standpoint of our allies), these
other critical economic battles could possibly con-
tinue throughout our lifetime. If the Western world
is slowly split apart over the next few decades, it
will likely be the result of our failure to effectively
address crucial global economic challenges.
PROVIDING STRONG LEADERSHIP
GLOBALLY AND EFFECTIVE
POLICYMAKING DOMESTICALLY
When you travel around the United States and talk
with people of all types and persuasions, there is a
rather common refrain; namely, why are we help-
ing foreign nations with the safety of their borders
and economies when we are not doing a particu-
larly good job of protecting our own? While there is
no moral equivalency in these arguments, they are
understandable. It is clear that many Americans
feel we need to do a better job here at home
before we can focus over there. We can under-
stand why some people living in this country, who
have been neglected for decades, ask how their
government can find the money for Ukraine and
other parts of the world but not for them. It is a
reasonable question.
From my point of view, our highly charged, emo-
tional and political domestic issues are centered
around 1) immigration and lack of border security
and 2) the fraying of the American dream, particu-
larly for low-income and rural Americans who feel
left behind amid the growing wealth and prosper-
ity of others around them. Please read the sidebar
on page 57, which I believe explains the legitimate
frustration of some of our citizens. And I agree
with them.
50
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER • Well-conceived regulations (and related
laws). This requires an ongoing concerted
effort to streamline regulations to cost effec-
tively drive better outcomes for the United
States. The last thing we need is a constant
pile-on of politically driven, fragmented poli-
cies. Please read the sidebar on the next
page, an editorial in The Wall Street Journal by
George McGovern, one of the most liberal
presidential nominees in our lifetime, in which
he clearly lays out the complexity, risks and
costs that businesses, large and small, face
every day. While he acknowledges the worthi-
ness of the goals of many regulations, he
points out their negatives. He also calls out
the “blame-shifting and scapegoating” and
“the endless exposure to frivolous claims and
high legal fees.” Not only is this state of
affairs demoralizing, but it also reduces
employment, capital investment and the for-
mation of new businesses, as well as cause
unnecessary bankruptcies. Estimates of the
regulatory costs for America are approxi-
mately $19,000 per worker, dwarfing the reg-
ulatory burdens in other countries. We all
want sensible regulations that make us a bet-
ter and safer nation — but this number is
astounding. We should be able to accomplish
our goals while sharply reducing needless and
wasteful expenses. And remember, it’s dis-
couraging not only to companies but to all cit-
izens who have to deal with it on a daily basis.
• Timely permits on projects large and small.
There is virtually no industry — from agricul-
ture and construction to transportation, tech-
nology, and oil and gas — or business, large or
small, that isn’t disadvantaged by the tedious
process and the length of time it takes to get
approvals for permits to get things done. This
includes federal, state and local requirements.
These bottlenecks also make investment far
more costly and slow. Timely permits would
improve infrastructure and save lives, not
endanger them.
• Proper federal government budgeting and
fiscal management. The staggering inability
of the government to draft and pass a proper
budget causes deep and unnecessary damage
to our growth. Some people estimate that the
waste alone (due to improper payments, over-
lapping programs, and fragmented and duplica-
tive contracts, among other things) could cost
the nation hundreds of billions of dollars annu-
ally. This uncertainty filters through virtually
every part of the American economy and should
not be accepted.
We can all forgo a little self-interest to do what
is right for our country.
Those of us who have benefited the most from this
country bear even greater responsibility to do this.
It’s perfectly understandable that institutions,
including businesses, unions and industries, lobby
in Washington, D.C., to protect themselves — in
good ways and bad — but we should more regu-
larly put national interests ahead of self-interests.
It’s good to want to ensure well-paying jobs and
healthy industries. But it is not good when it
reduces competition, stops the deployment of
enhanced technology, harms efficiency, creates
fake jobs or builds bridges to nowhere or damages
the general health of the economy. Doing the right
thing, the right way — which is achievable — would
be better for everyone. As former President John
F. Kennedy said, “Ask not what your country can do
for you — ask what you can do for your country.”
Celebrate American exceptionalism.
We can safely say that America is an exceptional
nation built and grounded on principles — princi-
ples of freedom of speech, freedom of religion,
free enterprise (capitalism), and the freedom and
empowerment brought to us by our democracy
through the power to elect our leaders and of our
Constitution, which makes these individual free-
doms sacrosanct. Much of the world yearns to be
here because of those principles — the right to life,
liberty and the pursuit of happiness. We should
extol those virtues while recognizing that America
has never been a perfect nation, like all other
nations. We can acknowledge our flaws and strive
to constantly correct them, without denigrating
our nation.
51
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER Let’s celebrate the shared sense of sacrifice
that gives us all strength.
There were very few positives from the pandemic,
but I’m mentioning one, which, unfortunately,
didn’t last, but reflected the best of us. In New
York City, at 7 p.m. every evening, people through-
out the city would open their windows, shouting
and screaming and banging pots and pans to show
gratitude to the essential workers — sanitation
workers, police, firefighters, emergency respond-
ers, nurses and doctors. Of course, these workers
were always essential, but I was hoping that spirit
and civility would become deeply embedded and
have longer lasting effects in our society.
I can understand when an individual for conscien-
tious reasons chooses not to do work that helps
our military. But I cannot understand when an
entire company takes that position. How can we
have a sense of shared sacrifice, when America is
home to 18 million veterans who were willing to
risk their lives for America’s safety, and yet some
companies are not even willing to use their finger-
tips to help?
For example, back in 1969 the cancellation of
the Reserve Officers’ Training Corps programs by
the country’s most prestigious universities and
colleges likely fueled the great divide — between
elites and others in our country — that persists
today. Our strength as a nation is best served
when the best students and the best soldiers are
brought together, and we would all benefit from
more civility and better teaching around basic
virtues like hard work, shared sacrifice, justice,
rationality and more respect for the enduring
values of American freedom and free enterprise.
Resist being “weaponized.”
We can start by trying to understand other people’s
and other voters’ points of view, even around deeply
emotional topics. We can stop insulting whole
classes of voters. We can stop name calling. We can
stop blame-shifting and scapegoating. We can stop
being petty. Politicians can cease insulting, baiting
and belittling each other, which diminishes them
and the voter. It has also become too acceptable
for some politicians to say one thing in private and
deliver a completely different message in public.
It would also be nice to see some cabinet members
from the opposing party. We should also stop
degrading and demonizing American business
and American institutions, which are the best in
the world, because it erodes confidence in our
very country.
Social media could do more.
There is no question that social media has some
real negative effects, from the manipulation of
elections to the increasingly documented negative
effects on the mental health of children. These are
issues impacting our individual and collective
spheres, and it’s time for social media companies
to take more action to remedy these challenges —
and swiftly. Rapid advances in technology will not
only make these existing issues harder to address,
but they will likely create new ones. The current
state of the online information landscape has
wide-ranging implications on trust in institutions,
information integrity and more — and it bears on
institutions like ours, where platform policy has
increasingly widespread implications for concerns
about fraud, security and other issue spaces.
A range of tools and approaches is required to
address this complex and important situation —
and there are several measures that platform com-
panies can immediately enact, voluntarily, while
strengthening and improving their business models.
One commonsense and modest step would be for
social media companies to further empower plat-
form users’ control over what they see and how it
is presented, leveraging existing tools and features
— like the alternative feed algorithm settings some
offer today. I believe many users (not just parents)
would appreciate a greater ability to more care-
fully curate their feeds; for example, prioritizing
educational content for their children.
Platforms could also consider enhanced authenti-
cation measures; i.e., having users identify them-
selves to the platform or to a trusted third party.
This would have the virtue of increasing individual
accountability and reducing imposters, bots and
53
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER possibly foreign political actors on platforms. It
would have immediate benefits for users who pre-
fer content from authenticated sources that take
responsibility for their postings. There are clear
competing values that need to be balanced in such
an approach, including those related to our cher-
ished right to free speech, individual privacy and
inclusion (for example, roughly 850 million people
globally don’t have a way to easily authenticate
themselves today). There are also legitimate ques-
tions as to whether authentication would be used
as a tool to chill or block speech or quash bona
fide political dissenters, and real work needs to be
done to identify policy and technical solutions that
balance such risks and benefits.
I offer these approaches as a starting place, under-
standing that it’s crucial to continue honest con-
versation across sectors about the immediate,
incremental improvements we can make to our
online public square, considering the high stakes
involved in how information is created and shared.
Effective measures will require time, money, learn-
ing and improvement, all in service of significantly
enhancing the well-being, quality, and civility of
our experiences online and in the world around us.
Healthy collaboration with business is needed.
Companies big and small create jobs, pay for
employee healthcare and benefits, and build
bridges, roads and hospitals. The people who work
for and run these companies care deeply about
their country — they are patriots, and they want to
see people and communities succeed and prosper.
Unfortunately, the message America hears is that
the federal government does not value business —
that business is the problem and not part of the
solution. There are fewer individuals in govern-
ment who have any significant experience in start-
ing or running a company, which is apparent every
day in the political rhetoric that demonizes busi-
nesses and free enterprise and that damages con-
fidence in American’s institutions. The relationship
between business and government, in fact, might
improve if there were more people from the busi-
ness sector working in government. Inexperience
with business is also evident from the regular lack
of transparency or curiosity from regulators as
they develop economic policies with potentially
seismic consequences for the economy.
When I travel around the country, I experience a
very different perspective on the street and at the
local level — I see that many governors, mayors
and city council members understand they are not
facing big challenges alone. They stand shoulder to
shoulder with our company, even when some of
their constituents disagree or are skeptical about
big banks. These government officials know they
need partners who have the same stake in helping
successful communities thrive and who care about
building a prosperous future as much as they do.
For example, in fewer than 10 years, Detroit saw
one of the greatest turnarounds because of a
vibrant collaboration between government and
business. And businesses know they cannot suc-
ceed if individuals, families, towns and cities are
not flourishing. We obviously don’t agree on every-
thing, but there is a shared belief that we must
work together. We can and should be full partners
in developing solutions to our big problems.
The federal government, regardless of which
party is in charge, needs to earn back trust
through competence and effective
policymaking.
The world is becoming more complex, more tech-
nologically competent and faster. Unfortunately,
the government simply is not built to innovate,
compete and move quickly, as in the competitive
business world. This may be the reason why gov-
ernment is becoming less effective. We need to
take action on this because the loss of trust in
government is damaging to society. We should be
brutally honest about the staggering number of
policies, systems and operations that are under-
performing: Too many ineffective public schools do
not give students the skills they need to land a
well-paying job; we have over 25 million uninsured
Americans, soaring healthcare costs and too many
bad outcomes; we are unable to plan, permit and
build infrastructure efficiently; our litigation
54
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER OUT OF THE LABYRINTH, WITH FOCUS
AND RESOLVE
Even America, the most prosperous nation on the
planet with its vast resources, needs to focus its
resources on the complex and difficult tasks ahead.
I hope to never read a book about How the West
Was Lost, summarized as follows: The failure to
save Ukraine and find peace in the Middle East led
to more bickering among the allies and weakened
military alliances. This accelerated a division
within the Western world, splitting countries into
different economic spheres and with each nation
trying to protect its economy, trade and energy
sources. America’s economy weakened, eventually
leading to the loss of its reserve currency status.
Besotted by populism and partisanship and
crippled by bureaucracy and lack of willpower,
America failed to focus on what it needed to do
to lead and save the Western world. The enemy
was within — we just didn’t see it in time.
Paraphrasing what Winston Churchill was thought
to have said: America, after it had exhausted all
other possibilities, would do the right thing.
What I want and hope to see is a book about
How the West Was Won. As the wars in Ukraine
and the Middle East dragged on and as the fears of
the Western world mounted, America rose to the
challenge as it had in other turbulent times in
history. America coalesced with its allies to form
the alliances necessary to keep the world safe for
freedom and democracy.
I remain with a deep and abiding faith in the
strength of the enduring values of America.
system is capricious and wasteful; progress on
immigration policies and reform is frustrating; lack
of efficient mortgage markets and an affordable
housing policy keep housing out of reach for many
Americans; problems plague the Department of
Veterans Affairs, the Federal Aviation Administra-
tion and the Internal Revenue Service; public uni-
versities don’t take responsibility for their costs
and are often funded by excessive student lending;
underinvestment in the electric grid results in
high costs and unreliable service; highly inefficient
U.S. merchant shipping and ports; and we have
unfunded pension plans and no action on deficit
spending, Social Security and Medicare. I’ll stop
here. This should be unacceptable to all of us.
We need to find a way to bring more varied
expertise and accountability to government.
We should be more ambitious in striving for excel-
lence in government. I acknowledge that some of
the best and the brightest are in government and
the military today. Yet we should return to a govern-
ment that seeks out more of the best and the
brightest people from every background, including
the private sector, to benefit from their knowledge
and experience. Government also needs to leverage
the expertise of business to address problems that
it cannot solve on its own. And to be fair, business
could use its influence to do less to further its own
interest and more to enhance the nation as a whole.
We need good government. And there are some
things only governments can do, such as oversee
the military and justice systems. And while most
innovation happens through the private sector,
there are certain types of foundational innovations
that can only be advanced by the government,
such as basic research that simply cannot be
funded by business. The Democrats want the
government to do even more and the Republicans
even less — I think we should spend more time
trying to do even better. But no one, not even my
most liberal Democratic friends, thinks that send-
ing the government another trillion a year would
be a wise use of money.
55
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER WE SHOULD HAVE MORE FAITH IN THE AMAZING POWER
OF OUR FREEDOMS
The heart and soul of the dynamism of America is human
you don’t like them (which you do not see in autocracies). But
freedom — freedom of speech, freedom of religion, free
we all know that democracy can be sloppy: Maintaining an
enterprise (capitalism), and the freedom and empowerment
effective democracy is hard work. Democracy fosters open
brought to us by our democracy through the right to elect our
debate and compromise, which lead to better decisions over
leaders. Free people are at liberty to move around as they see
time (whether in government or in business). Intelligence is
fit, work as they see fit, dream as they see fit, and invest in
effectively “crowdsourced” with constant feedback. Good public
themselves and in the pursuit of happiness as they see fit. This
policy comes from good debate and analytics, guided by reason
freedom that people enjoy, accompanied by the freedom of
coupled with a firm understanding of what you would like the
capital, is what drives the dynamism — economic and social —
outcomes to be and complemented with an honest assessment
of this great country.
of what is really happening.
Our civil liberties depend upon the rule of law, property rights,
Even democracies can become stagnant, bureaucratic and self-
including intellectual property, and restrictions on government
perpetuating. Good government does many admirable things,
encroachment upon these freedoms. Our Constitution and Bill
but admitting to mistakes is often not one of them. It takes
of Rights secure our individual freedoms and reserve all rights
civically engaged citizens and a strong free press to bring
to the individual other than those important but limited
sunlight to issues and keep a nation strong.
authorities given to the government.
Autocratic societies by their nature subjugate the individual to
The issue of individual rights is not all or none or freedom ver-
the state. By definition they are not meritocracies — they are
sus no freedom. There are, of course, terrible examples where
more about “who you know,” and they exist to perpetuate the
individual rights were trampled upon, and the results were dev-
existing ruling class. Their decisions are based on a completely
astating — both for the individual and for the economy — in East
different calculation, and their decision-making process does
Germany, Iran, North Korea, Russia, Venezuela, to name a few.
not encourage and, therefore, benefit from open
And there are many countries that protect individual rights and
debate. Democracy means that it is immoral to subjugate
are on a spectrum closer to American values. Think of Europe,
individual freedoms to state actors other than to protect the
for example. But even in some countries that have some of
existence of the nation itself.
these rights, a lack of dynamism — often due to bureaucracy,
weak institutions and government, and corruption — is palpable
and has clearly led to less innovation, lower growth and, in
general, a lower standard of living.
There are values that many of us hold dear, such as religion,
family and country. But none may be more important than the
freedoms that allow us to choose to live our life as we see fit.
We should do more to applaud the virtue and amazing power of
Freedom must necessarily be joined with the principle of
our freedoms.
striving toward equal opportunity. Equal opportunity is what
allows individuals to rise to the best of their ability — it also
means unequal outcomes. Equal opportunity is the foundation
for fairness and meritocracy. The fight for equality, which is a
good moral goal, should not damage the rights of the individual
and their liberties.
Democracy and freedom are cojoined — together, they make
freedom more durable. Democracy also has a self-correcting
element — every four years you get to throw out leadership if
56
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER HOW WE CAN HELP LIFT UP OUR LOW-INCOME CITIZENS
AND MEND AMERICA’S TORN SOCIAL FABRIC
To fix problems, we must first acknowledge them. Despite
incarcerated. Those who do run afoul of our justice system
decades of government programs and all the moralizing that
generally do not get the second chance that many of them
surrounds them, we have not done a particularly good job
deserve. Their exclusion from the workforce is not only unfair
lifting up our low-income fellow citizens. I may be wrong, but I
to them but also results in an estimated $87 billion average
do believe this is tearing at the social fabric of America and is
annual cost to the economy.
among the root causes of the fraying of the American dream.
Too many policies that are wrong — affecting housing and
The gap between low-wage and well-paid workers has been
mortgage markets, healthcare, immigration, regulation,
growing dramatically. From 1979 to 2019, the wage growth of
education and student lending, to name a few — are
the top 10% was nearly 10 times that of the bottom 10% —
jeopardizing the opportunity for American citizens to succeed.
which, basically, had not increased at all. The growth of low-
The people who suffer the most, throughout all of this, are not
income workers’ annualized real wages after the pandemic
high-income individuals. I strongly believe that these outcomes
was, for the first time in decades, higher than the top 60%, but
are destroying the concept of “fair” in America and are driving
that’s not enough. The net worth for the bottom 25% of
populism and diminishing, if not eliminating, trust — not only in
households is $20,800, and the net worth for the bottom 10%
government but in all our institutions. Simply put, the social
is essentially $0. This makes it increasingly difficult for low-
needs of far too many of our citizens are not being met. We
wage workers to support their families. Of the 160 million
should never accept these outcomes — we must fix them.
Americans working today, approximately 40 million are paid
less than $15 per hour.
There are two policy changes that I believe can have a dramatic
effect on jobs, growth and equality — and they go a long way
Low-income individuals bear far greater burdens than the rest
toward repairing the frayed American dream. Let’s start by
of us. Nearly 40% of Americans don’t have $400 in savings to
treating all jobs with respect. Even starter jobs, which are the
deal with unexpected expenses, such as medical bills or car
first rung on the ladder of opportunity, bring dignity and create
repairs, which leads to financial distress. More than 25 million
better social outcomes in terms of health, higher household
Americans don’t have medical insurance at all; of these, one in
formation and lower crime. Of these two policy changes, one
five are in a family with income below the federal poverty level.
would better utilize existing resources, and the other would
People who live in low-income neighborhoods also tend to have
cost some money. But both would significantly change
worse health outcomes, including higher rates of mental health
outcomes for low-income Americans.
issues, depression and suicide, and a lower life expectancy — as
many as 20 years. Finally, low-income Americans generally
experience higher unemployment and more crime.
The free one is so blindingly obvious that it’s almost
embarrassing to propose. Our schools (high schools,
community colleges and perhaps even four-year colleges)
No one can claim that the promise of equal opportunity is being
should take responsibility for outcomes — they should be
offered to all Americans through our education systems.
judged on the quality and income level of the jobs that their
Students in the lowest socioeconomic bracket are 50% less
graduates and even non-graduates attain. This means providing
likely to attend college than those in the highest socioeconomic
graduating students and other individuals with work skills (in
groups. Many inner city schools graduate under 50% of their
fields such as advanced manufacturing, cyber, data science and
students — and even those who graduate may not be well-
technology, healthcare and so on) that will lead to better paying
prepared for the workforce. In addition, boys growing up in the
jobs. These schools should work with local businesses to
bottom 10% of family income are 20 times more likely to be
replicate effective programs that are in place — because that is
where the actual jobs are now. This would be good for growth
and, as there are so many examples of successful programs, we
57
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER already know what to do. With nearly 9 million job openings
An increase in the EITC to a maximum of $10,000 would cost
and just under 6 million unemployed workers in the United
tens of billions a year, but I have little doubt that these policy
States, job skills training has never been needed more. We
changes would do more than anything else to lift up low-
already spend a tremendous amount of money on education —
income families and their communities. Well-paying jobs have
just not the right way.
The second step is related to the first: Get more income to low-
paid workers. While this one would cost money, it is to me a
complete no-brainer since it is an expansion of an existing
been shown to reduce crime, increase household formation,
improve health and reduce addiction. Both of these policies
would have the virtue of increasing the number of people in the
workforce. I also have little doubt that this would add to GDP.
program, the Earned Income Tax Credit (EITC), which many
We should attack all our other problems as well, but these two
Democrats and Republicans already agree upon. Today, the
policy changes alone would dramatically improve our low-
EITC supplements low- to moderate-income working individuals
income neighborhoods, broadly strengthen the economy and
and couples, particularly with children and people living in rural
give more opportunity to deserving citizens. It would restore
areas. For example, a single mother with two children earning
the American Dream for many.
$9 an hour (approximately $20,000 a year) could receive a tax
credit of more than $6,000 at year-end. Workers without
children receive a very small tax credit (96% of all EITC dollars
were received by families with children). This should be
dramatically expanded, including eliminating the child
requirement from the calculation altogether. We should convert
the EITC to make it more like a negative income payroll tax,
paid monthly. Any tax credit income should not be offset by any
other benefits these individuals already receive (we have to
eliminate benefit “cliffs” that disincentivize work).
58
A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER In Closing
It’s been 20 years since the Bank One-JPMorgan Chase merger — and it’s been
an extraordinary journey. I can’t even begin to express my heartfelt appreciation
and respect for the tremendous character and capabilities of the
management team who got us through the good times and the bad times
to where we stand today. And I recognize that we all stand on the shoulders of many
others who came before us in building this exceptional company of ours.
I would also like to express my deep gratitude to the 300,000+ employees,
and their families, of JPMorgan Chase. Through these annual letters,
I hope shareholders and all readers have gained a deeper understanding
of what it takes to be an “endgame winner” in a rapidly changing world.
More important, I hope you are as proud of what we have achieved — as a business,
as a bank and as a community investor — as I am.
Thank you for your partnership.
Finally, we sincerely hope to see the world on the path to peace and prosperity.
Jamie Dimon
Chairman and Chief Executive Officer
April 8, 2024
59
Footnotes
Client Franchises Built Over the Long Term (page 11)
Note: figures may not sum due to rounding
1 Certain wealth management clients were realigned from Asset & Wealth Management (AWM) to Consumer & Community Banking (CCB) in 4Q20. 2005 and 2013
amounts were not revised in connection with this realignment.
2 Federal Deposit Insurance Corporation (FDIC) 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. Rolling 8-quarter average of small businesses with revenues of more than $100,000 and
less than $25 million. 2023 results include First Republic. Barlow’s 2005 Primary Bank Market Share is based on companies with revenues of more than
$100,000 and less than $10 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.
5 Digital non-card payment transactions includes outflows for ACH, BillPay, PayChase, Zelle, RTP, external transfers, and digital wires, excluding Credit and Debit
card sales. 2005 is 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 GPCC loans outstanding, which excludes private label, American Express Company (AXP) Charge Card, 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 2023 sales volume and loans outstanding disclosures by peers (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. Card loans outstanding market share has been revised to reflect a restatement to the 2022 reported total industry outstandings disclosed by
Nilson, which impacts annual share growth in 2023.
11 Inside Mortgage Finance, Top Owned Mortgage Servicers as of 4Q23.
12 Experian Velocity data as of FY23. Reflects financing market share for new and used loan and lease units at franchised and independent dealers.
13 Coalition Greenwich Competitor Analytics (preliminary for FY23). 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.
14 Dealogic as of January 2, 2024, excludes the impact of UBS/CS merger prior to the year of the acquisition (2023).
15 Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses.
16 Firmwide Payments revenue metrics exclude the net impact of equity investments; 2005 data represents Treasury Services firmwide revenue only. All other
periods include Merchant Services revenue.
17 Coalition Greenwich Competitor Analytics (preliminary for FY23) reflects global firmwide Treasury Services business (CIB and CB). Market share is based on
JPMorgan Chase’s internal business structure, footprint and revenue. Ranks are based on Coalition Index Banks for Treasury Services.
18 Institutional Investor.
19 Based on third-party data.
20 The Market Share number represents US dollar payment instructions for direct payments and credit transfers processed over Society for Worldwide Interbank
Financial Telecommunications (“SWIFT”) in the countries where J.P. Morgan has sales coverage.
21 Nilson, Full Year 2023.
22 Coalition Greenwich FY23 Competitor Analytics (preliminary). Rank is based on JPMorgan Chase’s internal business structure and revenue and Coalition Index
Banks for Securities Services.
23 Data in 2005 column is as of 12/31/2006.
24 New relationships (gross) exclude impact of First Republic acquisition.
25
Includes gross revenues earned by the Firm that are subject to a revenue sharing arrangement between CB and the CIB for Investment Banking and Markets’
products sold to CB clients. This includes revenue related to fixed income and equity markets products.
26 S&P Global Market Intelligence as of December 31, 2023.
27 London Stock Exchange Group, FY23.
28 Aligns with the affordable housing component of the Firm’s $30 billion racial equity commitment.
29 Percentage of active mutual fund and active ETF 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. Due to a methodology change effective September 30, 2023, prior results include all long-term mutual fund assets and exclude active ETF assets.
30 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.
31 Traditional assets includes Equity, Fixed Income, Multi-Asset and Liquidity AUM Brokerage, Administration and Custody assets under supervision.
32 AUM only for 2005. Prior period amounts have been restated to include changes in product categorization.
33 Source: Euromoney.
60
34 Percentage of active mutual fund and active ETF 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.
35 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, 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.
36 Source: iMoneynet.
37 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 14)
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: Capital One Domestic Card and Consumer
Banking (COF-DC & CB), Bank of America Global Banking and Global Markets (BAC-GB & GM), Fifth Third Bank (FITB), Northern Trust Wealth 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), Bank of America
Global Banking and Global Markets (BAC-GB & GM), Wells Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management &
Investment Management (MS-WM & IM).
5 Best-in-class GSIB ROTCE represents implied net income minus preferred stock dividends of the comparable business segments of JPM GSIB peers, when
available, or of JPM GSIB peers on a firmwide basis when there is no comparable business segment: Bank of America Consumer Banking (BAC-CB), Bank of
America Global Banking and Global Markets (BAC-GB & GM), Wells Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management &
Investment Management (MS-WM & IM). WFC-CB is the only GSIB 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 15)
1 Tangible common equity 2005-2007 reflects common stockholders’ equity less goodwill and other intangible assets.
2 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.
3
Includes eligible High Quality Liquid Assets (HQLA) as defined in the liquidity coverage ratio (LCR) 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; for December 31, 2023 and 2022, the balance includes eligible end-of-period HQLA as defined in the LCR rule, issued
December 19, 2016. For December 31, 2017–2021, the balance includes average eligible HQLA. Periods prior to 2017 represent period-end balances. December
31, 2016 and 2015 balances are under the initial U.S. rule approved on September 3, 2014. The December 31, 2014 amount is estimated prior to the effective
date of the initial rule, and under the Basel III liquidity coverage ratio (Basel III LCR) for December 31, 2013.
4 2005-2012 reflect cash and cash due from banks and investment securities.
5 Capital returned to common stockholders includes common dividends and net repurchases.
Size of the Financial/Sector Industry (page 39)
1 2007 and 2010 sourced from WorldBank.org annual GDP publication. 2023 is calculated using JPM Research forecasts. Figures are represented in 2015 prices.
2 Consists of cash assets and Treasury and agency securities.
3 2023 figure is as of 3Q23.
4 Top 50 fund AUM data per Sovereign Wealth Fund Institute (SWFI).
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, previous years have been restated.
8 NYSE + NASDAQ; excludes investment funds, ETF’s 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 (Top 40 for 2007).
10 Preqin, Dealogic, JPM Credit Research.
61
Consumer &
Community Banking
I’m very proud to have co-led Consumer
& Community Banking (CCB) for the past
three years and am grateful to Jenn
Piepszak for her partnership. When we
took over this leading franchise, we
established a strategic framework for
continued, long-term success, and that
framework guided CCB to deliver strong
performance again in 2023. The evolving
macro landscape means uncertainty on
many fronts: the financial health of the
consumer, the path of credit and interest
rates, and the impact of new regulations.
While the future will bring challenges, it
will also create opportunities, and we’ve
proved our ability to adapt and optimize.
In 2023, we remained focused on a
consistent set of strategic priorities:
• Growing and deepening relationships by:
— Engaging customers with products
and services they love and
— Expanding our distribution
• Delivering financial performance that is
consistently best-in-class.
• Leveraging data and technology to
deliver customer value and drive speed
to market.
• Protecting our customers and the firm
through a strong risk and controls
environment.
• Cultivating talent to build high-
performing, diverse teams where
culture is a competitive advantage.
Our strategy is working as evidenced by
our results last year.
GROWING AND DEEPENING
RELATIONSHIPS
After the pandemic, we accelerated the
pace of customer acquisition while lower-
ing attrition. Maintaining that momentum,
we now serve over 82 million consumers
and 6.4 million small businesses, up 11%
and 37%, respectively, since 2019. We’re
driving that growth across businesses —
during the same period, Consumer Bank-
2019 TO 2023 GROWTH
CONSUMER BANKING
CUSTOMERS
BUSINESS BANKING
CLIENTS
WEALTH MANAGEMENT
RELATIONSHIPS2
+18%
+41%
+60%
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
CREDIT CARD
ACTIVE ACCOUNTS 1
AUTO
LOAN AND LEASE
ORIGINATIONS
HOME LENDING
MORTGAGE
ORIGINATIONS
+30%
+21%
-67%
CCB
0405_v3
Charts 4/3/24
ing customers are up 18%, Business
Banking clients are up 41% and Card
accounts are up 30%1.
We’re engaging customers with our prod-
ucts and services and delivering seamless
experiences across digital and branch
channels. Our digital banking platform
grew to nearly 67 million active custom-
ers, up 28% since 2019. Once customers
begin to use Chase.com and the Chase
mobile app, we make it easy to help them
save for the future, make small or big
purchases (including a car or home), plan
for retirement or a dream vacation, or
find the perfect restaurant for a night
on the town.
Our branches remain a critical touchpoint
as over 900,000 people walk into one
every day. We know being local matters
and that customers increasingly value
personal interaction and advice. In 2023,
over 2 million more customers met with
a banker than in 2022.
Once we onboard a customer to the fran-
chise, we focus on earning the right to
deepen that relationship and serve more
of their financial needs. Last year was a
banner year for deepening as we ended
2023 with over 24 million multi-line of
business (LOB) customers — up 9% from
2022 and 30% from 20193. We have
prioritized growing multi-LOB relation-
ships as it helps us address more of our
customers’ needs while driving higher
retention and engagement with our prod-
ucts and services. We constantly focus
on improving the customer experience,
which we measure in many ways. We’re
proud to have all-time-high satisfaction
1 Defined as average sales debit active accounts.
2 Unique families with primary and joint account owners
for open and funded accounts.
3 Reflects consumers and small businesses that have
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
relationships with two or more CCB lines of business.
62
CONSUMER & COMMUNITY BANKING
ratings across branch and digital chan-
nels, while our complaint rate per
account is down nearly 10% year-over-
year. Customer attrition is below historic
levels, and CCB’s overall net promoter
score remains very healthy.
DELIVERING FINANCIAL
PERFORMANCE THAT IS
CONSISTENTLY BEST-IN-CLASS
While we recognize that favorable macro
conditions contributed to overearning in
net interest income and credit, we still out-
performed as we delivered strong returns
and grew market share across businesses.
With a 38% return on equity, we exceeded
our 25% target for the third straight year
and would have done so even when nor-
malized to reflect through-the-cycle credit
and rate assumptions. Net income was
$21.2 billion, up 42% over 2022. Revenue
of $70.1 billion was up 28% from 2022, and
CCB’s overhead ratio was 50%. Average
deposits were $1.1 trillion, and although
down 3% from 2022, we outperformed the
industry average. Average loans were up
20% over the prior year to $526 billion,
including the First Republic acquisition.
EXTENDING OUR #1 POSITION
ACROSS INDUSTRY-LEADING
BUSINESSES
Our momentum is driven by successful
execution across all lines of business
in CCB. We’re the clear market leader in
Consumer Banking, Business Banking
and Card and continue to grow.
Consumer Banking
We extended our #1 position in 2023 with
an 11.3% deposit market share, up 40
basis points from 2022. Excluding First
Republic, share growth was up 10 basis
points. Since 2019, we’ve increased our
share by 220 basis points. We’ll continue
to drive growth by expanding branches
and evolving products to meet customer
needs by segment.
Branches remain the hub for our local
team of experts — over 50,000 bankers,
advisors and business relationship
managers — and a key distribution channel
for all parts of the firm. We continue to
optimize our network of over 4,800
branches as we aim to be within a
10-minute drive for 70% of the U.S.
population. This will help us grow share
in major metropolitan areas like Boston,
Philadelphia and Washington, D.C., as
well as states with mostly rural popula-
tions such as Alabama and Iowa, where
we are also expanding our presence.
We’ve added more than 650 new
branches in the last five years, by far
the most of any bank in the U.S. We’re
doubling down on that investment and
will add 500+ branches over the next
three years. The result is a significantly
younger branch network, which creates
embedded growth that already has driven
share gains and will continue to do so for
years to come. Newer or “unseasoned”
branches represent more than $150 bil-
lion in incremental deposit upside as they
mature. At the same time, we are consoli-
dating older branches in certain markets
in response to shifting customer behavior.
We aim to be the bank for all, so tailoring
products, services and experiences for
each customer segment and community is
central to our strategy. We’re increasingly
focused on supporting the financial health
of customers and communities through
digital and in-person resources, such as
our nearly 150 dedicated Community
Managers. We now have 16 Community
Center branches and plan to open three
more in 2024.
We started 2023 with a goal of maintain-
ing primary bank relationships and cap-
turing money in motion, and we did both.
We retained over 95% of our primary
bank customers and succeeded in deep-
ening with investments and an enhanced,
higher-yield product set — including
competitive-rate CDs and the new
J.P. Morgan Premium Deposit account. As
a result, we successfully captured more
than 80% of yield-seeking flows in 2023.
Business Banking
We offer small business owners a compre-
hensive product suite to help them start,
run and grow their businesses. We’re #1
in small business primary bank share
with 9.5% of a fragmented market and
plan to grow by:
• Increasing banker capacity to better
cover large clients, which drives higher
retention, cross-product deepening and
client satisfaction. In 2023, we added
more than 350 bankers against our
target of 1,000 incremental bankers.
• Rolling out value-added services like
payroll, broadening our payment accep-
tance suite with new offerings such as
invoicing (currently in pilot) and launch-
ing Tap-to-Pay, which enables mer-
chants to accept card payments on
their mobile devices.
• Continuing to expand support for small
business owners in underserved com-
munities through special purpose credit
programs, one-on-one mentoring and
local events.
Card
In 2023, we extended our #1 position in
credit card, with sales and outstandings
market share up approximately 50 and
30 basis points, respectively, compared
with 20194.
We drove growth by leveraging our
marketing capabilities to get the right
products in the right customers’ hands.
In 2023, we invested nearly $7 billion in
4 Card outstandings market share has been revised to
reflect a restatement to the 2022 reported total industry
outstandings disclosed by Nilson, which impacted annual
share growth in 2023.
63
CONSUMER & COMMUNITY BANKING
• Expanding Shopping through Chase
Offers. In 2023, we generated more
than $8 billion in attributed spend
volume, up over 30% from 2022.
We’re accelerating growth by launching
Chase Media Solutions SM, a new digital
media business aimed at merchants
that allows them to target and connect
with Chase customers.
• Innovating payments and lending
capabilities. To provide customers with
innovative, convenient ways to pay and
borrow, last year we began to roll out
Pay in 4SM, which has scaled to more
than 20 million customers. We also saw
more than 50% year-over-year growth
in card-linked installment originations
through My Chase Plan®.
Wealth Management
In 2023, we grew client investment assets
by 25% to $800 billion before accounting
for the First Republic acquisition. In total,
we ended the year with $950 billion in
assets, up $450 billion since 2019, as we
close in on our goal of reaching $1 trillion
in assets under supervision. We now have
2.5 million client relationships — up 60%
from 2019 — with a record 120,000 first-
time investors in 2023.
This momentum stems from the invest-
ments we’ve made in products, channels
and talent in the last four years since
we established J.P. Morgan Wealth
Management. In 2023, we:
• Added more than 400 total advisors,
ending the year with nearly 5,500 on
a path to 6,000.
• Scaled Wealth Plan, an omnichannel
financial planning experience that
customers start digitally and can finish
with an advisor. Customers have
created more than 1 million financial
plans since the experience launched
in December 2022.
5 #1 most-visited banking portal in the U.S. (Chase.com)
based on Similarweb.
gross marketing to generate 10 million
new credit card accounts and deliver
benefits to existing cardholders. The
continued demand for our leading products
has fueled portfolio growth, enabling us
to deliver more value and drive engage-
ment with our customer base.
In 2023, we focused on enhancing our
Card product continuum to effectively
serve the unique needs of each customer
segment and:
• Launched Chase Freedom RiseSM for
younger, new-to-credit customers,
which has shown strong adoption using
our branches as its primary distribution.
• Launched DoorDash Rewards
Mastercard®, adding a new strategic
partner to our co-brand portfolio.
• Scaled Ink Business PremierSM, launched
in late 2022, to grow share with small
businesses.
• Continued to enhance the Sapphire
value proposition by opening lounges in
five airports to date and leveraging the
travel, dining and shopping experiences
we’re building in Connected Commerce.
64
SCALING GROWTH BUSINESSES
In Connected Commerce and Wealth
Management, we have the assets to win
and outsized opportunity to grow to
what we view is our fair share, given the
breadth of CCB relationships. These busi-
nesses are natural adjacencies to banking
and credit card, with scale and distribu-
tion that will fuel their growth.
Connected Commerce
We continue building out a powerful two-
sided platform to connect Chase custom-
ers with top brands, helping them book
travel, discover new dining experiences
and save money while shopping. We
expect to drive approximately $30 billion
in volume and about $2 billion in revenue
through the platform in 2025. We’ve
nearly doubled volume over two years,
driving more than $18 billion in 2023.
Going forward, we’re focused on:
• Scaling Travel. We are a top 5 consumer
leisure travel provider with $10 billion in
booked volume last year, up more than
25% from 2022. We’ve just relaunched
ChaseTravel.com to help customers
dream, discover and book travel,
including a new collection of more than
600 of the world’s finest hotels.
CONSUMER & COMMUNITY BANKING#1 banking portal in the United States5#1 in total combined U.S. credit and debit payments volume #1#1#1 in U.S. retail deposit market share#1#1#1 primary bank for U.S. small businesses #1 U.S. credit card issuer based on sales and outstandings4 #1 SECURED LENDING
Auto and Home Lending
In Auto and Home Lending, our objective
is not market share but to be there for cus-
tomers during key moments and to create
franchise value while continuing to maxi-
mize the strength of the firm’s balance
sheet, capital and liquidity. Given the cycli-
cal nature of both businesses, we manage
returns on a through-the-cycle basis.
Despite recent market headwinds, Auto
and Home Lending delivered a return on
equity of 17% and 15%, respectively, aver-
aged over the last five years 6. While the
acquisition of First Republic’s mortgage
portfolio helped bolster Home Lending
returns last year, CCB’s mortgage business
was key to enabling the transaction.
Across both businesses, we continue
to leverage data and artificial intelligence
(AI)-enabled techniques to enhance and
optimize our underwriting and credit
decisioning.
We also remain committed to increasing
homeownership among underserved
communities. Our Chase Homebuyer
Grant program has scaled to over 15,000
communities since its launch in 2021, and
we recently increased the grant amount
to $7,500 in select markets.
LEVERAGING DATA AND
TECHNOLOGY TO DELIVER
CUSTOMER VALUE AND DRIVE
SPEED TO MARKET
Data and technology make everything we
do better — our products, channels and
experiences. In 2023, CCB spent over
$3 billion on technology investments
spanning both product development and
modernization.
A little over half of our annual investment
is focused on product development, help-
ing ensure we have the best products,
6 Excluding loan loss reserves.
services and channels to meet customers’
evolving needs. From paying a bill and
checking a balance to replacing a card
and disputing a transaction, we’re making
processes more seamless, taking friction
out of customers’ everyday financial lives.
At the same time, customers are increas-
ingly engaging with our advice-oriented
digital and omnichannel experiences to
meet their more complex needs, like buy-
ing a home or planning for retirement.
Engaged online activity — beyond viewing
balances — is up 25% since 2019.
The rest of our technology investment is
focused on modernization, which is both
offensive and defensive. We need to
deliver new products and experiences
more quickly while executing with resil-
iency at massive scale to stay competitive
and avoid being disrupted. We’ve made
significant progress and are on track to
substantially complete data center migra-
tion by the end of 2024. We’ve also
migrated almost 90% of our data to the
public cloud. Looking ahead, we’ll con-
tinue to focus on modernizing our core
banking infrastructure, which will enable
us to launch products faster, improve
platform stability and reduce run-the-
bank expenses over time.
Our data migration efforts help us take full
advantage of our extraordinary data
assets to deliver personalization at scale
and accelerate existing and future AI initia-
tives. We’ve been using AI for years and
have a strong foundation in place. Initially,
we focused on using AI to drive cost reduc-
tion and risk avoidance, but we’ve pivoted
to focus more on revenue growth. We’ll
continue to invest where we will realize the
greatest benefit, including:
• Optimizing marketing efforts to better
target profitable prospects.
• Identifying unmet customer needs, then
addressing them in the moment with
digital nudges and personalized offers.
• Increasing the productivity and effi-
ciency of our sales force through lead
management and propensity models.
• Predicting in real time the likelihood
of fraud to better protect customers
and the firm.
• Supporting specialists with AI advance-
ments like call prediction, real-time
insights and intelligent routing to drive
customer and employee satisfaction.
PROTECTING OUR CUSTOMERS
AND THE FIRM
Risk management is core to our culture
and a key competitive advantage, helping
us build trust and providing security to
customers. We are focused on protecting
shareholders, customers and the firm by
maintaining our fortress balance sheet,
strong controls environment and through-
the-cycle decision-making approach.
CULTIVATING TALENT
The work we do matters to customers,
communities and the economy overall. Our
goal is always to attract and retain great
talent and create a culture where every-
one’s voice matters. We help employees
build a long-term career at the firm and
have a workforce that reflects the commu-
nities we serve. Our high-performance
culture rewards the hard work, heart and
humanity that our more than 140,000
employees deliver every day. All of this
leads to the best business outcomes.
ACQUIRING FIRST REPUBLIC
In the midst of widespread instability in
the banking sector, it was the strength
and breadth of our franchise and the
dedication of thousands of employees
that enabled us to complete the acquisi-
tion of virtually all of First Republic’s
assets in one weekend.
We had long admired First Republic’s
capabilities and culture of client service,
which complement our existing affluent
65
CONSUMER & COMMUNITY BANKING
a through-the-cycle approach to manag-
ing our business. Moving forward, we’ll
continue to:
• Execute with excellence and a focus on
efficiency and flexibility as the environ-
ment around us changes.
• Engage with regulators on how
current proposals will negatively
impact consumers and the industry.
• Reshape our business where necessary
in response to new regulations, balanc-
ing impacts to shareholders, customers
and the communities we serve.
I remain very confident about the future
of our franchise, yet approach the oppor-
tunities and challenges we’ll face with
great humility.
Marianne Lake
CEO, Consumer & Community Banking
strategy. We already serve customers
across the wealth spectrum, but the
acquisition will help us deepen relation-
ships with the affluent segment. In 2023,
we prioritized stabilizing First Republic’s
existing business. We retained the vast
majority of customers, and deposits have
increased approximately 20% since the
acquisition. While we are on track against
key integration milestones, 2024 will be
critical as we aim to largely complete
integration efforts by year-end.
2024 LOOK AHEAD
Macro factors
The macro environment going forward
will likely look very different from 2023.
While we anticipate the Federal Reserve
will lower rates this year, the trajectory
is still uncertain. Lower rates will be a
headwind for deposit margins but a
tailwind for businesses such as Home
Lending. The diversification of our
franchise provides natural offsets
and hedges and creates resiliency in
earnings and performance.
We are rigorous in monitoring our portfo-
lios at a granular level using multiple
data sources to assess direct risk and the
overall health of consumers and small
businesses. Based on what we’re seeing,
consumers and small businesses both
still remain generally healthy. Although
consumers have largely spent the excess
cash reserves built up from the fiscal
response to the pandemic, balance
sheets remain strong. Spending on a per
account basis is largely flat year-over-
year. Delinquencies played out as
expected in 2023, and credit card losses
should fully normalize later this year.
Regulatory environment
The banking industry is facing an unprec-
edented barrage of untested and unstud-
ied proposed regulations and legislation
targeting multiple aspects of our busi-
ness. The combined impact of all of these
— Basel III, Regulation II (Debit Card
Interchange Fees), overdraft and late fee
changes, the Consumer Financial Protec-
tion Bureau’s Sections 1033 and 1071, and
the Credit Card Competition Act — will
meaningfully disrupt the economics of
consumer financial products and services.
This level of intervention will lead to some
combination of the following:
• Fewer financial products and services
available, and the remaining ones will
become more expensive and harder to
access, especially for lower-income
consumers.
• Less investment and innovation in the
financial services industry, leading to
an erosion of the customer experience.
• More consolidation across the industry,
which will limit consumer choice.
• More financial activity handled by
nonbanks outside of the regulatory
perimeter, increasing risk for
consumers.
Of course, we will comply with the final
rules and regulations and are relatively
well-positioned to do so. However,
consumers and small businesses will
likely bear the largest burden.
Our hand
We continue to operate from a position of
strength with a relentless focus on the
customer, a proven strategy and the best
team. We recognize headwinds on the
horizon and will adapt accordingly, taking
66
CONSUMER & COMMUNITY BANKING Commercial &
Investment Bank
When Jamie asked me to lead a new orga-
nization 12 years ago, I was thrilled. The
firm was combining its traditional Invest-
ment Bank with the Treasury & Securities
Services division.
The rationale was clear. The merger
would create a massive franchise encom-
passing the industry’s most diverse and
comprehensive solutions for the world’s
largest and most prominent companies,
governments and institutions. From capi-
tal raising and M&A advice to payments,
trading and custody, the combined fran-
chise would enable us to deliver a full
range of products and solutions to clients
around the world.
As others retrenched, we believed growth
would come from being global and diver-
sified, having scale and providing a com-
plete client offering. So we merged two
divisions, identified gaps and invested in
global capabilities. To this day, I believe
the decisions we made then set us up for
the success that we’ve had for the last
decade. The proof is in the revenue,
returns, rankings and market share that
we’ve discussed with you over the years.
This January, we announced the latest
evolution of our corporate structure by
merging two divisions once again: Com-
mercial Banking (CB) with the Corporate
& Investment Bank (CIB).
As we integrate these top-notch fran-
chises, I am delighted to hand the keys
of this incredible organization to Jenn
Piepszak and Troy Rohrbaugh. They are
exceptional leaders in every way, and
I know they will continue to work hard
each day, leading our employees and
serving our clients with heart, integrity
and excellence.
I am equally thrilled to spend more of
my time in my role as President and Chief
Operating Officer, helping Jamie with
firmwide, strategic priorities that will
provide growth and opportunities for
years to come.
Technology is reshaping the financial
services landscape, and we are channel-
ing its transformative power. Among our
efforts, we are already using AI to
onboard customers faster, combat fraud
and serve up more insights to clients.
My focus will be on driving synergies
across our lines of business, accelerating
our investments in growth and innova-
tion, and optimizing our resources across
the firm. Priorities include harnessing
data and modernizing our technology
infrastructure so we can apply artificial
intelligence (AI) to our businesses. This
will help identify efficiencies and areas of
opportunity. I also want to make sure we
continue to manage and deploy capital in
ways that best serve our clients, particu-
larly when they need it most.
In 2023, we made significant strides in
key areas:
In March, teams across our Consumer
Banking, Private Banking, Commercial
Banking and Investment Banking busi-
nesses joined forces to deliver the firm’s
full support to the venture ecosystem in
the aftermath of the regional banking tur-
moil. We are now exploring new ways to
better serve this community, including
tapping opportunities in the booming pri-
vate markets so that we can compete
effectively in this rapidly evolving area.
Our payments capabilities also continue
to strengthen and advance as we priori-
tize innovation and resiliency. We are
unique in that we can compete with fin-
techs on customer experience and digital
solutions while also offering the stability,
expansive network and services of a
global bank.
We are pushing into new markets both at
home and internationally. Whether it’s
growing our presence in emerging mar-
kets, deepening our relationships with
multinational corporations, or expanding
our U.S. branch network and wealth man-
agement business, our strategy is guided
by a commitment to clients, communities
and long-term value creation.
The leadership positions we have today are
the result of hard work and investment
over many years. We know also how hard it
is to stay ahead of the pack. My promise to
you, our shareholders, is that we will not
be complacent. We will stay humble and
hungry and strive always to be the best,
most respected financial firm in the world.
Daniel E. Pinto
President and Chief Operating Officer,
JPMorgan Chase & Co.
67
COMMERCIAL & INVESTMENT BANK In January 2024, we announced an excit-
ing new chapter in our decade-long
growth story.
The decision to bring together the firm’s
major wholesale businesses to form the
Commercial & Investment Bank continues
a journey we have been on for a while as
we seek to better support clients from
their early stages of growth through to
international expansion, acquisitions
and beyond.
The new combined business has the scale,
business diversity and financial firepower
to offer complete solutions across bank-
ing, trading, payments and custody to
middle market businesses, global compa-
nies and governments in more than 100
markets.
We are deeply indebted to Daniel Pinto,
who built the Corporate & Investment
Bank over the last 12 years with leader-
ship positions across products and
regions 1,2. In his time as CEO, the CIB grew
revenue from $34 billion in 2011 to $49
billion in 2023 and increased net income
by more than 75% during the same
period, and its Investment Banking and
Markets businesses have been #1 fran-
chises for over a decade 1,2.
It is a privilege to lead this remarkable
business, and we are thrilled about the
opportunities still to come. But let us first
reflect on the key events and highlights
of our performance in 2023.
OUR PERFORMANCE IN 2023
In 2023, the CIB generated net income of
$14 billion on $49 billion in revenue, mir-
roring 2022’s solid performance but down
from 2021’s record highs. Strong trading
results and record years for our deposit-
taking businesses cushioned the impact
of industrywide weakness in investment
banking activity, underscoring the bene-
fits of our diversified business model.
The year included central banks hiking
rates at the fastest pace in decades, a
second year of war in Ukraine and the
outbreak of conflict in the Middle East,
the collapse of several U.S. regional
banks and recession in parts of Europe.
Throughout, J.P. Morgan offered its
expertise and balance sheet, helping
companies, financial institutions and
governments weather the storm.
During the regional bank turmoil and
resulting economic stress, the firm
helped shore up the financial system
and the economy, stepping in with bil-
lions of dollars in liquidity to help
banks, their clients and investors navi-
gate the crisis. This was complemented
by the firm helping to raise $155 billion
for financial institutions in 2023.
Worldwide investment banking activity
was hit by the uncertain economic out-
look and market conditions. Industry-
wide fees shrank to a 10-year low 1, and
dealmaking remained subdued, causing
our own investment banking revenue
to dip slightly, to $6.2 billion from $6.5
billion in 2022. Even so, the business
maintained its #1 ranking in global
investment banking fees with a wallet
share of 8.8% 1. We also ranked #1 in
debt capital markets, #2 in mergers and
acquisitions (M&A), and rose to #1 in
equity capital markets 1.
Our M&A franchise advised on nearly
350 deals totaling more than $700 bil-
lion in volume 1, including some of the
year’s largest announced transactions:
the $42 billion separation of Johnson
& Johnson’s consumer health business,
agricultural supplier Viterra’s $17 billion
merger with U.S. oilseed and grain
processor Bunge, and sandwich chain
Subway’s $10 billion sale to Roark
Capital, one of the biggest transactions
in fast food history.
68
A decline in M&A dealmaking and the
higher interest rate environment led to
subdued debt capital markets and a drop
in our debt underwriting fees to $2.6
billion in 2023 compared with $2.8 billion
in 2022. A standout deal was the $31
billion bond deal for Pfizer to fund its
acquisition of cancer drug pioneer
Seagen, in which the firm had a lead role.
In 2023, our equity underwriting fees
were up 11% compared with 2022, and
we gained market share year-over-year1.
While market uncertainty dented confi-
dence in initial public offerings (IPO), the
franchise led two of the year’s biggest
offerings, including the $5 billion IPO of
British chip designer Arm Holdings and
consumer health company Kenvue’s
$4 billion debut.
It was another strong year for our
Markets business, which generated
$28 billion in revenue. Some of the
uncertainty that plagued investment
banking activity kept trading desks busy
as clients hedged and positioned them-
selves accordingly. Fixed Income Markets
revenue was up 1% from 2022, driven
by the Securitized Products Group and
Credit, mainly offset by normalization in
Currencies & Emerging Markets, while
Equity Markets revenue dipped after
a relatively strong performance in 2022.
Clients also voted J.P. Morgan the #1
global research firm in Institutional
Investor’s annual survey for the fourth
year in a row. Our analysis of economies
and markets, including research on
some 5,200 companies across more than
80 countries, is particularly sought after
during turbulent times.
CIB Payments reported a record
$9.3 billion in revenue in 2023, up from
$7.6 billion in 2022, as it benefited from
the higher interest rate environment.
1 Dealogic as of January 2, 2024
2 Coalition Greenwich Competitor Analytics (preliminary for
FY23). Market share is based on JPMorgan Chase’s internal
business structure and revenue. Ranks are based on Coalition
Index Banks.
COMMERCIAL & INVESTMENT BANK Securities Services, our fourth major line
of business in the CIB, also had a record
year, reporting $4.8 billion in revenue.
Sitting adjacent to the industry’s largest
Markets business, it provides post-trade
services to institutional asset-manager
and asset-owner clients, providing safe-
keeping, settlement and related services
for securities in approximately 100
markets around the world. Since the
CIB was formed in 2012, the Securities
Services business has nearly doubled
assets under custody from $17 trillion at
the end of 2011 to $32 trillion at the end
of 2023 3. In recent years, investments
in technology have enhanced the scale
and resiliency of its platforms, enabling
the business to grow revenue and secure
major new mandates.
SIZING UP THE OPPORTUNITIES
AHEAD
J.P. Morgan has an exceptional blend of
strengths that have continued to deliver
value over time. The completeness of our
products and services, talent, ongoing
investments in digital technology and
tools, client focus and fortress balance
sheet have given the CIB strong share
positions across almost all areas1,2.
We are not complacent about these lead-
ership positions. The competitive land-
scape for our businesses is intensifying,
driven by both traditional banks as well
as further growth of nonbank financial
institutions. Core to our strategy is look-
ing very closely at all areas of the busi-
ness and pinpointing where there are
weaknesses and opportunities to grow.
Here are some of our target areas:
The benefits of integration
This year we are integrating our major
wholesale businesses Commercial Banking
and the Corporate & Investment Bank.
There are more connections between the
8.8%
$66
2023
#1
INVESTMENT BANKING
Investment banking wallet trend and J.P. Morgan market share and rank
(cid:31)(cid:31) J.P. Morgan market share
(cid:31)(cid:31) Industry wallet ($ in billions)
9.2%
$112
8.4%
$79
7.8%
$79
2016—2019 average
2020-2021 average
2022
J.P. Morgan rank
#1
(all years)
#1
(all years)
#1
Source: Dealogic as of January 2, 2024
MARKETS
Markets revenue4 and J.P. Morgan market share and rank5
($ in billions)
+42%
$27.8
$19.6
2018
11.4%
#1
2023
11.4%
#1
Market share5
Rank5
3 Represents assets held directly or indirectly on
behalf of clients under safekeeping, custody
and servicing arrangements.
4 Revenue reflects J.P. Morgan reported revenue.
5 Coalition Greenwich Competitor Analytics (preliminary for FY23). Market share is based on JPMorgan Chase’s
internal business structure and revenue. Ranks are based on Coalition Index Banks for Markets.
69
COMMERCIAL & INVESTMENT BANK
two businesses than ever before. In 2023,
over $3 billion in gross Investment Bank-
ing and Markets revenue6 and more than
$8 billion in firmwide Payments revenue,
almost half, came from Commercial
Banking clients7. With our extensive foot-
print in the middle market, combined
with our Investment Banking franchise,
we are uniquely positioned to support
middle market clients as they grow in
size and complexity.
At the same time, our biggest multinational
and asset manager clients are navigating
an increasingly complex set of challenges
and need a banking partner with the scale,
global reach and full-service offering to
resolve them. With employees around the
world supporting clients in more than 100
countries, the newly enlarged business is
among the most complete institutional
client franchises in the industry. Wherever
companies are on their growth journey, the
newly combined business will have the
resources and coverage to help.
PAYMENTS AND SECURITIES SERVICES
Trading at scale
Our trading business operates at huge
scale.
In 2023, in the U.S. alone, it handled more
than 42 billion client orders and helped
investors buy and sell nearly $11 trillion
in 12,000 equity securities.
Our strategy of being a complete
counterparty is paying off, with our
biggest institutional clients choosing to
do more business with us. Accordingly,
the bank’s share of the institutional
client wallet has grown from 11.1% in
2018 to 13.9% in 2023 8.
Being there for clients in all markets and
conditions, however, demands a signifi-
cant amount of capital. Although this is a
headwind, the business continues to pro-
vide solid returns, and we remain focused
on the disciplined allocation of capital
while preparing for updated U.S. capital
requirements.
Firmwide Payments revenue 7, 11
($ in billions)
Securities Services revenue12
($ in billions)
+76%
$18.2
$10.4
+14%
$4.2
$4.8
2018
2023
2018
2023
6 Includes gross revenues earned by the firm that are subject
to a revenue sharing arrangement between CB and the CIB
for Investment Banking and Markets products sold to CB
clients. This includes revenues related to fixed income and
equity markets products. Refer to page 65 of the firm’s 2023
Form 10-K for discussion of revenue sharing.
7 Firmwide Payments revenues (predominantly in the CIB
and CB) includes certain revenues that are reported as
investment banking product revenue in CB and excludes
the net impact of equity investments.
8 Coalition Greenwich Institutional Client Analytics.
2023 based on 3Q23 year-to-date analysis.
9 Preqin
10 PitchBook
11 2018 firmwide Payments revenue adjusted down by
$0.2 billion for data processing accounting re-class.
12 2018 Securities Services revenue adjusted down by
$0.1 billion to exclude the impact of past business
simplification, exit actions and accounting changes.
70
As assets and international trade flows
increase, we are modernizing platforms
by moving to the cloud and increasing
automation to handle greater volumes at
lower cost.
To capture market share, institutional
trading needs to be easy and intuitive.
We are investing to enhance the trading
experience for clients across the life cycle
of their trades, from onboarding to pre-
trade services like research, execution,
post-trade settlement and data services.
We are investing heavily in the electronifi-
cation of our credit business, bringing
across some of the technology and
approach behind our Equities business.
Among other initiatives in 2023,
J.P. Morgan launched a new algorithmic
trading offering to U.S. Treasury investors
to capture share in the world’s most
important bond market.
Private capital markets
Private markets — both credit and equity
— have grown significantly over the past
decade. The private credit market has
grown nearly fourfold over the last 10
years to more than $1.6 trillion 9, while
money raised in venture capital and pri-
vate equity growth deals has more than
doubled over the same period10.
Our borrower and investor clients are on
both sides of this growth, and we are
well-positioned to serve the full range of
their needs. We are growing our solution-
agnostic credit strategy, deploying balance
sheet where it makes sense for direct
lending, in addition to our existing financ-
ing and structured solutions. We are also
enhancing our offering for asset managers
and financial sponsors looking to deploy
capital. As the private markets continue to
evolve, we will remain a significant player
with a goal of providing clients with a full
range of financing options.
COMMERCIAL & INVESTMENT BANK With the acquisition of First Republic Bank
and collapse of Silicon Valley Bank, we
have a unique opportunity to expand our
support for the Innovation Economy — the
ecosystem of venture-backed companies,
founders and investors, who rely on the
private markets. In the past, these efforts
were led largely by Commercial Banking.
With our new combined franchise, we
can now better serve this dynamic, fast-
growing client base. We want to make
clients-for-life out of the legions of tech
companies and their founders by support-
ing them from the earliest stages of
growth up to IPO and beyond.
Capital for the climate
In 2023, we continued to help clients
with their sustainability goals as well as
scaling green solutions. Since 2021, the
CIB has financed and facilitated $230
billion for green activities toward our
firmwide target of $1 trillion by 2030,
primarily by supporting clients with green
bond underwriting and financing for
renewable and clean energy. From financ-
ing and capital raising to strategic advice,
we are working closely with clients across
industries as they aim to meet their own
long-term sustainability targets.
Investing for the future
We are investing to scale and enhance the
resiliency of our core platforms and are
pioneering new technologies to move
faster and improve the client experience.
Across the business, we are exploring use
cases for artificial intelligence. In Markets,
our AI-powered Client Intelligence plat-
form is starting to use data from across
the business to create recommendations
based on client interactions, and our Prime
Finance team is harnessing AI to better
manage the inventory of securities we
have on hand for clients while optimizing
our balance sheet for capital efficiency.
Elsewhere, AI has improved the onboard-
ing experience for clients, speeding up and
improving the accuracy of our Know Your
Customer procedures, while in Investment
Banking, the technology is helping cover-
age teams to pinpoint when companies
might need to tap the equity markets.
Our Payments business moves nearly
$10 trillion13 each day, with capabilities to
send payments in more than 120 curren-
cies across 160 countries. We are future-
proofing its platforms and investing to
help businesses across industries, such as
healthcare and e-commerce accept and
make payments more seamlessly. In
Securities Services, an increasing focus is
to provide better data services to help
investor clients improve the performance
of their portfolios and the operational
efficiency of their businesses. In 2023, we
launched the first commercial offerings
on our Fusion platform, giving clients
access to their custody, fund accounting
and middle office data via API or the
cloud. We also rolled out a tool that helps
clients gather, cleanse and organize ESG
data from different sources.
LOOKING AHEAD
The start of 2024 has brought some early
encouraging signs for investment banking
activity but a more mixed outlook for our
Markets business.
Several risks remain. Economies are still
adjusting to life after the pandemic and
the injection of trillions of dollars in
monetary and fiscal stimulus; geopolitical
challenges continue to flare; and the
competitive threat is intensifying. The
outcome of these is inherently unknown
— they could provide both headwinds and
opportunities for our business.
The consistent returns created by the scale
and diversity of our franchise allow us to
keep investing through economic cycles.
13 Based on firmwide data using regulatory reporting
guidelines prescribed by the Federal Reserve for US
Title 1 planning purposes; includes internal settlements,
global payments to and through third-party processors
and banks, and other internal transfers.
We are global with capabilities at scale,
and now combined with Commercial
Banking, we have the ability to become
even more client-centric.
Our products, services and reach coupled
with incredible people and our winning
culture make us especially hopeful about
the future of our business.
It is an honor for both of us to lead this
world-class franchise, and we are excited
for the opportunities in front of us.
