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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 | |
September 30, 20182019 | | number | 1-5805 | |
JPMorgan Chase & Co.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.) |
| | | |
270 Park383 Madison Avenue, New York, | | |
New York, | 10017New York | | 10179 |
(Address of principal executive offices) | | (Zip Code) |
|
|
Registrant’s telephone number, including area code: (212) (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 5.45% Non-Cumulative Preferred Stock, Series P | JPM PR A | The New York Stock Exchange |
Depositary Shares, each representing a one-four hundredth interest in a share of 6.125% Non-Cumulative Preferred Stock, Series Y | JPM PR F | The New York Stock Exchange |
Depositary Shares, each representing a one-four hundredth interest in a share of 6.10% Non-Cumulative Preferred Stock, Series AA | JPM PR G | The New York Stock Exchange |
Depositary Shares, each representing a one-four hundredth interest in a share of 6.15% Non-Cumulative Preferred Stock, Series BB | JPM PR H | 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 |
Alerian MLP Index ETNs due May 24, 2024 | AMJ | NYSE Arca, Inc. |
Guarantee of Callable Step-Up Fixed Rate Notes due April 26, 2028 of JPMorgan Chase Financial Company LLC | JPM/28 | The New York Stock Exchange |
Guarantee of Cushing 30 MLP Index ETNs due June 15, 2037 of JPMorgan Chase Financial Company LLC | PPLN | 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).
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 filerx | ☒
| Accelerated filer | o☐ |
| | | |
Non-accelerated filero | ☐ | Smaller reporting company | o☐ |
| | | |
| | Emerging growth company | o☐ |
| | | |
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. o☐ | |
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 September 30, 2018: 3,325,410,7252019: 3,136,484,924
FORM 10-Q
TABLE OF CONTENTS
|
| | | |
| Page |
Item 1. | | |
| | |
| | 8680 |
| | 8781 |
| | 8882 |
| | 8983 |
| | 9084 |
| | 9185 |
| | 172165 |
| | 173166 |
| | 175168 |
Item 2. | | |
| | 3 |
| | 4 |
| | 5 |
| | 810 |
| | 1215 |
| | 1518 |
| | 1619 |
| | 1921 |
| | 4244 |
| | 4445 |
| | 4950 |
| | 5756 |
| | 6260 |
| | 7269 |
| | 7370 |
| | 7875 |
| | 7976 |
| | 8278 |
| | 8579 |
Item 3. | | 183176 |
Item 4. | | 183176 |
| |
Item 1. | | 183176 |
Item 1A. | | 183176 |
Item 2. | | 183176 |
Item 3. | | 184177 |
Item 4. | | 184177 |
Item 5. | | 184177 |
Item 6. | | 184177 |
JPMorgan Chase & Co.
Consolidated financial highlights (unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
(unaudited) As of or for the period ended, (in millions, except per share, ratio, headcount data and where otherwise noted)
| | | | | | | | Nine months ended Sept. 30, | |
3Q18 |
| 2Q18 |
| 1Q18 |
| 4Q17 |
| | 3Q17 |
| | 2018 |
| 2017 |
| |
Selected income statement data | | | | | | | | | | |
Total net revenue | $ | 27,260 |
| $ | 27,753 |
| $ | 27,907 |
| $ | 24,457 |
| | $ | 25,578 |
| | $ | 82,920 |
| $ | 76,248 |
| |
Total noninterest expense | 15,623 |
| 15,971 |
| 16,080 |
| 14,895 |
| | 14,570 |
| | 47,674 |
| 44,620 |
| |
Pre-provision profit | 11,637 |
| 11,782 |
| 11,827 |
| 9,562 |
| | 11,008 |
| | 35,246 |
| 31,628 |
| |
Provision for credit losses | 948 |
| 1,210 |
| 1,165 |
| 1,308 |
| | 1,452 |
| | 3,323 |
| 3,982 |
| |
Income before income tax expense | 10,689 |
| 10,572 |
| 10,662 |
| 8,254 |
| | 9,556 |
| | 31,923 |
| 27,646 |
| |
Income tax expense | 2,309 |
| 2,256 |
| 1,950 |
| 4,022 |
| | 2,824 |
| | 6,515 |
| 7,437 |
| |
Net income | $ | 8,380 |
| $ | 8,316 |
| $ | 8,712 |
| $ | 4,232 |
| | $ | 6,732 |
| | $ | 25,408 |
| $ | 20,209 |
| |
Earnings per share data | | | | | | | | | | |
Net income: Basic | $ | 2.35 |
| $ | 2.31 |
| $ | 2.38 |
| $ | 1.08 |
| | $ | 1.77 |
| | $ | 7.04 |
| $ | 5.26 |
| |
Diluted | 2.34 |
| 2.29 |
| 2.37 |
| 1.07 |
| | 1.76 |
| | 7.00 |
| 5.22 |
| |
Average shares: Basic | 3,376.1 |
| 3,415.2 |
| 3,458.3 |
| 3,489.7 |
| | 3,534.7 |
| | 3,416.5 |
| 3,570.9 |
| |
Diluted | 3,394.3 |
| 3,434.7 |
| 3,479.5 |
| 3,512.2 |
| | 3,559.6 |
| | 3,436.2 |
| 3,597.0 |
| |
Market and per common share data | | | | | | | | | | |
Market capitalization | 375,239 |
| 350,204 |
| 374,423 |
| 366,301 |
| | 331,393 |
| | 375,239 |
| 331,393 |
| |
Common shares at period-end | 3,325.4 |
| 3,360.9 |
| 3,404.8 |
| 3,425.3 |
| | 3,469.7 |
| | 3,325.4 |
| 3,469.7 |
| |
Share price:(a) | | | | | | | | | | |
High | $ | 119.24 |
| $ | 115.15 |
| $ | 119.33 |
| $ | 108.46 |
| | $ | 95.88 |
| | $ | 119.33 |
| $ | 95.88 |
| |
Low | 102.20 |
| 103.11 |
| 103.98 |
| 94.96 |
| | 88.08 |
| | 102.20 |
| 81.64 |
| |
Close | 112.84 |
| 104.20 |
| 109.97 |
| 106.94 |
| | 95.51 |
| | 112.84 |
| 95.51 |
| |
Book value per share | 69.52 |
| 68.85 |
| 67.59 |
| 67.04 |
| | 66.95 |
| | 69.52 |
| 66.95 |
| |
Tangible book value per share (“TBVPS”)(b) | 55.68 |
| 55.14 |
| 54.05 |
| 53.56 |
| | 54.03 |
| | 55.68 |
| 54.03 |
| |
Cash dividends declared per share | 0.80 |
| 0.56 |
| 0.56 |
| 0.56 |
| | 0.56 |
| | 1.92 |
| 1.56 |
| |
Selected ratios and metrics | | | | | | | | | | |
Return on common equity (“ROE”) (c) | 14 | % | 14 | % | 15 | % | 7 | % | | 11 | % | | 14 | % | 11 | % | |
Return on tangible common equity (“ROTCE”)(b)(c) | 17 |
| 17 |
| 19 |
| 8 |
| | 13 |
| | 18 |
| 14 |
| |
Return on assets(c) | 1.28 |
| 1.28 |
| 1.37 |
| 0.66 |
| | 1.04 |
| | 1.31 |
| 1.06 |
| |
Overhead ratio | 57 |
| 58 |
| 58 |
| 61 |
| | 57 |
| | 57 |
| 59 |
| |
Loans-to-deposits ratio | 65 |
| 65 |
| 63 |
| 64 |
| | 63 |
| | 65 |
| 63 |
| |
Liquidity coverage ratio (“LCR”) (average)(d) | 115 |
| 115 |
| 115 |
| 119 |
| | 120 |
| | 115 |
| 118 |
| |
Common equity Tier 1 (“CET1”) capital ratio(e) | 12.0 |
| 12.0 |
| 11.8 |
| 12.2 |
| | 12.5 |
| (h) | 12.0 |
| 12.5 |
| (h) |
Tier 1 capital ratio(e) | 13.6 |
| 13.6 |
| 13.5 |
| 13.9 |
| | 14.1 |
| (h) | 13.6 |
| 14.1 |
| (h) |
Total capital ratio(e) | 15.4 |
| 15.5 |
| 15.3 |
| 15.9 |
| | 16.1 |
| | 15.4 |
| 16.1 |
| |
Tier 1 leverage ratio(e) | 8.2 |
| 8.2 |
| 8.2 |
| 8.3 |
| | 8.4 |
| | 8.2 |
| 8.4 |
| |
Supplementary leverage ratio (“SLR”)(f) | 6.5 |
| 6.5 |
| 6.5 |
| 6.5 |
| | 6.6 |
| | 6.5 |
| 6.6 |
| |
Selected balance sheet data (period-end) | | | | | | | | | | |
Trading assets | $ | 419,827 |
| $ | 418,799 |
| $ | 412,282 |
| $ | 381,844 |
| | $ | 420,418 |
| | $ | 419,827 |
| $ | 420,418 |
| |
Investment securities | 231,398 |
| 233,015 |
| 238,188 |
| 249,958 |
| | 263,288 |
| | 231,398 |
| 263,288 |
| |
Loans | 954,318 |
| 948,414 |
| 934,424 |
| 930,697 |
| | 913,761 |
| | 954,318 |
| 913,761 |
| |
Core loans | 899,006 |
| 889,433 |
| 870,536 |
| 863,683 |
| | 843,432 |
| | 899,006 |
| 843,432 |
| |
Average core loans | 894,279 |
| 877,640 |
| 861,089 |
| 850,166 |
| | 837,522 |
| | 877,774 |
| 822,611 |
| |
Total assets | 2,615,183 |
| 2,590,050 |
| 2,609,785 |
| 2,533,600 |
| | 2,563,074 |
| | 2,615,183 |
| 2,563,074 |
| |
Deposits | 1,458,762 |
| 1,452,122 |
| 1,486,961 |
| 1,443,982 |
| | 1,439,027 |
| | 1,458,762 |
| 1,439,027 |
| |
Long-term debt | 270,124 |
| 273,114 |
| 274,449 |
| 284,080 |
| | 288,582 |
| | 270,124 |
| 288,582 |
| |
Common stockholders’ equity | 231,192 |
| 231,390 |
| 230,133 |
| 229,625 |
| | 232,314 |
| | 231,192 |
| 232,314 |
| |
Total stockholders’ equity | 258,956 |
| 257,458 |
| 256,201 |
| 255,693 |
| | 258,382 |
| | 258,956 |
| 258,382 |
| |
Headcount | 255,313 |
| 252,942 |
| 253,707 |
| 252,539 |
| | 251,503 |
| | 255,313 |
| 251,503 |
| |
Credit quality metrics | | | | | | | | | | |
Allowance for credit losses | $ | 14,225 |
| $ | 14,367 |
| $ | 14,482 |
| $ | 14,672 |
| | $ | 14,648 |
| | $ | 14,225 |
| $ | 14,648 |
| |
Allowance for loan losses to total retained loans | 1.39 | % | 1.41 | % | 1.44 | % | 1.47 | % | | 1.49 | % | | 1.39 | % | 1.49 | % | |
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(g) | 1.23 |
| 1.22 |
| 1.25 |
| 1.27 |
| | 1.29 |
| | 1.23 |
| 1.29 |
| |
Nonperforming assets | $ | 5,034 |
| $ | 5,767 |
| $ | 6,364 |
| $ | 6,426 |
| | $ | 6,154 |
| | $ | 5,034 |
| $ | 6,154 |
| |
Net charge-offs | 1,033 |
| 1,252 |
| 1,335 |
| 1,264 |
| | 1,265 |
| | 3,620 |
| 4,123 |
| (i) |
Net charge-off rate | 0.43 | % | 0.54 | % | 0.59 | % | 0.55 | % | | 0.56 | % | | 0.52 | % | 0.62 | % | (i) |
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1. |
| | | | | | | | | | | | | | | | | | | | | | | |
As of or for the period ended, (in millions, except per share, ratio, headcount data and where otherwise noted)
| | | | | | | Nine months ended Sept. 30, |
3Q19 |
| 2Q19 |
| 1Q19 |
| 4Q18 |
| 3Q18 |
| | 2019 |
| 2018 |
|
Selected income statement data | | | | | | | | |
Total net revenue | $ | 29,341 |
| $ | 28,832 |
| $ | 29,123 |
| $ | 26,109 |
| $ | 27,260 |
| | $ | 87,296 |
| $ | 82,920 |
|
Total noninterest expense | 16,422 |
| 16,341 |
| 16,395 |
| 15,720 |
| 15,623 |
| | 49,158 |
| 47,674 |
|
Pre-provision profit | 12,919 |
| 12,491 |
| 12,728 |
| 10,389 |
| 11,637 |
| | 38,138 |
| 35,246 |
|
Provision for credit losses | 1,514 |
| 1,149 |
| 1,495 |
| 1,548 |
| 948 |
| | 4,158 |
| 3,323 |
|
Income before income tax expense | 11,405 |
| 11,342 |
| 11,233 |
| 8,841 |
| 10,689 |
| | 33,980 |
| 31,923 |
|
Income tax expense | 2,325 |
| 1,690 |
| 2,054 |
| 1,775 |
| 2,309 |
| | 6,069 |
| 6,515 |
|
Net income | $ | 9,080 |
| $ | 9,652 |
| $ | 9,179 |
| $ | 7,066 |
| $ | 8,380 |
| | $ | 27,911 |
| $ | 25,408 |
|
Earnings per share data | | | | | | | | |
Net income: Basic | $ | 2.69 |
| $ | 2.83 |
| $ | 2.65 |
| $ | 1.99 |
| $ | 2.35 |
| | $ | 8.17 |
| $ | 7.04 |
|
Diluted | 2.68 |
| 2.82 |
| 2.65 |
| 1.98 |
| 2.34 |
| | 8.15 |
| 7.00 |
|
Average shares: Basic | 3,198.5 |
| 3,250.6 |
| 3,298.0 |
| 3,335.8 |
| 3,376.1 |
| | 3,248.7 |
| 3,416.5 |
|
Diluted | 3,207.2 |
| 3,259.7 |
| 3,308.2 |
| 3,347.3 |
| 3,394.3 |
| | 3,258.0 |
| 3,436.2 |
|
Market and per common share data | | | | | | | | |
Market capitalization | 369,133 |
| 357,479 |
| 328,387 |
| 319,780 |
| 375,239 |
| | 369,133 |
| 375,239 |
|
Common shares at period-end | 3,136.5 |
| 3,197.5 |
| 3,244.0 |
| 3,275.8 |
| 3,325.4 |
| | 3,136.5 |
| 3,325.4 |
|
Book value per share | 75.24 |
| 73.88 |
| 71.78 |
| 70.35 |
| 69.52 |
| | 75.24 |
| 69.52 |
|
Tangible book value per share (“TBVPS”)(a) | 60.48 |
| 59.52 |
| 57.62 |
| 56.33 |
| 55.68 |
| | 60.48 |
| 55.68 |
|
Cash dividends declared per share | 0.90 |
| 0.80 |
| 0.80 |
| 0.80 |
| 0.80 |
| | 2.50 |
| 1.92 |
|
Selected ratios and metrics | | | | | | | | |
Return on common equity (“ROE”)(b) | 15 | % | 16 | % | 16 | % | 12 | % | 14 | % | | 15 | % | 14 | % |
Return on tangible common equity (“ROTCE”)(a)(b) | 18 |
| 20 |
| 19 |
| 14 |
| 17 |
| | 19 |
| 18 |
|
Return on assets(b) | 1.30 |
| 1.41 |
| 1.39 |
| 1.06 |
| 1.28 |
| | 1.37 |
| 1.31 |
|
Overhead ratio | 56 |
| 57 |
| 56 |
| 60 |
| 57 |
| | 56 |
| 57 |
|
Loans-to-deposits ratio | 62 |
| 63 |
| 64 |
| 67 |
| 65 |
| | 62 |
| 65 |
|
Liquidity coverage ratio (“LCR”) (average) | 115 |
| 113 |
| 111 |
| 113 |
| 115 |
| | 115 |
| 115 |
|
Common equity Tier 1 (“CET1”) capital ratio(c) | 12.3 |
| 12.2 |
| 12.1 |
| 12.0 |
| 12.0 |
| | 12.3 |
| 12.0 |
|
Tier 1 capital ratio(c) | 14.1 |
| 14.0 |
| 13.8 |
| 13.7 |
| 13.6 |
| | 14.1 |
| 13.6 |
|
Total capital ratio(c) | 15.9 |
| 15.8 |
| 15.7 |
| 15.5 |
| 15.4 |
| | 15.9 |
| 15.4 |
|
Tier 1 leverage ratio(c) | 7.9 |
| 8.0 |
| 8.1 |
| 8.1 |
| 8.2 |
| | 7.9 |
| 8.2 |
|
Supplementary leverage ratio (“SLR”) | 6.3 |
| 6.4 |
| 6.4 |
| 6.4 |
| 6.5 |
| | 6.3 |
| 6.5 |
|
Selected balance sheet data (period-end) | | | | | | | | |
Trading assets | $ | 495,875 |
| $ | 523,373 |
| $ | 533,402 |
| $ | 413,714 |
| $ | 419,827 |
| | $ | 495,875 |
| $ | 419,827 |
|
Investment securities | 394,251 |
| 307,264 |
| 267,365 |
| 261,828 |
| 231,398 |
| | 394,251 |
| 231,398 |
|
Loans | 945,218 |
| 956,889 |
| 956,245 |
| 984,554 |
| 954,318 |
| | 945,218 |
| 954,318 |
|
Core loans | 899,572 |
| 908,971 |
| 905,943 |
| 931,856 |
| 899,006 |
| | 899,572 |
| 899,006 |
|
Average core loans | 900,567 |
| 905,786 |
| 916,567 |
| 907,271 |
| 894,279 |
| | 907,581 |
| 877,774 |
|
Total assets | 2,764,661 |
| 2,727,379 |
| 2,737,188 |
| 2,622,532 |
| 2,615,183 |
| | 2,764,661 |
| 2,615,183 |
|
Deposits | 1,525,261 |
| 1,524,361 |
| 1,493,441 |
| 1,470,666 |
| 1,458,762 |
| | 1,525,261 |
| 1,458,762 |
|
Long-term debt | 296,472 |
| 288,869 |
| 290,893 |
| 282,031 |
| 270,124 |
| | 296,472 |
| 270,124 |
|
Common stockholders’ equity | 235,985 |
| 236,222 |
| 232,844 |
| 230,447 |
| 231,192 |
| | 235,985 |
| 231,192 |
|
Total stockholders’ equity | 264,348 |
| 263,215 |
| 259,837 |
| 256,515 |
| 258,956 |
| | 264,348 |
| 258,956 |
|
Headcount | 257,444 |
| 254,983 |
| 255,998 |
| 256,105 |
| 255,313 |
| | 257,444 |
| 255,313 |
|
Credit quality metrics | | | | | | | | |
Allowance for credit losses | $ | 14,400 |
| $ | 14,295 |
| $ | 14,591 |
| $ | 14,500 |
| $ | 14,225 |
| | $ | 14,400 |
| $ | 14,225 |
|
Allowance for loan losses to total retained loans | 1.42 | % | 1.39 | % | 1.43 | % | 1.39 | % | 1.39 | % | | 1.42 | % | 1.39 | % |
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(d) | 1.32 |
| 1.28 |
| 1.28 |
| 1.23 |
| 1.23 |
| | 1.32 |
| 1.23 |
|
Nonperforming assets | $ | 5,343 |
| $ | 5,260 |
| $ | 5,616 |
| $ | 5,190 |
| $ | 5,034 |
| | $ | 5,343 |
| $ | 5,034 |
|
Net charge-offs | 1,371 |
| 1,403 |
| 1,361 |
| 1,236 |
| 1,033 |
| | 4,135 |
| 3,620 |
|
Net charge-off rate | 0.58 | % | 0.60 | % | 0.58 | % | 0.52 | % | 0.43 | % | | 0.59 | % | 0.52 | % |
| |
(a) | Based on daily prices reported by the New York Stock Exchange. |
| |
(b) | TBVPS and ROTCE are non-GAAP financial measures. For a further discussion of these measures, referRefer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 16-18.19–20 for a further discussion of these measures. |
| |
(c)(b) | Quarterly ratios are based upon annualized amounts. |
| |
(d)(c) | ForThe Basel III capital rules became fully phased-in effective January 1, 2019. During 2018, the nine months endedrequired capital measures were subject to the transitional rules and as of December 31, 2018 and September 30, 2017,2018, were the percentage represents the Firm’s reported average LCR per the U.S. LCR public disclosure requirements effective April 1, 2017. same on a fully phased-in and on a transitional basis. Refer to Key performance measures on page 59 and Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K and pages 45–49 of this Form 10-Q for additional information on these measures. |
| |
(e)(d) | Ratios presented are calculated under the Basel III Transitional capital rules and for the capital ratios represent the lower of the Standardized or Advanced approach. Refer to Capital Risk Management on pages 44-48 for additional information on Basel III. |
| |
(f) | Effective January 1, 2018, the SLR was fully phased-in under Basel III. The SLR is defined as Tier 1 capital divided by the Firm’s total leverage exposure. Ratios prior to March 31, 2018 were calculated under the Basel III Transitional rules. |
| |
(g) | ExcludedExcludes the impact of residential real estate purchased credit-impaired (“PCI”) loans, a non-GAAP financial measure. For a further discussion of these measures, referRefer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 16-18. For a further discussion, refer to19–20, and the Allowance for credit losses on pages 69–71. |
| |
(h) | The prior period ratios have been revised to conform with the current period presentation. |
| |
(i) | Excluding net charge-offs67–68 for a further discussion of $467 million related to the student loan portfolio sale, the net charge-off rate for the nine months ended September 30, 2017 would have been 0.55%.these measures. |
The following is management’sManagement’s discussion and analysis (“MD&A”) of the financial condition and results of operations (“MD&A”) of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) for the third quarter of 2018.2019.
This Quarterly Report on Form 10-Q for the third quarter of 2019 (“Form 10-Q”) should be read together with JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 20172018 (“2017 Annual Report” or “20172018 Form 10-K”), to which reference is hereby made, and which is referred to throughout this document.. Refer to the Glossary of terms and acronyms and line of business metrics on pages 175–182168–175 for definitions of terms and acronyms used throughout this Form 10-Q.
This Form 10-Qdocument contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth inRefer to Forward-looking Statements on page 79 of this Form 10-Q and Part I, Item 1A, Risk factors, on pages 7–28 of the forward-looking statements. For2018 Form 10-K for a further 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, refer to Forward-looking Statements on page 85 of this Form 10-Q and Part I, Item 1A, Risk Factors, on pages 8–26 of JPMorgan Chase’s 2017 Annual Report.uncertainties.
JPMorgan Chase & Co. (NYSE: JPM),a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America (“U.S.”), with operations worldwide; the FirmJPMorgan Chase had $2.6$2.8 trillion in assets and $259.0$264.3 billion in stockholders’ equity as of September 30, 2018. 2019. The Firm is a leader in investment
banking, financial services for consumers and
small businesses, commercialbanking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world’s most prominent corporate, institutional and government clients.
JPMorgan Chase’s principal bank subsidiaries aresubsidiary is JPMorgan Chase Bank, National Association (“(“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 23 32 states and Washington, D.C. as of September 30, 2018, and Chase Bank USA, National Association (“Chase Bank USA, N.A.”), a national banking association that is the Firm’s principal credit card-issuing bank.2019. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (“(“J.P. Morgan Securities”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 representative offices.subsidiary foreign banks. The Firm’s principal operating subsidiary in the United Kingdom (“U.K.U.K.”) is J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase Bank, N.A.
For management reporting purposes, the Firm’s activities are organized into four major reportable business segments, as well as a Corporate segment. The Firm’s consumer business segment is Consumer & Community Banking (“CCB”). The Firm’s wholesale business segments are Corporate & Investment Bank (“CIB”), Commercial Banking (“CB”), and Asset & Wealth Management (“AWM”). ForRefer to Note 31 of JPMorgan Chase’s 2018 Form 10-K for a description of the Firm’s business segments and the products and services they provide to their respective
client bases, refer to Note 31 of JPMorgan Chase’s 2017 Form 10-K.bases.
This executive overview of the MD&A highlights selected information and maydoes 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 and its various lines of business, this Form 10-Q and the 20172018 Form 10-K should be read together and in their entirety.
Effective January 1, 2018, the Firm adopted several new accounting standards, of which the most significant to the Firm are the guidance related to revenue recognition, and recognition and measurement of financial assets. The revenue recognition guidance required gross presentation of certain costs that were previously offset against revenue. This change was adopted retrospectively and, accordingly, prior period amounts were revised, resulting in both total net revenue and total noninterest expense increasing with no impact to net income. The adoption of the recognition and measurement guidance resulted in $505 million of fair value gains, which were recorded in total net revenue in the first quarter of 2018, on certain equity investments that were previously held at cost. For additional information, refer to Note 1.
| | Financial performance of JPMorgan Chase | Financial performance of JPMorgan Chase | | | | | | | | | Financial performance of JPMorgan Chase | | | | | | | | |
(unaudited) As of or for the period ended, (in millions, except per share data and ratios) | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
| 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
|
Selected income statement data | | | | | | | | | | | | | | | | | | | | | | |
Total net revenue | $ | 27,260 |
| | $ | 25,578 |
| | 7 | % | | $ | 82,920 |
| | $ | 76,248 |
| | 9 | % | $ | 29,341 |
| | $ | 27,260 |
| | 8 | % | | $ | 87,296 |
| | $ | 82,920 |
| | 5 | % |
Total noninterest expense | 15,623 |
| | 14,570 |
| | 7 |
| | 47,674 |
| | 44,620 |
| | 7 |
| 16,422 |
| | 15,623 |
| | 5 |
| | 49,158 |
| | 47,674 |
| | 3 |
|
Pre-provision profit | 11,637 |
| | 11,008 |
| | 6 |
| | 35,246 |
| | 31,628 |
| | 11 |
| 12,919 |
| | 11,637 |
| | 11 |
| | 38,138 |
| | 35,246 |
| | 8 |
|
Provision for credit losses | 948 |
| | 1,452 |
| | (35 | ) | | 3,323 |
| | 3,982 |
| | (17 | ) | 1,514 |
| | 948 |
| | 60 |
| | 4,158 |
| | 3,323 |
| | 25 |
|
Net income | 8,380 |
| | 6,732 |
| | 24 |
| | 25,408 |
| | 20,209 |
| | 26 |
| 9,080 |
| | 8,380 |
| | 8 |
| | 27,911 |
| | 25,408 |
| | 10 |
|
Diluted earnings per share | $ | 2.34 |
| | $ | 1.76 |
| | 33 |
| | $ | 7.00 |
| | $ | 5.22 |
| | 34 |
| $ | 2.68 |
| | $ | 2.34 |
| | 15 |
| | $ | 8.15 |
| | $ | 7.00 |
| | 16 |
|
Selected ratios and metrics | | | | | | | | | | | | | | | | | | | | | | |
Return on common equity | 14 | % | | 11 | % | | | | 14 | % | | 11 | % | | | 15 | % | | 14 | % | | | | 15 | % | | 14 | % | | |
Return on tangible common equity | 17 |
| | 13 |
| | | | 18 |
| | 14 |
| | | 18 |
| | 17 |
| | | | 19 |
| | 18 |
| | |
Book value per share | $ | 69.52 |
| | $ | 66.95 |
| | 4 |
| | $ | 69.52 |
| | $ | 66.95 |
| | 4 |
| $ | 75.24 |
| | $ | 69.52 |
| | 8 |
| | $ | 75.24 |
| | $ | 69.52 |
| | 8 |
|
Tangible book value per share | 55.68 |
| | 54.03 |
| | 3 |
| | 55.68 |
| | 54.03 |
| | 3 |
| 60.48 |
| | 55.68 |
| | 9 |
| | 60.48 |
| | 55.68 |
| | 9 |
|
Capital ratios(a) | | | | | | | | | | | | | | | | | | | | | | |
CET1(b) | 12.0 | % | | 12.5 | % | | | | 12.0 | % | | 12.5 | % | | | 12.3 | % | | 12.0 | % | | | | 12.3 | % | | 12.0 | % | | |
Tier 1 capital(b) | 13.6 |
| | 14.1 |
| | | | 13.6 |
| | 14.1 |
| | | 14.1 |
| | 13.6 |
| | | | 14.1 |
| | 13.6 |
| | |
Total capital | 15.4 |
| | 16.1 |
| | | | 15.4 |
| | 16.1 |
| | | 15.9 |
| | 15.4 |
| | | | 15.9 |
| | 15.4 |
| | |
| |
(a) | Ratios presented are calculated under theThe Basel III Transitional capital rules.rules became fully phased-in effective January 1, 2019. During 2018, the required capital measures were subject to the transitional rules and as of September 30, 2018, was the same on a fully phased-in and on a transitional basis. Refer to Key performance measures on page 59 and Capital Risk Management on pages 44-4885-94 of JPMorgan Chase’s 2018 Form 10-K and pages 45–49 of this Form 10-Q for additional information on Basel III. |
| |
(b) | The prior period ratios have been revised to conform with the current period presentation.these measures. |
Comparisons noted in the sections below are for the third quarter of 20182019 versus the third quarter of 2017,2018, unless otherwise specified.
Firmwide overview
JPMorgan Chase reported strong results in the current quarter of 2018, with record net income and EPS for a third quarter of $8.42019, with net income of $9.1 billion, or $2.34$2.68 per share, on record net revenue of $27.3$29.3 billion. Excluding the impact of the Tax Cuts & Jobs Acts (”TCJA”), net income and EPS were still records for a third quarter. The Firm reported ROE of 14%15% and ROTCE of 17%18%.
NetThe Firm had net income increased 24%of $9.1 billion, up 8%.
| |
• | Total net revenue increased 8%. Net interest income was $14.2 billion, up 2%, driven by continued balance sheet growth and mix, largely offset by the impact of rates. Noninterest revenue was $15.1 billion, up 13%, and included approximately $350 million of gains related to certain loan sales in Home Lending. Excluding these gains, the increase in noninterest revenue was largely driven by results in Fixed Income Markets in the CIB, as well as Home Lending and Auto in CCB. |
Noninterest expense was $16.4 billion, up 5%, reflectingdriven by higher net revenuevolume- and the impact of the lower U.S. federal statutory income tax rate as a result of the TCJA,revenue-related expenses and investments, including compensation and auto lease depreciation, partially offset by an increase in noninterest expense.
Total net revenue increased 7%. Net interest income was $13.9 billion, up 9%, driven by the net impact of higher rates, which includes lower Markets net interest income in CIB, as well as loan and deposit growth. Noninterest revenue was $13.4 billion, up 4%, largely driven by higher Markets noninterest revenue and auto lease income, partially offset by markdowns on certain legacy private equity investments of approximately $220 million.
Noninterest expense was $15.6 billion, up 7%, predominantly driven by investments in the business, including higher compensation expense on increased headcount, technology, marketing and real estate, and higher revenue-related costs, including auto lease depreciation.FDIC charges.
The provision for credit losses was $948 million, down from $1.5 billion, in the prior year. The decrease was driven by the consumer portfolio,up $566 million, largely reflectingas a result of net reduction toreductions in the allowance for credit losses in the current quarter, compared to aand net additionrecoveries in the prior year.
The total allowance for credit losses was $14.2$14.4 billion at September 30, 2018,2019, and the Firm had a loan loss coverage ratio of 1.42%, compared with 1.39% in the prior year; excluding the PCI portfolio, of 1.23%the equivalent ratio was 1.32%, compared with 1.29%1.23% in the prior year. The Firm’s nonperforming assets totaled $5.0$5.3 billion at September 30, 2018, a decrease2019, an increase from $6.2$5.0 billion in the prior year, reflecting increases in the wholesale portfolio related to select client downgrades, largely offset by improved credit performance in the consumer portfolio, and reductions in the wholesale portfolio including repayments and loan sales.portfolio.
Firmwide average coretotal loans increased 7%, andwere flat at $947 billion, or up 3% excluding CIB, core loans increased 6%.
the impact of certain loan sales in Home Lending.
Selected capital-related metrics
The Firm’s Basel III Fully Phased-In CET1 capital was $185$188 billion, and the Standardized and Advanced CET1 ratios were 12.0%12.3% and 12.9%13.1%, respectively.
The Firm’s Fully Phased-In SLRsupplementary leverage ratio (“SLR”) was 6.5%6.3% at September 30, 2018.2019.
The Firm continued to grow tangible book value per share (“TBVPS”), ending the third quarter of 20182019 at $55.68,$60.48, up 3%9%.
ROTCE and TBVPS are each non-GAAP financial measures. Core loans and each of the Fully Phased-In capital and certain leverage measures are all considered key performance measures. For a further discussion of each of these measures, referRefer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key PerformancePerformance Measures on pages 16-18, and Capital Risk Management on pages 44-48.
19–20 for a further discussion of each of these measures.
Lines of businessBusiness segment highlights
Selected business metrics for each of the Firm’s four lines of business are presented below for the third quarter of 2018.2019.
|
| | |
CCB ROE 31%32% | | • Average coreloans down 4%; Home Lending loans down 12% impacted by loan sales; credit card loans up 6%; average deposits of $674 billion up 4%8%• Client investment assets of $298 billion, up 14%13%; average deposits up 3%• Credit card sales volume up 12%10% and merchant processing volume up 14%11% |
CIB ROE 14%13% | | • Maintained #1 ranking for Global Investment Banking fees with 8.7%9.3% wallet share year-to-dateYTD• EquityTotal Markets revenue of $1.6$5.1 billion, up 17%•
Treasury Services revenue up 12% and Securities Services revenue up 5%14% |
CB ROE 21%16% | | • Gross Investment Banking revenue of $700 million, up 20%• Average client deposits of $173 billion, up 3% |
AWM ROE 24% | | • Average loan balances up 4%•
Strong credit quality with a net recovery of 3 bps |
AWM
ROE 31%
| | •
Average loan balances up 12%7%• Assets under management (“AUM”)(AUM) of $2.1$2.2 trillion, up 7%8% |
For a detailed discussion of results by line of business, referRefer to the Business Segment Results on pages 19-41.21–43 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 of $1.9 trillion for wholesale and consumer clients during the first nine months of 2018:2019, consisting of:
$174 billion of credit for consumers
$16 billion of credit for U.S. small businesses
$682 billion of credit for corporations
$960 billion of capital raised for corporate clients and non-U.S. government entities
$41 billion of credit and capital raised for U.S. government and nonprofit entities, including states, municipalities, hospitals and universities.
Recent events
On August 29, 2018, JPMorgan Chase announced the launch of You Invest, a new U.S. digital investment platform.
On September 12, 2018, JPMorgan Chase announced the creation of AdvancingCities, a new $500 million, five-year initiative to drive inclusive growth and create greater economic opportunity in cities across the world.
|
| | |
$1.7 trillion | | Total credit provided and capital raised |
| | |
$188 billion | | Credit for consumers |
| | |
$25 billion | | Credit for U.S. small businesses |
| | |
$630 billion | | Credit for corporations |
| | |
$785 billion | | Capital raised for corporate clients and non-U.S. government entities |
| | |
$53 billion | | Credit and capital raised for nonprofit and U.S. government entities(a) |
| |
(a) | Includes states, municipalities, hospitals and universities. |
20182019 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 and are subject to significant risks and uncertainties. ForRefer to Forward-Looking Statements on page 79 of this Form 10-Q and Risk Factors on pages 7–28 of JPMorgan Chase’s 2018 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, refer to Forward-Looking Statements on page 85 of this Form 10-Q and Risk Factors on pages 8–26 of JPMorgan Chase’s 2017 Annual Report.uncertainties. There is no assurance that actual results forin the full year of 20182019 will be in line with the outlook set forth below, and the Firm does not undertake to update any forward-looking statements.
JPMorgan Chase’s current outlook for the remainder of 20182019 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 interrelated factors will affect the performance of the Firm and its lines of business. The Firm expects that it will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the legal,business, economic, regulatory business and economiclegal environments in which it operates.
Firmwide
ForManagement expects full-year 2018, management expects2019 net interest income, on a managed basis, to be less than $57.5 billion, market dependent. This estimate is based on stable long-end rates and assumes no more federal funds rate cuts in 2019.
Management expects Firmwide adjusted expense for the full-year 2019 to be approximately $55.5 billion, depending on market conditions.$65.5 billion.
Management expects full-year 2018 noninterest revenue growth2019 net charge-offs to be approximately $5.5 billion.
Business Developments
Expected departure of 7-8% on a managed basis, depending on market conditions.the U.K. from the EU
The U.K.’s expected departure from the EU, which is commonly referred to as “Brexit,” is scheduled to occur not later than January 31, 2020.
The Firm continues to take a disciplined approachexecute the relevant elements of its Firmwide Brexit Implementation program with the objective of delivering the Firm’s capabilities to managing its expenses, while investing for growth and innovation. As a result, management expects full-year 2018 adjusted expenseEU clients on “day one” of approximately $63.5 billion (excluding Firmwide legal expense).any departure by the U.K. from the EU, whether or not an agreement has been reached to allow an orderly withdrawal.
Management estimates the full-year 2018 effective tax rateThe principal operational risks associated with Brexit continue to be approximately 20%, dependingthe potential for disruption caused by insufficient preparations by individual market participants or in the overall market ecosystem, and risks related to potential disruptions of connectivity among market participants. Although legislative and regulatory actions taken by the EU and the U.K. have mitigated some of the significant market-wide risks, there continues to be regulatory and legal uncertainty with respect to various matters including contract continuity and access by market participants to liquidity in certain products, such as products subject to potentially conflicting U.K. and EU regulatory requirements in relation to eligible trading venues, including certain cross-border derivative contracts and equities that are listed on both U.K. and EU exchanges.
As discussed in Business Developments on page 46 of the 2018 Form 10-K, the Firm is focused on the following key areas to ensure continuation of service to its EU clients: regulatory and legal entity readiness; client readiness; and business and operational readiness. Following are the significant updates from the matters discussed in the 2018 Form 10-K.
Regulatory and legal entity readiness
The Firm’s legal entities in Germany, Luxembourg and Ireland are now prepared and licensed to provide services to the Firm’s EU clients, including after any departure by the U.K. from the EU.
Client readiness
The agreements covering a significant proportion of the Firm’s EU client activity have been re-documented to other EU legal entities to help facilitate continuation of service. The Firm continues to actively engage with clients that have not completed re-documentation to ensure preparedness both in terms of documentation and any operational changes that may be required. The Firm may be negatively impacted by any operational disruption stemming from delays of or lapses in the readiness of other market participants or market infrastructures.
Business and operational readiness
The Firm relocated certain employees during the first quarter of 2019. During the second quarter of 2019, the Firm added specific employees to certain EU legal entities, where appropriate, to support the level of client activity that has been migrated. However, the Firm’s final staffing plan will depend upon several factors,the timing and terms of any withdrawal by the U.K. from the EU.
If Brexit is further delayed due to a transition deal or another mechanism, the Firm will continue to review the timing and extent of any further expansion of activities in its EU legal entities, as appropriate. The Firm continues to closely monitor legislative developments, and its implementation plan allows for flexibility given the continued uncertainties.
LIBOR transition
The Firm continues to develop and implement plans to appropriately mitigate the risks associated with the expected discontinuation of certain unsecured benchmark interest rates, including the geographic mixLondon Interbank Offered Rate (“LIBOR”) and other Interbank Offered Rates (“IBORs”). In particular, the Firm:
has implemented or is in the process of taxable incomeimplementing fallback language for LIBOR-linked syndicated loans, securitizations, floating rate notes and refinements to estimatesbi-lateral business loans based on the recommendations of the impactsAlternative Reference Rates Committee, and has started to introduce the Secured Overnight Financing Rate as a replacement benchmark rate for certain of these products;
continues to monitor the transition relief being considered by the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) concerning the accounting for contract modifications and hedge accounting; and
continues to engage with regulators and clients as the transition from IBORs progresses.
Refer to Business Developments on page 47 of the TCJA.
Management expects average core loan growth, excluding CIB,2018 Form 10-K for a discussion of 6-7% for full-year 2018.
the Firm’s initiatives to address the expected discontinuation of LIBOR and other IBORs.
|
| | | | |
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 nine months ended September 30, 20182019 and 2017,2018, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. ForRefer to pages 76–77 of this Form 10-Q and pages 141-143 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations, refer to pages 79–81 of this Form 10-Q and pages 138–140 of JPMorgan Chase’s 2017 Annual Report.
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.Operations.
| | Revenue | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
| 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
|
Investment banking fees | $ | 1,832 |
| | $ | 1,868 |
| | (2 | )% | | $ | 5,736 |
| | $ | 5,594 |
| | 3 | % | $ | 1,967 |
| | $ | 1,832 |
| | 7 | % | | $ | 5,658 |
| | $ | 5,736 |
| | (1 | )% |
Principal transactions | 2,964 |
| | 2,721 |
| | 9 |
| | 10,698 |
| | 9,440 |
| | 13 |
| 3,449 |
| | 2,964 |
| | 16 |
| | 11,239 |
| | 10,698 |
| | 5 |
|
Lending- and deposit-related fees | 1,542 |
| | 1,497 |
| | 3 |
| | 4,514 |
| | 4,427 |
| | 2 |
| 1,626 |
| | 1,542 |
| | 5 |
| | 4,643 |
| | 4,514 |
| | 3 |
|
Asset management, administration and commissions | 4,310 |
| | 4,072 |
| | 6 |
| | 12,923 |
| | 11,996 |
| | 8 |
| 4,351 |
| | 4,310 |
| | 1 |
| | 12,818 |
| | 12,923 |
| | (1 | ) |
Investment securities losses | (46 | ) | | (1 | ) | | NM |
| | (371 | ) | | (38 | ) | | NM |
| |
Investment securities gains/(losses) | | 78 |
| | (46 | ) | | NM |
| | 135 |
| | (371 | ) | | NM |
|
Mortgage fees and related income | 262 |
| | 429 |
| | (39 | ) | | 1,051 |
| | 1,239 |
| | (15 | ) | 887 |
| | 262 |
| | 239 |
| | 1,562 |
| | 1,051 |
| | 49 |
|
Card income | 1,328 |
| | 1,242 |
| | 7 |
| | 3,623 |
| | 3,323 |
| | 9 |
| 1,283 |
| | 1,328 |
| | (3 | ) | | 3,923 |
| | 3,623 |
| | 8 |
|
Other income(a) | 1,160 |
| | 952 |
| | 22 |
| | 4,041 |
| | 3,197 |
| | 26 |
| 1,472 |
| | 1,160 |
| | 27 |
| | 4,239 |
| | 4,041 |
| | 5 |
|
Noninterest revenue | 13,352 |
| | 12,780 |
| | 4 |
| | 42,215 |
| | 39,178 |
| | 8 |
| 15,113 |
| | 13,352 |
| | 13 |
| | 44,217 |
| | 42,215 |
| | 5 |
|
Net interest income | 13,908 |
| | 12,798 |
| | 9 |
| | 40,705 |
| | 37,070 |
| | 10 |
| 14,228 |
| | 13,908 |
| | 2 |
| | 43,079 |
| | 40,705 |
| | 6 |
|
Total net revenue | $ | 27,260 |
| | $ | 25,578 |
| | 7 | % | | $ | 82,920 |
| | $ | 76,248 |
| | 9 | % | $ | 29,341 |
| | $ | 27,260 |
| | 8 | % | | $ | 87,296 |
| | $ | 82,920 |
| | 5 | % |
| |
(a) | Included operating lease income of $1.2$1.4 billion and $928 million$1.2 billion for the three months ended ,September 30, 2019 and 2018, respectively and $3.3$4.0 billion and $2.6$3.3 billion for the nine months ended ,September 30, 2019 and 2018, respectively. |
Quarterly results
Investment banking fees decreased slightly compared to a strong prior year, with overallincreased reflecting:
higher debt underwriting fees, on wallet share gains despite a decline in industry-wide fees, driven by participation in large acquisition financing deals and increased activity in investment-grade bonds
higher equity underwriting fees which were more thandriven by wallet share gains primarily in the IPO and convertible markets,
partially offset by
lower debt underwriting and advisory fees. The increase in equity underwriting fees was driven by a higher share of fees including a strong performance in the IPO market. The decrease in debt underwriting fees was driven by declinesdecline in industry-wide fee levels, and advisory fees declined compared towith a strong prior year. For additional information, refer
Refer to CIB segment results on pages 26-3128–33 and Note 5. for additional information.
Principal transactions revenue increased primarily reflecting reflecting:
higher revenue in CIB, primarily driven by:
higher Equity Markets revenue in derivatives and prime brokerage reflecting strong client activity, andby
| |
•– | strong performance across products in Fixed Income Markets, higher revenueprimarily in Currencies & Emerging Markets on increased activity levels, as well as inRates, agency mortgage trading within Securitized Products, and Commodities, compared to a challengingwith the prior year. The increaseyear, which was partially offsetimpacted by less favorable market conditions, |
partially offset by
| |
– | lower revenue in CreditEquity Markets, primarily in derivatives, driven by lower client activity and Securitized Products. For additional information, refer to CIB segment results on pages 26-31 ,less favorable market conditions, compared with a strong prior year, and Note 5. |
The increase in CIB was partially offset by private equity losses reflecting markdownsCorporate, net gains on certain legacy private equity investments compared with net losses in Corporate.the prior year.
Principal transactions revenue in CIB may have offsets across other revenue lines, including net interest income. The Firm assesses its Markets business performance on a total revenue basis.
Refer to CIB, AWM and Corporate segment results on pages 28–33, pages 38–41 and pages 42–43, and Note 5 for additional information.
For information on lending-Lending- and deposit-related fees refer increased primarily due to thehigher deposit-related fees in CCB, reflecting growth in customer accounts and transactions.
Refer to CCB segment results for CCB on pages 21–25,22–27, CIB on pages 26-31,28–33 and CB on pages 32-3534–37, respectively, and Note 5. for additional information.
Asset management, administration and commissions revenue increased reflecting:
driven by higher asset management fees in AWM and CCB driven by higher market levels and net long-term product inflows, partially offset by fee compressionfrom growth in AWM, andclient investment assets.
higher brokerage commissions driven by higher volumes in CIB.
For additional information, referRefer to AWM, CCB and CIBAWM segment results on pages 36–39, 22–27 and pages 21–25 and pages 26-3138–41 , respectively, and Note 5. for additional information.
For further information on investmentInvestment securities gains/(losses) andprimarily reflect the impact of repositioning the investment securities portfolio, referportfolio. Refer to Corporate segment results on pages 40–4142–43 and Note 9. for additional information.
Mortgage fees and related income decreasedincreased driven by lower by:
higher net mortgage production revenue reflecting approximately $350 million of gains on the sale of certain loans, as well as higher production volumes and margins
net mortgage servicing revenue, which remained relatively flat, reflecting lower operating revenue driven by the impact of reclassifying certain loans to held-for-sale and faster prepayment speeds on lower rates, offset by favorable MSR risk management results and lower servicing revenue on a lower level of third-party loans serviced, as well as lower net production revenue reflecting lower production margins and volumes. For further information, referresults.
Refer to CCB segment results on pages 21–2522–27, Note 5 and Note 14. for further information.
Card income increased driven by:
lower new account origination costs, and
higher merchant processing fees on higher volumes,
largely offset by
lower net interchange incomedecreased reflecting higher rewards costs and partner payments, largelypredominantly offset by higher card salesinterchange income and merchant processing fees on higher volumes.
For further information, referRefer to CCB segment results on pages 21–2522–27 and Note 5. for further information.
Other income reflects increased reflecting:
higher operating lease income from growth in auto operating lease volume in CCB. For further information, referCCB
losses in the prior year on certain investments in CIB and Corporate,
partially offset by
lower other income in CIB associated with increased amortization on a higher level of alternative energy investments. The increased amortization was more than offset by the lower income tax expense from the associated tax credits.
Refer to Note 5. for further information.
Net interest income increased primarily due todriven by continued balance sheet growth and changes in mix, largely offset by the net impact of higher rates, which includes lower Markets net interest income in CIB, as well as loan and deposit growth.rates. The Firm’s average interest-earning assets were $2.2$2.4 trillion, up $26.1$162 billion, from the prior year, and the net interest yield on these assets, on a fully taxable equivalenttaxable-equivalent (“FTE”) basis, was 2.51%2.41%, an increasea decrease of 1412 basis points from the prior year.points. The net interest yield excluding CIB Markets was 3.30%3.23%, an increasea decrease of 407 basis points from the prior year.points. Net interest yield excluding CIB Marketsmarkets is a non-GAAP financial measure. For aRefer to the Consolidated average balance sheets, interest and rates schedule on pages 166–167 for further discussion of this measure, refer todetails; and the Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 16-18.19–20 for a further discussion of Net interest yield excluding CIB markets.
Year-to-date results
Investment banking fees increasedwere relatively flat reflecting:
higher equity underwritinglower advisory and advisory fees in CIB. The increase in equity underwriting fees was driven by a higherdecline in industry-wide fees despite wallet share of fees, primarily due to strong performance in the IPO market; the increase in advisory fees was driven by a higher number of large completed transactions,gains,
partially offset by
lowerhigher debt underwriting fees primarilyon wallet share gains despite a decline in industry-wide fees, driven by declinesparticipation in industry-wide fee levels and a lower share in leveraged finance.large acquisition financing deals
Principal transactions revenue increased primarily reflecting reflecting:
higher revenue in CIB, which included a gain on the IPO of Tradeweb. Excluding this gain, the increase in CIB’s revenue was driven by:
| |
– | higher revenue in Fixed Income Markets, primarily in agency mortgage trading within Securitized Products, and Commodities, partially offset by Currencies & Emerging Markets |
| |
– | favorable changes in funding spreads on derivatives in Credit Adjustments & Other, |
strength across products in Equity Markets, primarily in derivatives and prime brokerage, reflecting strong client activity, and
in Fixed Income Markets, higher revenue in Commodities compared to a challenging prior year, and strong performance in Currencies & Emerging Markets, largelypartially offset by lower revenue in Credit.
The
| |
– | lower revenue in Equity Markets driven by lower client activity in derivatives |
the net increase in CIB was partially offset by private equity losses reflecting markdowns
lower revenue in AWM, related to hedges on certain legacy private equity investments, compared withwhich was more than offset by higher valuation gains on the related investments reflected in the prior yearother income,
Corporate was relatively flat, reflecting
| |
– | losses on cash deployment transactions in Treasury and CIO, which were more than offset by the related net interest income earned on those transactions, and |
| |
– | lower net valuation losses on certain legacy private equity investments. |
Principal transactions revenue in Corporate.
CIB may have offsets across other revenue lines, including net interest income. The Firm assesses its Markets business performance on a total revenue basis.Lending- and deposit-related fees increased primarily due to higher deposit-related fees in CCB, reflecting growth in customer accounts and transactions.
Asset management, administration and commissions revenue increasedwas relatively flat reflecting:
lower asset management fees in AWM driven by a shift in the mix toward lower fee products,
largely offset by
higher asset management fees in AWM and CCB driven by higher market levels and net long-term product inflows partially offset by fee compressionfrom growth in AWM
higher brokerage commissions driven by higher volumes in CIB and AWM, and higher asset-based fees in CIB driven by net client inflows and higher market levels.investment assets.
Investment securities lossesgains/(losses) increased due to sales related toprimarily reflect the impact of repositioning of the investment securities portfolio.
Mortgage fees and related income decreasedincreased driven by lowerby:
higher net mortgage production revenue reflecting lower production margins,gains on sales of certain loans, as well as lower net servicing revenue reflecting lower servicing revenue on a lower level of third-party loans serviced, higher mortgage production margins and volumes,
partially offset by higher MSR risk management results.
lower net mortgage servicing revenue driven by
| |
– | lower operating revenue reflecting faster prepayment speeds on lower rates and the impact of reclassifying certain loans to held-for-sale, as well as |
| |
– | lower MSR risk management results reflecting updates to model inputs. |
Card income increased driven by:
lower new account origination costs, and
higher merchant processing fees on higher volumes,
largely offset by
lower net interchange income reflecting higher rewards costs and partner payments, largely offset by higher card sales volumes. The rewards costs included anthe absence of the prior-year adjustment of approximately $330 million to the credit card rewards liability of approximately $330 million in the second quarter of 2018, driven by an increase in redemption rate assumptions.liability.
Other incomeincreased reflecting:
higher operating lease income from growth in auto operating lease volume in CCB, and
higher investment valuation gains in AWM, which were largely offset by the impact of the related hedges reflected in principal transactions revenue,
partially offset by
lower other income in CIB associated with increased amortization on a higher level of alternative energy investments. The increased amortization was more than offset by the lower income tax expense from the associated tax credits.
The prior year included:
$505 million of fair value gains of $505 million recognized in the first quarter of 2018 related to the adoption of the new recognition and measurement accounting guidance for certain equity investments previously held at cost
partially offset by
the absence of a legal benefit of $645 million that was recorded in the prior yearfirst quarter of 2018, and
losses on certain investments in Corporate related to a settlement with the FDIC receivership for Washington MutualCIB and with Deutsche Bank as trustee to certain Washington Mutual trusts.Corporate.
Net interest income increased primarily due to the net impact of higher rates, which includes lower Markets net interest incomedriven by continued balance sheet growth and changes in CIB, as well as loan and deposit growth.mix. The Firm’s average interest-earning assets were $2.2$2.3 trillion, up $37.9$136 billion, from the prior year, and the net interest yield on these assets, on an FTE basis, was 2.49%, an increasea decrease of 151 basis points from the prior year.point. The net interest yield excluding CIB Markets was 3.21%3.34%, an increase of 4013 basis points from the prior year.points. Net interest yield excluding CIB markets is a non-GAAP financial measure.
| | Provision for credit losses | Provision for credit losses | | | | | | | | | | | Provision for credit losses | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions)
| 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
| 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
|
Consumer, excluding credit card | $ | (242 | ) | | $ | 206 |
| | NM |
| | $ | (152 | ) | | $ | 660 |
| | NM |
| $ | (61 | ) | | $ | (242 | ) | | 75 | % | | $ | (265 | ) | | $ | (152 | ) | | (74 | )% |
Credit card | 1,223 |
| | 1,319 |
| | (7 | )% | | 3,557 |
| | 3,699 |
| | (4 | ) | 1,375 |
| | 1,223 |
| | 12 |
| | 4,017 |
| | 3,557 |
| | 13 |
|
Total consumer | 981 |
| | 1,525 |
| | (36 | ) | | 3,405 |
| | 4,359 |
| | (22 | ) | 1,314 |
| | 981 |
| | 34 |
| | 3,752 |
| | 3,405 |
| | 10 |
|
Wholesale | (33 | ) | | (73 | ) | | 55 |
| | (82 | ) | | (377 | ) | | 78 |
| 200 |
| | (33 | ) | | NM |
| | 406 |
| | (82 | ) | | NM |
|
Total provision for credit losses | $ | 948 |
| | $ | 1,452 |
| | (35 | )% | | $ | 3,323 |
| | $ | 3,982 |
| | (17 | )% | $ | 1,514 |
| | $ | 948 |
| | 60 | % | | $ | 4,158 |
| | $ | 3,323 |
| | 25 | % |
Quarterly results
The provision for credit losses decreased as a result of:increased driven by consumer and wholesale.
The total consumer provision reflects:
an increase in credit card due to
| |
•– | a decreasehigher net charge-offs on loan growth, in the consumer provision in CCB due to line with expectations, and |
| |
– | a $250$200 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio, compared to a $150 million addition in the prior year |
an increase in consumer, excluding credit card in CCB due to
| |
– | a $100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio reflecting continued improvement in home pricesthe prior year, and lower delinquencies, |
| |
– | a $150 million addition to the allowance for loan losses in the credit card portfolio, due to loan growth and higher loss rates, as anticipated, compared to a $300 million addition in the prior year,
|
| |
– | lower net charge-offsrecoveries in the residential real estate portfolio largely driven by a recovery of approximately $80 million from a loan sale, and |
| |
– | lower net charge-offs in the auto portfolio as the prior year included $49 million of incremental charge-offs recorded in accordance with regulatory guidance benefited from a larger recovery on a loan sale |
partially offset by
| |
– | higher net charge-offs in the credit card portfolio due to seasoning of more recent vintages, as anticipated
|
| |
• | the decrease in the consumer provision was partially offset by a lower net benefit in the wholesale provision in the current period, which includes net recoveries predominantly related to a loan sale in CIB.
|
For a more detailed discussion of the credit portfolio and the allowance for credit losses, refer to the segment discussions of CCB on pages 21–25, CIB on pages 26-31, CB on pages 32-35, the Allowance for Credit Losses on pages 69–71 and Note 12.
Year-to-date results
The provision for credit losses decreased as a result of:
| |
• | a decrease in the consumer provision in CCB due to
|
| |
– | a $150 million addition to the allowance for loan losses in the credit card portfolio, due to loan growth and higher loss rates, as anticipated, compared to a $650 million addition in the prior year,
|
| |
– | lower net charge-offs in the residential real estate portfolio, largely driven by recoveries from loan sales, and
|
| |
– | a $250$50 million reduction in the allowance for loan losses in the business banking portfolio.
|
The wholesale provision was largely driven by select Commercial & Industrial (“C&I”) client downgrades. The prior year was a net benefit which included net recoveries predominantly related to a loan sale in CIB.
Refer to CCB segment results on pages 22–27, CIB on pages 28–33, CB on pages 34–37, AWM on pages 38–41, the Allowance for Credit Losses on pages 67–68, and Note 12 for additional information on the credit portfolio and the allowance for credit losses.
Year-to-date results
The provision for credit losses increased driven by wholesale and consumer.
The wholesale provision was largely driven by select C&I client downgrades. The prior year was a net benefit primarily driven by loan sales and other activity related to a single name in the Oil & Gas portfolio, partially offset by other net portfolio activity.
The total consumer provision reflects:
an increase in credit card due to
| |
– | a $400 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio and loan growth, compared to a $150 million addition in the prior year, and |
| |
– | higher net charge-offs on loan growth, in line with expectations |
partially offset by
a decrease in consumer, excluding credit card in CCB due to
| |
– | a $400 million reduction in the allowance for loan losses in the PCI residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies, compared toand a $175$100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio in the prior year, |
partially offset by
| |
– | higher net charge-offs in the credit card portfolio due to seasoning of more recent vintages, as anticipated and |
| |
– | the prior year included a $218$50 million write-down recorded in connection with the sale of the student loan portfolio
|
| |
• | the decrease in the consumer provision was partially offset by a lower net benefit in the wholesale provision with the current period net benefit primarily driven by loan sales and other activity related to a single name in the Oil & Gas portfolio, partially offset by other net portfolio activity. The prior year benefit was driven by a reduction in the allowance for creditloan losses in the Oil & Gas, Natural Gas Pipelines, and Metals and Mining portfolios. business banking portfolio
|
largely offset by
| |
– | lower net recoveries in the residential real estate portfolio as the prior year benefited from larger recoveries on loan sales. |
| | Noninterest expense | Noninterest expense | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions)
| 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change | 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
Compensation expense | $ | 8,108 |
| | $ | 7,697 |
| | 5 | % | | $ | 25,308 |
| | $ | 23,710 |
| | 7 | % | $ | 8,583 |
| | $ | 8,108 |
| | 6 | % | | $ | 26,067 |
| | $ | 25,308 |
| | 3 | % |
Noncompensation expense: | | | | | | | | | | | | | | | | | | | | | | |
Occupancy | 1,014 |
| | 930 |
| | 9 |
| | 2,883 |
| | 2,803 |
| | 3 |
| 1,110 |
| | 1,014 |
| | 9 |
| | 3,238 |
| | 2,883 |
| | 12 |
|
Technology, communications and equipment | 2,219 |
| | 1,972 |
| | 13 |
| | 6,441 |
| | 5,677 |
| | 13 |
| 2,494 |
| | 2,219 |
| | 12 |
| | 7,236 |
| | 6,441 |
| | 12 |
|
Professional and outside services | 2,086 |
| | 1,955 |
| | 7 |
| | 6,333 |
| | 5,646 |
| | 12 |
| 2,056 |
| | 2,086 |
| | (1 | ) | | 6,307 |
| | 6,333 |
| | — |
|
Marketing | 798 |
| | 710 |
| | 12 |
| | 2,396 |
| | 2,179 |
| | 10 |
| 945 |
| | 798 |
| | 18 |
| | 2,686 |
| | 2,396 |
| | 12 |
|
Other expense(a)(b) | 1,398 |
| | 1,306 |
| | 7 |
| | 4,313 |
| | 4,605 |
| | (6 | ) | 1,234 |
| | 1,398 |
| | (12 | ) | | 3,624 |
| | 4,313 |
| | (16 | ) |
Total noncompensation expense | 7,515 |
| | 6,873 |
| | 9 |
| | 22,366 |
| | 20,910 |
| | 7 |
| 7,839 |
| | 7,515 |
| | 4 |
| | 23,091 |
| | 22,366 |
| | 3 |
|
Total noninterest expense | $ | 15,623 |
| | $ | 14,570 |
| | 7 | % | | $ | 47,674 |
| | $ | 44,620 |
| | 7 | % | $ | 16,422 |
| | $ | 15,623 |
| | 5 | % | | $ | 49,158 |
| | $ | 47,674 |
| | 3 | % |
| |
(a) | Included Firmwide legal expense/(benefit) of $20$10 million and $(107)$20 million for the three months ended September 30, 20182019 and 2017,2018, respectively and $90$(2) million and $172$90 million for the nine months ended September 30, 2019 and 2018, and 2017. respectively. |
| |
(b) | Included FDIC-related expense of $349$114 million and $353$349 million for the three months ended September 30, 2019 and 2018, respectively and 2017, respectively,$378 million and $1.1 billion for each of the nine months ended September 30, 2019 and 2018, and 2017.respectively. |
Quarterly results
Compensation expense increased driven by investmentshigher revenue-related expense in headcountCIB and investments across the businesses, including bankers and advisors,front office hires, as well as technology and other support staff; and higher revenue-related compensation expense.staff.
Noncompensation expense increased as a result of:
higher investments across the businesses, including technology, real estate and marketing, and
higher volume-related expense, including depreciation expense due tofrom growth in auto operating lease volumeassets in CCB,
higher legal expense; the prior year was a net benefit
higher outside services and brokerage expense primarily due to higher volume-related transaction costsin certain businesses in CIB, and higher external fees on revenue growth in AWM
higher investments in technology,partially offset by
lower FDIC charges as a result of the elimination of the surcharge at the end of the third quarter of 2018, and
higher marketing expenselower other regulatory-related charges in CCB.
For a discussion of legal expense, refer to Note 22.CIB.
Year-to-date results
Compensation expense increased driven by investments in headcount across the businesses, including bankers and advisors,front office hires, as well as technology and other support staff, and higherpartially offset by lower revenue-related compensation expense largely in CIB.
Noncompensation expense increased as a result of:
higher outside services expense primarily due to investments across the businesses, including, technology, real estate and marketing
higher volume-related transaction costs in CIB and higher external fees on revenue growth in AWM
higherexpense, including depreciation expense due tofrom growth in auto operating lease volumeassets in CCB, and brokerage expense in certain businesses in CIB
contributions to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter, and
higher marketingpension costs due to changes to actuarial assumptions and estimates,
partially offset by
lower FDIC charges as a result of the elimination of the surcharge at the end of the third quarter of 2018
lower other regulatory-related charges in CIB
lower legal expense, and
lower distribution fees in CCBAWM.
The prior year included a loss of $174 million recorded in other expense in Corporate on the liquidation of a legal entity andin Corporate recorded in other expense.
higher investments in technology.
ForRefer to Note 19 for additional information on the liquidation of a legal entity, refer to Note 17.entity.
| | Income tax expense | Income tax expense | | | | | | | | Income tax expense | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions)
| 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change | 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
Income before income tax expense | $ | 10,689 |
| | $ | 9,556 |
| | 12 | % | | $ | 31,923 |
| | $ | 27,646 |
| | 15 | % | $ | 11,405 |
| | $ | 10,689 |
| | 7 | % | | $ | 33,980 |
| | $ | 31,923 |
| | 6 | % |
Income tax expense | 2,309 |
| | 2,824 |
| | (18 | ) | | 6,515 |
| | 7,437 |
| | (12 | ) | 2,325 |
| | 2,309 |
| | 1 |
| | 6,069 |
| | 6,515 |
| | (7 | ) |
Effective tax rate | 21.6 | % | | 29.6 | % | | | | 20.4 | % | | 26.9 | % | |
|
| 20.4 | % | | 21.6 | % | | | | 17.9 | % | | 20.4 | % | | |
Quarterly results
The effective tax rate decreased due to the TCJA, includingrecognition of tax benefits related to the reductionresolution of certain tax audits and changes in the mix of income and expense subject to U.S. federal, statutory income tax rate as well asand state and local taxes. In addition, the prior year included a $132 million net tax benefit resulting from changes in the estimates under the Tax Cuts and Jobs Act (“TCJA”) related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings.
Year-to-date results
The effective tax rate decreased due to the recognition of $1.0 billion of tax benefits related to the resolution of certain tax audits and changes in the mix of income and expense subject to U.S. federal, and state and local taxes. The decrease was partially offset by lower tax benefits related to the vesting of employee stock-based awards. In addition, the prior year included a $305 million net tax benefit resulting from changes in the estimates under the TCJA related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings. These items that reducedRefer to Note 1 for additional information on the effective2019 tax rate were partially offset by the impact of higher pre-tax income, and the change in mix of income and expense subject to U.S. federal, state and local taxes.benefits.
Year-to-date results
The effective tax rate decreased due to the TCJA, including the reduction in the U.S. federal statutory income tax rate as well as a $305 million net tax benefit recorded in the first nine months of 2018 resulting from changes in the estimates related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings. These items that reduced the effective tax rate were partially offset by the impact of higher pre-tax income, and the change in mix of income and expense subject to U.S. federal, state and local taxes.
|
| | | | |
CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
|
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
Consolidated balance sheets analysis
The following is a discussion of the significant changes between September 30, 2018,2019, and December 31, 2017.2018.
| | Selected Consolidated balance sheets data | (in millions) | Sep 30, 2018 |
| | Dec 31, 2017 |
| Change |
| September 30, 2019 |
| | December 31, 2018 |
| Change |
|
Assets | | | | | | | | |
Cash and due from banks | $ | 23,225 |
| | $ | 25,898 |
| (10 | )% | $ | 21,215 |
| | $ | 22,324 |
| (5 | )% |
Deposits with banks | 395,872 |
| | 405,406 |
| (2 | ) | 235,382 |
| | 256,469 |
| (8 | ) |
Federal funds sold and securities purchased under resale agreements | 217,632 |
| | 198,422 |
| 10 |
| 257,391 |
| | 321,588 |
| (20 | ) |
Securities borrowed | 122,434 |
| | 105,112 |
| 16 |
| 138,336 |
| | 111,995 |
| 24 |
|
Trading assets: | | | | | |
Debt and equity instruments | 359,765 |
| | 325,321 |
| 11 |
| |
Derivative receivables | 60,062 |
| | 56,523 |
| 6 |
| |
Trading assets | | 495,875 |
| | 413,714 |
| 20 |
|
Investment securities | 231,398 |
| | 249,958 |
| (7 | ) | 394,251 |
| | 261,828 |
| 51 |
|
Loans | 954,318 |
| | 930,697 |
| 3 |
| 945,218 |
| | 984,554 |
| (4 | ) |
Allowance for loan losses | (13,128 | ) | | (13,604 | ) | (3 | ) | (13,235 | ) | | (13,445 | ) | (2 | ) |
Loans, net of allowance for loan losses | 941,190 |
| | 917,093 |
| 3 |
| 931,983 |
| | 971,109 |
| (4 | ) |
Accrued interest and accounts receivable | 78,792 |
| | 67,729 |
| 16 |
| 88,988 |
| | 73,200 |
| 22 |
|
Premises and equipment | 14,180 |
| | 14,159 |
| — |
| 25,117 |
| | 14,934 |
| 68 |
|
Goodwill, MSRs and other intangible assets | 54,697 |
| | 54,392 |
| 1 |
| 53,078 |
| | 54,349 |
| (2 | ) |
Other assets | 115,936 |
| | 113,587 |
| 2 |
| 123,045 |
| | 121,022 |
| 2 |
|
Total assets | $ | 2,615,183 |
| | $ | 2,533,600 |
| 3 | % | $ | 2,764,661 |
| | $ | 2,622,532 |
| 5 | % |
Cash and due from banks and deposits with banks decreased primarily as a result of net long-term debt maturities. Thea shift in the deployment of cash in Treasury and CIO to investment securities. Deposits with banks reflect the Firm’s placements of its excess cash is largely placed with various central banks, predominantlyincluding the Federal Reserve Banks.
Federal funds sold and securities purchased under resale agreements increased primarily duedecreased largely as a result of a shift in the deployment of cash in Treasury and CIO. Refer to higher client-driven market-making activities and higher demand for securities to cover short positions in CIB. For additional information on the Firm’s Liquidity Risk Management refer to on pages 49–50–54. and Note 10 for additional information.
Securities borrowedincreased in CIB driven by higher demand for securities to cover short positions related to client-driven market-making activities in CIB.Fixed Income Markets, and to cover customer short positions in prime brokerage. Refer to Liquidity Risk Management on pages 50–54 and Note 10 for additional information.
Trading assets-debt and equity instrumentsassets increased predominantly as a result ofdue to:
growth in client-driven market-making activities in CIB, primarily equity instruments in prime brokerage, and debt instruments in Fixed Income Markets, drivenand equity instruments in Equity Markets, including prime brokerage, and when compared with lower levels at year-end, and
in CCB, an increase in U.S. GSE MBS acquired as part of the proceeds of warehouse loan sales, and growth related to originations of mortgage warehouse loans, resulting from the favorable rate environment,
partially offset by higher client demand. For additional information, refer
a reduction in short-term instruments associated with cash deployment activities in Treasury and CIO.
Refer to Notes 2 and 4. for additional information.
Investment securities decreasedincreased primarily reflecting net sales, paydowns and maturitiespurchases of U.S. Treasuries and U.S. GSE and government agency mortgage-backed securities (“MBS”), commercial MBS in Treasury and obligations of U.S. statesCIO driven by interest rate risk management and municipalities. For additional information on Investment securities, referbroader balance sheet management. Refer to Corporate segment results on pages 40–41,42–43, Investment Portfolio Risk Management on page 72,69, and Notes 2 and 9. for additional information on Investment securities.
Loans increased reflecting:
higher wholesaledecreased reflecting loan sales in Home Lending, and lower loans across all lines of business, predominantlyin CIB, primarily driven by CIB, including loans to financial institutiona loan syndication and commercial and industrial clients, and in AWM due to an increase in loans to Wealth Management clients globally, and
higher consumer loans driven by retention of high-quality prime mortgages in CCB and AWM, predominantlynet pay downs, partially offset by lower home equity loans, run-off of PCI loans, lower auto loans,increases in CB and mortgage loan sales.AWM.
The allowance for loan losses decreased driven by:
| |
• | a $250$550 million reduction in the CCB allowance for loan losses, which includes $400 million in the PCI residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies,delinquencies; $100 million in the non credit-impaired residential real estate portfolio; and $50 million in the business banking portfolio; as well as a $151 million reduction in the allowance for write-offs of PCI loans partially due to loan sales. These reductions were partially offset by a $150 million addition in the credit card portfolio, due to loan growth and higher loss rates, as anticipated. |
| |
• | a $132 million reduction in the wholesale allowance primarily driven by loan sales related to a single name in the Oil & Gas portfolio in the first quarterfor write-offs of 2018 and other net portfolio activity. PCI loans, |
For largely offset by
a $400 million addition to the allowance for loan losses in the credit card portfolio reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio and loan growth.
Refer to Credit and Investment Risk Management on pages 55–69, and Notes 2, 3, 11 and 12 for a more detailed discussion of loans and the allowance for loan losses, refer to Credit Risk Management on pages 55-72, and Notes 2, 3, 11 and 12.losses.
Accrued interest and accounts receivableincreased primarily reflecting higher client receivables related to client-driven activities in CIB.
Other assetsPremises and equipment increased reflecting higher auto operatingdue to the adoption of the new lease assets from growth in business volume in CCB.accounting guidance effective January 1, 2019. Refer to Note 16 for additional information.
For informationGoodwill, MSRs and other intangibles decreased reflecting lower MSRs as a result of faster prepayment speeds on Goodwill and MSRs, referlower rates, partially offset by an increase in goodwill associated with the acquisition of InstaMed. Refer to Note 14. for additional information.
| | Selected Consolidated balance sheets data (continued) | Selected Consolidated balance sheets data (continued) | | Selected Consolidated balance sheets data (continued) | |
(in millions) | Sep 30, 2018 |
| | Dec 31, 2017 |
| Change |
| September 30, 2019 |
| | December 31, 2018 |
| Change |
|
Liabilities | | | | | | | | |
Deposits | $ | 1,458,762 |
| | $ | 1,443,982 |
| 1 | % | $ | 1,525,261 |
| | $ | 1,470,666 |
| 4 | % |
Federal funds purchased and securities loaned or sold under repurchase agreements | 181,608 |
| | 158,916 |
| 14 |
| 247,766 |
| | 182,320 |
| 36 |
|
Short-term borrowings | 64,635 |
| | 51,802 |
| 25 |
| 48,893 |
| | 69,276 |
| (29 | ) |
Trading liabilities: | | | | | |
Debt and equity instruments | 109,457 |
| | 85,886 |
| 27 |
| |
Derivative payables | 41,693 |
| | 37,777 |
| 10 |
| |
Trading liabilities | | 138,343 |
| | 144,773 |
| (4 | ) |
Accounts payable and other liabilities | 209,707 |
| | 189,383 |
| 11 |
| 225,063 |
| | 196,710 |
| 14 |
|
Beneficial interests issued by consolidated variable interest entities (“VIEs”) | 20,241 |
| | 26,081 |
| (22 | ) | 18,515 |
| | 20,241 |
| (9 | ) |
Long-term debt | 270,124 |
| | 284,080 |
| (5 | ) | 296,472 |
| | 282,031 |
| 5 |
|
Total liabilities | 2,356,227 |
| | 2,277,907 |
| 3 |
| 2,500,313 |
| | 2,366,017 |
| 6 |
|
Stockholders’ equity | 258,956 |
| | 255,693 |
| 1 |
| 264,348 |
| | 256,515 |
| 3 |
|
Total liabilities and stockholders’ equity | $ | 2,615,183 |
| | $ | 2,533,600 |
| 3 | % | $ | 2,764,661 |
| | $ | 2,622,532 |
| 5 | % |
Deposits increased reflecting:
growth in operating deposits in CIB and CCB, largely offset by decreases in AWM and CB.
The increase in CIB was predominantly driven by growth in client activity in Treasury Services and Securities Services, and an increase in net issuances of structured notes in Markets, and
in CCB, driven by the continuation ofpredominantly due to continued growth fromin new customers, partially offset by balance migration into investment-related products.
The decrease in AWM was driven by balance migration predominantly into the Firm’s investment-related products,accounts, and in CB, primarily driven by the impact of seasonality and migration of non-operating deposits into higher-yielding investment products.growth from existing clients.
For more information, referRefer to the Liquidity Risk Management discussion on pages 49–50–54; and Notes 2
and 15. for additional information.
Federal funds purchased and securities loaned or sold under repurchase agreements increased reflecting driven by CIB and includes the Firm’s participation in the Federal Reserve’s open market operations, as well as higher secured financing of trading assets-debt and equity instruments and client-driven market-making activities in CIB.activities. Refer to Liquidity Risk Management on pages 50–54 and Note 10 for additional information.
Short-term borrowingsincreased due to the net issuance of decreased reflecting lower commercial paper and short-term advances from Federal Home Loan Banks (“FHLBs”FHLB”). For additional information, refer in Treasury and CIO, primarily driven by liquidity management. Refer to Liquidity Risk Management on pages 49–50–54. for additional information.
Trading liabilities–debt and equity instruments liabilitiesincreased predominantly decreased as a result of client-driven market-making activities in CIB, which resulted in lower levels of short positions primarily debt instruments in Fixed Income Markets, and equity instruments in prime brokerage. ForEquity Markets. Refer to Notes 2 and 4 for additional information, refer to Note 2 .information.
Trading liabilities–derivative payables increased predominantly as a result of client-driven market-making activities, which increased equity and commodity derivative payables. For additional information, refer to Derivative contracts on pages 67–68, and Notes 2 and 4.
Accounts payable and other liabilities increased partly as a result of reflecting:
higher client payables related to prime brokerageclient-driven activities in CIB.CIB, and
the impact of the adoption of the new lease accounting guidance effective January 1, 2019.
Refer to Note 16 for additional information on Leases.
Beneficial interests issued by consolidated VIEsdecreased due to net to:
maturities of credit card securitizations. Forsecuritizations,
predominantly offset by
higher levels of Firm-administered multi-seller conduit commercial paper issued to third parties.
Refer to Off-Balance Sheet Arrangements on page 18 and Notes 13 and 22 for further information on Firm-sponsored VIEs and loan securitization trusts, refer to Off-Balance Sheet Arrangements on page 15 and Notes 13 and 20.trusts.
Long-term debt decreased primarily driven by lower FHLB advances, partially offset byincreased as a result of client-driven net issuanceissuances of structured notes in CIB. ForCIB’s Markets business.
Refer to Liquidity Risk Management on pages 50–54 for additional information on the Firm’s long-term debt activities, referactivities.
Refer to Liquidity Risk Management on pages 49–54.
Forpage 83 for information on changes in stockholders’ equity refer to page 89, and on the Firm’s capital actions, refer to Capital actions on pages 47-48.47–48.
Consolidated cash flows analysis
The following is a discussion of cash flow activities during the nine months ended September 30, 20182019 and 2017.2018. | | (in millions) | | Nine months ended September 30, | | Nine months ended September 30, |
| 2018 |
| | 2017 |
| | 2019 |
| | 2018 |
|
Net cash provided by/(used in) | | | | | | | | |
Operating activities | | $ | 13,765 |
| | $ | (23,381 | ) | | $ | (77,039 | ) | | $ | 13,765 |
|
Investing activities | | (39,782 | ) | | 47,706 |
| | (38,181 | ) | | (39,782 | ) |
Financing activities | | 16,319 |
| | 36,405 |
| | 96,006 |
| | 16,319 |
|
Effect of exchange rate changes on cash | | (2,509 | ) | | 7,272 |
| | (2,982 | ) | | (2,509 | ) |
Net increase/(decrease) in cash and due from banks and deposits with banks | | $ | (12,207 | ) | | $ | 68,002 |
| |
Net decrease in cash and due from banks and deposits with banks | | | $ | (22,196 | ) | | $ | (12,207 | ) |
Operating activities
In 2019, cash used primarily resulted from higher trading assets, securities borrowed, other assets and accrued interest and accounts receivable, partially offset by higher accounts payable and other liabilities, trading liabilities, and net proceeds from loans originated for sale.
In 2018, cash provided primarily reflectedresulted from net income, increased trading liabilities andhigher accounts payable and other liabilities, and trading liabilities, partially offset by increases inhigher trading assets and securities borrowed.
In 2017, cash used primarily reflected increases in trading assets, and decreases in trading liabilities, and accounts payable and other liabilities, partially offset by net income and a decrease in other assets.
Investing activities
In 2019, cash used primarily resulted from net purchases of investment securities and net loan originations, predominantly offset by lower securities purchased under resale agreements, and proceeds from the sale of loans held-for-investment.
In 2018, cash used reflectedresulted from higher net loan originations and an increase in securities purchased under resale agreements, partially offset by lowernet proceeds from investment securities.securities and sales of loans held-for- investment.
Financing activities
In 2017,2019, cash provided reflected a decrease inresulted from higher deposits, and securities purchasedloaned or sold under resalerepurchase agreements, and lower investment securities, partially offset by higher net loan originations.
Financing activitieslower short-term and long-term borrowings.
In 2018, cash provided reflectedresulted from higher securities loaned or sold under repurchase agreements, deposits and short-term borrowings, partially offset by a decrease in long-term borrowings.
In 2017, cash provided reflected higher deposits and short-term borrowings, partially offset by a decrease in long-term borrowings.
Additionally, forFor both periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock.
For* * *
Refer to Consolidated Balance Sheets Analysis on pages 15-16, Capital Risk Management on pages 45–49, and Liquidity Risk Management on pages 50–54 of this Form 10-Q, and pages 95–100 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the activities affecting the Firm’s cash flows, refer to Consolidated Balance Sheets Analysis on pages 12–14, Capital Risk Management on pages 44-48, and Liquidity Risk Management on pages 49–54 of this Form 10-Q, and pages 92–97 of JPMorgan Chase’s 2017 Annual Report.flows.
|
| | | | |
OFF-BALANCE SHEET ARRANGEMENTS |
In the normal course of business, the Firm enters into various off-balance sheet arrangements and contractual obligations that may require future cash payments. Certain obligations are recognized on-balance sheet, while others are disclosed off-balance sheet under accounting principles generally accepted in the U.S. (“U.S. GAAP”).
The Firm is involved withhas several types of off–balance sheet arrangements, including through nonconsolidated special-purpose entities (“SPEs”), which are a type of VIE, and through lending-related financial instruments (e.g., commitments and guarantees).
The Firm holds capital, as deemed appropriate, against all SPE-related transactions and related exposures, such as derivative transactionscontracts and lending-related commitments and guarantees.
The Firm has no commitments to issue its own stock to support any SPE transaction, and its policies require that transactions with SPEs be conducted at arm’s length and reflect market pricing. Consistent with this policy, no JPMorgan Chase employee is permitted to invest in SPEs with which the Firm is involved where such investment would violate the Firm’s Code of Conduct.
The table below provides an index of where in this Form 10-Q a discussion of the Firm’s various off-balance sheet arrangements can be found. In addition, refer to Note 1 for information about the Firm’s consolidation policies.
|
| | |
Type of off-balance sheet arrangement | Location of disclosure | Page references |
Special-purpose entities: variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEs | Refer to Note 13 | 148-153139-144 |
Off-balance sheet lending-related financial instruments, guarantees, and other commitments | Refer to Note 2022 | 162-165156-159 |
|
|
EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES |
Non-GAAP financial measures
The Firm prepares its Consolidated Financial Statements usingin accordance with U.S. GAAP;GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 86-9080–84. That presentation, which is referred to as “reported” basis, provides the reader with an understanding of the Firm’s results that can be tracked consistently from year-to-year and enables a comparison of the Firm’s performance with other companies’ U.S. GAAP financial statements.
In addition to analyzing the Firm’s results on a reported basis, managementthe 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, on a “managed” basis; these Firmwide managed basis results are non-GAAP financial measures. The Firm also reviews the results of the lines of business on a managed basis. The Firm’s definition of managed basis starts, in each case, with the reported U.S. GAAP results and includeswhich include 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. Thesesecurities (“FTE” basis)
financial measures allow management to assess the comparability of revenue from year-to-year arising from both taxableNet interest income and tax-exempt sources. The corresponding income tax impact related to tax-exempt itemsnet yield excluding CIB’s Markets businesses
Certain credit metrics and ratios, which exclude PCI loans
Tangible common equity (“TCE”), ROTCE, and TBVPS.
In addition, core loans is recorded within income tax expense. These adjustments have no impact on net income as reporteda key performance measure utilized by the Firm asand its investors and analysts in assessing actual growth in the loan portfolio.
Refer to Explanation and Reconciliation of the Firm’s Use Of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59 of JPMorgan Chase’s 2018 Form 10-K for a whole or by the linesfurther discussion of business.
Management also uses certainmanagement’s use of non-GAAP financial measures at the Firm and business-segment level, because these other non-GAAP financial measures provide information to investors about the underlying operationalkey performance and trends of the Firm or of the particular business segment, as the case may be, and, therefore, facilitate a comparison of the Firm or the business segment with the performance of its relevant competitors. For additional information on these non-GAAP measures, refer to Business Segment Results on pages 19-41.
Non-GAAP financial measures used by the Firm may not be comparable to similarly named non-GAAP financial measures used by other companies.measures.
The following summary tables providetable provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis. |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, |
| 2018 | | 2017 |
(in millions, except ratios) | Reported results | | Fully taxable-equivalent adjustments(a)(b) | | Managed basis | | Reported results | | Fully taxable-equivalent adjustments(a) | | Managed basis |
Other income | $ | 1,160 |
| | $ | 408 |
| | | $ | 1,568 |
| | $ | 952 |
| | $ | 555 |
| | | $ | 1,507 |
|
Total noninterest revenue | 13,352 |
| | 408 |
| | | 13,760 |
| | 12,780 |
| | 555 |
| | | 13,335 |
|
Net interest income | 13,908 |
| | 154 |
| | | 14,062 |
| | 12,798 |
| | 319 |
| | | 13,117 |
|
Total net revenue | 27,260 |
| | 562 |
| | | 27,822 |
| | 25,578 |
| | 874 |
| | | 26,452 |
|
Pre-provision profit | 11,637 |
| | 562 |
| | | 12,199 |
| | 11,008 |
| | 874 |
| | | 11,882 |
|
Income before income tax expense | 10,689 |
| | 562 |
| | | 11,251 |
| | 9,556 |
| | 874 |
| | | 10,430 |
|
Income tax expense | $ | 2,309 |
| | $ | 562 |
| | | $ | 2,871 |
| | $ | 2,824 |
| | $ | 874 |
| | | $ | 3,698 |
|
Overhead ratio | 57 | % | | NM |
| | | 56 | % | | 57 | % | | NM |
| | | 55 | % |
| | | | | | | | | | | | | |
| Nine months ended September 30, |
| 2018 | | 2017 |
(in millions, except ratios) | Reported results | | Fully taxable-equivalent adjustments(a)(b) | | Managed basis | | Reported results | | Fully taxable-equivalent adjustments(a) | | Managed basis |
Other income | $ | 4,041 |
| | $ | 1,337 |
| | | $ | 5,378 |
| | $ | 3,197 |
| | $ | 1,733 |
| | | $ | 4,930 |
|
Total noninterest revenue | 42,215 |
| | 1,337 |
| | | 43,552 |
| | 39,178 |
| | 1,733 |
| | | 40,911 |
|
Net interest income | 40,705 |
| | 473 |
| | | 41,178 |
| | 37,070 |
| | 987 |
| | | 38,057 |
|
Total net revenue | 82,920 |
| | 1,810 |
| | | 84,730 |
| | 76,248 |
| | 2,720 |
| | | 78,968 |
|
Pre-provision profit | 35,246 |
| | 1,810 |
| | | 37,056 |
| | 31,628 |
| | 2,720 |
| | | 34,348 |
|
Income before income tax expense | 31,923 |
| | 1,810 |
| | | 33,733 |
| | 27,646 |
| | 2,720 |
| | | 30,366 |
|
Income tax expense | $ | 6,515 |
| | $ | 1,810 |
| | | $ | 8,325 |
| | $ | 7,437 |
| | $ | 2,720 |
| | | $ | 10,157 |
|
Overhead ratio | 57 | % | | NM |
| | | 56 | % | | 59 | % | | NM |
| | | 57 | % |
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1. |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, |
| 2019 | | 2018 |
(in millions, except ratios) | Reported results | | Fully taxable-equivalent adjustments(a) | | Managed basis | | Reported results | | Fully taxable-equivalent adjustments(a) | | Managed basis |
Other income | $ | 1,472 |
| | $ | 596 |
| | | $ | 2,068 |
| | $ | 1,160 |
| | $ | 408 |
| | | $ | 1,568 |
|
Total noninterest revenue | 15,113 |
| | 596 |
| | | 15,709 |
| | 13,352 |
| | 408 |
| | | 13,760 |
|
Net interest income | 14,228 |
| | 127 |
| | | 14,355 |
| | 13,908 |
| | 154 |
| | | 14,062 |
|
Total net revenue | 29,341 |
| | 723 |
| | | 30,064 |
| | 27,260 |
| | 562 |
| | | 27,822 |
|
Pre-provision profit | 12,919 |
| | 723 |
| | | 13,642 |
| | 11,637 |
| | 562 |
| | | 12,199 |
|
Income before income tax expense | 11,405 |
| | 723 |
| | | 12,128 |
| | 10,689 |
| | 562 |
| | | 11,251 |
|
Income tax expense | $ | 2,325 |
| | $ | 723 |
| | | $ | 3,048 |
| | $ | 2,309 |
| | $ | 562 |
| | | $ | 2,871 |
|
Overhead ratio | 56 | % | | NM |
| | | 55 | % | | 57 | % | | NM |
| | | 56 | % |
| | | | | | | | | | | | | |
| Nine months ended September 30, |
| 2019 | | 2018 |
(in millions, except ratios) | Reported results | | Fully taxable-equivalent adjustments(a) | | Managed basis | | Reported results | | Fully taxable-equivalent adjustments(a) | | Managed basis |
Other income | $ | 4,239 |
| | $ | 1,777 |
| | | $ | 6,016 |
| | $ | 4,041 |
| | $ | 1,337 |
| | | $ | 5,378 |
|
Total noninterest revenue | 44,217 |
| | 1,777 |
| | | 45,994 |
| | 42,215 |
| | 1,337 |
| | | 43,552 |
|
Net interest income | 43,079 |
| | 408 |
| | | 43,487 |
| | 40,705 |
| | 473 |
| | | 41,178 |
|
Total net revenue | 87,296 |
| | 2,185 |
| | | 89,481 |
| | 82,920 |
| | 1,810 |
| | | 84,730 |
|
Pre-provision profit | 38,138 |
| | 2,185 |
| | | 40,323 |
| | 35,246 |
| | 1,810 |
| | | 37,056 |
|
Income before income tax expense | 33,980 |
| | 2,185 |
| | | 36,165 |
| | 31,923 |
| | 1,810 |
| | | 33,733 |
|
Income tax expense | $ | 6,069 |
| | $ | 2,185 |
| | | $ | 8,254 |
| | $ | 6,515 |
| | $ | 1,810 |
| | | $ | 8,325 |
|
Overhead ratio | 56 | % | | NM |
| | | 55 | % | | 57 | % | | NM |
| | | 56 | % |
| |
(a) | Predominantly recognized in CIB, and CB business segments and Corporate. |
| |
(b) | The decrease in fully taxable-equivalent adjustments in the three and nine months ended September 30, 2018, reflects the impact of the TCJA. |
NetThe following table provides information on net interest income and net yield excluding CIB’s Markets businessesbusinesses.
In addition to reviewing net interest income and the net interest yield on a managed basis, management also reviews these metrics excluding CIB’s Markets businesses to assess the performance of the Firm’s lending, investing (including asset-liability management) and deposit-raising activities. The resulting metrics are referred to as non-markets related net interest income and net yield. CIB’s
Markets businesses are Fixed Income Markets and Equity Markets. Management believes that disclosure of non-
markets related net interest income and net yield provides investors and analysts with other measures by which to analyze the non-markets-related business trends of the Firm and provides a comparable measure to other financial institutions that are primarily focused on lending, investing and deposit-raising activities.
The data presented below are non-GAAP financial measures due to the exclusion of markets-related net interest income arising from CIB. |
| | | | | | | | | | | | | | | | | | | |
(in millions, except rates) | Three months ended September 30, | | Nine months ended September 30, |
2018 |
| 2017 |
| | Change |
| | 2018 | 2017 | | Change |
Net interest income – managed basis(a)(b) | $ | 14,062 |
| $ | 13,117 |
| | 7 | % | | $ | 41,178 |
| $ | 38,057 |
| | 8 | % |
Less: CIB Markets net interest income(c) | 704 |
| 1,070 |
| | (34 | ) | | 2,488 |
| 3,509 |
| | (29 | ) |
Net interest income excluding CIB Markets(a) | $ | 13,358 |
| $ | 12,047 |
| | 11 |
| | $ | 38,690 |
| $ | 34,548 |
| | 12 |
|
| | | | | | | | | |
Average interest-earning assets | $ | 2,220,258 |
| $ | 2,194,174 |
| | 1 |
| | $ | 2,215,377 |
| $ | 2,177,520 |
| | 2 |
|
Less: Average CIB Markets interest-earning assets(c) | 613,737 |
| 544,867 |
| | 13 |
| | 605,653 |
| 535,044 |
| | 13 |
|
Average interest-earning assets excluding CIB Markets | $ | 1,606,521 |
| $ | 1,649,307 |
| | (3 | )% | | $ | 1,609,724 |
| $ | 1,642,476 |
| | (2 | )% |
Net interest yield on average interest-earning assets – managed basis | 2.51 | % | 2.37 | % | | | | 2.49 | % | 2.34 | % | | |
Net interest yield on average CIB Markets interest-earning assets(c) | 0.46 |
| 0.78 |
| | | | 0.55 |
| 0.88 |
| | |
Net interest yield on average interest-earning assets excluding CIB Markets | 3.30 | % | 2.90 | % | | | | 3.21 | % | 2.81 | % | | |
|
| | | | | | | | | | | | | | | | | | | |
(in millions, except rates) | Three months ended September 30, | | Nine months ended September 30, |
2019 |
| 2018 |
| | Change |
| | 2019 | 2018 | | Change |
Net interest income – reported | $ | 14,228 |
| $ | 13,908 |
| | 2 | % | | $ | 43,079 |
| $ | 40,705 |
| | 6 | % |
Fully taxable-equivalent adjustments | 127 |
| 154 |
| | (18 | ) | | 408 |
| 473 |
| | (14 | ) |
Net interest income – managed basis(a) | $ | 14,355 |
| $ | 14,062 |
| | 2 |
| | $ | 43,487 |
| $ | 41,178 |
| | 6 |
|
Less: CIB Markets net interest income(b) | 723 |
| 704 |
| | 3 |
| | 1,971 |
| 2,488 |
| | (21 | ) |
Net interest income excluding CIB Markets(a) | $ | 13,632 |
| $ | 13,358 |
| | 2 |
| | $ | 41,516 |
| $ | 38,690 |
| | 7 |
|
| | | | | | | | | |
Average interest-earning assets(c) | $ | 2,365,154 |
| $ | 2,203,305 |
| | 7 |
| | $ | 2,334,623 |
| $ | 2,198,909 |
| | 6 |
|
Less: Average CIB Markets interest-earning assets(b)(c) | 690,593 |
| 596,784 |
| | 16 |
| | 671,236 |
| 589,185 |
| | 14 |
|
Average interest-earning assets excluding CIB Markets | $ | 1,674,561 |
| $ | 1,606,521 |
| | 4 | % | | $ | 1,663,387 |
| $ | 1,609,724 |
| | 3 | % |
Net interest yield on average interest-earning assets – managed basis(c) | 2.41 | % | 2.53 | % | | | | 2.49 | % | 2.50 | % | | |
Net interest yield on average CIB Markets interest-earning assets(b)(c) | 0.42 |
| 0.47 |
| | | | 0.39 |
| 0.56 |
| | |
Net interest yield on average interest-earning assets excluding CIB Markets | 3.23 | % | 3.30 | % | | | | 3.34 | % | 3.21 | % | | |
| |
(a) | Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable. |
| |
(b) | For a reconciliation of net interest incomeRefer to page 32 for further information on a reported and managed basis, refer to reconciliation from the Firm’s reported U.S. GAAP results to managed basis on page 16.CIB’s Markets businesses. |
| |
(c) | For further information on CIB’s Markets businesses, referIn the second quarter of 2019, the Firm reclassified balances related to page 30.certain instruments from interest-earning to noninterest-earning assets, as the associated returns are recorded in principal transactions revenue and not in net interest income. These changes were applied retrospectively and, accordingly, prior period amounts were revised to conform with the current presentation. |
The Firm also reviews adjusted expense, which is noninterest expense excluding Firmwide legal expense and is therefore a non-GAAP financial measure. Additionally, certain credit metrics and ratios disclosed by the Firm exclude PCI loans, and are therefore non-GAAP measures. Management believes these measures help investors
understand the effect of these items on reported results and provide an alternate presentation of the Firm’s performance. For additional information on credit metrics and ratios excluding PCI loans, refer to Credit and Investment Risk Management on pages 55-72.
Tangible common equity, ROTCE and TBVPS
Tangible common equity (“TCE”), ROTCE and TBVPS are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm’s net income
applicable to common equity as a percentage of average TCE. TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. TCE, ROTCE, and TBVPS are utilized by the Firm, as well as investors and analysts, in assessing the Firm’s use of equity.
The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
| | | Period-end | | Average | Period-end | | Average |
(in millions, except per share and ratio data) | Sep 30, 2018 |
| Dec 31, 2017 |
| | Three months ended September 30, | | Nine months ended September 30, | Sep 30, 2019 |
| Dec 31, 2018 |
| | Three months ended September 30, | Nine months ended September 30, |
| 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Common stockholders’ equity | $ | 231,192 |
| $ | 229,625 |
| | $ | 230,439 |
| $ | 231,861 |
| | $ | 228,995 |
| $ | 229,937 |
| $ | 235,985 |
| $ | 230,447 |
| | $ | 235,613 |
| $ | 230,439 |
| $ | 232,917 |
| $ | 228,995 |
|
Less: Goodwill | 47,483 |
| 47,507 |
| | 47,490 |
| 47,309 |
| | 47,496 |
| 47,297 |
| 47,818 |
| 47,471 |
| | 47,707 |
| 47,490 |
| 47,552 |
| 47,496 |
|
Less: Other intangible assets | 781 |
| 855 |
| | 795 |
| 818 |
| | 820 |
| 836 |
| 841 |
| 748 |
| | 842 |
| 795 |
| 776 |
| 820 |
|
Add: Certain Deferred tax liabilities(b)(a) | 2,239 |
| 2,204 |
| | 2,233 |
| 3,262 |
| | 2,221 |
| 3,243 |
| 2,371 |
| 2,280 |
| | 2,344 |
| 2,233 |
| 2,311 |
| 2,221 |
|
Tangible common equity | $ | 185,167 |
| $ | 183,467 |
| | $ | 184,387 |
| $ | 186,996 |
| | $ | 182,900 |
| $ | 185,047 |
| $ | 189,697 |
| $ | 184,508 |
| | $ | 189,408 |
| $ | 184,387 |
| $ | 186,900 |
| $ | 182,900 |
|
| | | | | | | | |
Return on tangible common equity | NA |
| NA |
| | 17 | % | 13 | % | | 18 | % | 14 | % | NA |
| NA |
| | 18 | % | 17 | % | 19 | % | 18 | % |
Tangible book value per share | $ | 55.68 |
| $ | 53.56 |
| | NA |
| NA |
| | NA |
| NA |
| $ | 60.48 |
| $ | 56.33 |
| | 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. |
| |
(b) | Amounts presented for December 31, 2017 and later periods include the effect from the revaluation of the Firm's net deferred tax liability as a result of the TCJA. |
Key performance measures
The Firm considers the following to be key regulatory capital measures:
Capital, risk-weighted assets (“RWA”), and capital and leverage ratios presented under Basel III Standardized and Advanced Fully Phased-In rules, and
SLR calculated under Basel III Advanced Fully Phased-In rules.
The Firm, as well as banking regulators, investors and analysts use these measures to assess the Firm’s regulatory capital position and to compare the Firm’s regulatory capital to that of other financial services companies.
For additional information on these measures, refer to Capital Risk Management on pages 44-48.
Core loans are also considered a key performance measure. Core loans represent loans considered central to the Firm’s ongoing businesses; and exclude loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. Core loans is a measure utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio.
The Firm is managed on a line of business basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. Results of these lines of businessthe Firm’s Operating Committee. Segment results are presented on a managed basis. For a definition of managed basis, referRefer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures and Key Performance Measures on pages 16-18.19–20 for a definition of managed basis.
Description of business segment reporting methodology
Results of the business segments are intended to present each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results includes the allocation of certain
income and expense items. ForRefer to Line of business equity on page 47 for further information about line of business capital, refer to Line of business equity on page 47.capital. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.
Business segment capital allocation
The amount of capital assigned to each business is referred to as equity. On at least an annual basis, the Firm assesses the level of capital required for each line of business as well as the assumptions and methodologies used in capital allocation are assessed and as a result, the capital allocated to allocate capital. Forlines of business may change. Refer to Line of business equity on page 91 of JPMorgan Chase’s 2018 Form 10-K for additional information on business segment capital allocation, refer to Line of business equity on pages 88-89 of JPMorgan Chase’s 2017 Annual Report.allocation.
For a further discussion of those methodologies, referRefer to Business Segment Results – Description of business segment reporting methodology on pages 55–5660–61 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for a further discussion of those methodologies.
Segment results – managed basis
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
Net income in 2018 for the business segments reflects the favorable impact of the reduction in the U.S. federal statutory income tax rate as a result of the TCJA.
The following tables summarize the businessFirm’s results by segment results for the periods indicated.
