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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
| | | | | | | | | | | | | | |
| For the quarterly period ended | | Commission file | |
| June 30, 2024 | | number | 1-5805 | |
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | |
| Delaware | | 13-2624428 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. employer
identification no.) |
| | | |
| 383 Madison Avenue, | | |
| New York, | New York | | 10179 |
| (Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (212) 270-6000
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock | JPM | The New York Stock Exchange |
Depositary Shares, each representing a one-four hundredth interest in a share of 5.75% Non-Cumulative Preferred Stock, Series DD | JPM PR D | The New York Stock Exchange |
Depositary Shares, each representing a one-four hundredth interest in a share of 6.00% Non-Cumulative Preferred Stock, Series EE | JPM PR C | The New York Stock Exchange |
Depositary Shares, each representing a one-four hundredth interest in a share of 4.75% Non-Cumulative Preferred Stock, Series GG | JPM PR J | The New York Stock Exchange |
| Depositary Shares, each representing a one-four hundredth interest in a share of 4.55% Non-Cumulative Preferred Stock, Series JJ | JPM PR K | The New York Stock Exchange |
Depositary Shares, each representing a one-four hundredth interest in a share of 4.625% Non-Cumulative Preferred Stock, Series LL | JPM PR L | The New York Stock Exchange |
| Depositary Shares, each representing a one-four hundredth interest in a share of 4.20% Non-Cumulative Preferred Stock, Series MM | JPM PR M | The New York Stock Exchange |
Guarantee of Callable Fixed Rate Notes due June 10, 2032 of JPMorgan Chase Financial Company LLC | JPM/32 | The New York Stock Exchange |
| Guarantee of Alerian MLP Index ETNs due January 28, 2044 of JPMorgan Chase Financial Company LLC | AMJB | NYSE Arca, Inc. |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
| Large accelerated filer | ☒ | Accelerated filer | ☐ |
| | | |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| | | |
| | Emerging growth company | ☐ |
| | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Number of shares of common stock outstanding as of June 30, 2024: 2,845,164,727
FORM 10-Q
TABLE OF CONTENTS
| | | | | | | | | | | |
| Page |
| Item 1. | | |
| | |
| | 91 |
| | 92 |
| | 93 |
| | 94 |
| | 95 |
| | 96 |
| | 191 |
| | 192 |
| | 194 |
| Item 2. | | |
| | 3 |
| | 4 |
| | 5 |
| | 9 |
| Consolidated Balance Sheets and Cash Flows Analysis | 15 |
| | 18 |
| | 20 |
| | 44 |
| | 45 |
| | 51 |
| | 61 |
| | 66 |
| | 78 |
| | 79 |
| | 85 |
| | 86 |
| | 89 |
| | 90 |
| Item 3. | | 202 |
| Item 4. | | 202 |
| |
| Item 1. | | 202 |
| Item 1A. | | 202 |
| Item 2. | | 202 |
| Item 3. | | 203 |
| Item 4. | | 203 |
| Item 5. | | 203 |
| Item 6. | | 204 |
JPMorgan Chase & Co.
Consolidated financial highlights (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the period ended, (in millions, except per share, ratio, employee data and where otherwise noted) | | | | | | | | Six months ended June 30, |
| 2Q24 | | 1Q24 | 4Q23 | 3Q23 | 2Q23 | | 2024 | | 2023 |
| Selected income statement data | | | | | | | | | | |
| Total net revenue | $ | 50,200 | | (e) | $ | 41,934 | | $ | 38,574 | | $ | 39,874 | | $ | 41,307 | | | $ | 92,134 | | (e) | $ | 79,656 | |
| Total noninterest expense | 23,713 | | (e) | 22,757 | | 24,486 | | 21,757 | | 20,822 | | | 46,470 | | (e) | 40,929 | |
Pre-provision profit(a) | 26,487 | | | 19,177 | | 14,088 | | 18,117 | | 20,485 | | | 45,664 | | | 38,727 | |
| Provision for credit losses | 3,052 | | | 1,884 | | 2,762 | | 1,384 | | 2,899 | | | 4,936 | | | 5,174 | |
| Income before income tax expense | 23,435 | | | 17,293 | | 11,326 | | 16,733 | | 17,586 | | | 40,728 | | | 33,553 | |
| Income tax expense | 5,286 | | | 3,874 | | 2,019 | | 3,582 | | 3,114 | | | 9,160 | | | 6,459 | |
Net income | $ | 18,149 | | | $ | 13,419 | | $ | 9,307 | | $ | 13,151 | | $ | 14,472 | | | $ | 31,568 | | | $ | 27,094 | |
| | | | | | | | | | |
| Earnings per share data | | | | | | | | | | |
Net income: Basic | $ | 6.13 | | | $ | 4.45 | | $ | 3.04 | | $ | 4.33 | | $ | 4.76 | | | $ | 10.58 | | | $ | 8.86 | |
| Diluted | 6.12 | | | 4.44 | | 3.04 | | 4.33 | | 4.75 | | | 10.56 | | | 8.85 | |
| Average shares: Basic | 2,889.8 | | | 2,908.3 | | 2,914.4 | | 2,927.5 | | 2,943.8 | | | 2,899.1 | | | 2,956.1 | |
| Diluted | 2,894.9 | | | 2,912.8 | | 2,919.1 | | 2,932.1 | | 2,948.3 | | | 2,903.9 | | | 2,960.5 | |
| | | | | | | | | | |
| Market and per common share data | | | | | | | | | | |
| Market capitalization | 575,463 | | | 575,195 | | 489,320 | | 419,254 | | 422,661 | | | 575,463 | | | 422,661 | |
| Common shares at period-end | 2,845.1 | | | 2,871.6 | | 2,876.6 | | 2,891.0 | | 2,906.1 | | | 2,845.1 | | | 2,906.1 | |
| Book value per share | 111.29 | | | 106.81 | | 104.45 | | 100.30 | | 98.11 | | | 111.29 | | | 98.11 | |
Tangible book value per share (“TBVPS”)(a) | 92.77 | | | 88.43 | | 86.08 | | 82.04 | | 79.90 | | | 92.77 | | | 79.90 | |
| Cash dividends declared per share | 1.15 | | | 1.15 | | 1.05 | | 1.05 | | 1.00 | | | 2.30 | | | 2.00 | |
| | | | | | | | | | |
| Selected ratios and metrics | | | | | | | | | | |
Return on common equity (“ROE”)(b) | 23 | | % | 17 | % | 12 | % | 18 | % | 20 | % | | 20 | | % | 19 | % |
Return on tangible common equity (“ROTCE”)(a)(b) | 28 | | | 21 | | 15 | | 22 | | 25 | | | 25 | | | 24 | |
Return on assets(b) | 1.79 | | | 1.36 | | 0.95 | | 1.36 | | 1.51 | | | 1.58 | | | 1.45 | |
| Overhead ratio | 47 | | | 54 | | 63 | | 55 | | 50 | | | 50 | | | 51 | |
| Loans-to-deposits ratio | 55 | | | 54 | | 55 | | 55 | | 54 | | | 55 | | | 54 | |
Firm Liquidity coverage ratio (“LCR”) (average) | 112 | | | 112 | | 113 | | 112 | | 112 | | | 112 | | | 112 | |
JPMorgan Chase Bank, N.A. LCR (average) | 125 | | | 129 | | 129 | | 123 | | 129 | | | 125 | | | 129 | |
Common equity Tier 1 (“CET1”) capital ratio(c)(d) | 15.3 | | | 15.0 | | 15.0 | | 14.3 | | 13.8 | | | 15.3 | | | 13.8 | |
Tier 1 capital ratio(c)(d) | 16.7 | | | 16.4 | | 16.6 | | 15.9 | | 15.4 | | | 16.7 | | | 15.4 | |
Total capital ratio(c)(d) | 18.5 | | | 18.2 | | 18.5 | | 17.8 | | 17.3 | | | 18.5 | | | 17.3 | |
Tier 1 leverage ratio(c) | 7.2 | | | 7.2 | | 7.2 | | 7.1 | | 6.9 | | | 7.2 | | | 6.9 | |
Supplementary leverage ratio (“SLR”)(c) | 6.1 | | | 6.1 | | 6.1 | | 6.0 | | 5.8 | | | 6.1 | | | 5.8 | |
| | | | | | | | | | |
Selected balance sheet data (period-end) | | | | | | | | | | |
| Trading assets | $ | 733,882 | | | $ | 754,409 | | $ | 540,607 | | $ | 601,993 | | $ | 636,996 | | | $ | 733,882 | | | $ | 636,996 | |
| Investment securities, net of allowance for credit losses | 589,998 | | | 570,679 | | 571,552 | | 585,380 | | 612,203 | | | 589,998 | | | 612,203 | |
| Loans | 1,320,700 | | | 1,309,616 | | 1,323,706 | | 1,310,059 | | 1,300,069 | | | 1,320,700 | | | 1,300,069 | |
| Total assets | 4,143,003 | | | 4,090,727 | | 3,875,393 | | 3,898,333 | | 3,868,240 | | | 4,143,003 | | | 3,868,240 | |
| Deposits | 2,396,530 | | | 2,428,409 | | 2,400,688 | | 2,379,526 | | 2,398,962 | | | 2,396,530 | | | 2,398,962 | |
| Long-term debt | 394,028 | | | 395,872 | | 391,825 | | 362,793 | | 364,078 | | | 394,028 | | | 364,078 | |
| Common stockholders’ equity | 316,652 | | | 306,737 | | 300,474 | | 289,967 | | 285,112 | | | 316,652 | | | 285,112 | |
| Total stockholders’ equity | 340,552 | | | 336,637 | | 327,878 | | 317,371 | | 312,516 | | | 340,552 | | | 312,516 | |
Employees | 313,206 | | | 311,921 | | 309,926 | | 308,669 | | 300,066 | | | 313,206 | | | 300,066 | |
| | | | | | | | | | |
| Credit quality metrics | | | | | | | | | | |
| Allowances for credit losses | $ | 25,514 | | | $ | 24,695 | | $ | 24,765 | | $ | 24,155 | | $ | 24,288 | | | $ | 25,514 | | | $ | 24,288 | |
| Allowance for loan losses to total retained loans | 1.81 | | % | 1.77 | % | 1.75 | % | 1.73 | % | 1.75 | % | | 1.81 | | % | 1.75 | % |
| Nonperforming assets | $ | 8,423 | | | $ | 8,265 | | $ | 7,597 | | $ | 8,131 | | $ | 7,838 | | | $ | 8,423 | | | $ | 7,838 | |
| Net charge-offs | 2,231 | | | 1,956 | | 2,164 | | 1,497 | | 1,411 | | | 4,187 | | | 2,548 | |
| Net charge-off rate | 0.71 | | % | 0.62 | % | 0.68 | % | 0.47 | % | 0.47 | % | | 0.67 | | % | 0.45 | % |
(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 18-19 for a further discussion of these measures.
(b)Ratios are based upon annualized amounts.
(c)The ratios reflect the Current Expected Credit Losses (“CECL”) capital transition provisions. Refer to Note 21 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2023 Form 10-K for additional information.
(d)Reflects the Firm’s ratios under the Basel III Standardized approach. Refer to Capital Risk Management on pages 45-50 for additional information.
(e)Total net revenue included a $7.9 billion net gain related to Visa shares, and total noninterest expense included a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Executive Overview on pages 5-8, and Notes 2 and 5 of this Form 10-Q, as well as pages 8 and 100 of JPMorgan Chase’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 for further information.
The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) for the second quarter of 2024.
This Quarterly Report on Form 10-Q for the second quarter of 2024 (“Form 10-Q”) should be read together with JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”). Refer to the Glossary of terms and acronyms and line of business metrics on pages 194-201 for definitions of terms and acronyms used throughout this Form 10-Q.
This Form 10-Q 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-Q and are subject to significant risks and uncertainties. Refer to Forward-looking Statements on page 90 of this Form 10-Q and Part I, Item 1A, Risk Factors on pages 9-33 of the 2023 Form 10-K 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.
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 $4.1 trillion in assets and $340.6 billion in stockholders’ equity as of June 30, 2024. 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.
Business Segment Reorganization: Effective in the second quarter of 2024, the Firm reorganized its reportable business segments by combining the former Corporate & Investment Bank and Commercial Banking business segments to form one reportable segment, the Commercial & Investment Bank (“CIB”). As a result of the reorganization, the Firm now has three 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 Commercial & Investment Bank (“CIB”) and Asset & Wealth Management (“AWM”) segments. Refer to Business Segment Results on pages 20-22 of this Form 10-Q and Recent events on page 52 of the 2023 Form 10-K for additional information on the reorganization, as well as Note 25 of this Form 10-Q and Note 32 of the 2023 Form 10-K, for a description of the Firm’s business segments and the products and services they provide to their respective client bases.
First Republic: 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”). References in this Form 10-Q to "associated with First Republic," "related to First Republic," "impact of First Republic" or similar expressions refer to the relevant effects of the First Republic acquisition, as well as subsequent related business and activities, as applicable. Refer to Note 26 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-Q, is not incorporated by reference into this Form 10-Q or the Firm’s other filings with the SEC.
This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of this Form 10-Q. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates affecting the Firm, this Form 10-Q and the 2023 Form 10-K should be read together and in their entirety.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Financial performance of JPMorgan Chase | | | | | | | | |
(unaudited) As of or for the period ended, (in millions, except per share data and ratios) | Three months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
Selected income statement data | | | | | | | | | | | |
| Noninterest revenue | $ | 27,454 | | | $ | 19,528 | | | 41 | % | | $ | 46,306 | | | $ | 37,166 | | | 25 | % |
| Net interest income | 22,746 | | | 21,779 | | | 4 | | | 45,828 | | | 42,490 | | | 8 | |
| Total net revenue | 50,200 | | | 41,307 | | | 22 | | | 92,134 | | | 79,656 | | | 16 | |
| Total noninterest expense | 23,713 | | | 20,822 | | | 14 | | | 46,470 | | | 40,929 | | | 14 | |
| Pre-provision profit | 26,487 | | | 20,485 | | | 29 | | | 45,664 | | | 38,727 | | | 18 | |
| Provision for credit losses | 3,052 | | | 2,899 | | | 5 | | | 4,936 | | | 5,174 | | | (5) | |
| Net income | 18,149 | | | 14,472 | | | 25 | | | 31,568 | | | 27,094 | | | 17 | |
| Diluted earnings per share | 6.12 | | | 4.75 | | | 29 | | | 10.56 | | | 8.85 | | | 19 | |
| Selected ratios and metrics | | | | | | | | | | | |
| Return on common equity | 23 | % | | 20 | % | | | | 20 | % | | 19 | % | | |
Return on tangible common equity | 28 | | | 25 | | | | | 25 | | | 24 | | | |
| Book value per share | $ | 111.29 | | | $ | 98.11 | | | 13 | | | $ | 111.29 | | | $ | 98.11 | | | 13 | |
| Tangible book value per share | 92.77 | | | 79.90 | | | 16 | | | 92.77 | | | 79.90 | | | 16 | |
Capital ratios(a)(b) | | | | | | | | | | | |
| CET1 capital | 15.3 | % | | 13.8 | % | | | | 15.3 | % | | 13.8 | % | | |
| Tier 1 capital | 16.7 | | | 15.4 | | | | | 16.7 | | | 15.4 | | | |
| Total capital | 18.5 | | | 17.3 | | | | | 18.5 | | | 17.3 | | | |
| Memo: | | | | | | | | | | | |
NII excluding Markets(c) | $ | 22,938 | | | $ | 22,370 | | | 3 | | | $ | 45,958 | | | $ | 43,306 | | | 6 | |
NIR excluding Markets(c) | 20,261 | | | 12,969 | | | 56 | | | 31,776 | | | 22,931 | | | 39 | |
Markets(c) | 7,793 | | | 7,062 | | | 10 | | | 15,806 | | | 15,500 | | | 2 | |
| Total net revenue - managed basis | $ | 50,992 | | | $ | 42,401 | | | 20 | | | $ | 93,540 | | | $ | 81,737 | | | 14 | |
(a)The ratios reflect the CECL capital transition provisions. Refer to Note 21 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2023 Form 10-K for additional information.
(b)Reflects the Firm’s ratios under the Basel III Standardized approach. Refer to Capital Risk Management on pages 45-50 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.
First Republic: JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank from the FDIC on May 1, 2023. As a result, the current-quarter and year-to-date results include the three- and six-month impact of First Republic, respectively, compared with two months in the prior-year periods. Where meaningful to the results, this is referred to in this Form 10-Q as the "timing impact" of First Republic.
Visa shares: On April 8, 2024, Visa Inc. commenced an initial exchange offer for Visa Class B-1 common shares. On May 6, 2024, the Firm announced that Visa had accepted the Firm’s tender of its 37.2 million Visa Class B-1 common shares in exchange for a combination of Visa Class B-2 common shares and Visa Class C common shares (“Visa C shares”), resulting in a $7.9 billion net gain for the period ended June 30, 2024.
In addition, the Firm contributed $1.0 billion of Visa shares to the JPMorgan Chase Foundation. Refer to Principal Investment Risk and Market Risk Management on page 78 and pages 79-84, respectively, and Notes 2 and 5 for additional information.
Comparisons noted in the sections below are for the second quarter of 2024 versus the second quarter of 2023, unless otherwise specified.
Firmwide overview
For the second quarter of 2024, JPMorgan Chase reported net income of $18.1 billion, up 25%, earnings per share of $6.12, ROE of 23% and ROTCE of 28%. The Firm's results included the following in Corporate: a $7.9 billion net gain related to Visa shares, a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation, and $546 million of net investment securities losses.
•Total net revenue was $50.2 billion, up 22%, reflecting:
–Net interest income ("NII") of $22.7 billion, up 4%, driven by the impact of balance sheet mix and higher rates; higher revolving balances in Card Services; the timing impact of First Republic; and higher Markets net interest income, largely offset by deposit margin compression across the LOBs and lower average deposit balances in CCB. NII excluding Markets was $22.9 billion, up 3%.
–Noninterest revenue ("NIR") was $27.5 billion, up 41%, driven by the $7.9 billion net gain related to Visa shares, higher investment banking fees, higher asset management fees, lower net investment securities losses in Treasury and CIO, and higher Markets noninterest revenue. The prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with First Republic.
•Noninterest expense was $23.7 billion, up 14%, predominantly driven by higher compensation expense, including higher revenue-related compensation and growth in employees, as well as the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation.
•The provision for credit losses was $3.1 billion, reflecting $2.2 billion of net charge-offs and a net addition to the allowance for credit losses of $821 million. Net charge-offs increased by $820 million, predominantly driven by the seasoning of newer vintages and continued credit normalization in Card Services. The net addition to the allowance for credit losses included $609 million in consumer, primarily in Card Services, and $189 million in wholesale.
The provision in the prior year was $2.9 billion, reflecting a $1.5 billion net addition to the allowance for credit losses, including $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments, and $1.4 billion of net charge-offs.
•The total allowance for credit losses was $25.5 billion at June 30, 2024. The Firm had an allowance for loan losses to retained loans coverage ratio of 1.81%, compared with 1.75% in the prior year.
•The Firm’s nonperforming assets totaled $8.4 billion at June 30, 2024, up 7%, driven by wholesale nonaccrual loans, which reflect downgrades in Real Estate, concentrated in Office, partially offset by net sales of consumer nonaccrual loans. Refer to Wholesale Credit Portfolio and Consumer Credit Portfolio on pages 65-74 and pages 61-64, respectively, for additional information.
•Firmwide average loans of $1.3 trillion were up 6%, predominantly driven by higher loans in CCB and CIB, including the timing impact of First Republic.
•Firmwide average deposits of $2.4 trillion were down 1%, reflecting:
–a decline in CCB in existing accounts primarily due to increased customer spending,
predominantly offset by
–net issuances of structured notes in CIB as a result of client demand in Markets, and net inflows in Payments,
–the timing impact of First Republic, and
–an increase in Corporate related to the Firm's international consumer initiatives.
Refer to Liquidity Risk Management on pages 51-58 for additional information.
Selected capital and other metrics
•CET1 capital was $267 billion, and the Standardized and Advanced CET1 ratios were 15.3% and 15.5%, respectively.
•SLR was 6.1%.
•TBVPS grew 16%, ending the second quarter of 2024 at $92.77.
•As of June 30, 2024, the Firm had eligible end-of-period High Quality Liquid Assets (“HQLA”) of approximately $841 billion and unencumbered marketable securities with a fair value of approximately $623 billion, resulting in approximately $1.5 trillion of liquidity sources. Refer to Liquidity Risk Management on pages 51-58 for additional information.
Refer to Consolidated Results of Operations and Consolidated Balance Sheets Analysis on pages 9-14 and pages 15-16, respectively, for a further discussion of the Firm's results, including the provision for credit losses; and Notes 5 and 26 for additional information on First Republic.
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 18-19 for a further discussion of each of these measures.
Business segment highlights
Selected business metrics for each of the Firm’s lines of business ("LOB") are presented below for the second quarter of 2024.
| | | | | | | | |
CCB ROE 30% | | •Average deposits down 7% year-over-year ("YoY"), down 1% quarter-over-quarter ("QoQ"); client investment assets up 14% •Average loans up 10% YoY including First Republic, flat QoQ; Card Services net charge-off rate of 3.50% •Debit and credit card sales volume(a) up 7% •Active mobile customers(b) up 7% |
CIB ROE 17% | | •#1 ranking for Global Investment Banking fees with 9.5% wallet share YTD •Markets revenue up 10%, with Fixed Income Markets up 5% and Equity Markets up 21% •Average Banking & Payments loans up 2% YoY, flat QoQ; average client deposits(c) up 2% YoY, up 1% QoQ |
| | |
AWM ROE 32% | | •Assets under management ("AUM") of $3.7 trillion, up 15% •Average loans up 2% YoY, flat QoQ; average deposits up 7% YoY due to the allocation of First Republic deposits to AWM in 4Q23, flat QoQ |
(a)Excludes Commercial Card.
(b)Users of all mobile platforms who have logged in within the past 90 days.
(c)Represents client deposits and other third-party liabilities pertaining to the Payments and Securities Services businesses.
Refer to the Business Segment Results on pages 20-43 for a detailed discussion of results by business segment.
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 the first six months of 2024, consisting of approximately:
| | | | | | | | |
$1.4 trillion | | Total credit provided and capital raised (including loans and commitments) |
| | |
$120 billion | | Credit for consumers |
| | |
$20 billion | | Credit for U.S. small businesses |
| | |
$1.3 trillion | | Credit and capital for corporations and non-U.S. government entities(a) |
| | |
$30 billion | | Credit and capital for nonprofit and U.S. government entities(b) |
(a)Credit and capital for corporations and non-U.S. government entities include Individuals and Individual Entities primarily consisting of Global Private Bank clients within AWM.
(b)Includes states, municipalities, hospitals and universities.
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-Q, and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements on page 90 of this Form 10-Q and Part I, Item 1A, Risk Factors on pages 9-33 of the 2023 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, and net interest income excluding Markets, to be approximately $91 billion, market dependent.
•Management expects adjusted expense to be approximately $92 billion, market dependent.
•Management expects the net charge-off rate in Card Services to be approximately 3.40%.
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 18-19.
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 FDIC, as receiver.
The Firm continues to progress in the conversion of operations, and the integration of clients, products and services, associated with the First Republic acquisition to align with the Firm’s businesses and operations. The Firm expects that these actions will be substantially complete by the end of 2024.
Refer to Note 26 for additional information related to First Republic.
Regulatory developments
On June 21, 2024, the Federal Reserve and the FDIC announced joint determinations on the Firm’s 2023 resolution plan, which identified no deficiencies and one shortcoming that must be satisfactorily addressed in the Firm’s next resolution plan due on July 1, 2025.
Refer to Supervision and regulation on pages 4-8 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s resolution plan.
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| CONSOLIDATED RESULTS OF OPERATIONS |
This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2024 and 2023, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment's results. Refer to pages 86-88 of this Form 10-Q and pages 155–158 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations.
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| Revenue | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Investment banking fees | $ | 2,304 | | | $ | 1,513 | | | 52 | % | | $ | 4,258 | | | $ | 3,162 | | | 35 | % |
| Principal transactions | 6,814 | | | 6,910 | | | (1) | | | 13,604 | | | 14,525 | | | (6) | |
| Lending- and deposit-related fees | 1,828 | | | 1,828 | | | — | | | 3,730 | | | 3,448 | | | 8 | |
| Asset management fees | 4,302 | | | 3,774 | | | 14 | | | 8,448 | | | 7,239 | | | 17 | |
| Commissions and other fees | 1,924 | | | 1,739 | | | 11 | | | 3,729 | | | 3,434 | | | 9 | |
| | | | | | | | | | | |
| Investment securities losses | (547) | | | (900) | | | 39 | | | (913) | | | (1,768) | | | 48 | |
| Mortgage fees and related income | 348 | | | 278 | | | 25 | | | 623 | | | 499 | | | 25 | |
| Card income | 1,332 | | | 1,094 | | | 22 | | | 2,550 | | | 2,328 | | | 10 | |
Other income(a)(b) | 9,149 | | (c) | 3,292 | | (d) | 178 | | | 10,277 | | (c) | 4,299 | | (d) | 139 | |
| Noninterest revenue | 27,454 | | | 19,528 | | | 41 | | | 46,306 | | | 37,166 | | | 25 | |
| Net interest income | 22,746 | | | 21,779 | | | 4 | | | 45,828 | | | 42,490 | | | 8 | |
| Total net revenue | $ | 50,200 | | | $ | 41,307 | | | 22 | % | | $ | 92,134 | | | $ | 79,656 | | | 16 | % |
(a) Included operating lease income of $689 million and $716 million for the three months ended June 30, 2024 and 2023, respectively, and $1.4 billion and $1.5 billion for the six months ended June 30, 2024 and 2023, respectively. Refer to Note 5 for additional information.
(b) Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures guidance, the amortization of certain of the Firm’s alternative energy tax-oriented investments that was previously recognized in other income is now being recognized in income tax expense. Refer to Notes 1, 5 and 13 for additional information.
(c) Included the net gain related to Visa shares of $7.9 billion for the three and six months ended June 30, 2024. Refer to Notes 2 and 5 for additional information.
(d) Included the preliminary estimated bargain purchase gain of $2.7 billion for the three and six months ended June 30, 2023, associated with the First Republic acquisition. Refer to Notes 5 and 26 for additional information.
Quarterly results
Investment banking fees increased in CIB reflecting:
•higher debt underwriting fees predominantly driven by higher industry-wide issuance in leveraged loans, high-yield bonds and high-grade bonds,
•higher equity underwriting fees driven by follow-on offerings, IPOs and private placements, reflecting wallet share gains amid favorable market conditions, and
•higher advisory fees driven by a higher number of large completed transactions compared with a challenging prior-year quarter.
Refer to CIB segment results on pages 28-35 and Note 5 for additional information.
Principal transactions revenue decreased, reflecting in CIB:
•lower Fixed Income Markets revenue in Rates, Currencies and Emerging Markets, and Commodities, partially offset by higher revenue in Securitized Products,
•a loss of $87 million in Credit Adjustments & Other in CIB, compared with a gain of $36 million in the prior year, and
•higher Equity Markets revenue in Prime Finance and Equity Derivatives.
The decrease in principal transactions revenue also included lower revenue in Treasury and CIO.
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 28-35 and pages 41-43, respectively, and Note 5 for additional information.
Lending- and deposit-related fees was flat as higher other lending- and deposit-related fees in CIB were offset by lower amortization in the current quarter associated with the purchase discount on certain short-dated First Republic lending-related commitments, predominantly in AWM. Refer to CCB, CIB and AWM segment results on pages 23-27, pages 28-35 and pages 36-40, respectively, and Note 5 for additional information.
Asset management fees increased driven by higher average market levels and net inflows in AWM and CCB. Refer to CCB and AWM segment results on pages 23-27 and pages 36-40, respectively, and Note 5 for additional information.
Commissions and other fees increased and included higher brokerage commissions and fees in CIB and AWM, and higher annuity sales commissions in CCB. Refer to CCB, CIB and AWM segment results on pages 23-27, pages 28-35 and pages 36-40, respectively, and Note 5 for additional information.
Investment securities losses decreased related to sales of U.S. Treasuries and U.S. GSE and government agency MBS, associated with repositioning the investment securities portfolio in Treasury and CIO. Refer to Corporate segment results on pages 41-43 and Note 9 for additional information.
Mortgage fees and related income increased in Home Lending, predominantly reflecting higher production revenue. Refer to CCB segment results on pages 23-27 and Note 14 for additional information.
Card income increased in CCB, reflecting higher net interchange on increased debit and credit card sales volume, and higher annual fees, partially offset by an increase in amortization of new account origination costs, reflecting continued growth in Card Services.
The prior-year net interchange included an increase to the rewards liability due to adjustments to the terms of certain reward programs. Refer to CCB segment results on pages 23-27 and Note 5 for additional information.
Other income increased, reflecting:
•in Corporate
–the $7.9 billion net gain related to Visa shares;
–the prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition, and
•the impact of the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, resulting in the amortization of certain of the Firm's alternative energy tax-oriented investments previously recognized in other income now being recognized in income tax expense.
Refer to Notes 1, 5 and 13 for additional information on the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance; Notes 2 and 5 for additional information on Visa shares and; Note 26 for additional information on the First Republic acquisition.
Net interest income increased, driven by the impact of balance sheet mix and higher rates; higher revolving balances in Card Services; the timing impact of First Republic; and higher Markets net interest income, largely offset by deposit margin compression across the LOBs and lower average deposit balances in CCB.
The Firm’s average interest-earning assets were $3.5 trillion, up $166 billion, and the yield was 5.57%, up 56 basis points (“bps”). The net yield on these assets, on an FTE basis, was 2.62%, flat when compared to the prior year. The net yield excluding Markets was 3.86%, up 3 bps.
Refer to the Consolidated average balance sheets, interest and rates schedule on page 192 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 18-19 for a further discussion of net yield excluding Markets.
Year-to-date results
Investment banking fees increased, reflecting in CIB:
•higher debt underwriting fees predominantly driven by higher industry-wide issuance in leveraged loans, high-grade bonds and high-yield bonds, and
•higher equity underwriting fees driven by higher IPOs, follow-on and convertible securities offerings.
Principal transactions revenue decreased predominantly in CIB, reflecting:
•lower Fixed Income Markets revenue in Rates, and Commodities, partially offset by higher revenue in Securitized Products,
•higher Equity Markets revenue in Prime Finance and Equity Derivatives, and
•losses of $102 million in Credit Adjustments & Other in CIB compared with losses of $117 million in the prior year.
Lending- and deposit-related fees increased, reflecting in CIB, higher lending-related fees, including loan commitment fees, and higher deposit-related fees, including cash management fees in Payments.
Asset management fees increased driven by higher average market levels and net inflows in AWM and CCB, as well as the timing impact of First Republic in CCB.
Commissions and other fees increased and included higher annuity sales commissions in CCB, as well as higher brokerage commissions and fees, and custody fees in CIB and AWM.
Investment securities losses decreased related to sales of U.S. GSE and government agency MBS and U.S. Treasuries, associated with repositioning the investment securities portfolio in Treasury and CIO.
Mortgage fees and related income increased in Home Lending, predominantly reflecting higher production revenue, which included the timing impact of First Republic.
Card income increased in CCB, reflecting higher net interchange on increased debit and credit card sales volume, as well as higher annual fees, largely offset by an increase in amortization of new account origination costs, reflecting continued growth in Card Services.
Other income increased, reflecting:
•in Corporate
–the $7.9 billion net gain related to Visa shares;
–the prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition, and
•the impact of the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, resulting in the amortization of certain of the Firm's alternative energy tax-oriented investments previously recognized in other income now being recognized in income tax expense.
The prior year included a gain of $339 million on the original minority interest in China International Fund Management ("CIFM") in AWM.
Refer to AWM segment results on pages 36-40 for additional information on CIFM.
Net interest income increased driven by the impact of balance sheet mix and higher rates; the timing impact of First Republic; higher revolving balances in Card Services; and higher Markets net interest income, partially offset by deposit margin compression across the LOBs and lower average deposit balances in CCB.
The Firm’s average interest-earning assets were $3.5 trillion, up $197 billion, and the yield was 5.56%, up 71 bps. The net yield on these assets, on an FTE basis, was 2.66%, an increase of 3 bps. The net yield excluding Markets was 3.85%, up 3 bps.
Refer to Executive Overview on pages 5-8 for additional information on the timing impact of First Republic.
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| Provision for credit losses | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Consumer, excluding credit card | $ | 144 | | | $ | 555 | | | (74) | % | | $ | 221 | | | $ | 803 | | | (72) | % |
| Credit card | 2,429 | | | 1,324 | | | 83 | | | 4,266 | | | 2,546 | | | 68 | |
| Total consumer | 2,573 | | | 1,879 | | | 37 | | | 4,487 | | | 3,349 | | | 34 | |
| Wholesale | 456 | | | 1,007 | | | (55) | | 400 | | | 1,811 | | | (78) | |
| Investment securities | 23 | | | 13 | | | 77 | | | 49 | | | 14 | | | 250 | |
| Total provision for credit losses | $ | 3,052 | | | $ | 2,899 | | | 5 | % | | $ | 4,936 | | | $ | 5,174 | | | (5) | % |
Quarterly results
The provision for credit losses was $3.1 billion, reflecting $2.2 billion of net charge-offs and an $821 million net addition to the allowance for credit losses.
Net charge-offs included $2.0 billion in consumer, driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $267 million in wholesale.
The net addition to the allowance for credit losses included:
•$609 million in consumer, driven by Card Services, predominantly due to loan growth and updates to certain macroeconomic variables, and
•$189 million in wholesale, driven by the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates, as well as net downgrade activity, primarily in Real Estate, largely offset by the impact of changes in the loan and lending-related commitment portfolios.
The provision in the prior year was $2.9 billion, reflecting a $1.5 billion net addition to the allowance for credit losses and net charge-offs of $1.4 billion. The net addition included $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments.
Refer to CCB segment results on pages 23-27, CIB on pages 28-35, AWM on pages 36-40, Corporate on pages 41-43; Allowance for Credit Losses on pages 75-77; Critical Accounting Estimates Used by the Firm on pages 86-88; Notes 11 and 12 for additional information on the credit portfolio and the allowance for credit losses.
Year-to-date results
The provision for credit losses was $4.9 billion, reflecting $4.2 billion of net charge-offs and a $749 million net addition to the allowance for credit losses.
Net charge-offs included $3.8 billion in consumer, predominantly driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $353 million in wholesale, primarily in Real Estate, concentrated in Office.
The net addition to the allowance for credit losses included:
•$653 million in consumer, reflecting a $753 million net addition in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $125 million net reduction in Home Lending, and
•$47 million in wholesale, driven by
–a net addition of $707 million, reflecting net downgrade activity, primarily in Real Estate, and the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $660 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios and updates to certain macroeconomic variables.
The provision in the prior year was $5.2 billion, reflecting a $2.6 billion net addition to the allowance for credit losses and net charge-offs of $2.5 billion. The net addition included $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments in the second quarter of 2023.
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| Noninterest expense | | | | | | | | | | | |
| (in millions) | Three months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
Compensation expense | $ | 12,953 | | | $ | 11,216 | | | 15 | % | | $ | 26,071 | | | $ | 22,892 | | | 14 | % |
| Noncompensation expense: | | | | | | | | | | | |
| Occupancy | 1,248 | | | 1,070 | | | 17 | | | 2,459 | | | 2,185 | | | 13 | |
Technology, communications and equipment(a) | 2,447 | | | 2,267 | | | 8 | | | 4,868 | | | 4,451 | | | 9 | |
| Professional and outside services | 2,722 | | | 2,561 | | | 6 | | | 5,270 | | | 5,009 | | | 5 | |
| Marketing | 1,221 | | | 1,122 | | | 9 | | | 2,381 | | | 2,167 | | | 10 | |
Other expense | 3,122 | | (d) | 2,586 | | | 21 | | | 5,421 | | (d) | 4,225 | | | 28 | |
Total noncompensation expense | 10,760 | | | 9,606 | | | 12 | | | 20,399 | | | 18,037 | | | 13 | |
Total noninterest expense | $ | 23,713 | | | $ | 20,822 | | | 14 | % | | $ | 46,470 | | | $ | 40,929 | | | 14 | % |
Certain components of other expense(b) | | | | | | | | | | | |
| Legal expense | $ | 317 | | | $ | 420 | | | | | $ | 245 | | | $ | 596 | | | |
| FDIC-related expense | 291 | | | 338 | | | | | 1,264 | | | 655 | | | |
Operating losses(c) | 323 | | | 304 | | | | | 622 | | | 603 | | | |
(a)Includes depreciation expense associated with auto operating lease assets. Refer to Note 16 for additional information.
(b)Refer to Note 5 for additional information.
(c)Predominantly fraud losses in CCB associated with customer deposit accounts, credit and debit cards.
(d)Included a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
Quarterly results
Compensation expense increased driven by:
•higher volume- and revenue-related compensation across the LOBs,
•an increase in employees, primarily in front office and technology, and
•the impact of First Republic, predominantly in CCB and Corporate, as the prior-year expense related to individuals associated with First Republic who were not employees of the Firm until July 2023, was recognized in other expense in Corporate,
Noncompensation expense increased as a result of:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in Corporate,
•higher investments in technology and marketing, predominantly in CCB, and
•higher occupancy expense,
partially offset by
•lower legal expense, reflecting a decline in Corporate, largely offset by an increase in CIB, and
•the alignment of expense to compensation expense, as noted above, partially offset by the timing impact associated with First Republic.
Refer to Note 26 for additional information on the First Republic acquisition; Notes 2 and 5 for additional information on Visa shares and other expense.
Year-to-date results
Compensation expense increased driven by:
•higher volume- and revenue-related compensation across the LOBs,
•an increase in employees, primarily in front office and technology, and
•the impact of First Republic, predominantly in CCB and Corporate, as the prior-year expense related to individuals associated with First Republic who were not employees of the Firm until July 2023, was recognized in other expense in Corporate.
Noncompensation expense increased as a result of:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in Corporate,
•the $725 million increase to the FDIC special assessment recognized in the first quarter of 2024 in Corporate,
•higher investments in technology and marketing, predominantly in CCB,
•the timing impact associated with First Republic, partially offset by the alignment of expense to compensation expense, as noted above, and
•higher occupancy expense,
partially offset by
•lower legal expense in Corporate and CIB.
Refer to Executive Overview on pages 5-8 for additional information on the timing impact of First Republic.
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| Income tax expense | | | | | | | |
| (in millions) | Three months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Income before income tax expense | $ | 23,435 | | | $ | 17,586 | | | 33 | % | | $ | 40,728 | | | $ | 33,553 | | | 21 | % |
| Income tax expense | 5,286 | | (a) | 3,114 | | | 70 | | | 9,160 | | (a) | 6,459 | | | 42 | |
| Effective tax rate | 22.6 | | % | 17.7 | % | | | | 22.5 | | % | 19.3 | % | | |
(a)Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures guidance, the amortization of certain of the Firm’s alternative energy tax-oriented investments is now being recognized in income tax expense. Refer to Notes 1, 5 and 13 for additional information.
Quarterly results
The effective tax rate increased driven by:
•the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, and
•changes in the level and mix of income and expenses subject to U.S. federal, state and local taxes, which included the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year included the impact of the income tax expense associated with the First Republic acquisition that was reflected in the preliminary estimated bargain purchase gain, which resulted in a reduction in the Firm's effective tax rate.
Year-to-date results
The effective tax rate increased driven by:
•the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, and
•changes in the level and mix of income and expenses subject to U.S. federal, state and local taxes, which included the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year included the impact of the income tax expense associated with the First Republic acquisition that was reflected in the preliminary estimated bargain purchase gain, which resulted in a reduction in the Firm's effective tax rate.
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| CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS |
Consolidated balance sheets analysis
The following is a discussion of the significant changes between June 30, 2024 and December 31, 2023. 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 |
| (in millions) | June 30,
2024 | | December 31,
2023 | Change |
| Assets | | | | |
| Cash and due from banks | $ | 27,265 | | | $ | 29,066 | | (6) | % |
| Deposits with banks | 503,554 | | | 595,085 | | (15) | |
| Federal funds sold and securities purchased under resale agreements | 392,763 | | | 276,152 | | 42 | |
| Securities borrowed | 199,062 | | | 200,436 | | (1) | |
| Trading assets | 733,882 | | | 540,607 | | 36 | |
| Available-for-sale securities | 266,252 | | | 201,704 | | 32 | |
| Held-to-maturity securities | 323,746 | | | 369,848 | | (12) | |
| Investment securities, net of allowance for credit losses | 589,998 | | | 571,552 | | 3 | |
| Loans | 1,320,700 | | | 1,323,706 | | — | |
| Allowance for loan losses | (22,991) | | | (22,420) | | 3 | |
| Loans, net of allowance for loan losses | 1,297,709 | | | 1,301,286 | | — | |
| Accrued interest and accounts receivable | 135,692 | | | 107,363 | | 26 | |
| Premises and equipment | 30,582 | | | 30,157 | | 1 | |
| Goodwill, MSRs and other intangible assets | 64,525 | | | 64,381 | | — | |
| Other assets | 167,971 | | | 159,308 | | 5 | |
| Total assets | $ | 4,143,003 | | | $ | 3,875,393 | | 7 | % |
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Cash and due from banks and deposits with banks decreased driven by Markets activities in CIB and cash deployment in Treasury and CIO.
Federal funds sold and securities purchased under resale agreements increased driven by Markets, reflecting higher client-driven market-making activities and higher demand for securities to cover short positions, as well as when compared with seasonally lower levels at year-end.
Refer to Note 10 for additional information on securities purchased under resale agreements and securities borrowed.
Securities borrowed decreased driven by Markets, reflecting lower client-driven activities, predominantly offset by higher demand for securities to cover short positions.
Trading assets increased due to higher levels of equity and debt instruments in Markets related to client-driven market-making activities, and compared with seasonally lower levels at year-end; and to a lesser extent, an increase in short-term cash deployment in Treasury and CIO.
Refer to Notes 2 and 4 for additional information.
Investment securities increased due to:
•higher available-for-sale ("AFS") securities, reflecting net purchases, primarily U.S. Treasuries and non-U.S. government debt securities, partially offset by maturities and paydowns, and
•lower HTM securities primarily driven by maturities and paydowns.
Refer to Corporate segment results on pages 41-43, Investment Portfolio Risk Management on page 78, and Notes 2 and 9 for additional information.
Loans were relatively flat, and included:
•a decline in Home Lending as paydowns and loan sales outpaced originations, and
•higher loans in Card Services driven by growth in new accounts and revolving balances.
The allowance for loan losses increased, reflecting a net addition to the allowance for loan losses of $571 million, consisting of:
•$636 million in consumer, primarily in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $141 million net reduction in Home Lending,
partially offset by
•a net reduction of $65 million in wholesale, driven by
–a net reduction of $763 million, primarily due to the impact of changes in the loan portfolio and updates to certain macroeconomic variables,
predominantly offset by
–a net addition of $698 million, including net downgrade activity and the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates.
Refer to Consolidated Results of Operations and Credit and Investment Risk Management on pages 9-14 and pages 59-78, respectively, Critical Accounting Estimates Used by the Firm on pages 86-88, and Notes 2, 3, 11 and 12 for additional information on loans and the total allowance for credit losses; and Note 26 for additional information on the First Republic acquisition.
Accrued interest and accounts receivable increased predominantly driven by higher client activities in Markets.
Goodwill, MSRs and other intangible assets: refer to Note 14 for additional information.
Other assets increased predominantly as a result of higher deferred tax assets and the fair value of the Visa C shares. Refer to Notes 2 and 5 for additional information on Visa shares.
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| Selected Consolidated balance sheets data (continued) | |
| (in millions) | June 30,
2024 | | December 31,
2023 | Change |
| Liabilities | | | | |
| Deposits | $ | 2,396,530 | | | $ | 2,400,688 | | — | % |
| Federal funds purchased and securities loaned or sold under repurchase agreements | 400,832 | | | 216,535 | | 85 | |
| Short-term borrowings | 47,308 | | | 44,712 | | 6 | |
| Trading liabilities | 240,836 | | | 180,428 | | 33 | |
| Accounts payable and other liabilities | 295,813 | | | 290,307 | | 2 | |
| Beneficial interests issued by consolidated variable interest entities (“VIEs”) | 27,104 | | | 23,020 | | 18 | |
| Long-term debt | 394,028 | | | 391,825 | | 1 | |
| Total liabilities | 3,802,451 | | | 3,547,515 | | 7 | |
| Stockholders’ equity | 340,552 | | | 327,878 | | 4 | |
| Total liabilities and stockholders’ equity | $ | 4,143,003 | | | $ | 3,875,393 | | 7 | % |
Deposits decreased, reflecting:
•a decline in CCB in existing accounts, primarily driven by seasonal tax outflows and migration into higher-yielding investments, largely offset by new accounts,
predominantly offset by
•higher deposits in CIB due to net inflows in Securities Services and Payments, partially offset by net maturities of structured notes in Markets,
•higher deposits in Corporate predominantly driven by new product offerings related to the Firm's international consumer initiatives, and
•higher balances in AWM driven by new product offerings, and an increase in deposits in existing accounts due to a change in product offerings associated with First Republic, predominantly offset by continued migration into higher-yielding investments.
Federal funds purchased and securities loaned or sold under repurchase agreements increased driven by Markets, reflecting higher client-driven market-making activities and higher secured financing of trading assets, as well as when compared with seasonally lower levels at year-end.
Short-term borrowings increased driven by higher net issuance of structured notes in Markets.
Refer to Liquidity Risk Management on pages 51-58 for additional information on deposits, federal funds purchased and securities loaned or sold under repurchase agreements, and short-term borrowings; Notes 2 and 15 for deposits and Note 10 for federal funds purchased and securities loaned or sold under repurchase agreements; Note 26 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, and compared with seasonally lower levels at year-end. Refer to Notes 2 and 4 for additional information.
Accounts payable and other liabilities increased due to higher client activities in Payments and Markets.
Beneficial interests issued by consolidated VIEs increased driven by the issuance of credit card securitizations in Treasury and CIO, and higher levels of Firm-administered multi-seller conduit commercial paper held by third parties in CIB, in line with the Firm’s funding plans.
Refer to Liquidity Risk Management on pages 51-58 and Notes 13 and 22 for additional information, specifically Firm-sponsored VIEs and loan securitization trusts.
Long-term debt increased driven by net issuances of structured notes in CIB due to client demand, and net issuances of long-term debt in Treasury and CIO, largely offset by lower FHLB advances. Refer to Liquidity Risk Management on pages 51-58; and Note 26 for additional information on the First Republic acquisition.
Stockholders’ equity increased reflecting net income, largely offset by the impact of capital actions, including repurchases of common shares, common and preferred stock dividend payments and net redemption of preferred stock. Refer to Consolidated statements of changes in stockholders’ equity on page 94, Capital Actions on page 49, and Note 19 for additional information.
Consolidated cash flows analysis
The following is a discussion of cash flow activities during the six months ended June 30, 2024 and 2023.
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| (in millions) | | | | Six months ended June 30, |
| | | | | 2024 | | 2023 |
Net cash provided by/(used in) | | | | | | | | |
| Operating activities | | | | | | $ | (115,689) | | | $ | (92,376) | |
| Investing activities | | | | | | (137,618) | | | 5,551 | |
Financing activities | | | | | | 168,406 | | | 14,642 | |
| Effect of exchange rate changes on cash | | | | | | (8,431) | | | 72 | |
Net decrease in cash and due from banks and deposits with banks | | | | | | $ | (93,332) | | | $ | (72,111) | |
Operating activities
•In 2024, cash used resulted from higher trading assets and higher accrued interest and accounts receivable, partially offset by higher trading liabilities and higher accounts payable and other liabilities.
•In 2023, cash used resulted from higher trading assets and lower accounts payable and other liabilities, partially offset by lower other assets, securities borrowed, and accrued interest and accounts receivable.
Investing activities
•In 2024, cash used resulted from higher securities purchased under resale agreements and net purchases of investment securities.
•In 2023, cash provided reflected net proceeds from investment securities, largely offset by higher net originations of loans, higher securities purchased under resale agreements, and net cash used in the First Republic acquisition.
Financing activities
•In 2024, cash provided reflected higher securities loaned or sold under repurchase agreements and net proceeds from long-and short-term borrowings, partially offset by lower deposits and net redemption of preferred stock.
•In 2023, cash provided reflected higher securities loaned or sold under repurchase agreements, largely offset by net activity in 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, as well as net payments on 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 15-16, Capital Risk Management on pages 45-50, and Liquidity Risk Management on pages 51-58, and the Consolidated Statements of Cash Flows on page 95 of this Form 10-Q, and pages 102–109 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the activities affecting the Firm’s cash flows.
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EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES |
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 91-95.
In addition to analyzing the Firm’s results on a reported basis, the Firm also reviews and uses certain non-GAAP financial measures at the Firmwide and segment level. These non-GAAP measures include:
•Firmwide “managed” basis results, including the overhead ratio, which include certain reclassifications to present total net revenue from investments that receive tax credits and tax-exempt securities on a basis comparable to taxable investments and securities (“FTE” basis). 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;
•Pre-provision profit, which represents total net revenue less total noninterest expense;
•Net interest income, net yield, and noninterest revenue excluding Markets;
•TCE, ROTCE, and TBVPS; and
•Adjusted expense, which represents noninterest expense excluding Firmwide legal expense.
Refer to Explanation and Reconciliation of the Firm’s Use Of Non-GAAP Financial Measures and Key Performance Measures on pages 62–64 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of management’s use of non-GAAP financial measures.
The following summary tables provide a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, |
| 2024 | | 2023 |
| (in millions, except ratios) | Reported | | | Fully taxable-equivalent adjustments(b) | | Managed
basis | | Reported | | Fully taxable-equivalent adjustments(b) | | Managed
basis |
| Other income | $ | 9,149 | | (a) | | $ | 677 | | (a) | | $ | 9,826 | | | $ | 3,292 | | | $ | 990 | | | | $ | 4,282 | |
| Total noninterest revenue | 27,454 | | | | 677 | | | | 28,131 | | | 19,528 | | | 990 | | | | 20,518 | |
| Net interest income | 22,746 | | | | 115 | | | | 22,861 | | | 21,779 | | | 104 | | | | 21,883 | |
| Total net revenue | 50,200 | | | | 792 | | | | 50,992 | | | 41,307 | | | 1,094 | | | | 42,401 | |
| Total noninterest expense | 23,713 | | | | NA | | | 23,713 | | | 20,822 | | | NA | | | 20,822 | |
| Pre-provision profit | 26,487 | | | | 792 | | | | 27,279 | | | 20,485 | | | 1,094 | | | | 21,579 | |
| Provision for credit losses | 3,052 | | | | NA | | | 3,052 | | | 2,899 | | | NA | | | 2,899 | |
| Income before income tax expense | 23,435 | | | | 792 | | | | 24,227 | | | 17,586 | | | 1,094 | | | | 18,680 | |
| Income tax expense | 5,286 | | (a) | | 792 | | (a) | | 6,078 | | | 3,114 | | | 1,094 | | | | 4,208 | |
| Net income | $ | 18,149 | | | | NA | | | $ | 18,149 | | | $ | 14,472 | | | NA | | | $ | 14,472 | |
| | | | | | | | | | | | | | |
| Overhead ratio | 47 | % | | | NM | | | 47 | % | | 50 | % | | NM | | | 49 | % |
| | | | | | | | | | | | | | |
| Six months ended June 30, |
| 2024 | | 2023 |
| (in millions, except ratios) | Reported | | | Fully taxable-equivalent adjustments(b) | | Managed
basis | | Reported | | Fully taxable-equivalent adjustments(b) | | Managed
basis |
| Other income | $ | 10,277 | | (a) | | $ | 1,170 | | (a) | | $ | 11,447 | | | $ | 4,299 | | | $ | 1,857 | | | | $ | 6,156 | |
| Total noninterest revenue | 46,306 | | | | 1,170 | | | | 47,476 | | | 37,166 | | | 1,857 | | | | 39,023 | |
| Net interest income | 45,828 | | | | 236 | | | | 46,064 | | | 42,490 | | | 224 | | | | 42,714 | |
| Total net revenue | 92,134 | | | | 1,406 | | | | 93,540 | | | 79,656 | | | 2,081 | | | | 81,737 | |
| Total noninterest expense | 46,470 | | | | NA | | | 46,470 | | | 40,929 | | | NA | | | 40,929 | |
| Pre-provision profit | 45,664 | | | | 1,406 | | | | 47,070 | | | 38,727 | | | 2,081 | | | | 40,808 | |
| Provision for credit losses | 4,936 | | | | NA | | | 4,936 | | | 5,174 | | | NA | | | 5,174 | |
| Income before income tax expense | 40,728 | | | | 1,406 | | | | 42,134 | | | 33,553 | | | 2,081 | | | | 35,634 | |
| Income tax expense | 9,160 | | (a) | | 1,406 | | (a) | | 10,566 | | | 6,459 | | | 2,081 | | | | 8,540 | |
| Net Income | $ | 31,568 | | | | NA | | | $ | 31,568 | | | $ | 27,094 | | | NA | | | $ | 27,094 | |
| | | | | | | | | | | | | | |
| Overhead ratio | 50 | % | | | NM | | | 50 | % | | 51 | % | | NM | | | 50 | % |
(a)Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures guidance, under the modified retrospective method. Refer to Notes 1, 5 and 13 for additional information.
(b)Predominantly recognized in CIB and Corporate.
The following table provides information on net interest income, net yield, and noninterest revenue excluding Markets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
(in millions, except rates) | Three months ended June 30, | | Six months ended June 30, |
| 2024 | 2023 | | Change | | 2024 | 2023 | | Change |
| Net interest income – reported | $ | 22,746 | | $ | 21,779 | | | 4 | % | | $ | 45,828 | | $ | 42,490 | | | 8 | % |
Fully taxable-equivalent adjustments | 115 | | 104 | | | 11 | | | 236 | | 224 | | | 5 | |
Net interest income – managed basis(a) | $ | 22,861 | | $ | 21,883 | | | 4 | | | $ | 46,064 | | $ | 42,714 | | | 8 | |
Less: Markets net interest income(b) | (77) | | (487) | | | 84 | | | 106 | | (592) | | | NM |
Net interest income excluding Markets(a) | $ | 22,938 | | $ | 22,370 | | | 3 | | | $ | 45,958 | | $ | 43,306 | | | 6 | |
| | | | | | | | | |
| Average interest-earning assets | $ | 3,509,725 | | $ | 3,343,780 | | | 5 | | | $ | 3,477,620 | | $ | 3,280,619 | | | 6 | |
Less: Average Markets interest-earning assets(b) | 1,116,853 | | 1,003,877 | | | 11 | | | 1,073,964 | | 993,283 | | | 8 | |
| Average interest-earning assets excluding Markets | $ | 2,392,872 | | $ | 2,339,903 | | | 2 | | | $ | 2,403,656 | | $ | 2,287,336 | | | 5 | |
| | | | | | | | | |
| Net yield on average interest-earning assets – managed basis | 2.62 | % | 2.62 | % | | | | 2.66 | % | 2.63 | % | | |
Net yield on average Markets interest-earning assets(b) | (0.03) | | (0.19) | | | | | 0.02 | | (0.12) | | | |
| Net yield on average interest-earning assets excluding Markets | 3.86 | % | 3.83 | % | | | | 3.85 | % | 3.82 | % | | |
| | | | | | | | | |
Noninterest revenue – reported(c) | $ | 27,454 | | $ | 19,528 | | | 41 | | | $ | 46,306 | | $ | 37,166 | | | 25 | |
Fully taxable-equivalent adjustments(c) | 677 | | 990 | | | (32) | | | 1,170 | | 1,857 | | | (37) | |
| Noninterest revenue – managed basis | $ | 28,131 | | $ | 20,518 | | | 37 | | | $ | 47,476 | | $ | 39,023 | | | 22 | |
Less: Markets noninterest revenue(b)(d) | 7,870 | | 7,549 | | | 4 | | | 15,700 | | 16,092 | | | (2) | |
| Noninterest revenue excluding Markets | $ | 20,261 | | $ | 12,969 | | | 56 | | | $ | 31,776 | | $ | 22,931 | | | 39 | |
| | | | | | | | | |
Memo: Total Markets net revenue(b) | $ | 7,793 | | $ | 7,062 | | | 10 | | | $ | 15,806 | | $ | 15,500 | | | 2 | |
| | | | | | | | | |
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)Refer to page 34 for further information on Markets.
(c)Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures guidance, under the modified retrospective method. Refer to Notes 1, 5 and 13 for additional information.
(d)Includes the markets-related revenues of the former Commercial Banking business segment. Prior-period amounts have been revised to conform with the current presentation.
The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Period-end | | Average |
| (in millions, except per share and ratio data) | June 30,
2024 | Dec 31,
2023 | | Three months ended June 30, | | Six months ended June 30, |
| 2024 | 2023 | | 2024 | 2023 |
Common stockholders’ equity | $ | 316,652 | | $ | 300,474 | | | $ | 308,763 | | $ | 277,885 | | | $ | 304,519 | | $ | 274,560 | |
| Less: Goodwill | 52,620 | | 52,634 | | | 52,618 | | 52,342 | | | 52,616 | | 52,031 | |
Less: Other intangible assets | 3,058 | | 3,225 | | | 3,086 | | 2,191 | | | 3,122 | | 1,746 | |
Add: Certain deferred tax liabilities(a) | 2,969 | | 2,996 | | | 2,975 | | 2,902 | | | 2,982 | | 2,727 | |
| Tangible common equity | $ | 263,943 | | $ | 247,611 | | | $ | 256,034 | | $ | 226,254 | | | $ | 251,763 | | $ | 223,510 | |
| | | | | | | | |
| Return on tangible common equity | NA | NA | | 28 | % | 25 | % | | 25 | % | 24 | % |
| Tangible book value per share | $ | 92.77 | | $ | 86.08 | | | NA | NA | | NA | 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.
The Firm is managed on an LOB basis. Effective in the second quarter of 2024, the Firm reorganized its reportable business segments by combining the former Corporate & Investment Bank and Commercial Banking business segments to form one reportable segment, the Commercial & Investment Bank (“CIB”). As a result of the reorganization, the Firm now has three reportable business segments: Consumer & Community Banking, Commercial & Investment Bank, 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 currently 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 18-19 for a definition of managed basis.
The following table depicts the Firm’s reportable business segments.
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 or businesses within each segment join efforts to sell products and services to the Firm’s clients and customers, the participating businesses 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 segments/businesses involved in the transaction. The segment and business results reflect these revenue-sharing agreements.
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.
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 pages 79-84 for additional information.
Capital allocation
The amount of capital assigned to each business segment is referred to as equity. 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 48, and page 98 of JPMorgan Chase’s 2023 Form 10-K for additional information on capital allocation.
Refer to Business Segment Results – Description of business segment reporting methodology on pages 65–85 and Note 32 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of those methodologies.
Segment results – managed basis
The following tables summarize the Firm’s results by segment for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | Consumer & Community Banking | | Commercial & Investment Bank | | Asset & Wealth Management |
| (in millions, except ratios) | 2024 | | 2023 | Change | | 2024 | | 2023 | Change | | 2024 | 2023 | Change |
| Total net revenue | $ | 17,701 | | | $ | 17,233 | | 3 | % | | $ | 17,917 | | | $ | 16,507 | | 9 | % | | $ | 5,252 | | $ | 4,943 | | 6 | % |
| Total noninterest expense | 9,425 | | | 8,313 | | 13 | | 9,166 | | | 8,194 | | 12 | | | 3,543 | | 3,163 | | 12 | |
| Pre-provision profit/(loss) | 8,276 | | | 8,920 | | (7) | | 8,751 | | | 8,313 | | 5 | | | 1,709 | | 1,780 | | (4) | |
| Provision for credit losses | 2,643 | | | 1,862 | | 42 | | 384 | | | 1,135 | | (66) | | | 20 | | 145 | | (86) | |
| Net income/(loss) | 4,210 | | | 5,306 | | (21) | | 5,897 | | | 5,300 | | 11 | | | 1,263 | | 1,226 | | 3 | |
| Return on equity (“ROE”) | 30 | % | | 38 | % | | | 17 | % | | 15 | % | | | 32 | % | 29 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Corporate | | Total |
| (in millions, except ratios) | | | | | 2024 | | 2023 | Change | | 2024 | | 2023 | Change |
| Total net revenue | | | | | $ | 10,122 | (a) | $ | 3,718 | 172 | % | | $ | 50,992 | | (a) | $ | 42,401 | | 20 | % |
| Total noninterest expense | | | | | 1,579 | (b) | 1,152 | 37 | | | 23,713 | | (b) | 20,822 | | 14 | |
| Pre-provision profit/(loss) | | | | | 8,543 | | 2,566 | 233 | | | 27,279 | | | 21,579 | | 26 | |
| Provision for credit losses | | | | | 5 | | (243) | NM | | 3,052 | | | 2,899 | | 5 | |
| Net income/(loss) | | | | | 6,779 | | 2,640 | 157 | | | 18,149 | | | 14,472 | | 25 | |
| ROE | | | | | NM | | NM | | | 23 | % | | 20 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended June 30, | Consumer & Community Banking | | Commercial & Investment Bank | | Asset & Wealth Management |
| (in millions, except ratios) | 2024 | | 2023 | | Change | | 2024 | | 2023 | Change | | 2024 | 2023 | Change |
| Total net revenue | $ | 35,354 | | | $ | 33,689 | | | 5 | % | | $ | 35,501 | | | $ | 33,618 | | 6 | % | | $ | 10,361 | | $ | 9,727 | | 7 | % |
| Total noninterest expense | 18,722 | | | 16,378 | | | 14 | | | 17,890 | | | 16,985 | | 5 | | | 7,003 | | 6,254 | | 12 | |
| Pre-provision profit/(loss) | 16,632 | | | 17,311 | | | (4) | | | 17,611 | | | 16,633 | | 6 | | | 3,358 | | 3,473 | | (3) | |
| Provision for credit losses | 4,556 | | | 3,264 | | | 40 | | | 385 | | | 1,610 | | (76) | | | (37) | | 173 | | NM |
| Net income/(loss) | 9,041 | | | 10,549 | | | (14) | | | 12,519 | | | 11,068 | | 13 | | | 2,553 | | 2,593 | | (2) | |
| ROE | 33 | % | | 39 | % | | | | 18 | % | | 16 | % | | | 32 | % | 31 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended June 30, | | Corporate | | Total |
| (in millions, except ratios) | | | | | 2024 | | 2023 | Change | | 2024 | | 2023 | Change |
| Total net revenue | | | | | $ | 12,324 | (a) | $ | 4,703 | 162 | % | | $ | 93,540 | | (a) | $ | 81,737 | | 14 | % |
| Total noninterest expense | | | | | 2,855 | (b) | 1,312 | 118 | | | 46,470 | | (b) | 40,929 | | 14 | |
| Pre-provision profit/(loss) | | | | | 9,469 | | 3,391 | 179 | | | 47,070 | | | 40,808 | | 15 | |
| Provision for credit losses | | | | | 32 | | 127 | (75) | | | 4,936 | | | 5,174 | | (5) | |
| Net income/(loss) | | | | | 7,455 | | 2,884 | 158 | | | 31,568 | | | 27,094 | | 17 | |
| ROE | | | | | NM | | NM | | | 20 | % | | 19 | % | |
(a)Included $7.9 billion net gain related to Visa shares. Refer to Note 2 for additional information.
(b)Included $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the three and six months ended June 30, 2024 and 2023, unless otherwise specified.
| | | | | | | | | | | | | | |
| CONSUMER & COMMUNITY BANKING |
Refer to pages 68-71 of JPMorgan Chase's 2023 Form 10-K and Line of Business Metrics on page 200 for a further discussion of the business profile of CCB.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected income statement data | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
(in millions, except ratios) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Revenue | | | | | | | | | | | |
| Lending- and deposit-related fees | $ | 830 | | | $ | 841 | | | (1) | % | | $ | 1,652 | | | $ | 1,664 | | | (1) | % |
| Asset management fees | 978 | | | 816 | |
| 20 | | | 1,925 | | | 1,492 | | | 29 | |
| Mortgage fees and related income | 346 | | | 274 | | | 26 | | | 620 | | | 497 | | | 25 | |
| Card income | 741 | | | 483 | | | 53 | | | 1,423 | | | 1,222 | | | 16 | |
All other income(a) | 1,101 | | | 1,129 | | | (2) | | | 2,321 | | | 2,291 | | | 1 | |
| Noninterest revenue | 3,996 | | | 3,543 | | | 13 | | | 7,941 | | | 7,166 | | | 11 | |
| Net interest income | 13,705 | | | 13,690 | | | — | | | 27,413 | | | 26,523 | | | 3 | |
| Total net revenue | 17,701 | | | 17,233 | | | 3 | | | 35,354 | | | 33,689 | | | 5 | |
| | | | | | | | | | | |
| Provision for credit losses | 2,643 | | | 1,862 | | | 42 | | | 4,556 | | | 3,264 | | | 40 | |
| | | | | | | | | | | |
| Noninterest expense | | | | | | | | | | | |
| Compensation expense | 4,240 | | | 3,628 | | | 17 | | | 8,469 | | | 7,173 | | | 18 | |
Noncompensation expense(b) | 5,185 | | | 4,685 | | | 11 | | | 10,253 | | | 9,205 | | | 11 | |
| Total noninterest expense | 9,425 | | (d) | 8,313 | | | 13 | | | 18,722 | | (d) | 16,378 | | | 14 | |
| Income before income tax expense | 5,633 | | | 7,058 | | | (20) | | | 12,076 | | | 14,047 | | | (14) | |
| Income tax expense | 1,423 | | | 1,752 | | | (19) | | | 3,035 | | | 3,498 | | | (13) | |
| Net income | $ | 4,210 | | | $ | 5,306 | | | (21) | | | $ | 9,041 | | | $ | 10,549 | | | (14) | |
| | | | | | | | | | | |
Revenue by business | | | | | | | | | | | |
| Banking & Wealth Management | $ | 10,375 | | | $ | 10,936 | | | (5) | | | $ | 20,699 | | | $ | 20,977 | | | (1) | |
| Home Lending | 1,319 | | | 1,007 | | | 31 | | | 2,505 | | | 1,727 | | | 45 | |
| Card Services & Auto | 6,007 | | | 5,290 | | | 14 | | | 12,150 | | | 10,985 | | | 11 | |
| | | | | | | | | | | |
Mortgage fees and related income details: | | | | | | | | | | | |
| Production revenue | 157 | | | 102 | | | 54 | | | 287 | | | 177 | | | 62 | |
Net mortgage servicing revenue(c) | 189 | | | 172 | | | 10 | | | 333 | | | 320 | | | 4 | |
Mortgage fees and related income | $ | 346 | | | $ | 274 | | | 26 | % | | $ | 620 | | | $ | 497 | | | 25 | % |
| | | | | | | | | | | |
| Financial ratios | | | | | | | | | | | |
| Return on equity | 30 | | % | 38 | | % | | | 33 | | % | 39 | | % | |
| Overhead ratio | 53 | | | 48 | | | | | 53 | | | 49 | | | |
(a)Primarily includes operating lease income and commissions and other fees. Operating lease income was $682 million and $704 million for the three months ended June 30, 2024 and 2023, respectively, and $1.3 billion and $1.4 billion for the six months ended June 30, 2024 and 2023, respectively.
(b)Included depreciation expense on leased assets of $430 million and $445 million for the three months ended June 30, 2024 and 2023, respectively, and $857 million and $852 million for the six months ended June 30, 2024 and 2023, respectively.
(c)Included MSR risk management results of $39 million and $25 million for the three months ended June 30, 2024 and 2023, respectively, and $38 million and $13 million for the six months ended June 30, 2024 and 2023, respectively.
(d)In the second quarter of 2023, substantially all of the expense associated with First Republic was reported in Corporate. Commencing in the third quarter of 2023, the expense is aligned to the appropriate LOB.
Quarterly results
Net income was $4.2 billion, down 21%.
Net revenue was $17.7 billion, up 3%.
Net interest income was $13.7 billion, flat when compared with the prior year, reflecting:
•higher Card Services NII on higher revolving balances, and
•the timing impact of First Republic in Home Lending,
offset by
•lower NII in Banking & Wealth Management ("BWM"), reflecting lower average deposits and deposit margin compression.