Jennifer Piepszak
Co-CEO, Commercial & Investment Bank
Troy Rohrbaugh
Co-CEO, Commercial & Investment Bank
71
COMMERCIAL & INVESTMENT BANK CB 04.04 pm
Charts updated 04 05
Supporting the Innovation Economy:
The collapse of Silicon Valley Bank in
March of last year was a profound
moment. Thousands of founders, compa-
nies and investors needed to protect their
liquidity and make payroll. Many came to
us, and we were ready. Because of our
focus and significant investments to serve
the Innovation Economy (IE) over the past
decade, we were prepared.
In 2023, we accelerated our strategy to
support this important segment of our
economy by:
• Adding approximately two years’
worth of clients in just two months,
with our team working around the clock
for weeks to assist clients and open
thousands of new accounts
• Hiring more than 200 experienced
bankers and senior leaders across key
markets
• Expanding our IE presence in eight
countries, including Australia, China,
Germany, Ireland, Israel, Nordics and
the United Kingdom
• Establishing Startup and Climate Tech
Banking teams to provide deep sector
expertise
• Providing tailored capabilities, such as
early-stage venture lending and capital
raising
• Investing in platforms that deliver
seamless digital experiences and inte-
grated payments offerings specifically
designed for startups and high-growth
companies
Acquiring First Republic Bank: JPMorgan
Chase’s acquisition of First Republic Bank
(FRB) was another notable highlight of
2023. Given the overlap with CB, FRB
offers a tremendous opportunity to
SELECT FINANCIAL HIGHLIGHTS
($ in billions)
TOTAL PAYMENTS REVENUE 1
MIDDLE MARKET EXPANSION
$8.3
$2.2
$5.7
$3.7
$1.5
$1.2
2021
2022
2023
2021
2022
2023
TOTAL REVENUE
NET INCOME
$15.5
$10.0
$11.5
$5.2
$4.2
$6.1
2021
2022
2023
2021
2022
2023
1
In the third quarter of 2023, certain revenue from CIB Markets products
was reclassified from Payments to Investment Banking. Prior period
amounts have been revised to conform with current presentation.
COMMERCIAL BANKING
2023 was a dynamic and complex year,
marked by geopolitical tensions, stubborn
inflation, rapidly rising interest rates and
a regional banking crisis. Through it all,
Commercial Banking (CB) served as a
source of stability for our clients and
communities and remained focused on
executing our strategic priorities.
Amidst this market disruption, our team
rose to the occasion to support thousands
of new clients, expand into key markets
and accelerate growth across our busi-
ness. CB’s exceptional performance
reflects the strength of our franchise,
ongoing client focus, and sustained invest-
ments in our platforms and capabilities:
• Record revenue of $15.5 billion, up
35% year-over-year, reflecting higher
net interest income, client acquisition
and expansion into new markets
• Record net income of $6.1 billion, up
46% year-over-year, and a 20% return
on equity
• Record Payments revenue of $8.3
billion, a 45% increase year-over-year
• Gross Investment Banking revenue of
$3.4 billion, a 14% increase
year-over-year
• Strong credit performance, with net
charge-offs of 12 basis points
I’m incredibly proud of our outstanding
operational and financial performance.
Our team’s steadfast commitment, con-
sistent investments and market discipline
drove our success.
Moments that mattered
Given the challenges several key competi-
tors faced in 2023, the banking landscape
changed dramatically and greatly acceler-
ated the expansion of our franchise.
72
COMMERCIAL & INVESTMENT BANK deepen our presence in high-growth
markets, expand our client franchise and
build upon our team. CB added more than
5,000 Commercial Real Estate clients and
approximately 2,000 Middle Market
clients along with high-quality loans and
deposits. We’re making steady progress
on the integration and are excited about
the synergies between our businesses
and strength of our combined teams.
Executing a proven strategy
Despite these unexpected events, we
made tremendous progress executing
against our long-term, through-the-cycle
strategy.
Building deep, enduring relationships:
CB provides local expertise to nearly
70,000 clients across markets and sec-
tors around the world. We welcomed
close to 5,000 2 businesses last year and
added roughly 500 bankers to build these
relationships. In addition to supporting
clients in all 50 states, we established a
presence in Israel, Malaysia and Singa-
pore, increasing our coverage of non-U.S.
headquartered clients across 27 countries.
Developing powerful solutions: Our
firm delivers end-to-end solutions to
help our clients run their businesses
more efficiently and fuel their growth.
Through firmwide partnerships, CB
offers customized capabilities, such
as bundled services for startups and
specialized payments offerings for
segments like healthcare, real estate
and government. These broad-based
global offerings serve our clients
through every stage of their life cycle.
Delivering an exceptional experience:
CB is making great progress to optimize
our clients’ journey across every touch-
point, including faster onboarding times,
streamlined documentation and intuitive,
self-service tools. As an example, we’ve
been able to reduce our onboarding time
to under 48 hours for a number of new
clients, and we’re working to scale this
experience. Informed by our clients’
needs and expectations, we’ll continue to
invest in our operations and platforms to
offer simple, efficient and digital-first
experiences to our clients of all sizes.
NOTABLE #1 RECOGNITIONS IN 2023
Multifamily Lender in the U.S.3
Middle Market, Market Penetration and Lead Share4
Harnessing the power of our data: CB
has invested in tools and capabilities
to harness the full power of our data.
We’ve worked to combine our proprietary
data with third-party sources to form an
integrated, comprehensive data asset
that enables us to better understand our
clients’ needs, manage risk and drive
operational efficiency.
Empowering our team: One of CB’s key
differentiators is — and always has been
— our people. We provide our team with
specialized training, collaboration and
workflow tools, and content targeted to
seamlessly address clients’ needs. Access
to personalized data and analytics helps
our team develop deep sector expertise
and insights to serve clients in a highly
differentiated manner.
Focus on community impact
CB has played an instrumental role in
supporting the neighborhoods where we
live and work. Our purpose-driven busi-
ness helps to create an inclusive econ-
omy, narrow the racial wealth gap and
drive sustainable economic growth. We’re
a pivotal part of the firm’s community
impact, but our work is more than that —
it’s essential to uplifting the places we
call home.
In 2023 alone, CB extended more than
$18 billion to help communities thrive,
including:
• $6 billion to vital institutions, such as
hospitals, governments and schools
#1
2 Excludes First Republic Bank.
3 S&P Global Market Intelligence.
4 Coalition Greenwich.
5 Barlow Research Associates.
6 London Stock Exchange Group.
Emerging Middle Market, Primary Bank Market Share5
• $3 billion in loans to emerging middle
Middle Market Syndicated Lender6
market businesses
• $5 billion to create and preserve over
41,000 affordable housing units
• $580 million in New Markets Tax
Credit financing to support community
development projects
• $240 million to community
development financial institutions
73
COMMERCIAL & INVESTMENT BANK
SPOTLIGHT ON NEW YORK CITY
For over 200 years, JPMorgan Chase has proudly served clients and communities across New York City (NYC). CB supports over
7,000 clients in NYC and has extended nearly $9 billion in financing to affordable housing developers, vital institutions and local
businesses since 2019.
CB has supported The City of New York
for more than 50 years, providing 60
NYC agencies with services, including
lending, fraud prevention, treasury
services, and more.
Through a multimillion-dollar investment
and a dedicated team, the firm is helping
Carver Federal Savings Bank serve
communities through its seven NYC
branches, including four in Brooklyn.
Founded in 1948, Carver is one of the
nation’s largest Black-managed minority
depository institutions and a community
development financial institution.
CB provided Bronx Pro Group and Services
for the Underserved with a $51 million standby
letter of credit to support the new construction
of Melrose North. This development includes
170 units of affordable housing, improved
energy efficiency and tenant amenities, and
a youth training and employment center.
NEW YORK CITY
CB invested in $10.6 million of New Markets
Tax Credit allocation to expand Urban Health
Plan’s Plaza Del Sol Family Health Center.
This facility provides access to primary and
specialty care, behavioral health, nutrition,
telehealth, and social services, such as the
Women, Infants and Children (WIC) program.
Our future is bright
By all measures, 2023 was a standout
year with our success driven 100% by our
people. I’d like to extend my heartfelt
gratitude to my extraordinary CB col-
leagues and partners across the firm
whose unwavering commitment not only
contributed to our performance but also
supported our clients throughout this
remarkable year.
My continued confidence in our future
reflects our proven strategy, as well as
our commitment to being our clients’
most important financial partner. An
ambitious agenda awaits, and we’re not
standing still. To build upon our strong
momentum, we’ll remain disciplined as
we accelerate our investments to drive
our business forward.
As announced earlier this year, we’re
excited to bring together the strengths
and capabilities of CB and the Corporate
& Investment Bank. This strategic combi-
nation further solidifies our strong part-
nerships across wholesale banking and
creates the most global, complete and
diversified Commercial & Investment
Bank in the world. With an incredible
team, extraordinary client franchise,
iconic brand and unmatched capabilities,
one thing is abundantly clear: Our future
is bright.
74
Douglas B. Petno
Co-Head, Global Banking,
Former CEO, Commercial Banking
COMMERCIAL & INVESTMENT BANKBROOKLYNMANHATTANTHE BRONXQUEENS Asset &
Wealth Management
A landmark year setting the stage for
future success
RECORD NEW CLIENTS AND FLOWS
Nearly half a trillion dollars — $490 billion
to be precise. That sum represents how
much net new money clients entrusted to
J.P. Morgan Asset & Wealth Management
(AWM) last year. During times of financial
crises or market uncertainty, J.P. Morgan
shines even brighter as a port in the
storm — and 2023 was no exception.
The U.S. regional banking crises served as
a stark reminder that banking and lend-
ing are not to be treated as a commodity.
As a reflection of this awareness, AWM
drew an influx of client flows last year at a
rate nearly twice that of our closest pub-
licly listed competitor.
STRONG INVESTMENT
PERFORMANCE AND LEADING
SOLUTIONS FOR CLIENTS
As a fiduciary, delivering strong, long-
term investment performance is our fore-
most priority. Approximately 80% of
J.P. Morgan Asset Management assets
under management (AUM) outperformed
the peer median over a 10-year time
period. This exceptional investment per-
formance is an outcome of decades of
refinement and involves close to 1,300
investment professionals along with one
of the industry’s largest research budgets,
which enables us to actively cover nearly
2,500 public companies, with over 5,000
company visits annually. This has resulted
in 93% of our equity assets outperforming
their peers over the past decade.
Achieving outstanding investment results
is never easy, but after several years of
extensive quantitative easing — which
often led to undifferentiated asset moves
in concert with one another — we are
returning to a market that prioritizes fun-
damentals in valuing companies and
securities, giving us plenty of reasons to
be optimistic about the future for our
investors across asset classes.
We provide our clients with expertise
and effective solutions to support them
through all market cycles and prepare
them for the future. Equipped with state-
of-the-art technology and artificial intelli-
gence (AI)-enhanced tools and capabili-
ties, our advisors stand ready to guide
our clients and deliver more personalized
offerings — from the first dollar they
RECORD 2023 FLOWS 1
($ in billions)
$115
2014
$115
$61
$85
$74
$24
2015
2016
2017
2018
$61
$85
$74
$24
$276
$276
2020
$176
2019
$176
$389
$490
$490
$389
$49
2021
2022
2023
$49
2021
2022
2023
86%
90%
83%
INVESTMENT PERFORMANCE
2023 % of J.P. Morgan Equity
Long-Term Funds AUM Outperforming
Peer Median Over 10 Years 2
TOTAL
EQUITIES
93%
93%
U.S.
95%
95%
INTERNATIONAL
EMERGING MARKETS
AND ASIA
2015
2014
2017
2020
LONG-TERM FUNDS AUM OUTPERFORMING PEER MEDIAN
91%
2016
2018
2019
82%
84%
85%
85%
85%
80%
J.P. Morgan Asset Management Long-Term Funds AUM Outperforming Peer Median Over
10 Years 2
82%
84%
85%
91%
85%
85%
80%
86%
90%
2014
2015
2016
2017
2018
2019
2020
2021
2022
83%
2023
94%
94%
80%
80%
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
1 In the fourth quarter of 2020, the firm realigned certain wealth management clients from
AWM to CCB. Prior periods have been revised to conform with the current presentation.
2 For footnote, refer to page 60 footnote 29 in this Annual Report.
75
ASSET & WEALTH MANAGEMENT invest in the markets to the decisions
they make about their long-term retire-
ment planning. Simultaneously, to assist
our clients in navigating the intricacies of
retirement, we offer robust strategies
through our SmartRetirement solutions.
Our dedication to research is at the heart
of everything we do, from stock selection
to unique market and asset allocation
insights. For example, we deliver exclu-
sive insights to our clients through our
proprietary, industry-leading Eye on the
Market and J.P. Morgan Guide to the
Markets, viewed by hundreds of thou-
sands of financial advisors and millions
of clients every year. And we draw on
the depth and breadth of our market and
economic expertise to provide insights
into investment themes to enable more
confident portfolio decisions. Clients rely
on us to help them distinguish the signals
from the noise.
IMPRESSIVE RESULTS FOR
SHAREHOLDERS
Our success across our preeminent diver-
sified investment and client franchises
drives our consistent growth. This year,
our total client assets grew to a record
$5 trillion, our revenue to a record $20 bil-
lion and our pre-tax income to a record $7
billion — resulting in a return on equity of
31%. These results underscore the power
of a global, highly diversified platform
with exceptional investment performance
and dedicated client service.
PERSONALIZATION, GOVERNANCE
AND STEWARDSHIP
I have never in my time running the AWM
franchise found two clients alike in their
needs, goals and risk tolerances for their
assets. For a sovereign wealth fund or
a first-time individual investor, investing
is deeply nuanced in terms of volatility
tolerances, income and distribution
requirements, taxes, preferences and
passions. The proprietary technologies
we gained from our acquisitions of 55ip
and OpenInvest, for example, enable us
to combine over 600 different invest-
ment strategies to create highly custom-
ized portfolios in a smart, efficient way.
We know our clients have a choice — not
only in managers and investment styles
but also in preferences around sectors or
tilts and, where appropriate, in a tax-
optimized way. We do not believe it is
J.P. Morgan’s job to tell clients what to
include or exclude inside their portfolio
sectors or stock selection. Instead, we
empower clients to guide us and drive
their own decisions.
And because preferences are often
personal in nature, we are steadfast in
focusing our stewardship on voting
matters that maximize long-term share-
holder value and good governance. With
the increased prevalence of outsourcing
proxy voting, by the end of 2024, generally
we will have eliminated third-party proxy
advisor voting recommendations from our
internally developed voting systems. We
believe these enhancements will allow
companies to better understand our inde-
pendent rationale regarding voting issues.
INVESTING FOR THE FUTURE
Active ETFs and SMAs
Innovation forms the core of our
business. Having launched our active
exchange-traded fund (ETF) platform
less than 10 years ago, we have emerged
as a global leader — ranking #2 in AUM
and net flows, led by having the #1, #3
and #5 largest actively managed ETFs
A Record Year
Delivering Strong Results
GLOBAL ACTIVE ETF RANKING
P
$20B
Revenue
$7B
P
Pre-tax Income
$5B
P
Net Income
$228B
Loans (EOP)
P
$5T
P
Client Assets
$490B
Flows
P
No.
Fund Name
Ticker
Total Assets
1
JPMorgan Equity Premium Income ETF
JEPI
$32.8
2
Dimensional US Core Equity 2 ETF
DFAC
$26.1
3
JPMorgan Ultra-Short Income ETF
JPST
$22.5
4
PIMCO Enhanced Short Maturity Active ETF
MINT
$10.8
5
JPMorgan Nasdaq Equity Premium Income ETF
JEPQ
$10.8
= recordP
EOP = End of period
76
($ in billions)
Source: Morningstar as of February 29, 2024, excludes GBTC
ASSET & WEALTH MANAGEMENT
in the world (JPMorgan Equity Premium
Income, JPMorgan Ultra-Short Income
and JPMorgan Nasdaq Equity Premium
Income). We persist in our efforts
to innovate, expanding our offerings
by launching 17 new solutions (12 U.S.
and five UCITS) in the past year. We
are equally enthusiastic about our
separately managed account (SMA)
platform. Acquiring 55ip enabled us to
provide our clients with improved tax
management and portfolio customiza-
tion, and our clients now have greater
control over their investments and taxes.
Since the acquisition, our AUM increased
16-fold in this area.
Alternatives
As a top 10 manager and investor, with
more than $400 billion in assets and
a 60-year legacy, we continue to invest
in scaling and expanding our alternatives
capabilities across private equity, hedge
funds, private credit, real estate and
infrastructure. After launching J.P. Morgan
Private Capital two years ago, we success-
fully introduced technology, consumer
and life sciences strategies. As access
to alternatives continues to widen, we
launched J.P. Morgan Real Estate Income
Trust (JPMREIT) and JPMorgan Private
Markets Fund (JPMF), which is one of the
industry’s first private equity funds avail-
able to individual investors. Overall, alter-
natives across AWM continue to grow.
Acquisitions
Global Shares, a share plan administrator
of both public and private companies
around the world, is one of our most
recent acquisitions. As we build out our
broader J.P. Morgan Workplace offering,
we are leveraging Global Shares as the
foundation to help new companies acceler-
ate growth and encourage employees and
owners to invest. With plan participants
from over 100 countries, the number
continues to grow — up 15% this past year.
Just as impressive, client assets are up
32% since the acquisition. We also com-
pleted the acquisition of China Interna-
tional Fund Management (CIFM), rebrand-
ing it as J.P. Morgan Asset Management
(China). We commemorated this pivotal
rebrand by moving 400 new onshore col-
leagues into Shanghai Tower. This served
not only as a celebration but also as a
testament to our shared heritage, global
strengths and deep-rooted expertise in
the local market, as J.P. Morgan’s history
in China dates back more than 100 years.
J.P. Morgan Asset Management (China)’s
headquarters in the heart of downtown Shanghai.
A rigorously controlled environment
To ensure scalable growth, we are
committed to operational excellence —
from enhancing trades, client transac-
tions and money movement to simplifying
interactions and implementing robust
controls and safeguards. Some of these
efforts are being further enhanced using
AI to streamline our processes, manage
risk and make informed decisions to
protect our clients. Additionally, these
investments in our infrastructure help
us — as fiduciaries — perform optimized
stress testing of client portfolios on a
consistent basis.
CONCLUSION
As I have said from the beginning of my
tenure as CEO of AWM, our focus is on
being the best in the industry, not the
biggest. And by best, I mean the best
performer for clients. Advice is not a
simple commodity. Strong investment
performance across a broad, diversified
offering paired with best-in-class advice
and thought leadership are critical ele-
ments. I am confident that our capabili-
ties and commitment to future-focused
investments, as well as enhancements
using technology and AI, will bolster our
ability to serve our clients and empower
them to attain their future success. By
achieving optimal results through these
efforts, clients reward us with their
flows, and future growth will follow.
Furthermore, we hold a unique advan-
tage that sets us apart from all of our
competitors: Being part of JPMorgan
Chase provides us with unmatched
resources, opportunities and scale.
I am so proud of how we helped our
clients and shareholders navigate the
challenges of 2023 and previous market
cycles. Our industry-leading growth of
client assets is a testament to our unwav-
ering commitment to delivering on our
fiduciary responsibilities and dedication
to serving clients’ best interests. We are
deeply grateful for this trust and will
continue to strive for excellence in all
we do, each and every day.
Mary Callahan Erdoes
CEO, Asset & Wealth Management
77
ASSET & WEALTH MANAGEMENT Corporate Responsibility
Across the firm, we believe that the
strength of our company is inextricably
linked to the vitality of our communities.
the world — and show that working in
lockstep with communities is critical to
promoting a strong business environment.
When families do well, we do well. When
communities thrive, we thrive.
GREATER WASHINGTON
In Corporate Responsibility (CR), we put
this philosophy into action by operating at
the nexus of business, policy and commu-
nity. We understand that complex prob-
lems aren’t solved with a single grant or
meeting but rather require multifaceted
solutions. This is why we have brought
together our philanthropy, government
relations, research and policy, sustainabil-
ity and community engagement functions
to tackle inclusive economic growth as
one team. Our integrated model allows
us to tap a wide-ranging set of tools and
perspectives to address societal issues
impacting our clients, customers and
employees and drive favorable conditions
for the firm’s continued success.
We are not just committed to delivering for
communities — we are built for it. With
team members around the globe, we part-
ner with local residents to understand
what’s happening on the ground and how
JPMorgan Chase can use its unique exper-
tise and resources to maximize impact.
Recognizing that there is no one-size-fits-
all approach, our local strategies are inform-
ed by global insights yet intentionally tai-
lored to the local context, whether that is
a region, neighborhood or even city block.
To me, there is nothing more rewarding
than seeing our impact up close. In that
spirit, I invite you to learn about our work
in Washington, D.C., Maryland and Virginia
(Greater Washington); the United Kingdom
(U.K.); Dallas-Fort Worth; and Chicago.
These place-based case studies showcase
the breadth and depth of our engage-
ments in hundreds of communities around
78
Landscape
While the firm has operated in Greater
Washington for more than 50 years, over
the past decade we have made a concerted
effort to advance our business footprint by
opening new branches, hiring local employ-
ees, lending to small businesses and con-
tributing in other ways. We have intention-
ally invested in areas where we can grow
alongside communities and help residents
achieve financial security, especially in
Washington, D.C., and Baltimore, two cities
with significant racial wealth divides.
Our approach
We have pursued initiatives to address
these disparities and lift up the region’s
residents and workforce.
• In D.C., we provided $3 million to help
launch the Congress Heights Community
Training and Development Corporation’s
(CHCTDC) small business career and skills
building incubator in Wards 7 and 8.
• We partnered with Baltimore’s Mayor’s
Office of Employment Development
to launch our Baltimore Virtual Call
Center, hiring 40 Baltimore-based cus-
tomer service specialists and leaders.
• Working with the Greater Washington
Partnership and Education Strategy
Group — and with support from local
government leaders in D.C., Maryland
and Virginia — we recommitted $5.4
million to the TalentReady initiative to
support the preparation of high school
students across the region for in-demand
careers, building on our previous com-
mitment that engaged more than 25,000
students across five school districts.
Our impact in action
We first worked with Monica Ray at
CHCTDC, where she had served as the
organization’s executive director for
more than two decades. Monica has
devoted her career to her community,
attracting investment to help improve
Wards 7 and 8’s low homeownership and
high poverty and unemployment rates.
After years of collaborating on CHCTDC
initiatives and the opening of Chase’s
Community Center Branch in Skyland
Town Center, Monica shared her vision
about helping to launch a small business
career and skills building incubator.
“We are providing support and coaching
for promising new businesses, as well as
for entrepreneurs still in the idea stage,”
she says. “Our JPMorgan Chase partnership
helps us arm these socially and economi-
cally disadvantaged women entrepreneurs
with the processes and systems they need
to succeed in their business ventures.”
Monica and her team have already helped
launch 83 new businesses and are grow-
ing 47 more, creating jobs and building
individual and community wealth.
THE UNITED KINGDOM
Landscape
The U.K. has long been an important mar-
ket for our firm. With over 22,000 employ-
ees, our offerings have continued to grow
with the 2021 launch of the Chase digital
consumer bank and the expansion in the
U.K. of our commercial banking, invest-
ment banking and asset management
businesses. While our presence has
evolved, the country’s economic landscape
has experienced historic changes, with
ongoing income inequality and nearly 22%
of U.K. residents living in poverty .
CORPORATE RESPONSIBILITY Our approach
To address some of the challenges facing
the U.K., we have focused on helping busi-
nesses succeed, supporting individuals as
they build a strong financial future and
connecting people to job opportunities.
This has included committing $64 million in
philanthropic capital over the past five
years, alongside the firm’s active employee
volunteerism programs, civic partnerships,
and close engagements with government
and nonprofits. We have also promoted
efforts to boost the U.K.’s leadership in
sustainable finance, providing input on a
report offering recommendations the U.K.
can take to unlock capital at scale to transi-
tion to a more sustainable energy system.
Examples of our work to benefit local
communities and economic growth include:
• The Aspiring Professionals Program
(APP), run in collaboration with the
Social Mobility Foundation, works to
connect talented young people from
low-income backgrounds with work
and mentorship experiences at
JPMorgan Chase.
• The Founders Forward mentoring
program pairs women entrepreneurs in
the U.K. with JPMorgan Chase mentors,
who provide business strategy and
leadership development guidance.
Our impact in action
Over the past five years, our collective
work with nonprofits has helped more
than 33,000 people reduce their debts and
improve their financial health. We have
also provided resources to support the
growth of over 10,000 small businesses
and place 9,000+ individuals into appren-
ticeships or full- or part-time positions.
Since launching in 2012, the APP has sup-
ported more than 800 young people, 86%
of whom began full-time employment at
JPMorgan Chase or other firms within 15
months of graduation. Radhika, currently a
vice president with the firm’s Global Rates
team, enrolled in APP. She credits the
program with helping her build the skills
she needed for the interview process and
now in her sales role at the firm.
Featured above: Elle
Founders Forward is also changing lives.
Approximately 240 women entrepreneurs
in the U.K. have participated in the pro-
gram. This includes Elle, whose business
won a startup accelerator competition
and expanded to the United States.
In addition to the U.K., we are proud to
offer Founders Forward in France and
Germany, further embedding our commit-
ment to fostering entrepreneurship into
the fabric of our global company.
DALLAS-FORT WORTH
Landscape
Texas is home to our largest employee
base in the United States. With many
companies like ours recognizing Texas as
a great place to do business, the state is
currently experiencing a skilled-labor
shortage, specifically in the Dallas-Fort
Worth area. This local challenge will
persist: Although 85% of living-wage
jobs in Dallas County require education
beyond a high school degree, as of 2017,
73% of Texas’ students were not able
to receive postsecondary credentials
within six years, largely due to financial
obstacles.
Our approach
To help young people access educational
and skills training opportunities, we
began advising and funding data-driven
nonprofits, including the Commit
Partnership and Tarrant To & Through (T3)
Partnership, coalitions of school systems,
higher education institutions, local
and state governments, foundations,
employers and workforce agencies,
among others.
While these organizations work to
address compounding issues that impact
student success and graduation rates, our
commitments are deliberately focused on
initiatives where we have expertise and
insights to add the greatest value. In
2023, we committed:
• $1.5 million to The Commit Partner-
ship’s Opportunity 2040 Plan Phase 1
to support a comprehensive 18-year
investment plan to help improve the
long-term financial health of 150,000
current students by 2040.
• $750,000 to the T3 Pathways to
Careers (P2C) platform to provide a
virtual college-to-career resource to
help parents and students understand
what’s needed to pursue industry-
based credentials, degrees, certifica-
tions and job opportunities.
We also promote policies at the local,
state and federal levels that align with our
goals. Since 2022, we have been a vocal
champion of Texas’s House Bill 8 legisla-
tion that creates a new funding model that
incentivizes community colleges in Texas
to ensure that more students complete
certificates and other credentials or trans-
fer to a four-year university to complete
their undergraduate degree.
Our impact in action
Halfway through the first year, Commit-
2Dallas’s Opportunity 2040 Plan has
already met 87% of its year 1 goal: to
help an additional 7,700 students reach
educational benchmarks that put them
on a pathway to well-paying jobs. This
work is touching Dallas County families
like the Donjuans, whose oldest daughter
Annahi will graduate from the University
of North Texas at Dallas this spring.
“I’m the first on both sides of my family
… to obtain higher education,” says
Annahi. “I decided to attend college in
order to start saving and serve as a role
model for my siblings.”
79
CORPORATE RESPONSIBILITY We are seeing a similar impact from our
T3 P2C commitment. Over the next six
months, T3 will integrate its platform with
the registration process for all Fort Worth
Independent School District middle
school students, which will give approxi-
mately 15,000 students valuable informa-
tion about educational opportunities at
various high schools and careers they can
pursue as an adult.
CHICAGO
Landscape
For more than 160 years, our firm has
served Chicago, a city ripe with business
opportunities — along with its share of
challenges. Between 2017 and 2019,
several reports captured the stark segre-
gation and inequities among communities
in Chicago, underscoring devastating
impacts on economic vitality.
Our approach
Looking at this research and findings
from the JPMorgan Chase Institute, we
recognized an opportunity to change
the decades-long trajectory of the city’s
South and West Sides from disinvestment
to revitalization. Following conversations
with policymakers and residents, we
focused on addressing the city’s afford-
able home shortage as an opportunity
to catalyze wealth building.
To leverage vacant city-owned land, CR
deepened partnerships with nonprofits
building affordable homes in coordination
with local government, including The
Resurrection Project, Reclaiming Chicago
and the Chicago Community Trust. These
organizations target city blocks to acquire
and build homes, supporting individual
and community wealth. They also connect
people with affordable mortgages and
help them plan for costs like maintenance
and repairs. Additionally, our businesses
combined expertise to make one of our
largest-ever affordable housing invest-
ments in redeveloping the Lawson YMCA
into 400+ affordable housing units.
80
Our impact in action
We see returns on our commitments in the
pride and promise of new homeowners,
including Janay, a public school teacher.
Janay saved part of every paycheck to pur-
chase her first home and put down roots.
Featured above: Janay
“As a teacher, building a sense of commu-
nity is one of the first things I do with my
students at the beginning of the year. It
is a way of making students feel safe,
valued and supported. This home does
the same for me,” she reports.
Janay’s inspiring story is one of many.
Housing production from a collaborative
of organizations — funded in part through
grants from JPMorgan Chase — surged
from 19 homes in 2022 to 79 homes in
2023, demonstrating significant progress
toward the collaborative’s goal of scaling
production to more than 100 homes per
year through 2030.
This is just the beginning. In addition to
deploying $1.1 million in home loans and
raising $50 million toward lending and
home construction, our grantees have
leveraged our philanthropic support to
secure another 500 city-owned vacant
lots and gain funding from the state of
Illinois focused on assisting with down
payments and closing appraisal gaps.
LOOKING AHEAD
The essence of our work outlined
above can be captured in three words:
We show up. As listeners, learners and
community partners, we come to the
table — real, tangible tables — ready to
create avenues to economic opportunity.
At these various tables, we ask: “What’s
working?” We examine our investments
with our colleagues across the firm and
external partners, gaining an understand-
ing of how winning approaches can be
scaled to markets around the world. Our
team’s work ensuring that policymakers
know the value we bring to communities
becomes all the more important as we
seek to scale solutions during this uncer-
tain political moment. It is in tandem with
elected officials and other stakeholders
that we have brought, and will continue
to bring, the right products and services
to our clients and customers.
And when we show up, in good and in
tough times, we will bring our holistic
model, positioning ourselves to grow and
truly be the bank for the place we are in,
in every market we serve. We take this
responsibility seriously. It is a privilege
to bank more than 88 million customers
and small businesses. It is a privilege to
support schools, hospitals and other
community institutions. But perhaps most
of all, it is a privilege to lead by example,
demonstrating through our business
success that the private sector has a
role to play in shaping a stronger, more
inclusive economy for everyone.
Tim Berry
Global Head of Corporate Responsibility,
Chairman of the Mid-Atlantic Region
CORPORATE RESPONSIBILITY
Table of contents
Financial:
Audited financial statements:
46 Three-Year Summary of Consolidated Financial
162 Management’s Report on Internal Control Over
Highlights
Financial Reporting
47 Five-Year Stock Performance
163 Report of Independent Registered Public Accounting
Management’s discussion and analysis:
48 Introduction
49 Executive Overview
54 Consolidated Results of Operations
Firm
166 Consolidated Financial Statements
171 Notes to Consolidated Financial Statements
58 Consolidated Balance Sheets and Cash Flows Analysis
Supplementary information:
62 Explanation and Reconciliation of the Firm’s Use of
310 Distribution of assets, liabilities and stockholders’
Non-GAAP Financial Measures
equity; interest rates and interest differentials
65 Business Segment Results
315 Glossary of Terms and Acronyms
86 Firmwide Risk Management
90 Strategic Risk Management
91 Capital Risk Management
102 Liquidity Risk Management
111 Credit and Investment Risk Management
135 Market Risk Management
144 Country Risk Management
146 Climate Risk Management
147 Operational Risk Management
155 Critical Accounting Estimates Used by the Firm
159 Accounting and Reporting Developments
161 Forward-Looking Statements
Note:
The following pages from JPMorgan Chase & Co.’s 2023
Form 10-K are not included herein: 1-44, 322
JPMorgan Chase & Co./2023 Form 10-K
45
Financial
THREE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
As of or for the year ended December 31,
(in millions, except per share, ratio, employee 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”)
Return on tangible common equity (“ROTCE”)(a)
Return on assets (“ROA”)
Overhead ratio
Loans-to-deposits ratio
Firm Liquidity coverage ratio (“LCR”) (average)(b)
JPMorgan Chase Bank, N.A. LCR (average)(b)
Common equity Tier 1 (“CET1”) capital ratio(c)(d)
Tier 1 capital ratio(c)(d)
Total capital ratio(c)(d)
Tier 1 leverage ratio(b)(c)
Supplementary leverage ratio (“SLR”)(b)(c)
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
Employees(e)
Credit quality metrics
Allowances for credit losses
Allowance for loan losses to total retained loans
Nonperforming assets
Net charge-offs
Net charge-off rate
2023
2022
2021
$
$
$
$
$
$
$
$
$
$
$
$
158,104
87,172
70,932
9,320
61,612
12,060
49,552
16.25
16.23
2,938.6
2,943.1
489,320
2,876.6
104.45
86.08
4.10
17 %
21
1.30
55
55
113
129
15.0
16.6
18.5
7.2
6.1
540,607
571,552
1,323,706
3,875,393
2,400,688
391,825
300,474
327,878
309,926
(f)
24,765
1.75 %
7,597
6,209
0.52 %
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 %
As of and for the period ended December 31, 2023, the results of the Firm include the impact of First Republic. Refer to Business Segment Results on page 67
and Note 34 for additional information.
(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 62–64 for a discussion of these measures.
(b) For the years ended December 31, 2023, 2022 and 2021, the percentage represents average ratios for the three months ended December 31, 2023,
2022 and 2021.
(c) The ratios reflect the Current Expected Credit Losses (“CECL”) capital transition provisions. Refer to Note 27 for additional information.
(d) Reflects the Firm’s ratios under the Basel III Standardized approach. Refer to Capital Risk Management on pages 91-101 for additional information.
(e) This metric, which was formerly Headcount, has been renamed Employees but is otherwise unchanged. Refer to Part I, Item 1, Business section on pages
2-3 of this Form 10-K for a further discussion of Human Capital.
(f) Included approximately 4,500 individuals associated with First Republic who became employees effective July 2, 2023.
46
JPMorgan Chase & Co./2023 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, 2018, 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)
2018
$ 100.00
100.00
100.00
100.00
2019
$ 147.27
136.12
132.09
131.48
2020
$ 139.14
122.09
129.77
155.65
2021
$ 177.72
168.90
175.02
200.29
2022
$ 155.33
132.76
156.59
164.02
2023
$ 203.09
131.58
175.61
207.13
JPMorgan Chase & Co./2023 Form 10-K
47
JPMorgan ChaseKBW BankS&P FinancialsS&P 50020182019202020212022202375100125150175200225250 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, 2023. The MD&A is included in both JPMorgan Chase’s Annual Report for the year ended
December 31, 2023 (“Annual Report”) and its Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 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 315-321 for definitions of terms and acronyms used throughout the Annual Report and the 2023 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 161 and Part 1, Item 1A: Risk factors in this Form 10-K on pages 9-33 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 $3.9 trillion in assets and $327.9 billion in
stockholders’ equity as of December 31, 2023. 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
non-bank 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 businesses are the
Corporate & Investment Bank (“CIB”), Commercial Banking
(“CB”), and Asset & Wealth Management (“AWM”)
segments. Refer to Business Segment Results on pages 65–
85, and Note 32 for a description of the Firm’s business
segments, and the products and services they provide to
their respective client bases. On May 1, 2023, JPMorgan
Chase acquired certain assets and assumed certain
liabilities of First Republic Bank (the “First Republic
acquisition”) from the Federal Deposit Insurance
Corporation (“FDIC”). All references in this Form 10-K to
“excluding First Republic,” “including First Republic,”
“associated with First Republic” or “attributable to First
Republic” refer to excluding or including the relevant
effects of the First Republic acquisition, as well as
subsequent related business and activities, as applicable.
Refer to Note 34 for additional information.
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, including documents on the website that are
referenced in this Form 10-K, is not incorporated by
reference into this 2023 Form 10-K or the Firm’s other
filings with the SEC.
48
JPMorgan Chase & Co./2023 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 the Firm’s 2023 Form 10-K. For a
complete description of the trends and uncertainties, as well
as the risks and critical accounting estimates affecting the
Firm, the 2023 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)(b)
CET1 capital
Tier 1 capital
Total capital
Memo:
NII excluding Markets(c)
NIR excluding Markets(c)
Markets(c)
Total net revenue - managed
basis
2023
2022
Change
$
68,837
$
61,985
11%
89,267
66,710
158,104
128,695
87,172
70,932
9,320
49,552
16.23
76,140
52,555
6,389
37,676
12.09
17 %
14 %
21
86.08
18
90.29
73.12
15.0 %
13.2 %
16.6
18.5
14.9
16.8
$
90,041
$
62,355
44,533
27,792
40,938
28,984
$ 162,366
$ 132,277
34
23
14
35
46
32
34
16
18
44
9
(4)
23
Book value per share
$
104.45
$
As of and for the year ended December 31, 2023, the results of the Firm
include the impact of First Republic. Refer to page 67 and Note 34 for
additional information.
(a) The ratios reflect the CECL capital transition provisions. Refer to Note
27 for additional information.
(b) Reflects the Firm’s ratios under the Basel III Standardized approach.
Refer to Capital Risk Management on pages 91-101 for additional
information.
(c) 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 2023 versus the full year of 2022, unless otherwise
specified.
Firmwide overview
JPMorgan Chase reported net income of $49.6 billion for
2023, up 32%, earnings per share of $16.23, ROE of 17%
and ROTCE of 21%.
• Total net revenue was $158.1 billion, up 23%,
reflecting:
– Net interest income (“NII”) of $89.3 billion, up 34%,
driven by higher rates, the impact of First Republic, and
higher revolving balances in Card Services, partially
offset by lower Markets net interest income and lower
average deposit balances. NII excluding Markets was
$90.0 billion, up 44%.
– Noninterest revenue (“NIR”) was $68.8 billion, up
11%, driven by the impact of First Republic, including
the $2.8 billion estimated bargain purchase gain,
higher Markets noninterest revenue, and higher asset
management fees, partially offset by the absence of the
gain on the sale of Visa B shares in the prior year,
higher net securities losses in Treasury and CIO, and
lower auto operating lease income.
• Noninterest expense was $87.2 billion, up 14%,
predominantly driven by higher compensation expense,
reflecting an increase in employees, primarily in
technology and front office, as well as wage inflation. The
increase in expense also includes the $2.9 billion FDIC
special assessment and costs associated with the First
Republic acquisition.
• The provision for credit losses was $9.3 billion,
reflecting $6.2 billion of net charge-offs and a net
addition to the allowance for credit losses of $3.1 billion.
Net charge-offs increased $3.3 billion, predominantly
driven by Card Services, and to a lesser extent single
name exposures in wholesale. The net addition to the
allowance for credit losses included:
– a net addition of $1.3 billion in consumer,
predominantly driven by CCB, reflecting $1.4 billion in
Card Services driven by loan growth, including an
increase in revolving balances, partially offset by a net
reduction of $200 million in Home Lending, and
– a net addition of $657 million in wholesale, driven by
net downgrade activity and a deterioration in the
outlook for commercial real estate in CB.
The net addition also included $1.2 billion to establish
the allowance for First Republic loans and lending-related
commitments in the second quarter of 2023.
The provision in the prior year included a $3.5 billion net
addition to the allowance for credit losses and net
charge-offs of $2.9 billion.
• The total allowance for credit losses was $24.8 billion at
December 31, 2023. The Firm had an allowance for loan
losses to retained loans coverage ratio of 1.75%,
compared with 1.81% in the prior year.
• The Firm’s nonperforming assets totaled $7.6 billion at
December 31, 2023, up 5%, predominantly driven by
wholesale nonaccrual loans, which reflected the impact of
downgrades. Refer to Wholesale Credit Portfolio and
Consumer Credit Portfolio on pages 120–130 and pages
114–119, respectively, for additional information.
JPMorgan Chase & Co./2023 Form 10-K
49
• Firmwide average loans of $1.2 trillion were up 13%,
predominantly driven by higher loans in CCB and CB,
primarily as a result of First Republic.
Selected capital and other metrics
• CET1 capital was $251 billion, and the Standardized and
Advanced CET1 ratios were both 15.0%.
• Firmwide average deposits of $2.4 trillion were down
• SLR was 6.1%.
4%, driven by
– continued migration into higher-yielding investments in
AWM, the impact of higher customer spending in CCB,
continued deposit attrition in CB, and a net decline in
CIB, which included actions taken to reduce certain
deposits,
partially offset by
– the increase in deposits associated with First Republic,
and growth related to the Firm’s international
consumer initiatives in Corporate.
Refer to Liquidity Risk Management on pages 102–109
for additional information.
• TBVPS grew 18%, ending 2023 at $86.08.
• As of December 31, 2023, the Firm had eligible end-of-
period High Quality Liquid Assets (“HQLA”) of
approximately $798 billion and unencumbered
marketable securities with a fair value of approximately
$649 billion, resulting in approximately $1.4 trillion of
liquidity sources. Refer to Liquidity Risk Management on
pages 102–109 for additional information.
Refer to Consolidated Results of Operations and
Consolidated Balance Sheets Analysis on pages 54–57 and
pages 58–60, respectively, for a further discussion of the
Firm's results, including the provision for credit losses; and
Business Segment Results on page 67 and Note 34 for
additional information on the First Republic acquisition.
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 62–64 for a further
discussion of each of these measures.
50
JPMorgan Chase & Co./2023 Form 10-K
Business segment highlights
Selected business metrics for each of the Firm’s four lines
of business (“LOB”) are presented below for the full year of
2023, and include the impact of First Republic, unless
otherwise specified.
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 2023, consisting of:
• Average deposits down 3%; client investment
assets up 47%, or up 25% excluding First
Republic
• Average loans up 20%, or up 6% excluding
First Republic; Card Services net charge-off
rate of 2.45%
• Debit and credit card sales volume(a) up 8%
• Active mobile customers(b) up 8%
• #1 ranking for Global Investment Banking
fees with 8.8% wallet share for the year
• Total Markets revenue of $27.8 billion, down
4%, with Fixed Income Markets up 1% and
Equity Markets down 13%
CCB
ROE 38%
CIB
ROE 13%
CB
ROE 20%
• Gross Investment Banking and Markets
revenue of $3.4 billion, up 14%
• Average loans up 20%, or up 8% excluding
First Republic; average deposits down 9%
AWM
ROE 31%
• Assets under management (“AUM”) of $3.4
trillion, up 24%
• Average loans up 2%, or down 2% excluding
First Republic; average deposits down 17%
(a) Excludes Commercial Card.
(b) Users of all mobile platforms who have logged in within the past 90
days. As of December 31, 2023, excludes First Republic.
Refer to the Business Segment Results on pages 65–85 for
a detailed discussion of results by business segment.
$2.3
trillion
Total credit provided and capital raised
(including loans and commitments)
$239
billion
$36
billion
$1.0
trillion
Credit for consumers
Credit for U.S. small businesses
Credit for corporations
$915
billion
Capital for corporate clients and non-U.S.
government entities
$47
billion
Credit and capital for nonprofit and U.S.
government entities(a)
(a) Includes states, municipalities, hospitals and universities.
JPMorgan Chase & Co./2023 Form 10-K
51
Recent events
• On February 6, 2024, JPMorgan Chase announced that it
plans to open more than 500 new branches, renovate
approximately 1,700 locations and hire 3,500 employees
over the next three years.
• On January 25, 2024, JPMorgan Chase announced new
responsibilities for several key executives:
– Jennifer Piepszak, formerly the Co-Chief Executive
Officer (“CEO”) of CCB, and Troy Rohrbaugh, formerly
the Co-head of Markets and Securities Services, became
Co-CEOs of the expanded Commercial & Investment
Bank, which brings together the Firm’s major wholesale
businesses consisting of Global Investment Banking,
Commercial Banking and Corporate Banking, as well as
Markets, Securities Services and Global Payments.
– Marianne Lake, the former Co-CEO of CCB, became the
sole CEO of that business.
– James Dimon, Chairman and CEO, and Daniel Pinto,
President and Chief Operating Officer, will continue to
jointly manage the company, with Mr. Pinto focusing on
the execution of the Firm’s LOB priorities.
As a result of these organizational changes, the Firm will
be reorganizing its business segments to reflect the
manner in which the segments will be managed. The
reorganization of the business segments is expected to be
effective in the second quarter of 2024.
• On January 16, 2024, JPMorgan Chase announced that
Mark Weinberger, 62, had been elected to its Board of
Directors, effective immediately. He will also serve as a
member of the Board’s Audit Committee. Mr. Weinberger
served as the Global Chairman and Chief Executive Officer
of Ernst & Young from 2013 to 2019.
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 161 and Part I, Item
1A, Risk Factors section on pages 9-33 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
2024 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 2024 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 2024
• Management expects net interest income to be
approximately $90 billion, market dependent.
• Management expects net interest income excluding
Markets to be approximately $88 billion, market
dependent.
• Management expects adjusted expense to be
approximately $90 billion, market dependent.
• Management expects the net charge-off rate in Card
Services to be less than 3.50%.
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 62–64.
52
JPMorgan Chase & Co./2023 Form 10-K
Business Developments
First Republic acquisition
On May 1, 2023, JPMorgan Chase acquired certain assets
and assumed certain liabilities of First Republic Bank (the
"First Republic acquisition") from the Federal Deposit
Insurance Corporation (“FDIC”), as receiver.
JPMorgan Chase’s Consolidated Financial Statements as of
and for the period ended December 31, 2023 reflect the
impact of First Republic. Where meaningful to the
disclosure, the impact of the First Republic acquisition, as
well as subsequent related business and activities, are
disclosed in various sections of this Form 10-K. The Firm
continues to convert certain operations, and to integrate
clients, products and services, associated with the First
Republic acquisition to align with the Firm’s businesses and
operations.
Refer to Note 34 and page 67 for additional information
related to First Republic.
Interbank Offered Rate (“IBOR”) transition
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) ceased on June 30, 2023
(“LIBOR Cessation”). The one-month, three-month and six-
month tenors of U.S. dollar LIBOR will continue to be
published on a "synthetic" basis, which will allow market
participants to use such rates for certain legacy LIBOR-
linked contracts through September 30, 2024.
As part of the Firm’s overall transition efforts which
culminated in the second quarter of 2023, the Firm
successfully completed the conversion of predominantly all
of its remaining cleared derivatives contracts linked to U.S.
dollar LIBOR to the Secured Overnight Financing Rate
(“SOFR”) as part of initiatives by the principal central
counterparties (“CCPs”) to convert cleared derivatives prior
to LIBOR Cessation. Nearly all of the Firm’s other U.S. dollar
LIBOR-linked products that remained outstanding at LIBOR
Cessation have been remediated through contractual
fallback provisions or through the framework provided by
the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”). The
Firm expects that the limited number of contracts
remaining that reference “synthetic” U.S. dollar LIBOR will
be remediated by September 30, 2024.
JPMorgan Chase & Co./2023 Form 10-K
53
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, 2023, unless otherwise specified. Refer to Consolidated Results of Operations on pages
51-54 of the Firm’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) for a discussion
of the 2022 versus 2021 results. Factors that relate primarily to a single business segment are discussed in more detail within
that business segment’s results. Refer to pages 155–158 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)
2023
2022
2021
– the net increase in Markets principal transactions
Financing, largely offset by lower revenue in Rates and
Currencies & Emerging Markets;
Investment banking fees
$
6,519
$
6,686 $ 13,216
Principal transactions
Lending- and deposit-related fees
Asset management fees
Commissions and other fees
24,460
7,413
15,220
6,836
19,912
16,304
7,098
7,032
14,096
14,405
6,581
6,624
Investment securities losses
(3,180)
(2,380)
(345)
Mortgage fees and related income
Card income
Other income(a)
Noninterest revenue
Net interest income
Total net revenue
1,176
4,784
5,609
68,837
89,267
(b)
1,250
4,420
4,322
61,985
66,710
2,170
5,102
4,830
69,338
52,311
$ 158,104
$ 128,695 $ 121,649
(a) Included operating lease income of $2.8 billion, $3.7 billion and $4.9
billion for the years ended December 31, 2023, 2022 and 2021,
respectively. Also includes losses on tax-oriented investments. Refer to
Note 6 for additional information.
(b) Included the estimated bargain purchase gain of $2.8 billion for the
year ended December 31, 2023, in Corporate associated with the First
Republic acquisition. Refer to Business Segment Results on page 67,
and Notes 6 and 34 for additional information.
2023 compared with 2022
Investment banking fees decreased, reflecting in CIB:
revenue was more than offset by a decline in Markets
net interest income, primarily due to higher funding
costs; and
• losses of $280 million in Credit Adjustments & Other
compared with $836 million in the prior year.
The prior year included net markdowns on held-for-sale
positions, primarily unfunded commitments, in the bridge
financing portfolio in CIB and CB.
The increase in principal transactions revenue also included
the impact of higher short-term cash deployment activities
in Treasury and CIO, reflective of the current interest rate
environment.
Principal transactions revenue in CIB generally has offsets
across other revenue lines, including net interest income.
The Firm assesses the performance of its Markets business
on a total net revenue basis.
Refer to CIB and Corporate segment results on pages 72–77
and pages 84–85, respectively, and Note 6 for additional
information.
Lending- and deposit-related fees increased, reflecting:
• lower advisory fees due to a lower number of completed
transactions, reflecting the lower level of announced
deals in the current and the prior year amid a challenging
environment, and
• higher lending-related revenue driven by the
amortization of the purchase discount on certain acquired
lending-related commitments associated with First
Republic, primarily in AWM and CB,
• lower debt underwriting fees as challenging market
predominantly offset by
• lower deposit-related fees in CB and CIB driven by the
higher level of client credits that reduce such fees.
Refer to CIB, CB and AWM segment results on pages 72–77,
pages 78–80 and pages 81–83, respectively, and Note 6 for
additional information.
Asset management fees increased driven by strong net
inflows and the removal of most money market fund fee
waivers in the prior year in AWM, and in CCB the impact of
First Republic, as well as higher average market levels and
strong net inflows. Refer to CCB and AWM segment results
on pages 68–71 and pages 81–83, respectively, and Note 6
for additional information.
conditions, primarily in the first half of the year, resulted
in lower issuance activity across leveraged loans,
investment-grade loans and high-grade bonds. This was
largely offset by higher issuance activity in high-yield
bonds driven by higher industry-wide issuance,
partially offset by
• higher equity underwriting fees driven by a higher level
of follow-on offerings due to lower equity market
volatility and a higher level of convertible securities
offerings, which benefited from higher rates, partially
offset by lower activity in private placements amid a
challenging environment.
Refer to CIB segment results on pages 72–77 and Note 6 for
additional information.
Principal transactions revenue increased, reflecting in CIB:
• higher Equity Markets principal transactions revenue in
Prime Finance and Equity Derivatives,
• higher Fixed Income Markets principal transactions
revenue in Securitized Products and Fixed Income
54
JPMorgan Chase & Co./2023 Form 10-K
The prior year included:
• a gain of $914 million on the sale of Visa B shares and
proceeds from an insurance settlement in Corporate, and
• a gain on an equity-method investment received in partial
satisfaction of a loan in CB.
Refer to Business Segment Results on page 67 and Note 34
for additional information on the First Republic acquisition;
Note 5 for additional information on net investment hedges;
and Note 6 for further information.
Net interest income increased driven by higher rates, the
impact of First Republic, and higher revolving balances in
Card Services, partially offset by lower Markets net interest
income and lower average deposit balances.
The Firm’s average interest-earning assets were $3.3
trillion, down $23 billion, and the yield was 5.14%, up 236
basis points (“bps”). The net yield on these assets, on an
FTE basis, was 2.70%, an increase of 70 bps. The net yield
excluding Markets was 3.85%, up 125 bps.
Refer to the Consolidated average balance sheets, interest
and rates schedule on pages 310-314 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
62–64 for a further discussion of Net yield excluding
Markets.
Commissions and other fees increased due to higher
commissions on annuity sales and travel-related services in
CCB. Refer to CCB segment results on pages 68–71 and
Note 6 for additional information.
Investment securities losses reflected higher net losses on
higher sales of U.S. Treasuries and U.S. GSE and
government agency MBS, associated with repositioning the
investment securities portfolio in both periods in Treasury
and CIO. Refer to Corporate segment results on pages 84–
85 and Note 10 for additional information.
Mortgage fees and related income: refer to CCB segment
results on pages 68–71, Note 6 and 15 for further
information.
Card income increased in CIB and CB, reflecting growth in
merchant processing volume and Commercial Card
transactions in J.P. Morgan Payments; and in CCB, driven by
higher net interchange income on increased debit and
credit card sales volume. Refer to Business Segment
Results, CCB, CIB and CB segment results on pages 65–85,
pages 68–71, pages 72–77 and pages 78–80, respectively,
and Note 6 for further information.
Other income increased, reflecting:
• the $2.8 billion estimated bargain purchase gain in
Corporate associated with the First Republic acquisition,
• the impact of net investment hedges in Treasury and CIO,
and
• a gain of $339 million recognized in the first quarter of
2023 in AWM on the original minority interest in China
International Fund Management (“CIFM”) upon the Firm's
acquisition of the remaining 51% interest in the entity,
partially offset by
• lower auto operating lease income in CCB due to a decline
in volume,
• lower net gains related to certain other Corporate
investments, and
• the net impact of equity investments in CIB, including
impairment losses in the second half of 2023,
JPMorgan Chase & Co./2023 Form 10-K
55
The provision in the prior year included a $3.5 billion net
addition 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 receded, and net charge-offs of $2.9
billion.
Refer to the segment discussions of CCB on pages 68–71,
CIB on pages 72–77, CB on pages 78–80, AWM on pages
81–83, the Allowance for Credit Losses on pages 131–133,
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)
2023
2022
2021
Consumer, excluding credit card
$
935 $
506 $ (1,933)
Credit card
Total consumer
Wholesale
Investment securities
6,048
6,983
2,299
38
3,353
3,859
2,476
54
(4,838)
(6,771)
(2,449)
(36)
Total provision for credit losses
$ 9,320 $ 6,389 $ (9,256)
2023 compared with 2022
The provision for credit losses was $9.3 billion, reflecting
$6.2 billion of net charge-offs and a net addition of $3.1
billion to the allowance for credit losses.
Net charge-offs increased $3.3 billion, consisting of $2.6
billion in consumer, predominantly driven by Card Services,
as the portfolio continued to normalize to pre-pandemic
levels, and $698 million in wholesale.
The net addition to the allowance for credit losses included
$1.9 billion, consisting of:
• $1.3 billion in consumer, predominantly driven by CCB,
reflecting a $1.4 billion net addition in Card Services,
partially offset by a net reduction of $200 million in
Home Lending. The net addition in Card Services was
driven by loan growth, including an increase in revolving
balances, partially offset by reduced borrower
uncertainty. The net reduction in Home Lending was
driven by improvements in the outlook for home prices;
and
• $657 million in wholesale, driven by net downgrade
activity and the net effect of changes in the Firm's
weighted average macroeconomic outlook, including a
deterioration in the outlook for commercial real estate in
CB, partially offset by the impact of changes in the loan
and lending-related commitment portfolios.
The net addition also included $1.2 billion to establish the
allowance for the First Republic loans and lending-related
commitments in the second quarter of 2023.
56
JPMorgan Chase & Co./2023 Form 10-K
Income tax expense
Year ended December 31,
(in millions, except rate)
Income before income tax
expense
Income tax expense
Effective tax rate
2023
2022
2021
$ 61,612
$ 46,166
$ 59,562
12,060
8,490
11,228
19.6 %
18.4 %
18.9 %
2023 compared with 2022
The effective tax rate increased predominantly driven by:
• the higher level of pre-tax income and changes in the mix
of income and expenses subject to U.S. federal, state and
local taxes,
• lower benefits associated with tax audit settlements, and
• vesting of employee stock based awards,
largely offset by
• the impact of the income tax expense associated with the
First Republic acquisition that was reflected in the
estimated bargain purchase gain, which resulted in a
reduction in the Firm’s effective tax rate, and
• an income tax benefit related to the finalization of certain
income tax regulations.
Refer to Note 25 for further information.
Noninterest expense
Year ended December 31,
(in millions)
2023
2022
2021
Compensation expense
$ 46,465 $ 41,636 $ 38,567
Noncompensation expense:
Occupancy
Technology, communications and
equipment(a)
Professional and outside services
Marketing
Other(b)
4,590
4,696
4,516
9,246
9,358
10,235
10,174
4,591
12,045
3,911
6,365
9,941
9,814
3,036
5,469
Total noncompensation expense(c)
Total noninterest expense
40,707
34,504
32,776
$ 87,172 $ 76,140 $ 71,343
(a) Includes depreciation expense associated with auto operating lease
assets.
(b) Included Firmwide legal expense of $1.4 billion, $266 million and
$426 million, as well as FDIC-related expense of $4.2 billion, $860
million and $730 million for the years ended December 31, 2023,
2022 and 2021, respectively. Refer to Note 6 for additional
information.
(c) Reflected the impact of First Republic of $1.5 billion, which included
expenses recorded in the second quarter of 2023 with respect to
individuals associated with First Republic who did not become
employees of the Firm until July 2, 2023. Refer to Business Segment
Results on page 67 for additional information.
2023 compared with 2022
Compensation expense increased driven by:
• an increase in employees, primarily in technology and
front office, as well as wage inflation,
• the impact of First Republic in the second half of 2023,
predominantly in CCB and Corporate, and
• higher volume- and revenue-related compensation
predominantly in AWM and CCB.
Noncompensation expense increased as a result of:
• higher FDIC-related expense, which included the $2.9
billion special assessment recognized in Corporate,
• the impact of First Republic in Corporate and CCB,
• higher legal expense in CIB, Corporate and CCB,
• higher investments in the business, including marketing
and technology, and
• higher other expenses, including higher indirect tax
expense in CIB, and higher travel and entertainment
expense across the segments,
partially offset by
• lower depreciation expense on lower auto lease assets.
Refer to Business Segment Results on page 67 and Note 34
for additional information on the First Republic acquisition;
Note 6 for further information;
JPMorgan Chase & Co./2023 Form 10-K
57
CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Consolidated balance sheets analysis
The following is a discussion of the significant changes between December 31, 2023 and 2022. Refer to pages 155–158 for a
discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Balance Sheets.
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
increased reflecting the higher level of excess cash placed
with the Federal Reserve Banks. The Firm’s excess cash
primarily resulted from:
• the net issuance of long-term debt, and
• the impact of maturities and paydowns of investment
securities in Treasury and CIO,
partially offset by
• the impacts associated with the First Republic acquisition
in the first half of 2023.
Federal funds sold and securities purchased under resale
agreements decreased, reflecting a reduction in client-
driven market-making activities, partially offset by higher
cash deployment in Treasury and CIO.
Securities borrowed increased driven by Markets,
reflecting a higher demand for securities to cover short
positions and client-driven activities.
Refer to Note 11 for additional information on securities
purchased under resale agreements and securities
borrowed.
Trading assets increased, reflecting in Markets higher debt
and equity instruments on client-driven market-making
activities, partially offset by lower derivative receivables,
primarily as a result of market movements. Refer to Notes 2
and 5 for additional information.
Investment securities decreased due to:
• lower available-for-sale ("AFS") securities driven by
maturities and paydowns, predominantly offset by the
impact of First Republic, net purchases, and the transfer
of securities from held-to-maturity (“HTM”) in the first
2023
2022
Change
$
29,066
$
27,697
5 %
595,085
276,152
200,436
540,607
201,704
369,848
571,552
539,537
315,592
185,369
453,799
205,857
425,305
631,162
1,323,706
1,135,647
(22,420)
(19,726)
1,301,286
1,115,921
107,363
30,157
64,381
159,308
125,189
27,734
60,859
182,884
$ 3,875,393
$ 3,665,743
10
(12)
8
19
(2)
(13)
(9)
17
14
17
(14)
9
6
(13)
6 %
quarter of 2023, and
• lower HTM securities driven by maturities and paydowns,
and the transfer of securities to AFS.
Refer to Corporate segment results on pages 84–85,
Investment Portfolio Risk Management on page 134 and
Notes 2 and 10 for additional information on investment
securities.
Loans increased, reflecting:
• $146 billion of loans associated with First Republic,
• growth in new accounts in Card Services, as well as higher
revolving balances, which continued to normalize to pre-
pandemic levels, and
• growth in Auto loans due to net originations.
The allowance for loan losses increased, reflecting:
• a net addition to the allowance for loan losses of $2.2
billion, consisting of:
– $1.3 billion in consumer, predominantly driven by CCB,
reflecting $1.4 billion in Card Services driven by loan
growth, including an increase in revolving balances,
partially offset by a net reduction of $176 million in
Home Lending, and
– $930 million in wholesale, driven by net downgrade
activity and the net effect of changes in the Firm's
weighted average macroeconomic outlook, and
• $1.1 billion to establish the allowance for the First
Republic loans in the second quarter of 2023.
The allowance for loan losses also reflected a reduction of
$587 million, on January 1, 2023, as a result of the
adoption of the Financial Instruments - Credit Losses:
Troubled Debt Restructurings accounting guidance.
58
JPMorgan Chase & Co./2023 Form 10-K
References in this Form 10-K to "changes to the TDR
accounting guidance" pertain to the Firm's adoption of this
guidance.
There was also a $408 million net reduction in the
allowance for lending-related commitments recognized in
other liabilities on the Consolidated balance sheets.
Refer to Consolidated Results of Operations and Credit and
Investment Risk Management on pages 54–57 and pages
111–134, respectively, and Notes 2, 3, 12 and 13 for
additional information on loans and the total allowance for
credit losses; and Business Segment Results on page 67 and
Note 34 for additional information on the First Republic
acquisition.
Accrued interest and accounts receivable decreased due
to lower client receivables related to client-driven activities
in Markets.
Premises and equipment increased as a result of the
construction-in-process associated with the Firm's
headquarters, the First Republic acquisition, largely lease
right-of-use assets, and higher capitalized software. Refer
to Note 16 and 18 for additional information.
Goodwill, MSRs and other intangibles increased
predominantly due to:
• other intangibles and goodwill related to the acquisition
of the remaining 51% interest in CIFM,
• core deposit intangibles associated with the First
Republic acquisition, and
• higher MSRs as a result of net additions primarily from
purchases, and the impact of higher interest rates,
partially offset by the realization of expected cash flows.
Refer to Note 15 and 34 for additional information.
Other assets decreased reflecting the impact of the change
in the type of collateral placed with CCPs from cash to
securities.