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended September 30, | Total net revenue | | Total noninterest expense | | Pre-provision profit/(loss) |
(in millions) | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change |
| | 2018 |
| 2017 |
| Change |
|
Consumer & Community Banking | $ | 13,290 |
| $ | 12,033 |
| 10 | | $ | 6,982 |
| $ | 6,495 |
| 7 | % | | $ | 6,308 |
| $ | 5,538 |
| 14 | % |
Corporate & Investment Bank | 8,805 |
| 8,615 |
| 2 | | 5,175 |
| 4,793 |
| 8 |
| | 3,630 |
| 3,822 |
| (5 | ) |
Commercial Banking | 2,271 |
| 2,146 |
| 6 | | 853 |
| 800 |
| 7 |
| | 1,418 |
| 1,346 |
| 5 |
|
Asset & Wealth Management | 3,559 |
| 3,472 |
| 3 | | 2,585 |
| 2,408 |
| 7 |
| | 974 |
| 1,064 |
| (8 | ) |
Corporate | (103 | ) | 186 |
| NM | | 28 |
| 74 |
| (62 | ) | | (131 | ) | 112 |
| NM |
|
Total | $ | 27,822 |
| $ | 26,452 |
| 5 | | $ | 15,623 |
| $ | 14,570 |
| 7 | % | | $ | 12,199 |
| $ | 11,882 |
| 3 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended September 30, | Consumer & Community Banking | | Corporate & Investment Bank | | Commercial Banking |
(in millions, except ratios) | 2019 |
| 2018 |
| Change | | 2019 |
| 2018 |
| Change | | 2019 |
| 2018 |
| Change |
|
Total net revenue | $ | 14,259 |
| $ | 13,290 |
| 7 | | $ | 9,338 |
| $ | 8,805 |
| 6 | | $ | 2,207 |
| $ | 2,271 |
| (3 | )% |
Total noninterest expense | 7,290 |
| 6,982 |
| 4 | | 5,348 |
| 5,175 |
| 3 | | 881 |
| 853 |
| 3 |
|
Pre-provision profit/(loss) | 6,969 |
| 6,308 |
| 10 | | 3,990 |
| 3,630 |
| 10 | | 1,326 |
| 1,418 |
| (6 | ) |
Provision for credit losses | 1,311 |
| 980 |
| 34 | | 92 |
| (42 | ) | NM | | 67 |
| (15 | ) | NM |
|
Net income/(loss) | 4,273 |
| 4,086 |
| 5 | | 2,809 |
| 2,626 |
| 7 | | 937 |
| 1,089 |
| (14 | ) |
Return on equity (“ROE”) | 32 | % | 31 | % | | | 13 | % | 14 | % | | | 16 | % | 21 | % | |
|
| | | | | | | | | | | | | | | | | | | | | |
Three months ended September 30, | Provision for credit losses | | Net income/(loss) | | Return on equity |
(in millions, except ratios) | 2018 |
| 2017 |
| Change |
| | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
|
Consumer & Community Banking | $ | 980 |
| $ | 1,517 |
| (35 | )% | | $ | 4,086 |
| $ | 2,553 |
| 60 | | 31 | % | 19 | % |
Corporate & Investment Bank | (42 | ) | (26 | ) | (62 | ) | | 2,626 |
| 2,546 |
| 3 | | 14 |
| 13 |
|
Commercial Banking | (15 | ) | (47 | ) | 68 |
| | 1,089 |
| 881 |
| 24 | | 21 |
| 17 |
|
Asset & Wealth Management | 23 |
| 8 |
| 188 |
| | 724 |
| 674 |
| 7 | | 31 |
| 29 |
|
Corporate | 2 |
| — |
| NM |
| | (145 | ) | 78 |
| NM | | NM |
| NM |
|
Total | $ | 948 |
| $ | 1,452 |
| (35 | )% | | $ | 8,380 |
| $ | 6,732 |
| 24 | | 14 | % | 11 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended September 30, | Asset & Wealth Management | | Corporate | | Total |
(in millions, except ratios) | 2019 |
| 2018 |
| Change |
| | 2019 |
| 2018 |
| Change | | 2019 |
| 2018 |
| Change |
Total net revenue | $ | 3,568 |
| $ | 3,559 |
| — |
| | $ | 692 |
| $ | (103 | ) | NM | | $ | 30,064 |
| $ | 27,822 |
| 8 |
Total noninterest expense | 2,622 |
| 2,585 |
| 1 |
| | 281 |
| 28 |
| NM | | 16,422 |
| 15,623 |
| 5 |
Pre-provision profit/(loss) | 946 |
| 974 |
| (3 | ) | | 411 |
| (131 | ) | NM | | 13,642 |
| 12,199 |
| 12 |
Provision for credit losses | 44 |
| 23 |
| 91 |
| | — |
| 2 |
| NM | | 1,514 |
| 948 |
| 60 |
Net income/(loss) | 668 |
| 724 |
| (8 | ) | | 393 |
| (145 | ) | NM | | 9,080 |
| 8,380 |
| 8 |
ROE | 24 | % | 31 | % | | | NM |
| NM |
| | | 15 | % | 14 | % | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
Nine months ended September 30, | Total net revenue | | Total noninterest expense | | Pre-provision profit/(loss) |
(in millions) | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change |
Consumer & Community Banking | $ | 38,384 |
| $ | 34,415 |
| 12 | | $ | 20,770 |
| $ | 19,390 |
| 7 | | $ | 17,614 |
| $ | 15,025 |
| 17 |
Corporate & Investment Bank | 29,211 |
| 27,139 |
| 8 | | 16,237 |
| 14,854 |
| 9 | | 12,974 |
| 12,285 |
| 6 |
Commercial Banking | 6,753 |
| 6,252 |
| 8 | | 2,541 |
| 2,415 |
| 5 | | 4,212 |
| 3,837 |
| 10 |
Asset & Wealth Management | 10,637 |
| 10,197 |
| 4 | | 7,732 |
| 7,606 |
| 2 | | 2,905 |
| 2,591 |
| 12 |
Corporate | (255 | ) | 965 |
| NM | | 394 |
| 355 |
| 11 | | (649 | ) | 610 |
| NM |
Total | $ | 84,730 |
| $ | 78,968 |
| 7 | | $ | 47,674 |
| $ | 44,620 |
| 7 | | $ | 37,056 |
| $ | 34,348 |
| 8 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nine months ended September 30, | Consumer & Community Banking | | Corporate & Investment Bank | | Commercial Banking |
(in millions, except ratios) | 2019 |
| 2018 |
| Change | | 2019 |
| 2018 |
| Change |
| | 2019 |
| 2018 |
| Change |
|
Total net revenue | $ | 41,843 |
| $ | 38,384 |
| 9 | | $ | 28,827 |
| $ | 29,211 |
| (1 | )% | | $ | 6,756 |
| $ | 6,753 |
| — |
|
Total noninterest expense | 21,663 |
| 20,770 |
| 4 | | 16,288 |
| 16,237 |
| — |
| | 2,618 |
| 2,541 |
| 3 |
|
Pre-provision profit/(loss) | 20,180 |
| 17,614 |
| 15 | | 12,539 |
| 12,974 |
| (3 | ) | | 4,138 |
| 4,212 |
| (2 | ) |
Provision for credit losses | 3,745 |
| 3,405 |
| 10 | | 179 |
| (142 | ) | NM |
| | 186 |
| 23 |
| NM |
|
Net income/(loss) | 12,410 |
| 10,824 |
| 15 | | 8,995 |
| 9,798 |
| (8 | ) | | 2,986 |
| 3,201 |
| (7 | ) |
ROE | 31 | % | 27 | % | | | 14 | % | 18 | % | | | 17 | % | 20 | % | |
|
| | | | | | | | | | | | | | | | | | | | | |
Nine months ended September 30, | Provision for credit losses | | Net income/(loss) | | Return on equity |
(in millions, except ratios) | 2018 |
| 2017 |
| Change |
| | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
|
Consumer & Community Banking | $ | 3,405 |
| $ | 4,341 |
| (22 | )% | | $ | 10,824 |
| $ | 6,764 |
| 60 | | 27 | % | 17 | % |
Corporate & Investment Bank | (142 | ) | (175 | ) | 19 |
| | 9,798 |
| 8,497 |
| 15 | | 18 |
| 15 |
|
Commercial Banking | 23 |
| (214 | ) | NM |
| | 3,201 |
| 2,582 |
| 24 | | 20 |
| 16 |
|
Asset & Wealth Management | 40 |
| 30 |
| 33 |
| | 2,249 |
| 1,683 |
| 34 | | 32 |
| 24 |
|
Corporate | (3 | ) | — |
| NM |
| | (664 | ) | 683 |
| NM | | NM |
| NM |
|
Total | $ | 3,323 |
| $ | 3,982 |
| (17 | )% | | $ | 25,408 |
| $ | 20,209 |
| 26 | | 14 | % | 11 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nine months ended September 30, | Asset & Wealth Management | | Corporate | | Total |
(in millions, except ratios) | 2019 |
| 2018 |
| Change |
| | 2019 |
| 2018 |
| Change | | 2019 |
| 2018 |
| Change |
|
Total net revenue | $ | 10,616 |
| $ | 10,637 |
| — |
| | $ | 1,439 |
| $ | (255 | ) | NM | | $ | 89,481 |
| $ | 84,730 |
| 6 | % |
Total noninterest expense | 7,865 |
| 7,732 |
| 2 |
| | 724 |
| 394 |
| 84 | | 49,158 |
| 47,674 |
| 3 |
|
Pre-provision profit/(loss) | 2,751 |
| 2,905 |
| (5 | ) | | 715 |
| (649 | ) | NM | | 40,323 |
| 37,056 |
| 9 |
|
Provision for credit losses | 48 |
| 40 |
| 20 |
| | — |
| (3 | ) | NM | | 4,158 |
| 3,323 |
| 25 |
|
Net income/(loss) | 2,048 |
| 2,249 |
| (9 | ) | | 1,472 |
| (664 | ) | NM | | 27,911 |
| 25,408 |
| 10 |
|
ROE | 25 | % | 32 | % | | | NM |
| NM |
| | | 15 | % | 14 | % | |
The following sections provide a comparative discussion of businessthe Firm’s results by segment results as of or for the three and nine months ended September 30, 20182019 versus the corresponding periodperiods in the prior year, unless otherwise specified.
|
| | | | |
CONSUMER & COMMUNITY BANKING |
ForRefer to pages 62–65 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 173 for a discussion of the business profile of CCB, refer to pages 57-61 of JPMorgan Chase’s 2017 Annual Report and Line of Business Metrics on page 180.CCB.
| | Selected income statement data | Selected income statement data | | | | | | | | | | | Selected income statement data | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions, except ratios) | 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
| 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
|
Revenue | | | | | | | | | | | | | | | | | | | | | | |
Lending- and deposit-related fees | $ | 936 |
| | $ | 885 |
| | 6 | % | | $ | 2,668 |
| | $ | 2,547 |
| | 5 | % | $ | 1,026 |
| | $ | 936 |
| | 10 | % | | $ | 2,827 |
| | $ | 2,668 |
| | 6 | % |
Asset management, administration and commissions | 626 |
| | 543 |
| | 15 |
| | 1,792 |
| | 1,644 |
| | 9 |
| 608 |
| | 626 |
| | (3 | ) | | 1,890 |
| | 1,792 |
| | 5 |
|
Mortgage fees and related income | 260 |
| | 428 |
| | (39 | ) | | 1,049 |
| | 1,235 |
| | (15 | ) | 886 |
| | 260 |
| | 241 |
| | 1,561 |
| | 1,049 |
| | 49 |
|
Card income | 1,219 |
| | 1,141 |
| | 7 |
| | 3,299 |
| | 3,019 |
| | 9 |
| 1,176 |
| | 1,219 |
| | (4 | ) | | 3,601 |
| | 3,299 |
| | 9 |
|
All other income | 1,135 |
| | 901 |
| | 26 |
| | 3,255 |
| | 2,454 |
| | 33 |
| 1,399 |
| | 1,135 |
| | 23 |
| | 3,989 |
| | 3,255 |
| | 23 |
|
Noninterest revenue | 4,176 |
| | 3,898 |
| | 7 |
| | 12,063 |
| | 10,899 |
| | 11 |
| 5,095 |
| | 4,176 |
| | 22 |
| | 13,868 |
| | 12,063 |
| | 15 |
|
Net interest income | 9,114 |
| | 8,135 |
| | 12 |
| | 26,321 |
| | 23,516 |
| | 12 |
| 9,164 |
| | 9,114 |
| | 1 |
| | 27,975 |
| | 26,321 |
| | 6 |
|
Total net revenue | 13,290 |
| | 12,033 |
| | 10 |
| | 38,384 |
| | 34,415 |
| | 12 |
| 14,259 |
| | 13,290 |
| | 7 |
| | 41,843 |
| | 38,384 |
| | 9 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Provision for credit losses | 980 |
| | 1,517 |
| | (35 | ) | | 3,405 |
| | 4,341 |
| | (22 | ) | 1,311 |
| | 980 |
| | 34 |
| | 3,745 |
| | 3,405 |
| | 10 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Noninterest expense | | | | | | | | | | | | | | | | | | | | | | |
Compensation expense(a) | 2,635 |
| | 2,548 |
| | 3 |
| | 7,916 |
| | 7,578 |
| | 4 |
| 2,683 |
| | 2,635 |
| | 2 |
| | 8,063 |
| | 7,916 |
| | 2 |
|
Noncompensation expense(b)(a) | 4,347 |
| | 3,947 |
| | 10 |
| | 12,854 |
| | 11,812 |
| | 9 |
| 4,607 |
| | 4,347 |
| | 6 |
| | 13,600 |
| | 12,854 |
| | 6 |
|
Total noninterest expense | 6,982 |
| | 6,495 |
| | 7 |
| | 20,770 |
| | 19,390 |
| | 7 |
| 7,290 |
| | 6,982 |
| | 4 |
| | 21,663 |
| | 20,770 |
| | 4 |
|
Income before income tax expense | 5,328 |
| | 4,021 |
| | 33 |
| | 14,209 |
| | 10,684 |
| | 33 |
| 5,658 |
| | 5,328 |
| | 6 |
| | 16,435 |
| | 14,209 |
| | 16 |
|
Income tax expense | 1,242 |
| | 1,468 |
| | (15 | ) | | 3,385 |
| | 3,920 |
| | (14 | ) | 1,385 |
| | 1,242 |
| | 12 |
| | 4,025 |
| | 3,385 |
| | 19 |
|
Net income | $ | 4,086 |
| | $ | 2,553 |
| | 60 |
| | $ | 10,824 |
| | $ | 6,764 |
| | 60 |
| $ | 4,273 |
| | $ | 4,086 |
| | 5 |
| | $ | 12,410 |
| | $ | 10,824 |
| | 15 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Revenue by line of business | | | | | | | | | | | | | | | | | | | | | | |
Consumer & Business Banking | $ | 6,385 |
| | $ | 5,408 |
| | 18 |
| | $ | 18,238 |
| | $ | 15,547 |
| | 17 |
| $ | 6,688 |
| | $ | 6,385 |
| | 5 |
| | $ | 20,053 |
| | $ | 18,238 |
| | 10 |
|
Home Lending | 1,306 |
| | 1,558 |
| | (16 | ) | | 4,162 |
| | 4,513 |
| | (8 | ) | 1,465 |
| | 1,306 |
| | 12 |
| | 3,929 |
| | 4,162 |
| | (6 | ) |
Card, Merchant Services & Auto | 5,599 |
| | 5,067 |
| | 10 |
| | 15,984 |
| | 14,355 |
| | 11 |
| 6,106 |
| | 5,599 |
| | 9 |
| | 17,861 |
| | 15,984 |
| | 12 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Mortgage fees and related income details: | | | | | | | | | | | | | | | | | | | | | | |
Net production revenue | 108 |
| | 158 |
| | (32 | ) | | 296 |
| | 451 |
| | (34 | ) | 738 |
| | 108 |
| | NM |
| | 1,291 |
| | 296 |
| | 336 |
|
Net mortgage servicing revenue(c)(b) | 152 |
| | 270 |
| | (44 | ) | | 753 |
| | 784 |
| | (4 | ) | 148 |
| | 152 |
| | (3 | ) | | 270 |
| | 753 |
| | (64 | ) |
Mortgage fees and related income | $ | 260 |
| | $ | 428 |
| | (39 | )% | | $ | 1,049 |
| | $ | 1,235 |
| | (15 | )% | $ | 886 |
| | $ | 260 |
| | 241 | % | | $ | 1,561 |
| | $ | 1,049 |
| | 49 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Financial ratios | | | | | | | | | | | | | | | | | | | | | | |
Return on equity | 31 | % | | 19 | % | | | | 27 | % | | 17 | % | | | 32 | % | | 31 | % | | | | 31 | % | | 27 | % | | |
Overhead ratio | 53 |
| | 54 |
| | | | 54 |
| | 56 |
| | | 51 |
| | 53 |
| | | | 52 |
| | 54 |
| | |
Note: In the discussion and the tables which follow, CCB presents certain financial measures which exclude the impact of PCI loans; these are non-GAAP financial measures.
| |
(a) | Effective inIncluded operating lease depreciation expense of $1.0 billion and $862 million for the first quarter ofthree months ended September 30, 2019 and 2018, certain operations staff were transferred from CCB to CB. The prior period amounts have been revised to conform with the current period presentation. For a further discussion of this transfer, refer to CB segment results on page 32.respectively, and $3.0 billion and $2.5 billion for nine months ended September 30, 2019 and 2018, respectively. |
| |
(b) | Included operating lease depreciation expenseMSR risk management results of $862$53 million and $688$(88) million for the three months ended September 30, 20182019 and 2017,2018, respectively and $2.5 billion and $1.9 billion for nine months ended September 30, 2018 and 2017, respectively. |
| |
(c) | Included MSR risk management results of $(88)$(200) million and $(23) million for the three months ended September 30, 2018 and 2017, respectively, and $(94) million and $(132) million for nine months ended September 30, 20182019 and 2017,2018, respectively. |
Quarterly results
Net income was $4.1$4.3 billion, an increase of 60%5%.
Net revenue was $13.3$14.3 billion, an increase of 10%7%. Net production revenue included approximately $350 million of gains on the sale of certain mortgage loans that were predominantly offset by a charge in net interest income for the unwind of the related internal funding from Treasury and Chief Investment Office (“CIO”) associated with these loans. The charge reflects the net present value of that funding and is recognized as interest income in Treasury and CIO. Refer to Corporate on pages 42–43 of this Form 10-Q and Funds Transfer Pricing (“FTP”) on page 60 of the Firm’s 2018 Form 10-K for further information.
Net interest income was $9.1$9.2 billion, up 12%,1% and includes the charge from the loan sales mentioned above. Excluding this charge, net interest income increased, driven by:
higher deposit marginsloan balances and margin expansion in Card, as well as growth in deposit balances in CBB, as well as margin expansion and higher loan balancesdeposit margins in Card,CBB,
partially offset by
lower loan balances due to loan sales, as well as loan spread compression from higher rates in Home Lending and Auto.Lending.
Noninterest revenue was $4.2$5.1 billion, up 7%,22% and includes the gain from the loan sales mentioned above. Excluding this gain, noninterest revenue increased, driven by:
higher net mortgage production revenue reflecting higher production volumes and margins, and
higher auto lease volume
higher card income due to
| |
– | lower new account origination costs, and |
| |
– | higher merchant processing fees on higher volumes |
largely offset by
| |
– | lower net interchange reflecting higher rewards costs and partner payments, largely offset by higher card sales volumes |
higher asset management fees reflecting an increase in client investment assets,
partially offset by
lower net mortgage servicing revenue, which remained relatively flat, reflecting lower operating revenue driven by the impact of reclassifying certain loans to held-for-sale and faster prepayment speeds on lower rates, offset by favorable MSR risk management results and lower mortgage servicing revenue on a lower level of third-party loans serviced, as well as lower net production revenue reflecting lower mortgage production margins and volumes.results.
Refer to Note 14 for further information regarding changes in value of the MSR asset and related hedges, and mortgage fees and related income.
Noninterest expense was $7.0$7.3 billion, up 7%4%, predominantly driven by:
technology, marketing and other investments in technology and marketing, and
the business, as well as higher auto lease depreciation.depreciation,
partially offset by
expense efficiencies and lower FDIC charges.
The provision for credit losses was $980 million, a decrease$1.3 billion, an increase of 35% from the prior year,34%, reflecting:
a $250 million reductionan increase in the allowance for loan losses in the residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies,
a $150 million addition to the allowance for loan losses in the credit card portfolio, due to loan growth and higher loss rates, as anticipated,
| |
– | higher net charge-offs on loan growth, in line with expectations, and |
| |
– | a $200 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio, compared to a $150 million addition in the prior year |
an increase in consumer, excluding credit card due to a $300 million addition in the prior year,
lower net charge-offs in the residential real estate portfolio, largely driven by a recovery of approximately $80 million from a loan sale, and
lower net charge-offs in the auto portfolio as the prior year included $49 million of incremental charge-offs recorded in accordance with regulatory guidance
| |
– | a $100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio in the prior year, and |
| |
– | lower net recoveries in the residential real estate portfolio as the prior year benefited from a larger recovery on a loan sale |
partially offset by
| |
– | a $50 million reduction in the allowance for loan losses in the business banking portfolio. |
higher net charge-offs in the credit card portfolio due to seasoning of more recent vintages, as anticipated.
Year-to-date results
Net income was $10.8$12.4 billion, an increase of 60%15%.
Net revenue was $38.4$41.8 billion, an increase of 12%9%. Net production revenue included gains on sales of certain mortgage loans that were predominantly offset by charges in net interest income for the unwind of the related internal funding from Treasury and CIO associated with these loans.
Net interest income was $26.3$28.0 billion, up 12%6%, and includes charges from the loan sales mentioned above. Excluding these charges, net interest income increased, driven by:
higher deposit margins and growth in deposit balances in CBB, as well as margin expansion and higher loan balances and margin expansion in Card,
partially offset by
lower loan balances due to loan sales, as well as loan spread compression from higher rates in Home Lending and Auto.Lending.
Noninterest revenue was $12.1$13.9 billion, up 11%15%, and includes gains from the loan sales mentioned above. Excluding these gains, noninterest revenue increased, driven by:
higher auto lease volume,
higher net mortgage production revenue reflecting higher production margins and volumes, and
the impact of the prior-year adjustment of approximately $330 million to the credit card incomerewards liability,
partially offset by
lower net mortgage servicing revenue driven by
| |
– | lower operating revenue reflecting faster prepayment speeds on lower rates and the impact of reclassifying certain loans to held-for-sale, as well as |
| |
– | lower MSR risk management results reflecting updates to model inputs. |
Noninterest expense was $21.7 billion, up 4%, driven by:
technology, marketing and other investments in the business, as well as higher auto lease depreciation,
partially offset by
expense efficiencies and lower FDIC charges.
The provision for credit losses was $3.7 billion, an increase of 10%, reflecting:
an increase in credit card due to
| |
– | lower new account origination costs,a $400 million addition to the allowance for loan losses reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio and loan growth, compared to a $150 million addition in the prior year, and |
| |
– | higher merchant processing feesnet charge-offs on higher volumesloan growth, in line with expectations |
partially offset by
a decrease in consumer, excluding credit card due to
| |
– | a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies, and a $100 million reduction in the allowance for loan losses in the non credit-impaired residential real estate portfolio, compared to a $250 million reduction in the PCI residential real estate portfolio in the prior year, and |
| |
– | a $50 million reduction in the allowance for loan losses in the business banking portfolio |
largely offset by
| |
– | lower net interchange reflecting higher rewards costs and partner payments, largely offset by higher card sales volumes. The rewards costs included an adjustment to the credit card rewards liability of approximately $330 millionrecoveries in the second quarter of 2018, driven by an increase in redemption rate assumptionsresidential real estate portfolio as the prior year benefited from larger recoveries on loan sales. |
higher deposit-related fees, as well as higher asset management fees reflecting an increase in client investment assets,
partially offset by
lower net production revenue reflecting lower mortgage production margins.
Noninterest expense was $20.8 billion, up 7%, driven by:
investments in technology and marketing, and
higher auto lease depreciation.
The provision for credit losses was $3.4 billion, a decrease of 22% from the prior year, reflecting:
a $150 million addition to the allowance for loan losses in the credit card portfolio, due to loan growth and higher loss rates, as anticipated, compared to a $650 million addition in the prior year,
lower net charge-offs in the residential real estate portfolio, largely driven by recoveries from loan sales, and
a $250 million reduction in the allowance for loan losses in the residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies, compared to a $175 million reduction in the non credit-impaired portfolio in the prior year
partially offset by
higher net charge-offs in the credit card portfolio due to seasoning of more recent vintages, as anticipated
the prior year included a $218 million write-down recorded in connection with the sale of the student loan portfolio.
|
| | | | | | | | | | | | | | | | | | | | | |
Selected metrics | | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except headcount) | 2018 |
| | 2017 |
| | Change |
| | 2018 | | 2017 | | Change |
|
Selected balance sheet data (period-end) | | | | | | | | | | | |
Total assets | $ | 560,432 |
| | $ | 537,459 |
| | 4 | % | | $ | 560,432 |
| | $ | 537,459 |
| | 4 | % |
Loans: | | | | | | | | | | | |
Consumer & Business Banking | 26,451 |
| | 25,275 |
| | 5 |
| | 26,451 |
| | 25,275 |
| | 5 |
|
Home equity | 37,461 |
| | 44,542 |
| | (16 | ) | | 37,461 |
| | 44,542 |
| | (16 | ) |
Residential mortgage | 205,389 |
| | 195,134 |
| | 5 |
| | 205,389 |
| | 195,134 |
| | 5 |
|
Home Lending | 242,850 |
| | 239,676 |
| | 1 |
| | 242,850 |
| | 239,676 |
| | 1 |
|
Card | 147,881 |
| | 141,313 |
| | 5 |
| | 147,881 |
| | 141,313 |
| | 5 |
|
Auto | 63,619 |
| | 65,102 |
| | (2 | ) | | 63,619 |
| | 65,102 |
| | (2 | ) |
Student | — |
| | 47 |
| | NM | | — |
| | 47 |
| | NM |
|
Total loans | 480,801 |
| | 471,413 |
| | 2 |
| | 480,801 |
| | 471,413 |
| | 2 |
|
Core loans | 425,917 |
| | 401,648 |
| | 6 |
| | 425,917 |
| | 401,648 |
| | 6 |
|
Deposits | 677,260 |
| | 653,460 |
| | 4 |
| | 677,260 |
| | 653,460 |
| | 4 |
|
Equity | 51,000 |
| | 51,000 |
| | — |
| | 51,000 |
| | 51,000 |
| | — |
|
Selected balance sheet data (average) | | | | | | | | | | | |
Total assets | $ | 551,080 |
| | $ | 531,959 |
| | 4 |
| | $ | 544,931 |
| | $ | 530,884 |
| | 3 |
|
Loans: | | | | | | | | | | | |
Consumer & Business Banking | 26,351 |
| | 25,166 |
| | 5 |
| | 26,104 |
| | 24,753 |
| | 5 |
|
Home equity | 38,211 |
| | 45,424 |
| | (16 | ) | | 39,951 |
| | 47,333 |
| | (16 | ) |
Residential mortgage | 204,689 |
| | 192,805 |
| | 6 |
| | 201,665 |
| | 187,954 |
| | 7 |
|
Home Lending | 242,900 |
| | 238,229 |
| | 2 |
| | 241,616 |
| | 235,287 |
| | 3 |
|
Card | 146,272 |
| | 141,172 |
| | 4 |
| | 143,986 |
| | 138,852 |
| | 4 |
|
Auto | 64,060 |
| | 65,175 |
| | (2 | ) | | 65,096 |
| | 65,321 |
| | — |
|
Student | — |
| | 58 |
| | NM | | — |
| | 3,847 |
| | NM |
|
Total loans | 479,583 |
| | 469,800 |
| | 2 |
| | 476,802 |
| | 468,060 |
| | 2 |
|
Core loans | 422,582 |
| | 398,319 |
| | 6 |
| | 415,662 |
| | 389,103 |
| | 7 |
|
Deposits | 674,211 |
| | 645,732 |
| | 4 |
| | 669,244 |
| | 636,257 |
| | 5 |
|
Equity | 51,000 |
| | 51,000 |
| | — |
| | 51,000 |
| | 51,000 |
| | — |
|
| | | | | | | | | | | |
Headcount(a)(b) | 129,891 |
| | 134,151 |
| | (3 | )% | | 129,891 |
| | 134,151 |
| | (3 | )% |
| |
(a) | Effective in the first quarter of 2018, certain operations staff were transferred from CCB to CB. The prior period amount has been revised to conform with the current period presentation. For further discussion of this transfer, refer to CB segment results on page 32. |
| |
(b) | During the third quarter of 2018, approximately 1,200 employees transferred from CCB to CIB as part of the reorganization of the Commercial Card business. |
|
| | | | | | | | | | | | | | | | | | | | | |
Selected metrics | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except ratio data) | 2018 |
|
| 2017 |
| | Change |
| | 2018 | | 2017 | | Change |
|
Credit data and quality statistics | | | | | | | | | | | |
Nonaccrual loans(a)(b) | $ | 3,520 |
|
| $ | 4,068 |
|
| (13 | )% |
| $ | 3,520 |
|
| $ | 4,068 |
|
| (13 | )% |
| | | | | | | | | | | |
Net charge-offs/(recoveries)(c) | | | | | | | | | | | |
Consumer & Business Banking | 68 |
| | 71 |
| | (4 | ) | | 171 |
| | 184 |
| | (7 | ) |
Home equity | (12 | ) | | 13 |
| | NM |
| | (3 | ) | | 67 |
| | NM |
|
Residential mortgage | (105 | ) | | (2 | ) | | NM |
| | (252 | ) | | (3 | ) | | NM |
|
Home Lending | (117 | ) | | 11 |
| | NM |
| | (255 | ) | | 64 |
| | NM |
|
Card | 1,073 |
| | 1,019 |
| | 5 |
| | 3,407 |
| | 3,049 |
| | 12 |
|
Auto | 56 |
| | 116 |
| | (52 | ) | | 182 |
| | 245 |
| | (26 | ) |
Student | — |
| | — |
| | — |
| | — |
| | 498 |
| (h) | NM |
|
Total net charge-offs/(recoveries) | $ | 1,080 |
| | $ | 1,217 |
| (g) | (11 | ) | | $ | 3,505 |
| | $ | 4,040 |
| (h) | (13 | ) |
| | | | | | | | | | | |
Net charge-off/(recovery) rate(c) | | | | | | | | | | | |
Consumer & Business Banking | 1.02 | % | | 1.12 | % | | | | 0.88 | % | | 0.99 | % | | |
Home equity(d) | (0.17 | ) | | 0.15 |
| | | | (0.01 | ) | | 0.25 |
| | |
Residential mortgage(d) | (0.22 | ) | | — |
| | | | (0.18 | ) | | — |
| | |
Home Lending(d) | (0.21 | ) | | 0.02 |
| | | | (0.16 | ) | | 0.04 |
| | |
Card | 2.91 |
| | 2.87 |
| | | | 3.16 |
| | 2.94 |
| | |
Auto | 0.35 |
| | 0.71 |
| | | | 0.37 |
| | 0.50 |
| | |
Student | — |
| | — |
| | | | — |
| | NM |
| | |
Total net charge-off/(recovery) rate(d) | 0.95 |
| | 1.10 |
| (g) | | | 1.05 |
| | 1.25 |
| (h) | |
| | | | | | | | | | | |
30+ day delinquency rate | | | | | | | | | | | |
Home Lending(e)(f) | 0.81 | % | | 1.03 | % | | | | 0.81 | % | | 1.03 | % | | |
Card | 1.75 |
| | 1.76 |
| | | | 1.75 |
| | 1.76 |
| | |
Auto | 0.82 |
| | 0.93 |
| | | | 0.82 |
| | 0.93 |
| | |
| | | | | | | | | | | |
90+ day delinquency rate — Card | 0.85 |
| | 0.86 |
| | | | 0.85 |
| | 0.86 |
| | |
| | | | | | | | | | | |
Allowance for loan losses | | | | | | | | | | | |
Consumer & Business Banking | $ | 796 |
| | $ | 796 |
| | — |
| | $ | 796 |
| | $ | 796 |
| | — |
|
Home Lending, excluding PCI loans | 1,003 |
| | 1,153 |
| | (13 | ) | | 1,003 |
| | 1,153 |
| | (13 | ) |
Home Lending — PCI loans(c) | 1,824 |
| | 2,245 |
| | (19 | ) | | 1,824 |
| | 2,245 |
| | (19 | ) |
Card | 5,034 |
| | 4,684 |
| | 7 |
| | 5,034 |
| | 4,684 |
| | 7 |
|
Auto | 464 |
| | 499 |
| | (7 | ) | | 464 |
| | 499 |
| | (7 | ) |
Total allowance for loan losses(c) | $ | 9,121 |
| | $ | 9,377 |
| | (3 | )% | | $ | 9,121 |
| | $ | 9,377 |
| | (3 | )% |
|
| | | | | | | | | | | | | | | | | | | | | |
Selected metrics | | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except headcount) | 2019 |
| | 2018 |
| | Change |
| | 2019 | | 2018 | | Change |
|
Selected balance sheet data (period-end) | | | | | | | | | | | |
Total assets | $ | 532,487 |
| | $ | 560,432 |
| | (5 | )% | | $ | 532,487 |
| | $ | 560,432 |
| | (5 | )% |
Loans: | | | | | | | | | | | |
Consumer & Business Banking | 26,699 |
| | 26,451 |
| | 1 |
| | 26,699 |
| | 26,451 |
| | 1 |
|
Home equity | 31,552 |
| | 37,461 |
| | (16 | ) | | 31,552 |
| | 37,461 |
| | (16 | ) |
Residential mortgage | 171,787 |
| | 205,389 |
| | (16 | ) | | 171,787 |
| | 205,389 |
| | (16 | ) |
Home Lending | 203,339 |
| | 242,850 |
| | (16 | ) | | 203,339 |
| | 242,850 |
| | (16 | ) |
Card | 159,571 |
| | 147,881 |
| | 8 |
| | 159,571 |
| | 147,881 |
| | 8 |
|
Auto | 61,410 |
| | 63,619 |
| | (3 | ) | | 61,410 |
| | 63,619 |
| | (3 | ) |
Total loans | 451,019 |
| | 480,801 |
| | (6 | ) | | 451,019 |
| | 480,801 |
| | (6 | ) |
Core loans | 405,662 |
| | 425,917 |
| | (5 | ) | | 405,662 |
| | 425,917 |
| | (5 | ) |
Deposits | 701,170 |
| | 677,260 |
| | 4 |
| | 701,170 |
| | 677,260 |
| | 4 |
|
Equity | 52,000 |
| | 51,000 |
| | 2 |
| | 52,000 |
| | 51,000 |
| | 2 |
|
Selected balance sheet data (average) | | | | | | | | | | | |
Total assets | $ | 538,500 |
| | $ | 551,080 |
| | (2 | ) | | $ | 544,833 |
| | $ | 544,931 |
| | — |
|
Loans: | | | | | | | | | | | |
Consumer & Business Banking | 26,550 |
| | 26,351 |
| | 1 |
| | 26,537 |
| | 26,104 |
| | 2 |
|
Home equity | 32,215 |
| | 38,211 |
| | (16 | ) | | 33,694 |
| | 39,951 |
| | (16 | ) |
Residential mortgage | 181,157 |
| | 204,689 |
| | (11 | ) | | 191,881 |
| | 201,665 |
| | (5 | ) |
Home Lending | 213,372 |
| | 242,900 |
| | (12 | ) | | 225,575 |
| | 241,616 |
| | (7 | ) |
Card | 158,168 |
| | 146,272 |
| | 8 |
| | 154,375 |
| | 143,986 |
| | 7 |
|
Auto | 61,371 |
| | 64,060 |
| | (4 | ) | | 62,118 |
| | 65,096 |
| | (5 | ) |
Total loans | 459,461 |
| | 479,583 |
| | (4 | ) | | 468,605 |
| | 476,802 |
| | (2 | ) |
Core loans | 413,036 |
| | 422,582 |
| | (2 | ) | | 419,851 |
| | 415,662 |
| | 1 |
|
Deposits | 693,980 |
| | 674,211 |
| | 3 |
| | 688,676 |
| | 669,244 |
| | 3 |
|
Equity | 52,000 |
| | 51,000 |
| | 2 |
| | 52,000 |
| | 51,000 |
| | 2 |
|
| | | | | | | | | | | |
Headcount | 127,687 |
| | 129,891 |
| | (2 | )% | | 127,687 |
| | 129,891 |
| | (2 | )% |
|
| | | | | | | | | | | | | | | | | | | | | |
Selected metrics | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except ratio data) | 2019 |
|
| 2018 |
| | Change |
| | 2019 | | 2018 | | Change |
|
Credit data and quality statistics | | | | | | | | | | | |
Nonaccrual loans(a)(b) | $ | 3,099 |
|
| $ | 3,520 |
|
| (12 | )% |
| $ | 3,099 |
|
| $ | 3,520 |
|
| (12 | )% |
| | | | | | | | | | | |
Net charge-offs/(recoveries)(c) | | | | | | | | | | | |
Consumer & Business Banking | 79 |
| | 68 |
| | 16 |
| | 204 |
| | 171 |
| | 19 |
|
Home equity | (25 | ) | | (12 | ) | | (108 | ) | | (41 | ) | | (3 | ) | | NM |
|
Residential mortgage | (17 | ) | | (105 | ) | | 84 |
| | (34 | ) | | (252 | ) | | 87 |
|
Home Lending | (42 | ) | | (117 | ) | | 64 |
| | (75 | ) | | (255 | ) | | 71 |
|
Card | 1,175 |
| | 1,073 |
| | 10 |
| | 3,617 |
| | 3,407 |
| | 6 |
|
Auto | 49 |
| | 56 |
| | (13 | ) | | 149 |
| | 182 |
| | (18 | ) |
Total net charge-offs/(recoveries) | $ | 1,261 |
| | $ | 1,080 |
| | 17 |
| | $ | 3,895 |
| | $ | 3,505 |
| | 11 |
|
| | | | | | | | | | | |
Net charge-off/(recovery) rate(c) | | | | | | | | | | | |
Consumer & Business Banking | 1.18 | % | | 1.02 | % | | | | 1.03 | % | | 0.88 | % | | |
Home equity(d) | (0.41 | ) | | (0.17 | ) | | | | (0.22 | ) | | (0.01 | ) | | |
Residential mortgage(d) | (0.04 | ) | | (0.22 | ) | | | | (0.03 | ) | | (0.18 | ) | | |
Home Lending(d) | (0.09 | ) | | (0.21 | ) | | | | (0.05 | ) | | (0.16 | ) | | |
Card | 2.95 |
| | 2.91 |
| | | | 3.13 |
| | 3.16 |
| | |
Auto | 0.32 |
| | 0.35 |
| | | | 0.32 |
| | 0.37 |
| | |
Total net charge-off/(recovery) rate(d) | 1.16 |
| | 0.95 |
| | | | 1.17 |
| | 1.05 |
| | |
| | | | | | | | | | | |
30+ day delinquency rate | | | | | | | | | | | |
Home Lending(e)(f) | 0.78 | % | | 0.81 | % | | | | 0.78 | % | | 0.81 | % | | |
Card | 1.84 |
| | 1.75 |
| | | | 1.84 |
| | 1.75 |
| | |
Auto | 0.88 |
| | 0.82 |
| | | | 0.88 |
| | 0.82 |
| | |
| | | | | | | | | | | |
90+ day delinquency rate — Card | 0.90 |
| | 0.85 |
| | | | 0.90 |
| | 0.85 |
| | |
| | | | | | | | | | | |
Allowance for loan losses | | | | | | | | | | | |
Consumer & Business Banking | $ | 746 |
| | $ | 796 |
| | (6 | ) | | $ | 746 |
| | $ | 796 |
| | (6 | ) |
Home Lending, excluding PCI loans | 903 |
| | 1,003 |
| | (10 | ) | | 903 |
| | 1,003 |
| | (10 | ) |
Home Lending — PCI loans(c) | 1,256 |
| | 1,824 |
| | (31 | ) | | 1,256 |
| | 1,824 |
| | (31 | ) |
Card | 5,583 |
| | 5,034 |
| | 11 |
| | 5,583 |
| | 5,034 |
| | 11 |
|
Auto | 465 |
| | 464 |
| | — |
| | 465 |
| | 464 |
| | — |
|
Total allowance for loan losses(c) | $ | 8,953 |
| | $ | 9,121 |
| | (2 | )% | | $ | 8,953 |
| | $ | 9,121 |
| | (2 | )% |
| |
(a) | Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing. |
| |
(b) | At September 30, 20182019 and 2017,2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.9$1.6 billion and $4.0$2.9 billion, respectively. These amounts have been excluded based upon the government guarantee. |
| |
(c) | Net charge-offs/(recoveries) and the net charge-off/(recovery) rates for the three months ended September 30, 2019 and 2018, and 2017, excluded $58$43 million and $20$58 million, respectively, and for nine months ended September 30, 2019 and 2018, and 2017, excluded $151$132 million and $66$151 million, respectively, of write-offs in the PCI portfolio. These write-offs decreased the allowance for loan losses for PCI loans. For further information on PCI write-offs, referRefer to Summary of changes in the allowance for credit losses on page 70.68 for further information on PCI write-offs. |
| |
(d) | Excludes the impact of PCI loans. For the three months ended September 30, 20182019 and 2017,2018, the net charge-off/(recovery) rates including the impact of PCI loans were as follows: (1) home equity of (0.12)(0.31)% and 0.11%(0.12)%, respectively; (2) residential mortgage of (0.20)(0.04)% and -%(0.20)%, respectively; (3) Home Lending of (0.19)(0.08)% and 0.02%(0.19)%, respectively; and (4) total CCB of 0.89%1.10% and 1.03%0.89%, respectively. For the nine months ended September 30, 20182019 and 2017,2018, the net charge-off/(recovery) rates including theincluded impact of PCI loans were as follows: (1) home equity of (0.01)(0.16)% and 0.19%(0.01)%, respectively; (2) residential mortgage of (0.17)(0.02)% and -%(0.17)%, respectively; (3) Home Lending of (0.14)(0.04)% and 0.04%(0.14)%, respectively; and (4) total CCB of 0.98%1.12% and 1.16%0.98%, respectively. |
| |
(e) | At September 30, 20182019 and 2017,2018, excluded mortgage loans insured by U.S. government agencies of $4.5$2.7 billion and $5.9$4.5 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee. |
| |
(f) | Excludes PCI loans. The 30+ day delinquency rate for PCI loans was 9.39%8.56% and 9.30%9.39% at September 30, 2019 and 2018, and 2017, respectively. |
| |
(g) | Net charge-offs and net charge-off rates for the three months ended September 30, 2017 included $63 million of incremental charge-offs recorded in accordance with regulatory guidance regarding the timing of loss recognition for certain auto and residential real estate loans in bankruptcy and auto loans where assets were acquired in loan satisfaction. |
| |
(h) | Excluding net charge-offs of $467 million related to the student loan portfolio sale, the total net charge-off rate for the nine months ended September 30, 2017 would have been 1.10%. |
| | Selected metrics | Selected metrics | | | | | | | | | | | Selected metrics | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in billions, except ratios and where otherwise noted) | 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
| 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
|
Business Metrics | | | | | | | | | | | | | | | | | | | | | | |
Number of branches | 5,066 |
| | 5,174 |
| | (2 | )% | | 5,066 |
| | 5,174 |
| | (2 | )% | 4,949 |
| | 5,066 |
| | (2 | )% | | 4,949 |
| | 5,066 |
| | (2 | )% |
Active digital customers (in thousands)(a) | 48,664 |
| | 46,349 |
| | 5 |
| | 48,664 |
| | 46,349 |
| | 5 |
| 51,843 |
| | 48,664 |
| | 7 |
| | 51,843 |
| | 48,664 |
| | 7 |
|
Active mobile customers (in thousands)(b) | 32,538 |
| | 29,273 |
| | 11 |
| | 32,538 |
| | 29,273 |
| | 11 |
| 36,510 |
| | 32,538 |
| | 12 |
| | 36,510 |
| | 32,538 |
| | 12 |
|
Debit and credit card sales volume | $ | 259.0 |
|
| $ | 231.1 |
|
| 12 |
| | $ | 746.4 |
|
| $ | 671.8 |
| | 11 |
| $ | 282.2 |
|
| $ | 259.0 |
|
| 9 |
| | $ | 818.8 |
|
| $ | 746.4 |
| | 10 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Consumer & Business Banking | | | | | | | | | | | | | | | | | | | | | | |
Average deposits | $ | 659.5 |
| | $ | 630.4 |
| | 5 |
| | $ | 655.3 |
| | $ | 621.7 |
| | 5 |
| $ | 678.3 |
| | $ | 659.5 |
| | 3 |
| | $ | 674.5 |
| | $ | 655.3 |
| | 3 |
|
Deposit margin | 2.43 | % | | 2.02 | % | | | | 2.33 | % | | 1.95 | % | | | 2.47 | % | | 2.43 | % | | | | 2.56 | % | | 2.33 | % | | |
Business banking origination volume | $ | 1.6 |
| | $ | 1.7 |
| | (2 | ) | | $ | 5.2 |
| | $ | 5.6 |
| | (6 | ) | $ | 1.6 |
| | $ | 1.6 |
| | (5 | ) | | $ | 4.8 |
| | $ | 5.2 |
| | (8 | ) |
Client investment assets | 298.4 |
| | 262.5 |
| | 14 |
| | 298.4 |
| | 262.5 |
| | 14 |
| 337.9 |
| | 298.4 |
| | 13 |
| | 337.9 |
| | 298.4 |
| | 13 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Home Lending | | | | | | | | | | | | | | | | | | | | | | |
Mortgage origination volume by channel | | | | | | | | | | | | | | | | | | | | | | |
Retail | $ | 10.6 |
| | $ | 10.6 |
| | — |
| | $ | 29.3 |
| | $ | 29.3 |
| | — |
| $ | 14.2 |
| | $ | 10.6 |
| | 34 |
| | $ | 34.6 |
| | $ | 29.3 |
| | 18 |
|
Correspondent | 11.9 |
| | 16.3 |
| | (27 | ) | | 32.9 |
| | 43.9 |
| | (25 | ) | 18.2 |
| | 11.9 |
| | 53 |
| | 37.3 |
| | 32.9 |
| | 13 |
|
Total mortgage origination volume(c) | $ | 22.5 |
| | $ | 26.9 |
| | (16 | ) | | $ | 62.2 |
| | $ | 73.2 |
| | (15 | ) | $ | 32.4 |
| | $ | 22.5 |
| | 44 |
| | $ | 71.9 |
| | $ | 62.2 |
| | 16 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Total loans serviced (period-end) | $ | 798.6 |
| | $ | 821.6 |
| | (3 | ) | | $ | 798.6 |
| | $ | 821.6 |
| | (3 | ) | $ | 774.8 |
| | $ | 798.6 |
| | (3 | ) | | $ | 774.8 |
| | $ | 798.6 |
| | (3 | ) |
Third-party mortgage loans serviced (period-end) | 526.5 |
| | 556.9 |
| | (5 | ) | | 526.5 |
| | 556.9 |
| | (5 | ) | 535.8 |
| | 526.5 |
| | 2 |
| | 535.8 |
| | 526.5 |
| | 2 |
|
MSR carrying value (period-end) | 6.4 |
| | 5.7 |
| | 12 |
| | 6.4 |
| | 5.7 |
| | 12 |
| 4.4 |
| | 6.4 |
| | (31 | ) | | 4.4 |
| | 6.4 |
| | (31 | ) |
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) | 1.22 | % | | 1.02 | % | | | | 1.22 | % | | 1.02 | % | | | 0.82 | % | | 1.22 | % | | | | 0.82 | % | | 1.22 | % | | |
| | | | | | | | | | | | | | | | | | | | | | |
MSR revenue multiple(d) | 3.49 | x | | 2.91 | x | | | | 3.49 | x | | 2.91 | x | | | 2.41 | x | | 3.49 | x | | | | 2.34 | x | | 3.49 | x | | |
| | | | | | | | | | | | | | | | | | | | | | |
Card, excluding Commercial Card | | | | | | | | | | | | | | | | | | | | | | |
Credit card sales volume | $ | 176.0 |
| | $ | 157.7 |
| | 12 |
| | $ | 507.1 |
| | $ | 454.2 |
| | 12 |
| $ | 193.6 |
| | $ | 176.0 |
| | 10 |
| | $ | 558.6 |
| | $ | 507.1 |
| | 10 |
|
New accounts opened (in millions) | 1.9 |
| | 1.9 |
| | — |
| | 5.8 |
| | 6.5 |
| | (11 | ) | |
| | | | | | | | | | | | | | | | | | | | | | |
Card Services | | | | | | | | | | | | | | | | | | | | | | |
Net revenue rate | 11.50 | % | | 10.95 | % | | | | 11.17 | % | | 10.55 | % | | | 11.40 | % | | 11.50 | % | | | | 11.50 | % | | 11.17 | % | | |
| | | | | | | | | | | | | | | | | | | | | | |
Merchant Services | | | | | | | | | | | | | | | | | | | | | | |
Merchant processing volume | $ | 343.8 |
| | $ | 301.6 |
| | 14 |
| | $ | 990.9 |
| | $ | 870.3 |
| | 14 |
| $ | 380.5 |
| | $ | 343.8 |
| | 11 |
| | $ | 1,108.6 |
| | $ | 990.9 |
| | 12 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Auto | | | | | | | | | | | | | | | | | | | | | | |
Loan and lease origination volume | $ | 8.1 |
| | $ | 8.8 |
| | (8 | ) | | $ | 24.8 |
| | $ | 25.1 |
| | (1 | ) | $ | 9.1 |
| | $ | 8.1 |
| | 12 |
| | $ | 25.5 |
| | $ | 24.8 |
| | 3 |
|
Average auto operating lease assets | 19.2 |
| | 15.6 |
| | 23 | % | | 18.4 |
| | 14.7 |
| | 25 | % | 21.8 |
| | 19.2 |
| | 14 | % | | 21.3 |
| | 18.4 |
| | 16 | % |
| |
(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) | Firmwide mortgage origination volume was $24.5$35.8 billion and $29.2$24.5 billion for the three months ended September 30, 2019 and 2018, respectively, and 2017, respectively,$78.5 billion and $68.2 billion and $81.0 billion for the nine months ended September 30, 20182019 and 2017,2018, respectively. |
| |
(d) | Represents the ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) divided by the ratio of annualized loan servicing-related revenue to third-party mortgage loans serviced (average). |
|
| | | | |
CORPORATE & INVESTMENT BANK |
ForRefer to pages 66–70 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 173 for a discussion of the business profile of CIB, refer to pages 62–66 of JPMorgan Chase’s 2017 Annual Report and Line of Business Metrics on CIB.page 180.
Effective January 1, 2018, the Firm adopted several new accounting standards; the guidance which had the most significant impact on the CIB segment results was revenue recognition, and recognition and measurement of financial assets. The revenue recognition guidance was applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
| | Selected income statement data | Selected income statement data | | | | | | | | | Selected income statement data | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions, except ratios) | 2018 | | 2017 | | Change | | 2018 | | 2017 | | Change | 2019 | | 2018 | | Change | | 2019 | | 2018 | | Change |
Revenue | | | | | | | | | | | | | | | | | | | | | | |
Investment banking fees | $ | 1,823 |
| | $ | 1,844 |
| | (1 | )% | | $ | 5,658 |
| | $ | 5,558 |
| | 2 | % | $ | 1,981 |
| | $ | 1,823 |
| | 9 | % | | $ | 5,671 |
| | $ | 5,658 |
| | — |
|
Principal transactions | 3,091 |
| | 2,673 |
| | 16 |
| | 10,786 |
| | 9,108 |
| | 18 |
| 3,418 |
| | 3,091 |
| | 11 |
| | 11,466 |
| | 10,786 |
| | 6 |
|
Lending- and deposit-related fees | 373 |
| | 374 |
| | — |
| | 1,136 |
| | 1,149 |
| | (1 | ) | 360 |
| | 373 |
| | (3 | ) | | 1,095 |
| | 1,136 |
| | (4 | ) |
Asset management, administration and commissions | 1,130 |
| | 1,041 |
| | 9 |
| | 3,416 |
| | 3,161 |
| | 8 |
| 1,197 |
| | 1,130 |
| | 6 |
| | 3,447 |
| | 3,416 |
| | 1 |
|
All other income | 88 |
| | 187 |
| | (53 | ) | | 958 |
| | 622 |
| | 54 |
| 226 |
| | 88 |
| | 157 |
| | 649 |
| | 958 |
| | (32 | ) |
Noninterest revenue | 6,505 |
| | 6,119 |
| | 6 |
| | 21,954 |
| | 19,598 |
| | 12 |
| 7,182 |
| | 6,505 |
| | 10 |
| | 22,328 |
| | 21,954 |
| | 2 |
|
Net interest income | 2,300 |
| | 2,496 |
| | (8 | ) | | 7,257 |
| | 7,541 |
| | (4 | ) | 2,156 |
| | 2,300 |
| | (6 | ) | | 6,499 |
| | 7,257 |
| | (10 | ) |
Total net revenue(a) | 8,805 |
| | 8,615 |
| | 2 |
| | 29,211 |
| | 27,139 |
| | 8 |
| 9,338 |
| | 8,805 |
| | 6 |
| | 28,827 |
| | 29,211 |
| | (1 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Provision for credit losses | (42 | ) | | (26 | ) | | (62 | ) | | (142 | ) | | (175 | ) | | 19 |
| 92 |
| | (42 | ) | | NM |
| | 179 |
| | (142 | ) | | NM |
|
| | | | | | | | | | | | | | | | | | | | | | |
Noninterest expense | | | | | | | | | | | | | | | | | | | | | | |
Compensation expense | 2,402 |
| | 2,284 |
| | 5 |
| | 8,158 |
| | 7,534 |
| | 8 |
| 2,734 |
| | 2,402 |
| | 14 |
| | 8,381 |
| | 8,158 |
| | 3 |
|
Noncompensation expense | 2,773 |
| | 2,509 |
| | 11 |
| | 8,079 |
| | 7,320 |
| | 10 |
| 2,614 |
| | 2,773 |
| | (6 | ) | | 7,907 |
| | 8,079 |
| | (2 | ) |
Total noninterest expense | 5,175 |
| | 4,793 |
| | 8 |
| | 16,237 |
| | 14,854 |
| | 9 |
| 5,348 |
| | 5,175 |
| | 3 |
| | 16,288 |
| | 16,237 |
| | — |
|
Income before income tax expense | 3,672 |
| | 3,848 |
| | (5 | ) | | 13,116 |
| | 12,460 |
| | 5 |
| 3,898 |
| | 3,672 |
| | 6 |
| | 12,360 |
| | 13,116 |
| | (6 | ) |
Income tax expense | 1,046 |
| | 1,302 |
| | (20 | ) | | 3,318 |
| | 3,963 |
| | (16 | ) | 1,089 |
| | 1,046 |
| | 4 |
| | 3,365 |
| | 3,318 |
| | 1 |
|
Net income | $ | 2,626 |
| | $ | 2,546 |
| | 3 | % | | $ | 9,798 |
| | $ | 8,497 |
| | 15 | % | $ | 2,809 |
| | $ | 2,626 |
| | 7 | % | | $ | 8,995 |
| | $ | 9,798 |
| | (8 | )% |
Financial ratios | | | | | | | | | | | | | | | | | | | | | | |
Return on equity | 14 | % | | 13 | % | | | | 18 | % | | 15 | % | | | 13 | % | | 14 | % | | | | 14 | % | | 18 | % | | |
Overhead ratio | 59 |
| | 56 |
| | | | 56 |
| | 55 |
| | | 57 |
| | 59 |
| | | | 57 |
| | 56 |
| | |
Compensation expense as percentage of total net revenue | 27 |
| | 27 |
| | | | 28 |
| | 28 |
| | | 29 |
| | 27 |
| | | | 29 |
| | 28 |
| | |
| |
(a) | IncludedIncludes tax-equivalent adjustments, predominantly due to income tax credits related to alternative energy investments; income tax credits and amortization of the cost of investments in affordable housing projects; and tax-exempt income from municipal bonds of $354$527 million and $505$354 million for the three months ended September 30, 20182019 and 2017,2018, respectively, and $1.2$1.6 billion and $1.6$1.2 billion for the nine months ended September 30, 20182019 and 2017,2018, respectively. |
| | Selected income statement data | Selected income statement data | | | | | | | | | Selected income statement data | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 | | 2017 | | Change | | 2018 | | 2017 | | Change | 2019 | | 2018 | | Change | | 2019 | | 2018 | | Change |
Revenue by business | | | | | | | | | | | | | | | | | | | | | | |
Investment Banking | $ | 1,731 |
| | $ | 1,730 |
| | — |
| | $ | 5,267 |
| | $ | 5,175 |
| | 2 | % | $ | 1,871 |
| | $ | 1,731 |
| | 8 | % | | $ | 5,392 |
| | $ | 5,267 |
| | 2 | % |
Treasury Services | 1,183 |
| | 1,058 |
| | 12 |
| | 3,480 |
| | 3,094 |
| | 12 |
| 1,101 |
| | 1,183 |
| | (7 | ) | | 3,383 |
| | 3,480 |
| | (3 | ) |
Lending | 331 |
| | 331 |
| | — |
| | 954 |
| | 1,093 |
| | (13 | ) | 329 |
| | 331 |
| | (1 | ) | | 1,006 |
| | 954 |
| | 5 |
|
Total Banking | 3,245 |
| | 3,119 |
| | 4 |
| | 9,701 |
| | 9,362 |
| | 4 |
| 3,301 |
| | 3,245 |
| | 2 |
| | 9,781 |
| | 9,701 |
| | 1 |
|
Fixed Income Markets | 2,844 |
| | 3,164 |
| | (10 | ) | | 10,850 |
| | 10,595 |
| | 2 |
| 3,557 |
| | 2,844 |
| | 25 |
| | 10,972 |
| | 10,850 |
| | 1 |
|
Equity Markets | 1,595 |
| | 1,363 |
| | 17 |
| | 5,571 |
| | 4,555 |
| | 22 |
| 1,517 |
| | 1,595 |
| | (5 | ) | | 4,986 |
| | 5,571 |
| | (11 | ) |
Securities Services | 1,057 |
| | 1,007 |
| | 5 |
| | 3,219 |
| | 2,905 |
| | 11 |
| 1,034 |
| | 1,057 |
| | (2 | ) | | 3,093 |
| | 3,219 |
| | (4 | ) |
Credit Adjustments & Other(a) | 64 |
| | (38 | ) | | NM |
| | (130 | ) | | (278 | ) | | 53 |
| (71 | ) | | 64 |
| | NM |
| | (5 | ) | | (130 | ) | | 96 |
|
Total Markets & Investor Services | 5,560 |
| | 5,496 |
| | 1 |
| | 19,510 |
| | 17,777 |
| | 10 |
| |
Total Markets & Securities Services | | 6,037 |
| | 5,560 |
| | 9 |
| | 19,046 |
| | 19,510 |
| | (2 | ) |
Total net revenue | $ | 8,805 |
| | $ | 8,615 |
| | 2 | % | | $ | 29,211 |
| | $ | 27,139 |
| | 8 | % | $ | 9,338 |
| | $ | 8,805 |
| | 6 | % | | $ | 28,827 |
| | $ | 29,211 |
| | (1 | )% |
| |
(a) | Consists primarily of credit valuation adjustments (“CVA”) managed centrally within CIB and funding valuation adjustments (“FVA”) on derivatives. Results 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. |
allocated to Fixed Income Markets and Equity Markets.
Quarterly results
Net income was $2.6$2.8 billion, up 3%7%.
Net revenue was $8.8$9.3 billion, up 6%.
Banking revenue was $3.3 billion, up 2%.
Banking revenue was $3.2 billion, up 4%. Investment Banking revenue was $1.7$1.9 billion, flat compared to a strong prior year,up 8%, driven by higher debt and equity underwriting fees, partially offset by lower debt underwriting and advisory fees. The Firm maintained its #1 ranking for Global Investment Banking fees with overall share gains, according to Dealogic. Equity underwriting fees were $420 million, up 40%
| |
– | Debt underwriting fees were $961 million, up 17%, reflecting wallet share gains despite a decline in industry-wide fees, driven by participation in large acquisition financing deals and increased activity in investment-grade bonds. |
| |
– | Equity underwriting fees were $514 million, up 22%, driven by wallet share gains primarily in the IPO and convertible markets. |
| |
– | Advisory fees were $506 million, down 13%, driven by a decline in industry-wide fees compared to a strong prior year. |
Treasury Services revenue was $1.1 billion, down 7%, driven by adeposit margin compression partially offset by fee growth and higher share of fees including a strong performance in the IPO market. Advisory fees were $581balances.
Lending revenue was $329 million, down 6%1%.
Markets & Securities Services revenue was $6.0 billion, up 9%. Markets revenue was $5.1 billion, up 14%.
Fixed Income Markets revenue was $3.6 billion, up 25% compared to the prior year which reflected less favorable market conditions. The current quarter results were driven by strong client activity across products primarily in Rates, agency mortgage trading within Securitized Products and Commodities.
Equity Markets revenue was $1.5 billion, down 5% compared to a strong prior year. Debt underwriting feesThe current quarter results were $822 million, down 11% compared to a strong prior year, driven by declines in industry-wide fee levels. Treasury Services revenue was $1.2 billion, up 12%, predominantly driven by the impact of higher interest rates and growth in operating deposits.
Markets & Investor Services revenue was $5.6 billion, up 1%. Fixed Income Markets revenue was $2.8 billion, down 10%. Excluding the reduction of approximately $140 million in tax-equivalent adjustments as a result of the TCJA, Fixed Income Markets revenue was down 6%. Fixed Income Markets reflected lower revenue in Rates, Fixed Income Financing, Creditderivatives reflecting lower client activity and Securitized Products as a result of compressed margins and tighter spreads in competitive markets. This decline wasless favorable market conditions which were partially offset by increased activity levelshigher revenue in Currencies & Emerging Markets, and higher Commodities revenue compared to a challenging prior year. Equity Markets revenue was $1.6 billion, up 17%, driven by strength across derivatives, prime brokerage and Cash Equities, reflecting strong client activity. Equities.
Securities Services revenue was $1.1$1.0 billion, up 5%down 2%, drivenwith deposit margin compression largely offset by higher interest rates and operating deposit growth, as well as higher asset-based fees driven by net client inflows.organic growth.
The provision for credit losses was $92 million, largely driven by a net addition to the allowance for credit losses related to select emerging market client downgrades. The prior year was a benefit of $42 million reflecting a net recovery related to a loan sale. The prior year was a benefit of $26 million.
Noninterest expense was $5.2$5.3 billion, up 8%3%, predominantly due to a combination ofdriven by higher legal expense, highervolume- and revenue-related expenses and investments, including compensation expense, largely driven by investments in technology and bankers, and higher volume-related transaction costs.
offset
by lower legal expenses and FDIC charges.
Year-to-date results
Net income was $9.8$9.0 billion, up 15%down 8%.
Net revenue was $29.2$28.8 billion, up 8%down 1%.
Banking revenue was $9.7$9.8 billion, up 4%. 1% compared to the prior year.
Investment Banking revenue was $5.3$5.4 billion, up 2%, driven bywith higher equitydebt underwriting, and advisory fees, largelypredominantly offset by lower debtadvisory and equity underwriting fees. The Firm maintained its #1 ranking for Global Investment Banking fees with overall share gains, according to Dealogic. Equity underwriting fees were $1.3 billion, up 21% driven by a higher share of fees, primarily due to strong performance in the IPO market. Advisory fees were $1.8 billion, up 10%, driven by a higher number of large completed transactions. Debt underwriting fees were $2.5 billion, down 10%, primarily driven by declines in industry-wide fee levels and a lower share in leveraged finance.
| |
– | Debt underwriting fees were $2.7 billion, up 7%, reflecting wallet share gains despite a decline in industry-wide fees, driven by participation in large acquisition financing deals. |
| |
– | Advisory fees were $1.7 billion, down 6%, and Equity underwriting fees were $1.3 billion, down 4%, driven by a decline in industry-wide fees despite wallet share gains. |
Treasury Services revenue was $3.5$3.4 billion, down 3%, with deposit margin compression predominantly offset by fee growth and higher balances.
Lending revenue was $1.0 billion, up 12%5%, predominantly driven by the impact of higher interest rates and growth in operating deposits. Lending revenue was $954 million, down 13%, driven by lower net interest income primarily reflecting a changegrowth in the portfolio composition and overall spread tightening as well as higher gains in the prior year on securities received from restructurings.loan balances.
Markets & InvestorSecurities Services revenue was $19.5$19.0 billion, up 10%down 2%. TheMarkets revenue was $16.0 billion, down 3% which included a gain from the IPO of Tradeweb. In addition, prior year results included approximately $500 million of fair value gains related to the adoption in the first quarter of 2018 of the new recognition and measurement accounting guidance for certain equity investments previously held at cost, and a reduction of approximately $450 million in tax-equivalent adjustments as a result of the TCJA. cost.
Fixed Income Markets revenue was $10.9$11.0 billion, up 2%. Excluding the impact of these fair value gains1% reflecting higher revenue in agency mortgage trading within Securitized Products and tax-equivalent adjustments, Fixed Income Markets revenue remained up 2%, with strong performance in Currencies & Emerging Markets, and higher Commodities revenue compared to a challenging prior year, largelypartially offset by lower revenue in Rates and Credit. Currencies & Emerging Markets.
Equity Markets revenue was $5.6$5.0 billion, up 22%,down 11% compared to a strong prior year, predominantly driven by strength across derivatives, prime brokerage and Cash Equities, reflecting stronglower client activity. activity in derivatives.
Securities Services revenue was $3.2$3.1 billion, up 11%down 4%, predominantly driven by deposit margin compression and the impact of higher interest rates and operating deposit growth as well as higher asset-based fees drivena business exit partially offset by net client inflows and higher market levels.organic growth.
Credit Adjustments & Other was a loss of $5 million, compared with a loss of $130 million in the prior year.
The provision for credit losses was $179 million reflecting select C&I client downgrades including those in an emerging market. The prior year was a benefit of $142 million, primarily driven by loan sales and other activity related to a single name in the Oil & Gas portfolio, partially offset by other net portfolio activity. The prior year was a benefit of $175 million primarily driven by a reduction in the allowance for credit losses in the Oil & Gas and Metals & Mining portfolios.
Noninterest expense was $16.2$16.3 billion, up 9%, predominantly driven byflat compared to the prior year reflecting higher compensation expense including performance-related compensation expensevolume-related expenses and investments, in technology and bankers,including front office hires, as well as volume-related transaction coststechnology staff, predominantly offset by lower FDIC charges and legalrevenue-related compensation expense.
| | Selected metrics | Selected metrics | | | | | | | | | | | Selected metrics | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except headcount) | 2018 | | 2017 | | Change | | 2018 | | 2017 | | Change | 2019 | | 2018 | | Change | | 2019 | | 2018 | | Change |
Selected balance sheet data (period-end) | | | | | | | | | | | | | | | | | | | | | | |
Assets | $ | 928,148 |
| | $ | 851,808 |
| | 9 | % | | $ | 928,148 |
| | $ | 851,808 |
| | 9 | % | $ | 1,023,132 |
| | $ | 928,148 |
| | 10 | % | | $ | 1,023,132 |
| | $ | 928,148 |
| | 10 | % |
Loans: | | | | | | | | | | | | | | | | | | | | | | |
Loans retained(a) | 117,084 |
| | 106,955 |
| | 9 |
| | 117,084 |
| | 106,955 |
| | 9 |
| 118,290 |
| | 117,084 |
| | 1 |
| | 118,290 |
| | 117,084 |
| | 1 |
|
Loans held-for-sale and loans at fair value | 6,133 |
| | 3,514 |
| | 75 |
| | 6,133 |
| | 3,514 |
| | 75 |
| 8,324 |
| | 6,133 |
| | 36 |
| | 8,324 |
| | 6,133 |
| | 36 |
|
Total loans | 123,217 |
| | 110,469 |
| | 12 |
| | 123,217 |
| | 110,469 |
| | 12 |
| 126,614 |
| | 123,217 |
| | 3 |
| | 126,614 |
| | 123,217 |
| | 3 |
|
Core loans | 122,953 |
| | 110,133 |
| | 12 |
| | 122,953 |
| | 110,133 |
| | 12 |
| 126,445 |
| | 122,953 |
| | 3 |
| | 126,445 |
| | 122,953 |
| | 3 |
|
Equity | 70,000 |
| | 70,000 |
| | — |
| | 70,000 |
| | 70,000 |
| | — |
| 80,000 |
| | 70,000 |
| | 14 |
| | 80,000 |
| | 70,000 |
| | 14 |
|
Selected balance sheet data (average) | | | | | | | | | | | | | | | | | | | | | | |
Assets | $ | 924,909 |
| | $ | 858,912 |
| | 8 |
| | $ | 924,145 |
| | $ | 853,948 |
| | 8 |
| $ | 1,003,395 |
| | $ | 924,909 |
| | 8 |
| | $ | 985,503 |
| | $ | 924,145 |
| | 7 |
|
Trading assets-debt and equity instruments | 349,390 |
| | 349,448 |
| | — |
| | 354,270 |
| | 343,232 |
| | 3 |
| 415,450 |
| | 349,390 |
| | 19 |
| | 406,304 |
| | 354,270 |
| | 15 |
|
Trading assets-derivative receivables | 62,025 |
| | 55,875 |
| | 11 |
| | 60,943 |
| | 56,575 |
| | 8 |
| 48,266 |
| | 62,025 |
| | (22 | ) | | 49,221 |
| | 60,943 |
| | (19 | ) |
Loans: | | | | | | | | | | | | | | | | | | | | | | |
Loans retained(a) | $ | 115,390 |
| | $ | 107,829 |
| | 7 |
| | $ | 112,921 |
| | $ | 108,741 |
| | 4 |
| $ | 119,007 |
| | $ | 115,390 |
| | 3 |
| | $ | 123,368 |
| | $ | 112,921 |
| | 9 |
|
Loans held-for-sale and loans at fair value | 7,328 |
| | 4,674 |
| | 57 |
| | 6,263 |
| | 5,254 |
| | 19 |
| 8,344 |
| | 7,328 |
| | 14 |
| | 8,239 |
| | 6,263 |
| | 32 |
|
Total loans | $ | 122,718 |
| | $ | 112,503 |
| | 9 |
| | $ | 119,184 |
| | $ | 113,995 |
| | 5 |
| $ | 127,351 |
| | $ | 122,718 |
| | 4 |
| | $ | 131,607 |
| | $ | 119,184 |
| | 10 |
|
Core loans | 122,442 |
| | 112,168 |
| | 9 |
| | 118,877 |
| | 113,631 |
| | 5 |
| 127,187 |
| | 122,442 |
| | 4 |
| | 131,436 |
| | 118,877 |
| | 11 |
|
Equity | 70,000 |
| | 70,000 |
| | — |
| | 70,000 |
| | 70,000 |
| | — |
| 80,000 |
| | 70,000 |
| | 14 |
| | 80,000 |
| | 70,000 |
| | 14 |
|
Headcount(b) | 54,052 |
| | 50,641 |
| | 7 | % | | 54,052 |
| | 50,641 |
| | 7 | % | 55,873 |
| | 54,052 |
| | 3 | % | | 55,873 |
| | 54,052 |
| | 3 | % |
| |
(a) | Loans retained includes credit portfolio loans, loans held by consolidated Firm-administered multi-seller conduits, trade finance loans, other held-for-investment loans and overdrafts. |
| |
(b) | During the third quarter of 2018 approximately 1,200 employees transferred from CCB to CIB as part of the reorganization of the Commercial Card business. |
| | Selected metrics | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except ratios) | 2018 | | 2017 | | Change | | 2018 | | 2017 | | Change | 2019 | | 2018 | | Change | | 2019 | | 2018 | | Change |
Credit data and quality statistics | | | | | | | | | | | | | | | | | | | | | | |
Net charge-offs/(recoveries) | $ | (40 | ) | | $ | 20 |
| | NM |
| | $ | 94 |
| | $ | 49 |
| | 92 | % | $ | 38 |
| | $ | (40 | ) | | NM |
| | $ | 140 |
| | $ | 94 |
| | 49 | % |
Nonperforming assets: | | | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans: | | | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans retained(a) | $ | 318 |
| | $ | 437 |
| | (27 | )% | | $ | 318 |
| | $ | 437 |
| | (27 | ) | $ | 712 |
| | $ | 318 |
| | 124 | % | | $ | 712 |
| | $ | 318 |
| | 124 |
|
Nonaccrual loans held-for-sale and loans at fair value | 9 |
| | 2 |
| | 350 |
| | 9 |
| | 2 |
| | 350 |
| 262 |
| | 9 |
| | NM |
| | 262 |
| | 9 |
| | NM |
|
Total nonaccrual loans | 327 |
| | 439 |
| | (26 | ) | | 327 |
| | 439 |
| | (26 | ) | 974 |
| | 327 |
| | 198 |
| | 974 |
| | 327 |
| | 198 |
|
Derivative receivables | 90 |
| | 164 |
| | (45 | ) | | 90 |
| | 164 |
| | (45 | ) | 26 |
| | 90 |
| | (71 | ) | | 26 |
| | 90 |
| | (71 | ) |
Assets acquired in loan satisfactions | 61 |
| | 92 |
| | (34 | ) | | 61 |
| | 92 |
| | (34 | ) | 75 |
| | 61 |
| | 23 |
| | 75 |
| | 61 |
| | 23 |
|
Total nonperforming assets | $ | 478 |
| | $ | 695 |
| | (31 | ) | | $ | 478 |
| | $ | 695 |
| | (31 | ) | $ | 1,075 |
| | $ | 478 |
| | 125 |
| | $ | 1,075 |
| | $ | 478 |
| | 125 |
|
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | $ | 1,068 |
| | $ | 1,253 |
| | (15 | ) | | $ | 1,068 |
| | $ | 1,253 |
| | (15 | ) | $ | 1,171 |
| | $ | 1,068 |
| | 10 |
| | $ | 1,171 |
| | $ | 1,068 |
| | 10 |
|
Allowance for lending-related commitments | 802 |
| | 745 |
| | 8 |
| | 802 |
| | 745 |
| | 8 |
| 824 |
| | 802 |
| | 3 |
| | 824 |
| | 802 |
| | 3 |
|
Total allowance for credit losses | $ | 1,870 |
| | $ | 1,998 |
| | (6 | )% | | $ | 1,870 |
| | $ | 1,998 |
| | (6 | )% | $ | 1,995 |
| | $ | 1,870 |
| | 7 | % | | $ | 1,995 |
| | $ | 1,870 |
| | 7 | % |
Net charge-off/(recovery) rate(b) | (0.14 | )% | | 0.07 | % | | | | 0.11 | % | | 0.06 | % | | | 0.13 | % | | (0.14 | )% | | | | 0.15 | % | | 0.11 | % | | |
Allowance for loan losses to period-end loans retained | 0.91 |
| | 1.17 |
| | | | 0.91 |
| | 1.17 |
| | | 0.99 |
| | 0.91 |
| | | | 0.99 |
| | 0.91 |
| | |
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits(c) | 1.27 |
| | 1.79 |
| | | | 1.27 |
| | 1.79 |
| | | 1.33 |
| | 1.27 |
| | | | 1.33 |
| | 1.27 |
| | |
Allowance for loan losses to nonaccrual loans retained(a) | 336 |
| | 287 |
| | | | 336 |
| | 287 |
| | | 164 |
| | 336 |
| | | | 164 |
| | 336 |
| | |
Nonaccrual loans to total period-end loans | 0.27 | % | | 0.40 | % | | | | 0.27 | % | | 0.40 | % | | | 0.77 | % | | 0.27 | % | | | | 0.77 | % | | 0.27 | % | | |
| |
(a) | Allowance for loan losses of $145$207 million and $177$145 million were held against these nonaccrual loans at September 30, 20182019 and 2017,2018, respectively. |
| |
(b) | Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate. |
| |
(c) | Management uses allowance for loan losses to period-end loans retained, excluding trade finance and conduits, a non-GAAP financial measure, to provide a more meaningful assessment of CIB’s allowance coverage ratio. |
| | Investment banking fees | Investment banking fees | | | | | | | | | | | Investment banking fees | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 | | 2017 | | Change | | 2018 | | 2017 | | Change | 2019 | | 2018 | | Change | | 2019 | | 2018 | | Change |
Advisory | $ | 581 |
| | $ | 620 |
| | (6 | )% | | $ | 1,782 |
| | $ | 1,624 |
| | 10 | % | $ | 506 |
| | $ | 581 |
| | (13 | )% | | $ | 1,675 |
| | $ | 1,782 |
| | (6 | )% |
Equity underwriting | 420 |
| | 300 |
| | 40 |
| | 1,336 |
| | 1,107 |
| | 21 |
| 514 |
| | 420 |
| | 22 |
| | 1,284 |
| | 1,336 |
| | (4 | ) |
Debt underwriting(a) | 822 |
| | 924 |
| | (11 | ) | | 2,540 |
| | 2,827 |
| | (10 | ) | 961 |
| | 822 |
| | 17 |
| | 2,712 |
| | 2,540 |
| | 7 |
|
Total investment banking fees | $ | 1,823 |
| | $ | 1,844 |
| | (1 | )% | | $ | 5,658 |
| | $ | 5,558 |
| | 2 | % | $ | 1,981 |
| | $ | 1,823 |
| | 9 | % | | $ | 5,671 |
| | $ | 5,658 |
| | — |
|
| |
(a) | IncludesRepresents long-term debt and loan syndications. |
| | League table results – wallet share | League table results – wallet share | | | | League table results – wallet share | | | | | | | | | | |
| Three months ended September 30, 2018 | | Full-year 2017 | Three months ended September 30, | | Nine months ended September 30, | | Full-year 2018
|
| Rank | Share | | Rank | Share | 2019 | | 2018 | | 2019 | | 2018 | |
| | Rank | | Share | | Rank | | Share | | Rank | | Share | | Rank | | Share | | Rank | | Share |
Based on fees(a) | | | | | | | | | | | | | | | |
Long-term debt(b) | | | | | |
M&A(b) | | | | | | | | | | | | |
Global | # | 1 |
| | 7.4 | | # | 1 |
| | 7.8 | # | 2 |
| | 8.6 | | # | 2 |
| | 8.4 | | # | 2 |
| | 9.3 | | # | 2 |
| | 8.8 | | # | 2 |
| | 8.7 | % |
U.S. | 2 |
| | 11.2 | | 2 |
| | 11.1 | 4 |
| | 8.7 | | 3 |
| | 7.0 | | 2 |
| | 9.4 | | 2 |
| | 9.3 | | 2 |
| | 8.9 |
|
Equity and equity-related(c) | | | | | | | | | | | | | | | |
Global | 3 |
| | 9.2 | | 2 |
| | 7.1 | 1 |
| | 11.9 | | 1 |
| | 9.7 | | 1 |
| | 10.3 | | 3 |
| | 9.1 | | 1 |
| | 9.0 |
|
U.S. | 1 |
| | 12.5 | | 1 |
| | 11.6 | 1 |
| | 17.3 | | 1 |
| | 13.2 | | 1 |
| | 13.8 | | 1 |
| | 12.5 | | 1 |
| | 12.3 |
|
M&A(d) | | | | | |
Long-term debt(d) | | | | | | | | | | | | |
Global | 2 |
| | 9.0 | | 2 |
| | 8.4 | 1 |
| | 8.8 | | 1 |
| | 7.8 | | 1 |
| | 8.0 | | 1 |
| | 7.4 | | 1 |
| | 7.2 |
|
U.S. | 2 |
| | 9.4 | | 2 |
| | 9.1 | 1 |
| | 13.7 | | 1 |
| | 12.9 | | 1 |
| | 12.2 | | 1 |
| | 11.4 | | 1 |
| | 11.2 |
|
Loan syndications | | | | | | | | | | | | | | | |
Global | 1 |
| | 9.6 | | 1 |
| | 9.3 | 1 |
| | 10.1 | | 1 |
| | 10.8 | | 1 |
| | 10.6 | | 1 |
| | 9.9 | | 1 |
| | 9.7 |
|
U.S. | 1 |
| | 12.2 | | 1 |
| | 10.9 | 1 |
| | 13.0 | | 1 |
| | 14.4 | | 1 |
| | 13.2 | | 1 |
| | 12.6 | | 1 |
| | 12.3 |
|
Global investment banking fees(e) | # | 1 |
| | 8.7 | | # | 1 |
| | 8.1 | # | 1 |
| | 9.6 | | # | 1 |
| | 9.0 | | # | 1 |
| | 9.3 | | # | 1 |
| | 8.7 | | # | 1 |
| | 8.6 | % |
| |
(a) | Source: Dealogic as of OctOctober 1, 2018.2019. 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. |
| |
(c) | Global equity and equity-related ranking includes rights offerings and Chinese A-Shares. |
| |
(d) | Global M&A reflect the removal of any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S. |
| |
(e) | Global investment banking fees exclude money market, short-term debt and shelf deals. |
Markets revenue
The following table summarizes select income statement data for the Markets businesses. Markets includes both Fixed Income Markets and Equity Markets. Markets revenue comprises principal transactions, fees, commissions and other income, as well as net interest income. The Firm assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate net interest income may be risk-managed by derivatives that are
recorded in principal transactions revenue. ForRefer to Notes 5 and 6 for a description of the composition of these income statement line items, refer to Notes 5 and 6. For further information, referitems. Refer to Markets revenue on page 6569 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for further information.
For the periods presented below, the predominant source of principal transactions revenue was the amount recognized
upon executing new transactions.
| | | Three months ended September 30, | | Three months ended September 30, | Three months ended September 30, | | Three months ended September 30, |
| 2018 | | 2017 | 2019 | | 2018 |
(in millions) | Fixed Income Markets | Equity Markets | Total Markets | | Fixed Income Markets | Equity Markets | Total Markets | Fixed Income Markets | Equity Markets | Total Markets | | Fixed Income Markets | Equity Markets | Total Markets |
Principal transactions | $ | 1,849 |
| $ | 1,252 |
| $ | 3,101 |
| | $ | 1,837 |
| $ | 948 |
| $ | 2,785 |
| $ | 2,292 |
| $ | 1,263 |
| $ | 3,555 |
| | $ | 1,849 |
| $ | 1,252 |
| $ | 3,101 |
|
Lending- and deposit-related fees | 51 |
| 1 |
| 52 |
| | 47 |
| 2 |
| 49 |
| 51 |
| 1 |
| 52 |
| | 51 |
| 1 |
| 52 |
|
Asset management, administration and commissions | 96 |
| 446 |
| 542 |
| | 93 |
| 397 |
| 490 |
| 110 |
| 472 |
| 582 |
| | 96 |
| 446 |
| 542 |
|
All other income | 33 |
| 7 |
| 40 |
| | 121 |
| 12 |
| 133 |
| 108 |
| 54 |
| 162 |
| | 33 |
| 7 |
| 40 |
|
Noninterest revenue | 2,029 |
| 1,706 |
| 3,735 |
| | 2,098 |
| 1,359 |
| 3,457 |
| 2,561 |
| 1,790 |
| 4,351 |
| | 2,029 |
| 1,706 |
| 3,735 |
|
Net interest income(a) | 815 |
| (111 | ) | 704 |
| | 1,066 |
| 4 |
| 1,070 |
| 996 |
| (273 | ) | 723 |
| | 815 |
| (111 | ) | 704 |
|
Total net revenue | $ | 2,844 |
| $ | 1,595 |
| $ | 4,439 |
| | $ | 3,164 |
| $ | 1,363 |
| $ | 4,527 |
| $ | 3,557 |
| $ | 1,517 |
| $ | 5,074 |
| | $ | 2,844 |
| $ | 1,595 |
| $ | 4,439 |
|
| | | Nine months ended September 30, | | Nine months ended September 30, | Nine months ended September 30, | | Nine months ended September 30, |
| 2018 | | 2017 | 2019 | | 2018 |
(in millions) | Fixed Income Markets | Equity Markets | Total Markets | | Fixed Income Markets | Equity Markets | Total Markets | Fixed Income Markets | Equity Markets | Total Markets | | Fixed Income Markets | Equity Markets | Total Markets |
Principal transactions | $ | 6,795 |
| $ | 4,528 |
| $ | 11,323 |
| | $ | 6,389 |
| $ | 3,066 |
| $ | 9,455 |
| $ | 7,205 |
| $ | 4,428 |
| $ | 11,633 |
| | $ | 6,795 |
| $ | 4,528 |
| $ | 11,323 |
|
Lending- and deposit-related fees | 147 |
| 4 |
| 151 |
| | 144 |
| 4 |
| 148 |
| 149 |
| 5 |
| 154 |
| | 147 |
| 4 |
| 151 |
|
Asset management, administration and commissions | 313 |
| 1,364 |
| 1,677 |
| | 300 |
| 1,230 |
| 1,530 |
| 310 |
| 1,359 |
| 1,669 |
| | 313 |
| 1,364 |
| 1,677 |
|
All other income | 764 |
| 18 |
| 782 |
| | 505 |
| 3 |
| 508 |
| 500 |
| 31 |
| 531 |
| | 764 |
| 18 |
| 782 |
|
Noninterest revenue | 8,019 |
| 5,914 |
| 13,933 |
| | 7,338 |
| 4,303 |
| 11,641 |
| 8,164 |
| 5,823 |
| 13,987 |
| | 8,019 |
| 5,914 |
| 13,933 |
|
Net interest income(a) | 2,831 |
| (343 | ) | 2,488 |
| | 3,257 |
| 252 |
| 3,509 |
| 2,808 |
| (837 | ) | 1,971 |
| | 2,831 |
| (343 | ) | 2,488 |
|
Total net revenue | $ | 10,850 |
| $ | 5,571 |
| $ | 16,421 |
| | $ | 10,595 |
| $ | 4,555 |
| $ | 15,150 |
| $ | 10,972 |
| $ | 4,986 |
| $ | 15,958 |
| | $ | 10,850 |
| $ | 5,571 |
| $ | 16,421 |
|
| |
(a) | Declines in Markets net interest income were driven by higher funding costs. |
| | Selected metrics | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except where otherwise noted) | 2018 | | 2017 | | Change | | 2018 | | 2017 | | Change | 2019 | | 2018 | | Change | | 2019 | | 2018 | | Change |
Assets under custody (“AUC”) by asset class (period-end) (in billions): | | | | | | | | | | | | | | | | | | | | | | |
Fixed Income | $ | 12,339 |
|
| $ | 12,878 |
| | (4 | )% | | $ | 12,339 |
| | $ | 12,878 |
| | (4 | )% | $ | 13,349 |
| | $ | 12,339 |
| | 8 | % | | $ | 13,349 |
| | $ | 12,339 |
| | 8 | % |
Equity | 9,174 |
|
| 7,439 |
| | 23 |
| | 9,174 |
| | 7,439 |
| | 23 |
| 9,301 |
| | 9,174 |
| | 1 |
| | 9,301 |
| | 9,174 |
| | 1 |
|
Other(a) | 2,890 |
|
| 2,421 |
| | 19 |
| | 2,890 |
| | 2,421 |
| | 19 |
| 3,045 |
| | 2,890 |
| | 5 |
| | 3,045 |
| | 2,890 |
| | 5 |
|
Total AUC | $ | 24,403 |
|
| $ | 22,738 |
| | 7 |
| | $ | 24,403 |
| | $ | 22,738 |
| | 7 |
| $ | 25,695 |
|
| $ | 24,403 |
| | 5 |
| | $ | 25,695 |
| | $ | 24,403 |
| | 5 |
|
Client deposits and other third party liabilities (average)(b) | $ | 434,847 |
|
| $ | 421,588 |
| | 3 | % | | $ | 430,640 |
| | $ | 406,184 |
| | 6 | % | |
Client deposits and other third-party liabilities (average)(b) | | $ | 471,291 |
|
| $ | 434,847 |
| | 8 | % | | $ | 457,961 |
| | $ | 430,640 |
| | 6 | % |
| |
(a) | Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts. |
| |
(b) | Client deposits and other third partythird-party liabilities pertain to the Treasury Services and Securities Services businesses. |
| | International metrics | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except where otherwise noted) | 2018 | | 2017 | | Change | | 2018 | | 2017 | | Change | 2019 | | 2018(c) | | Change | | 2019 | | 2018(c) | | Change |
Total net revenue(a) | | | | | | | | | | | | | | | | | | | | | | |
Europe/Middle East/Africa | $ | 2,766 |
| | $ | 2,751 |
| | 1 | % | | $ | 9,842 |
| | $ | 8,974 |
| | 10 | % | $ | 2,892 |
| | $ | 2,773 |
| | 4 | % | | $ | 8,955 |
| | $ | 9,936 |
| | (10 | )% |
Asia/Pacific | 1,242 |
| | 1,169 |
| | 6 |
| | 4,123 |
| | 3,442 |
| | 20 |
| 1,428 |
| | 1,234 |
| | 16 |
| | 4,143 |
| | 3,997 |
| | 4 |
|
Latin America/Caribbean | 321 |
| | 329 |
| | (2 | ) | | 1,064 |
| | 914 |
| | 16 |
| 404 |
| | 318 |
| | 27 |
| | 1,205 |
| | 1,123 |
| | 7 |
|
Total international net revenue | 4,329 |
| | 4,249 |
| | 2 |
| | 15,029 |
| | 13,330 |
| | 13 |
| 4,724 |
| | 4,325 |
| | 9 |
| | 14,303 |
| | 15,056 |
| | (5 | ) |
North America | 4,476 |
| | 4,366 |
| | 3 |
| | 14,182 |
| | 13,809 |
| | 3 |
| 4,614 |
| | 4,480 |
| | 3 |
| | 14,524 |
| | 14,155 |
| | 3 |
|
Total net revenue | $ | 8,805 |
| | $ | 8,615 |
| | 2 |
| | $ | 29,211 |
| | $ | 27,139 |
| | 8 |
| $ | 9,338 |
| | $ | 8,805 |
| | 6 |
| | $ | 28,827 |
| | $ | 29,211 |
| | (1 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Loans retained (period-end)(a) | Loans retained (period-end)(a) | | | | | | | | | | | Loans retained (period-end)(a) | | | | | | | | | | |
Europe/Middle East/Africa | $ | 25,941 |
| | $ | 25,677 |
| | 1 |
| | $ | 25,941 |
| | $ | 25,677 |
| | 1 |
| $ | 23,807 |
| | $ | 25,341 |
| | (6 | ) | | $ | 23,807 |
| | $ | 25,341 |
| | (6 | ) |
Asia/Pacific | 16,812 |
| | 13,398 |
| | 25 |
| | 16,812 |
| | 13,398 |
| | 25 |
| 14,402 |
| | 16,907 |
| | (15 | ) | | 14,402 |
| | 16,907 |
| | (15 | ) |
Latin America/Caribbean | 4,896 |
| | 6,737 |
| | (27 | ) | | 4,896 |
| | 6,737 |
| | (27 | ) | 5,782 |
| | 6,097 |
| | (5 | ) | | 5,782 |
| | 6,097 |
| | (5 | ) |
Total international loans | 47,649 |
| | 45,812 |
| | 4 |
| | 47,649 |
| | 45,812 |
| | 4 |
| 43,991 |
| | 48,345 |
| | (9 | ) | | 43,991 |
| | 48,345 |
| | (9 | ) |
North America | 69,435 |
| | 61,143 |
| | 14 |
| | 69,435 |
| | 61,143 |
| | 14 |
| 74,299 |
| | 68,739 |
| | 8 |
| | 74,299 |
| | 68,739 |
| | 8 |
|
Total loans retained(a) | $ | 117,084 |
| | $ | 106,955 |
| | 9 |
| | $ | 117,084 |
| | $ | 106,955 |
| | 9 |
| $ | 118,290 |
| | $ | 117,084 |
| | 1 |
| | $ | 118,290 |
| | $ | 117,084 |
| | 1 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Client deposits and other third-party liabilities (average)(a)(b) | | | | | | | | | | | | |
Client deposits and other third-party liabilities (average)(b) | | | | | | | | | | | | |
Europe/Middle East/Africa | $ | 162,060 |
| | $ | 160,778 |
| | 1 |
| | $ | 162,102 |
| | $ | 154,259 |
| | 5 |
| $ | 175,354 |
| | $ | 162,060 |
| | 8 |
| | $ | 171,601 |
| | $ | 162,102 |
| | 6 |
|
Asia/Pacific | 81,771 |
| | 78,334 |
| | 4 |
| | 82,272 |
| | 75,284 |
| | 9 |
| 91,556 |
| | 81,771 |
| | 12 |
| | 87,866 |
| | 82,272 |
| | 7 |
|
Latin America/Caribbean | 26,196 |
| | 25,236 |
| | 4 |
| | 26,477 |
| | 25,126 |
| | 5 |
| 30,165 |
| | 26,196 |
| | 15 |
| | 28,849 |
| | 26,477 |
| | 9 |
|
Total international | $ | 270,027 |
| | $ | 264,348 |
| | 2 |
| | $ | 270,851 |
| | $ | 254,669 |
| | 6 |
| $ | 297,075 |
| | $ | 270,027 |
| | 10 |
| | $ | 288,316 |
| | $ | 270,851 |
| | 6 |
|
North America | 164,820 |
| | 157,240 |
| | 5 |
| | 159,789 |
| | 151,515 |
| | 5 |
| 174,216 |
| | 164,820 |
| | 6 |
| | 169,645 |
| | 159,789 |
| | 6 |
|
Total client deposits and other third-party liabilities | $ | 434,847 |
| | $ | 421,588 |
| | 3 |
| | $ | 430,640 |
| | $ | 406,184 |
| | 6 |
| $ | 471,291 |
| | $ | 434,847 |
| | 8 |
| | $ | 457,961 |
| | $ | 430,640 |
| | 6 |
|
| | | | | | | | | | | | | | | | | | | | | | |
AUC (period-end)(a) (in billions) | | | | | | | | | | | | |
AUC (period-end)(b) (in billions) | | | | | | | | | | | | |
North America | $ | 15,148 |
| | $ | 13,574 |
| | 12 |
| | $ | 15,148 |
| | $ | 13,574 |
| | 12 |
| $ | 16,146 |
| | $ | 15,148 |
| | 7 |
| | $ | 16,146 |
| | $ | 15,148 |
| | 7 |
|
All other regions | 9,255 |
| | 9,164 |
| | 1 |
| | 9,255 |
| | 9,164 |
| | 1 |
| 9,549 |
| | 9,255 |
| | 3 |
| | 9,549 |
| | 9,255 |
| | 3 |
|
Total AUC | $ | 24,403 |
| | $ | 22,738 |
| | 7 | % | | $ | 24,403 |
| | $ | 22,738 |
| | 7 | % | $ | 25,695 |
| | $ | 24,403 |
| | 5 | % | | $ | 25,695 |
| | $ | 24,403 |
| | 5 | % |
| |
(a) | Total net revenue is based predominantly on the domicile of the client or location of the trading desk, as applicable. Loans outstandingand 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 Treasury Services and Securities Services businesses, and AUC, are based predominantly on the domicile of the client. |
| |
(b)(c) | Client deposits and other third party liabilities pertainThe prior period amounts have been revised to conform with the Treasury Services and Securities Services businesses.current period presentation. |
ForRefer to pages 71-73 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 174 for a discussion of the business profile of CB, refer to pages 67–69 of JPMorgan Chase’s 2017 Annual Report and Line of Business Metrics on page 181.CB.
| | Selected income statement data | Selected income statement data | | | | | | | Selected income statement data | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change | 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
Revenue | | | | | | | | | | | | | | | | | | | | | | |
Lending- and deposit-related fees | $ | 216 |
| | $ | 223 |
| | (3 | )% | | $ | 666 |
| | $ | 690 |
| | (3 | )% | $ | 221 |
| | $ | 216 |
| | 2 | % | | $ | 664 |
| | $ | 666 |
| | — | % |
Asset management, administration and commissions | 18 |
| | 16 |
| | 13 |
| | 52 |
| | 50 |
| | 4 |
| |
All other income(a) | 342 |
| | 353 |
| | (3 | ) | | 1,040 |
| | 1,034 |
| | 1 |
| 378 |
| | 360 |
| | 5 |
| | 1,142 |
| | 1,092 |
| | 5 |
|
Noninterest revenue | 576 |
| | 592 |
| | (3 | ) | | 1,758 |
| | 1,774 |
| | (1 | ) | 599 |
| | 576 |
| | 4 |
| | 1,806 |
| | 1,758 |
| | 3 |
|
Net interest income | 1,695 |
| | 1,554 |
| | 9 |
| | 4,995 |
| | 4,478 |
| | 12 |
| 1,608 |
| | 1,695 |
| | (5 | ) | | 4,950 |
| | 4,995 |
| | (1 | ) |
Total net revenue(b) | 2,271 |
| | 2,146 |
| | 6 |
| | 6,753 |
| | 6,252 |
| | 8 |
| 2,207 |
| | 2,271 |
| | (3 | ) | | 6,756 |
| | 6,753 |
| | — |
|
| | | | | | | | | | | | | | | | | | | | | | |
Provision for credit losses | (15 | ) | | (47 | ) | | 68 |
| | 23 |
| | (214 | ) | | NM |
| 67 |
| | (15 | ) | | NM |
| | 186 |
| | 23 |
| | NM |
|
| | | | | | | | | | | | | | | | | | | | | | |
Noninterest expense | | | | | | | | | | | | | | | | | | | | | | |
Compensation expense(c) | 432 |
| | 386 |
| | 12 |
| | 1,268 |
| | 1,156 |
| | 10 |
| |
Noncompensation expense(c) | 421 |
| | 414 |
| | 2 |
| | 1,273 |
| | 1,259 |
| | 1 |
| |
Compensation expense | | 454 |
| | 432 |
| | 5 |
| | 1,341 |
| | 1,268 |
| | 6 |
|
Noncompensation expense | | 427 |
| | 421 |
| | 1 |
| | 1,277 |
| | 1,273 |
| | — |
|
Total noninterest expense | 853 |
| | 800 |
| | 7 |
| | 2,541 |
| | 2,415 |
| | 5 |
| 881 |
| | 853 |
| | 3 |
| | 2,618 |
| | 2,541 |
| | 3 |
|
| | | | | | | | | | | | | | | | | | | | | | |
Income before income tax expense | 1,433 |
| | 1,393 |
| | 3 |
| | 4,189 |
| | 4,051 |
| | 3 |
| 1,259 |
| | 1,433 |
| | (12 | ) | | 3,952 |
| | 4,189 |
| | (6 | ) |
Income tax expense | 344 |
| | 512 |
| | (33 | ) | | 988 |
| | 1,469 |
| | (33 | ) | 322 |
| | 344 |
| | (6 | ) | | 966 |
| | 988 |
| | (2 | ) |
Net income | $ | 1,089 |
| | $ | 881 |
| | 24 | % | | $ | 3,201 |
| | $ | 2,582 |
| | 24 | % | $ | 937 |
| | $ | 1,089 |
| | (14 | )% | | $ | 2,986 |
| | $ | 3,201 |
| | (7 | )% |
| |
(a) | IncludesEffective in the first quarter of 2019, includes revenue from investment banking products, and commercial card transactions.transactions and asset management fees. The prior period amounts have been revised to conform with the current period presentation. |
| |
(b) | Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community |
development entities that provide loans to qualified businesses in low-income communities, as well as tax-exempt income related to municipal financing activities of $114 million and $107 million for the three months ended September 30, 2019 and 2018, respectively and $308 million and $316 million for the nine months ended September 30, 2019 and 2018, respectively.
Quarterly results
Net income was $937 million, a decrease of 14%.
Net revenue was $2.2 billion, down 3%. Net interest income was $1.6 billion, down 5%, driven by lower deposit margins, partially offset by higher deposit balances. Noninterest revenue was $599 million, an increase of 4%, predominantly driven by strong investment banking performance due to increased equity underwriting and M&A activity.
Noninterest expense was $881 million, up 3%, predominantly driven by investments in the business, largely offset by lower FDIC charges.
The provision for credit losses was $67 million, compared with a benefit of $15 million in the prior year.
Year-to-date results
Net income was $3.0 billion, a decrease of 7%.
Net revenue of $6.8 billion was flat. Net interest income was $5.0 billion, a decrease of 1%, driven by lower loan spreads and lower deposit balances, largely offset by higher deposit margins. Noninterest revenue was $1.8 billion, up 3% driven by higher investment banking revenue, predominantly due to increased equity underwriting and M&A activity.
Noninterest expense was $2.6 billion, an increase of 3%, predominantly driven by continued investments in the business, largely offset by lower FDIC charges.
The provision for credit losses was $186 million, largely driven by a net addition to the allowance for credit losses related to select C&I client downgrades.
|
| | | | | | | | | | | | | | | | | | | | | |
Selected income statement data (continued) | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
(in millions, except ratios) | 2019 |
| | 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
Revenue by product | | | | | | | | | | | |
Lending | $ | 1,006 |
| | $ | 1,027 |
| | (2 | )% | | $ | 3,030 |
| | $ | 3,052 |
| | (1 | )% |
Treasury services | 950 |
| | 1,021 |
| | (7 | ) | | 2,968 |
| | 3,019 |
| | (2 | ) |
Investment banking(a) | 226 |
| | 206 |
| | 10 |
| | 708 |
| | 644 |
| | 10 |
|
Other | 25 |
| | 17 |
| | 47 |
| | 50 |
| | 38 |
| | 32 |
|
Total Commercial Banking net revenue | $ | 2,207 |
| | $ | 2,271 |
| | (3 | ) | | $ | 6,756 |
| | $ | 6,753 |
| | — |
|
| | | | | | | | | | | |
Investment banking revenue, gross(b) | $ | 700 |
| | $ | 581 |
| | 20 |
| | $ | 2,110 |
| | $ | 1,889 |
| | 12 |
|
| | | | | | | | | | | |
Revenue by client segments | | | | | | | | | | | |
Middle Market Banking | $ | 903 |
| | $ | 935 |
| | (3 | ) | | $ | 2,793 |
| | $ | 2,749 |
| | 2 |
|
Corporate Client Banking | 739 |
| | 749 |
| | (1 | ) | | 2,264 |
| | 2,243 |
| | 1 |
|
Commercial Real Estate Banking(c) | 547 |
| | 562 |
| | (3 | ) | | 1,632 |
| | 1,681 |
| | (3 | ) |
Other(c) | 18 |
| | 25 |
| | (28 | ) | | 67 |
| | 80 |
| | (16 | ) |
Total Commercial Banking net revenue | $ | 2,207 |
| | $ | 2,271 |
| | (3 | )% | | $ | 6,756 |
| | $ | 6,753 |
| | — | % |
| | | | | | | | | | | |
Financial ratios | | | | | | | | | | | |
Return on equity | 16 | % | | 21 | % | | | | 17 | % | | 20 | % | | |
Overhead ratio | 40 |
| | 38 |
| | | | 39 |
| | 38 |
| | |
| |
(a) | Includes CB’s share of revenue from investment banking products sold to qualified businesses in low-income communities, as well as tax-exempt income relatedCB clients through the CIB. |
| |
(b) | Refer to municipal financing activitiespage 60 of $107 million and $143 millionthe 2018 Form 10-K for the three months ended September 30, 2018 and 2017 respectively, and $316 million and $395 million for the nine months ended September 30, 2018 and September 30, 2017, respectively. The decrease in taxable-equivalent adjustments reflects the impactdiscussion of TCJA.revenue sharing. |
| |
(c) | Effective in the first quarter of 2018, certain Operations2019, client segment data includes Commercial Real Estate Banking which comprises the former Commercial Term Lending and Compliance staff were transferred from CCBReal Estate Banking client segments, and Corporate, respectively, to CB. As a result, expense for this staff is now reflected in CB’s compensation expense with a corresponding adjustment for expense allocations reflected in noncompensation expense. CB’s, Corporate’s and CCB’s previously reported headcount, compensation expense and noncompensation expense have been revised to reflect this transfer. |
Quarterly results
Net income was $1.1 billion, an increase of 24%.
Net revenue was $2.3 billion, an increase of 6%. Net interest income was $1.7 billion, an increase of 9%, driven by higher deposit margins, partially offset by lower deposit balances, largely due to non-operating deposits migrating to higher yielding investments. Noninterest revenue was $576 million, 3% lower than the prior year.
Noninterest expense was $853 million, an increase of 7%, predominantly driven by investments in banker coverage and technology.
The provision for credit losses was a benefit of $15 million driven by net recoveries. The prior year was a benefit of $47 million, driven by net reductions in the allowance for credit losses, largely in the Real Estate portfolio.
Year-to-date results
Net income was $3.2 billion, an increase of 24%.
Net revenue was $6.8 billion, an increase of 8%. Net interest income was $5.0 billion, an increase of 12%, driven by higher deposit margins. Noninterest revenue was$1.8 billion, flat compared with the prior year.
Noninterest expense was $2.5 billion, an increase of 5%, driven by investments in banker coverage and technology.