Noninterest revenue was $4.0 billion, up 13%, predominantly driven by:
•higher card income reflecting higher net interchange on increased debit and credit card sales volume, and higher annual fees, partially offset by an increase in amortization related to new account origination costs, reflecting continued growth in the portfolio. Prior-year net interchange included an increase to the rewards liability due to adjustments to the terms of certain reward programs; and
•higher asset management fees, predominantly driven by higher average market levels.
Refer to Note 5 for additional information on card income, asset management fees, and commissions and other fees; and Critical Accounting Estimates on pages 86-88 for additional information on the credit card rewards liability.
Noninterest expense was $9.4 billion, up 13%, reflecting First Republic-related expense that was aligned to CCB from Corporate starting in the third quarter of 2023, impacting both compensation and noncompensation expense.
The increase in expense also reflected:
•higher compensation expense, largely driven by higher revenue-related compensation, primarily for advisors and bankers, and an increase in employees, including in technology, and
•higher noncompensation expense, largely driven by continued investments in technology and marketing.
The provision for credit losses was $2.6 billion, reflecting:
•net charge-offs of $2.1 billion, up $813 million, predominantly driven by $706 million in Card Services, primarily due to the seasoning of newer vintages and continued credit normalization, and
•a $579 million net addition to the allowance for credit losses, primarily in Card Services, predominantly driven by loan growth and updates to certain macroeconomic variables.
The provision in the prior year was $1.9 billion, reflecting net charge-offs of $1.3 billion and a $611 million net addition to the allowance for credit losses, including $408 million to establish the allowance for the First Republic loans and lending-related commitments, and $203 million in Card Services.
Refer to Credit and Investment Risk Management on pages 59-78 and Allowance for Credit Losses on pages 75-77 for a further discussion of the credit portfolios and the allowance for credit losses.
Year-to-date results
Net income was $9.0 billion, down 14%.
Net revenue was $35.4 billion, up 5%.
Net interest income was $27.4 billion, up 3%, driven by:
•higher Card Services NII on higher revolving balances, and
•the timing impact of First Republic in Home Lending,
largely offset by
•lower NII in BWM, reflecting lower average deposits and deposit margin compression.
Noninterest revenue was $7.9 billion, up 11%, predominantly driven by:
•higher asset management fees reflecting higher average market levels, including the timing impact of First Republic and, to a lesser extent, net inflows, as well as higher commissions from annuity sales in BWM,
•higher card income driven by higher net interchange on increased debit and credit card sales volume, as well as higher annual fees, largely offset by an increase in amortization related to new account origination costs, reflecting continued growth in the portfolio, and
•higher production revenue in Home Lending, including the timing impact of First Republic.
Refer to Executive Overview on pages 5-8 and Note 26 for additional information on First Republic.
Noninterest expense was $18.7 billion, up 14%, reflecting First Republic-related expense that was aligned to CCB from Corporate starting in the third quarter of 2023, impacting both compensation and noncompensation expense.
The increase in expense also reflected:
•higher compensation expense, largely driven by higher revenue-related compensation, primarily for advisors and bankers, and an increase in employees, including in technology, and
•higher noncompensation expense, largely driven by continued investments in technology and marketing.
The provision for credit losses was $4.6 billion, reflecting:
•net charge-offs of $3.9 billion, up $1.6 billion, including $1.5 billion in Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $85 million in Auto, driven by a decline in used vehicle valuations, and
•a $613 million net addition to the allowance for credit losses, consisting of:
–$753 million in Card Services, predominantly due to the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables,
partially offset by
–a $125 million net reduction in Home Lending, primarily due to improvements in the outlook for home prices in the first quarter of 2024.
The provision in the prior year was $3.3 billion, reflecting net charge-offs of $2.3 billion, a $553 million net addition to the allowance for credit losses, predominantly driven by Card Services, and a $408 million net 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected metrics | | | | | | | | | | |
| As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
| (in millions, except employees) | 2024 | | 2023 | Change | | 2024 | | 2023 | | Change |
Selected balance sheet data (period-end) | | | | | | | | | | |
| Total assets | $ | 638,493 | | | $ | 620,193 | | 3 | % | | $ | 638,493 | | | $ | 620,193 | | | 3 | % |
| Loans: | | | | | | | | | | |
| Banking & Wealth Management | 31,078 | | | 30,959 | | — | | | 31,078 | | | 30,959 | | | — | |
Home Lending(a) | 250,032 | | | 262,432 | | (5) | | | 250,032 | | | 262,432 | | | (5) | |
| Card Services | 216,213 | | | 191,353 | | 13 | | | 216,213 | | | 191,353 | | | 13 | |
| Auto | 75,310 | | | 73,587 | | 2 | | | 75,310 | | | 73,587 | | | 2 | |
| Total loans | 572,633 | | | 558,331 | | 3 | | | 572,633 | | | 558,331 | | | 3 | |
Deposits(b) | 1,069,753 | | | 1,173,514 | | (9) | | | 1,069,753 | | | 1,173,514 | | | (9) | |
| Equity | 54,500 | | | 55,500 | | (2) | | | 54,500 | | | 55,500 | | | (2) | |
Selected balance sheet data (average) | | | | | | | | | | |
| Total assets | $ | 628,757 | | | $ | 576,417 | | 9 | | | $ | 628,309 | | | $ | 541,788 | | | 16 | |
| Loans: | | | | | | | | | | |
| Banking & Wealth Management | 31,419 | | | 30,628 | | 3 | | | 31,330 | | | 29,572 | | | 6 | |
Home Lending(c) | 254,385 | | | 229,569 | | 11 | | | 256,126 | | | 201,005 | | | 27 | |
| Card Services | 210,119 | | | 187,028 | | 12 | | | 207,410 | | | 183,758 | | | 13 | |
| Auto | 75,804 | | | 71,083 | | 7 | | | 76,535 | | | 69,920 | | | 9 | |
| Total loans | 571,727 | | | 518,308 | | 10 | | | 571,401 | | | 484,255 | | | 18 | |
Deposits(b) | 1,073,544 | | | 1,157,309 | | (7) | | | 1,076,393 | | | 1,135,261 | | | (5) | |
| Equity | 54,500 | | | 54,346 | | — | | | 54,500 | | | 53,180 | | | 2 | |
| | | | | | | | | | |
| Employees | 143,412 | | | 137,087 | | 5 | % | | 143,412 | | | 137,087 | | | 5 | % |
(a)At June 30, 2024 and 2023, Home Lending loans held-for-sale and loans at fair value were $5.9 billion and $3.9 billion, respectively.
(b)In the fourth quarter of 2023, CCB transferred approximately $18.8 billion of deposits associated with First Republic to AWM and CIB. Refer to page 67 of the Firm’s 2023 Form 10-K for additional information.
(c)Average Home Lending loans held-for sale and loans at fair value were $7.7 billion and $5.3 billion for the three months ended June 30, 2024 and 2023, respectively, and $6.2 billion and $4.4 billion for the six months ended June 30, 2024 and 2023, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected metrics | | | | | | | | | | |
| As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
| (in millions, except ratio data) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Credit data and quality statistics | | | | | | | | | | | |
Nonaccrual loans(a) | $ | 3,413 | | | $ | 3,823 | | | (11) | % | | $ | 3,413 | | | $ | 3,823 | | | (11) | % |
| Net charge-offs/(recoveries) | | | | | | | | | | | |
| Banking & Wealth Management | 176 | | | 92 | | | 91 | | | 255 | | | 171 | | | 49 | |
| Home Lending | (40) | | | (28) | | | (43) | | | (47) | | | (46) | | | (2) | |
| Card Services | 1,830 | | | 1,124 | | | 63 | | | 3,518 | | | 2,046 | | | 72 | |
| Auto | 98 | | | 63 | | | 56 | | | 217 | | | 132 | | | 64 | |
| Total net charge-offs/(recoveries) | $ | 2,064 | | | $ | 1,251 | | | 65 | | | $ | 3,943 | | | $ | 2,303 | | | 71 | |
| | | | | | | | | | | |
| Net charge-off/(recovery) rate | | | | | | | | | | | |
| Banking & Wealth Management | 2.25 | | % | 1.20 | | % | | | 1.64 | | % | 1.17 | | % | |
| Home Lending | (0.07) | | | (0.05) | | | | | (0.04) | | | (0.05) | | | |
| Card Services | 3.50 | | | 2.41 | | | | | 3.41 | | | 2.25 | | | |
| Auto | 0.52 | | | 0.36 | | | | | 0.57 | | | 0.38 | | | |
| Total net charge-off/(recovery) rate | 1.47 | | % | 0.98 | | % | | | 1.40 | | % | 0.97 | | % | |
| | | | | | | | | | | |
| 30+ day delinquency rate | | | | | | | | | | | |
Home Lending(b) | 0.70 | | % | 0.58 | | % | | | 0.70 | | % | 0.58 | | % | |
| Card Services | 2.08 | | | 1.70 | | | | | 2.08 | | | 1.70 | | | |
| Auto | 1.12 | | | 0.92 | | | | | 1.12 | | | 0.92 | | | |
| | | | | | | | | | | |
| 90+ day delinquency rate - Card Services | 1.07 | | % | 0.84 | | % | | | 1.07 | | % | 0.84 | | % | |
| | | | | | | | | | | |
| Allowance for loan losses | | | | | | | | | | | |
| Banking & Wealth Management | $ | 685 | | | $ | 731 | | | (6) | | | $ | 685 | | | $ | 731 | | | (6) | |
| Home Lending | 437 | | | 777 | | | (44) | | | 437 | | | 777 | | | (44) | |
| Card Services | 13,206 | | | 11,600 | | | 14 | | | 13,206 | | | 11,600 | | | 14 | |
| Auto | 742 | | | 717 | | | 3 | | | 742 | | | 717 | | | 3 | |
| Total allowance for loan losses | $ | 15,070 | | | $ | 13,825 | | | 9 | % | | $ | 15,070 | | | $ | 13,825 | | | 9 | % |
(a)At June 30, 2024 and 2023, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $96 million and $139 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 June 30, 2024 and 2023, excluded mortgage loans insured by U.S. government agencies of $137 million and $195 million, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected metrics | | | | | | | | | | |
| As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
(in billions, except ratios and where otherwise noted) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Business Metrics | | | | | | | | | | | |
| Number of branches | 4,884 | | | 4,874 | | | — | % | | 4,884 | | | 4,874 | | | — | % |
Active digital customers (in thousands)(a) | 69,011 | | | 65,559 | | | 5 | | | 69,011 | | | 65,559 | | | 5 | |
Active mobile customers (in thousands)(b) | 55,564 | | | 51,963 | | | 7 | | | 55,564 | | | 51,963 | | | 7 | |
Debit and credit card sales volume | $ | 453.7 | | | $ | 424.0 | | | 7 | | | $ | 874.4 | | | $ | 811.3 | | | 8 | |
Total payments transaction volume (in trillions)(c) | 1.6 | | | 1.5 | | | 7 | | | 3.1 | | | 2.9 | | | 7 | |
| | | | | | | | | | | |
| Banking & Wealth Management | | | | | | | | | | | |
Average deposits | $ | 1,058.9 | | | $ | 1,142.8 | | | (7) | | | $ | 1,062.2 | | | $ | 1,120.7 | | | (5) | |
Deposit margin | 2.72 | | % | 2.83 | | % | | | 2.71 | | % | 2.81 | | % | |
| Business Banking average loans | $ | 19.5 | | | $ | 19.6 | | | (1) | | | $ | 19.5 | | | $ | 19.8 | | | (2) | |
| Business banking origination volume | 1.3 | | | 1.3 | | | 3 | | | 2.4 | | | 2.3 | | | 6 | |
Client investment assets(d) | 1,013.7 | | | 892.9 | | | 14 | | | 1,013.7 | | | 892.9 | | | 14 | |
| Number of client advisors | 5,672 | | | 5,153 | | | 10 | | | 5,672 | | | 5,153 | | | 10 | |
| | | | | | | | | | | |
| Home Lending | | | | | | | | | | | |
Mortgage origination volume by channel | | | | | | | | | | | |
Retail | $ | 6.9 | | | $ | 7.3 | | | (5) | | | $ | 11.3 | | | $ | 10.9 | | | 4 | |
Correspondent | 3.8 | | | 3.9 | | | (3) | | | 6.0 | | | 6.0 | | | — | |
Total mortgage origination volume(e) | $ | 10.7 | | | $ | 11.2 | | | (4) | | | $ | 17.3 | | | $ | 16.9 | | | 2 | |
| | | | | | | | | | | |
Third-party mortgage loans serviced (period-end) | $ | 642.8 | | | $ | 604.5 | | | 6 | | | 642.8 | | | $ | 604.5 | | | 6 | |
MSR carrying value (period-end) | 8.8 | | | 8.2 | | | 7 | | | 8.8 | | | 8.2 | | | 7 | |
| | | | | | | | | | | |
| Card Services | | | | | | | | | | | |
| Sales volume, excluding commercial card | $ | 316.6 | | | $ | 294.0 | | | 8 | | | $ | 607.6 | | | $ | 560.2 | | | 8 | |
| Net revenue rate | 9.61 | | % | 9.11 | | % | | | 9.85 | | % | 9.73 | | % | |
| Net yield on average loans | 9.46 | | | 9.31 | | | | | 9.67 | | | 9.60 | | | |
| | | | | | | | | | | |
Auto | | | | | | | | | | | |
Loan and lease origination volume | $ | 10.8 | | | $ | 12.0 | | | (10) | | | $ | 19.7 | | | $ | 21.2 | | | (7) | |
Average auto operating lease assets | 10.7 | | | 11.0 | | | (3) | % | | 10.6 | | | 11.3 | | | (6) | % |
(a)Users of all web and/or mobile platforms who have logged in within the past 90 days.
(b)Users of all mobile platforms who have logged in within the past 90 days.
(c)Total payments transaction volume includes debit and credit card sales volume and gross outflows of ACH, ATM, teller, wires, BillPay, PayChase, Zelle, person-to-person and checks.
(d)Includes assets invested in managed accounts and J.P. Morgan mutual funds where AWM is the investment manager. Refer to AWM segment results on pages 36-40 for additional information.
(e)Firmwide mortgage origination volume was $12.3 billion and $13.0 billion for the three months ended June 30, 2024 and 2023, respectively, and $19.9 billion and $19.8 billion for the six months ended June 30, 2024 and 2023, respectively.
| | | | | | | | | | | | | | |
COMMERCIAL & INVESTMENT BANK(a) |
| | |
The Commercial & Investment Bank is comprised of the Banking & Payments and Markets & Securities Services businesses. These businesses offer investment banking, lending, payments, market-making, financing, custody and securities products and services to a global base of corporate and institutional clients. Banking & Payments offers products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, and loan origination and syndication. Banking & Payments also 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, which is a global market-maker across products, including cash and derivative instruments, and also offers sophisticated risk management solutions, lending, prime brokerage, clearing and research. Markets & Securities Services also includes Securities Services, a leading global custodian that provides custody, fund services, liquidity and trading services, and data solutions products. |
(a)Reflects the reorganization of the Firm's business segments. Refer to Business Segment Results on pages 20-22 for additional information.
Refer to Line of Business Metrics on page 200 for a further discussion of the business profile of CIB.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected income statement data | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions, except ratios) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Revenue | | | | | | | | | | | |
| Investment banking fees | $ | 2,356 | | | $ | 1,569 | | | 50 | % | | $ | 4,370 | | | $ | 3,235 | | | 35 | % |
| Principal transactions | 6,691 | | | 6,742 | | | (1) | | | 13,325 | | | 14,174 | | | (6) | |
| Lending- and deposit-related fees | 924 | | | 782 | | | 18 | | | 1,897 | | | 1,548 | | | 23 | |
| Commissions and other fees | 1,337 | | | 1,238 | | | 8 | | | 2,609 | | | 2,487 | | | 5 | |
| Card income | 579 | | | 601 | | | (4) | | | 1,104 | | | 1,089 | | | 1 | |
| All other income | 857 | | | 705 | | | 22 | | | 1,600 | | | 1,408 | | | 14 | |
| Noninterest revenue | 12,744 | | | 11,637 | | | 10 | | | 24,905 | | | 23,941 | | | 4 | |
| Net interest income | 5,173 | | | 4,870 | | | 6 | | | 10,596 | | | 9,677 | | | 9 | |
Total net revenue(a) | 17,917 | | | 16,507 | | | 9 | | | 35,501 | | | 33,618 | | | 6 | |
| Provision for credit losses | 384 | | | 1,135 | | | (66) | | | 385 | | | 1,610 | | | (76) | |
| | | | | | | | | | | |
| Noninterest expense | | | | | | | | | | | |
| Compensation expense | 4,752 | | | 4,117 | | | 15 | | | 9,648 | | | 8,843 | | | 9 | |
| Noncompensation expense | 4,414 | | | 4,077 | | | 8 | | | 8,242 | | | 8,142 | | | 1 | |
| Total noninterest expense | 9,166 | | | 8,194 | | | 12 | | | 17,890 | | | 16,985 | | | 5 | |
Income before income tax expense | 8,367 | | | 7,178 | | | 17 | | | 17,226 | | | 15,023 | | | 15 | |
| Income tax expense | 2,470 | | | 1,878 | | | 32 | | | 4,707 | | | 3,955 | | | 19 | |
| Net income | $ | 5,897 | | | $ | 5,300 | | | 11 | % | | $ | 12,519 | | | $ | 11,068 | | | 13 | % |
| Financial ratios | | | | | | | | | | | |
| Return on equity | 17 | % | | 15 | % | | | | 18 | % | | 16 | % | | |
| Overhead ratio | 51 | | | 50 | | | | | 50 | | | 51 | | | |
Compensation expense as percentage of total net revenue | 27 | | | 25 | | | | | 27 | | | 26 | | | |
(a)Included tax equivalent adjustments primarily from income tax credits from investments in alternative energy, affordable housing and new markets, income from tax-exempt securities and loans, and the related amortization and other tax benefits of the investments in alternative energy and affordable housing of $737 million and $1.0 billion for the three months ended June 30, 2024 and 2023, respectively, and $1.3 billion and $2.0 billion for the six months ended June 30, 2024 and 2023, respectively. Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method guidance, under the modified retrospective method. Refer to Notes 1, 5 and 13 for additional information.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected income statement data | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Revenue by business | | | | | | | | | | | |
Investment Banking | $ | 2,464 | | | $ | 1,687 | | | 46 | % | | $ | 4,680 | | | $ | 3,475 | | | 35 | % |
| Payments | 4,546 | | | 4,714 | | | (4) | | | 9,012 | | | 9,145 | | | (1) | |
| Lending | 1,936 | | | 1,749 | | | 11 | | | 3,660 | | | 3,199 | | | 14 | |
Other | 4 | | | 38 | | | (89) | | | 1 | | | 47 | | | (98) | |
| Total Banking & Payments | 8,950 | | | 8,188 | | | 9 | | | 17,353 | | | 15,866 | | | 9 | |
| Fixed Income Markets | 4,822 | | | 4,608 | | | 5 | | | 10,149 | | | 10,361 | | | (2) | |
| Equity Markets | 2,971 | | | 2,454 | | | 21 | | | 5,657 | | | 5,139 | | | 10 | |
| Securities Services | 1,261 | | | 1,221 | | | 3 | | | 2,444 | | | 2,369 | | | 3 | |
Credit Adjustments & Other(a) | (87) | | | 36 | | | NM | | (102) | | | (117) | | | 13 | |
Total Markets & Securities Services | 8,967 | | | 8,319 | | | 8 | | | 18,148 | | | 17,752 | | | 2 | |
| Total net revenue | $ | 17,917 | | | $ | 16,507 | | | 9 | % | | $ | 35,501 | | | $ | 33,618 | | | 6 | % |
(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 19 for additional information.
| | |
Banking & Payments Revenue by Client Coverage Segment: (a) Global Corporate Banking & Global Investment Banking provides banking products and services generally to large corporations, financial institutions and merchants. Commercial Banking provides banking products and services generally to middle market clients, including start-ups, small and mid-sized companies, local governments, municipalities, and nonprofits, as well as to commercial real estate clients. Other includes amounts related to credit protection purchased against certain retained loans and lending-related commitments in Lending, the impact of equity investments in Payments and revenues not aligned with a primary client coverage segment. (a)Global Banking is a client coverage view within the Banking & Payments business and is comprised of the Global Corporate Banking, Global Investment Banking and Commercial Banking client coverage segments. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selected income statement data | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Banking & Payments revenue by client coverage segment | | | | | | | | | | | |
Global Corporate Banking & Global Investment Banking | $ | 6,141 | | | $ | 5,452 | | | 13 | % | | $ | 11,961 | | | $ | 10,816 | | | 11 | % |
Commercial Banking | 2,860 | | | 2,801 | | | 2 | | | 5,697 | | | 5,227 | | | 9 | |
| Middle Market Banking | 1,936 | | | 1,996 | | | (3) | | | 3,863 | | | 3,781 | | | 2 | |
| Commercial Real Estate Banking | 924 | | | 805 | | | 15 | | | 1,834 | | | 1,446 | | | 27 | |
Other | (51) | | | (65) | | | 22 | | | (305) | | | (177) | | | (72) | |
| Total Banking & Payments revenue | $ | 8,950 | | | $ | 8,188 | | | 9 | % | | $ | 17,353 | | | $ | 15,866 | | | 9 | % |
Quarterly results
Net income was $5.9 billion, up 11%.
Net revenue was $17.9 billion, up 9%.
Banking & Payments revenue was $9.0 billion, up 9%.
•Investment Banking revenue was $2.5 billion, up 46%, driven by higher Investment Banking fees, up 50%, reflecting higher fees across products. The Firm ranked #1 for Global Investment Banking fees, according to Dealogic.
–Debt underwriting fees were $1.1 billion, up 51%, predominantly driven by higher industry-wide issuance in leveraged loans, high-yield bonds and high-grade bonds.
–Equity underwriting fees were $495 million, up 56%, driven by follow-on offerings, IPOs and private placements, reflecting wallet share gains amid favorable market conditions.
–Advisory fees were $785 million, up 45%, driven by a higher number of large completed transactions compared with a challenging prior-year quarter.
•Payments revenue was $4.5 billion, down 4%, driven by deposit margin compression reflecting higher rates paid and higher deposit-related client credits, largely offset by fee growth due to higher volumes.
•Lending revenue was $1.9 billion, up 11%, predominantly driven by the impact of the First Republic acquisition, lower fair value losses on credit protection purchased against certain retained loans and lending-related commitments, and the impact of higher rates.
Markets & Securities Services revenue was $9.0 billion, up 8%. Markets revenue was $7.8 billion, up 10%.
•Equity Markets revenue was $3.0 billion, up 21%, driven by strong performance in Equity Derivatives and Prime Finance.
•Fixed Income Markets revenue was $4.8 billion, up 5%, largely driven by Securitized Products.
•Securities Services revenue was $1.3 billion, up 3%, driven by higher volumes and market levels, largely offset by deposit margin compression.
•Credit Adjustments & Other was a loss of $87 million, compared with a gain of $36 million in the prior year.
Noninterest expense was $9.2 billion, up 12%, predominantly driven by higher compensation, primarily revenue-related compensation, higher legal expense and higher volume-related non-compensation expense.
The provision for credit losses was $384 million, reflecting:
•a $220 million net addition to the allowance for credit losses, driven by the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates, as well as net downgrade activity, primarily in Real Estate, largely offset by the impact of changes in the loan and lending-related commitment portfolios, and
•net charge-offs of $164 million, of which approximately half was in Office.
The provision in the prior year was $1.1 billion, reflecting an addition of $608 million to establish the allowance for the First Republic loans and lending-related commitments. The net addition also reflected $389 million driven by updates to certain assumptions related to office real estate, as well as net downgrade activity in Middle Market Banking.
Refer to Credit and Investment Risk Management on pages 59-78, Allowance for Credit Losses on pages 75-77, and Critical Accounting Estimates on pages 86-88 for a further discussion of the credit portfolios and the allowance for credit losses.
Year-to-date results
Net income of $12.5 billion, up 13%.
Net revenue was $35.5 billion, up 6%.
Banking & Payments revenue was $17.4 billion, up 9%.
•Investment Banking revenue was $4.7 billion, up 35%. Investment Banking fees were up 35%, driven by higher fees across products. The Firm ranked #1 for Global Investment Banking fees, according to Dealogic.
–Debt underwriting fees were $2.1 billion, up 54%, predominantly driven by higher industry-wide issuances in leveraged loans, high-grade bonds and high-yield bonds.
–Equity underwriting fees were $850 million, up 54%, driven by higher IPOs, follow-on and convertible securities offerings.
–Advisory fees were $1.4 billion, up 7%.
•Payments revenue was $9.0 billion, down 1%, driven by deposit margin compression reflecting higher rates paid and higher deposit-related client credits, largely offset by fee growth.
•Lending revenue was $3.7 billion, up 14%, driven by the impact of the First Republic acquisition, and the impact of higher rates, partially offset by fair value losses on credit protection purchased against certain retained loans and lending-related commitments.
Markets & Securities Services revenue was $18.1 billion, up 2%. Markets revenue was $15.8 billion, up 2%.
•Equity Markets revenue was $5.7 billion, up 10%, driven by higher revenue in Equity Derivatives, and Prime Finance.
•Fixed Income Markets revenue was $10.1 billion, down 2%, driven by lower revenues in Rates and Commodities, largely offset by higher revenue in Securitized Products.
•Securities Services revenue was $2.4 billion, up 3%, driven by higher volumes and market levels, largely offset by deposit margin compression.
•Credit Adjustments & Other was a loss of $102 million, compared with a loss of $117 million in the prior year.
Noninterest expense was $17.9 billion, up 5%, predominantly driven by higher compensation expense, primarily revenue-related compensation.
The provision for credit losses was $385 million, reflecting:
•net charge-offs of $233 million, of which approximately half was in Office, and
•a $152 million net addition to the allowance for credit losses, driven by
–a net addition of $772 million, reflecting net downgrade activity, primarily in Real Estate, and included approximately $170 million associated with incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $620 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios.
The provision in the prior year was $1.6 billion, reflecting an addition of $608 million to establish the allowance for the First Republic loans and lending-related commitments, in the second quarter of 2023. The net addition also reflected $768 million driven by a deterioration in the Firm's weighted-average economic outlook, including updates to certain assumptions related to office real estate, as well as net downgrade activity.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected metrics | | | | | | | | | | |
| (in millions, except employees) | As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
| 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
Selected balance sheet data (period-end) | | | | | | | | | | | |
| Total assets | $ | 1,939,038 | | | $ | 1,737,334 | | | 12 | % | | $ | 1,939,038 | | | $ | 1,737,334 | | | 12 | % |
| Loans: | | | | | | | | | | | |
| Loans retained | 475,880 | | | 476,574 | | | — | | | 475,880 | | | 476,574 | | | — | |
Loans held-for-sale and loans at fair value(a) | 41,737 | | | 40,499 | | | 3 | | | 41,737 | | | 40,499 | | | 3 | |
| Total loans | 517,617 | | | 517,073 | | | — | | | 517,617 | | | 517,073 | | | — | |
| Equity | 132,000 | | | 138,000 | | | (4) | | | 132,000 | | | 138,000 | | | (4) | |
| | | | | | | | | | | |
Banking & Payments loans by client coverage segment (period-end)(b) | | | | | | | | | | | |
| Global Corporate Banking & Global Investment Banking | $ | 132,592 | | | $ | 133,535 | | | (1) | % | | $ | 132,592 | | | $ | 133,535 | | | (1) | % |
| Commercial Banking | 220,222 | | | 222,782 | | | (1) | | | 220,222 | | | 222,782 | | | (1) | |
| Middle Market Banking | 75,488 | | | 79,885 | | | (6) | | | 75,488 | | | 79,885 | | | (6) | |
| Commercial Real Estate Banking | 144,734 | | | 142,897 | | | 1 | | | 144,734 | | | 142,897 | | | 1 | |
| Other | 266 | | | 371 | | | (28) | | | 266 | | | 371 | | | (28) | |
| Total Banking & Payments loans | 353,080 | | | 356,688 | | | (1) | | | 353,080 | | | 356,688 | | | (1) | |
| | | | | | | | | | | |
Selected balance sheet data (average) | | | | | | | | | | | |
| Total assets | $ | 1,915,880 | | | $ | 1,752,732 | | | 9 | | | $ | 1,854,999 | | | $ | 1,719,118 | | | 8 | |
| Trading assets-debt and equity instruments | 638,473 | | | 533,092 | | | 20 | | | 609,686 | | | 511,066 | | | 19 | |
| Trading assets-derivative receivables | 58,850 | | | 63,118 | | | (7) | | | 58,059 | | | 63,578 | | | (9) | |
| Loans: | | | | | | | | | | | |
| Loans retained | $ | 471,861 | | | $ | 459,244 | | | 3 | | | $ | 471,524 | | | $ | 440,914 | | | 7 | |
Loans held-for-sale and loans at fair value(a) | 42,868 | | | 38,858 | | | 10 | | | 43,202 | | | 41,278 | | | 5 | |
| Total loans | $ | 514,729 | | | $ | 498,102 | | | 3 | | | $ | 514,726 | | | $ | 482,192 | | | 7 | |
Deposits(c) | 1,046,993 | | | 998,014 | | | 5 | | | 1,046,391 | | | 981,861 | | | 7 | |
| Equity | 132,000 | | | 137,505 | | | (4) | | | 132,000 | | | 137,005 | | | (4) | |
| | | | | | | | | | | |
Banking & Payments loans by client coverage segment (average)(b) | | | | | | | | | | | |
| Global Corporate Banking & Global Investment Banking | $ | 130,320 | | | $ | 131,852 | | | (1) | % | | $ | 128,861 | | | $ | 131,118 | | | (2) | % |
| Commercial Banking | 220,767 | | | 211,431 | | | 4 | | | 221,545 | | | 196,385 | | | 13 | |
| Middle Market Banking | 76,229 | | | 78,037 | | | (2) | | | 77,296 | | | 75,547 | | | 2 | |
| Commercial Real Estate Banking | 144,538 | | | 133,394 | | | 8 | | | 144,249 | | | 120,838 | | | 19 | |
| Other | 360 | | | 227 | | | 59 | | | 475 | | | 218 | | | 118 | |
| Total Banking & Payments loans | $ | 351,447 | | | $ | 343,510 | | | 2 | | | $ | 350,881 | | | $ | 327,721 | | | 7 | |
| | | | | | | | | | | |
| Employees | 93,387 | | | 90,813 | | | 3 | % | | 93,387 | | | 90,813 | | | 3 | % |
(a)Loans held-for-sale and loans at fair value primarily reflect lending-related positions originated and purchased in Markets, including loans held for securitization.
(b)Refer to page 29 for a description of each of the client coverage segments.
(c)In the fourth quarter of 2023, certain deposits associated with First Republic were transferred to CIB from CCB.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected metrics | | | | | | | | | | | |
| As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
(in millions, except ratios) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
Credit data and quality statistics | | | | | | | | | | | |
Net charge-offs/(recoveries) | $ | 164 | | | $ | 156 | | | 5 | % | | $ | 233 | | | $ | 243 | | | (4) | % |
| Nonperforming assets: | | | | | | | | | | | |
| Nonaccrual loans: | | | | | | | | | | | |
Nonaccrual loans retained(a) | $ | 2,631 | | | $ | 1,992 | | | 32 | | | $ | 2,631 | | | $ | 1,992 | | | 32 | |
Nonaccrual loans held-for-sale and loans at fair value(b) | 988 | | | 818 | | | 21 | | | 988 | | | 818 | | | 21 | |
| Total nonaccrual loans | 3,619 | | | 2,810 | | | 29 | | | 3,619 | | | 2,810 | | | 29 | |
| Derivative receivables | 290 | | | 286 | | | 1 | | | 290 | | | 286 | | | 1 | |
Assets acquired in loan satisfactions | 220 | | | 133 | | | 65 | | | 220 | | | 133 | | | 65 | |
| Total nonperforming assets | $ | 4,129 | | | $ | 3,229 | | | 28 | | | $ | 4,129 | | | $ | 3,229 | | | 28 | |
| Allowance for credit losses: | | | | | | | | | | | |
| Allowance for loan losses | $ | 7,344 | | | $ | 7,260 | | | 1 | | | $ | 7,344 | | | $ | 7,260 | | | 1 | |
| Allowance for lending-related commitments | 1,930 | | | 2,008 | | | (4) | | | 1,930 | | | 2,008 | | | (4) | |
Total allowance for credit losses | $ | 9,274 | | | $ | 9,268 | | | — | % | | $ | 9,274 | | | $ | 9,268 | | | — | % |
Net charge-off/(recovery) rate(c) | 0.14 | % | | 0.14 | % | | | | 0.10 | % | | 0.11 | % | | |
| Allowance for loan losses to period-end loans retained | 1.54 | | | 1.52 | | | | | 1.54 | | | 1.52 | | | |
| | | | | | | | | | | |
Allowance for loan losses to nonaccrual loans retained(a) | 279 | | | 364 | | | | | 279 | | | 364 | | | |
| Nonaccrual loans to total period-end loans | 0.70 | % | | 0.54 | % | | | | 0.70 | % | | 0.54 | % | | |
(a)Allowance for loan losses of $452 million and $350 million were held against these nonaccrual loans at June 30, 2024 and 2023, respectively.
(b)At June 30, 2024 and 2023, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $42 million and $76 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Investment banking fees | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
(in millions) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
Advisory | $ | 785 | | | $ | 540 | | | 45 | % | | $ | 1,383 | | | $ | 1,296 | | | 7 | % |
Equity underwriting | 495 | | | 318 | | | 56 | | | 850 | | | 553 | | | 54 | |
Debt underwriting(a) | 1,076 | | | 711 | | | 51 | | | 2,137 | | | 1,386 | | | 54 | |
Total investment banking fees | $ | 2,356 | | | $ | 1,569 | | | 50 | % | | $ | 4,370 | | | $ | 3,235 | | | 35 | % |
(a)Represents long-term debt and loan syndications.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| League table results – wallet share | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, | | Full-year 2023 |
| 2024 | | 2023 | | 2024 | | 2023 | |
| Rank | | Share | | Rank | | Share | | Rank | | Share | | Rank | | Share | | Rank | | Share |
Based on fees(a) | | | | | | | | | | | | | | | | | | |
M&A(b) | | | | | | | | | | | | | | | | | | | |
| Global | # | 1 | | | 10.5 | % | | # | 1 | | | 8.1 | % | | # | 1 | | | 9.9 | % | | # | 1 | | | 8.8 | % | | # | 2 | | | 9.0 | % |
| U.S. | 1 | | | 14.0 | | | 2 | | | 10.7 | | | 1 | | | 11.8 | | | 2 | | | 11.3 | | | 2 | | | 11.0 | |
Equity and equity-related(c) | | | | | | | | | | | | | | | | | | | |
| Global | 1 | | | 13.6 | | | 1 | | | 7.6 | | | 1 | | | 11.3 | | | 1 | | | 7.1 | | | 1 | | | 7.7 | |
| U.S. | 1 | | | 17.0 | | | 1 | | | 15.0 | | | 1 | | | 14.5 | | | 1 | | | 14.0 | | | 1 | | | 14.3 | |
Long-term debt(d) | | | | | | | | | | | | | | | | | | | |
| Global | 1 | | | 7.2 | | | 1 | | | 6.6 | | | 1 | | | 7.5 | | | 1 | | | 6.5 | | | 1 | | | 7.0 | |
| U.S. | 1 | | | 10.3 | | | 1 | | | 10.7 | | | 1 | | | 11.0 | | | 1 | | | 10.2 | | | 1 | | | 10.9 | |
Loan syndications | | | | | | | | | | | | | | | | | | | |
| Global | 1 | | | 11.0 | | | 1 | | | 12.8 | | | 1 | | | 11.5 | | | 1 | | | 12.5 | | | 1 | | | 11.9 | |
| U.S. | 1 | | | 13.1 | | | 1 | | | 16.7 | | | 1 | | | 13.9 | | | 1 | | | 16.9 | | | 1 | | | 15.1 | |
Global investment banking fees(e) | # | 1 | | | 9.9 | % | | # | 1 | | | 8.1 | % | | # | 1 | | | 9.5 | % | | # | 1 | | | 8.2 | % | | # | 1 | | | 8.6 | % |
(a)Source: Dealogic as of July 1, 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.
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 5 and 6 for a description of the composition of these income statement line items. Refer to Markets revenue on page 75 of JPMorgan Chase’s 2023 Form 10-K for further information.
For the periods presented below, the primary source of principal transactions revenue was the amount recognized upon executing new transactions.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Three months ended June 30, |
| 2024 | | 2023 |
(in millions) | Fixed Income Markets | Equity
Markets | Total
Markets | | Fixed Income Markets | Equity
Markets | Total
Markets |
Principal transactions | $ | 2,021 | | $ | 4,571 | | $ | 6,592 | | | $ | 3,120 | | $ | 3,350 | | $ | 6,470 | |
Lending- and deposit-related fees | 81 | | 22 | | 103 | | | 76 | | 7 | | 83 | |
| Commissions and other fees | 150 | | 522 | | 672 | | | 151 | | 472 | | 623 | |
| All other income | 533 | | (30) | | 503 | | | 410 | | (37) | | 373 | |
| Noninterest revenue | 2,785 | | 5,085 | | 7,870 | | | 3,757 | | 3,792 | | 7,549 | |
Net interest income(a) | 2,037 | | (2,114) | | (77) | | | 851 | | (1,338) | | (487) | |
| Total net revenue | $ | 4,822 | | $ | 2,971 | | $ | 7,793 | | | $ | 4,608 | | $ | 2,454 | | $ | 7,062 | |
| | | | | | | |
| Six months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 |
(in millions) | Fixed Income Markets | Equity
Markets | Total
Markets | | Fixed Income Markets | Equity
Markets | Total
Markets |
Principal transactions | $ | 4,824 | | $ | 8,385 | | $ | 13,209 | | | $ | 7,518 | | $ | 6,379 | | $ | 13,897 | |
Lending- and deposit-related fees | 203 | | 40 | | 243 | | | 146 | | 14 | | 160 | |
| Commissions and other fees | 309 | | 1,036 | | 1,345 | | | 295 | | 994 | | 1,289 | |
| All other income | 955 | | (52) | | 903 | | | 795 | | (49) | | 746 | |
| Noninterest revenue | 6,291 | | 9,409 | | 15,700 | | | 8,754 | | 7,338 | | 16,092 | |
Net interest income(a) | 3,858 | | (3,752) | | 106 | | | 1,607 | | (2,199) | | (592) | |
| Total net revenue | $ | 10,149 | | $ | 5,657 | | $ | 15,806 | | | $ | 10,361 | | $ | 5,139 | | $ | 15,500 | |
(a)The decline in Equity Markets net interest income was driven by higher funding costs.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected metrics | | | | | | | | | | | |
(in millions, except where otherwise noted) | As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
| 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
Assets under custody (“AUC”) by asset class (period-end) (in billions): | | | | | | | | | | | |
| Fixed Income | $ | 16,012 | | | $ | 14,708 | | | 9 | % | | $ | 16,012 | | | $ | 14,708 | | | 9 | % |
| Equity | 14,101 | | | 11,892 | | | 19 | | | 14,101 | | | 11,892 | | | 19 | |
Other(a) | 3,911 | | | 3,824 | | | 2 | | | 3,911 | | | 3,824 | | | 2 | |
| Total AUC | $ | 34,024 | | | $ | 30,424 | | | 12 | | | $ | 34,024 | | | $ | 30,424 | | | 12 | |
Client deposits and other third-party liabilities (average)(b) | $ | 936,725 | | | $ | 922,702 | | | 2 | % | | $ | 934,164 | | | $ | 911,265 | | | 3 | % |
(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b)Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| International metrics | | | | | | | | | | | |
| (in millions, except where otherwise noted) | As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
| 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
Total net revenue(a) | | | | | | | | | | | |
| Europe/Middle East/Africa | $ | 4,269 | | | $ | 3,980 | | | 7 | % | | $ | 8,441 | | | $ | 8,413 | | | — | % |
| Asia-Pacific | 2,162 | | | 1,959 | | | 10 | | | 4,303 | | | 4,155 | | | 4 | |
| Latin America/Caribbean | 551 | | | 559 | | | (1) | | | 1,274 | | | 1,138 | | | 12 | |
Total international net revenue | 6,982 | | | 6,498 | | | 7 | | | 14,018 | | | 13,706 | | | 2 | |
| North America | 10,935 | | | 10,009 | | | 9 | | | 21,483 | | | 19,912 | | | 8 | |
| Total net revenue | $ | 17,917 | | | $ | 16,507 | | | 9 | | | $ | 35,501 | | | $ | 33,618 | | | 6 | |
| | | | | | | | | | | |
Loans retained (period-end)(a) | | | | | | | | | | |
| Europe/Middle East/Africa | $ | 44,227 | | | $ | 41,539 | | | 6 | | | $ | 44,227 | | | $ | 41,539 | | | 6 | |
| Asia-Pacific | 15,753 | | | 15,913 | | | (1) | | | 15,753 | | | 15,913 | | | (1) | |
| Latin America/Caribbean | 8,645 | | | 9,056 | | | (5) | | | 8,645 | | | 9,056 | | | (5) | |
| Total international loans | 68,625 | | | 66,508 | | | 3 | | | 68,625 | | | 66,508 | | | 3 | |
| North America | 407,255 | | | 410,066 | | | (1) | | | 407,255 | | | 410,066 | | | (1) | |
| Total loans retained | $ | 475,880 | | | $ | 476,574 | | | — | | | $ | 475,880 | | | $ | 476,574 | | | — | |
| | | | | | | | | | | |
Client deposits and other third-party liabilities (average)(b) | | | | | | | | | | | |
| Europe/Middle East/Africa | $ | 259,425 | | | $ | 245,892 | | | 6 | | | $ | 260,439 | | | $ | 247,200 | | | 5 | |
| Asia-Pacific | 136,294 | | | 136,371 | | | — | | | 136,769 | | | 135,111 | | | 1 | |
| Latin America/Caribbean | 42,457 | | | 39,615 | | | 7 | | | 41,863 | | | 39,513 | | | 6 | |
| Total international | $ | 438,176 | | | $ | 421,878 | | | 4 | | | $ | 439,071 | | | $ | 421,824 | | | 4 | |
| North America | 498,549 | | | 500,824 | | | — | | | 495,093 | | | 489,441 | | | 1 | |
Total client deposits and other third-party liabilities | $ | 936,725 | | | $ | 922,702 | | | 2 | | | $ | 934,164 | | | $ | 911,265 | | | 3 | |
| | | | | | | | | | | |
AUC (period-end)(b) (in billions) | | | | | | | | | | | |
| North America | $ | 22,817 | | | $ | 20,512 | | | 11 | | | $ | 22,817 | | | $ | 20,512 | | | 11 | |
| All other regions | 11,207 | | | 9,912 | | | 13 | | | 11,207 | | | 9,912 | | | 13 | |
| Total AUC | $ | 34,024 | | | $ | 30,424 | | | 12 | % | | $ | 34,024 | | | $ | 30,424 | | | 12 | % |
(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 or booking location, as applicable.
| | | | | | | | | | | | | | |
| ASSET & WEALTH MANAGEMENT |
Refer to pages 81–83 of JPMorgan Chase’s 2023 Form 10-K and Line of Business Metrics on page 201 for a discussion of the business profile of AWM.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected income statement data | | | | | | |
(in millions, except ratios) | Three months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | Change | | 2024 | | 2023 | | Change |
| Revenue | | | | | | | | | | |
| Asset management fees | $ | 3,304 | | | $ | 2,932 | | 13 | % | | $ | 6,474 | | | $ | 5,714 | | | 13 | % |
| Commissions and other fees | 232 | | | 194 | | 20 | | | 425 | | | 354 | | | 20 | |
| All other income | 97 | | | 232 | | (58) | | | 248 | | | 623 | | | (60) | |
| Noninterest revenue | 3,633 | | | 3,358 | | 8 | | | 7,147 | | | 6,691 | | | 7 | |
| Net interest income | 1,619 | | | 1,585 | | 2 | | | 3,214 | | | 3,036 | | | 6 | |
| Total net revenue | 5,252 | | | 4,943 | | 6 | | | 10,361 | | | 9,727 | | | 7 | |
| | | | | | | | | | |
| Provision for credit losses | 20 | | | 145 | | (86) | | | (37) | | | 173 | | | NM |
| | | | | | | | | | |
| Noninterest expense | | | | | | | | | | |
| Compensation expense | 1,960 | | | 1,746 | | 12 | | | 3,932 | | | 3,481 | | | 13 | |
| Noncompensation expense | 1,583 | | | 1,417 | | 12 | | | 3,071 | | | 2,773 | | | 11 | |
| Total noninterest expense | 3,543 | | | 3,163 | | 12 | | | 7,003 | | | 6,254 | | | 12 | |
| | | | | | | | | | |
| Income before income tax expense | 1,689 | | | 1,635 | | 3 | | | 3,395 | | | 3,300 | | | 3 | |
| Income tax expense | 426 | | | 409 | | 4 | | | 842 | | | 707 | | | 19 | |
| Net income | $ | 1,263 | | | $ | 1,226 | | 3 | | | $ | 2,553 | | | $ | 2,593 | | | (2) | |
| | | | | | | | | | |
| Revenue by line of business | | | | | | | | | | |
| Asset Management | $ | 2,437 | | | $ | 2,128 | | 15 | | | $ | 4,763 | | | $ | 4,562 | | | 4 | |
| Global Private Bank | 2,815 | | | 2,815 | | — | | | 5,598 | | | 5,165 | | | 8 | |
| Total net revenue | $ | 5,252 | | | $ | 4,943 | | 6 | % | | $ | 10,361 | | | $ | 9,727 | | | 7 | % |
| | | | | | | | | | |
| Financial ratios | | | | | | | | | | |
| Return on equity | 32 | % | | 29 | % | | | 32 | % | | 31 | % | | |
| Overhead ratio | 67 | | | 64 | | | | 68 | | | 64 | | | |
| Pre-tax margin ratio: | | | | | | | | | | |
| Asset Management | 30 | | | 27 | | | | 29 | | | 32 | | | |
| Global Private Bank | 34 | | | 37 | | | | 36 | | | 35 | | | |
| Asset & Wealth Management | 32 | | | 33 | | | | 33 | | | 34 | | | |
Quarterly results
Net income was $1.3 billion, up 3%.
Net revenue was $5.3 billion, up 6%. Net interest income was $1.6 billion, up 2%. Noninterest revenue was $3.6 billion, up 8%.
Revenue from Asset Management was $2.4 billion, up 15%, predominantly driven by:
•higher asset management fees reflecting higher average market levels and strong net inflows, and
•higher performance fees.
Revenue from Global Private Bank of $2.8 billion was flat when compared with the prior year, and reflected:
•higher net interest income, driven by higher average deposits associated with First Republic which were transferred to AWM from CCB in the fourth quarter of 2023, and wider spreads on loans, offset by deposit margin compression reflecting higher rates paid, and
•lower noninterest revenue, driven by the amortization of the purchase discount on certain acquired short-dated lending-related commitments associated with First
Republic, predominantly offset by higher management fees due to strong net inflows and higher average market levels, and higher brokerage fees.
Noninterest expense was $3.5 billion, up 12%, predominantly driven by:
•higher compensation, including revenue-related compensation and continued growth in private banking advisor teams, and
•higher legal expense and distribution fees.
The provision for credit losses was $20 million.
The provision in the prior year was $145 million.
Refer to Note 5 for additional information on lending related fees.
Refer to Credit and Investment Risk Management on pages 59-78 and Allowance for Credit Losses on pages 75-77 for further discussions of the credit portfolios and the allowance for credit losses.
Year-to-date results
Net income was $2.6 billion, down 2%.
Net revenue was $10.4 billion, up 7%. Net interest income was $3.2 billion, up 6%. Noninterest revenue was $7.1 billion, up 7%.
Revenue from Asset Management was $4.8 billion, up 4%, driven by:
•higher asset management fees reflecting strong net inflows and higher average market levels, and
•higher performance fees.
The prior year included 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.
Revenue from Global Private Bank was $5.6 billion, up 8%, driven by:
•higher noninterest revenue, reflecting:
–higher management fees on strong net inflows and higher average market levels, as well as higher brokerage fees,
partially offset by
–the amortization of the purchase discount on certain acquired short-dated lending-related commitments associated with First Republic, and
•higher net interest income, driven by:
–higher loans associated with First Republic and wider spreads on loans,
largely offset by
–the net impact of deposit margin compression reflecting higher rates paid, and higher average deposits associated with First Republic which were transferred to AWM from CCB in the fourth quarter of 2023.
Noninterest expense was $7.0 billion, up 12%, predominantly driven by:
•higher compensation, including revenue-related compensation, and continued growth in private banking advisor teams, and
•higher legal expense, and distribution fees.
The provision for credit losses was a net benefit of $37 million.
The provision in the prior year was $173 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected metrics | | | | | | | | | |
| As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
(in millions, except ranking data, ratios and employees) | 2024 | | 2023 | Change | | 2024 | | 2023 | Change |
% of JPM mutual fund assets and ETFs rated as 4- or 5-star(a) | 71 | % | | 70 | % | | | 71 | % | | 70 | % | |
% of JPM mutual fund assets and ETFs ranked in 1st or 2nd quartile:(b) | | | | | | | | | |
| 1 year | 64 | | | 58 | | | | 64 | | | 58 | | |
| 3 years | 73 | | | 68 | | | | 73 | | | 68 | | |
| 5 years | 74 | | | 80 | | | | 74 | | | 80 | | |
| | | | | | | | | |
Selected balance sheet data (period-end)(c) | | | | | | | | | |
| Total assets | $ | 247,353 | | | $ | 247,118 | | — | % | | $ | 247,353 | | | $ | 247,118 | | — | % |
| Loans | 228,042 | | | 222,493 | | 2 | | | 228,042 | | | 222,493 | | 2 | |
Deposits(d) | 236,492 | | | 199,763 | | 18 | | | 236,492 | | | 199,763 | | 18 | |
| Equity | 15,500 | | | 17,000 | | (9) | | | 15,500 | | | 17,000 | | (9) | |
| | | | | | | | | |
Selected balance sheet data (average)(c) | | | | | | | | | |
| Total assets | $ | 242,155 | | | $ | 238,987 | | 1 | | | $ | 241,770 | | | $ | 233,933 | | 3 | |
| Loans | 224,122 | | | 219,469 | | 2 | | | 223,775 | | | 215,491 | | 4 | |
Deposits(d) | 227,423 | | | 211,872 | | 7 | | | 227,573 | | | 218,078 | | 4 | |
| Equity | 15,500 | | | 16,670 | | (7) | | | 15,500 | | | 16,337 | | (5) | |
| | | | | | | | | |
Employees | 28,579 | | | 26,931 | | 6 | | | 28,579 | | | 26,931 | | 6 | |
| | | | | | | | | |
| Number of Global Private Bank client advisors | 3,509 | | | 3,214 | | 9 | | | 3,509 | | | 3,214 | | 9 | |
| | | | | | | | | |
Credit data and quality statistics(c) | | | | | | | | | |
| Net charge-offs/(recoveries) | $ | 3 | | | $ | 2 | | 50 | | $ | 11 | | | $ | — | | NM |
| Nonaccrual loans | 745 | | | 615 | | 21 | | | 745 | | | 615 | | 21 | |
| Allowance for credit losses: | | | | | | | | | |
| Allowance for loan losses | $ | 575 | | | $ | 649 | | (11) | | | $ | 575 | | | $ | 649 | | (11) | |
Allowance for lending-related commitments | 40 | | | 39 | | 3 | | | 40 | | | 39 | | 3 | |
Total allowance for credit losses | $ | 615 | | | $ | 688 | | (11) | % | | $ | 615 | | | $ | 688 | | (11) | % |
| Net charge-off/(recovery) rate | 0.01 | % | | — | % | | | 0.01 | % | | — | % | |
Allowance for loan losses to period-end loans | 0.25 | | | 0.29 | | | | 0.25 | | | 0.29 | | |
Allowance for loan losses to nonaccrual loans | 77 | | | 106 | | | | 77 | | | 106 | | |
Nonaccrual loans to period-end loans | 0.33 | | | 0.28 | | | | 0.33 | | | 0.28 | | |
(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. 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. Prior-period amounts 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)In the fourth quarter of 2023, certain deposits associated with First Republic were transferred to AWM from CCB.
Assets under management were $3.7 trillion, up 15%, while client assets were $5.4 trillion, up 18%, each driven by higher market levels and continued net inflows.
| | | | | | | | | | | | | | |
| Client assets | | | | |
| As of June 30, |
| (in billions) | 2024 | | 2023 | Change |
| Assets by asset class | | | | |
| Liquidity | $ | 953 | | | $ | 826 | | 15 | % |
| Fixed income | 785 | | | 718 | | 9 | |
| Equity | 1,017 | | | 792 | | 28 | |
| Multi-asset | 719 | | | 647 | | 11 | |
| Alternatives | 208 | | | 205 | | 1 | |
| Total assets under management | 3,682 | | | 3,188 | | 15 | |
Custody/brokerage/administration/deposits | 1,705 | | | 1,370 | | 24 | |
Total client assets(a) | $ | 5,387 | | | $ | 4,558 | | 18 | |
| | | | |
| Assets by client segment | | | | |
| Private Banking | $ | 1,097 | | | $ | 881 | | 25 | |
| Global Institutional | 1,540 | | | 1,423 | | 8 | |
| Global Funds | 1,045 | | | 884 | | 18 | |
| Total assets under management | $ | 3,682 | | | $ | 3,188 | | 15 | |
| | | | |
Private Banking | $ | 2,681 | | | $ | 2,170 | | 24 | |
| Global Institutional | 1,654 | | | 1,497 | | 10 | |
| Global Funds | 1,052 | | | 891 | | 18 | |
Total client assets(a) | $ | 5,387 | | | $ | 4,558 | | 18 | % |
(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) | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in billions) | 2024 | 2023 | | 2024 | 2023 |
Assets under management rollforward | | | | | |
| Beginning balance | $ | 3,564 | | $ | 3,006 | | | $ | 3,422 | | $ | 2,766 | |
| Net asset flows: | | | | | |
| Liquidity | 16 | | 60 | | | 12 | | 153 | |
| Fixed income | 22 | | 37 | | | 36 | | 63 | |
Equity | 31 | | 20 | | | 52 | | 42 | |
| Multi-asset | (3) | | 3 | | | (5) | | 1 | |
| Alternatives | 2 | | 1 | | | 3 | | 2 | |
Market/performance/other impacts | 50 | | 61 | | | 162 | | 161 | |
| Ending balance, June 30 | $ | 3,682 | | $ | 3,188 | | | $ | 3,682 | | $ | 3,188 | |
| | | | | |
Client assets rollforward | | | | | |
| Beginning balance | $ | 5,219 | | $ | 4,347 | | | $ | 5,012 | | $ | 4,048 | |
| Net asset flows | 79 | | 112 | | | 122 | | 264 | |
Market/performance/other impacts | 89 | | 99 | | | 253 | | 246 | |
| Ending balance, June 30 | $ | 5,387 | | $ | 4,558 | | | $ | 5,387 | | $ | 4,558 | |
| | | | | | | | | | | | | | | | |
Selected Firmwide Metrics - Wealth Management | | | | | | |
| As of June 30, | | |
| 2024 | | 2023 | Change | | |
Client assets (in billions)(a) | $ | 3,427 | | | $ | 2,862 | | 20 | % | | |
| Number of client advisors | 9,181 | | | 8,367 | | 10 | | | |
(a) Consists of Global Private Bank in AWM and client investment assets in J.P. Morgan Wealth Management in CCB.
| | | | | | | | | | | | | | | | | | | | | | | |
| International | | | | |
| Three months ended June 30, | | Six months ended June 30, |
(in millions) | 2024 | 2023 | Change | | 2024 | 2023 | Change |
Total net revenue(a) | | | | | | | |
| Europe/Middle East/Africa | $ | 852 | | $ | 853 | | — | % | | $ | 1,705 | | $ | 1,700 | | — | % |
| Asia-Pacific | 512 | | 497 | | 3 | | | 983 | | 974 | | 1 | |
| Latin America/Caribbean | 270 | | 247 | | 9 | | | 531 | | 487 | | 9 | |
Total international net revenue | 1,634 | | 1,597 | | 2 | | | 3,219 | | 3,161 | | 2 | |
| North America | 3,618 | | 3,346 | | 8 | | | 7,142 | | 6,566 | | 9 | |
Total net revenue(a) | $ | 5,252 | | $ | 4,943 | | 6 | % | | $ | 10,361 | | $ | 9,727 | | 7 | % |
(a)Regional revenue is based on the domicile of the client.
| | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, | | As of June 30, |
(in billions) | 2024 | 2023 | Change | | 2024 | 2023 | Change |
| Assets under management | | | | | | | |
| Europe/Middle East/Africa | $ | 566 | | $ | 527 | | 7 | % | | $ | 566 | | $ | 527 | | 7 | % |
| Asia-Pacific | 273 | | 252 | | 8 | | | 273 | | 252 | | 8 | |
| Latin America/Caribbean | 95 | | 79 | | 20 | | | 95 | | 79 | | 20 | |
Total international assets under management | 934 | | 858 | | 9 | | | 934 | | 858 | | 9 | |
| North America | 2,748 | | 2,330 | | 18 | | | 2,748 | | 2,330 | | 18 | |
Total assets under management | $ | 3,682 | | $ | 3,188 | | 15 | | | $ | 3,682 | | $ | 3,188 | | 15 | |
| | | | | | | |
| Client assets | | | | | | | |
| Europe/Middle East/Africa | $ | 789 | | $ | 663 | | 19 | | | $ | 789 | | $ | 663 | | 19 | |
| Asia-Pacific | 423 | | 378 | | 12 | | | 423 | | 378 | | 12 | |
| Latin America/Caribbean | 246 | | 217 | | 13 | | | 246 | | 217 | | 13 | |
Total international client assets | 1,458 | | 1,258 | | 16 | | | 1,458 | | 1,258 | | 16 | |
| North America | 3,929 | | 3,300 | | 19 | | | 3,929 | | 3,300 | | 19 | |
| Total client assets | $ | 5,387 | | $ | 4,558 | | 18 | % | | $ | 5,387 | | $ | 4,558 | | 18 | % |
Refer to pages 84–85 of JPMorgan Chase’s 2023 Form 10-K for a discussion of Corporate.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected income statement and balance sheet data | | | | | | |
| As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
| (in millions, except employees) | 2024 | | 2023 | | Change | | 2024 | | 2023 | | Change |
| Revenue | | | | | | | | | | | |
| Principal transactions | $ | 60 | | | $ | 113 | | | (47) | % | | $ | 125 | | | $ | 195 | | | (36) | % |
| Investment securities losses | (546) | | | (900) | | | 39 | | | (912) | | | (1,768) | | | 48 | |
| All other income | 8,244 | | (c) | 2,767 | | (e) | 198 | | | 8,270 | | (c) | 2,798 | | (e) | 196 | |
| Noninterest revenue | 7,758 | | | 1,980 | | | 292 | | | 7,483 | | | 1,225 | | | NM |
| Net interest income | 2,364 | | | 1,738 | | | 36 | | | 4,841 | | | 3,478 | | | 39 | |
Total net revenue(a) | 10,122 | | | 3,718 | | | 172 | | | 12,324 | | | 4,703 | | | 162 | |
| Provision for credit losses | 5 | | | (243) | | | NM | | 32 | | | 127 | | | (75) | |
| Noninterest expense | 1,579 | | (d) | 1,152 | | (f) | 37 | | | 2,855 | | (d)(h) | 1,312 | | (f) | 118 | |
Income/(loss) before income tax expense/(benefit) | 8,538 | | | 2,809 | | | 204 | | | 9,437 | | | 3,264 | | | 189 | |
| Income tax expense/(benefit) | 1,759 | | | 169 | | (g) | NM | | 1,982 | | | 380 | | (g) | 422 | |
| Net income/(loss) | $ | 6,779 | | | $ | 2,640 | |
| 157 | | | $ | 7,455 | | | $ | 2,884 | | | 158 | |
| Total net revenue | | | | | | | | | | | |
| Treasury and CIO | $ | 2,084 | | | $ | 1,261 | | | 65 | | | $ | 4,401 | | | $ | 2,367 | | | 86 | |
| Other Corporate | 8,038 | | | 2,457 | | | 227 | | | 7,923 | | | 2,336 | | | 239 | |
| Total net revenue | $ | 10,122 | | | $ | 3,718 | | | 172 | | | $ | 12,324 | | | $ | 4,703 | | | 162 | |
| Net income/(loss) | | | | | | | | | | | |
| Treasury and CIO | $ | 1,513 | | | $ | 1,057 | | | 43 | | | $ | 3,154 | | | $ | 1,681 | | | 88 | |
| Other Corporate | 5,266 | | | 1,583 | |
| 233 | | | 4,301 | | (h) | 1,203 | | | 258 | |
| Total net income/(loss) | $ | 6,779 | | | $ | 2,640 | |
| 157 | | | $ | 7,455 | | | $ | 2,884 | | | 158 | |
| Total assets (period-end) | $ | 1,318,119 | | | $ | 1,263,595 | | | 4 | | | $ | 1,318,119 | | | $ | 1,263,595 | | | 4 | |
| Loans (period-end) | 2,408 | | | 2,172 | | | 11 | | | 2,408 | | | 2,172 | | | 11 | |
Deposits (period-end)(b) | 26,073 | |
| 21,083 | | | 24 | | | 26,073 | | | 21,083 | | | 24 | |
Employees | 47,828 | | | 45,235 | | | 6 | % | | 47,828 | |
| 45,235 | | | 6 | % |
(a)Included tax-equivalent adjustments, predominantly driven by tax-exempt income from municipal bonds, of $45 million for both the three months ended June 30, 2024 and 2023, and $94 million and $101 million for the six months ended June 30, 2024 and 2023, respectively.
(b)Predominantly relates to the Firm's international consumer initiatives.
(c)Included the net gain related to Visa shares of $7.9 billion for the three and six months ended June 30, 2024. Refer to Notes 2 and 5 for additional information.
(d)Included a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
(e)Included the preliminary estimated bargain purchase gain of $2.7 billion associated with First Republic.
(f)In the second quarter of 2023, substantially all of the expense associated with First Republic was reported in Corporate. Commencing in the third quarter of 2023, the expense is aligned to the appropriate LOBs.
(g)Income taxes associated with the First Republic acquisition were reflected in the preliminary estimated bargain purchase gain.
(h)Includes the increase to the FDIC special assessment. Refer to Note 5 for additional information.
Quarterly results
Net income was $6.8 billion, compared with $2.6 billion in the prior year.
Net revenue was $10.1 billion, compared with $3.7 billion in the prior year.
Net interest income was $2.4 billion, up 36%, due to the impact of balance sheet mix and higher rates.
Noninterest revenue was $7.8 billion, compared with $2.0 billion in the prior year. Excluding the $7.9 billion net gain related to Visa shares in the current quarter and the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition in the prior year, revenue was up $683 million, largely driven by:
•lower investment securities losses related to sales of U.S. Treasuries and U.S. GSE and government agency MBS, associated with repositioning the investment securities portfolio in Treasury and CIO, and
•measurement period adjustments resulting in an increase to the estimated bargain purchase gain associated with the First Republic acquisition.
Noninterest expense was $1.6 billion, up 37%, driven by:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation,
largely offset by
•lower expense associated with the First Republic acquisition as substantially all the expense was reported in Corporate in the second quarter of 2023 and
subsequently aligned to the appropriate LOBs starting in the third quarter of 2023, and
•lower legal expense.
The provision for credit losses was $5 million.
The provision in the prior year was a net benefit of $243 million, reflecting a reduction in the allowance for credit losses associated with the deposit placed with First Republic Bank in the first quarter of 2023.
The current period income tax expense was driven by changes in the level and mix of income and expenses subject to U.S. federal and state and local taxes, including the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year tax expense benefited from the income tax expense associated with the First Republic acquisition reflected in the preliminary estimated bargain purchase gain.
Refer to Note 9 for additional information on the investment securities portfolio, and Note 12 for additional information on the allowance for credit losses.
Year-to-date results
Net income was $7.5 billion, compared with $2.9 billion in the prior year.
Net revenue was $12.3 billion, compared with $4.7 billion in the prior year.
Net interest income was $4.8 billion, up 39%, primarily due to the impact of balance sheet mix and higher rates.
Noninterest revenue was $7.5 billion, compared with $1.2 billion in the prior year. Excluding the $7.9 billion net gain related to Visa shares in the current quarter and the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition in the prior year, revenue was up $1.2 billion, predominantly driven by:
•lower investment securities losses related to sales of U.S. GSE and government agency MBS and U.S. Treasuries, associated with repositioning the investment securities portfolio in Treasury and CIO, and
•higher revenue associated with the Firm's international consumer initiatives.
Noninterest expense was $2.9 billion, up 118%, driven by:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation,
•the $725 million increase to the FDIC special assessment recognized in the first quarter of 2024, and
•higher costs associated with the Firm's international consumer initiatives,
partially offset by
•lower legal expense, and
•lower expense associated with the First Republic acquisition as substantially all the expense was reported in Corporate in the second quarter of 2023 and subsequently aligned to the appropriate LOBs starting in the third quarter of 2023.
Refer to Note 5 for additional information on the FDIC special assessment.
The provision for credit losses was $32 million.
The provision in the prior year was $127 million.
Refer to Note 9 for additional information on the investment securities portfolio, and Note 12 for additional information on the allowance for credit losses.
The current period income tax expense was driven by changes in the level and mix of income and expenses subject to U.S. federal and state and local taxes, including the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year tax expense benefited from the income tax expense associated with the First Republic acquisition reflected in the preliminary estimated bargain purchase gain.
Other Corporate also reflects the Firm's international consumer initiatives, which includes Chase U.K., Nutmeg, and an ownership stake in C6 Bank.
Treasury and CIO overview
At June 30, 2024, the average credit rating of the Treasury and CIO investment securities comprising the portfolio in the table below was AA+ (based upon external ratings where available and, where not available, based primarily upon internal risk ratings). Refer to Note 9 for further information on the Firm’s investment securities portfolio and internal risk ratings.
Refer to Liquidity Risk Management on pages 51-58 for further information on liquidity and funding risk. Refer to Market Risk Management on pages 79-84 for information on interest rate and foreign exchange risks. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Selected income statement and balance sheet data | | | | | |
| As of or for the three months
ended June 30, | As of or for the six months
ended June 30, |
| (in millions) | 2024 | | 2023 | | Change | 2024 | | 2023 | | Change |
| Investment securities losses | $ | (546) | | | $ | (900) | | | 39 | % | $ | (912) | | | $ | (1,768) | | | 48 | % |
Available-for-sale securities (average) | $ | 247,304 | | | $ | 198,620 | | | 25 | | $ | 235,124 | | | $ | 200,687 | | | 17 | |
Held-to-maturity securities (average) | 330,347 | | | 410,594 | | | (20) | | 342,553 | | | 413,953 | | | (17) | |
| Investment securities portfolio (average) | $ | 577,651 | | | $ | 609,214 | | | (5) | | $ | 577,677 | | | $ | 614,640 | | | (6) | |
| Available-for-sale securities (period-end) | $ | 263,624 | |
| $ | 201,211 | | | 31 | | $ | 263,624 | |
| $ | 201,211 | | | 31 | |
Held-to-maturity securities (period-end) | 323,746 | | | 408,941 | | | (21) | | 323,746 | | | 408,941 | | | (21) | |
Investment securities portfolio, net of allowance for credit losses (period-end)(a) | $ | 587,370 | | | $ | 610,152 | | | (4) | % | $ | 587,370 | | | $ | 610,152 | | | (4) | % |
(a)As of June 30, 2024 and 2023, the allowance for credit losses on investment securities was $125 million and $74 million, respectively.
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.
Refer to pages 86–89 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of Firmwide risk management governance and oversight.