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
2023
2022
Change
$ 2,400,688
$ 2,340,179
216,535
44,712
180,428
290,307
23,020
391,825
202,613
44,027
177,976
300,141
12,610
295,865
3,547,515
3,373,411
327,878
292,332
3
7
2
1
(3)
83
32
5
12
Total liabilities and stockholders’ equity
$ 3,875,393
$ 3,665,743
6 %
Deposits increased, reflecting the net impact of:
• higher balances in CIB due to net issuances of structured
notes as a result of client demand, as well as deposit
inflows from client-driven activities in Payments and
Securities Services, partially offset by deposit attrition,
including actions taken to reduce certain deposits,
• growth in Corporate related to the Firm's international
consumer initiatives,
• lower balances in CCB reflecting higher customer
spending,
• a decline in AWM due to continued migration into higher-
yielding investments driven by the higher interest rate
environment, predominantly offset by growth from new
and existing customers as a result of new product
offerings, and
• a decrease in CB due to continued deposit attrition as
clients seek higher-yielding investments, predominantly
offset by the retention of inflows associated with
disruptions in the market in the first quarter of 2023.
The net increase also included $61 billion of deposits
associated with First Republic, primarily reflected in CCB,
AWM and CB.
Federal funds purchased and securities loaned or sold
under repurchase agreements increased, reflecting the
impact of a lower level of netting on reduced repurchase
activity.
Refer to Liquidity Risk Management on pages 102–109 for
additional information on deposits, federal funds purchased
and securities loaned or sold under repurchase agreements,
and short-term borrowings; Notes 2 and 17 for deposits
and Note 11 for federal funds purchased and securities
loaned or sold under repurchase agreements; Business
Segment Results on page 67 and Note 34 for additional
information on the First Republic acquisition.
Trading liabilities increased due to client-driven market-
making activities in Fixed Income Markets, which resulted in
higher levels of short positions in debt instruments,
partially offset by lower derivative payables primarily as a
result of market movements. Refer to Notes 2 and 5 for
additional information.
Accounts payable and other liabilities decreased primarily
due to lower client payables related to client-driven
activities in Markets, partially offset by higher accounts
payable and accrued liabilities, including the $2.9 billion
payable related to the FDIC special assessment. Refer to
Note 19 for additional information.
JPMorgan Chase & Co./2023 Form 10-K
59
Beneficial interests issued by consolidated VIEs increased
in CIB primarily driven by higher levels of Firm-
administered multi-seller conduit commercial paper held by
third parties, reflecting changes in the Firm’s short-term
liquidity management. Refer to Liquidity Risk Management
on pages 102–109; and Notes 14 and 28 for additional
information on Firm-sponsored VIEs and loan securitization
trusts.
Long-term debt increased, reflecting the impact of First
Republic, which included the Purchase Money Note issued
to the FDIC and additional FHLB advances, as well as net
issuance consistent with the Firm’s long-term funding plans.
The increase was also attributable to net issuances of
structured notes in Markets due to client demand and an
increase in fair value. Refer to Liquidity Risk Management
on pages 102–109 and Note 34 for additional information
on the First Republic acquisition.
Stockholders’ equity: refer to Consolidated Statements of
changes in stockholders’ equity on page 169, Capital
Actions on page 99, and Note 24 for additional information.
60
JPMorgan Chase & Co./2023 Form 10-K
Consolidated cash flows analysis
The following is a discussion of cash flow activities during
the years ended December 31, 2023 and 2022. Refer to
Consolidated cash flows analysis on page 57 of the Firm’s
2022 Form 10-K for a discussion of the 2021 activities.
(in millions)
2023
2022
2021
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
$ 12,974 $ 107,119 $ 78,084
67,643
(137,819)
(129,344)
(25,571)
(126,257)
275,993
1,871
(16,643)
(11,508)
$ 56,917 $ (173,600) $ 213,225
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 2023, cash provided primarily reflected net income,
lower other assets, and accrued interest and accounts
receivable, predominantly offset by higher trading assets,
lower accounts payable and other liabilities, and higher
securities borrowed.
• 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.
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 2023, cash provided resulted from net proceeds from
investment securities, proceeds from sales and
securitizations of loans held-for-investment and lower
securities purchased under resale agreements, largely
offset by net originations of loans and net cash used in
the First Republic Bank acquisition.
• 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.
Financing activities
The Firm’s financing activities include acquiring customer
deposits and issuing long-term debt and preferred stock.
• In 2023, cash used reflected lower deposits, which
included the impact of the repayment of the deposits
provided to First Republic Bank by the consortium of
large U.S. banks that the Firm assumed as part of the
First Republic acquisition, partially offset by higher
securities loaned under repurchase agreements and net
proceeds from long- and short-term borrowings.
• In 2022, cash used reflected lower deposits, partially
offset by net proceeds from long- and short-term
borrowings.
• 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 58–
60, Capital Risk Management on pages 91-101, and
Liquidity Risk Management on pages 102–109, and the
Consolidated Statements of Cash Flows on page 170 for a
further discussion of the activities affecting the Firm’s cash
flows.
JPMorgan Chase & Co./2023 Form 10-K
61
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 166–170. 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 65–85 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.
2023
2022
2021
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
$ 5,609
$
3,782
$ 9,391
$ 4,322
$
3,148
$ 7,470
$ 4,830
$
3,225 $ 8,055
Total noninterest revenue
Net interest income
Total net revenue
Total noninterest expense
Pre-provision profit
Provision for credit losses
68,837
89,267
158,104
87,172
70,932
9,320
3,782
72,619
61,985
3,148
65,133
69,338
480
89,747
66,710
434
67,144
52,311
4,262
162,366
128,695
3,582
132,277
121,649
NA
87,172
76,140
NA
76,140
71,343
4,262
75,194
52,555
3,582
56,137
50,306
3,225
72,563
430
52,741
3,655
125,304
NA
71,343
3,655
53,961
NA
9,320
6,389
NA
6,389
(9,256)
NA
(9,256)
Income before income tax expense
61,612
4,262
65,874
46,166
3,582
49,748
59,562
Income tax expense
Net income
Overhead ratio
12,060
$ 49,552
55 %
4,262
16,322
8,490
3,582
12,072
11,228
NA
NM
$ 49,552
$ 37,676
54 %
59 %
NA
NM
$ 37,676
$ 48,334
58 %
59 %
3,655
63,217
3,655
14,883
NA
NM
$ 48,334
57 %
(a) Predominantly recognized in CIB, CB and Corporate.
62
JPMorgan Chase & Co./2023 Form 10-K
Net interest income, net yield, and noninterest revenue
excluding Markets
In addition to reviewing net interest income, net yield, and
noninterest revenue on a managed basis, management also
reviews these metrics excluding Markets, as shown below.
Markets consists of CIB’s Fixed Income Markets and Equity
Markets. These metrics, which exclude 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 Markets activities. In addition, management
also assesses 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)
2023
2022
2021
$ 89,267
$ 66,710
$ 52,311
• 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.
480
434
430
$ 89,747
$ 67,144
$ 52,741
(294)
4,789
8,243
$ 90,041
$ 62,355
$ 44,498
$ 3,325,708 $ 3,349,079 $ 3,215,942
985,777
953,195
888,238
$ 2,339,931 $ 2,395,884 $ 2,327,704
2.70 %
2.00 %
1.64 %
(0.03)
0.50
0.93
3.85 %
2.60 %
1.91 %
$
68,837 $
61,985 $
69,338
3,782
3,148
3,225
$
72,619 $
65,133 $
72,563
28,086
24,195
19,151
$
44,533 $
40,938 $
53,412
$
27,792 $
28,984 $
27,394
(a) Interest includes the effect of related hedges. Taxable-equivalent
amounts are used where applicable.
(b) Refer to pages 75-76 for further information on Markets.
JPMorgan Chase & Co./2023 Form 10-K
63
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,
2023
Dec 31,
2022
Year ended December 31,
2023
2022
2021
$ 300,474 $ 264,928
$ 282,056
$ 253,068
$ 250,968
52,634
51,662
52,258
50,952
49,584
3,225
2,996
1,224
2,510
2,572
2,883
1,112
2,505
876
2,474
$ 247,611 $ 214,552
$ 230,109
$ 203,509
$ 202,982
NA
NA
$
86.08 $
73.12
21 %
NA
18 %
NA
23 %
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.
64
JPMorgan Chase & Co./2023 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 62–64 for a definition of managed basis.
Consumer Businesses
Wholesale Businesses
JPMorgan Chase (a)
Consumer & Community Banking
Corporate & Investment Bank
Commercial
Banking
Asset & Wealth
Management
Banking &
Wealth Management
Home Lending
Card Services &
Auto
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) As a result of the organizational changes that were announced on January 25, 2024, the Firm will be reorganizing its business segments to reflect the
manner in which the segments will be managed. The reorganization of the business segments is expected to be effective in the second quarter of 2024.
Refer to Recent events on page 52 for additional information.
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 periodically assesses the
assumptions, methodologies and reporting classifications
used for segment reporting, and therefore further
refinements may be implemented in future periods. The
Firm also assesses the level of capital required for each LOB
on at least an annual basis. 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 solely 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 higher 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,
2023, this has resulted in higher cost of funds for loans and
JPMorgan Chase & Co./2023 Form 10-K
65
Markets activities, and contributed to margin expansion on
deposits.
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 143 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 91-101 for
additional information.
Capital allocation
The amount of capital assigned to each business segment is
referred to as equity. The Firm’s current allocation
methodology incorporates Basel III Standardized risk-
weighted assets (“RWA”) and the global systemically
important banks (“GSIB”) surcharge, both under rules
currently in effect, as well as 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.
Refer to Line of business equity on page 98 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)
2023
2022
Total net revenue
$ 70,148 $ 54,814
Total noninterest expense
34,819
31,208
2021
(a) $ 49,879
(a)
29,028
2023
(a) $ 48,807
(a)
28,594
2022
$ 48,102
27,350
2021
(a) $ 51,943
(a)
25,553
2023
(a) $ 15,546
(a)
5,378
Pre-provision profit/(loss)
35,329
23,606
Provision for credit losses
6,899
3,813
20,851
(6,989)
20,213
20,752
121
1,158
26,390
(1,174)
Net income/(loss)
21,232
14,916
(a)
20,957
(a)
14,129
14,925
(a)
21,107
(a)
10,168
1,970
6,143
2022
2021
$ 11,533 $ 10,008
4,719
6,814
1,268
4,213
4,041
5,967
(947)
5,246
Return on equity (“ROE”)
38 %
29 %
41 %
13 %
14 %
25 %
20 %
16 %
21 %
Year ended December 31,
Asset & Wealth Management
Corporate
Total
(in millions, except ratios)
2023
2022
2021
2023
2022
2021
2023
2022
2021
Total net revenue
$ 19,827
$ 17,748 $ 16,957
$ 8,038 $
80 $ (3,483)
$ 162,366 $ 132,277 $ 125,304
Total noninterest expense
12,780
11,829
10,919
Pre-provision profit/(loss)
Provision for credit losses
Net income/(loss)
7,047
159
5,227
5,919
128
4,365
6,038
(227)
4,737
Return on equity (“ROE”)
31 %
25 %
33 %
5,601
2,437
171
2,821
NM
1,034
(954)
22
1,802
87,172
76,140
71,343
(5,285)
75,194
56,137
53,961
81
9,320
6,389
(9,256)
(743)
(3,713)
49,552
37,676
48,334
NM
NM
17 %
14 %
19 %
(a) In the first quarter of 2023, the allocations of revenue and expense to CCB associated with a Merchant Services revenue sharing agreement were
discontinued and are now retained in Payments in CIB. Prior-period amounts have been revised to conform with the current presentation.
66
JPMorgan Chase & Co./2023 Form 10-K
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
Year ended December 31,
Client assets (in billions)(a)
Number of client advisors
2023
$ 3,177
8,971
2022
2021
(b) $ 2,438 $ 2,456
7,463
8,166
Selected metrics - J.P. Morgan Payments
(in millions, except where otherwise noted)
Year ended December 31,
Total net revenue(a)
2023
2022
2021
$ 18,248 $ 13,909 $ 9,861
(a) Consists of Global Private Bank in AWM and client investment assets in
Merchant processing volume (in billions)
2,408
2,158
1,887
J.P. Morgan Wealth Management in CCB.
(b) At December 31, 2023, included $144.6 billion of client investment
assets associated with First Republic.
Average deposits (in billions)
715
779
800
(a) Includes certain revenues that are reported as investment banking
product revenue in CB, and excludes the net impact of equity
investments.
Segment information related to First Republic
The following table presents selected impacts to CCB, CB, AWM and Corporate associated with First Republic from the
acquisition date of May 1, 2023.
(in millions)
Selected Income Statement Data
Revenue
Asset management fees
All other income
Noninterest revenue
Net interest income
Total net revenue
Provision for credit losses
Noninterest expense
Net income
Consumer &
Community Banking
Commercial
Banking
Asset & Wealth
Management
Corporate
Total
As of or for the year ended December 31, 2023
$
$
387
489
876
2,401
3,277
421
1,219
1,244
$
—
201
201
704
905
731
45
98
$
—
503
503
668
1,171
128
50
753
$
(b)
(c)
—
2,862
2,862
(55)
2,807
—
1,033
2,015
387
4,055
4,442
3,718
8,160
1,280
2,347
4,110
Selected Balance Sheet Data (period-end)
Loans
Deposits (a)
$
94,671
42,710
$
38,495
6,163
$
11,436
12,098
$
$
—
—
144,602
60,971
(d)
(d)
(a) In the fourth quarter of 2023, CCB transferred certain deposits associated with First Republic to AWM, CB and CIB.
(b) Included the preliminary estimated bargain purchase gain of $2.7 billion recorded in other income. For the year ended December 31, 2023, reflects
measurement period adjustments of $63 million, resulting in an estimated bargain purchase gain of $2.8 billion for the year ended December 31, 2023.
Refer to Note 34 for additional information.
(c) Included $360 million of restructuring and integration costs.
(d) Excluded $1.9 billion of loans and $508 million of deposits allocated to CIB.
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the years ended
December 31, 2023 and 2022, unless otherwise specified.
JPMorgan Chase & Co./2023 Form 10-K
67
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)
2023
2022
2021
Revenue
Lending- and deposit-
related fees
$ 3,356
Asset management fees
3,282
$ 3,316
2,734
(d)
$ 3,034
2,794
Mortgage fees and related
income
Card income
All other income(a)
Noninterest revenue
Net interest income
Total net revenue
1,175
2,532
4,773
15,118
55,030
70,148
Provision for credit losses
6,899
Noninterest expense
(f)
(f)
1,236
2,469
5,131
14,886
39,928
54,814
(f)
(f)
2,159
3,364
5,741
17,092
32,787
49,879
3,813
(6,989)
(d)
(d)
(d)
Compensation expense
15,171
13,092
12,142
Noncompensation
expense(b)
19,648
Total noninterest expense 34,819
18,116
31,208
(d)
(f)
(f)
(f)
(f)
16,886
29,028
27,840
6,883
$ 20,957
28,430
7,198
$ 21,232
19,793
4,877
$ 14,916
Income before income tax
expense
Income tax expense
Net income
Revenue by line of
business
Banking & Wealth
Management
Home Lending
Card Services & Auto
Mortgage fees and related
income details:
Production revenue
Net mortgage servicing
revenue(c)
Mortgage fees and related
$ 43,199
4,140
22,809
(e) $ 30,059
(e)
3,674
(f) $ 23,786
5,291
(f)
21,081
20,802
421
754
497
2,215
739
(56)
income
$ 1,175
$ 1,236
$ 2,159
Financial ratios
Return on equity
Overhead ratio
38 %
50
29 %
57
41 %
58
(a) Primarily includes operating lease income and commissions and other
fees. Operating lease income was $2.8 billion, $3.6 billion and $4.8
billion for the years ended December 31, 2023, 2022 and 2021,
respectively.
(b) Included depreciation expense on leased assets of $1.7 billion, $2.4
billion and $3.3 billion for the years ended December 31, 2023, 2022
and 2021, respectively.
(c) Included MSR risk management results of $131 million, $93 million
and $(525) million for the years ended December 31, 2023, 2022
and 2021, respectively.
(d) Includes First Republic. Refer to page 67 for additional information.
(e) Banking & Wealth Management and Home Lending included revenue
associated with First Republic of $2.3 billion and $932 million,
respectively, for the year ended December 31, 2023.
(f) In the first quarter of 2023, the allocations of revenue and expense to
CCB associated with a Merchant Services revenue sharing agreement
were discontinued and are now retained in Payments in CIB. Prior-
period amounts have been revised to conform with the current
presentation.
68
JPMorgan Chase & Co./2023 Form 10-K
Noninterest expense was $34.8 billion, up 12%, reflecting:
• higher compensation expense, driven by an increase in
employees, including the impact of First Republic in the
second half of 2023 and additions primarily in bankers,
advisors and technology, wage inflation and higher
revenue-related compensation, as well as
• higher noncompensation expense, driven by the impact of
First Republic, investments in marketing and technology,
the increase in the FDIC assessment announced in the
prior year as well as higher legal expense, partially offset
by lower auto lease depreciation on lower auto lease
assets.
The provision for credit losses was $6.9 billion, reflecting:
• net charge-offs of $5.3 billion, up $2.6 billion,
predominantly driven by Card Services, as the portfolio
continued to normalize to pre-pandemic levels,
• a $1.2 billion net addition to the allowance for credit
losses, which included $1.4 billion in Card Services,
partially offset by a net reduction of $200 million in
Home Lending. The net addition in Card Services was
driven by loan growth, including an increase in revolving
balances, partially offset by reduced borrower
uncertainty. The net reduction in Home Lending was
driven by improvements in the outlook for home prices;
and
• $408 million to establish the allowance for the First
Republic loans and lending-related commitments in the
second quarter of 2023.
The provision in the prior year was $3.8 billion, driven by
net charge-offs of $2.7 billion and a $1.1 billion net
addition to the allowance for credit losses across CCB.
Refer to Credit and Investment Risk Management on pages
111–134 and Allowance for Credit Losses on pages 131–
133 for a further discussion of the credit portfolios and the
allowance for credit losses.
2023 compared with 2022
Net income was $21.2 billion, up 42%.
Net revenue was $70.1 billion, up 28%.
Net interest income was $55.0 billion, up 38%, driven by:
• deposit margin expansion on higher rates, partially offset
by lower average deposits and the impact of lower PPP
loan forgiveness in Banking & Wealth Management
(“BWM”),
• higher Card Services NII, reflecting an increase in
revolving balances, and
• the impact of First Republic in Home Lending.
Noninterest revenue was $15.1 billion, up 2%, driven by:
• higher asset management fees due to the impact of First
Republic as well as higher market levels and strong net
inflows, higher commissions on annuity sales in BWM and
higher other service fees associated with First Republic,
• higher net interchange income on increased debit and
credit card sales volume, and
– In Card Services, higher annual fees and the higher net
interchange income were more than offset by an
increase in amortization related to new account
origination costs, reflecting continued growth. Net
interchange income in Card Services also reflected the
impact of a reduction in rewards costs and partner
payments in the first quarter of 2023 related to a
periodic tax refund on airline miles redeemed and an
increase to the rewards liability due to adjustments to
certain reward program terms in the second quarter of
2023;
• higher travel-related commissions in Card Services,
predominantly offset by
• lower auto operating lease income as a result of a decline
in volume, and
• lower mortgage fees and related income in Home
Lending.
Refer to Note 6 for additional information on card income,
asset management fees, and commissions and other fees;
and Critical Accounting Estimates on pages 155–158 for
credit card rewards liability.
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.
Refer to Note 34 for additional information on the First
Republic acquisition.
JPMorgan Chase & Co./2023 Form 10-K
69
Selected metrics
As of or for the year ended
December 31,
(in millions, except
employees)
Selected balance sheet data
(period-end)
Total assets
Loans:
Banking & Wealth
Management(a)
Home Lending(b)
Card Services
2023
2022
2021
$ 642,951
$ 514,085 $ 500,370
31,142
259,181
(d)
(d)
29,008
35,095
172,554
180,529
211,175
185,175
154,296
Auto
77,705
68,191
69,138
Total loans
579,203
454,928
439,058
Deposits
Equity
1,094,738
(e)
1,131,611
1,148,110
55,500
50,000
50,000
Selected balance sheet data
(average)
Total assets
Loans:
Banking & Wealth
Management
Home Lending(c)
Card Services
$ 584,367
$ 497,263 $ 489,771
30,142
232,115
(f)
(f)
31,545
44,906
176,285
181,049
191,424
163,335
140,405
Auto
72,674
68,098
67,624
Total loans
526,355
439,263
433,984
Deposits
Equity
Employees
1,126,552
(g)
1,162,680
1,054,956
54,349
50,000
50,000
141,640
135,347
128,863
(a) At December 31, 2023, 2022 and 2021, included $94 million, $350
million and $5.4 billion of loans, respectively, in Business Banking
under the PPP.
(b) At December 31, 2023, 2022 and 2021, Home Lending loans held-
for-sale and loans at fair value were $3.4 billion, $3.0 billion and
$14.9 billion, respectively.
(c) Average Home Lending loans held-for sale and loans at fair value were
$4.8 billion, $7.3 billion and $15.4 billion for the years ended
December 31, 2023, 2022 and 2021, respectively.
(d) At December 31, 2023, included $4.0 billion and $90.7 billion for
Banking & Wealth Management and Home Lending, respectively,
associated with First Republic.
(e) Includes First Republic. In the fourth quarter of 2023, CCB transferred
certain deposits associated with First Republic to AWM, CB, and CIB.
Refer to page 67 for additional information.
(f) Average Banking & Wealth Management and Home Lending loans
associated with First Republic were $2.4 billion and $60.2 billion,
respectively, for the year ended December 31, 2023.
(g) Included $39.4 billion associated with First Republic for the year
ended December 31, 2023.
Selected metrics
As of or for the year ended
December 31,
(in millions, except ratio data)
2023
2022
2021
Credit data and quality
statistics
Nonaccrual loans(a)(b)
Net charge-offs/(recoveries)
Banking & Wealth
Management
Home Lending
Card Services
Auto
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
Banking & Wealth
Management
Home Lending
Card Services
Auto
$ 3,740
$ 3,899
$ 4,875
340
(56)
370
(229)
289
(275)
4,699
2,403
2,712
357
144
35
$ 5,340
$ 2,688
$ 2,761
1.13 %
1.17 % 0.64 %
(0.02)
(0.14)
(0.17)
2.45
0.49
1.47
0.21
1.94
0.05
1.02 %
0.62 % 0.66 %
0.66 %
0.83 % 1.25 %
2.14
1.19
1.45
1.01
1.04
0.64
1.05 %
0.68 % 0.50 %
$ 685
$ 722
$ 697
578
(f)
867
660
12,453
11,200
10,250
742
715
733
Total allowance for loan
losses
$ 14,458 (g) $ 13,504
$ 12,340
(a) At December 31, 2023, 2022 and 2021, nonaccrual loans excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $123 million, $187 million and $342 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, 2023, 2022 and 2021, generally excludes loans that
were under payment deferral programs offered in response to the
COVID-19 pandemic.
(c) At December 31, 2023, 2022 and 2021, included $94 million, $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.
(d) At December 31, 2023, 2022 and 2021, the principal balance of loans
under payment deferral programs offered in response to the COVID-19
pandemic was $29 million, $449 million and $1.1 billion in Home
Lending, respectively. Loans that are performing according to their
modified terms are generally not considered delinquent.
(e) At December 31, 2023, 2022 and 2021, excluded mortgage loans
insured by U.S. government agencies of $176 million, $258 million and
$405 million, respectively, that are 30 or more days past due. These
amounts have been excluded based upon the government guarantee.
(f) Includes First Republic.
(g) On January 1, 2023, the Firm adopted changes to the TDR accounting
guidance. The adoption of this guidance resulted in a net decrease in
the allowance for loan losses of $591 million, driven by residential real
estate and credit card. Refer to Note 1 for further information.
70
JPMorgan Chase & Co./2023 Form 10-K
(e) 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 81–83 for additional information. At December 31,
2023, included $144.6 billion of client investment assets associated
with First Republic.
(f) Firmwide mortgage origination volume was $41.4 billion, $81.8 billion
and $182.4 billion for the years ended December 31, 2023, 2022 and
2021, respectively.
(g) Excludes First Republic.
(h) Included $39.4 billion for the year ended December 31, 2023,
(i)
(j)
associated with First Republic.
Included $2.3 billion for the year ended December 31, 2023,
associated with First Republic.
Included origination volume under the PPP of $10.6 billion for the
year ended December 31, 2021. The program ended on May 31, 2021
for new applications.
Selected metrics
As of or for the year ended
December 31,
(in billions, except ratios
and where otherwise noted)
Business Metrics
CCB Consumer customers
(in millions)(a)
CCB Small business
customers (in millions)(a)
Number of branches
Active digital customers
(in thousands)(b)
Active mobile customers
(in thousands)(c)
Debit and credit card
sales volume
Total payments transaction
volume (in trillions)(d)
2023
2022
2021
82.1
6.4
(g)
(g)
79.2
76.5
5.7
5.3
4,897
4,787
4,790
66,983
53,828
(g)
(g)
63,136
58,857
49,710
45,452
$ 1,678.6
$ 1,555.4
$ 1,360.7
(g)
5.9
5.6
5.0
Banking & Wealth Management
Average deposits
$ 1,111.7 (h) $ 1,145.7
$ 1,035.4
Deposit margin
Business Banking average
loans
Business Banking
origination volume
Client investment assets(e)
Number of client advisors
Home Lending
Mortgage origination
volume by channel
Retail
Correspondent
Total mortgage origination
volume(f)
Third-party mortgage loans
serviced (period-end)
MSR carrying value
(period-end)
Card Services
Sales volume, excluding
commercial card
2.84 %
1.71 %
1.27 %
$ 19.6
$ 22.3
$ 37.5
4.8
4.3
13.9
(j)
951.1
647.1
718.1
5,456
5,029
4,725
$ 22.4
12.7
(i) $ 38.5
26.9
$ 91.8
70.9
$ 35.1
$ 65.4
$ 162.7
$ 631.2
$ 584.3
$ 519.2
8.5
8.0
5.5
$ 1,163.6
$ 1,064.7
$ 893.5
Net revenue rate
9.72 %
9.87 %
10.51 %
Net yield on average loans
New credit card accounts
opened (in millions)
9.61
10.0
9.77
9.6
9.88
8.0
Auto
Loan and lease
origination volume
Average auto
operating lease assets
$ 41.3
$ 30.4
$ 43.6
10.9
14.3
19.1
(a) The Consumer and Small business customers metrics include unique
individuals, and businesses and legal entities, respectively, that have
financial ownership or decision-making power with respect to
accounts; these metrics exclude customers under the age of 18. Where
a customer uses the same unique identifier as both a Consumer and a
Small business, the customer is included in both metrics. For
information concerning the Households metric previously disclosed,
refer to the Glossary of terms and acronyms on pages 315-321.
(b) Users of all web and/or mobile platforms who have logged in within
the past 90 days.
(c) Users of all mobile platforms who have logged in within the past 90
days.
(d) 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.
JPMorgan Chase & Co./2023 Form 10-K
71
from municipal bonds of $3.6 billion, $3.0 billion and $3.0 billion for
the years ended December 31, 2023, 2022 and 2021, respectively.
(c) In the first quarter of 2023, the allocations of revenue and expense to
CCB associated with a Merchant Services revenue sharing agreement
were discontinued and are now retained in Payments in CIB. Prior-
period amounts have been revised to conform with the current
presentation.
Selected income statement data
Year ended December 31,
(in millions, except ratios)
2023
2022
2021
Financial ratios
Return on equity
Overhead ratio
Compensation expense as
percentage of total net
revenue
Revenue by business
13 %
59
14 %
57
25 %
49
29
29
25
Investment Banking
$ 6,243
$ 6,510
$ 12,506
Payments
Lending
Total Banking
Fixed Income Markets
Equity Markets
Securities Services
Credit Adjustments & Other(a)
Total Markets & Securities
Services
7,579
(b)
6,464
(b)
9,273
1,007
1,377
16,523
15,466
18,813
18,617
8,979
10,367
4,772
4,488
(280)
(836)
1,001
19,971
16,865
10,529
4,328
250
32,284
32,636
31,972
Total net revenue
$ 48,807
$ 48,102
$ 51,943
(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.
(b) In the first quarter of 2023, the allocations of revenue and expense to
CCB associated with a Merchant Services revenue sharing agreement
were discontinued and are now retained in Payments in CIB. Prior-
period amounts have been revised to conform with the current
presentation.
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 services, that enable clients
to manage payments globally across liquidity and
account solutions, commerce solutions, clearing, trade
and working capital. 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, clearing 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)
2023
2022
2021
Revenue
Investment banking fees(a)
Principal transactions
Lending- and deposit-related
fees
$ 6,582
23,671
$ 6,929
19,926
$ 13,359
15,764
2,213
2,419
2,514
Commissions and other fees
4,821
5,058
4,995
Card income
All other income
1,450
1,249
1,578
621
(c)
(c)
1,108
663
(c)
(c)
Noninterest revenue
40,315
36,202
38,403
Net interest income
Total net revenue(b)
8,492
11,900
13,540
48,807
48,102
51,943
Provision for credit losses
121
1,158
(1,174)
Noninterest expense
Compensation expense
14,345
13,918
13,096
Noncompensation expense
14,249
13,432
(c)
12,457
(c)
Total noninterest expense
28,594
27,350
25,553
Income before income tax
expense
Income tax expense
Net income
20,092
19,594
27,564
5,963
4,669
(c)
6,457
(c)
$ 14,129
$ 14,925
$ 21,107
(a) Includes CB's share of revenue from investment banking products sold
to CB clients through the CIB that is subject to a revenue sharing
arrangement which is reported as a reduction in All other income.
(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
72
JPMorgan Chase & Co./2023 Form 10-K
Markets & Securities Services revenue was $32.3 billion,
down 1%. Markets revenue was $27.8 billion, down 4%.
• Fixed Income Markets revenue was $18.8 billion, up 1%,
driven by an increase in finance and trading activity in the
Securitized Products Group and improved performance in
Credit Trading, predominantly offset by lower revenue in
Currencies & Emerging Markets as the business
substantially normalized from the prior year’s elevated
levels of volatility and client activity.
• Equity Markets revenue was $9.0 billion, down 13%,
driven by lower revenue in Equity Derivatives and Cash
Equities, compared with a stronger performance in the
prior year.
• Securities Services revenue was $4.8 billion, up 6%,
driven by deposit margin expansion on higher rates,
largely offset by lower average deposits and fees.
• Credit Adjustments & Other was a loss of $280 million,
compared with a loss of $836 million in the prior year.
Noninterest expense was $28.6 billion, up 5%, driven by
higher legal expense, compensation expense, including the
impact of wage inflation, and higher indirect tax expense.
The provision for credit losses was $121 million, driven by
net charge-offs of $272 million, up $190 million, driven by
single name exposures, largely offset by a $151 million net
reduction in the allowance for credit losses.
The net reduction in the allowance was driven by the impact
of changes in the loan and lending-related commitment
portfolios and the net effect of changes in the Firm’s
weighted average macroeconomic outlook, predominantly
offset by an addition for certain accounts receivable and net
downgrade activity.
The provision in the prior year was $1.2 billion,
predominantly driven by a net addition to the allowance for
credit losses.
2023 compared with 2022
Net income was $14.1 billion, down 5%.
Net revenue was $48.8 billion, up 1%.
Banking revenue was $16.5 billion, up 7%.
• Investment Banking revenue was $6.2 billion, down 4%.
Excluding $257 million of markdowns on held-for-sale
positions, primarily unfunded commitments, in the bridge
financing portfolio recorded in the second quarter of
2022, Investment Banking revenue was down 8%.
Investment Banking fees were down 5%, driven by lower
advisory and debt underwriting fees, partially offset by
higher equity underwriting fees. The Firm ranked #1 for
Global Investment Banking fees, according to Dealogic.
– Advisory fees were $2.8 billion, down 8%, due to a
lower number of completed transactions, reflecting the
lower level of announced deals in the current and the
prior year amid a challenging environment.
– Debt underwriting fees were $2.6 billion, down 8%, as
challenging market conditions, primarily in the first
half of the year, resulted in lower issuance activity
across leveraged loans, investment-grade loans, and
high-grade bonds. This was largely offset by higher
issuance activity in high-yield bonds driven by higher
industry-wide issuance.
– Equity underwriting fees were $1.2 billion, up 11%,
driven by a higher level of follow-on offerings due to
lower equity market volatility and a higher level of
convertible securities offerings which benefited from
higher rates, partially offset by lower activity in private
placements amid a challenging environment.
• Payments revenue was $9.3 billion, up 22%, driven by
deposit margin expansion on higher rates and fees,
partially offset by the higher level of client credits that
reduce such fees and lower average deposits. The net
impact of equity investments was flat reflecting net
markdowns in both periods, including the impact of an
impairment in the current year.
• Lending revenue was $1.0 billion, down 27%, driven by
$494 million of fair value losses on hedges of retained
loans which included an increase in hedging activity,
compared to $27 million of gains in the prior year,
partially offset by higher net interest income.
JPMorgan Chase & Co./2023 Form 10-K
73
Selected metrics
As of or for the year ended
December 31, (in millions,
except employees)
Selected balance sheet
data (period-end)
Total assets
Loans:
2023
2022
2021
$ 1,338,168 $ 1,334,296 $ 1,259,896
Loans retained(a)
197,523
187,642
159,786
Loans held-for-sale and
loans at fair value(b)
Total loans
38,919
42,304
50,386
236,442
229,946
210,172
Equity
108,000
103,000
83,000
Selected balance sheet
data (average)
Total assets
$ 1,428,904 $ 1,406,250 $ 1,334,518
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
Deposits
Equity
Employees
508,799
405,916
448,099
63,836
77,802
68,203
190,601
172,627
145,137
39,831
46,846
51,072
230,432
219,473
196,209
728,537
739,700
760,048
108,000
103,000
74,404
73,452
83,000
67,546
(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
2023
2022
2021
$
272
$
82
$
6
866
718
584
828
1,694
364
848
1,566
296
844
1,428
316
115
87
91
2,173
1,949
1,835
2,321
2,292
1,348
1,048
1,448
1,372
3,369
3,740
2,720
0.14 %
0.05 %
— %
1.18
1.22
0.84
1.64
1.67
1.12
268
0.72
319
0.68
231
0.68
(a) Allowance for loan losses of $95 million, $104 million and $58 million
were held against these nonaccrual loans at December 31, 2023,
2022 and 2021, respectively.
(b) At December 31, 2023, 2022 and 2021, nonaccrual loans excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $59 million, $115 million and $281 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 62–64.
74
JPMorgan Chase & Co./2023 Form 10-K
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,
2023
2,814 $
1,151
2,617
2022
3,051 $
1,034
2,844
6,582 $
6,929 $
2021
4,381
3,953
5,025
13,359
2023
2022
2021
Rank
Share
Rank
Share
Rank
Share
2
2
1
1
1
1
1
1
1
9.3 % #
11.2
7.8
14.1
7.2
10.9
12.1
15.1
8.8 % #
2
2
2
1
1
1
1
1
1
7.9 % #
9.0
5.7
13.9
6.9
12.2
11.0
12.8
7.8 % #
2
2
3
2
1
1
1
1
1
9.6 %
10.7
8.8
11.8
8.4
12.1
10.9
12.6
9.3 %
$
$
#
#
(a) Source: Dealogic as of January 2, 2024. 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 generally 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
JPMorgan Chase & Co./2023 Form 10-K
75
For the periods presented below, the primary 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
Commissions and other fees
All other income
Noninterest revenue
Net interest income(a)
Total net revenue
Loss days(b)
2023
2022
2021
Fixed
Income
Markets
Equity
Markets
Total
Markets
Fixed
Income
Markets
Equity
Markets
Total
Markets
Fixed
Income
Markets
Equity
Markets
Total
Markets
$ 12,064 $ 11,514 $ 23,578 $ 11,682 $
8,846 $ 20,528 $
307
40
347
303
22
325
7,911 $
321
7,519 $ 15,430
338
17
596
1,744
14,711
4,102
$ 18,813 $
(87)
1,908
2,493
890
19,151
13,375
(4,396)
8,243
8,979 $ 27,792 $ 18,617 $ 10,367 $ 28,984 $ 16,865 $ 10,529 $ 27,394
2,504
1,657
28,086
(294)
550
916
13,451
5,166
2,525
817
24,195
4,789
545
972
9,749
7,116
9,402
1,127
10,744
(377)
1,975
1,948
(99)
(82)
3
7
4
(a) The decline in Markets net interest income was driven by higher funding costs.
(b) Loss days represent the number of days for which 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 137–139.
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)
2023
2022
2021
$ 15,543 $ 14,361 $
16,098
12,927
3,922
10,748
3,526
12,962
4,161
$ 32,392 $ 28,635 $
33,221
$
2,408 $
2,158 $
1,887
$ 645,074 $ 687,391 $ 714,910
(a) Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b) Represents Firmwide merchant processing volume.
(c) Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses.
76
JPMorgan Chase & Co./2023 Form 10-K
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
2023
2022
2021
$
13,725
$
15,303
$
7,607
2,094
23,426
25,381
48,807
42,792
14,333
8,341
65,466
132,057
197,523
230,225
126,918
39,134
396,277
248,797
645,074
21,792
10,600
32,392
$
$
$
$
$
$
$
$
7,846
2,239
25,388
22,714
(c)
48,102
39,424
15,571
8,599
63,594
124,048
187,642
247,203
129,134
39,917
416,254
271,137
687,391
19,219
9,416
28,635
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
13,954
7,555
1,833
23,342
28,601
(c)
51,943
33,084
14,471
7,006
54,561
105,225
159,786
243,867
132,241
46,045
422,153
292,757
714,910
21,655
11,566
33,221
(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.
(c) In the first quarter of 2023, the allocations of revenue and expense to CCB associated with a Merchant Services revenue sharing agreement were
discontinued and are now retained in Payments in CIB. Prior-period amounts have been revised to conform with the current presentation.
JPMorgan Chase & Co./2023 Form 10-K
77
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)
2023
Revenue
Lending- and deposit-related fees $ 1,210
Card income
All other income
Noninterest revenue
Net interest income
Total net revenue(a)
2022
2021
(b) $ 1,243 $ 1,392
624
685
763
3,494
3,336
3,929
12,052
(b)
8,197
6,079
15,546
11,533
10,008
Provision for credit losses
1,970
(b)
1,268
(947)
Noninterest expense
Compensation expense
2,760
(b)
2,296
1,973
Noncompensation expense
2,618
2,423
2,068
Total noninterest expense
5,378
4,719
4,041
2023 compared with 2022
Net income was $6.1 billion, up 46%.
Net revenue was $15.5 billion, up 35%.
Net interest income was $12.1 billion, up 47%, driven by:
• deposit margin expansion on higher rates, partially offset
by lower average deposits, and
• higher average loans, including the impact from First
Republic.
Noninterest revenue was $3.5 billion, up 5%, driven by:
• higher lending-related revenue predominantly driven by
the amortization of the purchase discount on certain
acquired lending-related commitments associated with
First Republic,
• net markups on held-for-sale positions, primarily
unfunded commitments, in the bridge financing portfolio,
compared with net markdowns in the prior year, and
• higher investment banking revenue and card income,
predominantly offset by
credits that reduce such fees, and
• the absence of a gain on an equity-method investment
received in partial satisfaction of a loan.
Noninterest expense was $5.4 billion, up 14%, driven by
higher compensation expense, reflecting an increase in
employees including front office and technology, as well as
higher volume-related expense, including the impact of new
client acquisitions.
The provision for credit losses was $2.0 billion, reflecting:
1,521
1,408
1,913
• lower deposit-related fees due to the higher level of client
Income before income tax
expense
8,198
5,546
6,914
• a $1.0 billion net addition to the allowance for credit
Income tax expense
2,055
1,333
1,668
Net income
$ 6,143
$ 4,213 $ 5,246
(a) 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 $382 million, $322 million and $330 million for
the years ended December 31, 2023, 2022 and 2021, respectively.
(b) Includes First Republic. Refer to page 67 for additional information.
losses, driven by the net effect of changes in the Firm’s
weighted average macroeconomic outlook, including a
deterioration in the outlook for commercial real estate
and net downgrade activity, partially offset by the impact
of changes in the loan and lending-related commitment
portfolios,
• $608 million to establish the allowance for the First
Republic loans and lending-related commitments in the
second quarter of 2023; and
• net charge-offs of $316 million, up $232 million,
primarily driven by Real Estate, predominantly
concentrated in Office.
The provision in the prior year was $1.3 billion, reflecting a
net addition to the allowance for credit losses.
78
JPMorgan Chase & Co./2023 Form 10-K
$ 5,993
8,250
1,167
136
(d) $ 4,524
5,691
$ 4,629
3,653
1,064
1,611
254
115
2021
Total assets
Loans:
$ 287,851
$ 243,108 $ 225,548
Loans retained
267,285
(d)
222,388
201,920
Loans held-for-sale and
loans at fair value
1,060
1,350
3,122
Total loans
$ 268,345
$ 223,738 $ 205,042
Deposits
Equity
267,758
(e)
294,180
301,343
29,507
25,000
24,000
$ 3,393
$ 2,978
$ 5,092
Average loans by client
segment
Total net revenue
$ 15,546
$ 11,533
$ 10,008
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 services that enable CB clients to
manage payments globally across liquidity and account
solutions, commerce solutions, clearing, trade and
working capital.
Investment banking includes revenue from a range of
products providing CB clients with sophisticated capital-
raising alternatives, as well as balance sheet and risk
management tools through advisory, equity
underwriting, and loan syndications. Revenue from fixed
income and equity markets products used by CB clients is
also included.
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)
2023
2022
Revenue by product
Lending
Payments(a)
Investment banking(a)(b)
Other
Investment Banking and
Markets revenue, gross(c)
Revenue by client segment
Middle Market Banking
Corporate Client Banking
Commercial Real Estate
Banking
Other
$ 7,371
4,777
(e) $ 5,134
3,918
$ 4,004
3,508
3,308
(e)
2,461
2,419
90
20
77
Total net revenue
$ 15,546
$ 11,533
$ 10,008
Financial ratios
Return on equity
Overhead ratio
20 %
35
16 %
41
21 %
40
(a) In the third quarter of 2023, certain revenue from CIB Markets
products was reclassified from payments to investment banking. Prior-
period amounts have been revised to conform with the current
presentation.
(b) Includes CB’s share of revenue from Investment Banking and Markets'
products sold to CB clients through the CIB which is reported in All
other income.
(c) Includes gross revenues earned by the Firm that are subject to a
revenue sharing arrangement between CB and the CIB for Investment
Banking and Markets' products sold to CB clients. This includes
revenues related to fixed income and equity markets products. Refer
to Business Segment Results on page 65 for a discussion of revenue
sharing.
(d) Includes First Republic. Refer to page 67 for additional information.
(e) Middle Market Banking and Commercial Real Estate Banking included
$216 million and $687 million, respectively, for the year ended
December 31, 2023, associated with First Republic.
Selected metrics
As of or for the year
ended December 31, (in
millions, except
employees)
Selected balance sheet
data (period-end)
Total assets
Loans:
2023
2022
2021
$ 300,325
$ 257,106 $ 230,776
Loans retained
277,663
(b)
233,879
206,220
Loans held-for-sale and
loans at fair value
545
707
2,223
Total loans
$ 278,208
$ 234,586 $ 208,443
Equity
30,000
25,000
24,000
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)
$ 78,043
56,132
(c) $ 72,625 $ 61,159
45,315
53,840
143,507
(c)
107,999
101,751
526
122
218
$ 278,208
$ 234,586 $ 208,443
Middle Market Banking
$ 77,130
Corporate Client Banking
58,770
(f) $ 67,830 $ 60,128
44,361
50,281
Commercial Real Estate
Banking
Other
Total loans
Employees
132,114
(f)
105,459
100,331
331
168
222
$ 268,345
$ 223,738 $ 205,042
17,867
14,687
12,902
(a) As of December 31, 2023, 2022 and 2021, total loans included $36
million, $132 million, and $1.2 billion of loans, respectively, under the
PPP, of which $32 million, $123 million and $1.1 billion were in
Middle Market Banking, respectively.
(b) Includes First Republic. Refer to page 67 for additional information.
(c) As of December 31, 2023, included $5.9 billion and $32.6 billion for
Middle Market Banking and Commercial Real Estate Banking,
respectively, associated with First Republic.
(d) Average loans retained associated with First Republic were $26.8
billion for the year ended December 31, 2023.
(e) In the fourth quarter of 2023, certain deposits associated with First
Republic were transferred from CCB. Refer to page 67 for additional
information.
(f) Average Middle Market Banking and Commercial Real Estate Banking
loans associated with First Republic were $4.2 billion and $22.5
billion, respectively, for the year ended December 31, 2023.
JPMorgan Chase & Co./2023 Form 10-K
79
Selected metrics
As of or for the year ended
December 31, (in millions, except
ratios)
Credit data and quality statistics
2023
2022
2021
Net charge-offs/(recoveries)
$
316
$
84 $
71
Nonperforming assets
Nonaccrual loans:
Nonaccrual loans retained(a)
$
809
$
766 $
740
Nonaccrual loans held-for-sale
and loans at fair value
—
—
—
Total nonaccrual loans
$
809
$
766 $
740
Assets acquired in loan
satisfactions
54
—
17
Total nonperforming assets
$
863
$
766 $
757
Allowance for credit losses:
Allowance for loan losses
$ 5,005
$ 3,324 $ 2,219
Allowance for lending-related
commitments
801
Total allowance for credit losses
$ 5,806
830
749
(c) $ 4,154 $ 2,968
Net charge-off/(recovery) rate(b)
0.12%
0.04%
0.04%
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
1.80
619
0.29
1.42
1.08
434
300
0.33
0.36
(a) Allowance for loan losses of $156 million, $153 million and $124
million was held against nonaccrual loans retained at December 31,
2023, 2022 and 2021, respectively.
(b) Loans held-for-sale and loans at fair value were excluded when
calculating the net charge-off/(recovery) rate.
(c) As of December 31, 2023, included a $729 million allowance for First
Republic.
80
JPMorgan Chase & Co./2023 Form 10-K
2023 compared with 2022
Net income was $5.2 billion, up 20%.
Net revenue was $19.8 billion, up 12%. Net interest
income was $6.3 billion, up 20%. Noninterest revenue was
$13.6 billion, up 8%.
Revenue from Asset Management was $9.1 billion, up 4%,
driven by:
• a gain of $339 million on the original minority interest in
CIFM upon the Firm's acquisition of the remaining 51%
interest in the entity, and
• higher asset management fees driven by strong net
inflows largely offset by the net impact of foreign
exchange rate movements, as well as the removal of most
money market fund fee waivers in the prior year,
largely offset by
• lower performance fees, and
• lower NII due to higher funding costs.
Revenue from Global Private Bank was $10.7 billion, up
20%, driven by:
• higher net interest income on higher average loans
associated with First Republic, and from deposit margin
expansion on higher rates, largely offset by lower
average deposits, and
• higher noninterest revenue, predominantly driven by the
amortization of the purchase discount on certain acquired
lending-related commitments associated with First
Republic, partially offset by net investment valuation
losses.
Noninterest expense was $12.8 billion, up 8%,
predominantly driven by higher compensation, including
continued growth in private banking advisor teams,
revenue-related compensation and the impacts of closing
the Global Shares and J.P. Morgan Asset Management China
acquisitions.
The provision for credit losses was $159 million,
predominantly driven by a $146 million addition to the
allowance for credit losses to establish the allowance for
the First Republic loans and lending-related commitments
in the second quarter of 2023.
The provision in the prior year was $128 million driven by a
net addition to the allowance for credit losses.
ASSET & WEALTH MANAGEMENT
Asset & Wealth Management, with client assets of $5.0
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)
2023
Revenue
2022
2021
Asset management fees
$ 11,826
$ 11,510
$ 11,518
Commissions and other fees
All other income
Noninterest revenue
Net interest income
Total net revenue
697
1,037
13,560
6,267
19,827
(a)(b)
662
335
$ 815
738
12,507
13,071
5,241
3,886
17,748
16,957
Provision for credit losses
159
128
(227)
Noninterest expense
Compensation expense
Noncompensation expense
Total noninterest expense
Income before income tax
expense
Income tax expense
Net income
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
7,115
5,665
12,780
6,888
1,661
$ 5,227
$ 9,129
10,698
$ 19,827
6,336
5,692
5,493
5,227
11,829
10,919
5,791
6,265
1,426
1,528
$ 4,365
$ 4,737
$ 8,818
$ 9,246
8,930
7,711
$ 17,748
$ 16,957
31 %
64
31
38
35
25 %
67
33 %
64
30
35
33
35
39
37
(a) Includes the amortization of the purchase discount on certain acquired
lending-related commitments associated with First Republic. The
discount is deferred in other liabilities and recognized on a straight-
line basis over the commitment period and was largely recognized in
the current year as the commitments are generally short term. Refer
to Note 34 for additional information.
(b) Includes the gain on the original minority interest in CIFM upon the
Firm’s acquisition of the remaining 51% interest in the entity.
JPMorgan Chase & Co./2023 Form 10-K
81
Asset Management has two high-level measures of its
overall fund performance.
• Percentage of active mutual fund and active ETF 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 active mutual fund and active ETF 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 employees)
% of JPM mutual fund assets
and ETFs rated as 4- or 5-
star(a)
% of JPM mutual fund assets
and ETFs 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
2023
2022
2021
69 %
73 %
69 %
40
67
71
68
76
81
54
73
80
$ 245,512
$ 232,037
$ 234,425
227,929
233,232
17,000
(d)
(e)
214,006
218,271
233,130
282,052
17,000
14,000
$ 240,222
$ 232,438
$ 217,187
220,487
216,178
16,671
(f)
(e)
215,582
261,489
198,487
230,296
17,000
14,000
Employees
28,485
26,041
22,762
Number of Global Private
Bank client advisors
Credit data and quality
statistics(c)
Net charge-offs/(recoveries)
Nonaccrual loans
Allowance for credit losses:
Allowance for loan losses
Allowance for lending-
related commitments
Total allowance for credit
losses
3,515
3,137
2,738
$
13
650
$
(7) $
459
26
708
$
633
$
494
$
365
28
20
18
$
661
(g) $
514
$
383
Net charge-off/(recovery) rate
Allowance for loan losses to
period-end loans
Allowance for loan losses to
nonaccrual loans
Nonaccrual loans to period-
end loans
0.01 %
— %
0.01 %
0.28
97
0.29
0.23
108
0.21
0.17
52
0.32
(a) Represents the Morningstar Rating for all domiciled funds except for
Japan domiciled funds which use Nomura. Includes only Asset
Management retail active open-ended mutual funds and active ETFs
that have a rating. Excludes money market funds, Undiscovered
Managers Fund, and Brazil domiciled funds. This metric has been
updated to include active ETFs, and prior period amounts have been
revised to conform with the current presentation.
(b) Quartile ranking sourced from Morningstar, Lipper and Nomura based
on country of domicile. Includes only Asset Management retail active
open-ended mutual funds and active ETFs that are ranked by the
aforementioned sources. Excludes money market funds, Undiscovered
Managers Fund, and Brazil domiciled funds. This metric has been
updated to include active ETFs, and prior period numbers have been
revised to conform with the current presentation.
(c) Loans, deposits and related credit data and quality statistics relate to
the Global Private Bank business.
(d) Includes First Republic. Refer to page 67 for additional information.
(e) In the fourth quarter of 2023, certain deposits associated with First
Republic were transferred from CCB. Refer to page 67 for additional
information.
(f) Includes $8.7 billion for the full year 2023, associated with First
Republic.
(g) Includes First Republic.
82
JPMorgan Chase & Co./2023 Form 10-K
International metrics
Year ended December 31,
(in billions, except where otherwise
noted)
Total net revenue (in millions)(a)
Europe/Middle East/Africa
Asia-Pacific
2023
2022
2021
$ 3,377 $ 3,240 $ 3,571
1,876
1,836
2,017
Latin America/Caribbean
985
967
886
Total international net revenue
6,238
6,043
6,474
North America
Total net revenue
13,589
11,705
10,483
$ 19,827 $ 17,748 $ 16,957
Assets under management
Europe/Middle East/Africa
$
539 $
487 $
Asia-Pacific
Latin America/Caribbean
Total international assets under
management
263
86
218
69
561
254
79
888
774
894
Total assets under management
$ 3,422 $ 2,766 $ 3,113
Client assets
Europe/Middle East/Africa
$
740 $
610 $
Asia-Pacific
Latin America/Caribbean
406
232
331
189
687
381
195
Total international client assets
1,378
1,130
1,263
North America
Total client assets
3,634
2,918
3,032
$ 5,012 $ 4,048 $ 4,295
(a) Regional revenue is based on the domicile of the client.
1,590
1,282
1,182
$ 5,012 $ 4,048 $ 4,295
North America
2,534
1,992
2,219
Client assets
2023 compared with 2022
Assets under management were $3.4 trillion and client
assets were $5.0 trillion, each up 24%, driven by continued
net inflows, higher market levels, and the impact of the
acquisition of Global Shares.
Client assets
December 31,
(in billions)
Assets by asset class
Liquidity
Fixed income
Equity
Multi-asset
Alternatives
2023
2022
2021
$
926 $
654 $
751
868
680
197
638
670
603
201
708
693
779
732
201
Total assets under management
3,422
2,766
3,113
Custody/brokerage/
administration/deposits
Total client assets(a)
Assets by client segment
Private Banking
Global Institutional
Global Funds
$
974 $
751 $
805
1,488
1,252
1,430
960
763
878
Total assets under management $ 3,422 $ 2,766 $ 3,113
Private Banking
Global Institutional
Global Funds
Total client assets(a)
$ 2,452 $ 1,964 $ 1,931
1,594
1,314
1,479
966
770
885
$ 5,012 $ 4,048 $ 4,295
(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
2023
2022
2021
$ 2,766 $ 3,113 $ 2,716
242
(55)
70
70
1
(1)
13
35
(9)
8
68
36
85
17
26
274
(339)
165
Ending balance, December 31
$ 3,422 $ 2,766 $ 3,113
Client assets rollforward
Beginning balance
Net asset flows
Market/performance/other
impacts
$ 4,048 $ 4,295 $ 3,652
490
49
389
474
(296)
254
Ending balance, December 31
$ 5,012 $ 4,048 $ 4,295
JPMorgan Chase & Co./2023 Form 10-K
83
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 solely 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
employees)
Revenue
Principal transactions
(227) $
2022
2023
302
$
$
2021
187
(345)
226
68
(3,551)
(3,483)
81
1,802
(3,180)
3,010
132
7,906
8,038
(c)
(c)
171
5,601
(c)(d)
(2,380)
809
(1,798)
1,878
80
22
1,034
2,266
(976)
(5,366)
(555) (e)
2,821
$
(233)
(743) $
(1,653)
(3,713)
6,072
1,966
8,038
(c)
(439)
519
$
80 $
(3,464)
(19)
(3,483)
4,206
(1,385) (c)(d)
2,821
$
(197)
(546)
(743) $
(3,057)
(656)
(3,713)
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)
$
Income tax expense/
(benefit)
Net income/(loss)
Total net revenue
Treasury and CIO
Other Corporate
Total net revenue
Net income/(loss)
Treasury and CIO
Other Corporate
Total net income/(loss) $
$
Total assets (period-
end)
Loans (period-end)
Deposits(b)
Employees
$ 1,348,437
1,924
21,826
47,530
$ 1,328,219 $ 1,518,100
1,770
396
38,952
2,181
14,203
44,196
(a) Included tax-equivalent adjustments, predominantly driven by tax-
exempt income from municipal bonds, of $211 million, $235 million
and $257 million for the years ended December 31, 2023, 2022 and
2021, respectively.
(b) Predominantly relates to the Firm's international consumer initiatives.
(c) Includes the impact of the First Republic acquisition. Refer to Notes 6
and 34 for additional information.
(d) Includes the FDIC special assessment. Refer to Note 6 for additional
information.
(e) Income taxes associated with the First Republic acquisition are
reflected in the estimated bargain purchase gain.
2023 compared with 2022
Net income was $2.8 billion, compared with a net loss of
$743 million in the prior year.
Net revenue was $8.0 billion, compared with $80 million in
the prior year, predominantly driven by higher net interest
income due to higher rates, partially offset by the impact of
lower Firmwide average deposit balances.
Noninterest revenue was $132 million, compared with a
loss of $1.8 billion in the prior year, driven by:
• the $2.8 billion estimated bargain purchase gain
associated with the First Republic acquisition,
• higher losses in the prior year on certain revenues
associated with foreign exchange rate movements that
are risk-managed by Treasury and CIO, and
• the impact of higher short-term cash deployment
activities as a result of the current interest rate
environment,
partially offset by
• higher net investment securities losses related to the
sales of U.S. Treasuries and U.S. GSE and government
agency MBS, associated with repositioning the investment
securities portfolio, and
• lower net gains related to certain other Corporate
investments.
The prior year included a gain on the sale of Visa B shares
and proceeds from an insurance settlement.
Noninterest expense was $5.6 billion, up $4.6 billion,
predominantly driven by:
• the $2.9 billion FDIC special assessment,
• $1.0 billion associated with First Republic, predominantly
driven by integration and restructuring costs as well as
expenses recorded in the second quarter of 2023 with
respect to individuals associated with First Republic who
did not become employees of the Firm until July 2, 2023,
• a greater benefit in the prior year on certain expenses
associated with foreign exchange rate movements that
are risk-managed by Treasury and CIO,
• higher legal expenses, and
• higher costs associated with the Firm's international
consumer growth initiatives,
partially offset by
• lower benefits-related and real estate expenses.
The net impact of movements in foreign exchange rates
associated with the foreign exchange risk that was
transferred to Treasury and CIO on certain revenues and
expenses was not material to net income. Refer to Foreign
Exchange Risk on page 66 for additional information.
Refer to Note 10 and Note 13 for additional information on
the investment securities portfolio and the allowance for
credit losses.
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JPMorgan Chase & Co./2023 Form 10-K
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)
2023
2022
2021
Investment securities losses
$
(3,180)
$
(2,380) $
(345)
Available-for-sale securities
(average)
Held-to-maturity securities
(average)(a)
Investment securities portfolio
$ 200,708
$ 239,924 $ 306,827
402,010
412,180
285,086
(average)
$ 602,718
$ 652,104 $ 591,913
Available-for-sale securities
(c)
(period-end)
$ 199,354
$ 203,981 $ 306,352
Held-to-maturity securities
(period–end)(a)
Investment securities
portfolio, net of allowance
for credit losses (period–
end)(b)
369,848
425,305
363,707
$ 569,202
$ 629,286 $ 670,059
(a) Effective January 1, 2023, the Firm adopted new hedge accounting
guidance. As permitted by the guidance, the Firm elected to transfer
$7.1 billion of HTM securities to AFS. 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. Refer
to Note 1 and Note 10 for additional information on the new hedge
accounting guidance.
(b) As of December 31, 2023, 2022 and 2021, the allowance for credit
losses on investment securities was $94 million, $67 million and $42
million, respectively.
(c) As of December 31, 2023, included $24.2 billion of AFS securities
associated with First Republic. Refer to Note 34 for additional
information.
The provision for credit losses was $171 million, reflecting
a net addition to the allowance for credit losses related to a
single name exposure, which was subsequently charged off
upon the restructuring of a loan.
The current period income tax benefit was driven by:
• the finalization of certain income tax regulations, other
tax adjustments and tax benefits associated with tax audit
settlements,
partially offset by
• the impact from changes in the level and mix of income
and expenses subject to U.S. federal, state and local taxes
that also impacted the Firm's tax reserves.
The income taxes associated with the First Republic
acquisition are reflected in the estimated bargain purchase
gain.
The prior 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, state
and local taxes that also impacted the Firm's tax reserves.
Other Corporate also reflects the Firm's international
consumer initiatives, which includes Chase U.K., the Firm's
digital retail bank in the U.K.; Nutmeg, a digital wealth
manager in the U.K.; and a 46% ownership stake in C6
Bank, a digital bank in Brazil.
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
102–109 for further information on liquidity and funding
risk. Refer to Market Risk Management on pages 135–143
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,
2023, the Treasury and CIO investment securities portfolio,
net of the allowance for credit losses, was $569.2 billion,
JPMorgan Chase & Co./2023 Form 10-K
85
Management’s discussion and analysis
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 an inadequate response 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
cybersecurity, 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, as well as
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 the risk and control
standards established by its own management.
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 owns the identification of risks
within their respective organizations and the design and
execution of controls to manage those risks.
Responsibilities also include adherence to applicable laws,
rules and regulations and implementation of the risk
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JPMorgan Chase & Co./2023 Form 10-K
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 the first line of defense and is responsible for
independently measuring risk, as well as assessing and
challenging the risk management practices of the first line
of defense. 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 businesses 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.
The Firm’s risk appetite is periodically 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.
JPMorgan Chase & Co./2023 Form 10-K
87
Management’s discussion and analysis
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 principal standing 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 and certain other
members of senior management are 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 reputation risks, conduct risks, and environmental,
social and governance (“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, rules 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.
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JPMorgan Chase & Co./2023 Form 10-K
Line of Business and Corporate Function Control Committees
oversee the 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
compliance and operational risk in a business or function,
addressing key compliance and 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
90
91-101
102-109
110
114-119
120-130
134
135-143
144-145
146
147-150
151
152
153
154
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 compliance and operational risk environment
including identified issues, compliance and 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.
JPMorgan Chase & Co./2023 Form 10-K
89
Management’s discussion and analysis
STRATEGIC RISK MANAGEMENT
Strategic risk is the risk to earnings, capital, liquidity or
reputation associated with poorly designed or failed
business plans or an inadequate response to changes in the
operating environment.
Management and oversight
The Operating Committee, together with the senior
leadership of each LOB and Corporate, are 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 review of acquisitions and new business
initiatives. 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 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 91-101 for further
information on capital risk. Refer to Liquidity Risk
Management on pages 102–109 for further information on
liquidity risk. Refer to Reputation Risk Management on page
110 for further information on reputation risk.
90
JPMorgan Chase & Co./2023 Form 10-K
CAPITAL RISK MANAGEMENT
Capital risk is the risk that 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 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 processes to classify, monitor and report
capital limit breaches;
• Performing assessments 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 normal
economic cycles and in stressed environments;
• Retain flexibility to take advantage of future investment
opportunities;
• Promote the Parent Company’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 principal insured depository
institution (“IDI”) subsidiary, JPMorgan Chase Bank, N.A.
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
• Regularly monitoring 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 as well as 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 86–89 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 the Firm, as a large Bank
Holding Company (“BHC”), 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 assess whether large BHCs,
such as the Firm, 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.
The Firm's current SCB requirement is 2.9%, and will
remain in effect until September 30, 2024. The Firm’s
Standardized CET1 capital ratio requirement, including
regulatory buffers, was 11.4% as of December 31, 2023.
Refer to Capital actions on page 99 for information on
actions taken by the Firm’s Board of Directors.
JPMorgan Chase & Co./2023 Form 10-K
91
Management’s discussion and analysis
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 Firm as a
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 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 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. Under the rules currently in effect, two
comprehensive approaches are prescribed for calculating
RWA: a standardized approach (“Basel III Standardized”),
and an advanced approach (“Basel III Advanced”).
For each of these 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.