The provision for credit losses was an expense of $23 million. The prior year was a benefit of $214 million, driven by net reductions in the allowance for credit losses, including in the Oil & Gas, Natural Gas Pipelines and Metals & Mining portfolios.
|
| | | | | | | | | | | | | | | | | | | | | |
Selected income statement data (continued) | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
(in millions, except ratios) | 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
Revenue by product | | | | | | | | | | | |
Lending | $ | 1,027 |
| | $ | 1,030 |
| | — | % | | $ | 3,052 |
| | $ | 3,045 |
| | — |
|
Treasury services | 1,021 |
| | 873 |
| | 17 |
| | 3,019 |
| | 2,523 |
| | 20 |
|
Investment banking(a) | 206 |
| | 196 |
| | 5 |
| | 644 |
| | 601 |
| | 7 |
|
Other | 17 |
| | 47 |
| | (64 | ) | | 38 |
| | 83 |
| | (54 | ) |
Total Commercial Banking net revenue | $ | 2,271 |
| | $ | 2,146 |
| | 6 |
| | $ | 6,753 |
| | $ | 6,252 |
| | 8 |
|
| | | | | | | | | | | |
Investment banking revenue, gross(b) | $ | 581 |
| | $ | 578 |
| | 1 |
| | $ | 1,889 |
| | $ | 1,777 |
| | 6 |
|
| | | | | | | | | | | |
Revenue by client segment | | | | | | | | | | | |
Middle Market Banking | $ | 935 |
| | $ | 848 |
| | 10 |
| | $ | 2,749 |
| | $ | 2,471 |
| | 11 |
|
Corporate Client Banking | 749 |
| | 688 |
| | 9 |
| | 2,243 |
| | 2,016 |
| | 11 |
|
Commercial Term Lending | 339 |
| | 367 |
| | (8 | ) | | 1,035 |
| | 1,098 |
| | (6 | ) |
Real Estate Banking | 175 |
| | 157 |
| | 11 |
| | 509 |
| | 438 |
| | 16 |
|
Other | 73 |
| | 86 |
| | (15 | ) | | 217 |
| | 229 |
| | (5 | ) |
Total Commercial Banking net revenue | $ | 2,271 |
| | $ | 2,146 |
| | 6 | % | | $ | 6,753 |
| | $ | 6,252 |
| | 8 | % |
| | | | | | | | | | | |
Financial ratios | | | | | | | | | | | |
Return on equity | 21 | % | | 17 | % | | | | 20 | % | | 16 | % | | |
Overhead ratio | 38 |
| | 37 |
| | | | 38 |
| | 39 |
| | |
| |
(a) | Includes total Firm revenue from investment banking products sold to CB clients, netCommunity Development Banking (previously part of revenue sharing with the CIB. |
| |
(b) | Represents total Firm revenue from investment banking products sold to CB clients. As a result of the adoption of the revenue recognition guidance, prior period amounts have been revised to conform with the current period presentation. For additional information, refer to Note 1. |
|
| | | | | | | | | | | | | | | | | |
Selected metrics | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except headcount) | 2018 |
| 2017 |
| Change |
| | 2018 | 2017 | Change |
Selected balance sheet data (period-end) | | | | | | | |
Total assets | $ | 217,194 |
| $ | 220,064 |
| (1 | )% | | $ | 217,194 |
| $ | 220,064 |
| (1 | )% |
Loans: | | | | | | | |
Loans retained | 205,177 |
| 201,463 |
| 2 |
| | 205,177 |
| 201,463 |
| 2 |
|
Loans held-for-sale and loans at fair value | 405 |
| 764 |
| (47 | ) | | 405 |
| 764 |
| (47 | ) |
Total loans | $ | 205,582 |
| $ | 202,227 |
| 2 |
| | $ | 205,582 |
| $ | 202,227 |
| 2 |
|
Core loans | 205,418 |
| 201,999 |
| 2 |
| | 205,418 |
| 201,999 |
| 2 |
|
Equity | 20,000 |
| 20,000 |
| — |
| | 20,000 |
| 20,000 |
| — |
|
| | | | | | | |
Period-end loans by client segment | | | | | | | |
Middle Market Banking | $ | 57,324 |
| $ | 56,192 |
| 2 |
| | $ | 57,324 |
| $ | 56,192 |
| 2 |
|
Corporate Client Banking | 46,890 |
| 47,682 |
| (2 | ) | | 46,890 |
| 47,682 |
| (2 | ) |
Commercial Term Lending | 76,201 |
| 74,349 |
| 2 |
| | 76,201 |
| 74,349 |
| 2 |
|
Real Estate Banking | 18,013 |
| 17,127 |
| 5 |
| | 18,013 |
| 17,127 |
| 5 |
|
Other | 7,154 |
| 6,877 |
| 4 |
| | 7,154 |
| 6,877 |
| 4 |
|
Total Commercial Banking loans | $ | 205,582 |
| $ | 202,227 |
| 2 |
| | $ | 205,582 |
| $ | 202,227 |
| 2 |
|
| | | | | | | |
Selected balance sheet data (average) | | | | | | | |
Total assets | $ | 219,232 |
| $ | 218,196 |
| — |
| | $ | 218,270 |
| $ | 216,574 |
| 1 |
|
Loans: | | | | | | | |
Loans retained | 205,603 |
| 199,487 |
| 3 |
| | 203,950 |
| 195,604 |
| 4 |
|
Loans held-for-sale and loans at fair value | 1,617 |
| 675 |
| 140 |
| | 1,139 |
| 931 |
| 22 |
|
Total loans | $ | 207,220 |
| $ | 200,162 |
| 4 |
| | $ | 205,089 |
| $ | 196,535 |
| 4 |
|
Core loans | 207,052 |
| 199,920 |
| 4 |
| | 204,902 |
| 196,254 |
| 4 |
|
| | | | | | | |
Average loans by client segment | | | | | | | |
Middle Market Banking | $ | 57,258 |
| $ | 55,782 |
| 3 |
| | $ | 57,121 |
| $ | 55,239 |
| 3 |
|
Corporate Client Banking | 49,004 |
| 46,451 |
| 5 |
| | 47,650 |
| 45,516 |
| 5 |
|
Commercial Term Lending | 75,919 |
| 74,136 |
| 2 |
| | 75,393 |
| 73,041 |
| 3 |
|
Real Estate Banking | 17,861 |
| 16,936 |
| 5 |
| | 17,774 |
| 16,205 |
| 10 |
|
Other | 7,178 |
| 6,857 |
| 5 |
| | 7,151 |
| 6,534 |
| 9 |
|
Total Commercial Banking loans | $ | 207,220 |
| $ | 200,162 |
| 4 |
| | $ | 205,089 |
| $ | 196,535 |
| 4 |
|
| | | | | | | |
Client deposits and other third-party liabilities | $ | 168,169 |
| $ | 176,218 |
| (5 | ) | | $ | 171,483 |
| $ | 175,402 |
| (2 | ) |
Equity | 20,000 |
| 20,000 |
| — |
| | 20,000 |
| 20,000 |
| — |
|
| | | | | | | |
Headcount(a) | 10,937 |
| 10,014 |
| 9 | % | | 10,937 |
| 10,014 |
| 9 | % |
| |
(a) | Effective in the first quarter of 2018, certain Operations and Compliance staff were transferred from CCB and Corporate, respectively, to CB.Other). The prior period amounts have been revised to conform with the current period presentation. For a further discussion of this transfer, refer to page 32, Selected income statement data, footnote (c). |
|
| | | | | | | | | | | | | | | | | |
Selected metrics | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except headcount) | 2019 |
| 2018 |
| Change |
| | 2019 | 2018 | Change |
Selected balance sheet data (period-end) | | | | | | | |
Total assets | $ | 222,483 |
| $ | 217,194 |
| 2 | % | | $ | 222,483 |
| $ | 217,194 |
| 2 | % |
Loans: | | | | | | | |
Loans retained | 209,448 |
| 205,177 |
| 2 |
| | 209,448 |
| 205,177 |
| 2 |
|
Loans held-for-sale and loans at fair value | 3,187 |
| 405 |
| NM |
| | 3,187 |
| 405 |
| NM |
|
Total loans | $ | 212,635 |
| $ | 205,582 |
| 3 |
| | $ | 212,635 |
| $ | 205,582 |
| 3 |
|
Core loans | 212,514 |
| 205,418 |
| 3 |
| | 212,514 |
| 205,418 |
| 3 |
|
Equity | 22,000 |
| 20,000 |
| 10 |
| | 22,000 |
| 20,000 |
| 10 |
|
| | | | | | | |
Period-end loans by client segment | | | | | | | |
Middle Market Banking | $ | 54,298 |
| $ | 57,324 |
| (5 | ) | | $ | 54,298 |
| $ | 57,324 |
| (5 | ) |
Corporate Client Banking | 55,976 |
| 46,890 |
| 19 |
| | 55,976 |
| 46,890 |
| 19 |
|
Commercial Real Estate Banking(a) | 101,326 |
| 100,072 |
| 1 |
| | 101,326 |
| 100,072 |
| 1 |
|
Other(a) | 1,035 |
| 1,296 |
| (20 | ) | | 1,035 |
| 1,296 |
| (20 | ) |
Total Commercial Banking loans | $ | 212,635 |
| $ | 205,582 |
| 3 |
| | $ | 212,635 |
| $ | 205,582 |
| 3 |
|
| | | | | | | |
Selected balance sheet data (average) | | | | | | | |
Total assets | $ | 218,620 |
| $ | 219,232 |
| — |
| | $ | 218,560 |
| $ | 218,270 |
| — |
|
Loans: | | | | | | | |
Loans retained | 207,286 |
| 205,603 |
| 1 |
| | 206,183 |
| 203,950 |
| 1 |
|
Loans held-for-sale and loans at fair value | 963 |
| 1,617 |
| (40 | ) | | 1,097 |
| 1,139 |
| (4 | ) |
Total loans | $ | 208,249 |
| $ | 207,220 |
| — |
| | $ | 207,280 |
| $ | 205,089 |
| 1 |
|
Core loans | 208,125 |
| 207,052 |
| 1 |
| | 207,145 |
| 204,902 |
| 1 |
|
| | | | | | | |
Average loans by client segment | | | | | | | |
Middle Market Banking | $ | 54,806 |
| $ | 57,258 |
| (4 | ) | | $ | 56,221 |
| $ | 57,121 |
| (2 | ) |
Corporate Client Banking | 51,389 |
| 49,004 |
| 5 |
| | 49,407 |
| 47,650 |
| 4 |
|
Commercial Real Estate Banking(a) | 101,044 |
| 99,627 |
| 1 |
| | 100,663 |
| 98,880 |
| 2 |
|
Other(a) | 1,010 |
| 1,331 |
| (24 | ) | | 989 |
| 1,438 |
| (31 | ) |
Total Commercial Banking loans | $ | 208,249 |
| $ | 207,220 |
| — |
| | $ | 207,280 |
| $ | 205,089 |
| 1 |
|
| | | | | | | |
Client deposits and other third-party liabilities | $ | 172,714 |
| $ | 168,169 |
| 3 |
| | $ | 169,427 |
| $ | 171,483 |
| (1 | ) |
Equity | 22,000 |
| 20,000 |
| 10 |
| | 22,000 |
| 20,000 |
| 10 |
|
| | | | | | | |
Headcount | 11,501 |
| 10,937 |
| 5 | % | | 11,501 |
| 10,937 |
| 5 | % |
| |
(a) | Effective in the first quarter of 2019, client segment data includes Commercial Real Estate Banking which comprises the former Commercial Term Lending and Real Estate Banking client segments, and Community Development Banking (previously part of Other). The prior period amounts have been revised to conform with the current period presentation. |
| | Selected metrics (continued) | Selected metrics (continued) | | | | | | | | | Selected metrics (continued) | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except ratios) | 2018 |
| 2017 |
| Change |
| | 2018 |
| | 2017 |
| | Change | 2019 |
| 2018 |
| Change |
| | 2019 |
| | 2018 |
| | Change |
Credit data and quality statistics | | | | | | | | | | | | | | | | |
Net charge-offs/(recoveries) | $ | (18 | ) | $ | 19 |
| NM |
| | $ | 16 |
| | $ | 17 |
| | (6 | )% | $ | 45 |
| $ | (18 | ) | NM |
| | $ | 71 |
| | $ | 16 |
| | 344 | % |
Nonperforming assets | | | | | | | | | | | | | | | | |
Nonaccrual loans: | | | | | | | | | | | | | | | | |
Nonaccrual loans retained(a) | $ | 452 |
| $ | 744 |
| (39 | )% | | $ | 452 |
| | $ | 744 |
| | (39 | )% | $ | 659 |
| $ | 452 |
| 46 | % | | $ | 659 |
| | $ | 452 |
| | 46 | % |
Nonaccrual loans held-for-sale and loans at fair value | 5 |
| — |
| NM |
| | 5 |
| | — |
| | NM |
| — |
| 5 |
| NM |
| | — |
| | 5 |
| | NM |
|
Total nonaccrual loans | $ | 457 |
| $ | 744 |
| (39 | ) | | $ | 457 |
| | $ | 744 |
| | (39 | ) | $ | 659 |
| $ | 457 |
| 44 |
| | $ | 659 |
| | $ | 457 |
| | 44 |
|
Assets acquired in loan satisfactions | 2 |
| 3 |
| (33 | ) | | 2 |
| | 3 |
| | (33 | ) | 19 |
| 2 |
| NM |
| | 19 |
| | 2 |
| | NM |
|
Total nonperforming assets | $ | 459 |
| $ | 747 |
| (39 | ) | | $ | 459 |
| | $ | 747 |
| | (39 | ) | $ | 678 |
| $ | 459 |
| 48 |
| | $ | 678 |
| | $ | 459 |
| | 48 |
|
Allowance for credit losses: | | | | | | | | | | | | | | | | |
Allowance for loan losses | $ | 2,619 |
| $ | 2,620 |
| — |
| | $ | 2,619 |
| | $ | 2,620 |
| | — |
| $ | 2,759 |
| $ | 2,619 |
| 5 |
| | $ | 2,759 |
| | $ | 2,619 |
| | 5 |
|
Allowance for lending-related commitments | 249 |
| 323 |
| (23 | ) | | 249 |
| | 323 |
| | (23 | ) | 293 |
| 249 |
| 18 |
| | 293 |
| | 249 |
| | 18 |
|
Total allowance for credit losses | $ | 2,868 |
| $ | 2,943 |
| (3 | )% | | $ | 2,868 |
| | $ | 2,943 |
| | (3 | )% | $ | 3,052 |
| $ | 2,868 |
| 6 | % | | $ | 3,052 |
| | $ | 2,868 |
| | 6 | % |
Net charge-off/(recovery) rate(b) | (0.03 | )% | 0.04 | % | | | 0.01 | % | | 0.01 | % | | | 0.09 | % | (0.03 | )% | | | 0.05 | % | | 0.01 | % | | |
Allowance for loan losses to period-end loans retained | 1.28 |
| 1.30 |
| | | 1.28 |
| | 1.30 |
| | | 1.32 |
| 1.28 |
| | | 1.32 |
| | 1.28 |
| | |
Allowance for loan losses to nonaccrual loans retained(a) | 579 |
| 352 |
| | | 579 |
| | 352 |
| | | 419 |
| 579 |
| | | 419 |
| | 579 |
| | |
Nonaccrual loans to period-end total loans | 0.22 |
| 0.37 |
| | | 0.22 |
| | 0.37 |
| | | 0.31 |
| 0.22 |
| | | 0.31 |
| | 0.22 |
| | |
| |
(a) | Allowance for loan losses of $105$119 million and $128$105 million was held against nonaccrual loans retained at September 30, 20182019 and 2017,2018, respectively. |
| |
(b) | Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate. |
|
| | | | |
ASSET & WEALTH MANAGEMENT |
ForRefer to pages 74–76 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on pages 174–175 for a discussion of the business profile of AWM, refer to AWM.pages 70–72 of JPMorgan Chase’s 2017 Annual Report and Line of Business Metrics on pages 181–182.
Effective January 1, 2018, the Firm adopted several new accounting standards; the guidance which had the most significant impact on the AWM segment results was revenue recognition. The revenue recognition guidance was applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
| | Selected income statement data | Selected income statement data | | | | Selected income statement data | | | |
(in millions, except ratios) | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
2018 |
| 2017 |
| Change |
| | 2018 |
| 2017 |
| Change |
| 2019 |
| 2018 |
| Change |
| | 2019 |
| 2018 |
| Change |
|
Revenue | | | | | | | | | | |
Asset management, administration and commissions | $ | 2,563 |
| $ | 2,466 |
| 4 | % | | $ | 7,623 |
| $ | 7,205 |
| 6 | % | $ | 2,574 |
| $ | 2,563 |
| — | % | | $ | 7,558 |
| $ | 7,623 |
| (1 | )% |
All other income | 117 |
| 151 |
| (23 | ) | | 374 |
| 472 |
| (21 | ) | 139 |
| 117 |
| 19 |
| | 431 |
| 374 |
| 15 |
|
Noninterest revenue | 2,680 |
| 2,617 |
| 2 |
| | 7,997 |
| 7,677 |
| 4 |
| 2,713 |
| 2,680 |
| 1 |
| | 7,989 |
| 7,997 |
| — |
|
Net interest income | 879 |
| 855 |
| 3 |
| | 2,640 |
| 2,520 |
| 5 |
| 855 |
| 879 |
| (3 | ) | | 2,627 |
| 2,640 |
| — |
|
Total net revenue | 3,559 |
| 3,472 |
| 3 |
| | 10,637 |
| 10,197 |
| 4 |
| 3,568 |
| 3,559 |
| — |
| | 10,616 |
| 10,637 |
| — |
|
| | | | | | | | | | |
Provision for credit losses | 23 |
| 8 |
| 188 |
| | 40 |
| 30 |
| 33 |
| 44 |
| 23 |
| 91 |
| | 48 |
| 40 |
| 20 |
|
| | | | | | | | | | |
Noninterest expense | | | | | | | | | | |
Compensation expense | 1,391 |
| 1,319 |
| 5 |
| | 4,112 |
| 3,928 |
| 5 |
| 1,391 |
| 1,391 |
| — |
| | 4,259 |
| 4,112 |
| 4 |
|
Noncompensation expense | 1,194 |
| 1,089 |
| 10 |
| | 3,620 |
| 3,678 |
| (2 | ) | 1,231 |
| 1,194 |
| 3 |
| | 3,606 |
| 3,620 |
| — |
|
Total noninterest expense | 2,585 |
| 2,408 |
| 7 |
| | 7,732 |
| 7,606 |
| 2 |
| 2,622 |
| 2,585 |
| 1 |
| | 7,865 |
| 7,732 |
| 2 |
|
| | | | | | | | | | |
Income before income tax expense | 951 |
| 1,056 |
| (10 | ) | | 2,865 |
| 2,561 |
| 12 |
| 902 |
| 951 |
| (5 | ) | | 2,703 |
| 2,865 |
| (6 | ) |
Income tax expense | 227 |
| 382 |
| (41 | ) | | 616 |
| 878 |
| (30 | ) | 234 |
| 227 |
| 3 |
| | 655 |
| 616 |
| 6 |
|
Net income | $ | 724 |
| $ | 674 |
| 7 |
| | $ | 2,249 |
| $ | 1,683 |
| 34 |
| $ | 668 |
| $ | 724 |
| (8 | ) | | $ | 2,048 |
| $ | 2,249 |
| (9 | ) |
| | | | | | | | | | |
Revenue by line of business | | | | | | | | | | |
Asset Management | $ | 1,827 |
| $ | 1,814 |
| 1 |
| | $ | 5,440 |
| $ | 5,288 |
| 3 |
| $ | 1,816 |
| $ | 1,827 |
| (1 | ) | | $ | 5,362 |
| $ | 5,440 |
| (1 | ) |
Wealth Management | 1,732 |
| 1,658 |
| 4 |
| | 5,197 |
| 4,909 |
| 6 |
| 1,752 |
| 1,732 |
| 1 |
| | 5,254 |
| 5,197 |
| 1 |
|
Total net revenue | $ | 3,559 |
| $ | 3,472 |
| 3 | % | | $ | 10,637 |
| $ | 10,197 |
| 4 | % | $ | 3,568 |
| $ | 3,559 |
| — | % | | $ | 10,616 |
| $ | 10,637 |
| — | % |
| | | | | | | | | | |
Financial ratios | | | | | | | | | | |
Return on equity | 31 | % | 29 | % | | | 32 | % | 24 | % | | 24 | % | 31 | % | | | 25 | % | 32 | % | |
Overhead ratio | 73 |
| 69 |
| | | 73 |
| 75 |
| | 73 |
| 73 |
| | | 74 |
| 73 |
| |
Pre-tax margin ratio: | | | | | | | | | | |
Asset Management | 27 |
| 29 |
| | | 27 |
| 19 |
| | 25 |
| 27 |
| | | 25 |
| 27 |
| |
Wealth Management | 26 |
| 32 |
| | | 27 |
| 31 |
| | 25 |
| 26 |
| | | 26 |
| 27 |
| |
Asset & Wealth Management | 27 |
| 30 |
| | | 27 |
| 25 |
| | 25 |
| 27 |
| | | 25 |
| 27 |
| |
Quarterly results
Net income was $724$668 million, an increasea decrease of 7%8%.
Net revenue wasof $3.6 billion an increase of 3%.was flat. Net interest income was $879$855 million, updown 3%, driven by deposit margin expansioncompression, largely offset by deposit and loan growth. Noninterest revenue was $2.7 billion, up 2%1%, driven by higher management fees on higheraverage market levels andlevels.
The provision for credit losses was $44 million, driven by net long-term product inflows, partially offset by fee compression andcharge-offs, as well as net additions to the impact of lower market valuation gains, including on seed capital investments.allowance for loan losses predominantly due to loan growth.
Noninterest expense was $2.6 billion, up 7%an increase of 1%, largelypredominantly driven by continued investments in technology and advisors, partially offset by lower distribution and technology, as well as higher external fees on revenue growth.legal fees.
Year-to-date results
Net income was $2.2$2.0 billion, an increasea decrease of 34%9%.
Net revenue wasof $10.6 billion an increase of 4%.was flat. Net interest income wasof $2.6 billion up 5%, drivenwas flat, reflecting loan growth, offset by deposit margin expansion and loan growth.compression. Noninterest revenue wasof $8.0 billion up 4%,was flat, reflecting a shift in the mix toward lower fee products and lower brokerage activity, offset by higher net investment valuation gains.
The provision for credit losses was $48 million, driven by higher management fees on higher market levels and net long-term product inflows, partially offset by fee compression andcharge-offs, as well as net additions to the impact of lower market valuation gains, including on seed capital investments.allowance for loan losses predominantly due to loan growth.
Noninterest expense was $7.7$7.9 billion, an increase of 2%, predominantly driven by higher external fees on revenue growth andcontinued investments in technology and advisors, and technology,partially offset by higher legal expense in the prior year.lower distribution fees.
| | Selected metrics | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except ranking data, headcount and ratios) | 2018 |
| 2017 |
| Change |
| | 2018 |
| 2017 |
| Change |
| 2019 |
| 2018 |
| Change |
| | 2019 |
| 2018 |
| Change |
|
% of JPM mutual fund assets rated as 4- or 5-star(a) | 64 | % | 65 | % | | | 64 | % | 65 | % | | 65 | % | 64 | % | | | 65 | % | 64 | % | |
% of JPM mutual fund assets ranked in 1st or 2nd quartile:(b) | | | | | | | | | | |
1 year | 65 |
| 61 |
| | | 65 |
| 61 |
| | 74 |
| 65 |
| | | 74 |
| 65 |
| |
3 years | 64 |
| 82 |
| | | 64 |
| 82 |
| | 80 |
| 64 |
| | | 80 |
| 64 |
| |
5 years | 83 |
| 81 |
| | | 83 |
| 81 |
| | 86 |
| 83 |
| | | 86 |
| 83 |
| |
| | | | | | | | | | |
Selected balance sheet data (period-end) | | | | | | | | | | |
Total assets | $ | 166,716 |
| $ | 149,170 |
| 12 | % | | $ | 166,716 |
| $ | 149,170 |
| 12 | % | $ | 174,226 |
| $ | 166,716 |
| 5 | % | | $ | 174,226 |
| $ | 166,716 |
| 5 | % |
Loans | 143,162 |
| 128,038 |
| 12 |
| | 143,162 |
| 128,038 |
| 12 |
| 153,245 |
| 143,162 |
| 7 |
| | 153,245 |
| 143,162 |
| 7 |
|
Core loans | 143,162 |
| 128,038 |
| 12 |
| | 143,162 |
| 128,038 |
| 12 |
| 153,245 |
| 143,162 |
| 7 |
| | 153,245 |
| 143,162 |
| 7 |
|
Deposits | 130,497 |
| 141,409 |
| (8 | ) | | 130,497 |
| 141,409 |
| (8 | ) | 138,439 |
| 130,497 |
| 6 |
| | 138,439 |
| 130,497 |
| 6 |
|
Equity | 9,000 |
| 9,000 |
| — |
| | 9,000 |
| 9,000 |
| — |
| 10,500 |
| 9,000 |
| 17 |
| | 10,500 |
| 9,000 |
| 17 |
|
| | | | | | | | | | |
Selected balance sheet data (average) | | | | | | | | | | |
Total assets | $ | 161,982 |
| $ | 146,388 |
| 11 |
| | $ | 158,218 |
| $ | 142,541 |
| 11 |
| $ | 171,121 |
| $ | 161,982 |
| 6 |
| | $ | 168,688 |
| $ | 158,218 |
| 7 |
|
Loans | 140,558 |
| 125,445 |
| 12 |
| | 136,663 |
| 122,002 |
| 12 |
| 150,486 |
| 140,558 |
| 7 |
| | 147,481 |
| 136,663 |
| 8 |
|
Core loans | 140,558 |
| 125,445 |
| 12 |
| | 136,663 |
| 122,002 |
| 12 |
| 150,486 |
| 140,558 |
| 7 |
| | 147,481 |
| 136,663 |
| 8 |
|
Deposits | 133,021 |
| 144,496 |
| (8 | ) | | 138,885 |
| 151,311 |
| (8 | ) | 138,822 |
| 133,021 |
| 4 |
| | 139,127 |
| 138,885 |
| — |
|
Equity | 9,000 |
| 9,000 |
| — |
| | 9,000 |
| 9,000 |
| — |
| 10,500 |
| 9,000 |
| 17 |
| | 10,500 |
| 9,000 |
| 17 |
|
| | | | | | | | | | |
Headcount | 23,747 |
| 22,685 |
| 5 |
| | 23,747 |
| 22,685 |
| 5 |
| 24,228 |
| 23,747 |
| 2 |
| | 24,228 |
| 23,747 |
| 2 |
|
| | | | | | | | | | |
Number of Wealth Management client advisors | 2,808 |
| 2,581 |
| 9 |
| | 2,808 |
| 2,581 |
| 9 |
| 2,872 |
| 2,808 |
| 2 |
| | 2,872 |
| 2,808 |
| 2 |
|
| | | | | | | | | | |
Credit data and quality statistics | | | | | | | | | | |
Net charge-offs | $ | 11 |
| $ | 5 |
| 120 |
| | $ | 7 |
| $ | 10 |
| (30 | ) | $ | 26 |
| $ | 11 |
| 136 |
| | $ | 27 |
| $ | 7 |
| 286 |
|
Nonaccrual loans | 285 |
| 337 |
| (15 | ) | | 285 |
| 337 |
| (15 | ) | 176 |
| 285 |
| (38 | ) | | 176 |
| 285 |
| (38 | ) |
Allowance for credit losses: | | | | | | | | | | |
Allowance for loan losses | $ | 317 |
| $ | 285 |
| 11 |
| | $ | 317 |
| $ | 285 |
| 11 |
| $ | 350 |
| $ | 317 |
| 10 |
| | $ | 350 |
| $ | 317 |
| 10 |
|
Allowance for lending-related commitments | 15 |
| 10 |
| 50 |
| | 15 |
| 10 |
| 50 |
| 16 |
| 15 |
| 7 |
| | 16 |
| 15 |
| 7 |
|
Total allowance for credit losses | $ | 332 |
| $ | 295 |
| 13 | % | | $ | 332 |
| $ | 295 |
| 13 | % | $ | 366 |
| $ | 332 |
| 10 | % | | $ | 366 |
| $ | 332 |
| 10 | % |
Net charge-off rate | 0.03 | % | 0.02 | % | | | 0.01 | % | 0.01 | % | | 0.07 | % | 0.03 | % | | | 0.02 | % | 0.01 | % | |
Allowance for loan losses to period-end loans | 0.22 |
| 0.22 |
| | | 0.22 |
| 0.22 |
| | 0.23 |
| 0.22 |
| | | 0.23 |
| 0.22 |
| |
Allowance for loan losses to nonaccrual loans | 111 |
| 85 |
| | | 111 |
| 85 |
| | 199 |
| 111 |
| | | 199 |
| 111 |
| |
Nonaccrual loans to period-end loans | 0.20 |
| 0.26 |
| | | 0.20 |
| 0.26 |
| | 0.11 |
| 0.20 |
| | | 0.11 |
| 0.20 |
| |
| |
(a) | Represents the “overall star rating” derived from Morningstar for the U.S., the U.K., Luxembourg, Hong Kong and Taiwan domiciled funds; and Nomura “star rating” for Japan domiciled funds. Includes only Asset Management retail open-ended mutual funds that have a rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil and India domiciled funds. |
| |
(b) | Quartile ranking sourced from: Lipper for the U.S. and Taiwan domiciled funds; Morningstar for the U.K., Luxembourg and Hong Kong domiciled funds; Nomura for Japan domiciled funds and Fund Doctor for South Korea domiciled funds. Includes only Asset Management retail open-ended mutual funds that are ranked by the aforementioned sources. Excludes money market funds, Undiscovered Managers Fund, and Brazil and India domiciled funds. |
Client assets of $2.9$3.1 trillion and assets under management of $2.1$2.2 trillion were both up 7%, and 8% respectively, predominantly driven by net inflows into long-term and liquidity products as well as higher market levels.levels globally.
| | Client assets | | | | |
| September 30, | September 30, |
(in billions) | 2018 |
| 2017 |
| Change |
| 2019 |
| 2018 |
| Change |
|
Assets by asset class | | | | |
Liquidity | $ | 463 |
| $ | 441 |
| 5 | % | $ | 505 |
| $ | 463 |
| 9 | % |
Fixed income | 457 |
| 461 |
| (1 | ) | 590 |
| 457 |
| 29 |
|
Equity | 452 |
| 405 |
| 12 |
| 437 |
| 452 |
| (3 | ) |
Multi-asset and alternatives | 705 |
| 638 |
| 11 |
| 714 |
| 705 |
| 1 |
|
Total assets under management | 2,077 |
| 1,945 |
| 7 |
| 2,246 |
| 2,077 |
| 8 |
|
Custody/brokerage/administration/deposits | 790 |
| 733 |
| 8 |
| 815 |
| 790 |
| 3 |
|
Total client assets | $ | 2,867 |
| $ | 2,678 |
| 7 |
| $ | 3,061 |
| $ | 2,867 |
| 7 |
|
| | | | |
Memo: | | | | |
Alternatives client assets (a) | $ | 172 |
| $ | 161 |
| 7 |
| $ | 183 |
| $ | 172 |
| 6 |
|
| | | | |
Assets by client segment | | | | |
Private Banking | $ | 576 |
| $ | 507 |
| 14 |
| $ | 636 |
| $ | 576 |
| 10 |
|
Institutional | 945 |
| 921 |
| 3 |
| 1,029 |
| 945 |
| 9 |
|
Retail | 556 |
| 517 |
| 8 |
| 581 |
| 556 |
| 4 |
|
Total assets under management | $ | 2,077 |
| $ | 1,945 |
| 7 |
| $ | 2,246 |
| $ | 2,077 |
| 8 |
|
| | | | |
Private Banking | $ | 1,339 |
| $ | 1,217 |
| 10 |
| $ | 1,424 |
| $ | 1,339 |
| 6 |
|
Institutional | 967 |
| 941 |
| 3 |
| 1,051 |
| 967 |
| 9 |
|
Retail | 561 |
| 520 |
| 8 |
| 586 |
| 561 |
| 4 |
|
Total client assets | $ | 2,867 |
| $ | 2,678 |
| 7 | % | $ | 3,061 |
| $ | 2,867 |
| 7 | % |
| |
(a) | Represents assets under management, as well as client balances in brokerage accountaccounts |
| | Client assets (continued) | | | | | | |
| Three months ended September 30, | Nine months ended September 30, | Three months ended September 30, | Nine months ended September 30, |
(in billions) | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Assets under management rollforward | | | | | | |
Beginning balance | $ | 2,028 |
| $ | 1,876 |
| | $ | 2,034 |
| $ | 1,771 |
| $ | 2,178 |
| $ | 2,028 |
| | $ | 1,987 |
| $ | 2,034 |
|
Net asset flows: | | | | | | |
Liquidity | 14 |
| 5 |
| | 10 |
| (1 | ) | 24 |
| 14 |
| | 23 |
| 10 |
|
Fixed income | 3 |
| 17 |
| | (9 | ) | 24 |
| 41 |
| 3 |
| | 97 |
| (9 | ) |
Equity | 1 |
| (5 | ) | | 8 |
| (12 | ) | (2 | ) | 1 |
| | (9 | ) | 8 |
|
Multi-asset and alternatives | 4 |
| 9 |
| | 29 |
| 26 |
| 1 |
| 4 |
| | (2 | ) | 29 |
|
Market/performance/other impacts | 27 |
| 43 |
| | 5 |
| 137 |
| 4 |
| 27 |
| | 150 |
| 5 |
|
Ending balance, September 30 | $ | 2,077 |
| $ | 1,945 |
| | $ | 2,077 |
| $ | 1,945 |
| $ | 2,246 |
| $ | 2,077 |
| | $ | 2,246 |
| $ | 2,077 |
|
| | | | | | |
Client assets rollforward | | | | | | |
Beginning balance | $ | 2,799 |
| $ | 2,598 |
| | $ | 2,789 |
| $ | 2,453 |
| $ | 2,998 |
| $ | 2,799 |
| | $ | 2,733 |
| $ | 2,789 |
|
Net asset flows | 33 |
| 25 |
| | 58 |
| 37 |
| 59 |
| 33 |
| | 120 |
| 58 |
|
Market/performance/other impacts | 35 |
| 55 |
| | 20 |
| 188 |
| 4 |
| 35 |
| | 208 |
| 20 |
|
Ending balance, September 30 | $ | 2,867 |
| $ | 2,678 |
| | $ | 2,867 |
| $ | 2,678 |
| $ | 3,061 |
| $ | 2,867 |
| | $ | 3,061 |
| $ | 2,867 |
|
| | International metrics | | | | | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions) | 2018 |
| 2017 |
| Change |
| | 2018 |
| 2017 |
| Change |
| 2019 |
| 2018 |
| Change |
| | 2019 |
| 2018 |
| Change |
|
Total net revenue (a) | | | | | | | | | | |
Europe/Middle East/Africa | $ | 677 |
| $ | 697 |
| (3 | )% | | $ | 2,095 |
| $ | 1,975 |
| 6 | % | $ | 672 |
| $ | 677 |
| (1 | )% | | $ | 2,014 |
| $ | 2,095 |
| (4 | )% |
Asia/Pacific | 377 |
| 358 |
| 5 |
| | 1,161 |
| 1,018 |
| 14 |
| 376 |
| 377 |
| — |
| | 1,104 |
| 1,161 |
| (5 | ) |
Latin America/Caribbean | 228 |
| 227 |
| — |
| | 689 |
| 628 |
| 10 |
| 218 |
| 228 |
| (4 | ) | | 658 |
| 689 |
| (4 | ) |
Total international net revenue | 1,282 |
| 1,282 |
| — |
| | 3,945 |
| 3,621 |
| 9 |
| 1,266 |
| 1,282 |
| (1 | ) | | 3,776 |
| 3,945 |
| (4 | ) |
North America | 2,277 |
| 2,190 |
| 4 |
| | 6,692 |
| 6,576 |
| 2 |
| 2,302 |
| 2,277 |
| 1 |
| | 6,840 |
| 6,692 |
| 2 |
|
Total net revenue(a) | $ | 3,559 |
| $ | 3,472 |
| 3 | % | | $ | 10,637 |
| $ | 10,197 |
| 4 | % | $ | 3,568 |
| $ | 3,559 |
| — |
| | $ | 10,616 |
| $ | 10,637 |
| — | % |
| |
(a) | Regional revenue is based on the domicile of the client. |
| | | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in billions) | 2018 |
| 2017 |
| Change |
| | 2018 |
| 2017 |
| Change |
| 2019 |
| 2018 |
| Change |
| | 2019 |
| 2018 |
| Change |
|
Assets under management | | | | | | | | | | |
Europe/Middle East/Africa | $ | 375 |
| $ | 357 |
| 5 | % | | $ | 375 |
| $ | 357 |
| 5 | % | $ | 387 |
| $ | 375 |
| 3 | % | | $ | 387 |
| $ | 375 |
| 3 | % |
Asia/Pacific | 164 |
| 144 |
| 14 |
| | 164 |
| 144 |
| 14 |
| 183 |
| 164 |
| 12 |
| | 183 |
| 164 |
| 12 |
|
Latin America/Caribbean | 65 |
| 59 |
| 10 |
| | 65 |
| 59 |
| 10 |
| 70 |
| 65 |
| 8 |
| | 70 |
| 65 |
| 8 |
|
Total international assets under management | 604 |
| 560 |
| 8 |
| | 604 |
| 560 |
| 8 |
| 640 |
| 604 |
| 6 |
| | 640 |
| 604 |
| 6 |
|
North America | 1,473 |
| 1,385 |
| 6 |
| | 1,473 |
| 1,385 |
| 6 |
| 1,606 |
| 1,473 |
| 9 |
| | 1,606 |
| 1,473 |
| 9 |
|
Total assets under management | $ | 2,077 |
| $ | 1,945 |
| 7 |
| | $ | 2,077 |
| $ | 1,945 |
| 7 |
| $ | 2,246 |
| $ | 2,077 |
| 8 |
| | $ | 2,246 |
| $ | 2,077 |
| 8 |
|
| | | | | | | | | | |
Client assets | | | | | | | | | | |
Europe/Middle East/Africa | $ | 435 |
| $ | 411 |
| 6 |
| | $ | 435 |
| $ | 411 |
| 6 |
| $ | 455 |
| $ | 435 |
| 5 |
| | $ | 455 |
| $ | 435 |
| 5 |
|
Asia/Pacific | 228 |
| 206 |
| 11 |
| | 228 |
| 206 |
| 11 |
| 253 |
| 228 |
| 11 |
| | 253 |
| 228 |
| 11 |
|
Latin America/Caribbean | 162 |
| 157 |
| 3 |
| | 162 |
| 157 |
| 3 |
| 172 |
| 162 |
| 6 |
| | 172 |
| 162 |
| 6 |
|
Total international client assets | 825 |
| 774 |
| 7 |
| | 825 |
| 774 |
| 7 |
| 880 |
| 825 |
| 7 |
| | 880 |
| 825 |
| 7 |
|
North America | 2,042 |
| 1,904 |
| 7 |
| | 2,042 |
| 1,904 |
| 7 |
| 2,181 |
| 2,042 |
| 7 |
| | 2,181 |
| 2,042 |
| 7 |
|
Total client assets | $ | 2,867 |
| $ | 2,678 |
| 7 | % | | $ | 2,867 |
| $ | 2,678 |
| 7 | % | $ | 3,061 |
| $ | 2,867 |
| 7 | % | | $ | 3,061 |
| $ | 2,867 |
| 7 | % |
ForRefer to pages 77–78 of JPMorgan Chase’s 2018 Form 10-K for a discussion of Corporate, refer to pages 73–74 of JPMorgan Chase’s 2017 Annual Report.Corporate.
| | Selected income statement and balance sheet data | Selected income statement and balance sheet data | | | | | | | Selected income statement and balance sheet data | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions, except headcount) | 2018 |
| 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
| 2019 |
| 2018 |
| | Change |
| | 2019 |
| | 2018 |
| | Change |
|
Revenue | | | | | | | | | | | | | | | | | | |
Principal transactions | $ | (161 | ) | $ | (2 | ) | | NM |
| | $ | (222 | ) | | $ | 161 |
| | NM |
| $ | 10 |
| $ | (161 | ) | | NM |
| | $ | (227 | ) | | $ | (222 | ) | | (2 | )% |
Investment securities losses | (46 | ) | — |
| | NM |
| | (371 | ) | | (37 | ) | | NM |
| |
All other income/(loss)(a) | 30 |
| 111 |
| | (73 | )% | | 373 |
| | 839 |
| | (56 | )% | |
Investment securities gains/(losses) | | 78 |
| (46 | ) | | NM |
| | 135 |
| | (371 | ) | | NM |
All other income | | 32 |
| 30 |
| | 7 | % | | 95 |
| | 373 |
| | (75) |
Noninterest revenue | (177 | ) | 109 |
| | NM |
| | (220 | ) | | 963 |
| | NM |
| 120 |
| (177 | ) | | NM |
| | 3 |
| | (220 | ) | | NM |
Net interest income | 74 |
| 77 |
| | (4 | )% | | (35 | ) | | 2 |
| | NM |
| 572 |
| 74 |
| | NM |
| | 1,436 |
| | (35 | ) | | NM |
Total net revenue(b)(a) | (103 | ) | 186 |
| | NM |
| | (255 | ) | | 965 |
| | NM |
| 692 |
| (103 | ) | | NM |
| | 1,439 |
| | (255 | ) | | NM |
| | | | | | | | | | | | | | | | | | |
Provision for credit losses | 2 |
| — |
| | NM |
| | (3 | ) | | — |
| | NM |
| — |
| 2 |
| | NM |
| | — |
| | (3 | ) | | NM |
| | | | | | | | | | | | | | | | | | |
Noninterest expense(c)(b) | 28 |
| 74 |
| | (62 | )% | | 394 |
| | 355 |
| | 11 | % | 281 |
| 28 |
| | NM |
| | 724 |
| | 394 |
| | 84 |
Income/(loss) before income tax expense/(benefit) | (133 | ) | 112 |
| | NM |
| | (646 | ) | | 610 |
| | NM |
| 411 |
| (133 | ) | | NM |
| | 715 |
| | (646 | ) | | NM |
Income tax expense/(benefit) | 12 |
| 34 |
| | (65 | )% | | 18 |
| | (73 | ) | | NM |
| 18 |
| 12 |
| | 50 |
| | (757 | ) | | 18 |
| | NM |
Net income/(loss) | $ | (145 | ) | $ | 78 |
| | NM |
| | $ | (664 | ) | | $ | 683 |
| | NM |
| $ | 393 |
| $ | (145 | ) | | NM |
| | $ | 1,472 |
| | $ | (664 | ) | | NM |
Total net revenue | | | | | | | | | | | | | | | | | | |
Treasury and CIO | $ | 186 |
| $ | 265 |
| | (30 | )% | | $ | 235 |
| | $ | 344 |
| | (32 | )% | $ | 801 |
| $ | 186 |
| | 331 |
| | $ | 1,930 |
| | $ | 235 |
| | NM |
Other Corporate | (289 | ) | (79 | ) | | (266 | ) | | (490 | ) | | 621 |
| | NM |
| (109 | ) | (289 | ) | | 62 |
| | (491 | ) | | (490 | ) | | — |
Total net revenue | $ | (103 | ) | $ | 186 |
| | NM |
| | $ | (255 | ) | | $ | 965 |
| | NM |
| $ | 692 |
| $ | (103 | ) | | NM |
| | $ | 1,439 |
| | $ | (255 | ) | | NM |
Net income/(loss) | | | | | | | | | | | | | | | | | | |
Treasury and CIO | $ | 96 |
| $ | 75 |
| | 28 | % | | $ | (244 | ) | | $ | (6 | ) | | NM |
| $ | 576 |
| $ | 96 |
| | 500 |
| | $ | 1,372 |
| | $ | (244 | ) | | NM |
Other Corporate | (241 | ) | 3 |
| | NM |
| | (420 | ) | | 689 |
| | NM |
| (183 | ) | (241 | ) | | 24 |
| | 100 |
| | (420 | ) | | NM |
Total net income/(loss) | $ | (145 | ) | $ | 78 |
| | NM |
| | $ | (664 | ) | | $ | 683 |
| | NM |
| $ | 393 |
| $ | (145 | ) | | NM |
| | $ | 1,472 |
| | $ | (664 | ) | | NM |
Total assets (period-end) | $ | 742,693 |
| $ | 804,573 |
| | (8 | ) | | $ | 742,693 |
| | $ | 804,573 |
| | (8 | ) | $ | 812,333 |
| $ | 742,693 |
| | 9 |
| | $ | 812,333 |
| | $ | 742,693 |
| | 9 |
Loans (period-end) | 1,556 |
| 1,614 |
| | (4 | ) | | 1,556 |
| | 1,614 |
| | (4 | ) | 1,705 |
| 1,556 |
| | 10 |
| | 1,705 |
| | 1,556 |
| | 10 |
Core loans(d)(c) | 1,556 |
| 1,614 |
| | (4 | ) | | 1,556 |
| | 1,614 |
| | (4 | ) | 1,706 |
| 1,556 |
| | 10 |
| | 1,706 |
| | 1,556 |
| | 10 |
Headcount(e) | 36,686 |
| 34,012 |
| | 8 | % | | 36,686 |
| | 34,012 |
| | 8 | % | 38,155 |
| 36,686 |
| | 4 | % | | 38,155 |
| | 36,686 |
| | 4 | % |
| |
(a) | Included revenue related to a legal settlementtax-equivalent adjustments, driven by tax-exempt income from municipal bonds, of $645$74 million and $94 million for the three months ended September 30, 2019 and 2018, respectively, and $241 million and $287 million for the nine months ended September 30, 2017.2019 and 2018, respectively. |
| |
(b) | Included tax-equivalent adjustments, predominantly due to tax-exempt income from municipal bond investmentsa net legal benefit of $94$(32) million and $216$(175) million for the three months ended September 30, 20182019 and 2017,2018, respectively, and $287$(189) million and $681$(225) million for the nine months ended September 30, 2019 and 2018, and 2017, respectively. The decrease in taxable-equivalent adjustments reflects the impact of the TCJA. |
| |
(c) | Included legal expense/(benefit) of $(175) million and $(148) million for the three months ended September 30, 2018 and 2017, respectively, and $(225) million and $(360) million for nine months ended September 30, 2018 and 2017, respectively. |
| |
(d) | Average core loans were $1.6$1.7 billion and $1.7$1.6 billion for the three months ended September 30, 20182019 and 2017,2018, respectively, and $1.7 billion and $1.6 billion for both the nine months ended September 30, 20182019 and 2017, respectively. |
| |
(e) | Effective in the first quarter of 2018, certain Compliance staff were transferred from Corporate to CB. The prior period amounts have been revised to conform with the current period presentation. For a further discussion of this transfer, refer to CB segment results on page 32.2018. |
Quarterly results
Net lossincome was $145$393 million, compared with a net incomeloss of $78$145 million in the prior year.
Net revenue was $692 million, compared with a net loss of $103 million largelyin the prior year, driven by markdownshigher net interest income and noninterest revenue. Net interest income was driven by balance sheet growth and changes in mix, partially offset by lower rates. Net interest income also includes income related to the unwind of the internal funding provided to CCB upon the sale of certain mortgage loans. The income reflects the net present value of that funding and is recognized as a charge to net interest income in CCB. Refer to CCB on pages 23–24 of this Form 10-Q and Funds Transfer Pricing (“FTP”) on page 60 of the Firm’s 2018 Form 10-K for further information.
Noninterest revenue increased reflecting small net gains on certain legacy private equity investments of approximately $220 million.compared to net losses in the prior year.
Noninterest expense of $281 million was $28up $253 million includingdue to higher investments in technology and a lower net legal benefit compared with the prior year.
The current period included tax benefits related to the resolution of certain tax audits as well as other tax adjustments, which were partially offset by higher real estate expense.
Current period incomechanges to certain tax expense reflectsreserves. The prior year reflected a net benefit of $132 million resulting from changes in estimates under the TCJA related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings, which werewas more than offset by changes to certain tax reserves as well asand other tax adjustments.
Year-to-date results
Net lossincome was $664 million,$1.5 billion, compared with a net incomeloss of $683$664 million in the prior year.
Net revenue was $1.4 billion, compared with a net loss of $255 million in the prior year driven by higher net interest income and noninterest revenue. Net interest income was
driven by balance sheet growth and changes in mix and includes the income related to the unwind of the internal funding, as mentioned above.
Noninterest revenue increased reflecting:
investment securities gains compared with a gain of $965 millionlosses in the prior-year. The current period includes investment securities losses relatedprior year due to the repositioning of the investment securities portfolio and
lower net valuation losses largely driven by markdowns on certain legacy private equity investments. investments,
partially offset by
losses on cash deployment transactions which were more than offset by the related net interest income earned on those transactions.
Noninterest expense of $724 million, was up $330 million reflecting:
higher investments in technology and real estate,
contributions to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter, and
higher pension costs due to changes to actuarial assumptions and estimates.
The prior year included a $645$174 million benefit fromloss on the liquidation of a legal settlement.entity.
IncomeThe current period included tax benefits of $957 million related to the resolution of certain tax audits, as well as other tax adjustments partially offset by changes in certain tax reserves. The prior year expense reflectsreflected changes to certain tax reserves, largely offset by a net benefit of $305 million resulting from changes in estimates under the TCJA related to the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings along withas well as other tax adjustments, which were more than offset by changes to certain tax reserves.adjustments.
Treasury and CIO overview
At September 30, 2018,2019, 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 ratings that correspond to ratings as defined by S&P and Moody’s). Refer to Note 9 for further information on the Firm’s investment securities portfolio.
ForRefer to Liquidity Risk Management on pages 50–54 for further information on liquidity and funding risk, referrisk. Refer to LiquidityMarket Risk Management on pages 49–54. For70–74 for information on interest rate, foreign exchange and other risks, refer to Market Risk Management on pages 73–77.
risks. |
| | | | | | | | | | | | | | | | | | | | | |
Selected income statement and balance sheet data | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | Change |
| | 2018 |
| | 2017 |
| | Change |
|
Investment securities losses | $ | (46 | ) | | $ | — |
| | NM |
| | $ | (371 | ) | | $ | (49 | ) | | NM |
|
Available-for-sale (“AFS”) investment securities (average) | $ | 197,230 |
| | $ | 212,633 |
| | (7 | )% | | $ | 200,569 |
| | $ | 224,094 |
| | (10 | )% |
Held-to-maturity (“HTM”) investment securities (average) | 31,232 |
| | 47,034 |
| | (34 | ) | | 31,842 |
| | 48,201 |
| | (34 | ) |
Investment securities portfolio (average) | $ | 228,462 |
| | $ | 259,667 |
| | (12 | ) | | $ | 232,411 |
| | $ | 272,295 |
| | (15 | ) |
AFS investment securities (period-end) | $ | 198,523 |
| | $ | 214,257 |
| | (7 | ) | | $ | 198,523 |
| | $ | 214,257 |
| | (7 | ) |
HTM investment securities (period-end) | 31,368 |
| | 47,079 |
| | (33 | ) | | 31,368 |
| | 47,079 |
| | (33 | ) |
Investment securities portfolio (period-end) | $ | 229,891 |
| | $ | 261,336 |
| | (12 | )% | | $ | 229,891 |
| | $ | 261,336 |
| | (12 | )% |
As permitted by the new hedge accounting guidance, the Firm elected to transfer certain investment securities from HTM to AFS in the first quarter of 2018. For additional information, refer to Notes 1 and 9. |
| | | | | | | | | | | | | | | | | | | |
Selected income statement and balance sheet data | | | | | | |
| As of or for the three months ended September 30, | | As of or for the nine months ended September 30, |
(in millions) | 2019 |
| | 2018 |
| | Change | | 2019 |
| | 2018 |
| | Change |
Investment securities gains/(losses) | $ | 78 |
| | $ | (46 | ) | | NM | | $ | 135 |
| | $ | (371 | ) | | NM |
Available-for-sale (“AFS”) investment securities (average) | $ | 305,894 |
| | $ | 197,230 |
| | 55 | | $ | 260,661 |
| | $ | 200,569 |
| | 30 |
Held-to-maturity (“HTM”) investment securities (average) | 35,494 |
| | 31,232 |
| | 14 | | 32,518 |
| | 31,842 |
| | 2 |
Investment securities portfolio (average) | $ | 341,388 |
| | $ | 228,462 |
| | 49 | | $ | 293,179 |
| | $ | 232,411 |
| | 26 |
AFS investment securities (period-end) | $ | 351,599 |
| | $ | 198,523 |
| | 77 | | $ | 351,599 |
| | $ | 198,523 |
| | 77 |
HTM investment securities (period-end) | 40,830 |
| | 31,368 |
| | 30 | | 40,830 |
| | 31,368 |
| | 30 |
Investment securities portfolio (period-end) | $ | 392,429 |
| | $ | 229,891 |
| | 71 | | $ | 392,429 |
| | $ | 229,891 |
| | 71 |
|
| | | | |
ENTERPRISE-WIDE RISK MANAGEMENT |
Risk is an inherent part of JPMorgan Chase’s business activities. When the Firm extends a consumer or wholesale loan, advises customers 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 businesses and the associated risks in a manner that balances serving the interests of its clients, customers and investors and protects the safety and soundness of the Firm.
The Firm believes that effective risk management requires:
| |
• | Acceptance of responsibility, including identification and escalation of risk issues, by all individuals within the Firm; Ownership of risk identification, assessment, data and management within each of the lines of business and Corporate; and Firmwide structures for risk governance. Acceptance of responsibility, including identification and escalation of risk issues, by all individuals within the Firm;
|
| |
• | Ownership of risk identification, assessment, data and management by each of the lines of business and corporate functions; and
|
| |
• | Firmwide structures for risk governance.
|
The Firm strives for continual improvement through efforts to enhance controls, ongoing employee training and development, talent retention, and other measures. The Firm follows a disciplined and balanced compensation framework with strong internal governance and independent Board oversight. The impact of risk and control issues are carefully considered in the Firm’s performance evaluation and incentive compensation processes.
Firmwide Risk Management is overseen and managed on an enterprise-wide basis. The Firm’s approach to risk management governance and oversight framework involves understanding drivers of risks, risk types of risks, and impacts of risks.
DriversRefer to pages 79-83 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of Enterprise-wide risk include, but aremanagement governance and oversight.
Effective July 2019, the Board of Directors’ Risk Policy Committee (“DRPC”) was renamed the Risk Committee. The committee’s responsibilities were not limitedchanged. Refer to page 81 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the economic environment, regulatory or government policy, competitor or market evolution, business decisions, process or judgment error, deliberate wrongdoing, dysfunctional markets, and natural disasters.
The Firm’s risks are generally categorized in the following four risk types:
| |
• | Strategic risk is the risk associated with the Firm’s current and future business plans and objectives, including capital risk, liquidity risk, and the impact to the Firm’s reputation.
|
| |
• | Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk, wholesale credit risk, and investment portfolio risk.
|
| |
• | Market risk is the risk associated with the effect of changes in market factors, such as interest and foreign exchange rates, equity and commodity prices, credit spreads or implied volatilities, on the value of assets and liabilities held for both the short and long term.
|
| |
• | Operational risk is the risk associated with inadequate or failed internal processes, people and systems, or from external events and includes compliance risk, conduct risk, legal risk, and estimations and model risk.
|
There may be many consequences of risks manifesting, including quantitative impacts such as reduction in earnings and capital, liquidity outflows, and fines or penalties, or qualitative impacts, such as reputation damage, loss of clients, and regulatory and enforcement actions.committee.
Governance and Oversight Functions
The Firm has established Firmwide risk management functions to manage different risk types. The scope of a particular risk management function may include multiple risk types. For example, the Firm’s Country Risk Management function oversees country risk which may be a driver of risk or an aggregation of exposures that could give rise to multiple risk types such as credit or market risk. The following provides an indexsections of where in this Form 10-Q and the 2018 Form 10-K discuss the risk governance and oversight functions in JPMorgan Chase’s 2017 Annual Report information aboutplace to manage the risks inherent in the Firm’s management of its key risks can be found.business activities.
|
| | |
Risk governance and oversight functions | Form 10-Q page reference | Form 10-K page reference |
Strategic risk | | 84 |
Capital risk | 45–49 | 85–94 |
Liquidity risk | 50–54 | 95–100 |
Reputation risk | | 101 |
Consumer credit risk | 56–59 | 106-111 |
Wholesale credit risk | 60–66 | 112-119 |
Investment portfolio risk | 69 | 123 |
Market risk | 70–74 | 124-131 |
Country risk | 75 | 132–133 |
Operational risk | | 134-136 |
Compliance risk | | 137 |
Conduct risk | | 138 |
Legal risk | | 139 |
Estimations and Model risk | | 140 |
|
| | |
Risk disclosures | Form 10-Q page reference | Annual Report page reference |
Enterprise-wide risk management | 42–43 | 75–80 |
Strategic risk management | | 81 |
Capital risk management | 44–48 | 82–91 |
Liquidity risk management | 49–54 | 92–97 |
Reputation risk management | | 98 |
Consumer credit portfolio
| 57-61 | 102–107 |
Wholesale credit portfolio | 62–68 | 108–116 |
Investment portfolio risk management | 72 | 120 |
Market risk management | 73–77 | 121–128 |
Country risk management | 78 | 129–130 |
Operational risk management | | 131–133 |
Compliance risk management
| | 134 |
Conduct risk management | | 135 |
Legal risk management | | 136 |
Estimations and Model risk management | | 137 |
Capital risk is the risk the Firm has an insufficient level and composition of capital to support the Firm’s business activities and associated risks during normal economic environments and under stressed conditions.
The Firm’s capital risk management strategy focuses on maintaining long-term stabilityRefer to enable it to build and invest in market-leading businesses, even in a highly stressed environment. Senior management considers the implications on the Firm’s capital prior to making decisions that could impact future business activities. In addition to considering the Firm’s earnings outlook, senior management evaluates all sources and uses of capital with a view to ensuring the Firm’s capital strength.
The Firm’s capital risk management objectives are achieved through the establishment of minimum capital targets and a strong capital governance framework. Capital risk management is intended to be flexible in order to react to a range of potential events. The Firm’s minimum capital targets are based on the most binding of three pillars: an internal assessment of the Firm’s capital needs; an estimate of required capital under the CCAR and Dodd-Frank Act stress testing requirements; and Basel III Fully Phased-In regulatory minimums. Where necessary, each pillar may include a management-established buffer.
For a further discussion of the Firm’s Capital Risk Management, refer to pages 82–9185-94 of JPMorgan Chase’s 2018 Form
2017 Annual Report,10-K, Note 1921 of this Form 10-Q and the Firm’s Pillar 3 Regulatory Capital Disclosures reports,
which are available on the Firm’s website (https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).
for a further discussion of the Firm’s Capital Risk Management, including capital planning and stress testing.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 (“BHC”) and banks, including the Firm and its insured depository institution (“IDI”) subsidiaries, including JPMorgan Chase Bank, N.A. Two comprehensive approaches are subject to prescribed for calculating RWA: a standardized approach (“Basel III
Standardized”), and an advanced approach (“Basel III Advanced”). Effective January 1, 2019, the capital rules which include minimum capital ratio requirements that are subject to phase-in periods (“transitional period”) throughadequacy of the endFirm is evaluated against the fully phased-in measures under Basel III and represents the lower of 2018. Whilethe Standardized or Advanced approaches. During 2018, the required capital remainsmeasures were subject to the transitional rules duringand as of December 31, 2018 the Firm's capital ratios as of September 30, 2018calculations were equivalent whether calculated on a transitional basis orthe same on a fully phased-in and on a transitional basis.
The capital adequacy of the Firm and its IDI subsidiaries, both during the transitional period and upon full phase-in, is evaluated against the lower of the twoFirm’s Basel III Standardized risk-based ratios as calculated underare currently more binding than the Basel III approaches (Standardized or Advanced) . The Basel III Standardized Fully Phased-In CET1 ratio is the Firm’s current binding constraint,Advanced risk-based ratios, and the Firm expects that this will remain its binding constraintthe case for the foreseeable future.
The Firm and its IDI subsidiaries, as appropriate, are subject to minimum capital ratios under Basel III rules and well-capitalized ratios underalso includes a requirement for Advanced Approach banking organizations, including the regulations issued byFirm, to calculate the Federal Reserve and the Prompt Corrective Action (“PCA”) requirementsSLR. Refer to page 91 of the FDIC Improvement Act (“FDICIA”), respectively. ForJPMorgan Chase’s 2018 Form 10-K for additional information refer to Note 19.on SLR.
The following tables present the Firm’s Transitional and Fully Phased-In risk-based and leverage-based capital metricsmeasures under both the Basel III Standardized and Advanced Approaches. The Firm’s Basel III ratios exceeded both the Transitional and Fully Phased-In regulatory minimums as of September 30, 20182019 and December 31, 2017. For2018. Refer to Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of these capital metrics, including regulatory minimums, and the Standardized and Advanced Approaches, refer to Strategy and Governance on pages 84–88 of JPMorgan Chase’s 2017 Annual Report.
metrics.
|
| | | | | | | | | | | | | | | | | | | | | | |
| Transitional | | Fully Phased-In | |
September 30, 2018 (in millions, except ratios) | Standardized | | Advanced | | Minimum capital ratios | | Standardized | | Advanced | | Minimum capital ratios | |
Risk-based capital metrics: | | | | | | | | | | | | |
CET1 capital | $ | 184,972 |
| | $ | 184,972 |
| | | | $ | 184,972 |
| | $ | 184,972 |
| | | |
Tier 1 capital | 210,589 |
| | 210,589 |
| | | | 210,589 |
| | 210,589 |
| | | |
Total capital | 238,303 |
| | 228,574 |
| | | | 238,303 |
| | 228,574 |
| | | |
Risk-weighted assets | 1,545,326 |
| | 1,438,529 |
| | | | 1,545,326 |
| | 1,438,529 |
| | | |
CET1 capital ratio | 12.0 | % | | 12.9 | % | | 9.0 | % | | 12.0 | % | | 12.9 | % | | 10.5 | % | |
Tier 1 capital ratio | 13.6 |
| | 14.6 |
| | 10.5 |
| | 13.6 |
| | 14.6 |
| | 12.0 |
| |
Total capital ratio | 15.4 |
| | 15.9 |
| | 12.5 |
| | 15.4 |
| | 15.9 |
| | 14.0 |
| |
Leverage-based capital metrics: | | | | | | | | | | | | |
Adjusted average assets(a) | $ | 2,552,612 |
| | $ | 2,552,612 |
| | | | $ | 2,552,612 |
| | $ | 2,552,612 |
| | | |
Tier 1 leverage ratio | 8.2 | % | | 8.2 | % | | 4.0 | % | | 8.2 | % | | 8.2 | % | | 4.0 | % | |
Total leverage exposure | NA |
| | NA |
| | | | NA |
| | $ | 3,235,518 |
| | | |
SLR(b) | NA |
| | NA |
| | NA |
| | NA |
| | 6.5 | % | | 5.0 | % | (b) |
| | | Transitional | | Fully Phased-In | | September 30, 2019 | | December 31, 2018 |
December 31, 2017 (in millions, except ratios) | Standardized | | Advanced | | Minimum capital ratios | | Standardized | | Advanced | | Minimum capital ratios | | |
(in millions) | | Standardized | | Advanced | | Minimum capital ratios | | Standardized(b) | | Advanced(b) | | Minimum capital ratios |
Risk-based capital metrics: | | | | | | | | | | | | | | | | | | | | | | | |
CET1 capital | $ | 183,300 |
| | $ | 183,300 |
| | | | $ | 183,244 |
| | $ | 183,244 |
| | | | $ | 188,151 |
| | $ | 188,151 |
| | | | $ | 183,474 |
| | $ | 183,474 |
| | |
Tier 1 capital | 208,644 |
| | 208,644 |
| | | | 208,564 |
| | 208,564 |
| | | | 214,831 |
| | 214,831 |
| | | | 209,093 |
| | 209,093 |
| | |
Total capital | 238,395 |
| | 227,933 |
| | | | 237,960 |
| | 227,498 |
| | | | 243,500 |
| | 233,203 |
| | | | 237,511 |
| | 227,435 |
| | |
Risk-weighted assets | 1,499,506 |
| | 1,435,825 |
| | | | 1,509,762 |
| | 1,446,696 |
| | | | 1,527,762 |
| | 1,435,693 |
| | | | 1,528,916 |
| | 1,421,205 |
| | |
CET1 capital ratio | 12.2 | % | | 12.8 | % | | 7.5 | % | | 12.1 | % | | 12.7 | % | | 10.5 | % | | 12.3 | % | | 13.1 | % | | 10.5 | % | | 12.0 | % | | 12.9 | % | | 9.0 | % |
Tier 1 capital ratio | 13.9 |
| | 14.5 |
| | 9.0 |
| | 13.8 |
| | 14.4 |
| | 12.0 |
| | 14.1 |
| | 15.0 |
| | 12.0 |
| | 13.7 |
| | 14.7 |
| | 10.5 |
|
Total capital ratio | 15.9 |
| | 15.9 |
| | 11.0 |
| | 15.8 |
| | 15.7 |
| | 14.0 |
| | 15.9 |
| | 16.2 |
| | 14.0 |
| | 15.5 |
| | 16.0 |
| | 12.5 |
|
Leverage-based capital metrics: | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted average assets(a) | $ | 2,514,270 |
| | $ | 2,514,270 |
| | | | $ | 2,514,822 |
| | $ | 2,514,822 |
| | | | $ | 2,717,852 |
| | $ | 2,717,852 |
| | | | $ | 2,589,887 |
| | $ | 2,589,887 |
| | |
Tier 1 leverage ratio | 8.3 | % | | 8.3 | % | | 4.0 | % | | 8.3 | % | | 8.3 | % | | 4.0 | % | | 7.9 | % | | 7.9 | % | | 4.0 | % | | 8.1 | % | | 8.1 | % | | 4.0 | % |
Total leverage exposure | NA |
| | $ | 3,204,463 |
| | | | NA |
| | $ | 3,205,015 |
| | | | NA |
| | $ | 3,404,535 |
| | | | NA |
| | $ | 3,269,988 |
| | |
SLR(b) | NA |
| | 6.5 | % | | NA |
| | NA |
| | 6.5 | % | | 5.0 | % | (b) | NA |
| | 6.3 | % | | 5.0 | % | | NA |
| | 6.4 | % | | 5.0 | % |
| |
(a) | Adjusted average assets, for purposes of calculating the Tier 1 leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets. |
| |
(b) | Effective January 1,The Firm’s capital ratios as of December 31, 2018 the SLR waswere equivalent whether calculated on a transitional or fully phased-in under Basel III. The December 31, 2017 amounts were calculated under the Basel III Transitional rules.basis. |
Capital components
The following table presents reconciliations of total stockholders’ equity to Basel III Fully Phased-In CET1 capital, Tier 1 capital and Total capital as of September 30, 20182019 and December 31, 2017.2018.
| | (in millions) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Total stockholders’ equity | $ | 258,956 |
| $ | 255,693 |
| $ | 264,348 |
| $ | 256,515 |
|
Less: Preferred stock(a) | 27,764 |
| 26,068 |
| 28,363 |
| 26,068 |
|
Common stockholders’ equity | 231,192 |
| 229,625 |
| 235,985 |
| 230,447 |
|
Less: | | |
Goodwill | 47,483 |
| 47,507 |
| 47,818 |
| 47,471 |
|
Other intangible assets | 781 |
| 855 |
| 841 |
| 748 |
|
Other CET1 capital adjustments | | 1,546 |
| 1,034 |
|
Add: | | |
Deferred tax liabilities(b) | 2,239 |
| 2,204 |
| 2,371 |
| 2,280 |
|
Less: Other CET1 capital adjustments | 195 |
| 223 |
| |
Standardized/Advanced Fully Phased-In CET1 capital | 184,972 |
| 183,244 |
| |
Standardized/Advanced CET1 capital | | 188,151 |
| 183,474 |
|
Preferred stock(a) | 27,764 |
| 26,068 |
| 28,363 |
| 26,068 |
|
Less: Other Tier 1 adjustments(a) | 2,147 |
| 748 |
| 1,683 |
| 449 |
|
Standardized/Advanced Fully Phased-In Tier 1 capital | $ | 210,589 |
| $ | 208,564 |
| |
Standardized/Advanced Tier 1 capital | | $ | 214,831 |
| $ | 209,093 |
|
Long-term debt and other instruments qualifying as Tier 2 capital | $ | 13,342 |
| $ | 14,827 |
| $ | 14,145 |
| $ | 13,772 |
|
Qualifying allowance for credit losses | 14,225 |
| 14,672 |
| 14,400 |
| 14,500 |
|
Other | 147 |
| (103 | ) | 124 |
| 146 |
|
Standardized Fully Phased-In Tier 2 capital | $ | 27,714 |
| $ | 29,396 |
| |
Standardized Fully Phased-In Total capital | $ | 238,303 |
| $ | 237,960 |
| |
Standardized Tier 2 capital | | $ | 28,669 |
| $ | 28,418 |
|
Standardized Total capital | | $ | 243,500 |
| $ | 237,511 |
|
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital | (9,729 | ) | (10,462 | ) | (10,297 | ) | (10,076 | ) |
Advanced Fully Phased-In Tier 2 capital | $ | 17,985 |
| $ | 18,934 |
| |
Advanced Fully Phased-In Total capital | $ | 228,574 |
| $ | 227,498 |
| |
| | |
Advanced Tier 2 capital | | $ | 18,372 |
| $ | 18,342 |
|
Advanced Total capital | | $ | 233,203 |
| $ | 227,435 |
|
| |
(a) | As of September 30, 2018, Preferred2019, preferred stock includesreflects the issuance of $1.7$2.25 billion of Series DDFF preferred stock and otherredemption of $880 million of Series W preferred stock. Other Tier 1 adjustments includes $1.7$1.37 billion of Series I preferred stock called for partial redemption on September 26, 2019 and subsequently redeemed on October 30, 2018.2019. Tier 1 capital as of September 30, 20182019 reflects both the issuance and the redemption.redemptions. |
| |
(b) | Represents certain deferred tax liabilities related to tax-deductible goodwill and identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.CET1 capital. |
Capital rollforward
The following table presents the changes in Basel III Fully Phased-In CET1 capital, Tier 1 capital and Tier 2 capital for the nine months ended September 30, 2018.2019.
| | Nine months ended September 30, (in millions) | 2018 |
| 2019 |
|
Standardized/Advanced CET1 capital at December 31, 2017 | $ | 183,244 |
| |
Standardized/Advanced CET1 capital at December 31, 2018 | | $ | 183,474 |
|
Net income applicable to common equity | 24,241 |
| 26,710 |
|
Dividends declared on common stock | (6,554 | ) | (8,086 | ) |
Net purchase of treasury stock | (12,385 | ) | (15,805 | ) |
Changes in additional paid-in capital | (1,246 | ) | (650 | ) |
Changes related to AOCI | (1,995 | ) | 2,877 |
|
Adjustment related to DVA(a) | (148 | ) | 287 |
|
Changes related to other CET1 capital adjustments | (185 | ) | (656 | ) |
Change in Standardized/Advanced CET1 capital | 1,728 |
| 4,677 |
|
Standardized/Advanced CET1 capital at September 30, 2018 | $ | 184,972 |
| |
Standardized/Advanced CET1 capital at September 30, 2019 | | $ | 188,151 |
|
| | |
Standardized/Advanced Tier 1 capital at December 31, 2017 | $ | 208,564 |
| |
Standardized/Advanced Tier 1 capital at December 31, 2018 | | $ | 209,093 |
|
Change in CET1 capital | 1,728 |
| 4,677 |
|
Net issuance of noncumulative perpetual preferred stock(b) | — |
| 925 |
|
Other | 297 |
| 136 |
|
Change in Standardized/Advanced Tier 1 capital | 2,025 |
| 5,738 |
|
Standardized/Advanced Tier 1 capital at September 30, 2018 | $ | 210,589 |
| |
Standardized/Advanced Tier 1 capital at September 30, 2019 | | $ | 214,831 |
|
| | |
Standardized Tier 2 capital at December 31, 2017 | $ | 29,396 |
| |
Standardized Tier 2 capital at December 31, 2018 | | $ | 28,418 |
|
Change in long-term debt and other instruments qualifying as Tier 2 | (1,485 | ) | 373 |
|
Change in qualifying allowance for credit losses | (448 | ) | (101 | ) |
Other | 251 |
| (21 | ) |
Change in Standardized Tier 2 capital | (1,682 | ) | 251 |
|
Standardized Tier 2 capital at September 30, 2018 | $ | 27,714 |
| |
Standardized Total capital at September 30, 2018 | $ | 238,303 |
| |
Standardized Tier 2 capital at September 30, 2019 | | $ | 28,669 |
|
Standardized Total capital at September 30, 2019 | | $ | 243,500 |
|
| | |
Advanced Tier 2 capital at December 31, 2017 | $ | 18,934 |
| |
Advanced Tier 2 capital at December 31, 2018 | | $ | 18,342 |
|
Change in long-term debt and other instruments qualifying as Tier 2 | (1,485 | ) | 373 |
|
Change in qualifying allowance for credit losses | 285 |
| (322 | ) |
Other | 251 |
| (21 | ) |
Change in Advanced Tier 2 capital | (949 | ) | 30 |
|
Advanced Tier 2 capital at September 30, 2018 | $ | 17,985 |
| |
Advanced Total capital at September 30, 2018 | $ | 228,574 |
| |
Advanced Tier 2 capital at September 30, 2019 | | $ | 18,372 |
|
Advanced Total capital at September 30, 2019 | | $ | 233,203 |
|
| |
(a) | Includes DVA related to structured notes recorded in AOCIAOCI. |
| |
(b) | Includes the net effect of $1.7$2.25 billion and $1.85 billion of non-cumulative preferred stock that was issued on July 31, 2019 and January 24, 2019, respectively, and redemptions of non-cumulative preferred stock of $925 million and $880 million on March 1, 2019 and September 21, 2018 and $1.71, 2019, respectively, as well as $1.37 billion of non-cumulative preferred stock that was called for partial redemption on September 27, 201826, 2019 and subsequently redeemed on October 30, 2018.2019. |
RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced Fully Phased-In for the nine months ended September 30, 2018.2019. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.
| | | Standardized | | Advanced | | Standardized | | Advanced | |
Nine months ended September 30, 2018 (in millions) | Credit risk RWA | Market risk RWA | Total RWA | | Credit risk RWA | Market risk RWA | Operational risk RWA | Total RWA | |
At December 31, 2017 | $ | 1,386,060 |
| $ | 123,702 |
| $ | 1,509,762 |
| | $ | 922,905 |
| $ | 123,791 |
| $ | 400,000 |
| $ | 1,446,696 |
| |
Nine months ended September 30, 2019 (in millions) | | Credit risk RWA | Market risk RWA | Total RWA | | Credit risk RWA | Market risk RWA | Operational risk RWA | Total RWA |
December 31, 2018 | | $ | 1,423,053 |
| $ | 105,863 |
| $ | 1,528,916 |
| | $ | 926,647 |
| $ | 105,976 |
| $ | 388,582 |
| $ | 1,421,205 |
|
Model & data changes(a) | (5,282 | ) | (3,550 | ) | (8,832 | ) | | 4,446 |
| (3,550 | ) | — |
| 896 |
| (3,406 | ) | (17,076 | ) | (20,482 | ) | | (4,542 | ) | (17,076 | ) | — |
| (21,618 | ) |
Portfolio runoff(b) | (7,073 | ) | — |
| (7,073 | ) | | (8,984 | ) | — |
| — |
| (8,984 | ) | (4,400 | ) | — |
| (4,400 | ) | | (4,300 | ) | — |
| — |
| (4,300 | ) |
Movement in portfolio levels(c) | 52,456 |
| (987 | ) | 51,469 |
| | 9,534 |
| (1,014 | ) | (8,599 | ) | (79 | ) | 24,711 |
| (983 | ) | 23,728 |
| | 44,408 |
| (1,136 | ) | (2,866 | ) | 40,406 |
|
Changes in RWA | 40,101 |
| (4,537 | ) | 35,564 |
| | 4,996 |
| (4,564 | ) | (8,599 | ) | (8,167 | ) | 16,905 |
| (18,059 | ) | (1,154 | ) | | 35,566 |
| (18,212 | ) | (2,866 | ) | 14,488 |
|
September 30, 2018 | $ | 1,426,161 |
| $ | 119,165 |
| $ | 1,545,326 |
| | $ | 927,901 |
| $ | 119,227 |
| $ | 391,401 |
| $ | 1,438,529 |
| |
September 30, 2019 | | $ | 1,439,958 |
| $ | 87,804 |
| $ | 1,527,762 |
| | $ | 962,213 |
| $ | 87,764 |
| $ | 385,716 |
| $ | 1,435,693 |
|
| |
(a) | Model & data changes refer to movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance (exclusive of rule changes). |
| |
(b) | Portfolio runoff for credit risk RWA primarily reflects reduced risk from position rolloffs in legacy portfolios in Home Lending. |
| |
(c) | Movement in portfolio levels (inclusive of rule changes) refers to: changes in book size, composition, credit quality, and market movements for credit risk RWA; changes in position and market movements for market risk RWA; and updates to cumulative losses for operational risk RWA. |
Supplementary leverage ratio
The SLR is defined as Tier 1 capital under Basel III divided by the Firm’s total leverage exposure. For additional information, referRefer to Capital Risk Management on page 88 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for additional information.
The following table presents the components of the Firm’s Fully Phased-In SLR as of September 30, 20182019 and December 31, 2017.2018.
| | (in millions, except ratio) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Tier 1 capital | $ | 210,589 |
| $ | 208,564 |
| $ | 214,831 |
| $ | 209,093 |
|
Total average assets | 2,599,621 |
| 2,562,155 |
| 2,765,052 |
| 2,636,505 |
|
Less: Adjustments for deductions from Tier 1 capital | 47,009 |
| 47,333 |
| 47,200 |
| 46,618 |
|
Total adjusted average assets(a) | 2,552,612 |
| 2,514,822 |
| 2,717,852 |
| 2,589,887 |
|
Off-balance sheet exposures(b) | 682,906 |
| 690,193 |
| 686,683 |
| 680,101 |
|
Total leverage exposure | $ | 3,235,518 |
| $ | 3,205,015 |
| $ | 3,404,535 |
| $ | 3,269,988 |
|
SLR | 6.5 | % | 6.5 | % | 6.3 | % | 6.4 | % |
| |
(a) | Adjusted average assets, for purposes of calculating the SLR, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets. |
| |
(b) | Off-balance sheet exposures are calculated as the average of the three month-end spot balances during the quarter. |
ForRefer to Note 21 for JPMorgan Chase Bank, N.A.’s and Chase Bank USA, N.A.’s SLR ratios, refer to Note 19.ratios.
Line of business equity
Each business segment is allocated capital by taking into consideration stand-alone peer comparisonsa variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. For additional information, referEffective January 1, 2019, line of business capital allocations have increased due to a combination of changes in the relative weights, with greater emphasis on Standardized RWA and stress, a higher capitalization rate, updated stress simulations, and general business growth. Refer to page 8891 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for additional information.
The following table represents the capital allocated to each business segment:
|
| | | | | | | |
(in billions) | September 30, 2018 |
| | December 31, 2017 |
|
Consumer & Community Banking | $ | 51.0 |
| | $ | 51.0 |
|
Corporate & Investment Bank | 70.0 |
| | 70.0 |
|
Commercial Banking | 20.0 |
| | 20.0 |
|
Asset & Wealth Management | 9.0 |
| | 9.0 |
|
Corporate | 81.2 |
| | 79.6 |
|
Total common stockholders’ equity | $ | 231.2 |
| | $ | 229.6 |
|
|
| | | | | | | |
(in billions) | September 30, 2019 |
| | December 31, 2018 |
|
Consumer & Community Banking | $ | 52.0 |
| | $ | 51.0 |
|
Corporate & Investment Bank | 80.0 |
| | 70.0 |
|
Commercial Banking | 22.0 |
| | 20.0 |
|
Asset & Wealth Management | 10.5 |
| | 9.0 |
|
Corporate | 71.5 |
| | 80.4 |
|
Total common stockholders’ equity | $ | 236.0 |
| | $ | 230.4 |
|
Planning and stress testing
Comprehensive Capital Analysis and Review
The Federal Reserve requires large bank holding companies, including the Firm, to submit a capital plan on an annual basis. Through the CCAR process, the Federal Reserve evaluates each bank holding company’s (“BHC”CCAR”) capital adequacy and internal capital adequacy assessment processes, as well as its plans to make capital distributions, such as dividend payments or stock repurchases.
On June 28, 2018,27, 2019, the Federal Reserve informed the Firm that it did not object on either a quantitative or qualitative basis, to the Firm’s 20182019 capital plan.
Capital actions
Preferred stock
Preferred stock dividends declared were $379$423 million and $1.2 billion for the three and nine months ended September 30, 2018.2019.
On September 21, 2018,October 31, 2019, the Firm issued $1.7 billionannounced and priced an offering of fixed rate 5.75%depositary shares representing $900 million of 4.75% non-cumulative preferred stock, Series DD. GG. This issuance is expected to close on November 7, 2019. On November 1, 2019, the Firm announced that it will redeem all $900 million of its 5.45% non-cumulative preferred stock, SeriesP on December 1, 2019.
On October 30, 2018,2019, the Firm redeemed $1.7$1.37 billion of its Series I fixed-to-floating rate non-cumulative perpetual preferred stock.
On September 1, 2019, the Firm redeemed all $880 million of its 6.30% non-cumulative preferred stock, Series I. ForW.
On July 31, 2019, the Firm issued $2.25 billion of fixed-to-floating rate non-cumulative preferred stock, Series FF.
Refer to Note 17 of this Form 10-Q and Note 20 of JPMorgan Chase’s 2018 Form 10-K for additional information on the Firm’s preferred stock, refer to Note 20 of JPMorgan Chase’s 2017 Annual Report.stock.
Common stock dividends
On September 18, 2018,17, 2019, the Firm announced that its Board of Directors had declared a quarterly common stock dividend, ofwhich increased to $0.90 per share, from $0.80 per share effective with the dividend paid on October 31, 2018.2019. The Firm’s dividends are subject to the Board of Directors’ approval on a quarterly basis.
Common equity
Effective as of June 28, 2018, theThe Firm’s Board of Directors has authorized the repurchase of up to $20.7$29.4 billion of gross common equity (common stock and warrants) between July 1, 20182019 and June 30, 2019,2020 as part of itsthe Firm’s annual capital plan.
The following table sets forth the Firm’s repurchases of common equity, on a settlement-date basis, for the three and nine months ended September 30, 20182019 and 2017. There were no repurchases of warrants during the three and nine months ended September 30, 2018 and 2017.2018.
| |
| Three months ended September 30, |
| Nine months ended September 30, (in millions) | Three months ended September 30, |
| Nine months ended September 30, |
(in millions) | 2018 |
| 2017 |
|
| 2018 |
| 2017 |
| 2019 |
| 2018 |
|
| 2019 |
| 2018 |
|
Total shares of common stock repurchased | 39.3 |
| 51.7 |
|
| 126.0 |
| 118.8 |
| 62.0 |
| 39.3 |
|
| 159.0 |
| 126.0 |
|
Aggregate common stock repurchases | $ | 4,416 |
| $ | 4,763 |
|
| $ | 14,055 |
| $ | 10,602 |
| $ | 6,949 |
| $ | 4,416 |
|
| $ | 17,250 |
| $ | 14,055 |
|
For additional information regarding repurchases of the Firm’s equity securities, referRefer 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 page 183pages 176-177 of this Form 10-Q and page 2830 of JPMorgan Chase’s 20172018 Form 10-K, respectively.
There were 7.7 million and 15.0 million warrants outstanding at September 30, 2018 and December 31, 2017, respectively. All outstanding warrants that were not exercised on or before October 29, 2018 have expired.respectively, for additional information regarding repurchases of the Firm’s equity securities.
Other capital requirements
TLAC
The Federal Reserve’s TLAC rule requires the top-tier U.S. GSIB holding companies, including the Firm, to maintain minimum levels of external TLAC and eligible LTD effective January 1, 2019.
As of September 30, 2018, the Firm was compliant with the requirements of the rule to which it will be subject on January 1, 2019. For additional information, referRefer to page 9093 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for additional information.
The following table presents the eligible external TLAC and LTD amounts, as well as a representation of the amounts as a percentage of the Firm’s total RWA and total leverage exposure.
|
| | | | | | |
September 30, 2019 | |
(in billions, except ratio) | Eligible external TLAC(a) | Eligible LTD |
Total eligible TLAC & LTD | $ | 387.8 |
| $ | 159.9 |
|
% of RWA | 25.4 | % | 10.5 | % |
Minimum requirement | 23.0 |
| 9.5 |
|
Surplus/(shortfall) | $ | 36.4 |
| $ | 14.8 |
|
| | |
% of total leverage exposure | 11.4 | % | 4.7 | % |
Minimum requirement | 9.5 |
| 4.5 |
|
Surplus/(shortfall) | $ | 64.3 |
| $ | 6.7 |
|
| |
(a) | As of September 30, 2019, total eligible external TLAC reflects the issuance of $2.25 billion of Series FF non-cumulative preferred stock, redemption of $880 million of Series W non-cumulative preferred stock, and redemption of $1.37 billion of Series I non-cumulative preferred stock called for partial redemption on September 26, 2019 and subsequently redeemed on October 30, 2019. |
Refer to Part I, Item 1A: Risk Factors on pages 7-28 of JPMorgan Chase’s 2018 Form 10-K for information on the financial consequences to holders of the Firm’s debt and equity securities in a resolution scenario.
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 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 subject to Rule 1.17 of the Commodity Futures Trading Commission (“CFTC”).
Refer to Capital risk management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K for a discussion on J.P. Morgan Securities has elected to compute its minimum netSecurities’ capital requirements under the “Alternative Net Capital Requirements” of the Net Capital Rule.
Under the market and credit risk standards of Appendix E of the Net Capital Rule, J.P. Morgan Securities is eligible to use the alternative method of computing net capital if, in addition to meeting its minimum net capital requirement, it maintains tentative net capital of at least $1.0 billion. J.P. Morgan Securities is required to notify the Securities and Exchange Commission (“SEC”) in the event that tentative net capital is less than $5.0 billion. As of September 30, 2018, J.P. Morgan Securities maintained tentative net capital in excess of the minimum and notification requirements.
The following table presents J.P. Morgan Securities’ net capital information:capital:
|
| | | | | | |
September 30, 2018 | Net Capital |
(in millions) | Actual |
| Minimum |
|
J.P. Morgan Securities | $ | 18,258 |
| $ | 2,903 |
|
|
| | | | | | |
September 30, 2019 | |
(in millions) | Actual |
| Minimum |
|
Net Capital | $ | 22,068 |
| $ | 3,746 |
|
J.P. Morgan Securities plc
J.P. Morgan Securities plc is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. and is the Firm’s principal operating subsidiary in the U.K. It has authority to engage in banking, investment banking and broker-dealer activities. J.P. Morgan Securities plc is jointly regulated by the U.K. Prudential RegulatoryRegulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”).
Refer to Capital risk management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K for a further discussion on J.P. Morgan Securities plc.
Effective January 1, 2019, the Bank of England requires, on a transitional basis, that U.K. banks, including U.K. regulated subsidiaries of overseas groups, maintain a minimum requirement for own funds and eligible liabilities (“MREL”). As of September 30, 2019, J.P. Morgan Securities plc is subjectwas compliant with the requirements of the MREL rule. Refer to the European Union Capital RequirementsSupervision and Regulation and the U.K. PRA capital rules, eachon pages 1-6 of which implemented Basel III and thereby subject J.P. Morgan Securities plc to its requirements.
JPMorgan Chase’s 2018 Form 10-K for additional information on MREL.
The following table presents J.P. Morgan Securities plc’s capital information:
|
| | | | | | | |
September 30, 2018 | Total capital | | CET1 ratio | | Total capital ratio |
(in millions, except ratios) | Estimated | | Estimated | Minimum | | Estimated | Minimum |
J.P. Morgan Securities plc | $41,284 | | 16.8% | 4.5% | | 16.8% | 8.0% |
|
| | | | | |
September 30, 2019 | | |
(in millions, except ratios) | Estimated |
| Minimum ratios |
|
Total capital | $ | 55,614 |
| |
CET1 ratio | 16.9 | % | 4.5 | % |
Total capital ratio | 21.5 | % | 8.0 | % |
|
| | | | |
LIQUIDITY RISK MANAGEMENT |
Liquidity risk is the risk that the Firm will be unable to meet its contractual and contingent financial obligations as they arise or that it does not have the appropriate amount, composition and tenor of funding and liquidity to support its assets and liabilities. For a further discussion of the Firm’s Liquidity Risk Management, referRefer to pages 92–9795–100 of JPMorgan Chase’s 2017 Annual Report2018 Form 10-K and the Firm’s US LCR Disclosure reports, which are available on the Firm’s website at: (https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).for a further discussion of the Firm’s Liquidity Risk Management.
LCR and HQLA
The LCR rule requires the Firm to maintain an amount of unencumbered HQLA that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of significant stress. HQLA is the amount of liquid assets that qualify for inclusion in the LCR. HQLA primarily consist of unencumbered cash and certain high qualityhigh-quality liquid securities as defined in the LCR rule. The LCR is required to be a minimum of 100%.
Under the LCR rule, the amount of HQLA held by JPMorgan Chase Bank N.A. and Chase Bank USA, N.A that areis in excess of each entity’sits standalone 100% minimum LCR requirement, and that areis not transferable to non-bank affiliates, must be excluded from the Firm’s reported HQLA.The LCR is required to be a minimum of 100%.
On August 22, 2018, the U.S. banking regulators published a final rule permitting investment-grade municipal obligations that meet certain criteria to qualify as HQLA for purposes of the U.S. LCR rule. The final rule went into effect on August 30, 2018, and did not have a material impact on the Firm’s HQLA or LCR for the three months ended September 30, 2018.
The following table summarizes the Firm’s average LCR for the three months ended September 30, 2018,2019, June 30, 20182019 and September 30, 20172018 based on the Firm’s current interpretation of the finalized LCR framework.
| | | Three months ended | Three months ended |
Average amount (in billions) | September 30, 2018 | June 30, 2018 | September 30, 2017 | |
Average amount (in millions) | | September 30, 2019 | June 30, 2019 | September 30, 2018 |
HQLA | | |
Eligible cash(a) | $ | 345 |
| $ | 363 |
| $ | 390 |
| $ | 199,757 |
| $ | 219,838 |
| $ | 344,660 |
|
Eligible securities(b)(c) | 190 |
| 166 |
| 179 |
| 337,704 |
| 317,439 |
| 190,349 |
|
Total HQLA(d) | $ | 535 |
| $ | 529 |
| $ | 568 |
| $ | 537,461 |
| $ | 537,277 |
| $ | 535,009 |
|
Net cash outflows | $ | 467 |
| $ | 458 |
| $ | 475 |
| $ | 468,452 |
| $ | 477,442 |
| $ | 466,803 |
|
LCR | 115 | % | 115 | % | 120 | % | 115 | % | 113 | % | 115 | % |
Net excess HQLA (d) | $ | 68 |
| $ | 71 |
| $ | 93 |
| $ | 69,009 |
| $ | 59,835 |
| $ | 68,206 |
|
| |
(a) | Represents cash on deposit at central banks, primarily the Federal Reserve Banks. |
| |
(b) | Predominantly U.S. Treasuries, U.S. AgencyGSE and U.S. government agency MBS, and sovereign bonds net of applicable haircuts under the LCR rules. |
| |
(c) | HQLA eligible securities may be reported in securities borrowed or purchased under resale agreements, trading assets, or investment securities on the Firm’s Consolidated balance sheets. |
| |
(d) | Excludes average excess HQLA at JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. that are not transferable to non-bank affiliates. |
The Firm’s average LCR was 115% for the three months ended September 30, 2018 and June 30, 2018.
The Firm’s average LCR decreasedincreased during the three months ended September 30, 2018,2019, compared with the prior yearthree-month period ended June 30, 2019, primarily due to a reductiondecline in the net cash primarily driven by long-term debt maturities and outflows from CIB client-driven markets activities.
The Firm’s average LCR may fluctuatefluctuates from period to period, due to changes in its HQLA and estimated net cash outflows under the LCR as a result of ongoing business activity. The Firm’s HQLA are expected to be available to meet its liquidity needs in a time of stress.
Other liquidity sources
As of September 30, 2018,2019, in addition to assets reported in the Firm’s HQLA, under the LCR rule, the Firm had approximately $225$312 billion of unencumbered marketable securities, such as equity securities and fixed income debt securities, available to raise liquidity, if required.liquidity. This includes HQLA-eligible securities included as part of the excess liquidity at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates.
As of September 30, 2018,2019, the Firm also had approximately $298.9 $313 billion of available borrowing capacity at various FHLBs, the discount windowswindow at the Federal Reserve BanksBank, and various other central banks as a result of collateral pledged by the Firm to such banks. This borrowing capacity excludes the benefit of securities reported in the Firm’s HQLA or other unencumbered securities that are currently pledged at the Federal Reserve Bank discount windows.window. Although available, the Firm does not view thethis borrowing capacity at the Federal Reserve Bank discount windowswindow and the various other central banks as a primary source of liquidity.
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.
The Firm funds its global balance sheet through diverse sources of funding including a stable deposit franchisedeposits as well as secured and unsecured funding in the capital markets.The Firm’s loan portfoliois funded with a portion of the Firm’s deposits,, through securitizations and, with respect to a portion of the Firm’s real estate-related loans, with secured borrowings from the FHLBs. Deposits in excess of the amount utilized to fund loans are primarily 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.Securities borrowed or purchased under resale agreements and trading assets-debt and equity instruments are primarily funded by the Firm’s securities loaned or sold under agreements to repurchase, trading liabilities-debt and equity instruments, and a portion of the Firm’s long-term debt and stockholders’ equity. In addition to funding securities borrowed or purchased under resale agreements and trading assets-debt and Refer to the discussion below for additional information relating to Deposits, Short-term funding, and Long-term funding and issuance. Refer to the discussion below for additional information relating to Deposits, Short-term funding, and Long-term funding and issuance.equity instruments, proceeds from the Firm’s debt and equity issuances are used to fund certain loans and other financial and non-financial assets, or may be invested in the Firm’s investment securities portfolio. Refer to the discussion below for additional information relating to Deposits, Short-term funding, and Long-term funding and issuance.
Deposits
The table below summarizes, by line of business, the deposit balances as of September 30, 2018,2019, and December 31, 2017,2018, and the average deposit balances for the three and nine months ended September 30, 20182019 and 2017,2018, respectively.
| | | September 30, 2018 |
| December 31, 2017 |
| | Three months ended September 30, | | Nine months ended September 30, | September 30, 2019 |
| December 31, 2018 |
| | Three months ended September 30, | | Nine months ended September 30, |
Deposits | | Average | | Average | | Average | | Average |
(in millions) | | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Consumer & Community Banking | $ | 677,260 |
| $ | 659,885 |
| | $ | 674,211 |
| $ | 645,732 |
| | $ | 669,244 |
| $ | 636,257 |
| $ | 701,170 |
| $ | 678,854 |
| | $ | 693,980 |
| $ | 674,211 |
| | $ | 688,676 |
| $ | 669,244 |
|
Corporate & Investment Bank | 482,490 |
| 455,883 |
| | 476,995 |
| 461,961 |
| | 472,879 |
| 444,064 |
| 510,403 |
| 482,084 |
| | 524,521 |
| 476,995 |
| | 509,775 |
| 472,879 |
|
Commercial Banking | 168,112 |
| 181,512 |
| | 168,102 |
| 176,095 |
| | 171,403 |
| 175,265 |
| 174,903 |
| 170,859 |
| | 172,653 |
| 168,102 |
| | 169,361 |
| 171,403 |
|
Asset & Wealth Management | 130,497 |
| 146,407 |
| | 133,021 |
| 144,496 |
| | 138,885 |
| 151,311 |
| 138,439 |
| 138,546 |
| | 138,822 |
| 133,021 |
| | 139,127 |
| 138,885 |
|
Corporate | 403 |
| 295 |
| | 533 |
| 2,739 |
| | 736 |
| 4,152 |
| 346 |
| 323 |
| | 904 |
| 533 |
| | 887 |
| 736 |
|
Total Firm | $ | 1,458,762 |
| $ | 1,443,982 |
| | $ | 1,452,862 |
| $ | 1,431,023 |
| | $ | 1,453,147 |
| $ | 1,411,049 |
| $ | 1,525,261 |
| $ | 1,470,666 |
| | $ | 1,530,880 |
| $ | 1,452,862 |
| | $ | 1,507,826 |
| $ | 1,453,147 |
|
A key strength of the Firm is its diversified deposit franchise, through each of its lines of business, whichprovidesDeposits provide a stable source of funding and limitsreduce the Firm’s reliance on the wholesale funding markets. A significant portion of the Firm’s deposits are consumer and wholesale operating deposits, which are both considered to be stable sources of liquidity. Wholesale operating deposits are considered to be stable sources of liquidity because they are generated from customers that maintain operating service relationships with the Firm.
The table below shows the loan and deposit balances, the loans-to-deposits ratios, and deposits as a percentage of total liabilities, as of September 30, 20182019 and December 31, 2017.2018.
| | (in billions except ratios) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Deposits | $ | 1,458.8 |
| | $ | 1,444.0 |
| $ | 1,525.3 |
| | $ | 1,470.7 |
|
Deposits as a % of total liabilities | 62 | % | | 63 | % | 61 | % | | 62 | % |
Loans | $ | 954.3 |
| | $ | 930.7 |
| $ | 945.2 |
| | $ | 984.6 |
|
Loans-to-deposits ratio | 65 | % | | 64 | % | 62 | % | | 67 | % |
The Firm believes that average deposit balances are generally more representative of deposit trends than period-end deposit balances.
Average deposits increased for the three months ended September 30, 2018 in CCB and CIB, partially offset by declines in AWM, CB and Corporate.2019.
The increase in CCB reflects the continuation of growth from new customers, partially offset by balance migration into investment-related products, and in CIB reflects growthan increase in operating deposits predominantly in Treasury Services driven by
growth in client activity.
activity, and an increase in the net issuances of structured notes in Markets. The declineincrease in CCB was driven by growth in new accounts. The increase in AWM was driven by balance migration predominantly into the Firm’s investment-related products, andgrowth in interest-bearing deposits on new client activity. The increase in CB was primarily driven by the migration of non-operating deposits into higher-yielding investment products . The decline in Corporate was predominantly due to maturities of wholesale non-operating deposits, consistent with the Firm’s efforts to reduce such deposits.growth from existing clients.
Average deposits increased for the nine months ended September 30, 20182019 in CCBCIB and CIB,CCB, partially offset by declinesa decline in CB. Balances in AWM CB and Corporate.were relatively flat.
The increase in CCB reflects the continuation of growth from new customers, partially offset by balance migration into investment-related products, and in CIB reflects growthan increase in operating deposits predominantly in Treasury Services and Securities Services driven by growth in client activity.
activity, and an increase in the net issuances of structured notes in Markets. The declineincrease in AWMCCB was driven by balancegrowth in new accounts.
The decrease in CB was primarily driven by lower non operating deposits.
AWM balances were relatively flat with growth in interest-bearing deposits offset by migration predominantly into the Firm’s investment-related products, and in CB was primarily driven by the migration of non-operating deposits into higher-yielding investment products. The decline in Corporate was predominantly due to maturities of wholesale non-operating deposits, consistent with the Firm’s efforts to reduce such deposits.
For further information on deposit and liability balance trends, referRefer to the discussion of the Firm’s Business Segment Results and the Consolidated Balance Sheets Analysis on pages 19-4121–43 and pages 12–1415-16, respectively,, respectively. for further information on deposit and liability balance trends.
The following table summarizes short-term and long-term funding, excluding deposits, as of September 30, 2018,2019, and December 31, 2017,2018, and average balances for the three and nine months endedSeptember 30, 2019 and 2018, and 2017, respectively. For additional information, referRefer to the Consolidated Balance Sheets Analysis on pages 12–1415–17 and Note 10.10 for additional information.
| | | September 30, 2018 | December 31, 2017 | | Three months ended September 30, | | Nine months ended September 30, | September 30, 2019 | December 31, 2018 | | Three months ended September 30, | | Nine months ended September 30, |
Sources of funds (excluding deposits) | Average | | Average | Average | | Average |
(in millions) | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Commercial paper | $ | 29,313 |
| $ | 24,186 |
| | $ | 28,702 |
| $ | 23,022 |
| | $ | 27,289 |
| $ | 18,653 |
| $ | 19,620 |
| $ | 30,059 |
| | $ | 19,607 |
| $ | 28,702 |
| | $ | 24,756 |
| $ | 27,289 |
|
Other borrowed funds(a) | 10,857 |
| 10,727 |
| | 11,172 |
| 10,469 |
| | 11,716 |
| 10,484 |
| |
Other borrowed funds | | 8,826 |
| 8,789 |
| | 10,537 |
| 11,172 |
| | 10,869 |
| 11,716 |
|
Total short-term unsecured funding(a) | $ | 40,170 |
| $ | 34,913 |
| | $ | 39,874 |
| $ | 33,491 |
| | $ | 39,005 |
| $ | 29,137 |
| $ | 28,446 |
| $ | 38,848 |
| | $ | 30,144 |
| $ | 39,874 |
| | $ | 35,625 |
| $ | 39,005 |
|
Securities sold under agreements to repurchase(b)(a) | $ | 168,450 |
| $ | 147,713 |
| | $ | 174,436 |
| $ | 169,638 |
| | $ | 178,929 |
| $ | 174,777 |
| $ | 235,968 |
| $ | 171,975 |
| | $ | 229,581 |
| $ | 174,436 |
| | $ | 215,148 |
| $ | 178,929 |
|
Securities loaned(b)(a) | 12,357 |
| 9,211 |
| | 9,131 |
| 10,946 |
| | 10,900 |
| 13,370 |
| 9,739 |
| 9,481 |
| | 8,505 |
| 9,131 |
| | 9,117 |
| 10,900 |
|
Other borrowed funds(a) | 24,465 |
| 16,889 |
| | 21,169 |
| 19,467 |
| | 21,336 |
| 15,136 |
| |
Other borrowed funds(b) | | 20,447 |
| 30,428 |
| | 21,758 |
| 21,169 |
| | 28,343 |
| 21,336 |
|
Obligations of Firm-administered multi-seller conduits(c) | $ | 4,304 |
| $ | 3,045 |
| | $ | 3,102 |
| $ | 2,947 |
| | $ | 3,070 |
| $ | 3,351 |
| $ | 10,514 |
| $ | 4,843 |
| | $ | 12,167 |
| $ | 3,102 |
| | $ | 10,987 |
| $ | 3,070 |
|
Total short-term secured funding(a) | $ | 209,576 |
| $ | 176,858 |
| | $ | 207,838 |
| $ | 202,998 |
| | $ | 214,235 |
| $ | 206,634 |
| $ | 276,668 |
| $ | 216,727 |
| | $ | 272,011 |
| $ | 207,838 |
| | $ | 263,595 |
| $ | 214,235 |
|
| | | | | | | | | | |
Senior notes | $ | 155,099 |
| $ | 155,852 |
| | $ | 154,820 |
| $ | 159,270 |
| | $ | 152,046 |
| $ | 154,148 |
| $ | 173,550 |
| $ | 162,733 |
| | $ | 172,059 |
| $ | 154,820 |
| | $ | 167,495 |
| $ | 152,046 |
|
Trust preferred securities(d) | — |
| 690 |
| | 517 |
| 2,336 |
| | 629 |
| 2,340 |
| — |
| — |
| | — |
| 517 |
| | — |
| 629 |
|
Subordinated debt(d) | 16,426 |
| 16,553 |
| | 16,079 |
| 18,399 |
| | 16,106 |
| 20,029 |
| 18,043 |
| 16,743 |
| | 17,797 |
| 16,079 |
| | 17,196 |
| 16,106 |
|
Structured notes(e)(d) | 52,187 |
| 45,727 |
| | 50,905 |
| 44,157 |
| | 48,874 |
| 42,025 |
| 70,687 |
| 53,090 |
| | 69,144 |
| 50,905 |
| | 62,984 |
| 48,874 |
|
Total long-term unsecured funding | $ | 223,712 |
| $ | 218,822 |
| | $ | 222,321 |
| $ | 224,162 |
| | $ | 217,655 |
| $ | 218,542 |
| $ | 262,280 |
| $ | 232,566 |
| | $ | 259,000 |
| $ | 222,321 |
| | $ | 247,675 |
| $ | 217,655 |
|
| | | | | | | | | | |
Credit card securitization(c) | $ | 14,142 |
| $ | 21,278 |
| | $ | 15,052 |
| $ | 24,709 |
| | $ | 16,620 |
| $ | 27,041 |
| $ | 6,457 |
| $ | 13,404 |
| | $ | 7,394 |
| $ | 15,052 |
| | $ | 10,802 |
| $ | 16,620 |
|
Other securitizations(c)(f) | — |
| — |
| | — |
| — |
| | — |
| 837 |
| |
Federal Home Loan Bank (“FHLB”) advances | 41,457 |
| 60,617 |
| | 48,645 |
| 67,288 |
| | 54,378 |
| 72,504 |
| |
Other long-term secured funding(g) | 4,955 |
| 4,641 |
| | 5,013 |
| 3,176 |
| | 4,832 |
| 3,202 |
| |
FHLB advances | | 29,642 |
| 44,455 |
| | 29,646 |
| 48,645 |
| | 35,998 |
| 54,378 |
|
Other long-term secured funding(e) | | 4,550 |
| 5,010 |
| | 4,558 |
| 5,013 |
| | 4,708 |
| 4,832 |
|
Total long-term secured funding | $ | 60,554 |
| $ | 86,536 |
| | $ | 68,710 |
| $ | 95,173 |
| | $ | 75,830 |
| $ | 103,584 |
| $ | 40,649 |
| $ | 62,869 |
| | $ | 41,598 |
| $ | 68,710 |
| | $ | 51,508 |
| $ | 75,830 |
|
| | | | | | | | | | |
Preferred stock(h) | $ | 27,764 |
| $ | 26,068 |
| | $ | 26,252 |
| $ | 26,068 |
| | $ | 26,130 |
| $ | 26,068 |
| |
Common stockholders’ equity(h) | $ | 231,192 |
| $ | 229,625 |
| | $ | 230,439 |
| $ | 231,861 |
| | $ | 228,995 |
| $ | 229,937 |
| |
Preferred stock(f) | | $ | 28,363 |
| $ | 26,068 |
| | $ | 28,241 |
| $ | 26,252 |
| | $ | 27,457 |
| $ | 26,130 |
|
Common stockholders’ equity(f) | | $ | 235,985 |
| $ | 230,447 |
| | $ | 235,613 |
| $ | 230,439 |
| | $ | 232,917 |
| $ | 228,995 |
|
| |
(a) | The prior period amounts have been revised to conform with the current period presentation. |
| |
(b) | Primarily consists of short-term securities loaned or sold under agreements to repurchase. |
| |
(b) | Includes FHLB advances with original maturities of less than one year of $2.6 billion and $11.4 billion as of September 30, 2019 and December 31, 2018, respectively. |
| |
(c) | Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets. |
| |
(d) | Subordinated debt includes $1.6 billion and $664 million of junior subordinated debentures distributed pro rata to the holders of trust preferred securities which were cancelled on December 18, 2017 and September 10, 2018, respectively. For further information refer to Note 19 of JPMorgan Chase’s 2017 Annual Report. |
| |
(e) | Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company. |
| |
(f) | Other securitizations include securitizations of student loans. The Firm deconsolidated the student loan securitization entities in the second quarter of 2017 as it no longer had a controlling financial interest in these entities as a result of the sale of the student loan portfolio. The Firm’s wholesale businesses also securitize loans for client-driven transactions, which are not considered to be a source of funding for the Firm and are not included in the table. |
| |
(g)(e) | Includes long-term structured notes which are secured. |
| |
(h)(f) | For additional information on preferred stock and common stockholders’ equity referRefer to Capital Risk Management on pages 44-48,45–49, Consolidated statements of changes in stockholders’ equity on page 83 of this Form 10-Q and Note 20 and Note 21 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for additional information on preferred stock and common stockholders’ equity. |
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, U.S. GSE and government agency MBS, and constitute a significant portion of the federal funds purchased and securities loaned or sold under repurchase agreements on the Consolidated balance sheets. The increase at September 30, 2018,2019, from December 31, 2017, reflected 2018, was driven by CIB and includes the Firm’s participation in the Federal Reserve’s open market operations, as well as higher secured financing of trading assets-debt and equity instruments and client-driven market-making activities in CIB.
and client-driven activities.
The balances associated with securities loaned or sold under agreements to repurchase fluctuate over time due to customers’ investment and financing activities;activities, the Firm’s demand for financing;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 issuance of wholesale commercial paper. The increasedecrease in commercial paper at September 30, 2019, from December 31, 2018, was due to higherlower net issuance.issuance primarily for short-term liquidity management.
Long-term funding and issuance
Long-term funding provides additional sources 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. TLAC. Long-term funding objectives include maintaining diversification, maximizing market access and optimizing funding costs. The Firm evaluates various funding markets, tenors and currencies in creating its optimal long-term funding plan.
The significant majority of the Firm’s long-term unsecured funding is issued by the Parent Company to provide maximum flexibility in support of both bank and nonbank subsidiary funding needs.The Parent Company advances substantially all net funding proceeds to its subsidiary, the Intermediate Holding Company (“IHC”). The IHC does not issue debt to external counterparties. The presentation in the following table has been revised to provide the notional value of thesummarizes long-term unsecured issuance and maturities or redemptions by the Parent Company and subsidiaries for the three and nine months ended September 30, 2019 and 2018. Refer to Liquidity Risk Management on pages 95-100 and Note 19 of JPMorgan Chase’s 2018 and 2017. ForForm 10-K for additional information on the IHC and long-term debt, refer to Liquidity Risk Management and Note 19 of JPMorgan Chase’s 2017 Annual Report.debt.
| | Long-term unsecured funding | Long-term unsecured funding | | | | | | | | Long-term unsecured funding | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, | | Three months ended September 30, | | Nine months ended September 30, |
| 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
(Notional in millions) | Parent Company(b) | | Subsidiaries(b) | Parent Company | | Subsidiaries |
Issuance | | | | | | | | | | | | | | |
Senior notes issued in the U.S. market | $ | 6,000 |
| $ | 4,000 |
| | $ | 17,000 |
| $ | 18,750 |
| | $ | 1,250 |
| $ | — |
| | $ | 8,761 |
| $ | — |
| $ | 5,000 |
| $ | 6,000 |
| | $ | 13,250 |
| $ | 17,000 |
| | $ | — |
| $ | 1,250 |
| | $ | 1,750 |
| $ | 8,761 |
|
Senior notes issued in non-U.S. markets | — |
| — |
| | 1,175 |
| 2,220 |
| | — |
| — |
| | — |
| — |
| 1,672 |
| — |
| | 3,920 |
| 1,175 |
| | — |
| — |
| | — |
| — |
|
Total senior notes | 6,000 |
| 4,000 |
| | 18,175 |
| 20,970 |
| | 1,250 |
| — |
| | 8,761 |
| — |
| 6,672 |
| 6,000 |
| | 17,170 |
| 18,175 |
| | — |
| 1,250 |
| | 1,750 |
| 8,761 |
|
Subordinated debt | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| |
Structured notes(a) | 387 |
| 337 |
| | 2,047 |
| 2,046 |
| | 5,934 |
| 6,250 |
| | 20,159 |
| 21,135 |
| 780 |
| 387 |
| | 2,596 |
| 2,047 |
| | 8,511 |
| 5,934 |
| | 23,643 |
| 20,159 |
|
Total long-term unsecured funding – issuance | $ | 6,387 |
| $ | 4,337 |
| | $ | 20,222 |
| $ | 23,016 |
| | $ | 7,184 |
| $ | 6,250 |
| | $ | 28,920 |
| $ | 21,135 |
| $ | 7,452 |
| $ | 6,387 |
| | $ | 19,766 |
| $ | 20,222 |
| | $ | 8,511 |
| $ | 7,184 |
| | $ | 25,393 |
| $ | 28,920 |
|
| | | | | | | | | | | | | | |
Maturities/redemptions | | | | | | | | | | | | | | |
Senior notes | $ | 646 |
| $ | 4,000 |
| | $ | 18,633 |
| $ | 16,826 |
| | $ | 1,503 |
| $ | 152 |
| | $ | 4,466 |
| $ | 1,368 |
| $ | 2,700 |
| $ | 646 |
| | $ | 10,607 |
| $ | 18,633 |
| | $ | 2,751 |
| $ | 1,503 |
| | $ | 4,567 |
| $ | 4,466 |
|
Subordinated debt | 15 |
| 395 |
| | 15 |
| 3,401 |
| | — |
| 500 |
| | — |
| 500 |
| 37 |
| 15 |
| | 183 |
| 15 |
| | — |
| — |
| | — |
| — |
|
Structured notes | 582 |
| 1,505 |
| | 2,465 |
| 4,785 |
| | 3,474 |
| 4,152 |
| | 12,104 |
| 13,245 |
| 477 |
| 582 |
| | 1,436 |
| 2,465 |
| | 4,540 |
| 3,474 |
| | 12,700 |
| 12,104 |
|
Total long-term unsecured funding – maturities/redemptions | $ | 1,243 |
| $ | 5,900 |
| | $ | 21,113 |
| $ | 25,012 |
| | $ | 4,977 |
| $ | 4,804 |
| | $ | 16,570 |
| $ | 15,113 |
| $ | 3,214 |
| $ | 1,243 |
| | $ | 12,226 |
| $ | 21,113 |
| | $ | 7,291 |
| $ | 4,977 |
| | $ | 17,267 |
| $ | 16,570 |
|
| |
(a) | Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company. |
| |
(b) | The prior period amounts have been revised to conform with the current period presentation. |
The Firmraises secured long-term funding through securitization of consumer credit card loans and advances from the FHLBs. The following table summarizes the securitization issuance and FHLB advances and their respective maturities or redemptions for the three and nine months ended September 30, 20182019 and 2017,2018, respectively. | | Long-term secured funding | Long-term secured funding | | | | | | | Long-term secured funding | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
| Issuance | | Maturities/Redemptions | | Issuance | | Maturities/Redemptions | Issuance | | Maturities/Redemptions | | Issuance | | Maturities/Redemptions |
(in millions) | 2018 | 2017 | | 2018 | 2017 | | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 | 2018 | | 2019 | 2018 | | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Credit card securitization | $ | — |
| $ | — |
| | $ | 2,375 |
| $ | 2,264 |
| | $ | 1,396 |
| $ | 1,545 |
| | $ | 8,500 |
| $ | 9,270 |
| $ | — |
| $ | — |
| | $ | 2,850 |
| $ | 2,375 |
| | $ | — |
| $ | 1,396 |
| | $ | 6,975 |
| $ | 8,500 |
|
Other securitizations(a) | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| 55 |
| |
FHLB advances | — |
| — |
| | 10,704 |
| 4,694 |
| | 4,000 |
| — |
| | 23,157 |
| 15,748 |
| — |
| — |
| | 5 |
| 10,704 |
| | — |
| 4,000 |
| | 14,810 |
| 23,157 |
|
Other long-term secured funding(b)(c) | 117 |
| 189 |
| | 139 |
| 516 |
| | 312 |
| 726 |
| | 161 |
| 640 |
| |
Other long-term secured funding(a) | | 62 |
| 117 |
| | 180 |
| 139 |
| | 115 |
| 312 |
| | 633 |
| 161 |
|
Total long-term secured funding | $ | 117 |
| $ | 189 |
| | $ | 13,218 |
| $ | 7,474 |
| | $ | 5,708 |
| $ | 2,271 |
| | $ | 31,818 |
| $ | 25,713 |
| $ | 62 |
| $ | 117 |
| | $ | 3,035 |
| $ | 13,218 |
| | $ | 115 |
| $ | 5,708 |
| | $ | 22,418 |
| $ | 31,818 |
|
| |
(a) | Other securitizations includes securitizations of student loans. The Firm deconsolidated the student loan securitization entities in the second quarter of 2017 as it no longer had a controlling financial interest in these entities as a result of the sale of the student loan portfolio. |
| |
(b) | Includes long-term structured notes which are secured. |
| |
(c) | The prior period amounts have been revised to conform with the current period presentation. |
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. ForRefer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for further description of the client-driven loan securitizations, refer to Note 14 of JPMorgan Chase’s 2017 Annual Report.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. ForRefer to SPEs on page 18, and liquidity risk and credit-related contingent features in Note 4 for additional information on the impact of a credit ratings downgrade on the funding requirements for VIEs, and on derivatives and collateral agreements, refer to SPEs on page 15, and Liquidity risk and credit-related contingent features in Note 4.agreements.