Risk governance and oversight functions
The following sections of this Form 10-Q and the 2023 Form 10-K discuss the risk governance and oversight functions in place to manage the risks inherent in the Firm’s business activities.
| | | | | | | | |
| Risk governance and oversight functions | Form 10-Q page reference | Form 10-K page reference |
| Strategic Risk | | 90 |
| Capital Risk | 45–50 | 91–101 |
| Liquidity Risk | 51–58 | 102-109 |
| Reputation Risk | | 110 |
| Consumer Credit Risk | 61–64 | 114-119 |
| Wholesale Credit Risk | 65–74 | 120-130 |
| Investment Portfolio Risk | 78 | 134 |
| Market Risk | 79–84 | 135-143 |
| Country Risk | 85 | 144-145 |
| Climate Risk | | 146 |
| Operational Risk | | 147-150 |
| Compliance Risk | | 151 |
| Conduct Risk | | 152 |
| Legal Risk | | 153 |
| Estimations and Model Risk | | 154 |
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.
Refer to pages 91-101 of JPMorgan Chase’s 2023 Form 10-K, Note 21 of this Form 10-Q and the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for a further discussion of the Firm’s capital risk.
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. Bank Holding Companies (“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 risk-weighted assets ("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 Board of Governors of the Federal Reserve System (the "Federal Reserve"), the Office of the Comptroller of the Currency ("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-Q as the "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. global systemically important banks ("GSIBs"). The proposed effective date is July 1, 2025, with a three-year transition period applicable to the expanded risk-based approach.
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 Firm is managing its CET1 capital in anticipation of the finalization of the U.S. Basel III proposal.
Refer to page 92 of JPMorgan Chase’s 2023 Form 10-K for additional information on the U.S. Basel III proposal.
As of June 30, 2024, the Advanced Total Capital ratio is the most binding constraint of the Firm's Basel III risk-based ratios. However, as of June 30, 2024, 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.
Refer to page 48 of this Form 10-Q and page 98 of JPMorgan Chase's 2023 Form 10-K for additional information on SLR.
Refer to page 93 of JPMorgan Chase's 2023 Form 10-K for information on Other Key Regulatory Developments.
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 Capital Risk Management on pages 91-101 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of these capital metrics. Refer to Note 21 for JPMorgan Chase Bank, N.A.’s risk-based and leverage-based capital metrics.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Standardized | | Advanced |
| (in millions, except ratios) | June 30, 2024 | | December 31, 2023 | | Capital ratio requirements(b) | | June 30, 2024 | | December 31, 2023 | | Capital ratio requirements(b) |
Risk-based capital metrics:(a) | | | | | | | | | | | |
| CET1 capital | $ | 267,196 | | | $ | 250,585 | | | | | $ | 267,196 | | | $ | 250,585 | | | |
| Tier 1 capital | 290,442 | | | 277,306 | | | | | 290,442 | | | 277,306 | | | |
| Total capital | 322,175 | | | 308,497 | | | | | 308,639 | | (c) | 295,417 | | (c) | |
| Risk-weighted assets | 1,743,481 | | | 1,671,995 | | | | | 1,726,204 | | (c) | 1,669,156 | | (c) | |
| CET1 capital ratio | 15.3 | % | | 15.0 | % | | 11.9 | % | | 15.5 | % | | 15.0 | % | | 11.5 | % |
| Tier 1 capital ratio | 16.7 | | | 16.6 | | | 13.4 | | | 16.8 | | | 16.6 | | | 13.0 | |
| Total capital ratio | 18.5 | | | 18.5 | | | 15.4 | | | 17.9 | | | 17.7 | | | 15.0 | |
(a)The capital metrics reflect the CECL capital transition provisions. As of June 30, 2024, CET1 capital reflected the remaining $720 million CECL benefit and will be fully phased in as of January 1, 2025; as of December 31, 2023, CET1 capital reflected a $1.4 billion benefit. Refer to Note 21 for additional information.
(b)Represents minimum requirements and regulatory buffers applicable to the Firm for the period ended June 30, 2024. For the period ended December 31, 2023, the Basel III Standardized CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 11.4%, 12.9%, and 14.9%, respectively; the Basel III Advanced CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 11.0%, 12.5%, and 14.5%, respectively. Refer to Note 21 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. Refer to Note 26 of this Form 10-Q and page 96 of JPMorgan Chase’s 2023 Form 10-K for additional information on First Republic.
| | | | | | | | | | | | | | |
Three months ended
(in millions, except ratios) | June 30, 2024 | December 31, 2023 | | Capital ratio requirements(c) |
Leverage-based capital metrics:(a) | | | | |
Adjusted average assets(b) | $ | 4,016,654 | | $ | 3,831,200 | | | |
| Tier 1 leverage ratio | 7.2 | % | 7.2 | % | | 4.0 | % |
| Total leverage exposure | $ | 4,768,202 | | $ | 4,540,465 | | | |
| SLR | 6.1 | % | 6.1 | % | | 5.0 | % |
(a)The capital metrics reflect the CECL capital transition provisions. Refer to Note 21 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 21 for additional information.
Capital components
The following table presents reconciliations of total stockholders’ equity to Basel III CET1 capital, Tier 1 capital and Total capital as of June 30, 2024 and December 31, 2023.
| | | | | | | | | | | |
| (in millions) | June 30, 2024 | | December 31,
2023 |
| Total stockholders’ equity | $ | 340,552 | | | $ | 327,878 | |
| Less: Preferred stock | 23,900 | | | 27,404 | |
| Common stockholders’ equity | 316,652 | | | 300,474 | |
| Add: | | | |
Certain deferred tax liabilities(a) | 2,969 | | | 2,996 | |
Other CET1 capital adjustments(b) | 4,827 | | | 4,717 | |
| Less: | | | |
Goodwill(c) | 54,194 | | | 54,377 | |
Other intangible assets | 3,058 | | | 3,225 | |
| | | |
Standardized/Advanced CET1 capital | $ | 267,196 | | | $ | 250,585 | |
| Add: Preferred stock | 23,900 | | | 27,404 | |
| Less: Other Tier 1 adjustments | 654 | | | 683 | |
Standardized/Advanced Tier 1 capital | $ | 290,442 | | | $ | 277,306 | |
Long-term debt and other instruments qualifying as Tier 2 capital | $ | 11,587 | | | $ | 11,779 | |
Qualifying allowance for credit losses(d) | 20,847 | | | 20,102 | |
Other | (701) | | | (690) | |
Standardized Tier 2 capital | $ | 31,733 | | | $ | 31,191 | |
Standardized Total capital | $ | 322,175 | | | $ | 308,497 | |
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital(e)(f) | (13,536) | |
| (13,080) | |
Advanced Tier 2 capital | $ | 18,197 | | | $ | 18,111 | |
Advanced Total capital | $ | 308,639 | | | $ | 295,417 | |
(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 June 30, 2024 and December 31, 2023, included a net benefit associated with cash flow hedges and debit valuation adjustments ("DVA") related to structured notes recorded in AOCI of $5.1 billion and $4.3 billion and the benefit from the CECL capital transition provisions of $720 million and $1.4 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 78 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 21 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)As of June 30, 2024 and December 31, 2023, included an incremental $596 million and $655 million allowance for credit losses, respectively, 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.
Capital rollforward
The following table presents the changes in Basel III CET1 capital, Tier 1 capital and Tier 2 capital for the six months ended June 30, 2024.
| | | | | | |
Six months ended June 30,
(in millions) | 2024 | |
| Standardized/Advanced CET1 capital at December 31, 2023 | $ | 250,585 | | |
| Net income applicable to common equity | 30,854 | | |
| Dividends declared on common stock | (6,670) | | |
Net purchase of treasury stock | (7,150) | | |
Changes in additional paid-in capital | 200 | | |
| Changes related to AOCI applicable to capital: | | |
| Unrealized gains/(losses) on investment securities | 249 | | |
Translation adjustments, net of hedges(a) | (360) | | |
| Fair value hedges | (13) | | |
| Defined benefit pension and other postretirement employee benefit (“OPEB”) plans | 23 | | |
Changes related to other CET1 capital adjustments(b) | (522) | | |
| Change in Standardized/Advanced CET1 capital | 16,611 | | |
Standardized/Advanced CET1 capital at June 30, 2024 | $ | 267,196 | | |
| Standardized/Advanced Tier 1 capital at December 31, 2023 | $ | 277,306 | | |
Change in CET1 capital(b) | 16,611 | | |
Net redemptions of noncumulative perpetual preferred stock | (3,504) | | |
| Other | 29 | | |
| Change in Standardized/Advanced Tier 1 capital | 13,136 | | |
Standardized/Advanced Tier 1 capital at June 30, 2024 | $ | 290,442 | | |
| Standardized Tier 2 capital at December 31, 2023 | $ | 31,191 | | |
Change in long-term debt and other instruments qualifying as Tier 2 | (192) | | |
Change in qualifying allowance for credit losses(b) | 745 | | |
Other | (11) | | |
Change in Standardized Tier 2 capital | 542 | | |
Standardized Tier 2 capital at June 30, 2024 | $ | 31,733 | | |
Standardized Total capital at June 30, 2024 | $ | 322,175 | | |
| Advanced Tier 2 capital at December 31, 2023 | $ | 18,111 | | |
Change in long-term debt and other instruments qualifying as Tier 2 | (192) | | |
Change in qualifying allowance for credit losses(b)(c) | 289 | | |
Other | (11) | | |
Change in Advanced Tier 2 capital | 86 | | |
Advanced Tier 2 capital at June 30, 2024 | $ | 18,197 | | |
Advanced Total capital at June 30, 2024 | $ | 308,639 | | |
(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 1 for additional information on changes in accounting principles and Note 21 for additional information on the CECL capital transition.
(c)As of June 30, 2024 and December 31, 2023, included an incremental $596 million and $655 million allowance for credit losses, respectively, 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.
RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced approaches for the six months ended June 30, 2024. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Standardized | | Advanced |
Six months ended
June 30, 2024
(in millions) | Credit risk RWA(c) | Market risk RWA | Total RWA | | Credit risk RWA(c)(d) | Market risk RWA | Operational risk
RWA | Total RWA |
| December 31, 2023 | $ | 1,603,851 | | $ | 68,144 | | $ | 1,671,995 | | | $ | 1,155,261 | | $ | 68,603 | | $ | 445,292 | | $ | 1,669,156 | |
Model & data changes(a) | 6,892 | | — | | 6,892 | | | 3,032 | | — | | — | | 3,032 | |
Movement in portfolio levels(b) | 51,945 | | 12,649 | | 64,594 | | | 52,323 | | 12,748 | | (11,055) | | 54,016 | |
| Changes in RWA | 58,837 | | 12,649 | | 71,486 | | | 55,355 | | 12,748 | | (11,055) | | 57,048 | |
| June 30, 2024 | $ | 1,662,688 | | $ | 80,793 | | $ | 1,743,481 | | | $ | 1,210,616 | | $ | 81,351 | | $ | 434,237 | | $ | 1,726,204 | |
(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, changes in composition and credit quality, market movements, impacts related to Visa shares 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 June 30, 2024 and December 31, 2023, the Basel III Standardized Credit risk RWA included wholesale and retail off balance-sheet RWA of $209.9 billion and $208.5 billion, respectively; and the Basel III Advanced Credit risk RWA included wholesale and retail off balance-sheet RWA of $196.2 billion and $188.5 billion, respectively.
(d)As of June 30, 2024 and December 31, 2023, Credit risk RWA reflected approximately $47.7 billion and $52.4 billion, respectively, 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
Refer to Supplementary Leverage Ratio on page 98 of JPMorgan Chase’s 2023 Form 10-K for additional information.
The following table presents the components of the Firm’s SLR.
| | | | | | | | | |
Three months ended
(in millions, except ratio) | June 30,
2024 | December 31, 2023 | |
Tier 1 capital | $ | 290,442 | | $ | 277,306 | | |
| Total average assets | 4,071,443 | | 3,885,632 | | |
Less: Regulatory capital adjustments(a) | 54,789 | | 54,432 | | |
Total adjusted average assets(b) | 4,016,654 | | 3,831,200 | | |
Add: Off-balance sheet exposures(c) | 751,548 | | 709,265 | | |
| Total leverage exposure | $ | 4,768,202 | | $ | 4,540,465 | | |
| SLR | 6.1 | % | 6.1 | % | |
(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 21 for additional information on the CECL capital transition.
(b)Adjusted average assets used for the calculation of Tier 1 leverage ratio.
(c)Off-balance sheet exposures are calculated as the average of the three month-end spot balances on applicable regulatory exposures during the reporting quarter. Refer to the Firm’s Pillar 3 Regulatory Capital Disclosures reports for additional information.
Line of business equity
Each business segment is allocated capital by taking into consideration a variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. 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. Refer to line of business equity on page 98 of JPMorgan Chase’s 2023 Form 10-K for additional information on capital allocation.
The following table presents the capital allocated to each business segment.
| | | | | | | | | | |
| Line of business equity (Allocated capital) |
(in billions) | June 30,
2024 | | | December 31, 2023 |
| Consumer & Community Banking | $ | 54.5 | | | | $ | 55.5 | |
Commercial & Investment Bank | 132.0 | | | | 138.0 | |
| Asset & Wealth Management | 15.5 | | | | 17.0 | |
| Corporate | 114.7 | | | | 90.0 | |
| Total common stockholders’ equity | $ | 316.7 | | | | $ | 300.5 | |
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.
On June 28, 2024, the Firm announced that its Board of Directors intends to increase the quarterly common stock dividend to $1.25 per share (up from the current $1.15 per share) for the third quarter of 2024. On May 20, 2024, the Firm announced that its Board of Directors had declared a quarterly common stock dividend of $1.15 per share, payable on July 31, 2024. The Firm’s dividends are subject to approval by the Board of Directors on a quarterly basis.
Common stock
On June 28, 2024, the Firm announced that its Board of Directors had authorized a new $30 billion common share repurchase program, effective July 1, 2024. Through June 30, 2024, the Firm was authorized to purchase up to $30 billion of common shares under its previously-approved common share repurchase program that was announced on April 13, 2022.
The following table sets forth the Firm’s repurchases of common stock for the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in millions) | 2024 | 2023 | 2024 | 2023 |
| Total number of shares of common stock repurchased | 27.0 | | 16.7 | | 42.9 | | 38.7 | |
Aggregate purchase price of common stock repurchases(a) | $ | 5,318 | | $ | 2,293 | | $ | 8,167 | | $ | 5,233 | |
(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.
The Board of Directors’ authorization to repurchase common shares is utilized at management’s discretion. The $30 billion common share repurchase program approved by the Board of Directors does not establish specific price targets or timetables. Management determines the amount and timing of common share repurchases based on 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 other investment opportunities. The amount of common shares that the Firm repurchases in any period may be substantially more or less than the amounts estimated or actually repurchased in prior periods, reflecting the dynamic nature of the decision-making process.
Refer to Capital actions on page 99 of JPMorgan Chase’s 2023 Form 10-K for additional information.
Refer to Part II, Item 2: Unregistered Sales of Equity Securities and Use of Proceeds and Part II, Item 5: Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities on pages 202-203 of this Form 10-Q and page 35 of JPMorgan Chase’s 2023 Form 10-K, respectively, for additional information regarding repurchases of the Firm’s equity securities.
Preferred stock
Preferred stock dividends were $317 million and $373 million, and $714 million and $729 million, for the three and six months ended June 30, 2024 and 2023, respectively.
During the six months ended and subsequent to June 30, 2024, the Firm issued and redeemed certain series of non-cumulative preferred stock. Refer to Note 17 of this Form 10-Q and Note 21 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s preferred stock, including the issuance and redemption of preferred stock.
Subordinated Debt
Refer to Long-term funding on page 57 of this Form 10-Q and Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s subordinated debt.
Capital planning and stress testing
Comprehensive Capital Analysis and Review
On April 5, 2024, the Firm submitted its 2024 Capital Plan to the Federal Reserve. On June 28, 2024, the Firm announced that its preliminary Stress Capital Buffer ("SCB") requirement provided by the Federal Reserve is 3.3% (up from the current 2.9%), and the Firm’s Standardized CET1 capital ratio requirement, including regulatory buffers, is 12.3% (up from the current 11.9%). In addition, consistent with the Firm's press release on June 26, 2024 regarding the potential for higher stress losses, should the Federal Reserve modify the Firm’s stress results, the Firm’s Standardized CET1 capital ratio requirement would likely be modestly higher than 12.3%. The Federal Reserve will provide the Firm with its final SCB requirement by August 31, 2024, and that requirement will become effective on October 1, 2024, and will remain in effect until September 30, 2025.
Refer to Capital planning and stress testing on pages 91-92 of JPMorgan Chase’s 2023 Form 10-K for additional information on CCAR.
Other capital requirements
Total Loss-Absorbing Capacity
The Federal Reserve’s total loss-absorbing capacity ("TLAC") rule requires the U.S. GSIB top-tier holding companies, including the Firm, to maintain minimum levels of external TLAC and eligible long-term debt ("eligible LTD").
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 June 30, 2024 and December 31, 2023.
| | | | | | | | | | | | | | |
| June 30, 2024 | December 31, 2023 |
| (in billions, except ratio) | External TLAC | LTD | External TLAC | LTD |
| Total eligible amount | $ | 533.9 | | $ | 228.0 | | $ | 513.8 | | $ | 222.6 | |
| % of RWA | 30.6 | % | 13.1 | % | 30.7 | % | 13.3 | % |
| Regulatory requirements | 23.0 | | 10.5 | | 23.0 | | 10.0 | |
| Surplus/(shortfall) | $ | 132.9 | | $ | 44.9 | | $ | 129.2 | | $ | 55.4 | |
| % of total leverage exposure | 11.2 | % | 4.8 | % | 11.3 | % | 4.9 | % |
| Regulatory requirements | 9.5 | | 4.5 | | 9.5 | | 4.5 | |
| Surplus/(shortfall) | $ | 81.0 | | $ | 13.4 | | $ | 82.5 | | $ | 18.3 | |
Effective January 1, 2024, the Firm's regulatory requirement for its eligible LTD to RWA ratio increased by 50 bps to 10.5%, due to the increase in the Firm’s GSIB Method 2 requirements. The Firm's regulatory requirement for its TLAC to RWA ratio remained at 23.0%. Refer to Risk-based Capital Regulatory Requirements on pages 94-95 of JPMorgan Chase’s 2023 Form 10-K for further information on the GSIB surcharge.
Refer to Liquidity Risk Management on pages 51-58 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 JPMorgan Chase’s 2023 Form 10-K for information on the financial consequences to holders of the Firm’s debt and equity securities in a resolution scenario.
Refer to other capital requirements on page 100 of JPMorgan Chase’s 2023 Form 10-K for additional information on TLAC.
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”).
The following table presents J.P. Morgan Securities’ net capital.
| | | | | | | | |
| June 30, 2024 | |
| (in millions) | Actual | Minimum |
| Net Capital | $ | 24,652 | | $ | 5,585 | |
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 June 30, 2024, J.P. Morgan Securities plc was compliant with its MREL requirements.
The following table presents J.P. Morgan Securities plc’s risk-based and leverage-based capital metrics.
| | | | | | | | | | | | | | |
| June 30, 2024 | | | Regulatory Minimum ratios(a) | |
| (in millions, except ratios) | Estimated | |
| Total capital | $ | 53,656 | | | | |
| CET1 capital ratio | 16.1 | | % | 4.5 | | % |
| Tier 1 capital ratio | 20.8 | | | 6.0 | | |
| Total capital ratio | 25.5 | | | 8.0 | | |
| | | | |
| Tier 1 leverage ratio | 6.2 | | | 3.3 | | (b) |
(a)Represents minimum Pillar 1 requirements specified by the PRA. J.P. Morgan Securities plc's capital ratios as of June 30, 2024 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 June 30, 2024, JPMSE was compliant with its MREL requirements.
The following table presents JPMSE’s risk-based and leverage-based capital metrics.
| | | | | | | | |
| June 30, 2024 | | Regulatory Minimum ratios(a) |
| (in millions, except ratios) | Estimated |
| Total capital | $ | 44,850 | | |
| CET1 capital ratio | 19.4 | % | 4.5 | % |
| Tier 1 capital ratio | 19.4 | | 6.0 | |
| Total capital ratio | 33.5 | | 8.0 | |
| Tier 1 leverage ratio | 6.3 | | 3.0 | |
(a)Represents minimum Pillar 1 requirements specified by the EU CRR. J.P. Morgan SE’s capital and leverage ratios as of June 30, 2024 exceeded the minimum requirements, including the additional capital requirements specified by EU regulators.
Refer to U.S. broker-dealer and Non-U.S. subsidiary regulatory capital on page 101 of JPMorgan Chase’s 2023 Form 10-K for further information.
| | | | | | | | | | | | | | |
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. Refer to pages 102–109 of JPMorgan Chase’s 2023 Form 10-K and the Firm’s U.S. LCR Disclosure reports, which are available on the Firm’s website, for a further discussion of the Firm’s liquidity risk.
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.
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. 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 June 30, 2024, March 31, 2024 and June 30, 2023 based on the Firm’s interpretation of the LCR framework.
| | | | | | | | | | | |
| Three months ended |
Average amount
(in millions) | June 30,
2024 | March 31, 2024 | June 30,
2023 |
| JPMorgan Chase & Co.: | | | |
| HQLA | | | |
Eligible cash(a) | $ | 461,392 | | $ | 483,292 | | $ | 440,294 | |
Eligible securities(b)(c) | 356,815 | | 313,818 | | 327,837 | |
Total HQLA(d) | $ | 818,207 | | $ | 797,110 | | $ | 768,131 | |
| Net cash outflows | $ | 732,179 | | $ | 711,611 | | $ | 683,446 | |
| LCR | 112 | % | 112 | % | 112 | % |
Net excess eligible HQLA(d) | $ | 86,028 | | $ | 85,499 | | $ | 84,685 | |
| JPMorgan Chase Bank N.A.: | | |
| LCR | 125 | % | 129 | % | 129 | % |
| Net excess eligible HQLA | $ | 189,124 | | $ | 221,104 | | $ | 211,233 | |
(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 for the three months ended June 30, 2024 decreased compared with the three months ended March 31, 2024, due to a decrease in JPMorgan Chase Bank, N.A.'s HQLA, primarily from a reduction in cash due to a decline in deposits and the impact of CIB markets activities.
JPMorgan Chase Bank, N.A.’s average LCR for the three months ended June 30, 2024 decreased compared with the three months ended June 30, 2023, reflecting the timing impact associated with the First Republic acquisition.
Refer to Executive Overview on pages 5-8 and Note 26 for additional information on First Republic.
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 impacts of Federal Reserve actions as well as other factors.
Refer to page 103 of JPMorgan Chase’s 2023 Form 10-K and the Firm’s U.S. LCR Disclosure reports for additional information on HQLA and net cash outflows.
Internal stress testing
The Firm conducts internal liquidity stress testing to monitor liquidity positions at the Firm and its material legal entities 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. Results of stress tests are considered in the formulation of the Firm’s funding plan and assessment of its liquidity position.
The Firm maintains liquidity at the Parent Company, the Intermediate Holding Company (“IHC”), and operating subsidiaries at levels sufficient to comply with liquidity risk tolerances and minimum liquidity requirements, and to manage through periods of stress when access to normal funding sources may be disrupted.
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 $623 billion and $649 billion as of June 30, 2024 and December 31, 2023, 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, 2023, was driven by decreases in excess eligible HQLA securities at JPMorgan Chase Bank, N.A. and in unencumbered AFS securities, largely offset by an increase in CIB trading assets.
As of June 30, 2024 and December 31, 2023, the Firm had approximately $1.5 trillion and $1.4 trillion of available cash and securities, respectively, comprised of eligible end-of-period HQLA, excluding the impact of regulatory haircuts, of approximately $841 billion and $798 billion, respectively, and unencumbered marketable securities with a fair value of approximately $623 billion and $649 billion, respectively.
The Firm also had available borrowing capacity at the FHLB and the discount window at the Federal Reserve Banks as a result of collateral pledged by the Firm to such banks of approximately $366 billion and $340 billion as of June 30, 2024 and December 31, 2023, 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, 2023 predominantly due to a higher amount of commercial loans and mortgages 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.
For the three months ended June 30, 2024, 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 on the Firm’s website for additional information.
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 22 for additional information on off-balance sheet obligations.
Deposits
The table below summarizes, by LOB and Corporate, the period-end deposit balances as of June 30, 2024 and December 31, 2023, and the average deposit balances for the three and six months ended June 30, 2024 and 2023, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | December 31, 2023 | | | Average | |
| | | Three months ended June 30, | | Six months ended June 30, | |
| (in millions) | | | 2024 | 2023 | | 2024 | 2023 | |
Consumer & Community Banking(a) | $ | 1,069,753 | | $ | 1,094,738 | | | | $ | 1,073,544 | | $ | 1,157,309 | | | $ | 1,076,393 | | $ | 1,135,261 | | |
Commercial & Investment Bank(a) | 1,064,212 | | 1,050,892 | | | | 1,046,993 | | 998,014 | | | 1,046,391 | | 981,861 | | |
Asset & Wealth Management(a) | 236,492 | | 233,232 | | | | 227,423 | | 211,872 | | | 227,573 | | 218,078 | | |
Corporate | 26,073 | | 21,826 | | | | 23,223 | | 20,219 | | | 22,628 | | 18,931 | | |
| Total Firm | $ | 2,396,530 | | $ | 2,400,688 | | | | $ | 2,371,183 | | $ | 2,387,414 | | | $ | 2,372,985 | | $ | 2,354,131 | | |
(a)In the fourth quarter of 2023, CCB transferred deposits associated with First Republic to AWM and CIB. Refer to page 67 of the Firm’s 2023 Form 10-K for additional information.
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 three months ended June 30, 2024 compared to the three months ended June 30, 2023, reflecting:
•a decline in CCB in existing accounts primarily due to increased customer spending, partially offset by new accounts,
predominantly offset by
•net issuances of structured notes in CIB as a result of client demand in Markets; and net inflows in Payments, which included the retention of inflows associated with disruptions in the market in the first quarter of 2023, predominantly offset by deposit attrition, which included actions taken to reduce certain deposits,
•the timing impact of First Republic, and
•an increase in Corporate related to the Firm's international consumer initiatives, including new product offerings in the second quarter of 2024.
Excluding the impact of First Republic, AWM was relatively flat, reflecting an increase from new product offerings, offset by continued migration into higher-yielding investments.
Average deposits were higher for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, reflecting:
•net issuances of structured notes in CIB as a result of client demand in Markets; and net inflows in Payments, which included the retention of inflows associated with disruptions in the market in the first quarter of 2023, largely offset by deposit attrition, which included actions taken to reduce certain deposits,
•the timing impact of First Republic, and
• an increase in Corporate related to the Firm's international consumer initiatives, including new product offerings in the second quarter of 2024,
predominantly offset by
•a decline in CCB in existing accounts primarily due to increased customer spending, partially offset by new accounts, and
•excluding the impact of First Republic, a decline in AWM, driven by continued migration into higher-yielding investments, predominantly offset by new product offerings.
Period-end deposits decreased from December 31, 2023, reflecting:
•a decline in CCB in existing accounts, primarily driven by seasonal tax outflows and migration into higher-yielding investments, largely offset by new accounts,
predominantly offset by
•higher deposits in CIB due to net inflows in Securities Services and Payments, partially offset by net maturities of structured notes in Markets,
•higher deposits in Corporate predominantly driven by new product offerings related to the Firm's international consumer initiatives, and
•higher balances in AWM driven by new product offerings, and an increase in deposits in existing accounts due to a change in product offerings associated with First Republic, predominantly offset by continued migration into higher-yielding investments.
Refer to the Firm’s Consolidated Balance Sheets Analysis and the Business Segment Results on pages 15-16 and pages 20-43, respectively, for further information on deposit and liability balance trends, as well as Note 26 for additional information on the First Republic acquisition. 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. Refer to pages 105–106 of JPMorgan Chase's 2023 Form 10-K for additional information on the Firm's total uninsured 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.
| | | | | | | | | | | | | | | | | | | | | | | |
(in millions) | | June 30,
2024 | | December 31,
2023 |
| U.S. | | Non-U.S. | | U.S. | Non-U.S. |
| Three months or less | | $ | 101,270 | | | $ | 81,154 | | | $ | 82,719 | | $ | 77,466 | |
| Over three months but within 6 months | | 19,080 | | | 14,486 | | | 17,736 | | 5,358 | |
| Over six months but within 12 months | | 12,853 | | | 4,029 | | | 10,294 | | 4,820 | |
| Over 12 months | | 866 | | | 1,819 | | | 710 | | 2,543 | |
| Total | | $ | 134,069 | | (a) | $ | 101,488 | | | $ | 111,459 | | $ | 90,187 | |
(a)At June 30, 2024, includes $10 billion of derivatives cash collateral reflecting a change in methodology for calculating uninsured deposits.
The table below shows the loan and deposit balances, the loans-to-deposits ratios, and deposits as a percentage of total liabilities, as of June 30, 2024 and December 31, 2023.
| | | | | | | | | | | |
| (in billions except ratios) | June 30, 2024 | | December 31, 2023 |
Deposits | $ | 2,396.5 | | | $ | 2,400.7 | |
Deposits as a % of total liabilities | 63 | % | | 68 | % |
Loans | $ | 1,320.7 | | | $ | 1,323.7 | |
Loans-to-deposits ratio | 55 | % | | 55 | % |
The following table provides a summary of the average balances and average interest rates of JPMorgan Chase’s deposits for the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Unaudited)
(in millions, except interest rates) | Average balances |
| Three months ended | | | | | Six months ended |
| June 30, 2024 | | June 30, 2023 | | | | | | June 30, 2024 | | June 30, 2023 |
| U.S. offices | | | | | | | | | | | |
| Noninterest-bearing | $ | 623,139 | | | $ | 646,767 | | | | | | | $ | 623,626 | | | $ | 635,748 | |
| Interest-bearing | | | | | | | | | | | |
Demand(a) | 278,260 | | | 286,453 | | | | | | | 278,479 | | | 283,524 | |
Savings(b) | 793,968 | | | 883,737 | | | | | | | 802,406 | | | 887,257 | |
| Time | 221,478 | | | 138,985 | | | | | | | 215,146 | | | 118,960 | |
| Total interest-bearing deposits | 1,293,706 | | | 1,309,175 | | | | | | | 1,296,031 | | | 1,289,741 | |
| Total deposits in U.S. offices | 1,916,845 | | | 1,955,942 | | | | | | | 1,919,657 | | | 1,925,489 | |
| Non-U.S. offices | | | | | | | | | | | |
| Noninterest-bearing | 25,188 | | | 24,948 | | | | | | | 24,860 | | | 25,390 | |
| Interest-bearing | | | | | | | | | | | |
| Demand | 337,776 | | | 320,822 | | | | | | | 337,983 | | | 320,527 | |
| Time | 91,374 | | | 85,702 | | | | | | | 90,485 | | | 82,725 | |
| Total interest-bearing deposits | 429,150 | | | 406,524 | | | | | | | 428,468 | | | 403,252 | |
| Total deposits in non-U.S. offices | 454,338 | | | 431,472 | | | | | | | 453,328 | | | 428,642 | |
| Total deposits | $ | 2,371,183 | | | $ | 2,387,414 | | | | | | | $ | 2,372,985 | | | $ | 2,354,131 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | Average interest rates |
| Three months ended | | | Six months ended |
| June 30, 2024 | | June 30, 2023 | | | June 30, 2024 | | June 30, 2023 |
| U.S. offices | | | | | | | | |
| Noninterest-bearing | NA | | NA | | | NA | | NA |
| Interest-bearing | | | | | | | | |
Demand(a) | 3.98 | % | | 3.41 | % | | | 3.92 | % | | 3.09 | % |
Savings(b) | 1.41 | | | 1.04 | | | | 1.37 | | | 0.97 | |
| Time | 5.11 | | | 4.53 | | | | 5.11 | | | 4.52 | |
| Total interest-bearing deposits | 2.57 | | | 1.93 | | | | 2.55 | | | 1.75 | |
| Total deposits in U.S. offices | 1.73 | | | 1.28 | | | | 1.71 | | | 1.19 | |
| Non-U.S. offices | | | | | | | | |
| Noninterest-bearing | NA | | NA | | | NA | | NA |
| Interest-bearing | | | | | | | | |
| Demand | 3.26 | | | 2.53 | | | | 3.26 | | | 2.38 | |
| Time | 6.15 | | | 5.66 | | | | 6.17 | | | 5.32 | |
| Total interest-bearing deposits | 3.86 | | | 3.21 | | | | 3.86 | | | 2.98 | |
| Total deposits in non-U.S. offices | 3.66 | | | 3.01 | | | | 3.66 | | | 2.80 | |
| Total deposits | 2.09 | % | | 1.60 | % | | | 2.09 | % | | 1.47 | % |
(a)Includes Negotiable Order of Withdrawal accounts, and certain trust accounts.
(b)Includes Money Market Deposit Accounts.
Refer to Note 15 for additional information on deposits.
The following table summarizes short-term and long-term funding, excluding deposits, as of June 30, 2024 and December 31, 2023, and average balances for the three and six months ended June 30, 2024 and 2023, respectively. Refer to the Consolidated Balance Sheets Analysis on pages 15-16 and Note 10 for additional information.
Sources of funds (excluding deposits)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 | | | Average | | | |
| | | Three months ended June 30, | | Six months ended June 30, | |
| (in millions) | | | 2024 | | | 2023 | | | 2024 | | 2023 | | | |
Commercial paper | $ | 10,059 | | | $ | 14,737 | | | | $ | 11,273 | | | | $ | 11,057 | | | | $ | 12,423 | | | $ | 11,930 | | | | |
Other borrowed funds | 11,158 | | | 8,200 | | | | 11,860 | | | | 9,791 | | | | 10,889 | | | 9,931 | | | | |
| Federal funds purchased | 1,361 | | | 787 | | | | 1,594 | | | | 1,564 | | | | 1,601 | | | 1,729 | | | | |
| Total short-term unsecured funding | $ | 22,578 | | | $ | 23,724 | | | | $ | 24,727 | | | | $ | 22,412 | | | | $ | 24,913 | | | $ | 23,590 | | | | |
Securities sold under agreements to repurchase(a) | $ | 395,959 | | | $ | 212,804 | | | | $ | 369,206 | | | | $ | 258,297 | | | | $ | 329,212 | | | $ | 252,322 | | | | |
Securities loaned(a) | 3,512 | | | 2,944 | | | | 4,571 | | | | 3,857 | | | | 4,364 | | | 3,994 | | | | |
| Other borrowed funds | 26,091 | | | 21,775 | |
| | 24,310 | | | | 21,179 | | | | 23,241 | |
| 22,037 | | | | |
Obligations of Firm-administered multi-seller conduits(b) | 19,437 | | | 17,781 | | | | 18,615 | | | | 12,741 | | | | 19,581 | | | 11,622 | | | | |
Total short-term secured funding | $ | 444,999 | | | $ | 255,304 | | | | $ | 416,702 | | | | $ | 296,074 | | | | $ | 376,398 | | | $ | 289,975 | | | | |
| Senior notes | $ | 193,509 | | | $ | 191,202 | | | | $ | 195,954 | | | | $ | 180,712 | | | | $ | 194,149 | | | $ | 182,830 | | | | |
| Subordinated debt | 19,591 | | | 19,708 | | | | 19,574 | | | | 20,543 | | | | 19,611 | | | 21,182 | | | | |
Structured notes(c) | 91,561 | | | 86,056 | | | | 90,554 | | | | 75,075 | | | | 89,019 | | | 74,413 | | | | |
| Total long-term unsecured funding | $ | 304,661 | | | $ | 296,966 | | | | $ | 306,082 | | | | $ | 276,330 | | | | $ | 302,779 | | | $ | 278,425 | | | | |
Credit card securitization(b) | $ | 5,315 | | | $ | 2,998 | | | | $ | 5,302 | | | | $ | 999 | | | | $ | 4,935 | | | $ | 1,087 | | | | |
| | | | | | | | | | | | | | | | | |
| FHLB advances | 35,628 | |
| 41,246 | |
| | 37,559 | | (g) | | 28,420 | | | | 39,022 | | (g) | 19,804 | | | | |
Purchase Money Note(d) | 49,097 | | | 48,989 | | | | 49,062 | | | | 32,745 | | | | 49,035 | | | 16,463 | | | | |
Other long-term secured funding(e) | 4,642 | | | 4,624 | | | | 4,807 | | | | 4,667 | | | | 4,801 | | | 4,383 | | | | |
| Total long-term secured funding | $ | 94,682 | | | $ | 97,857 | | | | $ | 96,730 | | | | $ | 66,831 | | | | $ | 97,793 | | | $ | 41,737 | | | | |
Preferred stock(f) | $ | 23,900 | | | $ | 27,404 | | | | $ | 25,867 | | | | $ | 27,404 | | | | $ | 26,910 | | | $ | 27,404 | | | | |
Common stockholders’ equity(f) | $ | 316,652 | | | $ | 300,474 | | | | $ | 308,763 | | | | $ | 277,885 | | | | $ | 304,519 | | | $ | 274,560 | | | | |
(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 26 for additional information.
(e)Includes long-term structured notes which are secured.
(f)Refer to Capital Risk Management on pages 45-50 and Consolidated statements of changes in stockholders’ equity on page 94 of this Form 10-Q, and Note 21 and Note 22 of JPMorgan Chase’s 2023 Form 10-K for additional information on preferred stock and common stockholders’ equity.
(g)Includes the timing impact of First Republic. Refer to Executive Overview on pages 5-8 and Note 26 of this Form 10-Q, and pages 102-109 of JPMorgan Chase's 2023 Form 10-K 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 June 30, 2024, compared with December 31, 2023, driven by Markets, reflecting higher client-driven market-making activities and higher secured financing of trading assets, as well as when compared with seasonally lower levels at year-end.
The increase in secured other borrowed funds at June 30, 2024 from December 31, 2023 was predominantly due to higher financing requirements in Markets. For the average three months ended June 30, 2024, compared to the prior year period, the increase was due to higher financing requirements in Markets, partially offset by maturities in Treasury and CIO.
The balances associated with securities loaned or sold under agreements to repurchase fluctuate over time due to
investment and financing activities of clients, the Firm’s demand for financing, the ongoing management of the mix of the Firm’s liabilities, including its secured and unsecured financing (for both the investment securities and market-making portfolios), and other market and portfolio factors.
The Firm’s sources of short-term unsecured funding primarily consist of issuances of wholesale commercial paper and other borrowed funds.
The decrease in commercial paper at June 30, 2024 from December 31, 2023 was due to lower issuances primarily as a result of short-term liquidity management.
The increase in unsecured other borrowed funds at June 30, 2024 from December 31, 2023 was predominantly driven by higher net issuances of structured notes in CIB, due to client demand.
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.
Unsecured funding and issuance
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 three and six months ended June 30, 2024, the increase in average structured notes compared to the prior year periods was attributable to net issuances of structured notes in Markets due to client demand.
The following table summarizes long-term unsecured issuance and maturities or redemptions for the three and six months ended June 30, 2024 and 2023. Refer to Liquidity Risk Management on pages 102–109 and Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information on the IHC and long-term debt.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Long-term unsecured funding | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, | | Three months ended June 30, | | Six months ended June 30, |
| 2024 | 2023 | | 2024 | 2023 | | 2024 | 2023 | | 2024 | 2023 |
(Notional in millions) | Parent Company | | Subsidiaries |
| Issuance | | | | | | | | | | | |
| Senior notes issued in the U.S. market | $ | 9,000 | | $ | 2,500 | | | $ | 17,500 | | $ | 2,500 | | | $ | — | | $ | — | | | $ | — | | $ | — | |
Senior notes issued in non-U.S. markets | 1,906 | | — | | | 4,079 | | — | | | — | | — | | | — | | — | |
| Total senior notes | 10,906 | | 2,500 | | | 21,579 | | 2,500 | | | — | | — | | | — | | — | |
| | | | | | | | | | | |
Structured notes(a) | 734 | | 563 | | | 1,602 | | 1,444 | | | 12,917 | | 7,947 | | | 27,868 | | 15,665 | |
Total long-term unsecured funding – issuance | $ | 11,640 | | $ | 3,063 | | | $ | 23,181 | | $ | 3,944 | | | $ | 12,917 | | $ | 7,947 | | | $ | 27,868 | | $ | 15,665 | |
| Maturities/redemptions | | | | | | | | | | | |
| Senior notes | $ | 9,501 | | $ | 6,335 | | | $ | 16,669 | | $ | 13,433 | | | $ | — | | $ | 2 | | | $ | 65 | | $ | 67 | |
| Subordinated debt | 22 | | 2,027 | | | 35 | | 2,027 | | | — | | — | | | — | | — | |
| Structured notes | 293 | | 324 | | | 510 | | 771 | | | 11,902 | | 6,479 | | | 23,408 | | 13,981 | |
Total long-term unsecured funding – maturities/redemptions | $ | 9,816 | | $ | 8,686 | | | $ | 17,214 | | $ | 16,231 | | | $ | 11,902 | | $ | 6,481 | | | $ | 23,473 | | $ | 14,048 | |
(a)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
Secured funding and issuance
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 three and six months ended June 30, 2024 and 2023, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Long-term secured funding | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 |
| (in millions) | Issuance | | Maturities/Redemptions | | Issuance | | Maturities/Redemptions |
Credit card securitization | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,348 | | | $ | — | | | $ | — | | | $ | 1,000 | |
| | | | | | | | | | | | | | | |
FHLB advances | — | | | 25,775 | | | 3,601 | | (c) | 602 | | | — | | | 25,775 | | | 5,648 | | (c) | 604 | |
Purchase Money Note(a) | — | | | 50,000 | | | — | | | — | | — | | | 50,000 | | | — | | | — |
Other long-term secured funding(b) | 166 | | | 591 | | | 133 | | | 58 | | | 720 | | | 742 | | | 370 | | | 112 | |
Total long-term secured funding | $ | 166 | | | $ | 76,366 | | | $ | 3,734 | | | $ | 660 | | | $ | 3,068 | | | $ | 76,517 | | | $ | 6,018 | | | $ | 1,716 | |
(a)Reflects the Purchase Money Note associated with the First Republic acquisition. Refer to Note 26 for more information.
(b)Includes long-term structured notes that are secured.
(c)Includes FHLB advances associated with the First Republic acquisition on May 1, 2023. Refer to Note 26 for more information.
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 of JPMorgan Chase’s 2023 Form 10-K for a further description of client-driven loan securitizations.
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 Notes 4 and 13 for additional information.
The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of June 30, 2024, 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 |
| June 30, 2024 | Long-term issuer | Short-term issuer | Outlook | | Long-term issuer | Short-term issuer | Outlook | | Long-term issuer | Short-term issuer | Outlook |
| Moody’s Investors Service | A1 | P-1 | Stable | | Aa2 | P-1 | Negative | | Aa3 | P-1 | Stable |
Standard & Poor’s (a) | A- | A-2 | Positive | | A+ | A-1 | Positive | | A+ | A-1 | Positive |
| Fitch Ratings | AA- | F1+ | Stable | | AA | F1+ | Stable | | AA | F1+ | Stable |
(a) On April 1, 2024, 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 stable to positive for the entities listed above.
Refer to page 109 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the factors that could affect the credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries.
| | | | | | | | | | | | | | |
| 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. Refer to Consumer Credit Portfolio, Wholesale Credit Portfolio and
Allowance for Credit Losses on pages 61-77 for a further discussion of Credit Risk.
Refer to page 78 for a further discussion of Investment Portfolio Risk. Refer to Credit and Investment Risk Management on pages 111–134 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s Credit and Investment Risk Management framework.
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 11, 22 and 4 for additional information on the Firm’s loans, lending-related commitments and derivative receivables.
Refer to Note 9 for information regarding the credit risk inherent in the Firm’s investment securities portfolio; and refer to Note 10 for information regarding credit risk inherent in the securities financing portfolio. Refer to Consumer Credit Portfolio on pages 61-64 and Note 11 for further discussions of the consumer credit environment, consumer loans and nonperforming exposure. Refer to Wholesale Credit Portfolio on pages 65-74 and Note 11 for further discussions of the wholesale credit environment, wholesale loans and nonperforming exposure.
| | | | | | | | | | | | | | | | | |
| Total credit portfolio | | | | |
| Credit exposure | | Nonperforming(c) |
| (in millions) | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 |
| Loans retained | $ | 1,273,047 | | $ | 1,280,870 | | | $ | 6,712 | | $ | 5,989 | |
| Loans held-for-sale | 9,403 | | 3,985 | | | 159 | | 184 | |
| Loans at fair value | 38,250 | | 38,851 | | | 920 | | 744 | |
| Total loans | 1,320,700 | | 1,323,706 | | | 7,791 | | 6,917 | |
| Derivative receivables | 54,673 | | 54,864 | |
| 290 | | 364 | |
Receivables from customers(a) | 56,018 | | 47,625 | | | — | | — | |
| Total credit-related assets | 1,431,391 | | 1,426,195 | | | 8,081 | | 7,281 | |
Assets acquired in loan satisfactions | | | | | |
| Real estate owned | NA | NA | | 303 | | 274 | |
| Other | NA | NA | | 39 | | 42 | |
Total assets acquired in loan satisfactions | NA | NA | | 342 | | 316 | |
| Lending-related commitments | 1,556,962 | | 1,497,847 | | | 541 | | 464 | |
| Total credit portfolio | $ | 2,988,353 | | $ | 2,924,042 | | | $ | 8,964 | | $ | 8,061 | |
Credit derivatives and credit-related notes used in credit portfolio management activities(b) | $ | (42,509) | | $ | (37,779) | | | $ | — | | $ | — | |
| Liquid securities and other cash collateral held against derivatives | (24,211) | | (22,461) | | | 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)At June 30, 2024 and December 31, 2023, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $138 million and $182 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 about the Firm’s net charge-offs and recoveries.
| | | | | | | | | | | | | | |
(in millions,
except ratios) | Three months ended June 30, | Six months ended June 30, |
| 2024 | 2023 | 2024 | 2023 |
| Net charge-offs | $ | 2,231 | | $ | 1,411 | | $ | 4,187 | $ | 2,548 | |
| Average retained loans | 1,262,029 | | 1,194,044 | | 1,262,644 | | 1,138,550 |
| Net charge-off rates | 0.71 | % | 0.47 | % | 0.67 | % | 0.45 | % |
| | | | | | | | | | | | | | |
| CONSUMER CREDIT PORTFOLIO |
The Firm’s retained consumer portfolio consists primarily of loans and lending-related commitments for residential real estate, credit card, and scored auto and business banking. 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. Refer to Note 11 of this Form 10-Q; and Consumer Credit Portfolio on pages 114–119 and Note 12 of JPMorgan Chase's 2023 Form 10-K for further information on consumer loans, as well as the Firm’s nonaccrual and charge-off accounting policies. Refer to Note 22 of this Form 10-Q and Note 28 of JPMorgan Chase's 2023 Form 10-K for further information on lending-related commitments.
The following tables present consumer credit-related information with respect to the scored credit portfolios held in CCB, AWM, CIB and Corporate.
| | | | | | | | | | | | | | | | | | | | | |
| Consumer credit portfolio | | | | | | |
| (in millions) | Credit exposure | | Nonaccrual loans(i) | |
June 30,
2024 | | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 | |
Consumer, excluding credit card | | | | | | | |
Residential real estate(a) | $ | 314,843 | | | $ | 326,409 | | | $ | 3,231 | | $ | 3,466 | | |
Auto and other(b)(c) | 67,952 | | | 70,866 | | | 192 | | 177 | | |
| Total loans – retained | 382,795 | | | 397,275 | | | 3,423 | | 3,643 | | |
| Loans held-for-sale | 1,366 | | | 487 | | | 86 | | 95 | | |
Loans at fair value(d) | 12,794 | | | 12,331 | | | 296 | | 465 | | |
| Total consumer, excluding credit card loans | 396,955 | | | 410,093 | | | 3,805 | | 4,203 | | |
Lending-related commitments(e) | 47,215 | | | 45,403 | | | | | |
| Total consumer exposure, excluding credit card | 444,170 | | | 455,496 | | | | | |
| Credit card | | | | | | | |
Loans retained(f) | 216,100 | | | 211,123 | | | NA | NA | |
| | | | | | | |
| Total credit card loans | 216,100 | | | 211,123 | | | NA | NA | |
Lending-related commitments(e)(g) | 964,727 | | | 915,658 | | | | | |
| Total credit card exposure | 1,180,827 | | | 1,126,781 | | | | | |
| Total consumer credit portfolio | $ | 1,624,997 | | | $ | 1,582,277 | | | $ | 3,805 | | $ | 4,203 | | |
Credit-related notes used in credit portfolio management activities(h) | $ | (620) | | | $ | (790) | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, |
| (in millions, except ratios) | Net charge-offs/(recoveries) | | Average loans - retained | | Net charge-off/(recovery) rate(j) |
| 2024 | 2023 | | 2024 | 2023 | | 2024 | 2023 |
| Consumer, excluding credit card | | | | | | | | |
| Residential real estate | $ | (37) | | $ | (25) | | | $ | 317,249 | | $ | 293,073 | | | (0.05) | % | (0.03) | % |
| Auto and other | 172 | | 147 | | | 68,413 | | 66,470 | | | 1.01 | | 0.89 | |
| Total consumer, excluding credit card - retained | 135 | | 122 | | | 385,662 | | 359,543 | | | 0.14 | | 0.14 | |
| Credit card - retained | 1,829 | | 1,124 | | | 210,020 | | 187,027 | | | 3.50 | | 2.41 | |
| Total consumer - retained | $ | 1,964 | | $ | 1,246 | | | $ | 595,682 | | $ | 546,570 | | | 1.33 | % | 0.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended June 30, |
| (in millions, except ratios) | Net charge-offs/(recoveries) | | Average loans - retained | | Net charge-off/(recovery) rate(j) |
| 2024 | 2023 | | 2024 | 2023 | | 2024 | 2023 |
| Consumer, excluding credit card | | | | | | | | |
| Residential real estate | $ | (43) | | $ | (45) | | | $ | 320,468 | | $ | 265,082 | | | (0.03) | % | (0.03) | % |
| Auto and other | 361 | | 299 | | | 69,379 | | 65,145 | | | 1.05 | | 0.93 | |
| Total consumer, excluding credit card - retained | 318 | | 254 | | | 389,847 | | 330,227 | | | 0.16 | | 0.16 | |
| Credit card - retained | 3,516 | | 2,046 | | | 207,329 | | 183,757 | | | 3.41 | | 2.25 | |
| Total consumer - retained | $ | 3,834 | | $ | 2,300 | | | $ | 597,176 | | $ | 513,984 | | | 1.29 | % | 0.90 | % |
(a)Includes scored mortgage and home equity loans held in CCB and AWM.
(b)At June 30, 2024 and December 31, 2023, excluded operating lease assets of $11.0 billion and $10.4 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. Refer to Note 16 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 22 for further information.
(f)Includes billed interest and fees.
(g)Also includes commercial card lending-related commitments primarily in 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 June 30, 2024 and December 31, 2023, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $138 million and $182 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.
(j)Average consumer loans held-for-sale and loans at fair value were $17.3 billion and $13.3 billion for the three months ended June 30, 2024 and 2023, respectively, and $16.2 billion and $12.4 billion for the six months ended June 30, 2024 and 2023, respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.
Consumer, excluding credit card
Portfolio analysis
Loans decreased from December 31, 2023 predominantly driven by retained residential real estate loans.
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 decreased compared to December 31, 2023, predominantly driven by paydowns and loan sales, net of originations. Net recoveries were higher for the three months ended June 30, 2024 compared to the same period in the prior year due to loan sales.
Loans held-for-sale increased from December 31, 2023, predominantly driven by a transfer of certain retained loans in anticipation of securitization.
Nonaccrual loans at fair value decreased compared to December 31, 2023, predominantly driven by net sales in CIB.
At June 30, 2024 and December 31, 2023, the carrying value of interest-only residential mortgage loans was $89.6 billion and $90.6 billion, respectively. These loans have an interest-only payment period generally followed by an adjustable-rate or fixed-rate fully amortizing payment period to maturity and are typically originated as higher-balance loans to higher-income borrowers. 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 $15.0 billion at June 30, 2024. The carrying value of home equity lines of credit outstanding included $4.0 billion of HELOCs that have recast from interest-only to fully amortizing payments or have been modified and $3.9 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) | June 30,
2024 | December 31,
2023 |
| Current | $ | 406 | | $ | 446 | |
| 30-89 days past due | 77 | | 102 | |
| 90 or more days past due | 138 | | 182 | |
| Total government guaranteed loans | $ | 621 | | $ | 730 | |
Geographic composition and current estimated loan-to-value ratio of residential real estate loans
Refer to Note 11 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 three and six months ended June 30, 2024, residential real estate financial difficulty modifications ("FDMs") were $68 million and $98 million, respectively, and $35 million and $75 million for the three and six months ended June 30, 2023, respectively. Loans subject to trial modification where the terms of the loans have not been permanently modified, and loans subject to discharge under Chapter 7 bankruptcy proceedings ("Chapter 7 loans"), were not material for the three and six months ended June 30, 2024 and 2023. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K and Note 11 of this Form 10-Q for further information.
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 decreased when compared to December 31, 2023, predominantly due to loan securitizations. Net charge-offs increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year predominantly due to higher scored auto net charge-offs of $37 million and $87 million, respectively, reflecting a decline in used vehicle valuations. Refer to Note 13 for further information on securitization activity.
Nonperforming assets
The following table presents information as of June 30, 2024 and December 31, 2023, about consumer, excluding credit card, nonperforming assets.
| | | | | | | | | | | |
Nonperforming assets(a) | | | |
| (in millions) | June 30,
2024 | | December 31,
2023 |
| Nonaccrual loans | | | |
Residential real estate | $ | 3,592 | | | $ | 4,015 | |
Auto and other | 213 | | | 188 | |
| Total nonaccrual loans | 3,805 | | | 4,203 | |
Assets acquired in loan satisfactions | | | |
| Real estate owned | 89 | | | 120 | |
| Other | 39 | | | 42 | |
Total assets acquired in loan satisfactions | 128 | | | 162 | |
| Total nonperforming assets | $ | 3,933 | | | $ | 4,365 | |
(a)At June 30, 2024 and December 31, 2023, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $138 million and $182 million, respectively. These amounts have been excluded based upon the government guarantee.
Nonaccrual loans
The following table presents changes in consumer, excluding credit card, nonaccrual loans for the six months ended June 30, 2024 and 2023.
| | | | | | | | |
| Nonaccrual loan activity |
Six months ended June 30,
(in millions) | 2024 | 2023 |
| Beginning balance | $ | 4,203 | | $ | 4,325 | |
| Additions | 1,447 | | 1,290 | |
| Reductions: | | |
Principal payments and other | 473 | | 452 | |
Sales | 539 | | 34 | |
| Charge-offs | 304 | | 202 | |
| Returned to performing status | 444 | | 573 | |
| Foreclosures and other liquidations | 85 | | 89 | |
| Total reductions | 1,845 | | 1,350 | |
| Net changes | (398) | | (60) | |
| Ending balance | $ | 3,805 | | $ | 4,265 | |
Refer to Note 11 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.
Credit card
Total credit card loans increased from December 31, 2023 reflecting growth from new accounts and revolving balances. The June 30, 2024 30+ day delinquency rate of 2.08% decreased from 2.14% at December 31, 2023, and the June 30, 2024 90+ day delinquency rate of 1.07% was relatively flat compared to 1.05% at December 31, 2023, reflecting seasonality, in line with expectations. Net charge-offs increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year as newer vintages season and credit normalization continues.
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. Refer to Note 11 for further information about this portfolio, including information about delinquencies.
Geographic and FICO composition of credit card loans
Refer to Note 11 for information on the geographic and FICO composition of the Firm’s credit card loans.
Modified credit card loans
For the three and six months ended June 30, 2024, credit card FDMs were $259 million and $491 million, respectively, and $181 million and $326 million for the three and six months ended June 30, 2023, respectively. FDMs increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year due to higher delinquencies, reflecting growth in the portfolio.
Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K and Note 11 of this Form 10-Q for further information.
| | | | | | | | | | | | | | |
| 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 68-71 for further information.
The Firm’s wholesale credit portfolio includes exposure held in CIB, 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 8 for additional information.
As of June 30, 2024, lending-related commitments increased by $8.2 billion, driven by Technology, Media & Telecommunications, including held-for-sale commitments, and SPEs, partially offset by a decrease in Asset Managers.
As of June 30, 2024, nonperforming exposure increased by $1.3 billion, predominantly driven by Real Estate, concentrated in Office, and in Industrials, resulting from downgrades. For the six months ended June 30, 2024, wholesale net charge-offs were $353 million, largely in Real Estate, concentrated in Office, and Individuals.
| | | | | | | | | | | | | | | | | |
| Wholesale credit portfolio |
| Credit exposure | | Nonperforming |
| (in millions) | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 |
| Loans retained | $ | 674,152 | | $ | 672,472 | | | $ | 3,289 | | $ | 2,346 | |
| Loans held-for-sale | 8,037 | | 3,498 | | | 73 | | 89 | |
| Loans at fair value | 25,456 | | 26,520 | | | 624 | | 279 | |
| Loans | 707,645 | | 702,490 | | | 3,986 | | 2,714 | |
| Derivative receivables | 54,673 | | 54,864 | | | 290 | | 364 | |
Receivables from customers(a) | 56,018 | | 47,625 | | | — | | — | |
| Total wholesale credit-related assets | 818,336 | | 804,979 | | | 4,276 | | 3,078 | |
Assets acquired in loan satisfactions | | | | | |
| Real estate owned | NA | NA | | 214 | | 154 | |
| Other | NA | NA | | — | | — | |
Total assets acquired in loan satisfactions | NA | NA | | 214 | | 154 | |
| Lending-related commitments | 545,020 | | 536,786 | | | 541 | | 464 | |
| Total wholesale credit portfolio | $ | 1,363,356 | | $ | 1,341,765 | | | $ | 5,031 | | $ | 3,696 | |
Credit derivatives and credit-related notes used in credit portfolio management activities(b) | $ | (41,889) | | $ | (36,989) | | | $ | — | | $ | — | |
| Liquid securities and other cash collateral held against derivatives | (24,211) | | (22,461) | | | 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 74 and Note 4 for additional information.
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 June 30, 2024 and December 31, 2023. 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 of JPMorgan Chase's 2023 Form 10-K for further information on internal risk ratings.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Maturity profile(d) | | Ratings profile |
| 1 year or less | After 1 year through 5 years | After 5 years | Total | | Investment-grade | | Noninvestment-grade | Total | Total % of IG |
June 30, 2024, (in millions, except ratios) |
| Loans retained | $ | 220,191 | | $ | 277,969 | | $ | 175,992 | | $ | 674,152 | | | $ | 454,958 | | | $ | 219,194 | | $ | 674,152 | | 67 | % |
| Derivative receivables | | | | 54,673 | | | | | | 54,673 | | |
| Less: Liquid securities and other cash collateral held against derivatives | | | | (24,211) | | | | | | (24,211) | | |
| Total derivative receivables, net of collateral | 7,476 | | 8,446 | | 14,540 | | 30,462 | | | 23,445 | | | 7,017 | | 30,462 | | 77 | |
| Lending-related commitments | 145,054 | | 374,870 | | 25,096 | | 545,020 | | | 351,961 | | | 193,059 | | 545,020 | | 65 | |
| Subtotal | 372,721 | | 661,285 | | 215,628 | | 1,249,634 | | | 830,364 | | | 419,270 | | 1,249,634 | | 66 | |
Loans held-for-sale and loans at fair value(a) | | | | 33,493 | | | | | | 33,493 | | |
| Receivables from customers | | | | 56,018 | | | | | | 56,018 | | |
| Total exposure – net of liquid securities and other cash collateral held against derivatives | | | | $ | 1,339,145 | | | | | | $ | 1,339,145 | | |
Credit derivatives and credit-related notes used in credit portfolio management activities(b)(c) | $ | (8,526) | | $ | (27,870) | | $ | (5,493) | | $ | (41,889) | | | $ | (33,333) | | | $ | (8,556) | | $ | (41,889) | | 80 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (continued from previous page) | | | | | | | | | | | |
| Maturity profile(d) | | Ratings profile |
| 1 year or less | After 1 year through 5 years | After 5 years | Total | | Investment-grade | | Noninvestment-grade | Total | | Total % of IG |
December 31, 2023
(in millions, except ratios) | |
| Loans retained | $ | 211,104 | | $ | 280,821 | | $ | 180,547 | | $ | 672,472 | | | $ | 458,838 | | | $ | 213,634 | | $ | 672,472 | | | 68 | % |
| Derivative receivables | | | | 54,864 | | | | | | 54,864 | | | |
| Less: Liquid securities and other cash collateral held against derivatives | | | | (22,461) | | | | | | (22,461) | | | |
| Total derivative receivables, net of collateral | 8,007 | | 8,970 | | 15,426 | | 32,403 | | | 24,919 | | | 7,484 | | 32,403 | | | 77 | |
| Lending-related commitments | 143,337 | | 368,646 | | 24,803 | | 536,786 | | | 341,611 | | | 195,175 | | 536,786 | | | 64 | |
| Subtotal | 362,448 | | 658,437 | | 220,776 | | 1,241,661 | | | 825,368 | | | 416,293 | | 1,241,661 | | | 66 | |
Loans held-for-sale and loans at fair value(a) | | | | 30,018 | | | | | | 30,018 | | | |
| Receivables from customers | | | | 47,625 | | | | | | 47,625 | | | |
| Total exposure – net of liquid securities and other cash collateral held against derivatives | | | | $ | 1,319,304 | | | | | | $ | 1,319,304 | | | |
Credit derivatives and credit-related notes used in credit portfolio management activities(b)(c) | $ | (3,311) | | $ | (28,353) | | $ | (5,325) | | $ | (36,989) | | | $ | (28,869) | | | $ | (8,120) | | $ | (36,989) | | | 78 | % |
(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 June 30, 2024, may become payable prior to maturity based on their cash flow profile or changes in market conditions.
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 $46.8 billion and $41.4 billion as of June 30, 2024 and December 31, 2023, representing approximately 3.7% and 3.3% of total wholesale credit exposure, respectively; of the $46.8 billion, $42.7 billion was performing. The increase in criticized exposure was driven by net downgrades in Real Estate, concentrated in Office and Multifamily, and held-for-sale commitments in Technology and Media.
The table below summarizes by industry the Firm’s exposures as of June 30, 2024 and December 31, 2023. The industry of risk category is generally based on the client or counterparty’s primary business activity. Refer to Note 4 of JPMorgan Chase's 2023 Form 10-K for additional information on industry concentrations.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wholesale credit exposure – industries(a) | | | | | | | |
| | | | Selected metrics |
| | | | | | 30 days or more past due and accruing loans | Net
charge-offs/
(recoveries) | Credit derivative and credit-related notes(h) | Liquid securities
and other cash collateral held against derivative
receivables |
| | | Noninvestment-grade |
As of or for the six months ended | Credit exposure(f)(g) | Investment- grade | Noncriticized | Criticized performing | Criticized nonperforming |
| June 30, 2024 |
| (in millions) |
| Real Estate | $ | 206,154 | | $ | 143,402 | | $ | 50,643 | | $ | 10,939 | | $ | 1,170 | | $ | 822 | | $ | 129 | | $ | (592) | | $ | — | |
Individuals and Individual Entities(b) | 141,591 | | 112,521 | | 28,296 | | 228 | | 546 | | 717 | | 116 | | — | | — | |
| Consumer & Retail | 126,681 | | 59,361 | | 59,008 | | 7,735 | | 577 | | 231 | | 60 | | (4,213) | | — | |
| Asset Managers | 126,282 | | 87,712 | | 38,459 | | 109 | | 2 | | 335 | | 1 | | — | | (7,712) | |
| Technology, Media & Telecommunications | 86,677 | | 48,518 | | 25,979 | | 11,838 | | 342 | | 40 | | 32 | | (4,521) | | — | |
| Industrials | 73,469 | | 38,084 | | 31,433 | | 3,637 | | 315 | | 195 | | 4 | | (2,190) | | — | |
| Banks & Finance Companies | 64,744 | | 35,205 | | 29,377 | | 155 | | 7 | | 2 | | — | | (588) | | (594) | |
| Healthcare | 63,662 | | 42,677 | | 17,312 | | 3,167 | | 506 | | 100 | | 22 | | (3,343) | | (2) | |
| Utilities | 37,380 | | 26,476 | | 9,919 | | 843 | | 142 | | 1 | | | (2,493) | | — | |
State & Municipal Govt(c) | 36,344 | | 34,256 | | 2,067 | | 16 | | 5 | | 121 | | — | | (3) | | — | |
| Automotive | 34,674 | | 22,868 | | 10,995 | | 671 | | 140 | | 43 | | 1 | | (1,047) | | — | |
| Oil & Gas | 33,593 | | 20,072 | | 13,136 | | 335 | | 50 | | 8 | | (2) | | (1,910) | | — | |
| Insurance | 23,519 | | 16,290 | | 6,979 | | 217 | | 33 | | 5 | | — | | (1,124) | | (7,834) | |
| Chemicals & Plastics | 21,996 | | 11,308 | | 9,397 | | 1,135 | | 156 | | 15 | | — | | (1,078) | | — | |
| Transportation | 17,339 | | 10,155 | | 6,739 | | 392 | | 53 | | 43 | | (7) | | (556) | | — | |
| Central Govt | 16,444 | | 16,021 | | 297 | | 126 | | — | | 2 | | — | | (2,084) | | (1,947) | |
| Metals & Mining | 16,277 | | 8,266 | | 7,373 | | 595 | | 43 | | 6 | | — | | (217) | | (1) | |
| Securities Firms | 9,486 | | 4,659 | | 4,824 | | 3 | | — | | — | | — | | (12) | | (2,597) | |
| Financial Markets Infrastructure | 5,381 | | 5,067 | | 314 | | — | | — | | — | | — | | (2) | | — | |
All other(d) | 132,152 | | 110,850 | | 20,735 | | 534 | | 33 | | 188 | | (3) | | (15,916) | | (3,524) | |
| Subtotal | $ | 1,273,845 | | $ | 853,768 | | $ | 373,282 | | $ | 42,675 | | $ | 4,120 | | $ | 2,874 | | $ | 353 | | $ | (41,889) | | $ | (24,211) | |
| Loans held-for-sale and loans at fair value | 33,493 | | | | | | | | | |
| Receivables from customers | 56,018 | | | | | | | | | |
Total(e) | $ | 1,363,356 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (continued from previous page) | | | | | | | | | | | |
| | | | | | | | Selected metrics |
| | | | | | | | 30 days or more past due and accruing
loans | Net
charge-offs/
(recoveries) | Credit derivative and credit-related notes(h) | | Liquid securities
and other cash collateral held against derivative
receivables |
| | | | Noninvestment-grade |
| As of or for the year ended | Credit exposure(f)(g) | | Investment- grade | Noncriticized | | Criticized performing | Criticized nonperforming |
| December 31, 2023 | | |
| (in millions) | | |
| Real Estate | $ | 208,261 | | | $ | 148,866 | | $ | 50,190 | | | $ | 8,558 | | $ | 647 | | $ | 717 | | $ | 275 | | $ | (574) | | | $ | — | |
Individuals and Individual Entities(b) | 145,849 | | | 110,673 | | 34,261 | | | 334 | | 581 | | 861 | | 10 | | — | | | — | |
| Consumer & Retail | 127,086 | | | 60,168 | | 58,606 | | | 7,863 | | 449 | | 318 | | 161 | | (4,204) | | | — | |
| Asset Managers | 129,574 | | | 83,857 | | 45,623 | | | 90 | | 4 | | 201 | | 1 | | — | | | (7,209) | |
| Technology, Media & Telecommunications | 77,296 | | | 40,468 | | 27,094 | | | 9,388 | | 346 | | 36 | | 81 | | (4,287) | | | — | |
| Industrials | 75,092 | | | 40,951 | | 30,586 | | | 3,419 | | 136 | | 213 | | 31 | | (2,949) | | | — | |
| Banks & Finance Companies | 57,177 | | | 33,881 | | 22,744 | | | 545 | | 7 | | 9 | | 277 | | (511) | | | (412) | |
| Healthcare | 65,025 | | | 43,163 | | 18,396 | | | 3,005 | | 461 | | 130 | | 17 | | (3,070) | | | — | |
Utilities | 36,061 | | | 25,242 | | 9,929 | | | 765 | | 125 | | 1 | | (3) | | (2,373) | | | — | |
State & Municipal Govt(c) | 35,986 | | | 33,561 | | 2,390 | | | 27 | | 8 | | 31 | | — | | (4) | | | — | |
| Automotive | 33,977 | | | 23,152 | | 10,060 | | | 640 | | 125 | | 59 | | — | | (653) | | | — | |
| Oil & Gas | 34,475 | | | 18,276 | | 16,076 | | | 111 | | 12 | | 45 | | 11 | | (1,927) | | | (5) | |
| Insurance | 20,501 | | | 14,503 | | 5,700 | | | 298 | | — | | 2 | | — | | (961) | | | (6,898) | |
| Chemicals & Plastics | 20,773 | | | 11,353 | | 8,352 | | | 916 | | 152 | | 106 | | 2 | | (1,045) | | | — | |
| Transportation | 16,060 | | | 8,865 | | 5,943 | | | 1,196 | | 56 | | 23 | | (26) | | (574) | | | — | |
| Central Govt | 17,704 | | | 17,264 | | 312 | | | 127 | | 1 | | — | | — | | (3,490) | | | (2,085) | |
| Metals & Mining | 15,508 | | | 8,403 | | 6,514 | | | 536 | | 55 | | 12 | | 44 | | (229) | | | — | |
| Securities Firms | 8,689 | | | 4,570 | | 4,118 | | | 1 | | — | | — | | — | | (14) | | | (2,765) | |
| Financial Markets Infrastructure | 4,251 | | | 4,052 | | 199 | | | — | | — | | — | | — | | — | | | — | |
All other(d) | 134,777 | | | 115,711 | | 18,618 | | | 439 | | 9 | | 21 | | (2) | | (10,124) | | | (3,087) | |
| 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 | 30,018 | | | |
| | | | | | | | |
| Receivables from customers | 47,625 | | | | | | | | | | | | |
Total(e) | $ | 1,341,765 | | | | | | | | | | | | |
(a)The industry rankings presented in the table as of December 31, 2023, are based on the industry rankings of the corresponding exposures as of June 30, 2024, not actual rankings of such exposures as of December 31, 2023.