In July 2023, the Federal Reserve, the OCC and the FDIC
released a proposal to amend the risk-based capital
framework, entitled "Regulatory capital rule: Amendments
applicable to large banking organizations and to banking
organizations with significant trading activity," which is
referred to in this Form 10-K as “U.S. Basel III proposal”.
Under the proposal, changes to the framework would
include replacement of the Advanced approach with an
expanded risk-based approach, which would not permit the
use of internal models for the calculation of RWA, other
than for market risk. In addition, the stress capital buffer
requirement would be applicable to both the expanded risk-
based approach and the Standardized approach. The
proposal would significantly revise risk-based capital
requirements for all banks with assets of $100 billion or
more, including the Firm and other U.S. GSIBs. The
proposed effective date is July 1, 2025, with a three-year
transition period applicable to the expanded risk-based
approach. Based on the Firm's understanding of the
proposal, as applied to its Consolidated balance sheets as of
June 30, 2023 (the reference date for a special data
collection exercise conducted by the Federal Reserve), the
estimated impact at the end of the transition period would
increase RWA by approximately 30%, which would result in
an approximately 25% increase to CET1 capital necessary
to meet the Firm’s CET1 ratio requirement, all else equal.
These estimates do not reflect any actions that the Firm
may take to mitigate the impact of the rule as currently
proposed.
Pending the finalization of the U.S. Basel III proposal, the
Firm expects that it will continue to build capital above the
current levels, and therefore the CET1 target of 13.5%
previously set by the Firm (which was with respect to the
current Standardized RWA measure) is no longer
meaningful. The Firm's quarterly capital ratios will vary
dependent on market conditions and other factors. Under
the requirements of the U.S. Basel III proposal, the new
expanded risk-based approach, when fully phased-in, would
be the Firm’s binding constraint.
The current Basel III rules establish 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 generally calculated
consistently between Basel III Standardized and Basel III
Advanced. In addition to the RWA calculated under these
approaches, the Firm may supplement such amounts to
92
JPMorgan Chase & Co./2023 Form 10-K
incorporate management judgment and feedback from its
regulators.
As of December 31, 2023, the Advanced Total Capital ratio
became the most binding constraint for the Firm’s Basel III
risk-based ratios, primarily reflecting the reduction in the
Stress Capital Buffer requirement. However, as of December
31, 2023, with respect to the CET1 and Tier 1 risk-based
ratios, the Standardized ratios are more binding than the
Advanced ratios.
Basel III also includes a requirement for Advanced
Approaches banking organizations, including the Firm, to
calculate its SLR. As of the fourth quarter of 2023, the
Firm’s SLR became more binding than the Basel III risk-
based ratios, primarily reflecting the reduction in the Stress
Capital Buffer requirement. With the increase in the GSIB
surcharge in the first quarter of 2024, the Firm expects the
risk-based ratios to revert to being more binding than the
SLR.
Refer to page 95 for additional information on GSIB
surcharge and page 98 for additional information on SLR.
Other Key Regulatory Developments
GSIB Surcharge
In July 2023, the Federal Reserve also released a proposal
to amend the calculation of the GSIB surcharge. If adopted
as proposed, these amendments would require the Firm to
assess its GSIB surcharge on an annual basis, using the
average of the quarterly surcharge calculations throughout
the calendar year, with daily averaging required for certain
measures within the surcharge calculation. Surcharge
increments would be reduced from 50 bps to 10 bps and
there would also be other technical amendments to the
Method 2 calculation. The proposed amendments would
revise risk-based capital requirements for the Firm and
other U.S. GSIBs, and would become effective two calendar
quarters after the adoption of the final rule. Refer to Risk-
based Capital Regulatory Requirements on pages 94-95 for
further information on the GSIB surcharge.
TLAC and Eligible LTD Requirements
In August 2023, the Federal Reserve, the FDIC and the OCC
released a proposal to expand the eligible long-term debt
("eligible LTD") and clean holding company requirements
under the existing total loss-absorbing capacity ("TLAC")
rule to apply to non-GSIB banks with $100 billion or more
in total consolidated assets. While U.S. GSIBs are already
subject to these requirements, the proposal would reduce
the amount of LTD with remaining maturities of less than
two years that count towards a U.S. GSIB's TLAC
requirement. The proposal would also expand the existing
capital deduction framework for LTD issued by GSIBs to
include LTD issued by non-GSIB banks subject to the LTD
requirements.
JPMorgan Chase & Co./2023 Form 10-K
93
Management’s discussion and analysis
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, as well as 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”.
94
JPMorgan Chase & Co./2023 Form 10-K
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, as defined in regulatory capital
rules. Refer to SLR on page 98 for additional information.
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 discretionary bonus payments for certain executive
officers.
Other regulatory capital
In addition to meeting the capital ratio requirements of
Basel III, the Firm and its principal IDI subsidiary, JPMorgan
Chase Bank, N.A. 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 requirements of the FDIC Improvement
Act, 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 current capital measures.
The following table presents the Firm’s effective GSIB
surcharge for the years ended December 31, 2024, 2023
and 2022.
Method 1
Method 2
2024
2.5 %
4.5 %
2023
2.5 %
4.0 %
2022
2.0 %
3.5 %
On November 27, 2023, the FSB released its annual list of
GSIBs based upon data as of December 31, 2022, which
affirmed the Firm’s Method 1 GSIB surcharge of 2.5%,
which will be effective January 1, 2025, unless the Firm’s
Method 1 GSIB surcharge, as determined by the FSB, is
lower based upon data as of December 31, 2023.
The Firm’s Method 2 surcharge calculated using data as of
December 31, 2021 is 4.5% (up from 4.0%), which
became 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
increased 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, 2023, 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 on discretionary bonus payments for certain executive
officers.
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 LTD. Refer to
TLAC on page 100 for additional information.
JPMorgan Chase & Co./2023 Form 10-K
95
Management’s discussion and analysis
Selected capital and RWA data
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. First Republic Bank was not subject to Advanced approach regulatory capital requirements. As a result,
for certain exposures associated with the First Republic acquisition, Advanced RWA and any impact on Advanced Total capital
is calculated under the Standardized approach as permitted by the transition provisions in the U.S. capital rules. Refer to Note
34 for additional information on the First Republic acquisition.
(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,
2023
December 31,
2022
Capital ratio
requirements(b)
December 31,
2023
December 31,
2022
Capital ratio
requirements(b)
$ 250,585
$ 218,934
277,306
308,497
245,631
277,769
1,671,995
1,653,538
$ 250,585
$ 218,934
277,306
295,417
1,669,156
(c)
(c)
245,631
264,583
1,609,773
15.0 %
16.6
18.5
13.2 %
14.9
16.8
11.4 %
12.9
14.9
15.0 %
16.6
17.7
13.6 %
15.3
16.4
11.0 %
12.5
14.5
(a) The capital metrics reflect the CECL capital transition provisions. Refer to Note 27 for additional information.
(b) Represents minimum requirements and regulatory buffers applicable to the Firm for the period ended December 31, 2023. For the period ended
December 31, 2022, the Basel III Standardized CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 12.0%, 13.5%, and 15.5%,
respectively; the Basel III Advanced CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 10.5%, 12.0%, and 14.0%,
respectively. Refer to Note 27 for additional information.
(c) Includes the impacts of certain assets associated with First Republic to which the Standardized approach has been applied as permitted by the transition
provisions in the U.S. capital rules.
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, 2023
December 31, 2022
Capital ratio
requirements(c)
$
$
3,831,200
$
3,703,873
7.2 %
6.6 %
4,540,465
$
4,367,092
6.1 %
5.6 %
4.0 %
5.0 %
(a) The capital metrics reflect the CECL capital transition provisions. Refer to Note 27 for additional information.
(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.
96
JPMorgan Chase & Co./2023 Form 10-K
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, 2023 and 2022.
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, 2023.
(in millions)
Total stockholders’ equity
Less: Preferred stock
Common stockholders’ equity
Add:
Certain deferred tax
liabilities(a)
Other CET1 capital
adjustments(b)
Less:
Goodwill(c)
Other intangible assets
Standardized/Advanced CET1
capital
Add: Preferred stock
Less: Other Tier 1 adjustments
Standardized/Advanced Tier 1
capital
December 31,
2023
327,878
$
December 31,
2022
292,332
$
27,404
300,474
27,404
264,928
2,996
4,717
54,377
3,225
250,585
27,404
683
2,510
6,221
53,501
1,224
218,934
27,404
707
$
277,306
$
245,631
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
$
$
$
$
11,779
$
13,569
20,102
(690)
31,191
308,497
(13,080) (f)
18,111
295,417
$
$
$
$
19,353
(784)
32,138
277,769
(13,186)
18,952
264,583
(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, 2023 and 2022, included a net benefit associated
with cash flow hedges and debit valuation adjustments ("DVA") related
to structured notes recorded in AOCI of $4.3 billion and $5.2 billion
and the benefit from the CECL capital transition provisions of $1.4
billion and $2.2 billion, respectively.
(c) Goodwill deducted from capital includes goodwill associated with
equity method investments in nonconsolidated financial institutions
based on regulatory requirements. Refer to page 134 for additional
information on principal investment risk.
(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.
Refer to Note 27 for additional information on the CECL capital
transition.
(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) Included an incremental $655 million allowance for credit losses on
certain assets associated with First Republic to which the Standardized
approach has been applied, as permitted by the transition provisions in
the U.S. capital rules.
Year ended December 31, (in millions)
2023
Standardized/Advanced CET1 capital at December 31, 2022 $ 218,934
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
December 31, 2023
Standardized/Advanced Tier 1 capital at December 31,
2022
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,
2023
48,051
(12,055)
(8,881)
1,084
5,381
329
(101)
373
(2,530)
31,651
$ 250,585
$ 245,631
31,651
—
24
31,675
$ 277,306
Standardized Tier 2 capital at December 31, 2022
$ 32,138
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
(1,790)
749
94
(947)
Standardized Tier 2 capital at December 31, 2023
Standardized Total capital at December 31, 2023
$ 31,191
$ 308,497
Advanced Tier 2 capital at December 31, 2022
$ 18,952
Change in long-term debt and other instruments qualifying
as Tier 2
Change in qualifying allowance for credit losses(b)(c)
Other
Change in Advanced Tier 2 capital
Advanced Tier 2 capital at December 31, 2023
Advanced Total capital at December 31, 2023
(1,790)
855
94
(841)
$ 18,111
$ 295,417
(a) Includes foreign currency translation adjustments and the impact of
related derivatives.
(b) Includes the impact of the CECL capital transition provisions and the
cumulative effect of changes in accounting principles. Refer to Note 27
for additional information on the CECL capital transition.
(c) Included an incremental $655 million allowance for credit losses on
certain assets associated with First Republic to which the Standardized
approach has been applied, as permitted by the transition provisions in
the U.S. capital rules.
JPMorgan Chase & Co./2023 Form 10-K
97
Management’s discussion and analysis
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, 2023. The amounts in the rollforward categories are estimates, based on the predominant driver of
the change.
Year ended December 31, 2023
(in millions)
Credit risk
RWA(c)
Standardized
Market risk
RWA
Total RWA
Credit risk
RWA(c)(d)
Market risk
RWA
Operational risk
RWA
Total RWA
Advanced
December 31, 2022
Model & data changes(a)
Movement in portfolio levels(b)
Changes in RWA
$ 1,568,536 $
85,002 $ 1,653,538
$ 1,078,076 $
85,432 $
446,265 $ 1,609,773
(11,024)
(4,883)
(15,907)
(11,313)
46,339
35,315
(11,975)
(16,858)
34,364
18,457
88,498
77,185
(4,883)
(11,946)
(16,829)
—
(16,196)
(973)
(973)
75,579
59,383
December 31, 2023
$ 1,603,851 $
68,144 $ 1,671,995
$ 1,155,261 $
68,603 $
445,292 $ 1,669,156
(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, changes in book size, impacts associated with the First Republic
acquisition, including the benefit of the shared-loss agreements entered into with the FDIC, position roll-offs in legacy portfolios in Home Lending, changes
in composition and credit quality, market movements, and deductions for excess eligible allowances for credit losses 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, 2023 and 2022, the Basel III Standardized Credit risk RWA included wholesale and retail off balance-sheet RWA of $208.5 billion and
$210.1 billion, respectively; and the Basel III Advanced Credit risk RWA included wholesale and retail off balance-sheet RWA of $188.5 billion and $180.8
billion, respectively.
(d) As of December 31, 2023, Credit risk RWA reflected approximately $52.4 billion of RWA calculated under the Standardized approach for certain assets
associated with First Republic as permitted by the transition provisions in the U.S. capital rules.
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,
2023
December 31,
2022
$ 277,306
$ 245,631
3,885,632
3,755,271
Less: Regulatory capital
adjustments(a)
Total adjusted average assets(b)
Add: Off-balance sheet exposures(c)
Total leverage exposure
SLR
54,432
51,398
3,831,200
3,703,873
709,265
663,219
$ 4,540,465
$ 4,367,092
6.1 %
5.6 %
(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. Refer to Note 27 for additional
information on the CECL capital transition.
(b) Adjusted average assets used for the calculation of Tier 1 leverage
under rules currently in effect, as well as 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, 2024,
changes to the Firm’s line of business capital allocations are
primarily a result of updates to the Firm’s current capital
requirements and changes in RWA for each LOB under rules
currently in effect. In addition, the capital that the Firm has
accumulated to meet the increased requirements of the U.S.
Basel III proposal has generally been retained in Corporate.
The following table presents the capital allocated to each
business segment.
Line of business equity (Allocated capital)
December 31,
(in billions)
Consumer & Community Banking
$
January 1,
2024
2023(a)
54.5 $ 55.5 $ 50.0
2022
ratio.
Corporate & Investment Bank
102.0
108.0
103.0
(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. Refer to the Firm’s Pillar 3 Regulatory Capital
Disclosures reports for additional information.
Commercial Banking
Asset & Wealth Management
Corporate
30.0
15.5
98.5
30.0
17.0
90.0
25.0
17.0
69.9
Total common stockholders’ equity $
300.5 $ 300.5 $ 264.9
(a) Includes the impact of the First Republic acquisition.
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 current allocation methodology incorporates
Basel III Standardized RWA and the GSIB surcharge, both
98
JPMorgan Chase & Co./2023 Form 10-K
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
$1.05 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
2023
25 %
2022
33 %
2021
25 %
Common stock
Effective May 1, 2022, the Firm is authorized to purchase
up to $30 billion under its common share repurchase
program previously approved by the Board of Directors,
which was announced on April 13, 2022.
The following table sets forth the Firm’s repurchases of
common stock for the years ended December 31, 2023,
2022 and 2021.
Year ended December 31, (in millions)
2023
2022(b)
2021(c)
Total number of shares of common
stock repurchased
Aggregate purchase price of common
stock repurchases(a)
69.5
23.1
119.7
$ 9,898 $ 3,122 $ 18,448
(a) Excludes excise tax and commissions. As part of the Inflation Reduction
Act of 2022, a 1% excise tax was imposed on net share repurchases
effective January 1, 2023.
(b) In the second half of 2022, the Firm temporarily suspended share
repurchases, which it resumed under its current common share
repurchase program in the first quarter of 2023.
(c) 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.
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; current and proposed future capital
requirements; 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 35 of the 2023 Form 10-K for
additional information regarding repurchases of the Firm’s
equity securities.
Refer to capital planning and stress testing on page 91 for
additional information.
Preferred stock
Preferred stock dividends declared were $1.5 billion for the
year ended December 31, 2023, and $1.6 billion for each
of the years ended December 31, 2022 and 2021.
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 108 and
Note 20 for additional information on the Firm’s
subordinated debt.
JPMorgan Chase & Co./2023 Form 10-K
99
Management’s discussion and analysis
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 discretionary bonus payments
for certain executive officers.
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, 2023 and 2022.
(in billions,
except ratio)
Total eligible
amount
% of RWA
Regulatory
requirements
Surplus/
(shortfall)
% of total
leverage
exposure
Regulatory
requirements
Surplus/
(shortfall)
December 31, 2023
External
TLAC
LTD
December 31, 2022
External
TLAC
LTD
$ 513.8
$ 222.6
$ 486.0
$ 228.5
30.7 %
13.3 %
29.4 %
13.8 %
23.0
10.0
22.5
9.5
$ 129.2
$
55.4
$ 114.0
$
71.4
11.3 %
4.9 %
11.1 %
5.2 %
9.5
4.5
9.5
4.5
$
82.5
$
18.3
$
71.2
$
32.0
Effective January 1, 2023, the Firm’s regulatory
requirements for TLAC to RWA and eligible LTD to RWA
ratios 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 94–95 for further information on
the GSIB surcharge.
Refer to Liquidity Risk Management on pages 102–109 for
further information on long-term debt issued by the Parent
Company.
Refer to Part I, Item 1A: Risk Factors on pages 9-33 of the
2023 Form 10-K for information on the financial
consequences to holders of the Firm’s debt and equity
securities in a resolution scenario.
100
JPMorgan Chase & Co./2023 Form 10-K
Effective January 1, 2023, J.P. Morgan Securities plc was
required to meet the minimum Tier 1 leverage ratio
requirement established by the PRA of 3.25%, plus
regulatory buffers.
The following table presents J.P. Morgan Securities plc’s
risk-based and leverage-based capital metrics:
December 31, 2023
(in millions, except ratios)
Actual
Regulatory Minimum
ratios(a)
Total capital
CET1 capital ratio
Tier 1 capital ratio
Total capital ratio
Tier 1 leverage ratio
$ 52,522
16.9 %
22.3
28.1
7.3
4.5 %
6.0
8.0
3.3
(b)
(a) Represents minimum Pillar 1 requirements specified by the PRA. J.P.
Morgan Securities plc's capital ratios as of December 31, 2023
exceeded the minimum requirements, including the additional capital
requirements specified by the PRA.
(b) At least 75% of the Tier 1 leverage ratio minimum must be met with
CET1 capital.
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, 2023, JPMSE was
compliant with its MREL requirements.
The following table presents JPMSE’s risk-based and
leverage-based capital metrics:
December 31, 2023
(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)
$
44,158
18.1 %
4.5 %
18.1
32.2
5.8
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, 2023
exceeded the minimum requirements, including the additional capital
requirements specified by EU regulators.
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, 2023
(in millions)
Net Capital
Actual
Minimum
$
27,865 $
5,346
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, 2023, 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, 2023, J.P. Morgan Securities
plc was compliant with its MREL requirements.
JPMorgan Chase & Co./2023 Form 10-K
101
Management’s discussion and analysis
LIQUIDITY RISK MANAGEMENT
Liquidity risk is the risk that the Firm will be unable to meet
its cash and collateral needs 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;
• 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, legal
entities, as well as currencies, 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 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 approval, the Firm’s liquidity risk
tolerances, liquidity strategy, and liquidity policy. Refer to
Firmwide Risk Management on pages 86–89 for further
discussion of ALCO and other risk-related committees.
Internal stress testing
The Firm conducts internal liquidity stress testing that is
intended to ensure that the Firm and its material legal
entities have sufficient liquidity under a variety of adverse
scenarios, including scenarios analyzed as part of the Firm’s
resolution and recovery planning. Internal stress tests are
produced 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;
• 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 to support 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
minimum liquidity requirements, and to manage through
102
JPMorgan Chase & Co./2023 Form 10-K
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, 2023, September 30, 2023 and
December 31, 2022 based on the Firm’s interpretation of
the LCR framework.
Average amount
(in millions)
December 31,
2023
September 30,
2023
December 31,
2022
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)
$ 485,263
$ 402,663
$ 542,847
313,365
378,702
190,201
$ 798,628
$ 781,365
$ 733,048
$ 704,857
$ 696,668
$ 652,580
113 %
112 %
112 %
$
93,771
$
84,697
$
80,468
JPMorgan Chase Bank, N.A.:
LCR
Net excess eligible
HQLA
129 %
123 %
151 %
$ 215,190
$ 167,096
$ 356,733
(a) Represents cash on deposit at central banks, primarily the Federal
Reserve Banks.
(b) 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. For purposes of
calculating the LCR, HQLA securities are included at fair value, which
may differ from the accounting treatment under U.S. GAAP.
(c) Predominantly U.S. Treasuries, U.S. GSE and government agency MBS,
and sovereign bonds net of regulatory haircuts under the LCR rule.
(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 increased during
the three months ended December 31, 2023, compared
with the three months ended September 30, 2023, driven
by CIB market activities, partially offset by loan growth.
JPMorgan Chase Bank, N.A.’s average LCR for the three
months ended December 31, 2023 decreased compared
with the three months ended December 31, 2022,
reflecting a decrease in JPMorgan Chase Bank, N.A.’s HQLA
as a result of a reduction in cash due to a decline in average
deposits and loan growth, as well as the impact of First
Republic and lower market values of HQLA-eligible
investment securities. These impacts were partially offset
by CIB markets activities.
Refer to Note 10 and Note 34 for additional information on
the Firm's investment securities portfolio and the First
Republic acquisition.
JPMorgan Chase & Co./2023 Form 10-K
103
For the three months ended December 31, 2023, both the
Firm and JPMorgan Chase Bank, N.A. were compliant with
the 100% minimum NSFR requirement, based on the Firm’s
interpretation of the final rule. Refer to the Firm's U.S. NSFR
Disclosure report covering December 31, 2023 and
September 30, 2023 on the Firm’s website for additional
information.
Management’s discussion and analysis
Actions by the Federal Reserve have impacted depositor
behavior, resulting in reductions to system-wide deposits,
including those held by the Firm. Each of the Firm and
JPMorgan Chase Bank, N.A.'s average LCR may fluctuate
from period to period due to changes in their respective
eligible HQLA and estimated net cash outflows as a result of
ongoing business activity and from the continued impacts of
Federal Reserve actions as well as other factors. 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.
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 $649 billion and $694 billion as of
December 31, 2023 and 2022, respectively, although the
amount of liquidity that could be raised at any particular
time would be dependent on prevailing market conditions.
The decrease compared to December 31, 2022, was driven
by a reduction in excess eligible HQLA securities at
JPMorgan Chase Bank, N.A., partially offset by an increase
in unencumbered AFS securities.
As of December 31, 2023 and 2022, the Firm had
approximately $1.4 trillion of available cash and securities
comprised of eligible end-of-period HQLA, excluding the
impact of regulatory haircuts of $798.0 billion and $735.5
billion, respectively, and unencumbered marketable
securities with a fair value of approximately $649 billion
and $694 billion, respectively.
The Firm also had available borrowing capacity at the
Federal Home Loan Banks (“FHLBs”) and the discount
window at the Federal Reserve Banks as a result of
collateral pledged by the Firm to such banks of
approximately $340 billion and $323 billion as of
December 31, 2023 and 2022, 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, 2022
primarily due to a higher amount of wholesale loans
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.
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.
104
JPMorgan Chase & Co./2023 Form 10-K
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, 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, 2023 and 2022.
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
The Firm believes that 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 generally 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, average deposit trends may be impacted.
Average deposits were lower for the year ended December
31, 2023 compared to the year ended December 31, 2022,
reflecting the net impact of:
• lower balances in AWM due to continued migration into
higher-yielding investments driven by the higher interest
rate environment, partially offset by growth from new and
existing customers as a result of new product offerings
and the impact of First Republic,
• a decline in CCB reflecting higher customer spending,
largely offset by the impact of First Republic,
• a decrease in CB due to continued deposit attrition as
clients seek higher-yielding investments, partially offset
by the retention of inflows associated with disruptions in
the market in the first quarter of 2023,
• a decline in CIB due to deposit attrition, including actions
taken to reduce certain deposits, predominantly offset by
2023
2022
2023
2022
$ 1,094,738 $ 1,131,611
$ 1,126,552 $ 1,162,680
777,638
273,254
233,232
21,826
689,893
271,342
233,130
14,203
728,537
267,758
216,178
20,042
739,700
294,180
261,489
9,866
$ 2,400,688 $ 2,340,179
$ 2,359,067 $ 2,467,915
net issuances of structured notes as a result of client
demand, and
• growth in Corporate related to the Firm's international
consumer initiatives.
Period-end deposits increased from December 31, 2022,
reflecting the net impact of:
• higher balances in CIB due to net issuances of structured
notes as a result of client demand, as well as deposit
inflows from client-driven activities in Payments and
Securities Services, partially offset by deposit attrition,
including actions taken to reduce certain deposits,
• growth in Corporate related to the Firm's international
consumer initiatives,
• lower balances in CCB reflecting higher customer
spending,
• a decline in AWM due to continued migration into higher-
yielding investments driven by the higher interest rate
environment, predominantly offset by growth from new
and existing customers as a result of new product
offerings, and
• a decrease in CB due to continued deposit attrition as
clients seek higher-yielding investments, predominantly
offset by the retention of inflows associated with
disruptions in the market in the first quarter of 2023.
The net increase also included $61 billion of deposits
associated with First Republic, primarily reflected in CCB,
AWM and CB.
JPMorgan Chase & Co./2023 Form 10-K
105
Management’s discussion and analysis
Refer to Business Segment Results on pages 65–85 and
Note 34 for additional information on the First Republic
acquisition.
Refer to the Firm’s Consolidated Balance Sheets Analysis
and the Business Segment Results on pages 58–60 and
pages 65–85, respectively, for further information on
deposit and liability balance trends. Refer to Note 3 for
further information on structured notes.
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, 2023 and 2022, the Firmwide estimated
uninsured deposits were $1,331.9 billion and $1,383.7
billion, respectively, primarily reflecting wholesale
operating deposits.
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,
2023
December 31,
2022
(in millions)
U.S.
Non-U.S.
U.S.
Non-U.S.
Three months or
less
Over three months
but within 6
months
Over six months
but within 12
months
Over 12 months
$ 82,719 $ 77,466 $ 43,513
$ 68,765
17,736
5,358
8,670
3,658
10,294
4,820
7,035
710
2,543
787
2,850
2,634
Total
$ 111,459 $ 90,187 $ 60,005
$ 77,907
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, 2023 and 2022.
As of December 31,
(in billions except ratios)
Deposits
Deposits as a % of total liabilities
Loans
Loans-to-deposits ratio
$
$
2023
2022
2,400.7
$ 2,340.2
68 %
69 %
1,323.7
$ 1,135.6
55 %
49 %
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, 2023, 2022, and 2021.
(Unaudited)
Year ended December 31,
Average balances
Average interest rates
(in millions, except interest rates)
2023
2022
2021
2023
2022
2021
U.S. offices
Noninterest-bearing
$
635,791
$
691,206
$
648,170
NA
NA
NA
Interest-bearing
Demand(a)
Savings(b)
Time
279,725
864,558
145,827
Total interest-bearing deposits
1,290,110
Total deposits in U.S. offices
1,925,901
324,512
971,788
62,022
1,358,322
2,049,528
322,122
930,866
48,628
1,301,616
1,949,786
3.50 %
0.92 %
0.06 %
1.10
4.74
2.03
1.36
0.28
2.07
0.52
0.34
0.06
0.26
0.07
0.05
Non-U.S. offices
Noninterest-bearing
Interest-bearing
Demand
Time
Total interest-bearing deposits
Total deposits in non-U.S. offices
24,747
28,043
26,315
NA
NA
NA
321,976
86,443
408,419
433,166
324,740
65,604
390,344
418,387
313,304
57,749
371,053
397,368
2.71
5.82
3.37
3.18
0.57
1.85
0.78
0.73
(0.10)
(0.09)
(0.10)
(0.09)
Total deposits
$ 2,359,067
$ 2,467,915
$ 2,347,154
1.70 %
0.41 %
0.02 %
(a) Includes Negotiable Order of Withdrawal accounts, and certain trust accounts.
(b) Includes Money Market Deposit Accounts.
Refer to Note 17 for additional information on deposits.
106
JPMorgan Chase & Co./2023 Form 10-K
The following table summarizes short-term and long-term funding, excluding deposits, as of December 31, 2023 and 2022,
and average balances for the years ended December 31, 2023 and 2022. Refer to the Consolidated Balance Sheets Analysis
on pages 58–60 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
Purchase Money Note(d)
Other long-term secured funding(e)
Total long-term secured funding
Preferred stock(f)
Common stockholders’ equity(f)
2023
14,737
8,200
787
23,724
212,804
2,944
21,775
17,781
255,304
191,202
19,708
86,056
296,966
2,998
41,246
48,989
4,624
97,857
27,404
300,474
(g)
(g)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Average
2022
12,557 $
8,418
1,684
22,659 $
2023
12,675
9,712
1,754
24,141
198,382 $ 249,661
4,671
22,010
14,918
2,547
23,052
9,236
$
2022
16,151
12,250
1,567
$
29,968
$ 236,192
5,003
25,211
7,387
233,217 $ 291,260
$ 273,793
188,025 $ 181,803
$ 189,047
21,803
70,839
20,374
76,574
20,125
68,656
280,667 $ 278,751
$ 277,828
1,999 $
1,634
$
1,950
11,093
28,865
NA
$
32,829
4,105
4,513
17,197 $
67,841
27,404 $
27,404
$
$
11,103
NA
3,837
16,890
31,893
264,928 $ 282,056
$ 253,068
(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) Reflects the Purchase Money Note associated with the First Republic acquisition on May 1, 2023. Refer to Note 34 for additional information.
(e) Includes long-term structured notes which are secured.
(f) Refer to Capital Risk Management on pages 91-101, Consolidated statements of changes in stockholders’ equity on page 169, Note 21 and Note 22 for
additional information on preferred stock and common stockholders’ equity.
(g) As of December 31, 2023, included short-term and long-term FHLB advances of $500 million and $23.2 billion, respectively, associated with First
Republic. Refer to Note 34 for additional information.
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, 2023, compared with December 31,
2022, reflecting the impact of a lower level of netting on
reduced repurchase activity.
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.
The Firm’s sources of short-term unsecured funding
primarily consist of issuances of wholesale commercial
paper and other borrowed funds.
The increase in period-end commercial paper and the
decrease in average balances for the year ended
December 31, 2023 compared to the respective prior year
periods were due to changes in net issuance levels primarily
for short-term liquidity management.
The decrease in average secured other borrowed funds for
the year ended December 31, 2023 compared to the prior
year period was primarily due to lower financing of Markets
activities.
JPMorgan Chase & Co./2023 Form 10-K
107
Management’s discussion and analysis
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 total outstanding long-term debt has been 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. For the year ended
December 31, 2023, the increase in period-end structured notes compared to the prior year period was attributable to net
issuances of structured notes in Markets due to client demand and an increase in fair value.
The following table summarizes long-term unsecured issuance and maturities or redemptions for the years ended
December 31, 2023 and 2022. 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
2023
2022
2023
2022
Parent Company
Subsidiaries
—
—
—
—
$
14,256 $
32,600 $
3,750 $
2,141
16,397
—
3,013
2,752
35,352
3,500
2,535
—
3,750
—
35,281
35,577
$
19,410 $
41,387 $
39,031 $
35,577
$
21,483 $
16,700 $
2,090
1,532
—
67 $
—
65
—
1,594
28,777
25,481
Total long-term unsecured funding – maturities/redemptions
$
25,105 $
18,294 $
28,844 $
25,546
(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, the FHLB advances, and their respective maturities or
redemptions, as applicable for the years ended December 31, 2023 and 2022. Additionally, the table includes the FHLB
advances and Purchase Money Note associated with First Republic. Refer to Note 34 for additional information.
Long-term secured funding
Year ended December 31,
(in millions)
Credit card securitization
FHLB advances
Purchase Money Note(a)
Other long-term secured funding(b)
Total long-term secured funding
Issuance
2023
$
1,998
$
39,775
50,000
991
Maturities/Redemptions
2022
999 $
—
NA
476
$
2023
1,000
9,485
—
432
2022
1,400
14
NA
268
$
92,764
$
1,475 $
10,917
$
1,682
(a) Reflects the Purchase Money Note associated with the First Republic acquisition. Refer to Note 34 for additional information.
(b) 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.
108
JPMorgan Chase & Co./2023 Form 10-K
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 Note 5 and Note 14
for additional information.
The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of December 31, 2023,
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
December 31, 2023
Moody’s Investors Service
Standard & Poor’s(a)
Fitch Ratings
Long-term
issuer
Short-term
issuer
A1
A-
AA-
P-1
A-2
F1+
Outlook
Stable
Stable
Stable
Long-term
issuer
Short-term
issuer
Aa2
A+
AA
P-1
A-1
F1+
Outlook
Negative
(b)
Stable
Stable
Long-term
issuer
Short-term
issuer
Aa3
A+
AA
P-1
A-1
F1+
Outlook
Stable
Stable
Stable
(a) On March 31, 2023, Standard & Poor's affirmed the credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries, and
revised the outlook from positive to stable.
(b) On November 13, 2023, Moody’s revised the outlook of the Firm’s principal bank subsidiary from stable to negative to reflect Moody’s change to the U.S.
sovereign outlook.
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.
JPMorgan Chase & Co./2023 Form 10-K
109
Governance and oversight
The Reputation Risk Governance policy establishes the
principles for managing reputation risk for the Firm. It is
the responsibility of each LOB, Corporate and employees 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 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
stakeholders, including clients, counterparties, customers,
communities, investors, regulators, or employees.
The types of events that may result in reputation risk are
wide-ranging and can be introduced by the Firm’s
employees, business strategies and activities, clients,
customers and counterparties with which the Firm does
business. These events could contribute to financial losses,
litigation, regulatory enforcement actions, fines, penalties
or other sanctions, as well as other harm to the Firm.
Organization and management
Reputation Risk Management is an independent risk
management function that 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
• Providing oversight of the governance framework
through processes and infrastructure to support
consistent identification, escalation and monitoring of
reputation risk issues Firmwide
110
JPMorgan Chase & Co./2023 Form 10-K
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 approval 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 155–158
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 appropriate. 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.
JPMorgan Chase & Co./2023 Form 10-K
111
In addition to Credit Risk Management, an independent
Credit Review function is responsible for:
• Independently assessing risk grades assigned to
exposures in the Firm’s wholesale credit portfolio and 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.
Management’s discussion and analysis
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.
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
112
JPMorgan Chase & Co./2023 Form 10-K
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 114–119 and Note 12
for further discussions of the consumer credit environment
and consumer loans. Refer to Wholesale Credit Portfolio on
pages 120–130 and Note 12 for further discussions of the
wholesale credit environment and wholesale loans.
On January 1, 2023, the Firm adopted changes to the TDR
accounting guidance, which eliminated the accounting and
disclosure requirements for TDRs including the requirement
to assess whether a modification is reasonably expected or
involves a concession. The new guidance requires disclosure
of loan modifications to borrowers experiencing financial
difficulty consisting of principal forgiveness, interest rate
reduction, other-than-insignificant payment delay, term
extension or a combination of these modifications. The Firm
has defined these types of modifications as financial
difficulty modifications ("FDMs"). As a result of the
elimination of the requirement to assess whether a
modification is reasonably expected or involves a
concession, the population of loans considered FDMs differs
from the population previously considered TDRs. Refer to
Note 1 and Note 12 for further information.
Total credit portfolio
December 31,
(in millions)
Loans retained
Credit exposure
Nonperforming(d)
2023
2022
2023
2022
$ 1,280,870
$ 1,089,598
$
5,989 $
5,837
Loans held-for-sale
Loans at fair value
3,985
38,851
3,970
42,079
Total loans
1,323,706
1,135,647
Derivative receivables
54,864
70,880
184
744
6,917
364
54
829
6,720
296
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
47,625
49,257
—
—
1,426,195
1,255,784
7,281
7,016
NA
NA
NA
NA
NA
NA
1,497,847
1,326,782
$ 2,924,042 (c) $ 2,582,566
274
42
316
464
203
28
231
455
$
8,061 $
7,702
$ (37,779)
$ (19,330)
$
— $
—
(22,461)
(23,014)
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) Includes credit exposure associated with First Republic consisting of
$102.2 billion in the Consumer credit portfolio and $90.6 billion in the
Wholesale credit portfolio.
(d) At December 31, 2023 and 2022, nonperforming assets excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $182 million and $302 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.
The following table provides information on Firmwide
nonaccrual loans to total loans.
December 31,
(in millions, except ratios)
Total nonaccrual loans
Total loans
2023
2022
$
6,917
$
6,720
1,323,706
1,135,647
Firmwide nonaccrual loans to total loans
outstanding
0.52 %
0.59 %
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
2023
2022
$
6,209
$
2,853
1,202,348
1,044,765
0.52 %
0.27 %
JPMorgan Chase & Co./2023 Form 10-K
113
Management’s discussion and analysis
CONSUMER CREDIT PORTFOLIO
The Firm’s retained consumer portfolio consists primarily of
loans and lending-related commitments for residential real
estate, credit card, scored auto and business banking,
including those associated with First Republic, primarily in
residential real estate. The consumer credit portfolio also
includes loans at fair value, predominantly in residential real
estate. 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.
114
JPMorgan Chase & Co./2023 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)
Total loans - retained
Loans held-for-sale
Loans at fair value(d)
Total consumer, excluding credit card loans
Lending-related commitments(e)
Total consumer exposure, excluding credit card
Credit card
Loans retained(f)
Total credit card loans
Lending-related commitments(e)(g)
Total credit card exposure
Total consumer credit portfolio
Credit-related notes used in credit portfolio management activities(h)
Credit exposure
Nonaccrual loans(j)(k)(l)
2023
2022
2023
2022
$
326,409
$
237,561
$
3,466 $
177
3,643
95
465
4,203
3,745
129
3,874
28
423
4,325
NA
NA
NA
NA
70,866
397,275
487
12,331
410,093
45,403
455,496
(i)
211,123
211,123
915,658
1,126,781
1,582,277
(790)
$
$
$
$
63,192
300,753
618
10,004
311,375
33,518
344,893
185,175
185,175
821,284
1,006,459
1,351,352
$
4,203 $
4,325
(1,187)
(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
Net charge-offs/(recoveries)
Average loans - retained
Net charge-off/(recovery) rate(m)
2023
2022
2023
2022
2023
2022
Year ended December 31,
$
(52) $
(226) $
296,515 $
233,454
(0.02) %
(0.10) %
684
632
4,698
495
269
2,403
67,546
364,061
191,412
$
5,330 $
2,672
$
555,473 $
65,955
299,409
163,335
462,744
1.01
0.17
2.45
0.75
0.09
1.47
0.96 %
0.58 %
(a) Includes scored mortgage and home equity loans held in CCB and AWM.
(b) At December 31, 2023 and 2022, excluded operating lease assets of $10.4 billion and $12.0 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) Includes scored mortgage loans held in CCB and CIB, and other consumer unsecured loans in CIB.
(e) 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.
(f) Includes billed interest and fees.
(g) Also includes commercial card lending-related commitments primarily in CB and CIB.
(h) 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.
(i) At December 31, 2023, included credit exposure of $102.2 billion associated with First Republic, consisting of $99.6 billion in residential real estate and
$2.6 billion in auto and other.
(j) At December 31, 2023 and 2022, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $182
million and $302 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, 2023 and 2022, nonaccrual loans excluded $15 million and $101 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 $12.9 billion and $17.4 billion for the years ended December 31, 2023 and 2022,
respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.
JPMorgan Chase & Co./2023 Form 10-K
115
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. 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. Refer to Note 12 for further information on loan classes.
December 31, 2023
(in millions)
Consumer, excluding credit card
Residential real estate
Auto and other
Total consumer, excluding credit card loans(a)
Total credit card loans
Total consumer loans
Loans due after one year at fixed interest rates
Residential real estate(b)
Auto and other
Credit card
Loans due after one year at variable interest rates(c)
Residential real estate(d)
Auto and other
Total consumer loans
Within
1 year(e)
1-5
years
5-15
years
After 15
years
Total
$
17,830
$
27,447
$ 110,504
$ 181,593
$ 337,374
20,191
(f)
$
38,021
$ 210,418
$ 248,439
$
$
$
47,315
5,209
4
72,719
74,762
$ 115,713
$ 181,597
$ 410,093
700
$
5
$
—
$ 211,123
75,462
$ 115,718
$ 181,597
$ 621,216
$
20,337
$
59,603
$
89,044
47,236
700
3,767
5
4
—
$
7,110
$
50,901
$
92,549
79
1,442
—
$
75,462
$ 115,718
$ 181,597
(a) Included $3.9 billion, $4.6 billion, $27.9 billion, and $56.2 billion of loans within 1 year, 1-5 years, 5-15 years, and after 15 years, respectively, associated
with First Republic.
(b) Included $3.0 billion, $8.9 billion, and $15.1 billion in 1-5 years, 5-15 years, and after 15 years, respectively, associated with First Republic.
(c) Includes loans that have an initial fixed interest rate that resets to a variable rate as the variable rate will be the prevailing rate over the life of the loan.
(d) Included $1.6 billion, $19.1 billion, and $41.0 billion in 1-5 years, 5-15 years, and after 15 years, respectively, associated with First Republic.
(e) Includes loans held-for-sale and loans at fair value.
(f) Includes overdrafts.
116
JPMorgan Chase & Co./2023 Form 10-K
Consumer, excluding credit card
Portfolio analysis
Loans increased from December 31, 2022 driven by
residential real estate loans associated with First Republic
and higher auto 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, 2022
driven by residential real estate loans associated with First
Republic. Retained nonaccrual loans decreased compared
to December 31, 2022 predominantly driven by loan sales,
partially offset by the net impact of paydowns and
additions, including those associated with First Republic.
Net recoveries were lower for the year ended December 31,
2023 compared to the prior year driven by lower
prepayments due to higher interest rates.
Loans at fair value increased from December 31, 2022,
driven by an increase in Home Lending as originations
outpaced warehouse loan sales, and in CIB as purchases
outpaced sales and paydowns.
At December 31, 2023 and 2022, the carrying values of
interest-only residential mortgage loans were $90.6 billion
and $36.3 billion, respectively. The increase was driven by
First Republic. 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. The credit performance of this portfolio
is comparable with the performance of the broader prime
mortgage portfolio.
The carrying value of home equity lines of credit
outstanding was $16.1 billion at December 31, 2023,
which included $2.6 billion associated with First Republic.
The carrying value of home equity lines of credit
outstanding included $4.2 billion of HELOCs that have
recast from interest-only to fully amortizing payments or
have been modified and $4.3 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.
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,
2023
December 31,
2022
$
446 $
102
182
659
136
302
Total government guaranteed loans
$
730 $
1,097
Geographic composition and current estimated loan-to-
value ratio of residential real estate loans
At December 31, 2023, $228.4 billion, or 70% of the total
retained residential real estate loan portfolio, was
concentrated in California, New York, Florida, Texas and
Massachusetts, compared with $147.8 billion, or 62% at
December 31, 2022.
Average current estimated loan-to-value (“LTV”) ratios
have improved, reflecting an increase in home prices.
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
For the year ended December 31, 2023, residential real
estate FDMs were $136 million. In addition to FDMs, the
Firm also had $69 million of loans subject to trial
modification where the terms of the loans have not been
permanently modified, as well as $9 million of loans subject
to discharge under Chapter 7 bankruptcy proceedings
("Chapter 7 loans"). The changes to the TDR accounting
guidance eliminated the TDR reasonably expected and
concession assessment criteria. Accordingly, trial
modifications and Chapter 7 loans were considered TDRs,
but not FDMs. Refer to Note 1 and Note 12 for further
information.
For the year ended December 31, 2022, residential real
estate TDRs were $362 million. Refer to Note 12 for further
information on TDRs in prior periods.
JPMorgan Chase & Co./2023 Form 10-K
117
Nonaccrual loans
The following table presents changes in consumer,
excluding credit card, nonaccrual loans for the years ended
December 31, 2023 and 2022.
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
$
2023
4,325 $
2,894
2022
5,350
2,196
1,306
472
1,052
186
3,016
(122)
1,393
255
1,405
168
3,221
(1,025)
$
4,203 $
4,325
(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.
Management’s discussion and analysis
Auto and other: The auto and other loan portfolio,
including loans at fair value, generally consists of prime-
quality scored auto and business banking loans, other
consumer unsecured loans, and overdrafts. The portfolio
increased when compared to December 31, 2022 due to
originations of scored auto loans and an increase in other
consumer unsecured fair value option loans in CIB
associated with First Republic, largely offset by paydowns.
Net charge-offs for the year ended December 31, 2023
increased compared to the prior year due to higher charge-
offs of scored auto loans driven by the decline in used
vehicle valuations. The scored auto net charge-off rates
were 0.56% and 0.24% for the years ended December 31,
2023 and 2022, respectively.
Nonperforming assets
The following table presents information as of
December 31, 2023 and 2022, about consumer, excluding
credit card, nonperforming assets.
Nonperforming assets(a)
December 31, (in millions)
2022
2023
Nonaccrual loans
Residential real estate(b)
Auto and other(c)
Total nonaccrual loans
Assets acquired in loan satisfactions
Real estate owned
Other
Total assets acquired in loan satisfactions
$
4,015 $
4,196
188
4,203
129
4,325
120
42
162
129
28
157
Total nonperforming assets
$
4,365 $
4,482
(a) At December 31, 2023 and 2022, nonperforming assets excluded
mortgage loans 90 or more days past due and insured by U.S.
government agencies of $182 million and $302 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, 2023 and 2022, nonaccrual loans excluded $15
million and $101 million, respectively, of PPP loans 90 or more days
past due and guaranteed by the SBA.
118
JPMorgan Chase & Co./2023 Form 10-K
Credit card
Total credit card loans increased from December 31, 2022
reflecting growth from new accounts and revolving
balances which continued to normalize to pre-pandemic
levels. The December 31, 2023 30+ and 90+ day
delinquency rates of 2.14% and 1.05%, respectively,
increased compared to the December 31, 2022 30+ and
90+ day delinquency rates of 1.45% and 0.68%,
respectively. Net charge-offs increased for the year ended
December 31, 2023 compared to the prior year as
delinquencies have normalized.
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, 2023, $98.1 billion, or 46% of the total
retained credit card loan portfolio, was concentrated in
California, Texas, New York, Florida and Illinois, compared
with $85.4 billion, or 46%, at December 31, 2022.
Modifications of credit card loans
For the year ended December 31, 2023, credit card FDMs
were $648 million. FDMs increased for the year ended
December 31, 2023 compared to credit card TDRs in the
prior year, as delinquencies have normalized. In addition to
FDMs, the Firm also had $27 million of loans subject to trial
modification where the terms of the loans have not been
permanently modified for the year ended December 31,
2023. The changes to the TDR accounting guidance
eliminated the TDR reasonably expected and concession
assessment criteria. Accordingly, trial modifications were
considered TDRs, but not FDMs.
For the year ended December 31, 2022, credit card TDRs
were $418 million.
Refer to Note 1 and Note 12 for further information about
this portfolio, including information about delinquencies,
geographic and FICO composition, and modifications.
JPMorgan Chase & Co./2023 Form 10-K
119
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 122–125 for further information.
The Firm’s wholesale credit portfolio includes exposure held
in CIB, CB, AWM, and Corporate, and risk-rated exposure
held in CCB, for which the wholesale methodology is applied
when determining the allowance for loan losses. The Firm
continues to convert certain operations, and to integrate
clients, products and services, associated with First
Republic. Accordingly, reporting classifications and internal
risk rating profiles in the wholesale portfolio may change in
future periods. Refer to Business Developments on page 53
for additional information.
As of December 31, 2023, retained loans increased
$68.8 billion predominantly driven by the impact of First
Republic. Lending-related commitments increased
$64.8 billion, driven by the impact of First Republic, and
net portfolio activity in CIB and CB.
As of December 31, 2023, nonperforming exposure
increased $476 million predominantly driven by
nonperforming retained loans in Real Estate and
Healthcare, reflecting downgrades, and Individuals largely
driven by the impact of First Republic, partially offset by a
single name upgrade in Civic Organizations.
For the year ended December 31, 2023, wholesale net
charge-offs increased $698 million, predominantly driven
by the restructuring of a loan, increases in Real Estate
(concentrated in Office) and Consumer & Retail.
Wholesale credit portfolio
December 31,
(in millions)
Credit exposure
Nonperforming
2023
2022
2023
2022
Loans retained
$ 672,472
$ 603,670 $ 2,346 $ 1,963
Loans held-for-sale
Loans at fair value
3,498
26,520
3,352
32,075
89
279
26
406
Loans
702,490
639,097
2,714
2,395
Derivative receivables
54,864
70,880
364
296
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
47,625
49,257
—
—
804,979
759,234
3,078
2,691
NA
NA
NA
NA
NA
NA
154
—
154
74
—
74
536,786
471,980
464
455
$ 1,341,765 (c) $ 1,231,214 $ 3,696 $ 3,220
$ (36,989)
$ (18,143) $
— $
—
(22,461)
(23,014)
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 130 and Note 5 for additional
information.
(c) Included credit exposure of $90.6 billion associated with First
Republic.
120
JPMorgan Chase & Co./2023 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, 2023 and 2022. 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(d)
Ratings profile
Total derivative receivables, net of collateral
8,007
8,970
15,426
32,403
24,919
Lending-related commitments
143,337
368,646
24,803
536,786
341,611
7,484
195,175
December 31, 2023
(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)
1 year or
less
After 1 year
through
5 years
After 5
years
Total
Investment-
grade
Noninvestment-
grade
Total
Total %
of IG
$ 211,104 $ 280,821 $ 180,547 $ 672,472
$ 458,838
$
213,634
$ 672,472
68 %
54,864
(22,461)
54,864
(22,461)
32,403
536,786
77
64
66
362,448
658,437
220,776
1,241,661
825,368
416,293
1,241,661
30,018
47,625
$ 1,319,304
30,018
47,625
$ 1,319,304
$
(3,311) $
(28,353) $
(5,325) $
(36,989) $
(28,869)
$
(8,120)
$
(36,989)
78 %
Maturity profile(d)
Ratings profile
December 31, 2022
(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
$ 204,761 $ 253,896 $ 145,013 $ 603,670
$ 425,412 $
178,258
$ 603,670
70 %
70,880
(23,014)
70,880
(23,014)
Total derivative receivables, net of collateral
13,508
14,880
19,478
47,866
Lending-related commitments
101,083
347,456
23,441
471,980
319,352
616,232
187,932
1,123,516
36,231
327,168
788,811
11,635
47,866
144,812
471,980
334,705
1,123,516
76
69
70
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)
35,427
49,257
35,427
49,257
$ 1,208,200
$ 1,208,200
$
(2,817) $
(13,530) $
(1,796) $
(18,143)
$
(15,115) $
(3,028) $
(18,143)
83 %
(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) 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, 2023, may become payable prior to maturity based on their cash flow
profile or changes in market conditions.
JPMorgan Chase & Co./2023 Form 10-K
121
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 $41.4 billion at December 31, 2023 and $31.3 billion at
December 31, 2022, representing approximately 3.3% and 2.7% of total wholesale credit exposure, respectively; of the
$41.4 billion, $38.3 billion was performing. The increase in criticized exposure was predominantly driven by Real Estate,
Technology, Media & Telecommunications (predominantly Technology) and Healthcare, reflecting downgrades.
The table below summarizes by industry the Firm’s exposures as of December 31, 2023 and 2022. 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)
As of or for the year ended
December 31, 2023
(in millions)
Credit
exposure(f)(g)
(h)
Investment-
grade
Noncriticized
Criticized
performing
Criticized
nonperforming
Noninvestment-grade
Selected metrics
30 days or
more past
due and
accruing
loans(i)
Net charge-
offs/
(recoveries)
Credit
derivative
and credit-
related
notes(i)
Liquid securities
and other cash
collateral held
against
derivative
receivables
Real Estate
$ 208,261 $ 148,866 $
50,190 $
8,558 $
647 $
717 $
275 $
(574) $
Individuals and Individual Entities(b)
145,849
110,673
Asset Managers
Consumer & Retail
Technology, Media &
Telecommunications
Industrials
Healthcare
Banks & Finance Companies
Utilities
State & Municipal Govt(c)
Oil & Gas
Automotive
Chemicals & Plastics
Insurance
Central Govt
Transportation
Metals & Mining
Securities Firms
Financial Markets Infrastructure
All other(d)
129,574
127,086
77,296
75,092
65,025
57,177
36,061
35,986
34,475
33,977
20,773
20,501
17,704
16,060
15,508
8,689
4,251
83,857
60,168
40,468
40,951
43,163
33,881
25,242
33,561
18,276
23,152
11,353
14,503
17,264
8,865
8,403
4,570
4,052
34,261
45,623
58,606
27,094
30,586
18,396
22,744
9,929
2,390
16,076
10,060
8,352
5,700
312
5,943
6,514
4,118
199
334
90
7,863
9,388
3,419
3,005
545
765
27
111
640
916
298
127
1,196
536
1
—
439
581
4
449
346
136
461
7
125
8
12
125
152
—
1
56
55
—
—
9
861
201
318
36
213
130
9
1
31
45
59
106
2
—
23
12
—
—
21
10
1
—
—
161
(4,204)
81
31
17
(4,287)
(2,949)
(3,070)
—
—
(7,209)
—
—
—
—
277
(511)
(412)
(3)
(2,373)
—
11
—
2
—
—
(26)
44
—
—
(4)
(1,927)
(653)
(1,045)
(961)
(3,490)
(574)
(229)
(14)
—
—
—
(5)
—
—
(6,898)
(2,085)
—
—
(2,765)
—
(2)
(10,124)
(3,087)
134,777
115,711
18,618
Subtotal
$ 1,264,122 $ 846,979 $
375,711 $
38,258 $
3,174 $
2,785 $
879 $ (36,989) $
(22,461)
Loans held-for-sale and loans at fair
value
Receivables from customers
Total(e)
30,018
47,625
$ 1,341,765
122
JPMorgan Chase & Co./2023 Form 10-K
As of or for the year ended
December 31, 2022
(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
Credit
derivative
and credit-
related
notes (i)
Net charge-
offs/
(recoveries)
Liquid
securities
and other
cash
collateral
held against
derivative
receivables
Real Estate
$ 170,857
$ 129,866 $
36,945
$
3,609 $
437 $
543 $
19 $
(113)
$
Individuals and Individual
Entities(b)
Asset Managers
Consumer & Retail
Technology, Media &
Telecommunications
Industrials
Healthcare
Banks & Finance Companies
Utilities
State & Municipal Govt(c)
Oil & Gas
Automotive
Chemicals & Plastics
Insurance
Central Govt
Transportation
Metals & Mining
Securities Firms
Financial Markets
Infrastructure
All other(d)
130,815
95,656
120,555
112,006
78,925
60,781
72,286
72,483
62,613
51,816
36,218
33,847
38,668
33,287
20,030
21,045
19,095
15,009
15,915
8,066
4,962
39,199
39,052
43,839
27,811
25,981
33,191
20,547
23,908
12,134
15,468
18,698
6,497
8,825
4,235
4,525
18,104
16,665
51,871
25,689
30,500
17,117
22,994
9,294
529
17,616
8,839
7,103
5,396
362
6,862
6,863
3,716
437
123,307
105,284
17,555
360
61
7,295
7,096
2,809
1,479
961
807
126
474
416
744
181
35
1,574
222
115
—
223
345
5
608
302
122
178
50
136
1
31
124
49
—
—
76
5
—
—
245
1,038
15
321
62
282
43
36
21
36
57
198
10
1
—
24
7
—
—
4
1
(1)
—
—
49
(1,157)
39
44
27
—
15
—
(6)
(2)
3
—
10
2
(1)
(1,766)
(1,258)
(1,055)
(262)
(607)
(9)
(414)
(513)
(298)
(273)
(4,591)
(339)
(27)
—
—
(8,278)
—
—
—
—
(994)
(1)
(5)
—
—
—
(7,296)
(677)
—
(4)
(13)
(26)
(2,811)
—
—
—
(5)
(5,435)
(2,948)
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
(a) The industry rankings presented in the table as of December 31, 2022, are based on the industry rankings of the corresponding exposures at
December 31, 2023, not actual rankings of such exposures at December 31, 2022.
(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, 2023 and 2022, noted above, the
Firm held: $5.9 billion and $6.6 billion, respectively, of trading assets; $21.4 billion and $6.8 billion, respectively, of AFS securities; and $9.9 billion and
$19.7 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 94% and 6%, respectively, at December 31, 2023 and
95% and 5%, respectively, at December 31, 2022.
(e) Excludes cash placed with banks of $614.1 billion and $556.6 billion, at December 31, 2023 and 2022, 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) Included credit exposure of $90.6 billion associated with First Republic predominantly in Real Estate, Asset Managers, and Individuals and Individual
Entities.
(i) 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.
JPMorgan Chase & Co./2023 Form 10-K
123
Management’s discussion and analysis
Presented below is additional detail on certain of the Firm’s industry exposures.
Real Estate
Real Estate exposure was $208.3 billion as of December 31, 2023. Criticized exposure increased by $5.2 billion from
$4.0 billion at December 31, 2022 to $9.2 billion at December 31, 2023, predominantly driven by client-specific
downgrades, partially offset by client-specific upgrades.
(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
Loans and
Lending-related
Commitments
$
121,946
$
20,254
16,462
16,145
15,542
12,763
4,729
$
207,841
$
December 31, 2023
Derivative
Receivables
Credit
exposure
% Investment-
grade
$
121,967
79 %
20,272
16,494
16,219
15,750
12,811
4,748
70
51
62
55
75
30
21
18
32
74
208
48
19
420
$
208,261
(d)
71 %
80 %
% Drawn(e)
90 %
72
81
46
63
73
48
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(e)
87 %
72
74
65
70
75
6
71
73
48
62
68
37
Total Real Estate Exposure
$
170,608
$
249
$
170,857
76 %
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 82% secured; unsecured exposure is predominantly investment-grade largely to Real Estate Investment Trusts
(“REITs”) and Real Estate Operating Companies (“REOCs”) whose underlying assets are generally diversified.
(d) Included $33.4 billion of credit exposure associated with First Republic, largely in Multifamily.
(e) Represents drawn exposure as a percentage of credit exposure.
124
JPMorgan Chase & Co./2023 Form 10-K
Consumer & Retail
Consumer & Retail exposure was $127.1 billion as of December 31, 2023. Criticized exposure increased by $409 million from
$7.9 billion at December 31, 2022 to $8.3 billion at December 31, 2023, driven by client-specific downgrades predominantly
offset by client-specific upgrades and net portfolio activity.
(in millions, except ratios)
Retail(a)
Business and Consumer Services
Food and Beverage
Consumer Hard Goods
Leisure(b)
Total Consumer & Retail(c)
(in millions, except ratios)
Retail(a)
Business and Consumer Services
Food and Beverage
Consumer Hard Goods
Leisure(b)
Total Consumer & Retail
December 31, 2023
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
$
$
36,042
34,822
32,256
13,169
8,784
334
392
930
197
160
$
36,376
35,214
33,186
13,366
8,944
% Investment-
grade
51 %
% Drawn(d)
30 %
42
57
43
25
42
36
33
47
$
125,073
$
2,013
$
127,086
47 %
36 %
December 31, 2022
Loans and
Lending-related
Commitments
Derivative
Receivables
Credit
exposure
% Investment-
grade
$
$
33,891
31,256
31,706
13,879
8,173
309
384
736
172
49
$
34,200
31,640
32,442
14,051
8,222
$
118,905
$
1,650
$
120,555
50 %
50
59
51
21
50 %
% Drawn(d)
33 %
40
39
39
45
38 %
(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, 2023, approximately 90% of the noninvestment-
grade Leisure portfolio is secured.
(c) Consumer & Retail exposure is approximately 59% secured; unsecured exposure is approximately 79% investment-grade.
(d) Represents drawn exposure as a percent of credit exposure.
Oil & Gas
Oil & Gas exposure was $34.5 billion as of December 31, 2023 of which $123 million was considered criticized.
(in millions, except ratios)
December 31, 2023
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)
$
$
18,121
15,649
33,770
$
$
536
169
705
$
$
18,657
15,818
34,475
51 %
55
53 %
(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
$
$
17,729
15,818
33,547
$
$
4,666
455
5,121
$
$
22,395
16,273
38,668
50 %
57
53 %
% Drawn(c)
26 %
22
25 %
% Drawn(c)
25 %
25
25 %
(a) Other Oil & Gas includes Integrated Oil & Gas companies, Midstream/Oil Pipeline companies and refineries.
(b) Oil & Gas exposure is approximately 35% secured, approximately 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./2023 Form 10-K
125
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, 2023 and
2022. Since December 31, 2022, nonaccrual loan exposure
increased by $319 million driven by retained loans in Real
Estate and Healthcare, reflecting downgrades, and
Individuals largely driven by the impact of First Republic,
partially offset by a single name upgrade in Civic
Organizations.
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
2023
2022
$ 2,395 $ 2,445
3,543
2,119
1,336
1,329
965
616
307
3,224
319
213
594
33
2,169
(50)
$ 2,714 $ 2,395
The following table presents net charge-offs/recoveries,
which are defined as gross charge-offs less recoveries, for
the years ended December 31, 2023 and 2022. 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)
2023
2022
Loans
Average loans retained
$ 646,875
$ 582,021
Gross charge-offs
Gross recoveries collected
Net charge-offs/(recoveries)
1,011
(132)
879
322
(141)
181
Net charge-off/(recovery) rate
0.14 %
0.03 %
Modified wholesale loans
The amortized cost of wholesale FDMs was $2.1 billion for
the year ended December 31, 2023. Refer to Note 1 and
Note 12 for further information.
Wholesale TDRs were $801 million for the year ended
December 31, 2022.
As a result of the elimination of the requirement to assess
whether a modification is reasonably expected or involves a
concession, the population of loans considered FDMs is
greater than the population previously considered TDRs.
Refer to Note 12 for further information on TDRs in prior
periods.
126
JPMorgan Chase & Co./2023 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. Refer to Note 12 for further information on loan classes.
December 31, 2023
(in millions, except ratios)
Wholesale loans:
Secured by real estate(a)
Commercial and industrial
Other(b)
Total wholesale loans
Loans due after one year at fixed interest rates
Secured by real estate(c)
Commercial and industrial
Other
Loans due after one year at variable interest rates(d)
Secured by real estate(e)
Commercial and industrial
Other(f)
Total wholesale loans
After 1
year
through 5
years
After 5
years
through
15 years
1 year or
less(g)
After 15
years
Total
$ 16,144
52,351
173,752
$ 242,247
$ 61,764
112,339
141,760
$ 315,863
$ 48,972
8,469
38,558
$ 95,999
$ 42,417
35
5,929
$ 48,381
$ 169,297
173,194
359,999
$ 702,490
$ 15,871
5,004
25,264
$ 11,185
1,376
17,656
$
720
34
3,910
$ 45,893
107,334
116,497
$ 315,863
$ 37,787
7,093
20,902
$ 95,999
$ 41,696
2
2,019
$ 48,381
(a) Included $6.6 billion, $16.9 billion, and $9.7 billion of loans in 1 year or less, after 1 year through 5 years, and after 5 years though 15, respectively,
associated with First Republic.
(b) Included $9.8 billion, and $4.1 billion of loans in 1 year or less, and after 1 year through 5 years, respectively, associated with First Republic.
(c) Included $9.7 billion, and $5.7 billion in after 1 year through 5 years, and after 5 years though 15, respectively, associated with First Republic.
(d) Includes loans that have an initial fixed interest rate that resets to a variable rate as the variable rate will be the prevailing rate over the life of the loan.
(e) Included $7.1 billion, and $4.0 billion in after 1 year through 5 years, and after 5 years though 15, respectively, associated with First Republic.
(f) Included $3.0 billion in after 1 year through 5 years associated with First Republic.