The credit ratings of the Parent Company and the Firm’s principal bank and nonbanknon-bank subsidiaries as of September 30, 2018, except as noted below,2019, were as follows.
|
| | | | | | | | | | | |
| JPMorgan Chase & Co. | | JPMorgan Chase Bank, N.A. Chase Bank USA, N.A.(a)
| | J.P. Morgan Securities LLC J.P. Morgan Securities plc |
September 30, 20182019 | 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(a) | A2 | P-1 | Stable | | Aa2 | P-1 | Stable | | Aa3 | P-1 | Stable |
Standard & Poor’s | A- | A-2 | Stable | | A+ | A-1 | Stable | | A+ | A-1 | Stable |
Fitch Ratings | AA- | F1+ | Stable | | AA | F1+ | Stable | | AA | F1+ | Stable |
| |
(a) | Moody’s ratingsOn May 18, 2019, the Firm merged Chase Bank USA, N.A. with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. The credit rating for JPMorgan Chase Bank, N.A. reflects the credit rating of October 25, 2018the merged entity. |
On October 25,Refer to page 100 of JPMorgan Chase’s 2018 Moody’s upgradedForm 10-K for a discussion of the factors that could affect credit ratings of the Parent Company’s long-term issuer rating to A2 (previously A3)Company and short-term issuer rating to P-1 (previously P-2). The long-term issuer ratings were also upgraded for JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. to Aa2 (previously Aa3), and for J.P. Morgan Securities LLC and J.P. Morgan Securities plc to Aa3 (previously A1).
On June 21, 2018, Fitch upgraded the Parent Company’s long-term issuer rating to AA- (previously A+) and short-term issuer rating to F1+ (previously F1). The long-term issuer ratings were also upgraded to AA for JPMorgan Chase Bank, N.A, Chase Bank USA, N.A., J.P. Morgan Securities LLC and J.P. Morgan Securities plc (all previously AA-).
Downgrades of the Firm’s long-term ratings by one or two notches could result in an increase in its cost of funds,principal bank and access to certain funding markets could be reduced. 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.
JPMorgan Chase’s unsecured debt does not contain requirements that would call for an acceleration of payments, maturities or changes in the structure of the existing debt, provide any limitations on future borrowings or require additional collateral, based on unfavorable changes in the Firm’s credit ratings, financial ratios, earnings, or stock price.
non-bank subsidiaries.
Critical factors in maintaining high credit ratings include a stable and diverse earnings stream, strong capital and liquidity ratios, strong credit quality and risk management controls, and diverse funding sources. Rating agencies continue to evaluate economic and geopolitical trends, regulatory developments, future profitability, risk management practices, and litigation matters, as well as their broader ratings methodologies. Changes in any of these factors could lead to changes in the Firm’s credit ratings.
|
| | | | |
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. Forinvestments, including consumer credit risk,
wholesale credit risk, and investment portfolio risk. Refer to pages 55-68 for a further discussion of Credit Risk referRisk.
Refer to pages 55-72. Forpage 69 for a further discussion onof Investment Portfolio Risk. Refer to Credit and Investment Risk refer to page 72. ForManagement on pages 102-123 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the Firm’s Credit and Investment Risk Management framework and organization, and the identification, monitoring and management, refer to Credit and Investment Risk Management on pages 99–120 of JPMorgan Chase’s 2017 Annual Report.management.
Credit risk is the risk associated with the default or change in credit profile of a client, counterparty or customer.
In the following tables, reported 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. Forassets; refer to Notes 2 and 3 for further information regarding these loans, referloans. Refer to Notes 211, 22, and 3. For4 for additional information on the Firm’s loans, lending-related commitments and derivative receivables, including the Firm’s accounting policies, referpolicies.
Refer to Notes 11, 20, and 4, respectively.
ForWholesale credit exposure – industry exposures on pages 62–64 for further information regarding the credit risk inherent in the Firm’s cash placed with banks,banks; refer to Wholesale credit exposure – industry exposures on pages 64–66;Note 9 of this Form 10-Q and Note 10 of JPMorgan Chase’s 2018 Form 10-K for information regarding the credit risk inherent in the Firm’s investment securities portfolio,portfolio; and refer to Note 910 of this Form 10-Q and Note 1011 of JPMorgan Chase’s 2017 Annual Report; and2018 Form 10-K for information regarding the credit risk inherent in the securities financing portfolio, referportfolio.
Refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K and Note 1011 of this Form 10-Q and Note 11 of JPMorgan Chase’s 2017 Annual Report.
Forfor a further discussion of the consumer credit environment and consumer loans, referloans. Refer to ConsumerWholesale Credit Portfolio on pages 102-107112–119 of JPMorgan Chase’s 2017 Annual Report2018 Form 10-K and Note 11 of this Form 10-Q. For10-Q for a further discussion of the wholesale credit environment and wholesale loans,loans.
refer to Wholesale Credit Portfolio on pages 108–116 of JPMorgan Chase’s 2017 Annual Report and Note 11 of this Form 10-Q. |
| | | | | | | | | | | | | |
Total credit portfolio | | | | |
| Credit exposure | | Nonperforming(d)(e) |
(in millions) | Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
Loans retained | $ | 928,887 |
| $ | 969,415 |
| | $ | 4,687 |
| $ | 4,611 |
|
Loans held-for-sale | 10,571 |
| 11,988 |
| | 88 |
| — |
|
Loans at fair value | 5,760 |
| 3,151 |
| | 176 |
| 220 |
|
Total loans–reported | 945,218 |
| 984,554 |
| | 4,951 |
| 4,831 |
|
Derivative receivables | 55,577 |
| 54,213 |
| | 26 |
| 60 |
|
Receivables from customers and other(a) | 32,236 |
| 30,217 |
| | — |
| — |
|
Total credit-related assets | 1,033,031 |
| 1,068,984 |
| | 4,977 |
| 4,891 |
|
Assets acquired in loan satisfactions | | | | | |
Real estate owned | NA |
| NA |
| | 340 |
| 269 |
|
Other | NA |
| NA |
| | 26 |
| 30 |
|
Total assets acquired in loan satisfactions | NA |
| NA |
| | 366 |
| 299 |
|
Lending-related commitments | 1,095,090 |
| 1,039,258 |
| | 446 |
| 469 |
|
Total credit portfolio | $ | 2,128,121 |
| $ | 2,108,242 |
| | $ | 5,789 |
| $ | 5,659 |
|
Credit derivatives used in credit portfolio management activities(b) | $ | (15,031 | ) | $ | (12,682 | ) | | $ | — |
| $ | — |
|
Liquid securities and other cash collateral held against derivatives(c) | (15,482 | ) | (15,322 | ) | | NA |
| NA |
|
|
| | | | | | | | | | | | | |
Total credit portfolio | | | | |
| Credit exposure | | Nonperforming(d)(e) |
(in millions) | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
|
Loans retained | $ | 947,651 |
| $ | 924,838 |
| | $ | 4,630 |
| $ | 5,943 |
|
Loans held-for-sale | 3,680 |
| 3,351 |
| | 14 |
| — |
|
Loans at fair value | 2,987 |
| 2,508 |
| | — |
| — |
|
Total loans – reported | 954,318 |
| 930,697 |
| | 4,644 |
| 5,943 |
|
Derivative receivables | 60,062 |
| 56,523 |
| | 90 |
| 130 |
|
Receivables from customers and other(a) | 26,137 |
| 26,272 |
| | — |
| — |
|
Total credit-related assets | 1,040,517 |
| 1,013,492 |
| | 4,734 |
| 6,073 |
|
Assets acquired in loan satisfactions | | | | | |
Real estate owned | NA |
| NA |
| | 268 |
| 311 |
|
Other | NA |
| NA |
| | 32 |
| 42 |
|
Total assets acquired in loan satisfactions | NA |
| NA |
| | 300 |
| 353 |
|
Lending-related commitments | 1,048,674 |
| 991,482 |
| | 252 |
| 731 |
|
Total credit portfolio | $ | 2,089,191 |
| $ | 2,004,974 |
| | $ | 5,286 |
| $ | 7,157 |
|
Credit derivatives used in credit portfolio management activities(b) | $ | (14,206 | ) | $ | (17,609 | ) | | $ | — |
| $ | — |
|
Liquid securities and other cash collateral held against derivatives(c) | (16,943 | ) | (16,108 | ) | | NA |
| NA |
|
|
| | | | | | | | | | | | | |
(in millions, except ratios) | Three months ended September 30, | | Nine months ended September 30, |
2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Net charge-offs | $ | 1,371 |
| $ | 1,033 |
| | $ | 4,135 |
| $ | 3,620 |
|
Average retained loans | | | | | |
Loans | 932,493 |
| 942,583 |
| | 944,666 |
| 931,766 |
|
Loans – reported, excluding residential real estate PCI loans | 910,753 |
| 916,205 |
| | 921,978 |
| 903,377 |
|
Net charge-off rates | | | | | |
Loans | 0.58 | % | 0.43 | % | | 0.59 | % | 0.52 | % |
Loans – excluding PCI | 0.60 |
| 0.45 |
| | 0.60 |
| 0.54 |
|
|
| | | | | | | | | | | | | |
(in millions, except ratios) | Three months ended September 30, | | Nine months ended September 30, |
2018 |
| 2017 |
| | 2018 |
| 2017 |
|
Net charge-offs(f) | $ | 1,033 |
| $ | 1,265 |
| | $ | 3,620 |
| $ | 4,123 |
|
Average retained loans | | | | | |
Loans | 942,583 |
| 903,892 |
| | 931,766 |
| 894,170 |
|
Loans – excluding residential real estate PCI loans | 916,205 |
| 871,465 |
| | 903,377 |
| 860,443 |
|
Net charge-off rates(f) | | | | | |
Loans | 0.43 | % | 0.56 | % | | 0.52 | % | 0.62 | % |
Loans – excluding PCI | 0.45 |
| 0.58 |
| | 0.54 |
| 0.64 |
|
| |
(a) | Receivables from customers and other primarily represents prime brokerage-related held-for-investment margin loans to brokerage customers.customer receivables. |
| |
(b) | Represents the net notional amount of protection purchased and sold through credit derivatives used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. For additional information, referRefer to Credit derivatives on page 6866 and Note 4.4 for additional information. |
| |
(c) | Includes collateral related to derivative instruments where an appropriate legal opinion has not been either sought or obtained. |
| |
(d) | Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing. |
| |
(e) | At September 30, 2018,2019, and December 31, 2017,2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.9$1.6 billion and $4.3$2.6 billion, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $78$50 million and $95$75 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 issued by the Federal Financial Institutions Examination Council (“FFIEC”). |
| |
(f) | For the nine months ended September 30, 2017, excluding net charge-offs of $467 million related to the student loan portfolio transfer, the net charge-off rate for Loans would have been 0.55% and for Loans – excluding PCI would have been 0.57%. |
|
| | | | |
CONSUMER CREDIT PORTFOLIO |
The Firm’s retained consumer portfolio consists primarily of residential real estate loans, credit card loans, auto loans, and business banking loans, as well as associated lending-related commitments. The Firm’s focus is on serving primarily the prime segment of the consumer credit market. For further information on consumer loans, referRefer to Note 11 of this Form
10-Q and Consumer Credit Portfolio on pages 102-107106–111 and Note 12 of JPMorgan Chase’s 2017 Annual Report. For2018 Form 10-K for further information on lending-related commitments, referconsumer loans. Refer to Note 2022 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for further information on lending-related commitments.
The following table presents consumer credit-related information with respect to the credit portfolio held by CCB, scored prime mortgage and scored home equity loans held by AWM, and prime mortgage loans held by Corporate. ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for further information about the Firm’s nonaccrual and charge-off accounting policies, refer to Note 12 of JPMorgan Chase’s 2017 Annual Report.policies.
| | Consumer credit portfolio | Consumer credit portfolio | | | | | | | | | | | | Consumer credit portfolio | | | | | | | | | | | |
| | | | | | Three months ended September 30, | | Nine months ended September 30, | | | | | | Three months ended September 30, | | Nine months ended September 30, |
(in millions, except ratios) | Credit exposure | | Nonaccrual loans(i)(j) | | Net charge-offs/(recoveries)(k)(l) | | Average annual net charge-off/(recoveries) rate(k)(l)(m) | | Net charge-offs/(recoveries)(d)(k) | | Average annual net charge-off/(recoveries) rate(d)(k)(m) | Credit exposure | | Nonaccrual loans(f)(g) | | Net charge-offs/(recoveries)(h) | | Net charge-off/(recovery) rate(h)(i) | | Net charge-offs/(recoveries)(h) | | Net charge-off/(recovery) rate(h)(i) |
Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Consumer, excluding credit card | | | | | | | | | | | | | | | | | | | | | | | | |
Loans, excluding PCI loans and loans held-for-sale | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | $ | 231,361 |
| $ | 216,496 |
| | $ | 1,880 |
| $ | 2,175 |
| | $ | (105 | ) | $ | 3 |
| | (0.18 | )% | 0.01 | % | | $ | (256 | ) | $ | 3 |
| | (0.15 | )% | — | % | $ | 197,456 |
| $ | 231,078 |
| | $ | 1,629 |
| $ | 1,765 |
| | $ | (15 | ) | $ | (105 | ) | | (0.03 | )% | (0.18 | )% | | $ | (31 | ) | $ | (256 | ) | | (0.02 | )% | (0.15 | )% |
Home equity | 29,318 |
| 33,450 |
| | 1,382 |
| 1,610 |
| | (12 | ) | 13 |
| | (0.16 | ) | 0.15 |
| | (2 | ) | 71 |
| | (0.01 | ) | 0.26 |
| 24,954 |
| 28,340 |
| | 1,208 |
| 1,323 |
| | (25 | ) | (12 | ) | | (0.39 | ) | (0.16 | ) | | (40 | ) | (2 | ) | | (0.20 | ) | (0.01 | ) |
Auto(a)(b) | 63,619 |
| 66,242 |
| | 137 |
| 141 |
| | 56 |
| 116 |
| | 0.35 |
| 0.71 |
| | 182 |
| 245 |
| | 0.37 |
| 0.50 |
| 61,410 |
| 63,573 |
| | 112 |
| 128 |
| | 49 |
| 56 |
| | 0.32 |
| 0.35 |
| | 149 |
| 182 |
| | 0.32 |
| 0.37 |
|
Consumer & Business Banking(b)(c) | 26,451 |
| 25,789 |
| | 237 |
| 283 |
| | 68 |
| 71 |
| | 1.02 |
| 1.12 |
| | 171 |
| 184 |
| | 0.88 |
| 0.99 |
| 26,699 |
| 26,612 |
| | 268 |
| 245 |
| | 79 |
| 68 |
| | 1.18 |
| 1.02 |
| | 204 |
| 171 |
| | 1.03 |
| 0.88 |
|
Student(d) | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| 498 |
| | — |
| NM |
| |
Total loans, excluding PCI loans and loans held-for-sale | 350,749 |
| 341,977 |
| | 3,636 |
| 4,209 |
| | 7 |
| 203 |
| | 0.01 |
| 0.24 |
| | 95 |
| 1,001 |
| | 0.04 |
| 0.40 |
| 310,519 |
| 349,603 |
| | 3,217 |
| 3,461 |
| | 88 |
| 7 |
| | 0.11 |
| 0.01 |
| | 282 |
| 95 |
| | 0.11 |
| 0.04 |
|
Loans – PCI | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | 9,393 |
| 10,799 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| 7,753 |
| 8,963 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
|
Prime mortgage | 4,931 |
| 6,479 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| 4,164 |
| 4,690 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
|
Subprime mortgage | 2,072 |
| 2,609 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| 1,797 |
| 1,945 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
|
Option ARMs(e) | 8,813 |
| 10,689 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| |
Option ARMs | | 7,576 |
| 8,436 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
|
Total loans – PCI | 25,209 |
| 30,576 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| 21,290 |
| 24,034 |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
|
Total loans – retained | 375,958 |
| 372,553 |
| | 3,636 |
| 4,209 |
| | 7 |
| 203 |
| | 0.01 |
| 0.22 |
| | 95 |
| 1,001 |
| | 0.03 |
| 0.37 |
| 331,809 |
| 373,637 |
| | 3,217 |
| 3,461 |
| | 88 |
| 7 |
| | 0.10 |
| 0.01 |
| | 282 |
| 95 |
| | 0.11 |
| 0.03 |
|
Loans held-for-sale | 104 |
| 128 |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| 4,821 |
| 95 |
| | 2 |
| — |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
|
Total consumer, excluding credit card loans | 376,062 |
| 372,681 |
| | 3,636 |
| 4,209 |
| | 7 |
| 203 |
| | 0.01 |
| 0.22 |
| | 95 |
| 1,001 |
| | 0.03 |
| 0.37 |
| 336,630 |
| 373,732 |
| | 3,219 |
| 3,461 |
| | 88 |
| 7 |
| | 0.10 |
| 0.01 |
| | 282 |
| 95 |
| | 0.11 |
| 0.03 |
|
Lending-related commitments(f) | 50,630 |
| 48,553 |
| | | | | | | | | | | |
Receivables from customers(g) | 155 |
| 133 |
| | | | | | | | | | | |
Lending-related commitments(d) | | 53,591 |
| 46,066 |
| | | | | | | | | | |
Receivables from customers | | 18 |
| 154 |
| | | | | | | | | | |
Total consumer exposure, excluding credit card | 426,847 |
| 421,367 |
| | | | | | | | | | | 390,239 |
| 419,952 |
| | | | | | | | | | |
Credit card | | | | | | | | | | | | | | | | | | | | | | |
Loans retained(h) | 147,856 |
| 149,387 |
| | — |
| — |
| | 1,073 |
| 1,019 |
| | 2.91 |
| 2.87 |
| | 3,407 |
| 3,049 |
| | 3.16 |
| 2.94 |
| |
Loans retained(e) | | 159,571 |
| 156,616 |
| | — |
| — |
| | 1,175 |
| 1,073 |
| | 2.95 |
| 2.91 |
| | 3,617 |
| 3,407 |
| | 3.13 |
| 3.16 |
|
Loans held-for-sale | 25 |
| 124 |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| — |
| 16 |
| | — |
| — |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
| | NA |
| NA |
|
Total credit card loans | 147,881 |
| 149,511 |
| | — |
| — |
| | 1,073 |
| 1,019 |
| | 2.91 |
| 2.87 |
| | 3,407 |
| 3,049 |
| | 3.16 |
| 2.94 |
| 159,571 |
| 156,632 |
| | — |
| — |
| | 1,175 |
| 1,073 |
| | 2.95 |
| 2.91 |
| | 3,617 |
| 3,407 |
| | 3.13 |
| 3.16 |
|
Lending-related commitments(f) | 600,728 |
| 572,831 |
| | | | | | | | | | | |
Lending-related commitments(d) | | 645,880 |
| 605,379 |
| | | | | | | | | | |
Total credit card exposure | 748,609 |
| 722,342 |
| | | | | | | | | | | 805,451 |
| 762,011 |
| | | | | | | | | | |
Total consumer credit portfolio | $ | 1,175,456 |
| $ | 1,143,709 |
| | $ | 3,636 |
| $ | 4,209 |
| | $ | 1,080 |
| $ | 1,222 |
| | 0.82 | % | 0.95 | % | | $ | 3,502 |
| $ | 4,050 |
| | 0.90 | % | 1.07 | % | $ | 1,195,690 |
| $ | 1,181,963 |
| | $ | 3,219 |
| $ | 3,461 |
| | $ | 1,263 |
| $ | 1,080 |
| | 1.00 | % | 0.82 | % | | $ | 3,899 |
| $ | 3,502 |
| | 1.02 | % | 0.90 | % |
Memo: Total consumer credit portfolio, excluding PCI | $ | 1,150,247 |
| $ | 1,113,133 |
| | $ | 3,636 |
| $ | 4,209 |
| | $ | 1,080 |
| $ | 1,222 |
| | 0.86 | % | 1.02 | % | | $ | 3,502 |
| $ | 4,050 |
| | 0.96 | % | 1.15 | % | $ | 1,174,400 |
| $ | 1,157,929 |
| | $ | 3,219 |
| $ | 3,461 |
| | $ | 1,263 |
| $ | 1,080 |
| | 1.05 | % | 0.86 | % | | $ | 3,899 |
| $ | 3,502 |
| | 1.07 | % | 0.96 | % |
| |
(a) | At September 30, 2018,2019, and December 31, 2017,2018, excluded operating lease assets of $19.6$22.1 billion and $17.1$20.5 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. The risk of loss on these assets relatesRefer to the residual value of the leased vehicles, which is managed through projection of the lease residual value at lease origination, periodic review of residual values, and through arrangements with certain auto manufacturers that mitigates this risk.Note 16 for further information. |
| |
(b) | Includes certain business banking and auto dealer risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by CCB, and therefore, for consistency in presentation, are included within the consumer portfolio. |
| |
(c) | Predominantly includes Business Banking loans. |
| |
(d) | For the nine months ended September 30, 2017, excluding net charge-offs of $467 million related to the student loan portfolio sale, the net charge-off rate for Total consumer, excluding credit card and PCI loans and loans held-for-sale would have been 0.22%; Total consumer – retained excluding credit card loans would have been 0.20%; Total consumer credit portfolio would have been 0.95%; and Total consumer credit portfolio, excluding PCI loans would have been 1.02%. |
| |
(e) | At both September 30, 2018, and December 31, 2017, approximately 68% of the PCI option adjustable rate mortgage (“ARM”) portfolio has been modified into fixed-rate, fully amortizing loans. |
| |
(f) | Credit card and home equity 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, 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. For further information, referRefer to Note 20.22 for further information. |
| |
(g) | Receivables from customers represent held-for-investment margin loans to brokerage customers that are collateralized through assets maintained in the clients’ brokerage accounts. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets. |
| |
(h)(e) | Includes billed interest and fees net of an allowance for uncollectible interest and fees. |
| |
(i)(f) | At September 30, 20182019 and December 31, 2017,2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.9$1.6 billion and $4.3$2.6 billion, 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 issued by the FFIEC. |
| |
(j)(g) | Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing. |
| |
(k)(h) | Net charge-offscharge-offs/(recoveries) and the net charge-offcharge-off/(recovery) rates excluded write-offs in the PCI portfolio of $58$43 million and $20$58 million for the three months ended September 30, 20182019 and 2017,2018, respectively, and $151$132 million and $66$151 million for the nine months ended September 30, 20182019 and 2017,2018, respectively. These write-offs decreased the allowance for loan losses for PCI loans. Refer to Allowance for Credit Losses on pages 69–7167–68 for further information. |
| |
(l) | Net charge-offs and net charge-off rates for the three months ended September 30, 2017 included $63 million of incremental charge-offs recorded in accordance with regulatory guidance regarding the timing of loss recognition for certain auto and residential real estate loans in bankruptcy and auto loans where assets were acquired in loan satisfaction. |
| |
(m)(i) | Average consumer loans held-for-sale were $196 million$5.5 billion and $339$196 million for the three months ended September 30, 20182019 and 2017,2018, respectively, and $2.6 billion and $240 million and $1.9 billion for the nine months ended September 30, 20182019 and 2017,2018, respectively. These amounts were excluded when calculating net charge-offcharge-off/(recovery) rates. |
Consumer, excluding credit card
Portfolio analysis
Consumer loanLoan balances increaseddecreased from December 31, 2017 predominantly2018 due to originationslower residential real estate loans, predominantly driven by loan sales. The credit performance of high-quality prime mortgage loans that have been retained on the balance sheet, largely offset by paydownsportfolio continues to benefit from a strong labor market and the charge-off or liquidation of delinquent loans.improvement in home prices.
PCI loans are excluded from theThe following discussions ofprovide information concerning individual loan products, andexcluding PCI loans which are addressed separately below. Forseparately. Refer to Note 11 of this Form 10-Q for further information about the Firm’s consumerthis portfolio, including information about delinquencies, loan modifications and other credit quality indicators, refer to Note 11 of this Form 10-Q.indicators.
Residential mortgage: The residential mortgage portfolio, including loans held-for-sale, predominantly consists of high-quality prime mortgage loans, with approximately 1% consisting of subprime mortgage loans. These subprime mortgage loans continue to run off and are performing in line with expectations. The residential mortgage portfolio including loans held-for-sale, increased from December 31, 2017 as the amount of retained originations of primarily high-quality prime mortgage loans exceeded paydowns. Residential mortgage 30+ day delinquencies decreased from December 31, 2017. Nonaccrual2018 driven by loan sales in Home Lending as well as paydowns, largely offset by originations of prime mortgage loans decreased from December 31, 2017 due to lower delinquencies.that have been retained on the balance sheet. Net recoveries for the three and nine months ended September 30, 2018 improved2019 were lower when compared with the same periodperiods in the prior year reflectingas the prior year benefited from larger recoveries on loan sales as well as continued improvement in home prices and lower delinquencies.sales.
At September 30, 2018,2019, and December 31, 2017,2018, the Firm’s residential mortgage portfolio included $21.3$21.8 billion and $20.2$21.6 billion, respectively, of interest-only loans. 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. To date, losses onborrowers, predominantly in AWM. Performance of this portfolio generally have been consistentfor the three and nine months ended September 30, 2019 was in line with the performance of the broader residential mortgage portfolio. The Firm continues to monitorportfolio for the risks associated with these loans.same period.
The following table provides a summary of the Firm’s residential mortgage portfolio insured and/or guaranteed by U.S. government agencies, including loans held-for-sale. 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) | September 30, 2019 |
| December 31, 2018 |
|
Current | $ | 2,100 |
| $ | 2,884 |
|
30-89 days past due | 1,054 |
| 1,528 |
|
90 or more days past due | 1,602 |
| 2,600 |
|
Total government guaranteed loans | $ | 4,756 |
| $ | 7,012 |
|
|
| | | | | | |
(in millions) | September 30, 2018 |
| December 31, 2017 |
|
Current | $ | 2,741 |
| $ | 2,401 |
|
30-89 days past due | 1,563 |
| 1,958 |
|
90 or more days past due | 2,896 |
| 4,264 |
|
Total government guaranteed loans | $ | 7,200 |
| $ | 8,623 |
|
Home equity: The home equity portfolio declined from December 31, 20172018 primarily reflecting loan paydowns. The amount of 30+ day delinquencies decreased from December 31, 2017. Nonaccrual loans decreased from December 31, 2017 due to lower delinquencies. Net recoveries for the three and nine months ended September 30, 2018 improved when compared with the same period in the prior year, as a result of continued improvement in home prices and lower delinquencies.
At September 30, 2018,2019, approximately 90% of the Firm’s home equity portfolio consisted of home equity lines of credit (“HELOCs”) and the remainder consisted of home equity loans (“HELOANs”). The carrying value of HELOCs outstanding was $26$23 billion at September 30, 2018.2019. This amount included $12$10 billion of HELOCs that have recast from interest-only to fully amortizing payments or have been modified and $4 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 Firm monitors risks associated with junior lien loans where the borrower has a senior lien loan that is either delinquent or has been modified. These loans are considered “high-risk seconds” and are classified as nonaccrual as they are considered to pose a higher risk of default than other junior lien loans. The carrying value of high-risk seconds declined from December 31, 2017.
For further information on the Firm’s home equity portfolio, referRefer to Note 11 of this Form 10-Q and Consumer Credit Portfolio on pages 102-107106–111 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for further information on the Firm’s home equity portfolio.
Auto: The auto loan portfolio which predominantly consists of prime-quality loans,loans. The portfolio declined when compared with December 31, 2017,2018, as paydowns and the charge-offcharge-offs or liquidation of delinquent loans were predominantly offset by new originations. Nonaccrual loans decreased from December 31, 2017. Net charge-offs for the three and nine months endedSeptember 30, 2018 declined when compared with the same period in the prior year primarily as a result of an incremental $49 million recorded in the prior year in accordance with regulatory guidance regarding the timing of loss recognition for certain loans in bankruptcy and loans where assets were acquired in loan satisfaction.
Consumer & Business Banking: Consumer & Business Banking loans increasedwere flat when compared with December 31, 2017 due to higher2018 as loan originations predominantlywere offset by paydowns and charge-offs of delinquent loans. Nonaccrual loans decreased from December 31, 2017. Net charge-offs for the three and nine months endedSeptember 30, 2018 decreased2019 increased when compared with the same period in the prior year.year due primarily to higher deposit overdraft losses.
Purchased credit-impaired loans: PCI loans represent certain loans that were acquired and deemed to be credit-impaired on the acquisition date. PCI loans decreased from December 31, 20172018 due to portfolio run off and loan sales.off. As of September 30, 2018,2019, approximately 11%9% of the option ARM PCI loans were delinquent and approximately 68%71% of the portfolio had been modified into fixed-rate, fully amortizing loans. The borrowers for substantially all of the remaining option ARM loans are making amortizing payments, although such payments are not necessarily fully amortizing. This latter group of loans is subject to the risk of payment shock due to future payment recast. Default rates generally increase on option ARM loans when payment recast results in a payment increase. The expected increase in default rates is considered in the Firm’s quarterly impairment assessment.
The following table provides a summary of lifetime principal loss estimates included in either the nonaccretable difference or the allowance for loan losses.
| | Summary of PCI loans lifetime principal loss estimates | | Lifetime loss estimates(a) | | Life-to-date liquidation losses(b) | Lifetime loss estimates(a) | | Life-to-date liquidation losses(b) |
(in billions) | Sep 30, 2018 |
| | Dec 31, 2017 |
| | Sep 30, 2018 |
| | Dec 31, 2017 |
| Sep 30, 2019 |
| | Dec 31, 2018 |
| | Sep 30, 2019 |
| | Dec 31, 2018 |
|
Home equity | $ | 14.1 |
| | $ | 14.2 |
| | $ | 13.0 |
| | $ | 12.9 |
| $ | 13.9 |
| | $ | 14.1 |
| | $ | 13.0 |
| | $ | 13.0 |
|
Prime mortgage | 4.0 |
| | 4.0 |
| | 3.8 |
| | 3.8 |
| 4.1 |
| | 4.1 |
| | 3.9 |
| | 3.9 |
|
Subprime mortgage | 3.3 |
| | 3.3 |
| | 3.1 |
| | 3.1 |
| 3.3 |
| | 3.3 |
| | 3.2 |
| | 3.2 |
|
Option ARMs | 10.2 |
| | 10.0 |
| | 9.9 |
| | 9.7 |
| 10.3 |
| | 10.3 |
| | 10.0 |
| | 9.9 |
|
Total | $ | 31.6 |
| | $ | 31.5 |
| | $ | 29.8 |
| | $ | 29.5 |
| $ | 31.6 |
| | $ | 31.8 |
| | $ | 30.1 |
| | $ | 30.0 |
|
| |
(a) | Includes the original nonaccretable difference established in purchase accounting of $30.5 billion for principal losses plus additional principal losses recognized subsequent to acquisition through the provision and allowance for loan losses. The remaining nonaccretable difference for principal losses was $556$476 million and $842$512 million at September 30, 2018,2019, and December 31, 2017,2018, respectively. |
| |
(b) | Represents both realization of loss upon loan resolution and any principal forgiven upon modification. |
Geographic composition of residential real estate loans
ForRefer to Note 11 for information on the geographic composition of the Firm’s residential real estate loans, refer to Note 11.loans.
Current estimated loan-to-value ratio of residential real estate loans
Average current estimated loan-to-value (“LTV”) ratios have declined consistent with recent improvements in home prices, customer paydowns, and charge-offs or liquidations of higher LTV loans. For furtherRefer to Note 11 for information on current estimated LTVs onof the Firm’s residential real estate loans, refer to Note 11.loans.
Loan modification activities for residential real estate loans
The performance of modified loans generally differs by product type due to differences in both the credit quality and the types of modifications provided. The performance ofPerformance metrics for modifications to the residential real estate portfolios as measured through cumulative redefault rates, were not materially different from December 31, 2017. For2018. Refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K for further information on the Firm’s cumulative redefault rates refer to Consumer Credit Portfolio on pages 102-107 of JPMorgan Chase’s 2017 Annual Report.rates.
Certain loans that were modified under the U.S. Government’s Home Affordable Modification Program (“HAMP”) and the Firm’s proprietary modification programsloans have interest rate reset provisions (“step-rate modifications”). Interest where the interest rates on these loans generally began to increase commencing in 2014 by 1% per year, and will continue to do so, until the rate reaches a specified cap. The cap on these loans is typically at a prevailing market interest rate for a fixed-rate mortgage loan as of the modification date. At September 30, 2018,2019, the carrying value of non-PCI loans and the unpaid principal balance of PCI loans modified in step-rate modifications, which have not yet met their specified caps, were $2$1.3 billion and $4$2.4 billion, respectively. The Firm continues to monitor this risk exposure and the impact of these potential interest rate
increases is considered in the Firm’s allowance for loan losses.
The following table presents information as of September 30, 2018,2019, and December 31, 2017,2018, relating to modified retained residential real estate loans for which concessions have been granted to borrowers experiencing financial difficulty. ForRefer to Note 11 for further information on modifications for the three and nine months ended September 30, 20182019 and 2017, refer to Note 11.2018.
| | Modified residential real estate loans | | September 30, 2018 | | December 31, 2017 | September 30, 2019 | | December 31, 2018 |
(in millions) | Retained loans | Non-accrual retained loans(d) | | Retained loans | Non-accrual retained loans(d) | Retained loans | Non-accrual retained loans(d) | | Retained loans | Non-accrual retained loans(d) |
Modified residential real estate loans, excluding PCI loans(a)(b) | | | | | | |
Residential mortgage | $ | 4,722 |
| $ | 1,536 |
| | $ | 5,620 |
| $ | 1,743 |
| $ | 4,118 |
| $ | 1,376 |
| | $ | 4,565 |
| $ | 1,459 |
|
Home equity | 2,056 |
| 993 |
| | 2,118 |
| 1,032 |
| 1,961 |
| 981 |
| | 2,012 |
| 955 |
|
Total modified residential real estate loans, excluding PCI loans | $ | 6,778 |
| $ | 2,529 |
| | $ | 7,738 |
| $ | 2,775 |
| $ | 6,079 |
| $ | 2,357 |
| | $ | 6,577 |
| $ | 2,414 |
|
Modified PCI loans(c) | | | | | | |
Home equity | $ | 2,135 |
| NA |
| | $ | 2,277 |
| NA |
| $ | 2,003 |
| NA |
| | $ | 2,086 |
| NA |
|
Prime mortgage | 3,296 |
| NA |
| | 4,490 |
| NA |
| 2,929 |
| NA |
| | 3,179 |
| NA |
|
Subprime mortgage | 2,162 |
| NA |
| | 2,678 |
| NA |
| 1,919 |
| NA |
| | 2,041 |
| NA |
|
Option ARMs | 6,660 |
| NA |
| | 8,276 |
| NA |
| 5,879 |
| NA |
| | 6,410 |
| NA |
|
Total modified PCI loans | $ | 14,253 |
| NA |
| | $ | 17,721 |
| NA |
| $ | 12,730 |
| NA |
| | $ | 13,716 |
| NA |
|
| |
(a) | Amounts represent the carrying value of modified residential real estate loans. |
| |
(b) | At September 30, 2018,2019, and December 31, 2017, $4.0 billion2018, $16 million and $3.8$4.1 billion, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., Federal Housing Administration (“FHA”), U.S. Department of Veterans Affairs (“VA”), Rural Housing Service of the U.S. Department of Agriculture (“RHS”)) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure. ForRefer to Note 13 for additional information about sales of loans in securitization transactions with Ginnie Mae, refer to Note 13.Mae. |
| |
(c) | Amounts represent the unpaid principal balance of modified PCI loans. |
| |
(d) | At September 30, 2018,2019, and December 31, 2017,2018, nonaccrual loans included $2.0$1.9 billion and $2.2$2.0 billion, respectively, of troubled debt restructurings (“TDRs”) for which the borrowers were less than 90 days past due. ForRefer to Note 11 for additional information about loans modified in a TDR that are on nonaccrual status, refer to Note 11.status. |
Nonperforming assets
The following table presents information as of September 30, 2018,2019, and December 31, 2017,2018, about consumer, excluding credit card, nonperforming assets.
| | Nonperforming assets(a) | | | | | | |
(in millions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Nonaccrual loans(b) | | | | | | |
Residential real estate | $ | 3,262 |
| | $ | 3,785 |
| $ | 2,839 |
| | $ | 3,088 |
|
Other consumer | 374 |
| | 424 |
| 380 |
| | 373 |
|
Total nonaccrual loans | 3,636 |
| | 4,209 |
| 3,219 |
| | 3,461 |
|
Assets acquired in loan satisfactions | | | | | | |
Real estate owned(c) | 205 |
| | 225 |
| 209 |
| | 196 |
|
Other | 32 |
| | 40 |
| 26 |
| | 30 |
|
Total assets acquired in loan satisfactions | 237 |
| | 265 |
| 235 |
| | 226 |
|
Total nonperforming assets | $ | 3,873 |
| | $ | 4,474 |
| $ | 3,454 |
| | $ | 3,687 |
|
| |
(a) | At September 30, 2018,2019, and December 31, 2017,2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.9$1.6 billion and $4.3$2.6 billion, respectively, and REO insured by U.S. government agencies of $78$50 million and $95$75 million, respectively. These amounts have been excluded based upon the government guarantee. |
| |
(b) | Excludes PCI loans, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, is not meaningful. The Firm is recognizing interest income on each pool of loans as each of the pools is performing. |
| |
(c) | The prior period amount has been revised to conform with the current period presentation. |
Nonaccrual loans in the residential real estate portfolio at September 30, 20182019 decreased to $3.3$2.8 billion from $3.8$3.1 billion at December 31, 2017,2018, of which 25%20% and 26%24% were greater than 150 days past due, respectively. In the aggregate, the unpaid principal balance of residential real estate loans greater than 150 days past due was charged down by approximately 33%31% and 40%32% to the estimated net realizable value of the collateral at September 30, 2018,2019, and December 31, 2017,2018, respectively.
Nonaccrual loans: The following table presents changes in consumer, excluding credit card, nonaccrual loans for the nine months ended September 30, 20182019 and 2017.2018.
| | Nonaccrual loan activity | | | | |
Nine months ended September 30, (in millions) | | 2018 |
| 2017 |
| | 2019 |
| 2018 |
|
Beginning balance | | $ | 4,209 |
| $ | 4,820 |
| | $ | 3,461 |
| $ | 4,209 |
|
Additions | | 2,174 |
| 2,553 |
| | 1,674 |
| 2,174 |
|
Reductions: | | | | |
Principal payments and other(a) | | 1,119 |
| 1,245 |
| | 766 |
| 1,119 |
|
Charge-offs | | 354 |
| 561 |
| | 301 |
| 354 |
|
Returned to performing status | | 1,057 |
| 1,121 |
| | 657 |
| 1,057 |
|
Foreclosures and other liquidations | | 217 |
| 285 |
| | 192 |
| 217 |
|
Total reductions | | 2,747 |
| 3,212 |
| | 1,916 |
| 2,747 |
|
Net changes | | (573 | ) | (659 | ) | | (242 | ) | (573 | ) |
Ending balance | | $ | 3,636 |
| $ | 4,161 |
| | $ | 3,219 |
| $ | 3,636 |
|
| |
(a) | Other reductions includes loan sales. |
Active and suspended foreclosure: ForRefer to Note 11 for information on loans that were in the process of active or suspended foreclosure, refer to Note foreclosure.11.
Credit card
Total credit card loans decreasedincreased from December 31, 2017 due to2018 reflecting increased sales volumes from existing customers and new account growth, partially offset by the impact of seasonality. The September 30, 20182019 30+ day delinquency rate seasonally decreased to 1.75% from 1.80% at December 31, 2017, and the September 30, 2018 90+ day delinquency rate decreasedrates of 1.84% and 0.90%, respectively, were relatively flat compared to 0.85% from 0.92% atthe December 31, 2017, in line with expectations.2018 30+ and 90+ day delinquency rates of 1.83% and 0.92%, respectively. Net charge-offs increased for the three and nine months ended September 30, 20182019 when compared with the same periodsperiod in the prior year as expected, primarily due to the seasoning of more recent vintagesloan growth, in line with higher loss rates, as anticipated given underwriting standards at the time of origination.expectations.
Consistent with the Firm’s policy, all credit card loans typically remain on accrual status until charged off. However, the Firm establishes an allowance, which is offset against loans and charged toreduces interest income, for the estimated uncollectible portion of accrued and billed interest and fee income.
Geographic and FICO composition of credit card loans
ForRefer to Note 11 for information on the geographic and FICO composition of the Firm’s credit card loans, refer to Note 11.loans.
Modifications of credit card loans
At September 30, 20182019 and December 31, 2017,2018, the Firm had $1.3$1.4 billion and $1.2$1.3 billion, respectively, of credit card loans outstanding that have been modified in TDRs. These balances included both credit card loans with modified payment terms and credit card loans that reverted backRefer to their pre-modification payment terms because the cardholder did not comply with the modified payment terms.
ForNote 11 for additional information about loan modification programs to borrowers, refer to Note 11.borrowers.
|
| | | | |
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 credit qualityperformance of the wholesale portfolio was stableremained favorable for the nine months ended September 30, 2018,2019, characterized by continued low levels of criticized exposure, nonaccrual loans and charge-offs. Refer to the industry discussion on pages 64–6662–64 for further information. Retained loans increased across all wholesale lines of business, predominantlyLoans held-for-sale decreased, driven by CIB, including loans to financial institution and commercial and industrial clients, anda loan syndication in AWM due to an increase in loans to Wealth Management clients globally.CIB. 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.
In the following tables, the Firm’s wholesale credit portfolio includes exposure held in CIB, CB, AWM and Corporate, andCorporate. It excludes all exposure managed by CCB.CCB, scored prime mortgage and scored home equity loans held in AWM and prime mortgage loans held in Corporate.
| | Wholesale credit portfolio | | Credit exposure | | Nonperforming(c) | Credit exposure | | Nonperforming(c) |
(in millions) | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
Loans retained | $ | 423,837 |
| $ | 402,898 |
| | $ | 994 |
| $ | 1,734 |
| $ | 437,507 |
| $ | 439,162 |
| | $ | 1,470 |
| $ | 1,150 |
|
Loans held-for-sale | 3,551 |
| 3,099 |
| | 14 |
| — |
| 5,750 |
| 11,877 |
| | 86 |
| — |
|
Loans at fair value | 2,987 |
| 2,508 |
| | — |
| — |
| 5,760 |
| 3,151 |
| | 176 |
| 220 |
|
Loans | 430,375 |
| 408,505 |
| | 1,008 |
| 1,734 |
| |
Loans – reported | | 449,017 |
| 454,190 |
| | 1,732 |
| 1,370 |
|
Derivative receivables | 60,062 |
| 56,523 |
| | 90 |
| 130 |
| 55,577 |
| 54,213 |
| | 26 |
| 60 |
|
Receivables from customers and other(a) | 25,982 |
| 26,139 |
| | — |
| — |
| 32,218 |
| 30,063 |
| | — |
| — |
|
Total wholesale credit-related assets | 516,419 |
| 491,167 |
| | 1,098 |
| 1,864 |
| 536,812 |
| 538,466 |
| | 1,758 |
| 1,430 |
|
Lending-related commitments | 397,316 |
| 370,098 |
| | 252 |
| 731 |
| 395,619 |
| 387,813 |
| | 446 |
| 469 |
|
Total wholesale credit exposure | $ | 913,735 |
| $ | 861,265 |
| | $ | 1,350 |
| $ | 2,595 |
| $ | 932,431 |
| $ | 926,279 |
| | $ | 2,204 |
| $ | 1,899 |
|
Credit derivatives used in credit portfolio management activities(b) | $ | (14,206 | ) | $ | (17,609 | ) | | $ | — |
| $ | — |
| $ | (15,031 | ) | $ | (12,682 | ) | | $ | — |
| $ | — |
|
Liquid securities and other cash collateral held against derivatives | (16,943 | ) | (16,108 | ) | | NA |
| NA |
| (15,482 | ) | (15,322 | ) | | NA |
| NA |
|
| |
(a) | Receivables from customers and other include $26.0$32.2 billion and $30.1 billion of prime brokerage-related held-for-investment margin loanscustomer receivables at both September 30, 2018,2019, and December 31, 2017,2018, respectively, to prime brokerage customers in CIB and AWM; these are classified in accrued interest and accounts receivable on the Consolidated balance sheets. |
| |
(b) | Represents the net notional amount of protection purchased and sold through credit derivatives used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. For additional information, referRefer to Credit derivatives on page 68,66 and Note 4.4 for additional information. |
| |
(c) | Excludes assets acquired in loan satisfactions. |
The following tables present the maturity and ratings profiles of the wholesale credit portfolio as of September 30, 2018,2019, and December 31, 2017.2018. The ratings scale is based on the Firm’s internal risk ratings, which generally correspond to the ratings assigned by S&P and Moody’s. ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for additional information on wholesale loan portfolio risk ratings, refer to Note 12 of JPMorgan Chase’s 2017 Annual Report.ratings.
| | Wholesale credit exposure – maturity and ratings profile | Wholesale credit exposure – maturity and ratings profile | | | | | | Wholesale credit exposure – maturity and ratings profile | | | | | |
| Maturity profile(d) | | Ratings profile | Maturity profile(d) | | Ratings profile |
| Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years | Total | | Investment-grade | | Noninvestment-grade | Total | Total % of IG | Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years | Total | | Investment-grade | | Noninvestment-grade | Total | Total % of IG |
September 30, 2018 (in millions, except ratios) | | AAA/Aaa to BBB-/Baa3 | | BB+/Ba1 & below | |
September 30, 2019 (in millions, except ratios) | | Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years | Total | | AAA/Aaa to BBB-/Baa3 | | BB+/Ba1 & below | Total | Total % of IG |
Loans retained | $ | 136,832 |
| $ | 184,166 |
| $ | 102,839 |
| $ | 423,837 |
| | $ | 324,343 |
| | $ | 99,494 |
| $ | 423,837 |
| 77 | % | | $ | 337,298 |
| | $ | 100,209 |
|
Derivative receivables | | 60,062 |
| | | | | 60,062 |
| | | 55,577 |
| | | | | 55,577 |
| |
Less: Liquid securities and other cash collateral held against derivatives | | (16,943 | ) | | | | | (16,943 | ) | | | (15,482 | ) | | | | | (15,482 | ) | |
Total derivative receivables, net of all collateral | 11,650 |
| 12,637 |
| 18,832 |
| 43,119 |
| | 34,602 |
| | 8,517 |
| 43,119 |
| 80 |
| 8,332 |
| 8,263 |
| 23,500 |
| 40,095 |
| | 32,535 |
| | 7,560 |
| 40,095 |
| 81 |
|
Lending-related commitments | 92,332 |
| 291,650 |
| 13,334 |
| 397,316 |
| | 297,286 |
| | 100,030 |
| 397,316 |
| 75 |
| 75,484 |
| 307,093 |
| 13,042 |
| 395,619 |
| | 291,144 |
| | 104,475 |
| 395,619 |
| 74 |
|
Subtotal | 240,814 |
| 488,453 |
| 135,005 |
| 864,272 |
| | 656,231 |
| | 208,041 |
| 864,272 |
| 76 |
| 216,704 |
| 515,233 |
| 141,284 |
| 873,221 |
| | 660,977 |
| | 212,244 |
| 873,221 |
| 76 |
|
Loans held-for-sale and loans at fair value(a) | | 6,538 |
| | | | | 6,538 |
| | | 11,510 |
| | | | | 11,510 |
| |
Receivables from customers and other | | 25,982 |
| | | | | 25,982 |
| | | 32,218 |
| | | | | 32,218 |
| |
Total exposure – net of liquid securities and other cash collateral held against derivatives | | $ | 896,792 |
| | | | | $ | 896,792 |
| | | $ | 916,949 |
| | | | | $ | 916,949 |
| |
Credit derivatives used in credit portfolio management activities(b)(c) | $ | (1,586 | ) | $ | (7,053 | ) | $ | (5,567 | ) | $ | (14,206 | ) | | $ | (12,537 | ) | | $ | (1,669 | ) | $ | (14,206 | ) | 88 | % | $ | (864 | ) | $ | (8,013 | ) | $ | (6,154 | ) | $ | (15,031 | ) | | $ | (13,606 | ) | | $ | (1,425 | ) | $ | (15,031 | ) | 91 | % |
| | | Maturity profile(d) | | Ratings profile | Maturity profile(d) | | Ratings profile |
| Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years | Total | | Investment-grade | | Noninvestment-grade | Total | Total % of IG | Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years | Total | | Investment-grade | | Noninvestment-grade | Total | Total % of IG |
December 31, 2017 (in millions, except ratios) | | AAA/Aaa to BBB-/Baa3 | | BB+/Ba1 & below | |
December 31, 2018 (in millions, except ratios) | | Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years | Total | | AAA/Aaa to BBB-/Baa3 | | BB+/Ba1 & below | Total | Total % of IG |
Loans retained | $ | 121,643 |
| $ | 177,033 |
| $ | 104,222 |
| $ | 402,898 |
| | $ | 311,681 |
| | $ | 91,217 |
| $ | 402,898 |
| 77 | % | | $ | 339,729 |
| | $ | 99,433 |
|
Derivative receivables | | 56,523 |
| | | | | 56,523 |
| | | 54,213 |
| | | | | 54,213 |
| |
Less: Liquid securities and other cash collateral held against derivatives | | (16,108 | ) | | | | | (16,108 | ) | | | (15,322 | ) | | | | | (15,322 | ) | |
Total derivative receivables, net of all collateral | 9,882 |
| 10,463 |
| 20,070 |
| 40,415 |
| | 32,373 |
| | 8,042 |
| 40,415 |
| 80 |
| 11,038 |
| 9,169 |
| 18,684 |
| 38,891 |
| | 31,794 |
| | 7,097 |
| 38,891 |
| 82 |
|
Lending-related commitments | 80,273 |
| 275,317 |
| 14,508 |
| 370,098 |
| | 274,127 |
| | 95,971 |
| 370,098 |
| 74 |
| 79,400 |
| 294,855 |
| 13,558 |
| 387,813 |
| | 288,724 |
| | 99,089 |
| 387,813 |
| 74 |
|
Subtotal | 211,798 |
| 462,813 |
| 138,800 |
| 813,411 |
| | 618,181 |
| | 195,230 |
| 813,411 |
| 76 |
| 228,896 |
| 500,998 |
| 135,972 |
| 865,866 |
| | 660,247 |
| | 205,619 |
| 865,866 |
| 76 |
|
Loans held-for-sale and loans at fair value(a) | | 5,607 |
| | | | | 5,607 |
| | | 15,028 |
| | | | | 15,028 |
| |
Receivables from customers and other | | 26,139 |
| | | | | 26,139 |
| | | 30,063 |
| | | | | 30,063 |
| |
Total exposure – net of liquid securities and other cash collateral held against derivatives | | $ | 845,157 |
| | | | | $ | 845,157 |
| | | $ | 910,957 |
| | | | | $ | 910,957 |
| |
Credit derivatives used in credit portfolio management activities(b)(c) | $ | (1,807 | ) | $ | (11,011 | ) | $ | (4,791 | ) | $ | (17,609 | ) | | $ | (14,984 | ) | | $ | (2,625 | ) | $ | (17,609 | ) | 85 | % | $ | (447 | ) | $ | (9,318 | ) | $ | (2,917 | ) | $ | (12,682 | ) | | $ | (11,213 | ) | | $ | (1,469 | ) | $ | (12,682 | ) | 88 | % |
| |
(a) | Represents loans held-for-sale, primarily related to syndicated loans and loans transferred from the retained portfolio, and loans at fair value. |
| |
(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. |
| |
(d) | The maturity profile of retained loans, lending-related commitments and derivative receivables is based on the remaining contractual maturity. Derivative contracts that are in a receivable position at September 30, 2018,2019, 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 deemed criticized align with the U.S. banking regulators’ definition of criticized exposures, which consist of the special mention, substandard and doubtful
categories. The total criticized component of the portfolio, excluding loans held-for-sale and loans at fair value, was $11.2$12.8 billion at September 30, 2018,2019, compared with $15.6$12.1 billion at December 31, 2017.2018. The decreaseincrease was largely driven by select names within Oil & Gas, includingclient downgrades across a loan sale.number of sectors.
Below are summaries of the Firm’s exposures as of September 30, 2018,2019, and December 31, 2017.2018. The industry of risk category is generally based on the client or counterparty’s primary business activity. ForRefer to Note 4 of JPMorgan Chase’s 2018 Form 10-K for additional information on industry concentrations, refer to Note 4 of JPMorgan Chase’s 2017 Annual Report.concentrations.
| | Wholesale credit exposure – industries(a) | Wholesale credit exposure – industries(a) | | | | | Wholesale credit exposure – industries(a) | | | | |
| | | | | | Selected metrics | | | | | | Selected metrics |
| | | | | | 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(f) | Liquid securities and other cash collateral held against derivative receivables | | | | | | 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(g) | Liquid securities and other cash collateral held against derivative receivables |
| | | Noninvestment-grade | | | Noninvestment-grade |
As of or for the nine months ended | Credit exposure(e) | Investment- grade | | Noncriticized | | Criticized performing | Criticized nonperforming | Credit exposure(f) | Investment- grade | | Noncriticized | | Criticized performing | Criticized nonperforming |
September 30, 2018 |
September 30, 2019 |
(in millions) | Credit exposure(e) | Investment- grade | | Noncriticized | | Criticized performing | Criticized nonperforming | 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(f) | Liquid securities and other cash collateral held against derivative receivables | Credit exposure(f) | Investment- grade | | Noncriticized | | Criticized performing | Criticized nonperforming | 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(g) | Liquid securities and other cash collateral held against derivative receivables |
Real Estate |
Individuals and Individual Entities(b) |
Consumer & Retail | 89,751 |
| 58,429 |
| | 29,438 |
| | 1,769 |
| 115 |
| 98,445 |
| 56,815 |
| | 39,387 |
| | 2,086 |
| 157 |
|
Technology, Media & Telecommunications | 74,286 |
| 48,676 |
| | 23,560 |
| | 2,005 |
| 45 |
| 57,127 |
| 33,754 |
| | 20,723 |
| | 2,509 |
| 141 |
|
Industrials | 57,810 |
| 38,374 |
| | 18,202 |
| | 1,052 |
| 182 |
| 118 |
| — |
| (146 | ) | (24 | ) | 57,085 |
| 38,511 |
| | 17,203 |
| | 1,222 |
| 149 |
| 158 |
| 30 |
| (551 | ) | (17 | ) |
Banks & Finance Cos | | 53,185 |
| 36,764 |
| | 15,979 |
| | 378 |
| 64 |
| 27 |
| — |
| (832 | ) | (2,683 | ) |
Asset Managers | | 50,119 |
| 44,006 |
| | 6,096 |
| | 4 |
| 13 |
| 26 |
| — |
| — |
| (5,201 | ) |
Healthcare | 53,952 |
| 37,912 |
| | 15,223 |
| | 788 |
| 29 |
| 22 |
| (4 | ) | — |
| (134 | ) | 48,041 |
| 36,641 |
| | 10,422 |
| | 891 |
| 87 |
| 40 |
| 6 |
| (230 | ) | (177 | ) |
Banks & Finance Cos | 52,194 |
| 37,491 |
| | 14,376 |
| | 323 |
| 4 |
| 27 |
| — |
| (622 | ) | (3,794 | ) | |
Oil & Gas | 45,205 |
| 24,985 |
| | 18,236 |
| | 1,641 |
| 343 |
| — |
| 33 |
| (349 | ) | (5 | ) | 44,007 |
| 23,882 |
| | 18,615 |
| | 635 |
| 875 |
| 9 |
| 43 |
| (445 | ) | (12 | ) |
Asset Managers | 41,951 |
| 36,286 |
| | 5,646 |
| | 5 |
| 14 |
| 11 |
| — |
| — |
| (5,752 | ) | |
Utilities | 28,944 |
| 24,312 |
| | 4,321 |
| | 158 |
| 153 |
| — |
| 38 |
| (199 | ) | (74 | ) | 29,709 |
| 23,543 |
| | 5,806 |
| | 184 |
| 176 |
| 10 |
| 37 |
| (387 | ) | (75 | ) |
State & Municipal Govt(b) | 26,381 |
| 25,772 |
| | 609 |
| | — |
| — |
| 16 |
| (1 | ) | (20 | ) | (16 | ) | |
State & Municipal Govt(c) | | 26,806 |
| 26,287 |
| | 519 |
| | — |
| — |
| 13 |
| — |
| — |
| (51 | ) |
Chemicals & Plastics | | 16,870 |
| 11,311 |
| | 5,490 |
| | 69 |
| — |
| 1 |
| — |
| (10 | ) | — |
|
Central Govt | 18,935 |
| 18,778 |
| | 104 |
| | 53 |
| — |
| 3 |
| — |
| (8,688 | ) | (1,972 | ) | 16,685 |
| 16,264 |
| | 421 |
| | — |
| — |
| 1 |
| — |
| (8,527 | ) | (2,836 | ) |
Automotive | 17,385 |
| 9,677 |
| | 7,398 |
| | 300 |
| 10 |
| 1 |
| — |
| (226 | ) | — |
| 16,430 |
| 10,053 |
| | 5,978 |
| | 399 |
| — |
| 6 |
| — |
| (172 | ) | — |
|
Chemicals & Plastics | 17,353 |
| 11,108 |
| | 6,227 |
| | 18 |
| — |
| 1 |
| — |
| (25 | ) | — |
| |
Metals & Mining | | 15,049 |
| 8,396 |
| | 6,280 |
| | 359 |
| 14 |
| — |
| (1 | ) | (204 | ) | (8 | ) |
Transportation | 16,225 |
| 10,058 |
| | 5,622 |
| | 482 |
| 63 |
| 45 |
| 6 |
| (32 | ) | (51 | ) | 14,969 |
| 9,196 |
| | 5,356 |
| | 317 |
| 100 |
| 37 |
| 4 |
| (36 | ) | (38 | ) |
Metals & Mining | 14,320 |
| 7,262 |
| | 6,768 |
| | 247 |
| 43 |
| 5 |
| — |
| (278 | ) | (3 | ) | |
Insurance | 13,704 |
| 10,323 |
| | 3,342 |
| | — |
| 39 |
| — |
| — |
| (37 | ) | (2,513 | ) | 13,365 |
| 10,517 |
| | 2,824 |
| | 19 |
| 5 |
| — |
| — |
| (36 | ) | (2,062 | ) |
Financial Markets Infrastructure | 5,697 |
| 5,555 |
| | 142 |
| | — |
| — |
| — |
| — |
| — |
| (26 | ) | 5,775 |
| 5,640 |
| | 135 |
| | — |
| — |
| — |
| — |
| — |
| (7 | ) |
Securities Firms | 4,599 |
| 3,129 |
| | 1,470 |
| | — |
| — |
| — |
| — |
| (230 | ) | (674 | ) | 4,418 |
| 2,789 |
| | 1,605 |
| | 24 |
| — |
| — |
| — |
| (49 | ) | (387 | ) |
All other(c) | 161,470 |
| 144,967 |
| | 16,124 |
| | 213 |
| 166 |
| 1,111 |
| 17 |
| (2,379 | ) | (1,881 | ) | |
All other(d) | | 73,510 |
| 70,286 |
| | 2,892 |
| | 330 |
| 2 |
| 20 |
| 7 |
| (2,634 | ) | (1,087 | ) |
Subtotal | $ | 881,215 |
| $ | 670,864 |
| | $ | 199,120 |
| | $ | 9,895 |
| $ | 1,336 |
| $ | 1,478 |
| $ | 119 |
| $ | (14,206 | ) | $ | (16,943 | ) | $ | 888,703 |
| $ | 674,831 |
| | $ | 201,025 |
| | $ | 10,905 |
| $ | 1,942 |
| $ | 978 |
| $ | 236 |
| $ | (15,031 | ) | $ | (15,482 | ) |
Loans held-for-sale and loans at fair value | 6,538 |
| | | | | | | 11,510 |
| | | | | | |
Receivables from customers and other | 25,982 |
| | | | | | 32,218 |
| | | | | |
Total(d) | $ | 913,735 |
| | | | | | |
Total(e) | | $ | 932,431 |
| | | | | |
| | (continued from previous page) | (continued from previous page) | | | | | | (continued from previous page) | | | | | |
|
|
|
|
|
|
| Selected metrics |
|
|
|
|
|
| Selected metrics |
|
|
|
|
|
|
| 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(f) | Liquid securities and other cash collateral held against derivative receivables |
|
|
|
|
|
| 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(g) | Liquid securities and other cash collateral held against derivative receivables |
|
|
| Noninvestment-grade |
|
| Noninvestment-grade |
As of or for the year ended | Credit exposure(e) | Investment- grade |
| Noncriticized |
| Criticized performing | Criticized nonperforming | Credit exposure(f) | Investment- grade |
| Noncriticized |
| Criticized performing | Criticized nonperforming |
December 31, 2017 |
December 31, 2018 |
(in millions) | Credit exposure(e) | Investment- grade |
| Noncriticized |
| Criticized performing | Criticized nonperforming | 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(f) | Liquid securities and other cash collateral held against derivative receivables | Credit exposure(f) | Investment- grade |
| Noncriticized |
| Criticized performing | Criticized nonperforming | 30 days or more past due and accruing loans | Net charge-offs/ (recoveries) | Credit derivative hedges(g) | Liquid securities and other cash collateral held against derivative receivables |
Real Estate |
Individuals and Individual Entities(b) |
Consumer & Retail | 87,679 |
| 55,737 |
|
| 29,619 |
|
| 1,791 |
| 532 |
| 94,815 |
| 60,678 |
|
| 31,901 |
|
| 2,033 |
| 203 |
|
Technology, Media & Telecommunications | 59,274 |
| 36,510 |
| | 20,453 |
| | 2,258 |
| 53 |
| 72,646 |
| 46,334 |
| | 24,081 |
| | 2,170 |
| 61 |
|
Industrials | 55,272 |
| 37,198 |
|
| 16,770 |
|
| 1,159 |
| 145 |
| 150 |
| (1 | ) | (196 | ) | (21 | ) | 58,528 |
| 38,487 |
|
| 18,594 |
|
| 1,311 |
| 136 |
| 171 |
| 20 |
| (207 | ) | (29 | ) |
Banks & Finance Cos | | 49,920 |
| 34,120 |
| | 15,496 |
| | 299 |
| 5 |
| 11 |
| — |
| (575 | ) | (2,290 | ) |
Asset Managers | | 42,807 |
| 36,722 |
|
| 6,067 |
|
| 4 |
| 14 |
| 10 |
| — |
| — |
| (5,829 | ) |
Healthcare | 55,997 |
| 42,643 |
| | 12,731 |
| | 585 |
| 38 |
| 82 |
| (1 | ) | — |
| (207 | ) | 48,142 |
| 36,687 |
|
| 10,625 |
|
| 761 |
| 69 |
| 23 |
| (5 | ) | (150 | ) | (133 | ) |
Banks & Finance Cos | 49,037 |
| 34,654 |
|
| 13,767 |
|
| 612 |
| 4 |
| 1 |
| 6 |
| (1,216 | ) | (3,174 | ) | |
Oil & Gas | 41,317 |
| 21,430 |
|
| 14,854 |
|
| 4,046 |
| 987 |
| 22 |
| 71 |
| (747 | ) | (1 | ) | 42,600 |
| 23,356 |
|
| 17,451 |
|
| 1,158 |
| 635 |
| 6 |
| 36 |
| (248 | ) | — |
|
Asset Managers | 32,531 |
| 28,029 |
|
| 4,484 |
|
| 4 |
| 14 |
| 27 |
| — |
| — |
| (5,290 | ) | |
Utilities | 29,317 |
| 24,486 |
|
| 4,383 |
|
| 227 |
| 221 |
| — |
| 11 |
| (160 | ) | (56 | ) | 28,172 |
| 23,558 |
|
| 4,326 |
|
| 138 |
| 150 |
| — |
| 38 |
| (142 | ) | (60 | ) |
State & Municipal Govt(b) | 28,633 |
| 27,977 |
|
| 656 |
|
| — |
| — |
| 12 |
| 5 |
| (130 | ) | (524 | ) | |
State & Municipal Govt(c) | | 27,351 |
| 26,746 |
|
| 603 |
|
| 2 |
| — |
| 18 |
| (1 | ) | — |
| (42 | ) |
Chemicals & Plastics | | 16,035 |
| 11,490 |
|
| 4,427 |
|
| 118 |
| — |
| 4 |
| — |
| — |
| — |
|
Central Govt | 19,182 |
| 18,741 |
|
| 376 |
|
| 65 |
| — |
| 4 |
| — |
| (10,095 | ) | (2,520 | ) | 18,456 |
| 18,251 |
| | 124 |
| | 81 |
| — |
| 4 |
| — |
| (7,994 | ) | (2,130 | ) |
Automotive | 14,820 |
| 9,321 |
| | 5,278 |
| | 221 |
| — |
| 10 |
| 1 |
| (284 | ) | — |
| 17,339 |
| 9,637 |
|
| 7,310 |
|
| 392 |
| — |
| 1 |
| — |
| (125 | ) | — |
|
Chemicals & Plastics | 15,945 |
| 11,107 |
|
| 4,764 |
|
| 74 |
| — |
| 4 |
| — |
| — |
| — |
| |
Metals & Mining | | 15,359 |
| 8,188 |
|
| 6,767 |
|
| 385 |
| 19 |
| 1 |
| — |
| (174 | ) | (22 | ) |
Transportation | 15,797 |
| 9,870 |
|
| 5,302 |
|
| 527 |
| 98 |
| 9 |
| 14 |
| (32 | ) | (131 | ) | 15,660 |
| 10,508 |
|
| 4,699 |
|
| 393 |
| 60 |
| 21 |
| 6 |
| (31 | ) | (112 | ) |
Metals & Mining | 14,171 |
| 6,989 |
|
| 6,822 |
|
| 321 |
| 39 |
| 3 |
| (13 | ) | (316 | ) | (1 | ) | |
Insurance | 14,089 |
| 11,028 |
|
| 2,981 |
|
| — |
| 80 |
| 1 |
| — |
| (157 | ) | (2,195 | ) | 12,639 |
| 9,777 |
|
| 2,830 |
|
| — |
| 32 |
| — |
| — |
| (36 | ) | (2,080 | ) |
Financial Markets Infrastructure | 5,036 |
| 4,775 |
|
| 261 |
|
| — |
| — |
| — |
| — |
| — |
| (23 | ) | 7,484 |
| 6,746 |
|
| 738 |
|
| — |
| — |
| — |
| — |
| — |
| (26 | ) |
Securities Firms | 4,113 |
| 2,559 |
|
| 1,553 |
|
| 1 |
| — |
| — |
| — |
| (274 | ) | (335 | ) | 4,558 |
| 3,099 |
|
| 1,459 |
|
| — |
| — |
| — |
| — |
| (158 | ) | (823 | ) |
All other(c) | 147,900 |
| 134,110 |
|
| 13,283 |
|
| 260 |
| 247 |
| 901 |
| 8 |
| (2,817 | ) | (1,600 | ) | |
All other(d) | | 68,284 |
| 64,664 |
|
| 3,606 |
|
| 12 |
| 2 |
| 2 |
| 2 |
| (1,581 | ) | (804 | ) |
Subtotal | $ | 829,519 |
| $ | 632,565 |
|
| $ | 181,349 |
|
| $ | 13,010 |
| $ | 2,595 |
| $ | 1,524 |
| $ | 119 |
| $ | (17,609 | ) | $ | (16,108 | ) | $ | 881,188 |
| $ | 673,617 |
|
| $ | 195,442 |
|
| $ | 10,450 |
| $ | 1,679 |
| $ | 1,096 |
| $ | 155 |
| $ | (12,682 | ) | $ | (15,322 | ) |
Loans held-for-sale and loans at fair value | 5,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 15,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables from customers and other | 26,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 30,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(d) | $ | 861,265 |
| | | | | | |
Total(e) | | $ | 926,279 |
| | | | | |
| |
(a) | The industry rankings presented in the table as of December 31, 2017,2018, are based on the industry rankings of the corresponding exposures at September 30, 2018,2019, not actual rankings of such exposures at December 31, 2017.2018. |
| |
(b) | Individuals and Individual Entities predominantly consists of Wealth Management clients within AWM 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 September 30, 2018,2019, and December 31, 2017,2018, noted above, the Firm held: $9.5$6.9 billion and $9.8$7.8 billion, respectively, of trading securities; $38.1$31.1 billion and $32.3$37.7 billion, respectively, of AFS securities; and $4.8 billion and $14.4 billion, respectively,at both periods of held-to-maturity (“HTM”) securities, issued by U.S. state and municipal governments. For further information, referRefer to Note 2 and Note 9. |
| |
(c) | All other includes: individuals (predominantly Wealth Management clients within AWM), SPEs, and private education and civic organizations, representing approximately 59%, 38%, and 3%, respectively, at September 30, 2018, and 59%, 37%, and 4%, respectively, at December 31, 2017.9 for further information. |
| |
(d) | All other includes: SPEs and Private education and civic organizations, representing approximately 91% and 9%, respectively, at September 30, 2019, and 92% and 8%, respectively, at December 31, 2018. |
| |
(e) | Excludes cash placed with banks of $410.5 bi$248.8 billionllion and $421.0$268.1 billion, at September 30, 2018,2019, and December 31, 2017,2018, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks. |
| |
(e)(f) | Credit exposure is net of risk participations and excludes the benefit of credit derivatives used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables. |
| |
(f)(g) | Represents the net notional amounts of protection purchased and sold through credit derivatives 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. |
Real Estate
Presented below is additional information on the Real Estate industry, to which the Firm has significant exposure.
Real Estate exposure increased $1.6$4.1 billion to $141.1$147.5 billion duringfor the nine months ended September 30, 2018, while2019, and the investment-gradeinvestment grade percentage of the portfolio remained relatively flat at 83%. ForRefer to Note 11 for further information on Real Estate loans, refer to Note 11.loans.
| | | September 30, 2018 | | September 30, 2019 | |
(in millions, except ratios) | Loans and Lending-related Commitments | | Derivative Receivables | | Credit exposure | | % Investment-grade | % Drawn(c) | Loans and Lending-related Commitments | | Derivative Receivables | | Credit exposure | | % Investment-grade | % Drawn(c) |
Multifamily(a) | $ | 85,410 |
| | $ | 14 |
| | $ | 85,424 |
| | 89 | % | | 93 | % | | $ | 85,666 |
| | $ | 86 |
| | $ | 85,752 |
| | 91 | % | | 92 | % | |
Other | 55,527 |
| | 102 |
| | 55,629 |
| | 75 |
| | 65 |
| | 60,968 |
| | 735 |
| | 61,703 |
| | 71 |
| | 59 |
| |
Total Real Estate Exposure(b) | 140,937 |
| | 116 |
| | 141,053 |
| | 83 |
| | 82 |
| | 146,634 |
| | 821 |
| | 147,455 |
| | 83 |
| | 79 |
| |
| | | | | | | | | | | | | | | | | | | | |
| December 31, 2017 | | December 31, 2018 | |
(in millions, except ratios) | Loans and Lending-related Commitments | | Derivative Receivables | | Credit exposure | | % Investment- grade | % Drawn(c) | Loans and Lending-related Commitments | | Derivative Receivables | | Credit exposure | | % Investment- grade | % Drawn(c) |
Multifamily(a) | $ | 84,635 |
| | $ | 34 |
| | $ | 84,669 |
| | 89 | % | | 92 | % | | $ | 85,683 |
| | $ | 33 |
| | $ | 85,716 |
| | 89 | % | | 92 | % | |
Other | 54,620 |
| | 120 |
| | 54,740 |
| | 74 |
| | 66 |
| | 57,469 |
| | 131 |
| | 57,600 |
| | 72 |
| | 63 |
| |
Total Real Estate Exposure(b) | 139,255 |
| | 154 |
| | 139,409 |
| | 83 |
| | 82 |
| | 143,152 |
| | 164 |
| | 143,316 |
| | 82 |
| | 81 |
| |
| |
(a) | Multifamily exposure is largely in California. |
| |
(b) | Real Estate exposure is predominantly secured; unsecured exposure is predominantly investment-grade. |
| |
(c) | Represents drawn exposure as a percentage of credit exposure. |
Loans
In the normal course of its wholesale business, the Firm provides loans to a variety of clients, ranging from large corporate and institutional clients to high-net-worth individuals. ForRefer to Note 11 for a further discussion on loans, including information on credit quality indicators and sales of loans, refer to Note 11.loans.
The following table presents the change in the nonaccrual loan portfolio for the nine months ended September 30, 20182019 and 2017.2018.
| | Wholesale nonaccrual loan activity | Nine months ended September 30, (in millions) | | 2018 |
| 2017 |
| | 2019 |
| 2018 |
|
Beginning balance | | $ | 1,734 |
| $ | 2,063 |
| | $ | 1,370 |
| $ | 1,734 |
|
Additions | | 570 |
| 993 |
| | 1,907 |
| 570 |
|
Reductions: | | | | |
Paydowns and other | | 541 |
| 997 |
| | 1,097 |
| 541 |
|
Gross charge-offs | | 251 |
| 155 |
| | 235 |
| 251 |
|
Returned to performing status | | 217 |
| 184 |
| | 25 |
| 217 |
|
Sales | | 287 |
| 248 |
| | 188 |
| 287 |
|
Total reductions | | 1,296 |
| 1,584 |
| | 1,545 |
| 1,296 |
|
Net changes | | (726 | ) | (591 | ) | | 362 |
| (726 | ) |
Ending balance | | $ | 1,008 |
| $ | 1,472 |
| | $ | 1,732 |
| $ | 1,008 |
|
The following table presents net charge-offs/recoveries, which are defined as gross charge-offs less recoveries, for the three and nine months ended September 30, 20182019 and 2017.2018. The amounts in the table below do not include gains or losses from sales of nonaccrual loans.
| | Wholesale net charge-offs/(recoveries) | Wholesale net charge-offs/(recoveries) | Wholesale net charge-offs/(recoveries) | | |
(in millions, except ratios) | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Loans – reported | | | | | | |
Average loans retained | $ | 420,597 |
| $ | 395,420 |
| | $ | 413,537 |
| $ | 390,062 |
| $ | 433,744 |
| $ | 420,597 |
| | $ | 434,434 |
| $ | 413,537 |
|
Gross charge-offs | 23 |
| 55 |
| | 264 |
| 154 |
| 120 |
| 23 |
| | 270 |
| 264 |
|
Gross recoveries | (70 | ) | (12 | ) | | (146 | ) | (81 | ) | (12 | ) | (70 | ) | | (34 | ) | (146 | ) |
Net charge-offs/(recoveries) | (47 | ) | 43 |
| | 118 |
| 73 |
| 108 |
| (47 | ) | | 236 |
| 118 |
|
Net charge-off/(recovery) rate | (0.04 | )% | 0.04 | % | | 0.04 | % | 0.03 | % | 0.10 | % | (0.04 | )% | | 0.07 | % | 0.04 | % |
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 the Firm fulfillsfulfill 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 are refinanced, extended, cancelled, or expire without being drawn upon or a default occurring. In the Firm’s view, the total contractual amount of these wholesale lending-related commitments is not representative of the Firm’s expected future credit exposure or funding requirements. ForRefer to Note 22 for further information on wholesale lending-related commitments, refer to Note 20 .commitments.
Derivative contracts
Derivatives enable clients and counterparties to manage risks including credit risk and risks arising from fluctuations in interest rates, foreign exchange, equities, and commodities. 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 and other market risk exposure. ForRefer to Note 4 for a further discussion of derivative contracts, refer to Note 4.contracts.
The following table summarizes the net derivative receivables for the periods presented.
|
| | | | | | |
Derivative receivables | | |
(in millions) | Derivative receivables |
September 30, 2018 |
| December 31, 2017 |
|
Interest rate | $ | 23,397 |
| $ | 24,673 |
|
Credit derivatives | 582 |
| 869 |
|
Foreign exchange | 17,043 |
| 16,151 |
|
Equity | 10,104 |
| 7,882 |
|
Commodity | 8,936 |
| 6,948 |
|
Total, net of cash collateral | 60,062 |
| 56,523 |
|
Liquid securities and other cash collateral held against derivative receivables(a) | (16,943 | ) | (16,108 | ) |
Total, net of collateral | $ | 43,119 |
| $ | 40,415 |
|
|
| | | | | | |
Derivative receivables | | |
(in millions) | September 30, 2019 |
| December 31, 2018 |
|
Total, net of cash collateral | 55,577 |
| 54,213 |
|
Liquid securities and other cash collateral held against derivative receivables(a) | (15,482 | ) | (15,322 | ) |
Total, net of collateral | $ | 40,095 |
| $ | 38,891 |
|
| |
(a) | Includes collateral related to derivative instruments where appropriate legal opinions have not been either sought or obtained with respect to master netting agreements. |
The fair value of derivative receivables reported on the Consolidated balance sheets were $60.1$55.6 billion and $56.5$54.2 billion at September 30, 2018,2019, and December 31, 2017,2018, respectively.
Derivative receivables represent the fair value of the derivative contracts after giving effect to legally enforceable master netting agreements and cash collateral held by the Firm. However, in management’s view, the appropriate measure of current credit risk should also take into consideration additional liquid securities (primarily U.S. government and agency securities and other group of seven nations (“G7”) government securities) and other cash collateral held by the Firm aggregating $16.9$15.5 billion and $16.1$15.3 billion at September 30, 2018,2019, and December 31, 2017,2018, respectively, that may be used as security when the fair value of the client’s exposure is in the Firm’s favor.
In addition to the collateral described in the preceding paragraph, the Firm also holds additional collateral (primarily cash, G7 government securities, other liquid government-agencygovernment agency and guaranteed securities, and corporate debt and equity securities) delivered by clients at the initiation of transactions, as well as collateral related to contracts that have a non-daily call frequency and collateral that the Firm has agreed to return but has not yet settled as of the reporting date. Although this collateral does not reduce the balances and is not included in the table above, it is available as security against potential exposure that could arise should the fair value of the client’s derivative transactionscontracts move in the Firm’s favor.
The derivative receivables fair value, net of all collateral, also does not include other credit enhancements, such as letters of credit. ForRefer to Note 4 for additional information on the Firm’s use of collateral agreements, refer to Note 4.agreements.
The following table summarizes the ratings profile of the Firm’s derivative receivables, including credit derivatives, net of all collateral, at the dates indicated. The ratings scale is based on the Firm’s internal ratings, which generally correspond to the ratings as assigned by S&P and Moody’s.
| | Ratings profile of derivative receivables | | | | | | | | | | |
| September 30, 2018 | | December 31, 2017 | |
Rating equivalent (in millions, except ratios) | Exposure net of collateral | % of exposure net of collateral | | Exposure net of collateral | % of exposure net of collateral | |
Rating equivalent
| | September 30, 2019 | | December 31, 2018 |
(in millions, except ratios) | | Exposure net of all collateral | % of exposure net of all collateral | | Exposure net of all collateral | % of exposure net of all collateral |
AAA/Aaa to AA-/Aa3 | $ | 13,208 |
| 31 | % | | $ | 11,529 |
| 29 | % | $ | 10,663 |
| 27 | % | | $ | 11,831 |
| 31 | % |
A+/A1 to A-/A3 | 7,568 |
| 17 |
| | 6,919 |
| 17 |
| 6,106 |
| 15 |
| | 7,428 |
| 19 |
|
BBB+/Baa1 to BBB-/Baa3 | 13,826 |
| 32 |
| | 13,925 |
| 34 |
| 15,766 |
| 39 |
| | 12,536 |
| 32 |
|
BB+/Ba1 to B-/B3 | 7,744 |
| 18 |
| | 7,397 |
| 18 |
| 7,116 |
| 18 |
| | 6,373 |
| 16 |
|
CCC+/Caa1 and below | 773 |
| 2 |
| | 645 |
| 2 |
| 444 |
| 1 |
| | 723 |
| 2 |
|
Total | $ | 43,119 |
| 100 | % | | $ | 40,415 |
| 100 | % | $ | 40,095 |
| 100 | % | | $ | 38,891 |
| 100 | % |
As previously noted, the Firm uses collateral agreements to mitigate counterparty credit risk. The percentage of the Firm’s over-the-counter derivatives transactionsderivative contracts 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 90% at both September 30, 2018,2019, and December 31, 2017.2018.
Credit derivatives
The Firm uses credit derivatives for two primary purposes: first, in its capacity as a market-maker, and second, as an end-user, to manage the Firm’s own credit risk associated with various exposures.
Credit portfolio management activities
Included in the Firm’s end-user activities are credit derivatives used to mitigate the credit risk associated with traditional lending activities (loans and unfunded commitments) and derivatives counterparty exposure in the Firm’s wholesale businesses (collectively, “credit portfolio management” activities). Information on credit portfolio management activities is provided in the table below.
| | Credit derivatives used in credit portfolio management activities | | Notional amount of protection purchased and sold(a) | Notional amount of protection purchased and sold(a) |
(in millions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Credit derivatives used to manage: | | | | | | |
Loans and lending-related commitments | $ | 1,060 |
| | $ | 1,867 |
| $ | 1,726 |
| | $ | 1,272 |
|
Derivative receivables | 13,146 |
| | 15,742 |
| 13,305 |
| | 11,410 |
|
Credit derivatives used in credit portfolio management activities | $ | 14,206 |
| | $ | 17,609 |
| $ | 15,031 |
| | $ | 12,682 |
|
| |
(a) | Amounts are presented net, considering the Firm’s net protection purchased or sold with respect to each underlying reference entity or index. |
ForRefer to Credit derivatives in Note 4 of this Form 10-Q and Note 5 of JPMorgan Chase’s 2018 Form 10-K for further information on credit derivatives and derivatives used in credit portfolio management activities, refer to Credit derivatives in Note 4 of this Form 10-Q, and Note 5 of JPMorgan Chase’s 2017 Annual Report.activities.
|
| | | | |
ALLOWANCE FOR CREDIT LOSSES |
The Firm’s allowance for credit losses covers the retained consumer and wholesale loan portfolios, as well as the Firm’s wholesale and certain consumer lending-related commitments.
ForRefer to Critical Accounting Estimates Used by the Firm on pages 76–77 and Note 12 of this Form 10-Q, and Critical Accounting Estimates Used by the Firm on pages 141-143 and Note 13 of JPMorgan Chase’s 2018 Form 10-K for further information on the components of the allowance for credit losses and related management judgments, refer to Critical Accounting Estimates Used by the Firm on pages 79–81 and Note 12 of this Form 10-Q, and Critical Accounting Estimates Used by the Firm on pages 138–140 and Note 13 of JPMorgan Chase’s 2017 Annual Report.judgments.
At least quarterly, the allowance for credit losses is reviewed by the CRO, the CFO and the Controller of the Firm. As of September 30, 2018,2019, JPMorgan Chase deemed the allowance for credit losses to be appropriate and sufficient to absorb probable credit losses inherent in the portfolio.
The consumer allowance for credit losses decreased compared with December 31, 2017 reflecting:2018, driven by:
| |
• | a $250 million reduction in the CCB allowance for loan losses in the residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies, as well as a $151 million reduction in the allowance for write-offs of PCI loans partially due to loan sales. These reductions were partially offset by a $150a $550 million reduction in the CCB allowance for loan losses, which includes $400 million in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies; $100 million in the non credit-impaired residential real estate portfolio; and $50 million in the business banking portfolio; as well as a $132 million reduction for write-offs of PCI loans, predominantly offset by a $400 million addition to the allowance for loan losses in the credit card portfolio reflecting higher loss rates, as newer vintages season and become a larger part of the portfolio and loan growth; as well as a $170 million addition in the credit card portfolio, due to loan growth and higher loss rates, as anticipated, and |
a reduction in the wholesale allowance primarilyfor credit losses largely driven by loan sales relatedselect C&I client downgrades.
Refer to a single name in the Oil & Gas portfolio in the first quarter of 2018Consumer Credit Portfolio on pages 56–59, Wholesale Credit Portfolio on pages 60–66 and other net portfolio activity.
ForNote 11 for additional information on the consumer and wholesale credit portfolios, refer to Consumer Credit Portfolio on pages 57–61 and Note 11, and Wholesale Credit Portfolio on pages 62–68.portfolios.
| | Summary of changes in the allowance for credit losses | Summary of changes in the allowance for credit losses | | | Summary of changes in the allowance for credit losses | | |
| 2018 | | 2017 | 2019 | | 2018 |
Nine months ended September 30, | Consumer, excluding credit card | Credit card | Wholesale | Total | | Consumer, excluding credit card | Credit card | Wholesale | Total | 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, | $ | 4,579 |
| $ | 4,884 |
| $ | 4,141 |
| $ | 13,604 |
| | $ | 5,198 |
| $ | 4,034 |
| $ | 4,544 |
| $ | 13,776 |
| $ | 4,146 |
| $ | 5,184 |
| $ | 4,115 |
| $ | 13,445 |
| | $ | 4,579 |
| $ | 4,884 |
| $ | 4,141 |
| $ | 13,604 |
|
Gross charge-offs | 776 |
| 3,777 |
| 264 |
| 4,817 |
| | 1,479 |
| 3,344 |
| 154 |
| 4,977 |
| 702 |
| 4,050 |
| 270 |
| 5,022 |
| | 776 |
| 3,777 |
| 264 |
| 4,817 |
|
Gross recoveries | (681 | ) | (370 | ) | (146 | ) | (1,197 | ) | | (478 | ) | (295 | ) | (81 | ) | (854 | ) | (420 | ) | (433 | ) | (34 | ) | (887 | ) | | (681 | ) | (370 | ) | (146 | ) | (1,197 | ) |
Net charge-offs(a) | 95 |
| 3,407 |
| 118 |
| 3,620 |
| | 1,001 |
| 3,049 |
| 73 |
| 4,123 |
| 282 |
| 3,617 |
| 236 |
| 4,135 |
| | 95 |
| 3,407 |
| 118 |
| 3,620 |
|
Write-offs of PCI loans(b)(a) | 151 |
| — |
| — |
| 151 |
| | 66 |
| — |
| — |
| 66 |
| 132 |
| — |
| — |
| 132 |
| | 151 |
| — |
| — |
| 151 |
|
Provision for loan losses | (152 | ) | 3,557 |
| (111 | ) | 3,294 |
| | 653 |
| 3,699 |
| (401 | ) | 3,951 |
| (265 | ) | 4,017 |
| 296 |
| 4,048 |
| | (152 | ) | 3,557 |
| (111 | ) | 3,294 |
|
Other | 1 |
| — |
| — |
| 1 |
| | (2 | ) | — |
| 3 |
| 1 |
| — |
| (1 | ) | 10 |
| 9 |
| | 1 |
| — |
| — |
| 1 |
|
Ending balance at September 30, | $ | 4,182 |
| $ | 5,034 |
| $ | 3,912 |
| $ | 13,128 |
| | $ | 4,782 |
| $ | 4,684 |
| $ | 4,073 |
| $ | 13,539 |
| $ | 3,467 |
| $ | 5,583 |
| $ | 4,185 |
| $ | 13,235 |
| | $ | 4,182 |
| $ | 5,034 |
| $ | 3,912 |
| $ | 13,128 |
|
Impairment methodology | | | | | | |
Asset-specific(c)(b) | $ | 204 |
| $ | 421 |
| $ | 280 |
| $ | 905 |
| | $ | 271 |
| $ | 376 |
| $ | 363 |
| $ | 1,010 |
| $ | 145 |
| $ | 488 |
| $ | 342 |
| $ | 975 |
| | $ | 204 |
| $ | 421 |
| $ | 280 |
| $ | 905 |
|
Formula-based | 2,154 |
| 4,613 |
| 3,632 |
| 10,399 |
| | 2,266 |
| 4,308 |
| 3,710 |
| 10,284 |
| 2,066 |
| 5,095 |
| 3,843 |
| 11,004 |
| | 2,154 |
| 4,613 |
| 3,632 |
| 10,399 |
|
PCI | 1,824 |
| — |
| — |
| 1,824 |
| | 2,245 |
| — |
| — |
| 2,245 |
| 1,256 |
| — |
| — |
| 1,256 |
| | 1,824 |
| — |
| — |
| 1,824 |
|
Total allowance for loan losses | $ | 4,182 |
| $ | 5,034 |
| $ | 3,912 |
| $ | 13,128 |
| | $ | 4,782 |
| $ | 4,684 |
| $ | 4,073 |
| $ | 13,539 |
| $ | 3,467 |
| $ | 5,583 |
| $ | 4,185 |
| $ | 13,235 |
| | $ | 4,182 |
| $ | 5,034 |
| $ | 3,912 |
| $ | 13,128 |
|
Allowance for lending-related commitments | | | | | | |
Beginning balance at January 1, | $ | 33 |
| $ | — |
| $ | 1,035 |
| $ | 1,068 |
| | $ | 26 |
| $ | — |
| $ | 1,052 |
| $ | 1,078 |
| $ | 33 |
| $ | — |
| $ | 1,022 |
| $ | 1,055 |
| | $ | 33 |
| $ | — |
| $ | 1,035 |
| $ | 1,068 |
|
Provision for lending-related commitments | — |
| — |
| 29 |
| 29 |
| | 7 |
| — |
| 24 |
| 31 |
| — |
| — |
| 110 |
| 110 |
| | — |
| — |
| 29 |
| 29 |
|
Other | — |
| — |
| — |
| — |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | — |
| — |
| — |
| — |
|
Ending balance at September 30, | $ | 33 |
| $ | — |
| $ | 1,064 |
| $ | 1,097 |
| | $ | 33 |
| $ | — |
| $ | 1,076 |
| $ | 1,109 |
| $ | 33 |
| $ | — |
| $ | 1,132 |
| $ | 1,165 |
| | $ | 33 |
| $ | — |
| $ | 1,064 |
| $ | 1,097 |
|
Impairment methodology | | | | | | |
Asset-specific | $ | — |
| $ | — |
| $ | 71 |
| $ | 71 |
| | $ | — |
| $ | — |
| $ | 220 |
| $ | 220 |
| $ | — |
| $ | — |
| $ | 135 |
| $ | 135 |
| | $ | — |
| $ | — |
| $ | 71 |
| $ | 71 |
|
Formula-based | 33 |
| — |
| 993 |
| 1,026 |
| | 33 |
| — |
| 856 |
| 889 |
| 33 |
| — |
| 997 |
| 1,030 |
| | 33 |
| — |
| 993 |
| 1,026 |
|
Total allowance for lending-related commitments(d)(c) | $ | 33 |
| $ | — |
| $ | 1,064 |
| $ | 1,097 |
| | $ | 33 |
| $ | — |
| $ | 1,076 |
| $ | 1,109 |
| $ | 33 |
| $ | — |
| $ | 1,132 |
| $ | 1,165 |
| | $ | 33 |
| $ | — |
| $ | 1,064 |
| $ | 1,097 |
|
Total allowance for credit losses | $ | 4,215 |
| $ | 5,034 |
| $ | 4,976 |
| $ | 14,225 |
| | $ | 4,815 |
| $ | 4,684 |
| $ | 5,149 |
| $ | 14,648 |
| $ | 3,500 |
| $ | 5,583 |
| $ | 5,317 |
| $ | 14,400 |
| | $ | 4,215 |
| $ | 5,034 |
| $ | 4,976 |
| $ | 14,225 |
|
Memo: | | | | | | |
Retained loans, end of period | $ | 375,958 |
| $ | 147,856 |
| $ | 423,837 |
| $ | 947,651 |
| | $ | 369,413 |
| $ | 141,200 |
| $ | 398,569 |
| $ | 909,182 |
| $ | 331,809 |
| $ | 159,571 |
| $ | 437,507 |
| $ | 928,887 |
| | $ | 375,958 |
| $ | 147,856 |
| $ | 423,837 |
| $ | 947,651 |
|
Retained loans, average | 374,298 |
| 143,931 |
| 413,537 |
| 931,766 |
| | 365,359 |
| 138,749 |
| 390,062 |
| 894,170 |
| 355,865 |
| 154,367 |
| 434,434 |
| 944,666 |
| | 374,298 |
| 143,931 |
| 413,537 |
| 931,766 |
|
PCI loans, end of period | 25,209 |
| — |
| 3 |
| 25,212 |
| | 31,821 |
| — |
| 3 |
| 31,824 |
| 21,290 |
| — |
| — |
| 21,290 |
| | 25,209 |
| — |
| 3 |
| 25,212 |
|
Credit ratios | | | | | | |
Allowance for loan losses to retained loans | 1.11 | % | 3.40 | % | 0.92 | % | 1.39 | % | | 1.29 | % | 3.32 | % | 1.02 | % | 1.49 | % | 1.04 | % | 3.50 | % | 0.96 | % | 1.42 | % | | 1.11 | % | 3.40 | % | 0.92 | % | 1.39 | % |
Allowance for loan losses to retained nonaccrual loans(e) | 115 |
| NM |
| 394 |
| 284 |
| | 115 |
| NM |
| 277 |
| 241 |
| |
Allowance for loan losses to retained nonaccrual loans(d) | | 108 |
| NM |
| 285 |
| 282 |
| | 115 |
| NM |
| 394 |
| 284 |
|
Allowance for loan losses to retained nonaccrual loans excluding credit card | 115 |
| NM |
| 394 |
| 175 |
| | 115 |
| NM |
| 277 |
| 157 |
| 108 |
| NM |
| 285 |
| 163 |
| | 115 |
| NM |
| 394 |
| 175 |
|
Net charge-off rates(a) | 0.03 |
| 3.16 |
| 0.04 |
| 0.52 |
| | 0.37 |
| 2.94 |
| 0.03 |
| 0.62 |
| 0.11 |
| 3.13 |
| 0.07 |
| 0.59 |
| | 0.03 |
| 3.16 |
| 0.04 |
| 0.52 |
|
Credit ratios, excluding residential real estate PCI loans | | | | | | |
Allowance for loan losses to retained loans | 0.67 |
| 3.40 |
| 0.92 |
| 1.23 |
| | 0.75 |
| 3.32 |
| 1.02 |
| 1.29 |
| 0.71 |
| 3.50 |
| 0.96 |
| 1.32 |
| | 0.67 |
| 3.40 |
| 0.92 |
| 1.23 |
|
Allowance for loan losses to retained nonaccrual loans(e) | 65 |
| NM |
| 394 |
| 244 |
| | 61 |
| NM |
| 277 |
| 201 |
| |
Allowance for loan losses to retained nonaccrual loans(d) | | 69 |
| NM |
| 285 |
| 256 |
| | 65 |
| NM |
| 394 |
| 244 |
|
Allowance for loan losses to retained nonaccrual loans excluding credit card | 65 |
| NM |
| 394 |
| 135 |
| | 61 |
| NM |
| 277 |
| 117 |
| 69 |
| NM |
| 285 |
| 136 |
| | 65 |
| NM |
| 394 |
| 135 |
|
Net charge-off rates(a) | 0.04 | % | 3.16 | % | 0.04 | % | 0.54 | % | | 0.40 | % | 2.94 | % | 0.03 | % | 0.64 | % | 0.11 | % | 3.13 | % | 0.07 | % | 0.60 | % | | 0.04 | % | 3.16 | % | 0.04 | % | 0.54 | % |
Note: In the table above, the financial measures which exclude the impact of PCI loans are non-GAAP financial measures.
| |
(a) | For the nine months ended September 30, 2017, excluding net charge-offs of $467 million related to the student loan portfolio transfer, the net charge-off rate for Consumer, excluding credit card would have been 0.20%; total Firm would have been 0.55%; Consumer, excluding credit card and PCI loans would have been 0.22%; and total Firm, excluding PCI would have been 0.57%. |
| |
(b) | Write-offs of PCI loans are recorded against the allowance for loan losses when actual losses for a pool exceed estimated losses that were recorded as purchase accounting adjustments at the time of acquisition. A write-off of a PCI loan is recognized when the underlying loan is removed from a pool. |
| |
(c)(b) | Includes risk-rated loans that have been placed on nonaccrual status and loans that have been modified in a TDR. The asset-specific credit card allowance for loan losses modified in a TDR is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates. |
| |
(d)(c) | The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets. |
| |
(d) | The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance. |
Provision for credit losses
The following table presents the components of the Firm’s provision for credit losses:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| Provision for loan losses | | Provision for lending-related commitments | | Total provision for credit losses | | Provision for loan losses | | Provision for lending-related commitments | | Total provision for credit losses |
(in millions) | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
|
Consumer, excluding credit card | $ | (242 | ) | $ | 205 |
| | $ | — |
| $ | 1 |
| | $ | (242 | ) | $ | 206 |
| | $ | (152 | ) | $ | 653 |
| | $ | — |
| $ | 7 |
| | $ | (152 | ) | $ | 660 |
|
Credit card | 1,223 |
| 1,319 |
| | — |
| — |
| | 1,223 |
| 1,319 |
| | 3,557 |
| 3,699 |
| | — |
| — |
| | 3,557 |
| 3,699 |
|
Total consumer | 981 |
| 1,524 |
| | — |
| 1 |
| | 981 |
| 1,525 |
| | 3,405 |
| 4,352 |
| | — |
| 7 |
| | 3,405 |
| 4,359 |
|
Wholesale | (13 | ) | (64 | ) | | (20 | ) | (9 | ) | | (33 | ) | (73 | ) | | (111 | ) | (401 | ) | | 29 |
| 24 |
| | (82 | ) | (377 | ) |
Total | $ | 968 |
| $ | 1,460 |
| | $ | (20 | ) | $ | (8 | ) | | $ | 948 |
| $ | 1,452 |
| | $ | 3,294 |
| $ | 3,951 |
| | $ | 29 |
| $ | 31 |
| | $ | 3,323 |
| $ | 3,982 |
|
Quarterly discussion
The provision for credit losses decreased as a result of:
| |
• | a decrease in the consumer provision in CCB due to
|
| |
– | a $250 million reduction in the allowance for loan losses in the residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies,
|
| |
– | a $150 million addition to the allowance for loan losses in the credit card portfolio, due to loan growth and higher loss rates, as anticipated, compared to a $300 million addition in the prior year
|
| |
– | lower net charge-offs in the residential real estate portfolio, largely driven by a recovery of approximately $80 million from a loan sale, and |
| |
– | lower net charge-offs in the auto portfolio as the prior year included $49 million of incremental charge-offs recorded in accordance with regulatory guidance |
partially offset by
| |
– | higher net charge-offs in the credit card portfolio due to seasoning of more recent vintages, as anticipated |
| |
• | the decrease in the consumer provision was partially offset by a lower net benefit in the wholesale provision in the current period, which includes net recoveries predominantly related to a loan sale in CIB.
|
Year-to-date discussion
The provision for credit losses decreased as a result of:
| |
• | a decrease in the consumer provision in CCB due to
|
| |
– | a $150 million addition to the allowance for loan losses in the credit card portfolio, due to loan growth and higher loss rates, as anticipated, compared to a $650 million addition in the prior year, |
| |
– | lower net charge-offs in the residential real estate portfolio, largely driven by recoveries from loan sales, and |
| |
– | a $250 million reduction in the allowance for loan losses in the residential real estate PCI portfolio, reflecting continued improvement in home prices and lower delinquencies, compared to a $175 million reduction in the non credit-impaired portfolio in the prior year |
partially offset by
| |
– | higher net charge-offs in the credit card portfolio due to seasoning of more recent vintages, as anticipated |
| |
– | the prior year included a $218 million write-down recorded in connection with the sale of the student loan portfolio
|
| |
• | the decrease in the consumer provision was partially offset bya lower net benefit in the wholesale provision with the current period net benefit primarily driven by loan sales and other activity related to a single name in the Oil & Gas portfolio, partially offset by other net portfolio activity. The prior year benefit was driven by a reduction in the allowance for credit losses in the Oil & Gas, Natural Gas Pipelines, and Metals and Mining portfolios.
|
|
| | | | |
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 held predominantly by Treasury and CIO in connection with the Firm’s balance sheet or asset-liability management objectives or from principal investments managed in variousthe LOBs and Corporate in predominantly privately-held financial assets and instruments. 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 minimizedmitigated given that Treasury and CIO generallysubstantially invest in high-quality securities. At September 30, 2018,2019, the Treasury and CIO investment securities portfolio was $229.9$392.4 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 ratings that correspond to ratings as defined by S&P and Moody’s). ForRefer to Corporate segment results on pages 42–43 and Note 9 for further information on the investment securities portfolio, referportfolio. Refer to Corporate segment resultsMarket Risk Management on pages 40–41 and Note 9. For70–74 for further information on the market risk inherent in the portfolio, referportfolio. Refer to MarketLiquidity Risk Management on pages 73–77. For50–54 for further information on related liquidity risk, refer to Liquidity Risk on pages 49–54.risk.
Principal investment risk
Principal investments are typically private non-traded financial instruments representing ownership or other forms of junior capital. Principal investments coverspan multiple asset classes and are made either in stand-alone investing businesses or as part of a broader business platform. Increasingly, In general, new principal investments areinclude tax-oriented investments, as well as investments made to enhance or accelerate LOB and Corporate strategic business initiatives. The Firm’s principal investments are managed by the various LOBs and Corporate and are reflected within thetheir respective LOB financial results. Effective January 1, 2018, the Firm adopted new accounting guidance related to the recognition and measurement of financial assets, which requires fair value adjustments upon observable price changes to certain equity investments previously held at cost in the principal investment portfolios. For additional information, refer to Note 2.
As of September 30, 20182019 and December 31, 2017,2018, the aggregate carrying values of the principal investment portfolios were $20.1$23.3 billion and $19.5$22.2 billion, respectively, which included tax-oriented investments (e.g., affordable housing and alternative energy investments) of $13.7$16.7 billion and $14.0$16.6 billion, respectively, and private equity, various debt and equity instruments,, and real assets of $6.4$6.6 billion and $5.5$5.6 billion, respectively.
ForRefer to page 123 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the Firm’s Investment Portfolio Risk Management governance and oversight, refer to page 120 of JPMorgan Chase’s 2017 Annual Report.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. ForRefer to Market Risk Management on pages 124–131 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the Firm’s Market Risk Management organization, tools used to measuremarket risk measurement, risk monitoring and control, and risk identification and classification, referpredominant business activities that give rise to Market Risk Management on pages 121-128 of JPMorgan Chase’s 2017 Annual Report.market risk.
Value-at-risk
JPMorgan Chase utilizes value-at-risk (“VaR”), a statistical risk measure, to estimate the potential loss from adverse market moves in a normalthe current market environment. The Firm has a single VaR framework used as a basis for calculating Risk Management VaR and Regulatory VaR.
As The Firm’s Risk Management VaR is based on historical data, it iscalculated assuming a one-day holding period and an imperfectexpected 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 lines of business and Corporate and, along with other market risk exposure and potential futurelosses. In addition, based on their reliance on available historical data, limited time horizons, and other factors, VaR measures, are inherently limited in their abilityprovides the appropriate information needed to measure certain risks andrespond to predict losses, particularly those associated with market illiquidity and sudden or severe shifts in market conditions.
For certain products, specific risk parameters are not captured in VaR due to the lack of inherent liquidity and availability of appropriate historical data.events. The Firm uses proxiescalculates separately a daily aggregated VaR in accordance with regulatory rules (“Regulatory VaR”), which is used to estimatederive the VaR for these and other products when daily time series are not available. It is likely that using an actual price-based time series for these products, if available, would affect the VaR results presented. The Firm therefore considers other measures such as stress testing and nonstatistical measures, in addition to VaR, to capture and manage its market risk positions. For further information, refer to Other risk measures on pages 126-128 of JPMorgan Chase’s 2017 Annual Report.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. For information regarding model reviews and approvals, referRefer to Estimations and Model Risk Management on page 137140 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for information regarding model reviews and approvals.
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 stable measureRefer to page 126 of VaR that closely aligns to the day-to-day risk management decisions made by the lines of business, and provides the necessary and appropriate information to respond to risk events on a daily basis. 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. ForJPMorgan Chase’s 2018 Form 10-K for further information regarding VaR, including the inherent limitations, and the key differences between Risk Management VaR and Regulatory VaR, referVaR. Refer to page 123 of JPMorgan Chase’s 2017 Annual Report. ForBasel III Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website at:
(http://investor.shareholder.com/jpmorganchase/basel.cfm) 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. Refer to Other risk measures on pages 129-131 of JPMorgan Chase’s Basel III Pillar 3 Regulatory Capital Disclosures reports, which are available on2018 Form 10-K for further information regarding nonstatistical market risk measures used by the Firm’s website at:
(https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).Firm.