(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 June 30, 2024 and December 31, 2023 noted above, the Firm held: $6.4 billion and $5.9 billion, respectively, of trading assets; $17.2 billion and $21.4 billion, respectively, of AFS securities; and $9.5 billion and $9.9 billion, respectively, of HTM securities, issued by U.S. state and municipal governments. Refer to Notes 2 and 9 for further information.
(d)All other includes: SPEs and Private education and civic organizations, representing approximately 94% and 6%, respectively, at both June 30, 2024 and December 31, 2023. Refer to Note 13 for more information on exposures to SPEs.
(e)Excludes cash placed with banks of $521.8 billion and $614.1 billion, at June 30, 2024 and December 31, 2023, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks.
(f)Credit exposure is net of risk participations and excludes the benefit of credit derivatives and credit-related notes used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
(g)Credit exposure includes held-for-sale and fair value option elected lending-related commitments.
(h)Represents the net notional amounts of protection purchased and sold through credit derivatives and credit-related notes used to manage the credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. The All other category includes purchased credit protection on certain credit indices.
Presented below is additional detail on certain of the Firm’s industry exposures.
Real Estate
Real Estate exposure was $206.2 billion as of June 30, 2024. Criticized exposure increased by $2.9 billion from $9.2 billion at December 31, 2023 to $12.1 billion at June 30, 2024, predominantly driven by net downgrades, concentrated in Office and Multifamily.
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| June 30, 2024 | |
| (in millions, except ratios) | Loans and Lending-related Commitments | | Derivative Receivables | | Credit exposure | | % Investment-grade | % Drawn(d) |
Multifamily(a) | $ | 122,986 | | | $ | 5 | | | $ | 122,991 | | | 77 | % | | 91 | % | |
| Industrial | 20,862 | | | 9 | | | 20,871 | | | 65 | | | 70 | | |
| Office | 16,435 | | | 25 | | | 16,460 | | | 47 | | | 84 | | |
Other Income Producing Properties(b) | 14,657 | | | 156 | | | 14,813 | | | 51 | | | 64 | | |
| Services and Non Income Producing | 14,547 | | | 66 | | | 14,613 | | | 63 | | | 51 | | |
| Retail | 11,977 | | | 20 | | | 11,997 | | | 75 | | | 74 | | |
| Lodging | 4,398 | | | 11 | | | 4,409 | | | 30 | | | 54 | | |
Total Real Estate Exposure(c) | $ | 205,862 | | | $ | 292 | | | $ | 206,154 | | | 70 | % | | 81 | % | |
| | | | | | | | | | |
| December 31, 2023 | |
| (in millions, except ratios) | Loans and Lending-related Commitments | | Derivative
Receivables | | Credit exposure | | % Investment-
grade | % Drawn(d) |
Multifamily(a) | $ | 121,946 | | | $ | 21 | | | $ | 121,967 | | | 79 | % | | 90 | % | |
| Industrial | 20,254 | | | 18 | | | 20,272 | | | 70 | | | 72 | | |
| Office | 16,462 | | | 32 | | | 16,494 | | | 51 | | | 81 | | |
Other Income Producing Properties(b) | 15,542 | | | 208 | | | 15,750 | | | 55 | | | 63 | | |
| Services and Non Income Producing | 16,145 | | | 74 | | | 16,219 | | | 62 | | | 46 | | |
| Retail | 12,763 | | | 48 | | | 12,811 | | | 75 | | | 73 | | |
| Lodging | 4,729 | | | 19 | | | 4,748 | | | 30 | | | 48 | | |
Total Real Estate Exposure | $ | 207,841 | | | $ | 420 | | | $ | 208,261 | | | 71 | % | | 80 | % | |
(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 83% 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)Represents drawn exposure as a percentage of credit exposure.
Consumer & Retail
Consumer & Retail exposure was $126.7 billion as of June 30, 2024. Criticized exposure was $8.3 billion at both June 30, 2024 and December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | |
| (in millions, except ratios) | Loans and Lending-related Commitments | | Derivative Receivables | | Credit exposure | | % Investment-grade | % Drawn(d) |
| Business and Consumer Services | $ | 35,757 | | | $ | 309 | | | $ | 36,066 | | | 42 | % | | 41 | % | |
Retail(a) | 35,769 | | | 248 | | | 36,017 | | | 51 | | | 32 | | |
| Food and Beverage | 30,619 | | | 544 | | | 31,163 | | | 58 | | | 39 | | |
| Consumer Hard Goods | 13,343 | | | 177 | | | 13,520 | | | 42 | | | 33 | | |
Leisure(b) | 9,777 | | | 138 | | | 9,915 | | | 21 | | | 42 | | |
Total Consumer & Retail(c) | $ | 125,265 | | | $ | 1,416 | | | $ | 126,681 | | | 47 | % | | 37 | % | |
| | | | | | | | | | |
| December 31, 2023 | |
| (in millions, except ratios) | Loans and Lending-related Commitments | | Derivative
Receivables | | Credit exposure | | % Investment-
grade | % Drawn(d) |
| Business and Consumer Services | $ | 34,822 | | | $ | 392 | | | $ | 35,214 | | | 42 | % | | 42 | % | |
Retail(a) | 36,042 | | | 334 | | | 36,376 | | | 51 | | | 30 | | |
| Food and Beverage | 32,256 | | | 930 | | | 33,186 | | | 57 | | | 36 | | |
| Consumer Hard Goods | 13,169 | | | 197 | | | 13,366 | | | 43 | | | 33 | | |
Leisure(b) | 8,784 | | | 160 | | | 8,944 | | | 25 | | | 47 | | |
| Total Consumer & Retail | $ | 125,073 | | | $ | 2,013 | | | $ | 127,086 | | | 47 | % | | 36 | % | |
(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 June 30, 2024, approximately 92% of the noninvestment-grade Leisure portfolio is secured.
(c)Consumer & Retail exposure is approximately 60% secured; unsecured exposure is approximately 80% investment-grade.
(d)Represents drawn exposure as a percent of credit exposure.
Oil & Gas
Oil & Gas exposure was $33.6 billion as of June 30, 2024. Criticized exposure was $385 million at June 30, 2024 and $123 million at December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | |
| (in millions, except ratios) | Loans and Lending-related Commitments | | Derivative Receivables | | Credit exposure | | % Investment-grade | % Drawn(c) |
| Exploration & Production (“E&P”) and Oil field Services | $ | 17,030 | | | $ | 792 | | | $ | 17,822 | | | 58 | % | | 27 | % | |
Other Oil & Gas(a) | 15,622 | | | 149 | | | 15,771 | | | 61 | | | 22 | | |
Total Oil & Gas(b) | $ | 32,652 | | | $ | 941 | | | $ | 33,593 | | | 60 | % | | 25 | % | |
| | | | | | | | | | |
| December 31, 2023 | |
| (in millions, except ratios) | Loans and Lending-related Commitments | | Derivative
Receivables | | Credit exposure | | % Investment-
grade | % Drawn(c) |
| Exploration & Production (“E&P”) and Oil field Services | $ | 18,121 | | | $ | 536 | | | $ | 18,657 | | | 51 | % | | 26 | % | |
Other Oil & Gas(a) | 15,649 | | | 169 | | | 15,818 | | | 55 | | | 22 | | |
| Total Oil & Gas | $ | 33,770 | | | $ | 705 | | | $ | 34,475 | | | 53 | % | | 25 | % | |
(a)Other Oil & Gas includes Integrated Oil & Gas companies, Midstream/Oil Pipeline companies and refineries.
(b)Oil & Gas exposure is approximately 34% secured, approximately half of which is reserve-based lending to the Exploration & Production sub-sector; unsecured exposure is approximately 69% investment-grade.
(c)Represents drawn exposure as a percent of credit exposure.
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 11 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 six months ended June 30, 2024 and 2023. Since June 30, 2023, nonaccrual loan exposure increased by $978 million, predominantly driven by Real Estate, concentrated in Office, resulting from downgrades.
| | | | | | | | | | | |
| Wholesale nonaccrual loan activity |
Six months ended June 30,
(in millions) | | 2024 | 2023 |
Beginning balance | | $ | 2,714 | | $ | 2,395 | |
Additions | | 2,825 | | 1,649 | |
| Reductions: | | | |
| Paydowns and other | | 885 | | 618 | |
Gross charge-offs | | 438 | | 281 | |
| Returned to performing status | | 190 | | 85 | |
| Sales | | 40 | | 52 | |
| Total reductions | | 1,553 | | 1,036 | |
| Net changes | | 1,272 | | 613 | |
| Ending balance | | $ | 3,986 | | $ | 3,008 | |
The following table presents net charge-offs/recoveries, which are defined as gross charge-offs less recoveries, for the three and six months ended June 30, 2024 and 2023. 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) | |
| (in millions, except ratios) | Three months ended June 30, | | Six months ended June 30, |
| 2024 | 2023 | | 2024 | 2023 |
| Loans | | | | | |
Average loans retained | $ | 666,347 | | $ | 647,474 | | | $ | 665,468 | | $ | 624,566 | |
Gross charge-offs | 312 | | 189 | | | 448 | | 294 | |
Gross recoveries collected | (45) | | (24) | | | (95) | | (46) | |
Net charge-offs/(recoveries) | 267 | | 165 | | | 353 | | 248 | |
Net charge-off/(recovery) rate | 0.16 | % | 0.10 | % | | 0.11 | % | 0.08 | % |
Modified wholesale loans
The amortized cost of wholesale FDMs for the three and six months ended June 30, 2024 were $740 million and $1.2 billion, respectively, of which $167 million and $293 million, respectively, were nonaccrual loan exposure. The amortized cost of wholesale FDMs for the three and six months ended June 30, 2023 were $673 million and $854 million, respectively, of which $353 million and $442 million, respectively, were nonaccrual loan exposure. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K and Note 11 of this Form 10-Q for further information.
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 22 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 of JPMorgan Chase's 2023 Form 10-K 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 over-the-counter ("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 June 30, 2024 and December 31, 2023. Refer to Note 4 for additional information on the Firm’s use of collateral agreements and for a further discussion of derivative contracts, counterparties and settlement types.
The fair value of derivative receivables reported on the Consolidated balance sheets was $54.7 billion and $54.9 billion at June 30, 2024 and December 31, 2023, 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 4 for additional information on the Firm’s use of collateral agreements for derivative transactions.
The following tables summarize the net derivative receivables and the internal ratings profile for the periods presented. | | | | | | | | |
| Derivative receivables | | |
| (in millions) | June 30,
2024 | December 31,
2023 |
| Total, net of cash collateral | $ | 54,673 | | $ | 54,864 | |
| Liquid securities and other cash collateral held against derivative receivables | (24,211) | | (22,461) | |
| Total, net of liquid securities and other cash collateral | $ | 30,462 | | $ | 32,403 | |
| Other collateral held against derivative receivables | (1,064) | | (993) | |
| Total, net of collateral | $ | 29,398 | | $ | 31,410 | |
| | | | | | | | | | | | | | | | | | | | |
| Ratings profile of derivative receivables | | | | | | |
| June 30, 2024 | | December 31, 2023 |
(in millions, except ratios) | Exposure net of collateral | % of exposure net of collateral | | Exposure net of collateral | | % of exposure net of collateral |
| Investment-grade | $ | 22,482 | | 76 | % | | $ | 24,004 | | | 76 | % |
| Noninvestment-grade | 6,916 | | 24 | | | 7,406 | | (a) | 24 | |
| Total | $ | 29,398 | | 100 | % | | $ | 31,410 | | | 100 | % |
Credit portfolio management activities
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 traditional lending activities (loans and lending-related commitments) and derivatives counterparty exposure in the Firm’s wholesale businesses. In addition, the Firm obtains credit protection against certain loans in the retained wholesale portfolio through the issuance of credit-related notes. Information on credit portfolio management activities is provided in the table below.
| | | | | | | | | | | |
| Credit derivatives and credit-related notes used in credit portfolio management activities |
| Notional amount of protection purchased and sold(a) |
| (in millions) | June 30,
2024 | | December 31,
2023 |
| Credit derivatives and credit-related notes used to manage: | | | |
Loans and lending-related commitments | $ | 24,386 | | | $ | 24,157 | |
| Derivative receivables | 17,503 | | | 12,832 | |
| Credit derivatives and credit-related notes used in credit portfolio management activities | $ | 41,889 | | | $ | 36,989 | |
(a)Amounts are presented net, considering the Firm’s net protection purchased or sold with respect to each underlying reference entity or index.
Refer to Credit derivatives in Note 4 of this Form 10-Q and Note 5 of JPMorgan Chase’s 2023 Form 10-K for further information on credit derivatives and derivatives used in credit portfolio management activities.
| | | | | | | | | | | | | | |
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 June 30, 2024 was $25.5 billion, reflecting a net addition of $749 million from December 31, 2023.
The net addition to the allowance for credit losses included:
•$653 million in consumer, reflecting a $753 million net addition in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $125 million net reduction in Home Lending, and
•$47 million in wholesale, driven by
–a net addition of $707 million, reflecting net downgrade activity, primarily in Real Estate, and included approximately $200 million associated with incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $660 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios and updates to certain macroeconomic variables.
The Firm has maintained the additional weight placed on the adverse scenarios in the first quarter of 2023 to reflect ongoing uncertainties and downside risks related to the geopolitical and macroeconomic environment.
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 5.3% in the second quarter of 2025, and a weighted average U.S. real GDP level that is 2.1% lower than the central case at the end of the fourth quarter of 2025.
The following table presents the Firm’s central case assumptions for the periods presented:
| | | | | | | | | | | |
| Central case assumptions
at June 30, 2024 |
| 4Q24 | 2Q25 | 4Q25 |
U.S. unemployment rate(a) | 4.1 | % | 4.1 | % | 4.0 | % |
YoY growth in U.S. real GDP(b) | 1.5 | % | 1.6 | % | 1.9 | % |
|
| Central case assumptions
at December 31, 2023 |
| 2Q24 | 4Q24 | 2Q25 |
U.S. unemployment rate(a) | 4.1 | % | 4.4 | % | 4.1 | % |
YoY growth in U.S. real GDP(b) | 1.8 | % | 0.7 | % | 1.0 | % |
(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 Note 13 and Note 10 of JPMorgan Chase's 2023 Form 10-K for a description of the policies, methodologies and judgments used to determine the Firm’s allowance for credit losses on loans, lending-related commitments, and investment securities.
Refer to Consumer Credit Portfolio on pages 61-64, Wholesale Credit Portfolio on pages 65-74 and Note 11 for additional information on the consumer and wholesale credit portfolios.
Refer to Critical Accounting Estimates Used by the Firm on pages 86-88 for further information on the allowance for credit losses and related management judgments.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for credit losses and related information | | | | | |
| 2024 | | 2023 |
| Six months ended June 30, | Consumer, excluding
credit card | Credit card | Wholesale | Total | | Consumer, excluding
credit card | Credit card | Wholesale | Total |
| (in millions, except ratios) | |
| Allowance for loan losses | | | | | | | | | |
| Beginning balance at January 1, | $ | 1,856 | | $ | 12,450 | | $ | 8,114 | | $ | 22,420 | | | $ | 2,040 | | $ | 11,200 | | $ | 6,486 | | $ | 19,726 | |
Cumulative effect of a change in accounting principle(a) | NA | NA | NA | NA | | (489) | (100) | 2 | | (587) |
| Gross charge-offs | 661 | | 3,998 | | 448 | | 5,107 | | | 501 | | 2,432 | | 294 | | 3,227 | |
| Gross recoveries collected | (343) | | (482) | | (95) | | (920) | | | (247) | | (386) | | (46) | | (679) | |
Net charge-offs | 318 | | 3,516 | | 353 | | 4,187 | | | 254 | | 2,046 | | 248 | | 2,548 | |
| Provision for loan losses | 204 | | 4,266 | | 288 | | 4,758 | | | 751 | | 2,546 | | 2,067 | | 5,364 | |
| Other | 1 | | — | | (1) | | — | | | — | | — | | 25 | | 25 | |
Ending balance at June 30, | $ | 1,743 | | $ | 13,200 | | $ | 8,048 | | $ | 22,991 | | | $ | 2,048 | | $ | 11,600 | | $ | 8,332 | | $ | 21,980 | |
| | | | | | | | | |
| Allowance for lending-related commitments | | | | | | | | | |
| Beginning balance at January 1, | $ | 75 | | $ | — | | $ | 1,899 | | $ | 1,974 | | | $ | 76 | | $ | — | | $ | 2,306 | | $ | 2,382 | |
| Provision for lending-related commitments | 17 | | — | | 77 | | 94 | | | 52 | | — | | (253) | | (201) | |
| Other | — | | — | | — | | — | | | 1 | | — | | 4 | | 5 | |
Ending balance at June 30, | $ | 92 | | $ | — | | $ | 1,976 | | $ | 2,068 | | | $ | 129 | | $ | — | | $ | 2,057 | | $ | 2,186 | |
| | | | | | | | | |
| Impairment methodology | | | | | | | | | |
Asset-specific(b) | $ | (856) | | $ | — | | $ | 562 | | $ | (294) | | | $ | (971) | | $ | — | | $ | 478 | | $ | (493) | |
| Portfolio-based | 2,599 | | 13,200 | | 7,486 | | 23,285 | | | 3,019 | | 11,600 | | 7,854 | | 22,473 | |
| Total allowance for loan losses | $ | 1,743 | | $ | 13,200 | | $ | 8,048 | | $ | 22,991 | | | $ | 2,048 | | $ | 11,600 | | $ | 8,332 | | $ | 21,980 | |
| | | | | | | | | |
| Impairment methodology | | | | | | | | | |
| Asset-specific | $ | — | | $ | — | | $ | 107 | | $ | 107 | | | $ | — | | $ | — | | $ | 65 | | $ | 65 | |
| Portfolio-based | 92 | | — | | 1,869 | | 1,961 | | | 129 | | — | | 1,992 | | 2,121 | |
Total allowance for lending-related commitments | $ | 92 | | $ | — | | $ | 1,976 | | $ | 2,068 | | | $ | 129 | | $ | — | | $ | 2,057 | | $ | 2,186 | |
| Total allowance for investment securities | NA | NA | NA | $ | 177 | | | NA | NA | NA | $ | 104 | |
Total allowance for credit losses(c) | $ | 1,835 | | $ | 13,200 | | $ | 10,024 | | $ | 25,236 | | | $ | 2,177 | | $ | 11,600 | | $ | 10,389 | | $ | 24,270 | |
| | | | | | | | | |
| Memo: | | | | | | | | | |
| Retained loans, end-of-period | $ | 382,795 | | $ | 216,100 | | $ | 674,152 | | $ | 1,273,047 | | | $ | 396,195 | | $ | 191,348 | | $ | 668,145 | | $ | 1,255,688 | |
| Retained loans, average | 389,847 | | 207,329 | | 665,468 | | 1,262,644 | | 330,227 | | 183,757 | | 624,566 | | 1,138,550 | |
| Credit ratios | | | | | | | | | |
Allowance for loan losses to retained loans | 0.46 | % | 6.11 | % | 1.19 | % | 1.81 | % | | 0.52 | % | 6.06 | % | 1.25 | % | 1.75 | % |
Allowance for loan losses to retained nonaccrual loans(d) | 51 | | NA | 245 | | 343 | | | 54 | | NA | 321 | | 345 | |
Allowance for loan losses to retained nonaccrual loans excluding credit card | 51 | | NA | 245 | | 146 | | | 54 | | NA | 321 | | 163 | |
| Net charge-off/(recovery) rates | 0.16 | | 3.41 | | 0.11 | 0.67 | | | 0.16 | | 2.25 | | 0.08 | | 0.45 | |
(a)Represents the impact to the allowance for loan losses upon the Firm's adoption of changes to the TDR accounting guidance on January 1, 2023. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K for further information.
(b)Includes collateral-dependent loans, including those for which foreclosure is deemed probable, and nonaccrual risk-rated loans.
(c)At June 30, 2024 and 2023, in addition to the allowance for credit losses in the table above, the Firm also had an allowance for credit losses of $278 million and $18 million, respectively, associated with certain accounts receivable in CIB.
(d)The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.
Allocation of allowance for loan losses
The table below presents a breakdown of the allowance for loan losses by loan class. Refer to Note 11 for further information on loan classes.
| | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
(in millions, except ratios) | Allowance for loan losses | Percent of retained loans to total retained loans | | Allowance for loan losses | Percent of retained loans to total retained loans |
| Residential real estate | $ | 659 | | 25 | % | | $ | 817 | | 25 | % |
| Auto and other | 1,084 | | 5 | | | 1,039 | | 6 | |
| Consumer, excluding credit card | 1,743 | | 30 | | | 1,856 | | 31 | |
| Credit card | 13,200 | | 17 | | | 12,450 | | 16 | |
| Total consumer | 14,943 | | 47 | | | 14,306 | | 47 | |
| Secured by real estate | 2,961 | | 13 | | | 2,997 | | 13 | |
| Commercial and industrial | 3,500 | | 13 | | | 3,519 | | 13 | |
| Other | 1,587 | | 27 | | | 1,598 | | 27 | |
| Total wholesale | 8,048 | | 53 | | | 8,114 | | 53 | |
Total | $ | 22,991 | | 100 | % | | $ | 22,420 | | 100 | % |
| | | | | | | | | | | | | | |
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 June 30, 2024, the Treasury and CIO investment securities portfolio, net of the allowance for credit losses, was $587.4 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 41-43 and Note 9 for further information on the investment securities portfolio and internal risk ratings. Refer to Liquidity Risk Management on pages 51-58 for further information on related liquidity risk. Refer to Market Risk Management on pages 79-84 for further information on the market risk inherent in the portfolio.
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 June 30, 2024 and December 31, 2023.
| | | | | | | | | | | |
| (in billions) | June 30, 2024 | | December 31, 2023 |
Tax-oriented investments, primarily in alternative energy and affordable housing(a) | $ | 31.8 | | | $ | 28.8 | |
Private equity, various debt and equity instruments, and real assets | 13.4 | | (b) | 10.5 | |
| Total carrying value | $ | 45.2 | | | $ | 39.3 | |
(a)Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures guidance. Refer to Note 13 for additional information.
(b)The increase from December 31, 2023 is primarily due to the Visa C shares held at fair value. Refer to Market Risk Management on pages 79-84 and Note 2 on page 111 for additional information.
Refer to page 134 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s Investment Portfolio Risk Management governance and oversight.
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. Refer to Market Risk Management on pages 135–143 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s Market Risk Management organization, market risk measurement, risk monitoring and control, and predominant business activities that give rise to market risk.
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 of JPMorgan Chase’s 2023 Form 10-K.
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.
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 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. For risk management purposes, the Firm believes this methodology 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 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.
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 of JPMorgan Chase’s 2023 Form 10-K for information regarding model reviews and approvals.
Refer to page 137 of JPMorgan Chase’s 2023 Form 10-K for further information regarding VaR, including the inherent limitations, and the key differences between Risk Management VaR and Regulatory VaR. 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). Refer to Other risk measures on pages 140–143 of JPMorgan Chase’s 2023 Form 10-K for further information regarding nonstatistical market risk measures used by the Firm.
Corporate VaR, Daily Risk Management VaR and VaR backtesting exceptions reflect the impact of Visa C shares that are held at fair value and therefore captured in VaR. Refer to Note 2 on page 111 for additional information.
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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | | | | | | |
| | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | | | | |
| (in millions) | | Avg. | Min | Max | | Avg. | Min | Max | | Avg. | Min | Max | | | | | | | | | |
CIB trading VaR by risk type(a) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed income | | $ | 31 | | | $ | 26 | | | $ | 37 | | | | $ | 35 | | | $ | 30 | | | $ | 39 | | | | $ | 57 | | | $ | 50 | | | $ | 66 | | | | | | | | | | |
| Foreign exchange | | 18 | | | 15 | | | 23 | | | | 13 | | | 8 | | | 19 | | | | 12 | | | 7 | | | 24 | | | | | | | | | | |
| Equities | | 7 | | | 5 | | | 11 | | | | 6 | | | 4 | | | 13 | | | | 8 | | | 5 | | | 11 | | | | | | | | | | |
Commodities and other | | 9 | | | 7 | | | 11 | | | | 7 | | | 6 | | | 10 | | | | 12 | | | 8 | | | 17 | | | | | | | | | | |
Diversification benefit to CIB trading VaR(b) | | (32) | | | NM | | NM | | | (29) | | | NM | | NM | | | (48) | | | NM | | NM | | | | | | | | | |
| CIB trading VaR | | 33 | | | 28 | |
| 37 | |
| | 32 | | | 27 | | | 40 | | | | 41 | | | 31 | | | 50 | | | | | | | | | | |
Credit Portfolio VaR(c) | | 21 | | | 18 | | | 25 | | | | 24 | | | 20 | | | 28 | | | | 14 | | | 11 | | | 18 | | | | | | | | | | |
Diversification benefit to CIB VaR(b) | | (16) | | | NM | | NM | | | (15) | | | NM | | NM | | | (11) | | | NM | | NM | | | | | | | | | |
CIB VaR | | 38 | | | 33 | |
| 43 | |
| | 41 | | | 36 | | | 50 | | | | 44 | | | 34 | | | 55 | | | | | | | | | | |
CCB VaR | | 2 | | | 1 | | | 4 | | | | 3 | | | 1 | | | 6 | | | | 9 | | | 6 | | | 14 | | | | | | | | | | |
AWM VaR(d) | | 8 | | | 7 | | | 9 | | | | 9 | | | 9 | |
| 10 | |
| | NM | | NM | | NM | | | | | | | | | |
Corporate VaR(d)(e) | | 48 | | | 7 | |
| 102 | | | | 10 | | | 9 | | | 11 | | | | 13 | | | 11 | | | 15 | | | | | | | | | | |
Diversification benefit to other VaR(b) | | (9) | | | NM | | NM |
| | (8) | |
| NM | | NM | | | (7) | | | NM | | NM | | | | | | | | | |
| Other VaR | | 49 | | | 10 | | | 101 | | | | 14 | | | 12 | | | 16 | | | | 15 | | | 13 | | | 19 | | | | | | | | | | |
Diversification benefit to CIB and other VaR(b) | | (31) | | | NM | | NM |
| | (7) | | | NM | | NM | | | (12) | | | NM | | NM | | | | | | | | | |
| Total VaR | | $ | 56 | | | $ | 39 | |
| $ | 91 | | | | $ | 48 | | | $ | 43 | | | $ | 58 | | | | $ | 47 | | | $ | 36 | | | $ | 56 | | | | | | | | | | |
(a)The impact of the business segment reorganization was not material to Total CIB VaR. Prior periods have not been revised. Refer to Business Segment Results on page 20 for additional information.
(b)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.
(c)Includes the derivative CVA, hedges of the CVA and credit protection purchased against certain retained loans and lending-related commitments, 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.
(d)In the second quarter of 2024, the presentation of Corporate and other LOB VaR was updated to disaggregate AWM VaR due to the increase associated with credit protection purchased against certain retained loans and lending-related commitments. The VaR does not include the retained loan portfolio, which is not reported at fair value.
(e)Includes Visa C shares and a legacy private equity position which is publicly traded.
Quarter over quarter results
Average total VaR for the three months ended June 30, 2024 increased by $8 million, when compared with March 31, 2024, predominantly due to the impact of the Visa C shares in Corporate VaR. Average CIB VaR for the three months ended June 30, 2024 decreased by $3 million, when compared to March 31, 2024 due to volatility rolling out of the one-year historical look-back period impacting Fixed Income and Credit Portfolio VaR.
Year over year results
Average total VaR for the three months ended June 30, 2024 increased by $9 million, compared with the same period in the prior year predominantly due to the impact of the Visa C shares in Corporate VaR. Average CIB VaR for the three months ended June 30, 2024 decreased by $6 million, compared with the same period in the prior year driven by volatility rolling out of the one-year historical look-back period impacting Fixed Income partially offset by an increase associated with credit protection purchased against certain retained loans and lending-related commitments within Credit Portfolio VaR.
The following graph presents daily Risk Management VaR for the five trailing quarters. The increase in VaR and subsequent decline observed in the second quarter of 2024 was primarily driven by changes in Visa C share exposure in the Firm's Corporate VaR.
Daily Risk Management VaR
| | | | | | | | | | | | | | |
Second Quarter
2023 | Third Quarter
2023 | Fourth Quarter
2023 | First Quarter
2023 | Second Quarter
2024 |
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 June 30, 2024, the Firm posted backtesting gains on 152 of the 258 days, and observed 14 VaR backtesting exceptions. For the three months ended June 30, 2024, the Firm posted backtesting gains on 42 of the 65 days, and the Firm observed five VaR backtesting exceptions primarily driven by price changes in Visa C shares.
The following chart presents the distribution of Firmwide daily backtesting gains and losses for the trailing 12 months and three months ended June 30, 2024. 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
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 of JPMorgan Chase’s 2023 Form 10-K for a summary by LOB and Corporate identifying positions included in earnings-at-risk.
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, 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 of JPMorgan Chase’s 2023 Form 10-K. 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 143 of JPMorgan Chase’s 2023 Form 10-K 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. 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. In the second quarter of 2024, the Firm updated certain deposit rates paid assumptions which take into account observed pricing and client and customer behavior during the most recent economic cycle. These updated deposit rates paid assumptions impacted the U.S. dollar scenarios, resulting in an increase in positive sensitivity in higher interest rate scenarios, and an increase in negative sensitivity in lower interest rate scenarios. 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 8 for additional information).
The Firm’s U.S. dollar and non-U.S. dollar sensitivities are presented in the table below.
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| (In billions) | June 30, 2024 |
| December 31, 2023 | |
U.S. dollar: | | | | |
Parallel shift: (a) | | | | |
| +100 bps shift in rates | $ | 2.8 | | | $ | 2.4 | | |
| -100 bps shift in rates | (2.5) | | | (2.1) | | |
| +200 bps shift in rates | 5.5 | | | 4.8 | | |
| -200 bps shift in rates | (4.8) | | | (4.6) | | |
| Steeper yield curve: | | | | |
| +100 bps shift in long-term rates | 1.5 | | | 0.6 | | |
| -100 bps shift in short-term rates | (1.0) | | | (1.5) | | |
| Flatter yield curve: | | | | |
| +100 bps shift in short-term rates | 1.3 | | | 1.8 | | |
| -100 bps shift in long-term rates | (1.5) | | | (0.5) | | |
Non-U.S. dollar: | | | | |
Parallel shift: (a) | | | | |
| +100 bps shift in rates | $ | 0.7 | | | $ | 0.7 | | |
| -100 bps shift in rates | (0.7) | | | (0.7) | | |
(a)Reflects the simultaneous shift of U.S. dollar and non-U.S. dollar rates.
The change in the Firm’s U.S. dollar sensitivities as of June 30, 2024 compared to December 31, 2023, reflected the impact of changes in the Firm’s actual and forecasted balance sheet and the update in the second quarter of 2024 of the deposit rates paid assumptions for certain consumer and wholesale deposit products based upon observed pricing and client and customer behavior during the most recent economic cycle. In the absence of this update, the Firm’s U.S. dollar sensitivities as of June 30, 2024, would have been lower by approximately $900 million and $1.9 billion to the +100 basis points and +200 basis points shifts, respectively, in short-term and parallel rate scenarios and higher by approximately $1.0 billion and $1.8 billion to the -100 basis points and -200 basis points shifts, respectively, in short-term and parallel rate scenarios.
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. The Firm's pricing and cash flow assumptions associated with deposits, as well as prepayment assumptions for loans and securities, are significant factors in the EVS measure. In accordance with the CTC interest rate risk management policy, the Firm has established limits on EVS as a percentage of TCE.
Certain assumptions used in the EVS measure may differ from those required in the fair value disclosure. For example, certain assets and liabilities with no stated maturity, such as credit card receivables and deposits, have longer assumed durations in the EVS measure. Additional information on long-term debt and held to maturity investment securities is disclosed on page 112 in Note 2 financial instruments that are not carried at fair value on the Consolidated balance sheets.
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 of JPMorgan Chase’s 2023 Form 10-K 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 June 30, 2024 and December 31, 2023, 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.
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Gain/(loss) (in millions) | | | | | | June 30, 2024 | | December 31, 2023 |
| Activity | | Description | | Sensitivity measure | | |
| | | | | | | | |
Debt and equity(a) | | | | | | | | |
| Asset Management activities | | Consists of seed capital and related hedges; fund co-investments(c); and certain deferred compensation and related hedges(d) | | 10% decline in market value | | $ | (56) | | | $ | (61) | |
| Other debt and equity | | 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 | | (955) | | | (1,044) | |
| | | | | | | | |
| Credit- and funding-related exposures | | | | | | |
Non-USD LTD cross-currency basis | | 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 | | (12) | | | (12) | |
Non-USD LTD hedges foreign currency (“FX”) exposure | | Primarily represents the foreign exchange revaluation on the fair value of the derivative hedges(e) | | 10% depreciation of currency | | 18 | | | 16 | |
| Derivatives – funding spread risk | | Impact of changes in the spread related to derivatives FVA(c) | | 1 basis point parallel increase in spread | | (2) | | | (3) | |
CVA - counterparty credit risk(b) | | Credit risk component of CVA and associated hedges | | 10% credit spread widening | | — | | | — | |
| 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 | | 46 | | | 46 | |
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.
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.
Refer to pages 144–145 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s country risk management.
Risk Reporting
The following table presents the Firm’s top 20 exposures by country (excluding the U.S.) as of June 30, 2024 and their comparative exposures as of December 31, 2023. 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 increase in exposure to Germany when compared to December 31, 2023, was driven by an increase in cash placed with the central bank of Germany primarily due to client-driven market-making activities and higher client deposits in CIB.
The Firm continues to monitor its exposure to Russia, which corresponds to cash placed with the central bank, but which excludes deposits placed on behalf of clients at the Deposit Insurance Agency of Russia. The Firm currently believes that its remaining exposure to Russia is not material. Refer to Note 24 on pages 183-184 for information concerning Russian litigation.
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Top 20 country exposures (excluding the U.S.)(a) |
(in billions) | June 30, 2024 | | December 31, 2023(f) |
| Deposits with banks(b) | Lending(c) | Trading and investing(d) | Other(e) | Total exposure | | Total exposure |
| Germany | $ | 90.8 | | $ | 12.7 | | $ | 2.6 | | $ | 0.7 | | $ | 106.8 | | | $ | 84.8 | |
| United Kingdom | 27.5 | | 22.8 | | 24.9 | | 3.1 | | 78.3 | | | 77.1 | |
| Japan | 33.3 | | 2.5 | | 3.9 | | 0.4 | | 40.1 | | | 36.0 | |
| Brazil | 6.5 | | 4.6 | | 7.7 | | — | | 18.8 | | | 16.7 | |
| Australia | 6.3 | | 8.8 | | 3.4 | | 0.1 | | 18.6 | | | 18.3 | |
| France | 0.5 | | 11.8 | | 4.3 | | 0.8 | | 17.4 | | | 10.1 | |
| Canada | 2.4 | | 11.1 | | 3.5 | | 0.2 | | 17.2 | | | 16.0 | |
| China | 2.8 | | 5.7 | | 4.6 | | 0.1 | | 13.2 | | | 14.0 | |
| Switzerland | 5.6 | | 4.5 | | 0.4 | | 2.3 | | 12.8 | | | 10.9 | |
| South Korea | 0.6 | | 3.3 | | 7.5 | | 0.5 | | 11.9 | | | 7.8 | |
| India | 1.8 | | 5.0 | | 4.5 | | 0.3 | | 11.6 | | | 9.7 | |
| Italy | — | | 10.0 | | 0.7 | | 0.3 | | 11.0 | | | 6.0 | |
| Saudi Arabia | 1.1 | | 5.2 | | 2.9 | | — | | 9.2 | | | 7.7 | |
| Singapore | 1.5 | | 2.6 | | 4.2 | | 0.4 | | 8.7 | | | 9.8 | |
| Belgium | 5.0 | | 2.3 | | 0.6 | | — | | 7.9 | | | 8.0 | |
| Mexico | 1.5 | | 3.4 | | 2.5 | | — | | 7.4 | | | 8.2 | |
| Netherlands | — | | 7.5 | | (0.6) | | 0.2 | | 7.1 | | | 5.6 | |
| Spain | 0.2 | | 4.8 | | 0.6 | | — | | 5.6 | | | 6.3 | |
| Sweden | — | | 3.6 | | 0.3 | | — | | 3.9 | | | 3.1 | |
| Luxembourg | 0.9 | | 1.6 | | 1.0 | | — | | 3.5 | | | 4.0 | |
(a)Country exposures presented in the table reflect 89% and 87% 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 June 30, 2024 and December 31, 2023, respectively.
(b)Predominantly represents cash placed with central banks.
(c)Includes loans and accrued interest receivable, lending-related commitments (net of eligible collateral and the allowance for credit losses). Excludes intra-day and operating exposures, such as those from settlement and clearing activities.
(d)Includes market-making 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 physical commodities inventory and clearing house guarantee funds.
(f)The country rankings presented in the table as of December 31, 2023, are based on the country rankings of the corresponding exposures at June 30, 2024, not actual rankings of such exposures at December 31, 2023.
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| CRITICAL ACCOUNTING ESTIMATES USED BY THE FIRM |
JPMorgan Chase’s accounting policies and use of estimates are integral to understanding its reported results. The Firm’s most complex accounting estimates require management’s judgment to ascertain the appropriate carrying value of assets and liabilities. The Firm has established policies and control procedures intended to ensure that estimation methods, including any judgments made as part of such methods, are well-controlled, independently reviewed and applied consistently from period to period. The methods used and judgments made reflect, among other factors, the nature of the assets or liabilities and the related business and risk management strategies, which may vary across the Firm’s businesses and portfolios. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The Firm believes its estimates for determining the carrying value of its assets and liabilities are appropriate. The following is a brief description of the Firm’s critical accounting estimates involving significant judgments.
Allowance for credit losses
The Firm’s allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of the Firm’s financial assets measured at amortized cost and certain off-balance sheet lending-related commitments. The allowance for credit losses 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 of JPMorgan Chase's 2023 Form 10-K 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, and Allowance for credit losses on pages 75-77 and Note 12 of this Form 10-Q for further information.
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 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. The acquired wholesale portfolio was incorporated into the Firm's modeled credit loss estimates commencing in the second quarter of 2024, and therefore is now reflected in the wholesale sensitivity analysis below, resulting in an increase of approximately $200 million. Refer to Note 26 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 75 and in Note 12, the Firm’s relative adverse scenario assumes an elevated U.S. unemployment rate, averaging approximately 2.2% higher over the eight-quarter forecast, with a peak difference of approximately 3.0% in the second 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 June 30, 2024, 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 June 30, 2024, 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 $750 million for residential real estate loans and lending-related commitments
•An increase of approximately $3.8 billion for credit card loans
▪An increase of approximately $4.3 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 June 30, 2024.
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.
| | | | | | | | | | | | | | |
June 30, 2024
(in millions, except ratios) | Total assets at fair value | | Total level 3 assets |
| Federal funds sold and securities purchased under resale agreements | $ | 379,930 | | | | $ | — | |
| Securities borrowed | 87,652 | | | | — | |
| Trading assets: | | | | |
| Trading–debt and equity instruments | 679,164 | | | | 2,301 | |
Derivative receivables(a) | 54,673 | | | | 10,246 | |
| Total trading assets | 733,837 | | | | 12,547 | |
| AFS securities | 266,252 | | | | — | |
| Loans | 38,250 | | | | 2,993 | |
| MSRs | 8,847 | | | | 8,847 | |
| Other | 16,269 | | | | 1,202 | |
Total assets measured at fair value on a recurring basis | 1,531,037 | | | | 25,589 | |
Total assets measured at fair value on a nonrecurring basis | 2,145 | | | | 1,279 | |
Total assets measured at fair value | $ | 1,533,182 | | | | $ | 26,868 | |
| Total Firm assets | $ | 4,143,003 | | | | |
Level 3 assets at fair value as a percentage of total Firm assets(a) | | | | 1 | % |
Level 3 assets at fair value as a percentage of total Firm assets at fair value(a) | | | | 2 | % |
(a)For purposes of the table above, the derivative receivables total reflects the impact of netting adjustments; however, the $10.2 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.
Valuation
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.
Credit card rewards liability
The credit card rewards liability was $13.8 billion and $13.2 billion at June 30, 2024 and December 31, 2023, respectively, and is recorded in accounts payable and other liabilities on the Consolidated balance sheets. Refer to pages 157-158 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant assumptions and sensitivities, associated with the Firm’s credit card rewards liability.
Income taxes
Refer to Income taxes on page 158 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant assumptions, judgments and interpretations associated with the accounting for income taxes.
Goodwill impairment
Management applies significant judgment when testing goodwill for impairment. Refer to Goodwill impairment on page 157 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant valuation judgments associated with goodwill impairment.
Refer to Note 14 for additional information on goodwill, including the goodwill impairment assessment as of June 30, 2024.
Litigation reserves
Refer to Note 24 of this Form 10-Q, and Note 30 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant estimates and judgments associated with establishing litigation reserves.
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| ACCOUNTING AND REPORTING DEVELOPMENTS |
| | | | | | | | | | | |
FASB Standards Adopted since January 1, 2024 |
Standard | Summary of guidance | | Effects on financial statements |
Fair Value Measurement: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions
Issued June 2022
| •Clarifies that a contractual sale restriction is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. •Requires disclosure for investments in equity securities subject to contractual sale restrictions, including: 1) fair value of these investments, 2) nature and remaining duration of the restriction(s) and 3) circumstances that could cause a lapse in the restriction(s). | | •Adopted prospectively on January 1, 2024, with no impact to the Firm’s consolidated financial statements.
|
Investments - Equity Method and Joint Ventures: Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
Issued March 2023
| •Expands the ability to elect proportional amortization on a program-by-program basis, for additional types of tax-oriented investments (beyond affordable housing tax credit investments). •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. | | •Adopted under the modified retrospective method on January 1, 2024. •Refer to Note 1 for further information.
|
FASB Standards Issued but not yet Adopted |
Standard | Summary of guidance | | Effects on financial statements |
Segment Reporting: Improvements to Reportable Segment Disclosures
Issued November 2023 | •Requires disclosure of significant segment expenses that are readily provided to the chief operating decision maker (“CODM”) and included in segment profit or loss. •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. | | •Required effective date: Annual financial statements for the year ending December 31, 2024 and for interim financial statements thereafter.(a) •The Firm is currently assessing the potential impact on its segment disclosures.
|
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. | | •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. |
(a) Early adoption is permitted.
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| 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 Form 10-Q 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-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
JPMorgan Chase & Co.
Consolidated statements of income (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions, except per share data) | 2024 | | 2023 | | 2024 | | 2023 |
| Revenue | | | | | | | |
| Investment banking fees | $ | 2,304 | | | $ | 1,513 | | | $ | 4,258 | | | $ | 3,162 | |
| Principal transactions | 6,814 | | | 6,910 | | | 13,604 | | | 14,525 | |
| Lending- and deposit-related fees | 1,828 | | | 1,828 | | | 3,730 | | | 3,448 | |
| Asset management fees | 4,302 | | | 3,774 | | | 8,448 | | | 7,239 | |
| Commissions and other fees | 1,924 | | | 1,739 | | | 3,729 | | | 3,434 | |
| | | | | | | |
| Investment securities losses | (547) | | | (900) | | | (913) | | | (1,768) | |
| Mortgage fees and related income | 348 | | | 278 | | | 623 | | | 499 | |
| Card income | 1,332 | | | 1,094 | | | 2,550 | | | 2,328 | |
| Other income | 9,149 | | | 3,292 | | | 10,277 | | | 4,299 | |
| Noninterest revenue | 27,454 | | | 19,528 | | | 46,306 | | | 37,166 | |
| Interest income | 48,513 | | | 41,644 | | | 95,951 | | | 78,648 | |
| Interest expense | 25,767 | | | 19,865 | | | 50,123 | | | 36,158 | |
| Net interest income | 22,746 | | | 21,779 | | | 45,828 | | | 42,490 | |
| Total net revenue | 50,200 | | | 41,307 | | | 92,134 | | | 79,656 | |
| | | | | | | |
| Provision for credit losses | 3,052 | | | 2,899 | | | 4,936 | | | 5,174 | |
| | | | | | | |
| Noninterest expense | | | | | | | |
| Compensation expense | 12,953 | | | 11,216 | | | 26,071 | | | 22,892 | |
| Occupancy expense | 1,248 | | | 1,070 | | | 2,459 | | | 2,185 | |
| Technology, communications and equipment expense | 2,447 | | | 2,267 | | | 4,868 | | | 4,451 | |
| Professional and outside services | 2,722 | | | 2,561 | | | 5,270 | | | 5,009 | |
| Marketing | 1,221 | | | 1,122 | | | 2,381 | | | 2,167 | |
| Other expense | 3,122 | | | 2,586 | | | 5,421 | | | 4,225 | |
| Total noninterest expense | 23,713 | | | 20,822 | | | 46,470 | | | 40,929 | |
| Income before income tax expense | 23,435 | | | 17,586 | | | 40,728 | | | 33,553 | |
| Income tax expense | 5,286 | | | 3,114 | | | 9,160 | | | 6,459 | |
| Net income | $ | 18,149 | | | $ | 14,472 | | | $ | 31,568 | | | $ | 27,094 | |
| Net income applicable to common stockholders | $ | 17,718 | | | $ | 14,011 | | | $ | 30,661 | | | $ | 26,204 | |
| Net income per common share data | | | | | | | |
| Basic earnings per share | $ | 6.13 | | | $ | 4.76 | | | $ | 10.58 | | | $ | 8.86 | |
| Diluted earnings per share | 6.12 | | | 4.75 | | | 10.56 | | | 8.85 | |
| | | | | | | |
| Weighted-average basic shares | 2,889.8 | | | 2,943.8 | | | 2,899.1 | | | 2,956.1 | |
| Weighted-average diluted shares | 2,894.9 | | | 2,948.3 | | | 2,903.9 | | | 2,960.5 | |
| | | | | | | |
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
JPMorgan Chase & Co.
Consolidated statements of comprehensive income (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| (in millions) | | 2024 | | 2023 | | 2024 | | 2023 |
| Net income | | $ | 18,149 | | | $ | 14,472 | | | $ | 31,568 | | | $ | 27,094 | |
| Other comprehensive income/(loss), after–tax | | | | | | | | |
| Unrealized gains/(losses) on investment securities | | 108 | | | 757 | | | 249 | | | 2,969 | |
| Translation adjustments, net of hedges | | (156) | | | 70 | | | (360) | | | 267 | |
| Fair value hedges | | 8 | | | 11 | | | (13) | | | (10) | |
| Cash flow hedges | | (22) | | | (497) | | | (911) | | | 301 | |
| Defined benefit pension and OPEB plans | | (3) | | | (6) | | | 23 | | | (61) | |
| DVA on fair value option elected liabilities | | 366 | | | (207) | | | 117 | | | (415) | |
| Total other comprehensive income/(loss), after–tax | | 301 | | | 128 | | | (895) | | | 3,051 | |
| Comprehensive income | | $ | 18,450 | | | $ | 14,600 | | | $ | 30,673 | | | $ | 30,145 | |
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
JPMorgan Chase & Co.
Consolidated balance sheets (unaudited)
| | | | | | | | | | | |
| (in millions, except share data) | June 30, 2024 | | December 31, 2023 |
| Assets | | | |
| Cash and due from banks | $ | 27,265 | | | $ | 29,066 | |
| Deposits with banks | 503,554 | | | 595,085 | |
Federal funds sold and securities purchased under resale agreements (included $379,930 and $259,813 at fair value) | 392,763 | | | 276,152 | |
Securities borrowed (included $87,652 and $70,086 at fair value) | 199,062 | | | 200,436 | |
Trading assets (included assets pledged of $176,536 and $128,994) | 733,882 | | | 540,607 | |
Available-for-sale securities (amortized cost of $269,899 and $205,456; included assets pledged of $9,146 and $9,219) | 266,252 | | | 201,704 | |
| Held-to-maturity securities | 323,746 | | | 369,848 | |
| Investment securities, net of allowance for credit losses | 589,998 | | | 571,552 | |
Loans (included $38,250 and $38,851 at fair value) | 1,320,700 | | | 1,323,706 | |
| Allowance for loan losses | (22,991) | | | (22,420) | |
| Loans, net of allowance for loan losses | 1,297,709 | | | 1,301,286 | |
| Accrued interest and accounts receivable | 135,692 | | | 107,363 | |
| Premises and equipment | 30,582 | | | 30,157 | |
| Goodwill, MSRs and other intangible assets | 64,525 | | | 64,381 | |
Other assets (included $17,233 and $12,306 at fair value and assets pledged of $6,702 and $6,764) | 167,971 | | | 159,308 | |
Total assets(a) | $ | 4,143,003 | | | $ | 3,875,393 | |
| Liabilities | | | |
Deposits (included $69,387 and $78,384 at fair value) | $ | 2,396,530 | | | $ | 2,400,688 | |
Federal funds purchased and securities loaned or sold under repurchase agreements (included $336,315 and $169,003 at fair value) | 400,832 | | | 216,535 | |
Short-term borrowings (included $26,117 and $20,042 at fair value) | 47,308 | | | 44,712 | |
| Trading liabilities | 240,836 | | | 180,428 | |
Accounts payable and other liabilities (included $5,925 and $5,637 at fair value) | 295,813 | | | 290,307 | |
Beneficial interests issued by consolidated VIEs (included $1 and $1 at fair value) | 27,104 | | | 23,020 | |
Long-term debt (included $93,448 and $87,924 at fair value) | 394,028 | | | 391,825 | |
Total liabilities(a) | 3,802,451 | | | 3,547,515 | |
Commitments and contingencies (refer to Notes 22, 23 and 24) | | | |
| Stockholders’ equity | | | |
Preferred stock ($1 par value; authorized 200,000,000 shares; issued 2,390,375 and 2,740,375 shares) | 23,900 | | | 27,404 | |
Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares) | 4,105 | | | 4,105 | |
| Additional paid-in capital | 90,328 | | | 90,128 | |
| Retained earnings | 356,924 | | | 332,901 | |
| Accumulated other comprehensive losses | (11,338) | | | (10,443) | |
Treasury stock, at cost (1,259,769,168 and 1,228,275,301 shares) | (123,367) | | | (116,217) | |
| Total stockholders’ equity | 340,552 | | | 327,878 | |
| Total liabilities and stockholders’ equity | $ | 4,143,003 | | | $ | 3,875,393 | |
(a)The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at June 30, 2024 and December 31, 2023. The assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests generally 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 13 for a further discussion.
| | | | | | | | | | | |
| (in millions) | June 30, 2024 | | December 31, 2023 |
| Assets | | | |
| Trading assets | $ | 2,366 | | | $ | 2,170 | |
| Loans | 37,367 | | | 37,611 | |
| All other assets | 641 | | | 591 | |
| Total assets | $ | 40,374 | | | $ | 40,372 | |
| Liabilities | | | |
| Beneficial interests issued by consolidated VIEs | $ | 27,104 | | | $ | 23,020 | |
| All other liabilities | 335 | | | 263 | |
| Total liabilities | $ | 27,439 | | | $ | 23,283 | |
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
JPMorgan Chase & Co.
Consolidated statements of changes in stockholders’ equity (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| (in millions, except per share data) | | 2024 | | 2023 | | 2024 | | 2023 |
| Preferred stock | | | | | | | | |
| Balance at the beginning of the period | | $ | 29,900 | | | $ | 27,404 | | | $ | 27,404 | | | $ | 27,404 | |
Issuance | | — | | | — | | | 2,496 | | | — | |
| Redemption | | (6,000) | | | — | | | (6,000) | | | — | |
| Balance at June 30 | | 23,900 | | | 27,404 | | | 23,900 | | | 27,404 | |
| | | | | | | | |
| Common stock | | | | | | | | |
| Balance at the beginning and end of the period | | 4,105 | | | 4,105 | | | 4,105 | | | 4,105 | |
| | | | | | | | |
| Additional paid-in capital | | | | | | | | |
| Balance at the beginning of the period | | 89,903 | | | 89,155 | | | 90,128 | | | 89,044 | |
| Shares issued and commitments to issue common stock for employee share-based compensation awards, and related tax effects | | 414 | | | 423 | | | 189 | | | 534 | |
Other | | 11 | | | — | | | 11 | | | — | |
| Balance at June 30 | | 90,328 | | | 89,578 | | | 90,328 | | | 89,578 | |
| | | | | | | | |
| Retained earnings | | | | | | | | |
| Balance at the beginning of the period | | 342,414 | | | 306,208 | | | 332,901 | | | 296,456 | |
| Cumulative effect of change in accounting principles | | — | | | — | | | (161) | | | 449 | |
| Net income | | 18,149 | | | 14,472 | | | 31,568 | | | 27,094 | |
| | | | | | | | |
Preferred stock dividends | | (317) | | | (373) | | | (714) | | | (729) | |
Common stock dividends ($1.15 and $1.00 per share and $2.30 and $2.00 per share, respectively) | | (3,322) | | | (2,948) | | | (6,670) | | | (5,911) | |
| Balance at June 30 | | 356,924 | | | 317,359 | | | 356,924 | | | 317,359 | |
| | | | | | | | |
| Accumulated other comprehensive income/(loss) | | | | | | | | |
| Balance at the beginning of the period | | (11,639) | | | (14,418) | | | (10,443) | | | (17,341) | |
| Other comprehensive income/(loss), after-tax | | 301 | | | 128 | | | (895) | | | 3,051 | |
| Balance at June 30 | | (11,338) | | | (14,290) | | | (11,338) | | | (14,290) | |
| | | | | | | | |
| Treasury stock, at cost | | | | | | | | |
| Balance at the beginning of the period | | (118,046) | | | (109,372) | | | (116,217) | | | (107,336) | |
| Repurchase | | (5,371) | | | (2,316) | | | (8,229) | | | (5,271) | |
| Reissuance | | 50 | | | 48 | | | 1,079 | | | 967 | |
| Balance at June 30 | | (123,367) | | | (111,640) | | | (123,367) | | | (111,640) | |
| | | | | | | | |
| Total stockholders’ equity | | $ | 340,552 | | | $ | 312,516 | | | $ | 340,552 | | | $ | 312,516 | |
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
JPMorgan Chase & Co.
Consolidated statements of cash flows (unaudited)
| | | | | | | | | | | |
| Six months ended June 30, |
| (in millions) | 2024 | | 2023 |
| Operating activities | | | |
| Net income | $ | 31,568 | | | $ | 27,094 | |
| Adjustments to reconcile net income to net cash used in operating activities: | | | |
| Provision for credit losses | 4,936 | | | 5,174 | |
| Depreciation and amortization | 4,006 | | | 2,156 | |
Deferred tax benefit | (1,609) | | | (2,238) | |
| Bargain purchase gain associated with the First Republic acquisition | (103) | | | (2,712) | |
Initial gain on the Visa share exchange | (7,990) | | | — | |
| Other | 1,460 | | | 3,008 | |
| Originations and purchases of loans held-for-sale | (105,772) | | | (48,270) | |
| Proceeds from sales, securitizations and paydowns of loans held-for-sale | 99,909 | | | 47,746 | |
| Net change in: | | | |
| Trading assets | (191,119) | | | (178,766) | |
| Securities borrowed | 1,589 | | | 21,835 | |
| Accrued interest and accounts receivable | (28,551) | | | 16,107 | |
| Other assets | 5,463 | | | 44,599 | |
| Trading liabilities | 53,225 | | | (4,846) | |
| Accounts payable and other liabilities | 13,163 | | | (24,563) | |
| Other operating adjustments | 4,136 | | | 1,300 | |
Net cash (used in) operating activities | (115,689) | | | (92,376) | |
| Investing activities | | | |
| Net change in: | | | |
| Federal funds sold and securities purchased under resale agreements | (116,562) | | | (9,816) | |
| Held-to-maturity securities: | | | |
| Proceeds from paydowns and maturities | 46,800 | | | 13,762 | |
| Purchases | (1,034) | | | (4,141) | |
| Available-for-sale securities: | | | |
| Proceeds from paydowns and maturities | 16,742 | | | 23,470 | |
| Proceeds from sales | 61,211 | | | 69,875 | |
| Purchases | (146,232) | | | (52,433) | |
| Proceeds from sales and securitizations of loans held-for-investment | 29,074 | | | 19,526 | |
| Other changes in loans, net | (24,568) | | | (33,353) | |
| | | |
| | | |
| Net cash used in the First Republic acquisition | (2,362) | | | (9,920) | |
| All other investing activities, net | (687) | | | (11,419) | |
Net cash (used in)/provided by investing activities | (137,618) | | | 5,551 | |
| Financing activities | | | |
| Net change in: | | | |
| Deposits | (7,212) | | | (27,782) | |
| Federal funds purchased and securities loaned or sold under repurchase agreements | 184,307 | | | 63,590 | |
| Short-term borrowings | 2,304 | | | (3,135) | |
| Beneficial interests issued by consolidated VIEs | 1,628 | | | 7,708 | |
| Proceeds from long-term borrowings | 54,103 | | | 19,357 | |
| Payments of long-term borrowings | (46,710) | | | (32,003) | |
| Proceeds from issuance of preferred stock | 2,500 | | | — | |
| Redemption of preferred stock | (6,000) | | | — | |
| Treasury stock repurchased | (8,168) | | | (5,167) | |
| Dividends paid | (7,270) | | | (6,651) | |
| All other financing activities, net | (1,076) | | | (1,275) | |
| Net cash provided by financing activities | 168,406 | | | 14,642 | |
| Effect of exchange rate changes on cash and due from banks and deposits with banks | (8,431) | | | 72 | |
| Net decrease in cash and due from banks and deposits with banks | (93,332) | | | (72,111) | |
| Cash and due from banks and deposits with banks at the beginning of the period | 624,151 | | | 567,234 | |
| Cash and due from banks and deposits with banks at the end of the period | $ | 530,819 | | | $ | 495,123 | |
| Cash interest paid | $ | 48,526 | | | $ | 35,250 | |
| Cash income taxes paid, net | 7,610 | | | 5,466 | |
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
Refer to the Glossary of Terms and Acronyms on pages 194-199 for definitions of terms and acronyms used throughout the Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Note 1 – Basis of presentation
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding company incorporated under Delaware law in 1968, is a leading financial services firm based in the U.S., with operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Refer to Note 25 for further discussion of the Firm's business segments.
On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank (the “First Republic acquisition”) from the 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 26 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.
The unaudited Consolidated Financial Statements prepared in conformity with U.S. GAAP require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expense, and the disclosures of contingent assets and liabilities. Actual results could be different from these estimates. In the opinion of management, all normal, recurring adjustments have been included such that this interim financial information is fairly stated.
These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, and related notes thereto, included in JPMorgan Chase’s 2023 Form 10-K.
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.
Refer to Notes 1 and 14 of JPMorgan Chase’s 2023 Form 10-K for a further description of JPMorgan Chase’s accounting policies regarding consolidation.
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 financing balances to be presented on a net basis 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. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K for further information on offsetting assets and liabilities.
Accounting standard adopted January 1, 2024
Equity Method and Joint Ventures: Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
The guidance expanded the types of tax-oriented investments, beyond affordable housing tax credit investments, that the Firm can elect on a program by program basis, to be accounted for using the proportional amortization method. This method requires the cost of eligible investments, within an elected program, to be amortized in proportion to the tax benefits received with the resulting amortization reported directly in income tax expense, which aligns with the associated tax credits and other tax benefits. Eligible investments must meet certain criteria, including that substantially all of the return is from income tax credits and other income tax benefits.
This guidance was adopted on January 1, 2024 under the modified retrospective method. The adoption of this guidance resulted in a change to the classification and timing of the amortization associated with certain of the Firm's alternative energy tax-oriented investments. As a result of the adoption, the amortization of these investments that was previously recognized in other income is now being recognized in income tax expense. The change in accounting resulted in a decrease to retained earnings of $161 million and increased the Firm’s income tax expense and the effective tax rate by approximately $450 million and two percentage points, respectively, in the first quarter of 2024, with no material impact to net income.
The guidance requires additional disclosure for all investments that generate income tax credits and other income tax benefits from a tax-oriented investment program for which the Firm has elected to apply the proportional amortization method. The guidance also requires a reevaluation of eligible investments when significant modifications or events occur that result in a change in the nature of the investment or a change in the Firm's relationship with the underlying project.
Refer to Notes 5 and 13 for additional information.
Note 2 – Fair value measurement
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s valuation methodologies for assets, liabilities and lending-related commitments measured at fair value and the fair value hierarchy.