(g) Includes loans held-for-sale, demand loans and overdrafts.
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, 2023 and 2022.
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
2023
2022
2023
2022
2023
2022
2023
2022
$ 178
$
6
$ 370
$ 145
$ 331
$
30
$ 879
$ 181
151,214
122,904
170,503
160,611
325,158
298,506
646,875
582,021
0.12 %
— %
0.22 %
0.09 %
0.10 %
0.01 %
0.14 %
0.03 %
JPMorgan Chase & Co./2023 Form 10-K
127
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 (including cash on deposit, and primarily
liquid and readily marketable debt or equity securities). 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.
Credit risk arising from lending activities subject to collateral
maintenance requirements is generally mitigated by factors
such as the short-term nature of the activity, the fair value of
collateral held and the Firm’s right to call for, and the
borrower’s obligation to provide, additional margin when the
fair value of the collateral declines. Because of these
mitigating factors, these receivables generally do not require
an allowance for credit losses. However, if in management’s
judgment, an allowance for credit losses is required, the Firm
estimates expected credit losses based on the value of the
collateral and probability of borrower default. These
receivables are reported within accrued interest and accounts
receivable on the Firm’s Consolidated balance sheets.
Refer to Note 13 for further information on the Firm’s
accounting policies for the allowance for credit losses.
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% at
both December 31, 2023 and 2022. 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 was $54.9 billion and $70.9
billion at December 31, 2023 and 2022, respectively. The
decrease was primarily 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 holds 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
receivables 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 for
derivative transactions.
128
JPMorgan Chase & Co./2023 Form 10-K
The following tables summarize the net derivative receivables
and the internal ratings profile for the periods presented.
Derivative receivables
December 31, (in millions)
2022
2023
Total, net of cash collateral
$
54,864 $
70,880
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
(22,461)
(23,014)
$
32,403 $
47,866
(993)
(1,261)
Total, net of collateral
$
31,410 $
46,605
Ratings profile of derivative receivables
December 31,
(in millions, except ratios)
Investment-grade
Noninvestment-grade
Total
2023
2022
Exposure net of
collateral
% of exposure net
of collateral
Exposure net of
collateral
% of exposure net
of collateral
$
$
24,004
7,406
31,410
76 % $
24
100 % $
35,097
11,508
46,605
75 %
25
100 %
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, 2023
(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 this variability, 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 exposures, 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
management process for derivatives exposures takes into
consideration the potential impact of wrong-way risk, which
JPMorgan Chase & Co./2023 Form 10-K
129
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
Notional amount of
protection
purchased and sold(a)
December 31, (in millions)
2023
2022
Credit derivatives and credit-related notes
used to manage:
Loans and lending-related commitments
$ 24,157 $
6,422
Derivative receivables
12,832
11,721
Credit derivatives and credit-related notes
used in credit portfolio management
activities
$ 36,989 $ 18,143
(a) Amounts are presented net, considering the Firm’s net protection
purchased or sold with respect to each underlying reference entity or
index.
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.
130
JPMorgan Chase & Co./2023 Form 10-K
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 5.5% in the fourth quarter of 2024, and a
weighted average U.S. real GDP level that is 1.5% lower
than the central case at the end of the second quarter of
2025.
The following table presents the Firm’s central case
assumptions for the periods presented:
Central case assumptions
at December 31, 2023
2Q24
4Q24
2Q25
U.S. unemployment rate(a)
YoY growth in U.S. real GDP(b)
4.1 %
1.8 %
4.4 %
0.7 %
4.1 %
1.0 %
Central case 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 %
— %
(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 155–158 for further information on the allowance
for credit losses and related management judgments.
Refer to Consumer Credit Portfolio on pages 114–119,
Wholesale Credit Portfolio on pages 120–130 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 generally consists of:
• 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, 2023
was $24.8 billion, reflecting a net addition of $3.1 billion
from December 31, 2022.
The net addition to the allowance for credit losses included
$1.9 billion, consisting of:
• $1.3 billion in consumer, predominantly driven by CCB,
comprised of $1.4 billion in Card Services, partially offset
by a net reduction of $200 million in Home Lending. The
net addition in Card Services was driven by loan growth,
including an increase in revolving balances, partially
offset by reduced borrower uncertainty. The net
reduction in Home Lending was driven by improvements
in the outlook for home prices, and
• $675 million in wholesale, driven by net downgrade
activity, the net effect of changes in the Firm’s weighted
average macroeconomic outlook, including deterioration
in the outlook for commercial real estate in CB, and an
addition for certain accounts receivable in CIB, partially
offset by the impact of changes in the loan and lending-
related commitment portfolios.
The net addition also included $1.2 billion to establish the
allowance for the First Republic loans and lending-related
commitments in the second quarter of 2023.
The changes in the Firm's weighted average macroeconomic
outlook also included updates to the central scenario in the
third quarter of 2023 to reflect a lower forecasted
unemployment rate consistent with a higher growth rate in
GDP, and the impact of the additional weight placed on the
adverse scenarios in the first quarter of 2023, reflecting
elevated recession risks due to high inflation and tightening
financial conditions.
The allowance for credit losses also reflected a reduction of
$587 million as a result of the adoption of changes to the
TDR accounting guidance on January 1, 2023. Refer to Note
1 for further information.
JPMorgan Chase & Co./2023 Form 10-K
131
Management’s discussion and analysis
Allowance for credit losses and related information
Year ended December 31,
(in millions, except ratios)
Allowance for loan losses
2023
2022
Consumer,
excluding
credit card
Credit card
Wholesale
Total
Consumer,
excluding
credit card
Credit card
Wholesale
Total
Beginning balance at January 1,
$ 2,040
$ 11,200
$ 6,486
$
19,726
$ 1,765
$ 10,250
$ 4,371
$ 16,386
Cumulative effect of a change in accounting
principle(a)
Gross charge-offs
Gross recoveries collected
Net charge-offs
Provision for loan losses
Other
(489)
1,151
(519)
632
936
1
(100)
5,491
(793)
4,698
6,048
—
2
1,011
(132)
879
2,484
21
(587)
7,653
(1,444)
6,209
9,468
22
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
Ending balance at December 31,
$ 1,856
$ 12,450
$ 8,114
$
22,420
$ 2,040
$ 11,200
$ 6,486
$ 19,726
Allowance for lending-related
commitments
Beginning balance at January 1,
$
76
$
Provision for lending-related commitments
Other
Ending balance at December 31,
$
(1)
—
75
$
—
—
—
—
$ 2,306
$
2,382
$
113
$
(407)
—
(408)
—
$ 1,899
$
1,974
$
(37)
—
76
$
—
—
—
—
$ 2,148
$
2,261
157
1
120
1
$ 2,306
$
2,382
Impairment methodology
Asset-specific(b)
Portfolio-based
$
(876)
$
—
$
392
$
(484)
$
(624) $
223
$
467
$
66
2,732
12,450
7,722
22,904
2,664
10,977
6,019
19,660
Total allowance for loan losses
$ 1,856
$ 12,450
$ 8,114
$
22,420
$ 2,040
$ 11,200
$ 6,486
$ 19,726
Impairment methodology
Asset-specific
Portfolio-based
Total allowance for lending-related
commitments
Total allowance for investment securities
Total allowance for credit losses(c)(d)
Memo:
$
$
—
75
$
75
$
—
—
—
$
89
$
89
$
1,810
1,885
$
—
76
$ 1,899
$
1,974
$
76
$
—
—
—
$
90
$
90
2,216
2,292
$ 2,306
$
2,382
NA
NA
NA $
128
NA
NA
NA $
96
$ 1,931
$ 12,450
$ 10,013
$
24,522
$ 2,116
$ 11,200
$ 8,792
$ 22,204
Retained loans, end of period
$ 397,275
$ 211,123
$ 672,472
$ 1,280,870
$ 300,753
$ 185,175
$ 603,670
$ 1,089,598
Retained loans, average
364,061
191,412
646,875
1,202,348
299,409
163,335
582,021
1,044,765
Credit ratios
Allowance for loan losses to retained loans
0.47 %
5.90 %
1.21 %
1.75 %
0.68 %
6.05 %
1.07 %
1.81 %
Allowance for loan losses to retained
nonaccrual loans(e)
Allowance for loan losses to retained
nonaccrual loans excluding credit card
Net charge-off rates
51
51
0.17
NA
NA
2.45
346
346
0.14
374
166
0.52
53
53
0.09
NM
NM
1.47
330
330
0.03
338
146
0.27
(a) Represents the impact to the allowance for loan losses upon the adoption of changes to the TDR accounting guidance on January 1, 2023. Refer to Note 1
for further information.
(b) Includes collateral-dependent loans, including those for which foreclosure is deemed probable, and nonaccrual risk-rated loans for all periods presented.
Prior periods also include non collateral-dependent TDRs or reasonably expected TDRs and modified PCD loans.
(c) At December 31, 2023 and 2022, in addition to the allowance for credit losses in the table above, the Firm also had an allowance for credit losses of
$243 million and $21 million, respectively, associated with certain accounts receivable in CIB.
(d) As of December 31, 2023, included the allowance for credit losses associated with First Republic.
(e) The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.
132
JPMorgan Chase & Co./2023 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(a)
2023
2022
Allowance for loan losses
Percent of retained loans
to total retained loans
Allowance for loan losses
Percent of retained loans
to total retained loans
$
$
817
1,039
1,856
12,450
14,306
2,997
3,519
1,598
8,114
22,420
25 % $
6
31
16
47
13
13
27
53
100 % $
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 %
(a) As of December 31, 2023, included the allowance for loan losses associated with First Republic.
JPMorgan Chase & Co./2023 Form 10-K
133
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, 2023, the
Treasury and CIO investment securities portfolio, net of the
allowance for credit losses, was $569.2 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 84–85 and Note 10 for further information on the
investment securities portfolio and internal risk ratings.
Refer to Liquidity Risk Management on pages 102–109 for
further information on related liquidity risk. Refer to Market
Risk Management on pages 135–143 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
based on market circumstances and in line with its strategic
initiatives, including the Firm’s environmental and social
goals.
The table below presents the aggregate carrying values of
the principal investment portfolios as of December 31,
2023 and 2022.
(in billions)
December 31,
2023
December 31,
2022
Tax-oriented investments,
primarily in alternative energy
and affordable housing(a)
Private equity, various debt and
equity instruments, and real
assets
Total carrying value
$
$
28.8
$
26.2
10.5
39.3
$
10.8
37.0
(a) As of December 31, 2023, included approximately $1.0 billion in tax-
oriented investments in CIB associated with First Republic.
Governance and oversight
The Firm’s approach to managing principal investment 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.
134
JPMorgan Chase & Co./2023 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. 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 154.
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 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
• Stress testing
• Profit and loss drawdowns
• Earnings-at-risk
• Economic Value Sensitivity
• 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./2023 Form 10-K
135
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 134 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
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
•
• Debt securities held in
advance of distribution to
clients, classified as trading
assets - debt instruments(b)
• Trading assets/liabilities -
derivatives that hedge the
retained loan portfolio(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, 2023 and 2022.
136
JPMorgan Chase & Co./2023 Form 10-K
testing, in addition to VaR, to capture and manage its
market risk positions.
As VaR model calculations require daily data and a
consistent source for valuation, the daily market data used
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.
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
154 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 as appropriate to various groups including senior
management, the Board Risk Committee 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./2023 Form 10-K
137
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 (a)
CIB trading VaR
Credit Portfolio VaR(b)
Diversification benefit to CIB VaR(a)
CIB VaR
CCB VaR
Corporate and other LOB VaR(c)
Diversification benefit to other VaR(a)
Other VaR
Diversification benefit to CIB and other VaR(a)
Total VaR
$
Avg.
49
12
7
11
(42)
37
14
(11)
40
7
12
(5)
14
(11)
2023
Min
Max
Avg.
2022
Min
$
59
$
33
$
$
31
$
6
3
6
NM
24
8
NM
23
1
9
NM
9
NM
71
26
11
19
NM
55
26
NM
58
15
17
NM
22
NM
57
8
12
15
(43)
51
16
(10)
57
6
12
(4)
14
(13)
$
58
$
3
7
10
NM
34
4
NM
35
2
9
NM
10
NM
34
Max
82
15
20
28
NM
69
235
(d)
NM
240
20
16
NM
24
NM
$ 242
(d)
$
43
$
26
$
(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. For maximum and minimum VaR, diversification benefit is not meaningful as
the maximum and minimum VaR for each portfolio may have occurred on different trading days than the components.
(b) Credit Portfolio VaR includes the derivative CVA, hedges of the CVA and hedges of the retained loan portfolio, which are reported in principal transactions
revenue. This VaR does not include the retained loan portfolio, which is not reported at fair value. 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) Corporate and other LOB VaR includes a legacy private equity position in Corporate which is publicly traded.
(d) In March 2022, the effects of nickel price increases and the associated volatility in the nickel market resulted in elevated maximum Credit Portfolio VaR, as
well as maximum Total VaR.
2023 compared with 2022
Average Total VaR decreased by $15 million for the year
ended December 31, 2023 when compared with the prior
year.
The decrease was driven by reduced market volatility and
risk reductions predominantly impacting fixed income,
commodities and equities.
The following graph presents daily Risk Management VaR for the four trailing quarters.
Daily Risk Management VaR
First Quarter
2023
Second Quarter
2023
Third Quarter
2023
Fourth Quarter
2023
138
JPMorgan Chase & Co./2023 Form 10-K
$ millions0255075
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, 2023, the Firm
posted backtesting gains on 139 of the 258 days, and
observed 13 VaR backtesting exceptions, of which eight
were in the three months ended December 31, 2023.
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 comprise each metric are
different and due to the exclusion of certain components of
total net revenue in backtesting gains and losses as
described above.
The following chart presents the distribution of Firmwide
daily backtesting gains and losses for the trailing 12 months
and three months ended December 31, 2023. 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./2023 Form 10-K
139
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.
Structural interest rate risk management
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 which are included in
VaR, but also from the Firm’s traditional banking activities,
which include extension of loans and credit facilities, taking
deposits, issuing debt, as well as the investment securities
portfolio, and associated derivative instruments. Refer to
the table on page 136 for a summary by LOB and Corporate
identifying positions included in earnings-at-risk.
Governance
The CTC Risk Committee establishes the Firm’s interest rate
risk management 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, including limits related to Earnings-at-
Risk and Economic Value Sensitivity. The Firm manages
structural interest rate risk generally through its investment
securities portfolio and interest rate derivatives.
Key Risk Drivers and Risk Management Process
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.
Earnings-at-Risk
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,
140
JPMorgan Chase & Co./2023 Form 10-K
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,
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
136. These simulations exclude hedges of exposure from
non-U.S. dollar foreign exchange risk arising from the
Firm’s capital investments. The inclusion of the hedges in
these simulations would increase U.S. dollar sensitivities
and decrease non-U.S. dollar sensitivities. Refer to non-U.S.
dollar foreign exchange risk on page 145 for more
information.
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. As part of the Firm's continuous evaluation and
periodic enhancements to its earnings-at-risk
calculations, the Firm updated its model in the second
quarter of 2023 to incorporate deposit repricing lags
impacting both consumer and wholesale deposits. The
model change incorporated observed pricing and
customer behavior in both rising and falling interest rate
environments. Actual deposit rates paid may differ from
the modeled assumptions, primarily due to customer
behavior and competition for deposits.
The Firm performs sensitivity analyses of the assumptions
used in earnings-at-risk scenarios, including with respect to
deposit betas and forecasts of deposit balances, both of
which are especially significant in the case of consumer
deposits. The results of these sensitivity analyses are
reported to the CTC Risk Committee and the Board Risk
Committee.
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. 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 52 for additional information).
The Firm’s U.S. dollar and non-U.S. dollar sensitivities are
presented in the table below.
December 31,
(in billions)
U.S. dollar: (a)
Parallel shift: (b)
+100 bps shift in rates
-100 bps shift in rates
+200 bps shift in rates
-200 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
Non-U.S. dollar:
Parallel shift: (b)
$
2023
2022
$
2.4
(2.1)
4.8
(4.6)
0.6
(1.5)
1.8
(0.5)
(2.0)
2.4
(4.2)
3.3
0.8
3.2
(2.8)
(0.9)
+100 bps shift in rates
-100 bps shift in rates
$
$
0.7
(0.7)
0.7
(0.6)
(a) Reflects the impact of the aforementioned model update to
incorporate deposit repricing lags. Prior periods have not been
revised.
(b) Reflects the simultaneous shift of U.S. dollar and non-U.S. dollar rates.
In the absence of the model update to incorporate deposit
repricing lags in the second quarter of 2023, the Firm's U.S.
dollar sensitivities as of December 31, 2023, would have
been lower by $4.1 billion to the +100 basis points shift in
short-term and parallel rate scenarios and higher by $3.7
billion to the -100 basis points shift in short-term and
parallel rate scenarios.
The change in the Firm’s U.S. dollar sensitivities as of
December 31, 2023 compared to December 31, 2022 also
reflected the impact of changes in the Firm’s balance sheet
including the impact of the First Republic acquisition.
JPMorgan Chase & Co./2023 Form 10-K
141
Management’s discussion and analysis
As of December 31, 2023, the Firm’s sensitivity to a
parallel shift in rates is primarily the result of a greater
impact from assets repricing compared to the impact of
liabilities repricing.
Economic Value Sensitivity
In addition to earnings-at-risk, which is measured as a
sensitivity to a baseline of earnings over the next 12
months, the Firm also measures Economic Value Sensitivity
(“EVS”). EVS stress tests the longer-term economic value of
equity by measuring the sensitivity of the Firm’s current
balance sheet, primarily retained loans, deposits, debt and
investment securities as well as related hedges, under
various interest rate scenarios. In accordance with the CTC
interest rate risk management policy, the Firm has
established limits on EVS as a percentage of TCE. Additional
information on long-term debt and held to maturity
investment securities is disclosed on page 195 in Note 2
financial instruments that are not carried at fair value on
the Consolidated balance sheets.
142
JPMorgan Chase & Co./2023 Form 10-K
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)
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 66 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 136 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, 2023 and 2022, 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,
2023
December 31,
2022
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
$
(61) $
(56)
(1,044)
(1,046)
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)
(12)
16
(3)
—
46
—
—
3
(4)
(1)
43
—
—
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 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.
JPMorgan Chase & Co./2023 Form 10-K
143
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.
Management’s discussion and analysis
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
144
JPMorgan Chase & Co./2023 Form 10-K
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, 2023, and
their comparative exposures as of December 31, 2022. The
top 20 country exposures represent the Firm’s largest total
exposures by individual country. Country exposures may
fluctuate from period to period due to a variety of factors,
including client activity, market flows and liquidity
management activities undertaken by the Firm.
The decrease in exposure to Japan when compared to
December 31, 2022, was driven by a reduction in cash
placed with the central bank of Japan as a result of liquidity
management activities undertaken by the Firm.
The decrease in exposure to Australia when compared to
December 31, 2022, was predominantly driven by a
reduction in cash placed with the central bank of Australia
due to client-driven activities resulting from changes in
interest rates.
The Firm continues to monitor its exposure to Russia which
was approximately $350 million as of December 31, 2023.
This amount excludes certain deposits placed on behalf of
clients at the Depository Insurance Agency of Russia.
Top 20 country exposures (excluding the U.S.)(a)
December 31,
(in billions)
2023
2022(f)
Deposits
with
banks(b)
Lending(c)
Trading
and
investing(d) Other(e)
Total
exposure
Total
exposure
Germany
$ 69.8 $ 12.1 $
2.1 $ 0.8 $ 84.8 $ 93.2
United
Kingdom
36.4
25.5
13.5
1.7
77.1
Japan
29.4
Australia
Brazil
Canada
China
Switzerland
France
Singapore
India
Mexico
Belgium
South Korea
Saudi
Arabia
Spain
Italy
Netherlands
Malaysia
9.7
5.2
2.3
3.5
5.2
0.6
1.9
1.2
1.1
5.6
0.8
0.6
0.3
0.1
0.1
3.5
Luxembourg
0.9
2.4
6.9
5.3
11.4
5.5
3.6
3.9
0.3
36.0
1.7
6.2
—
—
18.3
16.7
2.0
0.3
16.0
5.0
—
14.0
1.2
0.9
10.9
10.9
(2.2) 0.8
10.1
3.8
3.8
3.7
2.1
3.2
5.2
5.2
5.9
6.4
0.2
2.2
3.8
0.3
4.3
0.4
3.4
0.3
—
—
3.5
0.3
1.9
0.8
—
—
(0.2) 0.2
(1.2) 0.3
0.4
0.1
9.8
9.7
8.2
8.0
7.8
7.7
6.3
6.0
5.6
4.2
0.9
—
4.0
70.1
55.8
25.7
17.8
14.4
13.7
15.3
18.1
9.9
9.0
5.4
9.2
10.0
7.9
3.4
5.8
7.1
5.3
4.2
(a) Country exposures presented in the table reflect 88% of total
Firmwide non-U.S. exposure, where exposure is attributed to an
individual country based on the Firm’s internal country risk
management approach, at both December 31, 2023 and 2022.
(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 positions and hedging, investment securities,
and counterparty exposure on derivative and securities financings net
of eligible collateral. Market-making positions 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 clearing house guarantee funds and physical commodities.
(f) The country rankings presented in the table as of December 31, 2022,
are based on the country rankings of the corresponding exposures at
December 31, 2023, not actual rankings of such exposures at
December 31, 2022.
JPMorgan Chase & Co./2023 Form 10-K
145
Management’s discussion and analysis
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 cyclones. Chronic physical risk drivers include more
gradual shifts in the climate, such as sea level rise,
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 and maintaining the Firmwide
framework and strategy for managing climate risks that
may impact the Firm. 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.
146
JPMorgan Chase & Co./2023 Form 10-K
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 circumstances in which 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-based
capital estimate is the Loss Distribution Approach (“LDA”)
statistical model, which simulates the projected frequency
and severity of operational risk losses 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 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 91-101 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.
JPMorgan Chase & Co./2023 Form 10-K
147
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, natural disasters, the effects of
climate change, power or telecommunications loss, failure
of a third party to provide expected services, cyberattacks,
civil or political unrest or 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 extraordinary events
beyond its control that may impact critical business
functions and supporting assets including 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
resiliency risks. The program is required to be managed in
accordance with the Firm’s overall approach to Operational
Risk Management, including alignment with technology,
cybersecurity, data, physical security, crisis management,
real estate and outsourcing programs.
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 an appropriate standard 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 with respect to third-
party outsourcing risks.
Management’s discussion and analysis
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 establish escalation protocols to
senior management and to the Board of Directors.
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.
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 151, 152, 153 and 154, respectively for
more information on Compliance, Conduct, Legal, and
Estimations and Model risk. Details on other select
examples of operational risks such as business and
technology resiliency, payment fraud and third-party
outsourcing, as well as cybersecurity, 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 and other risks 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.
148
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Cybersecurity risk
Cybersecurity risk is the risk of harm or loss resulting from
misuse or abuse of technology or the unauthorized
disclosure of data.
Overview
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.
The Firm’s security efforts are designed to protect against,
among other things, cybersecurity attacks that can result in
unauthorized access to confidential information, the
destruction of data, disruptions to or degradations of
service, the sabotaging of systems or 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 measures and controls
reasonably designed to address this evolving environment,
including enhanced threat monitoring. In addition, the Firm
continues to review and enhance its capabilities to address
associated risks, such as those relating to the management
of administrative access to systems.
Third parties with which the Firm does business, that
facilitate the Firm’s business activities (e.g., vendors, supply
chain, exchanges, clearing houses, central depositories, and
financial intermediaries) or that the Firm has acquired are
also sources of cybersecurity risk to the Firm. Third party
incidents such as system breakdowns or failures,
misconduct by the employees of such parties, or cyber
attacks, including ransomware and supply-chain
compromises, could have a material adverse effect on the
Firm, including in circumstances in which an affected third
party is unable to deliver a product or service to the Firm or
where the incident delivers compromised software to the
Firm or results in lost or compromised information of the
Firm or its clients or customers.
Clients and customers 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. The Firm engages in periodic
discussions with its clients, customers and other external
parties concerning cybersecurity risks including
opportunities to improve cybersecurity.
Risks from cybersecurity threats, including any previous
cybersecurity events, have not materially affected the Firm
or its business strategy, results of operations or financial
condition. Notwithstanding the comprehensive approach
that the Firm takes to address cybersecurity risk, the Firm
may not be successful in preventing or mitigating a future
cybersecurity incident that could have a material adverse
effect on the Firm or its business strategy, results of
operations or financial condition.
Organization and management
The Global Chief Information Security Officer (“CISO”)
reports to the Global Chief Information Officer, and is a
member of key cybersecurity governance forums. The CISO
leads the Global Cybersecurity and Technology Controls
organization, which is responsible for identifying technology
and cybersecurity risks and for implementing and
maintaining controls to manage cybersecurity threats. The
CISO is responsible for the Firm’s Information Security
Program, which is designed to prevent, detect and respond
to cyber attacks in order to help safeguard the
confidentiality, integrity and availability of the Firm's
infrastructure, resources and information. The program
includes managing the Firm’s global cybersecurity
operations centers, providing training, conducting
cybersecurity event simulation exercises, implementing the
Firm’s policies and standards relating to technology risk
and cybersecurity management, and enhancing, as needed,
the Firm’s cybersecurity capabilities.
The Firm’s Information Security Program includes the
following functions:
Cyber Operations, which is responsible for implementing
and maintaining controls designed to detect and defend the
Firm against cyber attacks, and includes a dedicated
function for incident response and ongoing monitoring for
cybersecurity threats and vulnerabilities, including those
among the Firm’s third-party suppliers.
Technology Governance, Risk & Controls, which is
responsible for operationalizing technology risk and control
frameworks, analyzing regulatory developments that may
impact the Firm, and developing control catalogs and
assessments of controls, as well as overseeing governance
and reporting of technology and cybersecurity risk.
Security Awareness, which provides awareness and training
that reinforces information risk and security management
practices and compliance with the Firm's policies, standards
and practices. The 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 also provides specialized security training to
employees in specific roles, such as application developers.
The Firm’s Global Privacy Program requires all employees
to take periodic training on data privacy that focuses on
confidentiality and security, as well as responding to
unauthorized access to or use of information.
Technology Resiliency, which establishes control
requirements for planning and testing the prioritized
recovery of technology services in the event of degradation
or outage, including incident response planning, data
backup and retention, and recovery readiness in support of
the Firmwide Business Resiliency Program and operational
risk management practices.
JPMorgan Chase & Co./2023 Form 10-K
149
Management’s discussion and analysis
The Firm has a cybersecurity incident response plan
designed to enable the Firm to respond to attempted
cybersecurity incidents, coordinate as appropriate with law
enforcement and other government agencies, notify clients
and customers, as applicable, and recover from such
incidents. In addition, the Firm actively partners with
appropriate government and law enforcement agencies and
peer industry forums, participating in discussions and
simulations to assist in understanding the full spectrum of
cybersecurity risks and in enhancing defenses and
improving resiliency in the Firm’s operating environment.
Governance and oversight
The governance structure for the Global Cybersecurity and
Technology Controls organization is designed to
appropriately identify, escalate and mitigate cybersecurity
risks. Cybersecurity risk management and its governance
and oversight are integrated into the Firm’s operational risk
management framework, including through the escalation
of key risk and control issues to management and the
development of risk mitigation plans for heightened risk
and control issues. IRM independently assesses and
challenges the activities and risk management practices of
the Global Cybersecurity and Technology Controls
organization related to the identification, assessment,
measurement and mitigation of cybersecurity risk. As
needed, the Firm engages third-party assessors or auditing
firms with industry-recognized expertise on cybersecurity
matters to review specific aspects of the Firm’s
cybersecurity risk management framework, processes and
controls.
The governance and oversight for cybersecurity risk
management includes governance forums that inform
management of key areas of concern regarding the
prevention, detection, mitigation and remediation of
cybersecurity risks.
The Cybersecurity and Technology Controls Operating
Committee (“CTOC”) is the principal management
committee that oversees the Firm’s assessment and
management of cybersecurity risk, including oversight of
the implementation and maintenance of appropriate
controls in support of the Firm’s Information Security
Program. The membership of the CTOC includes senior
representatives from the Global Cybersecurity and
Technology Controls organization and relevant corporate
functions, including IRM and Internal Audit. CTOC members
have extensive experience and qualifications in various
technology and information security disciplines, including
relevant experience at the Firm, at other financial services
companies or in other highly-regulated industries.
The CTOC escalates key operational risk and control issues,
as appropriate, to the Global Technology Operating
Committee (“GTOC”) or its business control committee or to
the appropriate LOB and Corporate Control Committees.
The GTOC is responsible for the governance of the Firmwide
Global Technology organization, including oversight of
Firmwide technology strategies, the delivery of technology
and technology operations, the effective use of information
technology resources, and monitoring and resolving key
operational risk and control matters arising in the Global
Technology organization.
As part of its oversight of management’s implementation
and maintenance of the Firm’s risk management
framework, the Firm’s Board of Directors receives periodic
updates from the CIO, the CISO and senior members of the
CTOC concerning cybersecurity matters. These updates
generally include information regarding cybersecurity and
technology developments, the Firm’s Information Security
Program and recommended changes to that program,
cybersecurity policies and practices, and ongoing initiatives
to improve information security, as well as any significant
cybersecurity incidents and the Firm's efforts to address
those incidents. The Audit Committee and the Risk
Committee assist the Board in this oversight.
150
JPMorgan Chase & Co./2023 Form 10-K
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 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 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. The Code provides
the principles that help govern employee conduct with
clients, customers, suppliers, vendors, shareholders,
regulators, other employees, as well as with the markets
and communities in which the Firm operates. 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 or unethical conduct, or
conduct that violates the underlying principles of the Code,
by any of the Firm’s employees, consultants, clients,
customers, suppliers, contract or temporary workers, or
business partners or agents. Training is assigned to newly
hired employees upon joining the Firm, and to current
employees periodically thereafter. 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 (the “Hotline”)
by phone or the internet. The Hotline is anonymous, where
permitted by law, and is available at all times globally, with
translation services and is administered by an outside
service provider. The Code prohibits retaliation against
anyone who raises an issue or concern in good faith or
assists with an inquiry or investigation. Periodically, the
Audit Committee receives reports on the Code of Conduct
program.
JPMorgan Chase & Co./2023 Form 10-K
151
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 Business Principles. The Business
Principles serve as a guide for how employees are expected
to conduct themselves. With the Business 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 151 for further discussion of the
Code.
Governance and oversight
The Firm maintains oversight and coordination of its
conduct risk through the CCOR Management Framework.
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.
152
JPMorgan Chase & Co./2023 Form 10-K
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./2023 Form 10-K
153
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
LOBs and Corporate 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 relevant 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. 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. In addition, the
Firm may experience increased uncertainty in its estimates
if assets acquired differ from those used to develop the
models.
Refer to Critical Accounting Estimates Used by the Firm on
pages 155–158 and Note 2 for a summary of model-based
valuations and other valuation techniques.
154
JPMorgan Chase & Co./2023 Form 10-K
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 generally 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 and U.S. HPI.
• Key MEVs for the wholesale portfolio include U.S.
unemployment, U.S. real GDP, U.S. equity prices, U.S.
interest rates, U.S. corporate credit spreads, oil prices,
U.S. commercial real estate prices and U.S. 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.
As a result of the First Republic acquisition, the Firm
recorded an allowance for credit losses for the loans
acquired and lending-related commitments assumed as of
May 1, 2023. Given the differences in risk rating
methodologies for the First Republic portfolio, and the
ongoing integration of products and systems, the allowance
for credit losses for the acquired wholesale portfolio was
measured based on other facilities underwritten by the Firm
with similar risk characteristics and not based on modeled
estimates. As such, the First Republic wholesale portfolio is
excluded from the modeled estimates sensitivity analysis
below. The allowance for credit losses for predominantly all
of the consumer portfolio was measured using the Firm’s
modeled approach, as the consumer portfolio is
predominantly residential real estate that has more
commonly defined risk characteristics including loan to
value ratio and credit score, and therefore is reflected in
the sensitivity analysis below. Refer to Note 34 for
additional information on the First Republic acquisition.
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 131 and in Note 13, the Firm’s relative
adverse scenario assumes an elevated U.S. unemployment
rate, averaging approximately 2.1% higher over the eight-
quarter forecast, with a peak difference of approximately
2.7% in the fourth quarter of 2024; lower U.S. real GDP
with a slower recovery, remaining nearly 3.3% lower at the
end of the eight-quarter forecast, with a peak difference of
JPMorgan Chase & Co./2023 Form 10-K
155
Management’s discussion and analysis
approximately 3.9% in the fourth quarter of 2024; and
lower HPI with a peak difference of approximately 17.9% in
the third quarter of 2025.
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, 2023, 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, 2023, the
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 $850 million for residential
real estate loans and lending-related commitments
• An increase of approximately $3.1 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, 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, 2023.
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, 2023
(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
$ 259,813
70,086
$
—
—
485,701
54,864
540,565
201,704
38,851
8,522
11,322
2,373
8,924
11,297
—
3,079
8,522
758
Total assets measured at fair value on
a recurring basis
Total assets measured at fair value on a
nonrecurring basis
1,130,863
23,656
3,141
2,490
Total assets measured at fair value
$ 1,134,004
$ 26,146
Total Firm assets
$ 3,875,393
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)
1%
2%
(a) For purposes of the table above, the derivative receivables total
reflects the impact of netting adjustments; however, the $8.9 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.
156
JPMorgan Chase & Co./2023 Form 10-K
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
speeds, 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, 2023, 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, 2023. For each of the reporting units, fair
value exceeded carrying value by at least 9% 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, 2023.
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 $13.2 billion
and $11.3 billion at December 31, 2023 and 2022,
respectively, and is recorded in accounts payable and other
liabilities on the Consolidated balance sheets. The increase
in the liability was predominantly driven by continued
growth in rewards points earned on higher spend and
promotional offers outpacing redemptions throughout
2023, and, to a lesser extent, adjustments to certain
reward program terms in the second quarter of 2023.
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
JPMorgan Chase & Co./2023 Form 10-K
157
deferred tax asset is not realizable, a valuation allowance is
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, 2023, 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
redemption behavior and management judgment. Updates
to these assumptions will impact the rewards liability. As of
December 31, 2023, a combined increase of 25 basis
points in RR and 1 basis point in CPP would increase the
rewards liability by approximately $376 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
158
JPMorgan Chase & Co./2023 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.
Effects on financial statements
• Issued and effective March 12, 2020. The
January 7, 2021 and December 21, 2022
updates were effective when issued.
Issued March
2020 and updated
January 2021 and
December 2022
FASB Standards Adopted since January 1, 2023
Summary of guidance
Standard
• Expands the ability to hedge a portfolio of fixed-
Derivatives and
rate assets to allow more types of assets to be
Hedging: Fair Value
included in the portfolio, and to allow more of the
Hedging – Portfolio
portfolio to be hedged.
Layer Method
Issued March 2022
• Clarifies the types of derivatives that can be used
as hedges, and the balance sheet presentation
and disclosure requirements for the hedge
accounting adjustments.
• Allows a one-time reclassification from HTM to
AFS upon adoption.
Effects on financial statements
• Adopted prospectively on January 1, 2023.
• Refer to Note 1 for further information.
Financial Instruments –
Credit Losses: Troubled
Debt Restructurings
and Vintage Disclosures
Issued March 2022
• Eliminates existing accounting and disclosure
• Adopted under the modified retrospective
method on January 1, 2023.
• Refer to Note 1 for further information.
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.
JPMorgan Chase & Co./2023 Form 10-K
159
Management’s discussion and analysis
FASB Standards Issued but not yet Adopted as of December 31, 2023
Summary of guidance
Standard
Investments - Equity
• Expands the ability to elect proportional
Method and Joint
Ventures: Accounting
for Investments in Tax
Credit Structures Using
the Proportional
Amortization Method
amortization for more types of tax-oriented
investments (beyond low income housing tax
credit investments) on a program-by-program
basis.
• May be adopted using a full retrospective
method, or a modified retrospective method
wherein the effect of adoption is reflected as an
adjustment to retained earnings at the effective
date.
Issued March 2023
Segment Reporting:
Improvements to
Reportable Segment
Disclosures
• Requires disclosure of significant segment
expenses that are readily provided to the chief
operating decision maker (“CODM”) and included
in segment profit or loss.
Issued November 2023
• Requires disclosure of the composition and
aggregate amount of other segment items, which
represent the difference between profit or loss
and segment revenues less significant segment
expenses.
• Requires disclosure of the title and position of the
CODM and an explanation of how the CODM uses
the reported segment measures in assessing
segment performance and deciding how to
allocate resources.
Income Taxes:
Improvements to
Income Tax Disclosures
Issued December 2023
• Requires disclosure of income taxes paid
disaggregated by 1) federal, state, and foreign
taxes and 2) individual jurisdiction on the basis of
a quantitative threshold of equal to or greater
than 5 percent of total income taxes paid (net of
refunds received).
• Requires disclosure of the effective tax rate
reconciliation by specific categories, at a
minimum, with accompanying qualitative
disclosures, and separate disclosure of
reconciling items based on quantitative
thresholds.
• Requires categories within the effective tax rate
reconciliation to be further disaggregated if
quantitative thresholds are met.
(a) Early adoption is permitted.
Effects on financial statements
• Adopted under the modified retrospective
method on January 1, 2024, which resulted
in a decrease to retained earnings of
approximately $200 million.
• Required effective date: Annual financial
statements for the year ending December
31, 2024 and interim financial statements
for the year ending December 31, 2025.(a)
• The Firm is currently assessing the potential
impact on its segment disclosures.
• Required effective date: Annual financial
statements for the year ending December
31, 2025.(a)
• The guidance can be applied on a
prospective basis with the option to apply
the standard retrospectively.
• The Firm is evaluating the potential impact
on the Consolidated Financial Statements
disclosures, as well as the Firm’s planned
date of adoption.
160
JPMorgan Chase & Co./2023 Form 10-K
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 2023 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
geopolitical tensions and hostilities;
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;
Changes in FDIC assessments;
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;
• 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 2023 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 Annual Reports on Form 10-Ks, Quarterly
Reports on Form 10-Qs, or Current Reports on Form 8-K.
JPMorgan Chase & Co./2023 Form 10-K
161
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, 2023. 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, 2023, 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, 2023.
The effectiveness of the Firm’s internal control over financial
reporting as of December 31, 2023, 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 16, 2024
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JPMorgan Chase & Co./2023 Form 10-K
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, 2023 and 2022, 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, 2023,
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, 2023, 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, 2023 and
2022, and the results of its operations and its cash flows for
each of the three years in the period ended December 31,
2023 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, 2023, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the
COSO.
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
JPMorgan Chase & Co./2023 Form 10-K
163
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 $20.2 billion on total portfolio-based
retained loans of $881.3 billion at December 31, 2023. 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
$541.4 billion of its liabilities at fair value on a recurring
basis. Included in these balances are $11.3 billion of
trading assets and $42.2 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 interest rate volatility, interest
rate spread volatility, Bermudan switch value, and
correlation relating to interest rates, interest rate-to-
foreign exchange, equity prices, equity-to-foreign exchange,
equity-to-interest rate and credit.
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.
164
JPMorgan Chase & Co./2023 Form 10-K
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 16, 2024
We have served as the Firm’s auditor since 1965.
JPMorgan Chase & Co./2023 Form 10-K
165
JPMorgan Chase & Co.
Consolidated statements of income
Year ended December 31, (in millions, except per share data)
2023
2022
2021
Revenue
Investment banking fees
Principal transactions
Lending- and deposit-related fees
Asset management fees
Commissions and other fees
Investment securities 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
$
6,519 $
6,686 $
19,912
7,098
14,096
6,581
(2,380)
1,250
4,420
4,322
61,985
92,807
26,097
66,710
13,216
16,304
7,032
14,405
6,624
(345)
2,170
5,102
4,830
69,338
57,864
5,553
52,311
24,460
7,413
15,220
6,836
(3,180)
1,176
4,784
5,609
68,837
170,588
81,321
89,267
158,104
128,695
121,649
9,320
6,389
(9,256)
46,465
4,590
9,246
10,235
4,591
12,045
87,172
61,612
12,060
41,636
4,696
9,358
10,174
3,911
6,365
76,140
46,166
8,490
$
$
$
49,552 $
37,676 $
47,760 $
35,892 $
16.25 $
12.10 $
16.23
2,938.6
2,943.1
12.09
2,965.8
2,970.0
38,567
4,516
9,941
9,814
3,036
5,469
71,343
59,562
11,228
48,334
46,503
15.39
15.36
3,021.5
3,026.6
The Notes to Consolidated Financial Statements are an integral part of these statements.
166
JPMorgan Chase & Co./2023 Form 10-K
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
2023
2022
2021
$
49,552 $
37,676 $
48,334
5,381
329
(101)
1,724
373
(808)
6,898
(11,764)
(611)
98
(5,360)
(1,241)
1,621
(17,257)
$
56,450 $
20,419 $
(5,540)
(461)
(19)
(2,679)
922
(293)
(8,070)
40,264
The Notes to Consolidated Financial Statements are an integral part of these statements.
JPMorgan Chase & Co./2023 Form 10-K
167
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 $259,813 and $311,883 at fair value)
Securities borrowed (included $70,086 and $70,041 at fair value)
Trading assets (included assets pledged of $128,994 and $93,687)
Available-for-sale securities (amortized cost of $205,456 and $216,188; included assets pledged of $9,219 and $9,158)
Held-to-maturity securities
Investment securities, net of allowance for credit losses
Loans (included $38,851 and $42,079 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 $12,306 and $14,921 at fair value and assets pledged of $6,764 and $7,998)
Total assets(a)
Liabilities
Deposits (included $78,384 and $28,620 at fair value)
Federal funds purchased and securities loaned or sold under repurchase agreements (included $169,003 and $151,999
at fair value)
Short-term borrowings (included $20,042 and $15,792 at fair value)
Trading liabilities
Accounts payable and other liabilities (included $5,637 and $7,038 at fair value)
Beneficial interests issued by consolidated VIEs (included $1 and $5 at fair value)
Long-term debt (included $87,924 and $72,281 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 2,740,375 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 (1,228,275,301 and 1,170,676,094 shares)
Total stockholders’ equity
Total liabilities and stockholders’ equity
2023
2022
$
29,066 $
27,697
595,085
276,152
200,436
540,607
201,704
369,848
571,552
539,537
315,592
185,369
453,799
205,857
425,305
631,162
1,323,706
1,135,647
(22,420)
(19,726)
1,301,286
1,115,921
107,363
30,157
64,381
159,308
125,189
27,734
60,859
182,884
$ 3,875,393 $ 3,665,743
$ 2,400,688 $ 2,340,179
216,535
44,712
180,428
290,307
23,020
391,825
202,613
44,027
177,976
300,141
12,610
295,865
3,547,515
3,373,411
27,404
4,105
90,128
332,901
(10,443)
27,404
4,105
89,044
296,456
(17,341)
(116,217)
(107,336)
327,878
292,332
$ 3,875,393 $ 3,665,743
(a) The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at December 31, 2023 and 2022. 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
2023
2022
2,170 $
37,611
591
2,151
34,411
550
40,372 $
37,112
23,020 $
12,610
263
279
23,283 $
12,889
$
$
$
$
The Notes to Consolidated Financial Statements are an integral part of these statements.
168
JPMorgan Chase & Co./2023 Form 10-K
JPMorgan Chase & Co.
Consolidated statements of changes in stockholders’ equity
Year ended December 31, (in millions, except per share data)
2023
2022
2021
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
$ 27,404 $ 34,838 $ 30,063
—
—
—
7,350
(7,434)
(2,575)
27,404
27,404
34,838
4,105
4,105
4,105
89,044
88,415
88,394
1,084
—
629
—
152
(131)
90,128
89,044
88,415
296,456
272,268
236,990
449
—
—
49,552
37,676
48,334
(1,501)
(1,595)
(1,600)
Common stock ($4.10, $4.00 and $3.80 per share for 2023, 2022 and 2021, respectively)
(12,055)
(11,893)
(11,456)
Balance at December 31
Accumulated other comprehensive income/(loss)
Balance at January 1
Other comprehensive income/(loss), after-tax
Balance at December 31
Treasury stock, at cost
Balance at January 1
Repurchase
Reissuance
Balance at December 31
Total stockholders’ equity
332,901
296,456
272,268
(17,341)
(84)
7,986
6,898
(17,257)
(8,070)
(10,443)
(17,341)
(84)
(107,336)
(105,415)
(88,184)
(9,980)
(3,122)
(18,448)
1,099
1,201
1,217
(116,217)
(107,336)
(105,415)
$ 327,878 $ 292,332 $ 294,127
Effective January 1, 2023, the Firm adopted the Financial Instruments – Credit Losses: Troubled Debt Restructurings and Derivatives and
Hedging: Fair Value Hedging – Portfolio Layer Method accounting guidance. Refer to Note 1 for further information.
The Notes to Consolidated Financial Statements are an integral part of these statements.
JPMorgan Chase & Co./2023 Form 10-K
169
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 operating activities:
Provision for credit losses
Depreciation and amortization
Deferred tax (benefit)/expense
Bargain purchase gain associated with the First Republic acquisition
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 operating activities
Investing activities
Net change in:
2023
2022
2021
$ 49,552
$ 37,676
$ 48,334
9,320
7,512
(4,534)
(2,775)
4,301
6,389
7,051
(2,738)
—
(9,256)
7,932
3,748
—
5,174
3,274
(115,245)
(149,167)
(347,864)
116,430
167,709
336,413
(74,091)
(31,449)
85,710
(14,902)
20,203
(45,635)
19,928
32,970
5,315
(25,388)
4,581
(22,970)
(12,401)
(2,882)
(11,745)
11,170
58,614
2,339
(23,190)
43,162
(398)
12,974
107,119
78,084
Federal funds sold and securities purchased under resale agreements
39,740
(54,278)
34,473
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
Net cash used in First Republic Acquisition
All other investing activities, net
Net cash provided by/(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
53,056
48,626
50,897
(4,141)
(33,676)
(111,756)
53,744
39,159
50,075
108,434
84,616
162,748
(115,499)
(126,258)
(248,785)
47,312
44,892
35,845
(88,343)
(128,968)
(91,797)
(9,920)
—
—
(16,740)
(11,932)
(11,044)
67,643
(137,819)
(129,344)
(32,196)
(136,895)
293,764
13,801
8,455
(20,799)
(1,934)
(8,984)
7,773
9,029
75,417
2,205
78,442
(4,254)
82,409
(64,880)
(45,556)
(54,932)
—
—
—
7,350
(7,434)
(2,575)
(9,824)
(3,162)
(18,408)
(13,463)
(13,562)
(12,858)
(1,521)
234
(1,477)
(25,571)
(126,257)
275,993
1,871
(16,643)
(11,508)
56,917
(173,600)
213,225
567,234
740,834
527,609
$ 624,151
$ 567,234
$ 740,834
$ 77,114
$ 23,143
$
5,142
9,908
4,355
18,737
The Notes to Consolidated Financial Statements are an integral part of these statements.
170
JPMorgan Chase & Co./2023 Form 10-K
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. On May 1, 2023,
JPMorgan Chase acquired certain assets and assumed
certain liabilities of First Republic Bank (the “First Republic
acquisition”) from the Federal Deposit Insurance
Corporation (“FDIC”). The Firm continues to convert certain
operations, and to integrate clients, products and services
associated with the First Republic acquisition, to align with
the Firm’s businesses and operations. Accordingly,
reporting classification and internal risk rating profiles in
the wholesale portfolio may change in future periods. Refer
to Note 34 for additional information on the First Republic
acquisition.
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.
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
JPMorgan Chase & Co./2023 Form 10-K
171
Notes to consolidated financial statements
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
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 Firm-sponsored
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 fees,
commissions and other fees, 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
172
JPMorgan Chase & Co./2023 Form 10-K
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.
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 standards adopted January 1, 2023
Derivatives and Hedging: Fair Value Hedging – Portfolio
Layer Method
The adoption of this guidance expanded the ability to hedge
a portfolio of fixed-rate assets to allow more types of assets
to be included in the portfolio, and to allow more of the
portfolio to be hedged. This guidance also clarified the
types of derivatives that could be used as hedges, and the
balance sheet presentation and disclosure requirements for
the hedge accounting adjustments. As permitted by the
guidance, the Firm elected to transfer HTM securities to AFS
and designated those securities in a portfolio layer method
hedge upon adoption. The adoption impact of the transfer
on retained earnings was not material.
Refer to Note 5 and Note 10 for additional information.
Financial Instruments – Credit Losses: Troubled Debt
Restructurings (“TDRs”)
The adoption of this guidance eliminated the accounting
and disclosure requirements for TDRs, including the
requirement to measure the allowance using a discounted
cash flow (“DCF”) methodology, and allowed 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 collateral-dependent
loans and nonaccrual risk-rated loans which the Firm
elected to continue applying a DCF methodology. Refer to
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 $587 million
and an increase to retained earnings of $446 million, after-
tax, predominantly driven by residential real estate and
credit card.
The adoption of this guidance eliminated the disclosure
requirements for TDRs including the requirement to assess
whether a modification is reasonably expected or involves a
concession. The new guidance requires disclosure for loan
modifications to borrowers experiencing financial difficulty
consisting of principal forgiveness, interest rate reduction,
other-than-insignificant payment delay, term extension or a
combination of these modifications. The Firm has defined
these types of modifications as financial difficulty
modifications ("FDMs"). As a result of the elimination of the
requirement to assess whether a modification is reasonably
expected or involves a concession, the population of loans
considered FDMs differs from those previously considered
TDRs. This guidance also requires disclosure of current
period gross charge-offs by vintage origination year.
Refer to Note 12 for further information.
JPMorgan Chase & Co./2023 Form 10-K
173
Notes to consolidated financial statements
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 175
Note 3
page 197
Note 5
page 203
Note 6
page 217
Interest income and Interest expense
Note 7
page 221
Pension and other postretirement
employee benefit plans
Employee share-based incentives
Investment securities
Securities financing activities
Loans
Allowance for credit losses
Variable interest entities
Goodwill, mortgage servicing rights, and
other intangible assets
Premises and equipment
Leases
Note 8
page 222
Note 9
page 225
Note 10
page 227
Note 11
page 232
Note 12
page 235
Note 13
page 255
Note 14
page 261
Note 15
page 269
Note 16
page 274
Note 18
page 275
Accounts payable & other liabilities
Note 19
page 277
Long-term debt
Earnings per share
Income taxes
Off–balance sheet lending-related financial
instruments, guarantees and other
commitments
Litigation
Note 20
page 278
Note 23
page 283
Note 25
page 285
Note 28
page 291
Note 30
page 298
174
JPMorgan Chase & Co./2023 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. Fair value may also
incorporate valuation adjustments.
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 sufficiently
reduce the net open risk position.
• 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
JPMorgan Chase & Co./2023 Form 10-K
175
Notes to consolidated financial statements
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 192 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.
176
JPMorgan Chase & Co./2023 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./2023 Form 10-K
177
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 192 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 including 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.
178
JPMorgan Chase & Co./2023 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 192 of this Note.
Classification in the fair value
hierarchy
Level 2 or 3
JPMorgan Chase & Co./2023 Form 10-K
179
Notes to consolidated financial statements
The following table presents the assets and liabilities reported at fair value as of December 31, 2023 and 2022, by major
product category and fair value hierarchy.
Assets and liabilities measured at fair value on a recurring basis
Fair value hierarchy
December 31, 2023 (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:
— $
—
259,813
70,086
$
$
—
—
— $
—
259,813
70,086
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(a)
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
—
—
—
—
133,997
—
—
24,846
—
—
—
158,843
107,926
2,479
—
269,248
2,815
—
149
—
—
2,964
272,212
—
—
—
—
57,683
—
13,095
—
—
—
70,778
—
—
6,635
73,840
1,921
1,362
77,123
9,998
5,858
756
55,557
32,854
7,872
2,199
192,217
679
3,305
17,879
214,080
243,578
8,644
204,737
55,167
15,234
527,360
741,440
85,170
3,639
2,803
91,612
122
21,367
8,187
100
6,752
2,786
130,926
35,772
—
3,929
$
$
349,625 $
1,241,966
— $
—
—
76,551
169,003
18,284
107,292
32,252
4,409
—
147
—
—
4,556
111,848
3,968
—
—
232,277
11,293
211,289
60,887
15,894
531,640
563,892
1,617
1
60,198
889,546
758
5
12
775
—
10
—
179
484
684
6
2,138
127
7
101
2,373
4,298
1,010
889
2,522
205
8,924
11,297
—
—
—
—
—
—
—
—
—
—
—
3,079
8,522
758
23,656
1,833
—
1,758
37
3,796
745
827
4,924
484
10,776
10,813
52
—
27,726
42,182
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(224,367)
(9,103)
(187,756)
(52,761)
(10,397)
(484,384)
(484,384)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
74,598
1,926
1,374
77,898
143,995
5,868
756
80,582
33,338
8,556
2,205
353,198
108,732
5,791
17,980
485,701
26,324
551
18,019
4,928
5,042
54,864
540,565
85,170
3,639
2,803
91,612
57,805
21,367
21,282
100
6,752
2,786
201,704
38,851
8,522
11,322
(484,384) $
1,130,863
$
$
— $
—
—
—
(228,586)
(10,949)
(199,643)
(56,443)
(10,504)
(506,125)
(506,125)
—
—
—
78,384
169,003
20,042
139,581
11,896
1,089
12,620
9,368
5,874
40,847
180,428
5,637
1
87,924
541,419
Total liabilities measured at fair value on a recurring basis
$
115,816 $
$
(506,125) $
180
JPMorgan Chase & Co./2023 Form 10-K
December 31, 2022 (in millions)
Level 1
Level 2
Level 3
Derivative
netting
adjustments(f)
Fair value hierarchy
Federal funds sold and securities purchased under resale agreements
$
Securities borrowed
Trading assets:
Debt instruments:
— $
—
311,883
70,041
$
$
—
—
Total fair value
$
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)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
$
$
(568,713)
—
—
—
—
(274,321)
(9,217)
(232,665)
(53,657)
(16,512)
(586,372)
(586,372)
—
—
—
$
(586,372)
$
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
1,105,603
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 $
(a) At December 31, 2023 and 2022, included total U.S. GSE obligations of $78.5 billion and $73.8 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./2023 Form 10-K
181
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, 2023 and 2022, the fair values of these investments, which include certain hedge funds, private
equity funds, real estate and other funds, were $1.0 billion and $950 million, respectively. Included in these balances at December 31, 2023 and 2022,
were trading assets of $42 million and $43 million, respectively, and other assets of $984 million and $907 million, respectively.
(e) At December 31, 2023 and 2022, included $10.2 billion and $9.7 billion, respectively, of residential first-lien mortgages, and $6.0 billion and $6.8
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 $2.9 billion and $2.4 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.
182
JPMorgan Chase & Co./2023 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 and arithmetic 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 175–179 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./2023 Form 10-K
183
Notes to consolidated financial statements
Level 3 inputs(a)
December 31, 2023
Product/Instrument
Residential mortgage-backed securities and
loans(b)
Fair value
(in millions)
Principal valuation
technique
$
1,743 Discounted cash flows
Yield
Unobservable inputs(g)
Range of input values
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
1,460 Market comparables
484 Market comparables
1,335 Market comparables
179 Market comparables
Price
Price
Price
Price
Net interest rate derivatives
495 Option pricing
Interest rate volatility
Interest rate spread volatility
Bermudan switch value
Interest rate correlation
IR-FX correlation
Net credit derivatives
233 Discounted cash flows
Credit correlation
7 Discounted cash flows
Prepayment speed
32 Market comparables
Price
Credit spread
Recovery rate
Net foreign exchange derivatives
128 Option pricing
IR-FX correlation
(66) Discounted cash flows
Prepayment speed
Net equity derivatives
(2,402) Option pricing
Interest rate curve
Forward equity price(h)
Equity volatility
Equity correlation
Equity-FX correlation
Equity-IR correlation
Average(i)
7%
9%
0%
3%
$80
$98
$79
$91
72%
12%
6%
110%
$90
$242
$108
$109
420bps
77bps
117bps
64bps
54%
90%
60%
20%
70%
19%
19%
5%
5%
51%
3,617bps
384bps
11%
90%
$115
60%
17%
148%
145%
100%
65%
20%
55%
$73
20%
11%
7%
100%
28%
57%
(30)%
12%
0%
3%
0%
0%
$0
$0
$0
$2
25bps
37bps
0%
(82)%
(35)%
0%
35%
0bps
10%
$0
(40)%
2%
74%
3%
15%
(88)%
(19)%
Net commodity derivatives
(279) Option pricing
Oil commodity forward
$84 / BBL
$270 / BBL
$177 / BBL
Natural gas commodity forward
$2 / MMBTU
$6 / MMBTU $4 / MMBTU
MSRs
Long-term debt, short-term borrowings, and
deposits(e)
Commodity volatility
Commodity correlation
8,522 Discounted cash flows
Refer to Note 15
30,078 Option pricing
Interest rate volatility
Bermudan switch value
Interest rate correlation
IR-FX correlation
Equity correlation
Equity-FX correlation
Equity-IR correlation
1,239 Discounted cash flows
Credit correlation
Yield
Loss severity
17%
(35)%
25bps
0%
(82)%
(35)%
15%
(88)%
(19)%
35%
5%
0%
20%
98%
18%
31%
420bps
117bps
54%
90%
60%
100%
65%
20%
70%
20%
100%
19%
19%
5%
57%
(30)%
12%
51%
12%
50%
Other level 3 assets and liabilities, net(f)
920
(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 $758 million, nonagency securities of $5 million and non-trading loans of $980 million.
(c) Comprises nonagency securities of $12 million, trading loans of $65 million and non-trading loans of $1.4 billion.
(d) Comprises trading loans of $619 million and non-trading loans of $716 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 $671 million including $544 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.
184
JPMorgan Chase & Co./2023 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 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./2023 Form 10-K
185
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 – The 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 – The 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,
2023, 2022 and 2021. 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. 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.
186
JPMorgan Chase & Co./2023 Form 10-K
Fair value measurements using significant unobservable inputs
Fair
value at
January
1, 2023
Total
realized/
unrealized
gains/(losses)
Purchases(g)
Sales
Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2023
Change in
unrealized
gains/(losses)
related to
financial
instruments held
at Dec. 31, 2023
$
— $
—
$
— $
—
$
— $
— $
— $
—
$
—
Year ended
December 31, 2023
(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
759
5
7
4
6
6
249
(133)
—
—
(6)
—
771
16
249
(139)
7
155
463
759
23
—
74
36
(15)
—
1
—
217
322
1,027
7
(254)
(172)
(499)
(12)
665
(53)
2
64
—
(58)
164
7
141
(239)
—
—
701
556
13
304
489
31
(384) 191
(146)
(59)
251
(255)
(60)
(25)
151
928
59
(144)
(1,931)
(290)
Total debt instruments
2,178
111
1,823
(1,076)
Total net derivative receivables
673
1,023
(c)
1,329
(2,645)
Available-for-sale securities:
Corporate debt securities
Total available-for-sale securities
Loans
Mortgage servicing rights
Other assets
239
239
24
24
1,418
289
7,973
467
(d)
(c)
(e)
405
(36) (c)
—
—
2,398
1,281
525
(225)
(225)
(120)
(188)
(20)
(107)
(1)
(1)
(109)
(1)
—
(41)
(441)
(1)
(593)
(384)
(2)
(5)
—
1
8
9
3
22
114
382
5
535
192
—
1
(14)
758
—
(8)
5
12
(22)
775
—
10
(35)
(238)
(529)
(16)
179
484
684
6
1
1
7
9
—
74
35
30
—
(840) 2,138
148
(218)
127
(422)
—
7
(42)
101
—
(28)
(1,117)
(288)
654
47
(187)
(1,306)
15
144
700
502
265
62
419
230
(80)
(29)
(422)
(600) (2,402)
(646)
(51)
(11)
219
(279)
(843)
(269)
(1,120) (1,852)
—
—
—
—
(38)
(38)
—
—
(1,147)
1,306
(1,065) 3,079
(1,011)
(147)
—
45
—
8,522
(14)
758
(144)
(221) (c)
—
—
293
(c)
(e)
467
(82) (c)
2,909
—
2,135
(1,315)
(984)
728
(1,100) 2,373
(302) (c)
Year ended
December 31, 2023
(in millions)
Liabilities:(a)
Deposits
Short-term borrowings
Fair value
at January
1, 2023
Total realized/
unrealized
(gains)/losses
$ 2,162 $ 95
1,401
201
(c)(f)
(c)(f)
Trading liabilities – debt and equity
instruments
Accounts payable and other liabilities
84
53
(21) (c)
(4) (c)
Long-term debt
24,092
3,010
(c)(f)
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,
2023
Change in
unrealized
(gains)/losses
related to
financial
instruments held
at Dec. 31, 2023
$
— $
— $
940 $
(1,043) $
— $
(321) $ 1,833
$
—
(32)
(16)
—
—
9
24
4,522
(4,345)
—
—
(2)
—
3
19
8
(24) 1,758
(20)
(13)
37
52
—
12,679
(11,555)
229
(729) 27,726
2,870
(c)(f)
(c)(f)
(c)(f)
73
14
—
(4) (c)
JPMorgan Chase & Co./2023 Form 10-K
187
Notes to consolidated financial statements
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
Available-for-sale securities:
Corporate debt securities
Total available-for-sale securities
Loans
Mortgage servicing rights
Other assets
Year ended
December 31, 2022
(in millions)
Liabilities:(a)
Deposits
Short-term borrowings
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)
662
(1,036)
473
(377)
—
160
(1)
93
3
37
—
—
(16) 187
74
226
(419) 726
325
(483)
17
(9)
215
(114)
(3,626) 5,016
1,226
(2,530)
(907) 571
110
(331)
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)
(84)
(12)
—
(96)
—
(4)
(100)
(230)
(1)
(431)
(2)
—
(221)
4
—
3
7
—
84
357
925
5
1,378
1,066
—
1
(5)
759
(12)
(5)
5
7
(22)
771
—
7
(70)
(322)
(640)
(7)
155
463
759
23
(1,061) 2,178
(121)
665
—
(6)
2
64
29
—
—
29
—
(153)
(48)
(26)
1
(197)
(840)
(1)
46
329
(271)
83
96
350
587
(15)
(15)
(886)
(936)
(103)
732
(373)
701
(29)
13
(5)
489
332
170
459
90
56
(384)
(146)
3,435
369
(261)
673
4,765
(c)
5
3
(656)
5
89
—
—
—
—
239
239
1,053
(831) 1,418
—
2
—
7,973
(6)
405
2,279
(1,082) (c)
2,762
(1,653)
(654)
2,445
(1,188) 2,909
(992) (c)
Total debt instruments
1,457
(138)
2,249
(1,276)
Total net derivative receivables
(4,894) 6,726
(c)
1,893
(3,467)
Fair value measurements using significant unobservable inputs
Fair value
at January
1, 2022
Total
realized/
unrealized
(gains)/losses
Purchases
Sales
Issuances Settlements(h)
Transfers
into
level 3
Transfers
(out of)
level 3
Fair
value at
Dec. 31,
2022
$ 2,317 $ (292) (c)(f) $
2,481
(358) (c)(f)
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)
— $
— $
531 $
(114) $
— $
(280) $ 2,162
$
—
—
3,963
(4,685)
(41)
(37)
77
42
—
—
—
—
15
57
1
(15) 1,401
(8)
(6)
84
53
—
—
12,714
(8,876)
793
(1,044) 24,092
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
101
(c)
(16) (c)
(3,447) (c)(f)
188
JPMorgan Chase & Co./2023 Form 10-K
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
3
480
8
182
507
893
28
476
—
49
(28)
—
5
(23)
—
(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
—
233
(168)
—
—
(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
(31)
(3)
(2)
(2)
303
(36)
—
7
—
(107)
(225)
(873)
(7)
81
332
708
26
(1,214) 1,457
(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
Equity securities
Physical commodities
Other
Total trading assets – debt and
equity instruments
Net derivative receivables:(b)
Total debt instruments
2,098
Interest rate
Credit
Foreign exchange
Equity
Commodity
258
1,789
(224)
(434)
(3,862)
(731)
130
(209)
(480)
(728)
Total net derivative receivables
(4,993)
502
(c)
Available-for-sale 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
116
6
110
(192)
(12)
(110)
1,285
(2,813)
145
(493)
1,662
(3,620)
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
(88)
(16)
282
(6)
74
141
14
(419)
13
171
(3,626)
(155)
(4)
(12)
(907)
(426)
445
79
(4,894)
(145) (c)
—
—
—
—
161
161
1,301
(794) 1,933
—
—
—
5,494
(1)
306
(1)
(1) (d)
(59) (c)
(e)
98
(c)
11
Fair value measurements using significant unobservable inputs
Year ended
December 31, 2021
(in millions)
Liabilities:(a)
Deposits
Short-term borrowings
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
$ 2,913 $
(80) (c)(f) $
2,420
(1,391) (c)(f)
Trading liabilities – debt and equity
instruments
51
Accounts payable and other liabilities
68
(8) (c)
(c)
8
Long-term debt
23,397
369
(c)(f)
—
—
(101)
—
—
$
— $
431
$
(467)
$
2 $
(482) $ 2,317
—
6,823
(5,308)
38
1
—
—
—
—
—
13,505
(12,191)
9
64
—
103
(72) 2,481
(14)
(8)
30
69
(809) 24,374
(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
December 31, 2023, 2022 and 2021. 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% at both December 31, 2023 and December 31, 2022 and 10% at December 31, 2021.