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 | | Three months ended |
|
| September 30, 2018 | | June 30, 2018 | | September 30, 2017 | | September 30, 2019 |
| June 30, 2019 |
| September 30, 2018 |
|
(in millions) | Avg. | Min | Max | | Avg. | Min | Max | | Avg. | Min | Max |
| | Avg. | Min | Max |
| Avg. | Min | Max |
| Avg. | Min | Max |
|
|
CIB trading VaR by risk type | | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income | $ | 30 |
| | $ | 25 |
| | $ | 37 |
| | $ | 31 |
| | $ | 26 |
| | $ | 36 |
| | $ | 28 |
| | $ | 24 |
| | $ | 31 |
| | $ | 37 |
|
| $ | 31 |
|
| $ | 46 |
|
|
| $ | 39 |
|
| $ | 33 |
|
| $ | 45 |
|
|
| $ | 30 |
|
| $ | 25 |
|
| $ | 37 |
|
|
Foreign exchange | 5 |
| | 3 |
| | 11 |
| | 6 |
| | 4 |
| | 10 |
| | 13 |
| | 6 |
| | 20 |
| | 6 |
|
| 4 |
|
| 8 |
|
|
| 7 |
|
| 5 |
|
| 12 |
|
|
| 5 |
|
| 3 |
|
| 11 |
|
|
Equities | 16 |
| | 13 |
| | 19 |
| | 15 |
| | 13 |
| | 18 |
| | 12 |
| | 11 |
| | 14 |
| | 22 |
|
| 19 |
|
| 27 |
|
|
| 25 |
|
| 14 |
|
| 31 |
|
|
| 16 |
|
| 13 |
|
| 19 |
|
|
Commodities and other | 9 |
| | 7 |
| | 11 |
| | 7 |
| | 5 |
| | 9 |
| | 6 |
| | 4 |
| | 8 |
| | 8 |
|
| 7 |
|
| 9 |
|
|
| 9 |
|
| 7 |
|
| 10 |
|
|
| 9 |
|
| 7 |
|
| 11 |
|
|
Diversification benefit to CIB trading VaR | (27 | ) | (a) | NM |
| (b) | NM |
| (b) | | (27 | ) | (a) | NM |
| (b) | NM |
| (b) | | (31 | ) | (a) | NM |
| (b) | NM |
| (b) | (34 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (36 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (27 | ) | (a) | NM |
| (b) | NM |
| (b) |
CIB trading VaR | 33 |
| | 27 |
| (b) | 41 |
| (b) | | 32 |
| | 26 |
| (b) | 42 |
| (b) | | 28 |
| | 24 |
| (b) | 32 |
| (b) | 39 |
|
| 33 |
| (b) | 47 |
| (b) |
| 44 |
|
| 34 |
| (b) | 55 |
| (b) |
| 33 |
|
| 27 |
| (b) | 41 |
| (b) |
Credit portfolio VaR | 3 |
| | 3 |
| | 4 |
| | 4 |
| | 3 |
| | 4 |
| | 5 |
| | 5 |
| | 6 |
| | 5 |
|
| 4 |
|
| 7 |
|
|
| 5 |
|
| 4 |
|
| 7 |
|
|
| 3 |
|
| 3 |
|
| 4 |
|
|
Diversification benefit to CIB VaR | (3 | ) | (a) | NM |
| (b) | NM |
| (b) | | (3 | ) | (a) | NM |
| (b) | NM |
| (b) | | (3 | ) | (a) | NM |
| (b) | NM |
| (b) | (6 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (5 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (3 | ) | (a) | NM |
| (b) | NM |
| (b) |
CIB VaR | 33 |
| | 28 |
| (b) | 42 |
| (b) | | 33 |
| | 26 |
| (b) | 42 |
| (b) | | 30 |
| | 25 |
| (b) | 33 |
| (b) | 38 |
|
| 33 |
| (b) | 46 |
| (b) |
| 44 |
|
| 35 |
| (b) | 55 |
| (b) |
| 33 |
|
| 28 |
| (b) | 42 |
| (b) |
| | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CCB VaR | 1 |
| | 1 |
| | 2 |
| | 1 |
| | 1 |
| | 3 |
| | 2 |
| | 1 |
| | 3 |
| | 6 |
|
| 2 |
|
| 11 |
|
|
| 4 |
|
| 2 |
|
| 7 |
|
|
| 1 |
|
| 1 |
|
| 2 |
|
|
Corporate VaR | 13 |
| | 12 |
| | 14 |
| | 12 |
| | 10 |
| | 13 |
| | 3 |
| | 1 |
| | 3 |
| | 10 |
|
| 9 |
|
| 11 |
|
|
| 10 |
|
| 9 |
|
| 10 |
|
|
| 13 |
|
| 12 |
|
| 14 |
|
|
Diversification benefit to other VaR | (1 | ) | (a) | NM |
| (b) | NM |
| (b) | | (1 | ) | (a) | NM |
| (b) | NM |
| (b) | | (1 | ) | (a) | NM |
| (b) | NM |
| (b) | (5 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (5 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (1 | ) | (a) | NM |
| (b) | NM |
| (b) |
Other VaR | 13 |
| | 12 |
| (b) | 14 |
| (b) | | 12 |
| | 10 |
| (b) | 14 |
| (b) | | 4 |
| | 3 |
| (b) | 5 |
| (b) | 11 |
|
| 9 |
| (b) | 15 |
| (b) |
| 9 |
|
| 8 |
| (b) | 11 |
| (b) |
| 13 |
|
| 12 |
| (b) | 14 |
| (b) |
Diversification benefit to CIB and other VaR | (11 | ) | (a) | NM |
| (b) | NM |
| (b) | | (10 | ) | (a) | NM |
| (b) | NM |
| (b) | | (4 | ) | (a) | NM |
| (b) | NM |
| (b) | (10 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (7 | ) | (a) | NM |
| (b) | NM |
| (b) |
| (11 | ) | (a) | NM |
| (b) | NM |
| (b) |
Total VaR | $ | 35 |
| | $ | 30 |
| (b) | $ | 43 |
| (b) | | $ | 35 |
| | $ | 28 |
| (b) | $ | 44 |
| (b) | | $ | 30 |
| | $ | 26 |
| (b) | $ | 34 |
| (b) | $ | 39 |
|
| $ | 35 |
| (b) | $ | 46 |
| (b) |
| $ | 46 |
|
| $ | 36 |
| (b) | $ | 57 |
| (b) |
| $ | 35 |
|
| $ | 30 |
| (b) | $ | 43 |
| (b) |
| |
(a) | Average portfolio VaR is less than the sum of the VaR of the components described above, which is due to portfolio diversification. The diversification effect reflects that the risks are not perfectly correlated. |
| |
(b) | Diversification benefit represents the difference between the total VaR and each reported level and the sum of its individual components. Diversification benefit reflects the non-additive nature of VaR due to imperfect correlation across lines of business, Corporate, and risk types. The maximum and minimum VaR for each portfolio may have occurred on different trading days than the components and consequently diversification benefit is not meaningful. |
Quarter over quarter results
Average total VaR remained unchangeddecreased by $7 million for the threemonths ended September 30, 20182019 as compared with the prior quarter. There wasThis reflects a modest increasereduction in Commodities, offset by reductions inrisk across the Fixed Income exposure withinand Foreign Exchange risk types, as well as a decrease in the Equities risk type driven by certain CIB Trading VaR.investments, including Tradeweb.
Year over year results
Average total VaR increased by $5$4 million for the threemonths ended September 30, 2018,2019, compared with the same period in the prior year. The increase in average total VaR is primarily due to increased exposure in the Fixed Income risk type, as well as an increase in the Equities risk type in CIB driven by the inclusion of a Corporate private equity position that became publicly tradedTradeweb following the IPO in the fourthsecond quarter of 2017 and certain investments in CIB VaR.2019.
In addition, average CCB VaR can vary significantly as positions change, market volatility fluctuates, and diversification benefits change.has increased by $5 million, driven by mortgage servicing rights risk management activities.
VaR back-testing
The Firm evaluates the effectiveness of itsperforms daily VaR methodology bymodel back-testing, which compares the daily Risk Management VaR results with the daily gains and losses actually recognized on market-risk related revenue.
The Firm’s definition of market risk-related gains and losses is consistent with the definition used by the banking regulators under Basel III. Under this definition market risk-related gains and losses are defined as: gains and losses on the positions included in the Firm’s Risk Management VaR excluding fees, commissions, certain valuation adjustments, (e.g., liquidity and FVA), net interest income, and gains and losses arising from intraday trading.
The following chart compares actual daily market risk-related gains and losses with the Firm’s Risk Management VaR for the nine months ended September 30, 2018.2019. As the chart presents market risk-related gains and losses related to those positions included in the Firm’s Risk Management VaR, the results in the table below differ from the results of back-testing 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 CIB’s covered positions. The chart shows that forFor the nine months ended September 30, 2018,2019, the Firm observed five VaR back-testing exceptions and posted market risk-related gains on 113116 of the 194 days. TheFor the three months ended September 30, 2019, the Firm observed nothree VaR back-testing exceptions and posted market risk-related gains on 3835 of the 65 days for the three months ended September 30, 2018.66 days.
Daily Market Risk-Related Gains and Losses
vs. Risk Management VaR (1-day, 95% Confidence level)
Nine months ended September 30, 20182019
Market Risk-Related Gains and LossesRisk Management VaR |
| | | | | | | | |
First Quarter 20182019 | Second Quarter 20182019 | Third Quarter 20182019 |
Earnings-at-risk
The VaR and sensitivity measures illustrate the economic sensitivity of the Firm’s Consolidated balance sheets to changes in market variables. The effect of interest rate exposure on the Firm’s reported net income is also important as interest rate risk represents one of the Firm’s significant market risks. Interest rate risk arises not only from trading activities but also from the Firm’s traditional banking activities, which include extension of loans and credit facilities, taking deposits and issuing debt. Thedebt as well as from the investment securities portfolio. Refer to the table on page 125 of JPMorgan Chase’s 2018 Form 10-K for a summary by line of business and Corporate, identifying positions included in earnings-at-risk.
One way the Firm evaluates its structural interest rate risk exposureis through earnings-at-risk, which measures the extent to which changes in interest rates will affectearnings-at-risk. Earnings-at-risk estimates the Firm’s net interest income andrate exposure for a given interest rate-sensitive fees. Forrate scenario. It is presented as a summary by line of business, identifying positions included in earnings-at-risk, refersensitivity to the table on page 122 of JPMorgan Chase’s 2017 Annual Report.
The Firm generates a baseline, forwhich includes net interest income and certain interest rate-sensitive fees,rate sensitive fees. The baseline uses market interest rates and thenin 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). This simulationThese simulations primarily includesinclude retained loans, deposits, deposits with banks, investment securities, long term debt and any related interest rate hedges, and excludesexclude other positions in risk management VaR and other sensitivity-based measures as described on page 122125 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K.
Earnings-at-risk scenarios estimate the potential change in thisto 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 or decreasing short-term rates and holding long-term rates constant; 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 themany different factors, including:
The impact on exposures as a result of instantaneous changes in interest rates from baseline rates, as well as pricing sensitivities of deposits, optionality and changes in product mix. The scenarios include forecastedrates.
Forecasted balance sheet, changes, as well as modeled prepayment and reinvestment behavior, but do not include assumptions about actions that could be taken by the Firm in response to any such instantaneous rate changes. Mortgage prepayment assumptions are based on scenariothe 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.
| |
• | The pricing sensitivity of deposits, using normalized deposit betas over the cycle. These normalized deposit betas represent the amount by which deposit rates paid could change upon a given change in market interest |
rates. The pricing sensitivity of deposits in the baseline and scenarios use assumeddeposit rates paid which mayin these scenarios differ from actual deposit rates paid, particularly for retail deposits, due to timingrepricing lags and other factors.
The Firm’s earnings-at-risk scenarios areperiodically evaluated and enhanced in response to changes in the composition of the Firm’s balance sheet, changes in market conditions, improvements in the Firm’s simulation and other factors. While a relevant measure of the Firm’s interest rate exposure, the earnings at risk analysis does not represent a forecast of the Firm’s net interest income (Refer to 2019 Outlook on page 8 for additional information).
The Firm’s U.S. dollar sensitivities are presented in the table below.
|
| | | | | | | | | | | | | | |
JPMorgan Chase’s 12-month earnings-at-risk sensitivity profiles |
U.S. dollar | Instantaneous change in rates |
(in billions) | +200 bps | +100 bps | -100 bps | -200 bps |
September 30, 2018 | $ | 1.7 |
| | $ | 0.8 |
| | $ | (1.9 | ) | | NA | (a) |
December 31, 2017 | $ | 2.4 |
| | $ | 1.7 |
| | $ | (3.6 | ) | | NA | (a) |
|
| | | | | | | |
(in billions) | September 30, 2019 |
| | December 31, 2018 |
|
Parallel shift: | | | |
+100 bps shift in rates | $ | 0.7 |
| | $ | 0.9 |
|
-100 bps shift in rates | (2.6 | ) | | (2.1 | ) |
Steeper yield curve: | | | |
+100 bps shift in long-term rates | 0.9 |
| | 0.5 |
|
-100 bps shift in short-term rates | (0.9 | ) | | (1.2 | ) |
Flatter yield curve: | | | |
+100 bps shift in short-term rates | (0.2 | ) | | 0.4 |
|
-100 bps shift in long-term rates | (1.6 | ) | | (0.9 | ) |
| |
(a) | Given the current market interest rate environment, these downward parallel earnings-at-risk scenarios are not considered to be reasonably possible in the near term.
|
The change in the Firm’s U.S. dollar sensitivities as of September 30, 2019 compared to December 31, 2018 reflected updating the Firm’s baseline for lower short-term and long-term rates as well as the impact of changes in the Firm’s balance sheet. The Firm’s sensitivity to short-term rates is largelydecreased as a result of assets re-pricing at a faster pace than deposits.
The Firm’s net U.S. dollar sensitivities to 200 and 100 basis points instantaneous rate increases decreased by approximately $700 million and $900 million, respectively, whilechanges in the Firm’s net U.S. dollar sensitivity to 100 basis points instantaneous decrease in rates decreasedbalance sheet primarily offset by $1.7 billion when compared to December 31, 2017. The primary driver of these decreases was the updating of the Firm’s baseline to reflect higher interestlower rates. As higher interestThe Firm’s sensitivity to long-term rates are reflected inincreased primarily as a result of updating the Firm’s baselines, sensitivitiesbaseline to changes inreflect lower rates are expectedand is more impactful to be less significant.the downward scenario due to the Firm’s sensitivity to mortgage prepayments.
The Firm’s non-U.S. dollar sensitivities for an instantaneous increaseare presented in rates by 200 and 100 basis pointsthe table below. |
| | | | | | | |
(in billions) | September 30, 2019 |
| | December 31, 2018 |
|
Parallel shift: | | | |
+100 bps shift in rates | $ | 0.5 |
| | $ | 0.5 |
|
Flatter yield curve: | | | |
+100 bps shift in short-term rates | 0.5 |
| | 0.5 |
|
The results in a 12-month benefit to net interest income of approximately $800 millionand $500 million, respectively, at both September 30, 2018 and December 31, 2017. Thethe non-U.S. dollar sensitivities for an instantaneous decrease in rates by 200 and 100 basis points are not material to the Firm’s earnings-at-risk at September 30, 2018 and December 31, 2017.
Separately, another U.S. dollar interest rate scenario used by the Firm — involving a steeper yield curve with long-term rates rising by 100 basis points and short-term rates staying at current levels — results in a 12-month benefit to net interest income of approximately $500 million and $700 million at September 30, 2018 and December 31, 2017, respectively. The increase in net interest income under this scenario reflects the Firm reinvesting at the higher long-term rates, with funding costs remaining unchanged. The results of the comparable non-U.S. dollar scenarios arewere not material to the FirmFirm’s earnings-at-risk at September 30, 20182019 and December 31, 2017.2018.
Other sensitivity-based measures
The Firm quantifies the market risk of certain investment and funding activities by assessing the potential impact on net revenue and OCI due to changes in relevant market variables. ForRefer to the table Predominant business activities
that give rise to market risk on page 125 of JPMorgan Chase’s 2018 Form 10-K for additional information on the positions
captured in other sensitivity-based measures, please refer to the Risk identification and classification table on page 122 of JPMorgan Chase’s 2017 Annual Report.measures.
The table below represents the potential impact to net revenue or OCI for market risk-sensitive instruments that are not included in VaR or earnings-at-risk. Where appropriate, instruments used for hedging purposes are reported along with 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 September 30, 20182019 and December 31, 2017,2018, as the movement in market parameters across maturities may vary and are not intended to imply management’s expectation of future deterioration in these sensitivities.
| | Gain/(loss) (in millions) | | September 30, 2018 |
| | December 31, 2017 |
| | September 30, 2019 |
| | December 31, 2018 |
|
Activity | | Description | | Sensitivity measure | | | | Description | | Sensitivity measure | | |
| | | | | | | | |
Investment activities(a) | | | | | | | | |
Investment management activities | | Consists of seed capital and related hedges; and fund co-investments | | 10% decline in market value | | $ | (147 | ) | | $ | (110 | ) | | Consists of seed capital and related hedges; and fund co-investments | | 10% decline in market value | | $ | (79 | ) | | $ | (102 | ) |
Other investments | | Consists of privately held equity and other investments held at fair value | | 10% decline in market value | | (246 | ) | | (338 | ) | | Consists of privately held equity and other investments held at fair value | | 10% decline in market value | | (202 | ) | | (218 | ) |
| | | | | | | | |
Funding activities | | | | | | | | |
Non-USD LTD cross-currency basis | | Represents the basis risk on derivatives used to hedge the foreign exchange risk on the non-USD LTD(b) | | 1 basis point parallel tightening of cross currency basis | | (9 | ) | | (10 | ) | | Represents the basis risk on derivatives used to hedge the foreign exchange risk on the non-USD LTD(b) | | 1 basis point parallel tightening of cross currency basis | | (15 | ) | | (13 | ) |
Non-USD LTD hedges foreign currency (“FX”) exposure | | Primarily represents the foreign exchange revaluation on the fair value of the derivative hedges(b) | | 10% depreciation of currency | | 13 |
| | (13 | ) | | Primarily represents the foreign exchange revaluation on the fair value of the derivative hedges(b) | | 10% depreciation of currency | | 7 |
| | 17 |
|
Derivatives – funding spread risk | | Impact of changes in the spread related to derivatives FVA | | 1 basis point parallel increase in spread | | (4 | ) | | (6 | ) | | Impact of changes in the spread related to derivatives FVA | | 1 basis point parallel increase in spread | | (5 | ) | | (4 | ) |
Fair value option elected liabilities – funding spread risk | | Impact of changes in the spread related to fair value option elected liabilities DVA(b) | | 1 basis point parallel increase in spread | | 27 |
| | 22 |
| | Impact of changes in the spread related to fair value option elected liabilities DVA(b) | | 1 basis point parallel increase in spread | | 28 |
| | 30 |
|
Fair value option elected liabilities – interest rate sensitivity | | Interest rate sensitivity on fair value option liabilities resulting from a change in the Firm’s own credit spread(b) | | 1 basis point parallel increase in spread | | (1 | ) | | (1 | ) | | Interest rate sensitivity on fair value option liabilities resulting from a change in the Firm’s own credit spread(b) | | 1 basis point parallel increase in spread | | 1 |
| | 1 |
|
| |
(a) | Excludes equity securities without readily determinable fair values that are measured under the measurement alternative. Refer to Note 2 for additional information. |
| |
(b) | Impact recognized through OCI. |
The Firm, has athrough its lines of business and Corporate, may be exposed to country risk management framework for monitoring and assessing howresulting 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 ensurewhich the Firm’s country risk exposures are diversified and that exposure levels are appropriate given the Firm’s strategy and risk tolerance relative to a country.
Country Risk Management periodically designs and runs tailored stress scenariosRefer to test vulnerabilities to individual countries or groupspages 132–133 of countries in response to specific or potential market events, sector performance concerns and geopolitical risks. These tailored stress results are used to inform potential risk reduction across the firm, as necessary.
ForJPMorgan Chase’s 2018 Form 10-K for a further discussion of the Firm’s Country Risk Management organization; identification and measurement; stress testing; monitoring and control; and reporting, refer to pages 129–130 of JPMorgan Chase’s 2017 Annual Report.country risk management.
The following table presents the Firm’s top 20 exposures by country (excluding the U.S.) as of September 30, 2019 and their comparative exposures as of December 31, 2018. The selection of countries represents the Firm’s largest total exposures by country, based on the Firm’s internal country risk management approach, and does not represent the Firm’s view of any actual or potentially adverse credit conditions. Country exposures may fluctuate from period to period due to client activity and market flows.
|
| | | | | | | | | | | | | | | | |
Top 20 country exposures (excluding the U.S.)(a) |
(in billions) | September 30, 2019 | | December 31, 2018(e) |
| Lending and deposits(b) | Trading and investing(c) | Other(d) | Total exposure | | Total exposure |
Germany | $ | 58.1 |
| $ | 6.2 |
| $ | 0.4 |
| $ | 64.7 |
| | $ | 62.1 |
|
United Kingdom | 28.8 |
| 10.0 |
| 3.7 |
| 42.5 |
| | 40.7 |
|
Japan | 23.3 |
| 4.2 |
| 0.3 |
| 27.8 |
| | 29.1 |
|
Switzerland | 10.7 |
| 1.0 |
| 7.6 |
| 19.3 |
| | 12.8 |
|
France | 11.3 |
| 4.8 |
| 1.5 |
| 17.6 |
| | 17.9 |
|
China | 9.3 |
| 6.7 |
| 1.4 |
| 17.4 |
| | 19.3 |
|
Canada | 12.0 |
| 1.5 |
| — |
| 13.5 |
| | 14.3 |
|
India | 5.0 |
| 4.8 |
| 2.8 |
| 12.6 |
| | 11.8 |
|
Luxembourg | 11.6 |
| 0.7 |
| — |
| 12.3 |
| | 11.0 |
|
Australia | 7.1 |
| 5.0 |
| — |
| 12.1 |
| | 13.0 |
|
Netherlands | 6.0 |
| 1.2 |
| 3.0 |
| 10.2 |
| | 5.8 |
|
Brazil | 4.0 |
| 4.9 |
| — |
| 8.9 |
| | 7.3 |
|
Singapore | 4.3 |
| 1.6 |
| 2.6 |
| 8.5 |
| | 6.8 |
|
Saudi Arabia | 7.2 |
| 0.9 |
| — |
| 8.1 |
| | 5.3 |
|
South Korea | 4.0 |
| 3.6 |
| 0.1 |
| 7.7 |
| | 7.6 |
|
Italy | 2.2 |
| 4.7 |
| 0.1 |
| 7.0 |
| | 6.4 |
|
Hong Kong | 3.4 |
| 1.5 |
| 1.7 |
| 6.6 |
| | 5.4 |
|
Spain | 3.3 |
| 3.3 |
| — |
| 6.6 |
| | 5.1 |
|
Mexico | 4.2 |
| 0.9 |
| — |
| 5.1 |
| | 5.5 |
|
Belgium | 3.6 |
| 0.5 |
| — |
| 4.1 |
| | 2.3 |
|
|
| | | | | | | | | | | | | |
Top 20 country exposures (excluding the U.S.)(a) | |
| | September 30, 2018 |
(in billions) | | Lending and deposits(b) | Trading and investing(c)(d) | Other(e) | Total exposure |
Germany | | $ | 55.1 |
| $ | 11.1 |
| $ | 0.3 |
| $ | 66.5 |
|
United Kingdom | | 28.8 |
| 9.4 |
| 11.8 |
| 50.0 |
|
Japan | | 32.9 |
| 7.1 |
| 0.3 |
| 40.3 |
|
China | | 9.8 |
| 7.7 |
| 1.8 |
| 19.3 |
|
Switzerland | | 14.0 |
| 0.5 |
| 4.0 |
| 18.5 |
|
France | | 11.3 |
| 5.6 |
| 0.6 |
| 17.5 |
|
Canada | | 11.8 |
| 3.0 |
| 0.1 |
| 14.9 |
|
Australia | | 6.9 |
| 4.4 |
| — |
| 11.3 |
|
India | | 6.0 |
| 3.7 |
| 1.4 |
| 11.1 |
|
Luxembourg | | 9.5 |
| 0.5 |
| — |
| 10.0 |
|
Brazil | | 4.9 |
| 3.0 |
| — |
| 7.9 |
|
Netherlands | | 6.3 |
| 0.6 |
| 0.7 |
| 7.6 |
|
Spain | | 4.6 |
| 1.5 |
| 0.3 |
| 6.4 |
|
Italy | | 2.4 |
| 3.9 |
| 0.1 |
| 6.4 |
|
South Korea | | 4.1 |
| 2.0 |
| 0.1 |
| 6.2 |
|
Hong Kong | | 3.0 |
| 1.0 |
| 2.1 |
| 6.1 |
|
Saudi Arabia | | 5.3 |
| 0.5 |
| — |
| 5.8 |
|
Singapore | | 3.4 |
| 1.2 |
| 1.1 |
| 5.7 |
|
Mexico | | 4.1 |
| 1.0 |
| — |
| 5.1 |
|
United Arab Emirates | | 2.7 |
| 0.5 |
| — |
| 3.2 |
|
| |
(a) | CountryTop 20 country exposures presented in the table reflect 88%approximately 87% and 86% of total firmwide non-U.S. exposure.exposure, where exposure is attributed to a specific country, at September 30, 2019, and December 31, 2018 respectively. |
| |
(b) | Lending and deposits includes loans and accrued interest receivable (net of eligible collateral and the allowance for loan losses), deposits with banks (including central banks), acceptances, other monetary assets, issued letters of credit net of participations, and unused commitments to extend credit. Excludes intra-day and operating exposures, such as those from settlement and clearing activities. |
| |
(c) | Includes market-making inventory, AFS securities, and counterparty exposure on derivative and securities financings net of eligible collateral and hedging. |
| |
(d) | 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)(d) | Includes capital invested in local entities andPredominantly includes physical commodity inventory. |
| |
(e) | The country rankings presented in the table as of December 31, 2018, are based on the country rankings of the corresponding exposures at September 30, 2019, not actual rankings of such exposures at December 31, 2018. |
|
| | | | |
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
JPMorgan Chase’sThe Firm’s allowance for credit losses covers the retained consumer and wholesale loan portfolios, as well as the Firm’s wholesale and certain consumer lending-related commitments. The allowance for loan losses is intended to adjust the carrying value of the Firm’s loan assets to reflect probable credit losses inherent in the loan portfolio as of the balance sheet date. Similarly, the allowance for lending-related commitments is established to cover probable credit losses inherent in the lending-related commitments portfolio as of the balance sheet date.
The allowance for credit losses includes a formula-based component, an asset-specific component, and a component related to PCI loans. The determination of each of these components involves significant judgment on a number of matters. ForRefer to pages 120–122, page 141 and Note 13 of JPMorgan Chase’s 2018 Form 10-K for further information on these components, areas of judgment and methodologies used in establishing the Firm’s allowance for credit losses, refer to pages 117–119, page 138 and Note 13 of JPMorgan Chase’s 2017 Annual Report;losses; and refer to Allowance for credit losses on pages 69–7167–68 and Note 12 of this Form 10-Q.
As noted in the discussion on page 138141 of JPMorgan Chase’s 2017 Annual Report,2018 Form 10-K, the Firm’s allowance for credit losses is sensitive to numerous factors, which may differ depending on the portfolio. Changes in economic conditions or in the Firm’s assumptions and estimates could affect its estimate of probable credit losses inherent in the portfolio at the balance sheet date. The Firm uses its best judgment to assess these economic conditions and loss data in estimating the allowance for credit losses and these estimates are subject to periodic refinement based on changes to underlying external or Firm-specific historical data. Refer to Note 12 of this Form 10-Q for further discussion.information.
To illustrate the potential magnitude of certain alternate judgments, the Firm estimates that changes in the following inputs would have the following effects on the Firm’s
modeled credit loss estimates as of September 30, 2018, 2019,
without consideration of any offsetting or correlated effects of other inputs in the Firm’s allowance for loan losses:
A combined 5% decline in housing prices and a 100 basis point increase in unemployment rates from current levelsexpectations could imply:
| |
◦ | an increase to modeled credit loss estimates of approximately $425$250 million for PCI loans. |
| |
◦ | an increase to modeled annual credit loss estimates of approximately $75$50 million for residential real estate loans, excluding PCI loans. |
For credit card loans, a 100 basis point increase in unemployment rates from current levelsexpectations could imply an increase to modeled annual credit loss estimates of approximately $775$800 million.
An increase in probability of default (“PD”) factors consistent with a one-notch downgrade in the Firm’s internal risk ratings for its entire wholesale loan portfolio could imply an increase in the Firm’s modeled credit loss estimates of approximately $1.6$1.7 billion.
A 100 basis point increase in estimated loss given default (“LGD”) for the Firm’s entire wholesale loan portfolio could imply an increase in the Firm’s modeled credit loss estimates of approximately $175 million.
The purpose of these sensitivity analyses is to provide an indication of the isolated impacts of hypothetical alternative assumptions on modeled loss estimates. The changes in the inputs presented above are not intended to imply management’s expectation of future deterioration of those risk factors. In addition, these analyses are not intended to estimate changes in the overall allowance for loan losses, which would also be influenced by the judgment management applies to the modeled loss estimates to reflect the uncertainty and imprecision of these modeled loss estimates based on then-current circumstances and conditions.
It is difficult to estimate how potential changes in specific factors might affect the overall allowance for credit losses because management considers a variety of factors and inputs in estimating the allowance for credit losses. Changes in these factors and inputs may not occur at the same rate and may not be consistent across all geographies or product types, and changes in factors may be directionally inconsistent, such that improvement in one factor may offset deterioration in other factors. In addition, it is difficult to predict how changes in specific economic conditions or assumptions could affect borrower behavior or other factors considered by management in estimating the allowance for credit losses. Given the process the Firm follows and the judgments made in evaluating the risk factors related to its loss estimates, management believes that its current estimate of the allowance for credit losses is appropriate.
Fair value of financial instruments, MSRs and commodities inventory
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 valuation hierarchy. For further information, referRefer to Note 2. for further information.
| | September 30, 2018 (in billions, except ratios) | Total assets at fair value | | Total level 3 assets | |
September 30, 2019 (in billions, except ratios) | | Total assets at fair value | | Total level 3 assets |
Trading–debt and equity instruments | $ | 359.7 |
| | | $ | 4.2 |
| $ | 440.2 |
| | | $ | 4.4 |
|
Derivative receivables(a) | 60.1 |
| | 7.1 |
| 55.6 |
| | 5.6 |
|
Trading assets | 419.8 |
| | 11.3 |
| 495.8 |
| | 10.0 |
|
AFS securities | 200.0 |
| | 0.1 |
| 353.4 |
| | — |
|
Loans | 3.0 |
| | 0.1 |
| 5.8 |
| | — |
|
MSRs | 6.4 |
| | 6.4 |
| 4.4 |
| | 4.4 |
|
Other | 28.5 |
| | 1.1 |
| 27.8 |
| | 0.7 |
|
Total assets measured at fair value on a recurring basis | $ | 657.7 |
| | $ | 19.0 |
| $ | 887.2 |
| | $ | 15.1 |
|
Total assets measured at fair value on a nonrecurring basis | 1.8 |
| | 1.1 |
| 6.4 |
| | 1.0 |
|
Total assets measured at fair value | $ | 659.5 |
| | $ | 20.1 |
| $ | 893.6 |
| | $ | 16.1 |
|
Total Firm assets | $ | 2,615.2 |
| | | $ | 2,764.7 |
| | |
Level 3 assets as a percentage of total Firm assets(a) | | | 0.8 | % | | | 0.6 | % |
Level 3 assets as a percentage of total Firm assets at fair value(a) | | | 3.0 | % | | | 1.8 | % |
| |
(a) | For purposes of the table above, the derivative receivables total reflects the impact of netting adjustments; however, the $7.1$5.6 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 valuation 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 technique to use. Second, the lack of observability of certain significant inputs requires management to assess all relevant empirical data in deriving valuation inputs including, for example, transaction details, yield curves, interest rates, prepayment rates, default rates, volatilities, correlations, equity or debt prices, valuations of comparable instruments, foreign exchange rates and credit curves. ForRefer to Note 2 for a further discussion of the valuation of level 3 instruments, including unobservable inputs used, refer to Note 2.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. ForRefer to Note 2 for a further discussion of valuation adjustments applied by the Firm refer to Note 2.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. ForRefer 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, refer to Note 2.instruments.
Goodwill impairment
Management applies significant judgment when testing goodwill for impairment. The goodwill associated with each business combination is allocated to the related reporting units for goodwill impairment testing. ForRefer to Goodwill impairment on page 142 of JPMorgan Chase’s 2018 Form 10-K for a description of the significant valuation judgments associated with goodwill impairment, referimpairment.
Refer to Goodwill impairmentNote 14 for additional information on pages 139–140 of JPMorgan Chase’s 2017 Annual Report.
For the three months ended September 30, 2018, the Firm reviewed current economic conditions, business performance, estimated market cost of equity, and prior projections of business performance for all its businesses. Based upon such reviews, the Firm concluded thatgoodwill, including the goodwill allocated to its reporting units was not impairedimpairment assessment as of September 30, 2018.
Declines in business performance, increases in credit losses, increases in equity 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 or their associated goodwill 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.
For additional information on goodwill, refer to Note 14.
2019.
Credit card rewards liability
JPMorgan Chase offersThe credit cards with various rewards programs which allow cardholders to earn rewards points based on their account activity and the terms and conditions of the rewards program. Generally, there are no limits on the points that an eligible cardholder can earn, nor do the points expire, and the points can be redeemed for a variety of rewards, including cash (predominantly in the form of account credits), gift cards and travel. The Firm maintains acard rewards liability which represents the estimated cost of rewards points earned and expected to be redeemed by cardholders. The rewards liability is sensitive to various assumptions, including cost per point and redemption rates for each of the various rewards programs, which are evaluated periodically. The liability is accrued as the cardholder earns the benefit and is reduced when the cardholder redeems points. This liability was $5.8$6.3 billion and $4.9$5.8 billion at September 30, 20182019 and December 31, 2017,2018, respectively, and is recorded in accounts payable and other liabilities on the Consolidated balance sheets. Refer to page 143 of JPMorgan Chase’s 2018 Form 10-K for a description of the significant assumptions and judgments associated with the Firm’s credit card rewards liability.
Income taxes
ForRefer to Income taxes on page 143 of JPMorgan Chase’s 2018 Form 10-K for a description of the significant assumptions, judgments and interpretations associated with the accounting for income taxes, refer to Note 1, and Income taxes on page 140 of JPMorgan Chase’s 2017 Annual Report.taxes.
Litigation reserves
ForRefer to Note 24 of this Form 10-Q, and Note 29 of JPMorgan Chase’s 2018 Form 10-K for a description of the significant estimates and judgments associated with establishing litigation reserves, refer to Note 22 of this Form 10-Q, and Note 29 of JPMorgan Chase’s 2017 Annual Report.reserves.
|
| | | | |
ACCOUNTING AND REPORTING DEVELOPMENTS |
|
| | | | |
Financial Accounting Standards Board (“FASB”) Standards Adopted since January 1, 2018 |
| | | | |
Standard | | Summary of guidance | | Effects on financial statements |
| | | | |
Revenue recognition – revenue from contracts with customers
Issued May 2014
| | • Requires that revenue from contracts with customers be recognized upon transfer of control of a good or service in the amount of consideration expected to be received.
• Changes the accounting for certain contract costs, including whether they may be offset against revenue in the Consolidated statements of income, and requires additional disclosures about revenue and contract costs.
| | • Adopted January 1, 2018.
• For further information, refer to Note 1.
|
Recognition and
measurement of financial assets and financial liabilities
Issued January 2016
| | • Requires that certain equity instruments be measured at fair value, with changes in fair value recognized in earnings.
• Provides a measurement alternative for equity securities without readily determinable fair values to be measured at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer. Any such price changes are reflected in earnings beginning in the period of adoption.
| | • Adopted January 1, 2018.
• For further information, refer to Note 1.
|
Classification of certain cash receipts and cash payments in the statement of cash flows
Issued August 2016
| | • Provides targeted amendments to the classification of certain cash flows, including the treatment of settlement payments for zero coupon debt instruments and distributions received from equity method investments. | | • Adopted January 1, 2018.
• The adoption of the guidance had no material impact as the Firm was either in compliance with the amendments or the amounts to which it was applied were immaterial.
|
Treatment of restricted cash on the statement of cash flows
Issued November 2016
| | • Requires restricted cash to be combined with unrestricted cash when reconciling the beginning and ending cash balances on the Consolidated statements of cash flows.
• Requires additional disclosures to supplement the Consolidated statements of cash flows.
| | • Adopted January 1, 2018
• For further information, refer to Note 1.
|
|
| | | | |
FASB Standards Adopted since January 1, 2018 (continued) |
| | | | |
Standard | | Summary of guidance | | Effects on financial statements |
| | | | |
Definition of a business
Issued January 2017
| | • Narrows the definition of a business and clarifies that, to be considered a business, substantially all of the fair value of the gross assets acquired (or disposed of) may not be concentrated in a single identifiable asset or a group of similar assets.
• In addition, the definition now requires that a set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.
| | • Adopted January 1, 2018.
• The adoption of the guidance had no impact because it is being applied prospectively. Subsequent to adoption, fewer transactions will be treated as acquisitions or dispositions of a business.
|
Presentation of net periodic pension cost and net periodic postretirement benefit cost
Issued March 2017
| | • Requires the service cost component of net periodic pension and postretirement benefit cost to be reported separately in the Consolidated statements of income from the other components (e.g., expected return on assets, interest costs, amortization of gains/losses and prior service costs). | | • Adopted January 1, 2018.
• For further information, refer to Note 1.
|
Premium amortization on purchased callable debt securities
Issued March 2017
| | • Requires amortization of premiums to the earliest call date on debt securities with call features that are explicit, noncontingent and callable at fixed prices and on preset dates.
• Does not impact debt securities held at a discount; the discount continues to be amortized to the contractual maturity date.
| | • Adopted January 1, 2018.
• For further information, refer to Note 1.
|
Hedge accounting
Issued August 2017
| | • Aligns the accounting with the economics of the risk management activities.
• Expands the ability for certain hedges of interest rate risk to qualify for hedge accounting.
• Allows recognition of ineffectiveness in cash flow hedges and net investment hedges in OCI.
• Permits an election at adoption to transfer certain investment securities classified as held-to-maturity to available-for-sale.
• Simplifies hedge documentation requirements.
| | • Adopted January 1, 2018.
• For further information, refer to Note 1.
|
Reclassification of certain tax effects from AOCI
Issued February 2018
| | • Permits reclassification of the income tax effects of the TCJA on items within AOCI to retained earnings so that the tax effects of items within AOCI reflect the appropriate tax rate. | | • Adopted January 1, 2018.
• For further information, refer to Note 1.
|
|
| | | | |
FASB Standards Issued but not yet Adopted2019 |
| | | | |
Standard | | Summary of guidance | | Effects on financial statements |
| | | | |
Leases Issued February 2016 | | • Requires lessees to recognize all leases longer than twelve months on the Consolidated balance sheets as a lease liability with a corresponding right-of-use asset. • Requires lessees and lessors to classify most leases using principles similar to existing lease accounting, but eliminates the “bright line” classification tests. • Permits the Firm to generally account for its existing leases consistent with current guidance, except for the incremental balance sheet recognition. • Expands qualitative and quantitative leasing disclosures.
• May be adopted using a modified cumulative effect approach wherein the guidance is applied only to existing contracts as of the date of initial application, and to new contracts transacted after that date, or a cumulative-effect adjustment to retained earnings at the effective date without revising prior comparative periods.
| | • Required effective date:Adopted January 1, 2019.(a) • The Firm is in the final stages of its implementation which includes implementing a new lease accounting software solution for its real estate leases, and updating processes and internal controls for its leasing activities. As a lessee, the Firm is finalizing its estimate of the right-of-use asset and lease liability, which is based on the present value of lease payments. The Firm expects to recognize a lease liability and a corresponding right-of-use asset (at their present value) related to predominantly all of the $10 billion of future minimum payments required under operating leases as disclosed in Note 28 of JPMorgan Chase’s 2017 Annual Report. However, the population of contracts subject to balance sheet recognition and their initial measurement remains under evaluation; final financial statement impacts will depend on the lease portfolio at the time of adoption. The Firm does not expect material changes to the recognition of operating lease expense in its Consolidated statements of income. • The Firm plans to adopt the new lease guidance on January 1, 2019 through a cumulative-effect adjustment without revising prior comparative periods and electelected the available practical expedients, which willexpedient to not require it to reassess whether an existing contract containscontracts contain a lease or whether classification or unamortized initial lease costs would be different under the new lease guidance. The Firm elected the modified retrospective transition method, through a cumulative-effect adjustment to retained earnings without revising prior periods.
• Refer to Note 16 for further information.
|
|
| | | | |
FASB Standards Issued but not yet Adopted |
| | | | |
Standard | | Summary of guidance | | Effects on financial statements |
| | | | |
Financial instruments – credit losses
Issued June 2016 | | • Replaces existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost, which will reflect management’s estimate of credit losses over the full remaining expected life of the financial assets and will consider expected future changes in macroeconomic conditions. • Eliminates existing guidance for PCI loans, and requires recognition of the nonaccretable difference as an increase to the allowance for expected credit losses on financial assets purchased with more than insignificant credit deterioration since origination, which will be offset by anwith a corresponding increase in the carrying valuerecorded investment of the related loans. • Requires inclusion of expected recoveries, limited to the cumulative amount of prior write-offs, when estimating the allowance for credit losses for in scope financial assets (including collateral dependent assets). • Amends existing impairment guidance for AFS securities to incorporate an allowance, which will allow for reversals of credit impairments in the event that the credit of an issuer improves. • Requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.
| | • Required effective date: January 1, 2020.(a) • The Firm has established a Firmwide, cross-discipline governance structure, which provides implementation oversight. The Firm continues to identify key interpretive issues,test and is in the process of developing and implementingrefine its current expected credit loss models that satisfy the requirements of the new standard. Oversight and testing, as well as efforts to meet expanded disclosure requirements, will extend through the remainder of 2019. • The Firm expects that the allowance related to the Firm’s loans and commitments will increase as it will cover credit losses over the full remaining expected life of the portfolios, withportfolios. The Firm currently intends to estimate losses over a two-year forecast period using the most significant impact expected from the Firm’s credit card portfolio.weighted-average of a range of macroeconomic scenarios (established on a Firmwide basis), and then revert to longer term historical loss experience to estimate losses over more extended periods.• The extent ofFirm currently expects the increase in the allowance to be in the range of $4-6 billion, primarily driven by Card. This estimate is under evaluation, butsubject to further refinement based on continuing reviews and approvals of models, methodologies and judgments. The ultimate impact will depend upon the nature and characteristics of the Firm’s portfolio at the adoption date, and the macroeconomic conditions and forecasts at that date.date, and other management judgments.• The Firm plans to adopt the new guidance on January 1, 2020. |
Goodwill Issued January 2017 | | • Requires an impairment loss to be recognized when the estimated fair value of a reporting unit falls below its carrying value. • Eliminates the second condition in the current guidance that requires an impairment loss to be recognized only if the estimated implied fair value of the goodwill is below its carrying value. | | • Required effective date: January 1, 2020.(a) • Based on current impairment test results, the Firm does not expect a material effect on the Consolidated Financial Statements. However, the impact of the new accounting guidance will depend on the performance of the reporting units and the market conditions at the time of adoption. • After adoption, the guidance may result in more frequent goodwill impairment losses due to the removal of the second condition. • The Firm plans to adopt the new guidance on January 1, 2020. |
| |
(a) | Early adoption is permitted. |
|
| | | | |
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;
Changes in laws 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 income tax laws and regulations;
Securities and capital markets behavior, including changes in market liquidity and volatility;
Changes in investor sentiment or consumer spending or savings behavior;
Ability of the Firm to manage effectively its capital and liquidity, including approval of its capital plans by banking regulators;
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 and environmental concerns that may arise from its business activities;
Ability of the Firm to deal effectively with an economic slowdown or other economic or market disruption;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 (including but not limited to mortgages and asset-backed securities) 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 employees;
Ability of the Firm to control expenses;
Competitive pressures;
Changes in the credit quality of the Firm’s customers and counterparties;
Adequacy of the Firm’s risk management framework, disclosure controls and procedures and internal control over financial reporting;
Adverse judicial or regulatory proceedings;
Changes in applicable accounting policies, including the introduction of new accounting standards;
Ability of the Firm to determine accurate values of certain assets and liabilities;
Occurrence of natural or man-made disasters or calamities or conflicts 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 cyberattacks 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 2017 Annual Report on2018 Form 10-K for the year ended December 31, 2017.10-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 on10-Ks, Form 10-Q,10-Qs, or Current Reports on Form 8-K.
JPMorgan Chase & Co.
Consolidated statements of income (unaudited)
| | | | Three months ended September 30, | | Nine months ended September 30, | | Three months ended September 30, | | Nine months ended September 30, |
(in millions, except per share data) | | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| | 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Revenue | | | | | | | | | | | | | | | | |
Investment banking fees | | $ | 1,832 |
| | $ | 1,868 |
| | $ | 5,736 |
| | $ | 5,594 |
| | $ | 1,967 |
| | $ | 1,832 |
| | $ | 5,658 |
| | $ | 5,736 |
|
Principal transactions | | 2,964 |
| | 2,721 |
| | 10,698 |
| | 9,440 |
| | 3,449 |
| | 2,964 |
| | 11,239 |
| | 10,698 |
|
Lending- and deposit-related fees | | 1,542 |
| | 1,497 |
| | 4,514 |
| | 4,427 |
| | 1,626 |
| | 1,542 |
| | 4,643 |
| | 4,514 |
|
Asset management, administration and commissions | | 4,310 |
| | 4,072 |
| | 12,923 |
| | 11,996 |
| | 4,351 |
| | 4,310 |
| | 12,818 |
| | 12,923 |
|
Investment securities losses | | (46 | ) | | (1 | ) | | (371 | ) | | (38 | ) | |
Investment securities gains/(losses) | | | 78 |
| | (46 | ) | | 135 |
| | (371 | ) |
Mortgage fees and related income | | 262 |
| | 429 |
| | 1,051 |
| | 1,239 |
| | 887 |
| | 262 |
| | 1,562 |
| | 1,051 |
|
Card income | | 1,328 |
| | 1,242 |
| | 3,623 |
| | 3,323 |
| | 1,283 |
| | 1,328 |
| | 3,923 |
| | 3,623 |
|
Other income | | 1,160 |
| | 952 |
| | 4,041 |
| | 3,197 |
| | 1,472 |
| | 1,160 |
| | 4,239 |
| | 4,041 |
|
Noninterest revenue | | 13,352 |
| | 12,780 |
| | 42,215 |
| | 39,178 |
| | 15,113 |
| | 13,352 |
| | 44,217 |
| | 42,215 |
|
Interest income(a) | | 19,840 |
| | 16,687 |
| | 56,404 |
| | 47,379 |
| | 21,121 |
| | 19,439 |
| | 64,113 |
| | 55,499 |
|
Interest expense(a) | | 5,932 |
| | 3,889 |
| | 15,699 |
| | 10,309 |
| | 6,893 |
| | 5,531 |
| | 21,034 |
| | 14,794 |
|
Net interest income | | 13,908 |
| | 12,798 |
| | 40,705 |
| | 37,070 |
| | 14,228 |
| | 13,908 |
| | 43,079 |
| | 40,705 |
|
Total net revenue | | 27,260 |
| | 25,578 |
| | 82,920 |
| | 76,248 |
| | 29,341 |
| | 27,260 |
| | 87,296 |
| | 82,920 |
|
| | | | | | | | | | | | | | | | |
Provision for credit losses | | 948 |
| | 1,452 |
| | 3,323 |
| | 3,982 |
| | 1,514 |
| | 948 |
| | 4,158 |
| | 3,323 |
|
| | | | | | | | | | | | | | | | |
Noninterest expense | | | | | | | | | | | | | | | | |
Compensation expense | | 8,108 |
| | 7,697 |
| | 25,308 |
| | 23,710 |
| | 8,583 |
| | 8,108 |
| | 26,067 |
| | 25,308 |
|
Occupancy expense | | 1,014 |
| | 930 |
| | 2,883 |
| | 2,803 |
| | 1,110 |
| | 1,014 |
| | 3,238 |
| | 2,883 |
|
Technology, communications and equipment expense | | 2,219 |
| | 1,972 |
| | 6,441 |
| | 5,677 |
| | 2,494 |
| | 2,219 |
| | 7,236 |
| | 6,441 |
|
Professional and outside services | | 2,086 |
| | 1,955 |
| | 6,333 |
| | 5,646 |
| | 2,056 |
| | 2,086 |
| | 6,307 |
| | 6,333 |
|
Marketing | | 798 |
| | 710 |
| | 2,396 |
| | 2,179 |
| | 945 |
| | 798 |
| | 2,686 |
| | 2,396 |
|
Other expense | | 1,398 |
| | 1,306 |
| | 4,313 |
| | 4,605 |
| | 1,234 |
| | 1,398 |
| | 3,624 |
| | 4,313 |
|
Total noninterest expense | | 15,623 |
| | 14,570 |
| | 47,674 |
| | 44,620 |
| | 16,422 |
| | 15,623 |
| | 49,158 |
| | 47,674 |
|
Income before income tax expense | | 10,689 |
| | 9,556 |
| | 31,923 |
| | 27,646 |
| | 11,405 |
| | 10,689 |
| | 33,980 |
| | 31,923 |
|
Income tax expense | | 2,309 |
| | 2,824 |
| | 6,515 |
| | 7,437 |
| | 2,325 |
| | 2,309 |
| | 6,069 |
| | 6,515 |
|
Net income | | $ | 8,380 |
| | $ | 6,732 |
| | $ | 25,408 |
| | $ | 20,209 |
| | $ | 9,080 |
| | $ | 8,380 |
| | $ | 27,911 |
| | $ | 25,408 |
|
Net income applicable to common stockholders | | $ | 7,948 |
| | $ | 6,262 |
| | $ | 24,067 |
| | $ | 18,786 |
| | $ | 8,606 |
| | $ | 7,948 |
| | $ | 26,551 |
| | $ | 24,067 |
|
Net income per common share data | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 2.35 |
| | $ | 1.77 |
| | $ | 7.04 |
| | $ | 5.26 |
| | $ | 2.69 |
| | $ | 2.35 |
| | $ | 8.17 |
| | $ | 7.04 |
|
Diluted earnings per share | | 2.34 |
| | 1.76 |
| | 7.00 |
| | 5.22 |
| | 2.68 |
| | 2.34 |
| | 8.15 |
| | 7.00 |
|
| | | | | | | | | | | | | | | | |
Weighted-average basic shares | | 3,376.1 |
| | 3,534.7 |
| | 3,416.5 |
| | 3,570.9 |
| | 3,198.5 |
| | 3,376.1 |
| | 3,248.7 |
| | 3,416.5 |
|
Weighted-average diluted shares | | 3,394.3 |
| | 3,559.6 |
| | 3,436.2 |
| | 3,597.0 |
| | 3,207.2 |
| | 3,394.3 |
| | 3,258.0 |
| | 3,436.2 |
|
Cash dividends declared per common share | | $ | 0.80 |
| | $ | 0.56 |
| | $ | 1.92 |
| | $ | 1.56 |
| |
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1. | |
(a) | In the second quarter of 2019, the Firm implemented certain presentation changes that impacted interest income and interest expense, but had no effect on net interest income. These changes were applied retrospectively and, accordingly, prior period amounts were revised to conform with the current presentation. Refer to Note 6 for additional information. |
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 September 30, | | Nine months ended September 30, | | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| | 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Net income | | $ | 8,380 |
| | $ | 6,732 |
| | $ | 25,408 |
| | $ | 20,209 |
| | $ | 9,080 |
| | $ | 8,380 |
| | $ | 27,911 |
| | $ | 25,408 |
|
Other comprehensive income/(loss), after–tax | | | | | | | | | | | | | | | | |
Unrealized gains/(losses) on investment securities | | (819 | ) | | 147 |
| | (2,280 | ) | | 842 |
| | 479 |
| | (819 | ) | | 2,986 |
| | (2,280 | ) |
Translation adjustments, net of hedges | | (31 | ) | | — |
| | 84 |
| | 7 |
| | (165 | ) | | (31 | ) | | (90 | ) | | 84 |
|
Fair value hedges | | 34 |
| | NA |
| | (74 | ) | | NA |
| | (1 | ) | | 34 |
| | 87 |
| | (74 | ) |
Cash flow hedges | | (88 | ) | | 26 |
| | (327 | ) | | 170 |
| | 195 |
| | (88 | ) | | 430 |
| | (327 | ) |
Defined benefit pension and OPEB plans | | 19 |
| | 22 |
| | 78 |
| | 26 |
| | 46 |
| | 19 |
| | 123 |
| | 78 |
|
DVA on fair value option elected liabilities | | (402 | ) | | (112 | ) | | 125 |
| | (179 | ) | | 132 |
| | (402 | ) | | (229 | ) | | 125 |
|
Total other comprehensive income/(loss), after–tax | | (1,287 | ) | | 83 |
| | (2,394 | ) | | 866 |
| | 686 |
| | (1,287 | ) | | 3,307 |
| | (2,394 | ) |
Comprehensive income | | $ | 7,093 |
| | $ | 6,815 |
| | $ | 23,014 |
| | $ | 21,075 |
| | $ | 9,766 |
| | $ | 7,093 |
| | $ | 31,218 |
| | $ | 23,014 |
|
Effective January 1, 2018, the Firm adopted several new accounting standards. For additional information, refer to Note 1.
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) | Sep 30, 2018 | | Dec 31, 2017 | September 30, 2019 | | December 31, 2018 |
Assets | | | | | | |
Cash and due from banks | $ | 23,225 |
| | $ | 25,898 |
| $ | 21,215 |
| | $ | 22,324 |
|
Deposits with banks | 395,872 |
| | 405,406 |
| 235,382 |
| | 256,469 |
|
Federal funds sold and securities purchased under resale agreements (included $12,226 and $14,732 at fair value) | 217,632 |
| | 198,422 |
| |
Securities borrowed (included $4,528 and $3,049 at fair value) | 122,434 |
| | 105,112 |
| |
Trading assets (included assets pledged of $114,850 and $109,887) | 419,827 |
| | 381,844 |
| |
Investment securities (included $200,030 and $202,225 at fair value and assets pledged of $10,534 and $17,969) | 231,398 |
| | 249,958 |
| |
Loans (included $2,987 and $2,508 at fair value) | 954,318 |
| | 930,697 |
| |
Federal funds sold and securities purchased under resale agreements (included $13,705 and $13,235 at fair value) | | 257,391 |
| | 321,588 |
|
Securities borrowed (included $5,784 and $5,105 at fair value) | | 138,336 |
| | 111,995 |
|
Trading assets (included assets pledged of $138,827 and $89,073) | | 495,875 |
| | 413,714 |
|
Investment securities (included $353,421 and $230,394 at fair value and assets pledged of $12,518 and $11,432) | | 394,251 |
| | 261,828 |
|
Loans (included $5,760 and $3,151 at fair value) | | 945,218 |
| | 984,554 |
|
Allowance for loan losses | (13,128 | ) | | (13,604 | ) | (13,235 | ) | | (13,445 | ) |
Loans, net of allowance for loan losses | 941,190 |
| | 917,093 |
| 931,983 |
| | 971,109 |
|
Accrued interest and accounts receivable | 78,792 |
| | 67,729 |
| 88,988 |
| | 73,200 |
|
Premises and equipment | 14,180 |
| | 14,159 |
| 25,117 |
| | 14,934 |
|
Goodwill, MSRs and other intangible assets | 54,697 |
| | 54,392 |
| 53,078 |
| | 54,349 |
|
Other assets (included $12,479 and $16,128 at fair value and assets pledged of $5,334 and $7,980) | 115,936 |
| | 113,587 |
| |
Other assets (included $8,916 and $9,630 at fair value and assets pledged of $2,834 and $3,457) | | 123,045 |
| | 121,022 |
|
Total assets(a) | $ | 2,615,183 |
| | $ | 2,533,600 |
| $ | 2,764,661 |
| | $ | 2,622,532 |
|
Liabilities | | | | | | |
Deposits (included $20,500 and $21,321 at fair value) | $ | 1,458,762 |
| | $ | 1,443,982 |
| |
Federal funds purchased and securities loaned or sold under repurchase agreements (included $1,059 and $697 at fair value) | 181,608 |
| | 158,916 |
| |
Short-term borrowings (included $7,885 and $9,191 at fair value) | 64,635 |
| | 51,802 |
| |
Deposits (included $29,355 and $23,217 at fair value) | | $ | 1,525,261 |
| | $ | 1,470,666 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements (included $933 and $935 at fair value) | | 247,766 |
| | 182,320 |
|
Short-term borrowings (included $6,497 and $7,130 at fair value) | | 48,893 |
| | 69,276 |
|
Trading liabilities | 151,150 |
| | 123,663 |
| 138,343 |
| | 144,773 |
|
Accounts payable and other liabilities (included $5,159 and $9,208 at fair value) | 209,707 |
| | 189,383 |
| |
Beneficial interests issued by consolidated VIEs (included $17 and $45 at fair value)
| 20,241 |
| | 26,081 |
| |
Long-term debt (included $54,112 and $47,519 at fair value) | 270,124 |
| | 284,080 |
| |
Accounts payable and other liabilities (included $2,411 and $3,269 at fair value) | | 225,063 |
| | 196,710 |
|
Beneficial interests issued by consolidated VIEs (included $39 and $28 at fair value)
| | 18,515 |
| | 20,241 |
|
Long-term debt (included $71,957 and $54,886 at fair value) | | 296,472 |
| | 282,031 |
|
Total liabilities(a) | 2,356,227 |
| | 2,277,907 |
| 2,500,313 |
| | 2,366,017 |
|
Commitments and contingencies (refer to Notes 20, 21 and 22) |
|
| |
|
| |
Commitments and contingencies (refer to Notes 22, 23 and 24) | |
|
| |
|
|
Stockholders’ equity | | | | | | |
Preferred stock ($1 par value; authorized 200,000,000 shares; issued 2,776,375 and 2,606,750 shares) | 27,764 |
| | 26,068 |
| |
Preferred stock ($1 par value; authorized 200,000,000 shares; issued 2,836,250 and 2,606,750 shares) | | 28,363 |
| | 26,068 |
|
Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895 shares) | 4,105 |
| | 4,105 |
| 4,105 |
| | 4,105 |
|
Additional paid-in capital | 89,333 |
| | 90,579 |
| 88,512 |
| | 89,162 |
|
Retained earnings | 195,180 |
| | 177,676 |
| 217,888 |
| | 199,202 |
|
Accumulated other comprehensive loss | (2,425 | ) | | (119 | ) | |
Shares held in restricted stock units (“RSU”) Trust, at cost (472,953 shares) | (21 | ) | | (21 | ) | |
Treasury stock, at cost (779,523,170 and 679,635,064 shares) | (54,980 | ) | | (42,595 | ) | |
Accumulated other comprehensive income/(loss) | | 1,800 |
| | (1,507 | ) |
Shares held in restricted stock units (“RSU”) Trust, at cost (472,953 shares) | | (21 | ) | | (21 | ) |
Treasury stock, at cost (968,448,971 and 829,167,674 shares) | | (76,299 | ) | | (60,494 | ) |
Total stockholders’ equity | 258,956 |
| | 255,693 |
| 264,348 |
| | 256,515 |
|
Total liabilities and stockholders’ equity | $ | 2,615,183 |
| | $ | 2,533,600 |
| $ | 2,764,661 |
| | $ | 2,622,532 |
|
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
| |
(a) | The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at September 30, 2018,2019, and December 31, 2017.2018. 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. ForRefer to Note 13 for a further discussion, refer to Note 13.discussion. |
| | (in millions) | Sep 30, 2018 | | Dec 31, 2017 | September 30, 2019 | | December 31, 2018 |
Assets | | | | | | |
Trading assets | $ | 1,567 |
| | $ | 1,449 |
| $ | 1,461 |
| | $ | 1,966 |
|
Loans | 57,114 |
| | 68,995 |
| 53,022 |
| | 59,456 |
|
All other assets | 2,407 |
| | 2,674 |
| 974 |
| | 1,013 |
|
Total assets | $ | 61,088 |
| | $ | 73,118 |
| $ | 55,457 |
| | $ | 62,435 |
|
Liabilities | | | | | | |
Beneficial interests issued by consolidated VIEs | $ | 20,241 |
| | $ | 26,081 |
| $ | 18,515 |
| | $ | 20,241 |
|
All other liabilities | 330 |
| | 349 |
| 301 |
| | 312 |
|
Total liabilities | $ | 20,571 |
| | $ | 26,430 |
| $ | 18,816 |
| | $ | 20,553 |
|
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)
| | | | Nine months ended September 30, | | Three months ended September 30, | | | Nine months ended September 30, | |
(in millions, except per share data) | | 2018 |
| | 2017 |
| | 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
| | | | | |
Preferred stock | | | | | | | | | | | | |
Balance at January 1 | | $ | 26,068 |
| | $ | 26,068 |
| |
Balance at the beginning of the period | | | $ | 26,993 |
| | $ | 26,068 |
| | $ | 26,068 |
| | $ | 26,068 |
|
Issuance | | 1,696 |
| | — |
| | 2,250 |
| | 1,696 |
| | 4,100 |
| | 1,696 |
|
Redemption | | | (880 | ) | | — |
| | (1,805 | ) | | — |
|
Balance at September 30 | | $ | 27,764 |
| | $ | 26,068 |
| | 28,363 |
| | 27,764 |
| | 28,363 |
| | 27,764 |
|
| | | | | | | | | | | | |
Common stock | | | | | | | | | | | | |
Balance at January 1 and September 30 | | 4,105 |
| | 4,105 |
| |
Balance at the beginning and end of the period | | | 4,105 |
| | 4,105 |
| | 4,105 |
| | 4,105 |
|
| | | | | | | | | | | | |
Additional paid-in capital | | | | | | | | | | | | |
Balance at January 1 | | 90,579 |
| | 91,627 |
| |
Balance at the beginning of the period | | | 88,359 |
| | 89,392 |
| | 89,162 |
| | 90,579 |
|
Shares issued and commitments to issue common stock for employee shared-based compensation awards, and related tax effects | | (897 | ) | | (680 | ) | | 156 |
| | 179 |
| | (604 | ) | | (897 | ) |
Other | | (349 | ) | | (250 | ) | | (3 | ) | | (238 | ) | | (46 | ) | | (349 | ) |
Balance at September 30 | | 89,333 |
| | 90,697 |
| | 88,512 |
| | 89,333 |
| | 88,512 |
| | 89,333 |
|
| | | | | | | | | | | | |
Retained earnings | | | | | | | | | | | | |
Balance at January 1 | | 177,676 |
| | 162,440 |
| |
Balance at the beginning of the period | | | 212,093 |
| | 189,881 |
| | 199,202 |
| | 177,676 |
|
Cumulative effect of changes in accounting principles | | (183 | ) | | — |
| | — |
| | — |
| | 62 |
| | (183 | ) |
Net income | | 25,408 |
| | 20,209 |
| | 9,080 |
| | 8,380 |
| | 27,911 |
| | 25,408 |
|
Dividends declared: | | | | | | | | | | | | |
Preferred stock | | (1,167 | ) | | (1,235 | ) | | (423 | ) | | (379 | ) | | (1,201 | ) | | (1,167 | ) |
Common stock ($1.92 and $1.56 per share) | | (6,554 | ) | | (5,587 | ) | |
Common stock ($0.90 and $0.80 per share and $2.50 and $1.92 per share, respectively) | | | (2,862 | ) | | (2,702 | ) | | (8,086 | ) | | (6,554 | ) |
Balance at September 30 | | 195,180 |
| | 175,827 |
| | 217,888 |
| | 195,180 |
| | 217,888 |
| | 195,180 |
|
| | | | | | | | | | | | |
Accumulated other comprehensive income/(loss) | | | | | | | | | | | | |
Balance at January 1 | | (119 | ) | | (1,175 | ) | |
Balance at the beginning of the period | | | 1,114 |
| | (1,138 | ) | | (1,507 | ) | | (119 | ) |
Cumulative effect of changes in accounting principles | | 88 |
| | — |
| | — |
| | — |
| | — |
| | 88 |
|
Other comprehensive income/(loss) | | (2,394 | ) | | 866 |
| |
Other comprehensive income/(loss), after-tax | | | 686 |
| | (1,287 | ) | | 3,307 |
| | (2,394 | ) |
Balance at September 30 | | (2,425 | ) | | (309 | ) | | 1,800 |
| | (2,425 | ) | | 1,800 |
| | (2,425 | ) |
| | | | | | | | | | | | |
Shares held in RSU Trust, at cost | | | | | | | | | | | | |
Balance at January 1 and September 30 | | (21 | ) | | (21 | ) | |
Balance at the beginning and end of the period | | | (21 | ) | | (21 | ) | | (21 | ) | | (21 | ) |
| | | | | | | | | | | | |
Treasury stock, at cost | | | | | | | | | | | | |
Balance at January 1 | | (42,595 | ) | | (28,854 | ) | |
Balance at the beginning of the period | | | (69,428 | ) | | (50,829 | ) | | (60,494 | ) | | (42,595 | ) |
Repurchase | | (14,055 | ) | | (10,602 | ) | | (6,949 | ) | | (4,416 | ) | | (17,250 | ) | | (14,055 | ) |
Reissuance | | 1,670 |
| | 1,471 |
| | 78 |
| | 265 |
| | 1,445 |
| | 1,670 |
|
Balance at September 30 | | (54,980 | ) | | (37,985 | ) | | (76,299 | ) | | (54,980 | ) | | (76,299 | ) | | (54,980 | ) |
| | | | | | | | | | | | |
Total stockholders’ equity | | $ | 258,956 |
| | $ | 258,382 |
| | $ | 264,348 |
| | $ | 258,956 |
| | $ | 264,348 |
| | $ | 258,956 |
|
Effective January 1, 2018, the Firm adopted several new accounting standards. For additional information, refer to Note 1.
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
JPMorgan Chase & Co.
Consolidated statements of cash flows (unaudited) | | | Nine months ended September 30, | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| 2019 |
| | 2018 |
|
Operating activities | | | | | | |
Net income | $ | 25,408 |
| | $ | 20,209 |
| $ | 27,911 |
| | $ | 25,408 |
|
Adjustments to reconcile net income to net cash used in operating activities: | | | | | | |
Provision for credit losses | 3,323 |
| | 3,982 |
| 4,158 |
| | 3,323 |
|
Depreciation and amortization | 5,716 |
| | 4,547 |
| 6,229 |
| | 5,716 |
|
Deferred tax (benefit)/expense | (323 | ) | | (187 | ) | (440 | ) | | (323 | ) |
Other | 2,179 |
| | 1,655 |
| 1,645 |
| | 2,179 |
|
Originations and purchases of loans held-for-sale | (68,235 | ) | | (75,907 | ) | (53,934 | ) | | (68,235 | ) |
Proceeds from sales, securitizations and paydowns of loans held-for-sale | 68,214 |
| | 75,255 |
| 60,510 |
| | 68,214 |
|
Net change in: | | | | | | |
Trading assets | (44,427 | ) | | (31,189 | ) | (96,125 | ) | | (44,427 | ) |
Securities borrowed | (17,344 | ) | | (5,191 | ) | (26,162 | ) | | (17,344 | ) |
Accrued interest and accounts receivable | (11,335 | ) | | (9,795 | ) | (16,089 | ) | | (11,335 | ) |
Other assets | 2,909 |
| | 18,668 |
| (21,181 | ) | | 2,909 |
|
Trading liabilities | 21,580 |
| | (23,162 | ) | 12,774 |
| | 21,580 |
|
Accounts payable and other liabilities | 26,677 |
| | (10,124 | ) | 19,661 |
| | 26,677 |
|
Other operating adjustments | (577 | ) | | 7,858 |
| 4,004 |
| | (577 | ) |
Net cash provided by/(used in) operating activities | 13,765 |
| | (23,381 | ) | (77,039 | ) | | 13,765 |
|
Investing activities | | | | | | |
Net change in: | | | | | | |
Federal funds sold and securities purchased under resale agreements | (19,259 | ) | | 44,463 |
| 64,207 |
| | (19,259 | ) |
Held-to-maturity securities: | | | | | | |
Proceeds from paydowns and maturities | 2,268 |
| | 3,508 |
| 2,239 |
| | 2,268 |
|
Purchases | (8,613 | ) | | (594 | ) | (11,682 | ) | | (8,613 | ) |
Available-for-sale securities: | | | | | | |
Proceeds from paydowns and maturities | 29,618 |
| | 43,536 |
| 41,378 |
| | 29,618 |
|
Proceeds from sales | 34,322 |
| | 57,640 |
| 43,460 |
| | 34,322 |
|
Purchases | (46,530 | ) | | (73,717 | ) | (200,262 | ) | | (46,530 | ) |
Proceeds from sales and securitizations of loans held-for-investment | 20,154 |
| | 11,600 |
| 52,739 |
| | 20,154 |
|
Other changes in loans, net | (49,755 | ) | | (39,385 | ) | (25,977 | ) | | (49,755 | ) |
All other investing activities, net | (1,987 | ) | | 655 |
| (4,283 | ) | | (1,987 | ) |
Net cash provided by/(used in) investing activities | (39,782 | ) | | 47,706 |
| |
Net cash (used in) investing activities | | (38,181 | ) | | (39,782 | ) |
Financing activities | | | | | | |
Net change in: | | | | | | |
Deposits | 15,274 |
| | 51,352 |
| 77,147 |
| | 15,274 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | 22,719 |
| | 3,731 |
| 65,428 |
| | 22,719 |
|
Short-term borrowings | 12,974 |
| | 19,006 |
| (20,577 | ) | | 12,974 |
|
Beneficial interests issued by consolidated VIEs | 975 |
| | (1,312 | ) | 5,017 |
| | 975 |
|
Proceeds from long-term borrowings | 54,842 |
| | 46,311 |
| 45,155 |
| | 54,842 |
|
Payments of long-term borrowings | (69,636 | ) | | (65,932 | ) | (51,936 | ) | | (69,636 | ) |
Proceeds from issuance of preferred stock | 1,655 |
| | — |
| 4,100 |
| | 1,655 |
|
Redemption of preferred stock | | (1,805 | ) | | — |
|
Treasury stock repurchased | (14,055 | ) | | (10,602 | ) | (17,250 | ) | | (14,055 | ) |
Dividends paid | (6,989 | ) | | (6,478 | ) | (9,056 | ) | | (6,989 | ) |
All other financing activities, net | (1,440 | ) | | 329 |
| (217 | ) | | (1,440 | ) |
Net cash provided by financing activities | 16,319 |
| | 36,405 |
| 96,006 |
| | 16,319 |
|
Effect of exchange rate changes on cash and due from banks and deposits with banks | (2,509 | ) | | 7,272 |
| (2,982 | ) | | (2,509 | ) |
Net increase/(decrease) in cash and due from banks and deposits with banks | (12,207 | ) | | 68,002 |
| |
Net decrease in cash and due from banks and deposits with banks | | (22,196 | ) | | (12,207 | ) |
Cash and due from banks and deposits with banks at the beginning of the period | 431,304 |
| | 391,154 |
| 278,793 |
| | 431,304 |
|
Cash and due from banks and deposits with banks at the end of the period | $ | 419,097 |
| | $ | 459,156 |
| $ | 256,597 |
| | $ | 419,097 |
|
Cash interest paid | $ | 15,144 |
| | $ | 10,294 |
| $ | 20,790 |
| | $ | 15,144 |
|
Cash income taxes paid, net | 2,197 |
| | 3,238 |
| 3,478 |
| | 2,197 |
|
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
Refer to the Glossary of Terms and Acronyms on pages 175–179168–172 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 global financial services firm and one of the largest banking institutions 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. ForRefer to Note 25 for a further discussion of the Firm’s business segments, refer to Note 23.segments.
The accounting and financial reporting policies of JPMorgan Chase and its subsidiaries conform to U.S. GAAP. Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by regulatory authorities.
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 presented.
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 2017 Annual Report.2018 Form 10-K.
Certain amounts reported in prior periods have been reclassified to conform with the current presentation.
Consolidation
The Consolidated Financial Statements include the accounts of JPMorgan Chase and other entities in which the Firm has a controlling financial interest. All material intercompany balances and transactions have been eliminated.
Assets held for clients in an agency or fiduciary capacity by the Firm are not assets of JPMorgan Chase and are not included on the Consolidated balance sheets.
The Firm determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity.
ForRefer to Notes 1 and 14 of JPMorgan Chase’s 2018 Form 10-K for a further description of JPMorgan Chase’s accounting policies regarding consolidation, refer to Notes1 and 14 of JPMorgan Chase’s 2017 Annual Report.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 activities 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 when the specified conditions are met. ForRefer to Note 1 of JPMorgan Chase’s 2018 Form 10-K for further information on offsetting assets and liabilities, refer to Note1 of JPMorgan Chase’s 2017 Annual Report.liabilities.
Application of U.S. GAAP related to the Tax CutsIncome tax expense
The Firm’s effective tax rate was 20.4% and Jobs Act (“TCJA”) SEC Staff Accounting Bulletin No. 118
On December 22, 2017, the TCJA was signed into law and the Firm recorded the estimated impact of the deemed repatriation of the Firm’s unremitted non-U.S. earnings and the remeasurement of deferred taxes under the TCJA. These provisional amounts represent estimates under SEC guidance, which provides a one-year measurement period17.9% in which to refine the estimates based on new information or the issuance of interpretative guidance. Based on legislative guidance and adjustments to the 2017 federal tax return as filed, the Firm recorded a net tax benefit of $132 million in the third quarter for changes in the estimates to both the remeasurement of certain deferred taxes and the deemed repatriation tax on non-U.S. earnings. The year-to-date benefit recorded for changes in estimates was $305 million and the Firm may recognize additional adjustments during the fourth quarter as a result of the issuance of additional legislative and accounting guidance. The Firm considers any legislative or accounting guidance issued as of the balance sheet date when evaluating potential refinements to these estimates.
Accounting standards adopted January 1, 2018
The following table identifies the standards adopted, and the note where further information on the impact of the new guidance can be found: |
| |
Revenue recognition – revenue from contracts with customers | Note 5 |
Recognition and measurement of financial assets and financial liabilities | Notes 2 and 9 |
Treatment of restricted cash on the statement of cash flows | Note 18 |
Presentation of net periodic pension cost and net periodic postretirement benefit cost | Note 7 |
Premium amortization on purchased callable debt securities | Notes 9 and 17 |
Hedge accounting | Notes 4, 9 and 17 |
Reclassification of certain tax effects from AOCI | Note 17 |
Certain of the new accounting standards were applied retrospectively and prior period amounts were revised accordingly. The most significant of the new standards was revenue recognition, which requires gross presentation of certain costs that were previously offset against revenue. This change resulted in noninterest revenue and noninterest expense each increasing by $252 million and $777 million for the three and nine months ended September 30, 2017,2019, respectively, with no impactand 21.6% and 20.4% in the respective 2018 periods. For the nine months ended September 30, 2019, the effective tax rate reflected the recognition of $1.0 billion in tax benefits related to net income.
Upon adoptionthe resolution of the restricted cash guidance, to align the Consolidated balance sheets with the Consolidated statements of cash flows, the Firm reclassified restricted cash into cash and due from banks or deposits with banks. In addition, forcertain tax audits, which reduced the Firm’s Consolidated statements of cash flows, cash is defined as those amounts included in cash and due from banks and deposits with banks. This guidance was applied retrospectively and, accordingly, prior period amounts have been revised, resulting in cash and due from banks and deposits with banks increasingeffective tax rate by $71 million and $1.1 billion, respectively, and other assets decreasing by $1.2 billion at December 31, 2017.
Business changes and developments
On October 30, 2018, the Firm redeemed $1.7 billion of its fixed-to-floating rate non-cumulative perpetual preferred stock, Series I. For additional information on the Firm’s preferred stock, refer3.0%. Refer to Note 2024 of JPMorgan Chase’s 2017 Annual Report.
2018 Form 10-K for further information.
Note 2 – Fair value measurement
ForRefer to Note 2 of JPMorgan Chase’s 2018 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, refer to Note2 of JPMorgan Chase’s 2017 Annual Report.hierarchy.
The following table presents the assets and liabilities reported at fair value as of September 30, 2018,2019, and December 31, 2017,2018, by major product category and fair value hierarchy. | | Assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis |
|
|
|
|
| Assets and liabilities measured at fair value on a recurring basis |
|
|
|
|
|
| Fair value hierarchy |
| Derivative netting adjustments |
| Fair value hierarchy |
| Derivative netting adjustments(f) |
|
| | | | | | | | | | |
September 30, 2018 (in millions) | Level 1 | Level 2 |
| Level 3 |
| Total fair value |
| |
September 30, 2019 (in millions) | | Level 1 | Level 2 |
| Level 3 |
| Derivative netting adjustments(f) | Total fair value |
|
Federal funds sold and securities purchased under resale agreements | $ | — |
| $ | 12,226 |
|
| $ | — |
|
| $ | — |
| $ | 12,226 |
| $ | — |
| $ | 13,705 |
|
| $ | — |
|
| $ | 13,705 |
|
Securities borrowed | — |
| 4,528 |
|
| — |
|
| — |
| 4,528 |
| — |
| 5,784 |
|
| — |
|
| 5,784 |
|
Trading assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government agencies(a) | — |
| 46,252 |
|
| 529 |
|
| — |
| 46,781 |
| |
U.S. GSEs and government agencies(a) | | — |
| 70,617 |
|
| 811 |
|
| — |
| 71,428 |
|
Residential – nonagency | — |
| 1,681 |
|
| 77 |
|
| — |
| 1,758 |
| — |
| 2,253 |
|
| 24 |
|
| — |
| 2,277 |
|
Commercial – nonagency | — |
| 1,420 |
|
| 13 |
|
| — |
| 1,433 |
| — |
| 1,613 |
|
| 5 |
|
| — |
| 1,618 |
|
Total mortgage-backed securities | — |
| 49,353 |
|
| 619 |
|
| — |
| 49,972 |
| — |
| 74,483 |
|
| 840 |
|
| — |
| 75,323 |
|
U.S. Treasury and government agencies(a) | 40,815 |
| 7,443 |
|
| — |
|
| — |
| 48,258 |
| |
U.S. Treasury, GSEs and government agencies(a) | | 76,953 |
| 9,446 |
|
| — |
|
| — |
| 86,399 |
|
Obligations of U.S. states and municipalities | — |
| 8,785 |
|
| 699 |
|
| — |
| 9,484 |
| — |
| 6,229 |
|
| 627 |
|
| — |
| 6,856 |
|
Certificates of deposit, bankers’ acceptances and commercial paper | — |
| 3,070 |
| | — |
| | — |
| 3,070 |
| — |
| 2,180 |
| | — |
| | — |
| 2,180 |
|
Non-U.S. government debt securities | 26,824 |
| 28,875 |
| | 164 |
| | — |
| 55,863 |
| 38,162 |
| 36,634 |
| | 146 |
| | — |
| 74,942 |
|
Corporate debt securities | — |
| 23,210 |
| | 395 |
| | — |
| 23,605 |
| — |
| 20,461 |
| | 484 |
| | — |
| 20,945 |
|
Loans(b) | — |
| 40,051 |
| | 1,533 |
| | — |
| 41,584 |
| — |
| 43,308 |
| | 1,746 |
| | — |
| 45,054 |
|
Asset-backed securities | — |
| 2,779 |
| | 76 |
| | — |
| 2,855 |
| — |
| 2,996 |
| | 38 |
| | — |
| 3,034 |
|
Total debt instruments | 67,639 |
| 163,566 |
| | 3,486 |
| | — |
| 234,691 |
| 115,115 |
| 195,737 |
| | 3,881 |
| | — |
| 314,733 |
|
Equity securities | 104,701 |
| 405 |
| | 329 |
| | — |
| 105,435 |
| 100,829 |
| 249 |
| | 170 |
| | — |
| 101,248 |
|
Physical commodities(c) | 3,727 |
| 1,256 |
| | — |
| | — |
| 4,983 |
| 7,690 |
| 3,075 |
| | — |
| | — |
| 10,765 |
|
Other | — |
| 14,188 |
| | 413 |
| | — |
| 14,601 |
| — |
| 13,172 |
| | 332 |
| | — |
| 13,504 |
|
Total debt and equity instruments(d) | 176,067 |
| 179,415 |
| | 4,228 |
| | — |
| 359,710 |
| 223,634 |
| 212,233 |
| | 4,383 |
| | — |
| 440,250 |
|
Derivative receivables: | | | | | | | | | | |
Interest rate | 715 |
| 258,744 |
| | 2,000 |
| | (238,062 | ) | 23,397 |
| 1,312 |
| 372,834 |
| | 1,787 |
| | (347,426 | ) | 28,507 |
|
Credit | — |
| 22,553 |
| | 952 |
| | (22,923 | ) | 582 |
| — |
| 15,072 |
| | 645 |
| | (14,879 | ) | 838 |
|
Foreign exchange | 734 |
| 187,377 |
| | 773 |
| | (171,841 | ) | 17,043 |
| 3,681 |
| 158,893 |
| | 558 |
| | (150,451 | ) | 12,681 |
|
Equity | — |
| 43,791 |
| | 3,141 |
| | (36,828 | ) | 10,104 |
| — |
| 44,064 |
| | 2,314 |
| | (38,969 | ) | 7,409 |
|
Commodity | — |
| 22,129 |
| | 239 |
| | (13,432 | ) | 8,936 |
| — |
| 20,969 |
| | 269 |
| | (15,096 | ) | 6,142 |
|
Total derivative receivables(e) | 1,449 |
| 534,594 |
| | 7,105 |
| | (483,086 | ) | 60,062 |
| 4,993 |
| 611,832 |
| | 5,573 |
| | (566,821 | ) | 55,577 |
|
Total trading assets(f)(e) | 177,516 |
| 714,009 |
| | 11,333 |
| | (483,086 | ) | 419,772 |
| 228,627 |
| 824,065 |
| | 9,956 |
| | (566,821 | ) | 495,827 |
|
Available-for-sale securities: | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | |
U.S. government agencies(a) | — |
| 63,110 |
| | — |
| | — |
| 63,110 |
| |
U.S. GSEs and government agencies(a) | | — |
| 105,581 |
| | — |
| | — |
| 105,581 |
|
Residential – nonagency | — |
| 9,216 |
| | 1 |
| | — |
| 9,217 |
| — |
| 12,901 |
| | 1 |
| | — |
| 12,902 |
|
Commercial – nonagency | — |
| 7,048 |
| | — |
| | — |
| 7,048 |
| — |
| 5,324 |
| | — |
| | — |
| 5,324 |
|
Total mortgage-backed securities | — |
| 79,374 |
| | 1 |
| | — |
| 79,375 |
| — |
| 123,806 |
| | 1 |
| | — |
| 123,807 |
|
U.S. Treasury and government agencies | 27,816 |
| — |
| | — |
| | — |
| 27,816 |
| 141,529 |
| — |
| | — |
| | — |
| 141,529 |
|
Obligations of U.S. states and municipalities | — |
| 38,121 |
| | — |
| | — |
| 38,121 |
| — |
| 31,064 |
| | — |
| | — |
| 31,064 |
|
Certificates of deposit | — |
| 75 |
| | — |
| | — |
| 75 |
| — |
| 74 |
| | — |
| | — |
| 74 |
|
Non-U.S. government debt securities | 16,544 |
| 8,130 |
| | — |
| | — |
| 24,674 |
| 13,604 |
| 8,554 |
| | — |
| | — |
| 22,158 |
|
Corporate debt securities | — |
| 2,056 |
| | — |
| | — |
| 2,056 |
| — |
| 1,634 |
| | — |
| | — |
| 1,634 |
|
Asset-backed securities: | | | | | | | | | | |
Collateralized loan obligations | — |
| 20,048 |
| | 61 |
| | — |
| 20,109 |
| — |
| 27,908 |
| | — |
| | — |
| 27,908 |
|
Other | — |
| 7,804 |
| | — |
| | — |
| 7,804 |
| — |
| 5,247 |
| | — |
| | — |
| 5,247 |
|
Total available-for-sale securities | 44,360 |
| 155,608 |
| | 62 |
| | — |
| 200,030 |
| 155,133 |
| 198,287 |
| | 1 |
| | — |
| 353,421 |
|
Loans | — |
| 2,847 |
| | 140 |
| | — |
| 2,987 |
| — |
| 5,759 |
| | 1 |
| | — |
| 5,760 |
|
Mortgage servicing rights | — |
| — |
| | 6,433 |
| | — |
| 6,433 |
| — |
| — |
| | 4,419 |
| | — |
| 4,419 |
|
Other assets(g)(e) | 10,684 |
| 20 |
| | 1,063 |
| | — |
| 11,767 |
| 7,467 |
| 37 |
| | 746 |
| | — |
| 8,250 |
|
Total assets measured at fair value on a recurring basis | $ | 232,560 |
| $ | 889,238 |
| | $ | 19,031 |
| | $ | (483,086 | ) | $ | 657,743 |
| $ | 391,227 |
| $ | 1,047,637 |
| | $ | 15,123 |
| | $ | (566,821 | ) | $ | 887,166 |
|
Deposits | $ | — |
| $ | 16,060 |
| | $ | 4,440 |
| | $ | — |
| $ | 20,500 |
| $ | — |
| $ | 25,719 |
| | $ | 3,636 |
| | $ | — |
| $ | 29,355 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | — |
| 1,059 |
| | — |
| | — |
| 1,059 |
| — |
| 933 |
| | — |
| | — |
| 933 |
|
Short-term borrowings | — |
| 5,914 |
| | 1,971 |
| | — |
| 7,885 |
| — |
| 4,496 |
| | 2,001 |
| | — |
| 6,497 |
|
Trading liabilities: | | | | | |
|
| | | | | |
|
|
Debt and equity instruments(d) | 84,958 |
| 24,403 |
| | 96 |
| | — |
| 109,457 |
| 66,515 |
| 23,970 |
| | 68 |
| | — |
| 90,553 |
|
Derivative payables: | | | | | |
|
| | | | | |
|
|
Interest rate | 310 |
| 232,614 |
| | 1,309 |
| | (227,142 | ) | 7,091 |
| 1,206 |
| 335,401 |
| | 2,106 |
| | (328,490 | ) | 10,223 |
|
Credit |
|
| 22,435 |
| | 925 |
| | (21,908 | ) | 1,452 |
| — |
| 16,100 |
| | 962 |
| | (14,903 | ) | 2,159 |
|
Foreign exchange | 880 |
| 175,664 |
| | 1,075 |
| | (165,217 | ) | 12,402 |
| 3,583 |
| 160,760 |
| | 1,399 |
| | (150,726 | ) | 15,016 |
|
Equity | — |
| 45,937 |
| | 5,418 |
| | (39,377 | ) | 11,978 |
| — |
| 45,109 |
| | 5,782 |
| | (40,288 | ) | 10,603 |
|
Commodity | — |
| 22,075 |
| | 764 |
| | (14,069 | ) | 8,770 |
| — |
| 25,495 |
| | 316 |
| | (16,022 | ) | 9,789 |
|
Total derivative payables(e) | 1,190 |
| 498,725 |
| | 9,491 |
| | (467,713 | ) | 41,693 |
| 4,789 |
| 582,865 |
| | 10,565 |
| | (550,429 | ) | 47,790 |
|
Total trading liabilities | 86,148 |
| 523,128 |
| | 9,587 |
| | (467,713 | ) | 151,150 |
| 71,304 |
| 606,835 |
| | 10,633 |
| | (550,429 | ) | 138,343 |
|
Accounts payable and other liabilities | 5,127 |
| 20 |
| | 12 |
| | — |
| 5,159 |
| 2,355 |
| 37 |
| | 19 |
| | — |
| 2,411 |
|
Beneficial interests issued by consolidated VIEs | — |
| 16 |
| | 1 |
| | — |
| 17 |
| — |
| 39 |
| | — |
| | — |
| 39 |
|
Long-term debt | — |
| 34,074 |
| | 20,038 |
| | — |
| 54,112 |
| — |
| 49,608 |
| | 22,349 |
| | — |
| 71,957 |
|
Total liabilities measured at fair value on a recurring basis | $ | 91,275 |
| $ | 580,271 |
| | $ | 36,049 |
| | $ | (467,713 | ) | $ | 239,882 |
| $ | 73,659 |
| $ | 687,667 |
| | $ | 38,638 |
| | $ | (550,429 | ) | $ | 249,535 |
|
| |
| Fair value hierarchy |
| Derivative netting adjustments | |
| Fair value hierarchy |
| Derivative netting adjustments(f) | |
|
| | | | | | | | | | |
December 31, 2017 (in millions) | Level 1 |
| Level 2 |
|
| Level 3 |
|
| | Total fair value |
| |
December 31, 2018 (in millions) | | Level 1 | Level 2 |
| Level 3 |
| Derivative netting adjustments(f) | | Total fair value |
|
Federal funds sold and securities purchased under resale agreements | $ | — |
| $ | 14,732 |
|
| $ | — |
|
| $ | — |
| | $ | 14,732 |
| $ | — |
| $ | 13,235 |
|
| $ | — |
|
| | $ | 13,235 |
|
Securities borrowed | — |
| 3,049 |
|
| — |
|
| — |
| | 3,049 |
| — |
| 5,105 |
|
| — |
|
| | 5,105 |
|
Trading assets: | |
| |
| | | | |
| |
| | | |
Debt instruments: | |
| |
| | | | |
| |
| | | |
Mortgage-backed securities: | |
| |
| | | | |
| |
| | | |
U.S. government agencies(a) | — |
| 41,515 |
|
| 307 |
|
| — |
| | 41,822 |
| |
U.S. GSEs and government agencies(a) | | — |
| 76,249 |
|
| 549 |
|
| — |
| | 76,798 |
|
Residential – nonagency | — |
| 1,835 |
|
| 60 |
|
| — |
| | 1,895 |
| — |
| 1,798 |
|
| 64 |
|
| — |
| | 1,862 |
|
Commercial – nonagency | — |
| 1,645 |
|
| 11 |
|
| — |
| | 1,656 |
| — |
| 1,501 |
|
| 11 |
|
| — |
| | 1,512 |
|
Total mortgage-backed securities | — |
| 44,995 |
|
| 378 |
|
| — |
| | 45,373 |
| — |
| 79,548 |
|
| 624 |
|
| — |
| | 80,172 |
|
U.S. Treasury and government agencies(a) | 30,758 |
| 6,475 |
|
| 1 |
|
| — |
| | 37,234 |
| |
U.S. Treasury, GSEs and government agencies(a) | | 51,477 |
| 7,702 |
|
| — |
|
| — |
| | 59,179 |
|
Obligations of U.S. states and municipalities | — |
| 9,067 |
|
| 744 |
|
| — |
| | 9,811 |
| — |
| 7,121 |
|
| 689 |
|
| — |
| | 7,810 |
|
Certificates of deposit, bankers’ acceptances and commercial paper | — |
| 226 |
|
| — |
|
| — |
| | 226 |
| — |
| 1,214 |
|
| — |
|
| — |
| | 1,214 |
|
Non-U.S. government debt securities | 28,887 |
| 28,831 |
|
| 78 |
|
| — |
| | 57,796 |
| 27,878 |
| 27,056 |
|
| 155 |
|
| — |
| | 55,089 |
|
Corporate debt securities | — |
| 24,146 |
|
| 312 |
|
| — |
| | 24,458 |
| — |
| 18,655 |
|
| 334 |
|
| — |
| | 18,989 |
|
Loans(b) | — |
| 35,242 |
|
| 2,719 |
|
| — |
| | 37,961 |
| — |
| 40,047 |
|
| 1,706 |
|
| — |
| | 41,753 |
|
Asset-backed securities | — |
| 3,284 |
|
| 153 |
|
| — |
| | 3,437 |
| — |
| 2,756 |
|
| 127 |
|
| — |
| | 2,883 |
|
Total debt instruments | 59,645 |
| 152,266 |
|
| 4,385 |
|
| — |
| | 216,296 |
| 79,355 |
| 184,099 |
|
| 3,635 |
|
| — |
| | 267,089 |
|
Equity securities | 87,346 |
| 197 |
|
| 295 |
|
| — |
| | 87,838 |
| 71,119 |
| 482 |
|
| 232 |
|
| — |
| | 71,833 |
|
Physical commodities(c) | 4,924 |
| 1,322 |
|
| — |
|
| — |
| | 6,246 |
| 5,182 |
| 1,855 |
|
| — |
|
| — |
| | 7,037 |
|
Other | — |
| 14,197 |
|
| 690 |
|
| — |
| | 14,887 |
| — |
| 13,192 |
|
| 301 |
|
| — |
| | 13,493 |
|
Total debt and equity instruments(d) | 151,915 |
| 167,982 |
|
| 5,370 |
|
| — |
| | 325,267 |
| 155,656 |
| 199,628 |
|
| 4,168 |
|
| — |
| | 359,452 |
|
Derivative receivables: | |
|
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
| |
|
|
Interest rate | 181 |
| 314,107 |
|
| 1,704 |
|
| (291,319 | ) | | 24,673 |
| 682 |
| 266,380 |
|
| 1,642 |
|
| (245,490 | ) | | 23,214 |
|
Credit | — |
| 21,995 |
|
| 1,209 |
|
| (22,335 | ) | | 869 |
| — |
| 19,235 |
|
| 860 |
|
| (19,483 | ) | | 612 |
|
Foreign exchange | 841 |
| 158,834 |
|
| 557 |
|
| (144,081 | ) | | 16,151 |
| 771 |
| 166,238 |
|
| 676 |
|
| (154,235 | ) | | 13,450 |
|
Equity | — |
| 37,722 |
|
| 2,318 |
|
| (32,158 | ) | | 7,882 |
| — |
| 46,777 |
|
| 2,508 |
|
| (39,339 | ) | | 9,946 |
|
Commodity | — |
| 19,875 |
|
| 210 |
|
| (13,137 | ) | | 6,948 |
| — |
| 20,339 |
|
| 131 |
|
| (13,479 | ) | | 6,991 |
|
Total derivative receivables(e) | 1,022 |
| 552,533 |
|
| 5,998 |
|
| (503,030 | ) | | 56,523 |
| 1,453 |
| 518,969 |
|
| 5,817 |
|
| (472,026 | ) | | 54,213 |
|
Total trading assets(f)(e) | 152,937 |
| 720,515 |
|
| 11,368 |
|
| (503,030 | ) | | 381,790 |
| 157,109 |
| 718,597 |
|
| 9,985 |
|
| (472,026 | ) | | 413,665 |
|
Available-for-sale securities: | |
|
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
| |
|
|
Mortgage-backed securities: | |
|
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
| |
|
|
U.S. government agencies(a) | — |
| 70,280 |
|
| — |
|
| — |
| | 70,280 |
| |
U.S. GSEs and government agencies(a) | | — |
| 68,646 |
|
| — |
|
| — |
| | 68,646 |
|
Residential – nonagency | — |
| 11,366 |
|
| 1 |
|
| — |
| | 11,367 |
| — |
| 8,519 |
|
| 1 |
|
| — |
| | 8,520 |
|
Commercial – nonagency | — |
| 5,025 |
|
| — |
|
| — |
| | 5,025 |
| — |
| 6,654 |
|
| — |
|
| — |
| | 6,654 |
|
Total mortgage-backed securities | — |
| 86,671 |
|
| 1 |
|
| — |
| | 86,672 |
| — |
| 83,819 |
|
| 1 |
|
| — |
| | 83,820 |
|
U.S. Treasury and government agencies | 22,745 |
| — |
|
| — |
|
| — |
| | 22,745 |
| 56,059 |
| — |
|
| — |
|
| — |
| | 56,059 |
|
Obligations of U.S. states and municipalities | — |
| 32,338 |
|
| — |
|
| — |
| | 32,338 |
| — |
| 37,723 |
|
| — |
|
| — |
| | 37,723 |
|
Certificates of deposit | — |
| 59 |
|
| — |
|
| — |
| | 59 |
| — |
| 75 |
|
| — |
|
| — |
| | 75 |
|
Non-U.S. government debt securities | 18,140 |
| 9,154 |
|
| — |
|
| — |
| | 27,294 |
| 15,313 |
| 8,789 |
|
| — |
|
| — |
| | 24,102 |
|
Corporate debt securities | — |
| 2,757 |
|
| — |
|
| — |
| | 2,757 |
| — |
| 1,918 |
|
| — |
|
| — |
| | 1,918 |
|
Asset-backed securities: | |
|
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
| |
|
|
Collateralized loan obligations | — |
| 20,720 |
|
| 276 |
|
| — |
| | 20,996 |
| — |
| 19,437 |
|
| — |
|
| — |
| | 19,437 |
|
Other | — |
| 8,817 |
|
| — |
|
| — |
| | 8,817 |
| — |
| 7,260 |
|
| — |
|
| — |
| | 7,260 |
|
Equity securities(g) | 547 |
| — |
|
| — |
|
| — |
| | 547 |
| |
Total available-for-sale securities | 41,432 |
| 160,516 |
|
| 277 |
|
| — |
| | 202,225 |
| 71,372 |
| 159,021 |
|
| 1 |
|
| — |
| | 230,394 |
|
Loans | — |
| 2,232 |
|
| 276 |
|
| — |
| | 2,508 |
| — |
| 3,029 |
|
| 122 |
|
| — |
| | 3,151 |
|
Mortgage servicing rights | — |
| — |
|
| 6,030 |
|
| — |
| | 6,030 |
| — |
| — |
|
| 6,130 |
|
| — |
| | 6,130 |
|
Other assets(f)(g) | 13,795 |
| 343 |
|
| 1,265 |
|
| — |
| | 15,403 |
| |
Other assets(e) | | 7,810 |
| 195 |
|
| 927 |
|
| — |
| | 8,932 |
|
Total assets measured at fair value on a recurring basis | $ | 208,164 |
| $ | 901,387 |
|
| $ | 19,216 |
|
| $ | (503,030 | ) | | $ | 625,737 |
| $ | 236,291 |
| $ | 899,182 |
|
| $ | 17,165 |
|
| $ | (472,026 | ) | | $ | 680,612 |
|
Deposits | $ | — |
| $ | 17,179 |
|
| $ | 4,142 |
|
| $ | — |
| | $ | 21,321 |
| $ | — |
| $ | 19,048 |
|
| $ | 4,169 |
|
| $ | — |
| | $ | 23,217 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | — |
| 697 |
|
| — |
|
| — |
| | 697 |
| — |
| 935 |
|
| — |
|
| — |
| | 935 |
|
Short-term borrowings | — |
| 7,526 |
|
| 1,665 |
|
| — |
| | 9,191 |
| — |
| 5,607 |
|
| 1,523 |
|
| — |
| | 7,130 |
|
Trading liabilities: | |
| |
|
|
| |
|
| |
| |
|
|
| |
|
|
Debt and equity instruments(d) | 64,664 |
| 21,183 |
|
| 39 |
|
| — |
| | 85,886 |
| 80,199 |
| 22,755 |
|
| 50 |
|
| — |
| | 103,004 |
|
Derivative payables: | |
|
|
|
| | | | |
|
|
|
| | | |
Interest rate | 170 |
| 282,825 |
|
| 1,440 |
|
| (277,306 | ) | | 7,129 |
| 1,526 |
| 239,576 |
|
| 1,680 |
|
| (234,998 | ) | | 7,784 |
|
Credit | — |
| 22,009 |
|
| 1,244 |
|
| (21,954 | ) | | 1,299 |
| — |
| 19,309 |
|
| 967 |
|
| (18,609 | ) | | 1,667 |
|
Foreign exchange | 794 |
| 154,075 |
|
| 953 |
|
| (143,349 | ) | | 12,473 |
| 695 |
| 163,549 |
|
| 973 |
|
| (152,432 | ) | | 12,785 |
|
Equity | — |
| 39,668 |
|
| 5,727 |
|
| (36,203 | ) | | 9,192 |
| — |
| 46,462 |
|
| 4,733 |
|
| (41,034 | ) | | 10,161 |
|
Commodity | — |
| 21,017 |
|
| 884 |
|
| (14,217 | ) | | 7,684 |
| — |
| 21,158 |
|
| 1,260 |
|
| (13,046 | ) | | 9,372 |
|
Total derivative payables(e) | 964 |
| 519,594 |
|
| 10,248 |
|
| (493,029 | ) | | 37,777 |
| |
Total derivative payables | | 2,221 |
| 490,054 |
|
| 9,613 |
|
| (460,119 | ) | | 41,769 |
|
Total trading liabilities | 65,628 |
| 540,777 |
|
| 10,287 |
|
| (493,029 | ) | | 123,663 |
| 82,420 |
| 512,809 |
|
| 9,663 |
|
| (460,119 | ) | | 144,773 |
|
Accounts payable and other liabilities | 9,074 |
| 121 |
|
| 13 |
|
| — |
| | 9,208 |
| 3,063 |
| 196 |
|
| 10 |
|
| — |
| | 3,269 |
|
Beneficial interests issued by consolidated VIEs | — |
| 6 |
|
| 39 |
|
| — |
| | 45 |
| — |
| 27 |
|
| 1 |
|
| — |
| | 28 |
|
Long-term debt | — |
| 31,394 |
|
| 16,125 |
|
| — |
| | 47,519 |
| — |
| 35,468 |
|
| 19,418 |
|
| — |
| | 54,886 |
|
Total liabilities measured at fair value on a recurring basis | $ | 74,702 |
| $ | 597,700 |
|
| $ | 32,271 |
|
| $ | (493,029 | ) | | $ | 211,644 |
| $ | 85,483 |
| $ | 574,090 |
|
| $ | 34,784 |
|
| $ | (460,119 | ) | | $ | 234,238 |
|
| |
(a) | At September 30, 2018,2019, and December 31, 2017,2018, included total U.S. government-sponsored enterpriseGSE obligations of $77.3$133.6 billion and $78.0$92.3 billion, respectively, which were predominantly mortgage-related. |
| |
(b) | At September 30, 2018,2019, and December 31, 2017,2018, included within trading loans were $13.8$16.1 billion and $11.4$13.2 billion, respectively, of residential first-lien mortgages, and $2.6$4.2 billion and $4.2$2.3 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 $9.2$10.3 billion and $5.7$7.6 billion, respectively, and reverse mortgages of zero and $836 million respectively. |
| |
(c) | 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 |
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. ForRefer to Note 4 for a further discussion of the Firm’s hedge accounting relationships, refer to Note 4.relationships. To provide consistent fair value disclosure information, all physical commodities inventories have been included in each period presented.
| |
(d) | Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but not yet purchased (short positions). |
| |
(e) | 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. For purposes of the tables above, the Firm does not reduce derivative receivables and derivative payables balances for this netting adjustment, either within or across the levels of the fair value hierarchy, as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset or liability. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral. |
| |
(f) | 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 September 30, 2018,2019, and December 31, 2017,2018, the fair values of these investments, which include certain hedge funds, private equity funds, real estate and other funds, were $767$714 million and $779$747 million, respectively. Included in these balances at September 30, 2018,2019, and December 31, 2017,2018, were trading assets of $55$48 million and $54$49 million, respectively, and other assets of $712$666 million and $725$698 million, respectively. |
| |
(g)(f) | Effective January 1, 2018,As permitted under U.S. GAAP, the Firm adoptedhas elected to net derivative receivables and derivative payables and the recognitionrelated cash collateral received and measurement guidance. Equity securities thatpaid when a legally enforceable master netting agreement exists. The level 3 balances would be reduced if netting were previously reported as AFS securities were reclassified to other assets upon adoption. applied, including the netting benefit associated with cash collateral. |
Transfers between levels for instruments carried at fair
value on a recurring basis
For both the three months ended September 30, 2018 and 2017 and the nine months ended September 30, 2017 there were no individually significant transfers.
For the nine months ended September 30, 2018, the only significant transfers were between levels 2 and 3.
Significant transfers from level 3 to level 2 included the following:
$1.2 billion of total debt and equity instruments, the majority of which were trading loans, driven by an increase in observability.
$1.0 billion of gross equity derivative receivables and $1.2 billion of gross equity derivative payables as a result of an increase in observability and a decrease in the significance of unobservable inputs.
Significant transfers from level 2 to level 3 included the following:
$1.0 billion of gross equity derivative payables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
All transfers are based on changes in the observability of the valuation inputs and are assumed to occur at the beginning of the quarterly reporting period in which they occur.
Level 3 valuations
ForRefer to Note 2 of JPMorgan Chase’s 2018 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, refer to Note 2 of JPMorgan Chase’s 2017 Annual Report.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, for certain instruments, the weighted 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 and the weighted average value do not reflect the degree of input uncertainty or an assessment of the reasonableness of the Firm’s estimates and assumptions. Rather, they reflect the characteristics of the various instruments held by the Firm and the relative distribution of instruments within the range of characteristics. For example, two option contracts may have
similar levels of market risk exposure and valuation uncertainty, but may have significantly different implied volatility levels because the option contracts have different underlyings, tenors, or strike prices. The input range and weighted average values will therefore vary from period-to-period and parameter-to-parameter based on the characteristics of the instruments held by the Firm at each balance sheet date.