The following table presents the assets and liabilities reported at fair value as of June 30, 2024 and December 31, 2023, by major product category and fair value hierarchy.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets and liabilities measured at fair value on a recurring basis | | | | | | | |
| Fair value hierarchy | | Derivative
netting
adjustments(g) | |
| | | | | | | |
| June 30, 2024 (in millions) | Level 1 | | Level 2 | | Level 3 | | Total fair value |
| Federal funds sold and securities purchased under resale agreements | $ | — | | | $ | 379,930 | | | $ | — | | | $ | — | | $ | 379,930 | |
| Securities borrowed | — | | | 87,652 | | | — | | | — | | 87,652 | |
| Trading assets: | | | | | | | | |
| Debt instruments: | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | |
U.S. GSEs and government agencies(a) | — | | | 115,604 | | | 708 | | | — | | 116,312 | |
| Residential – nonagency | — | | | 2,439 | | | 5 | | | — | | 2,444 | |
| Commercial – nonagency | — | | | 1,125 | | | 11 | | | — | | 1,136 | |
| Total mortgage-backed securities | — | | | 119,168 | | | 724 | | | — | | 119,892 | |
U.S. Treasury, GSEs and government agencies(a) | 168,920 | | | 10,929 | | | — | | | — | | 179,849 | |
| Obligations of U.S. states and municipalities | — | | | 6,357 | | | 7 | | | — | | 6,364 | |
Certificates of deposit, bankers’ acceptances and commercial paper | — | | | 2,050 | | | — | | | — | | 2,050 | |
| Non-U.S. government debt securities | 36,575 | | | 70,501 | | | 193 | | | — | | 107,269 | |
| Corporate debt securities | — | | | 40,334 | | | 408 | | | — | | 40,742 | |
| Loans | — | | | 9,278 | | | 691 | | | — | | 9,969 | |
| Asset-backed securities | — | | | 3,178 | | | 2 | | | — | | 3,180 | |
| Total debt instruments | 205,495 | | | 261,795 | | | 2,025 | | | — | | 469,315 | |
| Equity securities | 189,321 | | | 517 | | | 122 | | | — | | 189,960 | |
Physical commodities(b) | 2,418 | | | 1,090 | | | 10 | | | — | | 3,518 | |
| Other | — | | | 16,227 | | | 144 | | | — | | 16,371 | |
Total debt and equity instruments(c) | 397,234 | | | 279,629 | | | 2,301 | | | — | | 679,164 | |
| Derivative receivables: | | | | | | | | |
| Interest rate | 1,706 | | | 228,084 | | | 5,197 | | | (209,402) | | 25,585 | |
| Credit | — | | | 9,212 | | | 1,172 | | | (9,719) | | 665 | |
| Foreign exchange | 132 | | | 189,541 | | | 1,023 | | | (172,907) | | 17,789 | |
| Equity | — | | | 82,257 | | | 2,603 | | | (79,030) | | 5,830 | |
| Commodity | — | | | 18,264 | | | 251 | | | (13,711) | | 4,804 | |
| Total derivative receivables | 1,838 | | | 527,358 | | | 10,246 | | | (484,769) | | 54,673 | |
Total trading assets(d) | 399,072 | | | 806,987 | | | 12,547 | | | (484,769) | | 733,837 | |
| Available-for-sale securities: | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | |
U.S. GSEs and government agencies(a) | — | | | 75,052 | | | — | | | — | | 75,052 | |
| Residential – nonagency | — | | | 3,024 | | | — | | | — | | 3,024 | |
| Commercial – nonagency | — | | | 2,821 | | | — | | | — | | 2,821 | |
| Total mortgage-backed securities | — | | | 80,897 | | | — | | | — | | 80,897 | |
| U.S. Treasury and government agencies | 127,229 | | | 299 | | | — | | | — | | 127,528 | |
| Obligations of U.S. states and municipalities | — | | | 17,188 | | | — | | | — | | 17,188 | |
| Non-U.S. government debt securities | 23,702 | | | 7,397 | | | — | | | — | | 31,099 | |
| Corporate debt securities | — | | | 90 | | | — | | | — | | 90 | |
| Asset-backed securities: | | | | | | | | |
| Collateralized loan obligations | — | | | 6,808 | | | — | | | — | | 6,808 | |
Other(a) | — | | | 2,642 | | | — | | | — | | 2,642 | |
| Total available-for-sale securities | 150,931 | | | 115,321 | | | — | | | — | | 266,252 | |
Loans(e) | — | | | 35,257 | | | 2,993 | | | — | | 38,250 | |
| Mortgage servicing rights | — | | | — | | | 8,847 | | | — | | 8,847 | |
Other assets(d) | 10,686 | | (f) | 4,381 | | | 1,202 | | | — | | 16,269 | |
| Total assets measured at fair value on a recurring basis | $ | 560,689 | | | $ | 1,429,528 | | | $ | 25,589 | | | $ | (484,769) | | $ | 1,531,037 | |
| Deposits | $ | — | | | $ | 67,464 | | | $ | 1,923 | | | $ | — | | $ | 69,387 | |
Federal funds purchased and securities loaned or sold under repurchase agreements | — | | | 336,315 | | | — | | | — | | 336,315 | |
| Short-term borrowings | — | | | 23,391 | | | 2,726 | | | — | | 26,117 | |
| Trading liabilities: | | | | | | | | |
Debt and equity instruments(c) | 169,338 | | | 36,612 | | | 68 | | | — | | 206,018 | |
| Derivative payables: | | | | | | | | |
| Interest rate | 2,319 | | | 215,812 | | | 3,896 | | | (210,993) | | 11,034 | |
| Credit | — | | | 11,495 | | | 992 | | | (11,324) | | 1,163 | |
| Foreign exchange | 133 | | | 188,768 | | | 855 | | | (179,050) | | 10,706 | |
| Equity | — | | | 87,409 | | | 5,594 | | | (85,992) | | 7,011 | |
| Commodity | — | | | 17,357 | | | 723 | | | (13,176) | | 4,904 | |
| Total derivative payables | 2,452 | | | 520,841 | | | 12,060 | | | (500,535) | | 34,818 | |
| Total trading liabilities | 171,790 | | | 557,453 | | | 12,128 | | | (500,535) | | 240,836 | |
| Accounts payable and other liabilities | 3,845 | | | 2,010 | | | 70 | | | — | | 5,925 | |
| Beneficial interests issued by consolidated VIEs | — | | | 1 | | | — | | | — | | 1 | |
| Long-term debt | — | | | 62,162 | | | 31,286 | | | — | | 93,448 | |
| Total liabilities measured at fair value on a recurring basis | $ | 175,635 | | | $ | 1,048,796 | | | $ | 48,133 | | | $ | (500,535) | | $ | 772,029 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value hierarchy | | Derivative
netting
adjustments(g) | | |
| | | | | | | | |
| December 31, 2023 (in millions) | Level 1 | | Level 2 | | Level 3 | | | Total fair value |
| Federal funds sold and securities purchased under resale agreements | $ | — | | | $ | 259,813 | | | $ | — | | | $ | — | | | $ | 259,813 | |
| Securities borrowed | — | | | 70,086 | | | — | | | — | | | 70,086 | |
| Trading assets: | | | | | | | | | |
| Debt instruments: | | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | | |
U.S. GSEs and government agencies(a) | — | | | 73,840 | | | 758 | | | — | | | 74,598 | |
| Residential – nonagency | — | | | 1,921 | | | 5 | | | — | | | 1,926 | |
| Commercial – nonagency | — | | | 1,362 | | | 12 | | | — | | | 1,374 | |
| Total mortgage-backed securities | — | | | 77,123 | | | 775 | | | — | | | 77,898 | |
U.S. Treasury, GSEs and government agencies(a) | 133,997 | | | 9,998 | | | — | | | — | | | 143,995 | |
| Obligations of U.S. states and municipalities | — | | | 5,858 | | | 10 | | | — | | | 5,868 | |
Certificates of deposit, bankers’ acceptances and commercial paper | — | | | 756 | | | — | | | — | | | 756 | |
| Non-U.S. government debt securities | 24,846 | | | 55,557 | | | 179 | | | — | | | 80,582 | |
| Corporate debt securities | — | | | 32,854 | | | 484 | | | — | | | 33,338 | |
| Loans | — | | | 7,872 | | | 684 | | | — | | | 8,556 | |
| Asset-backed securities | — | | | 2,199 | | | 6 | | | — | | | 2,205 | |
| Total debt instruments | 158,843 | | | 192,217 | | | 2,138 | | | — | | | 353,198 | |
| Equity securities | 107,926 | | | 679 | | | 127 | | | — | | | 108,732 | |
Physical commodities(b) | 2,479 | | | 3,305 | | | 7 | | | — | | | 5,791 | |
| Other | — | | | 17,879 | | | 101 | | | — | | | 17,980 | |
Total debt and equity instruments(c) | 269,248 | | | 214,080 | | | 2,373 | | | — | | | 485,701 | |
| Derivative receivables: | | | | | | | | | |
| Interest rate | 2,815 | | | 243,578 | |
| 4,298 | | | (224,367) | | | 26,324 | |
| Credit | — | | | 8,644 | | | 1,010 | | | (9,103) | | | 551 | |
| Foreign exchange | 149 | | | 204,737 | |
| 889 | | | (187,756) | | | 18,019 | |
| Equity | — | | | 55,167 | | | 2,522 | | | (52,761) | | | 4,928 | |
| Commodity | — | | | 15,234 | | | 205 | | | (10,397) | | | 5,042 | |
| Total derivative receivables | 2,964 | | | 527,360 | |
| 8,924 | | | (484,384) | | | 54,864 | |
Total trading assets(d) | 272,212 | | | 741,440 | |
| 11,297 | | | (484,384) | | | 540,565 | |
| Available-for-sale securities: | | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | | |
U.S. GSEs and government agencies(a) | — | | | 85,170 | | | — | | | — | | | 85,170 | |
| Residential – nonagency | — | | | 3,639 | | | — | | | — | | | 3,639 | |
| Commercial – nonagency | — | | | 2,803 | | | — | | | — | | | 2,803 | |
| Total mortgage-backed securities | — | | | 91,612 | | | — | | | — | | | 91,612 | |
| U.S. Treasury and government agencies | 57,683 | | | 122 | | | — | | | — | | | 57,805 | |
| Obligations of U.S. states and municipalities | — | | | 21,367 | | | — | | | — | | | 21,367 | |
| Non-U.S. government debt securities | 13,095 | | | 8,187 | | | — | | | — | | | 21,282 | |
| Corporate debt securities | — | | | 100 | | | — | | | — | | | 100 | |
| Asset-backed securities: | | | | | | | | | |
| Collateralized loan obligations | — | | | 6,752 | | | — | | | — | | | 6,752 | |
Other(a) | — | | | 2,786 | | | — | | | — | | | 2,786 | |
| Total available-for-sale securities | 70,778 | | | 130,926 | | | — | | | — | | | 201,704 | |
Loans(e) | — | | | 35,772 | | | 3,079 | | | — | | | 38,851 | |
| Mortgage servicing rights | — | | | — | | | 8,522 | | | — | | | 8,522 | |
Other assets(d) | 6,635 | | | 3,929 | | | 758 | | | — | | | 11,322 | |
| Total assets measured at fair value on a recurring basis | $ | 349,625 | | | $ | 1,241,966 | |
| $ | 23,656 | |
| $ | (484,384) | | | $ | 1,130,863 | |
| Deposits | $ | — | | | $ | 76,551 | | | $ | 1,833 | | | $ | — | | | $ | 78,384 | |
Federal funds purchased and securities loaned or sold under repurchase agreements | — | | | 169,003 | | | — | | | — | | | 169,003 | |
| Short-term borrowings | — | | | 18,284 | | | 1,758 | | | — | | | 20,042 | |
| Trading liabilities: | | | | | | | | | |
Debt and equity instruments(c) | 107,292 | | | 32,252 | | | 37 | | | — | | | 139,581 | |
| Derivative payables: | | | | | | | | | |
| Interest rate | 4,409 | | | 232,277 | |
| 3,796 | | | (228,586) | | | 11,896 | |
| Credit | — | | | 11,293 | |
| 745 | | | (10,949) | | | 1,089 | |
| Foreign exchange | 147 | | | 211,289 | |
| 827 | | | (199,643) | | | 12,620 | |
| Equity | — | | | 60,887 | |
| 4,924 | | | (56,443) | | | 9,368 | |
| Commodity | — | | | 15,894 | |
| 484 | | | (10,504) | | | 5,874 | |
| Total derivative payables | 4,556 | | | 531,640 | |
| 10,776 | | | (506,125) | | | 40,847 | |
| Total trading liabilities | 111,848 | | | 563,892 | |
| 10,813 | | | (506,125) | | | 180,428 | |
| Accounts payable and other liabilities | 3,968 | | | 1,617 | |
| 52 | | | — | | | 5,637 | |
| Beneficial interests issued by consolidated VIEs | — | | | 1 | |
| — | | | — | | | 1 | |
| Long-term debt | — | | | 60,198 | |
| 27,726 | | | — | | | 87,924 | |
| Total liabilities measured at fair value on a recurring basis | $ | 115,816 | | | $ | 889,546 | |
| $ | 42,182 | | | $ | (506,125) | | | $ | 541,419 | |
(a)At June 30, 2024 and December 31, 2023, included total U.S. GSE obligations of $131.3 billion and $78.5 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 4 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).
(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 both June 30, 2024 and December 31, 2023, the fair values of these investments, which include certain hedge funds, private equity funds, real estate and other funds, were $1.0 billion. Included in these balances at June 30, 2024 and December 31, 2023, were trading assets of $45 million and $42 million, respectively, and other assets of $964 million and $984 million, respectively.
(e)At June 30, 2024 and December 31, 2023, included $10.5 billion and $10.2 billion, respectively, of residential first-lien mortgages, and $5.4 billion and $6.0 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 $4.5 billion and $2.9 billion, respectively.
(f)At June 30, 2024, includes the Firm’s Visa C shares that are held at fair value. Refer to page 111 for additional information.
(g)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.
Level 3 valuations
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for further information on the Firm’s valuation process and a detailed discussion of the determination of fair value for individual financial instruments.
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.
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 inputs(a) | | | | | | |
| June 30, 2024 | | | | | | |
| Product/Instrument | Fair value (in millions) | | Principal valuation technique | Unobservable inputs(g) | Range of input values | Average(i) |
Residential mortgage-backed securities and loans(b) | $ | 1,523 | | | Discounted cash flows | Yield | 0% | | 88% | | 8% |
| | | Prepayment speed | 3% | | 12% | | 9% |
| | | | Conditional default rate | 0% | | 7% | | 0% |
| | | | Loss severity | 0% | | 110% | | 2% |
Commercial mortgage-backed securities and loans(c) | 1,539 | | | Market comparables | Price | $0 | | $90 | | $82 |
| Corporate debt securities | 408 | | | Market comparables | Price | $0 | | $175 | | $93 |
Loans(d) | 1,346 | | | Market comparables | Price | $0 | | $107 | | $78 |
| Non-U.S. government debt securities | 193 | | | Market comparables | Price | $0 | | $100 | | $93 |
| Net interest rate derivatives | 1,302 | | | Option pricing | Interest rate volatility | 7bps | | 490bps | | 115bps |
| | | | Interest rate spread volatility | 37bps | | 77bps | | 64bps |
| | | | Bermudan switch value | 0% | | 50% | | 18% |
| | | | Interest rate correlation | (82)% | | 97% | | 64% |
| | | | IR-FX correlation | (35)% | | 60% | | 6% |
| (1) | | | Discounted cash flows | Prepayment speed | 0% | | 20% | | 5% |
| Net credit derivatives | 149 | | | Discounted cash flows | Credit correlation | 26% | | 68% | | 47% |
| | | | Credit spread | 0bps | | 2,999bps | | 352 bps |
| | | | Recovery rate | 10% | | 90% | | 58% |
| 31 | | | Market comparables | Price | $0 | | $115 | | $72 |
| Net foreign exchange derivatives | 223 | | | Option pricing | IR-FX correlation | (40)% | | 60% | | 24% |
| (55) | | | Discounted cash flows | Prepayment speed | 11% | | 11% |
| | | | Interest rate curve | 2% | | 14% | | 6% |
| Net equity derivatives | (2,991) | | | Option pricing | Forward equity price(h) | 78% | | 153% | | 102% |
| | | | Equity volatility | 5% | | 147% | | 31% |
| | | | Equity correlation | (10)% | | 100% | | 56% |
| | | | Equity-FX correlation | (88)% | | 65% | | (32)% |
| | | | Equity-IR correlation | (15)% | | 15% | | 5% |
| Net commodity derivatives | (472) | | | Option pricing | Oil commodity forward | $89 / BBL | | $270 / BBL | | $179 / BBL |
| | | | Natural gas commodity forward | $1 / MMBTU | | $6 / MMBTU | | $4 / MMBTU |
| | | | Commodity volatility | 2% | | 24% | | 5% |
| | | | Commodity correlation | (35)% | | 98% | | 32% |
| MSRs | 8,847 | | | Discounted cash flows | Refer to Note 14 | | |
Long-term debt, short-term borrowings, and deposits(e) | 34,684 | | | Option pricing | Interest rate volatility | 7bps | | 490bps | | 115bps |
| | | Bermudan switch value | 0% | | 50% | | 18% |
| | | Interest rate correlation | (82)% | | 97% | | 64% |
| | | IR-FX correlation | (35)% | | 60% | | 6% |
| | | Equity volatility | 1% | | 134% | | 26% |
| | | Equity correlation | (10)% | | 100% | | 56% |
| | | Equity-FX correlation | (88)% | | 65% | | (32)% |
| | | Equity-IR correlation | (15)% | | 15% | | 5% |
| 1,251 | | | Discounted cash flows | Credit correlation | 26% | | 68% | | 47% |
| | | | Credit spread | 1bps | | 2,500bps | | 68 bps |
| | | | Recovery rate | 20% | | 75% | | 35% |
| | | | Yield | 5% | | 20% | | 11% |
| | | | Loss severity | 0% | | 100% | | 50% |
Other level 3 assets and liabilities, net(f) | 1,349 | | | | | | | | | |
(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 $708 million, nonagency securities of $5 million and non-trading loans of $810 million.
(c)Comprises nonagency securities of $11 million, trading loans of $65 million and non-trading loans of $1.5 billion.
(d)Comprises trading loans of $626 million and non-trading loans of $720 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 $776 million including $654 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.
Changes in and ranges of unobservable inputs
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the impact on fair value of changes in unobservable inputs and the relationships between unobservable inputs as well as 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.
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 three and six months ended June 30, 2024 and 2023. 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | |
Three months ended
June 30, 2024
(in millions) | Fair value at
April 1,
2024 | Total realized/unrealized gains/(losses) | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2024 | Change in unrealized gains/(losses) related
to financial instruments held at June 30, 2024 |
Purchases(g) | Sales | | Settlements(h) |
Assets:(a) | | | | | | | | | | | | | | | |
| Federal funds sold and securities purchased under resale agreements | $ | — | | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | | $ | — | | | $ | — | | |
| Trading assets: | | | | | | | | | | | | | | | |
| Debt instruments: | | | | | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | |
U.S. GSEs and government agencies | 729 | | | (1) | | | 44 | | (44) | | | (20) | | — | | — | | | 708 | | | (1) | | |
| Residential – nonagency | 8 | | | 1 | | | — | | — | | | — | | — | | (4) | | | 5 | | | 1 | | |
Commercial – nonagency | 12 | | | (1) | | | — | | — | | | — | | — | | — | | | 11 | | | (1) | | |
Total mortgage-backed securities | 749 | | | (1) | | | 44 | | (44) | | | (20) | | — | | (4) | | | 724 | | | (1) | | |
Obligations of U.S. states and municipalities | 7 | | | — | | | — | | — | | | — | | — | | — | | | 7 | | | — | | |
Non-U.S. government debt securities | 173 | | | (3) | | | 41 | | (5) | | | — | | — | | (13) | | | 193 | | | (4) | | |
| Corporate debt securities | 570 | | | (4) | | | 86 | | (72) | | | (151) | | 4 | | (25) | | | 408 | | | (5) | | |
| Loans | 531 | | | 3 | | | 178 | | (131) | | | (14) | | 262 | | (138) | | | 691 | | | 2 | | |
| Asset-backed securities | 14 | | | — | | | — | | (5) | | | (7) | | — | | — | | | 2 | | | — | | |
| Total debt instruments | 2,044 | | | (5) | | | 349 | | (257) | | | (192) | | 266 | | (180) | | | 2,025 | | | (8) | | |
| Equity securities | 203 | | | (25) | | | 33 | | (51) | | | — | | 19 | | (57) | | | 122 | | | 3 | | |
| Physical commodities | 2 | | | 4 | | | 4 | | — | | | — | | — | | — | | | 10 | | | 4 | | |
| Other | 107 | | | 33 | | | 15 | | — | | | (11) | | 1 | | (1) | | | 144 | | | 34 | | |
Total trading assets – debt and equity instruments | 2,356 | | | 7 | | (c) | 401 | | (308) | | | (203) | | 286 | | (238) | | | 2,301 | | | 33 | | (c) |
Net derivative receivables:(b) | | | | | | | | | | | | | | | |
| Interest rate | 800 | | | 46 | | | 139 | | (41) | | | 399 | | 58 | | (100) | | | 1,301 | | | 24 | | |
| Credit | 260 | | | 91 | | | — | | (1) | | | (153) | | (32) | | 15 | | | 180 | | | 89 | | |
| Foreign exchange | 24 | | | 128 | | | 43 | | (87) | | | 35 | | 24 | | 1 | | | 168 | | | 140 | | |
| Equity | (2,781) | | | 128 | | | 247 | | (591) | | | (109) | | 38 | | 77 | | | (2,991) | | | 216 | | |
| Commodity | (503) | | | 54 | | | 8 | | (52) | | | 20 | | (3) | | 4 | | | (472) | | | 60 | | |
Total net derivative receivables | (2,200) | | | 447 | | (c) | 437 | | (772) | | | 192 | | 85 | | (3) | | | (1,814) | | | 529 | | (c) |
Available-for-sale securities: | | | | | | | | | | | | | | | |
| Corporate debt securities | — | | | — | | | — | | — | | | — | | — | | — | | | — | | | — | | |
Total available-for-sale securities | — | | | — | | (d) | — | | — | | | — | | — | | — | | | — | | | — | | (d) |
| Loans | 2,901 | | | 72 | | (c) | 149 | | (183) | | | (253) | | 366 | | (59) | | | 2,993 | | | 58 | | (c) |
| Mortgage servicing rights | 8,605 | | | 119 | | (e) | 418 | | (32) | | | (263) | | — | | — | | | 8,847 | | | 119 | | (e) |
| Other assets | 811 | | | 37 | | (c) | 373 | | (13) | | | (11) | | 5 | | — | | | 1,202 | | | 37 | | (c) |
| | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | |
Three months ended
June 30, 2024
(in millions) | Fair value at
April 1,
2024 | Total realized/unrealized (gains)/losses | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2024 | Change in unrealized (gains)/losses related
to financial instruments held at June 30, 2024 |
| Purchases | Sales | Issuances | Settlements(h) |
Liabilities:(a) | | | | | | | | | | | | | | | |
| Deposits | $ | 2,055 | | | $ | 14 | | (c)(f) | $ | — | | $ | — | | $ | 265 | | $ | (407) | | $ | 34 | | $ | (38) | | | $ | 1,923 | | | $ | 12 | | (c)(f) |
| Short-term borrowings | 2,206 | | | 68 | | (c)(f) | — | | — | | 1,814 | | (1,360) | | 1 | | (3) | | | 2,726 | | | 45 | | (c)(f) |
Trading liabilities – debt and equity instruments | 37 | | | (37) | | (c) | (5) | | 55 | | — | | — | | 18 | | — | | | 68 | | | (37) | | (c) |
Accounts payable and other liabilities | 48 | | | (8) | | (c) | (3) | | 28 | | — | | — | | 5 | | — | | | 70 | | | (8) | | (c) |
| Long-term debt | 28,678 | | | (36) | | (c)(f) | — | | — | | 6,473 | | (4,121) | | 426 | | (134) | | | 31,286 | | | (31) | | (c)(f) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | |
Three months ended
June 30, 2023
(in millions) | Fair value at
April 1,
2023 | Total realized/unrealized gains/(losses) | | | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2023 | Change in unrealized gains/(losses) related
to financial instruments held at June 30, 2023 |
Purchases(g) | Sales | | | Settlements(h) | |
Assets:(a) | | | | | | | | | | | | | | | | | |
Federal funds sold and securities purchased under resale agreements | $ | — | | | $ | — | | | $ | — | | $ | — | | | | $ | — | | | $ | — | | $ | — | | | $ | — | | | $ | — | | |
| Trading assets: | | | | | | | | | | | | | | | | | |
| Debt instruments: | | | | | | | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | |
U.S. GSEs and government agencies | 757 | | | — | | | 106 | | (106) | | | | (40) | | | — | | (11) | | | 706 | | | (6) | | |
| Residential – nonagency | 5 | | | 6 | | | — | | (6) | | | | — | | | — | | — | | | 5 | | | — | | |
| Commercial – nonagency | 10 | | | (1) | | | — | | — | | | | — | | | 5 | | (8) | | | 6 | | | (1) | | |
Total mortgage-backed securities | 772 | | | 5 | | | 106 | | (112) | | | | (40) | | | 5 | | (19) | | | 717 | | | (7) | | |
Obligations of U.S. states and municipalities | 6 | | | — | | | — | | — | | | | — | | | — | | — | | | 6 | | | — | | |
Non-U.S. government debt securities | 169 | | | 29 | | | 50 | | (49) | | | | — | | | — | | — | | | 199 | | | 31 | | |
| Corporate debt securities | 538 | | | — | | | 61 | | (43) | | | | (2) | | | 7 | | (39) | | | 522 | | | (2) | | |
| Loans | 926 | | | (6) | | | 246 | | (65) | | | | (18) | | | 102 | | (80) | | | 1,105 | | | (6) | | |
| Asset-backed securities | 7 | | | — | | | 4 | | (1) | | | | — | | | 4 | | — | | | 14 | | | — | | |
| Total debt instruments | 2,418 | | | 28 | | | 467 | | (270) | | | | (60) | | | 118 | | (138) | | | 2,563 | | | 16 | | |
| Equity securities | 581 | | | (16) | | | 50 | | (36) | | | | — | | | 104 | | (52) | | | 631 | | | (16) | | |
| Physical commodities | — | | | — | | | 6 | | — | | | | — | | | — | | — | | | 6 | | | — | | |
| Other | 140 | | | (19) | | | 2 | | — | | | | (6) | | | — | | (4) | | | 113 | | | (18) | | |
Total trading assets – debt and equity instruments | 3,139 | | | (7) | | (c) | 525 | | (306) | | | | (66) | | | 222 | | (194) | | | 3,313 | | | (18) | | (c) |
Net derivative receivables:(b) | | | | | | | | | | | | | | | | | |
| Interest rate | 754 | | | (1,043) | | | 60 | | (42) | | | | 49 | |
| (914) | | 14 | | | (1,122) | | | (960) | | |
| Credit | 452 | | | 228 | | | — | | (1) | | | | 31 | | | 2 | | (23) | | | 689 | | | 240 | | |
| Foreign exchange | 545 | | | (37) | | | 51 | | (67) | | | | (126) | | | 55 | | (32) | | | 389 | | | (29) | | |
| Equity | (885) | | | (148) | |
| 295 | | (675) | | |
| (726) | |
| 349 | | (91) | |
| (1,881) | | | 9 | | |
| Commodity | (287) | | | (50) | | | 35 | | (51) | | | | 16 | | | (12) | | (4) | | | (353) | | | (71) | | |
Total net derivative receivables | 579 | | | (1,050) | | (c) | 441 | | (836) | | |
| (756) | |
| (520) | | (136) | |
| (2,278) | | | (811) | | (c) |
Available-for-sale securities: | | | | | | | | | | | | | | | | | |
| Corporate debt securities | 250 | | | 17 | | | — | | — | | | | — | | | — | | — | | | 267 | | | 17 | | |
Total available-for-sale securities | 250 | | | 17 | | (d) | — | | — | | | | — | | | — | | — | | | 267 | | | 17 | | (d) |
| Loans | 1,479 | | | (3) | | (c) | 2,137 | | (7) | | | | (490) | | | 760 | | (68) | | | 3,808 | | | (52) | | (c) |
| Mortgage servicing rights | 7,755 | | | 275 | | (e) | 546 | | (92) | | | | (255) | | | — | | — | | | 8,229 | | | 275 | | (e) |
| Other assets | 406 | | | 16 | | (c) | 5 | | (2) | | | | (14) | | | 8 | | (2) | | | 417 | | | 16 | | (c) |
| | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | |
Three months ended
June 30, 2023
(in millions) | Fair value at
April 1,
2023 | Total realized/unrealized (gains)/losses | | | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2023 | Change in unrealized (gains)/losses related
to financial instruments held at June 30, 2023 |
| Purchases | Sales | | Issuances | Settlements(h) | |
Liabilities:(a) | | | | | | | | | | | | | | | | | |
| Deposits | $ | 2,208 | | | $ | (51) | | (c)(f) | $ | — | | $ | — | | | $ | 139 | | $ | (181) | | | $ | — | | $ | (62) | | | $ | 2,053 | | | $ | (51) | | (c)(f) |
| Short-term borrowings | 1,410 | | | 50 | | (c)(f) | — | | — | | | 1,191 | | (927) | | | 2 | | (22) | | | 1,704 | | | 29 | | (c)(f) |
Trading liabilities – debt and equity instruments | 63 | | | (1) | | (c) | — | | (2) | | | — | | (2) | | | 6 | | (1) | | | 63 | | | (1) | | (c) |
Accounts payable and other liabilities | 56 | | | 5 | | (c) | (2) | | 3 | | | — | | — | | | 8 | | (2) | | | 68 | | | 5 | | (c) |
| Long-term debt | 25,227 | | | 325 | | (c)(f) | — | | — | | | 2,667 | | (2,550) | |
| 113 | | (357) | | | 25,425 | |
| 354 | | (c)(f) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | | | | | | | | | |
Six months ended June 30, 2024
(in millions) | Fair value at
Jan 1,
2024 | Total realized/unrealized gains/(losses) | | | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2024 | Change in unrealized gains/(losses) related
to financial instruments held at June 30, 2024 | | | | | | | | |
Purchases(g) | Sales | | | Settlements(h) | | | | | | | | | |
Assets:(a) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal funds sold and securities purchased under resale agreements | $ | — | | | $ | — | | | $ | — | | $ | — | | | | $ | — | | | $ | — | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | |
| Trading assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Debt instruments: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. GSEs and government agencies | 758 | | | — | | | 45 | | (61) | | | | (41) | | | 7 | | — | | | 708 | | | — | | | | | | | | | | |
| Residential – nonagency | 5 | | | — | | | — | | — | | | | — | | | 4 | | (4) | | | 5 | | | — | | | | | | | | | | |
| Commercial – nonagency | 12 | | | (2) | | | 1 | | — | | | | — | | | — | | — | | | 11 | | | (1) | | | | | | | | | | |
Total mortgage-backed securities | 775 | | | (2) | | | 46 | | (61) | | | | (41) | | | 11 | | (4) | | | 724 | | | (1) | | | | | | | | | | |
Obligations of U.S. states and municipalities | 10 | | | — | | | — | | — | | | | (2) | | | — | | (1) | | | 7 | | | — | | | | | | | | | | |
Non-U.S. government debt securities | 179 | | | 2 | | | 92 | | (72) | | | | — | | | 7 | | (15) | | | 193 | | | (6) | | | | | | | | | | |
| Corporate debt securities | 484 | | | 7 | | | 300 | | (167) | | | | (181) | | | 8 | | (43) | | | 408 | | | 7 | | | | | | | | | | |
| Loans | 684 | | | 8 | | | 321 | | (330) | | | | (45) | | | 324 | | (271) | | | 691 | | | 5 | | | | | | | | | | |
| Asset-backed securities | 6 | | | — | | | 1 | | (5) | | | | (7) | | | 7 | | — | | | 2 | | | — | | | | | | | | | | |
| Total debt instruments | 2,138 | | | 15 | | | 760 | | (635) | | | | (276) | | | 357 | | (334) | | | 2,025 | | | 5 | | | | | | | | | | |
| Equity securities | 127 | | | (19) | | | 114 | | (81) | | | | — | | | 43 | | (62) | | | 122 | | | 5 | | | | | | | | | | |
| Physical Commodities | 7 | | | 2 | | | 4 | | — | | | | (3) | | | — | | — | | | 10 | | | 2 | | | | | | | | | | |
| Other | 101 | | | 44 | | | 42 | | — | | | | (43) | | | 1 | | (1) | | | 144 | | | 42 | | | | | | | | | | |
Total trading assets – debt and equity instruments | 2,373 | | | 42 | | (c) | 920 | | (716) | | | | (322) | | | 401 | | (397) | | | 2,301 | | | 54 | | (c) | | | | | | | | |
Net derivative receivables:(b) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate | 502 | | | (282) | | | 192 | | (84) | | | | 883 | |
| 187 | | (97) | | | 1,301 | | | (374) | | | | | | | | | | |
| Credit | 265 | | | 66 | | | — | | (16) | | | | (139) | | | (38) | | 42 | | | 180 | | | 208 | | | | | | | | | | |
| Foreign exchange | 62 | | | 131 | | | 77 | | (125) | | | | (87) | | | (29) | | 139 | | | 168 | | | 139 | | | | | | | | | | |
| Equity | (2,402) | | | (524) | |
| 568 | | (1,199) | | |
| 222 | |
| (11) | | 355 | |
| (2,991) | | | (6) | | | | | | | | | | |
| Commodity | (279) | | | (122) | | | 18 | | (120) | | | | 27 | | | (1) | | 5 | | | (472) | | | (123) | | | | | | | | | | |
Total net derivative receivables | (1,852) | | | (731) | | (c) | 855 | | (1,544) | | |
| 906 | |
| 108 | | 444 | |
| (1,814) | | | (156) | | (c) | | | | | | | | |
Available-for-sale securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corporate debt securities | — | | | — | | | — | | — | | | | — | | | — | | — | | | — | | | — | | | | | | | | | | |
Total available-for-sale securities | — | | | — | | (d) | — | | — | | | | — | | | — | | — | | | — | | | — | | (d) | | | | | | | | |
| Loans | 3,079 | | | 109 | | (c) | 209 | | (205) | | | | (645) | | | 669 | | (223) | | | 2,993 | | | (3) | | (c) | | | | | | | | |
| Mortgage servicing rights | 8,522 | | | 397 | | (e) | 478 | | (27) | | | | (523) | | | — | | — | | | 8,847 | | | 397 | | (e) | | | | | | | | |
| Other assets | 758 | | | 66 | | (c) | 420 | | (22) | | | | (25) | | | 5 | | — | | | 1,202 | | | 66 | | (c) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | | | | | | | | | |
Six months ended June 30, 2024
(in millions) | Fair value at
Jan 1,
2024 | Total realized/unrealized (gains)/losses | | | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2024 | Change in unrealized (gains)/losses related
to financial instruments held at June 30, 2024 | | | | | | | | |
| Purchases | Sales | | Issuances | Settlements(h) | | | | | | | | | |
Liabilities:(a) | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deposits | $ | 1,833 | | | $ | (15) | | (c)(f) | $ | — | | $ | — | | | $ | 792 | | $ | (610) | | | $ | 34 | | $ | (111) | | | $ | 1,923 | | | $ | (21) | | (c)(f) | | | | | | | | |
| Short-term borrowings | 1,758 | | | 69 | | (c)(f) | — | | — | | | 3,459 | | (2,557) | | | 1 | | (4) | | | 2,726 | | | 30 | | (c)(f) | | | | | | | | |
Trading liabilities – debt and equity instruments | 37 | | | (40) | | (c) | (6) | | 57 | | | — | | — | | | 21 | | (1) | | | 68 | | | (67) | | (c) | | | | | | | | |
Accounts payable and other liabilities | 52 | | | (12) | | (c) | (6) | | 31 | | | — | | — | | | 5 | | — | | | 70 | | | (12) | | (c) | | | | | | | | |
| Long-term debt | 27,726 | | | 515 | | (c)(f) | — | | — | | | 10,976 | | (7,972) | |
| 443 | | (402) | | | 31,286 | |
| 424 | | (c)(f) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | |
Six months ended June 30, 2023
(in millions) | Fair value at
Jan 1,
2023 | Total realized/unrealized gains/(losses) | | | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2023 | Change in unrealized gains/(losses) related
to financial instruments held at June 30, 2023 |
Purchases(g) | Sales | | | Settlements(h) | |
Assets:(a) | | | | | | | | | | | | | | | | | |
Federal funds sold and securities purchased under resale agreements | $ | — | | | $ | — | | | $ | — | | $ | — | | | | $ | — | | | $ | — | | $ | — | | | $ | — | | | $ | — | | |
| Trading assets: | | | | | | | | | | | | | | | | | |
| Debt instruments: | | | | | | | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | |
U.S. GSEs and government agencies | 759 | | | 7 | | | 131 | | (113) | | | | (64) | | | — | | (14) | | | 706 | | | 2 | | |
| Residential – nonagency | 5 | | | 7 | | | — | | (6) | | | | (2) | | | 1 | | — | | | 5 | | | 1 | | |
| Commercial – nonagency | 7 | | | — | | | — | | — | | | | (1) | | | 8 | | (8) | | | 6 | | | (1) | | |
Total mortgage-backed securities | 771 | | | 14 | | | 131 | | (119) | | | | (67) | | | 9 | | (22) | | | 717 | | | 2 | | |
Obligations of U.S. states and municipalities | 7 | | | — | | | — | | (1) | | | | — | | | — | | — | | | 6 | | | — | | |
Non-U.S. government debt securities | 155 | | | 40 | | | 100 | | (96) | | | | — | | | — | | — | | | 199 | | | 43 | | |
| Corporate debt securities | 463 | | | 24 | | | 110 | | (60) | | | | (2) | | | 30 | | (43) | | | 522 | | | 18 | | |
| Loans | 759 | | | 2 | | | 682 | | (127) | | | | (113) | | | 125 | | (223) | | | 1,105 | | | 1 | | |
| Asset-backed securities | 23 | | | — | | | 5 | | (3) | | | | (1) | | | 5 | | (15) | | | 14 | | | (1) | | |
| Total debt instruments | 2,178 | | | 80 | | | 1,028 | | (406) | | | | (183) | | | 169 | | (303) | | | 2,563 | | | 63 | | |
| Equity securities | 665 | | | (47) | | | 108 | | (107) | | | | — | | | 140 | | (128) | | | 631 | | | (27) | | |
Physical commodities | 2 | | | — | | | 6 | | — | | | | (2) | | | — | | — | | | 6 | | | — | | |
| Other | 64 | | | (40) | | | 96 | | — | | | | (4) | | | 1 | | (4) | | | 113 | | | (19) | | |
Total trading assets – debt and equity instruments | 2,909 | | | (7) | | (c) | 1,238 | | (513) | | | | (189) | | | 310 | | (435) | | | 3,313 | | | 17 | | (c) |
Net derivative receivables:(b) | | | | | | | | | | | | | | | | | |
| Interest rate | 701 | | | (697) | | | 95 | | (92) | | | | 27 | |
| (1,079) | | (77) | | | (1,122) | | | (582) | | |
| Credit | 13 | | | 474 | | | 3 | | (4) | | | | 202 | | | 26 | | (25) | | | 689 | | | 497 | | |
| Foreign exchange | 489 | | | 52 | | | 79 | | (108) | | | | (201) | | | 119 | | (41) | | | 389 | | | 29 | | |
| Equity | (384) | | | 23 | |
| 613 | | (1,362) | | |
| (726) | |
| 460 | | (505) | |
| (1,881) | | | 95 | | |
| Commodity | (146) | | | (42) | | | 39 | | (118) | | | | (111) | | | (11) | | 36 | | | (353) | | | (206) | | |
Total net derivative receivables | 673 | | | (190) | | (c) | 829 | | (1,684) | | |
| (809) | |
| (485) | | (612) | |
| (2,278) | | | (167) | | (c) |
Available-for-sale securities: | | | | | | | | | | | | | | | | | |
| Corporate debt securities | 239 | | | 28 | | | — | | — | | | | — | | | — | | — | | | 267 | | | 28 | | |
Total available-for-sale securities | 239 | | | 28 | | (d) | — | | — | | | | — | | | — | | — | | | 267 | | | 28 | | (d) |
| Loans | 1,418 | | | 23 | | (c) | 2,285 | | (73) | | | | (585) | | | 917 | | (177) | | | 3,808 | | | 24 | | (c) |
| Mortgage servicing rights | 7,973 | | | 264 | | (e) | 577 | | (90) | | | | (495) | | | — | | — | | | 8,229 | | | 264 | | (e) |
| Other assets | 405 | | | 21 | | (c) | 17 | | (2) | | | | (30) | | | 8 | | (2) | | | 417 | | | 21 | | (c) |
| | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | |
Six months ended June 30, 2023
(in millions) | Fair value at
Jan 1,
2023 | Total realized/unrealized (gains)/losses | | | | | | | Transfers into
level 3 | Transfers (out of) level 3 | Fair value at
June 30, 2023 | Change in unrealized (gains)/losses related
to financial instruments held at June 30, 2023 |
| Purchases | Sales | | Issuances | Settlements(h) | |
Liabilities:(a) | | | | | | | | | | | | | | | | | |
| Deposits | $ | 2,162 | | | $ | (3) | | (c)(f) | $ | — | | $ | — | | | $ | 267 | | $ | (248) | | | $ | — | | $ | (125) | | | $ | 2,053 | | | $ | (31) | | (c)(f) |
| Short-term borrowings | 1,401 | | | 140 | | (c)(f) | — | | — | | | 2,242 | | (2,059) | | | 2 | | (22) | | | 1,704 | | | 34 | | (c)(f) |
Trading liabilities – debt and equity instruments | 84 | | | (13) | | (c) | (27) | | 6 | | | — | | (2) | | | 18 | | (3) | | | 63 | | | — | | |
Accounts payable and other liabilities | 53 | | | 4 | | (c) | (2) | | 7 | | | — | | — | | | 8 | | (2) | | | 68 | | | 4 | | (c) |
| Long-term debt | 24,092 | | | 1,681 | | (c)(f) | — | | — | | | 5,400 | | (5,525) | |
| 204 | | (427) | | | 25,425 | |
| 1,674 | | (c)(f) |
(a)Level 3 assets at fair value as a percentage of total Firm assets at fair value (including assets measured at fair value on a nonrecurring basis) were 2% at both June 30, 2024 and December 31, 2023. 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 6% and 8% at June 30, 2024 and December 31, 2023, respectively.
(b)All level 3 derivatives are presented on a net basis, irrespective of the underlying counterparty.
(c)Predominantly reported in principal transactions revenue, except for changes in fair value for CCB mortgage loans and lending-related commitments originated with the intent to sell, and mortgage loan purchase commitments, which are reported in mortgage fees and related income.
(d)Realized gains/(losses) on AFS securities are reported in investment securities gains/(losses). Unrealized gains/(losses) are reported in OCI. Realized and unrealized gains/(losses) recorded on level 3 AFS securities were not material both for the three and six months ended June 30, 2024 and 2023.
(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 three and six months ended June 30, 2024 and 2023. Unrealized (gains)/losses are reported in OCI, and were $(137) million and $23 million for the three months ended June 30, 2024 and 2023, respectively, and $(97) million and $(277) million for the six months ended June 30, 2024 and 2023, 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 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, 2023, 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 110 for further information on changes impacting items measured at fair value on a nonrecurring basis.
Three and six months ended June 30, 2024
Level 3 assets were $25.6 billion at June 30, 2024, reflecting an increase of $860 million from March 31, 2024, and an increase of $1.9 billion from December 31, 2023.
The increase for the three months ended June 30, 2024 was largely driven by higher:
•MSRs of $242 million, and
•Other Assets of $391 million predominantly due to purchases.
The increase for the six months ended June 30, 2024 was predominantly driven by higher:
•Gross derivative receivables of $1.3 billion due to gains, purchases and net transfers largely offset by settlements,
•MSRs of $325 million, and
•Other Assets of $444 million predominantly due to purchases.
Refer to Note 14 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
For the three months ended June 30, 2024, there were no significant transfers from level 2 into level 3 or from level 3 into level 2.
For the six months ended June 30, 2024, significant transfers from level 2 into level 3 included the following:
•$759 million and $798 million of gross equity derivative receivables and gross equity derivative payables, respectively, as a result of a decrease in observability and an increase in the significance of unobservable inputs.
For the six months ended June 30, 2024, significant transfers from level 3 into level 2 included the following:
•$987 million of gross equity derivative payables as a result of an increase in observability and a decrease in the significance of unobservable inputs.
For the three months ended June 30, 2023, significant transfers from level 2 into level 3 included the following:
•$1.2 billion of gross interest rate derivative payables as a result of transition to term SOFR for certain interest rate options.
•$760 million of non-trading loans driven by a decrease in observability.
For the three months ended June 30, 2023, there were no significant transfers from level 3 into level 2.
For the six months ended June 30, 2023, significant transfers from level 2 into level 3 included the following:
•$1.6 billion of gross interest rate derivative payables as a result of transition to term SOFR for certain interest rate options.
•$901 million of gross equity derivative receivables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
•$917 million of non-trading loans driven by a decrease in observability.
For the six months ended June 30, 2023, significant transfers from level 3 into level 2 included the following:
•$1.3 billion and $827 million of gross equity derivative receivables and gross equity derivative payables, respectively, as a result of an increase in observability and a decrease in the significance of unobservable inputs.
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.
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 periods indicated. 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 103-108 for further information on these instruments.
Three months ended June 30, 2024
•$682 million of net gains on assets, predominantly driven by gains in net derivative receivables due to market movements and gains in MSR reflecting lower prepayment speeds on higher rates.
•$1 million of net losses on liabilities, driven by losses in deposits and short-term borrowings predominantly offset by gains in trading liabilities - debt and equity instruments and long-term debt due to market movements.
Three months ended June 30, 2023
•$752 million of net losses on assets, driven by losses in net derivative receivables due to market movements.
•$328 million of net losses on liabilities, driven by losses in long-term debt due to market movements.
Six months ended June 30, 2024
•$117 million of net losses on assets, driven by losses in net derivative receivables due to market movements largely offset by gains in loans due to market movements and gains in MSR reflecting lower prepayment speeds on higher rates.
•$517 million of net losses on liabilities, driven by losses in long-term debt due to market movements.
Six months ended June 30, 2023
•$139 million of net gains on assets, driven by gains in MSR reflecting lower prepayment speeds on higher rates.
•$1.8 billion of net losses on liabilities, predominantly driven by losses in long-term debt due to market movements.
Refer to Note 14 for information on MSRs.
Credit and funding adjustments — derivatives
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.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | 2024 | | 2023 |
Credit and funding adjustments: | | | | | | | |
| Derivatives CVA | $ | (56) | | | $ | 66 | | | $ | 20 | | | $ | 121 | |
Derivatives FVA | (20) | | | 63 | | | 37 | | | 55 | |
| | | | | | | |
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for further information about both credit and funding adjustments, as well as information about valuation adjustments on fair value option elected liabilities.
Assets and liabilities measured at fair value on a nonrecurring basis
The following tables present the assets and liabilities held as of June 30, 2024 and 2023, for which nonrecurring fair value adjustments were recorded during the six months ended June 30, 2024 and 2023, by major product category and fair value hierarchy.
| | | | | | | | | | | | | | | | | | | | |
| Fair value hierarchy | | Total fair value |
| June 30, 2024 (in millions) | Level 1 | Level 2 | | Level 3 | |
| Loans | $ | — | | $ | 860 | |
| $ | 778 | | | $ | 1,638 | |
Other assets(a) | — | | 6 | | | 501 | | | 507 | |
| Total assets measured at fair value on a nonrecurring basis | $ | — | | $ | 866 | | | $ | 1,279 | | | $ | 2,145 | |
| Accounts payable and other liabilities | — | | — | | | — | | | — | |
| Total liabilities measured at fair value on a nonrecurring basis | $ | — | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | |
| Fair value hierarchy | | Total fair value |
| June 30, 2023 (in millions) | Level 1 | Level 2 | | Level 3 | |
| Loans | $ | — | | $ | 803 | |
| $ | 840 | | | $ | 1,643 | |
| Other assets | — | | 7 | | | 286 | |
| 293 | |
| Total assets measured at fair value on a nonrecurring basis | $ | — | | $ | 810 | | | $ | 1,126 | | | $ | 1,936 | |
| Accounts payable and other liabilities | — | | — | | | — | |
| — | |
| Total liabilities measured at fair value on a nonrecurring basis | $ | — | | $ | — | | | $ | — | | | $ | — | |
(a)Included 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 $501 million in level 3 assets measured at fair value on a nonrecurring basis as of June 30, 2024, $336 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. Also, included impairments on certain equity method investments.
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 three and six months ended June 30, 2024 and 2023, related to assets and liabilities held at those dates.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | 2024 | | 2023 |
| Loans | $ | (105) | | | $ | (96) | |
| $ | (149) | |
| $ | (128) | |
Other assets(a) | (178) | | | (36) | |
| (215) | | | (99) | |
| Accounts payable and other liabilities | — | | | — | |
| — | | | — | |
Total nonrecurring fair value gains/(losses) | $ | (283) | | | $ | (132) | | | $ | (364) | | | $ | (227) | |
(a)Included $(109) million and $(32) million for the three months ended June 30, 2024 and 2023, respectively, and $(147) million and $(93) million for the six months ended June 30, 2024 and 2023, respectively, of net gains/(losses) as a result of the measurement alternative. The current period also included impairments on certain equity method investments.
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 June 30, 2024 and 2023, 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.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| As of or for the period ended, (in millions) | 2024 | | 2023 | | 2024 | | 2023 |
| Other assets | | | | | | | |
Carrying value(a) | $ | 3,564 | | | $ | 4,673 | | | $ | 3,564 | | | $ | 4,673 | |
Upward carrying value changes(b) | 10 | | | 5 | |
| 30 | | | 40 |
Downward carrying value changes/impairment(c) | (119) | | | (37) | | | (177) | | | (133) | |
| | | | | | | |
(a)The carrying value as of December 31, 2023 was $4.5 billion. 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 June 30, 2024 were $1.1 billion.
(c)The cumulative downward carrying value changes/impairment between January 1, 2018 and June 30, 2024 were $(1.4) billion.
Included in other assets above is the Firm’s interest in approximately 18.6 million Visa Class B-2 common shares ("Visa B-2 shares") and 37.2 million Visa Class B common shares reflected in the Firm's principal investment portfolio as of June 30, 2024 and June 30, 2023, respectively.
The Visa Class B common shares were redenominated to Visa Class B-1 common shares (“Visa B-1 shares”) on January 24, 2024. On April 8, 2024, Visa commenced an initial exchange offer for any and all outstanding Visa B-1 shares. On May 6, 2024, the Firm announced that Visa had accepted the Firm’s tender of its 37.2 million Visa B-1 shares in exchange for a combination of Visa B-2 shares and Visa Class C common shares (“Visa C shares”). The Visa C shares are included in Assets and liabilities measured at fair value on a recurring basis on page 99. Visa's acceptance resulted in an initial gain of $8.0 billion based on the fair value of the Visa C shares. In addition, the current quarter also reflected other Visa-related activity, including the fair value changes of the Visa C shares and derivative instruments, as well as dividends, resulting in the $7.9 billion net gain on Visa shares. As of June 30, 2024, approximately $2 billion of Visa C shares are subject to a lock-up restriction that expires on August 4, 2024.
The Visa B-2 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-2 shares to Visa A shares was 1.5875 at June 30, 2024 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 June 30, 2024, there is significant uncertainty regarding when the transfer restrictions on Visa B-2 shares may be terminated and what the final conversion rate for the Visa B-2 shares will be. As a result of these considerations, as well as differences in voting rights, Visa B-2 shares are not considered to be similar to Visa A shares, and are held at their nominal carryover basis.
In connection with prior sales of Visa Class B common shares prior to the redenomination to Visa B-1 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. The notional amount of shares associated with those derivative instruments has been adjusted as a result of the Visa exchange offer. Refer to page 194 of JPMorgan Chase’s 2023 Form 10-K for further information.
Additional disclosures about the fair value of financial instruments that are not carried on the Consolidated balance sheets at fair value
The following table presents, by fair value hierarchy classification, the carrying values and estimated fair values at June 30, 2024 and December 31, 2023, 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| | Estimated fair value hierarchy | | | | | Estimated fair value hierarchy | |
| (in billions) | Carrying
value | Level 1 | Level 2 | Level 3 | | Total estimated
fair value | | Carrying
value | Level 1 | Level 2 | Level 3 | Total estimated
fair value |
| Financial assets | | | | | | | | | | | | |
| Cash and due from banks | $ | 27.3 | | $ | 27.3 | | $ | — | | $ | — | | | $ | 27.3 | | | $ | 29.1 | | $ | 29.1 | | $ | — | | $ | — | | $ | 29.1 | |
| Deposits with banks | 503.6 | | 503.4 | | 0.2 | | — | | | 503.6 | | | 595.1 | | 594.6 | | 0.5 | | — | | 595.1 | |
Accrued interest and accounts receivable | 135.3 | | — | | 135.2 | | 0.1 | | | 135.3 | | | 107.1 | | — | | 107.0 | | 0.1 | | 107.1 | |
Federal funds sold and securities purchased under resale agreements | 12.8 | | — | | 12.8 | | — | | | 12.8 | | | 16.3 | | — | | 16.3 | | — | | 16.3 | |
Securities borrowed | 111.4 | | — | | 111.4 | | — | | | 111.4 | | | 130.3 | | — | | 130.3 | | — | | 130.3 | |
Investment securities, held-to-maturity | 323.7 | | 127.2 | | 167.6 | | — | | | 294.8 | | | 369.8 | | 160.6 | | 182.2 | | — | | 342.8 | |
Loans, net of allowance for loan losses(a) | 1,259.5 | | — | | 276.1 | | 969.0 | | | 1,245.1 | | | 1,262.5 | | — | | 285.6 | | 964.6 | | 1,250.2 | |
| Other | 74.5 | | — | | 73.1 | | 1.7 | | | 74.8 | | | 76.1 | | — | | 74.9 | | 1.4 | | 76.3 | |
| Financial liabilities | | | | | | | | | | | | |
| Deposits | $ | 2,327.1 | | $ | — | | $ | 2,327.7 | | $ | — | | | $ | 2,327.7 | | | $ | 2,322.3 | | $ | — | | $ | 2,322.6 | | $ | — | | $ | 2,322.6 | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 64.5 | | — | | 64.5 | | — | | | 64.5 | | | 47.5 | | — | | 47.5 | | — | | 47.5 | |
Short-term borrowings | 21.2 | | — | | 21.2 | | — | | | 21.2 | | | 24.7 | | — | | 24.7 | | — | | 24.7 | |
Accounts payable and other liabilities(b) | 253.5 | | — | | 241.1 | | 11.2 | | | 252.3 | | | 241.8 | | — | | 233.3 | | 8.1 | | 241.4 | |
Beneficial interests issued by consolidated VIEs | 27.1 | | — | | 27.1 | | — | | | 27.1 | | | 23.0 | | — | | 23.0 | | — | | 23.0 | |
Long-term debt | 300.5 | | — | | 249.5 | | 50.7 | | | 300.2 | | | 303.9 | | — | | 252.2 | | 51.3 | | 303.5 | |
(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)Excludes lending-related commitments disclosed in the table below.
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| | Estimated fair value hierarchy | | | | Estimated fair value hierarchy | |
| (in billions) | Carrying value(a)(b)(c) | Level 1 | Level 2 | Level 3 | Total estimated fair value | | Carrying value(a)(b)(c) | Level 1 | Level 2 | Level 3 | Total estimated fair value |
Wholesale lending-related commitments | $ | 2.8 | | $ | — | | $ | — | | $ | 4.7 | | $ | 4.7 | | | $ | 3.0 | | $ | — | | $ | — | | $ | 4.8 | | $ | 4.8 | |
(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 June 30, 2024 and December 31, 2023, includes fair value adjustments associated with First Republic for other unfunded commitments to extend credit totaling $854 million and $1.1 billion, respectively, recorded in accounts payable and other liabilities on the Consolidated balance sheets. Refer to Notes 22 and 26 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 JPMorgan Chase’s 2023 Form 10-K for a further discussion of the valuation of lending-related commitments.
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
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 three and six months ended June 30, 2024 and 2023, 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | |
| 2024 | | 2023 | |
| (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) |
Federal funds sold and securities purchased under resale agreements | $ | 13 | | | $ | — | | | $ | 13 | | | | $ | 18 | | | $ | — | | | $ | 18 | | |
| Securities borrowed | 215 | | | — | | | 215 | | | | (60) | | | — | | | (60) | | |
| Trading assets: | | | | | | | | | | | | | |
Debt and equity instruments, excluding loans | 1,561 | | | — | | | 1,561 | | | | 1,160 | | | — | | | 1,160 | | |
Loans reported as trading assets: | | | | | | | | | | | | | |
| Changes in instrument-specific credit risk | 30 | | | — | | | 30 | | | | 100 | | | — | | | 100 | | |
| Other changes in fair value | 6 | | | 1 | | (c) | 7 | | | | 2 | | | 2 | | (c) | 4 | | |
| Loans: | | | | | | | | | | | | | |
| Changes in instrument-specific credit risk | 145 | | | (7) | | (c) | 138 | | | | 6 | | | (5) | | (c) | 1 | | |
| Other changes in fair value | 39 | | | 110 | | (c) | 149 | | | | (76) | | | (6) | | (c) | (82) | | |
| Other assets | 5 | | | — | | | 5 | | | | (16) | | | (1) | | (d) | (17) | | |
Deposits(a) | (984) | | | — | | | (984) | | | | (395) | | | — | | | (395) | | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 5 | | | — | | | 5 | | | | (8) | | | — | | | (8) | | |
Short-term borrowings(a) | (229) | | | — | | | (229) | | | | (110) | | | — | | | (110) | | |
| Trading liabilities | 10 | | | — | | | 10 | | | | (15) | | | — | | | (15) | | |
Beneficial interests issued by consolidated VIEs | — | | | — | | | — | | | | — | | | — | | | — | | |
| Other liabilities | (3) | | | — | | | (3) | | | | (1) | | | — | | | (1) | | |
Long-term debt(a)(b) | (2) | | | (2) | | (c)(d) | (4) | | | | (663) | | | (2) | | (c)(d) | (665) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended June 30, | |
| 2024 | | 2023 | |
| (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) | |
Federal funds sold and securities purchased under resale agreements | $ | 49 | | | $ | — | | | $ | 49 | | | | $ | 220 | | | $ | — | | | $ | 220 | | |
| Securities borrowed | 214 | | | — | | | 214 | | | | 28 | | | — | | | 28 | | |
| Trading assets: | | | | | | | | | | | | | |
Debt and equity instruments, excluding loans | 2,809 | | | — | | | 2,809 | | | | 2,755 | | | — | | | 2,755 | | |
Loans reported as trading assets: | | | | | | | | | | | | | |
| Changes in instrument-specific credit risk | 198 | | | — | | | 198 | | | | 231 | | | — | | | 231 | | |
| Other changes in fair value | 19 | | | 1 | | (c) | 20 | | | | 5 | | | 2 | | (c) | 7 | | |
| Loans: | | | | | | | | | | | | | |
| Changes in instrument-specific credit risk | 270 | | | (5) | | (c) | 265 | | | | 71 | | | (4) | | (c) | 67 | | |
| Other changes in fair value | (18) | | | 155 | | (c) | 137 | | | | 119 | | | 104 | | (c) | 223 | | |
| Other assets | 18 | | | — | | | 18 | | | | 14 | | | (1) | | (d) | 13 | | |
Deposits(a) | (1,958) | | | — | | | (1,958) | | | | (868) | | | — | | | (868) | | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 10 | | | — | | | 10 | | | | (69) | | | — | | | (69) | | |
Short-term borrowings(a) | (450) | | | — | | | (450) | | | | (269) | | | — | | | (269) | | |
| Trading liabilities | (2) | | | — | | | (2) | | | | (30) | | | — | | | (30) | | |
Beneficial interests issued by consolidated VIEs | — | | | — | | | — | | | | — | | | — | | | — | | |
| Other liabilities | (2) | | | — | | | (2) | | | | (1) | | | — | | | (1) | | |
Long-term debt(a)(b) | (936) | | | (10) | | (c)(d) | (946) | | | | (3,461) | | | (28) | | (c)(d) | (3,489) | | |
(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 both for the three and six months ended June 30, 2024 and 2023.
(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 6 for further information regarding interest income and interest expense.
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 June 30, 2024 and December 31, 2023, for loans, long-term debt and long-term beneficial interests for which the fair value option has been elected.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| (in millions) | Contractual principal outstanding | | Fair value | Fair value over/(under) contractual principal outstanding | | Contractual principal outstanding | | Fair value | Fair value over/(under) contractual principal outstanding |
| Loans | | | | | | | | | |
| Nonaccrual loans | | | | | | | | | |
| Loans reported as trading assets | $ | 2,527 | | | $ | 470 | | $ | (2,057) | | | $ | 2,987 | | | $ | 588 | | $ | (2,399) | |
| Loans | 1,086 | | | 909 | | (177) | | | 838 | | | 732 | | (106) | |
| Subtotal | 3,613 | | | 1,379 | | (2,234) | | | 3,825 | | | 1,320 | | (2,505) | |
| 90 or more days past due and government guaranteed | | | | | | | | | |
Loans(a) | 47 | | | 42 | | (5) | | | 65 | | | 59 | | (6) | |
All other performing loans(b) | | | | | | | | | |
| Loans reported as trading assets | 11,224 | | | 9,499 | | (1,725) | | | 9,547 | | | 7,968 | | (1,579) | |
| Loans | 38,586 | | | 37,299 | | (1,287) | | | 38,948 | | | 38,060 | | (888) | |
| Subtotal | 49,810 | | | 46,798 | | (3,012) | | | 48,495 | | | 46,028 | | (2,467) | |
| Total loans | $ | 53,470 | | | $ | 48,219 | | $ | (5,251) | | | $ | 52,385 | | | $ | 47,407 | | $ | (4,978) | |
| Long-term debt | | | | | | | | | |
| Principal-protected debt | $ | 53,425 | | (d) | $ | 43,796 | | $ | (9,629) | | | $ | 47,768 | | (d) | $ | 38,882 | | $ | (8,886) | |
Nonprincipal-protected debt(c) | NA | | 49,652 | | NA | | NA | | 49,042 | | NA |
| Total long-term debt | NA | | $ | 93,448 | | NA | | NA | | $ | 87,924 | | NA |
| Long-term beneficial interests | | | | | | | | | |
Nonprincipal-protected debt(c) | NA | | $ | 1 | | NA | | NA | | $ | 1 | | NA |
| Total long-term beneficial interests | NA | | $ | 1 | | NA | | NA | | $ | 1 | | 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 June 30, 2024 and December 31, 2023.
(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 June 30, 2024 and December 31, 2023, the contractual amount of lending-related commitments for which the fair value option was elected was $11.5 billion and $9.7 billion, respectively, with a corresponding fair value of $55 million and $97 million, respectively. Refer to Note 28 of JPMorgan Chase’s 2023 Form 10-K, and Note 22 of this Form 10-Q for further information regarding off-balance sheet lending-related financial instruments.
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| (in millions) | Long-term debt | Short-term borrowings | Deposits | | Total | | Long-term debt | Short-term borrowings | Deposits | | Total |
| Risk exposure | | | | | | | | | | | |
| Interest rate | $ | 42,945 | | $ | 635 | | $ | 65,413 | | | $ | 108,993 | | | $ | 38,604 | | $ | 654 | | $ | 74,526 | | | $ | 113,784 | |
| Credit | 5,212 | | 1,115 | | — | | | 6,327 | | | 5,444 | | 350 | | — | | | 5,794 | |
| Foreign exchange | 2,348 | | 1,529 | | 464 | | | 4,341 | | | 2,605 | | 941 | | 187 | | | 3,733 | |
| Equity | 40,619 | | 6,486 | | 2,965 | | | 50,070 | | | 38,685 | | 5,483 | | 2,905 | | | 47,073 | |
| Commodity | 1,697 | | 17 | | 1 | | (a) | 1,715 | | | 1,862 | | 11 | | 1 | | (a) | 1,874 | |
| Total structured notes | $ | 92,821 | | $ | 9,782 | | $ | 68,843 | | | $ | 171,446 | | | $ | 87,200 | | $ | 7,439 | | $ | 77,619 | | | $ | 172,258 | |
(a)Excludes deposits linked to precious metals for which the fair value option has not been elected of $716 million and $627 million for the periods ended June 30, 2024 and December 31, 2023, respectively.
Note 4 – Derivative instruments
JPMorgan Chase makes markets in derivatives for clients and also uses derivatives to hedge or manage its own risk exposures. Refer to Note 5 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s use of and accounting policies regarding derivative instruments.
The Firm’s disclosures are based on the accounting treatment and purpose of these derivatives. A limited number of the Firm’s derivatives are designated in hedge
accounting relationships and are disclosed according to the type of hedge (fair value hedge, cash flow hedge, or net investment hedge). Derivatives not designated in hedge accounting relationships include certain derivatives that are used to manage risks associated with specified assets and liabilities (“specified risk management” positions) as well as derivatives used in the Firm’s market-making businesses or for other purposes.
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 | Affected
segment or unit | 10-Q page reference |
| Manage specifically identified risk exposures in qualifying hedge accounting relationships: |
•Interest rate | Hedge fixed rate assets and liabilities | Fair value hedge | Corporate | 123-124 |
•Interest rate | Hedge floating-rate assets and liabilities | Cash flow hedge | Corporate | 125 |
•Foreign exchange | Hedge foreign currency-denominated assets and liabilities | Fair value hedge | Corporate | 123-124 |
•Foreign exchange | Hedge foreign currency-denominated forecasted revenue and expense | Cash flow hedge | Corporate | 125 |
•Foreign exchange | Hedge the value of the Firm’s investments in non-U.S. dollar functional currency entities | Net investment hedge | Corporate | 126 |
•Commodity | Hedge commodity inventory | Fair value hedge | CIB, AWM | 123-124 |
Manage specifically identified risk exposures not designated in qualifying hedge accounting relationships: |
•Interest rate | Manage the risk associated with mortgage commitments, warehouse loans and MSRs | Specified risk management | CCB | 127 |
•Credit | Manage the credit risk associated with wholesale lending exposures | Specified risk management | CIB, AWM | 127 |
•Interest rate and foreign exchange | Manage the risk associated with certain other specified assets and liabilities | Specified risk management | Corporate, CIB | 127 |
Market-making derivatives and other activities: |
•Various | Market-making and related risk management | Market-making and other | CIB | 127 |
•Various | Other derivatives | Market-making and other | CIB, AWM, Corporate | 127 |
Notional amount of derivative contracts
The following table summarizes the notional amount of free-standing derivative contracts outstanding as of June 30, 2024 and December 31, 2023.
| | | | | | | | | |
| Notional amounts(b) | |
| (in billions) | June 30, 2024 | December 31, 2023 | |
| Interest rate contracts | | | |
Swaps | $ | 25,819 | | $ | 23,251 | | |
Futures and forwards | 4,476 | | 2,690 | | |
Written options | 3,243 | | 3,370 | | |
Purchased options | 3,188 | | 3,362 | | |
Total interest rate contracts | 36,726 | | 32,673 | | |
Credit derivatives(a) | 1,188 | | 1,045 | | |
Foreign exchange contracts | | | |
Cross-currency swaps | 4,616 | | 4,721 | | |
Spot, futures and forwards | 8,811 | | 6,957 | | |
Written options | 968 | | 830 | | |
Purchased options | 952 | | 798 | | |
Total foreign exchange contracts | 15,347 | | 13,306 | | |
| Equity contracts | | | |
Swaps | 760 | | 639 | | |
Futures and forwards | 189 | | 157 | | |
Written options | 970 | | 778 | | |
Purchased options | 877 | | 698 | | |
| Total equity contracts | 2,796 | | 2,272 | | |
| Commodity contracts | | | |
Swaps | 129 | | 115 | | |
Spot, futures and forwards | 191 | | 157 | | |
Written options | 152 | | 130 | | |
Purchased options | 131 | | 115 | | |
Total commodity contracts | 603 | | 517 | | |
Total derivative notional amounts | $ | 56,660 | | $ | 49,813 | | |
(a)Refer to the Credit derivatives discussion on page 128 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.
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 June 30, 2024 and December 31, 2023, 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) | | | | | | | | | | |
| Gross derivative receivables | | | | Gross derivative payables | | |
June 30, 2024
(in millions) | 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) |
Trading assets and liabilities | | | | | | | | | | | | | | | |
| Interest rate | $ | 234,987 | | | $ | — | | | $ | 234,987 | | | $ | 25,585 | | | $ | 222,021 | | | $ | 6 | | | $ | 222,027 | | | $ | 11,034 | |
| Credit | 10,384 | | | — | | | 10,384 | | | 665 | | | 12,487 | | | — | | | 12,487 | | | 1,163 | |
| Foreign exchange | 189,889 | | | 807 | | | 190,696 | | | 17,789 | | | 189,130 | | | 626 | | | 189,756 | | | 10,706 | |
| Equity | 84,860 | | | — | | | 84,860 | | | 5,830 | | | 93,003 | | | — | | | 93,003 | | | 7,011 | |
| Commodity | 18,420 | | | 95 | | | 18,515 | | | 4,804 | | | 18,054 | | | 26 | | | 18,080 | | | 4,904 | |
Total fair value of trading assets and liabilities | $ | 538,540 | | | $ | 902 | | | $ | 539,442 | | | $ | 54,673 | | | $ | 534,695 | | | $ | 658 | | | $ | 535,353 | | | $ | 34,818 | |
| | | | | | | | | | | | | | | |
| Gross derivative receivables | | | | Gross derivative payables | | |
December 31, 2023
(in millions) | 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) |
Trading assets and liabilities | | | | | | | | | | | | | | | |
| Interest rate | $ | 250,689 | |
| $ | 2 | | | $ | 250,691 | | | $ | 26,324 | | | $ | 240,482 | | | $ | — | | | $ | 240,482 | | | $ | 11,896 | |
| Credit | 9,654 | | | — | | | 9,654 | | | 551 | | | 12,038 | | | — | | | 12,038 | | | 1,089 | |
| Foreign exchange | 205,010 | | | 765 | | | 205,775 | | | 18,019 | | | 210,623 | | | 1,640 | | | 212,263 | | | 12,620 | |
| Equity | 57,689 | | | — | | | 57,689 | | | 4,928 | | | 65,811 | | | — | | | 65,811 | | | 9,368 | |
| Commodity | 15,228 | | | 211 | | | 15,439 | | | 5,042 | | | 16,286 | | | 92 | | | 16,378 | | | 5,874 | |
Total fair value of trading assets and liabilities | $ | 538,270 | | | $ | 978 | | | $ | 539,248 | | | $ | 54,864 | | | $ | 545,240 | | | $ | 1,732 | | | $ | 546,972 | | | $ | 40,847 | |
(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.