(b) All level 3 derivatives are presented on a net basis, irrespective of the underlying counterparty.
JPMorgan Chase & Co./2023 Form 10-K
189
Change in
unrealized
(gains)/losses
related to
financial
instruments
held at Dec.
31, 2021
$ (77) (c)(f)
(83) (c)(f)
(157) (c)
(c)
8
(c)(f)
87
Notes to consolidated financial statements
(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 level 3 AFS securities were not material for the years ended December 31, 2023, 2022 and 2021.
(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, 2023, 2022 and 2021. Unrealized (gains)/losses are reported in OCI, and were $(158) million, $(529) million and $258 million for the
years ended December 31, 2023, 2022 and 2021, 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
• $921 million of gross interest rate derivative receivables
as a result of an increase in observability and a decrease
in the significance of unobservable inputs.
• $2.3 billion of gross equity derivative receivables and
$1.7 billion of gross equity derivative payables as a result
of an increase in observability and a decrease in the
significance of unobservable inputs.
• $1.1 billion of non-trading loans as a result of an increase
in observability and a decrease in the significance of
unobservable inputs.
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.
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, 2022, 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 193
for further information on changes impacting items measured
at fair value on a nonrecurring basis.
For the year ended December 31, 2023
Level 3 assets were $23.7 billion at December 31, 2023,
reflecting an increase of $30 million from December 31,
2022.
The increase for the year ended December 31, 2023 was
driven by:
• $1.7 billion increase in non-trading loans largely due to
$1.1 billion of loans in CIB associated with First Republic.
• $549 million increase in MSRs,
predominantly offset by:
• $1.8 billion decrease in gross derivative receivables due
to settlements and net transfers largely offset by gains
and purchases.
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, 2023, significant
transfers from level 2 into level 3 included the following:
• $951 million of gross interest rate derivative receivables
as a result of a decrease in observability and an increase
in the significance of unobservable inputs and $2.1 billion
of gross interest rate derivative payables as a result of
transition to term SOFR for certain interest rate options.
• $1.5 billion of gross equity derivative receivables and
$829 million 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.
During the year ended December 31, 2023, significant
transfers from level 3 into level 2 included the following:
• $1.1 billion of total debt and equity instruments, partially
due to trading loans, driven by an increase in
observability.
190
JPMorgan Chase & Co./2023 Form 10-K
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.
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.
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, 2023, 2022 and 2021. 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 186–190 for further information on these instruments.
2023
• $1.8 billion of net gains on assets, largely driven by gains
in net interest rate derivative receivables due to market
movements and gains in MSRs reflecting lower
prepayment speeds on higher rates.
• $3.3 billion of net losses on liabilities, predominantly
driven by losses in long-term debt due to market
movements.
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.
• $1.9 billion of gross equity derivative receivables and
Refer to Note 15 for information on MSRs.
$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.
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./2023 Form 10-K
191
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:
2023
2022
2021
Derivatives CVA
Derivatives FVA
$
221 $
22 $
362
114
42
47
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 190 in this Note and Note
24 for further information.
192
JPMorgan Chase & Co./2023 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, 2023 and 2022, for which nonrecurring fair
value adjustments were recorded during the years ended December 31, 2023 and 2022, by major product category and fair
value hierarchy.
December 31, 2023
(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, 2022
(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
—
—
—
—
—
$
$
$
599
52
651
—
—
Fair value hierarchy
Level 1
Level 2
—
—
—
—
—
$
$
$
643
36
679
—
—
$
$
$
$
$
$
1,156
1,334
2,490
—
—
$
$
$
1,755
1,386
3,141
—
—
Level 3
Total fair value
627
1,352
1,979
84
84
$
$
$
1,270
1,388
2,658
84
84
$
$
$
$
$
$
(a) Included impairments on certain equity method investments, as well as 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 $1.3
billion in level 3 assets measured at fair value on a nonrecurring basis as of December 31, 2023, $412 million 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.
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, 2023,
2022 and 2021, related to assets and liabilities held at
those dates.
December 31, (in millions)
2023
2022
2021
Loans
Other assets(a)
Accounts payable and other liabilities
Total nonrecurring fair value gains/
(losses)
$
(276) $
(55) $
(72)
(789)
(409)
—
(83)
344
5
$ (1,065) $
(547) $
277
(a) Included $(232) million, $(338) million and $379 million for the years
ended December 31, 2023, 2022 and 2021, respectively, of net
gains/(losses) as a result of the measurement alternative. The current
period also included impairments on certain equity method
investments.
Refer to Note 12 for further information about the
measurement of collateral-dependent loans.
JPMorgan Chase & Co./2023 Form 10-K
193
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, 2023 and 2022, 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)
2023
$
4,457
$
93
(325)
2022
4,096
488
(826)
(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, 2023 were $1.2 billion.
(c) The cumulative downward carrying value changes/impairment between January 1, 2018 and December 31, 2023 were $(1.2) billion.
Included in other assets above is the Firm’s interest in approximately 37 million Visa Class B common shares (“Visa B shares”).
These 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. The conversion rate of Visa B
shares to Visa A shares was 1.5875 at December 31, 2023 and may be 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. Accordingly, as of December 31, 2023, there is significant uncertainty regarding when the
transfer restrictions on Visa B shares may be terminated and what the final conversion rate for the Visa B shares will be. As a
result of these considerations, 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.
In connection with prior sales of Visa B shares, the Firm has entered into derivative instruments with the purchasers of the
shares under which the Firm retains the risk associated with changes in the conversion rate. Under the terms of the derivative
instruments, the Firm will (a) make or receive payments based on subsequent changes in the conversion rate and (b) make
periodic interest payments to the purchasers of the Visa B shares. The payments under the derivative instruments will continue
as long as the Visa B shares remain subject to transfer restrictions. The derivative instruments are 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 instruments are recorded in trading liabilities, and changes in fair value are recognized in
other income. As of December 31, 2023, the Firm held derivative instruments associated with 23 million Visa B shares that
the Firm had previously sold, which are all subject to similar terms and conditions.
On January 24, 2024, Visa filed a Current Report on Form 8-K with the SEC announcing that Visa’s stockholders approved
amendments to its Certificate of Incorporation that redenominate the Visa B shares to Visa Class B-1 common shares (“Visa
B-1 shares”) and authorize Visa to conduct one or more exchange offers ("the Program") which, if conducted, would have the
effect of releasing transfer restrictions on a portion of Visa's B-1 shares through an exchange for Visa Class C common shares
(“Visa C shares”). The Program would entitle the Firm to exchange its Visa B-1 shares, for Visa Class B-2 common shares (”Visa
B-2 shares”) and Visa C shares, through an initial exchange offer if and when conducted by Visa. The Visa B-2 shares would
continue to be subject to the transfer restrictions associated with the Visa B shares. The Firm is then entitled to sell the Visa C
shares received after a brief lock-up period expires, and Visa is also authorized to extend offers for potential future exchanges,
each enabling the release of additional Visa B shares if certain conditions are met. The timing and likelihood of any initial or
future exchange offer is dependent upon actions taken by Visa and other factors that may be outside of the Firm’s control.
194
JPMorgan Chase & Co./2023 Form 10-K
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.
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
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, 2023 and 2022, 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, 2023
Estimated fair value hierarchy
December 31, 2022
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
$
29.1 $
29.1 $
— $
— $
29.1 $
27.7 $
27.7 $
— $
— $
27.7
Deposits with banks
595.1
594.6
0.5
—
595.1
539.5
539.3
0.2
—
539.5
Accrued interest and accounts
receivable
Federal funds sold and securities
purchased under resale
agreements
Securities borrowed
Investment securities, held-to-
maturity
107.1
—
107.0
0.1
107.1
124.7
124.6
0.1
124.7
16.3
130.3
—
—
16.3
130.3
369.8
160.6
182.2
—
—
—
16.3
130.3
3.7
115.3
3.7
115.3
342.8
425.3
189.1
199.5
—
—
—
3.7
115.3
388.6
—
—
—
Loans, net of allowance for loan
losses(a)
Other
1,262.5
76.1
—
—
285.6
964.6
1,250.2
1,073.9
74.9
1.4
76.3
101.2
—
—
194.0
99.6
853.9
1,047.9
1.7
101.3
Financial liabilities
Deposits
$ 2,322.3 $
— $ 2,322.6 $
— $ 2,322.6 $ 2,311.6 $
— $ 2,311.5 $
— $ 2,311.5
Federal funds purchased and
securities loaned or sold under
repurchase agreements
Short-term borrowings(b)
Accounts payable and other
liabilities
Beneficial interests issued by
consolidated VIEs
Long-term debt(b)
47.5
24.7
241.8
23.0
303.9
—
—
—
—
—
47.5
24.7
—
—
47.5
24.7
50.6
28.2
233.3
8.1
241.4
257.5
23.0
252.2
—
51.3
23.0
303.5
12.6
223.6
—
—
—
—
—
50.6
28.2
251.2
12.6
216.5
—
—
5.6
—
2.8
50.6
28.2
256.8
12.6
219.3
(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) Includes FHLB advances in level 2 of Long-term debt and Short-term borrowings and the Purchase Money Note in level 3 of Long-term debt associated
with First Republic. Refer to Notes 20 and 34 for additional information.
JPMorgan Chase & Co./2023 Form 10-K
195
Notes to consolidated financial statements
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, 2023
Estimated fair value hierarchy
December 31, 2022
Estimated fair value hierarchy
Carrying
value(a)(b)(c)
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 $
3.0 $
— $
— $
4.8 $
4.8 $
2.3 $
— $
— $
3.2 $
3.2
(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.
(c) As of December 31, 2023, includes fair value adjustments associated with First Republic for other unfunded commitments to extend credit totaling
$1.1 billion recorded in accounts payable and other liabilities on the Consolidated balance sheets. Refer to Notes 28 and 34 for additional information.
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 177 of this Note for a further discussion of the valuation of lending-related commitments.
196
JPMorgan Chase & Co./2023 Form 10-K
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
JPMorgan Chase & Co./2023 Form 10-K
197
Notes to consolidated financial statements
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, 2023, 2022 and 2021, 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.
December 31, (in millions)
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)
2023
2022
2021
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)
300 $ —
164
—
$
300 $
(384) $ —
$
(384) $
164
(499)
—
(499)
(112)
(200)
$ —
$
—
(112)
(200)
3,656
—
3,656
(1,703)
—
(1,703)
(2,171)
(1) (c)
(2,172)
248
—
248
(136)
3
(c)
5
8
(59)
—
—
(136)
353
(59)
(8)
—
—
322
427
282
(4) (c)
(c)
216
(4) (d)
—
(2,582)
318
643
278
(2,582)
(242)
(1,421)
39
901
(c)
21
(794) (c)
(6) (d)
—
(221)
(2,215)
33
901
(121)
(567)
(24)
—
(16)
—
—
—
—
—
(121)
(567)
(24)
—
(16)
181
473
43
(1)
(11)
—
—
—
—
—
181
473
43
(1)
(11)
(5,875)
(78) (c)(d)
(5,953)
8,990
98
(c)(d)
9,088
589
(139)
12
(183)
69
(366)
7
—
(17)
(980)
(7) (c)
(c)
2,056
(26) (d)
—
—
—
—
—
—
4
(c)(d)
353
(8)
582
1,917
(14)
(183)
69
(366)
7
—
(17)
(976)
(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, 2023, 2022 and 2021.
(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.
198
JPMorgan Chase & Co./2023 Form 10-K
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, 2023 and 2022, for loans, long-term debt and long-term beneficial interests for
which the fair value option has been elected.
2023
2022
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
$
2,987
$
588 $
(2,399) $
2,517
$
368 $
(2,149)
Loans
Subtotal
838
3,825
732
1,320
(106)
(2,505)
967
3,484
829
1,197
(138)
(2,287)
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
65
59
(6)
124
115
(9)
9,547
38,948
48,495
7,968
38,060
46,028
(1,579)
(888)
(2,467)
7,823
42,588
50,411
6,135
41,135
47,270
(1,688)
(1,453)
(3,141)
$
52,385
$
47,407 $
(4,978) $
54,019
$
48,582 $
(5,437)
$
47,768
(d) $
38,882 $
(8,886) $
41,341
(d) $
31,105 $
(10,236)
NA
NA
NA
NA
49,042
$
87,924
$
$
1
1
NA
NA
NA
NA
NA
NA
NA
NA
41,176
$
72,281
$
$
5
5
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, 2023 and 2022.
(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.
At December 31, 2023 and 2022, the contractual amount of lending-related commitments for which the fair value option was
elected was $9.7 billion and $7.6 billion, respectively, with a corresponding fair value of $97 million and $24 million,
respectively. Refer to Note 28 for further information regarding off-balance sheet lending-related financial instruments.
JPMorgan Chase & Co./2023 Form 10-K
199
Notes to consolidated financial statements
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, 2023
December 31, 2022
Long-term
debt
Short-term
borrowings
Deposits
Total
Long-term
debt
Short-term
borrowings
Deposits
Total
$ 38,604 $
654 $ 74,526
$ 113,784
$ 31,973 $
260 $ 24,655
$ 56,888
5,444
2,605
38,685
1,862
350
941
—
187
5,483
2,905
11
(a)
1
5,794
3,733
47,073
1,874
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
Total structured notes
$ 87,200 $
7,439 $ 77,619
$ 172,258
$ 71,271 $
5,506 $ 28,252
$ 105,029
(a) Excludes deposits linked to precious metals for which the fair value option has not been elected of $627 million and $602 million for the years ended
December 31, 2023 and 2022, respectively.
200
JPMorgan Chase & Co./2023 Form 10-K
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 credit losses. Refer to Note 13
for additional information on the allowance for credit
losses.
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.
JPMorgan Chase & Co./2023 Form 10-K
201
Notes to consolidated financial statements
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, 2023 and 2022. The wholesale industry of risk category is generally based
on the client or counterparty’s primary business activity.
Credit
exposure(h)(i)
$ 455,496 $ 410,093
Loans
2023
On-balance sheet
Derivatives
Off-balance
sheet(k)
Credit
exposure(h)
2022
On-balance sheet
Loans
Derivatives
$
— $ 45,403 $ 344,893 $ 311,375
(j) $
December 31, (in millions)
Consumer, excluding credit card
Credit card(a)
Total consumer(a)
Wholesale(b)
Real Estate
Individuals and Individual Entities(c)
Asset Managers
Consumer & Retail
Technology, Media &
Telecommunications
Industrials
Healthcare
Banks & Finance Companies
Utilities
State & Municipal Govt(d)
Oil & Gas
Automotive
Chemicals & Plastics
Insurance
Central Govt
Transportation
Metals & Mining
Securities Firms
Financial Markets Infrastructure
All other(e)
Subtotal
1,126,781
211,123
1,582,277
621,216
—
—
915,658
1,006,459
185,175
961,061
1,351,352
496,550
208,261
166,372
145,849
126,339
129,574
127,086
77,296
75,092
65,025
57,177
36,061
35,986
34,475
33,977
20,773
20,501
17,704
16,060
15,508
8,689
4,251
52,178
46,274
22,450
26,548
23,169
33,941
7,067
20,019
8,480
17,459
6,458
2,535
5,463
5,080
4,655
865
86
134,777
97,034
420
725
9,925
2,013
2,451
1,335
1,577
2,898
3,396
442
705
428
441
7,138
10,669
555
274
3,285
2,155
4,032
41,469
18,785
67,471
78,799
52,395
47,209
40,279
20,338
25,598
15,525
25,290
16,090
13,874
10,828
1,572
10,425
10,579
4,539
2,010
170,857
131,681
130,815
120,424
95,656
120,555
72,286
72,483
62,613
51,816
36,218
33,847
38,668
33,287
20,030
21,045
19,095
15,009
15,915
8,066
4,962
40,511
45,867
21,622
26,960
22,970
32,172
9,107
18,147
9,632
14,735
5,771
2,387
3,167
5,005
5,398
556
13
33,711
123,307
87,545
Off-balance
sheet(k)
$ 33,518
821,284
854,802
38,927
9,957
38,748
73,038
47,714
43,753
37,960
16,398
23,842
15,115
23,915
18,023
13,852
10,577
2,973
9,437
10,042
4,123
1,899
31,687
—
—
—
249
434
16,397
1,650
2,950
1,770
1,683
3,246
3,269
585
5,121
529
407
8,081
12,955
567
475
3,387
3,050
4,075
Loans held-for-sale and loans at fair value
Receivables from customers(f)
Total wholesale
Total exposure(g)(h)
1,264,122
672,472
54,864
536,786
1,146,530
603,670
70,880
471,980
30,018
47,625
30,018
—
—
—
—
—
35,427
49,257
35,427
—
—
—
—
—
1,341,765
702,490
54,864
536,786
1,231,214
639,097
70,880
471,980
$ 2,924,042 $ 1,323,706
$ 54,864 $ 1,497,847 $ 2,582,566 $ 1,135,647
$ 70,880
$ 1,326,782
(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, 2022, are based on the industry rankings of the corresponding exposures at
December 31, 2023, not actual rankings of such exposures at December 31, 2022.
(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, 2023 and 2022, noted above, the
Firm held: $5.9 billion and $6.6 billion, respectively, of trading assets; $21.4 billion and $6.8 billion, respectively, of AFS securities; and $9.9 billion and
$19.7 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 94% and 6%, respectively, at December 31, 2023 and
95% and 5%, respectively, at December 31, 2022. 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 (including cash on deposit, and primarily liquid and readily marketable debt or equity securities).
(g) Excludes cash placed with banks of $614.1 billion and $556.6 billion, at December 31, 2023 and 2022, 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
(i)
derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
Included credit exposure associated with First Republic consisting of $102.2 billion in the Consumer, excluding credit card portfolio, and $90.6 billion in
the Wholesale portfolio predominantly in Real Estate, Asset Managers, and Individuals and Individual Entities.
(j) At December 31, 2023 and 2022, included $94 million and $350 million 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.
(k) Represents lending-related financial instruments.
202
JPMorgan Chase & Co./2023 Form 10-K
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 214–
216 of this Note for a further discussion of credit
derivatives.
Refer to the risk management derivatives gains and losses
table on page 214 and the hedge accounting gains and
losses tables on pages 211–213 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
207–214 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.
JPMorgan Chase & Co./2023 Form 10-K
203
The Firm employs the Portfolio Layer Method to manage
the interest rate risk of portfolios of fixed-rate assets.
Throughout the life of the open hedge, basis adjustments
are maintained at the portfolio level and are only allocated
to individual assets under certain circumstances. These
include instances where the portfolio amount falls below
the hedged layer amounts, or in cases of voluntary de-
designation.
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
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.
Notes to consolidated financial statements
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 interest-bearing financial
instruments, 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.
Effective January 1, 2023, the Firm adopted the new
portfolio layer method hedge accounting guidance which
expanded the ability to hedge a portfolio of fixed-rate
assets to allow more types of assets to be included in the
portfolio, and to allow more of the portfolio to be hedged.
204
JPMorgan Chase & Co./2023 Form 10-K
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
211-212
213
211-212
213
213
• Commodity
Hedge commodity inventory
Fair value hedge
CIB, AWM
211-212
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, AWM
• Interest rate and
foreign exchange
Manage the risk associated with certain other specified assets and
liabilities
Specified risk management
Corporate, CIB
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
214
214
214
214
214
JPMorgan Chase & Co./2023 Form 10-K
205
Notes to consolidated financial statements
Notional amount of derivative contracts
The following table summarizes the notional amount of
free-standing derivative contracts outstanding as of
December 31, 2023 and 2022.
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)
2023
2022
$
23,251
$
24,491
2,690
3,370
3,362
32,673
1,045
4,721
6,957
830
798
2,636
3,047
2,992
33,166
1,132
4,196
7,017
775
759
Total foreign exchange contracts
13,306
12,747
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
639
157
778
698
618
110
636
580
2,272
1,944
115
157
130
115
517
136
136
117
98
487
Total derivative notional amounts
$
49,813
$
49,476
(a) Refer to the Credit derivatives discussion on pages 214–216 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.
206
JPMorgan Chase & Co./2023 Form 10-K
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, 2023 and 2022, 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, 2023
(in millions)
Trading assets and
liabilities
Interest rate
Credit
Foreign exchange
Equity
Commodity
Total fair value of trading
assets and liabilities
December 31, 2022
(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)
$ 250,689 $
2 $ 250,691 $
26,324
$ 240,482 $
— $ 240,482 $
11,896
9,654
205,010
57,689
15,228
—
765
—
211
9,654
205,775
57,689
15,439
551
18,019
4,928
5,042
12,038
210,623
65,811
16,286
—
12,038
1,640
212,263
—
92
65,811
16,378
1,089
12,620
9,368
5,874
$ 538,270 $
978 $ 539,248 $
54,864
$ 545,240 $
1,732 $ 546,972 $
40,847
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
(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.
JPMorgan Chase & Co./2023 Form 10-K
207
Notes to consolidated financial statements
Derivatives netting
The following tables present, as of December 31, 2023 and 2022, 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
2023
2022
Gross
derivative
receivables
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
receivables
Gross
derivative
receivables
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
receivables
$ 176,901 $ (152,703)
$ 24,198
$ 203,922 $ (178,261)
$ 25,661
71,419
(71,275)
402
(389)
144
13
93,800
(93,424)
559
(311)
376
248
248,722
(224,367)
24,355
298,281
(271,996)
26,285
7,637
1,904
9,541
(7,226)
(1,877)
(9,103)
411
27
438
8,474
1,746
10,220
(7,535)
(1,704)
(9,239)
939
42
981
203,624
(187,295)
16,329
237,941
(216,796)
21,145
469
6
(459)
(2)
10
4
1,461
(1,417)
15
(1)
44
14
204,099
(187,756)
16,343
239,417
(218,214)
21,203
25,001
30,462
55,463
(23,677)
(29,084)
(52,761)
1,324
1,378
2,702
30,323
28,467
58,790
(25,665)
(27,109)
(52,774)
8,049
133
5,214
(5,084)
(123)
(5,190)
2,965
14,430
(7,633)
10
24
120
9,103
(112)
(8,745)
13,396
(10,397)
2,999
23,653
(16,490)
4,658
1,358
6,016
6,797
8
358
7,163
61,648
(d)
9,232
Derivative receivables with appropriate legal opinion
531,221
(484,384)
46,837
(d)
630,361
(568,713)
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
8,027
8,027
9,232
$ 539,248
$ 54,864
$ 639,593
$ 70,880
(22,461)
$ 32,403
(23,014)
$ 47,866
208
JPMorgan Chase & Co./2023 Form 10-K
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
2023
2022
Gross
derivative
payables
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
payables
Gross
derivative
payables
Amounts netted
on the
Consolidated
balance sheets
Net
derivative
payables
$ 161,901 $ (152,467)
$
9,434
$ 190,108 $ (176,890)
$ 13,218
76,007
(75,729)
436
(390)
278
46
97,417
(97,126)
327
(305)
291
22
238,344
(228,586)
9,758
287,852
(274,321)
13,531
10,332
1,639
(9,313)
(1,636)
11,971
(10,949)
1,019
3
1,022
8,054
1,674
9,728
(7,572)
(1,645)
(9,217)
482
29
511
209,386
(199,173)
10,213
246,457
(231,248)
15,209
552
6
(470)
—
82
6
1,488
(1,417)
20
—
71
20
209,944
(199,643)
10,301
247,965
(232,665)
15,300
29,999
33,137
63,136
(27,360)
(29,083)
(56,443)
8,788
120
5,376
(5,192)
(120)
(5,192)
14,284
(10,504)
2,639
4,054
6,693
3,596
—
184
3,780
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
38,384
(d)
12,757
Derivative payables with appropriate legal opinion
537,679
(506,125)
31,554
(d)
624,756
(586,372)
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
9,293
9,293
12,757
$ 546,972
$ 40,847
$ 637,513
$ 51,141
(4,547)
$ 36,300
(3,318)
$ 47,823
(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 $48.3 billion and $51.5 billion at December 31, 2023 and 2022, respectively. Net derivatives
payable included cash collateral netted of $70.0 billion and $69.2 billion at December 31, 2023 and 2022, respectively. Derivative cash collateral relates
to OTC and OTC-cleared derivative instruments.
JPMorgan Chase & Co./2023 Form 10-K
209
Notes to consolidated financial statements
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, 2023 and 2022.
OTC and OTC-cleared derivative payables containing downgrade triggers
(in millions)
Aggregate fair value of net derivative payables
Collateral posted
December 31, 2023
December 31, 2022
$
14,655
14,673
$
16,023
15,505
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, 2023 and 2022, 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, 2023
December 31, 2022
Single-notch
downgrade
Two-notch
downgrade
Single-notch
downgrade
Two-notch
downgrade
75 $
93
1,153 $
592
128 $
88
1,293
925
(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, 2023 and
2022.
210
JPMorgan Chase & Co./2023 Form 10-K
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, 2023,
2022 and 2021, 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, 2023
(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
$
1,554 $
(1,248) $
306 $
722
1,227
(483)
(706)
239
521
$
3,503 $
(2,437) $
1,066 $
— $
(601)
—
(601) $
157 $
239
525
921 $
—
(134)
—
(134)
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) $
— $
(262) $
(1,317)
1,423
106
(70)
106
36
(528)
—
106
48
$
(15,563) $
15,400 $
(163) $
(528) $
(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)
(a) Primarily consists of hedges of the benchmark (e.g., Secured Overnight Financing Rate (“SOFR”)) interest rate risk of fixed-rate long-term debt and AFS
securities. Gains and losses were recorded in net interest income.
(b) Includes the amortization of income/expense associated with the inception hedge accounting adjustment applied to the hedged item. 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.
JPMorgan Chase & Co./2023 Form 10-K
211
Notes to consolidated financial statements
As of December 31, 2023 and 2022, 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, 2023
(in millions)
Assets
Investment securities - AFS
Liabilities
Long-term debt
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
$
$
151,752
(c) $
549 $
(2,010) $
(1,461)
195,455
$
(2,042) $
(9,727) $
(11,769)
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)
(a) Excludes physical commodities with a carrying value of $5.6 billion and $26.0 billion at December 31, 2023 and 2022, 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, 2023 and 2022, the carrying amount excluded for AFS securities is
$19.3 billion and $20.3 billion, respectively, and for long-term debt is zero and $221 million, respectively.
(c) Carrying amount represents the amortized cost, net of allowance if applicable. Effective January 1, 2023, the Firm adopted the portfolio layer method
hedge accounting guidance. At December 31, 2023, the amortized cost of the portfolio layer method closed portfolios was $83.9 billion, of which $68.0
billion was designated as hedged. The amount designated as hedged is the sum of the notional amounts of all outstanding layers in each portfolio, which
includes both spot starting and forward starting layers. The cumulative amount of basis adjustments was $(165) million, which is comprised of $73 million
and $(238) million for active and discontinued hedging relationships, respectively. Refer to Note 1 and 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.
212
JPMorgan Chase & Co./2023 Form 10-K
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, 2023, 2022 and 2021,
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, 2023
(in millions)
Contract type
Interest rate(a)
Foreign exchange(b)
Total
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
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
$
$
(1,839)
64
(1,775)
$
$
274
209
483
$
$
2,113
145
2,258
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)
(a) Primarily consists of hedges of SOFR-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 2023, 2022 and 2021.
Over the next 12 months, the Firm expects that approximately $(1.6) billion (after-tax) of net losses recorded in AOCI at
December 31, 2023, 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 six 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, 2023, 2022 and
2021.
Year ended December 31,
(in millions)
Foreign exchange derivatives
2023
2022
2021
Amounts
recorded in
income(a)(b)
$384
Amounts
recorded in
OCI
$(1,732)
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
(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. During the year ended December 31, 2023, the Firm
reclassified a net pre-tax loss of $(35) million to other revenue including the impact of the acquisition of CIFM. The Firm reclassified net pre-tax gains of
$38 million to other income/expense related to the liquidation of certain legal entities during the year ended December 31, 2022. The amount
reclassified for the year ended December 31, 2021 was not material. Refer to Note 24 for further information.
JPMorgan Chase & Co./2023 Form 10-K
213
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.
Notes to consolidated financial statements
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
2023
2022
2021
$
(135) $
(827) $ 1,078
(441)
(2)
51
(48)
(94)
94
$
(578) $
(824) $ 1,078
(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.
214
JPMorgan Chase & Co./2023 Form 10-K
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: 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 makes
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, 2023 and
2022. Upon a credit event, the Firm as a seller of protection
would typically pay out 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. Other purchased protection
also includes credit protection against certain loans in the
retained lending portfolio through the issuance of credit
derivatives and credit-related notes.
JPMorgan Chase & Co./2023 Form 10-K
215
Notes to consolidated financial statements
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, 2023
(in millions)
Credit derivatives
Credit default swaps
Other credit derivatives(a)
Total credit derivatives
Credit-related notes(b)
Total
December 31, 2022
(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)
$
(450,172)
$
473,823
$
23,651
$
(38,846)
(489,018)
—
45,416
519,239
—
6,570
30,221
—
$
(489,018)
$
519,239
$
30,221
$
7,517
29,206
36,723
9,788
46,511
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
(a) Other credit derivatives predominantly consist of credit swap options and total return swaps.
(b) Predominantly represents Other protection purchased by CIB.
(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, 2023 and 2022, 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, 2023
(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
$ (89,981)
$
(263,834)
$ (29,470)
$
(383,285)
$
Noninvestment-grade
(31,419)
(69,515)
(4,799)
(105,733)
Total
$ (121,400)
$
(333,349)
$ (34,269)
$
(489,018)
$
3,659
2,466
6,125
$
(1,144)
$ 2,515
(1,583)
883
$
(2,727)
$ 3,398
December 31, 2022
(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
$ (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)
(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.
216
JPMorgan Chase & Co./2023 Form 10-K
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 fees, commissions
and other fees, 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.
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.
– Realized gains and losses result from the sale of
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)
2023
2022
2021
Underwriting
Equity
Debt
Total underwriting
Advisory
$ 1,149 $
975 $ 3,969
2,610
3,759
2,760
2,732
3,707
2,979
4,853
8,822
4,394
Total investment banking fees
$ 6,519 $ 6,686 $ 13,216
Investment banking fees are earned primarily by CIB.
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.
JPMorgan Chase & Co./2023 Form 10-K
217
Notes to consolidated financial statements
Year ended December 31,
(in millions)
2023
2022
2021
Trading revenue by
instrument type
Interest rate(a)
Credit(b)
Foreign exchange
Equity
Commodity
$ 5,607 $ 3,010
$ 1,646
1,434
5,082
10,229
2,202
(c)
1,412
5,119
8,068
2,348
2,691
2,787
7,773
1,428
Total trading revenue
24,554
19,957
16,325
Private equity losses
(94)
(45)
(21)
Principal transactions
$ 24,460 $ 19,912
$ 16,304
(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.
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 performing cash
management activities, and providing overdraft and other
deposit account services. Lending- and deposit-related fees
are recognized over the period in which the related service
is provided. Refer to Note 28 for further information on
lending-related commitments.
The following table presents the components of lending-
and deposit-related fees.
Year ended December 31,
(in millions)
Lending-related fees
Deposit-related fees
2023
$ 2,365
5,048
2022
2021
(a) $ 1,468 $ 1,472
5,560
5,630
Total lending- and deposit-related
fees
$ 7,413
$ 7,098 $ 7,032
(a) Includes the amortization of the purchase discount on certain acquired
lending-related commitments associated with First Republic,
predominantly in AWM and CB. The discount is deferred in other
liabilities and recognized on a straight-line basis over the commitment
period and was largely recognized in the current year as the
commitments are generally short term. Refer to Note 34 for additional
information.
Lending- and deposit-related fees are earned by CCB, CIB,
CB, and AWM.
Asset management fees
Investment management fees include fees associated with
assets the Firm manages 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.
All other asset management fees include 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 or investor
redemption activity.
The following table presents the components of asset
management fees.
Year ended December 31,
(in millions)
Asset management fees
2023
2022
2021
Investment management fees
$ 14,908
(a) $ 13,765 $ 14,027
All other asset management
fees
312
331
378
Total asset management fees
$ 15,220
$ 14,096 $ 14,405
(a) Includes the impact of First Republic. Refer to Note 34 for additional
information.
Asset management fees earned primarily by AWM and CCB.
Commissions and other fees
This revenue category includes commissions and fees from
brokerage and custody services, and other products.
Brokerage commissions 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.
Administration fees predominantly include fees for custody,
funds services, securities lending and securities clearance.
These fees are recorded as revenue over the period in
which the related service is provided.
218
JPMorgan Chase & Co./2023 Form 10-K
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
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
All other(a)
Total card income
2023
2022
2021
$ 31,021 $ 28,085 $ 23,592
(24,601)
(1,636)
(22,162)
(1,503)
(17,868)
(622)
$
4,784 $
4,420 $
5,102
(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.
The following table presents the components of
commissions and other fees.
Year ended December 31,
(in millions)
Commissions and other fees
2023
2022
2021
Brokerage commissions
$ 2,820 $ 2,831 $ 3,046
Administration fees
All other commissions and fees(a)
Total commissions and other fees $ 6,836 $ 6,581 $ 6,624
1,402
2,348
1,024
2,554
1,706
2,310
(a) Includes travel-related and annuity sales commissions, depositary
receipt-related service fees, as well as other service fees, which are
recognized as revenue when the services are rendered.
Commissions and other fees are earned primarily by CIB,
CCB and AWM.
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
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
JPMorgan Chase & Co./2023 Form 10-K
219
Notes to consolidated financial statements
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 losses associated with these
tax-oriented investments are more than offset by lower
income tax expense from the associated tax credits.
The following table presents certain components of other
income:
Year ended December 31,
(in millions)
2023
2022
2021
Operating lease income
$
2,843
$
3,654 $
4,914
(1,538)
(1,491)
(1,570)
Losses on tax-oriented
investments
Estimated bargain purchase
gain associated with the
First Republic acquisition
Gain related to the
acquisition of CIFM
2,775
(a)
339
(b)
—
—
—
—
—
Gain on sale of Visa B shares
—
914
(a) Refer to Note 34 for additional information on the First Republic
acquisition.
(b) Gain on the original minority interest in CIFM upon the Firm's
acquisition of the remaining 51% of the entity.
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)
2023
2022
2021
Legal expense
$ 1,436
$
266 $
FDIC-related expense
4,203
First Republic-related expense
1,060
(a)
(b)
860
—
426
730
(a) Included the $2.9 billion FDIC special assessment.
(b) Included payments to the FDIC in the second quarter of 2023 with
respect to First Republic individuals who were not employees of the
Firm until July 2, 2023, as well as $360 million restructuring and
integration costs. Refer to Note 34 for additional information on the
First Republic acquisition.
FDIC Special Assessment
In November 2023, the FDIC approved a final rule to
implement a special assessment intended to recover losses
to the Deposit Insurance Fund (“DIF”) arising from the
protection of uninsured depositors resulting from the
systemic risk determination made on March 12, 2023. The
final rule imposed a special assessment at a quarterly rate
of 3.36 basis points on insured depository institutions
whose estimated uninsured deposits were over $5.0 billion
as of December 31, 2022. In the fourth quarter of 2023,
the Firm recognized the estimated special assessment
expense of $2.9 billion (pre-tax).
Refer to Note 32 for additional information on noninterest
revenue and expense by segment.
220
JPMorgan Chase & Co./2023 Form 10-K
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.
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.
Interest income on loans and securities include the
amortization and accretion of purchase premiums and
discounts, as well as net deferred fees and costs on loans.
These amounts are deferred in loans and investment
securities, respectively, and recognized on a level-yield
basis.
Refer to Notes 10, 11, 12, and 20 for further information
on accounting for interest income and interest expense
related to investment securities, securities financing
activities (i.e., securities purchased or sold under resale or
repurchase agreements; securities borrowed; and securities
loaned), loans and long-term debt, respectively.
The following table presents the components of interest
income and interest expense:
Year ended December 31,
(in millions)
Interest income
Loans
Taxable securities
Non-taxable securities(a)
Total investment securities
Trading assets - debt instruments
Federal funds sold and securities
purchased under resale
agreements
Securities borrowed(b)
Deposits with banks
All other interest-earning assets(c)
Total interest income
Interest expense
Interest bearing deposits
Federal funds purchased and
securities loaned or sold under
repurchase agreements
Short-term borrowings
Trading liabilities - debt and all
other interest-bearing
liabilities(d)
Long-term debt
Beneficial interest issued by
consolidated VIEs
2023
2022
2021
$ 83,384
17,390
(e) $ 52,736 $ 41,537
6,460
10,372
1,336
975
18,726
(e)
11,347
15,950
9,053
1,063
7,523
6,825
15,079
7,983
21,797
7,669
4,632
2,237
9,039
3,763
958
(385)
512
894
$ 170,588
$ 92,807 $ 57,864
$ 40,016
$ 10,082 $
531
13,259
1,894
3,721
747
274
126
9,396
15,803
3,246
8,075
257
4,282
953
226
83
Total interest expense
$ 81,321
$ 26,097 $ 5,553
Net interest income
$ 89,267
$ 66,710 $ 52,311
Provision for credit losses
9,320
6,389
(9,256)
Net interest income after
provision for credit losses
$ 79,947
$ 60,321 $ 61,567
(a) Represents securities that are tax-exempt for U.S. federal income tax
purposes.
(b) Negative interest and rates reflect the net impact of interest earned
offset by fees paid on client-driven prime brokerage securities
borrowed transactions.
(c) 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.
(d) All other interest-bearing liabilities includes interest expense on
brokerage-related customer payables.
(e) Includes the accretion of the purchase discount on certain acquired
loans and investment securities associated with First Republic. Refer to
Note 34 for additional information.
JPMorgan Chase & Co./2023 Form 10-K
221
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 annual matching and pay credit contributions
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
2023
2022
$
(14,740)
$
(13,545)
22,013
7,273
(1,517)
19,890
6,345
(1,916)
The weighted-average discount rate used to value the benefit obligations as of December 31, 2023 and 2022, was 5.16% and
5.14%, 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. For
the year ended December 31, 2023, the net gain was
attributable to market-driven increases in the fair value of
plan assets, partially offset by changes in the discount rate
and interest crediting rate. 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.
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
2023
(393) $
1,609
2022
(192) (b) $
1,408
2021
(201) (b)
1,333
1,216 $ 1,216
(421) $ 1,459
$
$
1,132
(1,129)
$
$
$
(a) The service cost component of net periodic defined benefit cost is reported in compensation expense; all other components of net periodic defined benefit
costs are reported in other expense in the Consolidated statements of income.
(b) Includes pension settlement losses of $92 million and $33 million, respectively, for the years ended December 31, 2022 and 2021.
222
JPMorgan Chase & Co./2023 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
2023
5.14 %
5.74 %
2022
2.54 %
3.68 %
2021
2.17 %
2.97 %
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. As of
December 31, 2023, 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,
0-2% real estate, and 0-10% alternatives.
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 $1.8 billion and $1.7 billion, as of
December 31, 2023 and 2022, 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 the
fair value hierarchy
Assets measured at fair value using NAV as a
practical expedient
Net defined benefit pension plan payables
Total fair value of plan assets
Defined benefit pension and OPEB plans
2023
2022
Level 1(a)
Level 2(b)
Level 3(c)
Total fair value
Level 1(a)
Level 2(b)
Level 3(c)
Total fair value
$ 6,521 $ 10,713 $ 3,124 $
20,358 $ 5,308 $ 9,617 $ 2,613 $
17,538
2,097
(442)
2,593
(241)
$
22,013
$
19,890
(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, fund investments, and participating annuity contracts in 2023, and corporate-owned life insurance
policies and participating annuity contracts in 2022.
JPMorgan Chase & Co./2023 Form 10-K
223
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
increased in 2023 to $3.1 billion, due to $400 million in
unrealized gains and $173 million of transfers in, partially
offset by $59 million in settlements. The decline in 2022
was due to $501 million in unrealized losses and
$54 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
2024
2025
2026
2027
2028
Years 2029–2033
$
1,142
1,125
1,113
1,077
1,063
5,143
224
JPMorgan Chase & Co./2023 Form 10-K
Note 9 – Employee share-based incentives
Employee share-based awards
In 2023, 2022 and 2021, 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, 2023, 54 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”)
were generally granted with an exercise price equal to the
fair value of JPMorgan Chase’s common stock on the grant
date. SARs 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
in 2023 or 2022.
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
2023, 2022 and 2021, 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./2023 Form 10-K
225
Notes to consolidated financial statements
RSUs, PSUs and SARs 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, 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 and SARs activity for 2023.
Year ended December 31, 2023
(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
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
47,726 $
23,758
(17,773)
(1,468)
139.90
139.39
134.86
142.11
NA
NA
2,511
$ 141.19
—
—
(261)
46.58
—
—
—
—
52,243 $
141.31
2,250
$ 152.19
NA
NA
—
—
7.7 $
40,444
—
—
The total fair value of RSUs and PSUs that vested during the years ended December 31, 2023, 2022 and 2021, was $2.5
billion, $3.2 billion and $2.9 billion, respectively. The total intrinsic value of options exercised during the years ended
December 31, 2023, 2022 and 2021, was $24 million, $75 million and $232 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,
2023, 2022 and 2021, were $836 million, $901 million
and $957 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)
2023
2022
2021
Cost of prior grants of RSUs, PSUs and
SARs 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
$ 1,510 $ 1,253 $ 1,161
1,607
1,541
1,768
$ 3,117 $ 2,794 $ 2,929
At December 31, 2023, 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 1.7 years. The Firm does not
capitalize any compensation expense related to share-
based compensation awards to employees.
226
JPMorgan Chase & Co./2023 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.
Effective January 1, 2023, the Firm adopted the portfolio
layer method hedge accounting guidance which permitted a
transfer of HTM securities to AFS upon adoption. The Firm
transferred obligations of U.S. states and municipalities with
a carrying value of $7.1 billion resulting in the recognition
of $38 million net pre-tax unrealized losses in AOCI. Refer
to Note 1 and Note 24 for additional information.
During 2022, the Firm transferred investment securities
with a fair value of $78.3 billion from AFS to HTM for capital
management purposes. AOCI included pretax unrealized
losses of $4.8 billion on the securities at the date 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 between AFS and HTM are non-cash
transactions.
JPMorgan Chase & Co./2023 Form 10-K
227
Notes to consolidated financial statements
The amortized costs and estimated fair values of the investment securities portfolio were as follows for the dates indicated.
2023
2022
Amortized
cost(c)(d)
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
Amortized
cost(c)(d)
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
$ 88,377 $
870 $ 4,077 $ 85,170
$ 77,194 $
479 $ 6,170
$ 71,503
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
Unallocated portfolio layer fair value
basis adjustments(a)
Total available-for-sale securities
Held-to-maturity securities(b)
Mortgage-backed securities:
2,086
1,608
2,930
95,001
58,051
21,243
21,387
128
6,769
2,804
10
4
12
896
276
390
254
—
11
8
68
1
139
4,285
522
266
359
28
28
26
2,028
1,611
2,803
91,612
57,805
21,367
21,282
100
6,752
2,786
1,576
3,176
2,113
84,059
95,217
7,103
20,360
381
5,916
3,152
1
5
—
111
27
155
485
6,463
302
3,459
86
14
—
1
2
403
678
24
125
69
1,466
3,154
1,958
78,081
92,060
6,786
19,696
357
5,792
3,085
73
(73)
—
NA
NA
NA
NA
NA
205,456
1,762
5,514
201,704
(e)
216,188
890
11,221
205,857
U.S. GSEs and government agencies
105,614
39
11,643
94,010
113,492
U.S. Residential
Commercial
Total mortgage-backed securities
U.S. Treasury and government agencies
9,709
10,534
125,857
173,666
Obligations of U.S. states and municipalities
9,945
Asset-backed securities:
Collateralized loan obligations
Other
58,565
1,815
4
13
970
581
8,743
9,966
10,503
10,361
35
13,709
3
1,244
10
734
99,818
9,262
9,637
56
13,194
112,719
134,356
48
15,687
118,717
—
13,074
160,592
207,463
—
18,363
189,100
74
47
1
591
9,428
19,747
53
1,080
18,720
352
61
58,260
1,755
61,414
2,325
4
1,522
—
110
59,896
2,215
Total held-to-maturity securities
369,848
178
27,272
342,754
425,305
105
36,762
388,648
Total investment securities, net of
allowance for credit losses
$ 575,304 $
1,940 $ 32,786 $ 544,458
$ 641,493 $
995 $ 47,983
$ 594,505
(a) Represents the amount of portfolio layer method basis adjustments related to AFS securities hedged in a closed portfolio. Under U.S. GAAP portfolio layer
method basis adjustments are not allocated to individual securities, however the amounts impact the unrealized gains or losses in the table for the types
of securities being hedged. Refer to Note 1 and Note 5 for additional information.
(b) The Firm purchased $4.1 billion, $33.7 billion and $111.8 billion of HTM securities for the years ended December 31, 2023, 2022 and 2021,
respectively.
(c) The amortized cost of investment securities is reported net of allowance for credit losses of $128 million and $96 million at December 31, 2023 and
2022, respectively.
(d) Excludes $2.8 billion and $2.5 billion of accrued interest receivable at December 31, 2023 and 2022, 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, 2023 and 2022.
(e) As of December 31, 2023, included $24.2 billion of AFS securities associated with First Republic. Refer to Note 34 for additional information.
At December 31, 2023, 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.
228
JPMorgan Chase & Co./2023 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,
2023 and 2022. The tables exclude U.S. Treasury and government agency securities and U.S. GSE and government agency
MBS with unrealized losses of $4.6 billion and $9.6 billion, at December 31, 2023 and 2022, 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.
Available-for-sale securities with gross unrealized losses
Less than 12 months
12 months or more
Fair value
Gross
unrealized
losses
Fair value
Gross
unrealized losses
Total fair
value
Total gross
unrealized losses
$
81
—
228
309
2,134
7,145
9
932
208
$
— $
1,160 $
68 $
1,241 $
—
3
3
20
23
—
2
1
722
1,775
3,657
2,278
4,987
79
3,744
1,288
1
136
205
246
336
28
26
25
722
2,003
3,966
4,412
12,132
88
4,676
1,496
Total available-for-sale securities with gross
unrealized losses
$
10,737
(a)
$
49 $
16,033 $
866 $
26,770 $
Available-for-sale securities with gross unrealized losses
Less than 12 months
12 months or more
Fair value
Gross
unrealized losses
Fair value
Gross
unrealized losses
Total fair
value
Total gross
unrealized losses
Year ended December 31, 2023
(in millions)
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
Year ended December 31, 2022
(in millions)
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
$
$
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
68
1
139
208
266
359
28
28
26
915
111
27
155
293
403
678
24
125
69
20,904 $
846 $
8,519 $
746 $
29,423 $
1,592
(a) Includes the impact of First Republic, primarily obligations of U.S. states and municipalities. Refer to Note 34 for additional information.
JPMorgan Chase & Co./2023 Form 10-K
229
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 on HTM securities
represents expected credit losses over the remaining
expected life of the 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 December 31,
2023 and 2022, all HTM securities were rated investment
grade and were current and accruing, with approximately
99% and 98% rated at least AA+, respectively.
Allowance for credit losses on investment securities
The allowance for credit losses on investment securities was
$128 million, $96 million and $42 million as of
December 31, 2023, 2022 and 2021, respectively, which
included a cumulative-effect adjustment to retained
earnings related to the transfer of HTM securities to AFS for
the year ended December 31, 2023.
Selected impacts of investment securities on the
Consolidated statements of income
Year ended December 31,
(in millions)
Realized gains
Realized losses
2023
2022
2021
$ 622
$ 198
$ 595
(3,802)
(2,578)
(940)
Investment securities losses
$ (3,180)
$ (2,380)
$ (345)
Provision for credit losses
$
38
$
54
$
(36)
230
JPMorgan Chase & Co./2023 Form 10-K
Contractual maturities and yields
The following table presents the amortized cost and estimated fair value at December 31, 2023, of JPMorgan Chase’s investment
securities portfolio by contractual maturity.
By remaining maturity
December 31, 2023 (in millions)
Due after five years
through 10 years
Due after one year
through five years
Due in one
year or less
Due after
10 years(c)
Total
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(b)
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(b)
Fair value
Average yield(a)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
—
— %
1
1
5.44 %
10
10
3.70 %
8,841
8,814
3.68 %
81
20
15.37 %
23
23
6.13 %
8,956
8,868
3.79 %
—
—
— %
63,974
63,012
0.63 %
—
—
— %
—
—
— %
$
$
$
$
$
$
$
$
$
$
$
5,166
5,072
5.27 %
27,430
27,212
5.84 %
55
54
3.03 %
4,553
4,537
4.35 %
67
66
6.25 %
869
861
3.72 %
38,140
37,802
5.53 %
5,868
5,480
2.56 %
60,763
56,064
0.97 %
—
—
— %
16
16
6.86 %
$
$
$
$
$
$
$
$
$
$
$
5,660
5,662
6.15 %
23,884
23,933
6.15 %
531
533
4.51 %
3,658
3,470
2.00 %
14
14
4.10 %
3,506
3,503
6.48 %
37,253
37,115
5.75 %
8,382
7,448
2.58 %
48,929
41,516
1.26 %
283
254
3.21 %
20,345
20,262
6.36 %
$
$
$
$
$
$
$
$
$
$
$
84,175
80,878
4.96 %
6,736
6,659
6.60 %
20,647
20,770
5.93 %
4,335
4,461
3.79 %
—
—
— %
5,175
5,151
6.82 %
121,068
117,919
5.25 %
111,649
99,791
3.02 %
—
—
— %
9,714
9,174
3.94 %
40,019
39,737
6.58 %
95,001
91,612
(d)
5.05 %
58,051
57,805
6.06 %
21,243
21,367
(d)
5.89 %
(d)
(d)
21,387
21,282
3.55 %
162
100
10.62 %
9,573
9,538
6.41 %
205,417
201,704
5.33 %
125,899
112,719
2.97 %
173,666
160,592
0.93 %
9,997
9,428
3.92 %
60,380
60,015
6.50 %
$
63,974
$
66,647
$
77,939
$
161,382
$
369,942
63,012
0.63 %
61,560
1.11 %
69,480
148,702
342,754
2.74 %
3.96 %
2.61 %
(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,
including closed portfolio hedges. 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) For purposes of this table, the amortized cost of available-for-sale securities excludes the allowance for credit losses of $34 million and the portfolio layer
fair value hedge basis adjustments of $73 million at December 31, 2023. The amortized cost of held-to-maturity securities also excludes the allowance for
credit losses of $94 million at December 31, 2023.
(c) 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 seven years for agency residential MBS, seven years for
agency residential collateralized mortgage obligations, and six years for nonagency residential collateralized mortgage obligations.
(d) Includes AFS securities associated with First Republic, primarily due after 10 years. Refer to Note 34 for additional information.
JPMorgan Chase & Co./2023 Form 10-K
231
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, 2023 and 2022.
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.
232
JPMorgan Chase & Co./2023 Form 10-K
The table below summarizes the gross and net amounts of
the Firm’s securities financing agreements, as of
December 31, 2023 and 2022. 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, 2023
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
$
523,308 $
(247,181) $
276,127 $
(267,582)
$
Securities borrowed
Liabilities
244,046
(43,610)
200,436
(144,543)
8,545
55,893
Securities sold under repurchase agreements
Securities loaned and other(a)
$
459,985 $
(247,181) $
212,804 $
(182,011)
$
30,793
52,142
(43,610)
8,532
(8,501)
31
(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
(a) Includes securities-for-securities lending agreements of $5.6 billion and $7.0 billion at December 31, 2023 and 2022, 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, 2023 and 2022, included $7.1 billion and $6.0 billion, respectively, of securities
purchased under resale agreements; $50.7 billion and $49.0 billion, respectively, of securities borrowed; $30.0 billion and $29.1 billion, respectively, of
securities sold under repurchase agreements; and securities loaned and other which were not material at both December 31, 2023 and 2022.
JPMorgan Chase & Co./2023 Form 10-K
233
Notes to consolidated financial statements
The tables below present as of December 31, 2023 and 2022 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
2023
2022
Securities sold
under repurchase
agreements
Securities loaned
and other
Securities sold
under repurchase
agreements
Securities loaned
and other
U.S. GSEs and government agencies
$
71,064
$
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
2,292
2,669
216,467
2,323
97,400
39,247
2,703
25,820
$
459,985
$
—
—
—
1,034
—
1,455
2,025
—
47,628
52,142
$
58,050
$
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
December 31, 2023
(in millions)
Overnight and
continuous
Up to 30 days
30 – 90 days
Greater than
90 days
Total
Total securities sold under repurchase agreements
$
259,048
$
102,941
$
20,960
$
77,036
$
459,985
Total securities loaned and other
49,610
1,544
—
988
52,142
Remaining contractual maturity of the agreements
Remaining contractual maturity of the agreements
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
Transfers not qualifying for sale accounting
At December 31, 2023 and 2022, the Firm held $505 million and $692 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 primarily in short-term borrowings and long-term debt on the
Consolidated balance sheets.
234
JPMorgan Chase & Co./2023 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
recognized in 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
closed-end consumer loans, including modified credit card
accounts placed on a fixed payment plan, 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 to borrowers experiencing financial
difficulty that are determined to be collateral-
dependent.
JPMorgan Chase & Co./2023 Form 10-K
235
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 Firm’s nonaccrual policies.
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 Firm’s nonaccrual policies.
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.
Notes to consolidated financial statements
•
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.,
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.
236
JPMorgan Chase & Co./2023 Form 10-K
reported as TDRs. The concessions granted varied by
program and by borrower-specific characteristics, and
included interest rate reductions, term extensions, payment
delays, principal forgiveness, or the acceptance of equity or
other assets in lieu of payments. Loans with short-term and
other insignificant modifications that were not considered
concessions were not TDRs.
Loans modified in TDRs were generally measured for
impairment using the Firm’s established asset-specific
allowance methodology, which considers the expected
redefault rates for the modified loans. A loan modified in a
TDR generally remained subject to the asset-specific
component of the allowance throughout its remaining life,
regardless of whether the loan was performing and had
been returned to accrual status. Refer to Note 13 for
further discussion.
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 other 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, other-than-insignificant
payment delays or principal forgiveness. Effective January
1, 2023 the Firm adopted the Financial Instruments - Credit
Losses: Troubled Debt Restructurings and Vintage
Disclosure accounting guidance, which changed the
accounting for loan modifications from TDRs to FDMs. Refer
to Note 1 for further information.
Loans, except for credit card loans, reported as FDMs 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.
The allowance for credit losses associated with FDMs is
measured using the Firm’s established allowance
methodology, which considers the expected re-default rates
for the modified loans. Refer to Note 13 for further
discussion.
For periods ending prior to January 1, 2023, modifications
of loans where the Firm granted concessions to a borrower
experiencing financial difficulty were accounted for and
JPMorgan Chase & Co./2023 Form 10-K
237
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.
(b) Includes scored auto, business banking and consumer unsecured loans as well as overdrafts, primarily in CCB.
(c) Includes loans held in CIB, CB, AWM, Corporate, and risk-rated exposure 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 SPEs, financial institutions, personal investment companies and trusts, individuals and individual entities (predominantly Global Private
Bank clients within AWM and J.P. Morgan Wealth Management within CCB), states and political subdivisions, as well as loans to nonprofits. Refer to Note
14 for more information on SPEs.
The following tables summarize the Firm’s loan balances by portfolio segment.
December 31, 2023
(in millions)
Retained
Held-for-sale
At fair value
Total
December 31, 2022
(in millions)
Retained
Held-for-sale
At fair value
Total
Consumer, excluding
credit card
Credit card
Wholesale
$ 397,275
(a)
$ 211,123
$ 672,472
(a)
487
12,331
(a)
—
—
3,498
26,520
Total(b)(c)
$ 1,280,870
3,985
38,851
$ 410,093
$ 211,123
$ 702,490
$ 1,323,706
Consumer, excluding
credit card
Credit card
Wholesale
$ 300,753
$ 185,175
$ 603,670
618
10,004
—
—
3,352
32,075
Total(b)(c)
$ 1,089,598
3,970
42,079
$ 311,375
$ 185,175
$ 639,097
$ 1,135,647
(a) Includes loans associated with First Republic consisting of $90.7 billion of retained loans and $1.9 billion of loans at fair value in consumer, excluding
credit card and $53.9 billion of retained loans in wholesale.
(b) Excludes $6.8 billion and $5.2 billion of accrued interest receivable at December 31, 2023 and 2022, respectively. The Firm wrote off accrued interest
receivable of $49 million and $39 million for the years ended December 31, 2023 and 2022, respectively.
(c) 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, 2023 and 2022.
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
Consumer, excluding
credit card
$
92,205
(b)(c)(d)
$
Sales
Retained loans reclassified to held-for-sale(a)
2,202
274
Year ended December 31,
(in millions)
Purchases
Sales
Retained loans reclassified to held-for-sale(a)
Consumer, excluding
credit card
Credit card
(b)(c)
$
$
1,625
2,884
229
2023
Credit card
Wholesale
Total
2022
—
—
—
—
—
—
$
60,300
(d)
$
152,505
43,949
1,486
46,151
1,760
Wholesale
Total
$
1,088
41,934
1,055
$
2,713
44,818
1,284
238
JPMorgan Chase & Co./2023 Form 10-K
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
(a) Reclassifications of loans to held-for-sale are non-cash transactions.
(b) 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, 2023, 2022 and 2021. 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 $5.1 billion, $12.4 billion and $25.8 billion for the years ended December 31, 2023, 2022 and 2021,
respectively, which are predominantly sourced through the correspondent origination channel and underwritten in accordance with the Firm’s standards.
(d) Includes loans acquired in the First Republic acquisition consisting of $91.9 billion in Consumer, excluding credit card and $59.2 billion in Wholesale.
Refer to Note 34 for additional information.
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 $56 million for the
year ended December 31, 2023 of which $62 million was related to loans. Net gains/(losses) on sales of loans and lending-
related commitments 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. 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./2023 Form 10-K
239
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.
These loans include 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
Total retained loans
2023
$ 326,409
70,866
2022
(a) $ 237,561
63,192
$ 397,275
$ 300,753
(a) Included $90.7 billion of loans associated with First Republic.
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.
240
JPMorgan Chase & Co./2023 Form 10-K
Residential real estate
Delinquency is the primary credit quality indicator for retained residential real estate loans. The following tables provide
information on delinquency and gross charge-offs for the year ended December 31, 2023.
Term loans by origination year(f)
Revolving loans
December 31, 2023
2023
2022
2021
2020
2019
Prior to
2019
Within the
revolving
period
Converted to
term loans
Total
$ 23,216
$ 64,366
$ 84,496
$ 55,546
$ 21,530
$ 59,563
$ 7,479
$ 8,151
$ 324,347
33
1
74
10
89
17
70
8
41
21
801
456
49
5
223
164
1,380
682
(in millions, except ratios)
Loan delinquency(a)(b)
Current(c)
30–149 days past due
150 or more days past due
Total retained loans
$ 23,250
$ 64,450
$ 84,602
$ 55,624
$ 21,592
$ 60,820
$ 7,533
$ 8,538
$ 326,409
% of 30+ days past due to
total retained loans(d)(e)
Gross charge-offs
0.15 %
0.13 %
0.13 %
0.14 %
0.29 %
2.04 %
0.72 %
4.53 %
0.63 %
$
—
$
—
$
—
$
—
$
4
$
167
$
26
$
7
$
204
Term loans by origination year(f)
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(d)
0.08 %
0.02 %
0.05 %
0.19 %
0.42 %
2.07 %
0.34 %
3.80 %
0.66 %
(a) Individual delinquency classifications include mortgage loans insured by U.S. government agencies which were not material at December 31, 2023 and
2022.
(b) At December 31, 2023 and 2022, 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) Included $6.4 billion, $26.3 billion, $21.9 billion, $14.8 billion, $7.4 billion, and $10.9 billion of term loans originated in 2023, 2022, 2021, 2020, 2019
and prior to 2019, respectively, and $2.5 billion of revolving loans within the revolving period associated with First Republic.
(d) Excludes mortgage loans that are 30 or more days past due insured by U.S. government agencies which were not material at December 31, 2023 and
2022. These amounts have been excluded based upon the government guarantee.
(e) Included $343 million of 30 or more days past due loans associated with First Republic.
(f) 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./2023 Form 10-K
241
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.
December 31, 2023
December 31, 2022
(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(i)
Total retained loans
Weighted average LTV ratio(f)(j)
Weighted average FICO(g)(j)
Geographic region(i)(k)
California
New York
Florida
Texas
Massachusetts
Illinois
Colorado
Washington
New Jersey
Connecticut
All other
$
$
$
3,466
72
—
223
4
6,491
102
309,251
9,277
989
326,409
49 %
770
$
127,072
48,815
22,778
15,506
14,213
10,856
10,800
9,923
8,050
7,163
51,233
326,409
$
$
(l)
(l)
(l)
(m) $
(n) $
(n)
(n)
(n)
$
3,745
2
—
174
6
12,034
184
215,096
8,659
1,406
237,561
51 %
769
73,112
34,471
18,870
14,968
6,380
11,296
9,968
9,060
7,108
5,432
46,896
237,561
Total retained loans
$
(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 loans, regardless of their delinquency status. At December 31, 2023,
approximately 9% of Chapter 7 residential real estate loans were 30 days or more past due.