For the Firm’s derivatives and structured notes positions classified within level 3 at September 30, 2018,2019, interest rate correlation inputs used in estimating fair value were concentrated towards the upper end of the range; equity correlation, equity-FX, and equity-IR correlation inputs were
concentrated in the middle of the range; commodity correlation inputs were concentrated in the middle of the range; credit correlation inputs were concentrated towards the lower end of the range; and the interest rate-foreign exchange (“IR-FX”) correlation inputs were distributed across the range. In addition, the interest rate spread volatility inputs used in estimating fair value were distributed across the range; equity volatilities and commodity volatilities were concentrated towards the lower end of the range; and forward commodity prices used in estimating the fair value of commodity derivatives were concentrated towards the lowerupper end of the range. Prepayment speed inputs used in estimating the fair value of interest rate derivatives were concentrated towards the lower end of the range. Recovery rate yield and prepayment speed inputs used in estimating the fair value of credit derivatives were distributed across the range; credit spreads and conditional default rates were concentrated towards the lower end of the range; loss severity and price inputs were concentrated towards the upper end of the range and price inputs were concentrated towards the lower end of the range.
| | Level 3 inputs(a) | Level 3 inputs(a) | | | | | | | Level 3 inputs(a) | | | | | | |
September 30, 2018 | | | | | | | |
September 30, 2019 | | September 30, 2019 | | | | | | |
Product/Instrument | Fair value (in millions) | | Principal valuation technique | Unobservable inputs(g) | Range of input values | Weighted average | | Fair value (in millions) | | Principal valuation technique | Unobservable inputs(g) | Range of input values | Weighted average | |
Residential mortgage-backed securities and loans(b) | $ | 823 |
| | Discounted cash flows | Yield | 0 | % | – | 28 | % | | 6 | % | $ | 1,132 |
| | Discounted cash flows | Yield | 0 | % | – | 19 | % | | 5 | % |
| | Prepayment speed | 0 | % | – | 39 | % | | 9 | % | | | Prepayment speed | 0 | % | – | 22 | % | | 14 | % |
| | | Conditional default rate | 0 | % | – | 6 | % | | 1 | % | | | Conditional default rate | 0 | % | – | 4 | % | | 1 | % |
| | | Loss severity | 0 | % | – | 100 | % | | 5 | % | | | Loss severity | 0 | % | – | 100 | % | | 2 | % |
Commercial mortgage-backed securities and loans(c) | 439 |
| | Market comparables | Price | $ | 4 |
| – | $ | 101 |
| | $ | 93 |
| 147 |
| | Market comparables | Price | $ | 0 |
| – | $ | 102 |
| | $ | 80 |
|
Obligations of U.S. states and municipalities | 699 |
| | Market comparables | Price | $ | 60 |
| – | $ | 100 |
| | $ | 97 |
| 627 |
| | Market comparables | Price | $ | 68 |
| – | $ | 100 |
| | $ | 97 |
|
Corporate debt securities | 395 |
| | Market comparables | Price | $ | 3 |
| – | $ | 110 |
| | $ | 80 |
| 484 |
| | Market comparables | Price | $ | 4 |
| – | $ | 116 |
| | $ | 79 |
|
Loans(d) | 1,031 |
| | Market comparables | Price | $ | 3 |
| – | $ | 102 |
| | $ | 79 |
| 194 |
| | Discounted cash flows | Yield | 5 | % | – | 22 | % | | 7 | % |
| | 1,115 |
| | Market comparables | Price | $ | 12 |
| – | $ | 101 |
| | $ | 78 |
|
Asset-backed securities | 61 |
| | Discounted cash flows | Credit spread | 219 | bps | | 219 | bps | 38 |
| | Market comparables | Price | $ | 1 |
| – | $ | 100 |
| | $ | 53 |
|
| | | Prepayment speed | 20 | % | | 20 | % | |
| | | Conditional default rate | 2 | % | | 2 | % | |
| | | Loss severity | 30 | % | | 30 | % | |
| 76 |
| | Market comparables | Price | $ | 0 |
| – | $ | 100 |
| | $ | 51 |
| |
Net interest rate derivatives | 528 |
| | Option pricing | Interest rate spread volatility | 16 | bps | – | 38 | bps | | (388 | ) | | Option pricing | Interest rate spread volatility | 20 | bps | – | 30 | bps | |
| | | Interest rate correlation | (45 | )% | – | 97 | % | | | | | Interest rate correlation | (28 | )% | – | 96 | % | | |
| | | IR-FX correlation | 55 | % | – | 60 | % | | | | | IR-FX correlation | 53 | % | – | 60 | % | | |
| 163 |
| | Discounted cash flows | Prepayment speed | 0 | % | – | 30 | % | | | 69 |
| | Discounted cash flows | Prepayment speed | 4 | % | – | 30 | % | | |
Net credit derivatives | 26 |
| | Discounted cash flows | Credit correlation | 35 | % | – | 60 | % | | | (353 | ) | | Discounted cash flows | Credit correlation | 30 | % | – | 60 | % | | |
| | | Credit spread | 6 | bps | – | 1,543 | bps | | | |
| | | Recovery rate | 20 | % | – | 70 | % | | | |
| | | Yield | 3 | % | – | 52 | % | | | | | Credit spread | 4 | bps | – | 1,315 | bps | | |
| | | Prepayment speed | 5 | % | – | 17 | % | | | | | Recovery rate | 15 | % | – | 70 | % | | |
| | | Conditional default rate | 0 | % | – | 100 | % | | | | | Conditional default rate | 2 | % | – | 93 | % | | |
| | | Loss severity | 0 | % | – | 100 | % | | | | | Loss severity | 100% | | |
| 1 |
| | Market comparables | Price | $ | 10 |
| – | $ | 98 |
| | | 36 |
| | Market comparables | Price | $ | 1 |
| – | $ | 115 |
| | |
Net foreign exchange derivatives | (121 | ) | | Option pricing | IR-FX correlation | (45 | )% | – | 60 | % | | | (679 | ) | | Option pricing | IR-FX correlation | (58 | )% | – | 60 | % | | |
| (181 | ) | | Discounted cash flows | Prepayment speed | 8 | % | – | 9 | % | | | (162 | ) | | Discounted cash flows | Prepayment speed | 9% | | |
Net equity derivatives | (2,277 | ) | | Option pricing | Equity volatility | 10 | % | – | 60 | % | | | (3,468 | ) | | Option pricing | Equity volatility | 11 | % | – | 82 | % | | |
| | | Equity correlation | 10 | % | – | 95 | % | | | | | Equity correlation | 10 | % | – | 98 | % | | |
| | | Equity-FX correlation | (75 | )% | – | 60 | % | | | | | Equity-FX correlation | (81 | )% | – | 59 | % | | |
| | | Equity-IR correlation | 20 | % | – | 60 | % | | | | | Equity-IR correlation | 25 | % | – | 60 | % | | |
Net commodity derivatives | (525 | ) | | Option pricing | Forward commodity price | $ | 61 |
| – | $ 83 per barrel | (47 | ) | | Option pricing | Forward commodity price | $ | 30 |
| – | $ 61 per barrel |
| | | Commodity volatility | 5 | % | – | 48 | % | | | | | Commodity volatility | 5 | % | – | 111 | % | | |
| | | Commodity correlation | (52 | )% | – | 95 | % | | | | | Commodity correlation | (48 | )% | – | 95 | % | | |
MSRs | 6,433 |
| | Discounted cash flows | Refer to Note 14 | | | 4,419 |
| | Discounted cash flows | Refer to Note 14 | | |
Other assets | 322 |
| | Discounted cash flows | Credit spread | 70 | bps | | 70 | bps | 303 |
| | Discounted cash flows | Credit spread | 45 | bps | | 45 | bps |
| | | Yield | 8 | % | – | 10 | % | | 8 | % | | | Yield | 12% | | 12 | % |
| 1,154 |
| | Market comparables | Price | $ | 34 |
| – | $ | 106 |
| | $ | 45 |
| 775 |
| | Market comparables | Price | $ | 18 |
| – | $ | 115 |
| | $ | 36 |
|
| | | EBITDA multiple
| 3.0x |
| – | 9.2x |
| | 8.4x |
| |
Long-term debt, short-term borrowings, and deposits(e) | 26,449 |
| | Option pricing | Interest rate spread volatility | 16 | bps | – | 38 | bps | | 27,986 |
| | Option pricing | Interest rate spread volatility | 20 | bps | – | 30 | bps | |
| | Interest rate correlation | (45 | )% | – | 97 | % | | | | | Interest rate correlation | (28 | )% | – | 96 | % | | |
| | IR-FX correlation | (45 | )% | – | 60 | % | | | | | IR-FX correlation | (58 | )% | – | 60 | % | | |
| | Equity correlation | 10 | % | – | 95 | % | | | | | Equity correlation | 10 | % | – | 98 | % | | |
| | Equity-FX correlation | (75 | )% | – | 60 | % | | | | | Equity-FX correlation | (81 | )% | – | 59 | % | | |
| | Equity-IR correlation | 20 | % | – | 60 | % | | | | | Equity-IR correlation | 25 | % | – | 60 | % | | |
Other level 3 assets and liabilities, net(f) | 384 |
| | | | | | | 229 |
| | | | | | |
| |
(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) | IncludesComprises U.S. GSEs and government agency securities of $502$811 million, nonagency securities of $78$24 million and trading loans of $243$297 million. |
| |
(c) | Includes U.S. government agency securities of $27 million,Comprises nonagency securities of $13$5 million, trading loans of $259$141 million and non-trading loans of $140$1 million. |
| |
(d) | Comprises trading loans. |
| |
(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 level 3 assets and liabilities that 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. |
Changes in and ranges of unobservable inputs
ForRefer to Note 2 of JPMorgan Chase’s 2018 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 refer to Note 2 of JPMorgan Chase’s 2017 Annual Report.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 nine months ended September 30, 20182019 and 2017. 2018. When a determination is made to classify a financial instrument within level 3, the determination is based on the significance of the unobservable parametersinputs to the overall
the overall fair value measurement. However, level 3 financial instruments typically include, in addition to the unobservable or level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources); accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology. Also, the Firm risk-manages the observable components of level 3 financial instruments using securities and derivative positions that are classified within level 1 or 2 of the fair value hierarchy; as these level 1 and level 2 risk management instruments are not included below, the gains or losses in the following tables do not reflect the effect of the Firm’s risk management activities related to such level 3 instruments.
| | | Fair value measurements using significant unobservable inputs | | | Fair value measurements using significant unobservable inputs | | |
Three months ended September 30, 2018 (in millions) | Fair value at July 1, 2018 | Total realized/unrealized gains/(losses) | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2018 | |
Purchases(f) | Sales | | Settlements(g) | |
Three months ended September 30, 2019 (in millions) | | Fair value at July 1, 2019 | Total realized/unrealized gains/(losses) | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2019 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2019 |
| Purchases(f) | Sales | | Settlements(g) |
Assets:(a) | | | | | | | | | | | | | | | | | | | | |
Trading assets: | | | | | | | | | | | | | | | | | | | | |
Debt instruments: | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies | $ | 478 |
| | $ | 2 |
| | $ | 14 |
| $ | (28 | ) | | $ | (17 | ) | $ | 83 |
| $ | (3 | ) | | $ | 529 |
| | $ | — |
| | |
U.S. GSEs and government agencies | | $ | 617 |
| | $ | (71 | ) | | $ | 424 |
| $ | (104 | ) | | $ | (45 | ) | $ | — |
| $ | (10 | ) | | $ | 811 |
| | $ | (70 | ) | |
Residential – nonagency | 87 |
| | 1 |
| | — |
| (6 | ) | | (3 | ) | 18 |
| (20 | ) | | 77 |
| | 1 |
| | 42 |
| | — |
| | 2 |
| (3 | ) | | — |
| — |
| (17 | ) | | 24 |
| | (1 | ) | |
Commercial – nonagency | 18 |
| | (1 | ) | | — |
| — |
| | — |
| 9 |
| (13 | ) | | 13 |
| | (1 | ) | | 9 |
| | — |
| | 3 |
| (5 | ) | | — |
| — |
| (2 | ) | | 5 |
| | — |
| |
Total mortgage-backed securities | 583 |
| | 2 |
| | 14 |
| (34 | ) | | (20 | ) | 110 |
| (36 | ) | | 619 |
| | — |
| | 668 |
| | (71 | ) | | 429 |
| (112 | ) | | (45 | ) | — |
| (29 | ) | | 840 |
| | (71 | ) | |
U.S. Treasury and government agencies
| — |
| | — |
| | — |
| — |
| | — |
| — |
| — |
| | — |
| | — |
| | |
U.S. Treasury, GSEs and government agencies
| | — |
| | — |
| | — |
| — |
| | — |
| — |
| — |
| | — |
| | — |
| |
Obligations of U.S. states and municipalities | 736 |
| | 8 |
| | 26 |
| (70 | ) | | (1 | ) | — |
| — |
| | 699 |
| | 7 |
| | 680 |
| | (2 | ) | | 27 |
| (77 | ) | | (1 | ) | — |
| — |
| | 627 |
| | (2 | ) | |
Non-U.S. government debt securities | 183 |
| | (9 | ) | | 44 |
| (29 | ) | | (2 | ) | 1 |
| (24 | ) | | 164 |
| | (9 | ) | | 190 |
| | (1 | ) | | 40 |
| (74 | ) | | — |
| 3 |
| (12 | ) | | 146 |
| | (1 | ) | |
Corporate debt securities | 274 |
| | (2 | ) | | 156 |
| (87 | ) | | (4 | ) | 82 |
| (24 | ) | | 395 |
| | (3 | ) | | 562 |
| | 45 |
| | 56 |
| (167 | ) | | — |
| 17 |
| (29 | ) | | 484 |
| | 3 |
| |
Loans | 1,986 |
| | 17 |
| | 188 |
| (146 | ) | | (199 | ) | 48 |
| (361 | ) | | 1,533 |
| | 3 |
| | 1,778 |
| | (44 | ) | | 152 |
| (82 | ) | | (132 | ) | 211 |
| (137 | ) | | 1,746 |
| | (46 | ) | |
Asset-backed securities | 87 |
| | 6 |
| | 5 |
| (7 | ) | | (13 | ) | 5 |
| (7 | ) | | 76 |
| | 3 |
| | 33 |
| | — |
| | 11 |
| (2 | ) | | (2 | ) | 3 |
| (5 | ) | | 38 |
| | (2 | ) | |
Total debt instruments | 3,849 |
| | 22 |
| | 433 |
| (373 | ) | | (239 | ) | 246 |
| (452 | ) | | 3,486 |
| | 1 |
| | 3,911 |
| | (73 | ) | | 715 |
| (514 | ) | | (180 | ) | 234 |
| (212 | ) | | 3,881 |
| | (119 | ) | |
Equity securities | 288 |
| | 20 |
| | 6 |
| (48 | ) | | — |
| 82 |
| (19 | ) | | 329 |
| | (18 | ) | | 147 |
| | (14 | ) | | 10 |
| (10 | ) | | — |
| 46 |
| (9 | ) | | 170 |
| | (16 | ) | |
Other | 406 |
| | 30 |
| | 13 |
| — |
| | (37 | ) | 2 |
| (1 | ) | | 413 |
| | 10 |
| | 311 |
| | 18 |
| | 35 |
| (15 | ) | | (15 | ) | — |
| (2 | ) | | 332 |
| | 23 |
| |
Total trading assets – debt and equity instruments | 4,543 |
| | 72 |
| (c) | 452 |
| (421 | ) | | (276 | ) | 330 |
| (472 | ) | | 4,228 |
| | (7 | ) | (c) | 4,369 |
| | (69 | ) | (c) | 760 |
| (539 | ) | | (195 | ) | 280 |
| (223 | ) | | 4,383 |
| | (112 | ) | (c) |
Net derivative receivables:(a)(b) | | | | | | | | | | | | | | | | | | | | |
Interest rate | 489 |
| | 236 |
| | 28 |
| (22 | ) | | (101 | ) | 68 |
| (7 | ) | | 691 |
| | 216 |
| | (544 | ) | | 88 |
| | 39 |
| (15 | ) | | 53 |
| 10 |
| 50 |
| | (319 | ) | | (15 | ) | |
Credit | (24 | ) | | (19 | ) | | 1 |
| — |
| | 47 |
| 6 |
| 16 |
| | 27 |
| | (15 | ) | | (232 | ) | | (65 | ) | | 3 |
| (3 | ) | | (23 | ) | 3 |
| — |
| | (317 | ) | | (68 | ) | |
Foreign exchange | (245 | ) | | (56 | ) | | 29 |
| (7 | ) | | (49 | ) | (2 | ) | 28 |
| | (302 | ) | | (54 | ) | | (193 | ) | | (653 | ) | | 2 |
| (1 | ) | | (1 | ) | 6 |
| (1 | ) | | (841 | ) | | (657 | ) | |
Equity | (2,578 | ) | | (94 | ) | | 643 |
| (635 | ) | | 622 |
| (251 | ) | 16 |
| | (2,277 | ) | | (121 | ) | | (2,560 | ) | | (382 | ) | | 174 |
| (118 | ) | | (377 | ) | (203 | ) | (2 | ) | | (3,468 | ) | | (362 | ) | |
Commodity | (752 | ) | | 318 |
| | — |
| — |
| | (113 | ) | 15 |
| 7 |
| | (525 | ) | | 138 |
| | (908 | ) | | 8 |
| | 22 |
| (69 | ) | | 6 |
| 18 |
| 876 |
| | (47 | ) | | 40 |
| |
Total net derivative receivables | (3,110 | ) | | 385 |
| (c) | 701 |
| (664 | ) | | 406 |
| (164 | ) | 60 |
| | (2,386 | ) | | 164 |
| (c) | (4,437 | ) | | (1,004 | ) | (c) | 240 |
| (206 | ) | | (342 | ) | (166 | ) | 923 |
| | (4,992 | ) | | (1,062 | ) | (c) |
Available-for-sale securities: | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | — |
| | — |
| | 1 |
| — |
| | — |
| — |
| — |
| | 1 |
| | — |
| |
Asset-backed securities | 147 |
| | — |
| | — |
| — |
| | (86 | ) | — |
| — |
| | 61 |
| | — |
| | — |
| | — |
| | — |
| — |
| | — |
| — |
| — |
| | — |
| | — |
| |
Other | 1 |
| | — |
| | — |
| — |
| | — |
| — |
| — |
| | 1 |
| | — |
| | |
Total available-for-sale securities | 148 |
| | — |
|
| — |
| — |
| | (86 | ) | — |
| — |
| | 62 |
| | — |
|
| — |
| | — |
|
| 1 |
| — |
| | — |
| — |
| — |
| | 1 |
| | — |
|
|
Loans | 159 |
| | (1 | ) | (c) | 1 |
| — |
| | (19 | ) | — |
| — |
| | 140 |
| | (1 | ) | (c) | 5 |
| | — |
|
| — |
| — |
| | (4 | ) | — |
| — |
| | 1 |
| | — |
|
|
Mortgage servicing rights | 6,241 |
| | 98 |
| (e) | 291 |
| (2 | ) | | (195 | ) | — |
| — |
| | 6,433 |
| | 98 |
| (e) | 5,093 |
| | (447 | ) | (d) | 388 |
| (359 | ) | | (256 | ) | — |
| — |
| | 4,419 |
| | (447 | ) | (d) |
Other assets | 1,225 |
| | (160 | ) | (c) | 2 |
| — |
| | (7 | ) | 3 |
| — |
| | 1,063 |
| | (160 | ) | (c) | 861 |
| | (56 | ) | (c) | 19 |
| (72 | ) | | (6 | ) | — |
| — |
| | 746 |
| | (56 | ) | (c) |
| | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | | Fair value measurements using significant unobservable inputs | | |
Three months ended September 30, 2018 (in millions) | Fair value at July 1, 2018 | Total realized/unrealized (gains)/losses | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized (gains)/ losses related to financial instruments held at September 30, 2018 | |
Purchases | Sales | Issuances | Settlements(g) | |
Three months ended September 30, 2019 (in millions) | | Fair value at July 1, 2019 | Total realized/unrealized (gains)/losses | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2019 | Change in unrealized (gains)/ losses related to financial instruments held at September 30, 2019 |
| Purchases | Sales | Issuances | Settlements(g) |
Liabilities:(b)(a) | | | | | | | | | | | | | | | | | | | | |
Deposits | $ | 4,305 |
| | $ | (84 | ) | (c)(i) | $ | — |
| $ | — |
| $ | 517 |
| $ | (170 | ) | $ | 1 |
| $ | (129 | ) | | $ | 4,440 |
| | $ | (82 | ) | (c)(i) | $ | 4,066 |
| | $ | — |
|
| $ | — |
| $ | — |
| $ | 153 |
| $ | (188 | ) | $ | 12 |
| $ | (407 | ) | | $ | 3,636 |
| | $ | 16 |
| (c)(e) |
Short-term borrowings | 2,209 |
| | (47 | ) | (c)(i) | — |
| — |
| 713 |
| (885 | ) | 6 |
| (25 | ) | | 1,971 |
| | (31 | ) | (c)(i) | 2,052 |
| | 24 |
| (c)(e) | — |
| — |
| 949 |
| (1,040 | ) | 17 |
| (1 | ) | | 2,001 |
| | 28 |
| (c)(e) |
Trading liabilities – debt and equity instruments | 43 |
| | 36 |
| (c) | (6 | ) | 19 |
| — |
| (2 | ) | 7 |
| (1 | ) | | 96 |
| | 36 |
| (c) | 45 |
| | — |
|
| (5 | ) | 25 |
| — |
| 1 |
| 2 |
| — |
| | 68 |
| | — |
|
|
Accounts payable and other liabilities | 8 |
| | 1 |
| | — |
| — |
| — |
| — |
| 3 |
| — |
| | 12 |
| | 1 |
| | 92 |
| | (6 | ) | (c) | (71 | ) | 4 |
| — |
| — |
| — |
| — |
| | 19 |
| | (2 | ) | (c) |
Beneficial interests issued by consolidated VIEs | 1 |
| | — |
|
| — |
| — |
| — |
| — |
| — |
| — |
| | 1 |
| | — |
|
| — |
| | — |
|
| — |
| — |
| — |
| — |
| — |
| — |
| | — |
| | — |
|
|
Long-term debt | 18,262 |
| | 194 |
| (c)(i) | — |
| — |
| 3,551 |
| (1,809 | ) | 59 |
| (219 | ) | | 20,038 |
| | 192 |
| (c)(i) | 21,863 |
| | 187 |
| (c)(e) | — |
| — |
| 2,230 |
| (1,758 | ) | 49 |
| (222 | ) | | 22,349 |
| | 89 |
| (c)(e) |
| |
| Fair value measurements using significant unobservable inputs
|
| | Fair value measurements using significant unobservable inputs
|
| |
Three months ended September 30, 2017 (in millions) | Fair value at July 1, 2017 | Total realized/unrealized gains/(losses) |
| |
| Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2017 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2017 | |
Purchases(f) | Sales |
| | Settlements(g) | |
Three months ended September 30, 2018 (in millions) | | Fair value at July 1, 2018 | | Total realized/unrealized gains/(losses) |
| |
|
| Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2018 |
| Purchases(f) | Sales |
| | Settlements(g) | |
Assets:(a) |
|
|
| |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
Trading assets: |
|
|
| |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
Debt instruments: |
|
|
| |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
Mortgage-backed securities: |
|
|
| |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
U.S. government agencies | $ | 365 |
| $ | (2 | ) |
| $ | — |
| $ | (15 | ) |
| | $ | (20 | ) | $ | 10 |
| $ | (15 | ) |
| $ | 323 |
|
| $ | (2 | ) |
| |
U.S. GSEs and government agencies | | $ | 478 |
| | $ | 2 |
|
| $ | 14 |
| $ | (28 | ) |
| | $ | (17 | ) |
| $ | 83 |
| $ | (3 | ) |
| $ | 529 |
|
| $ | — |
|
|
Residential – nonagency | 98 |
| 6 |
|
| 4 |
| (4 | ) |
| | (12 | ) | 50 |
| (35 | ) |
| 107 |
|
| 5 |
|
| 87 |
| | 1 |
|
| — |
| (6 | ) |
| | (3 | ) |
| 18 |
| (20 | ) |
| 77 |
|
| 1 |
|
|
Commercial – nonagency | 65 |
| 3 |
|
| 10 |
| (24 | ) |
| | — |
| 3 |
| (30 | ) |
| 27 |
|
| 3 |
|
| 18 |
| | (1 | ) |
| — |
| — |
|
| |
|
|
| 9 |
| (13 | ) |
| 13 |
|
| (1 | ) |
|
Total mortgage-backed securities | 528 |
| 7 |
|
| 14 |
| (43 | ) |
| | (32 | ) | 63 |
| (80 | ) |
| 457 |
|
| 6 |
|
| 583 |
| | 2 |
|
| 14 |
| (34 | ) |
| | (20 | ) |
| 110 |
| (36 | ) |
| 619 |
|
| — |
|
|
U.S. Treasury and government agencies | — |
| — |
| | — |
| — |
| | | — |
| 1 |
| — |
| | 1 |
| | — |
| | |
U.S. Treasury, GSEs and government agencies | | — |
| | — |
| | — |
| — |
| | | — |
| | — |
| — |
| | — |
| | — |
| |
Obligations of U.S. states and municipalities | 681 |
| 3 |
|
| 31 |
| — |
|
| | — |
| — |
| — |
|
| 715 |
|
| 3 |
|
| 736 |
| | 8 |
|
| 26 |
| (70 | ) |
| | (1 | ) |
| — |
| — |
|
| 699 |
|
| 7 |
|
|
Non-U.S. government debt securities | 37 |
| — |
|
| 252 |
| (217 | ) |
| | — |
| 23 |
| (15 | ) |
| 80 |
|
| — |
|
| 183 |
| | (9 | ) |
| 44 |
| (29 | ) |
| | (2 | ) |
| 1 |
| (24 | ) |
| 164 |
|
| (9 | ) |
|
Corporate debt securities | 461 |
| 7 |
|
| 193 |
| (327 | ) |
| | (22 | ) | 68 |
| (19 | ) |
| 361 |
|
| 8 |
|
| 274 |
| | (2 | ) |
| 156 |
| (87 | ) |
| | (4 | ) |
| 82 |
| (24 | ) |
| 395 |
|
| (3 | ) |
|
Loans | 4,488 |
| 131 |
|
| 564 |
| (1,498 | ) |
| | (421 | ) | 246 |
| (303 | ) |
| 3,207 |
|
| 71 |
|
| 1,986 |
| | 17 |
|
| 188 |
| (146 | ) |
| | (199 | ) |
| 48 |
| (361 | ) |
| 1,533 |
|
| 3 |
|
|
Asset-backed securities | 83 |
| 5 |
|
| 170 |
| (10 | ) |
| | (8 | ) | 36 |
| (5 | ) |
| 271 |
|
| 4 |
|
| 87 |
| | 6 |
|
| 5 |
| (7 | ) |
| | (13 | ) |
| 5 |
| (7 | ) |
| 76 |
|
| 3 |
|
|
Total debt instruments | 6,278 |
| 153 |
|
| 1,224 |
| (2,095 | ) |
| | (483 | ) | 437 |
| (422 | ) |
| 5,092 |
|
| 92 |
|
| 3,849 |
| | 22 |
|
| 433 |
| (373 | ) |
| | (239 | ) |
| 246 |
| (452 | ) |
| 3,486 |
|
| 1 |
|
|
Equity securities | 284 |
| 6 |
|
| 29 |
| (40 | ) |
| | — |
| 16 |
| (7 | ) |
| 288 |
|
| 7 |
|
| 288 |
| | 20 |
|
| 6 |
| (48 | ) |
| |
|
|
| 82 |
| (19 | ) |
| 329 |
|
| (18 | ) |
|
Other | 731 |
| 20 |
|
| 5 |
| (38 | ) |
| | (25 | ) | — |
| (2 | ) |
| 691 |
|
| 16 |
|
| 406 |
| | 30 |
|
| 13 |
| — |
|
| | (37 | ) |
| 2 |
| (1 | ) |
| 413 |
|
| 10 |
|
|
Total trading assets – debt and equity instruments | 7,293 |
| 179 |
| (c) | 1,258 |
| (2,173 | ) |
| | (508 | ) | 453 |
| (431 | ) |
| 6,071 |
|
| 115 |
| (c) | 4,543 |
| | 72 |
| (c) | 452 |
| (421 | ) |
| | (276 | ) |
| 330 |
| (472 | ) |
| 4,228 |
|
| (7 | ) | (c) |
Net derivative receivables:(a)(b) |
|
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
| |
|
|
|
|
|
|
|
|
|
Interest rate | 712 |
| 101 |
|
| 16 |
| (23 | ) |
| | (182 | ) | 21 |
| 19 |
|
| 664 |
|
| (7 | ) |
| 489 |
| | 236 |
|
| 28 |
| (22 | ) |
| | (101 | ) |
| 68 |
| (7 | ) |
| 691 |
|
| 216 |
|
|
Credit | (45 | ) | (32 | ) |
| — |
| (1 | ) |
| | (2 | ) | 40 |
| 4 |
|
| (36 | ) |
| (22 | ) |
| (24 | ) | | (19 | ) |
| 1 |
| — |
|
| | 47 |
|
| 6 |
| 16 |
|
| 27 |
|
| (15 | ) |
|
Foreign exchange | (686 | ) | 16 |
|
| 9 |
| (2 | ) |
| | 68 |
| (39 | ) | 95 |
|
| (539 | ) |
| 37 |
|
| (245 | ) | | (56 | ) |
| 29 |
| (7 | ) |
| | (49 | ) |
| (2 | ) | 28 |
|
| (302 | ) |
| (54 | ) |
|
Equity | (2,444 | ) | (10 | ) |
| 355 |
| (184 | ) |
| | (132 | ) | (1 | ) | 41 |
|
| (2,375 | ) |
| 82 |
|
| (2,578 | ) | | (94 | ) |
| 643 |
| (635 | ) |
| | 622 |
|
| (251 | ) | 16 |
|
| (2,277 | ) |
| (121 | ) |
|
Commodity | (58 | ) | (30 | ) |
| — |
| — |
|
| | (3 | ) | (2 | ) | (7 | ) |
| (100 | ) |
| (51 | ) |
| (752 | ) | | 318 |
|
| — |
| — |
|
| | (113 | ) |
| 15 |
| 7 |
|
| (525 | ) |
| 138 |
|
|
Total net derivative receivables | (2,521 | ) | 45 |
| (c) | 380 |
| (210 | ) |
| | (251 | ) | 19 |
| 152 |
|
| (2,386 | ) |
| 39 |
| (c) | (3,110 | ) | | 385 |
| (c) | 701 |
| (664 | ) |
| | 406 |
|
| (164 | ) | 60 |
|
| (2,386 | ) |
| 164 |
| (c) |
Available-for-sale securities: | |
| |
| | |
| |
| |
| | | |
| |
| | |
| |
| |
| |
|
Mortgage-backed securities | | 1 |
| | — |
|
| — |
| — |
|
| | — |
|
| — |
| — |
|
| 1 |
|
| — |
|
|
Asset-backed securities | 547 |
| 2 |
|
| — |
| — |
|
| | (63 | ) | — |
| — |
|
| 486 |
|
| 2 |
|
| 147 |
| | — |
|
| — |
| — |
|
| | (86 | ) |
| — |
| — |
|
| 61 |
|
| — |
|
|
Other | 1 |
| — |
|
| — |
| — |
|
| | — |
| — |
| — |
|
| 1 |
|
| — |
|
| |
Total available-for-sale securities | 548 |
| 2 |
| (d) | — |
| — |
|
| | (63 | ) | — |
| — |
|
| 487 |
|
| 2 |
| (d) | 148 |
| | — |
|
| — |
| — |
|
| | (86 | ) |
| — |
| — |
|
| 62 |
|
| — |
|
|
Loans | 305 |
| 8 |
| (c) | — |
| (26 | ) |
| | (10 | ) | — |
| — |
|
| 277 |
|
| 8 |
| (c) | 159 |
| | (1 | ) | (c) | 1 |
| — |
|
| | (19 | ) |
| — |
| — |
|
| 140 |
|
| (1 | ) | (c) |
Mortgage servicing rights | 5,753 |
| (66 | ) | (e) | 253 |
| (2 | ) |
| | (200 | ) | — |
| — |
|
| 5,738 |
|
| (66 | ) | (e) | 6,241 |
| | 98 |
| (d) | 291 |
| (2 | ) |
| | (195 | ) |
| — |
| — |
|
| 6,433 |
|
| 98 |
| (d) |
Other assets | 1,934 |
| 18 |
| (c) | 3 |
| (2 | ) | | | (82 | ) | — |
| — |
| | 1,871 |
| | 16 |
| (c) | 1,225 |
| | (160 | ) | (c) | 2 |
| — |
| | | (7 | ) | | 3 |
| — |
| | 1,063 |
| | (160 | ) | (c) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs |
|
| Fair value measurements using significant unobservable inputs |
|
|
Three months ended September 30, 2017 (in millions) | Fair value at July 1, 2017 | Total realized/unrealized (gains)/losses |
|
| |
| Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2017 | Change in unrealized (gains)/losses related to financial instruments held at September 30, 2017 | |
Purchases | Sales | Issuances | Settlements(g) | |
Three months ended September 30, 2018 (in millions) | | Fair value at July 1, 2018 | | Total realized/unrealized (gains)/losses |
|
| |
| | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized (gains)/losses related to financial instruments held at September 30, 2018 |
| Purchases | Sales | Issuances | Settlements(g) |
|
Liabilities:(b)(a) |
|
|
| |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
|
| | |
|
|
|
|
|
|
|
|
Deposits | $ | 2,131 |
| $ | 33 |
| (c) | $ | — |
| $ | — |
| $ | 1,909 |
| | $ | (58 | ) | $ | — |
| $ | (177 | ) |
| $ | 3,838 |
|
| $ | 27 |
| (c) | $ | 4,305 |
| | $ | (84 | ) | (c)(e) | $ | — |
| $ | — |
| $ | 517 |
| | $ | (170 | ) |
| $ | 1 |
| $ | (129 | ) |
| $ | 4,440 |
|
| $ | (82 | ) | (c)(e) |
Federal funds purchased and securities loaned or sold under repurchase agreements | — |
| — |
| | — |
| — |
| — |
| | — |
| 1 |
| — |
| | 1 |
| | — |
| | |
Short-term borrowings | 1,314 |
| 33 |
| (c) | — |
| — |
| 818 |
| | (631 | ) | 13 |
| (76 | ) |
| 1,471 |
|
| 21 |
| (c) | 2,209 |
| | (47 | ) | (c)(e) | — |
| — |
| 713 |
| | (885 | ) |
| 6 |
| (25 | ) |
| 1,971 |
|
| (31 | ) | (c)(e) |
Trading liabilities – debt and equity instruments | 36 |
| 2 |
| (c) | (23 | ) | 28 |
| — |
| | — |
| — |
| — |
|
| 43 |
|
| 3 |
| (c) | 43 |
| | 36 |
| (c) | (6 | ) | 19 |
| — |
| | (2 | ) |
| 7 |
| (1 | ) |
| 96 |
|
| 36 |
| (c) |
Accounts payable and other liabilities | 10 |
| — |
|
| — |
| — |
| — |
| | (1 | ) | — |
| — |
|
| 9 |
|
| — |
|
| 8 |
| | 1 |
| (c) | — |
| — |
| — |
| | — |
|
| 3 |
| — |
|
| 12 |
|
| 1 |
| (c) |
Beneficial interests issued by consolidated VIEs | 1 |
| — |
|
| — |
| 39 |
| — |
| | — |
| 78 |
| — |
|
| 118 |
|
| — |
|
| 1 |
| | — |
|
| — |
| — |
| — |
| | — |
|
| — |
| — |
|
| 1 |
|
| — |
|
|
Long-term debt | 14,732 |
| 319 |
| (c)(j) | — |
| — |
| 3,023 |
| (j) | (3,552 | ) | 181 |
| (209 | ) |
| 14,494 |
| (j) | 242 |
| (c)(j) | 17,632 |
| (i) | 194 |
| (c)(e) | — |
| — |
| 3,551 |
| | (1,809 | ) |
| 59 |
| (219 | ) |
| 19,408 |
| (i) | 192 |
| (c)(e) |
| | | Fair value measurements using significant unobservable inputs | | | Fair value measurements using significant unobservable inputs | | |
Nine months ended September 30, 2018 (in millions) | Fair value at January 1, 2018 | Total realized/unrealized gains/(losses) | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2018 | |
Purchases(f) | Sales | | Settlements(g) | |
Nine months ended September 30, 2019 (in millions) | | Fair value at January 1, 2019 | Total realized/unrealized gains/(losses) | | | | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2019 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2019 |
| Purchases(f) | Sales | | | Settlements(g) | |
Assets:(a) | | | | | | | | | | | | | | | | | | | | | | | | |
Trading assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Debt instruments: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies | $ | 307 |
| | $ | 5 |
| | $ | 348 |
| $ | (126 | ) | | $ | (56 | ) | $ | 92 |
| $ | (41 | ) | | $ | 529 |
| | $ | 3 |
| | |
U.S. GSEs and government agencies | | $ | 549 |
| | $ | (111 | ) | | $ | 747 |
| $ | (272 | ) | | | $ | (83 | ) | | $ | 1 |
| $ | (20 | ) | | $ | 811 |
| | $ | (116 | ) | |
Residential – nonagency | 60 |
| | 1 |
| | 45 |
| (19 | ) | | (6 | ) | 58 |
| (62 | ) | | 77 |
| | 4 |
| | 64 |
| | 25 |
| | 83 |
| (86 | ) | | | (20 | ) | | 15 |
| (57 | ) | | 24 |
| | (1 | ) | |
Commercial – nonagency | 11 |
| | 2 |
| | 7 |
| (8 | ) | | (13 | ) | 30 |
| (16 | ) | | 13 |
| | (1 | ) | | 11 |
| | 2 |
| | 19 |
| (24 | ) | | | (14 | ) | | 15 |
| (4 | ) | | 5 |
| | 1 |
| |
Total mortgage-backed securities | 378 |
| | 8 |
| | 400 |
| (153 | ) | | (75 | ) | 180 |
| (119 | ) | | 619 |
| | 6 |
| | 624 |
| | (84 | ) | | 849 |
| (382 | ) | | | (117 | ) | | 31 |
| (81 | ) | | 840 |
| | (116 | ) | |
U.S. Treasury and government agencies
| 1 |
| | — |
| | — |
| — |
| | — |
| — |
| (1 | ) | | — |
| | — |
| | |
U.S. Treasury, GSEs and government agencies
| | — |
| | — |
| | — |
| — |
| | | — |
| | — |
| — |
| | — |
| | — |
| |
Obligations of U.S. states and municipalities | 744 |
| | (3 | ) | | 107 |
| (70 | ) | | (79 | ) | — |
| — |
| | 699 |
| | (3 | ) | | 689 |
| | 12 |
| | 85 |
| (152 | ) | | | (7 | ) | | — |
| — |
| | 627 |
| | 13 |
| |
Non-U.S. government debt securities | 78 |
| | (19 | ) | | 395 |
| (213 | ) | | (2 | ) | 18 |
| (93 | ) | | 164 |
| | (18 | ) | | 155 |
| | (2 | ) | | 228 |
| (231 | ) | | | — |
| | 14 |
| (18 | ) | | 146 |
| | 3 |
| |
Corporate debt securities | 312 |
| | (6 | ) | | 297 |
| (227 | ) | | (15 | ) | 249 |
| (215 | ) | | 395 |
| | (1 | ) | | 334 |
| | 74 |
| | 340 |
| (236 | ) | | | (53 | ) | | 96 |
| (71 | ) | | 484 |
| | 15 |
| |
Loans | 2,719 |
| | 58 |
| | 1,223 |
| (1,680 | ) | | (528 | ) | 422 |
| (681 | ) | | 1,533 |
| | (22 | ) | | 1,706 |
| | 95 |
| | 609 |
| (416 | ) | | | (408 | ) | | 509 |
| (349 | ) | | 1,746 |
| | 44 |
| |
Asset-backed securities | 153 |
| | 15 |
| | 64 |
| (29 | ) | | (53 | ) | 18 |
| (92 | ) | | 76 |
| | 8 |
| | 127 |
| | — |
| | 30 |
| (81 | ) | | | (39 | ) | | 23 |
| (22 | ) | | 38 |
| | (3 | ) | |
Total debt instruments | 4,385 |
| | 53 |
| | 2,486 |
| (2,372 | ) | | (752 | ) | 887 |
| (1,201 | ) | | 3,486 |
| | (30 | ) | | 3,635 |
| | 95 |
| | 2,141 |
| (1,498 | ) | | | (624 | ) | | 673 |
| (541 | ) | | 3,881 |
| | (44 | ) | |
Equity securities | 295 |
| | (1 | ) | | 99 |
| (108 | ) | | (1 | ) | 86 |
| (41 | ) | | 329 |
| | 11 |
| | 232 |
| | (28 | ) | | 33 |
| (92 | ) | | | (22 | ) | | 142 |
| (95 | ) | | 170 |
| | (21 | ) | |
Other | 690 |
| | (209 | ) | | 47 |
| (40 | ) | | (75 | ) | 3 |
| (3 | ) | | 413 |
| | (250 | ) | | 301 |
| | 42 |
| | 50 |
| (16 | ) | | | (41 | ) | | 1 |
| (5 | ) | | 332 |
| | 55 |
| |
Total trading assets – debt and equity instruments | 5,370 |
| | (157 | ) | (c) | 2,632 |
| (2,520 | ) | | (828 | ) | 976 |
| (1,245 | ) | | 4,228 |
| | (269 | ) | (c) | 4,168 |
| | 109 |
| (c) | 2,224 |
| (1,606 | ) | | | (687 | ) | | 816 |
| (641 | ) | | 4,383 |
| | (10 | ) | (c) |
Net derivative receivables:(a)(b) | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate | 264 |
| | 576 |
| | 83 |
| (77 | ) | | (234 | ) | 40 |
| 39 |
| | 691 |
| | 498 |
| | (38 | ) | | (575 | ) | | 86 |
| (102 | ) | (i) | | 174 |
| (i) | 22 |
| 114 |
| | (319 | ) | | (694 | ) | |
Credit | (35 | ) | | 19 |
| | 3 |
| (7 | ) | | 22 |
| 5 |
| 20 |
| | 27 |
| | 7 |
| | (107 | ) | | (209 | ) | | 16 |
| (5 | ) | | | (13 | ) | | 7 |
| (6 | ) | | (317 | ) | | (169 | ) | |
Foreign exchange | (396 | ) | | 184 |
| | 42 |
| (15 | ) | | (46 | ) | (114 | ) | 43 |
| | (302 | ) | | 42 |
| | (297 | ) | | (840 | ) | | 13 |
| (18 | ) | | | 294 |
| | (19 | ) | 26 |
| | (841 | ) | | (815 | ) | |
Equity | (3,409 | ) | | 688 |
| | 1,467 |
| (1,919 | ) | | 1,043 |
| (324 | ) | 177 |
| | (2,277 | ) | | 31 |
| | (2,225 | ) | | 328 |
| | 335 |
| (573 | ) | | | (1,062 | ) | | (418 | ) | 147 |
| | (3,468 | ) | | (1,193 | ) | |
Commodity | (674 | ) | | 468 |
| | — |
| — |
| | (287 | ) | 7 |
| (39 | ) | | (525 | ) | | 158 |
| | (1,129 | ) | | 370 |
| | 32 |
| (240 | ) | | | 51 |
| | 2 |
| 867 |
| | (47 | ) | | 634 |
| |
Total net derivative receivables | (4,250 | ) | | 1,935 |
| (c) | 1,595 |
| (2,018 | ) | | 498 |
| (386 | ) | 240 |
| | (2,386 | ) | | 736 |
| (c) | (3,796 | ) | | (926 | ) | (c) | 482 |
| (938 | ) | | | (556 | ) | | (406 | ) | 1,148 |
| | (4,992 | ) | | (2,237 | ) | (c) |
Available-for-sale securities: |
|
| | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | 1 |
| | — |
| | 1 |
| — |
| | | (1 | ) | | — |
| — |
| | 1 |
| | — |
| |
Asset-backed securities | 276 |
| | 1 |
| | — |
| — |
| | (216 | ) | — |
| — |
| | 61 |
| | 1 |
| | — |
| | — |
| | — |
| — |
| | | — |
| | — |
| — |
| | — |
| | — |
| |
Other | 1 |
| | — |
| | — |
| — |
| | — |
| — |
| — |
| | 1 |
| | — |
| | |
Total available-for-sale securities | 277 |
| | 1 |
| (d) | — |
| — |
| | (216 | ) | — |
| — |
| | 62 |
| | 1 |
| (d) | 1 |
| | — |
| | 1 |
| — |
| | | (1 | ) | | — |
| — |
| | 1 |
| | — |
| |
Loans | 276 |
| | (5 | ) | (c) | 123 |
| — |
| | (180 | ) | — |
| (74 | ) | | 140 |
| | (5 | ) | (c) | 122 |
| | 4 |
| (c) | — |
| — |
| | | (125 | ) | | — |
| — |
| | 1 |
| | — |
| |
Mortgage servicing rights | 6,030 |
| | 576 |
| (e) | 770 |
| (401 | ) | | (542 | ) | — |
| — |
| | 6,433 |
| | 576 |
| (e) | 6,130 |
| | (1,572 | ) | (d) | 1,250 |
| (687 | ) | | | (702 | ) | | — |
| — |
| | 4,419 |
| | (1,572 | ) | (d) |
Other assets | 1,265 |
| | (210 | ) | (c) | 49 |
| (16 | ) | | (28 | ) | 4 |
| (1 | ) | | 1,063 |
| | (217 | ) | (c) | 927 |
| | (152 | ) | (c) | 170 |
| (160 | ) | | | (33 | ) | | 1 |
| (7 | ) | | 746 |
| | (145 | ) | (c) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | | Fair value measurements using significant unobservable inputs | | |
Nine months ended September 30, 2018 (in millions) | Fair value at January 1, 2018 | Total realized/unrealized (gains)/losses | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized (gains)/ losses related to financial instruments held at September 30, 2018 | |
Purchases | Sales | Issuances | Settlements(g) | |
Nine months ended September 30, 2019 (in millions) | | Fair value at January 1, 2019 | Total realized/unrealized (gains)/losses | | | | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2019 | Change in unrealized (gains)/ losses related to financial instruments held at September 30, 2019 |
| Purchases | Sales | | Issuances | Settlements(g) | |
Liabilities:(b)(a) | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | $ | 4,142 |
| | $ | (125 | ) | (c)(i) | $ | — |
| $ | — |
| $ | 1,272 |
| $ | (425 | ) | $ | 2 |
| $ | (426 | ) | | $ | 4,440 |
| | $ | (115 | ) | (c)(i) | $ | 4,169 |
| | $ | 241 |
| (c)(e) | $ | — |
| $ | — |
| | $ | 580 |
| $ | (504 | ) | | $ | 12 |
| $ | (862 | ) | | $ | 3,636 |
| | $ | 250 |
| (c)(e) |
Short-term borrowings | 1,665 |
| | (229 | ) | (c)(i) | — |
| — |
| 2,783 |
| (2,245 | ) | 61 |
| (64 | ) | | 1,971 |
| | 26 |
| (c)(i) | 1,523 |
| | 142 |
| (c)(e) | — |
| — |
| | 2,637 |
| (2,265 | ) | | 85 |
| (121 | ) | | 2,001 |
| | 74 |
| (c)(e) |
Trading liabilities – debt and equity instruments | 39 |
| | 28 |
| (c) | (68 | ) | 95 |
| — |
| (1 | ) | 9 |
| (6 | ) | | 96 |
| | 11 |
| (c) | 50 |
| | — |
| | (12 | ) | 41 |
| | — |
| 1 |
| | 9 |
| (21 | ) | | 68 |
| | (1 | ) | (c) |
Accounts payable and other liabilities | 13 |
| | — |
| | (6 | ) | 1 |
| — |
| — |
| 4 |
| — |
| | 12 |
| | — |
| | 10 |
| | (7 | ) | (c) | (79 | ) | 94 |
| | — |
| — |
| | 1 |
| — |
| | 19 |
| | 4 |
| (c) |
Beneficial interests issued by consolidated VIEs | 39 |
| | — |
| | — |
| — |
| — |
| (38 | ) | — |
| — |
| | 1 |
| | — |
| | 1 |
| | (1 | ) | (c) | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| | — |
| |
Long-term debt | 16,125 |
| | (396 | ) | (c)(i) | — |
| — |
| 10,382 |
| (6,155 | ) | 653 |
| (571 | ) | | 20,038 |
| | (576 | ) | (c)(i) | 19,418 |
| | 1,915 |
| (c)(e) | — |
| — |
| | 6,929 |
| (5,675 | ) | | 522 |
| (760 | ) | | 22,349 |
| | 2,010 |
| (c)(e) |
| | | Fair value measurements using significant unobservable inputs | | | Fair value measurements using significant unobservable inputs
| | |
Nine months ended September 30, 2017 (in millions) | Fair value at January 1, 2017 | Total realized/unrealized gains/(losses) | | | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2017 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2017 | |
Purchases(f) | Sales | | | Settlements(g) | |
Nine months ended September 30, 2018 (in millions) | | Fair value at January 1, 2018 | Total realized/unrealized gains/(losses) | | | | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized gains/(losses) related to financial instruments held at September 30, 2018 |
| Purchases(f) | Sales | | | Settlements(g) | |
Assets:(a) | | | | | | | | | | | | | | | | | | | | | | | | |
Trading assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Debt instruments: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies | $ | 392 |
| | $ | (9 | ) | | $ | 161 |
| $ | (166 | ) | | | $ | (55 | ) | $ | 37 |
| $ | (37 | ) | | $ | 323 |
| | $ | (17 | ) | | |
U.S. GSEs and government agencies | | $ | 307 |
| $ | 5 |
| | $ | 348 |
| $ | (126 | ) | | | $ | (56 | ) | | $ | 92 |
| $ | (41 | ) | | $ | 529 |
| | $ | 3 |
| |
Residential – nonagency | 83 |
| | 14 |
| | 40 |
| (24 | ) | | | (21 | ) | 111 |
| (96 | ) | | 107 |
| | 2 |
| | 60 |
| 1 |
| | 45 |
| (19 | ) | | | (6 | ) | | 58 |
| (62 | ) | | 77 |
| | 4 |
| |
Commercial – nonagency | 17 |
| | 5 |
| | 27 |
| (38 | ) | | | (5 | ) | 63 |
| (42 | ) | | 27 |
| | 1 |
| | 11 |
| 2 |
| | 7 |
| (8 | ) | | | (13 | ) | | 30 |
| (16 | ) | | 13 |
| | (1 | ) | |
Total mortgage-backed securities | 492 |
| | 10 |
| | 228 |
| (228 | ) | | | (81 | ) | 211 |
| (175 | ) | | 457 |
| | (14 | ) | | 378 |
| 8 |
| | 400 |
| (153 | ) | | | (75 | ) | | 180 |
| (119 | ) | | 619 |
| | 6 |
| |
U.S. Treasury and government agencies
| — |
| | — |
| | — |
| — |
| | | — |
| 1 |
| — |
| | 1 |
| | — |
| | |
U.S. Treasury, GSEs and government agencies | | 1 |
| — |
| | — |
| — |
| | | — |
| | — |
| (1 | ) | | — |
| | — |
| |
Obligations of U.S. states and municipalities | 649 |
| | 15 |
| | 126 |
| (70 | ) | | | (5 | ) | — |
| — |
| | 715 |
| | 15 |
| | 744 |
| (3 | ) | | 107 |
| (70 | ) | | | (79 | ) | | — |
| — |
| | 699 |
| | (3 | ) | |
Non-U.S. government debt securities | 46 |
| | 3 |
| | 426 |
| (395 | ) | | | — |
| 50 |
| (50 | ) | | 80 |
| | — |
| | 78 |
| (19 | ) | | 395 |
| (213 | ) | | | (2 | ) | | 18 |
| (93 | ) | | 164 |
| | (18 | ) | |
Corporate debt securities | 576 |
| | — |
| | 690 |
| (473 | ) | | | (398 | ) | 128 |
| (162 | ) | | 361 |
| | 11 |
| | 312 |
| (6 | ) | | 297 |
| (227 | ) | | | (15 | ) | | 249 |
| (215 | ) | | 395 |
| | (1 | ) | |
Loans | 4,837 |
| | 309 |
| | 2,055 |
| (2,565 | ) | | | (1,186 | ) | 564 |
| (807 | ) | | 3,207 |
| | 73 |
| | 2,719 |
| 58 |
| | 1,223 |
| (1,680 | ) | | | (528 | ) | | 422 |
| (681 | ) | | 1,533 |
| | (22 | ) | |
Asset-backed securities | 302 |
| | 27 |
| | 279 |
| (178 | ) | | | (44 | ) | 50 |
| (165 | ) | | 271 |
| | 2 |
| | 153 |
| 15 |
| | 64 |
| (29 | ) | | | (53 | ) | | 18 |
| (92 | ) | | 76 |
| | 8 |
| |
Total debt instruments | 6,902 |
| | 364 |
| | 3,804 |
| (3,909 | ) | | | (1,714 | ) | 1,004 |
| (1,359 | ) | | 5,092 |
| | 87 |
| | 4,385 |
| 53 |
| | 2,486 |
| (2,372 | ) | | | (752 | ) | | 887 |
| (1,201 | ) | | 3,486 |
| | (30 | ) | |
Equity securities | 231 |
| | 40 |
| | 142 |
| (87 | ) | | | — |
| 18 |
| (56 | ) | | 288 |
| | 34 |
| | 295 |
| (1 | ) | | 99 |
| (108 | ) | | | (1 | ) | | 86 |
| (41 | ) | | 329 |
| | 11 |
| |
Other | 761 |
| | 85 |
| | 27 |
| (45 | ) | | | (137 | ) | 10 |
| (10 | ) | | 691 |
| | 46 |
| | 690 |
| (209 | ) | | 47 |
| (40 | ) | | | (75 | ) | | 3 |
| (3 | ) | | 413 |
| | (250 | ) | |
Total trading assets – debt and equity instruments | 7,894 |
| | 489 |
| (c) | 3,973 |
| (4,041 | ) | | | (1,851 | ) | 1,032 |
| (1,425 | ) | | 6,071 |
| | 167 |
| (c) | 5,370 |
| (157 | ) | (c) | 2,632 |
| (2,520 | ) | | | (828 | ) | | 976 |
| (1,245 | ) | | 4,228 |
| | (269 | ) | (c) |
Net derivative receivables:(a)(b) | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate | 1,263 |
| | 182 |
| | 53 |
| (76 | ) | | | (833 | ) | 55 |
| 20 |
| | 664 |
| | (184 | ) | | 264 |
| 576 |
| | 83 |
| (77 | ) | | | (234 | ) | | 40 |
| 39 |
| | 691 |
| | 498 |
| |
Credit | 98 |
| | (126 | ) | | 1 |
| (4 | ) | | | (64 | ) | 57 |
| 2 |
| | (36 | ) | | (57 | ) | | (35 | ) | 19 |
| | 3 |
| (7 | ) | | | 22 |
| | 5 |
| 20 |
| | 27 |
| | 7 |
| |
Foreign exchange | (1,384 | ) | | 86 |
| | 13 |
| (6 | ) | | | 633 |
| (16 | ) | 135 |
| | (539 | ) | | (12 | ) | | (396 | ) | 184 |
| | 42 |
| (15 | ) | | | (46 | ) | | (114 | ) | 43 |
| | (302 | ) | | 42 |
| |
Equity | (2,252 | ) | | 24 |
| | 840 |
| (312 | ) | | | (660 | ) | (182 | ) | 167 |
| | (2,375 | ) | | 76 |
| | (3,409 | ) | 688 |
| | 1,467 |
| (1,919 | ) | | | 1,043 |
| | (324 | ) | 177 |
| | (2,277 | ) | | 31 |
| |
Commodity | (85 | ) | | (34 | ) | | — |
| — |
| | | 22 |
| 2 |
| (5 | ) | | (100 | ) | | 27 |
| | (674 | ) | 468 |
| | — |
| — |
| | | (287 | ) | | 7 |
| (39 | ) | | (525 | ) | | 158 |
| |
Total net derivative receivables | (2,360 | ) | | 132 |
| (c) | 907 |
| (398 | ) | | | (902 | ) | (84 | ) | 319 |
| | (2,386 | ) | | (150 | ) | (c) | (4,250 | ) | 1,935 |
| (c) | 1,595 |
| (2,018 | ) | | | 498 |
| | (386 | ) | 240 |
| | (2,386 | ) | | 736 |
| (c) |
Available-for-sale securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities | | 1 |
| — |
| | — |
| — |
| | | — |
| | — |
| — |
| | 1 |
| | — |
| |
Asset-backed securities | 663 |
| | 14 |
| | — |
| (50 | ) | | | (141 | ) | — |
| — |
| | 486 |
| | 12 |
| | 276 |
| 1 |
| | — |
| — |
| | | (216 | ) | | — |
| — |
| | 61 |
| | 1 |
| |
Other | 1 |
| | — |
| | — |
| — |
| | | — |
| — |
| — |
| | 1 |
| | — |
| | |
Total available-for-sale securities | 664 |
| | 14 |
| (d) | — |
| (50 | ) | | | (141 | ) | — |
| — |
| | 487 |
| | 12 |
| (d) | 277 |
| 1 |
| (j) | — |
| — |
| | | (216 | ) | | — |
| — |
| | 62 |
| | 1 |
| (j) |
Loans | 570 |
| | 32 |
| (c) | — |
| (26 | ) | | | (299 | ) | — |
| — |
| | 277 |
| | 8 |
| (c) | 276 |
| (5 | ) | (c) | 123 |
| — |
| | | (180 | ) | | — |
| (74 | ) | | 140 |
| | (5 | ) | (c) |
Mortgage servicing rights | 6,096 |
| | (223 | ) | (e) | 624 |
| (140 | ) | | | (619 | ) | — |
| — |
| | 5,738 |
| | (224 | ) | (e) | 6,030 |
| 576 |
| (d) | 770 |
| (401 | ) | | | (542 | ) | | — |
| — |
| | 6,433 |
| | 576 |
| (d) |
Other assets | 2,223 |
| | 248 |
| (c) | 35 |
| (157 | ) | | | (478 | ) | — |
| — |
| | 1,871 |
| | 126 |
| (c) | 1,265 |
| (210 | ) | (c) | 49 |
| (16 | ) | | | (28 | ) | | 4 |
| (1 | ) | | 1,063 |
| | (217 | ) | (c) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value measurements using significant unobservable inputs | | | Fair value measurements using significant unobservable inputs | | |
Nine months ended September 30, 2017 (in millions) | Fair value at January 1, 2017 | Total realized/unrealized (gains)/losses | | | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2017 | Change in unrealized (gains)/ losses related to financial instruments held at September 30, 2017 | |
Purchases | Sales | Issuances | | Settlements(g) | |
Nine months ended September 30, 2018 (in millions) | | Fair value at January 1, 2018 | Total realized/unrealized (gains)/losses | | | | | | Transfers into level 3(h) | Transfers (out of) level 3(h) | Fair value at September 30, 2018 | Change in unrealized (gains)/losses related to financial instruments held at September 30, 2018 |
| Purchases | Sales | Issuances | Settlements(g) | |
Liabilities:(b)(a) | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | $ | 2,117 |
| | $ | 39 |
| (c) | $ | — |
| $ | — |
| $ | 2,510 |
| | $ | (169 | ) | $ | — |
| $ | (659 | ) | | $ | 3,838 |
| | $ | 140 |
| (c) | $ | 4,142 |
| $ | (125 | ) | (c)(e) | $ | — |
| $ | — |
| $ | 1,272 |
| | $ | (425 | ) | | $ | 2 |
| $ | (426 | ) | | $ | 4,440 |
| | $ | (115 | ) | (c)(e) |
Federal funds purchased and securities loaned or sold under repurchase agreements | — |
| | — |
| | — |
| — |
| — |
| | — |
| 1 |
| — |
| | 1 |
| | — |
| | |
Short-term borrowings | 1,134 |
| | 80 |
| (c) | — |
| | 2,208 |
| | (1,873 | ) | 53 |
| (131 | ) | | 1,471 |
| | 50 |
| (c) | 1,665 |
| (229 | ) | (c)(e) | — |
| — |
| 2,783 |
| | (2,245 | ) | | 61 |
| (64 | ) | | 1,971 |
| | 26 |
| (c)(e) |
Trading liabilities – debt and equity instruments | 43 |
| | 1 |
| (c) | (31 | ) | 32 |
| — |
| | 1 |
| 3 |
| (6 | ) | | 43 |
| | 1 |
| (c) | 39 |
| 28 |
| (c) | (68 | ) | 95 |
| — |
| | (1 | ) | | 9 |
| (6 | ) | | 96 |
| | 11 |
| (c) |
Accounts payable and other liabilities | 13 |
| | — |
| | (1 | ) | — |
| — |
| | (3 | ) | — |
| — |
| | 9 |
| | — |
| | 13 |
| — |
| | (6 | ) | 1 |
| — |
| | — |
| | 4 |
| — |
| | 12 |
| | — |
| |
Beneficial interests issued by consolidated VIEs | 48 |
| | 3 |
| | (44 | ) | 39 |
| — |
| | (6 | ) | 78 |
| — |
| | 118 |
| | — |
| | 39 |
| — |
| | — |
| — |
| — |
| | (38 | ) | | — |
| — |
| | 1 |
| | — |
| |
Long-term debt | 12,850 |
| | 918 |
| (c)(j) | — |
| — |
| 9,756 |
| (j) | (8,637 | ) | 269 |
| (662 | ) | | 14,494 |
| (j) | 996 |
| (c)(j) | 16,125 |
| (396 | ) | (c)(e) | — |
| — |
| 9,792 |
| (i) | (6,195 | ) | (i) | 653 |
| (571 | ) | | 19,408 |
| (i) | (576 | ) | (c)(e) |
| |
(a) | All levelLevel 3 derivatives are presentedassets as a percentage of total Firm assets accounted for at fair value (including assets measured at fair value on a net basis, irrespective of the underlying counterparty. |
| |
(b) | nonrecurring basis) were 2% and 3% at September 30, 2019 and December 31, 2018, respectively. Level 3 liabilities as a percentage of total Firm liabilities accounted for at fair value (including liabilities measured at fair value on a nonrecurring basis) were 15% at both September 30, 20182019 and December 31, 2017,2018, 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, as well as other-than-temporary impairment (“OTTI”) losses that are recordedChanges in earnings,fair value for MSRs are reported in investment securities losses. Unrealized gains/(losses)mortgage fees and related income. |
| |
(e) | Realized (gains)/losses due to DVA for fair value option elected liabilities are reported in OCI. Thereprincipal transactions revenue, and they were no realized gains/(losses) or foreign exchange hedge accounting adjustments recorded in income on AFS securitiesnot material for the three and nine months ended September 30, 20182019 and 2017,2018, respectively. Unrealized gains/(losses) recorded on AFS securities(gains)/losses are reported in OCI, and they were zero$(62) million and $2$123 million for the three months ended September 30, 20182019 and 2017,2018, respectively and $1 million and $14$108 million for the nine months ended September 30, 20182019 and 2017, respectively. |
| |
(e) | Changes in fair valuewere 0t material for CCB MSRs are reported in mortgage fees and related income.the nine months ended September 30, 2018. |
| |
(f) | Loan originations are included in purchases. |
| |
(g) | Includes financial assets and liabilities that have matured, been partially or fully repaid, impacts of modifications, deconsolidationdeconsolidations associated with beneficial interests in VIEs and other items. |
| |
(h) | All transfers into and/or out of level 3 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. |
| |
(i) | Realized (gains)/losses due to DVA for fair value option elected liabilities are reported in principal transactions revenue. Unrealized (gains)/losses are reported in OCI. Unrealized (gains)/losses were $123 million for the three months ended September 30, 2018 and unrealized (gains)/losses were not material for the nine months ended September 30, 2018. There were no material realized (gains)/losses for the three and nine months ended September 30, 2018, respectively. |
| |
(j) | The prior period amounts have been revised to conform with the current period presentation. |
| |
(j) | Realized gains/(losses) on AFS securities, as well as other-than-temporary impairment (“OTTI”) losses that are recorded in earnings, are reported in investment securities gains/(losses). Unrealized gains/(losses) are reported in OCI. There were 0 realized gains/(losses) recorded in income on AFS securities for the three and nine months ended September 30, 2019 and 2018, respectively. Unrealized gains/(losses) recorded on AFS securities in OCI were 0 for both the three months ended September 30, 2019 and 2018, respectively and 0 and $1 million for the nine months ended September 30, 2019 and 2018, respectively. |
Level 3 analysis
Consolidated balance sheets changes
Level 3 assets, (includingincluding assets measured at fair value on a nonrecurring basis)basis, were 0.8% 0.6% of total Firm assets at September 30, 2018. 2019. The following describes significant changes to level 3 assets since December 31, 2017, 2018, for those items measured at fair value on a recurring basis. ForRefer to Assets and liabilities measured at fair value on a nonrecurring basis on page 97 for further information on changes impacting items measured at fair value on a nonrecurring basis, referbasis.
Three and nine months ended September 30, 2019
Level 3 assets were $15.1 billion at September 30, 2019, reflecting a decrease of $1.4 billion and $2.0 billion from June 30, 2019 and December 31, 2018, respectively.
The decrease for the three months ended September 30, 2019 was predominantly driven by a reduction of $674 million in MSRs and a reduction of $619 million in gross equity derivative receivables due to Assetssettlements.
The decrease for the nine months ended September 30, 2019 was predominantly driven by a reduction of approximately $1.7 billion in MSRs. Refer to the Gains and liabilities measuredlosses section below for additional information.
Transfers between levels for instruments carried at fair value on a nonrecurringrecurring basis onpage 105.
ThreeFor both the three and nine months ended September 30, 20182019, there were no individually significant transfers from level 2 to level 3.
Level 3 assets were $19.0 billion at September 30, 2018, reflecting a decrease of $272 million from June 30, 2018 with no movements that were individually significant.
NineFor the three and nine months ended September 30, 20182019, individually significant transfers from level 3 to level 2 included $906 million and $927 million, respectively of gross commodities derivative payables as a result of an increase in observability.
Level 3 assets atFor the three months ended September 30, 2018, decreasedthere were no individually significant transfers from level 2 to level 3.
For the nine months ended September 30, 2018, significant transfers from level 2 to level 3 included the following:
$1.0 billion of gross equity derivative payables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
For the three months ended September 30, 2018, there were no individually significant transfers from level 3 to level 2.
For the nine months ended September 30, 2018, significant transfers from level 3 to level 2 included the following:
$1.2 billion of total debt and equity instruments, the majority of which were trading loans, driven by $185 million from December 31, 2017 with no movements that were individually significant.an increase in observability.
$1.0 billion of gross equity derivative receivables and $1.2 billion of gross equity derivative payables 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. For further information on theseThese amounts exclude any effects of the Firm’s risk management activities where the financial instruments referare classified as level 1 and 2 of the fair value hierarchy. Refer to Changes in level 3 recurring fair value measurements rollforward tables onpages 99–104.90–95 for further information on these instruments.
Three months ended September 30, 2019
$1.6 billion of net losses on assets, predominantly driven by net derivative receivables due to market movements and MSRs largely reflecting faster prepayment speeds on lower rates. Refer to Note 14 for information on MSRs.
$205 million of net losses on liabilities, none of which were individually significant.
Three months ended September 30, 2018
$394 million of net gains on assets and $100 million of net gains on liabilities, none of which were individually significant.
ThreeNine months ended September 30, 20172019
$186 million2.5 billion of net gainslosses on assets, driven by net derivative receivables due to market movements and $387 millionMSRs reflecting faster prepayment speeds on lower rates. Refer to Note 14 for information on MSRs.
$2.3 billion of net losses on liabilities, none of which were individually significant.predominantly driven by market movements in long-term debt.
Nine months ended September 30, 2018
$2.1 billion of net gains on assets predominantly driven by market movements in derivative receivables.
| |
• | $722 million of net gains on liabilities, none of which were individually significant. Nine months ended September 30, 2017
$692 million of of net gains on assets and $1.0 billion of net losses on liabilities, none of which were individually significant.
|
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 September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Credit and funding adjustments: | | | | | | | | | | | | | | |
Derivatives CVA | $ | 66 |
| | $ | 245 |
| | $ | 223 |
| | $ | 715 |
| $ | 55 |
| | $ | 66 |
| | $ | 71 |
| | $ | 223 |
|
Derivatives FVA | 88 |
| | (222 | ) | | 102 |
| | (289 | ) | (83 | ) | | 88 |
| | (20 | ) | | 102 |
|
ForRefer to Note 2 of JPMorgan Chase’s 2018 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, refer to Note 2 of JPMorgan Chase’s 2017 Annual Report.liabilities.
Assets and liabilities measured at fair value on a nonrecurring basis
The following tables present the assets still held as of September 30, 20182019 and 2017,2018, respectively, for which a nonrecurring fair value adjustment was recorded during the nine months ended September 30, 2019 and 2018, and 2017, respectively, by major product category and fair value hierarchy. | | | Fair value hierarchy | | Total fair value | Fair value hierarchy | | Total fair value |
September 30, 2018 (in millions) | Level 1 |
| Level 2 |
| | Level 3 |
| | |
September 30, 2019 (in millions) | | Level 1 |
| Level 2 |
| | Level 3 |
| | Total fair value |
Loans | $ | — |
| $ | 492 |
|
| $ | 243 |
| (a) | $ | 735 |
| $ | — |
| $ | 5,338 |
| (b) | $ | 246 |
| (c) |
Other assets(b)(a) | — |
| 216 |
| | 826 |
| | 1,042 |
| — |
| 18 |
| | 775 |
| | 793 |
|
Total assets measured at fair value on a nonrecurring basis | $ | — |
| $ | 708 |
| | $ | 1,069 |
|
| $ | 1,777 |
| $ | — |
| $ | 5,356 |
| | $ | 1,021 |
| | $ | 6,377 |
|
| | | Fair value hierarchy | | Total fair value | Fair value hierarchy | | Total fair value |
September 30, 2017 (in millions) | Level 1 |
| Level 2 |
| | Level 3 |
| | |
September 30, 2018 (in millions) | | Level 1 |
| Level 2 |
| | Level 3 |
| | Total fair value |
Loans | $ | — |
| $ | 338 |
| | $ | 542 |
| | $ | 880 |
| $ | — |
| $ | 492 |
| | $ | 243 |
| |
Other assets | — |
| 7 |
| | 245 |
| | 252 |
| — |
| 216 |
| | 826 |
| | 1,042 |
|
Total assets measured at fair value on a nonrecurring basis | $ | — |
| $ | 345 |
| | $ | 787 |
| | $ | 1,132 |
| $ | — |
| $ | 708 |
| | $ | 1,069 |
| | $ | 1,777 |
|
| |
(a) | Primarily includes equity securities without readily determinable fair values that were adjusted based on observable price changes in orderly transactions from an identical or similar investment of the same issuer (measurement alternative). Of the $243$775 million in level 3 assets measured at fair value on a nonrecurring basis as of September 30, 2018,2019, $638 million related to such equity securities. These equity securities are classified as level 3 due to the infrequency of the observable prices and/or the restrictions on the shares. |
| |
(b) | Primarily includes certain mortgage loans that were reclassified to held-for-sale. |
| |
(c) | Of the $246 million in level 3 assets measured at fair value on a nonrecurring basis as of September 30, 2019, $200 million related to residential real estate loans carried at the net realizable value of the underlying collateral (e.g., collateral-dependent loans and other loans charged off in accordance with regulatory guidance). These amounts are classified as level 3 as they are valued using ainformation from broker’s price opinionopinions, appraisals and automated valuation models and discounted based upon the Firm’s experience with actual liquidation values. These discounts to the broker price opinions ranged from 13%14% to 40%49% with a weighted average of 22%29%. |
| |
(b) | Primarily includes equity securities without readily determinable fair values that were adjusted based on observable price changes in orderly transactions from an identical or similar investment of the same issuer (measurement alternative) as a result of the adoption of the recognition and measurement guidance. Of the $826 million in level 3 assets measured at fair value on a nonrecurring basis as of September 30, 2018, $724 million related to such equity securities. These equity securities are classified as level 3 due to the infrequency of the observable prices and/or the restrictions on the shares. |
There were no material liabilities measured at fair value on a nonrecurring basis at September 30, 20182019 and at September 30, 2017.2018.
Nonrecurring fair value changes
The following table presents the total change in value of assets and liabilities for which a fair value adjustment has been recognized for the three and nine months ended September 30, 20182019 and 2017,2018, related to financial instrumentsassets held at those dates.
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
|
Loans | $ | (22 | ) | | $ | (52 | ) | | $ | (36 | ) |
| $ | (157 | ) |
Other assets | (117 | ) | (a) | (11 | ) | | 383 |
| (a) | (44 | ) |
Accounts payable and other liabilities | — |
| | — |
| | — |
| | (1 | ) |
Total nonrecurring fair value gains/(losses) | $ | (139 | ) | | $ | (63 | ) | | $ | 347 |
| | $ | (202 | ) |
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Loans | $ | (142 | ) | (b) | $ | (22 | ) | | $ | (232 | ) | (b) | $ | (36 | ) |
Other assets(a) | 23 |
| | (117 | ) | | 123 |
| | 383 |
|
Total nonrecurring fair value gains/(losses) | $ | (119 | ) | | $ | (139 | ) | | $ | (109 | ) | | $ | 347 |
|
| |
(a) | Included $34 million and $(113) million for the three months ended September 30, 2019 and 2018, respectively and $132 million and $384 million for the three months and nine months ended September 30, 2019 and 2018, respectively, of fair value gains/(losses)net gains as a result of the measurement alternative. |
| |
(b) | Primarily includes the impact of certain mortgage loans that were reclassified to held-for-sale. |
ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for further information about the measurement of impaired collateral-dependent loans, and other loans where the carrying value is based on the fair value of the underlying collateral (e.g., residential mortgage loans charged off in accordance with regulatory guidance), refer to Note 12 of JPMorgan Chase’s 2017 Annual Report..
Equity securities without readily determinable fair values
The Firm 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, with such changes recognized in earnings.
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 still held as of September 30, 2019 and 2018, 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 | | Nine months ended |
| September 30, | | September 30, |
As of or for the period ended, | | | | | | | |
(in millions) | 2019 | | 2018 | | 2019 | | 2018 |
Other assets | | | | | | | |
Carrying value(a) | $ | 2,771 |
| | $ | 1,801 |
| | $ | 2,771 |
| | $ | 1,801 |
|
Upward carrying value changes(b) | 34 |
| | 14 |
| | 169 |
| | 540 |
|
Downward carrying value changes/impairment(c) | — |
| | (127 | ) | | (37 | ) | | (156 | ) |
| |
(a) | The carrying value as of December 31, 2018 was $1.5 billion. |
| |
(b) | The cumulative upward carrying value changes between January 1, 2018 and September 30, 2019 were $479 million. |
| |
(c) | The cumulative downward carrying value changes/impairment between January 1, 2018 and September 30, 2019 were $(197) million. |
Included in other assets above is the Firm’s interest in approximately 40 million Visa Class B shares, recorded at a nominal carrying value. These shares are subject to certain transfer restrictions currently and will be convertible into Visa Class A shares upon final resolution of certain litigation matters involving Visa. The conversion rate of Visa Class B shares into Visa Class A shares is 1.6228 at September 30, 2019, and may be adjusted by Visa depending on developments related to the litigation matters.
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 September 30, 2018,2019, and December 31, 2017,2018, 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. For additional information regarding the financial instruments within the scope of this disclosure, and the methods and significant assumptions used to estimate their fair value, refer to Note2 of JPMorgan Chase’s 2017 Annual Report.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2018 | | December 31, 2017 |
| | 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 | $ | 23.2 |
| $ | 23.2 |
| $ | — |
| $ | — |
| $ | 23.2 |
| | $ | 25.9 |
| $ | 25.9 |
| $ | — |
| $ | — |
| $ | 25.9 |
|
Deposits with banks | 395.9 |
| 392.2 |
| 3.7 |
| — |
| 395.9 |
| | 405.4 |
| 401.8 |
| 3.6 |
| — |
| 405.4 |
|
Accrued interest and accounts receivable | 77.7 |
| — |
| 77.6 |
| 0.1 |
| 77.7 |
| | 67.0 |
| — |
| 67.0 |
| — |
| 67.0 |
|
Federal funds sold and securities purchased under resale agreements | 205.4 |
| — |
| 205.4 |
| — |
| 205.4 |
| | 183.7 |
| — |
| 183.7 |
| — |
| 183.7 |
|
Securities borrowed | 117.9 |
| — |
| 117.9 |
| — |
| 117.9 |
| | 102.1 |
| — |
| 102.1 |
| — |
| 102.1 |
|
Securities, held-to-maturity | 31.4 |
| — |
| 30.9 |
| — |
| 30.9 |
| | 47.7 |
| — |
| 48.7 |
| — |
| 48.7 |
|
Loans, net of allowance for loan losses(a) | 938.2 |
| — |
| 227.3 |
| 710.0 |
| 937.3 |
| | 914.6 |
| — |
| 213.2 |
| 707.1 |
| 920.3 |
|
Other(b) | 55.0 |
| — |
| 54.1 |
| 1.0 |
| 55.1 |
| | 53.9 |
| — |
| 52.1 |
| 9.2 |
| 61.3 |
|
Financial liabilities | | | | | | | | | | | |
Deposits | $ | 1,438.3 |
| $ | — |
| $ | 1,438.4 |
| $ | — |
| $ | 1,438.4 |
| | $ | 1,422.7 |
| $ | — |
| $ | 1,422.7 |
| $ | — |
| $ | 1,422.7 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | 180.5 |
| — |
| 180.5 |
| — |
| 180.5 |
| | 158.2 |
| — |
| 158.2 |
| — |
| 158.2 |
|
Short-term borrowings | 56.7 |
| — |
| 56.7 |
| — |
| 56.7 |
| | 42.6 |
| — |
| 42.4 |
| 0.2 |
| 42.6 |
|
Accounts payable and other liabilities | 173.4 |
| — |
| 170.0 |
| 3.1 |
| 173.1 |
| | 152.0 |
| — |
| 148.9 |
| 2.9 |
| 151.8 |
|
Beneficial interests issued by consolidated VIEs | 20.2 |
| — |
| 20.2 |
| — |
| 20.2 |
| | 26.0 |
| — |
| 26.0 |
| — |
| 26.0 |
|
Long-term debt and junior subordinated deferrable interest debentures | 216.0 |
| — |
| 217.5 |
| 3.3 |
| 220.8 |
| | 236.6 |
| — |
| 240.3 |
| 3.2 |
| 243.5 |
|
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2019 | | December 31, 2018 |
| | 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 | $ | 21.2 |
| $ | 21.2 |
| $ | — |
| $ | — |
| $ | 21.2 |
| | $ | 22.3 |
| $ | 22.3 |
| $ | — |
| $ | — |
| $ | 22.3 |
|
Deposits with banks | 235.4 |
| 235.4 |
| — |
| — |
| 235.4 |
| | 256.5 |
| 256.5 |
| — |
| — |
| 256.5 |
|
Accrued interest and accounts receivable | 87.9 |
| — |
| 87.9 |
| — |
| 87.9 |
| | 72.0 |
| — |
| 71.9 |
| 0.1 |
| 72.0 |
|
Federal funds sold and securities purchased under resale agreements | 243.7 |
| — |
| 243.7 |
| — |
| 243.7 |
| | 308.4 |
| — |
| 308.4 |
| — |
| 308.4 |
|
Securities borrowed | 132.6 |
| — |
| 132.6 |
| — |
| 132.6 |
| | 106.9 |
| — |
| 106.9 |
| — |
| 106.9 |
|
Investment securities, held-to-maturity | 40.8 |
| — |
| 42.4 |
| — |
| 42.4 |
| | 31.4 |
| — |
| 31.5 |
| — |
| 31.5 |
|
Loans, net of allowance for loan losses(a) | 926.2 |
| — |
| 218.9 |
| 720.7 |
| 939.6 |
| | 968.0 |
| — |
| 241.5 |
| 728.5 |
| 970.0 |
|
Other | 60.6 |
| — |
| 59.8 |
| 0.9 |
| 60.7 |
| | 60.5 |
| — |
| 59.6 |
| 1.0 |
| 60.6 |
|
Financial liabilities | | | | | | | | | | | |
Deposits | $ | 1,495.9 |
| $ | — |
| $ | 1,496.3 |
| $ | — |
| $ | 1,496.3 |
| | $ | 1,447.4 |
| $ | — |
| $ | 1,447.5 |
| $ | — |
| $ | 1,447.5 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | 246.8 |
| — |
| 246.8 |
| — |
| 246.8 |
| | 181.4 |
| — |
| 181.4 |
| — |
| 181.4 |
|
Short-term borrowings | 42.4 |
| — |
| 42.4 |
| — |
| 42.4 |
| | 62.1 |
| — |
| 62.1 |
| — |
| 62.1 |
|
Accounts payable and other liabilities | 181.5 |
| 0.7 |
| 177.0 |
| 3.4 |
| 181.1 |
| | 160.6 |
| 0.2 |
| 157.0 |
| 3.0 |
| 160.2 |
|
Beneficial interests issued by consolidated VIEs | 18.5 |
| — |
| 18.5 |
| — |
| 18.5 |
| | 20.2 |
| — |
| 20.2 |
| — |
| 20.2 |
|
Long-term debt and junior subordinated deferrable interest debentures | 224.3 |
| — |
| 223.5 |
| 3.4 |
| 226.9 |
| | 227.1 |
| — |
| 224.6 |
| 3.3 |
| 227.9 |
|
| |
(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. The difference between the estimated fair value and carrying value of a financial asset or liability is the result of the different methodologies used to determine fair value as compared with carrying value. For example, credit losses are estimated for a financial asset’s remaining life in a fair value calculation but are estimated for a loss emergence period in the allowance for loan loss calculation; future loan income (interest and fees) is incorporated in a fair value calculation but is generally not considered in the allowance for loan losses. For a further discussion of the Firm’s methodologies for estimating the fair value of loans and lending-related commitments, refer to Valuation hierarchy on pages 156–159 of JPMorgan Chase’s 2017 Annual Report. |
| |
(b) | The prior period amounts have been revised to conform with the current period presentation. |
The majority of the Firm’s lending-related commitments are not carried at fair value on a recurring basis on the Consolidated balance sheets. The carrying value of the wholesale allowance for lending-related commitments and the estimated fair value of these wholesale lending-related commitments were as follows for the periods indicated.
| | | September 30, 2018 | | December 31, 2017 | September 30, 2019 | | December 31, 2018 |
| | Estimated fair value hierarchy | | Estimated fair value hierarchy | | | Estimated fair value hierarchy | | | | Estimated fair value hierarchy | |
(in billions) | Carrying value(a) | Level 1 | Level 2 | Level 3 | Total estimated fair value | | Carrying value(a) | Level 1 | Level 2 | Level 3 | Total estimated fair value | Carrying value(a) | Level 1 | Level 2 | Level 3 | Total estimated fair value | | Carrying value(a) | Level 1 | Level 2 | Level 3 | Total estimated fair value(b) |
Wholesale lending-related commitments | $1.1 | $— | $1.5 | | $1.1 | $— | $1.6 | $ | 1.1 |
| $ | — |
| $ | — |
| $ | 1.9 |
| $ | 1.9 |
| | $ | 1.0 |
| $ | — |
| $ | — |
| $ | 1.9 |
| $ | 1.9 |
|
| |
(a) | Excludes the current carrying values of the guarantee liability and the offsetting asset, each of which is recognized at fair value at the inception of the guarantees. |
| |
(b) | The prior period amounts have been revised to conform with the current period presentation. |
The Firm does not estimate the fair value of consumer 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. ForRefer to page 161 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the valuation of lending-related commitments, refer to page 157commitments. of JPMorgan Chase’s 2017 Annual Report.
Equity securities without readily determinable fair values
As a result of the adoption of the recognition and measurement guidance and the election of the measurement alternative in the first quarter of 2018, the Firm 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, with such changes recognized in earnings.
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 still held as of September 30, 2018, that are measured under the measurement alternative and the related adjustments recorded during the periods presented for those securities with observable price changes. These securities are included in the nonrecurring fair value tables when applicable price changes are observable.
|
| | | | | | | |
| As of or for the |
(in millions) | Three months ended September 30, 2018 | | Nine months ended September 30, 2018 |
Other assets | | | |
Carrying value | $ | 1,801 |
| | $ | 1,801 |
|
Upward carrying value changes | 14 |
| | 540 |
|
Downward carrying value changes/impairment | (127 | ) | | (156 | ) |
Included in other assets above is the Firm’s interest in approximately 40 millionVisa Class B shares, recorded at a nominal carrying value. These shares are subject to certain transfer restrictions currently and will be convertible into Visa Class A shares upon final resolution of certain litigation matters involving Visa. The conversion rate of Visa Class B shares into Visa Class A shares is 1.6298 at September 30, 2018, and may be adjusted by Visa depending on developments related to the litigation matters.
Note 3 – Fair value option
ForRefer to Note 3 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the primary financial instruments for which the fair value option was elected, including the basis for those elections and the determination of instrument-specific credit risk, where relevant, refer to Note3 of JPMorgan Chase’s 2017 Annual Report.relevant.
Changes in fair value under the fair value option election
The followingtable presentsthe changes in fair value included in the Consolidated statements of income for the three months ended September 30, 20182019 and 2017,2018, 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 September 30, | Three months ended September 30, |
| 2018 | | 2017 | 2019 | | 2018 |
(in millions) | Principal transactions |
| All other income | Total changes in fair value recorded (e) | | Principal transactions | | All other income | Total changes in fair value recorded (e) | Principal transactions | | All other income | Total changes in fair value recorded (e) | | Principal transactions | | All other income | Total changes in fair value recorded (e) |
Federal funds sold and securities purchased under resale agreements | $ | (23 | ) |
| $ | — |
|
| $ | (23 | ) |
| | $ | (17 | ) | | $ | — |
| | $ | (17 | ) | $ | (23 | ) | | $ | — |
| | $ | (23 | ) | | $ | (23 | ) | | $ | — |
| | $ | (23 | ) |
Securities borrowed | (24 | ) |
| — |
|
| (24 | ) |
| | (10 | ) | | — |
| | (10 | ) | 99 |
| | — |
| | 99 |
| | (24 | ) | | — |
| | (24 | ) |
Trading assets: | |
| |
|
|
|
| | | | | | | | | | | | | | | | | |
Debt and equity instruments, excluding loans | (45 | ) |
| 5 |
| (c) | (40 | ) |
| | 412 |
| | — |
| | 412 |
| 546 |
| | — |
| | 546 |
| | (45 | ) | | 5 |
| (c) | (40 | ) |
Loans reported as trading assets: | |
| |
|
|
|
| | | | | | | | | | | | | | | | | |
Changes in instrument-specific credit risk | 122 |
|
| 1 |
| (c) | 123 |
|
| | 139 |
| | (2 | ) | (c) | 137 |
| 111 |
| | (4 | ) | (c) | 107 |
| | 122 |
| | 1 |
| (c) | 123 |
|
Other changes in fair value | (6 | ) |
| 49 |
| (c) | 43 |
|
| | 111 |
| | 249 |
| (c) | 360 |
| 74 |
| | 320 |
| (c) | 394 |
| | (6 | ) | | 49 |
| (c) | 43 |
|
Loans: | |
| |
|
|
|
| | | | | | | | | | | | | | | | | |
Changes in instrument-specific credit risk | (1 | ) |
| — |
|
| (1 | ) |
| | — |
| | — |
| | — |
| (4 | ) | | — |
| | (4 | ) | | (1 | ) | | — |
| | (1 | ) |
Other changes in fair value | 1 |
|
| — |
|
| 1 |
|
| | 3 |
| | — |
| | 3 |
| — |
| | — |
| | — |
| | 1 |
| | — |
| | 1 |
|
Other assets | 2 |
|
| 16 |
| (d) | 18 |
|
| | 3 |
| | (4 | ) | (d) | (1 | ) | (6 | ) | | — |
| | (6 | ) | | 2 |
| | 16 |
| (d) | 18 |
|
Deposits(a) | 32 |
|
| — |
|
| 32 |
|
| | (117 | ) | | — |
| | (117 | ) | (397 | ) | | — |
| | (397 | ) | | 32 |
| | — |
| | 32 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | 8 |
|
| — |
|
| 8 |
|
| | 2 |
| | — |
| | 2 |
| 2 |
| | — |
| | 2 |
| | 8 |
| | — |
| | 8 |
|
Short-term borrowings(a) | (25 | ) |
| — |
|
| (25 | ) |
| | (54 | ) | | — |
| | (54 | ) | 173 |
| | — |
| | 173 |
| | (25 | ) | | — |
| | (25 | ) |
Trading liabilities | 2 |
|
| — |
|
| 2 |
|
| | (3 | ) | | — |
| | (3 | ) | — |
| | — |
| | — |
| | 2 |
| | — |
| | 2 |
|
Other liabilities | | 1 |
| | — |
| | 1 |
| | — |
| | — |
| | — |
|
Long-term debt(a)(b) | 259 |
|
| — |
|
| 259 |
|
| | (793 | ) | | — |
| | (793 | ) | (614 | ) | | — |
| | (614 | ) | | 259 |
| | — |
| | 259 |
|
| | | Nine months ended September 30, | Nine months ended September 30, |
| 2018 | | 2017 | 2019 | | 2018 |
(in millions) | Principal transactions | | All other income | Total changes in fair value recorded(e) | | Principal transactions | | All other income | Total changes in fair value recorded(e) | Principal transactions | | All other income | Total changes in fair value recorded (e) | | Principal transactions | | All other income | Total changes in fair value recorded (e) |
Federal funds sold and securities purchased under resale agreements | $ | (49 | ) | | $ | — |
| | $ | (49 | ) | | | $ | (50 | ) | | $ | — |
| | $ | (50 | ) | $ | 10 |
| | $ | — |
| | $ | 10 |
| | $ | (49 | ) | | $ | — |
| | $ | (49 | ) |
Securities borrowed | (22 | ) | | — |
| | (22 | ) | | 80 |
| | — |
| | 80 |
| 179 |
| | — |
| | 179 |
| | (22 | ) | | — |
| | (22 | ) |
Trading assets: | | | — |
| | | | | | | | | | | | | | | | | | | |
Debt and equity instruments, excluding loans | (490 | ) | | 6 |
| (c) | (484 | ) | | 1,107 |
| | 2 |
| (c) | 1,109 |
| 2,104 |
| | — |
| | 2,104 |
| | (490 | ) | | 6 |
| (c) | (484 | ) |
Loans reported as trading assets: | | | — |
| | | | | | | | | | | | | | | | | | | |
Changes in instrument-specific credit risk | 458 |
| | 5 |
| (c) | 463 |
| | 382 |
| | 13 |
| (c) | 395 |
| 558 |
| | 1 |
| (c) | 559 |
| | 458 |
| | 5 |
| (c) | 463 |
|
Other changes in fair value | 64 |
| | 24 |
| (c) | 88 |
| | 188 |
| | 601 |
| (c) | 789 |
| 274 |
| | 885 |
| (c) | 1,159 |
| | 64 |
| | 24 |
| (c) | 88 |
|
Loans: | | | | | | | | | | | | | | | | | | | | | | |
Changes in instrument-specific credit risk | (2 | ) | | — |
| | (2 | ) | | (1 | ) | | — |
| | (1 | ) | (12 | ) | | — |
| | (12 | ) | | (2 | ) | | — |
| | (2 | ) |
Other changes in fair value | (1 | ) | |
|
| | (1 | ) | | 4 |
| | 3 |
| (c) | 7 |
| 1 |
| | — |
| | 1 |
| | (1 | ) | | — |
| | (1 | ) |
Other assets | 4 |
| | 6 |
| (d) | 10 |
| | 10 |
| | (26 | ) | (d) | (16 | ) | (3 | ) | | 3 |
| (d) | — |
| | 4 |
| | 6 |
| (d) | 10 |
|
Deposits(a) | 371 |
| | — |
| | 371 |
| | (362 | ) | | — |
| | (362 | ) | (1,589 | ) | | — |
| | (1,589 | ) | | 371 |
| | — |
| | 371 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | 27 |
| | — |
| | 27 |
| | 4 |
| | — |
| | 4 |
| (18 | ) | | — |
| | (18 | ) | | 27 |
| | — |
| | 27 |
|
Other borrowed funds(a) | 86 |
| | — |
| | 86 |
| | (485 | ) | | — |
| | (485 | ) | |
Short-term borrowings(a) | | (601 | ) | | — |
| | (601 | ) | | 86 |
| | — |
| | 86 |
|
Trading liabilities | 1 |
| | — |
| | 1 |
| | (4 | ) | | — |
| | (4 | ) | 5 |
| | — |
| | 5 |
| | 1 |
| | — |
| | 1 |
|
Other liabilities | | (7 | ) | | — |
| | (7 | ) | | — |
| | — |
| | — |
|
Long-term debt(a)(b) | 1,486 |
| | — |
| | 1,486 |
| | (1,716 | ) | | — |
| | (1,716 | ) | (5,220 | ) | | — |
| | (5,220 | ) | | 1,486 |
| | — |
| | 1,486 |
|
| |
(a) | Unrealized gains/(losses) due to instrument-specific credit risk (DVA) for liabilities for which the fair value option has been elected is recorded in OCI, while realized gains/(losses) are recorded in principal transactions revenue. Realized gains/(losses) due to instrument-specific credit risk recorded in principal transactions revenue were not material for the three and nine months ended September 30, 20182019 and 2017,2018, respectively. |
| |
(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 hybrid financial instruments. ForRefer to Note 6 for further information regarding interest income and interest expense, refer to Note 6.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 September 30, 2018,2019, and December 31, 2017,2018, for loans, long-term debt and long-term beneficial interests for which the fair value option has been elected.
| | | September 30, 2018 | | December 31, 2017 | September 30, 2019 | | December 31, 2018 |
(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 | 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(a) |
|
|
|
|
|
|
| | | | |
|
|
|
|
|
|
| | | | |
Nonaccrual loans |
|
|
|
|
|
|
| | | | |
|
|
|
|
|
|
| | | | |
Loans reported as trading assets | $ | 4,171 |
|
| $ | 1,189 |
| $ | (2,982 | ) | | $ | 4,219 |
| | $ | 1,371 |
| $ | (2,848 | ) | $ | 3,884 |
|
| $ | 1,151 |
| $ | (2,733 | ) | | $ | 4,240 |
| | $ | 1,350 |
| $ | (2,890 | ) |
Loans | — |
|
| — |
| — |
| | 39 |
| | — |
| (39 | ) | 181 |
|
| 151 |
| (30 | ) | | 39 |
| | — |
| (39 | ) |
Subtotal | 4,171 |
|
| 1,189 |
| (2,982 | ) | | 4,258 |
| | 1,371 |
| (2,887 | ) | 4,065 |
|
| 1,302 |
| (2,763 | ) | | 4,279 |
| | 1,350 |
| (2,929 | ) |
All other performing loans |
|
|
|
|
|
|
| | | | |
|
|
|
|
|
|
| | | | |
Loans reported as trading assets | 41,986 |
|
| 40,395 |
| (1,591 | ) | | 38,157 |
| | 36,590 |
| (1,567 | ) | 45,315 |
|
| 43,903 |
| (1,412 | ) | | 42,215 |
| | 40,403 |
| (1,812 | ) |
Loans | 3,039 |
|
| 2,987 |
| (52 | ) | | 2,539 |
| | 2,508 |
| (31 | ) | 5,686 |
|
| 5,609 |
| (77 | ) | | 3,186 |
| | 3,151 |
| (35 | ) |
Total loans | $ | 49,196 |
|
| $ | 44,571 |
| $ | (4,625 | ) | | $ | 44,954 |
| | $ | 40,469 |
| $ | (4,485 | ) | $ | 55,066 |
|
| $ | 50,814 |
| $ | (4,252 | ) | | $ | 49,680 |
| | $ | 44,904 |
| $ | (4,776 | ) |
Long-term debt |
|
|
|
|
|
|
| | | | |
|
|
|
|
|
|
| | | | |
Principal-protected debt | $ | 31,858 |
| (c) | $ | 27,518 |
| $ | (4,340 | ) | | $ | 26,297 |
| (c) | $ | 23,848 |
| $ | (2,449 | ) | $ | 40,750 |
| (c) | $ | 37,635 |
| $ | (3,115 | ) | | $ | 32,674 |
| (c) | $ | 28,718 |
| $ | (3,956 | ) |
Nonprincipal-protected debt(b) | NA |
|
| 26,594 |
| NA |
| | NA |
| | 23,671 |
| NA |
| NA |
|
| 34,322 |
| NA |
| | NA |
| | 26,168 |
| NA |
|
Total long-term debt | NA |
|
| $ | 54,112 |
| NA |
| | NA |
| | $ | 47,519 |
| NA |
| NA |
|
| $ | 71,957 |
| NA |
| | NA |
| | $ | 54,886 |
| NA |
|
Long-term beneficial interests | | | |
|
| | | | | | | | | | | |
Nonprincipal-protected debt | NA |
|
| $ | 17 |
| NA |
| | NA |
| | $ | 45 |
| NA |
| |
Nonprincipal-protected debt(b) | | NA |
|
| $ | 39 |
| NA |
| | NA |
| | $ | 28 |
| NA |
|
Total long-term beneficial interests | NA |
|
| $ | 17 |
| NA |
| | NA |
| | $ | 45 |
| NA |
| NA |
|
| $ | 39 |
| NA |
| | NA |
| | $ | 28 |
| NA |
|
| |
(a) | There were no0 performing loans that were ninety days or more past due as of September 30, 2018,2019, and December 31, 2017,2018, respectively. |
| |
(b) | Remaining contractual principal is not applicable to nonprincipal-protected notes.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 the maturity, of the note, 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. |
| |
(c) | 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 September 30, 2018,2019, and December 31, 2017,2018, the contractual amount of lending-related commitments for which the fair value option was elected was $9.1$6.5 billion and $7.4$6.9 billion, respectively, with a corresponding fair value of $(53)$(91) million and $(76)$(82) million, respectively. ForRefer to Note 27 of JPMorgan Chase’s 2018 Form 10-K, and Note 22 of this Form 10-Q for further information regarding off-balance sheet lending-related financial instruments, refer to Note27 of JPMorgan Chase’s 2017 Annual Report, and Note 20 of this Form 10-Q.instruments.
Structured note products by balance sheet classification and risk component
The following table presents the fair value of the structured notes, issued by the Firm, by balance sheet classification and the primary risk type.
| |
| September 30, 2018 |
| December 31, 2017 | September 30, 2019 | | December 31, 2018 |
(in millions) | Long-term debt | Short-term borrowings | Deposits | Total |
| Long-term debt | Short-term borrowings | Deposits | Total | Long-term debt | Short-term borrowings | Deposits | Total | | Long-term debt | Short-term borrowings | Deposits | Total |
Risk exposure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | |
Interest rate | $ | 23,333 |
| $ | 616 |
| $ | 9,269 |
| $ | 33,218 |
|
| $ | 22,056 |
| $ | 69 |
| $ | 8,058 |
| $ | 30,183 |
| $ | 33,402 |
| $ | 54 |
| $ | 17,547 |
| $ | 51,003 |
| | $ | 24,137 |
| $ | 62 |
| $ | 12,372 |
| $ | 36,571 |
|
Credit | 3,771 |
| 483 |
| — |
| 4,254 |
|
| 4,329 |
| 1,312 |
| — |
| 5,641 |
| 5,207 |
| 817 |
| — |
| 6,024 |
| | 4,009 |
| 995 |
| — |
| 5,004 |
|
Foreign exchange | 2,930 |
| 96 |
| 37 |
| 3,063 |
|
| 2,841 |
| 147 |
| 38 |
| 3,026 |
| 3,570 |
| 45 |
| 8 |
| 3,623 |
| | 3,169 |
| 157 |
| 38 |
| 3,364 |
|
Equity | 21,950 |
| 6,258 |
| 7,330 |
| 35,538 |
|
| 17,581 |
| 7,106 |
| 6,548 |
| 31,235 |
| 27,644 |
| 5,565 |
| 8,190 |
| 41,399 |
| | 21,382 |
| 5,422 |
| 7,368 |
| 34,172 |
|
Commodity | 355 |
| 7 |
| 1,715 |
| 2,077 |
|
| 230 |
| 15 |
| 4,468 |
| 4,713 |
| 504 |
| 7 |
| 1,352 |
| 1,863 |
| | 372 |
| 34 |
| 1,207 |
| 1,613 |
|
Total structured notes | $ | 52,339 |
| $ | 7,460 |
| $ | 18,351 |
| $ | 78,150 |
|
| $ | 47,037 |
| $ | 8,649 |
| $ | 19,112 |
| $ | 74,798 |
| $ | 70,327 |
| $ | 6,488 |
| $ | 27,097 |
| $ | 103,912 |
| | $ | 53,069 |
| $ | 6,670 |
| $ | 20,985 |
| $ | 80,724 |
|
Note 4 – Derivative instruments
JPMorgan Chase makes markets in derivatives for clients and also uses derivatives to hedge or manage its own risk exposures. ForRefer to Note 5 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of the Firm’s use of and accounting policies regarding derivative instruments, refer to Note5 of JPMorgan Chase’s 2017 Annual Report.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 certain risks associated with specified assets or liabilities (“specified risk management” positions) as well as derivatives used in the Firm’s market-making businesses or for other purposes.
Derivatives designated as hedges
The adoption of the new hedge accounting guidance in the first quarter of 2018 better aligns hedge accounting with the economics of the Firm’s risk management activities. For additional information on the impact of the new guidance, refer to Note17.
To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability or forecasted transaction and type of risk to be hedged, and how the effectiveness of the derivative is assessed prospectively and retrospectively. To assess effectiveness, the Firm uses statistical methods such as regression analysis, nonstatistical methods such as dollar-value comparisons of the change in the fair value of the derivative to the change in the fair value or cash flows of the hedged item, and qualitative comparisons of critical terms and the evaluation of any changes in those terms. The extent to which a derivative has been, and is expected to continue to be, highly effective at offsetting changes in the fair value or
cash flows of the hedged item must be assessed and documented at least quarterly. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued.
For qualifying fair value hedges, changes in the fair value of the derivative, and in the value of the hedged item for the risk being hedged, are recognized in earnings. Certain amounts excluded from the assessment of effectiveness are recorded in OCI and recognized in earnings through an amortization approach over the life of the derivative. If the hedge relationship is terminated, then the adjustment to the hedged item continues to be reported as part of the basis of the hedged item, and for benchmark interest rate hedges, is amortized to earnings as a yield adjustment. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item - primarily net interest income and principal transactions revenue.
For qualifying cash flow hedges, changes in the fair value of the derivative are recorded in OCI and recognized in earnings as the hedged item affects earnings. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item - primarily interest income, interest expense, noninterest revenue and compensation expense. If the hedge relationship is terminated, then the change in value of the derivative recorded in AOCI is recognized in earnings when the cash flows that were hedged affect earnings. For hedge relationships that are discontinued because a forecasted transaction is not expected to occur according to the original hedge forecast, any related derivative values recorded in AOCI are immediately recognized in earnings.
For qualifying net investment hedges, changes in the fair value of the derivatives due to changes in spot foreign exchange rates are recorded in OCI as translation adjustments. Amounts excluded from the assessment of effectiveness are recorded directly in earnings.