Derivatives netting
The following tables present, as of June 30, 2024 and December 31, 2023, 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| (in millions) | 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 |
U.S. GAAP nettable derivative receivables | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | |
| Over-the-counter (“OTC”) | $ | 168,141 | | $ | (144,008) | | | $ | 24,133 | | | $ | 176,901 | | | $ | (152,703) | | | $ | 24,198 | | |
| OTC–cleared | 65,370 | | (65,108) | | | 262 | | | 71,419 | | | (71,275) | | | 144 | | |
Exchange-traded(a) | 290 | | (286) | | | 4 | | | 402 | | | (389) | | | 13 | | |
| Total interest rate contracts | 233,801 | | (209,402) | | | 24,399 | | | 248,722 | | | (224,367) | | | 24,355 | | |
| Credit contracts: | | | | | | | | | | | |
| OTC | 8,097 | | (7,622) | | | 475 | | | 7,637 | | | (7,226) | | | 411 | | |
| OTC–cleared | 2,165 | | (2,097) | | | 68 | | | 1,904 | | | (1,877) | | | 27 | | |
| Total credit contracts | 10,262 | | (9,719) | | | 543 | | | 9,541 | | | (9,103) | | | 438 | | |
| Foreign exchange contracts: | | | | | | | | | | | |
| OTC | 188,341 | | (172,404) | | | 15,937 | | | 203,624 | | | (187,295) | | | 16,329 | | |
| OTC–cleared | 563 | | (503) | | | 60 | | | 469 | | | (459) | | | 10 | | |
Exchange-traded(a) | 22 | | — | | | 22 | | | 6 | | | (2) | | | 4 | | |
| Total foreign exchange contracts | 188,926 | | (172,907) | | | 16,019 | | | 204,099 | | | (187,756) | | | 16,343 | | |
| Equity contracts: | | | | | | | | | | | |
| OTC | 32,589 | | (30,408) | | | 2,181 | | | 25,001 | | | (23,677) | | | 1,324 | | |
Exchange-traded(a) | 51,181 | | (48,622) | | | 2,559 | | | 30,462 | | | (29,084) | | | 1,378 | | |
| Total equity contracts | 83,770 | | (79,030) | | | 4,740 | | | 55,463 | | | (52,761) | | | 2,702 | | |
| Commodity contracts: | | | | | | | | | | | |
| OTC | 9,836 | | (7,171) | | | 2,665 | | | 8,049 | | | (5,084) | | | 2,965 | | |
| OTC–cleared | 168 | | (124) | | | 44 | | | 133 | | | (123) | | | 10 | | |
Exchange-traded(a) | 6,567 | | (6,416) | | | 151 | | | 5,214 | | | (5,190) | | | 24 | | |
| Total commodity contracts | 16,571 | | (13,711) | | | 2,860 | | | 13,396 | | | (10,397) | | | 2,999 | | |
Derivative receivables with appropriate legal opinion | 533,330 | | (484,769) | | | 48,561 | | (d) | 531,221 | | | (484,384) | | | 46,837 | | (d) |
Derivative receivables where an appropriate legal opinion has not been either sought or obtained | 6,112 | | | | 6,112 | | | 8,027 | | | | | 8,027 | | |
Total derivative receivables recognized on the Consolidated balance sheets | $ | 539,442 | | | | $ | 54,673 | | | $ | 539,248 | | | | | $ | 54,864 | | |
Collateral not nettable on the Consolidated balance sheets(b)(c) | | | | (24,211) | | | | | | | (22,461) | | |
Net amounts | | | | $ | 30,462 | | | | | | | $ | 32,403 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| (in millions) | 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 |
U.S. GAAP nettable derivative payables | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | |
| OTC | $ | 150,477 | | $ | (141,055) | | | $ | 9,422 | | | $ | 161,901 | | | $ | (152,467) | | | $ | 9,434 | | |
| OTC–cleared | 69,892 | | (69,606) | | | 286 | | | 76,007 | | | (75,729) | | | 278 | | |
Exchange-traded(a) | 367 | | (332) | | | 35 | | | 436 | | | (390) | | | 46 | | |
| Total interest rate contracts | 220,736 | | (210,993) | | | 9,743 | | | 238,344 | | | (228,586) | | | 9,758 | | |
| Credit contracts: | | | | | | | | | | | |
| OTC | 10,497 | | (9,491) | | | 1,006 | | | 10,332 | | | (9,313) | | | 1,019 | | |
| OTC–cleared | 1,850 | | (1,833) | | | 17 | | | 1,639 | | | (1,636) | | | 3 | | |
| Total credit contracts | 12,347 | | (11,324) | | | 1,023 | | | 11,971 | | | (10,949) | | | 1,022 | | |
| Foreign exchange contracts: | | | | | | | | | | | |
| OTC | 187,718 | | (178,544) | | | 9,174 | | | 209,386 | | | (199,173) | | | 10,213 | | |
| OTC–cleared | 556 | | (505) | | | 51 | | | 552 | | | (470) | | | 82 | | |
Exchange-traded(a) | 33 | | (1) | | | 32 | | | 6 | | | — | | | 6 | | |
| Total foreign exchange contracts | 188,307 | | (179,050) | | | 9,257 | | | 209,944 | | | (199,643) | | | 10,301 | | |
| Equity contracts: | | | | | | | | | | | |
| OTC | 41,659 | | (37,372) | | | 4,287 | | | 29,999 | | | (27,360) | | | 2,639 | | |
Exchange-traded(a) | 49,600 | | (48,620) | | | 980 | | | 33,137 | | | (29,083) | | | 4,054 | | |
| Total equity contracts | 91,259 | | (85,992) | | | 5,267 | | | 63,136 | | | (56,443) | | | 6,693 | | |
| Commodity contracts: | | | | | | | | | | | |
| OTC | 9,077 | | (6,682) | | | 2,395 | | | 8,788 | | | (5,192) | | | 3,596 | | |
| OTC–cleared | 124 | | (124) | | | — | | | 120 | | | (120) | | | — | | |
Exchange-traded(a) | 6,437 | | (6,370) | | | 67 | | | 5,376 | | | (5,192) | | | 184 | | |
| Total commodity contracts | 15,638 | | (13,176) | | | 2,462 | | | 14,284 | | | (10,504) | | | 3,780 | | |
Derivative payables with appropriate legal opinion | 528,287 | | (500,535) | | | 27,752 | | (d) | 537,679 | | | (506,125) | | | 31,554 | | (d) |
Derivative payables where an appropriate legal opinion has not been either sought or obtained | 7,066 | | | | 7,066 | | | 9,293 | | | | | 9,293 | | |
Total derivative payables recognized on the Consolidated balance sheets | $ | 535,353 | | | | $ | 34,818 | | | $ | 546,972 | | | | | $ | 40,847 | | |
Collateral not nettable on the Consolidated balance sheets(b)(c) | | | | (5,924) | | | | | | | (4,547) | | |
Net amounts | | | | $ | 28,894 | | | | | | | $ | 36,300 | | |
(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 at both June 30, 2024 and December 31, 2023. Net derivatives payable included cash collateral netted of $64.1 billion and $70.0 billion at June 30, 2024 and December 31, 2023, respectively. Derivative cash collateral relates to OTC and OTC-cleared derivative instruments.
Liquidity risk and credit-related contingent features
Refer to Note 5 of JPMorgan Chase’s 2023 Form 10-K for a more detailed discussion of liquidity risk and credit-related contingent features related to the Firm’s 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 June 30, 2024 and December 31, 2023.
| | | | | | | | | | | | | | | | | | |
| OTC and OTC-cleared derivative payables containing downgrade triggers | |
| (in millions) | June 30, 2024 | | December 31, 2023 | |
Aggregate fair value of net derivative payables | | $ | 14,051 | | | | $ | 14,655 | | |
| Collateral posted | | 14,245 | | | | 14,673 | | |
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 June 30, 2024 and December 31, 2023, 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 | | | | | |
| June 30, 2024 | | December 31, 2023 | |
| (in millions) | Single-notch downgrade | Two-notch downgrade | | Single-notch downgrade | Two-notch downgrade | |
Amount of additional collateral to be posted upon downgrade(a) | $ | 104 | | $ | 1,148 | | | $ | 75 | | $ | 1,153 | | |
Amount required to settle contracts with termination triggers upon downgrade(b) | 77 | | 403 | | | 93 | | 592 | | |
(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 10, 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 June 30, 2024 and December 31, 2023.
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 three and six months ended June 30, 2024 and 2023, 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gains/(losses) recorded in income | | Income statement impact of
excluded components(e) | | OCI impact |
Three months ended June 30, 2024
(in millions) | Derivatives | | Hedged items | | Income statement impact | | Amortization approach | Changes in fair value | | Derivatives - Gains/(losses) recorded in OCI(f) |
| Contract type | | | | | | | | | | |
Interest rate(a)(b) | $ | 160 | | | $ | (42) | | | $ | 118 | | | | $ | 122 | | | $ | — | |
Foreign exchange(c) | (54) | | | 110 | | | 56 | | | (132) | | 56 | | | 11 | |
Commodity(d) | (60) | | | 89 | | | 29 | | | | 27 | | | — | |
| Total | $ | 46 | | | $ | 157 | | | $ | 203 | | | $ | (132) | | $ | 205 | | | $ | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gains/(losses) recorded in income | | Income statement impact of excluded components(e) | | OCI impact | |
Three months ended June 30, 2023
(in millions) | Derivatives | | Hedged items | | Income statement impact | | Amortization approach | Changes in fair value | | Derivatives - Gains/(losses) recorded in OCI(f) | |
| Contract type | | | | | | | | | | | |
Interest rate(a)(b) | $ | (151) | | | $ | 164 | | | $ | 13 | | | $ | — | | $ | 5 | | | $ | — | | |
Foreign exchange(c) | 254 | | | (188) | | | 66 | | | (156) | | 66 | | | 15 | | |
Commodity(d) | 422 | | | (290) | | | 132 | | | — | | 133 | | | — | | |
| Total | $ | 525 | | | $ | (314) | | | $ | 211 | | | $ | (156) | | $ | 204 | | | $ | 15 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gains/(losses) recorded in income | | Income statement impact of
excluded components(e) | | OCI impact |
Six months ended June 30, 2024
(in millions) | Derivatives | | Hedged items | | Income statement impact | | Amortization approach | Changes in fair value | | Derivatives - Gains/(losses) recorded in OCI(f) |
| Contract type | | | | | | | | | | |
Interest rate(a)(b) | $ | 478 | | | $ | (262) | | | $ | 216 | | | $ | — | | $ | 233 | | | $ | — | |
Foreign exchange(c) | (194) | | | 299 | | | 105 | | | (248) | | 105 | | | (16) | |
Commodity(d) | 202 | | | (147) | | | 55 | | | — | | 51 | | | — | |
| Total | $ | 486 | | | $ | (110) | | | $ | 376 | | | $ | (248) | | $ | 389 | | | $ | (16) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gains/(losses) recorded in income | | Income statement impact of excluded components(e) | | OCI impact | |
Six months ended June 30, 2023
(in millions) | Derivatives | | Hedged items | | Income statement impact | | Amortization approach | Changes in fair value | | Derivatives - Gains/(losses) recorded in OCI(f) | |
| Contract type | | | | | | | | | | | |
Interest rate(a)(b) | $ | 1,021 | | | $ | (940) | | | $ | 81 | | | $ | — | | $ | 15 | | | $ | — | | |
Foreign exchange(c) | 412 | | | (282) | | | 130 | | | (329) | | 130 | | | (13) | | |
Commodity(d) | (1,118) | | | 1,335 | | | 217 | | | — | | 217 | | | — | | |
| Total | $ | 315 | | | $ | 113 | | | $ | 428 | | | $ | (329) | | $ | 362 | | | $ | (13) | | |
(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.
As of June 30, 2024 and December 31, 2023, 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.
| | | | | | | | | | | | | | | | | | | | |
| | Carrying amount of the hedged items(a)(b) | | Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items: |
June 30, 2024
(in millions) | | | Active hedging relationships(d) | Discontinued hedging relationships(d)(e) | Total |
| Assets | | | | | | |
| Investment securities - AFS | | $ | 143,925 | | (c) | $ | (1,779) | | $ | (2,013) | | $ | (3,792) | |
| Liabilities | | | | | | |
| Long-term debt | | 201,959 | | | (4,048) | | (9,464) | | (13,512) | |
| Beneficial interests issued by consolidated VIEs | | 2,317 | | | (31) | | — | | (31) | |
| | | | | | |
| | Carrying amount of the hedged items(a)(b) | | Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items: |
December 31, 2023
(in millions) | | | Active hedging relationships(d) | Discontinued hedging relationships(d)(e) | Total |
| Assets | | | | | | |
| Investment securities - AFS | | $ | 151,752 | | (c) | $ | 549 | | $ | (2,010) | | $ | (1,461) | |
| Liabilities | | | | | | |
| Long-term debt | | 195,455 | | | (2,042) | | (9,727) | | (11,769) | |
| Beneficial interests issued by consolidated VIEs | | — | | | — | | — | | — | |
(a)Excludes physical commodities with a carrying value of $3.2 billion and $5.6 billion at June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, the carrying amount excluded for AFS securities was $25.8 billion and $19.3 billion, respectively. At June 30, 2024 and December 31, 2023, the carrying amount excluded for long-term debt was $535 million and zero, respectively.
(c)Carrying amount represents the amortized cost, net of allowance if applicable. At June 30, 2024 and December 31, 2023, the amortized cost of the portfolio layer method closed portfolios was $67.6 billion and $83.9 billion, of which $63.1 billion and $68.0 billion was designated as hedged, respectively. 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. At June 30, 2024 and December 31, 2023, the cumulative amount of basis adjustments was $(1.8) billion and $(165) million, which is comprised of $(1.3) billion and $73 million for active hedging relationships, and $(485) million and $(238) million for discontinued hedging relationships, respectively. Refer to Note 9 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.
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 three and six months ended June 30, 2024 and 2023, 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.
| | | | | | | | | | | | | | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Three months ended June 30, 2024
(in millions) | Amounts reclassified
from AOCI to income | | Amounts recorded
in OCI | Total change
in OCI for period |
| Contract type | | | | |
Interest rate(a) | $ | (662) | | | $ | (677) | | $ | (15) | |
Foreign exchange(b) | 7 | | | (6) | | (13) | |
| Total | $ | (655) | | | $ | (683) | | $ | (28) | |
| | | | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Three months ended June 30, 2023
(in millions) | Amounts reclassified
from AOCI to income | | Amounts recorded
in OCI | Total change in OCI for period |
| Contract type | | | | |
Interest rate(a) | $ | (474) | | | $ | (1,199) | | $ | (725) | |
Foreign exchange(b) | 9 | | | 80 | | 71 | |
| Total | $ | (465) | | | $ | (1,119) | | $ | (654) | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Six months ended June 30, 2024
(in millions) | Amounts reclassified
from AOCI to income | | Amounts recorded
in OCI | Total change
in OCI for period |
| Contract type | | | | |
Interest rate(a) | $ | (1,283) | | | $ | (2,401) | | $ | (1,118) | |
Foreign exchange(b) | 39 | | | (44) | | (83) | |
| Total | $ | (1,244) | | | $ | (2,445) | | $ | (1,201) | |
| | | | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Six months ended June 30, 2023
(in millions) | Amounts reclassified
from AOCI to income | | Amounts recorded
in OCI | Total change
in OCI for period |
| Contract type | | | | |
Interest rate(a) | $ | (902) | | | $ | (738) | | $ | 164 | |
Foreign exchange(b) | (46) | | | 186 | | 232 | |
| Total | $ | (948) | | | $ | (552) | | $ | 396 | |
(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 three months ended June 30, 2024 and 2023.
Over the next 12 months, the Firm expects that approximately $(2.0) billion (after-tax) of net losses recorded in AOCI at June 30, 2024, related to cash flow hedges will be recognized in income. For cash flow hedges that have been terminated, the maximum length of time over which the derivative results recorded in AOCI will be recognized in earnings is approximately seven years, corresponding to the timing of the originally hedged forecasted cash flows. For open cash flow hedges, the maximum length of time over which forecasted transactions are hedged is approximately seven years. The Firm’s longer-dated forecasted transactions relate to core lending and borrowing activities.
Net investment hedge gains and losses
The following table presents hedging instruments, by contract type, that were used in net investment hedge accounting relationships, and the pre-tax gains/(losses) recorded on such instruments for the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gains/(losses) recorded in income and other comprehensive income/(loss) |
| 2024 | | 2023 |
Three months ended June 30,
(in millions) | Amounts recorded in income(a)(b) | Amounts recorded in OCI | | Amounts recorded in income(a)(b) | Amounts recorded in OCI |
| Foreign exchange derivatives | | $ | 104 | | | $ | 962 | | | | $ | 121 | | | $ | (88) | |
| | | | | | | | | |
| Gains/(losses) recorded in income and other comprehensive income/(loss) |
| 2024 | | 2023 |
Six months ended June 30,
(in millions) | Amounts recorded in income(a)(b) | Amounts recorded in OCI | | Amounts recorded in income(a)(b) | Amounts recorded in OCI |
| Foreign exchange derivatives | | $ | 193 | | | $ | 2,404 | | | | $ | 205 | | | $ | (1,092) | |
(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 associated with net investment hedges. During the three and six months ended June 30, 2024, the Firm reclassified a net pre-tax gain of $10 million to other revenue. During the six months ended June 30, 2023, the Firm reclassified a pre-tax loss of $(41) million to other revenue related to the acquisition of CIFM. The amounts reclassified for the three months ended June 30, 2023 were not material. Refer to Note 19 for further information.
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.
| | | | | | | | | | | | | | | | | | | |
| Derivatives gains/(losses)
recorded in income | | |
| Three months ended June 30, | | Six months ended June 30, | |
| (in millions) | 2024 | 2023 | | 2024 | 2023 | | |
| Contract type | | | | | | | |
Interest rate(a) | $ | (21) | | $ | (112) | | | $ | (244) | | $ | (126) | | | |
Credit(b) | (22) | | (67) | | | (280) | | (163) | | | |
Foreign exchange(c) | 19 | | 41 | | | 26 | | 43 | | | |
| Total | $ | (24) | | $ | (138) | | | $ | (498) | | $ | (246) | | | |
(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 5 for information on principal transactions revenue.
Credit derivatives
Refer to Note 5 of JPMorgan Chase’s 2023 Form 10-K for a more detailed discussion of credit derivatives. The following tables present a summary of the notional amounts of credit derivatives and credit-related notes the Firm sold and purchased as of June 30, 2024 and December 31, 2023. 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
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maximum payout/Notional amount | |
| June 30, 2024 (in millions) | Protection sold | Protection purchased with identical underlyings(c) | | Net protection (sold)/purchased(d) | | Other protection purchased(e) | |
| Credit derivatives | | | | | | | | |
| Credit default swaps | $ | (466,668) | | | $ | 484,309 | | | $ | 17,641 | | | $ | 6,235 | | |
Other credit derivatives(a) | (95,908) | | | 121,361 | | | 25,453 | | | 13,207 | | |
| Total credit derivatives | (562,576) | | | 605,670 | | | 43,094 | | | 19,442 | | |
Credit-related notes(b) | — | | | — | | | — | | | 11,072 | | |
| Total | $ | (562,576) | | | $ | 605,670 | | | $ | 43,094 | | | $ | 30,514 | | |
| | | | | | | | |
| Maximum payout/Notional amount | |
| December 31, 2023 (in millions) | Protection sold | Protection purchased with identical underlyings(c) | | Net protection (sold)/purchased(d) | | Other protection purchased(e) | |
| Credit derivatives | | | | | | | | |
| Credit default swaps | $ | (450,172) | | | $ | 473,823 | | | $ | 23,651 | | | $ | 7,517 | | |
Other credit derivatives(a) | (38,846) | | | 45,416 | | | 6,570 | |
| 29,206 | | |
| Total credit derivatives | (489,018) | | | 519,239 | | | 30,221 | | | 36,723 | | |
Credit-related notes(b) | — | | | — | | | — | | | 9,788 | | |
| Total | $ | (489,018) | | | $ | 519,239 | | | $ | 30,221 | | | $ | 46,511 | | |
(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. Also includes credit protection against certain loans and lending-related commitments in the retained lending portfolio through the issuance of credit derivatives and credit-related notes.
The following tables summarize the notional amounts by the ratings, maturity profile, and total fair value, of credit derivatives as of June 30, 2024 and December 31, 2023, 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 | | | |
June 30, 2024
(in millions) | <1 year | | 1–5 years | | >5 years | | Total
notional amount | | Fair value of receivables(b) | | Fair value of payables(b) | | Net fair value |
Risk rating of reference entity | | | | | | | | | | | | | |
| Investment-grade | $ | (145,536) | | | $ | (277,523) | | | $ | (33,751) | | | $ | (456,810) | | | $ | 4,072 | | | $ | (1,602) | | | $ | 2,470 | |
| Noninvestment-grade | (33,590) | | | (68,742) | | | (3,434) | | | (105,766) | | | 2,137 | | | (1,564) | | | 573 | |
| Total | $ | (179,126) | | | $ | (346,265) | | | $ | (37,185) | | | $ | (562,576) | | | $ | 6,209 | | | $ | (3,166) | | | $ | 3,043 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2023
(in millions) | <1 year | | 1–5 years | | >5 years | | Total
notional amount | | Fair value of receivables(b) | | Fair value of payables(b) | | Net fair value |
Risk rating of reference entity | | | | | | | | | | | | | |
| Investment-grade | $ | (89,981) | | | $ | (263,834) | | | $ | (29,470) | | | $ | (383,285) | | | $ | 3,659 | | | $ | (1,144) | | | $ | 2,515 | |
| Noninvestment-grade | (31,419) | | | (69,515) | | | (4,799) | | | (105,733) | | | 2,466 | | | (1,583) | | | 883 | |
| Total | $ | (121,400) | | | $ | (333,349) | | | $ | (34,269) | | | $ | (489,018) | | | $ | 6,125 | | | $ | (2,727) | | | $ | 3,398 | |
(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.
Note 5 – Noninterest revenue and noninterest expense
Noninterest revenue
Refer to Note 6 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the components of and accounting policies for the Firm’s noninterest revenue.
Investment banking fees
The following table presents the components of investment banking fees.
| | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in millions) | 2024 | 2023 | 2024 | 2023 |
| Underwriting | | | | |
| Equity | $ | 494 | | $ | 317 | | $ | 848 | | $ | 550 | |
| Debt | 1,030 | | 704 | | 2,033 | | 1,376 | |
| Total underwriting | 1,524 | | 1,021 | | 2,881 | | 1,926 | |
| Advisory | 780 | | 492 | | 1,377 | | 1,236 | |
Total investment banking fees | $ | 2,304 | | $ | 1,513 | | $ | 4,258 | | $ | 3,162 | |
Principal transactions
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 6 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.
| | | | | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, | |
| (in millions) | 2024 | | 2023 | 2024 | | 2023 | |
Trading revenue by instrument type | | | | | | | |
Interest rate(a) | $ | 935 | | | $ | 1,781 | | $ | 2,006 | | | $ | 3,567 | | |
Credit(b) | 447 | | | 419 | | 1,138 | | | 1,053 | | |
| Foreign exchange | 1,077 | | | 1,435 | | 2,613 | | | 2,986 | | |
| Equity | 4,101 | | | 2,941 | | 7,378 | | | 5,634 | | |
| Commodity | 246 | | | 368 | | 446 | | | 1,294 | | |
| Total trading revenue | 6,806 | | | 6,944 | | 13,581 | | | 14,534 | | |
Private equity gains/(losses) | 8 | | | (34) | | 23 | | | (9) | | |
Principal transactions | $ | 6,814 | | | $ | 6,910 | | $ | 13,604 | | | $ | 14,525 | | |
(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.
Lending- and deposit-related fees
The following table presents the components of lending- and deposit-related fees.
| | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | 2024 | | 2023 |
Lending-related fees(a) | $ | 518 | | | $ | 590 | | $ | 1,121 | | | $ | 959 | |
| Deposit-related fees | 1,310 | | | 1,238 | | 2,609 | | | 2,489 | |
Total lending- and deposit-related fees | $ | 1,828 | | | $ | 1,828 | | $ | 3,730 | | | $ | 3,448 | |
(a)Includes the amortization of the fair value discount on certain acquired lending-related commitments associated with First Republic, predominantly in AWM and CIB. The discount is deferred in other liabilities and recognized on a straight-line basis over the commitment period and was largely recognized in the prior year as the commitments are generally short term. Refer to Note 26 for additional information.
Deposit-related fees include the impact of credits earned by clients that reduce such fees.
Asset management fees
The following table presents the components of asset management fees.
| | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | 2024 | | 2023 |
Asset management fees | | | | | | |
Investment management fees | $ | 4,210 | | | $ | 3,695 | | $ | 8,269 | | | $ | 7,085 | |
All other asset management fees | 92 | | | 79 | | 179 | | | 154 | |
| Total asset management fees | $ | 4,302 | | | $ | 3,774 | | $ | 8,448 | | | $ | 7,239 | |
| | | | | | |
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Commissions and other fees
The following table presents the components of commissions and other fees.
| | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | 2023 | | 2024 | | 2023 |
| Commissions and other fees | | | | | | |
Brokerage commissions and fees | $ | 788 | | $ | 722 | | | $ | 1,551 | | | $ | 1,469 | |
Administration fees | 608 | | 575 | | | 1,214 | | | 1,132 | |
All other commissions and fees (a) | 528 | | 442 | | | 964 | | | 833 | |
| Total commissions and other fees | $ | 1,924 | | $ | 1,739 | | | $ | 3,729 | | | $ | 3,434 | |
(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.
Card income
The following table presents the components of card income.
| | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | 2024 | | 2023 |
Interchange and merchant processing income | $ | 8,520 | | | $ | 7,885 | | $ | 16,351 | | | $ | 15,024 | |
| Rewards costs and partner payments | (6,789) | | | (6,392) | | (12,960) | | | (11,901) | |
Other card income(a) | (399) | | | (399) | | (841) | | | (795) | |
Total card income | $ | 1,332 | | | $ | 1,094 | | $ | 2,550 | | | $ | 2,328 | |
(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.
Refer to Note 14 for further information on mortgage fees and related income.
Other income
The following table presents certain components of other income.
| | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
(in millions) | 2024 | | 2023 | | 2024 | 2023 |
| Operating lease income | $ | 689 | | | $ | 716 | | | $ | 1,361 | | $ | 1,471 | |
Losses on tax-oriented investments | (23) | | | (462) | | | (37) | | (874) | |
Estimated bargain purchase gain associated with the First Republic acquisition | 119 | | | 2,712 | | | 103 | | 2,712 | |
| | | | | | |
Gain related to the acquisition of CIFM(a) | — | | | — | | | — | | 339 | |
Initial gain on the Visa share exchange(b) | 7,990 | | | — | | | 7,990 | | — | |
| | | | | | |
(a)Gain on the original minority interest in CIFM upon the Firm's acquisition of the remaining 51% of the entity.
(b)Relates to the initial gain recognized on May 6, 2024. Refer to Note 2 for additional information.
Refer to Note 16 for information on operating lease income included within other income.
Proportional Amortization Method: Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method guidance, the amortization of certain of the Firm's alternative energy tax-oriented investments that was previously recognized in other income is now being recognized in income tax expense, which aligns with the associated tax credits and other tax benefits. Refer to Notes 1 and 13 for additional information.
Noninterest expense
Other expense
Other expense on the Firm’s Consolidated statements of income includes the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, | |
| (in millions) | 2024 | | 2023 | | 2024 | | 2023 | |
| Legal expense | $ | 317 | | | $ | 420 | | | $ | 245 | | | $ | 596 | | |
| | | | | | | | |
| | | | | | | | |
| FDIC-related expense | 291 | | | 338 | | | 1,264 | | (d) | 655 | | |
Operating losses(a) | 323 | | | 304 | | | 622 | | | 603 | | |
Contribution of Visa shares(b) | 1,000 | | | — | | | 1,000 | | | — | | |
First Republic-related expense(c) | 237 | | | 599 | | | 473 | | | 599 | | |
| | | | | | | | |
(a)Predominantly fraud losses in CCB associated with customer deposit accounts, credit and debit cards.
(b)Represents the contribution of a portion of Visa C shares to the JPMorgan Chase Foundation. Refer to Note 2 for additional information.
(c)Reflects the expenses classified within other expense, including $161 million and $316 million of restructuring and integration costs associated with First Republic in the three and six months ended June 30, 2024, respectively. Additionally, the second quarter of 2023 Included payments to the FDIC for the First Republic individuals who were not employees of the Firm until July 2, 2023. Refer to Note 26 for additional information on the First Republic acquisition.
(d)The first quarter of 2024 included an increase of $725 million to the FDIC special assessment reflecting the FDIC's revised estimate of Deposit Insurance Fund losses.
Note 6 – Interest income and Interest expense
Refer to Note 7 of JPMorgan Chase’s 2023 Form 10-K for a description of JPMorgan Chase’s accounting policies regarding interest income and interest expense.
The following table presents the components of interest income and interest expense.
| | | | | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in millions) | 2024 | 2023 | 2024 | | 2023 |
| Interest income | | | | | |
Loans(a) | $ | 22,898 | | $ | 20,306 | | $ | 45,772 | | | $ | 38,014 | |
| Taxable securities | 5,124 | | 4,194 | | 9,995 | | | 8,161 | |
Non-taxable securities(b) | 302 | | 343 | | 625 | | | 591 | |
Total investment securities(a) | 5,426 | | 4,537 | | 10,620 | | | 8,752 | |
| Trading assets - debt instruments | 4,993 | | 4,013 | | 9,585 | | | 7,659 | |
| Federal funds sold and securities purchased under resale agreements | 4,821 | | 3,767 | | 9,036 | | | 6,898 | |
| Securities borrowed | 2,177 | | 1,866 | | 4,343 | | | 3,582 | |
| Deposits with banks | 6,059 | | 5,189 | | 12,445 | | | 10,008 | |
All other interest-earning assets(c) | 2,139 | | 1,966 | | 4,150 | | | 3,735 | |
| Total interest income | $ | 48,513 | | $ | 41,644 | | $ | 95,951 | | | $ | 78,648 | |
| Interest expense | | | | | |
| Interest-bearing deposits | $ | 12,421 | | $ | 9,591 | | $ | 24,655 | | | $ | 17,228 | |
| Federal funds purchased and securities loaned or sold under repurchase agreements | 5,108 | | 3,400 | | 9,077 | | | 6,204 | |
| Short-term borrowings | 502 | | 428 | | 1,037 | | | 849 | |
Trading liabilities – debt and all other interest-bearing liabilities(d) | 2,604 | | 2,373 | | 5,240 | | | 4,344 | |
| Long-term debt | 4,780 | | 3,876 | | 9,398 | | | 7,189 | |
| Beneficial interest issued by consolidated VIEs | 352 | | 197 | | 716 | | | 344 | |
| Total interest expense | $ | 25,767 | | $ | 19,865 | | $ | 50,123 | | | $ | 36,158 | |
| Net interest income | $ | 22,746 | | $ | 21,779 | | $ | 45,828 | | | $ | 42,490 | |
| Provision for credit losses | 3,052 | | 2,899 | | 4,936 | | | 5,174 | |
| Net interest income after provision for credit losses | $ | 19,694 | | $ | 18,880 | | $ | 40,892 | | | $ | 37,316 | |
(a)Includes the amortization and accretion of purchase premiums and discounts, as well as net deferred fees and costs on loans.
(b)Represents securities which are tax-exempt for U.S. federal income tax purposes.
(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.
Note 7 – Pension and other postretirement employee benefit plans
Refer to Note 8 of JPMorgan Chase’s 2023 Form 10-K for a discussion of JPMorgan Chase’s pension and OPEB plans.
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.
| | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | Three months ended June 30, | | | | Six months ended June 30, | | | |
| 2024 | | 2023 | | | | 2024 | | 2023 | | | |
| Pension and OPEB plans | | | Pension and OPEB plans | | |
| Total net periodic defined benefit plan cost/(credit) | $ | (115) | | | $ | (94) | | | | | $ | (228) | | | $ | (188) | | | | |
Total defined contribution plans | 443 | | | 397 | | | | | 831 | | | 762 | | | | |
Total pension and OPEB cost included in noninterest expense | $ | 328 | | | $ | 303 | | | | | $ | 603 | | | $ | 574 | | | | |
As of June 30, 2024 and December 31, 2023, the fair values of plan assets for the Firm’s significant defined benefit pension and OPEB plans were $21.9 billion and $22.0 billion, respectively.
Note 8 – Employee share-based incentives
Refer to Note 9 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the accounting policies and other information relating to employee share-based incentives.
The Firm recognized the following noncash compensation expense related to its various employee share-based incentive plans in its Consolidated statements of income.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | 2024 | | 2023 |
| Cost of prior grants of restricted stock units (“RSUs”), performance share units (“PSUs”) and stock appreciation rights (“SARs”) that are amortized over their applicable vesting periods | $ | 430 | | | $ | 449 | | | $ | 865 | | | $ | 806 | |
| Accrual of estimated costs of share-based awards to be granted in future periods, predominantly those to full-career eligible employees | 514 | | | 385 | | | 1,017 | | | 898 | |
| Total noncash compensation expense related to employee share-based incentive plans | $ | 944 | | | $ | 834 | | | $ | 1,882 | | | $ | 1,704 | |
In the first quarter of 2024, in connection with its annual incentive grant for the 2023 performance year, the Firm granted 17 million RSUs and 726 thousand PSUs with weighted-average grant date fair values of $164.42 per RSU and $165.62 per PSU.
Note 9 – 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. At June 30, 2024, 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).
Refer to Note 10 of JPMorgan Chase’s 2023 Form 10-K for additional information regarding the investment securities portfolio.
The amortized costs and estimated fair values of the investment securities portfolio were as follows for the dates indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 | |
| (in millions) | Amortized cost(d)(e) | Gross unrealized gains | Gross unrealized losses | Fair value | | Amortized cost(d)(e) | Gross unrealized gains | Gross unrealized losses | Fair value | |
| Available-for-sale securities | | | | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | | | | |
| U.S. GSEs and government agencies | $ | 78,806 | | $ | 428 | | $ | 4,182 | | | $ | 75,052 | | | $ | 88,377 | | $ | 870 | | $ | 4,077 | | $ | 85,170 | | |
| Residential: | | | | | | | | | | | |
| U.S. | 2,326 | | 8 | | 62 | | | 2,272 | | | 2,086 | | 10 | | 68 | | 2,028 | | |
| Non-U.S. | 749 | | 3 | | — | | | 752 | | | 1,608 | | 4 | | 1 | | 1,611 | | |
| Commercial | 2,898 | | 9 | | 86 | | | 2,821 | | | 2,930 | | 12 | | 139 | | 2,803 | | |
| Total mortgage-backed securities | 84,779 | | 448 | | 4,330 | | | 80,897 | | | 95,001 | | 896 | | 4,285 | | 91,612 | | |
| U.S. Treasury and government agencies | 127,890 | | 392 | | 754 | | | 127,528 | | | 58,051 | | 276 | | 522 | | 57,805 | | |
| Obligations of U.S. states and municipalities | 17,546 | | 132 | | 490 | | | 17,188 | | | 21,243 | | 390 | | 266 | | 21,367 | | |
| Non-U.S. government debt securities | 31,442 | | 76 | | 419 | | | 31,099 | | | 21,387 | | 254 | | 359 | | 21,282 | | |
| Corporate debt securities | 102 | | — | | 12 | | | 90 | | | 128 | | — | | 28 | | 100 | | |
| Asset-backed securities: | | | | | | | | | | | |
| Collateralized loan obligations | 6,784 | | 31 | | 7 | | | 6,808 | | | 6,769 | | 11 | | 28 | | 6,752 | | |
| Other | 2,641 | | 12 | | 11 | | | 2,642 | | | 2,804 | | 8 | | 26 | | 2,786 | | |
Unallocated portfolio layer fair value basis adjustments(a) | (1,285) | | — | | (1,285) | | | NA | | 73 | | (73) | | — | NA | |
| Total available-for-sale securities | 269,899 | | 1,091 | | 4,738 | | | 266,252 | |
| 205,456 | | 1,762 | | 5,514 | | 201,704 | |
|
Held-to-maturity securities(b) | | | | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | | | | |
| U.S. GSEs and government agencies | 101,515 | | 15 | | 13,729 | | | 87,801 | | | 105,614 | | 39 | | 11,643 | | 94,010 | | |
| U.S. Residential | 9,162 | | 2 | | 1,050 | | | 8,114 | | | 9,709 | | 4 | | 970 | | 8,743 | | |
| Commercial | 9,879 | | 12 | | 491 | | | 9,400 | | | 10,534 | | 13 | | 581 | | 9,966 | | |
| Total mortgage-backed securities | 120,556 | | 29 | | 15,270 | | | 105,315 | | | 125,857 | | 56 | | 13,194 | | 112,719 | | |
| U.S. Treasury and government agencies | 140,281 | | — | | 13,104 | | | 127,177 | | | 173,666 | | — | | 13,074 | | 160,592 | | |
| Obligations of U.S. states and municipalities | 9,490 | | 38 | | 673 | | | 8,855 | | | 9,945 | | 74 | | 591 | | 9,428 | | |
| Asset-backed securities: | | | | | | | | | | | |
| Collateralized loan obligations | 51,822 | | 113 | | 30 | | | 51,905 | | | 58,565 | | 47 | | 352 | | 58,260 | | |
| Other | 1,597 | | 3 | | 49 | | | 1,551 | | | 1,815 | | 1 | | 61 | | 1,755 | | |
Total held-to-maturity securities(c) | 323,746 | | 183 | | 29,126 | | | 294,803 | | | 369,848 | | 178 | | 27,272 | | 342,754 | | |
| Total investment securities, net of allowance for credit losses | $ | 593,645 | | $ | 1,274 | | $ | 33,864 | | | $ | 561,055 | | | $ | 575,304 | | $ | 1,940 | | $ | 32,786 | | $ | 544,458 | | |
(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 4 for additional information.
(b)The Firm purchased $555 million and $1.0 billion of HTM securities for the three and six months ended June 30, 2024, respectively, and $520 million and $4.1 billion for the three and six months ended June 30, 2023, respectively.
(c)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. This transfer was a non-cash transaction. Refer to Note 19 of this Form 10-Q and Note 1 of JPMorgan Chase’s 2023 Form 10-K for additional information.
(d)The amortized cost of investment securities is reported net of allowance for credit losses of $177 million and $128 million at June 30, 2024 and December 31, 2023, respectively.
(e)Excludes $3.4 billion and $2.8 billion of accrued interest receivable at June 30, 2024 and December 31, 2023, respectively. The Firm did not reverse through interest income any accrued interest receivable for the three and six months ended June 30, 2024 and 2023. Refer to Note 10 of JPMorgan Chase’s 2023 Form 10-K for further discussion of accounting policies for accrued interest receivable on investment securities.
AFS securities impairment
The following tables present the fair value and gross unrealized losses by aging category for AFS securities at June 30, 2024 and December 31, 2023. The tables exclude U.S. Treasury and government agency securities and U.S. GSE and government agency MBS with unrealized losses of $4.9 billion and $4.6 billion, at June 30, 2024 and December 31, 2023, 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 | | |
| June 30, 2024 (in millions) | Fair value | | Gross
unrealized losses | | Fair value | Gross
unrealized losses | Total fair value | Total gross unrealized losses |
| Available-for-sale securities | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | |
| Residential: | | | | | | | | |
U.S. | $ | 114 | | | $ | 1 | | | $ | 1,026 | | $ | 61 | | $ | 1,140 | | $ | 62 | |
| Non-U.S. | — | | | — | | | 110 | | — | | 110 | | — | |
| Commercial | 398 | | | 4 | | | 1,383 | | 82 | | 1,781 | | 86 | |
| Total mortgage-backed securities | 512 | | | 5 | | | 2,519 | | 143 | | 3,031 | | 148 | |
| Obligations of U.S. states and municipalities | 8,602 | | | 184 | | | 3,003 | | 306 | | 11,605 | | 490 | |
| Non-U.S. government debt securities | 13,262 | | | 80 | | | 4,762 | | 339 | | 18,024 | | 419 | |
| Corporate debt securities | 4 | | | — | | | 52 | | 12 | | 56 | | 12 | |
| Asset-backed securities: | | | | | | | | |
| Collateralized loan obligations | — | | | — | | | 615 | | 7 | | 615 | | 7 | |
| Other | 335 | | | — | | | 622 | | 11 | | 957 | | 11 | |
Total available-for-sale securities with gross unrealized losses | $ | 22,715 | |
| $ | 269 | | | $ | 11,573 | | $ | 818 | | $ | 34,288 | | $ | 1,087 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Available-for-sale securities with gross unrealized losses |
| Less than 12 months | | 12 months or more | | |
| December 31, 2023 (in millions) | Fair value | | Gross
unrealized losses | | Fair value | Gross
unrealized losses | Total fair value | Total gross unrealized losses |
| Available-for-sale securities | | | | | | | | |
| Mortgage-backed securities: | | | | | | | | |
| Residential: | | | | | | | | |
| U.S. | $ | 81 | | | $ | — | | | $ | 1,160 | | $ | 68 | | $ | 1,241 | | $ | 68 | |
| Non-U.S. | — | | | — | | | 722 | | 1 | | 722 | | 1 | |
| Commercial | 228 | | | 3 | | | 1,775 | | 136 | | 2,003 | | 139 | |
| Total mortgage-backed securities | 309 | | | 3 | | | 3,657 | | 205 | | 3,966 | | 208 | |
| Obligations of U.S. states and municipalities | 2,134 | | | 20 | | | 2,278 | | 246 | | 4,412 | | 266 | |
| Non-U.S. government debt securities | 7,145 | | | 23 | | | 4,987 | | 336 | | 12,132 | | 359 | |
| Corporate debt securities | 9 | | | — | | | 79 | | 28 | | 88 | | 28 | |
| Asset-backed securities: | | | | | | | | |
| Collateralized loan obligations | 932 | | | 2 | | | 3,744 | | 26 | | 4,676 | | 28 | |
| Other | 208 | | | 1 | | | 1,288 | | 25 | | 1,496 | | 26 | |
| Total available-for-sale securities with gross unrealized losses | $ | 10,737 | |
| $ | 49 | | | $ | 16,033 | | $ | 866 | | $ | 26,770 | | $ | 915 | |
HTM securities – credit risk
Credit quality indicator
The primary credit quality indicator for HTM securities is the risk rating assigned to each security. At both June 30, 2024 and December 31, 2023, all HTM securities were rated investment grade and were current and accruing, with approximately 99% rated at least AA+.
Allowance for credit losses on investment securities
The allowance for credit losses on investment securities was $177 million and $104 million as of June 30, 2024 and 2023, respectively, which included a cumulative-effect adjustment to retained earnings related to the transfer of HTM securities to AFS for the six months ended June 30, 2023.
Refer to Note 10 of JPMorgan Chase’s 2023 Form 10-K for further discussion of accounting policies for AFS and HTM securities.
Selected impacts of investment securities on the Consolidated statements of income
| | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | | Six months ended June 30, |
| (in millions) | 2024 | 2023 | | | 2024 | 2023 |
| Realized gains | $ | 64 | | $ | 198 | | | | $ | 237 | | $ | 329 | |
| Realized losses | (611) | | (1,098) | | | | (1,150) | | (2,097) | |
| Investment securities losses | $ | (547) | | $ | (900) | | | | $ | (913) | | $ | (1,768) | |
| Provision for credit losses | $ | 23 | | $ | 13 | | | | $ | 49 | | $ | 14 | |
Contractual maturities and yields
The following table presents the amortized cost and estimated fair value at June 30, 2024, of JPMorgan Chase’s investment securities portfolio by contractual maturity.
| | | | | | | | | | | | | | | | | | | | | | | | | |
By remaining maturity
June 30, 2024 (in millions) | Due in one
year or less | Due after one year through five years | Due after five years through 10 years | Due after 10 years(c) | | Total | | | |
| Available-for-sale securities | | | | | | | | | |
| Mortgage-backed securities | | | | | | | | | |
| Amortized cost | $ | 3 | | $ | 5,214 | | $ | 4,659 | | $ | 74,903 | | | $ | 84,779 | | | | |
| Fair value | 3 | | 5,142 | | 4,654 | | 71,098 | | | 80,897 | |
| | |
Average yield(a) | 4.67 | % | 5.21 | % | 6.01 | % | 4.82 | % | | 4.91 | % | | | |
| U.S. Treasury and government agencies | | | | | | | | | |
| Amortized cost | $ | — | | $ | 91,511 | | $ | 29,421 | | $ | 6,958 | | | $ | 127,890 | | | | |
| Fair value | — | | 91,529 | | 29,504 | | 6,495 | | | 127,528 | | | | |
Average yield(a) | — | % | 5.03 | % | 6.01 | % | 6.54 | % | | 5.33 | % | | | |
| Obligations of U.S. states and municipalities | | | | | | | | | |
| Amortized cost | $ | 15 | | $ | 17 | | $ | 80 | | $ | 17,434 | | | $ | 17,546 | | | | |
| Fair value | 15 | | 17 | | 78 | | 17,078 | | | 17,188 | |
| | |
Average yield(a) | 2.25 | % | 3.48 | % | 4.26 | % | 5.93 | % | | 5.91 | % | | | |
| Non-U.S. government debt securities | | | | | | | | | |
| Amortized cost | $ | 12,698 | | $ | 7,643 | | $ | 3,231 | | $ | 7,870 | | | $ | 31,442 | | | | |
| Fair value | 12,688 | | 7,595 | | 2,968 | | 7,848 | | | 31,099 | | | | |
Average yield(a) | 4.50 | % | 4.66 | % | 1.78 | % | 4.05 | % | | 4.15 | % | | | |
| Corporate debt securities | | | | | | | | | |
| Amortized cost | $ | 140 | | $ | — | | $ | 14 | | $ | — | | | $ | 154 | | | | |
| Fair value | 77 | | — | | 13 | | — | | | 90 | | | | |
Average yield(a) | 11.11 | % | — | % | 4.10 | % | — | % | | 10.48 | % | | | |
| Asset-backed securities | | | | | | | | | |
| Amortized cost | $ | 24 | | $ | 559 | | $ | 2,519 | | $ | 6,323 | | | $ | 9,425 | | | | |
| Fair value | 24 | | 558 | | 2,527 | | 6,341 | | | 9,450 | |
| | |
Average yield(a) | 4.68 | % | 5.09 | % | 6.39 | % | 6.87 | % | | 6.63 | % | | | |
| | | | | | | | | |
| Total available-for-sale securities | | | | | | | | | |
Amortized cost(b) | $ | 12,880 | | $ | 104,944 | | $ | 39,924 | | $ | 113,488 | | | $ | 271,236 | | | | |
| Fair value | 12,807 | | 104,841 | | 39,744 | | 108,860 | | | 266,252 | |
| | |
Average yield(a) | 4.57 | % | 5.01 | % | 5.69 | % | 5.15 | % | | 5.15 | % | | | |
| Held-to-maturity securities | | | | | | | | | |
| Mortgage-backed securities | | | | | | | | | |
| Amortized cost | $ | — | | $ | 7,374 | | $ | 7,073 | | $ | 106,197 | | | $ | 120,644 | | | | |
| Fair value | — | | 6,803 | | 6,203 | | 92,309 | | | 105,315 | | | | |
Average yield(a) | — | % | 2.64 | % | 2.61 | % | 3.00 | % | | 2.96 | % | | | |
| U.S. Treasury and government agencies | | | | | | | | | |
| Amortized cost | $ | 32,167 | | $ | 60,115 | | $ | 47,999 | | $ | — | | | $ | 140,281 | | | | |
| Fair value | 31,852 | | 55,456 | | 39,869 | | — | | | 127,177 | | | | |
Average yield(a) | 0.85 | % | 0.96 | % | 1.25 | % | — | % | | 1.03 | % | | | |
| Obligations of U.S. states and municipalities | | | | | | | | | |
| Amortized cost | $ | — | | $ | — | | $ | 271 | | $ | 9,256 | | | $ | 9,527 | | | | |
| Fair value | — | | — | | 239 | | 8,616 | | | 8,855 | | | | |
Average yield(a) | — | % | — | % | 3.19 | % | 3.92 | % | | 3.90 | % | | | |
| Asset-backed securities | | | | | | | | | |
| Amortized cost | $ | — | | $ | 304 | | $ | 19,032 | | $ | 34,083 | | | $ | 53,419 | | | | |
| Fair value | — | | 305 | | 19,055 | | 34,096 | | | 53,456 | | | | |
Average yield(a) | — | % | 6.76 | % | 6.19 | % | 6.52 | % | | 6.40 | % | | | |
| Total held-to-maturity securities | | | | | | | | | |
Amortized cost(b) | $ | 32,167 | | $ | 67,793 | | $ | 74,375 | | $ | 149,536 | | | $ | 323,871 | | | | |
| Fair value | 31,852 | | 62,564 | | 65,366 | | 135,021 | | | 294,803 | | | | |
Average yield(a) | 0.85 | % | 1.16 | % | 2.65 | % | 3.86 | % | | 2.72 | % | | | |
(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 $52 million and the portfolio layer fair value hedge basis adjustments of $(1.3) billion at June 30, 2024. The amortized cost of held-to-maturity securities also excludes the allowance for credit losses of $125 million at June 30, 2024.
(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 eight years for agency residential MBS and six years for both agency residential collateralized mortgage obligations and nonagency residential collateralized mortgage obligations.
Note 10 – Securities financing activities
Refer to Note 11 of JPMorgan Chase’s 2023 Form 10-K for a discussion of accounting policies relating to securities financing activities. Refer to Note 3 for further information regarding securities financing agreements for which the fair value option has been elected. Refer to Note 23 for further information regarding assets pledged and collateral received in securities financing agreements.
The table below summarizes the gross and net amounts of the Firm’s securities financing agreements as of June 30, 2024 and December 31, 2023. 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.
| | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 |
| (in millions) | Gross amounts | 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) |
Assets | | | | | | |
Securities purchased under resale agreements | $ | 640,309 | | $ | (248,036) | | $ | 392,273 | | $ | (380,530) | | | $ | 11,743 | |
Securities borrowed | 246,052 | | (46,990) | | 199,062 | | (145,011) | | | 54,051 | |
Liabilities | | | | | | |
| Securities sold under repurchase agreements | $ | 643,995 | | $ | (248,036) | | $ | 395,959 | | $ | (348,145) | | | $ | 47,814 | |
Securities loaned and other(a) | 56,390 | | (46,990) | | 9,400 | | (9,359) | | | 41 | |
| | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| (in millions) | Gross amounts | 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) |
Assets | | | | | | |
Securities purchased under resale agreements | $ | 523,308 | | $ | (247,181) | | $ | 276,127 | | $ | (267,582) | | | $ | 8,545 | |
Securities borrowed | 244,046 | | (43,610) | | 200,436 | | (144,543) | | | 55,893 | |
Liabilities | | | | | | |
| Securities sold under repurchase agreements | $ | 459,985 | | $ | (247,181) | | $ | 212,804 | | $ | (182,011) | | | $ | 30,793 | |
Securities loaned and other(a) | 52,142 | | (43,610) | | 8,532 | | (8,501) | | | 31 | |
(a)Includes securities-for-securities lending agreements of $5.9 billion and $5.6 billion at June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, included $7.2 billion and $7.1 billion, respectively, of securities purchased under resale agreements; $48.5 billion and $50.7 billion, respectively, of securities borrowed; $46.2 billion and $30.0 billion, respectively, of securities sold under repurchase agreements; and securities loaned and other which were not material at both June 30, 2024 and December 31, 2023.
The tables below present as of June 30, 2024 and December 31, 2023 the types of financial assets pledged in securities financing agreements and the remaining contractual maturity of the securities financing agreements.
| | | | | | | | | | | | | | | | | | | | | | | |
| Gross liability balance |
| June 30, 2024 | | December 31, 2023 |
| (in millions) | Securities sold under repurchase agreements | | Securities loaned and other | | Securities sold under repurchase agreements | | Securities loaned and other |
| Mortgage-backed securities | | | | | | | |
| U.S. GSEs and government agencies | $ | 74,419 | | | $ | — | | | $ | 71,064 | | | $ | — | |
| Residential - nonagency | 2,378 | | | — | | | 2,292 | | | — | |
| Commercial - nonagency | 2,526 | | | — | | | 2,669 | | | — | |
| U.S. Treasury, GSEs and government agencies | 326,550 | | | 625 | | | 216,467 | | | 1,034 | |
| Obligations of U.S. states and municipalities | 2,642 | | | — | | | 2,323 | | | — | |
| Non-U.S. government debt | 147,698 | | | 1,579 | | | 97,400 | | | 1,455 | |
| Corporate debt securities | 44,145 | | | 2,072 | | | 39,247 | | | 2,025 | |
| Asset-backed securities | 3,590 | | | — | | | 2,703 | | | — | |
| Equity securities | 40,047 | | | 52,114 | | | 25,820 | | | 47,628 | |
Total | $ | 643,995 | | | $ | 56,390 | | | $ | 459,985 | | | $ | 52,142 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Remaining contractual maturity of the agreements |
| Overnight and continuous | | | | | | Greater than
90 days | | |
| June 30, 2024 (in millions) | | Up to 30 days | | 30 – 90 days | | | Total |
| Total securities sold under repurchase agreements | $ | 312,993 | | | $ | 178,700 | | | $ | 49,573 | | | $ | 102,729 | | | $ | 643,995 | |
| Total securities loaned and other | 54,240 | | | — | | | 152 | | | 1,998 | | | 56,390 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Remaining contractual maturity of the agreements |
| Overnight and continuous | | | | | | Greater than
90 days | | |
| December 31, 2023 (in millions) | | Up to 30 days | | 30 – 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 | |
Transfers not qualifying for sale accounting
At June 30, 2024 and December 31, 2023, the Firm held $417 million and $505 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.
Note 11 – 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
Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for a detailed discussion of loans, including accounting policies. Refer to Note 3 of this Form 10-Q for further information on the Firm's elections of fair value accounting under the fair value option. Refer to Note 2 of this Form 10-Q for information on loans carried at fair value and classified as trading assets.
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 | | Credit card | | Wholesale(c)(d) |
• Residential real estate(a) • Auto and other(b) | | • 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, 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 of JPMorgan Chase’s 2023 Form 10-K for more information on SPEs.
The following tables summarize the Firm’s loan balances by portfolio segment.
| | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | Consumer, excluding credit card | | Credit card | | Wholesale | | Total(a)(b) | |
| (in millions) | |
| Retained | $ | 382,795 | | | $ | 216,100 | | | $ | 674,152 | | | $ | 1,273,047 | | |
| Held-for-sale | 1,366 | | | — | | | 8,037 | | | 9,403 | | |
| At fair value | 12,794 | | | — | | | 25,456 | |
| 38,250 | | |
| Total | $ | 396,955 | | | $ | 216,100 | | | $ | 707,645 | | | $ | 1,320,700 | | |
| | | | | | | | |
| December 31, 2023 | Consumer, excluding credit card | | Credit card | | Wholesale | | Total(a)(b) | |
| (in millions) | |
| Retained | $ | 397,275 | | | $ | 211,123 | | | $ | 672,472 | | | $ | 1,280,870 | | |
| Held-for-sale | 487 | | | — | | | 3,498 | | | 3,985 | | |
| At fair value | 12,331 | | | — | | | 26,520 | | | 38,851 | | |
| Total | $ | 410,093 | | | $ | 211,123 | | | $ | 702,490 | | | $ | 1,323,706 | | |
(a)Excludes $6.7 billion and $6.8 billion of accrued interest receivables as of June 30, 2024 and December 31, 2023, respectively. Accrued interest receivables written off were not material for the three and six months ended June 30, 2024 and 2023.
(b)Loans (other than those for which the fair value option has been elected) are presented net of unamortized discounts and premiums and net deferred loan fees or costs. These amounts were not material as of June 30, 2024 and December 31, 2023. For the discount associated with First Republic loans, refer to Note 26 on pages 188–190.
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 |
Three months ended June 30,
(in millions) | Consumer, excluding
credit card | Credit card | Wholesale | Total | | Consumer, excluding
credit card | Credit card | Wholesale | | Total |
| Purchases | $ | 232 | | (b)(c) | $ | — | | $ | 193 | | $ | 425 | | | $ | 92,002 | | (b)(c)(d) | $ | — | | $ | 58,398 | | (d) | $ | 150,400 | |
| Sales | 4,602 | | | — | | 10,954 | | 15,556 | | | 438 | | | — | | 9,709 | | | 10,147 | |
Retained loans reclassified to held-for-sale(a) | 182 | | | — | | 363 | | 545 | | | 81 | |
| — | | 771 | | | 852 | |
| | | | | | | | | | | | |
| 2024 | | 2023 |
Six months ended June 30,
(in millions) | Consumer, excluding
credit card | Credit card | Wholesale | Total | | Consumer, excluding
credit card | Credit card | Wholesale | | Total |
| Purchases | $ | 356 | | (b)(c) | $ | — | | $ | 354 | | $ | 710 | | | $ | 92,081 | | (b)(c)(d) | $ | — | | $ | 58,561 | | (d) | $ | 150,642 | |
| Sales | 7,966 | | | — | | 20,536 | | 28,502 | | | 438 | | | — | | 18,880 | | | 19,318 | |
Retained loans reclassified to held-for-sale(a) | 1,169 | | | — | | 548 | | 1,717 | | | 124 | | | — | | 1,085 | | | 1,209 | |
(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 three and six months ended June 30, 2024 and 2023. 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 $80 million and $1.6 billion for the three months ended June 30, 2024 and 2023, respectively, and $284 million and $2.3 billion for the six months ended June 30, 2024 and 2023, 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 $58.4 billion in Wholesale.
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 for the three and six months ended June 30, 2024 were $(36) million and $60 million, respectively, of which $(33) million and $33 million, respectively, were related to loans. Net gains/(losses) on sales of loans and lending-related commitments for the three and six months ended June 30, 2023 were $14 million and $37 million, respectively, of which $16 million and $43 million, respectively, were 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.
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.
| | | | | | | | | | | |
| (in millions) | June 30,
2024 | | December 31,
2023 |
| Residential real estate | $ | 314,843 | | | $ | 326,409 | |
| Auto and other | 67,952 | | | 70,866 | |
| Total retained loans | $ | 382,795 | | | $ | 397,275 | |
Delinquency rates are the primary credit quality indicator for consumer loans. Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for further information on consumer credit quality indicators.
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions, except ratios) | June 30, 2024 |
Term loans by origination year(c) | | Revolving loans | | Total |
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior to 2020 | | Within the revolving period | Converted to term loans | |
Loan delinquency(a) | | | | | | | | | | | |
Current | $ | 5,203 | | $ | 18,586 | | $ | 62,746 | | $ | 82,170 | | $ | 53,916 | | $ | 75,532 | | | $ | 7,001 | | $ | 7,591 | | | $ | 312,745 | |
30–149 days past due | 18 | | 24 | | 141 | | 95 | | 43 | | 745 | | | 18 | | 218 | | | 1,302 | |
150 or more days past due | 13 | | 2 | | 40 | | 36 | | 38 | | 503 | | | 27 | | 137 | | | 796 | |
Total retained loans | $ | 5,234 | | $ | 18,612 | | $ | 62,927 | | $ | 82,301 | | $ | 53,997 | | $ | 76,780 | | | $ | 7,046 | | $ | 7,946 | | | $ | 314,843 | |
% of 30+ days past due to total retained loans(b) | 0.59 | % | 0.14 | % | 0.29 | % | 0.16 | % | 0.15 | % | 1.61 | % | | 0.64 | % | 4.47 | % | | 0.66 | % |
| Gross charge-offs | $ | — | | $ | — | | $ | 1 | | $ | 1 | | $ | — | | $ | 123 | | | $ | 10 | | $ | 4 | | | $ | 139 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions, except ratios) | December 31, 2023 |
Term loans by origination year(c) | | Revolving loans | | Total |
| 2023 | 2022 | 2021 | 2020 | 2019 | Prior to 2019 | | Within the revolving period | Converted to term loans | |
Loan delinquency(a) | | | | | | | | | | | |
| Current | $ | 23,216 | $ | 64,366 | $ | 84,496 | $ | 55,546 | $ | 21,530 | $ | 59,563 | | $ | 7,479 | $ | 8,151 | | $ | 324,347 |
30–149 days past due | 33 | 74 | 89 | 70 | 41 | 801 | | 49 | 223 | | 1,380 |
150 or more days past due | 1 | 10 | 17 | 8 | 21 | 456 | | 5 | 164 | | 682 |
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(b) | 0.15 | % | 0.13 | % | 0.13 | % | 0.14 | % | 0.29 | % | 2.04 | % | | 0.72 | % | 4.53 | % | | 0.63 | % |
Gross charge-offs | $ | — | | $ | — | | $ | — | | $ | — | | $ | 4 | | $ | 167 | | | $ | 26 | | $ | 7 | | | $ | 204 | |
(a)Individual delinquency classifications include mortgage loans insured by U.S. government agencies which were not material at June 30, 2024 and December 31, 2023.
(b)Excludes mortgage loans that are 30 or more days past due insured by U.S. government agencies which were not material at June 30, 2024 and December 31, 2023. These amounts have been excluded based upon the government guarantee.
(c)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.
Nonaccrual loans and other credit quality indicators
The following table provides information on nonaccrual and other credit quality indicators for retained residential real estate loans.
| | | | | | | | | | | | | | | |
| (in millions, except weighted-average data) | June 30, 2024 | | December 31, 2023 | | |
Nonaccrual loans(a)(b)(c)(d) | $ | 3,231 | | | $ | 3,466 | | | |
| | | | | |
Current estimated LTV ratios(e)(f)(g) | | | | | |
Greater than 125% and refreshed FICO scores: | | | | | |
| Equal to or greater than 660 | $ | 76 | | | $ | 72 | | | |
| Less than 660 | — | | | — | | | |
101% to 125% and refreshed FICO scores: | | | | | |
| Equal to or greater than 660 | 172 | | | 223 | | | |
| Less than 660 | 4 | | | 4 | | | |
80% to 100% and refreshed FICO scores: | | | | | |
| Equal to or greater than 660 | 5,169 | | | 6,491 | | | |
| Less than 660 | 66 | | | 102 | | | |
Less than 80% and refreshed FICO scores: | | | | | |
| Equal to or greater than 660 | 299,687 | | | 309,251 | | | |
| Less than 660 | 8,878 | | | 9,277 | | | |
No FICO/LTV available(h) | 791 | | | 989 | | | |
Total retained loans | $ | 314,843 | | | $ | 326,409 | | | |
| | | | | |
Weighted-average LTV ratio(e)(i) | 47 | % | | 49 | % | | |
Weighted-average FICO(f)(i) | 775 | | | 770 | | | |
| | | | | |
Geographic region(h)(j) | | | | | |
| California | $ | 123,206 | | | $ | 127,072 | | | |
| New York | 47,572 | | | 48,815 | | | |
| Florida | 21,989 | | | 22,778 | | | |
| Texas | 14,846 | | | 15,506 | | | |
| Massachusetts | 13,780 | | | 14,213 | | | |
| Colorado | 10,458 | | | 10,800 | | | |
| Illinois | 10,235 | | | 10,856 | | | |
| Washington | 9,453 | | | 9,923 | | | |
| New Jersey | 7,707 | | | 8,050 | | | |
| Connecticut | 6,952 | | | 7,163 | | | |
| All other | 48,645 | | | 51,233 | | | |
Total retained loans | $ | 314,843 | | | $ | 326,409 | | | |
(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 June 30, 2024, 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 June 30, 2024 and December 31, 2023.
(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 $42 million and $44 million and $85 million and $89 million for the three and six months ended June 30, 2024 and 2023, respectively.
(e)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.
(f)Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
(g)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.
(h)Included U.S. government-guaranteed loans as of June 30, 2024 and December 31, 2023.
(i)Excludes loans with no FICO and/or LTV data available.
(j)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at June 30, 2024.
Loan modifications
The Firm grants certain modifications of residential real estate loans to borrowers experiencing financial difficulty. 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 deferral and principal forgiveness that would otherwise have been required under the terms of the original agreement, are considered FDMs. Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for further information.
Financial effects of FDMs
For the three and six months ended June 30, 2024, residential real estate FDMs were $68 million and $98 million, respectively. 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 7 years and 10 years, and reducing the weighted-average contractual interest rate from 7.59% to 6.04% and 7.58% to 5.50% for the three and six months ended June 30, 2024, respectively.
For the three and six months ended June 30, 2023, residential real estate FDMs were $35 million and $75 million, respectively. The financial effects of the FDMs, which were largely in the form of term extensions and interest rate reductions, included extending the weighted-average life of the loans by 15 years and 18 years, and reducing the weighted-average contractual interest rate from 6.90% to 4.21% and 6.75% to 4.01% for the three and six months ended June 30, 2023, respectively.
As of June 30, 2024 and December 31, 2023, there were no additional commitments to lend to borrowers experiencing financial difficulty whose loans have been modified as FDMs.
For the three and six months ended June 30, 2024 and 2023, loans subject to a trial modification, where the terms of the loans have not been permanently modified, and Chapter 7 loans were not material.
Payment status of FDMs
The following table provides information on the payment status of FDMs during the twelve months ended June 30, 2024 and the six months ended June 30, 2023.
| | | | | | | | | | |
(in millions) | Amortized cost basis | |
| Twelve months ended June 30, | Six months ended June 30, | | |
| 2024 | 2023 | | |
Current | $ | 125 | | $ | 64 | | | |
30-149 days past due | 19 | | 5 | | | |
150 or more days past due | 14 | | 6 | | | |
| Total | $ | 158 | | $ | 75 | | | |
Defaults of FDMs
FDMs that defaulted in the three and six months ended June 30, 2024 and were reported as FDMs in the twelve months prior to the default were not material. FDMs that defaulted in the three and six months ended June 30, 2023 and were reported as FDMs on or after January 1, 2023, the date that the Firm adopted the changes to the TDR accounting guidance were not material. Refer to Note 1 of JPMorgan Chase's 2023 Form 10-K for further information.
Active and suspended foreclosure
At June 30, 2024 and December 31, 2023, the Firm had residential real estate loans, excluding those insured by U.S. government agencies, with a carrying value of $619 million and $566 million, respectively, that were not included in REO, but were in the process of active or suspended foreclosure.
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 |
(in millions, except ratios) | Term loans by origination year | | Revolving loans | |
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior to 2020 | | Within the revolving period | Converted to term loans | Total |
| Loan delinquency | | | | | | | | | | |
Current | $ | 14,694 | | $ | 21,269 | | $ | 11,903 | | $ | 9,777 | | $ | 4,583 | | $ | 1,259 | | | $ | 3,369 | | $ | 122 | | $ | 66,976 | |
| 30–119 days past due | 90 | | 258 | | 250 | | 185 | | 58 | | 36 | | | 34 | | 27 | | 938 | |
| 120 or more days past due | — | | 1 | | — | | 4 | | 8 | | 1 | | | 2 | | 22 | | 38 | |
| Total retained loans | $ | 14,784 | | $ | 21,528 | | $ | 12,153 | | $ | 9,966 | | $ | 4,649 | | $ | 1,296 | | | $ | 3,405 | | $ | 171 | | $ | 67,952 | |
% of 30+ days past due to total retained loans | 0.61 | % | 1.20 | % | 2.06 | % | 1.90 | % | 1.42 | % | 2.85 | % | | 1.06 | % | 28.65 | % | 1.44 | % |
| Gross charge-offs | $ | 80 | | $ | 189 | | $ | 118 | | $ | 67 | | $ | 21 | | $ | 45 | | | $ | — | | $ | 2 | | $ | 522 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
(in millions, except ratios) | Term loans by origination year | | Revolving loans | |
| 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 | 276 | | 279 | | 231 | | 78 | | 43 | | 17 | | | 19 | | 24 | | 967 | |
| 120 or more days past due | 1 | | 1 | | 7 | | 8 | | — | | — | | | 3 | | 17 | | 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 | 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 | |
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) | Total Auto and other |
| June 30, 2024 | December 31, 2023 |
Nonaccrual loans(a)(b) | $ | 192 | | $ | 177 | |
| | |
Geographic region(c) | | |
| California | $ | 10,433 | | $ | 10,959 | |
| Texas | 8,025 | | 8,502 | |
| Florida | 5,507 | | 5,684 | |
| New York | 4,910 | | 4,938 | |
| Illinois | 2,977 | | 3,147 | |
| New Jersey | 2,505 | | 2,609 | |
| Pennsylvania | 1,962 | | 1,900 | |
| Georgia | 1,789 | | 1,912 | |
| Arizona | 1,673 | | 1,779 | |
| North Carolina | 1,630 | | 1,714 | |
| All other | 26,541 | | 27,722 | |
| Total retained loans | $ | 67,952 | | $ | 70,866 | |
(a)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.
(b)Interest income on nonaccrual loans recognized on a cash basis was not material for the three and six months ended June 30, 2024 and 2023.
(c)The geographic regions presented in this table are ordered based on the magnitude of the corresponding loan balances at June 30, 2024.
Loan modifications
The Firm grants certain modifications of auto and other loans to borrowers experiencing financial difficulty.
For the three and six months ended June 30, 2024 and 2023, auto and other FDMs were not material.
As of June 30, 2024 and December 31, 2023, there were no additional commitments to lend to borrowers modified as FDMs.
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.
Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for further information on the credit card loan portfolio, including credit quality indicators.
The following tables provide information on delinquency and gross charge-offs.
| | | | | | | | | | | |
(in millions, except ratios) | June 30, 2024 |
| Within the revolving period | Converted to term loans | Total |
Loan delinquency | | | |
| Current and less than 30 days past due and still accruing | $ | 210,533 | | $ | 1,082 | | $ | 211,615 | |
30–89 days past due and still accruing | 2,083 | | 92 | | 2,175 | |
90 or more days past due and still accruing | 2,257 | | 53 | | 2,310 | |
| Total retained loans | $ | 214,873 | | $ | 1,227 | | $ | 216,100 | |
| Loan delinquency ratios | | | |
% of 30+ days past due to total retained loans | 2.02 | % | 11.82 | % | 2.08 | % |
% of 90+ days past due to total retained loans | 1.05 | | 4.32 | | 1.07 | |
| Gross charge-offs | $ | 3,885 | | $ | 113 | | $ | 3,998 | |
| | | | | | | | | | | |
(in millions, except ratios) | December 31, 2023 |
| Within the revolving period | Converted to term loans | Total |
Loan delinquency | | | |
| Current and less than 30 days past due and still accruing | $ | 205,731 | | $ | 882 | | $ | 206,613 | |
30–89 days past due and still accruing | 2,217 | | 84 | | 2,301 | |
90 or more days past due and still accruing | 2,169 | | 40 | | 2,209 | |
| Total retained loans | $ | 210,117 | | $ | 1,006 | | $ | 211,123 | |
| Loan delinquency ratios | | | |
% of 30+ days past due to total retained loans | 2.09 | % | 12.33 | % | 2.14 | % |
% of 90+ days past due to total retained loans | 1.03 | | 3.98 | | 1.05 | |
| Gross charge-offs | $ | 5,325 | | $ | 166 | | $ | 5,491 | |
Other credit quality indicators
The following table provides information on other credit quality indicators for retained credit card loans.
| | | | | | | | |
| (in millions, except ratios) | June 30, 2024 | December 31, 2023 |
Geographic region(a) | | |
| California | $ | 33,609 | | $ | 32,652 | |
| Texas | 22,679 | | 22,086 | |
| New York | 17,389 | | 16,915 | |
| Florida | 15,652 | | 15,103 | |
| Illinois | 11,661 | | 11,364 | |
| New Jersey | 8,959 | | 8,688 | |
| Colorado | 6,587 | | 6,307 | |
| Ohio | 6,505 | | 6,424 | |
| Pennsylvania | 6,101 | | 6,088 | |
| Arizona | 5,357 | | 5,209 | |
| All other | 81,601 | | 80,287 | |
| Total retained loans | $ | 216,100 | | $ | 211,123 | |
Percentage of portfolio based on carrying value with estimated refreshed FICO scores | | |
| Equal to or greater than 660 | 85.8 | % | 85.8 | % |
| Less than 660 | 14.0 | | 14.0 | |
| No FICO available | 0.2 | | 0.2 | |
(a)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at June 30, 2024.