(b) Mortgage loans insured by U.S. government agencies excluded from nonaccrual loans were not material at December 31, 2023 and 2022.
(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 $180 million and $175 million for the years ended December 31, 2023 and 2022,
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.
Included U.S. government-guaranteed loans as of December 31, 2023 and 2022.
(i)
(j) Excludes loans with no FICO and/or LTV data available.
(k) The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2023.
(l)
Included $1.1 billion in equal to or greater than 660 FICO scores within 80% to 100% LTV ratio, and $87.9 billion and $1.1 billion in equal to or greater
than 660 and less than 660 FICO scores, respectively, within less than 80% LTV ratio associated with First Republic.
(m) Included $90.7 billion of loans associated with First Republic.
(n) Included $54.9 billion, $14.9 billion, $3.5 billion, and $7.8 billion in California, New York, Florida and Massachusetts, respectively, associated with First
Republic.
242
JPMorgan Chase & Co./2023 Form 10-K
Loan modifications
The Firm grants certain modifications of residential real
estate loans to borrowers experiencing financial difficulty,
which effective January 1, 2023, are reported as FDMs. The
Firm's proprietary modification programs as well as
government programs, including U.S. GSE programs, that
generally provide various modifications to borrowers
experiencing financial difficulty including, but not limited
to, interest rate reductions, term extensions, other-than-
insignificant payment delay and principal forgiveness that
would otherwise have been required under the terms of the
original agreement, are considered FDMs.
Financial effects of FDMs
For the year ended December 31, 2023, residential real
estate FDMs were $136 million. The financial effects of the
FDMs, which were predominantly in the form of term
extensions and interest rate reductions, included extending
the weighted-average life of the loans by 20 years, and
reducing the weighted-average contractual interest rate
from 7.21% to 4.44% for the year ended December 31,
2023. There were no additional commitments to lend to
borrowers experiencing financial difficulty whose loans
have been modified as FDMs.
In addition to FDMs, the Firm also had $69 million of loans
subject to a trial modification, and $9 million of Chapter 7
loans for the year ended December 31, 2023. The changes
to the TDR accounting guidance eliminated the TDR
reasonably expected and concession assessment criteria.
Accordingly, trial modifications and Chapter 7 loans were
considered TDRs, but not FDMs. Refer to Note 1 for further
information.
Payment status of FDMs and redefaults
For the year ended December 31, 2023, residential real
estate FDMs of $29 million were 30 or more days past due
and FDMs that re-defaulted were $17 million.
Nature and extent of TDRs
For periods ending prior to January 1, 2023, modifications
of residential real estate loans where the Firm granted
concessions to borrowers who were experiencing financial
difficulty were generally accounted for and reported as
TDRs. Loans with short-term or other insignificant
modifications that were not considered concessions were
not TDRs. For the years ended December 31, 2022 and
2021, new TDRs were $362 million and $866 million, and
there were no additional commitments to lend to borrowers
whose residential real estate loans were modified in TDRs.
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 during
the period presented. This table excludes loans with short-
term or other insignificant modifications that are not
considered concessions.
Year ended December 31,
2022
2021
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)
3,902
4,182
6,246
4,588
54 %
74 %
67
10
1
37
53
23
2
36
(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 TDRs and redefaults
The following table provides information about the financial
effects of the various concessions granted in modifications
of residential real estate loans 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 does not include temporary
concessions offered through trial modifications. This table
also excludes loans with short-term or other insignificant
modifications that were 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
$
2022
2021
4.75 %
4.54 %
3.35
2.92
22
38
1
16
2
$
23
38
—
28
1
Balance of loans that redefaulted within one
year of permanent modification(a)
$ 147
$ 160
(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.
Active and suspended foreclosure
At December 31, 2023 and 2022, the Firm had residential
real estate loans, excluding those insured by U.S.
government agencies, with a carrying value of $566 million
and $565 million, respectively, that were not included in
REO, but were in the process of active or suspended
foreclosure.
JPMorgan Chase & Co./2023 Form 10-K
243
Notes to consolidated financial statements
Auto and other
Delinquency is the primary credit quality indicator for retained auto and other loans. The following tables provide information
on delinquency and gross charge-offs for the year ended December 31, 2023.
Term loans by origination year
Revolving loans
December 31, 2023
(in millions, except ratios)
2023
2022
2021
2020
2019
Prior to
2019
Within the
revolving
period
Converted
to term
loans
Total
Loan delinquency
Current
$ 30,328
$ 14,797
$ 12,825
$ 6,538
$ 1,777
$
511
$ 2,984
$
102
$ 69,862
30–119 days past due
120 or more days past due
276
1
279
1
231
7
78
8
43
—
17
—
19
3
24
17
967
37
Total retained loans
$ 30,605
$ 15,077
$ 13,063
$ 6,624
$ 1,820
$
528
$ 3,006
$
143
$ 70,866
% of 30+ days past due to total
retained loans(a)
0.91 %
1.86 %
1.75 %
1.15 %
2.36 %
3.22 %
0.73 % 28.67 %
1.39 %
Gross charge-offs
$
333
$
297
$
161
$
53
$
35
$
64
$
—
$
4
$
947
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
$ 11,401
$ 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 %
(a) At December 31, 2023 and 2022, auto and other loans excluded $20 million and $153 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.
244
JPMorgan Chase & Co./2023 Form 10-K
Loan modifications
The Firm grants certain modifications of auto and other
loans to borrowers experiencing financial difficulty, which
effective January 1, 2023, are reported as FDMs. For the
year ended December 31, 2023, auto and other FDMs
were not material and there were no additional
commitments to lend to borrowers modified as FDMs.
For periods ending prior to January 1, 2023, modifications
of auto and other loans where the Firm granted concessions
to borrowers who were experiencing financial difficulty
were generally accounted for and reported as TDRs. Loans
with short-term or other insignificant modifications that
were not considered concessions were not TDRs. For the
years ended December 31, 2022 and 2021, auto and other
TDRs 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
Georgia
Pennsylvania
Arizona
North Carolina
All other
Total Auto and other
December 31,
2023
December 31,
2022
$
177 $
129
$
10,959 $
8,502
5,684
4,938
3,147
2,609
1,912
1,900
1,779
1,714
9,689
7,216
4,847
4,345
2,839
2,219
1,708
1,822
1,551
1,481
27,722
25,475
Total retained loans
$
70,866 $
63,192
(a) At December 31, 2023 and 2022, nonaccrual loans excluded $15
million and $101 million, respectively, of PPP loans 90 or more days
past due and guaranteed by the SBA, of which $15 million and $76
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, 2023 and 2022.
(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, 2023 and 2022.
(d) The geographic regions presented in this table are ordered based on
the magnitude of the corresponding loan balances at December 31,
2023.
JPMorgan Chase & Co./2023 Form 10-K
245
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 other credit quality indicators. 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 and gross charge-offs for the year ended December 31, 2023.
(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
Gross charge-offs
(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
Within the revolving period
Converted to term loans
Total
December 31, 2023
$
$
$
205,731
$
882
$
2,217
2,169
84
40
210,117
$
1,006
$
2.09 %
1.03
5,325
$
12.33 %
3.98
166
$
December 31, 2022
Within the revolving period
Converted to term loans
Total
$
$
181,793
$
696
$
1,356
1,230
64
36
184,379
$
796
$
1.40 %
0.67
12.56 %
4.52
206,613
2,301
2,209
211,123
2.14 %
1.05
5,491
182,489
1,420
1,266
185,175
1.45 %
0.68
246
JPMorgan Chase & Co./2023 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
Colorado
Pennsylvania
Arizona
All other
December 31, 2023
December 31, 2022
$
32,652
$
22,086
16,915
15,103
11,364
8,688
6,424
6,307
6,088
5,209
80,287
28,154
19,171
15,046
12,905
10,089
7,643
5,792
5,493
5,517
4,487
70,878
185,175
Total retained loans
$
211,123
$
Percentage of portfolio based on carrying value with estimated refreshed FICO scores
Equal to or greater than 660
Less than 660
No FICO available
85.8 %
14.0
0.2
86.8 %
13.0
0.2
(a) The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at December 31, 2023.
Loan modifications
The Firm grants certain modifications of credit card loans to borrowers experiencing financial difficulty, which effective
January 1, 2023, are reported as FDMs. These modifications may involve placing the customer’s credit card account on a fixed
payment plan, generally for 60 months, which typically includes reducing the interest rate on the credit card account. If the
borrower does not make the contractual payments when due under the modified payment terms, the credit card loan
continues to age and will 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 FDMs
The following table provides information on credit card loan modifications considered FDMs.
Year ended December 31, 2023
(in millions)
Loan modification
Amortized
cost basis
% of loan modifications to total
retained credit card loans
Financial effect of loan modification
Term extension and interest rate reduction(a)(b)
Total
$
$
648
648
Term extension with a reduction in the
weighted average contractual interest rate
from 23.19% to 3.64%
0.31 %
(a) Term extension includes credit card loans whose terms have been modified under long-term programs by placing the customer’s credit card account on a
fixed payment plan.
(b) The interest rates represent weighted average at enrollment.
For the year ended December 31, 2023, the Firm also had $27 million of credit card loans subject to trial modifications. The
changes to the TDR accounting guidance eliminated the TDR reasonably expected and concession assessment criteria.
Accordingly, trial modifications are not considered FDMs.
Payment status of FDMs and redefaults
The following table provides information on the payment
status of FDMs during the year ended December 31, 2023.
Year ended December 31, 2023
(in millions)
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
$
Amortized
cost basis
558
59
31
648
There were $50 million FDMs that re-defaulted during the
year ended December 31, 2023 which were a combination
of term extension and interest rate reduction.
For credit card loans modified as FDMs, 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./2023 Form 10-K
247
Notes to consolidated financial statements
Financial effects of TDRs and redefaults
For periods ending prior to January 1, 2023, modifications
of credit card loans where the Firm granted concessions to
borrowers who were experiencing financial difficulty were
generally accounted for and reported as TDRs. The Firm
granted concessions for most of the credit card loans under
long-term programs. These concessions involved placing
the customer’s credit card account on a fixed payment plan,
generally for 60 months, and typically included reducing
the interest rate on the credit card account. Substantially all
modifications under the Firm’s long-term programs were
considered to be TDRs. Loans with short-term or other
insignificant modifications that were not considered
concessions were not reported as TDRs.
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
$
418
$
393
19.86 %
17.75 %
4.13
5.14
Balance of loans that redefaulted within one
year of modification(b)
$
34
$
57
(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 was
deemed to have occurred when the borrower missed two
consecutive contractual payments. Defaulted modified
credit card loans remained in the modification program and
continued to be charged of in accordance with the Firm’s
standard charge-off policy.
248
JPMorgan Chase & Co./2023 Form 10-K
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. Refer to Note 1 for
additional information.
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.
JPMorgan Chase & Co./2023 Form 10-K
249
Notes to consolidated financial statements
Internal risk rating is the primary credit quality indicator for retained wholesale loans. The following tables provide
information on internal risk rating and gross charge-offs for the year ended December 31, 2023.
December 31,
(in millions, except ratios)
Loans by risk ratings
Secured by real estate
Commercial and industrial
Other(b)
Total retained loans
2023
2022
2023
2022
2023
2022
2023
2022
Investment-grade
$ 120,405
$
99,552
$
72,624
$
76,275
$ 265,809
$ 249,585
$ 458,838
$ 425,412
Noninvestment- grade:
Noncriticized
34,241
23,272
Criticized performing
Criticized nonaccrual
Total noninvestment- grade
Total retained loans(a)
% of investment-grade to
total retained loans
% of total criticized to total
retained loans
% of criticized nonaccrual to
total retained loans
7,291
401
3,662
246
41,933
27,180
80,637
12,684
1,221
94,542
81,393
8,974
1,018
91,385
75,178
1,257
724
77,159
57,888
190,056
162,553
1,106
699
21,232
2,346
13,742
1,963
59,693
213,634
178,258
$ 162,338
$ 126,732
$ 167,166
$ 167,660
$ 342,968
$ 309,278
$ 672,472
$ 603,670
74.17 %
78.55 %
43.44 %
45.49 %
77.50 %
80.70 %
68.23 %
70.47 %
4.74
0.25
3.08
0.19
8.32
0.73
5.96
0.61
0.58
0.21
0.58
0.23
3.51
0.35
2.60
0.33
(a) As of December 31, 2023 included $33.8 billion of Secured by real estate loans, $3.0 billion of Commercial and industrial loans, and $17.1 billion of
Other loans associated with First Republic.
(b) Includes loans to SPEs, financial institutions, personal investment companies and trusts, individuals and individual entities (predominantly Global Private
Bank clients within AWM and J.P. Morgan Wealth Management within CCB), states and political subdivisions, as well as loans to nonprofits. As of
December 31, 2023, predominantly consisted of $106.9 billion to individuals and individual entities, $91.2 billion to SPEs, and $87.5 billion to financial
institutions, Refer to Note 14 for more information on SPEs.
Secured by real estate
December 31, 2023
Term loans by origination year
Revolving loans
(in millions)
2023
2022
2021
2020
2019
Prior to 2019
Loans by risk ratings
Within the
revolving
period
Converted to
term loans
Total
Investment-grade
$
10,687 $
28,874 $
25,784 $
16,820 $
15,677 $
21,108
$
1,455 $
Noninvestment-grade
Total retained loans(a)
Gross charge-offs
$
$
4,477
12,579
7,839
3,840
3,987
7,918
1,291
15,164 $
41,453 $
33,623 $
20,660 $
19,664 $
29,026
20 $
48 $
22 $
— $
23 $
78
$
$
2,746 $
— $
—
2
2
1
$
120,405
41,933
162,338
192
$
$
Secured by real estate
December 31, 2022
Term loans by origination year
Revolving loans
(in millions)
2022
2021
2020
2019
2018
Prior to 2018
Loans by risk ratings
Within the
revolving
period
Converted to
term loans
Total
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
(a) As of December 31, 2023 included $3.3 billion, $11.2 billion, $6.2 billion, $4.3 billion, $2.9 billion, and $5.1 billion of retained loans originated in 2023,
2022, 2021, 2020, 2019 and prior to 2019, respectively, and $838 million of revolving loans within the revolving period associated with First Republic.
250
JPMorgan Chase & Co./2023 Form 10-K
Commercial and industrial
December 31, 2023
Term loans by origination year
(in millions)
Loans by risk ratings
2023
2022
2021
2020
2019
Prior to 2019
Revolving loans
Within the
revolving
period
Converted
to term
loans
Total
Investment-grade
$
14,875 $
10,642 $
4,276 $
2,291 $
1,030 $
1,115
$
38,394 $
Noninvestment-grade
Total retained loans(a)
Gross charge-offs
$
$
18,890
16,444
9,299
1,989
1,144
33,765 $
27,086 $
13,575 $
4,280 $
2,174 $
25 $
8 $
110 $
55 $
2 $
1,006
2,121
12
45,696
$
$
84,090 $
259 $
1
74
75
8
$
72,624
94,542
$ 167,166
$
479
Commercial and industrial
December 31, 2022
Term loans by origination year
Revolving loans
(in millions)
2022
2021
2020
2019
2018
Loans by risk ratings
Prior to
2018
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
91,385
$ 167,660
(a) As of December 31, 2023, included $364 million, $568 million, $471 million, $212 million, $53 million, and $121 million of retained loans originated in
2023, 2022, 2021, 2020, 2019 and prior to 2019, respectively, and $1.2 billion of revolving loans within the revolving period and $12 million converted
to term loans associated with First Republic.
Other(a)
December 31, 2023
Term loans by origination year
Revolving loans
2023
2022
2021
2020
2019
Prior to 2019
Within the
revolving
period
Converted to
term loans
Total
(in millions)
Loans by risk ratings
Investment-grade
$
38,338 $
18,034 $
10,033 $
10,099 $
3,721 $
6,662
$
176,728 $
2,194
$
265,809
Noninvestment-grade
Total retained loans(b)
Gross charge-offs
$
$
14,054
8,092
6,169
2,172
811
52,392 $
26,126 $
16,202 $
12,271 $
4,532 $
5 $
298 $
8 $
8 $
— $
2,001
8,663
8
$
$
43,801
59
220,529 $
2,253
13 $
—
77,159
342,968
340
$
$
Other(a)
December 31, 2022
Term loans by origination year
Revolving loans
(in millions)
2022
2021
2020
2019
2018
Prior to 2018
Loans by risk ratings
Within the
revolving
period
Converted to
term loans
Total
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
(a) Includes loans to SPEs, financial institutions, personal investment companies and trusts, individuals and individual entities (predominantly Global Private
Bank clients within AWM and J.P. Morgan Wealth Management within CCB), states and political subdivisions, as well as loans to nonprofits. Refer to Note
14 for more information on SPEs.
(b) As of December 31, 2023, included $610 million, $1.0 billion, $820 million, $1.1 billion, $244 million, and $1.4 billion of retained loans originated in
2023, 2022, 2021, 2020, 2019 and prior to 2019, respectively, and $11.8 billion of revolving loans within the revolving period and $56 million
converted to term loans associated with First Republic.
JPMorgan Chase & Co./2023 Form 10-K
251
Notes to consolidated financial statements
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 $10.2 billion and $6.4 billion as of December 31, 2023 and 2022, 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)
Retained loans secured by real estate
Criticized
Multifamily
Other Commercial
Total retained loans secured by
real estate
2023
2022
2023
2022
2023
2022
$ 100,725
$ 79,139
$ 61,613
$ 47,593
$ 162,338
(a) $ 126,732
3,596
1,916
4,096
1,992
7,692
3,908
3.08 %
% of criticized to total retained loans secured by real estate
3.57 %
2.42 %
6.65 %
4.19 %
4.74 %
Criticized nonaccrual
$
76
$
51
$
325
$
195
$
401
$
246
% of criticized nonaccrual loans to total retained loans secured by real estate
0.08 %
0.06 %
0.53 %
0.41 %
0.25 %
0.19 %
(a) Included $20.7 billion and $13.1 billion of Multifamily and Other commercial loans, respectively, associated with First Republic.
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)(b)
Total U.S.
Total non-U.S.
Total retained loans
Loan delinquency
Secured by real estate
Commercial
and industrial
Other
Total
retained loans
2023
2022
2023
2022
2023
2022
2023
2022
$ 159,499 $ 123,740
$ 127,638 $ 125,324
$ 262,499 $ 230,525
$ 549,636 $ 479,589
2,839
2,992
39,528
42,336
80,469
78,753
122,836
124,081
$ 162,338 $ 126,732
$ 167,166 $ 167,660
$ 342,968 $ 309,278
$ 672,472 $ 603,670
Current and less than 30 days past due and still accruing $ 161,314 $ 126,083
$ 164,899 $ 165,415
$ 341,128 $ 307,511
$ 667,341 $ 599,009
30–89 days past due and still accruing
90 or more days past due and still accruing(c)
Criticized nonaccrual(c)
473
150
401
402
1
246
884
162
1,221
1,127
100
1,018
1,090
1,015
26
724
53
699
2,447
338
2,346
2,544
154
1,963
Total retained loans
$ 162,338 $ 126,732
$ 167,166 $ 167,660
$ 342,968 $ 309,278
$ 672,472 $ 603,670
(a) The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
(b) Borrowers associated with First Republic are predominantly domiciled in the U.S.
(c) Represents loans that are considered well-collateralized and therefore still accruing interest.
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
2023
2022
2023
2022
2023
2022
2023
2022
With an allowance
Without an allowance(a)
Total nonaccrual loans(b)
$
$
129 $
272
401 $
172
$
74
776 $
445
686
$
332
246
$
1,221 $
1,018
$
492 $
232
724 $
487
$
1,397
$
212
949
699
$
2,346
$
1,345
618
1,963
(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, 2023 and 2022.
252
JPMorgan Chase & Co./2023 Form 10-K
Loan modifications
The Firm grants certain modifications of wholesale loans to borrowers experiencing financial difficulty, which effective January
1, 2023, are reported as FDMs.
Financial effects of FDMs
The following tables provide information by loan class about modifications considered FDMs.
Secured by real estate
Year ended December 31, 2023
(in millions)
Loan modification
Single modifications
Amortized cost basis
% of loan modifications to total
retained Real Estate loans
Financial effect of loan modification
Term extension
$
149
0.09 % Extended loans by a weighted average of 14 months
Other-than-insignificant
payment deferral
Multiple modifications
Interest rate reduction and
term extension
Other-than-insignificant
payment deferral and
interest rate reduction
Total
$
(in millions)
Loan modification
Single modifications
Term extension
$
Other-than-insignificant
payment deferral
Multiple modifications
Other-than-insignificant
payment deferral and term
extension
$
Other-than-insignificant
payment deferral and
interest rate reduction and
term extension
Term extension and principal
forgiveness
Interest rate reduction and
term extension
3
3
5
160
— %
Provided payment deferrals with delayed amounts primarily
re-amortized over the remaining life of the loan
— %
Reduced weighted average contractual interest by 350 bps
and extended loans by a weighted average of 3 months
Provided payment deferrals with delayed amounts primarily
recaptured at maturity and reduced weighted average
contractual interest by 184 bps
— %
Commercial and industrial
Year ended December 31, 2023
Amortized cost basis
% of loan modifications to total
retained Commercial and industrial
loans
Financial effect of loan modification
916
402
35
2
7
1
0.55 % Extended loans by a weighted average of 17 months
0.24 %
Provided payment deferrals with delayed amounts primarily
recaptured at the end of the deferral period
Provided payment deferrals with delayed amounts primarily
re-amortized over the remaining life of the loan and extended
loans by a weighted-average of 7 months
0.02 %
Provided payment deferrals with delayed amounts primarily
re-amortized over the remaining life of the loan, reduced
weighted average contractual interest by 75 bps and
extended loans by a weighted average of 29 months
— %
— %
Extended loans by a weighted average of 76 months and
reduced amortized cost basis of the loans by $5 million
Reduced weighted average contractual interest rate over the
life of the loan as a result of converting from variable to fixed
rate and extended loans by a weighted average of 16 months
— %
$
1,363
JPMorgan Chase & Co./2023 Form 10-K
253
Notes to consolidated financial statements
(in millions)
Loan modification
Single modifications
Interest rate reduction
$
Term extension
Multiple modifications
Other-than-insignificant
payment deferral and term
extension
Total(a)
$
Other
Year ended December 31, 2023
Amortized cost basis
% of loan modifications to total
retained Other loans
Financial effect of loan modification
9
355
245
609
— % Reduced weighted average contractual interest by 654 bps
0.10 % Extended loans by a weighted average of 23 months
Provided payment deferrals with delayed amounts primarily
recaptured at the end of the deferral period and extended
loans by a weighted average of 137 months
0.07 %
(a) Includes loans to nonprofits, financial institutions, and personal investment companies and trusts.
Payment status of FDMs and redefaults
The following table provides information by loan class about the payment status of FDMs during the year ended December 31,
2023.
(in millions)
Current and less than 30 days past due and still
accruing
30-89 days past due and still accruing
Criticized nonaccrual
Total
$
$
Secured by real estate
Commercial and industrial
Other
Year ended December 31, 2023
Year ended December 31, 2023
Year ended December 31, 2023
Amortized cost basis
118 $
2
40
160 $
947 $
42
374
1,363 $
400
—
209
609
The following table provides information by loan class about FDMs that re-defaulted during the year ended December 31,
2023.
Secured by real estate
Commercial and industrial
Other
Amortized cost basis
Year ended December 31, 2023
Year ended December 31, 2023
Year ended December 31, 2023
(in millions)
Loan modification
Term extension
Other-than-insignificant payment deferral
Interest rate reduction and term extension
Total(a)
$
$
(a) Represents FDMs that were 30 days or more past due.
As of December 31, 2023, additional unfunded
commitments to lend to borrowers experiencing financial
difficulty for Commercial and industrial and Other loan
FDMs were $1.8 billion and $4 million, respectively. There
were no additional unfunded commitments to lend to
borrowers experiencing financial difficulties for Secured by
real estate loan FDMs.
Nature and extent of TDRs
Prior to January 1, 2023, certain loan modifications were
considered TDRs. These loan modifications provided various
concessions to borrower who were experiencing financial
difficulty. Loans with short-term or other insignificant
modifications that were not considered concessions were
not TDRs nor were loans for which the Firm elected to
suspend TDR accounting guidance under the option
provided by the CARES Act.
1 $
2
3
6 $
49 $
—
1
50 $
31
—
—
31
For the year ended December 31, 2022 and 2021, new
TDRs were $801 million and $881 million, respectively.
New TDRs for the year ended December 31, 2022 and
2021 reflected extended maturity dates and covenant
waivers primarily in the Commercial and Industrial loan
class. For the year ended December 31, 2022 and 2021,
the impact of these modifications resulting in new TDRs was
not material to the Firm.
As a result of the elimination of the requirement to assess
whether a modification is reasonably expected or involves a
concession, the population of loans considered FDMs is
greater than the population previously considered TDRs.
254
JPMorgan Chase & Co./2023 Form 10-K
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 generally comprises:
• the allowance for loan losses, which covers the Firm’s
retained loan portfolios (scored and risk-rated),
• 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 collateral-dependent loans and 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
a weighted average of five internally developed
macroeconomic scenarios over an eight-quarter forecast
period, followed by a single year straight-line interpolation
JPMorgan Chase & Co./2023 Form 10-K
255
Notes to consolidated financial statements
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 nonaccrual
risk-rated loans in the wholesale portfolio segment are
generally evaluated individually.
On January 1, 2023 the Firm adopted the Financial
Instruments - Credit Losses: Troubled Debt Restructurings
accounting guidance as described in Note 1.
The adoption of this guidance eliminated the requirement
to measure the allowance for TDRs using a discounted cash
flow (DCF) methodology and allowed the option of a non-
DCF portfolio-based approach for modified loans to
borrowers experiencing financial difficulty. 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 change from an asset-specific allowance
approach to its non-DCF, portfolio-based allowance
approach for modified loans to troubled borrowers for all
portfolios except collateral-dependent loans and nonaccrual
risk-rated loans, for which the asset-specific allowance
approach will continue to apply. The adoption did not
impact the collateral-dependent allowance approach or
scope.
This guidance was adopted under the modified
retrospective method which resulted in a net decrease to
the allowance for credit losses of $587 million and an
increase to retained earnings of $446 million, after-tax
predominantly driven by residential real estate and credit
card.
For collateral-dependent loans, the fair value of collateral
less estimated costs to sell, as applicable, 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 recognized (for recoveries of prior charge-offs
associated with improvements in the fair value of the
collateral).
For non-collateral dependent loans, 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 effective interest rate. Subsequent changes in
impairment are generally recognized as an adjustment to
the allowance for loan losses. The asset-specific component
of the allowance for non-collateral dependent loans
incorporates the effect of the modification on the loan’s
expected cash flows including changes in interest rates,
principal forgiveness, and other concessions, as well as
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, 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.
Other financial assets
In addition to loans and investment securities, the Firm
holds other financial assets that are measured at amortized
cost on the Consolidated balance sheets, including credit
exposures arising from lending activities subject to
collateral maintenance requirements. Management
estimates the allowance for other financial assets using
various techniques considering historical losses and current
economic conditions.
Credit risk arising from lending activities subject to
collateral maintenance requirements is generally mitigated
by factors such as the short-term nature of the activity, the
256
JPMorgan Chase & Co./2023 Form 10-K
fair value of collateral held and the Firm’s right to call for,
and the borrower’s obligation to provide additional margin
when the fair value of the collateral declines. Because of
these mitigating factors, these exposures generally do not
require an allowance for credit losses. However,
management may also consider other factors such as the
borrower’s ongoing ability to provide collateral to satisfy
margin requirements, or whether collateral is significantly
concentrated in an individual issuer or in securities with
similar risk characteristics. If in management’s judgment,
an allowance for credit losses for these exposures is
required, the Firm estimates expected credit losses based
on the value of the collateral and probability of borrower
default.
JPMorgan Chase & Co./2023 Form 10-K
257
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)(c)
Allowance for loan losses by impairment methodology
Asset-specific(d)
Portfolio-based
Total allowance for loan losses
Loans by impairment methodology
Asset-specific(d)
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(e)
Lending-related commitments by impairment methodology
Asset-specific
Portfolio-based(f)
Total lending-related commitments
2023
Consumer,
excluding
credit card
Credit card
Wholesale
Total
$
2,040
$
11,200
$
6,486
$
19,726
(489)
1,151
(519)
632
936
1
(100)
5,491
(793)
4,698
6,048
—
2
1,011
(132)
879
2,484
21
(587)
7,653
(1,444)
6,209
9,468
22
1,856
$
12,450
$
8,114
$
22,420
76
—
(1)
—
75
NA
1,931
$
$
$
(876)
$
2,732
1,856
$
NA
—
—
—
—
NA
12,450
—
12,450
12,450
$
2,306
$
2,382
—
(407)
—
1,899
NA
10,013
392
7,722
8,114
$
$
$
$
$
NA
(408)
—
1,974
128
24,522
(484)
22,904
22,420
$
$
$
$
3,287
$
—
$
2,338
$
5,625
393,988
211,123
670,134
1,275,245
$
$
$
$
$
$
$
$
397,275
$
211,123
$
672,472
$ 1,280,870
$
$
$
$
$
6
$
3,216
—
75
75
—
28,248
28,248
$
$
$
$
—
—
—
—
—
—
—
—
$
$
$
$
180
$
1,012
186
4,228
89
1,810
1,899
$
$
89
1,885
1,974
464
$
464
516,577
544,825
$
517,041
$
545,289
(a) Represents the impact to the allowance for loan losses upon the adoption of the Financial Instruments - Credit Losses: Troubled Debt Restructurings
accounting guidance. Refer to Note 1 for further information.
(b) At December 31, 2023 and 2022, in addition to the allowance for credit losses in the table above, the Firm also had an allowance for credit losses of
$243 million and $21 million, respectively, associated with certain accounts receivable in CIB.
(c) As of December 31, 2023, included the allowance for credit losses associated with First Republic.
(d) Includes collateral-dependent loans, including those for which foreclosure is deemed probable, and nonaccrual risk-rated loans for all periods presented.
Prior periods also include non collateral-dependent TDRs or reasonably expected TDRs and modified PCD loans.
(e) The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(f) At December 31, 2023, 2022 and 2021, lending-related commitments excluded $17.2 billion, $13.1 billion and $15.7 billion, respectively, for the
consumer, excluding credit card portfolio segment; $915.7 billion, $821.3 billion and $730.5 billion, respectively, for the credit card portfolio segment;
and $19.7 billion, $9.8 billion and $32.1 billion, respectively, for the wholesale portfolio segment, which were not subject to the allowance for lending-
related commitments.
258
JPMorgan Chase & Co./2023 Form 10-K
(table continued from previous page)
2022
2021
Consumer,
excluding
credit card
Credit card
Wholesale
Total
Consumer,
excluding
credit card
Credit card
Wholesale
Total
$
1,765
$
10,250
$
4,371
$
16,386
$
3,636
$
17,800
$
6,892
$
28,328
NA
812
(543)
269
543
1
2,040
113
NA
(37)
—
76
NA
2,116
$
$
$
$
NA
3,192
(789)
2,403
3,353
—
11,200
NA
—
—
—
—
NA
11,200
(624)
$
2,664
2,040
$
223
10,977
11,200
$
$
$
$
$
$
NA
322
(141)
181
2,293
3
6,486
2,148
NA
157
1
2,306
NA
8,792
467
6,019
6,486
$
$
$
$
$
$
$
$
$
$
$
$
$
NA
4,326
(1,473)
2,853
6,189
4
NA
630
(619)
11
(1,858)
(2)
19,726
$
1,765
2,261
$
187
NA
120
1
2,382
$
96
NA
(75)
1
113
NA
22,204
$
1,878
$
$
$
$
66
$
(665)
$
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)
16,386
2,409
NA
(149)
1
2,261
42
18,689
(89)
16,475
16,386
$
$
$
$
$
$
19,660
19,726
$
2,430
1,765
$
10,250
$
11,978
$
796
$
2,189
$
14,963
$
13,919
$
987
$
2,255
$
17,161
288,775
184,379
601,481
1,074,635
281,637
153,309
558,099
993,045
$
300,753
$
185,175
$
603,670
$ 1,089,598
$
295,556
$
154,296
$
560,354
$ 1,010,206
$
$
$
$
$
(33)
$
3,585
—
76
76
—
20,423
20,423
$
$
$
$
—
—
—
—
—
—
—
—
$
$
$
$
16
464
90
2,216
2,306
$
$
$
(17) $
33
$
4,049
4,472
90
$
2,292
2,382
$
—
113
113
455
$
455
$
461,688
482,111
$
462,143
$
482,566
$
—
29,588
29,588
—
—
—
—
—
—
—
—
$
$
$
$
38
617
167
1,981
2,148
$
$
$
71
5,089
167
2,094
2,261
764
$
764
453,571
483,159
$
454,335
$
483,923
$
$
$
$
JPMorgan Chase & Co./2023 Form 10-K
259
The following table presents the Firm’s central case
assumptions for the periods presented:
Central case assumptions
at December 31, 2023
2Q24
4Q24
2Q25
U.S. unemployment rate(a)
YoY growth in U.S. real GDP(b)
4.1 %
1.8 %
4.4 %
0.7 %
4.1 %
1.0 %
Central case 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 %
— %
(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 155–158 for further information on the allowance
for credit losses and related management judgments.
Refer to Consumer Credit Portfolio on pages 114–119,
Wholesale Credit Portfolio on pages 120–130 for additional
information on the consumer and wholesale credit
portfolios.
Notes to consolidated financial statements
Discussion of changes in the allowance
The allowance for credit losses as of December 31, 2023
was $24.8 billion, reflecting a net addition of $3.1 billion
from December 31, 2022.
The net addition to the allowance for credit losses included
$1.9 billion, consisting of:
• $1.3 billion in consumer, predominantly driven by CCB,
comprised of $1.4 billion in Card Services, partially offset
by a net reduction of $200 million in Home Lending. The
net addition in Card Services was driven by loan growth,
including an increase in revolving balances, partially
offset by reduced borrower uncertainty. The net
reduction in Home Lending was driven by improvements
in the outlook for home prices, and
• $675 million in wholesale, driven by net downgrade
activity, the net effect of changes in the Firm’s weighted
average macroeconomic outlook, including deterioration
in the outlook for commercial real estate in CB, and an
addition for certain accounts receivable in CIB, partially
offset by the impact of changes in the loan and lending-
related commitment portfolios.
The net addition also included $1.2 billion to establish the
allowance for the First Republic loans and lending-related
commitments in the second quarter of 2023.
The changes in the Firm's weighted average macroeconomic
outlook also included updates to the central scenario in the
third quarter of 2023 to reflect a lower forecasted
unemployment rate consistent with a higher growth rate in
GDP, and the impact of the additional weight placed on the
adverse scenarios in the first quarter of 2023, reflecting
elevated recession risks due to high inflation and tightening
financial conditions.
The allowance for credit losses also reflected a reduction of
$587 million as a result of the adoption of changes to the
TDR accounting guidance on January 1, 2023. Refer to Note
1 for further information.
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 5.5% in the fourth quarter of 2024, and a
weighted average U.S. real GDP level that is 1.5% lower
than the central case at the end of the second quarter of
2025.
260
JPMorgan Chase & Co./2023 Form 10-K
Note 14 – Variable interest entities
Refer to Note 1 on page 171 for a further description of the Firm’s accounting policies regarding consolidation of and
involvement with 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
Credit card securitization trusts
Securitization of originated credit card receivables
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
2023 Form 10-K
page references
pages 261–262
pages 262–264
pages 262–264
page 264
Municipal bond vehicles
Financing of municipal bond investments
pages 264–265
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 page 266
of this Note for more information on the VIEs sponsored by third parties.
Significant Firm-sponsored VIEs
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, 2023 and 2022, the Firm held undivided
interests in Firm-sponsored credit card securitization trusts
of $4.9 billion and $6.1 billion, respectively. The Firm
maintained an average undivided interest in principal
receivables owned by those trusts of approximately 65%
JPMorgan Chase & Co./2023 Form 10-K
261
Notes to consolidated financial statements
and 62% for the years ended December 31, 2023 and
2022, 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, 2023 and 2022. 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, 2023
(in millions)
Securitization-related(a)
Residential mortgage:
Prime/Alt-A and option ARMs
$
58,570 $
675 $
39,319
$
595 $
1,981 $
60 $
2,636
Subprime
Commercial and other(b)
Total
8,881
168,042
—
—
1,312
120,262
3
831
—
—
3
5,638
1,354
7,823
$
235,493 $
675 $
160,893
$
1,429 $
7,619 $
1,414 $ 10,462
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
—
—
$
229,986 $
754 $
1,743
127,037
165,838
10
888
—
5,373
—
670
$
1,642 $
7,291 $
670 $
10
6,931
9,603
(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 $52 million and $134 million at December 31, 2023 and 2022, respectively, and subordinated securities were not material for both December 31,
2023 and 2022, 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, 2023 and 2022, 77% and 84%, 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 $2.5 billion and $2.6 billion of investment-grade retained interests at December 31, 2023
and 2022, respectively, and $88 million and $27 million of noninvestment-grade retained interests at December 31, 2023 and 2022, respectively. The
retained interests in commercial and other securitization trusts consisted of $6.1 billion and $5.8 billion of investment-grade retained interests, and $1.7
billion and $1.1 billion of noninvestment-grade retained interests at December 31, 2023 and 2022, respectively.
262
JPMorgan Chase & Co./2023 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
2023
2022
2021
$ 18,864 $ 16,128 $ 53,923
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 2023, 2022 and 2021, and
retained interests in any such Firm-sponsored VIEs as of
December 31, 2023 and 2022 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./2023 Form 10-K
263
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
2023
2022
Interest in VIEs
$
3,371 $
2,580
As of December 31, 2023 and 2022, 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 $9.8
billion and $13.8 billion of the commercial paper issued by
the Firm-administered multi-seller conduits at
December 31, 2023 and 2022, 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
$10.8 billion and $10.6 billion at December 31, 2023 and
2022, 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 2023 and 2022.
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
264
JPMorgan Chase & Co./2023 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,
2023 and 2022.
December 31, 2023
(in millions)
VIE program type
Assets
Liabilities
Trading
assets
Loans
Other(b)
Total
assets(c)
Beneficial
interests in
VIE assets(d)
Other(e)
Total
liabilities
Firm-sponsored credit card trusts
$
— $
9,460
$
117 $
9,577 $
2,998 $
6 $
Firm-administered multi-seller conduits
1
27,372
Municipal bond vehicles
Mortgage securitization entities(a)
Other
2,056
—
113
—
693
86
194
22
8
250
27,567
2,078
701
449
17,781
2,116
125
—
30
11
57
159
3,004
17,811
2,127
182
159
Total
$
2,170 $
37,611
$
591 $
40,372 $
23,020 $
263 $
23,283
December 31, 2022
(in millions)
VIE program type
Assets
Liabilities
Trading assets
Loans
Other(b)
Total
assets(c)
Beneficial
interests in
VIE assets(d)
Other(e)
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
(f)
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
(a) Includes residential mortgage securitizations.
(b) Includes assets classified as cash and other assets on the Consolidated balance sheets.
(c) 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.
(d) 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 $3.1 billion and $2.1 billion at December 31, 2023 and
2022, respectively.
(e) Includes liabilities classified as accounts payable and other liabilities on the Consolidated balance sheets.
(f) Primarily includes purchased supply chain finance receivables and purchased auto loan securitizations in CIB.
JPMorgan Chase & Co./2023 Form 10-K
265
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 $35.1
billion and $30.2 billion, of which $14.7 billion and $10.6
billion was unfunded at December 31, 2023 and 2022,
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, 2023 and 2022, was
$5.1 billion and $5.8 billion, respectively. The fair value of
assets held by such VIEs at December 31, 2023 and 2022
was $7.3 billion and $8.2 billion respectively.
266
JPMorgan Chase & Co./2023 Form 10-K
Securitization activity
The following table provides information related to the Firm’s securitization activities for the years ended December 31, 2023,
2022 and 2021, 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.
2023
2022
2021
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)
$
Commercial
and other(e)
7,678 $
3,901
Residential
mortgage(d)
$
10,218 $
Commercial
and other(e)
9,036
Residential
mortgage(d)
$
Commercial
and other(e)
23,876 $
14,917
$
7,251 $
3,896
$
9,783 $
8,921
$
24,450 $
15,044
24
325
5
425
62
489
2
285
153
578
1
273
(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,
2023
2022
2021
Residential mortgage retained interest:
Weighted-average life (in years)
9.6
10.8
3.9
Weighted-average discount rate
4.8 % 4.0 % 3.3 %
Commercial mortgage retained interest:
Weighted-average life (in years)
3.0
5.9
6.0
Weighted-average discount rate
4.6 % 2.9 % 1.2 %
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./2023 Form 10-K
267
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)
2023
2022
2021
Carrying value of loans sold
$ 19,906 $ 48,891 $ 105,035
Proceeds received from loan
sales as cash
Proceeds from loan sales as
securities(a)(b)
$
300 $
22 $
161
19,389
48,096
103,286
Total proceeds received from
loan sales(c)
Gains/(losses) on loan sales(d)(e) $
$ 19,689 $ 48,118 $ 103,447
— $
(25) $
9
(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, 2023 and 2022. Substantially all of the
loans and real estate owned 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)
2023
$
597 $
8
22
2022
839
10
27
(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, 2023 and 2022.
As of or for the year ended December 31,
(in millions)
Securitized loans
Residential mortgage:
Securitized assets
90 days past due
Net liquidation losses /
(recoveries)
2023
2022
2023
2022
2023
2022
Prime/ Alt-A & option ARMs
$
39,319 $
37,058
$
440 $
1,312
1,743
120,262
127,037
131
2,874
$ 160,893 $ 165,838
$
3,445 $
1,671
$
79 $
511
212
948
$
14 $
5
60
(29)
(1)
50
20
Subprime
Commercial and other
Total loans securitized
268
JPMorgan Chase & Co./2023 Form 10-K
Goodwill impairment testing
The Firm’s goodwill was not impaired at December 31,
2023, 2022 and 2021.
Note 15 – Goodwill, mortgage servicing rights, and other intangible assets
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
additional information pertaining to facts and
circumstances that existed as of the acquisition date 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 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 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 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)
2023
2022
2021
Consumer & Community Banking
$ 32,116 $ 32,121 $ 31,474
Corporate & Investment Bank
Commercial Banking
Asset & Wealth Management
Corporate
Total goodwill
8,266
8,008
7,906
2,985
2,985
2,986
8,582
7,902
7,222
685
646
727
$ 52,634 $ 51,662 $ 50,315
The following table presents changes in the carrying
amount of goodwill.
Year ended December 31, (in
millions)
2023
2022
2021
Balance at beginning of period
$ 51,662 $ 50,315 $ 49,248
Changes during the period from:
Business combinations(a)
Other(b)
917
55
1,426
1,073
(79)
(6)
Balance at December 31,
$ 52,634 $ 51,662 $ 50,315
(a) For 2023, predominantly represents estimated goodwill associated
with the acquisition of the remaining 51% interest in CIFM in AWM and
the acquisition of Aumni Inc. in CIB. 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.
(b) Predominantly foreign currency adjustments.
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. LOB’s allocated
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 for 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
JPMorgan Chase & Co./2023 Form 10-K
269
Notes to consolidated financial statements
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.
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 loss 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.
270
JPMorgan Chase & Co./2023 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, 2023, 2022 and 2021.
As of or for the year ended December 31, (in millions, except where otherwise noted)
2023
2022
2021
Fair value at beginning of period
MSR activity:
Originations of MSRs
Purchase of MSRs(a)
Disposition of MSRs(b)
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(c)
Changes in valuation due to other inputs and assumptions:
Projected cash flows (e.g., cost to service)
Discount rates
Prepayment model changes and other(d)
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(e)
$
7,973 $
5,494 $
3,276
253
1,028
(188)
1,093
(1,011)
798
1,400
(822)
1,376
(936)
1,659
1,363
(114)
2,908
(788)
424
2,022
404
(22)
14
51
43
467
14
—
3
17
2,039
109
—
(415)
(306)
98
$
$
8,522 $
7,973 $
5,494
467 $
2,039 $
1,590
632
659
1,535
584
758
98
1,298
520
1,611
(a) Includes purchase price adjustments associated with MSRs purchased, primarily as a result of loans that prepaid within 90 days of settlement, allowing the
Firm to recover the purchase price.
(b) Includes excess MSRs transferred to agency-sponsored trusts in exchange for stripped mortgage-backed securities (“SMBS”). 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.
(c) 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.
(d) Represents changes in prepayments other than those attributable to changes in market interest rates.
(e) 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./2023 Form 10-K
271
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,
2023, 2022 and 2021.
Year ended December 31,
(in millions)
CCB mortgage fees and related
income
2023
2022
2021
Production revenue
$ 421 $ 497 $ 2,215
Net mortgage servicing revenue:
Operating revenue:
Loan servicing revenue
1,634
1,582
1,257
Changes in MSR asset fair value
due to collection/realization of
expected cash flows
(1,011)
(936)
(788)
Total operating revenue
623
646
469
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, 2023 and 2022, and outlines the
sensitivities of those fair values to immediate adverse
changes in those assumptions, as defined below.
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
Total risk management
Total net mortgage servicing
revenue
Total CCB mortgage fees and related
income
All other
December 31,
(in millions, except rates)
424
2,022
404
Weighted-average prepayment speed
assumption (constant prepayment rate)
2023
2022
6.29 %
6.12 %
43
17
(306)
(336)
(1,946)
131
93
(623)
(525)
Impact on fair value of 10% adverse change $ (206)
$ (183)
Impact on fair value of 20% adverse change
(401)
(356)
Weighted-average option adjusted spread(a)
6.10 %
5.77 %
Impact on fair value of 100 basis points
adverse change
Impact on fair value of 200 basis points
$ (369)
$ (341)
(709)
(655)
754
739
(56)
adverse change
1,175
1,236
2,159
1
14
11
(a) Includes the impact of operational risk and regulatory capital.
Mortgage fees and related income
$ 1,176 $ 1,250 $ 2,170
(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).
272
JPMorgan Chase & Co./2023 Form 10-K
Impairment testing
The Firm’s finite-lived and indefinite-lived other intangible
assets are assessed for impairment annually or more often
if events or changes in circumstances indicate that the asset
might be impaired. Once the Firm determines that an
impairment exists for an intangible asset, the impairment is
recognized in other expense.
Other intangible assets
The Firm’s finite-lived and indefinite-lived other intangible
assets are initially recorded at their fair value primarily
upon completion of a business combination. Subsequently,
the Firm’s finite-lived intangible assets, including core
deposit intangibles, customer relationship intangibles, and
certain other intangible assets, are amortized over their
useful lives, estimated based on the expected future
economic benefits to the Firm of the intangible asset. The
Firm’s intangible assets with indefinite lives, such as asset
management contracts, are not subject to amortization and
are assessed periodically for impairment.
As of December 31, 2023 and 2022, the gross carrying
values of other intangible assets were $4.2 billion and $1.9
billion, respectively, and the accumulated amortization was
$994 million and $679 million, respectively.
As of December 31, 2023 and 2022, the net carrying
values consist of finite-lived intangible assets of $2.0 billion
and $707 million, respectively, as well as indefinite-lived
intangible assets, which are not subject to amortization, of
$1.2 billion and $517 million, respectively.
As of December 31, 2023, other intangible assets reflected
core deposit and certain wealth management customer
relationship intangibles related to the First Republic
acquisition, and asset management contracts related to the
Firm’s acquisition of the remaining 51% interest in CIFM.
Refer to Note 34 for additional information on the First
Republic acquisition.
As of December 31, 2023 and 2022, amortization expense
was $315 million and $145 million, respectively.
The following table presents estimated future amortization
expense.
December 31, (millions)
Finite-lived
intangible assets
2024
2025
2026
2027
2028
$
330
294
290
288
272
JPMorgan Chase & Co./2023 Form 10-K
273
Notes to consolidated financial statements
Note 16 – Premises and equipment
Premises and equipment includes land carried at cost, as
well as buildings, leasehold improvements, internal-use
software and furniture and equipment carried at cost less
accumulated depreciation and amortization. The Firm’s
operating lease right-of-use assets are also included in
Premises and equipment. Refer to Note 18 for a further
discussion of the Firm’s right-of-use assets.
The following table presents certain components of
Premises and equipment.
Note 17 – Deposits
As of December 31, 2023 and 2022, noninterest-bearing
and interest-bearing deposits were as follows.
December 31, (in millions)
2023
2022
U.S. offices
Noninterest-bearing (included $75,393
and $26,363 at fair value)(a)
Interest-bearing (included $573 and
$586 at fair value)(a)
Total deposits in U.S. offices
Non-U.S. offices
Noninterest-bearing (included $1,737
and $1,398 at fair value)(a)
Interest-bearing (included $681 and
$273 at fair value)(a)
Total deposits in non-U.S. offices
$ 643,748 $
644,902
1,303,100
1,276,346
1,946,848
1,921,248
23,097
27,005
430,743
453,840
391,926
418,931
$ 2,400,688 $ 2,340,179
December 31, (in millions)
Land, buildings and leasehold improvements
Right-of-use assets(a)
Other premises and equipment(b)
Total premises and equipment
2023
2022
$ 14,862 $ 13,486
7,917
7,378
7,432
6,816
$ 30,157 $ 27,734
Total deposits
(a) Excluded $514 million and $350 million of right-of-use assets that
were recorded in Other assets at December 31, 2023 and 2022,
respectively.
(b) Other premises and equipment is comprised of internal-use software
and furniture and equipment.
JPMorgan Chase computes depreciation using the straight-
line method over the estimated useful life for buildings and
furniture and equipment. The Firm depreciates leasehold
improvements over the lesser of the remainder of the lease
term or the estimated useful life. The Firm also 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.
The estimated useful lives range from 10 to 50 years for
buildings and leasehold improvements, and 3 to 10 years
for internal-use software and furniture and equipment.
Impairment is assessed when events or changes in
circumstances indicate that the carrying value of an asset
may not be fully recoverable.
(a) Includes structured notes classified as deposits for which the fair value
option has been elected. Refer to Note 3 for further discussion.
As of December 31, 2023 and 2022, 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
2023
2022
$ 132,654 $ 64,622
90,187
77,907
$ 222,841 $ 142,529
(a) Represents all time deposits in non-U.S. offices as these deposits
typically exceed the insured limit.
As of December 31, 2023, the remaining maturities of
interest-bearing time deposits were as follows.
December 31,
(in millions)
2024
2025
2026
2027
2028
After 5 years
Total
U.S.
Non-U.S.
Total
$ 194,895 $ 86,971 $ 281,866
742
243
140
136
475
180
21
35
992
251
922
264
175
1,128
726
$ 196,631 $ 88,450 $ 285,081
274
JPMorgan Chase & Co./2023 Form 10-K
Note 18 - Leases
Firm as lessee
At December 31, 2023, 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 assets, predominantly included in premises and
equipment, also include 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 carrying values of the Firm’s operating leases were as
follows:
December 31,
(in millions, except where otherwise
noted)
Right-of-use assets
Lease liabilities
2023
$ 8,431
8,833
(a) $
(b)
2022
7,782
8,183
Weighted average remaining lease term
(in years)
Weighted average discount rate
8.4
4.01 %
8.4
3.55 %
Supplemental cash flow information
Cash paid for amounts included in the
measurement of lease liabilities -
operating cash flows
Supplemental non-cash information
Right-of-use assets obtained in
exchange for operating lease
obligations
$ 1,662
$
1,613
$ 2,094
$
1,435
(a) Included $647 million of right-of-use assets associated with First
Republic.
(b) Included $712 million of lease liabilities associated with First Republic.
Year ended December 31,
(in millions)
Rental expense
Gross rental expense
Sublease rental income
Net rental expense
2023
2022
$
$
2,079 $
2,079
(72)
(119)
2,007 $
1,960
The following table presents future payments under
operating leases as of December 31, 2023:
Year ended December 31, (in millions)
2024
2025
2026
2027
2028
After 2028
Total future minimum lease payments
Less: Imputed interest
Total
$ 1,685
1,576
1,318
1,169
1,015
3,767
10,530
(1,697)
$ 8,833
In addition to the table above, as of December 31, 2023,
the Firm had additional future operating lease
commitments of $420 million that were signed but had not
yet commenced. These operating leases will commence
between 2024 and 2026 with lease terms up to 21 years.
JPMorgan Chase & Co./2023 Form 10-K
275
Notes to consolidated financial statements
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 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
2023
2022
$
10,663 $
12,302
3,288
4,282
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)
2023
2022
Operating lease income
$
2,843 $
3,654 $
Depreciation expense
1,778
2,475
2021
4,914
3,380
The following table presents future receipts under
operating leases as of December 31, 2023:
Year ended December 31, (in millions)
2024
2025
2026
2027
2028
After 2028
$ 1,868
1,158
451
32
9
8
Total future minimum lease receipts
$ 3,526
276
JPMorgan Chase & Co./2023 Form 10-K
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, accrued interest payables, merchant servicing
payables, income tax payables and litigation reserves.
The following table presents 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
2023
2022
$ 161,960 $ 188,692
128,347
111,449
$ 290,307 $ 300,141
(a) Includes credit card rewards liability of $13.2 billion and $11.3 billion
at December 31, 2023 and 2022, respectively.
The credit card rewards liability 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. The redemption rate and cost per point
assumptions are key assumptions to estimate the liability
and the current period impact is recognized in Card Income.
Refer to Note 7, 18, 25 and 30 for additional information
on accrued interest, operating lease liabilities, income taxes
and litigation reserves, respectively.
JPMorgan Chase & Co./2023 Form 10-K
277
Notes to consolidated financial statements
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,
2023.
By remaining maturity at
December 31,
(in millions, except rates)
Parent company
Senior debt:
Subordinated debt:
Subsidiaries
Federal Home Loan Banks
advances:
Purchase Money Note(a):
Senior debt:
Subordinated debt:
2023
Under 1 year
1-5 years
After 5 years
Total
2022
Total
Fixed rate
$
5,981
$
86,113
$ 108,890
$ 200,984
$
194,515
Variable rate
Interest rates(f)
Fixed rate
Variable rate
Interest rates(f)
131
2.52 %
5,989
2.91 %
1,985
3.72 %
8,105
3.32 %
11,565
3.06 %
$
2,976
$
5,886
$
8,863
$
17,725
$
19,693
—
3.88 %
—
4.88 %
—
4.69 %
—
4.62 %
—
4.50 %
Subtotal $
9,088
$
97,988
$ 119,738
$ 226,814
$
225,773
Fixed rate
$
13,940
$
9,269
Variable rate
Interest rates(f)
Fixed rate
Interest rates(f)
Fixed rate
Variable rate
Interest rates(f)
Fixed rate
Variable rate
Interest rates(f)
$
$
$
4,000
4.59 %
—
— %
2,958
20,933
4.28 %
255
—
8.25 %
14,000
5.12 %
$
48,989
3.40 %
$
11,551
25,336
5.41 %
$
—
—
— %
Subtotal $
42,086
$ 109,145
37
—
6.06 %
—
— %
6,236
5,779
1.48 %
—
—
— %
$
$
$
$
$
$
$
23,246
(g)
$
18,000
4.89 %
$
48,989
3.40 %
$
20,745
$
52,048
3.91 %
255
—
8.25 %
$
$
$
$
$
—
420
6.18 %
12,052
$ 163,283
518
790
7.45 %
$
518
1,210
7.14 %
93
11,000
4.32 %
NA
NA
15,383
41,506
2.02 %
262
—
8.25 %
68,244
550
1,298
6.33 %
$
420
$ 207,553
$
1,308
$ 133,098
$
1,728
$ 391,825
$
(h)(i) $
1,848
295,865
$
2,998
$
—
4.74 %
—
125
3.45 %
$
2,998
$
125
4.69 %
1,999
143
2.81 %
Junior subordinated debt:
Fixed rate
$
Variable rate
Interest rates(f)
Subtotal $
Fixed rate
Variable rate
Interest rates(f)
$
$
$
Total long-term debt(b)(c)(d)
Long-term beneficial
interests:
Total long-term beneficial
interests(e)
—
—
— %
—
51,174
—
—
— %
—
$
2,998
$
125
$
3,123
$
2,142
(a) Reflects the Purchase Money Note associated with the First Republic acquisition. Refer to Note 34 for additional information.
(b) Included long-term debt of $93.0 billion and $13.8 billion secured by assets totaling $218.5 billion and $208.3 billion at December 31, 2023 and 2022,
respectively. The amount of long-term debt secured by assets does not include amounts related to hybrid instruments.
(c) Included $87.9 billion and $72.3 billion of long-term debt accounted for at fair value at December 31, 2023 and 2022, respectively.
(d) Included $12.5 billion and $10.3 billion of outstanding zero-coupon notes at December 31, 2023 and 2022, respectively. The aggregate principal amount
of these notes at their respective maturities is $47.9 billion and $45.3 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.
(e) Included on the Consolidated balance sheets in beneficial interests issued by consolidated VIEs. Also included amounts accounted for at fair value which
were not material as of December 31, 2023 and 2022. Excluded short-term commercial paper and other short-term beneficial interests of $19.9 billion
and $10.5 billion at December 31, 2023 and 2022, respectively.
(f) The interest rates shown are the weighted average of contractual rates in effect at December 31, 2023 and 2022, 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.
(g) As of December 31, 2023, included $23.2 billion of FHLB advances associated with First Republic. Refer to Note 34 for additional information.
(h) As of December 31, 2023, long-term debt in the aggregate of $208.2 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.
(i) The aggregate carrying values of debt that matures in each of the five years subsequent to 2023 is $51.2 billion in 2024, $53.5 billion in 2025, $48.7
billion in 2026, $26.2 billion in 2027 and $79.0 billion in 2028.
278
JPMorgan Chase & Co./2023 Form 10-K
The weighted-average contractual interest rates for total
long-term debt excluding structured notes accounted for at
fair value were 3.65% and 3.26% as of December 31,
2023 and 2022, 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 5.20% and 4.89%
as of December 31, 2023 and 2022, respectively.
JPMorgan Chase & Co. has guaranteed certain long-term
debt of its subsidiaries, including structured notes. These
guarantees rank pari passu with the Firm’s other unsecured
and unsubordinated indebtedness. The amount of such
guaranteed long-term debt and structured notes was $41.1
billion and $28.2 billion at December 31, 2023 and 2022,
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.
JPMorgan Chase & Co./2023 Form 10-K
279
Notes to consolidated financial statements
Note 21 – Preferred stock
At December 31, 2023 and 2022, 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, 2023 and
2022, and the quarterly dividend declarations for the years ended December 31, 2023, 2022 and 2021.
Shares(a)
Carrying value
(in millions)
Dividend declared per share(d)
December 31,
December 31,
2023
2022
2023
2022
Issue date
Contractual rate
in effect at
December 31,
2023
Earliest
redemption
date(b)
Floating
annualized
rate(c)
Year ended December 31,
2023
2022
2021
Fixed-rate:
Series AA
—
Series BB
—
Series DD 169,625
Series EE
185,000
—
—
$
— $
—
—
—
6/4/2015
7/29/2015
— % 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
$
— $
—
— $ 305.00
—
307.50
575.00
575.00
575.00
600.00
600.00
600.00
475.00
475.00
475.00
455.00
455.00
321.03
462.52
462.52
245.39
420.00
420.00
142.33
Series I
Series Q
Series R
Series S
Series U
Series V
Series X
Series Z
Series CC
Series FF
—
—
$
— $
—
4/23/2008
— % 4/30/2018
— % $
— $ 375.03 $ 370.38
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
SOFR + 3.25
5/1/2023
SOFR + 3.25
801.41
515.00
515.00
1,500
7/29/2013
SOFR + 3.30
8/1/2023
SOFR + 3.30
756.73
600.00
600.00
2,000
1/22/2014
6.750
2/1/2024
SOFR + 3.78
675.00
675.00
675.00
1,000
3/10/2014
6.125
4/30/2024
SOFR + 3.33
612.50
612.50
612.50
—
—
—
—
6/9/2014
—
7/1/2019
—
—
340.91
353.65
160,000
160,000
1,600
1,600
9/23/2014
6.100
10/1/2024
SOFR + 3.33
610.00
610.00
610.00
—
—
—
—
4/21/2015
—
5/1/2020
—
—
—
401.44
125,750
125,750
1,258
1,258
10/20/2017
SOFR + 2.58
11/1/2022
SOFR + 2.58
804.08
526.27
462.50
(h)
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
460.00
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
400.00
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
365.00
201.76
(e)
2,740,375
$ 27,404 $ 27,404
(a) Represented by depositary shares.
(b) Each series of fixed-to-floating rate preferred stock converts to a floating rate at the earliest redemption date.
(c) Effective June 30, 2023, CME Term SOFR became the replacement reference rate for fixed-to-floating rate preferred stock issued by the Firm that formerly
referenced U.S. dollar LIBOR. References in the table to “SOFR” mean a floating annualized rate equal to three-month term SOFR (plus a spread adjustment
of 0.26% per annum) plus the spreads noted. The reference to “CMT” means a floating annualized rate equal to the five-year Constant Maturity Treasury
(“CMT”) rate plus the spread noted.
(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 Q preferred stock became floating and payable quarterly starting on May 1, 2023; prior to which the dividend rate was fixed
at 5.15% or $257.50 per share payable semiannually. The dividend rate for each quarterly dividend period commencing on August 1, 2023 is three-
month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spread of 3.25%.
(g) The dividend rate for Series R preferred stock became floating and payable quarterly starting on August 1, 2023; prior to which the dividend rate was
fixed at 6.00% or $300.00 per share payable semiannually. The dividend rate for each quarterly dividend period commencing on August 1, 2023 is three-
month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spread of 3.30%.
(h) 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. The dividend rate for each quarterly dividend period commencing on August 1, 2023 is
three-month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spread of 2.58%.
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, 2023.
280
JPMorgan Chase & Co./2023 Form 10-K
(e)
(e)
(e)
(f)
(g)
Redemptions
On October 31, 2022, the Firm redeemed all $2.9 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.
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”).
JPMorgan Chase & Co./2023 Form 10-K
281
Notes to consolidated financial statements
Note 22 – Common stock
At December 31, 2023 and 2022, JPMorgan Chase was
authorized to issue 9.0 billion shares of common stock with
a par value of $1 per share.
Common shares issued which were reissued from treasury
by the Firm during the years ended December 31, 2023,
2022 and 2021 were as follows.
Year ended December 31,
(in millions)
Total issued – balance at
January 1
2023
2022
2021
4,104.9
4,104.9
4,104.9
Treasury – balance at January 1
(1,170.7) (1,160.8) (1,055.5)
Repurchase
Reissuance:
Employee benefits and
compensation plans
Employee stock purchase
plans
Total reissuance
Total treasury – balance at
December 31
(69.5)
(23.1)
(119.7)
10.9
12.0
13.5
1.0
11.9
1.2
13.2
0.9
14.4
(1,228.3) (1,170.7) (1,160.8)
Outstanding at December 31
2,876.6
2,934.2
2,944.1
Effective May 1, 2022, the Firm is authorized to purchase
up to $30 billion under its common share repurchase
program previously approved by the Board of Directors,
which was announced on April 13, 2022.