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: | | | |
| Hedge fixed rate assets and liabilities | Fair value hedge | Corporate | 118-119109-110 |
| Hedge floating-rate assets and liabilities | Cash flow hedge | Corporate | 120111 |
| Hedge foreign currency-denominated assets and liabilities | Fair value hedge | Corporate | 118-119109-110 |
| Hedge foreign currency-denominated forecasted revenue and expense | Cash flow hedge | Corporate | 120111 |
| Hedge the value of the Firm’s investments in non-U.S. dollar functional currency entities | Net investment hedge | Corporate | 121112 |
| Hedge commodity inventory | Fair value hedge | CIB | 118-119109-110 |
Manage specifically identified risk exposures not designated in qualifying hedge accounting relationships: | | | |
| Manage the risk of the mortgage pipeline, warehouse loans and MSRs | Specified risk management | CCB | 121112 |
| Manage the credit risk of wholesale lending exposures | Specified risk management | CIB | 121112 |
foreign exchange | Manage the risk of certain other specified assets and liabilities | Specified risk management | Corporate | 121112 |
Market-making derivatives and other activities: | | | |
| Market-making and related risk management | Market-making and other | CIB | 121112 |
| Other derivatives | Market-making and other | CIB, AWM, Corporate | 121112 |
Notional amount of derivative contracts
The following table summarizes the notional amount of derivative contracts outstanding as of September 30, 2018,2019, and December 31, 2017.2018.
| | | Notional amounts(b) | Notional amounts(b) |
(in billions) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Interest rate contracts | | |
Swaps | $ | 25,236 |
| $ | 21,043 |
| $ | 25,099 |
| $ | 21,763 |
|
Futures and forwards | 7,326 |
| 4,904 |
| 4,887 |
| 3,562 |
|
Written options | 4,718 |
| 3,576 |
| 4,290 |
| 3,997 |
|
Purchased options | 5,233 |
| 3,987 |
| 4,697 |
| 4,322 |
|
Total interest rate contracts | 42,513 |
| 33,510 |
| 38,973 |
| 33,644 |
|
Credit derivatives(a) | 1,603 |
| 1,522 |
| 1,365 |
| 1,501 |
|
Foreign exchange contracts | | |
Cross-currency swaps | 3,893 |
| 3,953 |
| 3,886 |
| 3,548 |
|
Spot, futures and forwards | 6,812 |
| 5,923 |
| 7,111 |
| 5,871 |
|
Written options | 961 |
| 786 |
| 832 |
| 835 |
|
Purchased options | 956 |
| 776 |
| 852 |
| 830 |
|
Total foreign exchange contracts | 12,622 |
| 11,438 |
| 12,681 |
| 11,084 |
|
Equity contracts | | |
Swaps | 402 |
| 367 |
| 389 |
| 346 |
|
Futures and forwards | 106 |
| 90 |
| 131 |
| 101 |
|
Written options | 596 |
| 531 |
| 692 |
| 528 |
|
Purchased options | 543 |
| 453 |
| 632 |
| 490 |
|
Total equity contracts | 1,647 |
| 1,441 |
| 1,844 |
| 1,465 |
|
Commodity contracts | | |
Swaps | 140 |
| 116 |
| 148 |
| 134 |
|
Spot, futures and forwards | 164 |
| 168 |
| 218 |
| 156 |
|
Written options | 157 |
| 98 |
| 166 |
| 135 |
|
Purchased options | 134 |
| 93 |
| 153 |
| 120 |
|
Total commodity contracts | 595 |
| 475 |
| 685 |
| 545 |
|
Total derivative notional amounts | $ | 58,980 |
| $ | 48,386 |
| $ | 55,548 |
| $ | 48,239 |
|
| |
(a) | ForRefer to the Credit derivatives discussion on page 113 for more information on volumes and types of credit derivative contracts, refer to the Credit derivatives discussion on page 122.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 transactions,contracts, the notional amount is not exchanged; it is used simply as a reference 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 September 30, 2018,2019, and December 31, 2017,2018, 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) | Free-standing derivative receivables and payables(a) | | | | | | | | | | | Free-standing derivative receivables and payables(a) | | | | | | | | | | |
| Gross derivative receivables | | | | Gross derivative payables | | | Gross derivative receivables | | | | Gross derivative payables | | |
September 30, 2018 (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) | |
September 30, 2019 (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 | $ | 260,636 |
| | $ | 823 |
| | $ | 261,459 |
| | $ | 23,397 |
| | $ | 234,232 |
| | $ | 1 |
| | $ | 234,233 |
| | $ | 7,091 |
| $ | 375,082 |
| | $ | 851 |
| | $ | 375,933 |
| | $ | 28,507 |
| | $ | 338,711 |
| | $ | 2 |
| | $ | 338,713 |
| | $ | 10,223 |
|
Credit | 23,505 |
| | — |
| | 23,505 |
| | 582 |
| | 23,360 |
| | — |
| | 23,360 |
| | 1,452 |
| 15,717 |
| | — |
| | 15,717 |
| | 838 |
| | 17,062 |
| | — |
| | 17,062 |
| | 2,159 |
|
Foreign exchange | 188,261 |
| | 623 |
| | 188,884 |
| | 17,043 |
| | 176,771 |
| | 848 |
| | 177,619 |
| | 12,402 |
| 162,364 |
| | 768 |
| | 163,132 |
| | 12,681 |
| | 164,583 |
| | 1,159 |
| | 165,742 |
| | 15,016 |
|
Equity | 46,932 |
| | — |
| | 46,932 |
| | 10,104 |
| | 51,355 |
| | — |
| | 51,355 |
| | 11,978 |
| 46,378 |
| | — |
| | 46,378 |
| | 7,409 |
| | 50,891 |
| | — |
| | 50,891 |
| | 10,603 |
|
Commodity | 22,175 |
| | 193 |
| | 22,368 |
| | 8,936 |
| | 22,749 |
| | 90 |
| | 22,839 |
| | 8,770 |
| 20,985 |
| | 253 |
| | 21,238 |
| | 6,142 |
| | 25,470 |
| | 341 |
| | 25,811 |
| | 9,789 |
|
Total fair value of trading assets and liabilities | $ | 541,509 |
| | $ | 1,639 |
| | $ | 543,148 |
| | $ | 60,062 |
| | $ | 508,467 |
| | $ | 939 |
| | $ | 509,406 |
| | $ | 41,693 |
| $ | 620,526 |
| | $ | 1,872 |
| | $ | 622,398 |
| | $ | 55,577 |
| | $ | 596,717 |
| | $ | 1,502 |
| | $ | 598,219 |
| | $ | 47,790 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross derivative receivables | | | | Gross derivative payables | | | Gross derivative receivables | | | | Gross derivative payables | | |
December 31, 2017 (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) | |
December 31, 2018 (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 | $ | 314,962 |
| (c) | $ | 1,030 |
| (c) | $ | 315,992 |
| | $ | 24,673 |
| | $ | 284,433 |
| (c) | $ | 3 |
| (c) | $ | 284,436 |
| | $ | 7,129 |
| $ | 267,871 |
| | $ | 833 |
| | $ | 268,704 |
| | $ | 23,214 |
| | $ | 242,782 |
| | $ | — |
| | $ | 242,782 |
| | $ | 7,784 |
|
Credit | 23,205 |
| | — |
| | 23,205 |
| | 869 |
| | 23,252 |
| | — |
| | 23,252 |
| | 1,299 |
| 20,095 |
| | — |
| | 20,095 |
| | 612 |
| | 20,276 |
| | — |
| | 20,276 |
| | 1,667 |
|
Foreign exchange | 159,740 |
| | 491 |
| | 160,231 |
| | 16,151 |
| | 154,601 |
| | 1,221 |
| | 155,822 |
| | 12,473 |
| 167,057 |
| | 628 |
| | 167,685 |
| | 13,450 |
| | 164,392 |
| | 825 |
| | 165,217 |
| | 12,785 |
|
Equity | 40,040 |
| | — |
| | 40,040 |
| | 7,882 |
| | 45,395 |
| | — |
| | 45,395 |
| | 9,192 |
| 49,285 |
| | — |
| | 49,285 |
| | 9,946 |
| | 51,195 |
| | — |
| | 51,195 |
| | 10,161 |
|
Commodity | 20,066 |
| | 19 |
| | 20,085 |
| | 6,948 |
| | 21,498 |
| | 403 |
| | 21,901 |
| | 7,684 |
| 20,223 |
| | 247 |
| | 20,470 |
| | 6,991 |
| | 22,297 |
| | 121 |
| | 22,418 |
| | 9,372 |
|
Total fair value of trading assets and liabilities | $ | 558,013 |
| (c) | $ | 1,540 |
| (c) | $ | 559,553 |
| | $ | 56,523 |
| | $ | 529,179 |
| (c) | $ | 1,627 |
| (c) | $ | 530,806 |
| | $ | 37,777 |
| $ | 524,531 |
| | $ | 1,708 |
| | $ | 526,239 |
| | $ | 54,213 |
| | $ | 500,942 |
| | $ | 946 |
| | $ | 501,888 |
| | $ | 41,769 |
|
| |
(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. |
| |
(c) | The prior period amounts have been revised to conform with the current period presentation. |
Derivatives netting
The following tables present, as of September 30, 2018,2019, and December 31, 2017,2018, 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 non-cash financial instruments (generally U.S. government and agency securities and other G7 government securities) and cash collateral held at third partythird-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. |
| |
• | 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. |
| | | | September 30, 2018 | | December 31, 2017 | | September 30, 2019 | | December 31, 2018 |
(in millions) | (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 | (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 | U.S. GAAP nettable derivative receivables | | | | | | | | | | | U.S. GAAP nettable derivative receivables | | | | | | | | | | | |
Interest rate contracts: | Interest rate contracts: | | | | | | | | | | Interest rate contracts: | | | | | | | | | | |
Over-the-counter (“OTC”) | Over-the-counter (“OTC”) | $ | 250,181 |
| $ | (230,533 | ) | | $ | 19,648 |
| | $ | 305,569 |
| | $ | (284,917 | ) | | $ | 20,652 |
| Over-the-counter (“OTC”) | $ | 356,075 |
| $ | (332,566 | ) | | $ | 23,509 |
| | $ | 258,227 |
| | $ | (239,498 | ) | | $ | 18,729 |
| |
OTC–cleared | OTC–cleared | 7,512 |
| (7,374 | ) | | 138 |
| | 6,531 |
| | (6,318 | ) | | 213 |
| OTC–cleared | 14,438 |
| (14,343 | ) | | 95 |
| | 6,404 |
| | (5,856 | ) | | 548 |
| |
Exchange-traded(a) | Exchange-traded(a) | 300 |
| (155 | ) | | 145 |
| | 185 |
| | (84 | ) | | 101 |
| Exchange-traded(a) | 577 |
| (517 | ) | | 60 |
| | 322 |
| | (136 | ) | | 186 |
| |
Total interest rate contracts | Total interest rate contracts | 257,993 |
| (238,062 | ) | | 19,931 |
| | 312,285 |
| | (291,319 | ) | | 20,966 |
| Total interest rate contracts | 371,090 |
| (347,426 | ) | | 23,664 |
| | 264,953 |
| | (245,490 | ) | | 19,463 |
| |
Credit contracts: | Credit contracts: | | | | | | | | | | Credit contracts: | | | | | | | | | | |
OTC | OTC | 12,502 |
| (12,153 | ) | | 349 |
| | 15,390 |
| | (15,165 | ) | | 225 |
| OTC | 11,168 |
| (10,682 | ) | | 486 |
| | 12,648 |
| | (12,261 | ) | | 387 |
| |
OTC–cleared | OTC–cleared | 10,806 |
| (10,770 | ) | | 36 |
| | 7,225 |
| | (7,170 | ) | | 55 |
| OTC–cleared | 4,321 |
| (4,197 | ) | | 124 |
| | 7,267 |
| | (7,222 | ) | | 45 |
| |
Total credit contracts | Total credit contracts | 23,308 |
| (22,923 | ) | | 385 |
| | 22,615 |
| | (22,335 | ) | | 280 |
| Total credit contracts | 15,489 |
| (14,879 | ) | | 610 |
| | 19,915 |
| | (19,483 | ) | | 432 |
| |
Foreign exchange contracts: | Foreign exchange contracts: | | | | | | | | | | Foreign exchange contracts: | | | | | | | | | | |
OTC | OTC | 184,421 |
| (171,163 | ) | | 13,258 |
| | 155,289 |
| | (142,420 | ) | | 12,869 |
| OTC | 160,181 |
| (150,271 | ) | | 9,910 |
| | 163,862 |
| | (153,988 | ) | | 9,874 |
| |
OTC–cleared | OTC–cleared | 676 |
| (659 | ) | | 17 |
| | 1,696 |
| | (1,654 | ) | | 42 |
| OTC–cleared | 176 |
| (174 | ) | | 2 |
| | 235 |
| | (226 | ) | | 9 |
| |
Exchange-traded(a) | Exchange-traded(a) | 42 |
| (19 | ) | | 23 |
| | 141 |
| | (7 | ) | | 134 |
| Exchange-traded(a) | 20 |
| (6 | ) | | 14 |
| | 32 |
| | (21 | ) | | 11 |
| |
Total foreign exchange contracts | Total foreign exchange contracts | 185,139 |
| (171,841 | ) | | 13,298 |
| | 157,126 |
| | (144,081 | ) | | 13,045 |
| Total foreign exchange contracts | 160,377 |
| (150,451 | ) | | 9,926 |
| | 164,129 |
| | (154,235 | ) | | 9,894 |
| |
Equity contracts: | Equity contracts: | | | | | | | | | | Equity contracts: | | | | | | | | | | |
OTC | OTC | 25,197 |
| (22,380 | ) | | 2,817 |
| | 22,024 |
| | (19,917 | ) | | 2,107 |
| OTC | 22,195 |
| (20,281 | ) | | 1,914 |
| | 26,178 |
| | (23,879 | ) | | 2,299 |
| |
Exchange-traded(a) | Exchange-traded(a) | 16,789 |
| (14,448 | ) | | 2,341 |
| | 14,188 |
| | (12,241 | ) | | 1,947 |
| Exchange-traded(a) | 21,678 |
| (18,688 | ) | | 2,990 |
| | 18,876 |
| | (15,460 | ) | | 3,416 |
| |
Total equity contracts | Total equity contracts | 41,986 |
| (36,828 | ) | | 5,158 |
| | 36,212 |
| | (32,158 | ) | | 4,054 |
| Total equity contracts | 43,873 |
| (38,969 | ) | | 4,904 |
| | 45,054 |
| | (39,339 | ) | | 5,715 |
| |
Commodity contracts: | Commodity contracts: | | | | | | | | | | Commodity contracts: | | | | | | | | | | |
OTC | OTC | 12,497 |
| (4,916 | ) | | 7,581 |
| | 10,903 |
| | (4,436 | ) | | 6,467 |
| OTC | 7,714 |
| (5,954 | ) | | 1,760 |
| | 7,448 |
| | (5,261 | ) | | 2,187 |
| |
OTC–cleared | | OTC–cleared | 26 |
| (25 | ) | | 1 |
| | — |
| | — |
| | — |
| |
Exchange-traded(a) | Exchange-traded(a) | 9,198 |
| (8,516 | ) | | 682 |
| | 8,854 |
| | (8,701 | ) | | 153 |
| Exchange-traded(a) | 9,151 |
| (9,117 | ) | | 34 |
| | 8,815 |
| | (8,218 | ) | | 597 |
| |
Total commodity contracts | Total commodity contracts | 21,695 |
| (13,432 | ) | | 8,263 |
| | 19,757 |
| | (13,137 | ) | | 6,620 |
| Total commodity contracts | 16,891 |
| (15,096 | ) | | 1,795 |
| | 16,263 |
| | (13,479 | ) | | 2,784 |
| |
Derivative receivables with appropriate legal opinion | Derivative receivables with appropriate legal opinion | 530,121 |
| (483,086 | ) | (b) | 47,035 |
| | 547,995 |
| | (503,030 | ) | (b) | 44,965 |
| Derivative receivables with appropriate legal opinion | 607,720 |
| (566,821 | ) | | 40,899 |
| (d) | 510,314 |
| | (472,026 | ) | | 38,288 |
| (d) |
Derivative receivables where an appropriate legal opinion has not been either sought or obtained | Derivative receivables where an appropriate legal opinion has not been either sought or obtained | 13,027 |
| | | 13,027 |
| | 11,558 |
| | | | 11,558 |
| Derivative receivables where an appropriate legal opinion has not been either sought or obtained | 14,678 |
| | | 14,678 |
| | 15,925 |
| | | | 15,925 |
| |
Total derivative receivables recognized on the Consolidated balance sheets | Total derivative receivables recognized on the Consolidated balance sheets | $ | 543,148 |
| | | $ | 60,062 |
| | $ | 559,553 |
| | | | $ | 56,523 |
| Total derivative receivables recognized on the Consolidated balance sheets | $ | 622,398 |
| | | $ | 55,577 |
| | $ | 526,239 |
| | | | $ | 54,213 |
| |
Collateral not nettable on the Consolidated balance sheets(c)(d) | | | (13,826 | ) | | | | | | (13,363 | ) | |
Collateral not nettable on the Consolidated balance sheets(b)(c) | | Collateral not nettable on the Consolidated balance sheets(b)(c) | | | (13,224 | ) | | | | | | (13,046 | ) | |
Net amounts | Net amounts | | | $ | 46,236 |
| | | | | | $ | 43,160 |
| Net amounts | | | $ | 42,353 |
| | | | | | $ | 41,167 |
| |
| | | | September 30, 2018 | | December 31, 2017 | | September 30, 2019 | | December 31, 2018 |
(in millions) | (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 | (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 | U.S. GAAP nettable derivative payables | | | | | | | | | | U.S. GAAP nettable derivative payables | | | | | | | | | | |
Interest rate contracts: | Interest rate contracts: | | | | | | | | | | Interest rate contracts: | | | | | | | | | | |
OTC | OTC | $ | 225,999 |
| $ | (220,369 | ) | | $ | 5,630 |
| | $ | 276,960 |
| | $ | (271,294 | ) | | $ | 5,666 |
| OTC | $ | 321,553 |
| $ | (313,017 | ) | | $ | 8,536 |
| | $ | 233,404 |
| | $ | (228,369 | ) | | $ | 5,035 |
| |
OTC–cleared | OTC–cleared | 6,650 |
| (6,618 | ) | | 32 |
| | 6,004 |
| | (5,928 | ) | | 76 |
| OTC–cleared | 15,176 |
| (14,960 | ) | | 216 |
| | 7,163 |
| | (6,494 | ) | | 669 |
| |
Exchange-traded(a) | Exchange-traded(a) | 172 |
| (155 | ) | | 17 |
| | 127 |
| | (84 | ) | | 43 |
| Exchange-traded(a) | 585 |
| (513 | ) | | 72 |
| | 210 |
| | (135 | ) | | 75 |
| |
Total interest rate contracts | Total interest rate contracts | 232,821 |
| (227,142 | ) | | 5,679 |
| | 283,091 |
| | (277,306 | ) | | 5,785 |
| Total interest rate contracts | 337,314 |
| (328,490 | ) | | 8,824 |
| | 240,777 |
| | (234,998 | ) | | 5,779 |
| |
Credit contracts: | Credit contracts: | | | | | | | | | | Credit contracts: | | | | | | | | | | |
OTC | OTC | 13,133 |
| (11,852 | ) | | 1,281 |
| | 16,194 |
| | (15,170 | ) | | 1,024 |
| OTC | 13,130 |
| (11,254 | ) | | 1,876 |
| | 13,412 |
| | (11,895 | ) | | 1,517 |
| |
OTC–cleared | OTC–cleared | 10,062 |
| (10,056 | ) | | 6 |
| | 6,801 |
| | (6,784 | ) | | 17 |
| OTC–cleared | 3,797 |
| (3,649 | ) | | 148 |
| | 6,716 |
| | (6,714 | ) | | 2 |
| |
Total credit contracts | Total credit contracts | 23,195 |
| (21,908 | ) | | 1,287 |
| | 22,995 |
| | (21,954 | ) | | 1,041 |
| Total credit contracts | 16,927 |
| (14,903 | ) | | 2,024 |
| | 20,128 |
| | (18,609 | ) | | 1,519 |
| |
Foreign exchange contracts: | Foreign exchange contracts: | | | | | | | | | | Foreign exchange contracts: | | | | | | | | | | |
OTC | OTC | 173,389 |
| (164,557 | ) | | 8,832 |
| | 150,966 |
| | (141,789 | ) | | 9,177 |
| OTC | 162,336 |
| (150,537 | ) | | 11,799 |
| | 160,930 |
| | (152,161 | ) | | 8,769 |
| |
OTC–cleared | OTC–cleared | 679 |
| (654 | ) | | 25 |
| | 1,555 |
| | (1,553 | ) | | 2 |
| OTC–cleared | 190 |
| (185 | ) | | 5 |
| | 274 |
| | (268 | ) | | 6 |
| |
Exchange-traded(a) | Exchange-traded(a) | 25 |
| (6 | ) | | 19 |
| | 98 |
| | (7 | ) | | 91 |
| Exchange-traded(a) | 14 |
| (4 | ) | | 10 |
| | 16 |
| | (3 | ) | | 13 |
| |
Total foreign exchange contracts | Total foreign exchange contracts | 174,093 |
| (165,217 | ) | | 8,876 |
| | 152,619 |
| | (143,349 | ) | | 9,270 |
| Total foreign exchange contracts | 162,540 |
| (150,726 | ) | | 11,814 |
| | 161,220 |
| | (152,432 | ) | | 8,788 |
| |
Equity contracts: | Equity contracts: | | | | | | | | | | Equity contracts: | | | | | | | | | | |
OTC | OTC | 28,618 |
| (24,869 | ) | | 3,749 |
| | 28,193 |
| | (23,969 | ) | | 4,224 |
| OTC | 27,010 |
| (21,600 | ) | | 5,410 |
| | 29,437 |
| | (25,544 | ) | | 3,893 |
| |
Exchange-traded(a) | Exchange-traded(a) | 16,234 |
| (14,508 | ) | | 1,726 |
| | 12,720 |
| | (12,234 | ) | | 486 |
| Exchange-traded(a) | 20,365 |
| (18,688 | ) | | 1,677 |
| | 16,285 |
| | (15,490 | ) | | 795 |
| |
Total equity contracts | Total equity contracts | 44,852 |
| (39,377 | ) | | 5,475 |
| | 40,913 |
| | (36,203 | ) | | 4,710 |
| Total equity contracts | 47,375 |
| (40,288 | ) | | 7,087 |
| | 45,722 |
| | (41,034 | ) | | 4,688 |
| |
Commodity contracts: | Commodity contracts: | | | | | | | | | | Commodity contracts: | | | | | | | | | | |
OTC | OTC | 13,607 |
| (5,600 | ) | | 8,007 |
| | 12,645 |
| | (5,508 | ) | | 7,137 |
| OTC | 10,450 |
| (6,874 | ) | | 3,576 |
| | 8,930 |
| | (4,838 | ) | | 4,092 |
| |
OTC–cleared | | OTC–cleared | 25 |
| (25 | ) | | — |
| | — |
| | — |
| | — |
| |
Exchange-traded(a) | Exchange-traded(a) | 8,558 |
| (8,469 | ) | | 89 |
| | 8,870 |
| | (8,709 | ) | | 161 |
| Exchange-traded(a) | 10,004 |
| (9,123 | ) | | 881 |
| | 8,259 |
| | (8,208 | ) | | 51 |
| |
Total commodity contracts | Total commodity contracts | 22,165 |
| (14,069 | ) | | 8,096 |
| | 21,515 |
| | (14,217 | ) | | 7,298 |
| Total commodity contracts | 20,479 |
| (16,022 | ) | | 4,457 |
| | 17,189 |
| | (13,046 | ) | | 4,143 |
| |
Derivative payables with appropriate legal opinion | Derivative payables with appropriate legal opinion | 497,126 |
| (467,713 | ) | (b) | 29,413 |
| | 521,133 |
| | (493,029 | ) | (b) | 28,104 |
| Derivative payables with appropriate legal opinion | 584,635 |
| (550,429 | ) | | 34,206 |
| (d) | 485,036 |
| | (460,119 | ) | | 24,917 |
| (d) |
Derivative payables where an appropriate legal opinion has not been either sought or obtained | Derivative payables where an appropriate legal opinion has not been either sought or obtained | 12,280 |
| | | 12,280 |
| | 9,673 |
| | | | 9,673 |
| Derivative payables where an appropriate legal opinion has not been either sought or obtained | 13,584 |
| | | 13,584 |
| | 16,852 |
| | | | 16,852 |
| |
Total derivative payables recognized on the Consolidated balance sheets | Total derivative payables recognized on the Consolidated balance sheets | $ | 509,406 |
| | | $ | 41,693 |
| | $ | 530,806 |
| | | | $ | 37,777 |
| Total derivative payables recognized on the Consolidated balance sheets | $ | 598,219 |
| | | $ | 47,790 |
| | $ | 501,888 |
| | | | $ | 41,769 |
| |
Collateral not nettable on the Consolidated balance sheets(c)(d) | | | (3,566 | ) | | | | | | (4,180 | ) | |
Collateral not nettable on the Consolidated balance sheets(b)(c) | | Collateral not nettable on the Consolidated balance sheets(b)(c) | | | (9,236 | ) | | | | | | (4,449 | ) | |
Net amounts | Net amounts | | | $ | 38,127 |
| | | | | | $ | 33,597 |
| Net amounts | | | $ | 38,554 |
| | | | | | $ | 37,320 |
| |
| |
(a) | Exchange-traded derivative balances that relate to futures contracts are settled daily. |
| |
(b) | Net derivatives receivable included cash collateral netted of $55.5 billion at both September 30, 2018, and December 31, 2017, respectively. Net derivatives payable included cash collateral netted of $40.1 billion and $45.5 billion related to OTC and OTC-cleared derivatives at September 30, 2018, and December 31, 2017, respectively. |
| |
(c) | Represents liquid security collateral as well as cash collateral held at third partythird-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. |
| |
(d)(c) | Derivative collateral relates only to OTC and OTC-cleared derivative instruments. |
| |
(d) | Net derivatives receivable included cash collateral netted of $78.8 billion and $55.2 billion at September 30, 2019, and December 31, 2018, respectively. Net derivatives payable included cash collateral netted of $62.4 billion and $43.3 billion at September 30, 2019, and December 31, 2018, respectively. Derivative cash collateral relates to OTC and OTC-cleared derivative instruments. |
Liquidity risk and credit-related contingent features
ForRefer to Note 5 of JPMorgan Chase’s 2018 Form 10-K for a more detailed discussion of liquidity risk and credit-related contingent features related to the Firm’s derivative contracts, refer to Note5of JPMorgan Chase’s 2017 Annual Report.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 September 30, 2018,2019, and
December 31, 2017.
2018. | | OTC and OTC-cleared derivative payables containing downgrade triggers | (in millions) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 | | | December 31, 2018 | |
Aggregate fair value of net derivative payables | $ | 10,103 |
| $ | 11,916 |
| | $ | 15,466 |
| | $ | 9,396 |
|
Collateral posted | 8,926 |
| 9,973 |
| | 14,388 |
| | 8,907 |
|
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, National Association (“JPMorgan Chase Bank, N.A.”),
at September 30, 2018,2019, and December 31, 2017,2018, 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 threshold rating 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 payments 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 | Liquidity impact of downgrade triggers on OTC and OTC-cleared derivatives | | | | Liquidity impact of downgrade triggers on OTC and OTC-cleared derivatives | | | |
| September 30, 2018 | | December 31, 2017 | September 30, 2019 | | December 31, 2018 |
(in millions) | Single-notch downgrade | Two-notch downgrade | | Single-notch downgrade | Two-notch downgrade | Single-notch downgrade | Two-notch downgrade | | Single-notch downgrade | Two-notch downgrade |
Amount of additional collateral to be posted upon downgrade(a) | $ | 116 |
| $ | 2,046 |
| | $ | 79 |
| $ | 1,989 |
| $ | 223 |
| $ | 1,420 |
| | $ | 76 |
| $ | 947 |
|
Amount required to settle contracts with termination triggers upon downgrade(b) | 317 |
| 861 |
| | 320 |
| 650 |
| 184 |
| 1,475 |
| | 172 |
| 764 |
|
| |
(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 at September 30, 2018 was not material at both September 30, 2019 and there were no such transfers at December 31, 2017.2018.
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 nine months ended September 30, 20182019 and 2017,2018, 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(f) | | OCI impact | Gains/(losses) recorded in income | | Income statement impact of excluded components(e) | | OCI impact |
Three months ended September 30, 2018 (in millions) | Derivatives | Hedged items | Income statement impact | | Amortization approach | Changes in fair value | | Derivatives - Gains/(losses) recorded in OCI(g) | |
Three months ended September 30, 2019 (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) | $ | (870 | ) | $ | 1,032 |
| $ | 162 |
| | $ | — |
| $ | 160 |
| | $ | — |
| $ | 1,770 |
| $ | (1,550 | ) | $ | 220 |
| | $ | — |
| $ | 228 |
| | $ | — |
|
Foreign exchange(c) | 277 |
| (165 | ) | 112 |
| | (137 | ) | 112 |
| | 45 |
| (167 | ) | 293 |
| 126 |
| | (224 | ) | 126 |
| | (1 | ) |
Commodity(d) | 454 |
| (461 | ) | (7 | ) | | — |
| (5 | ) | | — |
| 278 |
| (232 | ) | 46 |
| | — |
| 49 |
| | — |
|
Total | $ | (139 | ) | $ | 406 |
| $ | 267 |
| | $ | (137 | ) | $ | 267 |
| | $ | 45 |
| $ | 1,881 |
| $ | (1,489 | ) | $ | 392 |
| | $ | (224 | ) | $ | 403 |
| | $ | (1 | ) |
| | | Gains/(losses) recorded in income | | Income statement impact due to: | | Gains/(losses) recorded in income | | Income statement impact of excluded components(e)
| | OCI impact |
Three months ended September 30, 2017 (in millions) | Derivatives | Hedged items | Income statement impact | | Hedge ineffectiveness(e) | Excluded components(f) | | |
Three months ended September 30, 2018 (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) | $ | 22 |
| $ | 182 |
| $ | 204 |
| | $ | (2 | ) | $ | 206 |
| | $ | (870 | ) | $ | 1,032 |
| $ | 162 |
| | $ | — |
| $ | 160 |
| | $ | — |
|
Foreign exchange(c) | (982 | ) | 1,002 |
| 20 |
| | — |
| 20 |
| | 277 |
| (165 | ) | 112 |
| | (137 | ) | 112 |
| | 45 |
|
Commodity(d) | (457 | ) | 461 |
| 4 |
| | 4 |
| — |
| | 454 |
| (461 | ) | (7 | ) | | — |
| (5 | ) | | — |
|
Total | $ | (1,417 | ) | $ | 1,645 |
| $ | 228 |
| | $ | 2 |
| $ | 226 |
| | $ | (139 | ) | $ | 406 |
| $ | 267 |
| | $ | (137 | ) | $ | 267 |
| | $ | 45 |
|
| | | Gains/(losses) recorded in income | | Income statement impact of excluded components(f) | | OCI impact | Gains/(losses) recorded in income | | Income statement impact of excluded components(e) | | OCI impact |
Nine months ended September 30, 2018 (in millions) | Derivatives | Hedged items | Income statement impact | | Amortization approach | Changes in fair value | | Derivatives - Gains/(losses) recorded in OCI(g) | |
Nine months ended September 30, 2019 (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) | $ | (2,747 | ) | $ | 3,214 |
| $ | 467 |
| | $ | — |
| $ | 459 |
| | $ | — |
| $ | 4,996 |
| $ | (4,399 | ) | $ | 597 |
| | $ | — |
| $ | 596 |
| | $ | — |
|
Foreign exchange(c) | 797 |
| (452 | ) | 345 |
| | (404 | ) | 345 |
| | (96 | ) | (31 | ) | 401 |
| 370 |
| | (675 | ) | 370 |
| | 114 |
|
Commodity(d) | 649 |
| (626 | ) | 23 |
| | — |
| 29 |
| | — |
| (164 | ) | 237 |
| 73 |
| | — |
| 67 |
| | — |
|
Total | $ | (1,301 | ) | $ | 2,136 |
| $ | 835 |
| | $ | (404 | ) | $ | 833 |
| | $ | (96 | ) | $ | 4,801 |
| $ | (3,761 | ) | $ | 1,040 |
| | $ | (675 | ) | $ | 1,033 |
| | $ | 114 |
|
|
| | | | | | | | | | | | | | | | | | |
| Gains/(losses) recorded in income | | Income statement impact due to: | | |
Nine months ended September 30, 2017 (in millions) | Derivatives | Hedged items | Income statement impact | | Hedge ineffectiveness(e) | Excluded components(f) | | |
Contract type | | | | | | | | |
Interest rate(a)(b) | $ | (131 | ) | $ | 759 |
| $ | 628 |
| | $ | (16 | ) | $ | 644 |
| | |
Foreign exchange(c) | (3,254 | ) | 3,235 |
| (19 | ) | | — |
| (19 | ) | | |
Commodity(d) | (823 | ) | 861 |
| 38 |
| | 23 |
| 15 |
| | |
Total | $ | (4,208 | ) | $ | 4,855 |
| $ | 647 |
| | $ | 7 |
| $ | 640 |
| | |
|
| | | | | | | | | | | | | | | | | | | | |
| Gains/(losses) recorded in income | | Income statement impact of excluded components(e) | | OCI impact |
Nine months ended September 30, 2018 (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) | $ | (2,747 | ) | $ | 3,214 |
| $ | 467 |
| | $ | — |
| $ | 459 |
| | $ | — |
|
Foreign exchange(c) | 797 |
| (452 | ) | 345 |
| | (404 | ) | 345 |
| | (96 | ) |
Commodity(d) | 649 |
| (626 | ) | 23 |
| | — |
| 29 |
| | — |
|
Total | $ | (1,301 | ) | $ | 2,136 |
| $ | 835 |
| | $ | (404 | ) | $ | 833 |
| | $ | (96 | ) |
| |
(a) | Primarily consists of hedges of the benchmark (e.g., London Interbank Offered Rate (“LIBOR”)) interest rate risk of fixed-rate long-term debt and AFS securities. Gains and losses were recorded in net interest income. |
| |
(b) | Excludes the amortization expense associated with the inception hedge accounting adjustment applied to the hedged item. This expense is recorded in net interest income and substantially offsets the income statement impact of the excluded components. Also 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) | Hedge ineffectiveness is the amount by which the gain or loss on the designated derivative instrument does not exactly offset the gain or loss on the hedged item attributable to the hedged risk. |
| |
(f) | 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. Under the new hedge accounting guidance, theThe initial amount of the excluded components may be amortized into income over the life of the derivative, or changes in fair value may be recognized in current period earnings. |
| |
(g)(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 September 30, 2019 and December 31, 2018, 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:
| | Carrying amount of the hedged items(a)(b) | | Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items:
|
September 30, 2018 (in millions) | | Active hedging relationships | Discontinued hedging relationships(d) | Total | |
September 30, 2019 (in millions) | | | Carrying amount of the hedged items(a)(b) | | Active hedging relationships | Discontinued hedging relationships(d) | Total |
Assets | | | | | | |
Investment securities - AFS
| | $ | 47,896 |
| (c) | $ | (2,292 | ) | $ | 438 |
| $ | (1,854 | ) | | $ | 123,914 |
| (c) | $ | 3,664 |
| $ | 261 |
| $ | 3,925 |
|
Liabilities | | | | | | | | |
Long-term debt | | $ | 135,239 |
| | $ | (2,693 | ) | $ | (5 | ) | $ | (2,698 | ) | | $ | 163,494 |
| | $ | 9,957 |
| $ | 125 |
| $ | 10,082 |
|
Beneficial interests issued by consolidated VIEs | | 6,976 |
| | — |
| (42 | ) | (42 | ) | | 2,362 |
| | — |
| (11 | ) | (11 | ) |
| | | | | |
| | | 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, 2018 (in millions) | | | Active hedging relationships | Discontinued hedging relationships(d) | Total |
Assets | | | | | |
Investment securities - AFS
| | | $ | 55,313 |
| (c) | $ | (1,105 | ) | $ | 381 |
| $ | (724 | ) |
Liabilities | | | | | |
Long-term debt | | | $ | 139,915 |
| | $ | 141 |
| $ | 8 |
| $ | 149 |
|
Beneficial interests issued by consolidated VIEs | | | 6,987 |
| | — |
| (33 | ) | (33 | ) |
| |
(a) | Excludes physical commodities with a carrying value of $4.6$10.3 billion and $6.8 billion at September 30, 2019 and December 31, 2018, 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. Given 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. TheAt September 30, 2019 and December 31, 2018, the carrying amount excluded for available-for-sale securities is $14.7$15.3 billion and $14.6 billion, respectively, and for long-term debt is $7.2 billion.$4.1 billion and $7.3 billion, respectively. |
| |
(c) | Carrying amount represents the amortized cost. |
| |
(d) | Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date. |
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 nine months ended September 30, 20182019 and 2017,2018, respectively. The Firm includes the gain/(loss) 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 itemitem..
| | | | Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Three months ended September 30, 2019 (in millions) | | Amounts reclassified from AOCI to income | Amounts recorded in OCI | Total change in OCI for period |
Contract type | | |
Interest rate(a) | | $ | (16 | ) | $ | 290 |
| $ | 306 |
|
Foreign exchange(b) | | (21 | ) | (68 | ) | (47 | ) |
Total | | $ | (37 | ) | $ | 222 |
| $ | 259 |
|
| | | | | | | | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) | Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Three months ended September 30, 2018 (in millions) | Amounts reclassified from AOCI to income | Amounts recorded in OCI | Total change in OCI for period | Amounts reclassified from AOCI to income | Amounts recorded in OCI | Total change in OCI for period |
Contract type | | |
Interest rate(a) | $ | 10 |
| $ | (30 | ) | $ | (40 | ) | $ | 10 |
| $ | (30 | ) | $ | (40 | ) |
Foreign exchange(b) | (19 | ) | (92 | ) | (73 | ) | (19 | ) | (92 | ) | (73 | ) |
Total | $ | (9 | ) | $ | (122 | ) | $ | (113 | ) | $ | (9 | ) | $ | (122 | ) | $ | (113 | ) |
| | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) | |
Three months ended September 30, 2017 (in millions) | Amounts reclassified from AOCI to income | Amounts recorded in OCI(c) | Total change in OCI for period | |
Contract type | | |
Interest rate(a) | $ | 1 |
| $ | (1 | ) | $ | (2 | ) | |
Foreign exchange(b) | (11 | ) | 30 |
| 41 |
| |
Total | $ | (10 | ) | $ | 29 |
| $ | 39 |
| |
| | | Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) | Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Nine months ended September 30, 2018 (in millions) | Amounts reclassified from AOCI to income | Amounts recorded in OCI | Total change in OCI for period | |
Nine months ended September 30, 2019 (in millions) | | Amounts reclassified from AOCI to income | Amounts recorded in OCI | Total change in OCI for period |
Contract type | | |
Interest rate(a) | $ | 36 |
| $ | (141 | ) | $ | (177 | ) | $ | (12 | ) | $ | 501 |
| $ | 513 |
|
Foreign exchange(b) | 26 |
| (224 | ) | (250 | ) | (90 | ) | (37 | ) | 53 |
|
Total | $ | 62 |
| $ | (365 | ) | $ | (427 | ) | $ | (102 | ) | $ | 464 |
| $ | 566 |
|
| | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) | |
Nine months ended September 30, 2017 (in millions) | Amounts reclassified from AOCI to income | Amounts recorded in OCI(c) | Total change in OCI for period | |
Contract type | | |
Interest rate(a) | $ | (16 | ) | $ | 11 |
| $ | 27 |
| |
Foreign exchange(b) | (144 | ) | 100 |
| 244 |
| |
Total | $ | (160 | ) | $ | 111 |
| $ | 271 |
| |
|
| | | | | | | | | |
| Derivatives gains/(losses) recorded in income and other comprehensive income/(loss) |
Nine months ended September 30, 2018 (in millions) | Amounts reclassified from AOCI to income | Amounts recorded in OCI | Total change in OCI for period |
Contract type | | | |
Interest rate(a) | $ | 36 |
| $ | (141 | ) | $ | (177 | ) |
Foreign exchange(b) | 26 |
| (224 | ) | (250 | ) |
Total | $ | 62 |
| $ | (365 | ) | $ | (427 | ) |
| |
(a) | Primarily consists of benchmark interest rate hedges of LIBOR-indexed floating-rate assets and floating-rate liabilities. 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. |
| |
(c) | Represents the effective portion of changes in value of the related hedging derivative. Hedge ineffectiveness is the amount by which the cumulative gain or loss on the designated derivative instrument exceeds the present value of the cumulative expected change in cash flows on the hedged item attributable to the hedged risk. The Firm did not recognize any ineffectiveness on cash flow hedges during the three and nine months ended September 30, 2017. |
The Firm did not experience any forecasted transactions that failed to occur for the three and nine months ended September 30, 20182019 and 2017.2018.
Over the next 12 months, the Firm expects that approximately $(118)$(130) million (after-tax) of net losses recorded in AOCI at September 30, 2018, 2019, related to cash flow hedges will be recognized in income. For terminated 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 five years, corresponding to the timing of the originally hedged forecasted cash flows.
forecasted transactions are remaining is approximately six years.
For open cash flow hedges, the maximum length of time over which forecasted transactions are hedged is approximately sixseven 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 nine months ended September 30, 20182019 and 2017.2018.
| | | | | | | | | | | | | | | | | | | Gains/(losses) recorded in income and other comprehensive income/(loss) |
| 2018 | | 2017 | 2019 | | 2018 |
Three months ended September 30, (in millions) | Amounts recorded in income(a)(c) | Amounts recorded in OCI | | Amounts recorded in income(a)(c) | Amounts recorded in OCI(b) | Amounts recorded in income(a)(b) | Amounts recorded in OCI | | Amounts recorded in income(a)(b) | Amounts recorded in OCI |
Foreign exchange derivatives | | $ | 2 |
| | $ | 311 |
| | $ | (39 | ) | | $ | (286 | ) | | $ | 17 |
| | $ | 866 |
| | $ | 2 |
| | $ | 311 |
|
| | | | | | | | | | | | | | | | |
| 2018 | | 2017 | Gains/(losses) recorded in income and other comprehensive income/(loss) |
| | 2019 | | 2018 |
Nine months ended September 30, (in millions) | Amounts recorded in income(a)(c) | Amounts recorded in OCI | | Amounts recorded in income(a)(c) | Amounts recorded in OCI(b) | Amounts recorded in income(a)(b) | Amounts recorded in OCI | | Amounts recorded in income(a)(b)(c) | Amounts recorded in OCI |
Foreign exchange derivatives | | $ | (5 | ) | | $ | 1,126 |
| | $ | (150 | ) | | $ | (1,161 | ) | | $ | 65 |
| | $ | 705 |
| | $ | (8 | ) | | $ | 1,126 |
|
| |
(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) | Represents the effective portion of changes in value of the related hedging derivative. The Firm did not recognize any ineffectiveness on net investment hedges directly in income during the three and nine months ended September 30, 2017. |
| |
(c) | Excludes amounts reclassified from AOCI to income on the sale or liquidation of hedged entities. For additional information, referDuring the nine months ended September 30, 2019, the Firm reclassified net pre-tax gains of $5 million to Note 17.other income related to the liquidation of certain legal entities. During the nine months ended September 30, 2018, the Firm reclassified net pre-tax losses of $23 million to other expense related to the liquidation of a legal entity. |
| |
(c) | The prior period amount has been revised to conform with the current period presentation. |
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 the mortgage pipeline, warehouse loans, MSRs, wholesale lending exposures, and foreign currency-denominated assets and liabilities.
| | | Derivatives gains/(losses) recorded in income | Derivatives gains/(losses) recorded in income | |
| Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, | |
(in millions) | 2018 | 2017 | | 2018 | 2017 | 2019 | 2018 | | 2019 | 2018 | |
Contract type | | | | | | | |
Interest rate(a) | $ | (42 | ) | $ | 97 |
| | $ | (277 | ) | $ | 318 |
| $ | 769 |
| $ | (42 | ) | | $ | 1,718 |
| $ | (277 | ) | |
Credit(b) | (7 | ) | (18 | ) | | (17 | ) | (70 | ) | (21 | ) | (7 | ) | | (33 | ) | (17 | ) | |
Foreign exchange(c) | 52 |
| (18 | ) | | 152 |
| (52 | ) | 40 |
| 52 |
| | 15 |
| 167 |
| (d) |
Total | $ | 3 |
| $ | 61 |
| | $ | (142 | ) | $ | 196 |
| $ | 788 |
| $ | 3 |
| | $ | 1,700 |
| $ | (127 | ) | (d) |
| |
(a) | Primarily represents interest rate derivatives used to hedge the interest rate risk inherent in the mortgage pipeline, 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. |
| |
(d) | The prior period amounts have been revised to conform with the current period presentation. |
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
ForRefer to Note 5 of JPMorgan Chase’s 2018 Form 10-K for a more detailed discussion of credit derivatives, refer to Note5 of JPMorgan Chase’s 2017 Annual Report.derivatives. 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 | Maximum payout/Notional amount |
September 30, 2018 (in millions) | Protection sold | Protection purchased with identical underlyings(b) | Net protection (sold)/purchased(c) | | Other protection purchased(d) | |
September 30, 2019 (in millions) | | Protection sold | Protection purchased with identical underlyings(b) | Net protection (sold)/purchased(c) | | Other protection purchased(d) |
Credit derivatives | | | | | | | | | | |
Credit default swaps | $ | (746,195 | ) | | $ | 754,889 |
| $ | 8,694 |
| | $ | 6,341 |
| $ | (610,946 | ) | | $ | 623,709 |
| $ | 12,763 |
| | $ | 3,630 |
|
Other credit derivatives(a) | (38,928 | ) | | 45,393 |
| 6,465 |
| | 11,563 |
| (55,919 | ) | | 61,847 |
| 5,928 |
| | 8,503 |
|
Total credit derivatives | (785,123 | ) | | 800,282 |
| 15,159 |
| | 17,904 |
| (666,865 | ) | | 685,556 |
| 18,691 |
| | 12,133 |
|
Credit-related notes | (18 | ) | | — |
| (18 | ) | | 7,653 |
| — |
| | — |
| — |
| | 9,297 |
|
Total | $ | (785,141 | ) | | $ | 800,282 |
| $ | 15,141 |
| | $ | 25,557 |
| $ | (666,865 | ) | | $ | 685,556 |
| $ | 18,691 |
| | $ | 21,430 |
|
| | | | | | | | | | |
| Maximum payout/Notional amount | Maximum payout/Notional amount |
December 31, 2017 (in millions) | Protection sold | Protection purchased with identical underlyings(b) | Net protection (sold)/purchased(c) | | Other protection purchased(d) | |
December 31, 2018 (in millions) | | Protection sold | Protection purchased with identical underlyings(b) | Net protection (sold)/purchased(c) | | Other protection purchased(d) |
Credit derivatives | | | | | | | | | | |
Credit default swaps | $ | (690,224 | ) | | $ | 702,098 |
| $ | 11,874 |
| | $ | 5,045 |
| $ | (697,220 | ) | | $ | 707,282 |
| $ | 10,062 |
| | $ | 4,053 |
|
Other credit derivatives(a) | (54,157 | ) | | 59,158 |
| 5,001 |
| | 11,747 |
| (41,244 | ) | | 42,484 |
| 1,240 |
| | 8,488 |
|
Total credit derivatives | (744,381 | ) | | 761,256 |
| 16,875 |
| | 16,792 |
| (738,464 | ) | | 749,766 |
| 11,302 |
| | 12,541 |
|
Credit-related notes | (18 | ) | | — |
| (18 | ) | | 7,915 |
| — |
| | — |
| — |
| | 8,425 |
|
Total | $ | (744,399 | ) | | $ | 761,256 |
| $ | 16,857 |
| | $ | 24,707 |
| $ | (738,464 | ) | | $ | 749,766 |
| $ | 11,302 |
| | $ | 20,966 |
|
| |
(a) | Other credit derivatives largely consistspredominantly consist of credit swap options.options and total return swaps. |
| |
(b) | 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. |
| |
(c) | 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. |
| |
(d) | Represents protection purchased by the Firm on referenced instruments (single-name, portfolio or index) where the Firm has not sold any protection on the identical reference instrument. |
The following tables summarize the notional amounts by the ratings, maturity profile, and total fair value, of credit derivatives and credit-related notes as of September 30, 2018,2019, and December 31, 2017,2018, 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 and credit-related notes where JPMorgan Chase is the purchaser of protection are comparable to the profile reflected below.
| | Protection sold — credit derivatives and credit-related notes ratings(a)/maturity profile | Protection sold — credit derivatives and credit-related notes ratings(a)/maturity profile | | | | Protection sold — credit derivatives and credit-related notes ratings(a)/maturity profile | | | |
September 30, 2018 (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 | |
September 30, 2019 (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 | $ | (116,930 | ) | | $ | (364,470 | ) | | $ | (71,226 | ) | | $ | (552,626 | ) | | $ | 8,043 |
| | $ | (1,859 | ) | | $ | 6,184 |
| $ | (106,698 | ) | | $ | (316,946 | ) | | $ | (75,615 | ) | | $ | (499,259 | ) | | $ | 5,621 |
| | $ | (1,260 | ) | | $ | 4,361 |
|
Noninvestment-grade | (53,103 | ) | | (147,117 | ) | | (32,295 | ) | | (232,515 | ) | | 8,337 |
| | (4,519 | ) | | 3,818 |
| (39,180 | ) | | (103,249 | ) | | (25,177 | ) | | (167,606 | ) | | 4,699 |
| | (3,415 | ) | | 1,284 |
|
Total | $ | (170,033 | ) | | $ | (511,587 | ) | | $ | (103,521 | ) | | $ | (785,141 | ) | | $ | 16,380 |
| | $ | (6,378 | ) | | $ | 10,002 |
| $ | (145,878 | ) | | $ | (420,195 | ) | | $ | (100,792 | ) | | $ | (666,865 | ) | | $ | 10,320 |
| | $ | (4,675 | ) | | $ | 5,645 |
|
| | December 31, 2017 (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 | |
December 31, 2018 (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 | $ | (159,286 | ) | | $ | (319,726 | ) | | $ | (39,429 | ) | | $ | (518,441 | ) | | $ | 8,516 |
| | $ | (1,134 | ) | | $ | 7,382 |
| $ | (115,443 | ) | | $ | (402,325 | ) | | $ | (43,611 | ) | | $ | (561,379 | ) | | $ | 5,720 |
| | $ | (2,791 | ) | | $ | 2,929 |
|
Noninvestment-grade | (73,394 | ) | | (134,125 | ) | | (18,439 | ) | | (225,958 | ) | | 7,407 |
| | (5,313 | ) | | 2,094 |
| (45,897 | ) | | (119,348 | ) | | (11,840 | ) | | (177,085 | ) | | 4,719 |
| | (5,660 | ) | | (941 | ) |
Total | $ | (232,680 | ) | | $ | (453,851 | ) | | $ | (57,868 | ) | | $ | (744,399 | ) | | $ | 15,923 |
| | $ | (6,447 | ) | | $ | 9,476 |
| $ | (161,340 | ) | | $ | (521,673 | ) | | $ | (55,451 | ) | | $ | (738,464 | ) | | $ | 10,439 |
| | $ | (8,451 | ) | | $ | 1,988 |
|
| |
(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 and cash collateral received by the Firm. |
Note 5 – Noninterest revenue and noninterest
expense
Noninterest revenue
ForRefer to Note 6 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the components of and accounting policies for the Firm’s noninterest revenue, refer to Note 6 of JPMorgan Chase’s 2017 Annual Report.
The adoption of the revenue recognition guidance in the first quarter of 2018, required gross presentation of certain costs previously offset against revenue, predominantly associated with certain distribution costs (previously offset against asset management, administration and commissions), with the remainder associated with certain underwriting costs (previously offset against investment banking fees). Adoption of the guidance did not result in any material changes in the timing of revenue recognition. This guidance was adopted retrospectively and, accordingly, prior period amounts were revised, which resulted in an increase in both noninterest revenue and noninterest expense. For additional information, refer to Note1.revenue.
Investment banking fees
The following table presents the components of investment banking fees.
| |
| Three months ended September 30, |
| Nine months ended September 30, | Three months ended September 30, |
| Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
|
| 2018 |
| 2017 | 2019 |
| | 2018 |
|
| 2019 |
| 2018 |
Underwriting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity | $ | 417 |
|
| $ | 302 |
|
| $ | 1,342 |
|
| $ | 1,105 |
| $ | 517 |
|
| $ | 417 |
|
| $ | 1,293 |
|
| $ | 1,342 |
|
Debt | 836 |
|
| 945 |
|
| 2,596 |
|
| 2,873 |
| 955 |
|
| 836 |
|
| 2,720 |
|
| 2,596 |
|
Total underwriting | 1,253 |
|
| 1,247 |
|
| 3,938 |
|
| 3,978 |
| 1,472 |
|
| 1,253 |
|
| 4,013 |
|
| 3,938 |
|
Advisory | 579 |
|
| 621 |
|
| 1,798 |
|
| 1,616 |
| 495 |
|
| 579 |
|
| 1,645 |
|
| 1,798 |
|
Total investment banking fees | $ | 1,832 |
|
| $ | 1,868 |
|
| $ | 5,736 |
|
| $ | 5,594 |
| $ | 1,967 |
|
| $ | 1,832 |
|
| $ | 5,658 |
|
| $ | 5,736 |
|
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.activities in CIB and cash 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 line of busi
ness.business. | | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 | | 2017 | 2019 |
| | 2018 |
| | 2019 | | 2018 |
Trading revenue by instrument type | | | | | | | | | | | | | | |
Interest rate | $ | 338 |
| | $ | 649 |
| | $ | 1,784 |
| | $ | 2,032 |
| $ | 835 |
| | $ | 338 |
| | $ | 1,901 |
| | $ | 1,784 |
|
Credit | 202 |
| | 330 |
| | 1,230 |
| | 1,288 |
| 328 |
| | 202 |
| | 1,375 |
| | 1,230 |
|
Foreign exchange | 937 |
| | 681 |
| | 2,706 |
| | 2,363 |
| 892 |
| | 937 |
| | 2,509 |
| | 2,706 |
|
Equity | 1,363 |
| | 915 |
| | 4,376 |
| | 3,153 |
| 1,003 |
| | 1,363 |
| | 4,530 |
| | 4,376 |
|
Commodity | 277 |
| | 156 |
| | 800 |
| | 461 |
| 372 |
| | 277 |
| | 982 |
| | 800 |
|
Total trading revenue | 3,117 |
| | 2,731 |
| | 10,896 |
| | 9,297 |
| 3,430 |
| | 3,117 |
| | 11,297 |
| | 10,896 |
|
Private equity gains/(losses)(a) | (153 | ) | | (10 | ) | | (198 | ) | | 143 |
| 19 |
| | (153 | ) | | (58 | ) | | (198 | ) |
Principal transactions | $ | 2,964 |
| | $ | 2,721 |
| | $ | 10,698 |
| | $ | 9,440 |
| $ | 3,449 |
| | $ | 2,964 |
| | $ | 11,239 |
| | $ | 10,698 |
|
| |
(a) | The third quarter of 2018 included markdowns of approximately $220 million on certain private equity investments in Corporate, with $170 million recorded within principal transactions revenue and $50 million in other income. |
Lending- and deposit-related fees
The following table presents the components of lending- and deposit-related fees.
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 | 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
Lending-related fees | $ | 284 |
| | $ | 280 |
| | $ | 838 |
| | $ | 824 |
| $ | 286 |
| | $ | 284 |
| | $ | 861 |
| | $ | 838 |
|
Deposit-related fees | 1,258 |
| | 1,217 |
| | 3,676 |
| | 3,603 |
| 1,340 |
| | 1,258 |
| | 3,782 |
| | 3,676 |
|
Total lending- and deposit-related fees | $ | 1,542 |
| | $ | 1,497 |
| | $ | 4,514 |
| | $ | 4,427 |
| $ | 1,626 |
| | $ | 1,542 |
| | $ | 4,643 |
| | $ | 4,514 |
|
Asset management, administration and commissions
The following table presents the components of Firmwide asset management, administration and commissions. | | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 | | 2017 | 2019 |
| | 2018 |
| | 2019 | | 2018 |
Asset management fees | | | | | | | | | | | | | | |
Investment management fees(a) | $ | 2,716 |
| | $ | 2,636 |
| | $ | 8,081 |
| | $ | 7,603 |
| $ | 2,738 |
| | $ | 2,716 |
| | $ | 8,013 |
| | $ | 8,081 |
|
All other asset management fees(b) | 79 |
| | 63 |
| | 211 |
| | 226 |
| 82 |
| | 79 |
| | 229 |
| | 211 |
|
Total asset management fees | 2,795 |
| | 2,699 |
| | 8,292 |
| | 7,829 |
| 2,820 |
| | 2,795 |
| | 8,242 |
| | 8,292 |
|
| | | | | | | | | | | | | | |
Total administration fees(c) | 533 |
| | 514 |
| | 1,651 |
| | 1,500 |
| 567 |
| | 533 |
| | 1,646 |
| | 1,651 |
|
| | | | | | | | | | | | | | |
Commission and other fees | | | | | | | | |
Commissions and other fees | | | | | | | | |
Brokerage commissions | 604 |
| | 546 |
| | 1,887 |
| | 1,691 |
| 634 |
| | 604 |
| | 1,861 |
| | 1,887 |
|
All other commissions and fees | 378 |
| | 313 |
| | 1,093 |
| | 976 |
| 330 |
| | 378 |
| | 1,069 |
| | 1,093 |
|
Total commissions and fees | 982 |
| | 859 |
| | 2,980 |
| | 2,667 |
| 964 |
| | 982 |
| | 2,930 |
| | 2,980 |
|
Total asset management, administration and commissions | $ | 4,310 |
| | $ | 4,072 |
| | $ | 12,923 |
| | $ | 11,996 |
| $ | 4,351 |
| | $ | 4,310 |
| | $ | 12,818 |
| | $ | 12,923 |
|
| |
(a) | Represents fees earned from managing assets on behalf of the Firm’s clients, including investors in Firm-sponsored funds and owners of separately managed investment accounts. |
| |
(b) | Represents fees for services that are ancillary to investment management services, such as commissions earned on the sales or distribution of mutual funds to clients. |
| |
(c) | Predominantly includes fees for custody, securities lending, funds services and securities clearance. |
Card income
The following table presents the components of card income:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Interchange and merchant processing income | $ | 4,781 |
| | $ | 4,342 |
| | $ | 13,863 |
| | $ | 12,557 |
| $ | 5,127 |
| | $ | 4,781 |
| | $ | 15,032 |
| | $ | 13,863 |
|
Rewards costs and partner payments(a) | (3,276 | ) | | (2,727 | ) | | (9,687 | ) | (b) | (7,941 | ) | (3,669 | ) | | (3,276 | ) | | (10,515 | ) | | (9,687 | ) |
Other card income(a)(b) | (177 | ) | | (373 | ) | | (553 | ) | | (1,293 | ) | (175 | ) | | (177 | ) | | (594 | ) | | (553 | ) |
Total card income | $ | 1,328 |
| | $ | 1,242 |
| | $ | 3,623 |
| | $ | 3,323 |
| $ | 1,283 |
| | $ | 1,328 |
| | $ | 3,923 |
| | $ | 3,623 |
|
| |
(a) | The three and nine months ended September 30, 2018, included an adjustment to the credit card rewards liability of approximately $330 million. |
| |
(b) | Predominantly represents annual fees and new account origination costs, which are deferred and recognized on a straight-line basis over a 12-month period. |
| |
(b) | Includes an adjustment to the credit card rewards liability of approximately $330 million, recorded in the second quarter of 2018. |
Other income
Other income
Refer to Note 14 Goodwill and MSRs for information on the Firm’s Consolidated statements ofmortgage fees and related income.
Refer to Note 16 Leases for information on operating lease income included the following:
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
|
Operating lease income | $ | 1,157 |
| | $ | 928 |
| | $ | 3,316 |
| | $ | 2,625 |
|
within other income.
Noninterest expense
Other expense
Other expense on the Firm’s Consolidated statements of income included the following:
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Legal expense | $ | 20 |
| | $ | (107 | ) | | $ | 90 |
| | $ | 172 |
| |
Legal expense/(benefit) | | $ | 10 |
| | $ | 20 |
| | $ | (2 | ) | | $ | 90 |
|
FDIC-related expense | 349 |
| | 353 |
| | 1,100 |
| | 1,110 |
| 114 |
| | 349 |
| | 378 |
| | 1,100 |
|
Note 6 – Interest income and Interest expense
ForRefer to Note 7 of JPMorgan Chase’s 2018 Form 10-K for a description of JPMorgan Chase’s accounting policies regarding interest income and interest expense, refer to Note7 of JPMorgan Chase’s 2017 Annual Report.expense.
The following table presents the components of interest income and interest expense.
| |
| Three months ended September 30, |
| Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
|
| 2017 |
|
| 2018 |
|
| 2017 |
| 2019 |
|
| 2018 |
| | 2019 |
| | 2018 |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
| | | | | | | |
Loans(a) | $ | 12,207 |
|
| $ | 10,519 |
|
| $ | 34,915 |
|
| $ | 30,265 |
| $ | 12,586 |
|
| $ | 12,207 |
| | $ | 38,192 |
| | $ | 34,915 |
|
Taxable securities | 1,402 |
|
| 1,362 |
|
| 4,098 |
|
| 4,202 |
| 2,132 |
|
| 1,402 |
| | 5,712 |
| | 4,098 |
|
Non-taxable securities(b) | 394 |
|
| 456 |
|
| 1,199 |
|
| 1,393 |
| 318 |
|
| 394 |
| | 1,021 |
| | 1,199 |
|
Total investment securities(a) | 1,796 |
|
| 1,818 |
|
| 5,297 |
|
| 5,595 |
| 2,450 |
|
| 1,796 |
| | 6,733 |
| | 5,297 |
|
Trading assets | 2,155 |
|
| 1,947 |
|
| 6,369 |
|
| 5,611 |
| |
Trading assets - debt instruments | | 2,659 |
|
| 2,155 |
| | 8,343 |
| | 6,369 |
|
Federal funds sold and securities purchased under resale agreements | 952 |
|
| 622 |
|
| 2,490 |
|
| 1,676 |
| 1,542 |
|
| 952 |
| | 4,865 |
| | 2,490 |
|
Securities borrowed(c) | 200 |
|
| — |
|
| 410 |
|
| (65 | ) | 434 |
|
| 248 |
| | 1,298 |
| | 549 |
|
Deposits with banks | 1,585 |
|
| 1,259 |
|
| 4,449 |
|
| 3,002 |
| 898 |
|
| 1,585 |
| | 3,200 |
| | 4,449 |
|
All other interest-earning assets(d) | 945 |
|
| 522 |
|
| 2,474 |
|
| 1,295 |
| |
All other interest-earning assets(c)(d) | | 552 |
|
| 496 |
| | 1,482 |
| | 1,430 |
|
Total interest income(c) | 19,840 |
|
| 16,687 |
|
| 56,404 |
|
| 47,379 |
| 21,121 |
|
| 19,439 |
| | 64,113 |
| | 55,499 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
| | | | | | | |
Interest-bearing deposits | 1,621 |
|
| 837 |
|
| 4,021 |
|
| 1,949 |
| 2,409 |
| | 1,621 |
| | 7,010 |
| | 4,021 |
|
Federal funds purchased and securities loaned or sold under repurchase agreements | 827 |
|
| 451 |
|
| 2,164 |
|
| 1,131 |
| 1,241 |
| | 827 |
| | 3,577 |
| | 2,164 |
|
Short-term borrowings(e) | 288 |
|
| 149 |
|
| 757 |
|
| 318 |
| 261 |
| | 288 |
| | 1,051 |
| | 757 |
|
Trading liabilities – debt and all other interest-bearing liabilities(f) | 1,018 |
|
| 570 |
|
| 2,579 |
|
| 1,490 |
| |
Trading liabilities – debt and all other interest-bearing liabilities(c)(f) | | 660 |
| | 617 |
| | 2,141 |
| | 1,674 |
|
Long-term debt | 2,056 |
| | 1,759 |
| | 5,812 |
| | 5,035 |
| 2,188 |
| | 2,056 |
| | 6,796 |
| | 5,812 |
|
Beneficial interest issued by consolidated VIEs | 122 |
|
| 123 |
|
| 366 |
|
| 386 |
| 134 |
| | 122 |
| | 459 |
| | 366 |
|
Total interest expense(c) | 5,932 |
|
| 3,889 |
|
| 15,699 |
|
| 10,309 |
| 6,893 |
| | 5,531 |
| | 21,034 |
| | 14,794 |
|
Net interest income | 13,908 |
|
| 12,798 |
|
| 40,705 |
|
| 37,070 |
| 14,228 |
| | 13,908 |
| | 43,079 |
| | 40,705 |
|
Provision for credit losses | 948 |
|
| 1,452 |
|
| 3,323 |
|
| 3,982 |
| 1,514 |
| | 948 |
| | 4,158 |
| | 3,323 |
|
Net interest income after provision for credit losses | $ | 12,960 |
|
| $ | 11,346 |
|
| $ | 37,382 |
|
| $ | 33,088 |
| $ | 12,714 |
| | $ | 12,960 |
| | $ | 38,921 |
| | $ | 37,382 |
|
| |
(a) | Includes the amortization/accretion of unearned income (e.g., purchase premiums/discounts, net deferred fees/costs, etc.). |
| |
(b) | Represents securities which are tax-exempt for U.S. federal income tax purposes. |
| |
(c) | NegativeIn the second quarter of 2019, the Firm implemented certain presentation changes that impacted interest income isand interest expense, but had no effect on net interest income. These changes were made to align the accounting treatment between the balance sheet and the related to client-driven demandinterest income or expense, primarily by offsetting interest income and expense for certain securities combinedprime brokerage-related held-for-investment customer receivables and payables that are currently presented as a single margin account on the balance sheet. These changes were applied retrospectively and, accordingly, prior period amounts were revised to conform with the impact of low interest rates. This is matched book activity and the negative interest expense on the corresponding securities loaned is recognized in interest expense.current presentation. |
| |
(d) | Includes prime brokerage-related held-for-investment margin loans,customer receivables, which are classified in accrued interest and accounts receivable, and all other interest-earning assets includedwhich are classified in other assets on the Consolidated balance sheets. |
| |
(e) | Includes commercial paper. |
| |
(f) | Other interest-bearing liabilities include brokerageprime brokerage-related customer payables. |
Note 7 – Pension and other postretirement employee benefit plans
ForRefer to Note 8 of JPMorgan Chase’s 2018 Form 10-K for a discussion of JPMorgan Chase’s pension and OPEB plans, refer to Note8 of JPMorgan Chase’s 2017 Annual Report.plans.
The following table presents the components of net periodic benefit costs reported in the Consolidated statements of income for the Firm’s U.S. and non-U.S. defined benefit pension, defined contribution and OPEB plans. | | (in millions) | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
2018 | 2017 | | 2018 | 2017 | | 2018 | 2017 | | 2018 | 2017 | 2019 | 2018 | | 2019 | 2018 | | 2019 | 2018 | | 2019 | 2018 |
Defined benefit pension plans | | OPEB plans | | Defined benefit pension plans | | OPEB plans | Pension plans | | OPEB plans | | Pension plans | | OPEB plans |
Components of net periodic benefit cost | | | | | | | | | | | | | | |
Benefits earned during the period | $ | 88 |
| $ | 83 |
| | $ | — |
| $ | — |
| | $ | 267 |
| $ | 247 |
| | $ | — |
| $ | — |
| $ | 88 |
| $ | 88 |
| | $ | — |
| $ | — |
| | $ | 266 |
| $ | 267 |
| | $ | — |
| $ | — |
|
Interest cost on benefit obligations | 139 |
| 148 |
| | 6 |
| 7 |
| | 417 |
| 447 |
| | 18 |
| 21 |
| 148 |
| 139 |
| | 6 |
| 6 |
| | 447 |
| 417 |
| | 18 |
| 18 |
|
Expected return on plan assets | (246 | ) | (242 | ) | | (25 | ) | (24 | ) | | (741 | ) | (725 | ) | | (77 | ) | (72 | ) | (227 | ) | (246 | ) | | (28 | ) | (25 | ) | | (686 | ) | (741 | ) | | (84 | ) | (77 | ) |
Amortization: | | | | | | | | |
| | | | | | | | |
|
Net (gain)/loss | 26 |
| 63 |
| | — |
| — |
| | 78 |
| 187 |
| | — |
| — |
| 42 |
| 26 |
| | — |
| — |
| | 125 |
| 78 |
| | — |
| — |
|
Prior service cost/(credit) | (7 | ) | (9 | ) | | — |
| — |
| | (19 | ) | (27 | ) | | — |
| — |
| |
Settlement | — |
| — |
| | — |
| — |
| | — |
| (3 | ) | | — |
| — |
| |
Net periodic defined benefit cost(a) | — |
| 43 |
| | (19 | ) | (17 | ) | | 2 |
| 126 |
| | (59 | ) | (51 | ) | |
Other defined benefit pension plans(b) | 6 |
| 6 |
| | NA |
| NA |
| | 21 |
| 16 |
| | NA |
| NA |
| |
Prior service (credit)/cost | | — |
| (7 | ) | | — |
| — |
| | 2 |
| (19 | ) | | — |
| — |
|
Net periodic defined benefit cost | | 51 |
| — |
| | (22 | ) | (19 | ) | | 154 |
| 2 |
| | (66 | ) | (59 | ) |
Other defined benefit pension plans(a) | | 7 |
| 6 |
| | NA |
| NA |
| | 20 |
| 21 |
| | NA |
| NA |
|
Total defined benefit plans | 6 |
| 49 |
| | (19 | ) | (17 | ) | | 23 |
| 142 |
| | (59 | ) | (51 | ) | 58 |
| 6 |
| | (22 | ) | (19 | ) | | 174 |
| 23 |
| | (66 | ) | (59 | ) |
Total defined contribution plans | 229 |
| 221 |
| | NA |
| NA |
| | 661 |
| 617 |
| | NA |
| NA |
| 255 |
| 229 |
| | NA |
| NA |
| | 718 |
| 661 |
| | NA |
| NA |
|
Total pension and OPEB cost included in noninterest expense | $ | 235 |
| $ | 270 |
| | $ | (19 | ) | $ | (17 | ) | | $ | 684 |
| $ | 759 |
| | $ | (59 | ) | $ | (51 | ) | $ | 313 |
| $ | 235 |
| | $ | (22 | ) | $ | (19 | ) | | $ | 892 |
| $ | 684 |
| | $ | (66 | ) | $ | (59 | ) |
| |
(a) | Effective January 1, 2018, benefits earned during the period are reported in compensation expense; all other components of net periodic defined benefit costs are reported within other expense in the Consolidated statements of income. |
| |
(b) | Includes various defined benefit pension plans which are individually immaterial. |
The following table presents the fair values of plan assets for the U.S. defined benefit pension and OPEB plans and for the material non-U.S. defined benefit pension plans.
| | (in billions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Fair value of plan assets | | | | | | |
Defined benefit pension plans | $ | 19.2 |
| | $ | 19.6 |
| $ | 20.1 |
| | $ | 18.1 |
|
OPEB plans | 2.8 |
| | 2.8 |
| 2.9 |
| | 2.6 |
|
There are no0 expected contributions to the U.S. defined benefit pension plan for 2018.2019.
Note 8 – Employee share-based incentives
ForRefer to Note 9 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the accounting policies and other information relating to employee share-based incentives, refer to Note9 of JPMorgan Chase’s 2017 Annual Report.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 September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Cost of prior grants of RSUs, stock appreciation rights (“SARs”) and performance share units (“PSUs”) that are amortized over their applicable vesting periods | $ | 282 |
| | $ | 267 |
| | $ | 956 |
| | $ | 867 |
| |
Cost of prior grants of RSUs, performance share units (“PSUs”) and stock appreciation rights (“SARs”) that are amortized over their applicable vesting periods | | $ | 265 |
| | $ | 282 |
| | $ | 882 |
| | $ | 956 |
|
Accrual of estimated costs of share-based awards to be granted in future periods including those to full-career eligible employees | 240 |
| | 224 |
| | 852 |
| | 750 |
| 294 |
| | 240 |
| | 900 |
| | 852 |
|
Total noncash compensation expense related to employee share-based incentive plans | $ | 522 |
| | $ | 491 |
| | $ | 1,808 |
| | $ | 1,617 |
| $ | 559 |
| | $ | 522 |
| | $ | 1,782 |
| | $ | 1,808 |
|
In the first quarter of 2018,2019, in connection with its annual incentive grant for the 20172018 performance year, the Firm granted 1721 million RSUs and 516630 thousand PSUs with weighted-average grant date fair values of $111.17$98.98 per RSU and $110.46$98.96 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 Note2. 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 September 30, 2018, 2019, the investment securities portfolio consisted of debt securities with an average credit rating of AA+ (based(based upon external ratings where available,
and where not available, based primarily upon internal ratings which correspond to ratings as defined by S&P and Moody’s). ForRefer to Note 10 of JPMorgan Chase’s 2018 Form 10-K for additional information regarding the investment securities portfolio, refer to Note10 of JPMorgan Chase’s 2017 Annual Report.portfolio.
As a result of the adoption of the premium amortization accounting guidance in the first quarter of 2018, premiums
on purchased callable debt securities must be amortized to the earliest call date for debt securities with call features that are explicit, noncontingent and callable at fixed prices and on preset dates. The guidance primarily impacts obligations of U.S. states and municipalities held in the Firm’s investment securities portfolio. For additional information, refer to Note17.
As permitted by the new hedge accounting guidance, the Firm also elected to transfer U.S. government agency MBS, commercial MBS, and obligations of U.S. states and municipalities with a carrying value of $22.4 billion from HTM to AFS in the first quarter of 2018. This transfer was a non-cash transaction. For additional information, refer to Note17.
The amortized costs and estimated fair values of the investment securities portfolio were as follows for the dates indicated.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2019 | | December 31, 2018 |
(in millions) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value |
Available-for-sale securities | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | |
U.S. GSEs and government agencies(a) | $ | 103,086 |
| $ | 2,556 |
| $ | 61 |
| | $ | 105,581 |
| | $ | 69,026 |
| $ | 594 |
| $ | 974 |
| | $ | 68,646 |
|
Residential: | | | | | | | | | | | |
U.S. | 10,083 |
| 273 |
| 6 |
| | 10,350 |
| | 5,877 |
| 79 |
| 31 |
| | 5,925 |
|
Non-U.S. | 2,490 |
| 64 |
| 2 |
| | 2,552 |
| | 2,529 |
| 72 |
| 6 |
| | 2,595 |
|
Commercial | 5,228 |
| 100 |
| 4 |
| | 5,324 |
| | 6,758 |
| 43 |
| 147 |
| | 6,654 |
|
Total mortgage-backed securities | 120,887 |
| 2,993 |
| 73 |
| | 123,807 |
| | 84,190 |
| 788 |
| 1,158 |
| | 83,820 |
|
U.S. Treasury and government agencies | 141,646 |
| 376 |
| 493 |
| | 141,529 |
| | 55,771 |
| 366 |
| 78 |
| | 56,059 |
|
Obligations of U.S. states and municipalities | 28,871 |
| 2,193 |
| — |
| | 31,064 |
| | 36,221 |
| 1,582 |
| 80 |
| | 37,723 |
|
Certificates of deposit | 74 |
| — |
| — |
| | 74 |
| | 75 |
| — |
| — |
| | 75 |
|
Non-U.S. government debt securities | 21,644 |
| 524 |
| 10 |
| | 22,158 |
| | 23,771 |
| 351 |
| 20 |
| | 24,102 |
|
Corporate debt securities | 1,596 |
| 39 |
| 1 |
| | 1,634 |
| | 1,904 |
| 23 |
| 9 |
| | 1,918 |
|
Asset-backed securities: | | | | | | | | | | | |
Collateralized loan obligations | 27,942 |
| 18 |
| 52 |
| | 27,908 |
| | 19,612 |
| 1 |
| 176 |
| | 19,437 |
|
Other | 5,199 |
| 57 |
| 9 |
| | 5,247 |
| | 7,225 |
| 57 |
| 22 |
| | 7,260 |
|
Total available-for-sale securities | 347,859 |
| 6,200 |
| 638 |
| | 353,421 |
| | 228,769 |
| 3,168 |
| 1,543 |
| | 230,394 |
|
Held-to-maturity securities | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | |
U.S. GSEs and government agencies(a) | 35,976 |
| 1,250 |
| 20 |
| | 37,206 |
| | 26,610 |
| 134 |
| 200 |
| | 26,544 |
|
Total mortgage-backed securities | 35,976 |
| 1,250 |
| 20 |
| | 37,206 |
| | 26,610 |
| 134 |
| 200 |
| | 26,544 |
|
U.S. Treasury and government agencies
| 51 |
| — |
| — |
| | 51 |
| | — |
| — |
| — |
| | — |
|
Obligations of U.S. states and municipalities | 4,803 |
| 317 |
| — |
| | 5,120 |
| | 4,824 |
| 105 |
| 15 |
| | 4,914 |
|
Total held-to-maturity securities | 40,830 |
| 1,567 |
| 20 |
| | 42,377 |
| | 31,434 |
| 239 |
| 215 |
| | 31,458 |
|
Total investment securities | $ | 388,689 |
| $ | 7,767 |
| $ | 658 |
| | $ | 395,798 |
| | $ | 260,203 |
| $ | 3,407 |
| $ | 1,758 |
| | $ | 261,852 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2018 | | December 31, 2017 |
(in millions) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value |
Available-for-sale securities | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | |
U.S. government agencies(a) | $ | 64,229 |
| $ | 389 |
| $ | 1,508 |
| | $ | 63,110 |
| | $ | 69,879 |
| $ | 736 |
| $ | 335 |
| | $ | 70,280 |
|
Residential: | | | | | | | | | | | |
U.S. | 6,396 |
| 127 |
| 36 |
| | 6,487 |
| | 8,193 |
| 185 |
| 14 |
| | 8,364 |
|
Non-U.S. | 2,639 |
| 94 |
| 3 |
| | 2,730 |
| | 2,882 |
| 122 |
| 1 |
| | 3,003 |
|
Commercial | 7,151 |
| 79 |
| 182 |
| | 7,048 |
| | 4,932 |
| 98 |
| 5 |
| | 5,025 |
|
Total mortgage-backed securities | 80,415 |
| 689 |
| 1,729 |
| | 79,375 |
| | 85,886 |
| 1,141 |
| 355 |
| | 86,672 |
|
U.S. Treasury and government agencies | 27,526 |
| 486 |
| 196 |
| | 27,816 |
| | 22,510 |
| 266 |
| 31 |
| | 22,745 |
|
Obligations of U.S. states and municipalities | 36,659 |
| 1,580 |
| 118 |
| | 38,121 |
| | 30,490 |
| 1,881 |
| 33 |
| | 32,338 |
|
Certificates of deposit | 75 |
| — |
| — |
| | 75 |
| | 59 |
| — |
| — |
| | 59 |
|
Non-U.S. government debt securities | 24,398 |
| 321 |
| 45 |
| | 24,674 |
| | 26,900 |
| 426 |
| 32 |
| | 27,294 |
|
Corporate debt securities | 1,993 |
| 64 |
| 1 |
| | 2,056 |
| | 2,657 |
| 101 |
| 1 |
| | 2,757 |
|
Asset-backed securities: | | | | | | | | | | | |
Collateralized loan obligations | 20,139 |
| 12 |
| 42 |
| | 20,109 |
| | 20,928 |
| 69 |
| 1 |
| | 20,996 |
|
Other | 7,761 |
| 70 |
| 27 |
| | 7,804 |
| | 8,764 |
| 77 |
| 24 |
| | 8,817 |
|
Total available-for-sale debt securities | 198,966 |
| 3,222 |
| 2,158 |
| | 200,030 |
| | 198,194 |
| 3,961 |
| 477 |
| | 201,678 |
|
Available-for-sale equity securities(b) | — |
| — |
| — |
| | — |
| | 547 |
| — |
| — |
| | 547 |
|
Total available-for-sale securities | 198,966 |
| 3,222 |
| 2,158 |
| | 200,030 |
| | 198,741 |
| 3,961 |
| 477 |
| | 202,225 |
|
Held-to-maturity securities | | | | | | | | | | | |
Mortgage-backed securities: | | | | | | | | | | | |
U.S. government agencies(c) | 26,537 |
| 5 |
| 493 |
| | 26,049 |
| | 27,577 |
| 558 |
| 40 |
| | 28,095 |
|
Commercial | — |
| — |
| — |
| | — |
| | 5,783 |
| 1 |
| 74 |
| | 5,710 |
|
Total mortgage-backed securities | 26,537 |
| 5 |
| 493 |
| | 26,049 |
| | 33,360 |
| 559 |
| 114 |
| | 33,805 |
|
Obligations of U.S. states and municipalities | 4,831 |
| 69 |
| 31 |
| | 4,869 |
| | 14,373 |
| 554 |
| 80 |
| | 14,847 |
|
Total held-to-maturity securities | 31,368 |
| 74 |
| 524 |
| | 30,918 |
| | 47,733 |
| 1,113 |
| 194 |
| | 48,652 |
|
Total investment securities | $ | 230,334 |
| $ | 3,296 |
| $ | 2,682 |
| | $ | 230,948 |
| | $ | 246,474 |
| $ | 5,074 |
| $ | 671 |
| | $ | 250,877 |
|
| |
(a) | Includes totalAFS U.S. government-sponsored enterpriseGSE obligations with fair values of $44.2$78.8 billion and $45.8$50.7 billion, at September 30, 2018, and December 31, 2017, respectively. |
| |
(b) | Effective January 1, 2018, the Firm adopted the recognition and measurement guidance. Equity securities that were previously reported as AFS securities were reclassified to other assets upon adoption. |
| |
(c) | Included totalHTM U.S. government-sponsored enterpriseGSE obligations with amortized cost of $20.6$30.8 billion and $22.0$20.9 billion, at September 30, 2018,2019, and December 31, 2017,2018, respectively. As of September 30, 2019, mortgage-backed securities issued by Fannie Mae and Freddie Mac each exceeded 10% of JPMorgan Chase’s total stockholders’ equity; the amortized cost and fair value of such securities was $69.8 billion and $72.0 billion, and $37.8 billion and $38.8 billion, respectively. |
Investment securities impairment
The following tables present the fair value and gross unrealized losses for investment securities by aging category at September 30, 2018,2019, and December 31, 2017.2018.
| | | Investment securities with gross unrealized losses | Investment securities with gross unrealized losses |
| Less than 12 months | | 12 months or more | | Less than 12 months | | 12 months or more | |
September 30, 2018 (in millions) | Fair value | Gross unrealized losses | | Fair value | Gross unrealized losses | Total fair value | Total gross unrealized losses | |
September 30, 2019 (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: | | | | | | |
U.S. government agencies | $ | 37,109 |
| $ | 988 |
| | $ | 10,492 |
| $ | 520 |
| $ | 47,601 |
| $ | 1,508 |
| |
U.S. GSEs and government agencies | | $ | 8,505 |
| $ | 37 |
| | $ | 2,952 |
| $ | 24 |
| $ | 11,457 |
| $ | 61 |
|
Residential: | | | | | | |
U.S. | 1,343 |
| 20 |
| | 860 |
| 16 |
| 2,203 |
| 36 |
| — |
| — |
| | 558 |
| 6 |
| 558 |
| 6 |
|
Non-U.S. | 635 |
| 2 |
| | 180 |
| 1 |
| 815 |
| 3 |
| 47 |
| — |
| | 472 |
| 2 |
| 519 |
| 2 |
|
Commercial | 914 |
| 11 |
| | 3,018 |
| 171 |
| 3,932 |
| 182 |
| 752 |
| 4 |
| | 165 |
| — |
| 917 |
| 4 |
|
Total mortgage-backed securities | 40,001 |
| 1,021 |
| | 14,550 |
| 708 |
| 54,551 |
| 1,729 |
| 9,304 |
| 41 |
| | 4,147 |
| 32 |
| 13,451 |
| 73 |
|
U.S. Treasury and government agencies | 4,556 |
| 100 |
| | 1,416 |
| 96 |
| 5,972 |
| 196 |
| 84,152 |
| 489 |
| | 540 |
| 4 |
| 84,692 |
| 493 |
|
Obligations of U.S. states and municipalities | 4,171 |
| 63 |
| | 1,291 |
| 55 |
| 5,462 |
| 118 |
| 41 |
| — |
| | 23 |
| — |
| 64 |
| — |
|
Certificates of deposit | — |
| — |
| | — |
| — |
| — |
| — |
| 74 |
| — |
| | — |
| — |
| 74 |
| — |
|
Non-U.S. government debt securities | 4,237 |
| 16 |
| | 1,798 |
| 29 |
| 6,035 |
| 45 |
| 3,189 |
| 6 |
| | 1,357 |
| 4 |
| 4,546 |
| 10 |
|
Corporate debt securities | — |
| — |
| | 38 |
| 1 |
| 38 |
| 1 |
| 83 |
| — |
| | 36 |
| 1 |
| 119 |
| 1 |
|
Asset-backed securities: | | | | | | |
Collateralized loan obligations | 10,267 |
| 42 |
| | — |
| — |
| 10,267 |
| 42 |
| 7,086 |
| 8 |
| | 6,684 |
| 44 |
| 13,770 |
| 52 |
|
Other | 2,018 |
| 6 |
| | 2,545 |
| 21 |
| 4,563 |
| 27 |
| 506 |
| 3 |
| | 1,598 |
| 6 |
| 2,104 |
| 9 |
|
Total available-for-sale securities | 65,250 |
| 1,248 |
| | 21,638 |
| 910 |
| 86,888 |
| 2,158 |
| 104,435 |
| 547 |
| | 14,385 |
| 91 |
| 118,820 |
| 638 |
|
Held-to-maturity securities | | | | | | |
Mortgage-backed securities | | | | | | |
U.S. government agencies | 22,131 |
| 356 |
| | 2,595 |
| 137 |
| 24,726 |
| 493 |
| |
Commercial | — |
| — |
| | — |
| — |
| — |
| — |
| |
U.S. GSEs and government agencies | | 2,240 |
| 20 |
| | 86 |
| — |
| 2,326 |
| 20 |
|
Total mortgage-backed securities | 22,131 |
| 356 |
| | 2,595 |
| 137 |
| 24,726 |
| 493 |
| 2,240 |
| 20 |
| | 86 |
| — |
| 2,326 |
| 20 |
|
U.S. Treasury and government agencies
| | 51 |
| — |
| | — |
| — |
| 51 |
| — |
|
Obligations of U.S. states and municipalities | 853 |
| 10 |
| | 677 |
| 21 |
| 1,530 |
| 31 |
| — |
| — |
| | — |
| — |
| — |
| — |
|
Total held-to-maturity securities | 22,984 |
| 366 |
| | 3,272 |
| 158 |
| 26,256 |
| 524 |
| 2,291 |
| 20 |
| | 86 |
| — |
| 2,377 |
| 20 |
|
Total investment securities with gross unrealized losses | $ | 88,234 |
| $ | 1,614 |
| | $ | 24,910 |
| $ | 1,068 |
| $ | 113,144 |
| $ | 2,682 |
| $ | 106,726 |
| $ | 567 |
| | $ | 14,471 |
| $ | 91 |
| $ | 121,197 |
| $ | 658 |
|
| | | Investment securities with gross unrealized losses | Investment securities with gross unrealized losses |
| Less than 12 months | | 12 months or more | | Less than 12 months | | 12 months or more | |
December 31, 2017 (in millions) | Fair value | Gross unrealized losses | | Fair value | Gross unrealized losses | Total fair value | Total gross unrealized losses | |
December 31, 2018 (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: | | | | | | |
U.S. government agencies | $ | 36,037 |
| $ | 139 |
| | $ | 7,711 |
| $ | 196 |
| $ | 43,748 |
| $ | 335 |
| |
U.S. GSEs and government agencies | | $ | 17,656 |
| $ | 318 |
| | $ | 22,728 |
| $ | 656 |
| $ | 40,384 |
| $ | 974 |
|
Residential: | | | | | | |
U.S. | 1,112 |
| 5 |
| | 596 |
| 9 |
| $ | 1,708 |
| 14 |
| 623 |
| 4 |
| | 1,445 |
| 27 |
| 2,068 |
| 31 |
|
Non-U.S. | — |
| — |
| | 266 |
| 1 |
| 266 |
| 1 |
| 907 |
| 5 |
| | 165 |
| 1 |
| 1,072 |
| 6 |
|
Commercial | 528 |
| 4 |
| | 335 |
| 1 |
| 863 |
| 5 |
| 974 |
| 6 |
| | 3,172 |
| 141 |
| 4,146 |
| 147 |
|
Total mortgage-backed securities | 37,677 |
| 148 |
| | 8,908 |
| 207 |
| 46,585 |
| 355 |
| 20,160 |
| 333 |
| | 27,510 |
| 825 |
| 47,670 |
| 1,158 |
|
U.S. Treasury and government agencies | 1,834 |
| 11 |
| | 373 |
| 20 |
| 2,207 |
| 31 |
| 4,792 |
| 7 |
| | 2,391 |
| 71 |
| 7,183 |
| 78 |
|
Obligations of U.S. states and municipalities | 949 |
| 7 |
| | 1,652 |
| 26 |
| 2,601 |
| 33 |
| 1,808 |
| 15 |
| | 2,477 |
| 65 |
| 4,285 |
| 80 |
|
Certificates of deposit | — |
| — |
| | — |
| — |
| — |
| — |
| 75 |
| — |
| | — |
| — |
| 75 |
| — |
|
Non-U.S. government debt securities | 6,500 |
| 15 |
| | 811 |
| 17 |
| 7,311 |
| 32 |
| 3,123 |
| 5 |
| | 1,937 |
| 15 |
| 5,060 |
| 20 |
|
Corporate debt securities | — |
| — |
| | 52 |
| 1 |
| 52 |
| 1 |
| 478 |
| 8 |
| | 37 |
| 1 |
| 515 |
| 9 |
|
Asset-backed securities: | | | | | | |
Collateralized loan obligations | — |
| — |
| | 276 |
| 1 |
| 276 |
| 1 |
| 18,681 |
| 176 |
| | — |
| — |
| 18,681 |
| 176 |
|
Other | 3,521 |
| 20 |
| | 720 |
| 4 |
| 4,241 |
| 24 |
| 1,208 |
| 6 |
| | 2,354 |
| 16 |
| 3,562 |
| 22 |
|
Total available-for-sale securities | 50,481 |
| 201 |
| | 12,792 |
| 276 |
| 63,273 |
| 477 |
| 50,325 |
| 550 |
| | 36,706 |
| 993 |
| 87,031 |
| 1,543 |
|
Held-to-maturity securities | | | | | | |
Mortgage-backed securities | | | | | | |
U.S. government agencies | 4,070 |
| 38 |
| | 205 |
| 2 |
| 4,275 |
| 40 |
| |
Commercial | 3,706 |
| 41 |
| | 1,882 |
| 33 |
| 5,588 |
| 74 |
| |
U.S. GSEs and government agencies | | 4,385 |
| 23 |
| | 7,082 |
| 177 |
| 11,467 |
| 200 |
|
Total mortgage-backed securities | 7,776 |
| 79 |
| | 2,087 |
| 35 |
| 9,863 |
| 114 |
| 4,385 |
| 23 |
| | 7,082 |
| 177 |
| 11,467 |
| 200 |
|
U.S. Treasury and government agencies
| | — |
| — |
| | — |
| — |
| — |
| — |
|
Obligations of U.S. states and municipalities | 584 |
| 9 |
| | 2,131 |
| 71 |
| 2,715 |
| 80 |
| 12 |
| — |
| | 1,114 |
| 15 |
| 1,126 |
| 15 |
|
Total held-to-maturity securities | 8,360 |
| 88 |
| | 4,218 |
| 106 |
| 12,578 |
| 194 |
| 4,397 |
| 23 |
| | 8,196 |
| 192 |
| 12,593 |
| 215 |
|
Total investment securities with gross unrealized losses | $ | 58,841 |
| $ | 289 |
| | $ | 17,010 |
| $ | 382 |
| $ | 75,851 |
| $ | 671 |
| $ | 54,722 |
| $ | 573 |
| | $ | 44,902 |
| $ | 1,185 |
| $ | 99,624 |
| $ | 1,758 |
|
Gross unrealized lossesOther-than-temporary impairment
The Firm has recognizedrecognizes unrealized losses on investment securities that it intends to sell as OTTI. The Firm does not intend to sell any of the remaining investment securities with an unrealized loss in AOCI as of September 30, 2018,2019, and it is not likely that the Firm will be required to sell these securities before recovery of their amortized cost basis. Except for the securities for which credit losses have been recognized in income,Further, the Firm did not recognize any credit-related OTTI losses during the nine months ended September 30, 2019 and 2018. Accordingly, the Firm believes that the investment securities with an unrealized loss in AOCI as of September 30, 2018,2019, are not other-than-temporarily impaired. ForRefer to Note 10 of JPMorgan Chase’s 2018 Form 10-K for additional information on other-than-temporary impairment, refer to Note10 of the JPMorgan Chase’s 2017 Annual Report.impairment.
Investment securities gains and losses
The following table presents realized gains and losses and OTTI from AFS securities that were recognized in income.
|
| | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| 2017 |
| | 2018 |
| 2017 |
|
Realized gains | $ | 58 |
| $ | 122 |
| | $ | 137 |
| $ | 664 |
|
Realized losses | (103 | ) | (123 | ) | | (507 | ) | (696 | ) |
OTTI losses | (1 | ) | — |
| | (1 | ) | (6 | ) |
Net investment securities losses | $ | (46 | ) | $ | (1 | ) | | $ | (371 | ) | $ | (38 | ) |
| | | | | |
OTTI losses | | | | | |
Credit-related losses recognized in income | $ | — |
| $ | — |
| | $ | — |
| $ | — |
|
Investment securities the Firm intends to sell(a) | (1 | ) | — |
| | (1 | ) | (6 | ) |
Total OTTI losses recognized in income | $ | (1 | ) | $ | — |
| | $ | (1 | ) | $ | (6 | ) |
|
| | | | | | | | | | | | | | |
| Three months ended September 30, | | | Nine months ended September 30, |
(in millions) | 2019 |
| 2018 |
| | | 2019 |
| 2018 |
|
Realized gains | $ | 78 |
| $ | 58 |
| | | $ | 454 |
| $ | 137 |
|
Realized losses | — |
| (103 | ) | | | (319 | ) | (507 | ) |
OTTI losses(a) | — |
| (1 | ) | | | — |
| (1 | ) |
Net investment securities gains/(losses) | $ | 78 |
| $ | (46 | ) | | | $ | 135 |
| $ | (371 | ) |
| |
(a) | Excludes realized losses on securities sold of $21 million and $6 million for the nine months ended September 30, 2018 and 2017 that had been previously reported as an OTTI loss due to the intention to sell the securities. |
(a) Represents OTTI losses recognized in income on investment securities the Firm intends to sell. Excludes realized losses on securities sold of $21 million for the nine months ended September 30, 2018 that had been previously reported as an OTTI loss due to the intention to sell the securities.
Changes in the credit loss component of credit-impaired debt securities
The cumulative credit loss component, including any changes therein, of OTTI losses that have been recognized in income related to AFS securities that the Firm does not intend to sell was not material as of and during the nine month periods ended September 30, 20182019 and 2017.2018.
Contractual maturities and yields
The following table presents the amortized cost and estimated fair value at September 30, 2018,2019, of JPMorgan Chase’s investment securities portfolio by contractual maturity.
| | By remaining maturity September 30, 2018 (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 | |
By remaining maturity September 30, 2019 (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(b) | | Total |
Available-for-sale securities | | | | | | |
Mortgage-backed securities(a) | | | | | | |
Amortized cost | $ | 258 |
| $ | 377 |
| $ | 5,746 |
| $ | 74,034 |
| | $ | 80,415 |
| $ | 14 |
| $ | 59 |
| $ | 10,230 |
| $ | 110,584 |
| | $ | 120,887 |
|
Fair value | 260 |
| 379 |
| 5,827 |
| 72,909 |
| | 79,375 |
| 14 |
| 60 |
| 10,476 |
| 113,257 |
| | 123,807 |
|
Average yield(b) | 1.84 | % | 2.45 | % | 3.44 | % | 3.48 | % | | 3.46 | % | |
Average yield(a) | | 3.59 | % | 2.73 | % | 2.92 | % | 3.45 | % | | 3.40 | % |
U.S. Treasury and government agencies |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | 84 |
| $ | 8,565 |
| $ | 13,644 |
| $ | 5,233 |
| | $ | 27,526 |
| $ | 10,904 |
| $ | 95,139 |
| $ | 25,557 |
| $ | 10,046 |
| | $ | 141,646 |
|
Fair value | 85 |
| 8,673 |
| 13,533 |
| 5,525 |
| | 27,816 |
| 10,901 |
| 95,231 |
| 25,659 |
| 9,738 |
| | 141,529 |
|
Average yield(b) | 2.12 | % | 2.70 | % | 2.53 | % | 2.91 | % | | 2.66 | % | |
Average yield(a) | | 1.99 | % | 1.96 | % | 2.02 | % | 2.04 | % | | 1.98 | % |
Obligations of U.S. states and municipalities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | 103 |
| $ | 715 |
| $ | 2,783 |
| $ | 33,058 |
| | $ | 36,659 |
| $ | 170 |
| $ | 228 |
| $ | 1,089 |
| $ | 27,384 |
| | $ | 28,871 |
|
Fair value | 104 |
| 728 |
| 2,872 |
| 34,417 |
| | 38,121 |
| 172 |
| 236 |
| 1,135 |
| 29,521 |
| | 31,064 |
|
Average yield(b) | 2.07 | % | 3.89 | % | 5.05 | % | 5.01 | % | | 4.98 | % | |
Average yield(a) | | 3.32 | % | 4.00 | % | 5.60 | % | 4.94 | % | | 4.95 | % |
Certificates of deposit |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | 75 |
| $ | — |
| $ | — |
| $ | — |
| | $ | 75 |
| $ | 74 |
| $ | — |
| $ | — |
| $ | — |
| | $ | 74 |
|
Fair value | 75 |
| — |
| — |
| — |
| | 75 |
| 74 |
| — |
| — |
| — |
| | 74 |
|
Average yield(b) | 0.49 | % | — | % | — | % | — | % | | 0.49 | % | |
Average yield(a) | | 0.49 | % | — | % | — | % | — | % | | 0.49 | % |
Non-U.S. government debt securities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | 4,289 |
| $ | 14,711 |
| $ | 5,398 |
| $ | — |
| | $ | 24,398 |
| $ | 6,342 |
| $ | 11,580 |
| $ | 3,416 |
| $ | 306 |
| | $ | 21,644 |
|
Fair value | 4,289 |
| 14,886 |
| 5,499 |
| — |
| | 24,674 |
| 6,350 |
| 11,870 |
| 3,633 |
| 305 |
| | 22,158 |
|
Average yield(b) | 3.00 | % | 1.86 | % | 1.30 | % | — | % | | 1.94 | % | |
Average yield(a) | | 2.23 | % | 1.99 | % | 1.34 | % | 1.67 | % | | 1.95 | % |
Corporate debt securities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | 70 |
| $ | 914 |
| $ | 872 |
| $ | 137 |
| | $ | 1,993 |
| $ | 216 |
| $ | 718 |
| $ | 662 |
| $ | — |
| | $ | 1,596 |
|
Fair value | 70 |
| 936 |
| 905 |
| 145 |
| | 2,056 |
| 218 |
| 737 |
| 679 |
| — |
| | 1,634 |
|
Average yield(b) | 4.04 | % | 4.40 | % | 4.57 | % | 4.73 | % | | 4.48 | % | |
Average yield(a) | | 4.83 | % | 3.91 | % | 3.78 | % | — | % | | 3.98 | % |
Asset-backed securities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | — |
| $ | 3,537 |
| $ | 5,345 |
| $ | 19,018 |
| | $ | 27,900 |
| $ | — |
| $ | 1,873 |
| $ | 9,411 |
| $ | 21,857 |
| | $ | 33,141 |
|
Fair value | — |
| 3,515 |
| 5,347 |
| 19,051 |
| | 27,913 |
| — |
| 1,876 |
| 9,412 |
| 21,867 |
| | 33,155 |
|
Average yield(b) | — | % | 2.83 | % | 3.19 | % | 3.04 | % | | 3.04 | % | |
Average yield(a) | | — | % | 2.94 | % | 3.17 | % | 3.03 | % | | 3.06 | % |
Total available-for-sale securities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | 4,879 |
| $ | 28,819 |
| $ | 33,788 |
| $ | 131,480 |
| | $ | 198,966 |
| $ | 17,720 |
| $ | 109,597 |
| $ | 50,365 |
| $ | 170,177 |
| | $ | 347,859 |
|
Fair value | 4,883 |
| 29,117 |
| 33,983 |
| 132,047 |
| | 200,030 |
| 17,729 |
| 110,010 |
| 50,994 |
| 174,688 |
| | 353,421 |
|
Average yield(b) | 2.88 | % | 2.37 | % | 2.85 | % | 3.78 | % | | 3.39 | % | |
Average yield(a) | | 2.12 | % | 2.00 | % | 2.47 | % | 3.55 | % | | 2.83 | % |
Held-to-maturity securities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Mortgage-backed securities(a) |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | — |
| $ | — |
| $ | 2,765 |
| $ | 23,772 |
| | $ | 26,537 |
| $ | — |
| $ | — |
| $ | 4,655 |
| $ | 31,321 |
| | $ | 35,976 |
|
Fair value | — |
| — |
| 2,725 |
| 23,324 |
| | 26,049 |
| — |
| — |
| 5,049 |
| 32,157 |
| | 37,206 |
|
Average yield(b)(a) | — | % | — | % | 3.52 | % | 3.33 | % | | 3.35 | % | — | % | — | % | 3.29 | % | 3.12 | % | | 3.14 | % |
U.S. Treasury and government agencies
| | | | |
Amortized cost
| | $ | — |
| $ | 51 |
| $ | — |
| $ | — |
| | $ | 51 |
|
Fair value
| | — |
| 51 |
| — |
| — |
| | 51 |
|
Average yield(a)
| | — | % | 1.47 | % | — | % | — | % | | 1.47 | % |
Obligations of U.S. states and municipalities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | — |
| $ | — |
| $ | 20 |
| $ | 4,811 |
| | $ | 4,831 |
| $ | — |
| $ | — |
| $ | 55 |
| $ | 4,748 |
| | $ | 4,803 |
|
Fair value | — |
| — |
| 20 |
| 4,849 |
| | 4,869 |
| — |
| — |
| 58 |
| 5,062 |
| | 5,120 |
|
Average yield(b) | — | % | — | % | 3.90 | % | 4.11 | % | | 4.11 | % | |
Average yield(b)(a) | | — | % | — | % | 3.89 | % | 4.02 | % | | 4.02 | % |
Total held-to-maturity securities |
|
|
|
|
|
|
|
| | |
|
|
|
|
|
|
|
| | |
Amortized cost | $ | — |
| $ | — |
| $ | 2,785 |
| $ | 28,583 |
| | $ | 31,368 |
| $ | — |
| $ | 51 |
| $ | 4,710 |
| $ | 36,069 |
| | $ | 40,830 |
|
Fair value | — |
| — |
| 2,745 |
| 28,173 |
| | 30,918 |
| — |
| 51 |
| 5,107 |
| 37,219 |
| | 42,377 |
|
Average yield(b)(a) | — | % | — | % | 3.53 | % | 3.46 | % | | 3.47 | % | |
Average yield(a) | | — | % | 1.47 | % | 3.30 | % | 3.24 | % | | 3.24 | % |
| |
(a) | As of September 30, 2018, mortgage-backed securities issued by Fannie Mae exceeded 10% of JPMorgan Chase’s total stockholders’ equity; the amortized cost and fair value of such securities was $51.2 billion and $50.6 billion, respectively. |
| |
(b) | Average yield is computed using the effective yield of each security owned at the end of the period, weighted based on the amortized cost of each security. The effective yield considers the contractual coupon, amortization of premiums and accretion of discounts, and the effect of related hedging derivatives. Taxable-equivalent amounts are used where applicable. The effective yield excludes unscheduled principal prepayments; and accordingly, actual maturities of securities may differ from their contractual or expected maturities as certain securities may be prepaid. |
| |
(c)(b) | Includes investment securities with no stated maturity. 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 75 years for agency residential MBS, 3 years for agency residential collateralized mortgage obligations and 3 years for nonagency residential collateralized mortgage obligations. |
Note 10 – Securities financing activities
ForRefer to Note 11 of JPMorgan Chase’s 2018 Form 10-K for a discussion of accounting policies relating to securities financing activities, referactivities. Refer to Note 11 of JPMorgan Chase’s 2017 Annual Report. For3 for further information regarding securities borrowed and securities lending agreements for which the fair value option has been elected, referelected. Refer to Note 3. For23 for further information regarding assets pledged and collateral received in securities financing agreements, refer to Note 21.agreements.
The table below summarizes the gross and net amounts of the Firm’s securities financing agreements as of September 30, 20182019 and December 31, 2017.2018. When the Firm has obtained an appropriate legal opinion with respect to thea 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
the balances outstanding under its securities financing agreements with the same counterparty. In addition, the Firm exchanges securities and/or cash collateral with its counterparties; this collateral also reducescounterparty 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 counterparty.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, and related collateral does not reduce the amounts presented.the Firm below.has an appropriate legal opinion with respect to the master netting agreement with the counterparty. Where a legal opinion has not been either sought or obtained, the securities financing balances are presented gross in the “Net amounts” below, and related collateral does not reduce the amounts presented.the counterparty. Such collateral, along with securities financing balances that do not meet all these relevant netting criteria under U.S. GAAP, is presented as “Amounts not nettable on the Consolidated balance sheets,” and reduces the “Net amounts” presented below, if the Firm has an appropriate legal opinion with respect to the master netting agreement with the counterparty. Where a legal opinion has not been either sought or obtained, the securities financing balances are presented gross in the “Net amounts” below, and related collateral does not reduce the amounts presented.
| | | September 30, 2018 | September 30, 2019 |
(in millions) | Gross amounts | Amounts netted on the Consolidated balance sheets | Amounts presented on the Consolidated balance sheets(b) | Amounts not nettable on the Consolidated balance sheets(c) | Net amounts(d) | Gross amounts | Amounts netted on the Consolidated balance sheets | Amounts presented on the Consolidated balance sheets(b) | Amounts not nettable on the Consolidated balance sheets(c) | Net amounts(d) |
Assets | | | | | | |
Securities purchased under resale agreements | $ | 521,732 |
| $ | (304,110 | ) | $ | 217,622 |
| $ | (205,345 | ) | | $ | 12,277 |
| $ | 630,033 |
| $ | (372,650 | ) | $ | 257,383 |
| $ | (244,241 | ) | | $ | 13,142 |
|
Securities borrowed | 143,644 |
| (21,210 | ) | 122,434 |
| (89,771 | ) | | 32,663 |
| 160,304 |
| (21,968 | ) | 138,336 |
| (104,517 | ) | | 33,819 |
|
Liabilities | | | | | | |
Securities sold under repurchase agreements | $ | 472,560 |
| $ | (304,110 | ) | $ | 168,450 |
| $ | (154,335 | ) | | $ | 14,115 |
| $ | 608,618 |
| $ | (372,650 | ) | $ | 235,968 |
| $ | (213,150 | ) | | $ | 22,818 |
|
Securities loaned and other(a) | 38,720 |
| (21,210 | ) | 17,510 |
| (17,146 | ) | | 364 |
| 34,104 |
| (21,968 | ) | 12,136 |
| (11,878 | ) | | 258 |
|
| | | December 31, 2017 | December 31, 2018 |
(in millions) | Gross amounts | Amounts netted on the Consolidated balance sheets | Amounts presented on the Consolidated balance sheets(b) | Amounts not nettable on the Consolidated balance sheets(c) | Net amounts(d) | Gross amounts | Amounts netted on the Consolidated balance sheets | Amounts presented on the Consolidated balance sheets(b) | Amounts not nettable on the Consolidated balance sheets(c) | Net amounts(d) |
Assets | | | | | | |
Securities purchased under resale agreements | $ | 448,608 |
| $ | (250,505 | ) | $ | 198,103 |
| $ | (188,502 | ) |
| $ | 9,601 |
| $ | 691,116 |
| $ | (369,612 | ) | $ | 321,504 |
| $ | (308,854 | ) |
| $ | 12,650 |
|
Securities borrowed | 113,926 |
| (8,814 | ) | 105,112 |
| (76,805 | ) | | 28,307 |
| 132,955 |
| (20,960 | ) | 111,995 |
| (79,747 | ) | | 32,248 |
|
Liabilities | | | | | | |
Securities sold under repurchase agreements | $ | 398,218 |
| $ | (250,505 | ) | $ | 147,713 |
| $ | (129,178 | ) |
| $ | 18,535 |
| $ | 541,587 |
| $ | (369,612 | ) | $ | 171,975 |
| $ | (149,125 | ) |
| $ | 22,850 |
|
Securities loaned and other(a) | 27,228 |
| (8,814 | ) | 18,414 |
| (18,151 | ) | | 263 |
| 33,700 |
| (20,960 | ) | 12,740 |
| (12,358 | ) | | 382 |
|
| |
(a) | Includes securities-for-securities lending transactionsagreements of $5.2$2.4 billion and $9.2$3.3 billion at September 30, 20182019 and December 31, 2017,2018, respectively, accounted for at fair value, where the Firm is acting as lender. These amounts are presented within other liabilities inIn the Consolidated balance sheets.sheets, 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. |
| |
(b) | Includes securities financing agreements accounted for at fair value. At September 30, 20182019 and December 31, 2017,2018, included securities purchased under resale agreements of $12.2$13.7 billion and $14.7$13.2 billion, respectively andrespectively; securities sold under repurchase agreements to repurchase of $1.1$933 million and $935 million, respectively; and securities borrowed of $5.8 billion and $697 million,$5.1 billion, respectively. There were $4.5 billion and $3.0 billion of securities borrowed at September 30, 2018 and December 31, 2017, respectively. There were no0 securities loaned accounted for at fair value in either period. |
| |
(c) | 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. |
| |
(d) | 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 September 30, 20182019 and December 31, 2017,2018, included $6.4$9.1 billion and $7.5$7.9 billion, respectively, of securities purchased under resale agreements; $29.7$30.6 billion and $25.5$30.3 billion, respectively, of securities borrowed; $13.2$21.9 billion and $16.5$21.5 billion, respectively, of securities sold under agreements to repurchase;repurchase agreements; and $45$96 million and $29$25 million, respectively, of securities loaned and other. |
The tables below present as of September 30, 2018,2019, and December 31, 20172018 the types of financial assets pledged in securities financing agreements and the remaining contractual maturity of the securities financing agreements.
|
| | | | | | | | | | | | | |
| Gross liability balance |
| September 30, 2018 | | December 31, 2017 |
(in millions) | Securities sold under repurchase agreements | Securities loaned and other(a) | | Securities sold under repurchase agreements | Securities loaned and other(a) |
Mortgage-backed securities | | | | | |
U.S. government agencies | 25,116 |
| — |
| | 13,100 |
| — |
|
Residential - nonagency | 1,861 |
| — |
| | 2,972 |
| — |
|
Commercial - nonagency | 1,431 |
| — |
| | 1,594 |
| — |
|
U.S. Treasury and government agencies | 236,939 |
| 14 |
| | 177,581 |
| 14 |
|
Obligations of U.S. states and municipalities | 1,161 |
| — |
| | 1,557 |
| — |
|
Non-U.S. government debt | 174,400 |
| 2,294 |
| | 170,196 |
| 2,485 |
|
Corporate debt securities | 15,474 |
| 216 |
| | 14,231 |
| 287 |
|
Asset-backed securities | 2,543 |
| — |
| | 3,508 |
| — |
|
Equity securities | 13,635 |
| 36,196 |
| | 13,479 |
| 24,442 |
|
Total | $ | 472,560 |
| $ | 38,720 |
| | $ | 398,218 |
| $ | 27,228 |
|
|
| | | | | | | | | | | | | | | | | |
| Remaining contractual maturity of the agreements |
| Overnight and continuous | | | | | Greater than 90 days | |
September 30, 2018 (in millions) | | Up to 30 days | | 30 – 90 days | Total |
Total securities sold under repurchase agreements | $ | 195,713 |
| | $ | 166,754 |
| | $ | 46,511 |
| $ | 63,582 |
| $ | 472,560 |
|
Total securities loaned and other(a) | 29,415 |
| | 138 |
| | 1,805 |
| 7,362 |
| 38,720 |
|
|
| | | | | | | | | | | | | | | | | |
| Remaining contractual maturity of the agreements |
| Overnight and continuous | | | | | Greater than 90 days | |
December 31, 2017 (in millions) | | Up to 30 days | | 30 – 90 days | Total |
Total securities sold under repurchase agreements | $ | 142,185 |
| (b) | $ | 180,674 |
| (b) | $ | 41,611 |
| $ | 33,748 |
| $ | 398,218 |
|
Total securities loaned and other(a) | 22,876 |
| | 375 |
| | 2,328 |
| 1,649 |
| 27,228 |
|
|
| | | | | | | | | | | | | | | |
| Gross liability balance |
| September 30, 2019 | | December 31, 2018 |
(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 | $ | 33,399 |
| | $ | — |
| | $ | 34,311 |
| (a) | $ | — |
|
Residential - nonagency | 1,804 |
| | — |
| | 2,165 |
| | — |
|
Commercial - nonagency | 1,778 |
| | — |
| | 1,390 |
| | — |
|
U.S. Treasury, GSEs and government agencies | 366,820 |
| | 8 |
| | 317,578 |
| (a) | 69 |
|
Obligations of U.S. states and municipalities | 1,400 |
| | — |
| | 1,150 |
| | — |
|
Non-U.S. government debt | 165,568 |
| | 1,769 |
| | 154,900 |
| | 4,313 |
|
Corporate debt securities | 13,067 |
| | 1,361 |
| | 13,898 |
| | 428 |
|
Asset-backed securities | 1,746 |
| | — |
| | 3,867 |
| | — |
|
Equity securities | 23,036 |
| | 30,966 |
| | 12,328 |
| | 28,890 |
|
Total | $ | 608,618 |
| | $ | 34,104 |
| | $ | 541,587 |
| | $ | 33,700 |
|
| |
(a) | Includes securities-for-securities lending transactions of $5.2 billion and $9.2 billion at September 30, 2018 and December 31, 2017, respectively, accounted for at fair value, where the Firm is acting as lender. These amounts are presented within other liabilities on the Consolidated balance sheets. |
| |
(b) | The prior period amounts have been revised to conform with the current period presentation. |
|
| | | | | | | | | | | | | | | | | |
| Remaining contractual maturity of the agreements |
| Overnight and continuous | | | | | Greater than 90 days | |
September 30, 2019 (in millions) | | Up to 30 days | | 30 – 90 days | Total |
Total securities sold under repurchase agreements | $ | 336,082 |
| | $ | 132,662 |
| | $ | 53,504 |
| $ | 86,370 |
| $ | 608,618 |
|
Total securities loaned and other | 30,172 |
| | 231 |
| | 748 |
| 2,953 |
| 34,104 |
|
|
| | | | | | | | | | | | | | | | | |
| Remaining contractual maturity of the agreements |
| Overnight and continuous | | | | | Greater than 90 days | |
December 31, 2018 (in millions) | | Up to 30 days | | 30 – 90 days | Total |
Total securities sold under repurchase agreements | $ | 247,579 |
| | $ | 174,971 |
| | $ | 71,637 |
| $ | 47,400 |
| $ | 541,587 |
|
Total securities loaned and other | 28,402 |
| | 997 |
| | 2,132 |
| 2,169 |
| 33,700 |
|
Transfers not qualifying for sale accounting
At September 30, 2018,2019, and December 31, 2017,2018, the Firm held $1.6 billion$654 million and $1.5$2.1 billion, respectively, of financial assets for which the rights have been transferred to third parties; however, the transfers did not qualify as a sale in accordance with U.S. GAAP. These transfers have been recognized as collateralized financing transactions. The transferred assets are recorded in trading assets and loans, and the corresponding liabilities are recorded predominantly in short-term borrowings on the Consolidated balance sheets. The prior period amount has been revised to conform with the current period presentation.