Loan modifications
The Firm grants certain modifications of credit card loans to borrowers experiencing financial difficulty. 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 tables provide information on credit card loan modifications considered FDMs.
| | | | | | | | | | | | | | | | |
| Loan modifications | | |
| Three months ended June 30, | Six months ended June 30, | | |
| (in millions) | 2024 | 2023 | 2024 | 2023 | |
Term extension and interest rate reduction(a)(b) | | | | | | |
| Amortized cost basis | $ | 259 | | $ | 181 | | $ | 491 | | $ | 326 | | | |
| % of total modifications to total retained credit card loans | 0.12 | % | 0.09 | % | 0.23 | % | 0.17 | % | | |
| Financial effect of loan modifications | Term extension with a reduction in the weighted average contractual interest rate from 23.89% to 3.04% | Term extension with a reduction in the weighted average contractual interest rate from 23.27% to 3.57% | Term extension with a reduction in the weighted average contractual interest rate from 23.88% to 3.17% | Term extension with a reduction in the weighted average contractual interest rate from 22.96% to 3.54% | | |
(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) Interest rates represents the weighted average at the time of modification.
Payment status of FDMs
The following table provides information on the payment status of FDMs during the twelve months ended June 30, 2024 and the six months ended June 30, 2023.
| | | | | | | | | | |
(in millions) | Amortized cost basis | |
| Twelve months ended June 30, | Six months ended June 30, | | |
| 2024 | 2023 | | |
| Current and less than 30 days past due and still accruing | $ | 701 | | $ | 264 | | | |
| 30-89 days past due and still accruing | 61 | | 38 | | | |
| 90 or more days past due and still accruing | 42 | | 24 | | | |
| Total | $ | 804 | | $ | 326 | | | |
Defaults of FDMs
FDMs that defaulted in the three and six months ended June 30, 2024 and were reported as FDMs in the twelve months prior to the default were not material. FDMs that defaulted in the three and six months ended June 30, 2023 and were reported as FDMs on or after January 1, 2023, the date that the Firm adopted the changes to the TDR accounting guidance were not material. Refer to Note 1 of JPMorgan Chase's 2023 Form 10-K for further information.
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.
Wholesale loan portfolio
Wholesale loans include loans made to a variety of clients, ranging from large corporate and institutional clients, to small businesses and high-net-worth individuals. The primary credit quality indicator for wholesale loans is the internal risk rating assigned to each loan. Refer to Note 12 of JPMorgan Chase’s 2023 Form 10-K for further information on these risk ratings.
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Secured by real estate | | Commercial and industrial | | Other(a) | | Total retained loans |
| (in millions, except ratios) | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | | Dec 31,
2023 |
Loans by risk ratings | | | | | | | | | | | | | |
Investment-grade | $ | 116,812 | | $ | 120,405 | | | $ | 70,806 | | | $ | 72,624 | | | $ | 267,340 | | $ | 265,809 | | | $ | 454,958 | | | $ | 458,838 | |
Noninvestment-grade: | | | | | | | | | | | | | |
Noncriticized | 36,840 | | 34,241 | | | 82,888 | | | 80,637 | | | 74,008 | | 75,178 | | | 193,736 | | | 190,056 | |
Criticized performing | 9,370 | | 7,291 | | | 11,384 | | | 12,684 | | | 1,415 | | 1,257 | | | 22,169 | | | 21,232 | |
| Criticized nonaccrual | 864 | | 401 | | | 1,620 | | | 1,221 | | | 805 | | 724 | | | 3,289 | | | 2,346 | |
| Total noninvestment-grade | 47,074 | | 41,933 | | | 95,892 | | | 94,542 | | | 76,228 | | 77,159 | | | 219,194 | | | 213,634 | |
Total retained loans | $ | 163,886 | | $ | 162,338 | | | $ | 166,698 | | | $ | 167,166 | | | $ | 343,568 | | $ | 342,968 | | | $ | 674,152 | | | $ | 672,472 | |
% of investment-grade to total retained loans | 71.28 | % | 74.17 | % | | 42.48 | % | | 43.44 | % | | 77.81 | % | 77.50 | % | | 67.49 | % | | 68.23 | % |
% of total criticized to total retained loans | 6.24 | | 4.74 | | | 7.80 | | | 8.32 | | | 0.65 | | 0.58 | | | 3.78 | | | 3.51 | |
% of criticized nonaccrual to total retained loans | 0.53 | | 0.25 | | | 0.97 | | | 0.73 | | | 0.23 | | 0.21 | | | 0.49 | | | 0.35 | |
(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. As of June 30, 2024 and December 31, 2023, predominantly consisted of $107.2 billion and $106.9 billion, respectively, to individuals and individual entities; $94.3 billion and $87.5 billion, respectively, to financial institutions; and $83.5 billion and $91.2 billion, respectively, to SPEs. Refer to Note 14 of JPMorgan Chase’s 2023 Form 10-K for more information on SPEs.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Secured by real estate |
(in millions) | June 30, 2024 |
| Term loans by origination year | | Revolving loans | | |
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior to 2020 | | Within the revolving period | Converted to term loans | | Total |
Loans by risk ratings | | | | | | | | | | | |
| Investment-grade | $ | 4,147 | | $ | 10,400 | | $ | 27,215 | | $ | 24,165 | | $ | 16,066 | | $ | 33,375 | | | $ | 1,444 | | $ | — | | | $ | 116,812 | |
| Noninvestment-grade | 2,434 | | 5,028 | | 13,865 | | 8,913 | | 3,737 | | 11,629 | | | 1,457 | | 11 | | | 47,074 | |
Total retained loans | $ | 6,581 | | $ | 15,428 | | $ | 41,080 | | $ | 33,078 | | $ | 19,803 | | $ | 45,004 | | | $ | 2,901 | | $ | 11 | | | $ | 163,886 | |
| Gross charge-offs | $ | 1 | | $ | 13 | | $ | 27 | | $ | — | | $ | 33 | | $ | 38 | | | $ | — | | $ | — | | | $ | 112 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Secured by real estate |
(in millions) | 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 |
Loans by risk ratings | | | | | | | | | | | |
| Investment-grade | $ | 10,687 | | $ | 28,874 | | $ | 25,784 | | $ | 16,820 | | $ | 15,677 | | $ | 21,108 | | | $ | 1,455 | | $ | — | | | $ | 120,405 | |
| Noninvestment-grade | 4,477 | | 12,579 | | 7,839 | | 3,840 | | 3,987 | | 7,918 | | | 1,291 | | 2 | | | 41,933 | |
| Total retained loans | $ | 15,164 | | $ | 41,453 | | $ | 33,623 | | $ | 20,660 | | $ | 19,664 | | $ | 29,026 | | | $ | 2,746 | | $ | 2 | | | $ | 162,338 | |
| Gross charge-offs | $ | 20 | | $ | 48 | | $ | 22 | | $ | — | | $ | 23 | | $ | 78 | | | $ | — | | $ | 1 | | | $ | 192 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial |
(in millions) | June 30, 2024 |
| Term loans by origination year | | Revolving loans | | |
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior to 2020 | | Within the revolving period | Converted to term loans | | Total |
Loans by risk ratings | | | | | | | | | | | |
| Investment-grade | $ | 8,308 | | $ | 7,356 | | $ | 7,868 | | $ | 3,414 | | $ | 1,639 | | $ | 1,661 | | | $ | 40,558 | | $ | 2 | | | $ | 70,806 | |
| Noninvestment-grade | 10,734 | | 14,385 | | 13,359 | | 7,621 | | 1,145 | | 1,443 | | | 47,132 | | 73 | | | 95,892 | |
Total retained loans | $ | 19,042 | | $ | 21,741 | | $ | 21,227 | | $ | 11,035 | | $ | 2,784 | | $ | 3,104 | | | $ | 87,690 | | $ | 75 | | | $ | 166,698 | |
| Gross charge-offs | $ | 5 | | $ | 4 | | $ | 67 | | $ | 24 | | $ | 1 | | $ | 3 | | | $ | 88 | | $ | 2 | | | $ | 194 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial |
(in millions) | 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 |
Loans by risk ratings | | | | | | | | | | | |
| Investment-grade | $ | 14,875 | | $ | 10,642 | | $ | 4,276 | | $ | 2,291 | | $ | 1,030 | | $ | 1,115 | | | $ | 38,394 | | $ | 1 | | | $ | 72,624 | |
| Noninvestment-grade | 18,890 | | 16,444 | | 9,299 | | 1,989 | | 1,144 | | 1,006 | | | 45,696 | | 74 | | | 94,542 | |
Total retained loans | $ | 33,765 | | $ | 27,086 | | $ | 13,575 | | $ | 4,280 | | $ | 2,174 | | $ | 2,121 | | | $ | 84,090 | | $ | 75 | | | $ | 167,166 | |
| Gross charge-offs | $ | 25 | | $ | 8 | | $ | 110 | | $ | 55 | | $ | 2 | | $ | 12 | | | $ | 259 | | $ | 8 | | | $ | 479 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other(a) |
(in millions) | June 30, 2024 |
| Term loans by origination year | | Revolving loans | | |
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior to 2020 | | Within the revolving period | Converted to term loans | | Total |
Loans by risk ratings | | | | | | | | | | | |
| Investment-grade | $ | 16,122 | | $ | 27,693 | | $ | 16,067 | | $ | 8,229 | | $ | 10,129 | | $ | 8,656 | | | $ | 179,160 | | $ | 1,284 | | | $ | 267,340 | |
| Noninvestment-grade | 7,791 | | 8,122 | | 6,241 | | 4,578 | | 1,819 | | 2,236 | | | 45,329 | | 112 | | | 76,228 | |
Total retained loans | $ | 23,913 | | $ | 35,815 | | $ | 22,308 | | $ | 12,807 | | $ | 11,948 | | $ | 10,892 | | | $ | 224,489 | | $ | 1,396 | | | $ | 343,568 | |
| Gross charge-offs | $ | — | | $ | 36 | | $ | 2 | | $ | 26 | | $ | 41 | | $ | 36 | | | $ | 1 | | $ | — | | | $ | 142 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other(a) |
(in millions) | 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 |
| 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 | 14,054 | | 8,092 | | 6,169 | | 2,172 | | 811 | | 2,001 | | | 43,801 | | 59 | | | 77,159 | |
| Total retained loans | $ | 52,392 | | $ | 26,126 | | $ | 16,202 | | $ | 12,271 | | $ | 4,532 | | $ | 8,663 | | | $ | 220,529 | | $ | 2,253 | | | $ | 342,968 | |
| Gross charge-offs | $ | 5 | | $ | 298 | | $ | 8 | | $ | 8 | | $ | — | | $ | 8 | | | $ | 13 | | $ | — | | | $ | 340 | |
(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 of JPMorgan Chase’s 2023 Form 10-K for more information on SPEs.
The following table presents additional information on retained loans secured by real estate, which consists of loans secured wholly or substantially by a lien or liens on real property at origination.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(in millions, except ratios) | Multifamily | | Other commercial | | Total retained loans secured by real estate |
June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 |
Retained loans secured by real estate | $ | 101,726 | | $ | 100,725 | | | $ | 62,160 | | $ | 61,613 | | | $ | 163,886 | | $ | 162,338 | |
| Criticized | 4,086 | | 3,596 | | | 6,148 | | 4,096 | | | 10,234 | | 7,692 | |
| % of criticized to total retained loans secured by real estate | 4.02 | % | 3.57 | % | | 9.89 | % | 6.65 | % | | 6.24 | % | 4.74 | % |
| Criticized nonaccrual | $ | 90 | | $ | 76 | | | $ | 774 | | $ | 325 | | | $ | 864 | | $ | 401 | |
% of criticized nonaccrual loans to total retained loans secured by real estate | 0.09 | % | 0.08 | % | | 1.25 | % | 0.53 | % | | 0.53 | % | 0.25 | % |
Geographic distribution and delinquency
The following table provides information on the geographic distribution and delinquency for retained wholesale loans.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Secured by real estate | | Commercial
and industrial | | Other | | Total
retained loans |
| (in millions) | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 |
Loans by geographic distribution(a) | | | | | | | | | | | |
| Total U.S. | $ | 160,858 | | $ | 159,499 | | | $ | 128,139 | | $ | 127,638 | | | $ | 262,178 | | $ | 262,499 | | | $ | 551,175 | | $ | 549,636 | |
| Total non-U.S. | 3,028 | | 2,839 | | | 38,559 | | 39,528 | | | 81,390 | | 80,469 | | | 122,977 | | 122,836 | |
| Total retained loans | $ | 163,886 | | $ | 162,338 | | | $ | 166,698 | | $ | 167,166 | | | $ | 343,568 | | $ | 342,968 | |
| $ | 674,152 | | $ | 672,472 | |
| Loan delinquency | | | | | | | | | | | |
Current and less than 30 days past due and still accruing | $ | 162,166 | | $ | 161,314 | | | $ | 164,281 | | $ | 164,899 | | | $ | 341,542 | | $ | 341,128 | |
| $ | 667,989 | | $ | 667,341 | |
30–89 days past due and still accruing(b) | 813 | | 473 | | | 734 | | 884 | | | 1,202 | | 1,090 | | | 2,749 | | 2,447 | |
90 or more days past due and still accruing(c) | 43 | | 150 | | | 63 | | 162 | | | 19 | | 26 | | | 125 | | 338 | |
| Criticized nonaccrual | 864 | | 401 | | | 1,620 | | 1,221 | | | 805 | | 724 | | | 3,289 | | 2,346 | |
| Total retained loans | $ | 163,886 | | $ | 162,338 | | | $ | 166,698 | | $ | 167,166 | | | $ | 343,568 | | $ | 342,968 | |
| $ | 674,152 | | $ | 672,472 | |
(a)The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
(b)As of June 30, 2024, includes delayed payments associated with certain First Republic loans as a result of ongoing integration activities. As of August 2, 2024, these loans were largely current.
(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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in millions) | Secured by real estate | | Commercial
and industrial | | Other | | Total
retained loans |
June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 | | June 30,
2024 | Dec 31,
2023 |
| Nonaccrual loans | | | | | | | | | | | |
| With an allowance | $ | 156 | | $ | 129 | | | $ | 1,284 | | $ | 776 | | | $ | 618 | | $ | 492 | | | $ | 2,058 | | $ | 1,397 | |
Without an allowance(a) | 708 | | 272 | | | 336 | | 445 | | | 187 | | 232 | | | 1,231 | | 949 | |
Total nonaccrual loans(b) | $ | 864 | | $ | 401 | | | $ | 1,620 | | $ | 1,221 | | | $ | 805 | | $ | 724 | | | $ | 3,289 | | $ | 2,346 | |
(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 was not material for the three and six months ended June 30, 2024 and 2023.
Loan modifications
The Firm grants certain modifications of wholesale loans to borrowers experiencing financial difficulty.
Financial effects of FDMs
The following tables provide information by loan class about modifications considered FDMs during the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | |
| Secured by real estate |
| Three months ended June 30, 2024 | | Six months ended June 30, 2024 |
(in million) | Amortized cost basis | % of loan modifications to total retained Secured by real estate loans | Financial effect of loan modifications | | Amortized cost basis | % of loan modifications to total retained Secured by real estate loans | Financial effect of loan modifications |
| Single modifications | | | | | | | |
| Term extension | $ | 27 | | 0.02 | % | Extended loans by a weighted-average of 5 months | | $ | 28 | | 0.02 | % | Extended loans by a weighted-average of 5 months |
| | | | | | | |
| Multiple modifications | | | | | | | |
Other-than-insignificant payment deferral and interest rate reduction | 35 | | 0.02 | | Provided payment deferrals with delayed amounts recaptured at maturity and reduced weighted-average contractual interest by 185 bps | | 48 | | 0.03 | | Provided payment deferrals with delayed amounts recaptured at maturity and reduced weighted-average contractual interest by 162 bps |
Other(a) | — | | — | | NM | | 1 | | — | | NM |
| Total | $ | 62 | | | | | $ | 77 | | | |
(a)Includes a loan with a single modification.
| | | | | | | | | | | | | | | | | | | | | | | |
| Secured by real estate |
| Three months ended June 30, 2023 | | Six months ended June 30, 2023 |
| Amortized cost basis | % of loan modifications to total retained Secured by real estate loans | Financial effect of loan modifications | | Amortized cost basis | % of loan modifications to total retained Secured by real estate loans | Financial effect of loan modifications |
| Single modifications | | | | | | | |
| Term extension | $ | 68 | | 0.04 | % | Extended loans by a weighted-average of 9 months | | $ | 71 | | 0.04 | % | Extended loans by a weighted-average of 9 months |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Other(a) | 9 | | — | | NM | | 14 | | — | | NM |
| Total | $ | 77 | | | | | $ | 85 | | | |
(a)Includes loans with both single and multiple modifications.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Commercial and industrial |
| | | | | | | | Three months ended June 30, 2024 | | Six months ended June 30, 2024 |
| | | | | | | | Amortized cost basis | % of loan modifications to total retained Commercial and industrial loans | Financial effect of loan modifications | | Amortized cost basis | % of loan modifications to total retained Commercial and industrial loans | Financial effect of loan modifications |
| Single modifications | | | | | | | | | | | | |
| Term extension | | | | | | | | $ | 460 | | 0.28 | % | Extended loans by a weighted-average of 12 months | | $ | 754 | | 0.45 | % | Extended loans by a weighted-average of 13 months |
| Other-than-insignificant payment deferral | | | | | | | | 162 | | 0.10 | | Provided payment deferrals with delayed amounts primarily re-amortized over the remaining tenor | | 166 | | 0.10 | | Provided payment deferrals with delayed amounts primarily re-amortized over the remaining tenor |
| Multiple modifications | | | | | | | | | | | |
Other-than-insignificant payment deferral and term extension | | | | | | | | 20 | | 0.01 | | Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 19 months | | 115 | | 0.07 | | Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 20 months |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Other(a) | | | | | | | | 2 | | — | | NM | | 6 | | — | | NM |
| Total | | | | | $ | 644 | | | | | $ | 1,041 | | | |
(a)Includes loans with both single and multiple modifications.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Commercial and industrial |
| | | | | | | | Three months ended June 30, 2023 | | Six months ended June 30, 2023 |
| | | | | | | | Amortized cost basis | % of loan modifications to total retained Commercial and industrial loans | Financial effect of loan modifications | | Amortized cost basis | % of loan modifications to total retained Commercial and industrial loans | Financial effect of loan modifications |
| Single modifications | | | | | | | | | | | | |
| Term extension | | | | | | | | $ | 306 | | 0.18 | % | Extended loans by a weighted-average of 8 months | | $ | 423 | | 0.25 | % | Extended loans by a weighted-average of 10 months |
| | | | | | | | | | | | | | |
| Multiple modifications | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Term extension and principal forgiveness | | | | | | | | — | | — | | | | 40 | 0.02 | | Extended loans by a weighted average of 64 months and reduced amortized cost basis of the loans by $23 million |
Other(a) | | | | | | | | 6 | | — | | NM | | 6 | | — | | NM |
| Total | | | | | $ | 312 | | | | | $ | 469 | | | |
(a)Includes loans with both single and multiple modifications.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Other |
| | | | | | | | Three months ended June 30, 2024 | | Six months ended June 30, 2024 |
| | | | | | | | Amortized cost basis | % of loan modifications to total retained Other loans | Financial effect of loan modifications | | Amortized cost basis | % of loan modifications to total retained Other loans | Financial effect of loan modifications |
| Single modifications | | | | | | | | | | | | |
| Term extension | | | | | | | | $ | 19 | | 0.01 | % | Extended loans by a weighted-average of 7 months | | $ | 29 | | 0.01 | % | Extended loans by a weighted-average of 11 months |
| Other-than-insignificant payment deferral | | | | | | | | 13 | | — | | Provided payment deferrals with delayed amounts recaptured at the end of the deferral period | | 13 | | — | | Provided payment deferrals with delayed amounts recaptured at the end of the deferral period |
| | | | | | | | | | | |
| | | | | | | | | | | | | | |
Other(a) | | | | | | | | 2 | | — | | NM | | 2 | | — | | NM |
| Total | | | | | $ | 34 | | | | | $ | 44 | | | |
(a)Includes a loan with multiple modifications.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Other |
| | | | | | | | Three months ended June 30, 2023 | | Six months ended June 30, 2023 |
| | | | | | | | Amortized cost basis | % of loan modifications to total retained Other loans | Financial effect of loan modifications | | Amortized cost basis | % of loan modifications to total retained Other loans | Financial effect of loan modifications |
| Single modifications | | | | | | | | | | | | |
| Term extension | | | | | | | | $ | 38 | | 0.01 | % | Extended loans by a weighted average of 3 months | | $ | 54 | | 0.02 | % | Extended loans by a weighted average of 6 months |
Interest rate reduction | | | | | | | | 11 | — | | Reduced weighted-average contractual interest by 654 bps | | 11 | — | | Reduced weighted-average contractual interest by 654 bps |
| Multiple modifications | | | | | | | | | | | |
Other-than-insignificant payment deferral and term extension | | | | | | | | 235 | 0.07 | | Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 144 months | | 235 | 0.07 | | Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 144 months |
| | | | | | | | | | | | | | |
| Total | | | | | $ | 284 | | | | | $ | 300 | | | |
Payment status of FDMs
The following table provides information on the payment status of FDMs during the twelve months ended June 30, 2024 and the six months ended June 30, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized cost basis | |
| Twelve months ended June 30, 2024 | | | Six months ended June 30, 2023 | |
| (in millions) | Secured by real estate | Commercial and industrial | Other | | | Secured by real estate | Commercial and industrial | Other | |
Current and less than 30 days past due and still accruing | $ | 74 | | $ | 1,271 | | $ | 134 | | | | $ | 77 | | $ | 331 | | $ | — | | |
| 30-89 days past due and still accruing | 1 | | 79 | | — | | | | 1 | | — | | — | | |
| 90 or more days past due and still accruing | — | | — | | — | | | | — | | 3 | | — | | |
| Criticized nonaccrual | 70 | | 425 | | 208 | | | | 7 | | 135 | | 300 | | |
| Total | $ | 145 | | $ | 1,775 | | $ | 342 | | | | $ | 85 | | $ | 469 | | $ | 300 | | |
Defaults of FDMs
The following table provides information by loan class about FDMs that defaulted in the three and six months ended June 30, 2024 that were reported as FDMs in the twelve months prior to the default, and FDMs that defaulted in the three and six months ended June 30, 2023 that were reported as FDMs on or after January 1, 2023, the date that the Firm adopted the changes to the TDR accounting guidance.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized cost basis | |
| Three months ended June 30, 2024 | | | Six months ended June 30, 2024 | |
| (in millions) | Secured by real estate | Commercial and industrial | Other | | | Secured by real estate | Commercial and industrial | Other | |
Term extension | $ | 1 | | $ | 110 | | $ | 9 | | | | $ | 6 | | $ | 111 | | $ | 11 | | |
Other-than-insignificant payment deferral | — | | 23 | | — | | | | — | | 23 | | — | | |
Other than insignificant payment deferral and term extension | — | | 20 | | — | | | | — | | 20 | | — | | |
Interest rate reduction and term extension | 3 | | 1 | | — | | | | 3 | | 2 | | — | | |
| Total | $ | 4 | | $ | 154 | | $ | 9 | | | | $ | 9 | | $ | 156 | | $ | 11 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized cost basis | |
| Three months ended June 30, 2023 | | | Six months ended June 30, 2023 | |
| (in millions) | Secured by real estate | Commercial and industrial | Other | | | Secured by real estate | Commercial and industrial | Other | |
Term extension | $ | — | | $ | 3 | | $ | — | | | | $ | 1 | | $ | 7 | | $ | — | | |
| Total | $ | — | | $ | 3 | | $ | — | | | | $ | 1 | | $ | 7 | | $ | — | | |
As of June 30, 2024 and December 31, 2023, additional unfunded commitments on modified loans to borrowers experiencing financial difficulty were $849 million and $1.8 billion, respectively, in Commercial and industrial, and $73 million and $4 million, respectively, in Other loan class. There were no additional commitments to borrowers experiencing financial difficulty whose loans have been modified as FDMs in Secured by real estate for both periods.
Note 12 – 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.
Refer to Note 13 of JPMorgan Chase's 2023 Form 10-K for a detailed discussion of the allowance for credit losses and the related accounting policies.
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 of JPMorgan Chase’s 2023 Form 10-K and Note 9 of this Form 10-Q for further information on the allowance for credit losses on investment securities.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 |
Six months ended June 30,
(in millions) | Consumer, excluding
credit card | Credit card | Wholesale | | Total | | Consumer, excluding credit card | Credit card | Wholesale | Total |
| Allowance for loan losses | | | | | | | | | | |
| Beginning balance at January 1, | $ | 1,856 | | $ | 12,450 | | $ | 8,114 | | | $ | 22,420 | | | $ | 2,040 | | $ | 11,200 | | $ | 6,486 | | $ | 19,726 | |
Cumulative effect of a change in accounting principle(a) | NA | NA | NA | | NA | | (489) | (100) | 2 | | (587) | |
| Gross charge-offs | 661 | | 3,998 | | 448 | | | 5,107 | | | 501 | | 2,432 | | 294 | | 3,227 | |
| Gross recoveries collected | (343) | | (482) | | (95) | | | (920) | | | (247) | | (386) | | (46) | | (679) | |
| Net charge-offs/(recoveries) | 318 | | 3,516 | | 353 | | | 4,187 | | | 254 | | 2,046 | | 248 | | 2,548 | |
| Provision for loan losses | 204 | | 4,266 | | 288 | | | 4,758 | | | 751 | | 2,546 | | 2,067 | | 5,364 | |
Other | 1 | | — | | (1) | | | — | | | — | | — | | 25 | | 25 | |
Ending balance at June 30, | $ | 1,743 | | $ | 13,200 | | $ | 8,048 | | | $ | 22,991 | | | $ | 2,048 | | $ | 11,600 | | $ | 8,332 | | $ | 21,980 | |
Allowance for lending-related commitments | | | | | | | | | | |
Beginning balance at January 1, | $ | 75 | | $ | — | | $ | 1,899 | | | $ | 1,974 | | | $ | 76 | | $ | — | | $ | 2,306 | | $ | 2,382 | |
| Provision for lending-related commitments | 17 | | — | | 77 | | | 94 | | | 52 | | — | | (253) | | (201) | |
Other | — | | — | | — | | | — | | | 1 | | — | | 4 | | 5 | |
Ending balance at June 30, | $ | 92 | | $ | — | | $ | 1,976 | | | $ | 2,068 | | | $ | 129 | | $ | — | | $ | 2,057 | | $ | 2,186 | |
| Total allowance for investment securities | NA | NA | NA | | 177 | | | NA | NA | NA | 104 | |
Total allowance for credit losses(b) | $ | 1,835 | | $ | 13,200 | | $ | 10,024 | | | $ | 25,236 | | | $ | 2,177 | | $ | 11,600 | | $ | 10,389 | | $ | 24,270 | |
Allowance for loan losses by impairment methodology | | | | | | | | | | |
Asset-specific(c) | $ | (856) | | $ | — | | $ | 562 | | | $ | (294) | | | $ | (971) | | $ | — | | $ | 478 | | $ | (493) | |
| Portfolio-based | 2,599 | | 13,200 | | 7,486 | | | 23,285 | | | 3,019 | | 11,600 | | 7,854 | | 22,473 | |
| Total allowance for loan losses | $ | 1,743 | | $ | 13,200 | | $ | 8,048 | | | $ | 22,991 | | | $ | 2,048 | | $ | 11,600 | | $ | 8,332 | | $ | 21,980 | |
| | | | | | | | | | |
| Loans by impairment methodology | | | | | | | | | | |
Asset-specific(c) | $ | 3,034 | | $ | — | | $ | 3,283 | | | $ | 6,317 | | | $ | 3,439 | | $ | — | | $ | 2,587 | | $ | 6,026 | |
| Portfolio-based | 379,761 | | 216,100 | | 670,869 | | | 1,266,730 | | | 392,756 | | 191,348 | | 665,558 | | 1,249,662 | |
| Total retained loans | $ | 382,795 | | $ | 216,100 | | $ | 674,152 | | | $ | 1,273,047 | | | $ | 396,195 | | $ | 191,348 | | $ | 668,145 | | $ | 1,255,688 | |
Collateral-dependent loans | | | | | | | | | | |
| Net charge-offs | $ | 3 | | $ | — | | $ | 134 | | | $ | 137 | | | $ | 5 | | $ | — | | $ | 77 | | $ | 82 | |
Loans measured at fair value of collateral less cost to sell | 2,978 | | — | | 1,341 | | | 4,319 | | | 3,388 | | — | | 762 | | 4,150 | |
Allowance for lending-related commitments by impairment methodology | | | | | | | | | | |
Asset-specific | $ | — | | $ | — | | $ | 107 | | | $ | 107 | | | $ | — | | $ | — | | $ | 65 | | $ | 65 | |
Portfolio-based | 92 | | — | | 1,869 | | | 1,961 | | | 129 | | — | | 1,992 | | 2,121 | |
Total allowance for lending-related commitments(d) | $ | 92 | | $ | — | | $ | 1,976 | | | $ | 2,068 | | | $ | 129 | | $ | — | | $ | 2,057 | | $ | 2,186 | |
Lending-related commitments by impairment methodology | | | | | | | | | | |
Asset-specific | $ | — | | $ | — | | $ | 541 | | | $ | 541 | | | $ | — | | $ | — | | $ | 332 | | $ | 332 | |
Portfolio-based(e) | 27,375 | | — | | 511,857 | | | 539,232 | | | 32,428 | | — | | 521,408 | | 553,836 | |
Total lending-related commitments | $ | 27,375 | | $ | — | | $ | 512,398 | | | $ | 539,773 | | | $ | 32,428 | | $ | — | | $ | 521,740 | | $ | 554,168 | |
(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 of JPMorgan Chase's 2023 Form 10-K for further information.
(b)At June 30, 2024 and 2023, in addition to the allowance for credit losses in the table above, the Firm also had an allowance for credit losses of $278 million and $18 million, respectively, associated with certain accounts receivable in CIB.
(c)Includes collateral-dependent loans, including those for which foreclosure is deemed probable, and nonaccrual risk-rated loans.
(d)The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(e)At June 30, 2024 and 2023, lending-related commitments excluded $19.8 billion and $18.4 billion, respectively, for the consumer, excluding credit card portfolio segment; $964.7 billion and $881.5 billion, respectively, for the credit card portfolio segment; and $32.6 billion and $19.3 billion, respectively, for the wholesale portfolio segment, which were not subject to the allowance for lending-related commitments.
Discussion of changes in the allowance
The allowance for credit losses as of June 30, 2024 was $25.5 billion, reflecting a net addition of $749 million from December 31, 2023.
The net addition to the allowance for credit losses included:
•$653 million in consumer, reflecting a $753 million net addition in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $125 million net reduction in Home Lending, and
•$47 million in wholesale, driven by
–a net addition of $707 million, reflecting net downgrade activity, primarily in Real Estate, and included approximately $200 million associated with incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $660 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios and updates to certain macroeconomic variables.
The Firm has maintained the additional weight placed on the adverse scenarios in the first quarter of 2023 to reflect ongoing uncertainties and downside risks related to the geopolitical and macroeconomic environment.
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 5.3% in the second quarter of 2025, and a weighted average U.S. real GDP level that is 2.1% lower than the central case at the end of the fourth quarter of 2025.
The following table presents the Firm’s central case assumptions for the periods presented:
| | | | | | | | | | | |
| Central case assumptions
at June 30, 2024 |
| 4Q24 | 2Q25 | 4Q25 |
U.S. unemployment rate(a) | 4.1 | % | 4.1 | % | 4.0 | % |
YoY growth in U.S. real GDP(b) | 1.5 | % | 1.6 | % | 1.9 | % |
|
| Central case assumptions
at December 31, 2023 |
| 2Q24 | 4Q24 | 2Q25 |
U.S. unemployment rate(a) | 4.1 | % | 4.4 | % | 4.1 | % |
YoY growth in U.S. real GDP(b) | 1.8 | % | 0.7 | % | 1.0 | % |
(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 Note 13 and Note 10 of JPMorgan Chase’s 2023 Form 10-K for a description of the policies, methodologies and judgments used to determine the Firm’s allowance for credit losses on loans, lending-related commitments, and investment securities.
Refer to Note 11 for additional information on the consumer and wholesale credit portfolios.
Refer to Critical Accounting Estimates Used by the Firm on pages 86-88 for further information on the allowance for credit losses and related management judgments.
Note 13 – Variable interest entities
Refer to Note 1 and Note 14 of JPMorgan Chase’s 2023 Form 10-K 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 | Form 10-Q page references |
| CCB | Credit card securitization trusts | Securitization of originated credit card receivables | 159 |
| Mortgage securitization trusts | Servicing and securitization of both originated and purchased residential mortgages | 159–161 |
| CIB | Mortgage and other securitization trusts | Securitization of both originated and purchased residential and commercial mortgages, and other consumer loans | 159–161 |
| Multi-seller conduits | Assisting clients in accessing the financial markets in a cost-efficient manner and structuring transactions to meet investor needs | 161 |
| Municipal bond vehicles | Financing of municipal bond investments | 161 |
In addition, CIB also invests in and provides financing, lending-related services and other services to VIEs sponsored by third parties. Refer to pages 162–163 of this Note for more information on the VIEs sponsored by third parties.
Significant Firm-sponsored VIEs
Credit card securitizations
As a result of the Firm’s continuing involvement, the Firm is considered to be the primary beneficiary of its Firm-sponsored credit card securitization trust, the Chase Issuance Trust.
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. Refer to page 165 of this Note for information on the securitization-related loan delinquencies and liquidation losses.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal amount outstanding | | JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e) |
| June 30, 2024 (in millions) | Total assets held by securitization VIEs | Assets
held in consolidated securitization VIEs | Assets held in nonconsolidated securitization VIEs with continuing involvement | | Trading assets | Investment securities | Other financial assets | Total interests held by JPMorgan
Chase |
Securitization-related(a) | | | | | | | | |
| Residential mortgage: | | | | | | | | |
| Prime/Alt-A and option ARMs | $ | 64,815 | | $ | 645 | | $ | 45,545 | | | $ | 568 | | $ | 1,811 | | $ | 126 | | $ | 2,505 | |
| Subprime | 8,768 | | — | | 1,470 | | | 26 | | 22 | | — | | 48 | |
Commercial and other(b) | 174,322 | | — | | 120,198 | | | 596 | | 5,646 | | 1,485 | | 7,727 | |
| Total | $ | 247,905 | | $ | 645 | | $ | 167,213 | | | $ | 1,190 | | $ | 7,479 | | $ | 1,611 | | $ | 10,280 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Principal amount outstanding | | JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e) |
| December 31, 2023 (in millions) | Total assets held by securitization VIEs | Assets
held in consolidated securitization VIEs | Assets held in nonconsolidated securitization VIEs with continuing involvement | | Trading assets | Investment securities | Other financial assets | Total interests held by
JPMorgan
Chase |
Securitization-related(a) | | | | | | | | |
| Residential mortgage: | | | | | | | | |
| Prime/Alt-A and option ARMs | $ | 58,570 | | $ | 675 | | $ | 39,319 | | | $ | 595 | | $ | 1,981 | | $ | 60 | | $ | 2,636 | |
| Subprime | 8,881 | | — | | 1,312 | | | 3 | | — | | — | | 3 | |
Commercial and other(b) | 168,042 | | — | | 120,262 | | | 831 | | 5,638 | | 1,354 | | 7,823 | |
| Total | $ | 235,493 | | $ | 675 | | $ | 160,893 | | | $ | 1,429 | | $ | 7,619 | | $ | 1,414 | | $ | 10,462 | |
(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 $129 million and $52 million at June 30, 2024 and December 31, 2023, respectively, and subordinated securities which were not material at June 30, 2024 and December 31, 2023, which the Firm purchased in connection with CIB’s secondary market-making activities.
(d)Includes interests held in re-securitization transactions.
(e)As of June 30, 2024 and December 31, 2023, 76% and 77%, 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 $2.3 billion and $2.5 billion of investment-grade retained interests at June 30, 2024 and December 31, 2023, respectively, and $158 million and $88 million of noninvestment-grade retained interests at June 30, 2024 and December 31, 2023, respectively. The retained interests in commercial and other securitization trusts consisted of $5.9 billion and $6.1 billion of investment-grade retained interests at June 30, 2024 and December 31, 2023, respectively, and $1.8 billion and $1.7 billion of noninvestment-grade retained interests at June 30, 2024 and December 31, 2023, respectively.
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.
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.
Re-securitizations
The following table presents the principal amount of securities transferred to re-securitization VIEs.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | | 2023 | | 2024 | | 2023 |
Transfers of securities to VIEs | | | | | | | |
| U.S. GSEs and government agencies | $ | 12,772 | | | $ | 6,261 | | | $ | 21,178 | | | $ | 9,667 | |
The Firm did not transfer any private label securities to re-securitization VIEs during the three and six months ended June 30, 2024 and 2023, respectively and retained interests in any such Firm-sponsored VIEs as of June 30, 2024 and December 31, 2023 were not material.
The following table presents information on the Firm's interests in nonconsolidated re-securitization VIEs.
| | | | | | | | | | | |
| Nonconsolidated
re-securitization VIEs |
| (in millions) | June 30, 2024 | | December 31, 2023 |
U.S. GSEs and government agencies | | | |
Interest in VIEs | $ | 4,879 | | | $ | 3,371 | |
As of June 30, 2024 and December 31, 2023, 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
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 $2.7 billion and $9.8 billion of the commercial paper issued by the Firm-administered multi-seller conduits at June 30, 2024 and December 31, 2023, 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 $12.1 billion and $10.8 billion at June 30, 2024 and December 31, 2023, respectively, and are reported as off-balance sheet lending-related commitments in other unfunded commitments to extend credit. Refer to Note 22 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. TOB transactions are known as customer TOB trusts and non-customer TOB trusts. Customer TOB trusts are sponsored by a third party.
The Firm serves as sponsor for all non-customer TOB transactions.
Consolidated VIE assets and liabilities
The following table presents information on assets and liabilities related to VIEs consolidated by the Firm as of June 30, 2024 and December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | Liabilities |
| June 30, 2024 (in millions) | Trading assets | Loans | | Other(c) | Total assets(d) | | Beneficial interests in VIE assets(e) | Other(f) | Total
liabilities |
| VIE program type | | | | | | | | | |
| Firm-sponsored credit card trusts | $ | — | $ | 13,188 | | $ | 167 | $ | 13,355 | | $ | 5,315 | $ | 11 | $ | 5,326 |
| Firm-administered multi-seller conduits | 1 | 21,960 | | 159 | 22,120 | | 19,437 | 28 | 19,465 |
| Municipal bond vehicles | 2,034 | — | | 21 | 2,055 | | 2,231 | 8 | 2,239 |
Mortgage securitization entities(a) | — | 663 | | 8 | 671 | | 121 | 52 | 173 |
| Other | 331 | 1,556 | (b) | 286 | 2,173 | | — | 236 | 236 |
| Total | $ | 2,366 | $ | 37,367 | | $ | 641 | $ | 40,374 | | $ | 27,104 | $ | 335 | $ | 27,439 |
| | | | | | | | | |
| Assets | | Liabilities |
| December 31, 2023 (in millions) | Trading assets | Loans | | Other(c) | Total assets(d) | | Beneficial interests in VIE assets(e) | Other(f) | Total
liabilities |
| VIE program type | | | | | | | | | |
| Firm-sponsored credit card trusts | $ | — | $ | 9,460 | | $ | 117 | $ | 9,577 | | $ | 2,998 | $ | 6 | $ | 3,004 |
| Firm-administered multi-seller conduits | 1 | 27,372 | | 194 | 27,567 | | 17,781 | 30 | 17,811 |
| Municipal bond vehicles | 2,056 | — | | 22 | 2,078 | | 2,116 | 11 | 2,127 |
Mortgage securitization entities(a) | — | 693 | | 8 | 701 | | 125 | 57 | 182 |
| Other | 113 | 86 | | 250 | 449 | | — | 159 | 159 |
| Total | $ | 2,170 | $ | 37,611 | | $ | 591 | $ | 40,372 | | $ | 23,020 | $ | 263 | $ | 23,283 |
(a)Includes residential mortgage securitizations.
(b)Primarily includes consumer loans in CIB.
(c)Includes assets classified as cash and other assets on the Consolidated balance sheets.
(d)The assets of the consolidated VIEs included in the program types above are used to settle the liabilities of those entities. The assets and liabilities include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation.
(e)The interest-bearing beneficial interest liabilities issued by consolidated VIEs are classified on the Consolidated balance sheets as “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 $5.4 billion and $3.1 billion at June 30, 2024 and December 31, 2023, respectively.
(f)Includes liabilities classified as accounts payable and other liabilities on the Consolidated balance sheets.
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, alternative 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 $33.6 billion and $35.1 billion at June 30, 2024 and December 31, 2023, of which $14.0 billion and $14.7 billion was unfunded at June 30, 2024 and December 31, 2023, 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 of JPMorgan Chase’s 2023 Form 10-K for further information on affordable housing tax credits and Note 22 of this Form 10-Q for more information on off-balance sheet lending-related commitments.
Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method guidance which expanded the types of tax-oriented investments, beyond affordable housing tax credit investments, that the Firm can elect on a program by program basis, to be accounted for
using the proportional amortization method. Refer to Note 1 for further information.
The proportional amortization method requires the cost of eligible investments, within an elected program, be amortized in proportion to the tax benefits received with the resulting amortization reported directly in income tax expense, which aligns with the associated tax credits and other tax benefits. Investments must meet certain criteria to be eligible, including that substantially all of the return is from income tax credits and other income tax benefits.
In addition, under this method deferred taxes are generally not recorded as the investment is now amortized in proportion to the income tax credits and other income tax benefits received. Delayed equity contributions that are unconditional and legally binding or conditional and probable of occurring are recorded in other liabilities with a corresponding increase in the carrying value of the investment. The guidance also requires a reevaluation of eligible investments when significant modifications or events occur that result in a change in the nature of the investment or a change in the Firm's relationship with the underlying project. During the period, there were no significant modifications or events that resulted in a change in the nature of an eligible investment or a change in the Firm's relationship with the underlying project.
The following table provides information on tax-oriented investments for which the Firm elected to apply the proportional amortization method.
| | | | | | | | | | | | | | | | | |
As of or for the period ended, (in millions) | Alternative energy and affordable housing programs(d) |
| Three months ended June 30, | | Six months ended June 30, |
| 2024 | 2023 | | 2024 | 2023 |
Programs for which the Firm elected proportional amortization: | | | | | |
Carrying value(a) | $ | 30,498 | | $ | 13,419 | | | $ | 30,498 | | $ | 13,419 | |
Tax credits and other tax benefits(b) | 1,521 | | 495 | | | 2,787 | | 946 | |
Investments that qualify to be accounted for using proportional amortization: | | | | | |
Amortization losses recognized as a component of income tax expense | (1,135) | | (389) | | | (2,151) | | (744) | |
Non-income-tax-related gains and other returns received that are recognized outside of income tax expense(c) | 20 | | — | | | 68 | | — | |
(a)Recorded in Other assets on the Consolidated balance sheets. Excludes programs to which the Firm does not apply the proportional amortization method, such as historic tax credit and new market tax credit programs.
(b)Reflected in Income tax expense on the Consolidated statements of income and Investing activities on the Consolidated statements of cash flows.
(c)Recorded in Other income on the Consolidated statements of income and Investing activities on the Consolidated statements of cash flows.
(d)As of December 31, 2023, the carrying value of eligible affordable housing investments was $14.6 billion. Refer to Note 25 of JPMorgan Chase’s 2023 Form 10-K for further information on affordable housing tax credits.
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 June 30, 2024 and December 31, 2023 was $5.3 billion and $5.1 billion, respectively. The fair value of assets held by such VIEs at June 30, 2024 and December 31, 2023 was $7.4 billion and $7.3 billion, respectively.
Loan securitizations
The Firm has securitized and sold a variety of loans, including residential mortgages, credit card receivables, commercial mortgages and other consumer loans.
Securitization activity
The following table provides information related to the Firm’s securitization activities for the three months ended June 30, 2024 and 2023, 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| (in millions) | Residential mortgage(d) | Commercial and other(e) | | Residential mortgage(d) | Commercial and other(e) | | Residential mortgage(d) | Commercial and other(e) | | Residential mortgage(d) | Commercial and other(e) |
| Principal securitized | $ | 4,471 | | $ | 4,886 | | | $ | 2,216 | | $ | 376 | | | $ | 9,393 | | $ | 7,244 | | | $ | 3,289 | | $ | 376 | |
All cash flows during the period:(a) | | | | | | | | | | | |
Proceeds received from loan sales as financial instruments(b)(c) | $ | 4,310 | | $ | 4,784 | | | $ | 2,123 | | $ | 380 | | | $ | 9,141 | | $ | 7,108 | | | $ | 3,153 | | $ | 380 | |
| Servicing fees collected | 6 | | 8 | | | 6 | | 1 | | | 12 | | 11 | | | 12 | | 1 | |
Cash flows received on interests | 92 | | 165 | | | 86 | | 91 | | | 162 | | 295 | | | 160 | | 178 | |
(a)Excludes re-securitization transactions.
(b)Primarily 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 auto loans.
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 22 of this Form 10-Q for additional information about the Firm’s loan sales- and securitization-related indemnifications and Note 14 for additional information about the impact of the Firm’s sale of certain excess MSRs.
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.
| | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | 2023 | | 2024 | 2023 |
Carrying value of loans sold | $ | 6,630 | | $ | 6,323 | | | $ | 11,166 | | $ | 9,021 | |
Proceeds received from loan sales as cash | 60 | | 33 | | | 366 | | 40 | |
Proceeds from loan sales as securities(a)(b) | 6,499 | | 6,220 | | | 10,691 | | 8,882 | |
Total proceeds received from loan sales(c) | $ | 6,559 | | $ | 6,253 | | | $ | 11,057 | | $ | 8,922 | |
Gains/(losses) on loan sales(d)(e) | $ | — | | $ | — | | | $ | — | | $ | — | |
(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 22, 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 11 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 June 30, 2024 and December 31, 2023. Substantially all of these loans and real estate are insured or guaranteed by U.S. government agencies.
| | | | | | | | |
| (in millions) | June 30,
2024 | December 31,
2023 |
Loans repurchased or option to repurchase(a) | $ | 530 | | $ | 597 | |
Real estate owned | 8 | | 8 | |
Foreclosed government-guaranteed residential mortgage loans(b) | 11 | | 22 | |
(a)Primarily 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 June 30, 2024 and December 31, 2023. For loans sold or securitized where servicing is the Firm’s only form of continuing involvement, the Firm generally experiences a loss only if the Firm was required to repurchase a delinquent loan or foreclosed asset due to a breach in representations and warranties associated with its loan sale or servicing contracts.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Net liquidation losses/(recoveries) |
| Securitized assets | | 90 days past due | | Three months ended June 30, | | Six months ended June 30, |
| (in millions) | June 30, 2024 | | December 31, 2023 | | June 30, 2024 | | December 31, 2023 | | 2024 | | 2023 | | 2024 | | 2023 |
| Securitized loans | | | | | | | | | | | | | | | |
| Residential mortgage: | | | | | | | | | | | | | | | |
| Prime / Alt-A & option ARMs | $ | 45,545 | | | $ | 39,319 | | | $ | 459 | | | $ | 440 | | | $ | 5 | | | $ | 3 | | | $ | 7 | | | $ | 10 | |
| Subprime | 1,470 | | | 1,312 | | | 109 | | | 131 | | | — | | | 2 | | | 1 | | | 4 | |
| Commercial and other | 120,198 | | | 120,262 | | | 1,408 | | | 2,874 | | | 13 | | | — | | | 19 | | | 19 | |
| Total loans securitized | $ | 167,213 | | | $ | 160,893 | | | $ | 1,976 | | | $ | 3,445 | | | $ | 18 | | | $ | 5 | | | $ | 27 | | | $ | 33 | |
Note 14 – Goodwill, mortgage servicing rights, and other intangible assets
Refer to Note 15 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the accounting policies related to 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.
The following table presents goodwill attributed to the reportable business segments and Corporate.
| | | | | | | | |
| (in millions) | June 30,
2024 | December 31,
2023 |
| Consumer & Community Banking | $ | 32,116 | | $ | 32,116 | |
| Commercial & Investment Bank | 11,270 | | 11,251 | |
| Asset & Wealth Management | 8,555 | | 8,582 | |
| Corporate | 679 | | 685 | |
| Total goodwill | $ | 52,620 | | $ | 52,634 | |
The following table presents changes in the carrying amount of goodwill.
| | | | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
| (in millions) | 2024 | 2023 | 2024 | 2023 | | |
| Balance at beginning of period | $ | 52,636 | | $ | 52,144 | | $ | 52,634 | | $ | 51,662 | | | |
Changes during the period from: | | | | | | |
Business combinations(a) | (5) | | 236 | | 29 | | 687 | | | |
Other(b) | (11) | | — | | (43) | | 31 | | | |
| Balance at June 30, | $ | 52,620 | | $ | 52,380 | | $ | 52,620 | | $ | 52,380 | | | |
(a)For the six months ended June 30, 2024, includes estimated goodwill associated with the acquisition of LayerOne Financial in CIB in the first quarter. For the three and six months ended June 30, 2023, represents estimated goodwill associated with the acquisition of Aumni Inc. in CIB in the second quarter, and the acquisition of the remaining 51% interest in CIFM in AWM in the first quarter.
(b)Primarily foreign currency adjustments.
Goodwill impairment testing
Goodwill 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. Refer to Note 15 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s goodwill impairment testing.
Unanticipated declines in business performance, increases in credit losses, increases in capital requirements, as well as deterioration in economic or market conditions, adverse regulatory or legislative changes or increases in the estimated market cost of equity, could cause the estimated fair values of the Firm’s reporting units to decline in the future, which could result in a material impairment charge to earnings in a future period related to some portion of the associated goodwill.
As of June 30, 2024, the Firm reviewed current economic conditions, estimated market cost of equity, as well as actual business results and projections of business performance. In addition, as a result of the business segment reorganization, the Firm assessed goodwill for impairment. Based on such reviews, the Firm has concluded that goodwill was not impaired as of June 30, 2024, or December 31, 2023, nor was goodwill written off due to impairment during the six months ended June 30, 2024 or 2023.
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. Refer to Notes 2 and 15 of JPMorgan Chase’s 2023 Form 10-K for a further description of the MSR asset, interest rate risk management, and the valuation of MSRs.
The following table summarizes MSR activity for the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | |
| As of or for the three months
ended June 30, | | As of or for the six months
ended June 30, |
| (in millions, except where otherwise noted) | 2024 | 2023 | | 2024 | 2023 |
| Fair value at beginning of period | $ | 8,605 | | $ | 7,755 | | | $ | 8,522 | | $ | 7,973 | |
| MSR activity: | | | | | |
| Originations of MSRs | 95 | | 78 | | | 153 | | 110 | |
Purchase of MSRs(a) | 323 | | 468 | | | 325 | | 467 | |
Disposition of MSRs(b) | (32) | | (92) | | | (27) | | (90) | |
| Net additions/(dispositions) | 386 | | 454 | | | 451 | | 487 | |
Changes due to collection/realization of expected cash flows | (263) | | (255) | | | (523) | | (495) | |
Changes in valuation due to inputs and assumptions: | | | | | |
Changes due to market interest rates and other(c) | 117 | | 283 | | | 385 | | 261 | |
Changes in valuation due to other inputs and assumptions: | | | | | |
Projected cash flows (e.g., cost to service) | — | | 2 | | | 7 | | 2 | |
Discount rates | — | | — | | | — | | — | |
Prepayment model changes and other(d) | 2 | | (10) | | | 5 | | 1 | |
| Total changes in valuation due to other inputs and assumptions | 2 | | (8) | | | 12 | | 3 | |
| Total changes in valuation due to inputs and assumptions | 119 | | 275 | | | 397 | | 264 | |
Fair value at June 30, | $ | 8,847 | | $ | 8,229 | | | $ | 8,847 | | $ | 8,229 | |
Changes in unrealized gains/(losses) included in income related to MSRs held at June 30, | $ | 119 | | $ | 275 | | | $ | 397 | | $ | 264 | |
Contractual service fees, late fees and other ancillary fees included in income | 395 | | 388 | | | 794 | | 776 | |
Third-party mortgage loans serviced at June 30, (in billions) | 644 | | 605 | | | 644 | | 605 | |
Servicer advances, net of an allowance for uncollectible amounts, at June 30(e) | 524 | | 595 | | | 524 | | 595 | |
(a)Includes purchase price adjustments associated with MSRs purchased in the prior quarter, 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.
The following table presents the components of mortgage fees and related income (including the impact of MSR risk management activities) for the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, |
| (in millions) | 2024 | 2023 | | 2024 | 2023 |
| CCB mortgage fees and related income | | | | | |
| Production revenue | $ | 157 | | $ | 102 | | | $ | 287 | | $ | 177 | |
| | | | | |
| Net mortgage servicing revenue: | | | | | |
| Operating revenue: | | | | | |
| Loan servicing revenue | 412 | | 402 | | | 817 | | 802 | |
| Changes in MSR asset fair value due to collection/realization of expected cash flows | (262) | | (255) | | | (522) | | (495) | |
| Total operating revenue | 150 | | 147 | | | 295 | | 307 | |
| Risk management: | | | | | |
Changes in MSR asset fair value due to market interest rates and other(a) | 117 | | 283 | | | 385 | | 261 | |
Other changes in MSR asset fair value due to other inputs and assumptions in model(b) | 2 | | (8) | | | 12 | | 3 | |
| Changes in derivative fair value and other | (80) | | (250) | | | (359) | | (251) | |
| Total risk management | 39 | | 25 | | | 38 | | 13 | |
| Total net mortgage servicing revenue | 189 | | 172 | | | 333 | | 320 | |
| Total CCB mortgage fees and related income | 346 | | 274 | | | 620 | | 497 | |
| All other | 2 | | 4 | | | 3 | | 2 | |
| Mortgage fees and related income | $ | 348 | | $ | 278 | | | $ | 623 | | $ | 499 | |
(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).
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 June 30, 2024 and December 31, 2023, and outlines the sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.
| | | | | | | | | | | | | | |
| (in millions, except rates) | June 30,
2024 | | Dec 31,
2023 |
Weighted-average prepayment speed assumption (constant prepayment rate) | 6.18 | % | | 6.29 | % |
Impact on fair value of 10% adverse change | $ | (204) | | | $ | (206) | |
Impact on fair value of 20% adverse change | (397) | | | (401) | |
Weighted-average option adjusted spread(a) | 5.94 | % | | 6.10 | % |
Impact on fair value of a 100 basis point adverse change | $ | (381) | | | $ | (369) | |
Impact on fair value of a 200 basis point adverse change | (732) | | | (709) | |
(a)Includes the impact of operational risk and regulatory capital.
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. 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. 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 June 30, 2024 and December 31, 2023, other intangible assets consisted of finite-lived intangible assets of $1.9 billion and $2.0 billion, respectively, as well as indefinite-lived intangible assets, which are not subject to amortization, of $1.2 billion for both periods.
Note 15 – Deposits
Refer to Note 17 of JPMorgan Chase’s 2023 Form 10-K for further information on deposits.
As of June 30, 2024 and December 31, 2023, noninterest-bearing and interest-bearing deposits were as follows:
| | | | | | | | | | | |
| (in millions) | June 30,
2024 | | December 31, 2023 |
| U.S. offices | | | |
Noninterest-bearing (included $66,178 and $75,393 at fair value)(a) | $ | 632,316 | | | $ | 643,748 | |
Interest-bearing (included $588 and $573 at fair value)(a) | 1,291,737 | | | 1,303,100 | |
| Total deposits in U.S. offices | 1,924,053 | | | 1,946,848 | |
| Non-U.S. offices | | | |
Noninterest-bearing (included $2,158 and $1,737 at fair value)(a) | 26,362 | | | 23,097 | |
Interest-bearing (included $463 and $681 at fair value)(a) | 446,115 | | | 430,743 | |
| Total deposits in non-U.S. offices | 472,477 | | | 453,840 | |
| Total deposits | $ | 2,396,530 | | | $ | 2,400,688 | |
(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 June 30, 2024 and December 31, 2023, time deposits in denominations that met or exceeded the insured limit were as follows:
| | | | | | | | | | | | | | | |
| (in millions) | | June 30, 2024 | | December 31, 2023 | |
| U.S. offices | | $ | 148,883 | | | $ | 132,654 | | |
Non-U.S. offices(a) | | 101,488 | | | 90,187 | | |
| Total | | $ | 250,371 | | | $ | 222,841 | | |
(a)Represents all time deposits in non-U.S. offices as these deposits typically exceed the insured limit.
As of June 30, 2024, the remaining maturities of interest-bearing time deposits in each of the 12-month periods ending June 30 were as follows: | | | | | | | | | | | | | | | | | | | | |
June 30,
(in millions) | | | | | | |
| U.S. | | Non-U.S. | | Total |
| 2025 | | $ | 223,458 | | | $ | 98,431 | | | $ | 321,889 | |
| 2026 | | 801 | | | 64 | | | 865 | |
| 2027 | | 275 | | | 5 | | | 280 | |
| 2028 | | 124 | | | 24 | | | 148 | |
| 2029 | | 441 | | | 695 | | | 1,136 | |
| After 5 years | | 160 | | | 111 | | | 271 | |
| Total | | $ | 225,259 | | | $ | 99,330 | | | $ | 324,589 | |
Note 16 – Leases
Refer to Note 18 of JPMorgan Chase’s 2023 Form 10-K for a further discussion on leases.
Firm as lessee
At June 30, 2024, 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.
Operating lease liabilities and right-of-use (“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 carrying values of the Firm’s operating leases were as follows:
| | | | | | | | | | | | |
| (in millions) | June 30, 2024 | December 31, 2023 | | | | |
| Right-of-use assets | $ | 8,358 | | $ | 8,431 | | | | | |
| Lease liabilities | 8,739 | | 8,833 | | | | | |
The Firm’s net rental expense was $556 million and $448 million for the three months ended June 30, 2024 and 2023 and $1.1 billion and $935 million for the six months ended June 30, 2024 and 2023, respectively.
Firm as lessor
The Firm’s lease financings are predominantly auto operating leases, and are included in other assets on the Firm’s Consolidated balance sheets.
The following table presents the Firm’s operating lease income, included within other income, and the related depreciation expense, included within technology, communications and equipment expense, on the Consolidated statements of income.
| | | | | | | | | | | | | | |
| Three months ended June 30, | Six months ended June 30, |
(in millions) | 2024 | 2023 | 2024 | 2023 |
| Operating lease income | $ | 689 | | $ | 716 | | $ | 1,361 | | $ | 1,471 | |
| Depreciation expense | 438 | | 457 | | 874 | | 876 | |
Note 17 – Preferred stock
Refer to Note 21 of JPMorgan Chase’s 2023 Form 10-K for a further discussion on preferred stock.
The following is a summary of JPMorgan Chase’s non-cumulative preferred stock outstanding as of June 30, 2024 and December 31, 2023, and the quarterly dividend declarations for the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares(a) | Carrying value (in millions) | | Contractual rate in effect at June 30, 2024 | Earliest redemption date(b) | Floating annualized rate(c) | Dividend declared per share | |
| June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 | Issue date | Three months ended June 30, | Six months ended June 30, | |
| 2024 | 2023 | 2024 | 2023 | |
Fixed-rate: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Series DD | 169,625 | | 169,625 | | $ | 1,696 | | $ | 1,696 | | 9/21/2018 | 5.750 | % | 12/1/2023 | NA | $ | 143.75 | | $ | 143.75 | | $287.50 | $287.50 | |
Series EE | 185,000 | | 185,000 | | 1,850 | | 1,850 | | 1/24/2019 | 6.000 | | 3/1/2024 | NA | 150.00 | | 150.00 | | 300.00 | 300.00 | |
Series GG | 90,000 | | 90,000 | | 900 | | 900 | | 11/7/2019 | 4.750 | | 12/1/2024 | NA | 118.75 | | 118.75 | | 237.50 | 237.50 | |
| Series JJ | 150,000 | | 150,000 | | 1,500 | | 1,500 | | 3/17/2021 | 4.550 | | 6/1/2026 | NA | 113.75 | | 113.75 | | 227.50 | 227.50 | |
| Series LL | 185,000 | | 185,000 | | 1,850 | | 1,850 | | 5/20/2021 | 4.625 | | 6/1/2026 | NA | 115.63 | | 115.63 | | 231.26 | 231.26 | |
Series MM | 200,000 | | 200,000 | | 2,000 | | 2,000 | | 7/29/2021 | 4.200 | | 9/1/2026 | NA | 105.00 | | 105.00 | | 210.00 | 210.00 | |
| | | | | | | | | | | | | |
| Fixed-to-floating rate: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Series Q | — | | 150,000 | | — | | 1,500 | | 4/23/2013 | — | | 5/1/2023 | SOFR + 3.25 | — | | 218.48 | | 220.45 | 347.23 | (d) |
Series R | — | | 150,000 | | — | | 1,500 | | 7/29/2013 | — | | 8/1/2023 | SOFR + 3.30 | — | | 150.00 | | 221.70 | 300.00 | (e) |
Series S | — | | 200,000 | | — | | 2,000 | | 1/22/2014 | — | | 2/1/2024 | SOFR + 3.78 | — | | 168.75 | | 233.70 | 337.50 | (f) |
Series U | — | | 100,000 | | — | | 1,000 | | 3/10/2014 | — | | 4/30/2024 | SOFR + 3.33 | — | | 153.13 | | 153.13 | 306.25 |
|
| | | | | | | | | | | | | |
Series X | 160,000 | | 160,000 | | 1,600 | | 1,600 | | 9/23/2014 | 6.100 | | 10/1/2024 | SOFR + 3.33 | 152.50 | | 152.50 | | 305.00 | 305.00 | |
| | | | | | | | | | | | | |
Series CC | 125,750 | | 125,750 | | 1,258 | | 1,258 | | 10/20/2017 | SOFR + 2.58 | 11/1/2022 | SOFR + 2.58 | 208.75 | | 201.36 | | 412.45 | 384.15 | |
Series FF | 225,000 | | 225,000 | | 2,250 | | 2,250 | | 7/31/2019 | 5.000 | | 8/1/2024 | SOFR + 3.38 | 125.00 | | 125.00 | | 250.00 | 250.00 | |
Series HH | 300,000 | | 300,000 | | 3,000 | | 3,000 | | 1/23/2020 | 4.600 | | 2/1/2025 | SOFR + 3.125 | 115.00 | | 115.00 | | 230.00 | 230.00 | |
Series II | 150,000 | | 150,000 | | 1,500 | | 1,500 | | 2/24/2020 | 4.000 | | 4/1/2025 | SOFR + 2.745 | 100.00 | | 100.00 | | 200.00 | 200.00 | |
| Series KK | 200,000 | | 200,000 | | 2,000 | | 2,000 | | 5/12/2021 | 3.650 | | 6/1/2026 | CMT + 2.85 | 91.25 | | 91.25 | | 182.50 | 182.50 | |
Series NN | 250,000 | | NA | 2,496 | | NA | 3/12/2024 | 6.875 | | 6/1/2029 | CMT + 2.737 | 150.87 | | NA | 150.87 | NA | (g) |
| Total preferred stock | 2,390,375 | | 2,740,375 | | $ | 23,900 | | $ | 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)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%.
(e)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%.
(f)The dividend rate for Series S preferred stock became floating and payable quarterly starting on February 1, 2024; prior to which the dividend rate was fixed at 6.75% or $337.50 per share payable semiannually. The dividend rate for each quarterly dividend period commencing on February 1, 2024 is three-month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spread of 3.78%.
(g)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.
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 $24.1 billion at June 30, 2024.
On March 12, 2024, the Firm issued $2.5 billion of fixed-rate reset non-cumulative preferred stock, Series NN.
Redemptions
On August 1, 2024, the Firm redeemed all $2.3 billion of its fixed-to-floating rate non-cumulative preferred stock, Series FF.
On May 1, 2024, the Firm redeemed all $5.0 billion of its fixed-to-floating rate non-cumulative preferred stock, Series Q, Series R and Series S.
On April 30, 2024, the Firm redeemed all $1.0 billion of its fixed-to-floating rate non-cumulative preferred stock, Series U.
Note 18 – Earnings per share
Refer to Note 23 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the computation of basic and diluted earnings per share (“EPS”). The following table presents the calculation of basic and diluted EPS for the three and six months ended June 30, 2024 and 2023.
| | | | | | | | | | | | | | | | | |
| (in millions, except per share amounts) | Three months ended June 30, | | Six months ended June 30, |
| 2024 | 2023 | | 2024 | 2023 |
Basic earnings per share | | | | | |
| Net income | $ | 18,149 | | $ | 14,472 | | | $ | 31,568 | | $ | 27,094 | |
Less: Preferred stock dividends | 317 | | 373 | | | 714 | | 729 | |
Net income applicable to common equity | 17,832 | | 14,099 | | | 30,854 | | 26,365 | |
Less: Dividends and undistributed earnings allocated to participating securities | 114 | | 88 | | | 193 | | 161 | |
Net income applicable to common stockholders | $ | 17,718 | | $ | 14,011 | | | $ | 30,661 | | $ | 26,204 | |
| | | | | |
Total weighted-average basic shares outstanding | 2,889.8 | | 2,943.8 | | | 2,899.1 | | 2,956.1 | |
Net income per share | $ | 6.13 | | $ | 4.76 | | | $ | 10.58 | | $ | 8.86 | |
| | | | | |
Diluted earnings per share | | | | | |
Net income applicable to common stockholders | $ | 17,718 | | $ | 14,011 | | | $ | 30,661 | | $ | 26,204 | |
Total weighted-average basic shares outstanding | 2,889.8 | | 2,943.8 | | | 2,899.1 | | 2,956.1 | |
| Add: Dilutive impact of unvested PSUs, nondividend-earning RSUs and SARs | 5.1 | | 4.5 | | | 4.8 | | 4.4 | |
Total weighted-average diluted shares outstanding | 2,894.9 | | 2,948.3 | | | 2,903.9 | | 2,960.5 | |
Net income per share | $ | 6.12 | | $ | 4.75 | | | $ | 10.56 | | $ | 8.85 | |
Note 19 – 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).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of or for the three months ended
June 30, 2024
(in millions) | 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 | Accumulated other comprehensive income/(loss) |
|
| Balance at April 1, 2024 | | $ | (3,602) | | | | | $ | (1,420) | | | | $ | (155) | | | $ | (4,821) | | | | | $ | (1,052) | | | | $ | (589) | | | | $ | (11,639) | | |
| Net change | | 108 | | | | | (156) | | | | 8 | | | (22) | | | | | (3) | | | | 366 | | | | 301 | | |
| Balance at June 30, 2024 | | $ | (3,494) | | (a) | | | $ | (1,576) | | | | $ | (147) | | | $ | (4,843) | | | | | $ | (1,055) | | | | $ | (223) | | | | $ | (11,338) | | |
| | | | | | | | | | | | | | | | | | | | | | |
As of or for the three months ended
June 30, 2023
(in millions) | 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 | Accumulated other comprehensive income/(loss) |
|
| Balance at April 1, 2023 | | $ | (6,912) | | | | | $ | (1,348) | | | | $ | (54) | | | $ | (4,858) | | | | | $ | (1,506) | | | | $ | 260 | | | | $ | (14,418) | | |
| Net change | | 757 | | | | | 70 | | | | 11 | | | (497) | | | | | (6) | | | | (207) | | | | 128 | | |
| Balance at June 30, 2023 | | $ | (6,155) | | (a) | | | $ | (1,278) | | | | $ | (43) | | | $ | (5,355) | | | | | $ | (1,512) | | | | $ | 53 | | | | $ | (14,290) | | |
| | | | | | | | | | | | | | | | | | | | | | |
As of or for the six months ended
June 30, 2024
(in millions) | 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 | Accumulated other comprehensive income/(loss) |
|
| Balance at January 1, 2024 | | $ | (3,743) | | | | | $ | (1,216) | | | | $ | (134) | | | $ | (3,932) | | | | | $ | (1,078) | | | | $ | (340) | | | | $ | (10,443) | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Net change | | 249 | | | | | (360) | | | | (13) | | | (911) | | | | | 23 | | | | 117 | | | | (895) | | |
| Balance at June 30, 2024 | | $ | (3,494) | | (a) | | | $ | (1,576) | | | | $ | (147) | | | $ | (4,843) | | | | | $ | (1,055) | | | | $ | (223) | | | | $ | (11,338) | | |
| | | | | | | | | | | | | | | | | | | | | | |
As of or for the six months ended
June 30, 2023
(in millions) | 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 | Accumulated other comprehensive income/(loss) |
|
| Balance at January 1, 2023 | | $ | (9,124) | | | | | $ | (1,545) | | | | $ | (33) | | | $ | (5,656) | | | | | $ | (1,451) | | | | $ | 468 | | | | $ | (17,341) | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Net change | | 2,969 | | | | | 267 | | | | (10) | | | 301 | | | | | (61) | | | | (415) | | | | 3,051 | | |
| Balance at June 30, 2023 | | $ | (6,155) | | (a) | | | $ | (1,278) | | | | $ | (43) | | | $ | (5,355) | | | | | $ | (1,512) | | | | $ | 53 | | | | $ | (14,290) | | |
(a)As of June 30, 2024 and 2023 included after-tax net unamortized unrealized gains/(losses) of $(725) million and $(1.1) billion related to AFS securities that have been transferred to HTM, respectively. As of June 30, 2023 included 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. Refer to Note 9 for further information.