The following table sets forth the Firm’s repurchases of
common stock for the years ended December 31, 2023,
2022 and 2021.
Year ended December 31,
(in millions)
Total number of shares of common
stock repurchased
Aggregate purchase price of
common stock repurchases(a)
2023 2022(b)
2021(c)
69.5
23.1
119.7
$ 9,898 $ 3,122 $ 18,448
(a) Excludes excise tax and commissions. As part of the Inflation Reduction
Act of 2022, a 1% excise tax was imposed on net share repurchases
effective January 1, 2023.
(b) In the second half of 2022, the Firm temporarily suspended share
repurchases, which it resumed under its current common share
repurchase program in the first quarter of 2023.
(c) 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.
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; current and proposed future capital
requirements; 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, 2023, approximately 61.6 million
shares of common stock were reserved for issuance under
various employee incentive, compensation, option and
stock purchase plans, and directors’ compensation plans.
282
JPMorgan Chase & Co./2023 Form 10-K
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, 2023, 2022 and
2021.
Year ended December 31,
(in millions,
except per share amounts)
Basic earnings per share
2023
2022
2021
Net income
$ 49,552 $ 37,676 $ 48,334
Less: Preferred stock dividends
1,501
1,595
1,600
Net income applicable to common
equity
Less: Dividends and undistributed
earnings allocated to participating
securities
Net income applicable to common
stockholders
48,051
36,081
46,734
291
189
231
$ 47,760 $ 35,892 $ 46,503
Total weighted-average basic shares
outstanding
2,938.6
2,965.8
3,021.5
Net income per share
$ 16.25 $ 12.10 $ 15.39
Diluted earnings per share
Net income applicable to common
stockholders
Total weighted-average basic shares
outstanding
Add: Dilutive impact of unvested
PSUs, nondividend-earning RSUs
and SARs
Total weighted-average diluted
shares outstanding
$ 47,760 $ 35,892 $ 46,503
2,938.6
2,965.8
3,021.5
4.5
4.2
5.1
2,943.1
2,970.0
3,026.6
Net income per share
$ 16.23 $ 12.09 $ 15.36
JPMorgan Chase & Co./2023 Form 10-K
283
Notes to consolidated financial statements
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, 2020
Net change
Balance at December 31, 2021
Net change
Balance at December 31, 2022
Net change
Balance at December 31, 2023
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
$ 8,180
(5,540)
$ 2,640
(a)
(11,764)
$ (9,124) (a)
5,381
$ (3,743) (a)
$
$
(473) $
(112) $ 2,383
$
(1,132)
$
(461)
(19)
(2,679)
922
(860)
(293)
(934) $
(131) $
(296)
$
(210)
$
(1,153)
(611)
98
(5,360)
(1,241)
$
(1,545) $
(33) $ (5,656)
$
(1,451)
329
(101)
1,724
373
$
(1,216) $
(134) $ (3,932)
$
(1,078)
1,621
468
(808)
(340)
$
$
Accumulated
other
comprehensive
income/(loss)
$
$
7,986
(8,070)
(84)
(17,257)
$
(17,341)
6,898
$
(10,443)
(a) As of December 31, 2023 includes after-tax net unamortized unrealized gains/(losses) of $(29) million related to HTM securities that have been
transferred to AFS as permitted by the new hedge accounting guidance adopted on January 1, 2023. Includes after-tax net unamortized unrealized gains/
(losses) of $(895) million, $(1.3) billion, and $2.4 billion related to AFS securities that have been transferred to HTM for the years ended 2023, 2022 and
2021, 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:
2023
Tax
effect
After-tax
Pre-tax
2022
Tax
effect
After-tax
Pre-tax
2021
Tax
effect
After-tax
Net unrealized gains/(losses) arising during the period
$ 3,891 $
(922) $ 2,969 $ (17,862) $ 4,290 $ (13,572) $ (7,634) $ 1,832 $ (5,802)
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:
3,180
(768)
2,412
2,380
(572)
1,808
345
(83)
262
7,071
(1,690)
5,381
(15,482)
3,718
(11,764)
(7,289)
1,749
(5,540)
1,714
(1,697)
17
(134)
(95)
1,619
(3,574)
265
(3,309)
(2,447)
125
(2,322)
407
312
33
(1,290)
3,553
329
(101)
(21)
130
(855)
(590)
(32)
2,698
2,452
(591)
1,861
(611)
98
5
(466)
(26)
7
(461)
(19)
Net unrealized gains/(losses) arising during the period
483
(114)
369
(7,473)
1,794
(5,679)
(2,303)
553
(1,750)
Reclassification adjustment for realized (gains)/losses
included in net income(d)
Net change
Defined benefit pension and OPEB plans, net
change(e):
DVA on fair value option elected liabilities, net
change:
1,775
2,258
(420)
(534)
1,355
1,724
420
(101)
319
(1,222)
293
(929)
(7,053)
1,693
(5,360)
(3,525)
846
(2,679)
421
(48)
373
(1,459)
218
(1,241)
1,129
(207)
922
(1,066)
258
(808)
2,141
(520)
1,621
(393)
100
(293)
Total other comprehensive income/(loss)
$ 8,567 $ (1,669) $ 6,898 $ (21,744) $ 4,487 $ (17,257) $ (10,099) $ 2,029 $ (8,070)
(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, 2023, the Firm reclassified a net pre-tax loss of $(3) million to other revenue,
$(35) million related to the net investment hedge loss, and a $32 million gain related to cumulative translation adjustment, including the impact of the
acquisition of CIFM. During the year ended December 31, 2022, the Firm reclassified a net pre-tax loss of $(8) million. During the year ended
December 31, 2021, the Firm reclassified a net pre-tax loss of $(7) 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 swaps.
(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.
284
JPMorgan Chase & Co./2023 Form 10-K
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,
2023
2022
2021
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
2.8
(0.9)
1.5
(4.4)
(0.4)
19.6 % (a)
3.5
(0.9)
0.4
(5.4)
(0.2)
3.0
(0.9)
0.1
(4.2)
(0.1)
18.4 % 18.9 %
(a) Income tax expense associated with the First Republic acquisition was
reflected in the estimated bargain purchase gain, which resulted in a
reduction in the Firm’s effective tax rate.
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)
2023
2022
2021
$
8,973 $ 5,606 $ 2,865
4,355
3,266
2,992
2,718
2,630
1,897
16,594
11,228
7,480
(3,475)
(2,004)
3,460
35
(1,094)
(154)
(580)
(101)
389
(4,534)
(2,738)
3,748
Total income tax expense
$ 12,060 $ 8,490 $ 11,228
Total income tax expense includes $68 million of tax
benefits in 2023, $331 million of tax benefits in 2022, and
$69 million of tax expenses in 2021, 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, which are predominantly reflected in
OCI as disclosed in Note 24. For the year ended December
31, 2023, stockholders’ equity also reflected the tax effect
associated with the Firm’s adoption of the TDR accounting
guidance recognized in retained earnings. Refer to Note 1
for further information.
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
2023
2022
2021
$ 46,868 $ 34,626 $ 50,126
14,744
11,540
9,436
$ 61,612 $ 46,166 $ 59,562
(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.
JPMorgan Chase & Co./2023 Form 10-K
285
Affordable housing tax credits
The Firm recognized $2.0 billion of tax credits and other tax
benefits associated with investments in affordable housing
projects within income tax expense for the year ended
2023, and $1.8 billion and $1.7 billion for the years ended
2022 and 2021, respectively. The amount of amortization
of such investments reported in income tax expense was
$1.6 billion, $1.4 billion and $1.3 billion, respectively. The
carrying value of these investments, which are reported in
other assets on the Firm’s Consolidated balance sheets, was
$14.6 billion and $12.1 billion at December 31, 2023 and
2022, 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 $6.8 billion and $5.4 billion at December 31,
2023 and 2022, respectively.
Deferred taxes
Deferred income tax expense/(benefit) reflects the
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, the
net deferred tax assets are reflected in other assets on the
Firm’s Consolidated balance sheets.
December 31, (in millions)
2023
2022
Deferred tax assets
Allowance for loan losses
$
Employee benefits
Accrued expenses and other
Non-U.S. operations
Tax attribute carryforwards
Gross deferred tax assets
Valuation allowance
$
5,809
1,247
9,887
(a)
860
290
18,093
(183)
5,193
1,342
8,577
1,148
365
16,625
(198)
Deferred tax assets, net of valuation
allowance
Deferred tax liabilities
$
17,910
$
16,427
Depreciation and amortization
$
779
$
2,044
Mortgage servicing rights, net of
hedges
Leasing transactions
Other, net
Gross deferred tax liabilities
1,794
2,254
2,935
7,762
1,864
2,843
3,801
10,552
Net deferred tax assets
$
10,148
$
5,875
(a) Includes the estimated net deferred tax asset associated with the First
Republic acquisition. The allocation of the tax basis to individual assets
may be refined during the measurement period, which could result in
an impact to the gross deferred tax assets and liabilities.
JPMorgan Chase has recorded deferred tax assets of $290
million at December 31, 2023 in connection with tax
attribute carryforwards. State and local capital loss
carryforwards were $1.2 billion, U.S. federal NOL
carryforwards were $586 million, non-U.S. NOL
carryforwards were $570 million, and other U.S. federal tax
attributes were $118 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 2040 whereas others have an unlimited
carryforward period. The state and local capital loss
carryforwards will expire in 2026 and 2027.
The valuation allowance at December 31, 2023, was due to
the state and local capital loss carryforwards and certain
non-U.S. deferred tax assets, including NOL carryforwards.
286
JPMorgan Chase & Co./2023 Form 10-K
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 tax years that remain subject to income tax
examination of JPMorgan Chase and its consolidated
subsidiaries by significant jurisdictions as of December 31,
2023.
JPMorgan Chase – U.S.
2011 – 2013
Periods under
examination
JPMorgan Chase – U.S.
2014 - 2020
Status
Field examination of
amended returns;
certain matters at
Appellate level
Field examination of
original and amended
returns; certain
matters at Appellate
level
JPMorgan Chase – New
York State
2012 - 2014
Field Examination
JPMorgan Chase – New
2015 - 2017
Field Examination
York City
JPMorgan Chase – U.K.
2011 – 2020
Field examination of
certain select entities
Unrecognized tax benefits
At December 31, 2023, 2022 and 2021, JPMorgan Chase’s
unrecognized tax benefits, excluding related interest
expense and penalties, were $5.4 billion, $5.0 billion and
$4.6 billion, respectively, of which $3.9 billion, $3.8 billion
and $3.4 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 $1.1 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
2023
2022
2021
$ 5,043 $ 4,636 $ 4,250
1,440
1,234
798
37
123
393
(1,110)
(824)
(657)
Decreases related to cash settlements
with taxing authorities
(9)
(126)
(148)
Balance at December 31,
$ 5,401 $ 5,043 $ 4,636
After-tax interest expense/(benefit) and penalties related
to income tax liabilities recognized in income tax expense
were $229 million, $141 million and $174 million in 2023,
2022 and 2021, respectively.
At December 31, 2023 and 2022, in addition to the liability
for unrecognized tax benefits, the Firm had accrued $1.6
billion and $1.3 billion, respectively, for income tax-related
interest and penalties.
JPMorgan Chase & Co./2023 Form 10-K
287
Notes to consolidated financial statements
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)
2023
2022
10.3
18.7
9.3
8.1
$ 19.6 $ 26.8
(a) Comprises $18.2 billion and $25.4 billion in deposits with banks, and
$1.4 billion and $1.4 billion in cash and due from banks on the
Consolidated balance sheets as of December 31, 2023 and 2022,
respectively.
Also, as of December 31, 2023 and 2022, the Firm had the
following other restricted assets:
• Cash and securities pledged with clearing organizations
for the benefit of customers of $40.5 billion and $42.4
billion, respectively.
• Securities with a fair value of $20.5 billion and $31.7
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, 2024, the Parent Company’s banking
subsidiaries could pay, in the aggregate, approximately $20
billion in dividends to their respective bank holding
companies without the prior approval of their relevant
banking regulators. The capacity to pay dividends in 2024
will be supplemented by the banking subsidiaries’ earnings
during the year.
288
JPMorgan Chase & Co./2023 Form 10-K
Note 27 – Regulatory capital
The Federal Reserve establishes capital requirements,
including well-capitalized standards, for the Firm as a
consolidated financial holding company. The 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 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. JPMorgan Chase Bank, N.A. is also
subject to these capital requirements established by its
primary regulators.
The following table presents the risk-based regulatory
capital ratio requirements and well-capitalized ratios to
which the Firm and JPMorgan Chase Bank, N.A. were subject
as of December 31, 2023 and 2022.
Standardized capital
ratio requirements
IDI(c)
BHC(a)(b)
Advanced capital
ratio requirements
IDI(c)
BHC(a)(b)
Well-capitalized
ratios
BHC(d)
IDI(e)
Risk-based capital ratios
CET1 capital
11.4 %
7.0 % 11.0 %
7.0 %
NA
6.5 %
Tier 1
capital
Total capital
12.9
14.9
8.5
10.5
12.5
14.5
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 JPMorgan Chase
Bank, N.A. 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
4.0% as calculated under Method 2; plus a 2.9% 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, 2022, the CET1, Tier 1, and Total
capital ratio requirements under Basel III Standardized applicable to
the Firm were 12.0%, 13.5% and 15.5%, respectively; the Basel III
Advanced CET1, Tier 1, and Total capital ratio requirements applicable
to the Firm were 10.5%, 12.0%, and 14.0%, respectively. SCB for
Basel III Standardized ratio for 2022 was 4.0%.
(c) Represents requirements for JPMorgan Chase Bank, N.A. The CET1,
Tier 1 and Total capital ratio requirements include a fixed capital
conservation buffer requirement of 2.5% that is applicable to
JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, N.A. is 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 JPMorgan Chase Bank, N.A. 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 JPMorgan Chase Bank, N.A. were subject
as of December 31, 2023 and 2022.
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 JPMorgan Chase
Bank, N.A. 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 JPMorgan Chase Bank, N.A., respectively.
(b) The Federal Reserve's regulations do not establish well-capitalized
thresholds for these measures for BHCs.
JPMorgan Chase & Co./2023 Form 10-K
289
Notes to consolidated financial statements
CECL Regulatory Capital Transition
Beginning January 1, 2022, the $2.9 billion CECL capital
benefit, provided by the Federal Reserve in response to the
COVID-19 pandemic, is being phased out at 25% per year
over a three-year period. As of December 31, 2023, the
Firm’s CET1 capital reflected the remaining $1.4 billion
benefit associated with the CECL capital transition
provisions.
Similarly, as of January 1, 2023, the Firm has phased out
50% of the other CECL capital transition provisions which
impacted Tier 2 capital, adjusted average assets, total
leverage exposure and RWA, as applicable.
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, 2023
and 2022, JPMorgan Chase and JPMorgan Chase Bank, N.A. were well-capitalized and met all capital requirements to which
each was subject.
December 31, 2023
(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, 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
Basel III Standardized
Basel III Advanced
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
$
250,585
$
262,030
$
277,306
308,497
262,032
281,308
250,585
277,306
295,417
1,671,995
1,621,789
1,669,156
15.0 %
16.6
18.5
16.2 %
16.2
17.3
15.0 %
16.6
17.7
$
(b)
(b)
262,030
262,032
268,392
1,526,952
17.2 %
17.2
17.6
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
$
245,631
277,769
269,672
288,433
218,934
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
(a) The capital metrics reflect the CECL capital transition provisions.
(b) Includes the impacts of certain assets associated with First Republic to which the Standardized approach has been applied as permitted by the transition
provisions in the U.S. capital rules.
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, 2023
December 31, 2022
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
$
$
3,831,200
$
3,337,842
7.2 %
7.9 %
4,540,465
$
4,038,739
$
$
3,703,873
$
3,249,912
6.6 %
8.3 %
4,367,092
$
3,925,502
6.1 %
6.5 %
5.6 %
6.9 %
(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.
290
JPMorgan Chase & Co./2023 Form 10-K
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, 2023 and 2022. 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.
JPMorgan Chase & Co./2023 Form 10-K
291
Notes to consolidated financial statements
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
2023
Expires
after
3 years
through
5 years
Expires
after 5
years
Carrying value(h)(i)
2022
2023
2022
Total
Total
$ 6,917 $
7,175 $
6,493 $ 9,540 $ 30,125 $ 21,287
678
12,247
19,164
915,658
934,822
159
7,334
—
—
2,872
6,493
12,412
15,278
45,403
12,231
148
33,518
826
—
—
915,658
821,284
—
7,334
6,493
12,412
961,061
854,802
826
(j)
(j)
75
—
75
—
75
125,478
175,190
179,046
23,812
503,526
440,407
2,797
(j)(k)
2,328
(k)
13,775
10,478
3,628
991
28,872
27,439
479
4,084
143,337
222
185,890
82
182,756
—
24,803
4,388
536,786
4,134
471,980
37
3,313
$ 1,078,159 $ 193,224 $ 189,249 $ 37,215 $ 1,497,847 $ 1,326,782 $ 4,139
$ 283,664 $
— $
— $
— $ 283,664 $ 283,386
$
1,693
364
11,657
40,848
54,562
59,180
94,920
60,170
NA
NA
265,887
186
554
NA
NA
—
9,216
1,516
—
—
NA
NA
—
—
95,106
116,975
60,724
66,407
NA
NA
NA
803
NA
820
—
314
—
265,887
191,068
4,028
15,074
8,634
—
89
—
—
76
24
—
38
408
6
2,742
$ 2,817
$
—
649
(2)
(7)
76
28
—
53
By remaining maturity as of 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)
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)
(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) As of December 31, 2023 and 2022, reflected the contractual amount net of risk participations totaling $88 million and $71 million, respectively, for
other unfunded commitments to extend credit; $8.2 billion at both periods for standby letters of credit and other financial guarantees; and $589 million
and $512 million, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk
participations.
(e) As of December 31, 2023 and 2022, collateral held by the Firm in support of securities lending indemnification agreements was $300.3 billion and
$298.5 billion, respectively. Securities lending collateral primarily consists of cash, G7 government securities, and securities issued by U.S. GSEs and
government agencies.
(f) As of December 31, 2023 and 2022, 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) As of December 31, 2023 and 2022, primarily includes unfunded commitments related to certain tax-oriented equity investments, other equity
investment commitments. and unfunded commitments to purchase secondary market loans.
(h) For lending-related products, the carrying value includes 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.
(i) For lending-related commitments, the carrying value also includes fees and any purchase discounts or premiums that are deferred and recognized in
accounts payable and other liabilities on the Consolidated balance sheets. Deferred amounts for revolving commitments and commitments not expected to
fund, are amortized to lending- and deposit-related fees on a straight line basis over the commitment period. For all other commitments the deferred
amounts remain deferred until the commitment funds or is sold.
(j) As of December 31, 2023, includes fair value adjustments associated with First Republic for residential real estate lending-related commitments totaling
$630 million, for auto and other lending-related commitments totaling $148 million and for other unfunded commitments to extend credit totaling $1.1
billion. Refer to Note 34 for additional information.
(k) As of December 31, 2022, included net markdowns on held-for-sale positions related to unfunded commitments in the bridge financing portfolio.
292
JPMorgan Chase & Co./2023 Form 10-K
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 the 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 292.
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, 2023 and 2022.
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
2023
2022
Standby letters of credit and
other financial guarantees
Other letters
of credit
Standby letters of credit and
other financial guarantees
Other letters
of credit
$
$
$
$
$
19,694
9,178
28,872
110
369
479
16,861
$
$
$
$
$
3,552
836
4,388
37
—
37
539
$
$
$
$
$
19,205
8,234
27,439
82
326
408
15,296
$
$
$
$
$
3,040
1,094
4,134
6
—
6
795
(a) The ratings scale is based on the Firm’s internal risk ratings. Refer to Note 12 for further information on internal risk ratings.
JPMorgan Chase & Co./2023 Form 10-K
293
Notes to consolidated financial statements
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, 2023 and 2022.
(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,
2023
December 31,
2022
$
54,562 $
59,180
32,488
31,820
1,652
2,063
89
649
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
294
JPMorgan Chase & Co./2023 Form 10-K
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 292.
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, 2023, 2022 and 2021,
the Firm processed an aggregate volume of $2,411.0
billion, $2,158.4 billion, and $1,886.7 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.
JPMorgan Chase & Co./2023 Form 10-K
295
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 pari passu
with the Firm’s unsecured and unsubordinated
indebtedness, are not included in the table on page 292 of
this Note. Refer to Note 20 for additional information.
Notes to consolidated financial statements
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 292, 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 292. 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
296
JPMorgan Chase & Co./2023 Form 10-K
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)
2023
2022
Collateral permitted to be sold or
repledged, delivered, or otherwise used
Collateral sold, repledged, delivered or
otherwise used
$ 1,303.9 $ 1,346.9
982.8
1,019.4
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)
2023
2022
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 (a)
Assets pledged at Federal Reserve banks and
FHLBs
Total pledged assets
$ 145.0 $ 110.8
244.2
114.8
675.6
567.6
$ 1,064.8 $ 793.2
(a) As of December 31, 2023, included $88.4 billion of assets pledged to
the FDIC associated with the First Republic acquisition. Refer to Note
34 for additional information.
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
2023
2022
$ 108.6 $ 104.4
681.7
274.5
485.9
202.9
$ 1,064.8 $ 793.2
JPMorgan Chase & Co./2023 Form 10-K
297
Notes to consolidated financial statements
Note 30 – Litigation
Contingencies
As of December 31, 2023, the Firm and its subsidiaries and
affiliates are defendants or respondents in numerous
evolving legal proceedings, including private proceedings,
public proceedings, government investigations, regulatory
enforcement matters, and the matters described below. 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 $1.3 billion at December 31, 2023. 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. 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. The Firm is challenging the validity of
service and the Malaysian Court’s jurisdiction to hear the
claim. In August 2023 the Court denied an application by
1MDB to discontinue its claim with permission to re-file a
new claim in the future. An appeals court is scheduled in
August 2024 to hear separate appeals filed by 1MDB and
the Firm against that August 2023 decision. In its appeal,
the Firm seeks to prevent any claim from continuing.
In addition, in November 2023, the Federal Office of the
Attorney General (OAG) in Switzerland notified J.P. Morgan
(Suisse) SA that it is conducting an investigation into
possible criminal liability in connection with transactions
arising from J.P. Morgan (Suisse) SA’s relationship with the
1MDB PetroSaudi joint venture and its related persons for
the period September 2009 through August 2015. The OAG
investigation is ongoing.
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”) relating to delays in delivering
or failure to deliver residential units. In August 2021, the
ED issued an order fining J.P. Morgan India Private Limited
approximately $31.5 million, and the Firm is appealing that
order. 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 criminal currency control and
money laundering provisions, and ordered the ED to
conduct a further inquiry. The Firm is responding to and
cooperating with the inquiry.
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
298
JPMorgan Chase & Co./2023 Form 10-K
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 a putative class
action filed against the Firm and other foreign exchange
dealers on behalf of certain parties who purchased foreign
currencies at allegedly inflated rates, the District Court
denied certification of a class and granted summary
judgment against the named plaintiffs in March 2023. An
appeal by those plaintiffs of the District Court's decision is
pending. 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 U.K. actions was reached in
December 2022. In July 2023, the U.K. Court of Appeal
overturned the Competition Appeal Tribunal's earlier denial
of a request for class certification on an opt-out basis. In
Israel, a settlement in principle has been reached on the
putative class action, which remains subject to court
approval.
Government Inquiries Related to the Zelle Network. The Firm
is responding to inquiries from civil government authorities
regarding the handling of disputes related to transfers of
funds through the Zelle Network. The Firm is cooperating
with these inquiries and responding to requests for
information.
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 September 2018, the parties settled the class action
seeking monetary relief, with the defendants collectively
contributing approximately $6.2 billion. The settlement has
been approved by the District Court and affirmed on appeal.
Based on the percentage of merchants that opted out of the
settlement, $700 million has been returned to the
defendants from the settlement escrow. A separate class
action seeking injunctive relief continues, 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 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
approximately 70% of the combined Mastercard-branded
and Visa-branded payment card sales volume.
Jeffrey Epstein Litigation. JPMorgan Chase Bank, N.A. was
named as a defendant in lawsuits filed in the United States
District Court for the Southern District of New York alleging
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. In June
2023, the Court granted preliminary approval of a
settlement between the victim class and JPMorgan Chase
Bank, N.A., pursuant to which JPMorgan Chase Bank, N.A.
paid $290 million to a fund for Epstein survivors. In
November 2023, the Court granted final approval of the
settlement, rejecting objections, including those of certain
state Attorneys General, regarding the victims’ releases.
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. The Firm appealed a December 2016
decision by the European Commission against the Firm and
other banks finding an infringement of European antitrust
rules relating to EURIBOR. In December 2023, the European
General Court annulled the fine imposed by the European
Commission, but exercised its discretion to re-impose a fine
in an identical amount. The Firm is considering its options.
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. In addition, a lawsuit filed
by a group of individual plaintiffs 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 was dismissed in October
2023. Plaintiff filed an appeal of the dismissal to the United
States Court of Appeals for the Ninth Circuit in November
2023. The Firm has resolved all non-U.S. dollar LIBOR
actions.
Russian Litigation. The Firm is obligated to comply with
international sanctions laws, which mandate the freezing or
restriction of certain assets. These laws apply when assets
associated with individuals, companies, products or services
are within the scope of the sanctions. The Firm has faced
actual and threatened litigation in Russia seeking payments
on transactions that the Firm cannot make, and is
contractually excused from paying, under relevant
sanctions laws, with judgment entered against the Firm in
one claim in February 2024. The Russian court may
JPMorgan Chase & Co./2023 Form 10-K
299
Notes to consolidated financial statements
disregard the parties’ contractual agreement on forum
selection, and may not recognize foreign sanctions laws as a
basis for not making payment. The Firm holds assets in
Russia, which could be seized if the claims are granted and
enforced.
SEC Inquiries. The Firm is responding to requests from the
SEC regarding aspects of certain advisory programs within
J.P. Morgan Securities LLC, including aggregation of
accounts for billing, discounting advisory fees, and selecting
portfolio managers. Separately, the Firm is responding to
requests from the SEC in connection with the timing of the
Firm’s liquidation of shares distributed in-kind to certain
investment vehicles that invest in third-party managed
private funds. The Firm is cooperating with the SEC in
regard to both inquires.
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. The
settlement of this action by the parties has been
preliminarily approved, and is subject to final court
approval.
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, and in July 2023, the plaintiff
filed an appeal, which remains pending. 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. Defendants
have moved to dismiss the complaint. 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. In December 2023, the court granted Defendants’
motion to dismiss the amended complaint.
A shareholder derivative suit was filed in May 2023 in the
United States District Court for the Southern District of New
York against various officers and directors of the Firm
asserting breaches of fiduciary duty and unjust enrichment
based upon allegations that the defendants caused the Firm
to retain Jeffrey Epstein as a client of the bank after
defendants knew, or should have known, that Epstein was
using the Firm’s financial services to facilitate his alleged
sex trafficking activities. In December 2023, the Court
dismissed the derivative 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.
Trading Venues Investigations. The Firm has been
responding to government inquiries regarding its processes
to inventory trading venues and confirm the completeness
of certain data fed to trade surveillance platforms. The Firm
self-identified that certain trading and order data through
the CIB was not feeding into its trade surveillance
platforms. The Firm has completed enhancements to the
CIB’s venue inventory and data completeness controls, and
other remediation is underway. The Firm has also
performed a review of the data not originally surveilled,
which is nearly complete, and has not identified any
employee misconduct, harm to clients or the market. While
the identified gaps represent a fraction of the overall
activity across the CIB, the data gap on one venue, which
largely consisted of sponsored client access activity, was
significant. The Firm is dedicated to maintaining rigorous
controls and continuously enhancing the reliability of its
trade infrastructure. The Firm expects to enter into
resolutions with two U.S. regulators that will require the
Firm to, among other things, complete its remediation,
engage an independent consultant, and pay aggregate civil
penalties of approximately $350 million. The Firm is also in
advanced negotiations with a third U.S. regulator, but there
is no assurance that such discussions will result in a
resolution. The Firm does not expect any disruption of
service to clients as a result of these resolutions.
* * *
300
JPMorgan Chase & Co./2023 Form 10-K
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 $1.4 billion, $266
million and $426 million for the years ended December 31,
2023, 2022 and 2021, respectively. There is no assurance
that the Firm’s litigation reserves will not need to be
adjusted in the future.
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.
JPMorgan Chase & Co./2023 Form 10-K
301
Notes to consolidated financial statements
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(c)
Expense(d)
Income before
income tax
expense
Net income
Total assets
2023
Europe/Middle East/Africa
Asia-Pacific
Latin America/Caribbean
Total international
North America(a)(b)
Total
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
$
20,974
$
11,947 $
9,027 $
6,402
$
529,335
10,605
3,294
34,873
123,231
6,550
1,971
20,468
76,024
4,055
1,323
14,405
47,207
2,709
994
10,105
39,447
251,588
83,003
863,926
3,011,467
$
158,104
$
96,492 $
61,612 $
49,552
$ 3,875,393
$
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
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
860,841
40,954
2,882,726
$
121,649
$
62,087 $
59,562 $
48,334 $ 3,743,567
(e)
(e)
(e)
(a) Substantially reflects the U.S.
(b) Includes the impact of First Republic. Refer to Note 34 for additional information.
(c) Revenue is composed of net interest income and noninterest revenue.
(d) Expense is composed of noninterest expense and the provision for credit losses.
(e) Total assets for the U.K. were approximately $352 billion, $357 billion and $365 billion at December 31, 2023, 2022 and 2021, respectively.
302
JPMorgan Chase & Co./2023 Form 10-K
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 services, that enable clients to
manage payments globally across liquidity and account
solutions, commerce solutions, clearing, trade and working
capital. 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, clearing 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 $5.0
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 solely 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.
JPMorgan Chase & Co./2023 Form 10-K
303
Notes to consolidated financial statements
Segment results
The following table provides a summary of the Firm’s
segment results as of or for the years ended December 31,
2023, 2022 and 2021, 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 current allocation methodology incorporates
Basel III Standardized RWA and the GSIB surcharge, both
under rules currently in effect, as well as 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)
Consumer & Community Banking
Corporate & Investment Bank
Commercial Banking
Asset & Wealth Management
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
Noninterest revenue
$ 15,118
$ 14,886
(b)
$ 17,092
(b)
$ 40,315
$ 36,202
(b)
$ 38,403
(b)
$ 3,494
$ 3,336
$ 3,929
$ 13,560
$ 12,507
$ 13,071
Net interest income
Total net revenue
55,030
39,928
32,787
8,492
11,900
13,540
12,052
8,197
6,079
6,267
5,241
3,886
70,148
54,814
49,879
48,807
48,102
51,943
15,546
11,533
10,008
19,827
17,748
16,957
Provision for credit losses
6,899
3,813
(6,989)
121
1,158
(1,174)
1,970
1,268
(947)
159
128
(227)
Noninterest expense
34,819
31,208
(b)
29,028
(b)
28,594
27,350
(b)
25,553
(b)
5,378
4,719
4,041
12,780
11,829
10,919
Income/(loss) before
income tax expense/
(benefit)
Income tax expense/
(benefit)
Net income/(loss)
Average equity
Total assets
Return on equity
Overhead ratio
28,430
19,793
27,840
20,092
19,594
27,564
8,198
5,546
6,914
6,888
5,791
6,265
7,198
4,877
(b)
6,883
(b)
5,963
4,669
(b)
6,457
(b)
2,055
1,333
1,668
1,661
1,426
1,528
$ 21,232
$ 14,916
$ 20,957
$ 14,129
$ 14,925
$ 21,107
$ 6,143
$ 4,213
$ 5,246
$ 5,227
$ 4,365
$ 4,737
$ 54,349
$ 50,000
$ 50,000
$ 108,000 $ 103,000
$ 83,000
$ 29,507
$ 25,000
$ 24,000
$ 16,671
$ 17,000
$ 14,000
642,951
514,085
500,370
1,338,168
1,334,296
1,259,896
300,325
257,106
230,776
245,512
232,037
234,425
38 %
29 %
50
57
41 %
58
13 %
14 %
59
57
25 %
49
20 %
16 %
21 %
31 %
25 %
33 %
35
41
40
64
67
64
304
JPMorgan Chase & Co./2023 Form 10-K
(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
2023
2022
2021
2023
2022
2021
2023
2022
2021
$
132 $
(1,798)
$
68
$
(3,782) $
(3,148)
$
(3,225)
$ 68,837
$ 61,985
$ 69,338
1,878
(3,551)
(480)
(434)
(430)
89,267
66,710
52,311
(3,483)
(4,262)
(3,582)
(3,655)
158,104
128,695
121,649
7,906
8,038
171
5,601
80
22
1,034
81
1,802
—
—
—
—
2,266
(555)
(976)
(233)
2,821 $
(743)
73,529 $
58,068
$
$
(5,366)
(4,262)
(3,582)
(1,653)
(4,262)
(3,582)
$
$
(3,713) $
79,968
$
— $
— $
—
—
$
$
1,348,437
1,328,219
1,518,100
NM
NM
NM
NM
NM
NM
NA
NM
NM
NA
NM
NM
—
—
(3,655)
(3,655)
—
—
NA
NM
NM
9,320
6,389
(9,256)
87,172
76,140
71,343
61,612
46,166
59,562
12,060
8,490
11,228
$ 49,552
$ 37,676
$ 48,334
$ 282,056
$ 253,068
$ 250,968
3,875,393
3,665,743
3,743,567
17 %
55
14 %
59
19 %
59
(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.
(b) In the first quarter of 2023, the allocations of revenue and expense to CCB associated with a Merchant Services revenue sharing agreement were
discontinued and are now retained in Payments in CIB. Prior-period amounts have been revised to conform with the current presentation.
As a result of the organizational changes that were announced on January 25, 2024, the Firm will be reorganizing its business
segments to reflect the manner in which the segments will be managed. The reorganization of the business segments is
expected to be effective in the second quarter of 2024.
JPMorgan Chase & Co./2023 Form 10-K
305
Statements of cash flows
Year ended December 31,
(in millions)
Operating activities
Net income
2023
2022
2021
$ 49,552 $ 37,676 $ 48,334
Less: Net income of subsidiaries
and affiliates
62,868
44,699
51,252
Parent company net loss
(13,316)
(7,023)
(2,918)
Cash dividends from subsidiaries
and affiliates
61,000
40,500
10,000
Other operating adjustments
9,412
(23,747)
(12,677)
Net cash provided by/(used in)
operating activities
57,096
9,730
(5,595)
Investing activities
Net change in:
Notes to consolidated financial statements
Note 33 – Parent Company
The following tables present Parent Company-only financial
statements.
Statements of income and comprehensive income
2023
2022
2021
$ 61,000 $ 40,500 $ 10,000
—
—
498
—
32
Interest income from subsidiaries
1,166
Year ended December 31,
(in millions)
Income
Dividends from subsidiaries and
affiliates:
Bank and bank holding
company
Non-bank
Other income/(expense) from
subsidiaries:
Bank and bank holding
company
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
1,801
(3,497)
250
(654)
335
5,271
859
366
1,137
63,563
43,107
12,394
Advances to and investments in
subsidiaries and affiliates, net
(25,000)
All other investing activities, net
25
—
31
(3,000)
31
Net cash provided by/(used in)
investing activities
(24,975)
31
(2,969)
2,258
22,731
5,353
11,714
(14,658)
(1,349)
3,431
2,817
17,403
10,890
46,160
32,217
1,525
1,260
2,637
6,641
5,753
1,329
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
1,867
4,199
41,252
Redemption of preferred stock
(2,249)
(4,491)
2,647
—
—
—
19,398
41,389
49,169
(25,105)
(18,294)
(15,543)
—
—
—
7,350
(7,434)
(2,575)
Net income
$ 49,552 $ 37,676 $ 48,334
Treasury stock repurchased
(9,824)
(3,162)
(18,408)
Other comprehensive income/
(loss), net
6,898
(17,257)
(8,070)
Comprehensive income
$ 56,450 $ 20,419 $ 40,264
Balance sheets
December 31, (in millions)
Assets
Cash and due from banks
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:
2023
2022
$
42 $
41
9,804
3,198
9,806
2,727
152
21
136
46
Bank and bank holding company
568,472
532,759
Non-bank
Other assets
Total assets
1,045
8,962
1,064
9,108
$ 591,696 $ 555,687
Dividends paid
(13,463)
(13,562)
(12,858)
All other financing activities, net
(879)
(1,205)
(1,238)
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
(32,122)
(6,759)
8,544
(1)
3,002
(20)
9,847
6,845
6,865
$ 9,846 $ 9,847 $ 6,845
Cash interest paid
Cash income taxes paid, net(d)
$ 13,742 $ 7,462 $ 4,065
10,291
6,941
15,259
(a) Includes interest expense for intercompany derivative hedges on the
Firm’s LTD and related fair value adjustments, which is offset by
related amounts in Other interest expense/(income).
(b) At December 31, 2023, long-term debt that contractually matures in
2024 through 2028 totaled $9.1 billion, $27.5 billion, $29.1 billion,
$20.1 billion, and $21.8 billion, respectively.
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
Total liabilities and stockholders’ equity
$ 591,696 $ 555,687
$ 22,777 $ 24,164
(c) Refer to Notes 20 and 28 for information regarding the Parent
999
1,130
11,500
10,440
228,542
227,621
263,818
263,355
327,878
292,332
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 $13.2 billion, $11.3 billion, and $13.9 billion
for the years ended December 31, 2023, 2022 and 2021,
respectively.
306
JPMorgan Chase & Co./2023 Form 10-K
assets, which represent the fair value of the CSLA and
SFSLA on the acquisition date, are reflected in the total
assets acquired.
As part of the consideration paid, JPMorgan Chase issued a
five-year, $50 billion secured note to the FDIC (the
"Purchase Money Note"). The Purchase Money Note bears
interest at a fixed rate of 3.4% and is secured by certain of
the acquired loans. The Purchase Money Note is prepayable
upon notice to the holder.
The Firm had placed a $5 billion deposit with First Republic
Bank on March 16, 2023, as part of $30 billion of deposits
provided by a consortium of large U.S. banks. The Firm's $5
billion deposit was effectively settled as part of the
acquisition and the associated allowance for credit losses
was released upon closing. The Firm subsequently repaid
the remaining $25 billion of deposits to the consortium of
banks, including accrued interest through the payment date
on May 9, 2023.
Note 34 – Business combinations
On May 1, 2023, JPMorgan Chase acquired certain assets
and assumed certain liabilities of First Republic Bank (the
"First Republic acquisition") from the Federal Deposit
Insurance Corporation (“FDIC”), as receiver. The Firm
believes that the First Republic acquisition is
complementary to the Firm's existing franchises. The
acquisition resulted in an estimated bargain purchase gain,
which represents the excess of the estimated fair value of
the net assets acquired above the purchase price.
The Firm has determined that this acquisition constitutes a
business combination under U.S. GAAP. Accordingly, the
initial recognition of the assets acquired and liabilities
assumed were generally measured at their estimated fair
values as of May 1, 2023. The determination of those fair
values required management to make certain market-based
assumptions about expected future cash flows, discount
rates and other valuation inputs at the time of the
acquisition. The Firm believes that the fair value estimates
of the assets acquired and liabilities assumed provide a
reasonable basis for determining the estimated bargain
purchase gain.
The Firm and the FDIC have not yet completed the
settlement process under which the purchase price, and the
identification of the assets acquired and liabilities assumed,
will be finalized. The finalization of this settlement process
may impact the amount of the estimated bargain purchase
gain. The purchase and assumption agreement entered into
with the FDIC allows for final settlement to occur up to a
year after the acquisition date.
In addition, the purchase price and the estimated bargain
purchase gain could change pending management's
finalization of its acquisition date fair value estimates for
certain of the assets acquired and liabilities assumed, which
may take place up to one year from the acquisition date, as
permitted by U.S. GAAP.
The First Republic acquisition resulted in a preliminary
estimated bargain purchase gain of $2.7 billion. The Firm
has continued to progress in the settlement process with
the FDIC and refine its acquisition-date fair value estimates.
As a result, during the year ended December 31, 2023,
adjustments totaling $63 million were made, increasing the
estimated bargain purchase gain to $2.8 billion.
In connection with the First Republic acquisition, the Firm
and the FDIC entered into two shared-loss agreements with
respect to certain loans and lending-related commitments
(the "shared-loss assets"): the Commercial Shared-Loss
Agreement ("CSLA") and the Single-Family Shared-Loss
Agreement (“SFSLA”). The CSLA covers 80% of credit
losses, on a pari passu basis, over 5 years with a
subsequent 3-year recovery period for certain acquired
commercial loans and other real estate exposure. The
SFSLA covers 80% of credit losses, on a pari passu basis,
for 7 years for certain acquired loans secured by mortgages
on real property or shares in cooperative property
constituting a primary residence. The indemnification
JPMorgan Chase & Co./2023 Form 10-K
307
Notes to consolidated financial statements
The computation of the purchase price, the estimated fair values of the assets acquired and liabilities assumed as part of the
First Republic acquisition and the related estimated bargain purchase gain are presented below, and reflect the adjustments
made through December 31, 2023 to the acquisition-date fair value of the net assets acquired.
(in millions)
Purchase price consideration
Amounts paid/due to the FDIC, net of cash acquired(a)
Purchase Money Note (at fair value)
Settlement of First Republic deposit and other related party transactions(b)
Contingent consideration - Shared-loss agreements
Purchase price consideration
Assets
Securities
Loans(c)
Core deposit and customer relationship intangibles
Indemnification assets - Shared-loss agreements
Accounts receivable and other assets(c)(d)
Total assets acquired
Liabilities
Deposits
FHLB advances
Lending-related commitments
Accounts payable and other liabilities(c)(d)
Deferred tax liabilities
Total liabilities assumed
Fair value of net assets acquired
Estimated gain on acquisition, after-tax
Fair value purchase
price allocation as of
May 1, 2023
$
$
$
$
$
$
$
$
13,524
48,848
5,447
15
67,834
30,285
153,242
1,455
675
6,574
192,231
87,572
27,919
2,614
2,793
724
121,622
70,609
2,775
(a) Includes $10.6 billion of cash paid to the FDIC at acquisition and $3.6 billion payable to the FDIC, less cash acquired of $680 million.
(b) Includes $447 million of securities financing transactions with First Republic Bank that were effectively settled on the acquisition date.
(c) In the fourth quarter, certain assets and liabilities were reclassified resulting in a $762 million increase to loans, an $870 million decrease to accounts
receivable and other assets and a $30 million increase to accounts payable and other liabilities.
(d) Other assets include $1.2 billion in tax-oriented investments and $683 million of lease right-of-use assets. Other liabilities include the related tax-oriented
investment liabilities of $669 million and lease liabilities of $748 million. Refer to Note 14 and Note 18 for additional information.
The issuance of the $50 billion Purchase Money Note, the effective settlement of the Firm's $5 billion deposit and
$447 million of securities financing with First Republic Bank, and the $3.6 billion payable to the FDIC as part of the purchase
price consideration are considered non-cash transactions.
The following describes the accounting policies and fair value methodologies generally used by the Firm for the following
assets acquired and liabilities assumed: core deposit and customer relationship intangibles, shared-loss agreements and the
related indemnification assets, Purchase Money Note, and FHLB advances.
For further discussion of the Firm’s accounting policies and valuation methodologies, refer to Note 2 and Note 3 for fair value
measurement, Note 10 for investment securities, Note 12 for loans, Note 17 for deposits, and Note 28 for lending-related
commitments.
Core deposit and customer relationship intangibles
Core deposit and certain wealth management customer
relationship intangibles were acquired as part of the First
Republic acquisition. The core deposit intangible of $1.3
billion was valued by discounting estimated after-tax cost
savings over the remaining useful life of the deposits using
the favorable source of funds method. The after-tax cost
savings were estimated based on the difference between
the cost of maintaining the core deposit base relative to the
cost of next best alternative funding sources available to
market participants. The customer relationship intangibles
of $180 million were valued by discounting estimated after-
tax earnings over their remaining useful lives using the
multi-period excess earnings method. Both intangible asset
valuations utilized assumptions that the Firm believes a
market participant would use to estimate fair values, such
as growth and attrition rates, projected fee income as well
as related costs to service the relationships, and discount
rates. The core deposit and customer relationship
intangibles will be amortized over a projected period of
future cash flows of approximately 7 years. Refer to Note
15 for further discussion on other intangible assets.
Indemnification assets - Shared-loss agreements
The indemnification assets represent forecasted recoveries
from the FDIC associated with the shared-loss assets over
the respective shared-loss recovery periods. The
indemnification assets were recorded at fair value in other
308
JPMorgan Chase & Co./2023 Form 10-K
assets on the Consolidated balance sheets on the
acquisition date. The fair values of the indemnification
assets were estimated based on the timing of the forecasted
losses underlying the related allowance for credit losses.
The subsequent quarterly remeasurement of the
indemnification assets is based on changes in the amount
and timing of forecasted losses in the allowance for credit
losses associated with the shared-loss assets and is
recorded in other income. Under certain circumstances, the
Firm may be required to make a payment to the FDIC upon
termination of the shared-loss agreements based on the
level of actual losses and recoveries on the shared-loss
assets. The estimated potential future payment is reflected
as contingent consideration as part of the purchase price
consideration.
Purchase Money Note and FHLB advances
The Purchase Money Note is recorded in long-term debt on
the Consolidated balance sheets. The fair value of the
Purchase Money Note was estimated based on a discounted
cash flow methodology and incorporated estimated market
discount rates.
The FHLB advances assumed in the acquisition are recorded
in short-term borrowings and in long-term debt. The fair
values of the FHLB advances were based on a discounted
cash flow methodology and considered the observed FHLB
advance issuance rates.
Loans
The following table presents the unpaid principal balance ("UPB") and estimated fair values of the loans acquired as of May 1,
2023, and reflects adjustments to the acquisition-date fair value of the loans acquired through December 31, 2023.
(in millions)
Residential real estate
Auto and other
Total consumer
Secured by real estate
Commercial & industrial
Other(a)
Total wholesale
Total loans
May 1, 2023
UPB
Fair value
$
106,240
$
3,093
109,333
37,117
4,332
23,499
64,948
92,053
2,030
94,083
33,602
3,932
21,625
59,159
$
174,281
$
153,242
(a) In the fourth quarter, certain assets and liabilities were reclassified resulting in a $900 million increase to the UPB and a $762 million increase to the fair
value of Other wholesale loans.
Unaudited pro forma condensed combined financial information
Included in the Firm's Consolidated statements of income are noninterest revenue, net interest income and net income
contributed by First Republic of $4.4 billion, $3.7 billion and $4.1 billion, respectively, for the year ended December 31,
2023.
The following table presents certain unaudited pro forma financial information for the year ended December 31, 2023 and
2022 as if the First Republic acquisition had occurred on January 1, 2022, including recognition of the estimated bargain
purchase gain of $2.8 billion and the provision for credit losses of $1.2 billion. Additional adjustments include the interest on
the Purchase Money Note and the impact of amortizing and accreting certain estimated fair value adjustments related to
intangible assets, loans and lending-related commitments.
The Firm expects to achieve operating cost savings and other business synergies resulting from the acquisition that are not
reflected in the pro forma amounts. The pro forma information is not necessarily indicative of the historical results of
operations had the acquisition occurred on January 1, 2022, nor is it indicative of the results of operations in future periods,
particularly in light of recent changes in market and economic conditions.
(in millions)
Noninterest revenue
Net interest income
Net income
Year ended December 31,
2023
$
65,816 $
90,856
48,665
2022
66,510
71,005
41,089
JPMorgan Chase & Co./2023 Form 10-K
309
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 2021 through 2023.
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 2023,
2022 and 2021.
(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)(c)
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
Federal funds purchased and securities loaned or sold under repurchase agreements
Short-term borrowings
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
2023
Interest(g)
$
21,797
15,079
7,983
16,001
17,390
1,560
18,950
83,589
7,669
171,068
(h)
499,396
317,159
193,228
376,928
573,914
30,886
604,800
1,248,076
86,121
3,325,708
(20,762)
24,853
160,087
64,227
63,212
204,899
3,822,224
$
$
$
40,016
13,259
1,894
9,396
953
15,803
81,321
1,698,529
$
256,086
37,468
286,605
18,648
296,433
2,593,769
660,538
30,501
46,355
181,601
3,512,764
27,404
282,056
309,460
(f)
$
3,822,224
Rate
4.36 %
4.75
4.13
4.25
3.03
5.05
3.13
6.70
8.90
5.14
(i)
2.36 %
5.18
5.05
3.28
5.11
5.33
3.14
2.00 %
2.70
Net interest income and net yield on interest-earning assets
$
89,747
(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) The rates reflect the impact of interest earned on cash collateral where the cash collateral has been netted against certain derivative payables.
(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.
310
JPMorgan Chase & Co./2023 Form 10-K
Rate
1.35 %
1.51
1.09
3.21
1.66
4.39
1.77
4.81
2.93
2.78
(i)
(Table continued from previous page)
Average
balance
2022
Interest(g)
$
9,039
4,632
2,237
9,097
10,372
1,224
11,596
52,877
3,763
93,241
(h)
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
$
$
$
1,748,666
$
10,082
0.58 %
3,721
747
3,246
226
8,075
26,097
1.53
1.62
1.21
2.02
3.23
1.02
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
Average
balance
2021
Interest(g)
Rate
$
$
$
$
512
958
(385)
6,856
6,460
1,336
7,796
41,663
894
58,294
(h)
(j)
(i)
0.07 %
0.36
(0.20)
2.42
1.15
4.33
1.31
4.02
0.73
1.81
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
$
259,302
44,618
241,431
14,595
250,378
2,482,993
674,485
36,656
60,318
186,755
3,441,207
33,027
250,968
283,995
(f)
$
3,725,202
$
67,144
1.76 %
2.00
$
52,741
1.59 %
1.64
(e) The combined balance of trading liabilities – debt and equity instruments was $153.3 billion, $138.1 billion and $128.2 billion for the years ended
December 31, 2023, 2022 and 2021, respectively.
(f) The ratio of average stockholders’ equity to average assets was 8.1%, 7.4% and 7.6% for the years ended December 31, 2023, 2022 and 2021,
respectively. The return on average stockholders’ equity, based on net income, was 16.0%, 13.2% and 17.0% for the years ended December 31, 2023,
2022 and 2021, respectively.
(g) Interest includes the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(h) Included fees and commissions on loans of $2.2 billion, $1.8 billion and $1.9 billion for the years ended December 31, 2023, 2022 and 2021,
respectively
(i) The annualized rate for securities based on amortized cost was 3.09%, 1.75% and 1.33% for the years ended December 31, 2023, 2022 and 2021,
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.
JPMorgan Chase & Co./2023 Form 10-K
311
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 2021
through 2023. 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:
2023
Average balance
Interest
Rate
$
296,784 $
202,612
15,348
6,449
5.17 %
3.18
U.S.
Non-U.S.
Securities borrowed:
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.(a)
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:
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(b)
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
155,304
161,855
133,805
59,423
248,541
128,387
568,505
36,295
1,137,162
110,914
86,121
3,325,708
1,290,110
408,419
197,049
59,037
205,388
118,685
18,648
293,218
3,215
2,593,769
731,939
3,325,708 $
$
$
8,330
6,749
6,239
1,744
10,721
5,280
17,469
1,481
76,884
6,705
7,669
171,068
26,253
13,763
10,639
2,620
7,774
3,516
953
15,749
54
81,321
81,321
89,747
77,923
11,824
5.36
4.17
4.66
2.93
4.31
4.11
3.07
4.08
6.76
6.05
8.90
5.14
2.03
3.37
5.40
4.44
3.79
2.96
5.11
5.37
1.68
3.14
2.45 %
2.70 %
3.01
1.61
24.7
20.2
(a) The rates reflect the impact of interest earned on cash collateral where that cash collateral has been netted against certain derivative payables.
(b) Represents the amount of noninterest-bearing liabilities funding interest-earning assets.
(c) Negative interest and rates reflect the net impact of interest earned offset by fees paid on client-driven prime brokerage securities borrowed transactions.
Refer to the “Net interest income” discussion in Consolidated Results of Operations on pages 54–57 for further information.
312
JPMorgan Chase & Co./2023 Form 10-K
(Table continued from previous page)
2022
2021
Average balance
Interest
Rate
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
$
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 $
$
$
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
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
0.13 %
(0.09)
0.26
0.43
(0.23)
(0.12)
(c)
(c)
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
JPMorgan Chase & Co./2023 Form 10-K
313
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 310-313 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)
2023 versus 2022
2022 versus 2021
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:
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:
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
$
(8,225) $ 16,155 $
(361)
5,189
7,930
4,828
$
(1,185) $
166
7,910 $
1,636
6,725
1,802
1,347
(629)
(411)
(95)
3,358
666
(1,690)
228
10,296
(258)
(3,749)
477
4,792
4,937
4,839
1,413
1,949
931
8,165
651
6,139
4,308
4,428
1,318
5,307
1,597
6,475
879
17,635
3,039
7,655
77,350
27,931
2,781
3,906
77,827
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
30,942
34,947
(1,284)
597
20,511
10,110
19,227
10,707
268
161
5,857
3,265
6,125
3,426
1,293
(480)
6,263
2,462
7,556
1,982
(466)
93
3,327
493
2,861
586
409
(17)
381
4,981
1,924
5,390
1,907
206
125
2,523
756
2,729
881
346
727
(69)
212
143
2,494
(3)
3,390
5,229
8
7,723
5
51,834
55,224
75
(31)
362
3,722
27
3,797
(4)
20,182
20,544
$
(2,913) $ 25,516 $ 22,603
$
3,643 $ 10,760 $ 14,403
314
JPMorgan Chase & Co./2023 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.
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”: Represents assets held
directly or indirectly on behalf of clients under safekeeping,
custody and servicing arrangements.
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
Bridge Financing Portfolio: A portfolio of held-for-sale
unfunded loan commitments and funded loans. The
unfunded commitments include both short-term bridge loan
commitments that will ultimately be replaced by longer
term financing as well as term loan commitments. The
funded loans include term loans and funded revolver
facilities.
CB: Commercial Banking
CCAR: Comprehensive Capital Analysis and Review
CCB: Consumer & Community Banking
CCB Consumer customer: A unique individual that has
financial ownership or decision-making power with respect
to accounts; excludes customers under the age of 18.
Where a customer uses the same identifier as both a
Consumer and a Small business, the customer is included in
both metrics.
CCB Small business customer: A unique business or legal
entity that has financial ownership or decision-making
power with respect to accounts. Where a customer uses the
same identifier as both a Consumer and a Small business,
the customer is included in both metrics.
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
CEO: Chief Executive Officer
CET1 Capital: Common equity Tier 1 capital
CFO: Chief Financial Officer
CFP: Contingency funding plan
CFTC: Commodity Futures Trading Commission
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.
JPMorgan Chase & Co./2023 Form 10-K
315
Glossary of Terms and Acronyms
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.
Criticized: Criticized loans, lending-related commitments
and derivative receivables that are classified as special
mention, substandard and doubtful categories for
regulatory purposes and are generally consistent with a
rating of CCC+/Caa1 and below, as defined by S&P and
Moody’s.
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: 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
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
FDM: "Financial difficulty modification" applies to loan
modifications effective January 1, 2023, and is deemed to
occur when the Firm modifies specific terms of the original
loan agreement. The following types of modifications are
considered FDMs: principal forgiveness, interest rate
reduction, other-than-insignificant payment delay, term
extension or a combination of these modifications.
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
316
JPMorgan Chase & Co./2023 Form 10-K
Glossary of Terms and Acronyms
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.
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
FINRA: Financial Industry Regulatory Authority
ISDA: International Swaps and Derivatives Association
Firm: JPMorgan Chase & Co.
JPMorgan Chase: 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
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.
Freddie Mac: Federal Home Loan Mortgage Corporation
J.P. Morgan Securities: J.P. Morgan Securities LLC
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.
JPMSE: J.P. Morgan SE
LCR: Liquidity coverage ratio
LDA: Loss Distribution Approach
LGD: Loss given default
FSB: Financial Stability Board
FTE: Fully taxable equivalent
FVA: Funding valuation adjustment
FX: Foreign exchange
G7: Group of Seven nations: Countries in the G7 are
Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
G7 government securities: Securities 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
LIBOR: London Interbank Offered Rate
LLC: Limited Liability Company
LOB: Line of business
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
JPMorgan Chase & Co./2023 Form 10-K
317
Glossary of Terms and Acronyms
and Commodities in CIB's Fixed Income Markets.
or her assets or the amount or source of his or her income.
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
MD&A: Management’s discussion and analysis
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.
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.
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
requirements, including prescriptive requirements related
to income and overall debt levels. New prime mortgage
borrowers provide full documentation and generally have
reliable payment histories.
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
Correspondent – Banks, thrifts, other mortgage banks and
other financial institutions that sell closed loans to the Firm.
Multi-asset: Any fund or account that allocates assets under
management to more than one asset class.
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
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:
318
JPMorgan Chase & Co./2023 Form 10-K
Glossary of Terms and Acronyms
• Interchange income: Fees earned by credit and debit
card issuers on sales transactions.
• Rewards 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.
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 satisfactions, predominantly real
estate owned and other commercial and personal property.
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.
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:
JPMorgan Chase & Co./2023 Form 10-K
319
Glossary of Terms and Acronyms
• 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.
– 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.
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.
PSU(s): 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
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: U.S. Securities and Exchange Commission
Securities financing agreements: Include resale,
repurchase, securities borrowed and securities loaned
agreements
Securitized Products Group: Comprised of Securitized
Products and tax-oriented investments.
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
320
JPMorgan Chase & Co./2023 Form 10-K
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
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
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
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” applies to loan
modifications granted prior to January 1, 2023 and 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
JPMorgan Chase & Co./2023 Form 10-K
321
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.;
Chairman, President and
Chief Executive Officer
GEICO
(Conglomerate and insurance)
Alicia Boler Davis 4
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)
Mellody Hobson4, 5
Co-CEO and President
Ariel Investments, LLC
(Investment management)
Operating Committee
Member of:
1 Audit Committee
2 Compensation & Management
Development Committee
3 Corporate Governance &
Nominating Committee
4 Risk Committee
5 Public Responsibility Committee
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, 5
Chairman and
Chief Executive Officer
General Dynamics
(Aerospace and defense)
Virginia M. Rometty 2, 3
Retired Executive Chairman,
President and Chief Executive Officer
International Business Machines
Corporation
(Technology)
Mark A. Weinberger 1
Retired Global Chairman and
Chief Executive Officer
Ernst & Young LLP
(Professional services)
James Dimon
Chairman and Chief Executive Officer
Lori A. Beer
Chief Information Officer
Takis T. Georgakopoulos
Global Head of Payments
Douglas B. Petno
Co-Head of Global Banking
Daniel E. Pinto
President and Chief Operating Officer
Ashley Bacon
Chief Risk Officer
Jeremy Barnum
Chief Financial Officer
Tim Berry
Global Head of Corporate
Responsibility; Chairman of the
Mid-Atlantic Region
Mary Callahan Erdoes
CEO, Asset & Wealth Management
Stacey Friedman
General Counsel
Teresa A. Heitsenrether
Chief Data & Analytics Officer
Jennifer A. Piepszak
Co-CEO, Commercial & Investment Bank
Marianne Lake
CEO, Consumer & Community Banking
Troy L. Rohrbaugh
Co-CEO, Commercial & Investment Bank
Robin Leopold
Head of Human Resources
Sanoke Viswanathan
Chief Strategy & Growth Officer;
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
322
JPMorgan Chase & Co./2023 Annual Report
Regional Chief Executive Officers
Asia Pacific
Europe/Middle East/Africa
Sjoerd Leenart
Regional CEO
Filippo Gori
Regional CEO;
Co-Head of Global Banking
Latin America/Canada
Alfonso Eyzaguirre
Regional CEO
Senior Country Officers and Location Heads
Asia Pacific
Europe/Middle East/Africa
Latin America/Caribbean
Poland
Michal Szwarc
Saudi Arabia
Bader A. Alamoudi
Sub-Saharan Africa
Kevin G. Latter
Switzerland
Reinnout Böttcher
Türkiye and Azerbaijan
Mustafa Bagriacik
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
India
Kaustubh Kulkarni
Japan
Steve Teru Rinoie
Korea
Howard Kim
Southeast Asia
Sudhir Goel
Indonesia
Gioshia Ralie
Malaysia
Hooi Ching Wong
Philippines
Carlos Ma. G Mendoza
Singapore
Wai Mei Hong
Thailand
Marco Sucharitkul
Taiwan
Carl K. Chien
Vietnam
Van Bich Phan
Austria
Stefan P, Povaly
Belgium
Tanguy A. Piret
Commonwealth of Independent
States
Timur Kunanbayev
France
Kyril Courboin
Germany
Stefan P. Povaly
Iberia
Ignacio de la Colina
Ireland
Marc Hussey
Israel
Roy Navon
Italy
Francesco Cardinali
Luxembourg
Philippe Ringard
Middle East and North Africa
Khaled Hobballah
The Netherlands
Cassander Verwey
Nordics
Klaus Thune/Jonas Wikmark
JPMorgan Chase Vice Chairs
Vittorio U. Grilli
David Mayhew
Peter L. Scher
323
JPMorgan Chase & Co./2023 Annual Report J.P. Morgan International Council
As of March 1, 2024
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
Armando Garza Sada
Chairman of the Board
ALFA, S.A.B. of C.V.
San Pedro Garza García, Mexico
Amin H. Nasser
President and Chief Executive Officer
Saudi Aramco
Dhahran, Saudi Arabia
Axel Dumas
Executive Chairman
Hermès International
Paris, France
John Elkann
Chief Executive Officer
EXOR N.V.
Turin, Italy
David Feffer
President
Suzano Holding
São Paulo, Brazil
Ignacio S. Galán
Executive Chairman
Iberdrola, S.A.
Madrid, Spain
Marcos Galperin
Chief Executive Officer
Mercado Libre
Montevideo, Uruguay
Alex Gorsky
Former Chairman and
Chief Executive Officer
Johnson & Johnson
New Brunswick, New Jersey
Joe Kaeser
Supervisory Board Chairman
Siemens Energy AG
Munich, Germany
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
The Hon. Condoleezza Rice
Principal
Rice, Hadley, Gates & Manuel LLC
Stanford, California
Nassef Sawiris
Executive Chair
OCI N.V.
London, United Kingdom
Ratan Naval Tata
Chairman Emeritus
Tata Sons Private Limited
Mumbai, India
Joseph C. Tsai
Chairman
Alibaba Group
Hong Kong, Hong Kong SAR
Jaime Augusto Zobel de Ayala
Chairman
Ayala Corporation
Makati City, Philippines
*Ex-officio
324
JPMorgan Chase & Co./2023 Annual Report Corporate headquarters
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Telephone: 212-270-6000
jpmorganchase.com
Annual Report on Form 10-K
The Annual Report on Form 10-K of
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U.S. Securities and Exchange Commission
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