The following table presents the pre-tax and after-tax changes in the components of OCI.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 |
Three months ended June 30,
(in millions) | Pre-tax | | Tax effect | | After-tax | | Pre-tax | | Tax effect | | After-tax |
| Unrealized gains/(losses) on investment securities: | | | | | | | | | | | |
| Net unrealized gains/(losses) arising during the period | $ | (405) | | | $ | 99 | | | $ | (306) | | | $ | 95 | | | $ | (21) | | | $ | 74 | |
Reclassification adjustment for realized (gains)/losses included in net income(a) | 547 | | | (133) | | | 414 | | | 900 | | | (217) | | | 683 | |
| Net change | 142 | | | (34) | | | 108 | | | 995 | | | (238) | | | 757 | |
Translation adjustments(b): | | | | | | | | | | | |
| Translation | (929) | | | 50 | | | (879) | | | 126 | | | 10 | | | 136 | |
| Hedges | 952 | | | (229) | | | 723 | | | (88) | | | 22 | | | (66) | |
| Net change | 23 | | | (179) | | | (156) | | | 38 | | | 32 | | | 70 | |
Fair value hedges, net change(c) | 11 | | | (3) | | | 8 | | | 15 | | | (4) | | | 11 | |
| Cash flow hedges: | | | | | | | | | | | |
| Net unrealized gains/(losses) arising during the period | (683) | | | 165 | | | (518) | | | (1,119) | | | 268 | | | (851) | |
Reclassification adjustment for realized (gains)/losses included in net income(d) | 655 | | | (159) | | | 496 | | | 465 | | | (111) | | | 354 | |
| Net change | (28) | | | 6 | | | (22) | | | (654) | | | 157 | | | (497) | |
Defined benefit pension and OPEB plans, net change | (2) | | | (1) | | | (3) | | | (8) | | | 2 | | | (6) | |
DVA on fair value option elected liabilities, net change | 485 | | | (119) | | | 366 | | | (273) | | | 66 | | | (207) | |
| Total other comprehensive income/(loss) | $ | 631 | | | $ | (330) | | | $ | 301 | | | $ | 113 | | | $ | 15 | | | $ | 128 | |
| | | | | | | | | | | |
| 2024 | | 2023 |
Six months ended June 30,
(in millions) | Pre-tax | | Tax effect | | After-tax | | Pre-tax | | Tax effect | | After-tax |
| Unrealized gains/(losses) on investment securities: | | | | | | | | | | | |
| Net unrealized gains/(losses) arising during the period | $ | (586) | | | $ | 143 | | | $ | (443) | | | $ | 2,137 | | | $ | (511) | | | $ | 1,626 | |
Reclassification adjustment for realized (gains)/losses included in net income(a) | 913 | | | (221) | | | 692 | | | 1,768 | | | (425) | | | 1,343 | |
| Net change | 327 | | | (78) | | | 249 | | | 3,905 | | | (936) | | | 2,969 | |
Translation adjustments(b): | | | | | | | | | | | |
| Translation | (2,294) | | | 118 | | | (2,176) | | | 1,099 | | | (31) | | | 1,068 | |
| Hedges | 2,394 | | | (578) | | | 1,816 | | | (1,051) | | | 250 | | | (801) | |
| Net change | 100 | | | (460) | | | (360) | | | 48 | | | 219 | | | 267 | |
Fair value hedges, net change(c) | (16) | | | 3 | | | (13) | | | (13) | | | 3 | | | (10) | |
| Cash flow hedges: | | | | | | | | | | | |
| Net unrealized gains/(losses) arising during the period | (2,445) | | | 591 | | | (1,854) | | | (552) | | | 132 | | | (420) | |
Reclassification adjustment for realized (gains)/losses included in net income(d) | 1,244 | | | (301) | | | 943 | | | 948 | | | (227) | | | 721 | |
| Net change | (1,201) | | | 290 | | | (911) | | | 396 | | | (95) | | | 301 | |
Defined benefit pension and OPEB plans, net change | 34 | | | (11) | | | 23 | | | (79) | | | 18 | | | (61) | |
DVA on fair value option elected liabilities, net change | 158 | | | (41) | | | 117 | | | (547) | | | 132 | | | (415) | |
| Total other comprehensive income/(loss) | $ | (598) | | | $ | (297) | | | $ | (895) | | | $ | 3,710 | | | $ | (659) | | | $ | 3,051 | |
(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 three and six months ended June 30, 2024, the Firm reclassified a net pre-tax gain of $1 million to other revenue, of which $10 million related to net investment hedges. The amounts were not material for the three months ended June 30, 2023. During the six months ended June 30, 2023, the Firm reclassified a net pre-tax loss of $(5) million to other revenue related to the acquisition of CIFM of which $(41) million related to the net investment hedge loss.
(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.
Note 20 – Restricted cash and other restricted
assets
Refer to Note 26 of JPMorgan Chase’s 2023 Form 10-K for a detailed discussion of the Firm’s 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 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:
| | | | | | | | |
| (in billions) | June 30,
2024 | December 31, 2023 |
Segregated for the benefit of securities and cleared derivative customers | $ | 14.0 | | $ | 10.3 | |
Cash reserves at non-U.S. central banks and held for other general purposes | 9.4 | | 9.3 | |
Total restricted cash(a) | $ | 23.4 | | $ | 19.6 | |
(a)Comprises $21.7 billion and $18.2 billion in deposits with banks, and $1.7 billion and $1.4 billion in cash and due from banks on the Consolidated balance sheets as of June 30, 2024 and December 31, 2023, respectively.
Also, as of June 30, 2024 and December 31, 2023, the Firm had the following other restricted assets:
•Cash and securities pledged with clearing organizations for the benefit of customers of $33.2 billion and $40.5 billion, respectively.
•Securities with a fair value of $22.5 billion and $20.5 billion, respectively, were also restricted in relation to customer activity.
Note 21 – Regulatory capital
Refer to Note 27 of JPMorgan Chase’s 2023 Form 10-K for a detailed discussion on 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 insured depository institution ("IDI") subsidiary, JPMorgan Chase Bank, N.A.
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 June 30, 2024 and December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Standardized capital ratio requirements | | Advanced
capital ratio requirements | | Well-capitalized ratios |
| BHC(a)(b) | IDI(c) | | BHC(a)(b) | IDI(c) | | BHC(d) | IDI(e) |
| Risk-based capital ratios | | | | | | |
| CET1 capital | 11.9 | % | 7.0 | % | | 11.5 | % | 7.0 | % | | NA | 6.5 | % |
| Tier 1 capital | 13.4 | | 8.5 | | | 13.0 | | 8.5 | | | 6.0 | % | 8.0 | |
| Total capital | 15.4 | | 10.5 | | | 15.0 | | 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 4.5% 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, 2023, the CET1, Tier 1, and Total capital ratio requirements under Basel III Standardized applicable to the Firm were 11.4%, 12.9%, and 14.9%, respectively; the Basel III Advanced CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 11.0%, 12.5%, and 14.5%, respectively.
(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 June 30, 2024 and December 31, 2023.
| | | | | | | | | | | | | | | | | | | | |
| | Capital ratio requirements(a) | | Well-capitalized ratios |
| | BHC | IDI | | BHC(b) | IDI |
| Leverage-based capital ratios | | | | | | |
| Tier 1 leverage | | 4.0 | % | 4.0 | % | | NA | 5.0 | % |
| SLR | | 5.0 | | 6.0 | | | NA | 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.
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 June 30, 2024 and December 31, 2023, the Firm's CET1 capital reflected the remaining benefit of $720 million and $1.4 billion, respectively, associated with the CECL capital transition provisions.
Similarly, as of January 1, 2024, the Firm has phased out 75% of the other CECL capital transition provisions which impacted Tier 2 capital, adjusted average assets, total leverage exposure and RWA, as applicable.
Refer to Note 27 of JPMorgan Chase’s 2023 Form 10-K for further information on CECL capital transition provisions.
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 June 30, 2024 and December 31, 2023, JPMorgan Chase and JPMorgan Chase Bank, N.A. were well-capitalized and met all capital requirements to which each was subject.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
June 30, 2024
(in millions, except ratios) | Basel III Standardized | | | Basel III Advanced | |
JPMorgan
Chase & Co. | | JPMorgan
Chase Bank, N.A. | | | JPMorgan
Chase & Co. | | JPMorgan
Chase Bank, N.A. | | |
Risk-based capital metrics:(a) | | | | | | | | | | |
CET1 capital | $ | 267,196 | | | $ | 277,096 | | | | $ | 267,196 | | | $ | 277,096 | | | |
Tier 1 capital | 290,442 | | | 277,099 | | |
| 290,442 | |
| 277,099 | | | |
Total capital | 322,175 | | | 297,156 | | | | 308,639 | | (b) | 283,665 | | (b) | |
| | | | | | | | | | |
| | | | | | | | | | |
| Risk-weighted assets | 1,743,481 | | | 1,692,925 | | | | 1,726,204 | | (b) | 1,568,264 | | (b) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| CET1 capital ratio | 15.3 | % | | 16.4 | % | | | 15.5 | % | | 17.7 | % | | |
| Tier 1 capital ratio | 16.7 | | | 16.4 | | | | 16.8 | | | 17.7 | | | |
| Total capital ratio | 18.5 | | | 17.6 | | | | 17.9 | | | 18.1 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2023
(in millions, except ratios) | Basel III Standardized | | | Basel III Advanced | | |
JPMorgan Chase & Co. | | JPMorgan Chase Bank, N.A. | | | JPMorgan Chase & Co. | | JPMorgan Chase Bank, N.A. | | |
Risk-based capital metrics:(a) | | | | | | | | | | |
| CET1 capital | $ | 250,585 | | | $ | 262,030 | | | | $ | 250,585 | | | $ | 262,030 | | | |
| Tier 1 capital | 277,306 | | | 262,032 | | | | 277,306 | | | 262,032 | | | |
| Total capital | 308,497 | | | 281,308 | | | | 295,417 | | (b) | 268,392 | | (b) | |
| | | | | | | | | | |
| | | | | | | | | | |
| Risk-weighted assets | 1,671,995 | | | 1,621,789 | | | | 1,669,156 | | (b) | 1,526,952 | | (b) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| CET1 capital ratio | 15.0 | % | | 16.2 | % | | | 15.0 | % | | 17.2 | % | | |
| Tier 1 capital ratio | 16.6 | | | 16.2 | | | | 16.6 | | | 17.2 | | | |
| Total capital ratio | 18.5 | | | 17.3 | | | | 17.7 | | | 17.6 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(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) | June 30, 2024 | | | December 31, 2023 | |
JPMorgan
Chase & Co. | JPMorgan
Chase Bank, N.A. | | | JPMorgan
Chase & Co. | JPMorgan
Chase Bank, N.A. | |
Leverage-based capital metrics:(a) | | | | | | | |
Adjusted average assets(b) | $ | 4,016,654 | | $ | 3,408,684 | | | | $ | 3,831,200 | | $ | 3,337,842 | | |
Tier 1 leverage ratio | 7.2 | % | 8.1 | % | | | 7.2 | % | 7.9 | % | |
| Total leverage exposure | $ | 4,768,202 | | $ | 4,157,231 | | | | $ | 4,540,465 | | $ | 4,038,739 | | |
| SLR | 6.1 | % | 6.7 | % | | | 6.1 | % | 6.5 | % | |
(a)The capital metrics reflect the CECL capital transition provisions.
(b)Adjusted average assets, for purposes of calculating the leverage ratios, includes quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill, inclusive of estimated equity method goodwill, and other intangible assets.
Note 22 – 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. Refer to Note 28 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of lending-related commitments and guarantees, and the Firm’s related accounting policies.
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 12 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 June 30, 2024 and December 31, 2023. The amounts in the table below for credit card, home equity and certain scored business banking 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 and certain scored business banking 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Off–balance sheet lending-related financial instruments, guarantees and other commitments | | | |
| Contractual amount | | Carrying value(h)(i) | |
| June 30, 2024 | | | Dec 31,
2023 | | June 30,
2024 | | Dec 31,
2023 | |
By remaining maturity
(in millions) | Expires in 1 year or less | Expires after
1 year through
3 years | Expires after
3 years through
5 years | Expires after 5 years | Total | | | Total | | | | | |
| Lending-related | | | | | | | | | | | | | |
| Consumer, excluding credit card: | | | | | | | | | | | | | |
Residential Real Estate(a) | $ | 11,225 | | $ | 7,493 | | $ | 5,461 | | $ | 8,674 | | $ | 32,853 | | | | $ | 30,125 | | | $ | 623 | | (j) | $ | 678 | | (j) |
| Auto and other | 10,896 | | 21 | | — | | 3,445 | | 14,362 | | | | 15,278 | | | 69 | | (j) | 148 | | (j) |
| Total consumer, excluding credit card | 22,121 | | 7,514 | | 5,461 | | 12,119 | | 47,215 | | | | 45,403 | | | 692 | | | 826 | | |
Credit card(b) | 964,727 | | — | | — | | — | | 964,727 | | | | 915,658 | | | — | | | — | | |
Total consumer(c) | 986,848 | | 7,514 | | 5,461 | | 12,119 | | 1,011,942 | | | | 961,061 | | | 692 | | | 826 | | |
| Wholesale: | | | | | | | | | | | | | |
Other unfunded commitments to extend credit(d) | 124,757 | | 192,737 | | 169,714 | | 24,442 | | 511,650 | | | | 503,526 | | | 2,692 | | (j) | 2,797 | | (j) |
Standby letters of credit and other financial guarantees(d) | 16,443 | | 8,919 | | 3,209 | | 553 | | 29,124 | | | | 28,872 | | | 403 | | | 479 | | |
Other letters of credit(d) | 3,854 | | 249 | | 42 | | 101 | | 4,246 | | | | 4,388 | | | 36 | | | 37 | | |
Total wholesale(c) | 145,054 | | 201,905 | | 172,965 | | 25,096 | | 545,020 | | | | 536,786 | | | 3,131 | | | 3,313 | | |
| Total lending-related | $ | 1,131,902 | | $ | 209,419 | | $ | 178,426 | | $ | 37,215 | | $ | 1,556,962 | | | | $ | 1,497,847 | | | $ | 3,823 | | | $ | 4,139 | | |
| Other guarantees and commitments | | | | | | | | | | | | | |
Securities lending indemnification agreements and guarantees(e) | $ | 319,353 | | $ | — | | $ | — | | $ | — | | $ | 319,353 | | | | $ | 283,664 | | | $ | — | | | $ | — | | |
| Derivatives qualifying as guarantees | 1,435 | | 77 | | 10,479 | | 40,910 | | 52,901 | | | | 54,562 | | | 88 | | | 89 | | |
Unsettled resale and securities borrowed agreements | 154,224 | | 258 | | — | | — | | 154,482 | | | | 95,106 | |
| 1 | | | — | | |
Unsettled repurchase and securities loaned agreements | 107,401 | | 537 | | — | | — | | 107,938 | | | | 60,724 | | | — | | | — | | |
Loan sale and securitization-related indemnifications: | | | | | | | | | | | | | |
| Mortgage repurchase liability | NA | NA | NA | NA | NA | | | NA | | 60 | | | 76 | | |
| Loans sold with recourse | NA | NA | NA | NA | 825 | | | | 803 | | | 23 | | | 24 | | |
Exchange & clearing house guarantees and commitments(f) | 124,661 | | — | | — | | — | | 124,661 | | | | 265,887 | | | — | | | — | | |
Other guarantees and commitments(g) | 10,939 | | 718 | | 93 | | 741 | | 12,491 | | | | 15,074 | | | 27 | | | 38 | | |
(a)Includes certain commitments to purchase loans from correspondents.
(b)Also includes commercial card lending-related commitments primarily in CIB.
(c)Predominantly all consumer and wholesale lending-related commitments are in the U.S.
(d)As of June 30, 2024 and December 31, 2023, reflected the contractual amount net of risk participations totaling $90 million and $88 million, respectively, for other unfunded commitments to extend credit; $9.9 billion and $8.2 billion, respectively, for standby letters of credit and other financial guarantees; $372 million and $589 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 June 30, 2024 and December 31, 2023, collateral held by the Firm in support of securities lending indemnification agreements was $339.5 billion and $300.3 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 June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, primarily includes unfunded commitments to purchase secondary market loans, other equity investment commitments, and unfunded commitments related to certain tax-oriented equity investments, and reflects the impact of adopting updates to the Accounting for Investments in Tax Credit Structures guidance effective January 1, 2024.
(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 June 30, 2024 and December 31, 2023, includes fair value adjustments associated with First Republic for residential real estate lending-related commitments totaling $550 million and $630 million, respectively, for auto and other lending-related commitments totaling $69 million and $148 million, respectively, and for other unfunded commitments to extend credit totaling $854 million and $1.1 billion, respectively. Refer to Note 26 for additional information.
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.
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 June 30, 2024 and December 31, 2023.
Standby letters of credit, other financial guarantees and other letters of credit
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| (in millions) | Standby letters of
credit and other financial guarantees | | Other letters
of credit | | Standby letters of
credit and other financial guarantees | | Other letters
of credit |
Investment-grade(a) | $ | 20,333 | | | $ | 3,477 | | | $ | 19,694 | | | $ | 3,552 | |
Noninvestment-grade(a) | 8,791 | | | 769 | | | 9,178 | | | 836 | |
| Total contractual amount | $ | 29,124 | | | $ | 4,246 | | | $ | 28,872 | | | $ | 4,388 | |
| | | | | | | |
| Allowance for lending-related commitments | $ | 107 | | | $ | 36 | | | $ | 110 | | | $ | 37 | |
| Guarantee liability | 296 | | | — | | | 369 | | | — | |
| Total carrying value | $ | 403 | | | $ | 36 | | | $ | 479 | | | $ | 37 | |
| Commitments with collateral | $ | 16,272 | | | $ | 426 | | | $ | 16,861 | | | $ | 539 | |
(a)The ratings scale is based on the Firm’s internal risk ratings. Refer to Note 11 for further information on internal risk ratings.
Derivatives qualifying as guarantees
The Firm transacts in certain derivative contracts that have the characteristics of a guarantee under U.S. GAAP. Refer to Note 28 of JPMorgan Chase’s 2023 Form 10-K for further information on these derivatives.
The following table summarizes the derivatives qualifying as guarantees as of June 30, 2024 and December 31, 2023.
| | | | | | | | | |
| (in millions) | June 30, 2024 | | December 31, 2023 |
| | | |
| Notional amounts | | | |
| Derivative guarantees | $ | 52,901 | | | $ | 54,562 | |
Stable value contracts with contractually limited exposure | 32,510 | | | 32,488 | |
Maximum exposure of stable value contracts with contractually limited exposure | 1,653 | | | 1,652 | |
| | | |
| Fair value | | | |
Derivative payables | 88 | | | 89 | |
| | | |
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 4 for a further discussion of credit derivatives.
Loan sales- and securitization-related indemnifications
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.
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 24 of this Form 10-Q and Note 30 of JPMorgan Chase’s 2023 Form 10-K for additional information regarding litigation.
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.
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 179. Refer to Note 11 of JPMorgan Chase’s 2023 Form 10-K for additional information on credit risk mitigation practices on resale agreements and the types of collateral pledged under repurchase agreements.
Guarantees of subsidiaries
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 179 of this Note. Refer to Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information.
Note 23 – Pledged assets and collateral
Refer to Note 29 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s 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.
| | | | | | | | | | | |
| (in billions) | June 30, 2024 | | December 31, 2023 |
Assets that may be sold or repledged or otherwise used by secured parties | $ | 192.4 | | | $ | 145.0 | |
Assets that may not be sold or repledged or otherwise used by secured parties | 283.5 | | | 244.2 | |
Assets pledged at Federal Reserve banks and FHLBs | 689.1 | | | 675.6 | |
Total pledged assets | $ | 1,165.0 | | | $ | 1,064.8 | |
Total pledged assets do not include assets of consolidated VIEs; these assets are used to settle the liabilities of those entities. Refer to Note 13 for additional information on assets and liabilities of consolidated VIEs. Refer to Note 10 for additional information on the Firm’s securities financing activities. Refer to Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s long-term debt.
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.
| | | | | | | | | | | | |
| (in billions) | June 30, 2024 | | December 31, 2023 | |
Collateral permitted to be sold or repledged, delivered, or otherwise used | $ | 1,493.6 | | | $ | 1,303.9 | | |
| Collateral sold, repledged, delivered or otherwise used | 1,188.1 | | | 982.8 | | |
Note 24 – Litigation
Contingencies
As of June 30, 2024, 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 $1.7 billion at June 30, 2024. 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. In March 2024, the Court upheld the Firm's challenge to the validity of service and the Malaysian Court’s jurisdiction to hear the claim. That decision has been appealed by 1MDB. 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 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 United States District Court for the Southern District of New York denied certification of a class and granted summary judgment against the named plaintiffs in March 2023. In May 2024, the United States Court of Appeals for the Second Circuit affirmed the District Court's decision, and in July 2024, plaintiffs’ subsequent petition for en banc review by the full Court of Appeals was denied. 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 the Consumer Financial Protection Bureau (CFPB) regarding the transfers of funds through the Zelle Network. In connection with this, the CFPB Staff has informed the Firm that it is authorized to pursue a resolution of the inquiries or file an enforcement action. The Firm is evaluating next steps, including litigation.
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 United States District Court for the Eastern District of New York 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. In June 2024, the District Court denied preliminary approval of a settlement of the injunctive class action in which Visa and Mastercard agreed to certain changes to their respective network rules and system-wide reductions in interchange
rates for U.S.-based merchants. The parties are considering next steps.
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 over 70% of the combined Mastercard-branded and Visa-branded payment card sales volume.
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. In March 2024, the Firm filed an appeal of this decision with the Court of Justice of the European Union.
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. Plaintiffs' appeal of the dismissal to the United States Court of Appeals for the Ninth Circuit filed in November 2023 remains pending. 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 blocking 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 under, and is contractually excused from paying as a result of, relevant sanctions laws. In claims involving the Firm and claims filed
against other financial institutions, Russian courts have disregarded the parties’ contractual agreements concerning forum selection and did not recognize foreign sanctions laws as a basis for not making payment. As to claims against the Firm, a Russian court entered judgment against the Firm in one claim in February 2024, which was executed in July 2024 against assets held onshore by the Firm in Russia. The Firm continues to appeal the Russian court’s decision. In separate claims, in April 2024, Russian courts ordered an interim freeze of assets in Russia (including funds in bank accounts, securities, shares in authorized capital, and certain trademarks, of the named defendants) pending a determination on the underlying claims. Russian courts may rule similarly in other cases, including ordering freezes and seizure of assets. The Firm challenged the April 2024 freeze orders in the Russian courts and in a New York federal court action, and a Russian court has issued an order instructing the Firm to discontinue the New York action. The value of the current claims and the orders to freeze assets against the Firm exceed the total amount of available assets that the Firm holds in Russia. If further claims are enforced despite the actions taken by the Firm to challenge the claims and orders and to seek the proper application of law, the Firm’s assets in Russia could be seized in full or the Firm could be prevented from complying with its obligations.
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 continues to cooperate and is currently engaged in resolution discussions with the SEC. There is no assurance that such discussions will result in resolutions
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 separate shareholder derivative suit was filed in March 2022 in the United States District Court for the Eastern District of New York asserting state claims of breaches of fiduciary duty and federal claims of 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. In March 2024, the Court granted Defendants’ motion to dismiss the federal claims and declined to exercise jurisdiction over the remaining state claims.
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 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 entered into resolutions with the OCC and the Board of Governors of the FRB in March 2024 and with the Commodity Futures Trading Commission in May 2024. The resolutions required the Firm to, among other things, pay aggregate civil penalties of $450 million, which the Firm has paid, and to complete the Firm’s remediation. The Firm has also engaged an independent compliance consultant as required by the resolutions. The Firm does not expect any disruption of service to clients as a result of these resolutions.
* * *
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 $317 million and $420 million for the three months ended June 30, 2024 and 2023, 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.
Note 25 – Business segments
The Firm is managed on an LOB basis. Effective in the second quarter of 2024, the Firm reorganized its reportable business segments by combining the former Corporate & Investment Bank and Commercial Banking business segments to form one reportable segment, the Commercial & Investment Bank (“CIB”). As a result of the reorganization, the Firm now has three reportable business segments: Consumer & Community Banking, Commercial & Investment Bank, 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 currently 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 18-19 for a definition of managed basis.
Refer to Note 32 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of JPMorgan Chase’s business segments.
Segment results
The following table provides a summary of the Firm’s segment results as of or for the three and six months ended June 30, 2024 and 2023, 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. Refer to Note 32 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s managed basis.
Capital allocation
The amount of capital assigned to each business segment is referred to as equity. 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 Note 32 of JPMorgan Chase’s 2023 Form 10-K for additional information on capital allocation.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment results and reconciliation(a) | |
As of or for the three months
ended June 30,
(in millions, except ratios) | Consumer &
Community Banking | | Commercial &
Investment Bank | | Asset & Wealth Management | |
| 2024 | | 2023 | | 2024 | 2023 | | 2024 | | 2023 | |
| Noninterest revenue | $ | 3,996 | | $ | 3,543 | | $ | 12,744 | $ | 11,637 | | $ | 3,633 | | $ | 3,358 | |
| Net interest income | 13,705 | | 13,690 | | 5,173 | 4,870 | | 1,619 | | 1,585 | |
| Total net revenue | 17,701 | | 17,233 | | 17,917 | 16,507 | | 5,252 | | 4,943 | |
Provision for credit losses | 2,643 | | 1,862 | | 384 | 1,135 | | 20 | | 145 | |
| Noninterest expense | 9,425 | | 8,313 | | 9,166 | 8,194 | | 3,543 | | 3,163 | |
Income/(loss) before income tax expense/(benefit) | 5,633 | | 7,058 | | 8,367 | 7,178 | | 1,689 | | 1,635 | |
| Income tax expense/(benefit) | 1,423 | | 1,752 | | 2,470 | 1,878 | | 426 | | 409 | |
| Net income/(loss) | $ | 4,210 | | $ | 5,306 | | $ | 5,897 | $ | 5,300 | | $ | 1,263 | | $ | 1,226 | |
Average equity | $ | 54,500 | | $ | 54,346 | | $ | 132,000 | $ | 137,505 | | $ | 15,500 | | $ | 16,670 | |
| Total assets | 638,493 | | 620,193 | | 1,939,038 | 1,737,334 | | 247,353 | | 247,118 | |
| ROE | 30 | % | | 38 | % | | 17 | % | 15 | % | | 32 | % | | 29 | % | |
| Overhead ratio | 53 | | | 48 | | | 51 | | 50 | | | 67 | | | 64 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of or for the three months
ended June 30,
(in millions, except ratios) | Corporate | | Reconciling Items(a) | | Total | |
| 2024 | | 2023 | | 2024 | 2023 | | 2024 | | 2023 | |
| Noninterest revenue | $ | 7,758 | (b) | $ | 1,980 | | $ | (677) | $ | (990) | | $ | 27,454 | (b) | $ | 19,528 | |
| Net interest income | 2,364 | | 1,738 | | (115) | (104) | | 22,746 | | 21,779 | |
| Total net revenue | 10,122 | | 3,718 | | (792) | (1,094) | | 50,200 | | 41,307 | |
Provision for credit losses | 5 | | (243) | | — | — | | 3,052 | | 2,899 | |
| Noninterest expense | 1,579 | (c) | 1,152 | | — | — | | 23,713 | (c) | 20,822 | |
| Income/(loss) before income tax expense/(benefit) | 8,538 | | 2,809 | | (792) | (1,094) | | 23,435 | | 17,586 | |
| Income tax expense/(benefit) | 1,759 | | 169 | | (792) | (1,094) | | 5,286 | | 3,114 | |
| Net income/(loss) | $ | 6,779 | | $ | 2,640 | | $ | — | $ | — | | $ | 18,149 | | $ | 14,472 | |
Average equity | $ | 106,763 | | $ | 69,364 | | $ | — | $ | — | | $ | 308,763 | | $ | 277,885 | |
| Total assets | 1,318,119 | | 1,263,595 | | NA | NA | | 4,143,003 | | 3,868,240 | |
| ROE | NM | | NM | | NM | NM | | 23 | % | | 20 | % | |
| Overhead ratio | NM | | NM | | NM | NM | | 47 | | | 50 | | |
(a)Segment managed results reflect revenue on an 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)Included $7.9 billion net gain related to Visa shares. Refer to Note 2 for additional information.
(c)Included $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment results and reconciliation(a) |
As of or for the six months
ended June 30,
(in millions, except ratios) | Consumer &
Community Banking | | Commercial &
Investment Bank | | Asset & Wealth Management |
| 2024 | | 2023 | | 2024 | 2023 | | 2024 | | 2023 |
| Noninterest revenue | $ | 7,941 | | $ | 7,166 | | $ | 24,905 | $ | 23,941 | | $ | 7,147 | | $ | 6,691 |
| Net interest income | 27,413 | | 26,523 | | 10,596 | 9,677 | | 3,214 | | 3,036 |
| Total net revenue | 35,354 | | 33,689 | | 35,501 | 33,618 | | 10,361 | | 9,727 |
Provision for credit losses | 4,556 | | 3,264 | | 385 | 1,610 | | (37) | | 173 |
| Noninterest expense | 18,722 | | 16,378 | | 17,890 | 16,985 | | 7,003 | | 6,254 |
Income/(loss) before income tax expense/(benefit) | 12,076 | | 14,047 | | 17,226 | 15,023 | | 3,395 | | 3,300 |
| Income tax expense/(benefit) | 3,035 | | 3,498 | | 4,707 | 3,955 | | 842 | | 707 |
| Net income/(loss) | $ | 9,041 | | $ | 10,549 | | $ | 12,519 | $ | 11,068 | | $ | 2,553 | | $ | 2,593 |
Average equity | $ | 54,500 | | $ | 53,180 | | $ | 132,000 | $ | 137,005 | | $ | 15,500 | | $ | 16,337 |
| Total assets | 638,493 | | 620,193 | | 1,939,038 | 1,737,334 | | 247,353 | | 247,118 |
| ROE | 33 | % | | 39 | % | | 18 | % | 16 | % | | 32 | % | | 31 | % |
| Overhead ratio | 53 | | | 49 | | | 50 | | 51 | | | 68 | | | 64 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of or for the six months
ended June 30,
(in millions, except ratios) | Corporate | | Reconciling Items(a) | | Total |
| 2024 | | 2023 | | 2024 | 2023 | | 2024 | | 2023 |
| Noninterest revenue | $ | 7,483 | (b) | $ | 1,225 | | $ | (1,170) | $ | (1,857) | | $ | 46,306 | (b) | $ | 37,166 |
| Net interest income | 4,841 | | 3,478 | | (236) | (224) | | 45,828 | | 42,490 |
| Total net revenue | 12,324 | | 4,703 | | (1,406) | (2,081) | | 92,134 | | 79,656 |
Provision for credit losses | 32 | | 127 | | — | — | | 4,936 | | 5,174 |
| Noninterest expense | 2,855 | (c) | 1,312 | | — | — | | 46,470 | (c) | 40,929 |
| Income/(loss) before income tax expense/(benefit) | 9,437 | | 3,264 | | (1,406) | (2,081) | | 40,728 | | 33,553 |
| Income tax expense/(benefit) | 1,982 | | 380 | | (1,406) | (2,081) | | 9,160 | | 6,459 |
| Net income/(loss) | $ | 7,455 | | $ | 2,884 | | $ | — | $ | — | | $ | 31,568 | | $ | 27,094 |
Average equity | $ | 102,519 | | $ | 68,038 | | $ | — | $ | — | | $ | 304,519 | | $ | 274,560 |
| Total assets | 1,318,119 | | 1,263,595 | | NA | NA | | 4,143,003 | | 3,868,240 |
| ROE | NM | | NM | | NM | NM | | 20 | % | | 19 | % |
| Overhead ratio | NM | | NM | | NM | NM | | 50 | | | 51 | |
(a)Segment managed results reflect revenue on an 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)Included $7.9 billion net gain related to Visa shares. Refer to Note 2 for additional information.
(c)Included $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
Note 26 – 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 acquisition resulted in a 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 First Republic acquisition resulted in a preliminary estimated bargain purchase gain of $2.7 billion. As the one-year measurement period permitted by U.S. GAAP has now concluded, management has finalized its fair value estimates for the assets acquired and liabilities assumed. The final bargain purchase gain of $2.9 billion reflects adjustments made during the measurement period to the fair value of the net assets acquired, including an increase of $119 million and $103 million for the three and six months ended June 30, 2024, respectively. Certain matters related to the final settlement remain outstanding between the Firm and the FDIC. Any subsequent adjustments will not impact the final bargain purchase gain and will be reflected in Other income.
Refer to Note 34 of JPMorgan Chase’s 2023 Form 10-K for further information on the First Republic acquisition.
The computation of the purchase price, the fair values of the assets acquired and liabilities assumed as part of the First Republic acquisition and the related bargain purchase gain are presented below, and reflects adjustments made during the measurement period to the acquisition-date fair value of the net assets acquired.
| | | | | |
| Fair value purchase
price allocation as of
May 1, 2023 |
| (in millions) |
| Purchase price consideration | |
Amounts paid/due to the FDIC, net of cash acquired(a) | $ | 13,555 | |
Purchase Money Note (at fair value)(b) | 48,848 | |
Settlement of First Republic deposit and other related party transactions(c) | 5,447 | |
| Contingent consideration - Shared-loss agreements | 15 | |
| Purchase price consideration | $ | 67,865 | |
| |
| Assets | |
| Securities | $ | 30,285 | |
| Loans | 153,242 | |
| Core deposit and customer relationship intangibles | 1,455 | |
| Indemnification assets - Shared-loss agreements | 675 | |
Accounts receivable and other assets(d) | 6,740 | |
| Total assets acquired | $ | 192,397 | |
| |
| Liabilities | |
| Deposits | $ | 87,572 | |
| FHLB advances | 27,919 | |
| Lending-related commitments | 2,614 | |
Accounts payable and other liabilities(d) | 2,792 | |
| Deferred tax liabilities | 757 | |
| Total liabilities assumed | $ | 121,654 | |
| |
| Fair value of net assets acquired | $ | 70,743 | |
| Gain on acquisition, after income taxes | $ | 2,878 | |
(a)Net of cash acquired of $680 million, and including disputed amounts.
(b)As part of the consideration paid, JPMorgan Chase issued a five-year, $50 billion secured note to the FDIC (the "Purchase Money Note").
(c)Includes $447 million of securities financing transactions with First Republic Bank that were effectively settled on the acquisition date.
(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 of JPMorgan Chase's 2023 Form 10-K for additional information.
Refer to JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s accounting policies and valuation methodologies for securities, loans, core deposits and customer relationship intangibles, shared-loss agreements and the related indemnification assets, deposits, Purchase Money Note, FHLB advances and lending-related commitments.
Loans
The following table presents the unpaid principal balance ("UPB") and fair values of the loans acquired as of May 1, 2023, and reflects adjustments made during the measurement period to the acquisition-date fair value of the loans acquired.
| | | | | | | | | | | |
|
| May 1, 2023 |
| (in millions) | UPB | | Fair value |
| Residential real estate | $ | 106,240 | | | $ | 92,053 | |
| Auto and other | 3,093 | | | 2,030 | |
| Total consumer | 109,333 | | | 94,083 | |
| Secured by real estate | 37,117 | | | 33,602 | |
| Commercial & industrial | 4,332 | | | 3,932 | |
| Other | 23,499 | | | 21,625 | |
| Total wholesale | 64,948 | | | 59,159 | |
| Total loans | $ | 174,281 | | | $ | 153,242 | |
Unaudited pro forma condensed combined financial information
The following table presents certain unaudited pro forma financial information for the three and six months ended June 30, 2023 as if the First Republic acquisition had occurred on January 1, 2022, including recognition of the estimated bargain purchase gain of $2.7 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.
| | | | | | | | | | | | | | | | | | |
| Three months ended June 30, | | Six months ended June 30, | | |
| (in millions) | | 2023 | | 2023 | | | | |
| Noninterest revenue | | $ | 16,924 | | | $ | 34,832 | | | | | |
| Net interest income | | 22,184 | | | 44,084 | | | | | |
| Net income | | 13,565 | | | 26,726 | | | | | |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of JPMorgan Chase & Co.:
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated balance sheet of JPMorgan Chase & Co. and its subsidiaries (the “Firm”) as of June 30, 2024, and the related consolidated statements of income, comprehensive income and changes in stockholders’ equity for the three-month and six-month periods ended June 30, 2024 and 2023 and the consolidated statements of cash flows for the six-month periods ended June 30, 2024 and 2023, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Firm as of December 31, 2023, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and of cash flows for the year then ended (not presented herein), and in our report dated February 16, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Firm’s management. 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 review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
August 2, 2024
PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, NY 10017
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
JPMorgan Chase & Co. |
| Consolidated average balance sheets, interest and rates (unaudited) |
| (Taxable-equivalent interest and rates; in millions, except rates) |
| | | |
| Three months ended June 30, 2024 | | Three months ended June 30, 2023 |
| Average
balance | Interest(f) | | Rate
(annualized) | | Average
balance | Interest(f) | | Rate
(annualized) |
| Assets | | | | | | | | | | | |
| Deposits with banks | $ | 512,150 | | $ | 6,059 | | | 4.76 | % | | | $ | 495,018 | | $ | 5,189 | | | 4.20 | % | |
Federal funds sold and securities purchased under resale agreements | 370,817 | | 4,821 | | | 5.23 | | | | 326,563 | | 3,767 | | | 4.63 | | |
| Securities borrowed | 195,877 | | 2,177 | | | 4.47 | | | | 191,393 | | 1,866 | |
| 3.91 | | |
| Trading assets – debt instruments | 452,933 | | 5,005 | | | 4.44 | | | | 391,945 | | 4,025 | | | 4.12 | | |
| Taxable securities | 552,909 | | 5,124 | | | 3.73 | | | | 578,876 | | 4,194 | | | 2.91 | | |
Nontaxable securities(a) | 27,135 | | 349 | | | 5.17 | | | | 32,676 | | 390 | | | 4.79 | | |
| Total investment securities | 580,044 | | 5,473 | | | 3.80 | | (g) | | 611,552 | | 4,584 | | | 3.01 | | (g) |
| Loans | 1,313,085 | | 22,954 | | | 7.03 | | | | 1,238,237 | | 20,351 | | | 6.59 | | |
All other interest-earning assets(b)(c) | 84,819 | | 2,139 | | | 10.14 | | | | 89,072 | | 1,966 | | | 8.85 | | |
| Total interest-earning assets | 3,509,725 | | 48,628 | | | 5.57 | | | | 3,343,780 | | 41,748 | | | 5.01 | | |
| Allowance for loan losses | (22,273) | | | | | | | (20,055) | | | | | |
| Cash and due from banks | 22,136 | | | | | | | 25,228 | | | | | |
| Trading assets – equity and other instruments | 221,382 | | | | | | | 169,558 | | | | | |
| Trading assets – derivative receivables | 57,175 | | | | | | | 63,339 | | | | | |
| Goodwill, MSRs and other intangible Assets | 64,452 | | | | | | | 62,530 | | | | | |
| All other noninterest-earning assets | 218,846 | | | | | | | 207,008 | | | | | |
| Total assets | $ | 4,071,443 | | | | | | | $ | 3,851,388 | | | | | |
| Liabilities | | | | | | | | | | | |
| Interest-bearing deposits | $ | 1,722,856 | | $ | 12,421 | | | 2.90 | % | | | $ | 1,715,699 | | $ | 9,591 | | | 2.24 | % | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 375,371 | | 5,108 | | | 5.47 | | | | 263,718 | | 3,400 | | | 5.17 | | |
| Short-term borrowings | 38,234 | | 502 | | | 5.27 | | | | 35,335 | | 428 | | | 4.87 | | |
Trading liabilities – debt and all other interest-bearing liabilities(d)(e) | 318,703 | | 2,604 | | | 3.29 | | | | 293,269 | | 2,373 | | | 3.25 | | |
| Beneficial interests issued by consolidated VIEs | 26,222 | | 352 | | | 5.40 | | | | 15,947 | | 197 | | | 4.95 | | |
| Long-term debt | 342,516 | | 4,780 | | | 5.61 | | | | 294,239 | | 3,876 | | | 5.28 | | |
| Total interest-bearing liabilities | 2,823,902 | | 25,767 | | | 3.67 | | | | 2,618,207 | | 19,865 | | | 3.04 | | |
| Noninterest-bearing deposits | 648,327 | | | | | | | 671,715 | | | | | |
Trading liabilities – equity and other instruments(e) | 30,456 | | | | | | | 28,513 | | | | | |
| Trading liabilities – derivative payables | 37,538 | | | | | | | 46,934 | | | | | |
| All other liabilities, including the allowance for lending-related commitments | 196,590 | | | | | | | 180,730 | | | | | |
| Total liabilities | 3,736,813 | | | | | | | 3,546,099 | | | | | |
| Stockholders’ equity | | | | | | | | | | | |
| Preferred stock | 25,867 | | | | | | | 27,404 | | | | | |
| Common stockholders’ equity | 308,763 | | | | | | | 277,885 | | | | | |
| Total stockholders’ equity | 334,630 | | | | | | | 305,289 | | | | | |
| Total liabilities and stockholders’ equity | $ | 4,071,443 | | | | | | | $ | 3,851,388 | | | | | |
| Interest rate spread | | | | 1.90 | % | | | | | | 1.97 | % | |
| Net interest income and net yield on interest-earning assets | | $ | 22,861 | | | 2.62 | | | | | $ | 21,883 | | | 2.62 | | |
(a)Represents securities which 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.
(e)The combined balance of trading liabilities – debt and equity instruments was $192.3 billion and $153.7 billion for the three months ended June 30, 2024 and 2023, respectively.
(f)Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(g)The annualized rate for securities based on amortized cost was 3.76% and 2.96% for the three months ended June 30, 2024 and 2023, respectively, and does not give effect to changes in fair value that are reflected in AOCI.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
JPMorgan Chase & Co. |
| Consolidated average balance sheets, interest and rates (unaudited) |
| (Taxable-equivalent interest and rates; in millions, except rates) |
| | | |
| Six months ended June 30, 2024 | | Six months ended June 30, 2023 |
| Average
balance | Interest(f) | | Rate
(annualized) | | Average
balance | Interest(f) | | Rate
(annualized) |
| Assets | | | | | | | | | | | |
| Deposits with banks | $ | 523,929 | | $ | 12,445 | | | 4.78 | % | | | $ | 500,311 | | $ | 10,008 | | | 4.03 | % | |
Federal funds sold and securities purchased under resale agreements | 347,402 | | 9,036 | | | 5.23 | | | | 319,911 | | 6,898 | | | 4.35 | | |
| Securities borrowed | 194,211 | | 4,343 | | | 4.50 | | | | 192,114 | | 3,582 | |
| 3.76 | | |
| Trading assets – debt instruments | 437,725 | | 9,608 | | | 4.41 | | | | 374,908 | | 7,685 | | | 4.13 | | |
| Taxable securities | 551,486 | | 9,995 | | | 3.64 | | | | 587,750 | | 8,161 | | | 2.80 | | |
Nontaxable securities(a) | 28,559 | | 725 | | | 5.11 | | | | 29,022 | | 698 | | | 4.85 | | |
| Total investment securities | 580,045 | | 10,720 | | | 3.72 | | (g) | | 616,772 | | 8,859 | | | 2.90 | | (g) |
| Loans | 1,312,332 | | 45,885 | | | 7.03 | | | | 1,184,231 | | 38,105 | | | 6.49 | | |
All other interest-earning assets(b)(c) | 81,976 | | 4,150 | | | 10.18 | | | | 92,372 | | 3,735 | | | 8.15 | | |
| Total interest-earning assets | 3,477,620 | | 96,187 | | | 5.56 | | | | 3,280,619 | | 78,872 | | | 4.85 | | |
| Allowance for loan losses | (22,320) | | | | | | | (19,593) | | | | | |
| Cash and due from banks | 22,881 | | | | | | | 25,640 | | | | | |
| Trading assets – equity and other instruments | 206,082 | | | | | | | 160,868 | | | | | |
| Trading assets – derivative receivables | 57,405 | | | | | | | 63,929 | | | | | |
| Goodwill, MSRs and other intangible Assets | 64,427 | | | | | | | 61,697 | | | | | |
| All other noninterest-earning assets | 213,945 | | | | | | | 207,913 | | | | | |
| Total assets | $ | 4,020,040 | | | | | | | $ | 3,781,073 | | | | | |
| Liabilities | | | | | | | | | | | |
| Interest-bearing deposits | $ | 1,724,499 | | $ | 24,655 | | | 2.88 | % | | | $ | 1,692,993 | | $ | 17,228 | | | 2.05 | % | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 335,177 | | 9,077 | | | 5.45 | | | | 258,045 | | 6,204 | | | 4.85 | | |
Short-term borrowings | 38,381 | | 1,037 | | | 5.42 | | | | 37,039 | | 849 | | | 4.63 | | |
Trading liabilities – debt and all other interest-bearing liabilities(d)(e) | 310,849 | | 5,240 | | | 3.39 | | | | 285,467 | | 4,344 | | | 3.07 | | |
| Beneficial interests issued by consolidated VIEs | 26,815 | | 716 | | | 5.37 | | | | 14,722 | | 344 | | | 4.71 | | |
| Long-term debt | 341,464 | | 9,398 | | | 5.53 | | | | 271,912 | | 7,189 | | | 5.33 | | |
| Total interest-bearing liabilities | 2,777,185 | | 50,123 | | | 3.63 | | | | 2,560,178 | | 36,158 | | | 2.85 | | |
| Noninterest-bearing deposits | 648,486 | | | | | | | 661,138 | | | | | |
Trading liabilities – equity and other instruments(e) | 29,539 | | | | | | | 29,137 | | | | | |
| Trading liabilities – derivative payables | 38,707 | | | | | | | 48,139 | | | | | |
| All other liabilities, including the allowance for lending-related commitments | 194,694 | | | | | | | 180,517 | | | | | |
| Total liabilities | 3,688,611 | | | | | | | 3,479,109 | | | | | |
| Stockholders’ equity | | | | | | | | | | | |
| Preferred stock | 26,910 | | | | | | | 27,404 | | | | | |
| Common stockholders’ equity | 304,519 | | | | | | | 274,560 | | | | | |
| Total stockholders’ equity | 331,429 | | | | | | | 301,964 | | | | | |
| Total liabilities and stockholders’ equity | $ | 4,020,040 | | | | | | | $ | 3,781,073 | | | | | |
| Interest rate spread | | | | 1.93 | % | | | | | | 2.00 | % | |
| Net interest income and net yield on interest-earning assets | | $ | 46,064 | | | 2.66 | | | | | $ | 42,714 | | | 2.63 | | |
(a)Represents securities which 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.
(e)The combined balance of trading liabilities – debt and equity instruments was $183.2 billion and $148.5 billion for the six months ended June 30, 2024 and 2023, respectively.
(f)Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(g)The annualized rate for securities based on amortized cost was 3.68% and 2.85% for the six months ended June 30, 2024 and 2023, respectively, and does not give effect to changes in fair value that are reflected in AOCI.
| | | | | | | | | | | | | | |
| GLOSSARY OF TERMS AND ACRONYMS |
2023 Form 10-K: Annual report on Form 10-K for year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission.
ABS: Asset-backed securities
Active foreclosures: Loans referred to foreclosure where formal foreclosure proceedings are ongoing. Includes both judicial and non-judicial states.
AFS: Available-for-sale
Allowance for loan losses to total retained loans: represents period-end allowance for loan losses divided by retained loans.
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(s): Adjustable rate mortgage(s)
AUC: “Assets under custody”: Represents assets held directly or indirectly on behalf of clients under safekeeping, custody and servicing arrangements.
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.
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.
CCAR: Comprehensive Capital Analysis and Review
CCB: Consumer & Community Banking
CCP: Central Counterparty
CDS: Credit default swaps
CECL: Current Expected Credit Losses
CEO: Chief Executive Officer
CET1 capital: Common equity Tier 1 capital
CFO: Chief Financial Officer
CFTC: Commodity Futures Trading Commission
CIB: Commercial & 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.
CLTV: Combined loan-to-value
CMT: Constant Maturity Treasury
Collateral-dependent: A loan is considered to be collateral-dependent when repayment of the loan is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty, including when foreclosure is deemed probable based on borrower delinquency.
Commercial Card: provides a wide range of payment services to corporate and public sector clients worldwide through the commercial card products. Services include procurement, corporate travel and entertainment, expense management services, and business-to-business payment solutions.
Credit derivatives: Financial instruments whose value is derived from the credit risk associated with the debt of a third-party issuer (the reference entity) which allow one party (the protection purchaser) to transfer that risk to another party (the protection seller). Upon the occurrence of a credit event by the reference entity, which may include, among other events, the bankruptcy or failure to pay its obligations, or certain restructurings of the debt of the reference entity, neither party has recourse to the reference entity. The protection purchaser has recourse to the protection seller for the difference between the face value of the CDS contract and the fair value at the time of settling the credit derivative contract. The determination as to whether a credit event has occurred is generally made by the relevant International Swaps and Derivatives Association (“ISDA”) Determinations Committee.
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.
CRR: Capital Requirements Regulation
CVA: Credit valuation adjustment
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
ESG: Environmental, Social and Governance
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 of volume- and revenue-related expenses include commissions and incentive compensation, depreciation expense related to operating lease assets, and brokerage expense related to equities trading transaction volume.
•Investments include expenses associated with supporting medium- to longer-term strategic plans of the Firm. Examples of investments include initiatives in technology (including related compensation), marketing, and compensation for new bankers and client advisors.
•Structural expenses are those associated with the day-to-day cost of running the bank and are expenses not covered by the above two categories. Examples of structural expenses include employee salaries and benefits, as well as noncompensation costs such as real estate and all other expenses.
Fannie Mae: Federal National Mortgage Association
FASB: Financial Accounting Standards Board
FCA: Financial Conduct Authority
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 deferral, 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
FICO score: A measure of consumer credit risk based on information in consumer credit reports produced by Fair Isaac Corporation. Because certain aged data is excluded from credit reports based on rules in the Fair Credit Reporting Act, FICO scores may not reflect all historical information about a consumer.
FICC: Fixed Income Clearing Corporation
FINRA: Financial Industry Regulatory Authority
Firm: JPMorgan Chase & Co.
Forward points: represents the interest rate differential between two currencies, which is either added to or subtracted from the current exchange rate (i.e., “spot rate”) to determine the forward exchange rate.
Freddie Mac: Federal Home Loan Mortgage Corporation
Free-standing derivatives: is 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.
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.
HQLA: High-quality liquid assets
HTM: Held-to-maturity
IBOR: Interbank Offered Rate
IDI: Insured depository institutions
IHC: JPMorgan Chase Holdings LLC, an intermediate holding company
Investment-grade: An indication of credit quality based on
JPMorgan Chase’s internal risk assessment system. “Investment grade” generally represents a risk profile similar to a rating of a “BBB-”/“Baa3” or better, as defined by independent rating agencies.
IPO: Initial Public Offering
IR: Interest rate
ISDA: International Swaps and Derivatives Association
JPMorgan Chase: JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.: JPMorgan Chase Bank, National Association
JPMorgan Chase Foundation or Foundation: a not-for-profit organization that makes contributions for charitable and educational purposes.
J.P. Morgan Securities: J.P. Morgan Securities LLC
JPMSE: J.P. Morgan SE
LCR: Liquidity coverage ratio
LIBOR: London Interbank Offered Rate
LLC: Limited Liability Company
LOB: Line of business
LTV: “Loan-to-value ratio”: For residential real estate loans, the relationship, expressed as a percentage, between the principal amount of a loan and the appraised value of the collateral (i.e., residential real estate) securing the loan.
Origination date LTV ratio
The LTV ratio at the origination date of the loan. Origination date LTV ratios are calculated based on the actual appraised values of collateral (i.e., loan-level data) at the origination date.
Current estimated LTV ratio
An estimate of the LTV as of a certain date. The current estimated LTV ratios are calculated using estimated collateral values derived from a nationally recognized home price index measured at the metropolitan statistical area (“MSA”) level. These MSA-level home price indices consist of actual data to the extent available and forecasted data where actual data is not available. As a result, the estimated collateral values used to calculate these ratios do not represent actual appraised loan-level collateral values; as such, the resulting LTV ratios are necessarily imprecise and should therefore be viewed as estimates.
Combined LTV ratio
The LTV ratio considering all available lien positions, as well as unused lines, related to the property. Combined LTV ratios are used for junior lien home equity products.
Macro businesses: the macro businesses include Rates, Currencies and Emerging Markets, Fixed Income Financing and Commodities in CIB's Fixed Income Markets.
Managed basis: A non-GAAP presentation of Firmwide financial results that includes reclassifications to present revenue on a fully taxable-equivalent basis. Management also uses this financial measure at the segment level, because it believes this provides information to enable
investors to understand the underlying operational performance and trends of the particular business segment and facilitates a comparison of the business segment with the performance of competitors.
Markets: consists of CIB's Fixed Income Markets and Equity Markets businesses.
Master netting agreement: A single agreement with a counterparty that permits multiple transactions governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency in the event of a default (e.g., bankruptcy, failure to make a required payment or securities transfer or deliver collateral or margin when due).
MBS: Mortgage-backed securities
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 product types:
Alt-A
Alt-A loans are generally higher in credit quality than subprime loans but have characteristics that would disqualify the borrower from a traditional prime loan. Alt-A lending characteristics may include one or more of the following: (i) limited documentation; (ii) a high CLTV ratio; (iii) loans secured by non-owner occupied properties; or (iv) a debt-to-income ratio above normal limits. A substantial proportion of the Firm’s Alt-A loans are those where a borrower does not provide complete documentation of his or her assets or the amount or source of his or her income.
Option ARMs
The option ARM real estate loan product is an adjustable-rate mortgage loan that provides the borrower with the option each month to make a fully amortizing, interest-only or minimum payment. The minimum payment on an option ARM loan is based on the interest rate charged during the introductory period. This introductory rate is usually significantly below the fully indexed rate. The fully indexed rate is calculated using an index rate plus a margin. Once the introductory period ends, the contractual interest rate charged on the loan increases to the fully indexed rate and adjusts monthly to reflect movements in the index. The minimum payment is typically insufficient to cover interest accrued in the prior month, and any unpaid interest is deferred and added to the principal balance of the loan. Option ARM loans are subject to payment recast, which
converts the loan to a variable-rate fully amortizing loan upon meeting specified loan balance and anniversary date triggers.
Prime
Prime mortgage loans are made to borrowers with good credit records who meet specific underwriting 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
MSR: Mortgage servicing rights
NA: Data is not applicable or available for the period presented.
Net Capital Rule: Rule 15c3-1 under the Securities Exchange Act of 1934.
Net charge-off/(recovery) rate: represents net charge-offs/(recoveries) (annualized) divided by average retained loans for the reporting period.
Net interchange income includes the following components:
•Interchange income: Fees earned by credit and debit card issuers on sales transactions.
•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 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
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 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. 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
OCC: Office of the Comptroller of the Currency
OCI: Other comprehensive income/(loss)
OPEB: Other postretirement employee benefit
OTC: “Over-the-counter derivatives”: Derivative contracts that are negotiated, executed and settled bilaterally between two derivative counterparties, where one or both counterparties is a derivatives dealer.
OTC cleared: “Over-the-counter 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 restricted stock and 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.
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.
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
Preferred stock dividends: reflects dividends declared and deemed dividends upon redemption of preferred stock
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.
Principal transactions revenue: Principal transactions revenue is driven by many factors, including the bid-offer spread, which is the difference between the price at which the Firm is willing to buy a financial or other instrument and the price at which the Firm is willing to sell that instrument. It also consists of realized (as a result of closing out or termination of transactions, or interim cash payments) and unrealized (as a result of changes in valuation) gains and losses on financial and other instruments (including those accounted for under the fair value option) primarily used in client-driven market-making activities and on private equity investments. 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 certain realized and unrealized gains and losses related to hedge accounting and specified risk-management activities, including: (a) certain derivatives designated in qualifying hedge accounting relationships (primarily fair value hedges of commodity and foreign exchange risk), (b) certain derivatives used for specific risk management purposes, primarily to mitigate credit risk and foreign exchange risk, and (c) other derivatives.
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: Total 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
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 Poors
SA-CCR: Standardized Approach for Counterparty Credit Risk
SAR as it pertains to Hong Kong: Special Administrative Region
SAR(s) as it pertains to employee stock awards: Stock appreciation rights
SCB: Stress capital buffer
Scored portfolios: Consumer loan portfolios that predominantly include residential real estate loans, credit card loans, auto loans to individuals and certain small business loans.
SEC: U.S. Securities and Exchange Commission
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
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.
Suspended foreclosures: Loans referred to foreclosure where formal foreclosure proceedings have started but are currently on hold, which could be due to bankruptcy or loss mitigation. Includes both judicial and non-judicial states.
Taxable-equivalent basis: In presenting managed results, 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 the managed results on a basis 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
U.S.: United States of America
U.S. GAAP: Accounting principles generally accepted in the United States of America.
U.S. government agencies: U.S. government agencies include, but are not limited to, agencies such as Ginnie Mae and FHA, and do not include Fannie Mae and Freddie Mac which are U.S. government-sponsored enterprises (“U.S. GSEs”). In general, obligations of U.S. government agencies are fully and explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government in the event of a default.
U.S. GSE(s): “U.S. government-sponsored enterprises” are quasi-governmental, privately-held entities established or chartered by the U.S. government to serve public purposes as specified by the U.S. Congress to improve the flow of credit to specific sectors of the economy and provide certain essential services to the public. U.S. GSEs include Fannie Mae and Freddie Mac, but do not include Ginnie Mae or FHA. U.S. GSE obligations are not explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government.
U.S. Treasury: U.S. Department of the Treasury
Unaudited: Financial statements and/or information that have not been subject to auditing procedures by an independent registered public accounting firm.
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.
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.
CONSUMER & COMMUNITY BANKING (“CCB”)
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.
Home Lending Production and Home Lending Servicing revenue comprises the following:
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.
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.
Mortgage origination channels comprise the following:
Retail: Borrowers who buy or refinance a home through direct contact with a mortgage banker employed by the Firm using a branch office, the Internet or by phone. Borrowers are frequently referred to a mortgage banker by a banker in a Chase branch, real estate brokers, home builders or other third parties.
Correspondent: Banks, thrifts, other mortgage banks and other financial institutions that sell closed loans to the Firm.
Card Services: is a business that primarily issues credit cards to consumers and small businesses.
Net revenue rate: Represents Card Services net revenue (annualized) expressed as a percentage of average loans for the period.
Auto loan and lease origination volume: Dollar amount of auto loans and leases originated.
Commercial & Investment Bank (“CIB”)
Definition of selected CIB revenue:
Investment Banking: Includes investment banking fees as well as other revenues associated with investment banking activities and services including advising on corporate strategy and structure, and capital-raising in equity and debt markets.
Payments: reflects revenue from cash management solutions, including services that enable clients to manage payments globally across liquidity and account solutions, commerce solutions, clearing, trade and working capital.
Lending: includes revenue from a variety of financing alternatives, which includes on a secured basis.
Other: includes tax-equivalent adjustments generated from Community Development Banking and activity derived from principal transactions.
Fixed Income Markets: primarily includes revenue related to market-making and lending across global fixed income markets, including foreign exchange, interest rate, credit and commodities markets.
Equity Markets: primarily includes revenue related to market-making and lending across global equity markets, including cash, derivative and prime brokerage products.
Securities Services: revenues are primarily generated from net interest income, asset based fees, and transaction based fees. Our core product offering is organized into four key areas: custody, fund services, liquidity and trading services, and data solutions. These services are marketed primarily to institutional investors.
Description of certain business metrics:
Assets under custody (“AUC”): represents activities associated with the safekeeping and servicing of assets on which Securities Services earns fees.
Investment banking fees: represents advisory, equity underwriting, bond underwriting and loan syndication fees.
Description of CIB client coverage segment for Banking and Payments revenue:
Global Corporate Banking & Global Investment Banking: provides banking products and services generally to large corporations, financial institutions and merchants.
Commercial Banking: provides banking products and services generally to middle market clients, including start-ups, small and mid-sized companies, local governments, municipalities, and nonprofits, as well as to commercial real estate clients.
Other: includes amounts related to credit protection purchased against certain retained loans and lending-related commitments in Lending, the impact of equity investments in Payments and revenues not aligned with a primary client coverage segment.
ASSET & WEALTH MANAGEMENT (“AWM”)
Assets under management (“AUM”): represent assets managed by AWM on behalf of its Private Banking, Global Institutional and Global Funds clients. Includes “Committed capital not Called.”
Client assets: represent assets under management, as well as custody, brokerage, administration and deposit accounts.
Multi-asset: Any fund or account that allocates assets under management to more than one asset class.
Alternative assets: The following types of assets constitute alternative investments – hedge funds, currency, real estate, private equity and other investment funds designed to focus on nontraditional strategies.
AWM’s lines of business consist of the following:
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, trusts and estates, loans, mortgages, deposits and investment management to high net worth clients.
AWM’s client segments consist of the following:
Private Banking: clients include high- and ultra-high-net-worth individuals, families, money managers and business owners.
Global Institutional: clients include both corporate and public institutions, endowments, foundations, nonprofit organizations and governments worldwide.
Global Funds: clients include financial intermediaries and individual investors.
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 industry-wide 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 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 and Taiwan funds. If these share classes are not available, the oldest share class is used as the primary share class.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Refer to the Market Risk Management section of Management’s discussion and analysis and pages 135–143 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the quantitative and qualitative disclosures about market risk.
Item 4. Controls and Procedures.
As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of the Firm’s management, including its Chairman and Chief Executive Officer and its Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chairman and Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective. Refer to Exhibits 31.1 and 31.2 for the Certifications furnished by the Chairman and Chief Executive Officer and Chief Financial Officer, respectively.
The Firm is committed to maintaining high standards of internal control over financial reporting. Nevertheless, because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Deficiencies or lapses in internal controls may occur from time to time, and there can be no assurance that any such deficiencies will not result in significant deficiencies or material weaknesses in internal control in the future and collateral consequences therefrom. Refer to “Management’s report on internal control over financial reporting” on page 162 of JPMorgan Chase’s 2023 Form 10-K for further information. There was no change in the Firm’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the three months ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Firm’s internal control over financial reporting.
Part II – Other Information
Item 1. Legal Proceedings.
Refer to the discussion of the Firm’s material legal proceedings in Note 24 of this Form 10-Q for information that updates the disclosures set forth under Part I, Item 3: Legal Proceedings, in JPMorgan Chase’s 2023 Form 10-K.
Item 1A. Risk Factors.
Refer to Part I, Item 1A: Risk Factors on pages 9-33 of JPMorgan Chase’s 2023 Form 10-K and Forward-Looking Statements on page 90 of this Form 10-Q for a discussion of certain risk factors affecting the Firm.
Supervision and regulation
Refer to the Supervision and regulation section on pages 4–8 of JPMorgan Chase’s 2023 Form 10-K for information on Supervision and Regulation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Repurchases under the common share repurchase program
Refer to Capital Risk Management on pages 45-50 of this Form 10-Q and pages 91-101 of JPMorgan Chase’s 2023 Form 10-K for information regarding repurchases under the Firm’s common share repurchase program.
On June 28, 2024, the Firm announced that its Board of Directors had authorized a new $30 billion common share repurchase program, effective July 1, 2024. Through June 30, 2024, the Firm was authorized to purchase up to $30 billion of common shares under its previously-approved common share repurchase program that was announced on April 13, 2022.
Shares repurchased pursuant to the common share repurchase program during the six months ended June 30, 2024 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six months ended June 30, 2024 | Total number of shares of common stock repurchased | | Average price paid per share of common stock(a) | | | | | | Aggregate purchase price of common stock repurchases (in millions)(a) | | Dollar value of remaining authorized repurchase (in millions)(a)(b) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| First quarter | 15,869,936 | | | $ | 179.50 | | | | | | | $ | 2,849 | | | $ | 16,886 | |
| | | | | | | | | | | |
| April | 4,306,651 | | | $ | 191.55 | | | | | | | $ | 824 | | | $ | 16,062 | |
| May | 12,727,717 | | | 198.35 | | | | | | | 2,525 | | | 13,537 | |
| June | 9,985,362 | | | 197.17 | | | | | | | 1,969 | | | 11,568 | |
| Second quarter | 27,019,730 | | | $ | 196.83 | | | | | | | $ | 5,318 | | | $ | 11,568 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Year-to-date | 42,889,666 | | | $ | 190.42 | | | | | | | $ | 8,167 | | | $ | 11,568 | |
(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)Represents the amount remaining under the $30 billion repurchase program.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Trading arrangements
During the second quarter of 2024, no director or officer who is subject to the filing requirements of Section 16 of the Securities Exchange Act of 1934 ("Section 16 Director or Officer") adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (each, as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934). Certain of the Firm's Section 16 Directors or Officers may participate in employee stock purchase plans, 401(k) plans or dividend reinvestment plans of the Firm that have been designed to comply with Rule 10b5-1(c).
Item 6. Exhibits.
| | | | | | | | |
| Exhibit No. | | Description of Exhibit |
| | |
| 15 | | |
| | |
| 22 | | |
| | |
| 31.1 | | |
| | |
| 31.2 | | |
| | |
| 32 | | |
| | |
| 101.INS | | The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.(c) |
| 101.SCH | | XBRL Taxonomy Extension Schema Document.(a) |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document.(a) |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document.(a) |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document.(a) |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document.(a) |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
(a)Filed herewith.
(b)Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
(c)Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Firm’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated statements of income (unaudited) for the three and six months ended June 30, 2024 and 2023, (ii) the Consolidated statements of comprehensive income (unaudited) for the three and six months ended June 30, 2024 and 2023, (iii) the Consolidated balance sheets (unaudited) as of June 30, 2024 and December 31, 2023, (iv) the Consolidated statements of changes in stockholders’ equity (unaudited) for the three and six months ended June 30, 2024 and 2023, (v) the Consolidated statements of cash flows (unaudited) for the six months ended June 30, 2024 and 2023, and (vi) the Notes to Consolidated Financial Statements (unaudited).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | |
| JPMorgan Chase & Co. |
| (Registrant) |
| | | | | |
| By: | /s/ Elena Korablina |
| Elena Korablina |
| Managing Director and Firmwide Controller |
| (Principal Accounting Officer) |