Note 11 – Loans
Loan accounting framework
The accounting for a loan depends on management’s strategy for the loan, and on whether the loan was credit-impaired at the date of acquisition. The Firm accounts for loans based on the following categories:
| |
• | Originated or purchased loans held-for-investment (i.e., “retained”), other than PCI loans |
Loans held-for-sale
Loans at fair value
PCI loans held-for-investment
ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for a detailed discussion of loans, including accounting policies, refer to Note12 of JPMorgan Chase’s 2017 Annual Report. policies. Refer to Note3 of this Form 10-Q for further information on the Firm’s elections of fair value accounting under the fair value option. Refer to Note2 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(a) | | Credit card | | Wholesale(f) |
Residential real estate – excluding PCI • Residential mortgage(b) • Home equity(c) Other consumer loans(d) • Auto • Consumer & Business Banking(e) Residential real estate – PCI • Home equity • Prime mortgage • Subprime mortgage • Option ARMs | | • Credit card loans | | • Commercial and industrial • Real estate • Financial institutions • Government agenciesGovernments & Agencies • Other(g) |
| |
(a) | Includes loans held in CCB, scored prime mortgage and scored home equity loans held in AWM and prime mortgage loans held in Corporate. |
| |
(b) | Predominantly includes prime loans (including option ARMs) and subprime loans.. |
| |
(c) | Includes senior and junior lien home equity loans. |
| |
(d) | Includes certain business banking and auto dealer risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by CCB, and therefore, for consistency in presentation, are included with the other consumer loan classes. |
| |
(e) | Predominantly includes Business Banking loans. |
| |
(f) | Includes loans held in CIB, CB, AWM and Corporate. Excludes scored prime mortgage and scored home equity loans held in AWM and prime mortgage loans held in Corporate. Classes are internally defined and may not align with regulatory definitions. |
| |
(g) | Includes loans to: individuals and individual entities (predominantly consists of Wealth Management clients within AWM)AWM and includes exposure to personal investment companies and personal and testamentary trusts), SPEs and privatePrivate education and civic organizations. For more information on SPEs, referRefer to Note 14 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for more information on SPEs. |
The following tables summarize the Firm’s loan balances by portfolio segment.
| | September 30, 2018 | Consumer, excluding credit card | | Credit card(a) | | Wholesale | | Total | | |
September 30, 2019 | | Consumer, excluding credit card | | Credit card(a) | | Wholesale | | Total | |
(in millions) | Consumer, excluding credit card | | Credit card(a) | | Wholesale | | Total | | |
Retained | (b) | $ | 331,809 |
| | $ | 159,571 |
| | $ | 437,507 |
| | $ | 928,887 |
| (b) |
Held-for-sale | 104 |
| | 25 |
| | 3,551 |
| | 3,680 |
| | 4,821 |
| | — |
| | 5,750 |
| | 10,571 |
| |
At fair value | — |
| | — |
| | 2,987 |
| | 2,987 |
| | — |
| | — |
| | 5,760 |
| | 5,760 |
| |
Total | $ | 376,062 |
| | $ | 147,881 |
| | $ | 430,375 |
| | $ | 954,318 |
| | $ | 336,630 |
| | $ | 159,571 |
| | $ | 449,017 |
| | $ | 945,218 |
| |
| | | | | | | | | | | | | | | | |
December 31, 2017 | Consumer, excluding credit card | | Credit card(a) | | Wholesale | | Total | | |
December 31, 2018 | | Consumer, excluding credit card | | Credit card(a) | | Wholesale | | Total | |
(in millions) | Consumer, excluding credit card | | Credit card(a) | | Wholesale | | Total | | |
Retained | (b) | $ | 373,637 |
| | $ | 156,616 |
| | $ | 439,162 |
| | $ | 969,415 |
| (b) |
Held-for-sale | 128 |
| | 124 |
| | 3,099 |
| | 3,351 |
| | 95 |
| | 16 |
| | 11,877 |
| | 11,988 |
| |
At fair value | — |
| | — |
| | 2,508 |
| | 2,508 |
| | — |
| | — |
| | 3,151 |
| | 3,151 |
| |
Total | $ | 372,681 |
| | $ | 149,511 |
| | $ | 408,505 |
| | $ | 930,697 |
| | $ | 373,732 |
| | $ | 156,632 |
| | $ | 454,190 |
| | $ | 984,554 |
| |
| |
(a) | Includes accrued interest and fees net of an allowance for the uncollectible portion of accrued interest and fee income. |
| |
(b) | Loans (other than PCI loans and loans 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 September 30, 2018,2019, and December 31, 2017.2018. |
The following tables provide information about the carrying value of retained loans purchased, sold and reclassified to held-for-sale during the periods indicated. Reclassifications of loans to held-for sale are non-cash transactions. The Firm manages its exposure to credit risk on an ongoing basis. Selling loans is one way that the Firm reduces its credit exposures.Loans that were reclassified to held-for-sale and sold in a subsequent period are excluded from the sales line of this table.
| |
| |
| 2018 | | 2017 | |
| 2019 | | 2018 |
Three months ended September 30, (in millions) | |
| Consumer, excluding credit card | Credit card | Wholesale | Total | | Consumer, excluding credit card | Credit card | Wholesale | Total | |
| Consumer, excluding credit card | Credit card | Wholesale | Total | | Consumer, excluding credit card | Credit card | Wholesale | Total |
Purchases | |
| $ | 561 |
| (a)(b) | $ | — |
| $ | 285 |
| $ | 846 |
| | $ | 711 |
| (a)(b) | $ | — |
| $ | 479 |
| $ | 1,190 |
| |
| $ | 259 |
| (a)(b) | $ | — |
| $ | 453 |
| $ | 712 |
| | $ | 561 |
| (a)(b) | $ | — |
| $ | 285 |
| $ | 846 |
|
Sales | |
| 1,789 |
|
| — |
| 4,197 |
| 5,986 |
| | 672 |
| | — |
| 3,342 |
| 4,014 |
| |
| 14,970 |
|
| — |
| 5,559 |
| 20,529 |
| | 1,789 |
| | — |
| 4,197 |
| 5,986 |
|
Retained loans reclassified to held-for-sale | |
| — |
| | — |
| 666 |
| 666 |
| | — |
|
| — |
| 367 |
| 367 |
| |
| 3,889 |
| | — |
| 359 |
| 4,248 |
| | — |
|
| — |
| 666 |
| 666 |
|
| | | | | | | | | | | | | | | | |
| | 2018 | | 2017 | | 2019 | | 2018 |
Nine months ended September 30, (in millions) | | Consumer, excluding credit card | Credit card | Wholesale | Total | | Consumer, excluding credit card | Credit card | Wholesale | Total | | Consumer, excluding credit card | Credit card | Wholesale | Total | | Consumer, excluding credit card | Credit card | Wholesale | Total |
Purchases | | $ | 2,164 |
| (a)(b) | $ | — |
| $ | 1,915 |
| $ | 4,079 |
| | $ | 2,277 |
| (a)(b) | $ | — |
| $ | 1,357 |
| $ | 3,634 |
| | $ | 1,044 |
| (a)(b) | $ | — |
| $ | 1,041 |
| $ | 2,085 |
| | $ | 2,164 |
| (a)(b) | $ | — |
| $ | 1,915 |
| $ | 4,079 |
|
Sales | | 4,661 |
| | — |
| 12,829 |
| 17,490 |
| | 2,025 |
| | — |
| 8,166 |
| 10,191 |
| | 30,484 |
| | — |
| 16,404 |
| 46,888 |
| | 4,661 |
| | — |
| 12,829 |
| 17,490 |
|
Retained loans reclassified to held-for-sale | | 36 |
| | — |
| 1,926 |
| 1,962 |
| | 6,340 |
| (c) | — |
| 961 |
| 7,301 |
| | 8,950 |
| | — |
| 1,784 |
| 10,734 |
| | 36 |
| | — |
| 1,926 |
| 1,962 |
|
| |
(a) | Purchases predominantly represent the Firm’s voluntary repurchase of certain delinquent loans from loan pools as permitted by Government National Mortgage Association (“Ginnie Mae”) guidelines. 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. |
| |
(b) | Excludes purchases of retained loans sourced through the correspondent origination channel and underwritten in accordance with the Firm’s standards. Such purchases were $4.7 billion and $5.6 billionand $6.9 billionfor the three months ended September 30, 20182019 and 2017, 2018, respectively, and $14.5$12.2 billion and $18.2$14.5 billion for the nine months ended September 30, 2019 and 2018, and 2017, respectively. |
| |
(c) | Includes the Firm’s student loan portfolio which was sold in 2017. |
Gains and losses on sales of loans
Gains and lossesNet gains on sales of loans (including adjustments to record loans held-for-sale at the lower of cost or fair value) recognized in other incomenoninterest revenue were not material to the Firm$254 million and $433 million, for the three and nine months ended September 30, 20182019, respectively. Gains and 2017.losses on sales of loans were 0t material for the three and nine months ended September 30, 2018. 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 residential mortgages, home equity loans and lines of credit, auto loans and consumer and business banking loans, with a focus on serving the prime consumer credit market. The portfolio also includes home equity loans secured by junior liens, prime mortgage loans with an interest-only payment period and certain payment-option loans that may result in negative amortization.
The following table provides information about retained consumer loans, excluding credit card, by class. In 2017, the Firm sold its student loan portfolio.
| | (in millions) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Residential real estate – excluding PCI | | |
Residential mortgage | $ | 231,361 |
| $ | 216,496 |
| $ | 197,456 |
| $ | 231,078 |
|
Home equity | 29,318 |
| 33,450 |
| 24,954 |
| 28,340 |
|
Other consumer loans | | |
Auto | 63,619 |
| 66,242 |
| 61,410 |
| 63,573 |
|
Consumer & Business Banking | 26,451 |
| 25,789 |
| 26,699 |
| 26,612 |
|
Residential real estate – PCI | | |
Home equity | 9,393 |
| 10,799 |
| 7,753 |
| 8,963 |
|
Prime mortgage | 4,931 |
| 6,479 |
| 4,164 |
| 4,690 |
|
Subprime mortgage | 2,072 |
| 2,609 |
| 1,797 |
| 1,945 |
|
Option ARMs | 8,813 |
| 10,689 |
| 7,576 |
| 8,436 |
|
Total retained loans | $ | 375,958 |
| $ | 372,553 |
| $ | 331,809 |
| $ | 373,637 |
|
ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for further information on consumer credit quality indicators, refer to Note12 of JPMorgan Chase’s 2017 Annual Report.indicators.
Residential real estate – excluding PCI loans
The following table provides information by class for retained residential real estate – excluding PCI loans.
| | Residential real estate – excluding PCI loans | Residential real estate – excluding PCI loans | | | | Residential real estate – excluding PCI loans | | | |
(in millions, except ratios) | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI |
Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
Loan delinquency(a) | | | | | | | | | | |
Current | $ | 225,799 |
| $ | 208,713 |
| | $ | 28,554 |
| $ | 32,391 |
| | $ | 254,353 |
| $ | 241,104 |
| $ | 196,354 |
| $ | 225,899 |
| | $ | 24,398 |
| $ | 27,611 |
| | $ | 220,752 |
| $ | 253,510 |
|
30–149 days past due | 2,825 |
| 4,234 |
| | 470 |
| 671 |
| | 3,295 |
| 4,905 |
| 691 |
| 2,763 |
| | 355 |
| 453 |
| | 1,046 |
| 3,216 |
|
150 or more days past due | 2,737 |
| 3,549 |
| | | 294 |
| 388 |
| | 3,031 |
| 3,937 |
| 411 |
| 2,416 |
| | | 201 |
| 276 |
| | 612 |
| 2,692 |
|
Total retained loans | $ | 231,361 |
| $ | 216,496 |
| | $ | 29,318 |
| $ | 33,450 |
| | $ | 260,679 |
| $ | 249,946 |
| $ | 197,456 |
| $ | 231,078 |
| | $ | 24,954 |
| $ | 28,340 |
| | $ | 222,410 |
| $ | 259,418 |
|
% of 30+ days past due to total retained loans(b) | 0.51 | % | 0.77 | % | | 2.61 | % | 3.17 | % | | 0.75 | % | 1.09 | % | 0.53 | % | 0.48 | % | | 2.23 | % | 2.57 | % | | 0.72 | % | 0.71 | % |
90 or more days past due and government guaranteed(c) | $ | 2,828 |
| $ | 4,172 |
| | $ | — |
| $ | — |
| | $ | 2,828 |
| $ | 4,172 |
| $ | 40 |
| $ | 2,541 |
| | $ | — |
| $ | — |
| | $ | 40 |
| $ | 2,541 |
|
Nonaccrual loans | 1,880 |
| 2,175 |
| | 1,382 |
| 1,610 |
| | 3,262 |
| 3,785 |
| 1,629 |
| 1,765 |
| | 1,208 |
| 1,323 |
| | 2,837 |
| 3,088 |
|
Current estimated LTV ratios(d)(e) | | | | | |
|
| | | | | |
|
|
Greater than 125% and refreshed FICO scores: | | | | | |
|
| | | | | |
|
|
Equal to or greater than 660 | $ | 28 |
| $ | 37 |
| | $ | 6 |
| $ | 10 |
| | $ | 34 |
| $ | 47 |
| $ | 25 |
| $ | 25 |
| | $ | 4 |
| $ | 6 |
| | $ | 29 |
| $ | 31 |
|
Less than 660 | 30 |
| 19 |
| | 1 |
| 3 |
| | 31 |
| 22 |
| 20 |
| 13 |
| | 2 |
| 1 |
| | 22 |
| 14 |
|
101% to 125% and refreshed FICO scores: | | | | | |
|
| | | | | |
|
|
Equal to or greater than 660 | 20 |
| 36 |
| | 138 |
| 296 |
| | 158 |
| 332 |
| 22 |
| 37 |
| | 68 |
| 111 |
| | 90 |
| 148 |
|
Less than 660 | 60 |
| 88 |
| | 46 |
| 95 |
| | 106 |
| 183 |
| 35 |
| 53 |
| | 23 |
| 38 |
| | 58 |
| 91 |
|
80% to 100% and refreshed FICO scores: | | | | | |
|
| | | | | |
Equal to or greater than 660 | 3,606 |
| 4,369 |
| | 1,059 |
| 1,676 |
| | 4,665 |
| 6,045 |
| 4,650 |
| 3,977 |
| | 697 |
| 986 |
| | 5,347 |
| 4,963 |
|
Less than 660 | 314 |
| 483 |
| | 359 |
| 569 |
| | 673 |
| 1,052 |
| 212 |
| 281 |
| | 214 |
| 326 |
| | 426 |
| 607 |
|
Less than 80% and refreshed FICO scores: | | | | | |
|
| | | | | |
|
|
Equal to or greater than 660 | 212,585 |
| 194,758 |
| | 22,851 |
| 25,262 |
| | 235,436 |
| 220,020 |
| 185,438 |
| 212,505 |
| | 20,394 |
| 22,632 |
| | 205,832 |
| 235,137 |
|
Less than 660 | 6,734 |
| 6,952 |
| | 3,501 |
| 3,850 |
| | 10,235 |
| 10,802 |
| 6,035 |
| 6,457 |
| | 2,842 |
| 3,355 |
| | 8,877 |
| 9,812 |
|
No FICO/LTV available | 888 |
| 1,259 |
| | 1,357 |
| 1,689 |
| | 2,245 |
| 2,948 |
| 952 |
| 813 |
| | 710 |
| 885 |
| | 1,662 |
| 1,698 |
|
U.S. government-guaranteed | 7,096 |
| 8,495 |
| | — |
| — |
| | 7,096 |
| 8,495 |
| 67 |
| 6,917 |
| | — |
| — |
| | 67 |
| 6,917 |
|
Total retained loans | $ | 231,361 |
| $ | 216,496 |
| | $ | 29,318 |
| $ | 33,450 |
| | $ | 260,679 |
| $ | 249,946 |
| $ | 197,456 |
| $ | 231,078 |
| | $ | 24,954 |
| $ | 28,340 |
| | $ | 222,410 |
| $ | 259,418 |
|
Geographic region(f) | | | | | | | | | | | | |
California | $ | 74,324 |
| $ | 68,855 |
| | $ | 5,852 |
| $ | 6,582 |
| | $ | 80,176 |
| $ | 75,437 |
| $ | 66,166 |
| $ | 74,759 |
| | $ | 5,074 |
| $ | 5,695 |
| | $ | 71,240 |
| $ | 80,454 |
|
New York | 29,146 |
| 27,473 |
| | 6,016 |
| 6,866 |
| | 35,162 |
| 34,339 |
| 25,442 |
| 28,847 |
| | 5,074 |
| 5,769 |
| | 30,516 |
| 34,616 |
|
Illinois | 15,242 |
| 14,501 |
| | 2,208 |
| 2,521 |
| | 17,450 |
| 17,022 |
| 13,304 |
| 15,249 |
| | 1,868 |
| 2,131 |
| | 15,172 |
| 17,380 |
|
Texas | 13,926 |
| 12,508 |
| | 1,843 |
| 2,021 |
| | 15,769 |
| 14,529 |
| 12,345 |
| 13,769 |
| | 1,640 |
| 1,819 |
| | 13,985 |
| 15,588 |
|
Florida | 10,624 |
| 9,598 |
| | 1,619 |
| 1,847 |
| | 12,243 |
| 11,445 |
| 10,195 |
| 10,704 |
| | 1,366 |
| 1,575 |
| | 11,561 |
| 12,279 |
|
New Jersey | 7,448 |
| 7,142 |
| | 1,702 |
| 1,957 |
| | 9,150 |
| 9,099 |
| |
Washington | 8,057 |
| 6,962 |
| | 904 |
| 1,026 |
| | 8,961 |
| 7,988 |
| 7,638 |
| 8,304 |
| | 762 |
| 869 |
| | 8,400 |
| 9,173 |
|
Colorado | 8,131 |
| 7,335 |
| | 525 |
| 632 |
| | 8,656 |
| 7,967 |
| 7,577 |
| 8,140 |
| | 458 |
| 521 |
| | 8,035 |
| 8,661 |
|
New Jersey | | 5,749 |
| 7,302 |
| | 1,447 |
| 1,642 |
| | 7,196 |
| 8,944 |
|
Massachusetts | 6,545 |
| 6,323 |
| | 246 |
| 295 |
| | 6,791 |
| 6,618 |
| 5,610 |
| 6,574 |
| | 208 |
| 236 |
| | 5,818 |
| 6,810 |
|
Arizona | 4,519 |
| 4,109 |
| | 1,211 |
| 1,439 |
| | 5,730 |
| 5,548 |
| 3,862 |
| 4,434 |
| | 986 |
| 1,158 |
| | 4,848 |
| 5,592 |
|
All other(f)(g) | 53,399 |
| 51,690 |
| | | 7,192 |
| 8,264 |
| | 60,591 |
| 59,954 |
| 39,568 |
| 52,996 |
| | | 6,071 |
| 6,925 |
| | 45,639 |
| 59,921 |
|
Total retained loans | $ | 231,361 |
| $ | 216,496 |
| | $ | 29,318 |
| $ | 33,450 |
| | $ | 260,679 |
| $ | 249,946 |
| $ | 197,456 |
| $ | 231,078 |
| | $ | 24,954 |
| $ | 28,340 |
| | $ | 222,410 |
| $ | 259,418 |
|
| |
(a) | Individual delinquency classifications include mortgage loans insured by U.S. government agencies as follows: current included $2.7 billion$20 million and $2.4$2.8 billion; 30–149 days past due included $2.2 billion$16 million and $3.2$2.1 billion; and 150 or more days past due included $2.2 billion$31 million and $2.9$2.0 billion at September 30, 2018,2019, and December 31, 2017,2018, respectively. |
| |
(b) | At September 30, 2018,2019, and December 31, 2017,2018, residential mortgage loans excluded mortgage loans insured by U.S. government agencies of $4.4 billion$47 million and $6.1$4.1 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee. |
| |
(c) | These balances, which are 90 days or more past due, were excluded from nonaccrual loans as the loans are guaranteed by U.S government agencies. Typically the principal balance of the loans is insured and interest is guaranteed at a specified reimbursement rate subject to meeting agreed-upon servicing guidelines. At September 30, 2018,2019, and December 31, 2017,2018, these balances included $1.3 billion$38 million and $1.5 billion,$999 million, respectively, of loans that are no longer accruing interest based on the agreed-upon servicing guidelines. For the remaining balance, interest is being accrued at the guaranteed reimbursement rate. There were no0 loans that were not guaranteed by U.S. government agencies that are 90 or more days past due and still accruing interest at September 30, 2018,2019, and December 31, 2017.2018. |
| |
(d) | 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. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates. Current estimated combined LTV for junior lien home equity loans considers all available lien positions, as well as unused lines, related to the property. |
| |
(e) | Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis. |
| |
(f) | The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at September 30, 2019. |
| |
(g) | At September 30, 2018,2019, and December 31, 2017,2018, included mortgage loans insured by U.S. government agencies of $7.1 billion$67 million and $8.5$6.9 billion, respectively. These amounts have been excluded from the geographic regions presented based upon the government guarantee. |
Approximately 37% of the home equity portfolio are senior lien loans; the remaining balance are junior lien HELOANs or HELOCs. The following table representsprovides the Firm’s delinquency statistics for junior lien home equity loans and lines of credit as of September 30, 2018,2019, and December 31, 2017.2018.
| | | Total loans | | Total 30+ day delinquency rate | Total loans | | Total 30+ day delinquency rate |
(in millions, except ratios) | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
| HELOCs:(a) | | | | | | |
Within the revolving period(b) | $ | 5,482 |
| $ | 6,363 |
| | 0.22 | % | 0.50 | % | $ | 5,625 |
| $ | 5,608 |
| | 0.37 | % | 0.25 | % |
Beyond the revolving period | 11,982 |
| 13,532 |
| | 2.78 |
| 3.56 |
| 9,283 |
| 11,286 |
| | 2.47 |
| 2.80 |
|
HELOANs | 1,104 |
| 1,371 |
| | 2.99 |
| 3.50 |
| 827 |
| 1,030 |
| | 2.42 |
| 2.82 |
|
Total | $ | 18,568 |
| $ | 21,266 |
| | 2.04 | % | 2.64 | % | $ | 15,735 |
| $ | 17,924 |
| | 1.72 | % | 2.00 | % |
| |
(a) | These HELOCs are predominantly revolving loans for a 10-year period, after which time the HELOC converts to a loan with a 20-year amortization period, but also include HELOCs that allow interest-only payments beyond the revolving period. |
| |
(b) | 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 experiencing financial difficulty. |
HELOCs beyond the revolving period and HELOANs have higher delinquency rates than HELOCs within the revolving period.That is primarily because the fully-amortizing payment that is generally required for thoseproducts is higher than the minimum payment optionsavailable for HELOCs within the revolving period. The higher delinquency rates associated with amortizing HELOCs and HELOANs are factored into the Firm’s allowance for loan losses.
Impaired loans
The table below sets forth information about the Firm’s residential real estate impaired loans, excluding PCI loans. These loans are considered to be impaired as they have been modified in a TDR. All impaired loans are evaluated for an asset-specific allowance as described in Note 13 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K.
| | (in millions) | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI |
Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
Impaired loans | | | | | | | | | | |
With an allowance | $ | 3,558 |
| $ | 4,407 |
| | $ | 1,177 |
| $ | 1,236 |
| | $ | 4,735 |
| $ | 5,643 |
| $ | 2,958 |
| $ | 3,381 |
| | $ | 1,062 |
| $ | 1,142 |
| | $ | 4,020 |
| $ | 4,523 |
|
Without an allowance(a) | 1,164 |
| 1,213 |
| | 879 |
| 882 |
| | 2,043 |
| 2,095 |
| 1,160 |
| 1,184 |
| | 899 |
| 870 |
| | 2,059 |
| 2,054 |
|
Total impaired loans(b)(c) | $ | 4,722 |
| $ | 5,620 |
| | $ | 2,056 |
| $ | 2,118 |
| | $ | 6,778 |
| $ | 7,738 |
| $ | 4,118 |
| $ | 4,565 |
| | $ | 1,961 |
| $ | 2,012 |
| | $ | 6,079 |
| $ | 6,577 |
|
Allowance for loan losses related to impaired loans | $ | 97 |
| $ | 62 |
| | $ | 42 |
| $ | 111 |
| | $ | 139 |
| $ | 173 |
| $ | 63 |
| $ | 88 |
| | $ | 14 |
| $ | 45 |
| | $ | 77 |
| $ | 133 |
|
Unpaid principal balance of impaired loans(d) | 6,439 |
| 7,741 |
| | 3,537 |
| 3,701 |
| | 9,976 |
| 11,442 |
| 5,578 |
| 6,207 |
| | 3,355 |
| 3,466 |
| | 8,933 |
| 9,673 |
|
Impaired loans on nonaccrual status(e) | 1,536 |
| 1,743 |
| | 993 |
| 1,032 |
| | 2,529 |
| 2,775 |
| 1,376 |
| 1,459 |
| | 981 |
| 955 |
| | 2,357 |
| 2,414 |
|
| |
(a) | Represents collateral-dependent residential real estate loans that are charged off to the fair value of the underlying collateral less cost to sell. The Firm reports, in accordance with regulatory guidance, residential real estate loans that have been discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower (“Chapter 7 loans”) as collateral-dependent nonaccrual TDRs, regardless of their delinquency status. At September 30, 2018,2019, Chapter 7 residential real estate loans included approximately 13%12% of residential mortgages and 9%7% of home equity that were 30 days or more past due. |
| |
(b) | At September 30, 2018,2019, and December 31, 2017, $4.0 billion2018, $16 million and $3.8$4.1 billion, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., FHA, VA, RHS) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure. |
| |
(c) | Predominantly all residential real estate impaired loans excluding PCI loans,in the table above are in the U.S. |
| |
(d) | Represents the contractual amount of principal owed at September 30, 2018,2019, and December 31, 2017.2018. The unpaid principal balance differs from the impaired loan balances due to various factors including charge-offs, net deferred loan fees or costs, and unamortized discounts or premiums on purchased loans. |
| |
(e) | At September 30, 20182019 and December 31, 2017,2018, nonaccrual loans included $2.0$1.9 billion and $2.2$2.0 billion, respectively, of TDRs for which the borrowers were less than 90 days past due. ForRefer to the Loan accounting framework in Note 12 of JPMorgan Chase’s 2018 Form 10-K for additional information about loans modified in a TDR that are on nonaccrual status refer to the Loan accounting framework in Note 12 of JPMorgan Chase’s 2017 Annual Report.status. |
The following tables present average impaired loans and the related interest income reported by the Firm.
| | Three months ended September 30, (in millions) | Average impaired loans | | Interest income on impaired loans(a) | | Interest income on impaired loans on a cash basis(a) | Average impaired loans | | Interest income on impaired loans(a) | | Interest income on impaired loans on a cash basis(a) |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Residential mortgage | $ | 4,872 |
| $ | 5,743 |
| | $ | 61 |
| $ | 71 |
| | $ | 19 |
| $ | 19 |
| $ | 4,200 |
| $ | 4,872 |
| | $ | 55 |
| $ | 61 |
| | $ | 17 |
| $ | 19 |
|
Home equity | 2,065 |
| 2,150 |
| | 33 |
| 32 |
| | 21 |
| 20 |
| 1,938 |
| 2,065 |
| | 33 |
| 33 |
| | 21 |
| 21 |
|
Total residential real estate – excluding PCI | $ | 6,937 |
| $ | 7,893 |
| | $ | 94 |
| $ | 103 |
| | $ | 40 |
| $ | 39 |
| $ | 6,138 |
| $ | 6,937 |
| | $ | 88 |
| $ | 94 |
| | $ | 38 |
| $ | 40 |
|
| | | | | | | | | | |
Nine months ended September 30, 2018 (in millions) | Average impaired loans | | Interest income on impaired loans(a) | | Interest income on impaired loans on a cash basis(a) | |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| |
Nine months ended September 30, (in millions) | | Average impaired loans | | Interest income on impaired loans(a) | | Interest income on impaired loans on a cash basis(a) |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Residential mortgage | $ | 5,242 |
| $ | 5,861 |
| | $ | 197 |
| $ | 217 |
| | $ | 58 |
| $ | 57 |
| $ | 4,390 |
| $ | 5,242 |
| | $ | 171 |
| $ | 197 |
| | $ | 52 |
| $ | 58 |
|
Home equity | 2,092 |
| 2,213 |
| | 98 |
| 95 |
| | 63 |
| 60 |
| 1,973 |
| 2,092 |
| | 99 |
| 98 |
| | 62 |
| 63 |
|
Total residential real estate – excluding PCI | $ | 7,334 |
| $ | 8,074 |
| | $ | 295 |
| $ | 312 |
| | $ | 121 |
| $ | 117 |
| $ | 6,363 |
| $ | 7,334 |
| | $ | 270 |
| $ | 295 |
| | $ | 114 |
| $ | 121 |
|
| |
(a) | Generally, interest income on loans modified in TDRs is recognized on a cash basis until the borrower has made a minimum of six6 payments under the new terms, unless the loan is deemed to be collateral-dependent. |
Loan modifications
Modifications of residential real estate loans, excluding PCI loans, are generally accounted for and reported as TDRs. There were no additional commitments to lend to borrowers whose residential real estate loans, excluding PCI loans, have been modified in TDRs.
The following table presents new TDRs reported by the Firm.
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Residential mortgage | $ | 67 |
| $ | 57 |
| | $ | 314 |
| $ | 225 |
| $ | 50 |
| $ | 67 |
| | $ | 181 |
| $ | 314 |
|
Home equity | 55 |
| 82 |
| | 241 |
| 232 |
| 100 |
| 55 |
| | 214 |
| 241 |
|
Total residential real estate – excluding PCI | $ | 122 |
| $ | 139 |
| | $ | 555 |
| $ | 457 |
| $ | 150 |
| $ | 122 |
| | $ | 395 |
| $ | 555 |
|
Nature and extent of modifications
The U.S. Treasury’s Making Home Affordable programs, as well as the Firm’s proprietary modification programs, generally provide various concessions to financially troubled borrowers including, but not limited to, interest rate reductions, term or payment extensions and deferral of principal and/or interest payments that would otherwise have been required under the terms of the original agreement.
The following tables provide information about how residential real estate loans, excluding PCI loans, were modified under the Firm’s loss mitigation programs described above during the periods presented. These tables exclude Chapter 7 loans where the sole concession granted is the discharge of debtdebt..
| | Three months ended September 30, | | Total residential real estate – excluding PCI | | Total residential real estate – excluding PCI |
Residential mortgage | | Home equity | | Residential mortgage | | Home equity | |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Number of loans approved for a trial modification | 513 |
| 206 |
| | 586 |
| 536 |
| | 1,099 |
| 742 |
| 365 |
| 513 |
| | 854 |
| 586 |
| | 1,219 |
| 1,099 |
|
Number of loans permanently modified | 719 |
| 510 |
| | 939 |
| 1,228 |
| | 1,658 |
| 1,738 |
| 307 |
| 719 |
| | 855 |
| 939 |
| | 1,162 |
| 1,658 |
|
Concession granted:(a) | | | | | | | | | | |
Interest rate reduction | 58 | % | 64 | % | | 77 | % | 60 | % | | 69 | % | 61 | % | 78 | % | 58 | % | | 93 | % | 77 | % | | 89 | % | 69 | % |
Term or payment extension | 83 |
| 80 |
| | 88 |
| 66 |
| | 86 |
| 70 |
| 94 |
| 83 |
| | 59 |
| 88 |
| | 68 |
| 86 |
|
Principal and/or interest deferred | 30 |
| 22 |
| | 11 |
| 8 |
| | 19 |
| 12 |
| 21 |
| 30 |
| | 6 |
| 11 |
| | 10 |
| 19 |
|
Principal forgiveness | 9 |
| 17 |
| | 7 |
| 19 |
| | 8 |
| 19 |
| 7 |
| 9 |
| | 4 |
| 7 |
| | 5 |
| 8 |
|
Other(b) | 36 |
| 15 |
| | 58 |
| 32 |
| | 49 |
| 27 |
| 53 |
| 36 |
| | 85 |
| 58 |
| | 76 |
| 49 |
|
| | | | | | | | | | |
Nine months ended September 30, | | Total residential real estate – excluding PCI | | Total residential real estate – excluding PCI |
Residential mortgage | | Home equity | | Residential mortgage | | Home equity | |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Number of loans approved for a trial modification | 1,789 |
| 1,052 |
| | 1,895 |
| 1,844 |
| | 3,684 |
| 2,896 |
| 1,603 |
| 1,789 |
| | 1,786 |
| 1,895 |
| | 3,389 |
| 3,684 |
|
Number of loans permanently modified | 2,374 |
| 1,952 |
| | 4,005 |
| 4,028 |
| | 6,379 |
| 5,980 |
| 1,178 |
| 2,374 |
| | 2,778 |
| 4,005 |
| | 3,956 |
| 6,379 |
|
Concession granted:(a) | | | | | | | | | | |
Interest rate reduction | 36 | % | 73 | % | | 57 | % | 68 | % | | 49 | % | 69 | % | 65 | % | 36 | % | | 83 | % | 57 | % | | 78 | % | 49 | % |
Term or payment extension | 49 |
| 84 |
| | 62 |
| 78 |
| | 57 |
| 80 |
| 91 |
| 49 |
| | 64 |
| 62 |
| | 72 |
| 57 |
|
Principal and/or interest deferred | 47 |
| 16 |
| | 22 |
| 12 |
| | 31 |
| 13 |
| 26 |
| 47 |
| | 7 |
| 22 |
| | 13 |
| 31 |
|
Principal forgiveness | 7 |
| 18 |
| | 7 |
| 12 |
| | 7 |
| 14 |
| 6 |
| 7 |
| | 5 |
| 7 |
| | 5 |
| 7 |
|
Other(b) | 40 |
| 24 |
| | 58 |
| 19 |
| | 52 |
| 21 |
| 44 |
| 40 |
| | 71 |
| 58 |
| | 63 |
| 52 |
|
| |
(a) | Represents concessions granted in permanent modifications as a percentage of the number of loans permanently modified. The sum of the percentages exceeds 100% because predominantly all of the modifications include more than one type of concession. Concessions offered on trial modifications are generally consistent with those granted on permanent modifications. |
| |
(b) | Includes variable interest rate to fixed interest rate modifications for the three and nine months ended September 30, 2018 and 2017. Also includes forbearances that meet the definition of a TDR for the three and nine months ended September 30, 2019 and 2018. Forbearances suspend or reduce monthly payments for a specific period of time to address a temporary hardship. |
Financial effects of modifications and redefaults
The following tables provide information about the financial effects of the various concessions granted in modifications of residential real estate loans, excluding PCI loans, under the loss mitigation programs described above and about redefaults of certain loans modified in TDRs for the periods presented.The following tables present only the financial effects of permanent modifications and doesdo not include temporary concessions offered through trial modifications. These tables also exclude Chapter 7 loans where the sole concession granted is the discharge of debt.
| | Three months ended September 30, (in millions, except weighted-average data) | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Weighted-average interest rate of loans with interest rate reductions – before TDR | 6.13 | % | 4.92 | % | | 5.69 | % | 5.26 | % | | 5.89 | % | 5.06 | % | 5.68 | % | 6.13 | % | | 5.50 | % | 5.69 | % | | 5.57 | % | 5.89 | % |
Weighted-average interest rate of loans with interest rate reductions – after TDR | 4.23 |
| 2.89 |
| | 3.83 |
| 2.96 |
| | 4.01 |
| 2.92 |
| 3.99 |
| 4.23 |
| | 3.30 |
| 3.83 |
| | 3.58 |
| 4.01 |
|
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – before TDR | 22 |
| 24 |
| | 18 |
| 18 |
| | 21 |
| 22 |
| 21 |
| 22 |
| | 19 |
| 18 |
| | 20 |
| 21 |
|
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – after TDR | 39 |
| 38 |
| | 39 |
| 38 |
| | 39 |
| 38 |
| 39 |
| 39 |
| | 39 |
| 39 |
| | 39 |
| 39 |
|
Charge-offs recognized upon permanent modification | $ | — |
| $ | — |
| | $ | — |
| $ | — |
| | $ | — |
| $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | — |
| | $ | — |
| $ | — |
|
Principal deferred | 7 |
| 3 |
| | 2 |
| 1 |
| | 9 |
| 4 |
| 5 |
| 7 |
| | 1 |
| 2 |
| | 6 |
| 9 |
|
Principal forgiven | 3 |
| 5 |
| | 1 |
| 4 |
| | 4 |
| 9 |
| 1 |
| 3 |
| | 1 |
| 1 |
| | 2 |
| 4 |
|
Balance of loans that redefaulted within one year of permanent modification(a) | $ | 27 |
| $ | 32 |
| | $ | 19 |
| $ | 17 |
| | $ | 46 |
| $ | 49 |
| $ | 36 |
| $ | 27 |
| | $ | 17 |
| $ | 19 |
| | $ | 53 |
| $ | 46 |
|
| | | | | | | | | | |
Nine months ended September 30, (in millions, except weighted-average) | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI | |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| |
Nine months ended September 30, (in millions, except weighted-average data) | | Residential mortgage | | Home equity | | Total residential real estate – excluding PCI |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Weighted-average interest rate of loans with interest rate reductions – before TDR | 5.45 | % | 5.16 | % | | 5.34 | % | 4.92 | % | | 5.39 | % | 5.06 | % | 6.08 | % | 5.45 | % | | 5.56 | % | 5.34 | % | | 5.77 | % | 5.39 | % |
Weighted-average interest rate of loans with interest rate reductions – after TDR | 3.64 |
| 2.97 |
| | 3.39 |
| 2.55 |
| | 3.49 |
| 2.79 |
| 4.36 |
| 3.64 |
| | 3.60 |
| 3.39 |
| | 3.90 |
| 3.49 |
|
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – before TDR | 24 |
| 24 |
| | 18 |
| 22 |
| | 22 |
| 23 |
| 21 |
| 24 |
| | 20 |
| 18 |
| | 20 |
| 22 |
|
Weighted-average remaining contractual term (in years) of loans with term or payment extensions – after TDR | 38 |
| 38 |
| | 39 |
| 39 |
| | 38 |
| 38 |
| 39 |
| 38 |
| | 40 |
| 39 |
| | 39 |
| 38 |
|
Charge-offs recognized upon permanent modification | $ | — |
| $ | 1 |
| | $ | 1 |
| $ | 1 |
| | $ | 1 |
| $ | 2 |
| $ | 1 |
| $ | — |
| | $ | — |
| $ | 1 |
| | $ | 1 |
| $ | 1 |
|
Principal deferred | 17 |
| 10 |
| | 7 |
| 8 |
| | 24 |
| 18 |
| 13 |
| 17 |
| | 4 |
| 7 |
| | 17 |
| 24 |
|
Principal forgiven | 9 |
| 16 |
| | 5 |
| 9 |
| | 14 |
| 25 |
| 3 |
| 9 |
| | 3 |
| 5 |
| | 6 |
| 14 |
|
Balance of loans that redefaulted within one year of permanent modification(a) | $ | 69 |
| $ | 86 |
| | $ | 49 |
| $ | 36 |
| | $ | 118 |
| $ | 122 |
| $ | 87 |
| $ | 69 |
| | $ | 45 |
| $ | 49 |
| | $ | 132 |
| $ | 118 |
|
| |
(a) | Represents loans permanently modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The dollar amounts presented represent the balance of such loans at the end of the reporting period in which such loans defaulted. For residential real estate loans modified in TDRs, payment default is deemed to occur when the loan becomes two2 contractual payments past due. In the event that a modified loan redefaults, it is probable that the loan will ultimately be liquidated through foreclosure or another similar type of liquidation transaction. Redefaults of loans modified within the last 12 months may not be representative of ultimate redefault levels. |
At September 30, 2018,2019, the weighted-average estimated remaining lives of residential real estate loans, excluding PCI loans, permanently modified in TDRs were 10 years for residential mortgage and 9 years for home equity. The estimated remaining lives of these loans reflect estimated prepayments, both voluntary and involuntary (i.e., foreclosures and other forced liquidations).
Active and suspended foreclosure
At September 30, 2018,2019, and December 31, 2017,2018, the Firm had non-PCI residential real estate loans, excluding those insured by U.S. government agencies, with a carrying value of $719$546 million and $787$653 million, respectively, that were not included in REO, but were in the process of active or suspended foreclosure.
Other consumer loans
The table below provides information for other consumer retained loan classes, including auto and business banking loans.
| | (in millions, except ratios) | Auto | | Consumer & Business Banking | | Total other consumer | Auto | | Consumer & Business Banking | | Total other consumer |
Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
Loan delinquency | | | | | | | | | | |
Current | $ | 63,095 |
| $ | 65,651 |
| | $ | 26,170 |
| $ | 25,454 |
| | $ | 89,265 |
| $ | 91,105 |
| $ | 60,872 |
| $ | 62,984 |
| | $ | 26,346 |
| $ | 26,249 |
| | $ | 87,218 |
| $ | 89,233 |
|
30–119 days past due | 517 |
| 584 |
| | 183 |
| 213 |
| | 700 |
| 797 |
| 534 |
| 589 |
| | 231 |
| 252 |
| | 765 |
| 841 |
|
120 or more days past due | 7 |
| 7 |
| | 98 |
| 122 |
| | 105 |
| 129 |
| 4 |
| — |
| | 122 |
| 111 |
| | 126 |
| 111 |
|
Total retained loans | $ | 63,619 |
| $ | 66,242 |
| | $ | 26,451 |
| $ | 25,789 |
| | $ | 90,070 |
| $ | 92,031 |
| $ | 61,410 |
| $ | 63,573 |
| | $ | 26,699 |
| $ | 26,612 |
| | $ | 88,109 |
| $ | 90,185 |
|
% of 30+ days past due to total retained loans | 0.82 | % | 0.89 | % | | 1.06 | % | 1.30 | % | | 0.89 | % | 1.01 | % | 0.88 | % | 0.93 | % | | 1.32 | % | 1.36 | % | | 1.01 | % | 1.06 | % |
Nonaccrual loans(a) | 137 |
| 141 |
| | 237 |
| 283 |
| | 374 |
| 424 |
| 112 |
| 128 |
| | 268 |
| 245 |
| | 380 |
| 373 |
|
Geographic region(b) | | | | | | | | | | |
California | $ | 8,382 |
| $ | 8,445 |
| | $ | 5,375 |
| $ | 5,032 |
| | $ | 13,757 |
| $ | 13,477 |
| $ | 8,016 |
| $ | 8,330 |
| | $ | 5,744 |
| $ | 5,520 |
| | $ | 13,760 |
| $ | 13,850 |
|
Texas | 6,497 |
| 7,013 |
| | 3,002 |
| 2,916 |
| | 9,499 |
| 9,929 |
| 6,644 |
| 6,531 |
| | 3,042 |
| 2,993 |
| | 9,686 |
| 9,524 |
|
New York | 3,843 |
| 4,023 |
| | 4,218 |
| 4,195 |
| | 8,061 |
| 8,218 |
| 3,627 |
| 3,863 |
| | 4,339 |
| 4,381 |
| | 7,966 |
| 8,244 |
|
Illinois | 3,667 |
| 3,916 |
| | 2,045 |
| 2,017 |
| | 5,712 |
| 5,933 |
| 3,438 |
| 3,716 |
| | 1,737 |
| 2,046 |
| | 5,175 |
| 5,762 |
|
Florida | 3,332 |
| 3,350 |
| | 1,484 |
| 1,424 |
| | 4,816 |
| 4,774 |
| 3,280 |
| 3,256 |
| | 1,565 |
| 1,502 |
| | 4,845 |
| 4,758 |
|
Arizona | 2,061 |
| 2,221 |
| | 1,451 |
| 1,383 |
| | 3,512 |
| 3,604 |
| 1,990 |
| 2,084 |
| | 1,268 |
| 1,491 |
| | 3,258 |
| 3,575 |
|
Ohio | 1,987 |
| 2,105 |
| | 1,346 |
| 1,380 |
| | 3,333 |
| 3,485 |
| 1,900 |
| 1,973 |
| | 1,189 |
| 1,305 |
| | 3,089 |
| 3,278 |
|
New Jersey | 1,990 |
| 2,044 |
| | 738 |
| 721 |
| | 2,728 |
| 2,765 |
| 1,920 |
| 1,981 |
| | 805 |
| 723 |
| | 2,725 |
| 2,704 |
|
Michigan | 1,378 |
| 1,418 |
| | 1,332 |
| 1,357 |
| | 2,710 |
| 2,775 |
| 1,279 |
| 1,357 |
| | 1,264 |
| 1,329 |
| | 2,543 |
| 2,686 |
|
Louisiana | 1,570 |
| 1,656 |
| | 860 |
| 849 |
| | 2,430 |
| 2,505 |
| 1,598 |
| 1,587 |
| | 768 |
| 860 |
| | 2,366 |
| 2,447 |
|
All other | 28,912 |
| 30,051 |
| | 4,600 |
| 4,515 |
| | 33,512 |
| 34,566 |
| 27,718 |
| 28,895 |
| | 4,978 |
| 4,462 |
| | 32,696 |
| 33,357 |
|
Total retained loans | $ | 63,619 |
| $ | 66,242 |
| | $ | 26,451 |
| $ | 25,789 |
| | $ | 90,070 |
| $ | 92,031 |
| $ | 61,410 |
| $ | 63,573 |
| | $ | 26,699 |
| $ | 26,612 |
| | $ | 88,109 |
| $ | 90,185 |
|
Loans by risk ratings(b)(c) | | | | | | | | | | |
Noncriticized | $ | 14,193 |
| $ | 15,604 |
| | $ | 18,644 |
| $ | 17,938 |
| | $ | 32,837 |
| $ | 33,542 |
| $ | 13,823 |
| $ | 15,749 |
| | $ | 18,738 |
| $ | 18,743 |
| | $ | 32,561 |
| $ | 34,492 |
|
Criticized performing | 337 |
| 93 |
| | 760 |
| 791 |
| | 1,097 |
| 884 |
| 394 |
| 273 |
| | 747 |
| 751 |
| | 1,141 |
| 1,024 |
|
Criticized nonaccrual | 3 |
| 9 |
| | 195 |
| 213 |
| | 198 |
| 222 |
| — |
| — |
| | 218 |
| 191 |
| | 218 |
| 191 |
|
| |
(a) | There were no0 loans that were 90 or more days past due and still accruing interest at September 30, 2018,2019, and December 31, 2017.2018. |
| |
(b) | The geographic regions presented in this table are ordered based on the magnitude of the corresponding loan balances at September 30, 2019. |
| |
(c) | For risk-rated business banking and auto loans, the primary credit quality indicator is the risk rating of the loan, including whether the loans are considered to be criticized and/or nonaccrual. |
Other consumer impaired loans and loan
modifications
The table below sets forth information about the Firm’s other consumer impaired loans, including risk-rated business banking and auto loans that have been placed on nonaccrual status, and loans that have been modified in TDRs.
| | (in millions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Impaired loans | | | | | | |
With an allowance | $ | 227 |
| | $ | 272 |
| $ | 242 |
| | $ | 222 |
|
Without an allowance(a) | 41 |
| | 26 |
| 20 |
| | 29 |
|
Total impaired loans(b)(c) | $ | 268 |
| | $ | 298 |
| $ | 262 |
| | $ | 251 |
|
Allowance for loan losses related to impaired loans | $ | 65 |
| | $ | 73 |
| $ | 68 |
| | $ | 63 |
|
Unpaid principal balance of impaired loans(d) | 372 |
| | 402 |
| 357 |
| | 355 |
|
Impaired loans on nonaccrual status | 244 |
| | 268 |
| 240 |
| | 229 |
|
| |
(a) | When discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged off and/or there have been interest payments received and applied to the loan balance. |
| |
(b) | Predominantly all other consumer impaired loans are in the U.S. |
| |
(c) | Other consumer average impaired loans were $271$254 million and $366$271 million for the three months ended September 30, 20182019 and 2017,2018, respectively, and $281$248 million and $459$281 million for the nine months ended September 30, 20182019 and 2017,2018, respectively. The related interest income on impaired loans, including those on a cash basis, was not material for the three and nine months ended September 30, 20182019 and 2017.2018. |
| |
(d) | Represents the contractual amount of principal owed at September 30, 2018,2019, and December 31, 2017.2018. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs, interest payments received and applied to the principal balance, net deferred loan fees or costs, and unamortized discounts or premiums on purchased loans. |
Loan modifications
Certain other consumer loan modifications are considered to be TDRs as they provide various concessions to borrowers who are experiencing financial difficulty. All of these TDRs are reported as impaired loans. Refer to Note 12 of JPMorgan Chase’s 2017 Annual Report2018 Form 10-K for further information on other consumer loans modified in TDRs.
At September 30, 20182019 and December 31, 2017,2018, other consumer loans modified in TDRs were $90$77 million and $102$79 million, respectively. The impact of these modifications, as well as new TDRs, were not material to the Firm for the three and nine months ended September 30, 20182019 and 2017.2018. Additional commitments to lend to borrowers whose loans have been modified in TDRs as of September 30, 20182019 and December 31, 20172018 were not material. TDRs on nonaccrual status were $66$55 million and $72$57 million at September 30, 20182019 and December 31, 2017,2018, respectively.
Purchased credit-impaired loans
ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for a detailed discussion of PCI loans, including the related accounting policies, refer to Note12 of JPMorgan Chase’s 2017 Annual Report.policies.
Residential real estate – PCI loans
The table below sets forth information about the Firm’s consumer, excluding credit card, PCI loans.
| | (in millions, except ratios) | Home equity |
| Prime mortgage |
| Subprime mortgage |
| Option ARMs |
| Total PCI | Home equity |
| Prime mortgage |
| Subprime mortgage |
| Option ARMs |
| Total PCI |
Sep 30, 2018 |
| Dec 31, 2017 |
|
| Sep 30, 2018 |
| Dec 31, 2017 |
|
| Sep 30, 2018 |
| Dec 31, 2017 |
|
| Sep 30, 2018 |
| Dec 31, 2017 |
|
| Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
|
| Sep 30, 2019 |
| Dec 31, 2018 |
|
| Sep 30, 2019 |
| Dec 31, 2018 |
|
| Sep 30, 2019 |
| Dec 31, 2018 |
|
| Sep 30, 2019 |
| Dec 31, 2018 |
|
Carrying value(a) | $ | 9,393 |
| $ | 10,799 |
|
| $ | 4,931 |
| $ | 6,479 |
|
| $ | 2,072 |
| $ | 2,609 |
|
| $ | 8,813 |
| $ | 10,689 |
|
| $ | 25,209 |
| $ | 30,576 |
| $ | 7,753 |
| $ | 8,963 |
|
| $ | 4,164 |
| $ | 4,690 |
|
| $ | 1,797 |
| $ | 1,945 |
|
| $ | 7,576 |
| $ | 8,436 |
|
| $ | 21,290 |
| $ | 24,034 |
|
Loan delinquency (based on unpaid principal balance) | Loan delinquency (based on unpaid principal balance) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan delinquency (based on unpaid principal balance) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current | $ | 9,047 |
| $ | 10,272 |
|
| $ | 4,429 |
| $ | 5,839 |
|
| $ | 2,152 |
| $ | 2,640 |
|
| $ | 7,904 |
| $ | 9,662 |
|
| $ | 23,532 |
| $ | 28,413 |
| $ | 7,543 |
| $ | 8,624 |
|
| $ | 3,759 |
| $ | 4,226 |
|
| $ | 1,915 |
| $ | 2,033 |
|
| $ | 6,876 |
| $ | 7,592 |
|
| $ | 20,093 |
| $ | 22,475 |
|
30–149 days past due | 257 |
| 356 |
|
| 269 |
| 336 |
|
| 297 |
| 381 |
|
| 427 |
| 547 |
|
| 1,250 |
| 1,620 |
| 234 |
| 278 |
|
| 241 |
| 259 |
|
| 247 |
| 286 |
|
| 362 |
| 398 |
|
| 1,084 |
| 1,221 |
|
150 or more days past due | 263 |
| 392 |
|
| 257 |
| 327 |
|
| 143 |
| 176 |
|
| 526 |
| 689 |
|
| 1,189 |
| 1,584 |
| 165 |
| 242 |
|
| 183 |
| 223 |
|
| 99 |
| 123 |
|
| 350 |
| 457 |
|
| 797 |
| 1,045 |
|
Total loans | $ | 9,567 |
| $ | 11,020 |
|
| $ | 4,955 |
| $ | 6,502 |
|
| $ | 2,592 |
| $ | 3,197 |
|
| $ | 8,857 |
| $ | 10,898 |
|
| $ | 25,971 |
| $ | 31,617 |
| $ | 7,942 |
| $ | 9,144 |
|
| $ | 4,183 |
| $ | 4,708 |
|
| $ | 2,261 |
| $ | 2,442 |
|
| $ | 7,588 |
| $ | 8,447 |
|
| $ | 21,974 |
| $ | 24,741 |
|
% of 30+ days past due to total loans | 5.44 | % | 6.79 | % |
| 10.62 | % | 10.20 | % |
| 16.98 | % | 17.42 | % |
| 10.76 | % | 11.34 | % |
| 9.39 | % | 10.13 | % | 5.02 | % | 5.69 | % |
| 10.14 | % | 10.24 | % |
| 15.30 | % | 16.75 | % |
| 9.38 | % | 10.12 | % |
| 8.56 | % | 9.16 | % |
Current estimated LTV ratios (based on unpaid principal balance)(b)(c) | Current estimated LTV ratios (based on unpaid principal balance)(b)(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current estimated LTV ratios (based on unpaid principal balance)(b)(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 125% and refreshed FICO scores: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equal to or greater than 660 | $ | 17 |
| $ | 33 |
|
| $ | 1 |
| $ | 4 |
|
| $ | — |
| $ | 2 |
|
| $ | 3 |
| $ | 6 |
|
| $ | 21 |
| $ | 45 |
| $ | 13 |
| $ | 17 |
|
| $ | 2 |
| $ | 1 |
|
| $ | — |
| $ | — |
|
| $ | 3 |
| $ | 3 |
|
| $ | 18 |
| $ | 21 |
|
Less than 660 | 15 |
| 21 |
|
| 10 |
| 16 |
|
| 12 |
| 20 |
|
| 8 |
| 9 |
|
| 45 |
| 66 |
| 10 |
| 13 |
|
| 6 |
| 7 |
|
| 7 |
| 9 |
|
| 5 |
| 7 |
|
| 28 |
| 36 |
|
101% to 125% and refreshed FICO scores: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equal to or greater than 660 | 153 |
| 274 |
|
| 7 |
| 16 |
|
| 8 |
| 20 |
|
| 24 |
| 43 |
|
| 192 |
| 353 |
| 96 |
| 135 |
|
| 6 |
| 6 |
|
| 7 |
| 4 |
|
| 18 |
| 17 |
|
| 127 |
| 162 |
|
Less than 660 | 73 |
| 132 |
|
| 24 |
| 42 |
|
| 38 |
| 75 |
|
| 46 |
| 71 |
|
| 181 |
| 320 |
| 46 |
| 65 |
|
| 19 |
| 22 |
|
| 24 |
| 35 |
|
| 18 |
| 33 |
|
| 107 |
| 155 |
|
80% to 100% and refreshed FICO scores: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equal to or greater than 660 | 846 |
| 1,195 |
|
| 92 |
| 221 |
|
| 62 |
| 119 |
|
| 145 |
| 316 |
|
| 1,145 |
| 1,851 |
| 643 |
| 805 |
|
| 58 |
| 75 |
|
| 52 |
| 54 |
|
| 102 |
| 119 |
|
| 855 |
| 1,053 |
|
Less than 660 | 394 |
| 559 |
|
| 132 |
| 230 |
|
| 192 |
| 309 |
|
| 220 |
| 371 |
|
| 938 |
| 1,469 |
| 271 |
| 388 |
|
| 71 |
| 112 |
|
| 109 |
| 161 |
|
| 128 |
| 190 |
|
| 579 |
| 851 |
|
Lower than 80% and refreshed FICO scores: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equal to or greater than 660 | 5,627 |
| 6,134 |
|
| 2,791 |
| 3,551 |
|
| 753 |
| 895 |
|
| 5,235 |
| 6,113 |
|
| 14,406 |
| 16,693 |
| 5,031 |
| 5,548 |
|
| 2,559 |
| 2,689 |
|
| 809 |
| 739 |
|
| 4,932 |
| 5,111 |
|
| 13,331 |
| 14,087 |
|
Less than 660 | 1,940 |
| 2,095 |
|
| 1,649 |
| 2,103 |
|
| 1,403 |
| 1,608 |
|
| 2,792 |
| 3,499 |
|
| 7,784 |
| 9,305 |
| 1,613 |
| 1,908 |
|
| 1,283 |
| 1,568 |
|
| 1,155 |
| 1,327 |
|
| 2,093 |
| 2,622 |
|
| 6,144 |
| 7,425 |
|
No FICO/LTV available | 502 |
| 577 |
|
| 249 |
| 319 |
|
| 124 |
| 149 |
|
| 384 |
| 470 |
|
| 1,259 |
| 1,515 |
| 219 |
| 265 |
|
| 179 |
| 228 |
|
| 98 |
| 113 |
|
| 289 |
| 345 |
|
| 785 |
| 951 |
|
Total unpaid principal balance | $ | 9,567 |
| $ | 11,020 |
|
| $ | 4,955 |
| $ | 6,502 |
|
| $ | 2,592 |
| $ | 3,197 |
|
| $ | 8,857 |
| $ | 10,898 |
|
| $ | 25,971 |
| $ | 31,617 |
| $ | 7,942 |
| $ | 9,144 |
|
| $ | 4,183 |
| $ | 4,708 |
|
| $ | 2,261 |
| $ | 2,442 |
|
| $ | 7,588 |
| $ | 8,447 |
|
| $ | 21,974 |
| $ | 24,741 |
|
Geographic region (based on unpaid principal balance)(d) | Geographic region (based on unpaid principal balance)(d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Geographic region (based on unpaid principal balance)(d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California | $ | 5,678 |
| $ | 6,555 |
|
| $ | 2,706 |
| $ | 3,716 |
|
| $ | 627 |
| $ | 797 |
|
| $ | 4,966 |
| $ | 6,225 |
|
| $ | 13,977 |
| $ | 17,293 |
| $ | 4,704 |
| $ | 5,420 |
|
| $ | 2,280 |
| $ | 2,578 |
|
| $ | 549 |
| $ | 593 |
|
| $ | 4,355 |
| $ | 4,798 |
|
| $ | 11,888 |
| $ | 13,389 |
|
Florida | 1,014 |
| 1,137 |
|
| 351 |
| 428 |
|
| 249 |
| 296 |
|
| 753 |
| 878 |
|
| 2,367 |
| 2,739 |
| 865 |
| 976 |
|
| 295 |
| 332 |
|
| 218 |
| 234 |
|
| 630 |
| 713 |
|
| 2,008 |
| 2,255 |
|
New York | 543 |
| 607 |
|
| 383 |
| 457 |
|
| 282 |
| 330 |
|
| 538 |
| 628 |
|
| 1,746 |
| 2,022 |
| 469 |
| 525 |
|
| 338 |
| 365 |
|
| 249 |
| 268 |
|
| 452 |
| 502 |
|
| 1,508 |
| 1,660 |
|
Illinois | | 207 |
| 233 |
| | 139 |
| 154 |
| | 115 |
| 123 |
| | 181 |
| 199 |
| | 642 |
| 709 |
|
Washington | 442 |
| 532 |
|
| 103 |
| 135 |
|
| 46 |
| 61 |
|
| 185 |
| 238 |
|
| 776 |
| 966 |
| 348 |
| 419 |
|
| 85 |
| 98 |
|
| 38 |
| 44 |
|
| 155 |
| 177 |
|
| 626 |
| 738 |
|
Illinois | 242 |
| 273 |
|
| 164 |
| 200 |
|
| 131 |
| 161 |
|
| 211 |
| 249 |
|
| 748 |
| 883 |
| |
New Jersey | 217 |
| 242 |
|
| 145 |
| 178 |
|
| 94 |
| 110 |
|
| 283 |
| 336 |
|
| 739 |
| 866 |
| 184 |
| 210 |
|
| 117 |
| 134 |
|
| 81 |
| 88 |
|
| 222 |
| 258 |
|
| 604 |
| 690 |
|
Massachusetts | 67 |
| 79 |
|
| 118 |
| 149 |
|
| 78 |
| 98 |
|
| 252 |
| 307 |
|
| 515 |
| 633 |
| 56 |
| 65 |
|
| 103 |
| 113 |
|
| 69 |
| 73 |
|
| 216 |
| 240 |
|
| 444 |
| 491 |
|
Maryland | 51 |
| 57 |
|
| 104 |
| 129 |
|
| 106 |
| 132 |
|
| 188 |
| 232 |
|
| 449 |
| 550 |
| 43 |
| 48 |
|
| 89 |
| 95 |
|
| 90 |
| 96 |
|
| 160 |
| 178 |
|
| 382 |
| 417 |
|
Virginia | 56 |
| 66 |
|
| 94 |
| 123 |
|
| 39 |
| 51 |
|
| 234 |
| 280 |
|
| 423 |
| 520 |
| 47 |
| 54 |
|
| 82 |
| 91 |
|
| 35 |
| 37 |
|
| 190 |
| 211 |
|
| 354 |
| 393 |
|
Arizona | 175 |
| 203 |
|
| 70 |
| 106 |
|
| 45 |
| 60 |
|
| 121 |
| 156 |
|
| 411 |
| 525 |
| 138 |
| 165 |
|
| 60 |
| 69 |
|
| 39 |
| 43 |
|
| 99 |
| 112 |
|
| 336 |
| 389 |
|
All other | 1,082 |
| 1,269 |
|
| 717 |
| 881 |
|
| 895 |
| 1,101 |
|
| 1,126 |
| 1,369 |
|
| 3,820 |
| 4,620 |
| 881 |
| 1,029 |
|
| 595 |
| 679 |
|
| 778 |
| 843 |
|
| 928 |
| 1,059 |
|
| 3,182 |
| 3,610 |
|
Total unpaid principal balance | $ | 9,567 |
| $ | 11,020 |
|
| $ | 4,955 |
| $ | 6,502 |
|
| $ | 2,592 |
| $ | 3,197 |
|
| $ | 8,857 |
| $ | 10,898 |
|
| $ | 25,971 |
| $ | 31,617 |
| $ | 7,942 |
| $ | 9,144 |
|
| $ | 4,183 |
| $ | 4,708 |
|
| $ | 2,261 |
| $ | 2,442 |
|
| $ | 7,588 |
| $ | 8,447 |
|
| $ | 21,974 |
| $ | 24,741 |
|
| |
(a) | Carrying value includes the effect of fair value adjustments that were applied to the consumer PCI portfolio at the date of acquisition. |
| |
(b) | 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. These property values do not represent actual appraised loan level collateral values; as such, the resulting ratios are necessarily imprecise and should be viewed as estimates. Current estimated combined LTV for junior lien home equity loans considers all available lien positions, as well as unused lines, related to the property. |
| |
(c) | Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis. |
| |
(d) | The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at September 30, 2019. |
Approximately 25%26% of the PCI home equity portfolio are senior lien loans; the remaining balance are junior lien HELOANs or HELOCs. The following table represents the Firm’s delinquency statistics for PCI junior lien home equity loans and lines of credit based on the unpaid principal balance as of September 30, 2018,2019, and December 31, 2017.2018. | | | Total loans | | Total 30+ day delinquency rate | Total loans | | Total 30+ day delinquency rate |
(in millions, except ratios) | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
| HELOCs:(a) | | | | |
Within the revolving period(b) | $ | 6 |
| $ | 51 |
| | — | % | 1.96 | % | |
Beyond the revolving period(c) | 6,837 |
| 7,875 |
| | 3.79 |
| 4.63 |
| |
HELOCs(a)(b) | | 5,623 |
| 6,531 |
| | 3.66 | % | 4.00 | % |
HELOANs | 296 |
| 360 |
| | 3.38 |
| 5.28 |
| 234 |
| 280 |
| | 2.99 |
| 3.57 |
|
Total | $ | 7,139 |
| $ | 8,286 |
| | 3.77 | % | 4.65 | % | $ | 5,857 |
| $ | 6,811 |
| | 3.64 | % | 3.98 | % |
| |
(a) | In general, these HELOCs are revolving loans for a 10-year period, after which time the HELOC converts to an interest-only loan with a balloon payment at the end of the loan’s term. Substantially all HELOCs are beyond the revolving period. |
| |
(b) | Substantially all undrawn HELOCs within the revolving period have been closed. |
| |
(c) | Includes loans modified into fixed rate amortizing loans. |
The table below sets forthpresents the accretable yield activity for the Firm’s PCI consumer loans for the three and nine months endedSeptember 30, 20182019 and 2017,2018, and represents the Firm’s estimate of gross interest income expected to be earned over the remaining life of the PCI loan portfolios. The table excludes the cost to fund the PCI portfolios, and therefore the accretable yield does not represent net interest income expected to be earned on these portfolios.
| | | Total PCI | Total PCI |
(in millions, except ratios) | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
2018 | 2017 | | 2018 | 2017 | 2019 | 2018 | | 2019 | 2018 |
Beginning balance | $ | 8,722 |
| $ | 12,639 |
| | $ | 11,159 |
| $ | 11,768 |
| $ | 7,699 |
| $ | 8,722 |
| | $ | 8,422 |
| $ | 11,159 |
|
Accretion into interest income | (303 | ) | (345 | ) | | (958 | ) | (1,061 | ) | (272 | ) | (303 | ) | | (841 | ) | (958 | ) |
Changes in interest rates on variable-rate loans | 37 |
| 51 |
| | (231 | ) | 218 |
| (308 | ) | 37 |
| | (402 | ) | (231 | ) |
Other changes in expected cash flows(a) | 46 |
| (1,333 | ) | | (1,468 | ) | 87 |
| 255 |
| 46 |
| | 195 |
| (1,468 | ) |
Balance at September 30 | $ | 8,502 |
| $ | 11,012 |
| | $ | 8,502 |
| $ | 11,012 |
| $ | 7,374 |
| $ | 8,502 |
| | $ | 7,374 |
| $ | 8,502 |
|
Accretable yield percentage | 4.95 | % | 4.54 | % | | 4.88 | % | 4.48 | % | 5.27 | % | 4.95 | % | | 5.32 | % | 4.88 | % |
| |
(a) | Other changes in expected cash flows may vary from period to period as the Firm continues to refine its cash flow model, for example cash flows expected to be collected due to the impact of modifications and changes in prepayment assumptions. |
Active and suspended foreclosure
At September 30, 2018,2019, and December 31, 2017,2018, the Firm had PCI residential real estate loans with an unpaid principal balance of $1.1 billion$776 million and $1.3 billion, $964 million, respectively,that were not included in REO, but were in the process of active or suspended foreclosure.
Credit card loan portfolio
ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for further information on the credit card loan portfolio, including credit quality indicators, refer to Note 12 of JPMorgan Chase’s 2017 Annual Report.indicators.
The table below sets forth information about the Firm’s credit card loans. | | (in millions, except ratios) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Loan delinquency | | |
Current and less than 30 days past due and still accruing | $ | 145,271 |
| $ | 146,704 |
| $ | 156,629 |
| $ | 153,746 |
|
30–89 days past due and still accruing | 1,323 |
| 1,305 |
| 1,500 |
| 1,426 |
|
90 or more days past due and still accruing | 1,262 |
| 1,378 |
| 1,442 |
| 1,444 |
|
Total retained credit card loans | $ | 147,856 |
| $ | 149,387 |
| |
Total retained loans | | $ | 159,571 |
| $ | 156,616 |
|
Loan delinquency ratios | | |
% of 30+ days past due to total retained loans | 1.75 | % | 1.80 | % | 1.84 | % | 1.83 | % |
% of 90+ days past due to total retained loans | 0.85 |
| 0.92 |
| 0.90 |
| 0.92 |
|
Credit card loans by geographic region | | |
Geographic region(a) | | |
California | $ | 22,166 |
| $ | 22,245 |
| $ | 24,313 |
| $ | 23,757 |
|
Texas | 14,171 |
| 14,200 |
| 15,790 |
| 15,085 |
|
New York | 12,908 |
| 13,021 |
| 13,940 |
| 13,601 |
|
Florida | 9,064 |
| 9,138 |
| 10,101 |
| 9,770 |
|
Illinois | 8,482 |
| 8,585 |
| 9,125 |
| 8,938 |
|
New Jersey | 6,345 |
| 6,506 |
| 6,821 |
| 6,739 |
|
Ohio | 4,803 |
| 4,997 |
| 5,093 |
| 5,094 |
|
Pennsylvania | 4,677 |
| 4,883 |
| 4,918 |
| 4,996 |
|
Colorado | 4,090 |
| 4,006 |
| 4,543 |
| 4,309 |
|
Michigan | 3,710 |
| 3,826 |
| 3,942 |
| 3,912 |
|
All other | 57,440 |
| 57,980 |
| 60,985 |
| 60,415 |
|
Total retained credit card loans | $ | 147,856 |
| $ | 149,387 |
| |
Total retained loans | | $ | 159,571 |
| $ | 156,616 |
|
Percentage of portfolio based on carrying value with estimated refreshed FICO scores | | |
Equal to or greater than 660 | 83.7 | % | 84.0 | % | 83.6 | % | 84.2 | % |
Less than 660 | 14.9 |
| 14.6 |
| 15.6 |
| 15.0 |
|
No FICO available | 1.4 |
| 1.4 |
| 0.8 |
| 0.8 |
|
| |
(a) | The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at September 30, 2019. |
Credit card impaired loans and loan modifications
ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for a detailed discussion of impaired credit card loans, including credit card loan modifications, refer to Note12 of JPMorgan Chase’s 2017 Annual Report.modifications.
The table below sets forth information about the Firm’s impaired credit card loans. All of these loans are considered to be impaired as they have been modified in TDRs.
| | (in millions) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Impaired credit card loans with an allowance(b)(c) | | $ | 1,423 |
| $ | 1,319 |
|
Credit card loans with modified payment terms(c) | $ | 1,228 |
| $ | 1,135 |
| |
Modified credit card loans that have reverted to pre-modification payment terms(d) | 56 |
| 80 |
| |
Total impaired credit card loans(e) | $ | 1,284 |
| $ | 1,215 |
| |
Allowance for loan losses related to impaired credit card loans | $ | 421 |
| $ | 383 |
| 488 |
| 440 |
|
| |
(a) | The carrying value and the unpaid principal balance are the same for credit card impaired loans. |
| |
(b) | There were no impaired loans without an allowance. |
| |
(c) | Represents credit card loans outstanding to borrowers enrolled in a credit card modification program as of the date presented. |
| |
(d) | Represents credit card loans that were modified in TDRs but that have subsequently reverted back to the loans’ pre-modification payment terms. |
At September 30, 2018, and December 31, 2017, $26 million and $43 million, respectively, of loans have reverted back to the pre-modification payment terms of the loans due to noncompliance with the terms of the modified loans. The remaining $30 million and $37 million at September 30, 2018, and December 31, 2017, respectively, of these loans are to borrowers who have successfully completed a short-term modification program. The Firm continues to report these loans as TDRs since the borrowers’ credit lines remain closed.
| |
(e) | Predominantly all impaired credit card loans are in the U.S. |
The following table presents average balances of impaired credit card loans and interest income recognized on those loans.
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Average impaired credit card loans | $ | 1,267 |
| $ | 1,205 |
| | $ | 1,245 |
| $ | 1,215 |
| $ | 1,406 |
| $ | 1,267 |
| | $ | 1,371 |
| $ | 1,245 |
|
Interest income on impaired credit card loans | 17 |
| 15 |
| | 48 |
| 44 |
| 18 |
| 17 |
| | 53 |
| 48 |
|
Loan modifications
The Firm may offer one of a number of loan modification programs to credit card borrowers who are experiencing financial difficulty. Most of thesethe credit card loans have been modified under long-term programs for borrowers who are experiencing financial difficulties. Modifications under long-term programsThese modifications involve placing the customer on a fixed payment plan, generally for 60 months.months, and typically include reducing the interest rate on the credit card. Substantially all modifications are considered to be TDRs. New enrollments in these loan modification programs were $242 million and $215 million and $191 million for the three months ended September 30, 2019 and 2018, respectively, and 2017, respectively,$717 million and $640 million and $552 million for the nine months ended September 30, 20182019 and 2017,2018, respectively. For all periods disclosed, new enrollments were less than 1% of total retained credit card loans.
ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for additional information about credit card loan modifications, refer to Note12 of JPMorgan Chase’s 2017 Annual Report.modifications.
Financial effects of modifications and redefaults
The following table provides information about the financial effects of the concessions granted on credit card loans modified in TDRs and redefaults for the periods presented.
| | (in millions, except weighted-average data) | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Weighted-average interest rate of loans – before TDR | 18.25 | % | 16.84 | % | | 17.82 | % | 16.52 | % | 19.18 | % | 18.25 | % | | 19.23 | % | 17.82 | % |
Weighted-average interest rate of loans – after TDR | 5.10 |
| 4.95 |
| | 5.12 |
| 4.84 |
| 4.65 |
| 5.10 |
| | 4.80 |
| 5.12 |
|
Loans that redefaulted within one year of modification(a) | $ | 31 |
| $ | 27 |
| | $ | 82 |
| $ | 72 |
| $ | 42 |
| $ | 31 |
| | $ | 108 |
| $ | 82 |
|
| |
(a) | Represents loans modified in TDRs that experienced a payment default in the periods presented, and for which the payment default occurred within one year of the modification. The amounts presented represent the balance of such loans as of the end of the quarter in which they defaulted. |
For credit card loans modified in TDRs, payment default is deemed to have occurred when the borrower misses two consecutive contractual payments. A substantial portion of these loans are expected to be charged-off in accordance with the Firm’s standard charge-off policy. Based on historical experience, the estimated weighted-average default rate for modified credit card loans was expected to be 32.78%34.30% and 31.54%33.38% as of September 30, 2018,2019, and December 31, 20172018, respectively.
Wholesale loan portfolio
Wholesale loans include loans made to a variety of clients, ranging from large corporate and institutional clients to high-net-worth individuals. The primary credit quality indicator for wholesale loans is the risk rating assigned to
each loan. ForRefer to Note 12 and Note 13 of JPMorgan Chase’s 2018 Form 10-K for further information on these risk ratings, refer to Note12and Note13 of JPMorgan Chase’s 2017 Annual Report.ratings.
The table below provides information by class of receivable for the retained loans in the Wholesale portfolio segment.
| | | Commercial and industrial | | Real estate | | Financial institutions | Government agencies | | Other(d) | Total retained loans | Commercial and industrial | | Real estate | | Financial institutions | Governments & Agencies | | Other(d) | Total retained loans |
(in millions, except ratios) | Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | Dec 31, 2017 | Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | Dec 31, 2017 | Sep 30, 2018 | Dec 31, 2017 | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | Dec 31, 2018 | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | Dec 31, 2018 | Sep 30, 2019 | Dec 31, 2018 |
Loans by risk ratings | | | | | | | | | | | | | | |
Investment-grade | $ | 66,968 |
| $ | 68,071 |
| | $ | 100,036 |
| $ | 98,467 |
| | $ | 31,194 |
| $ | 26,791 |
| $ | 14,435 |
| $ | 15,140 |
| | $ | 111,710 |
| $ | 103,212 |
| $ | 324,343 |
| $ | 311,681 |
| $ | 61,709 |
| $ | 73,497 |
| | $ | 101,379 |
| $ | 100,107 |
| | $ | 39,492 |
| $ | 32,178 |
| $ | 12,905 |
| $ | 13,984 |
| | $ | 121,813 |
| $ | 119,963 |
| $ | 337,298 |
| $ | 339,729 |
|
Noninvestment-grade: | | | | | | | | | | | | | | |
Noncriticized | 51,758 |
| 46,558 |
| | 14,526 |
| 14,335 |
| | 14,374 |
| 13,071 |
| 168 |
| 369 |
| | 13,288 |
| 9,988 |
| 94,114 |
| 84,321 |
| 52,484 |
| 51,720 |
| | 13,574 |
| 14,876 |
| | 16,123 |
| 15,316 |
| 206 |
| 201 |
| | 11,059 |
| 11,478 |
| 93,446 |
| 93,591 |
|
Criticized performing | 3,429 |
| 3,983 |
| | 604 |
| 710 |
| | 142 |
| 210 |
| — |
| — |
| | 211 |
| 259 |
| 4,386 |
| 5,162 |
| 3,743 |
| 3,738 |
| | 808 |
| 620 |
| | 202 |
| 150 |
| — |
| 2 |
| | 540 |
| 182 |
| 5,293 |
| 4,692 |
|
Criticized nonaccrual | 696 |
| 1,357 |
| | 130 |
| 136 |
| | 2 |
| 2 |
| — |
| — |
| | 166 |
| 239 |
| 994 |
| 1,734 |
| 1,291 |
| 851 |
| | 65 |
| 134 |
| | 22 |
| 4 |
| — |
| — |
| | 92 |
| 161 |
| 1,470 |
| 1,150 |
|
Total noninvestment- grade | 55,883 |
| 51,898 |
| | 15,260 |
| 15,181 |
| | 14,518 |
| 13,283 |
| 168 |
| 369 |
| | 13,665 |
| 10,486 |
| 99,494 |
| 91,217 |
| 57,518 |
| 56,309 |
| | 14,447 |
| 15,630 |
| | 16,347 |
| 15,470 |
| 206 |
| 203 |
| | 11,691 |
| 11,821 |
| 100,209 |
| 99,433 |
|
Total retained loans | $ | 122,851 |
| $ | 119,969 |
| | $ | 115,296 |
| $ | 113,648 |
| | $ | 45,712 |
| $ | 40,074 |
| $ | 14,603 |
| $ | 15,509 |
| | $ | 125,375 |
| $ | 113,698 |
| $ | 423,837 |
| $ | 402,898 |
| $ | 119,227 |
| $ | 129,806 |
| | $ | 115,826 |
| $ | 115,737 |
| | $ | 55,839 |
| $ | 47,648 |
| $ | 13,111 |
| $ | 14,187 |
| | $ | 133,504 |
| $ | 131,784 |
| $ | 437,507 |
| $ | 439,162 |
|
% of total criticized exposure to total retained loans | 3.36 | % | 4.45 | % | | 0.64 | % | 0.74 | % | | 0.32 | % | 0.53 | % | — | % | — | % | | 0.30 | % | 0.44 | % | 1.27 | % | 1.71 | % | 4.22 | % | 3.54 | % | | 0.75 | % | 0.65 | % | | 0.40 | % | 0.32 | % | — | % | 0.01 | % | | 0.47 | % | 0.26 | % | 1.55 | % | 1.33 | % |
% of criticized nonaccrual to total retained loans | 0.57 |
| 1.13 |
| | 0.11 |
| 0.12 |
| | — |
| — |
| — |
| — |
| | 0.13 |
| 0.21 |
| 0.23 |
| 0.43 |
| 1.08 |
| 0.66 |
| | 0.06 |
| 0.12 |
| | 0.04 |
| 0.01 |
| — |
| — |
| | 0.07 |
| 0.12 |
| 0.34 |
| 0.26 |
|
| | | | | | | | | | | | | | |
Loans by geographic distribution(a) | | | | | | | | | | | | | | |
Total non-U.S. | $ | 30,435 |
| $ | 28,470 |
| | $ | 2,741 |
| $ | 3,101 |
| | $ | 17,748 |
| $ | 16,790 |
| $ | 2,973 |
| $ | 2,906 |
| | $ | 49,030 |
| $ | 44,112 |
| $ | 102,927 |
| $ | 95,379 |
| $ | 28,850 |
| $ | 29,572 |
| | $ | 3,202 |
| $ | 2,967 |
| | $ | 17,112 |
| $ | 18,524 |
| $ | 2,699 |
| $ | 3,150 |
| | $ | 48,394 |
| $ | 48,433 |
| $ | 100,257 |
| $ | 102,646 |
|
Total U.S. | 92,416 |
| 91,499 |
| | 112,555 |
| 110,547 |
| | 27,964 |
| 23,284 |
| 11,630 |
| 12,603 |
| | 76,345 |
| 69,586 |
| 320,910 |
| 307,519 |
| 90,377 |
| 100,234 |
| | 112,624 |
| 112,770 |
| | 38,727 |
| 29,124 |
| 10,412 |
| 11,037 |
| | 85,110 |
| 83,351 |
| 337,250 |
| 336,516 |
|
Total retained loans | $ | 122,851 |
| $ | 119,969 |
| | $ | 115,296 |
| $ | 113,648 |
| | $ | 45,712 |
| $ | 40,074 |
| $ | 14,603 |
| $ | 15,509 |
| | $ | 125,375 |
| $ | 113,698 |
| $ | 423,837 |
| $ | 402,898 |
| $ | 119,227 |
| $ | 129,806 |
| | $ | 115,826 |
| $ | 115,737 |
| | $ | 55,839 |
| $ | 47,648 |
| $ | 13,111 |
| $ | 14,187 |
| | $ | 133,504 |
| $ | 131,784 |
| $ | 437,507 |
| $ | 439,162 |
|
| | | | | | | | | | | | | | |
| | | | | | | | |
Loan delinquency(b) | | | | | | | | | | | | | | |
Current and less than 30 days past due and still accruing | $ | 121,913 |
| $ | 118,288 |
| | $ | 115,098 |
| $ | 113,258 |
| | $ | 45,671 |
| $ | 40,042 |
| $ | 14,585 |
| $ | 15,493 |
| | $ | 124,097 |
| $ | 112,559 |
| $ | 421,364 |
| $ | 399,640 |
| $ | 117,621 |
| $ | 128,678 |
| | $ | 115,733 |
| $ | 115,533 |
| | $ | 55,764 |
| $ | 47,622 |
| $ | 13,097 |
| $ | 14,165 |
| | $ | 132,844 |
| $ | 130,918 |
| $ | 435,059 |
| $ | 436,916 |
|
30–89 days past due and still accruing | 211 |
| 216 |
| | 52 |
| 242 |
| | 38 |
| 15 |
| 15 |
| 12 |
| | 1,110 |
| 898 |
| 1,426 |
| 1,383 |
| 279 |
| 109 |
| | 22 |
| 67 |
| | 51 |
| 12 |
| 13 |
| 18 |
| | 568 |
| 702 |
| 933 |
| 908 |
|
90 or more days past due and still accruing(c) | 31 |
| 108 |
| | 16 |
| 12 |
| | 1 |
| 15 |
| 3 |
| 4 |
| | 2 |
| 2 |
| 53 |
| 141 |
| 36 |
| 168 |
| | 6 |
| 3 |
| | 2 |
| 10 |
| 1 |
| 4 |
| | — |
| 3 |
| 45 |
| 188 |
|
Criticized nonaccrual | 696 |
| 1,357 |
| | 130 |
| 136 |
| | 2 |
| 2 |
| — |
| — |
| | 166 |
| 239 |
| 994 |
| 1,734 |
| 1,291 |
| 851 |
| | 65 |
| 134 |
| | 22 |
| 4 |
| — |
| — |
| | 92 |
| 161 |
| 1,470 |
| 1,150 |
|
Total retained loans | $ | 122,851 |
| $ | 119,969 |
| | $ | 115,296 |
| $ | 113,648 |
| | $ | 45,712 |
| $ | 40,074 |
| $ | 14,603 |
| $ | 15,509 |
| | $ | 125,375 |
| $ | 113,698 |
| $ | 423,837 |
| $ | 402,898 |
| $ | 119,227 |
| $ | 129,806 |
| | $ | 115,826 |
| $ | 115,737 |
| | $ | 55,839 |
| $ | 47,648 |
| $ | 13,111 |
| $ | 14,187 |
| | $ | 133,504 |
| $ | 131,784 |
| $ | 437,507 |
| $ | 439,162 |
|
| |
(a) | The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower. |
| |
(b) | The credit quality of wholesale loans is assessed primarily through ongoing review and monitoring of an obligor’s ability to meet contractual obligations rather than relying on the past due status, which is generally a lagging indicator of credit quality. For a further discussion, referRefer to Note 12 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for a further discussion. |
| |
(c) | Represents loans that are considered well-collateralized and therefore still accruing interest. |
| |
(d) | Other includes individuals and individual entities (predominantly consists of Wealth Management clients within AWM)AWM and includes exposure to personal investment companies and personal and testamentary trusts), SPEs and privatePrivate education and civic organizations. For more information on SPEs, referRefer to Note 14 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for more information on SPEs. |
The following table presents additional information on the real estate class of loans within the Wholesale portfolio for the periods indicated. ForRefer to Note 12 of JPMorgan Chase’s 2018 Form 10-K for further information on real estate loans, refer to Note12 of JPMorgan Chase’s 2017 Annual Report.loans.
| |
(in millions, except ratios) | Multifamily | | Other commercial | | Total real estate loans | Multifamily | | Other commercial | | Total real estate loans |
Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
|
Real estate retained loans | $ | 79,112 |
| $ | 77,597 |
| | $ | 36,184 |
| $ | 36,051 |
| | $ | 115,296 |
| $ | 113,648 |
| $ | 79,169 |
| $ | 79,184 |
| | $ | 36,657 |
| $ | 36,553 |
| | $ | 115,826 |
| $ | 115,737 |
|
Criticized exposure | 383 |
| 491 |
| | 351 |
| 355 |
| | 734 |
| 846 |
| 533 |
| 388 |
| | 340 |
| 366 |
| | 873 |
| 754 |
|
% of total criticized exposure to total real estate retained loans | 0.48 | % | 0.63 | % | | 0.97 | % | 0.98 | % | | 0.64 | % | 0.74 | % | 0.67 | % | 0.49 | % | | 0.93 | % | 1.00 | % | | 0.75 | % | 0.65 | % |
Criticized nonaccrual | $ | 47 |
| $ | 44 |
| | $ | 83 |
| $ | 92 |
| | $ | 130 |
| $ | 136 |
| $ | 34 |
| $ | 57 |
| | $ | 31 |
| $ | 77 |
| | $ | 65 |
| $ | 134 |
|
% of criticized nonaccrual loans to total real estate retained loans | 0.06 | % | 0.06 | % | | 0.23 | % | 0.26 | % | | 0.11 | % | 0.12 | % | 0.04 | % | 0.07 | % | | 0.08 | % | 0.21 | % | | 0.06 | % | 0.12 | % |
Wholesale impaired retained loans and loan modifications
Wholesale impaired retained loans consist of loans that have been placed on nonaccrual status and/or that have been modified in a TDR. All impaired loans are evaluated for an asset-specific allowance as described in Note 13 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K.
The table below sets forth information about the Firm’s wholesale impaired retained loans. | |
(in millions) | Commercial and industrial | | Real estate | | Financial institutions | | Government agencies | | Other | | Total retained loans | | Commercial and industrial | | Real estate | | Financial institutions | | Governments & Agencies | | Other | | Total retained loans | |
Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | Dec 31, 2017 | | Sep 30, 2018 | | Dec 31, 2017 | | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | Dec 31, 2018 | | Sep 30, 2019 | | Dec 31, 2018 | |
Impaired loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance | $ | 658 |
| $ | 1,170 |
| | $ | 78 |
| $ | 78 |
| | $ | 2 |
| $ | 93 |
| | $ | — |
| $ | — |
| | $ | 151 |
| $ | 168 |
| | $ | 889 |
| | $ | 1,509 |
| | $ | 1,068 |
| $ | 807 |
| | $ | 46 |
| $ | 107 |
| | $ | 22 |
| $ | 4 |
| | $ | — |
| $ | — |
| | $ | 96 |
| $ | 152 |
| | $ | 1,232 |
| | $ | 1,070 |
| |
Without an allowance(a) | 84 |
| 228 |
| | 53 |
| 60 |
| | — |
| — |
| | — |
| — |
| | 25 |
| 70 |
| | 162 |
| | 358 |
| | 279 |
| 140 |
| | 21 |
| 27 |
| | — |
| — |
| | — |
| — |
| | 4 |
| 13 |
| | 304 |
| | 180 |
| |
Total impaired loans | $ | 742 |
| $ | 1,398 |
| | $ | 131 |
| $ | 138 |
| | $ | 2 |
| $ | 93 |
| | $ | — |
| $ | — |
| | $ | 176 |
| $ | 238 |
| | $ | 1,051 |
| (c) | $ | 1,867 |
| (c) | $ | 1,347 |
| $ | 947 |
| | $ | 67 |
| $ | 134 |
| | $ | 22 |
| $ | 4 |
| | $ | — |
| $ | — |
| | $ | 100 |
| $ | 165 |
| | $ | 1,536 |
| (c) | $ | 1,250 |
| (c) |
Allowance for loan losses related to impaired loans | $ | 243 |
| $ | 404 |
| | $ | 15 |
| $ | 11 |
| | $ | 1 |
| $ | 4 |
| | $ | — |
| $ | — |
| | $ | 21 |
| $ | 42 |
| | $ | 280 |
| | $ | 461 |
| | $ | 320 |
| $ | 252 |
| | $ | 13 |
| $ | 25 |
| | $ | 7 |
| $ | 1 |
| | $ | — |
| $ | — |
| | $ | 2 |
| $ | 19 |
| | $ | 342 |
| | $ | 297 |
| |
Unpaid principal balance of impaired loans(b) | 846 |
| 1,604 |
| | 198 |
| 201 |
| | 2 |
| 94 |
| | — |
| — |
| | 387 |
| 255 |
| | 1,433 |
| | 2,154 |
| | 1,532 |
| 1,043 |
| | 104 |
| 203 |
| | 23 |
| 4 |
| | — |
| — |
| | 336 |
| 473 |
| | 1,995 |
| | 1,723 |
| |
| |
(a) | When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, the loan does not require an allowance. This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the loan balance. |
| |
(b) | Represents the contractual amount of principal owed at September 30, 2018,2019, and December 31, 2017.2018. The unpaid principal balance differs from the impaired loan balances due to various factors, including charge-offs; interest payments received and applied to the carrying value; net deferred loan fees or costs; and unamortized discount or premiums on purchased loans. |
| |
(c) | Based upon the domicile of the borrower, largely consists of loans in the U.S. |
The following table presents the Firm’s average impaired retained loans for the periods indicated. | | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Commercial and industrial | $ | 838 |
| $ | 1,207 |
| | $ | 1,095 |
| $ | 1,277 |
| $ | 1,073 |
| $ | 838 |
| | $ | 1,082 |
| $ | 1,095 |
|
Real estate | 134 |
| 167 |
| | 138 |
| 175 |
| 80 |
| 134 |
| | 105 |
| 138 |
|
Financial institutions | 45 |
| 70 |
| | 76 |
| 38 |
| 9 |
| 45 |
| | 11 |
| 76 |
|
Government agencies | — |
| — |
| | — |
| — |
| |
Governments & Agencies | | — |
| — |
| | — |
| — |
|
Other | 202 |
| 231 |
| | 214 |
| 246 |
| 123 |
| 202 |
| | 207 |
| 214 |
|
Total(b)(a) | $ | 1,219 |
| $ | 1,675 |
| | $ | 1,523 |
| $ | 1,736 |
| $ | 1,285 |
| $ | 1,219 |
| | $ | 1,405 |
| $ | 1,523 |
|
| |
(a) | The related interest income on accruing impaired loans and interest income recognized on a cash basis were not material for the three and nine months ended September 30, 20182019 and 2017. |
| |
(b) | The prior period amounts have been revised to conform with the current period presentation.2018. |
Certain loan modifications are considered to be TDRs as they provide various concessions to borrowers who are experiencing financial difficulty. All TDRs are reported as impaired loans in the tables above. TDRs were $517$498 million and $614$576 million as of September 30, 2018,2019, and December 31, 2017,2018, respectively. The impact of these modifications, as well as new TDRs, were not material to the Firm for the three and nine months ended September 30, 2019 and 2018.
Note 12 – Allowance for credit losses
ForRefer to Note 13 of JPMorgan Chase’s 2018 Form 10-K for a detailed discussion of the allowance for credit losses and the related accounting policies, refer to Note 13 of JPMorgan Chase’s 2017 Annual Report.policies.
Allowance for credit losses and related information
The table below summarizes information about the allowances for loan losses and lending-related commitments, and includes a breakdown of loans and lending-related commitments by impairment methodology.
| | | 2018 | | 2017 | | 2019 | | 2018 | |
Nine months ended September 30, (in millions) | Consumer, excluding credit card | Credit card | | Wholesale | Total | | Consumer, excluding credit card | | Credit card | | Wholesale | Total | | 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, | $ | 4,579 |
| $ | 4,884 |
| | $ | 4,141 |
| $ | 13,604 |
| | $ | 5,198 |
| | $ | 4,034 |
| | $ | 4,544 |
| $ | 13,776 |
| | $ | 4,146 |
| $ | 5,184 |
| | $ | 4,115 |
| $ | 13,445 |
| | $ | 4,579 |
| | $ | 4,884 |
| | $ | 4,141 |
| $ | 13,604 |
| |
Gross charge-offs | 776 |
| 3,777 |
| | 264 |
| 4,817 |
| | 1,479 |
| | 3,344 |
| | 154 |
| 4,977 |
| | 702 |
| 4,050 |
| | 270 |
| 5,022 |
| | 776 |
| | 3,777 |
| | 264 |
| 4,817 |
| |
Gross recoveries | (681 | ) | (370 | ) | | (146 | ) | (1,197 | ) | | (478 | ) | | (295 | ) | | (81 | ) | (854 | ) | | (420 | ) | (433 | ) | | (34 | ) | (887 | ) | | (681 | ) | | (370 | ) | | (146 | ) | (1,197 | ) | |
Net charge-offs | 95 |
| 3,407 |
| | 118 |
| 3,620 |
| | 1,001 |
| | 3,049 |
| | 73 |
| 4,123 |
| | 282 |
| 3,617 |
| | 236 |
| 4,135 |
| | 95 |
| | 3,407 |
| | 118 |
| 3,620 |
| |
Write-offs of PCI loans(a) | 151 |
| — |
| | — |
| 151 |
| | 66 |
| | — |
| | — |
| 66 |
| | 132 |
| — |
| | — |
| 132 |
| | 151 |
| | — |
| | — |
| 151 |
| |
Provision for loan losses | (152 | ) | 3,557 |
| | (111 | ) | 3,294 |
| | 653 |
| | 3,699 |
| | (401 | ) | 3,951 |
| | (265 | ) | 4,017 |
| | 296 |
| 4,048 |
| | (152 | ) | | 3,557 |
| | (111 | ) | 3,294 |
| |
Other | 1 |
| — |
| | — |
| 1 |
| | (2 | ) | | — |
| | 3 |
| 1 |
| | — |
| (1 | ) | | 10 |
| 9 |
| | 1 |
| | — |
| | — |
| 1 |
| |
Ending balance at September 30, | $ | 4,182 |
| $ | 5,034 |
| | $ | 3,912 |
| $ | 13,128 |
| | $ | 4,782 |
| | $ | 4,684 |
| | $ | 4,073 |
| $ | 13,539 |
| | $ | 3,467 |
| $ | 5,583 |
| | $ | 4,185 |
| $ | 13,235 |
| | $ | 4,182 |
| | $ | 5,034 |
| | $ | 3,912 |
| $ | 13,128 |
| |
| | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses by impairment methodology | | | | | | | | | | | | | | | | | | | | |
Asset-specific(b) | $ | 204 |
| $ | 421 |
| (c) | $ | 280 |
| $ | 905 |
| | $ | 271 |
| | $ | 376 |
| (c) | $ | 363 |
| $ | 1,010 |
| | $ | 145 |
| $ | 488 |
| (c) | $ | 342 |
| $ | 975 |
| | $ | 204 |
| | $ | 421 |
| (c) | $ | 280 |
| $ | 905 |
| |
Formula-based | 2,154 |
| 4,613 |
| | 3,632 |
| 10,399 |
| | 2,266 |
| | 4,308 |
| | 3,710 |
| 10,284 |
| | 2,066 |
| 5,095 |
| | 3,843 |
| 11,004 |
| | 2,154 |
| | 4,613 |
| | 3,632 |
| 10,399 |
| |
PCI | 1,824 |
| — |
| | — |
| 1,824 |
| | 2,245 |
| | — |
| | — |
| 2,245 |
| | 1,256 |
| — |
| | — |
| 1,256 |
| | 1,824 |
| | — |
| | — |
| 1,824 |
| |
Total allowance for loan losses | $ | 4,182 |
| $ | 5,034 |
| | $ | 3,912 |
| $ | 13,128 |
| | $ | 4,782 |
| | $ | 4,684 |
| | $ | 4,073 |
| $ | 13,539 |
| | $ | 3,467 |
| $ | 5,583 |
| | $ | 4,185 |
| $ | 13,235 |
| | $ | 4,182 |
| | $ | 5,034 |
| | $ | 3,912 |
| $ | 13,128 |
| |
| | | | | | | | | | | | | | | | | | | | |
Loans by impairment methodology | | | | | | | | | | | | | | | | | | | | |
Asset-specific | $ | 7,046 |
| $ | 1,284 |
| | $ | 1,051 |
| $ | 9,381 |
| | $ | 8,147 |
| | $ | 1,206 |
| | $ | 1,638 |
| $ | 10,991 |
| | $ | 6,341 |
| $ | 1,423 |
| | $ | 1,536 |
| $ | 9,300 |
| | $ | 7,046 |
| | $ | 1,284 |
| | $ | 1,051 |
| $ | 9,381 |
| |
Formula-based | 343,703 |
| 146,572 |
| | 422,783 |
| 913,058 |
| | 329,445 |
| | 139,994 |
| | 396,928 |
| 866,367 |
| | 304,178 |
| 158,148 |
| | 435,971 |
| 898,297 |
| | 343,703 |
| | 146,572 |
| | 422,783 |
| 913,058 |
| |
PCI | 25,209 |
| — |
| | 3 |
| 25,212 |
| | 31,821 |
| | — |
| | 3 |
| 31,824 |
| | 21,290 |
| — |
| | — |
| 21,290 |
| | 25,209 |
| | — |
| | 3 |
| 25,212 |
| |
Total retained loans | $ | 375,958 |
| $ | 147,856 |
| | $ | 423,837 |
| $ | 947,651 |
| | $ | 369,413 |
| | $ | 141,200 |
| | $ | 398,569 |
| $ | 909,182 |
| | $ | 331,809 |
| $ | 159,571 |
| | $ | 437,507 |
| $ | 928,887 |
| | $ | 375,958 |
| | $ | 147,856 |
| | $ | 423,837 |
| $ | 947,651 |
| |
| | | | | | | | | | | | | | | | | | | | |
Impaired collateral-dependent loans | | | | | | | | | | | | | | | | | | | | |
Net charge-offs | $ | 15 |
| $ | — |
| | $ | — |
| $ | 15 |
| | $ | 47 |
| | $ | — |
| | $ | 30 |
| $ | 77 |
| | $ | 28 |
| $ | — |
| | $ | 23 |
| $ | 51 |
| | $ | 15 |
| | $ | — |
| | $ | — |
| $ | 15 |
| |
Loans measured at fair value of collateral less cost to sell | 2,077 |
| — |
| | 258 |
| 2,335 |
| | 2,198 |
| | — |
| | 250 |
| 2,448 |
| | 2,083 |
| — |
| | 113 |
| 2,196 |
| | 2,077 |
| | — |
| | 258 |
| 2,335 |
| |
| | | | | | | | | | | | | | | | | | | | |
Allowance for lending-related commitments | | | | | | | | | | | | | | | | | | | | |
Beginning balance at January 1, | $ | 33 |
| $ | — |
| | $ | 1,035 |
| $ | 1,068 |
| | $ | 26 |
| | $ | — |
| | $ | 1,052 |
| $ | 1,078 |
| | $ | 33 |
| $ | — |
| | $ | 1,022 |
| $ | 1,055 |
| | $ | 33 |
| | $ | — |
| | $ | 1,035 |
| $ | 1,068 |
| |
Provision for lending-related commitments | — |
| — |
| | 29 |
| 29 |
| | 7 |
| | — |
| | 24 |
| 31 |
| | — |
| — |
| | 110 |
| 110 |
| | — |
| | — |
| | 29 |
| 29 |
| |
Other | — |
| — |
| | — |
| — |
| | — |
| | — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| | — |
| | — |
| — |
| |
Ending balance at September 30, | $ | 33 |
| $ | — |
| | $ | 1,064 |
| $ | 1,097 |
| | $ | 33 |
| | $ | — |
| | $ | 1,076 |
| $ | 1,109 |
| | $ | 33 |
| $ | — |
| | $ | 1,132 |
| $ | 1,165 |
| | $ | 33 |
| | $ | — |
| | $ | 1,064 |
| $ | 1,097 |
| |
| | | | | | | | | | | | | | | | | | | | |
Allowance for lending-related commitments by impairment methodology | | | | | | | | | | | | | | | | | | | | |
Asset-specific | $ | — |
| $ | — |
| | $ | 71 |
| $ | 71 |
| | $ | — |
| | $ | — |
| | $ | 220 |
| $ | 220 |
| | $ | — |
| $ | — |
| | $ | 135 |
| $ | 135 |
| | $ | — |
| | $ | — |
| | $ | 71 |
| $ | 71 |
| |
Formula-based | 33 |
| — |
| | 993 |
| 1,026 |
| | 33 |
| | — |
| | 856 |
| 889 |
| | 33 |
| — |
| | 997 |
| 1,030 |
| | 33 |
| | — |
| | 993 |
| 1,026 |
| |
Total allowance for lending-related commitments | $ | 33 |
| $ | — |
| | $ | 1,064 |
| $ | 1,097 |
| | $ | 33 |
| | $ | — |
| | $ | 1,076 |
| $ | 1,109 |
| | $ | 33 |
| $ | — |
| | $ | 1,132 |
| $ | 1,165 |
| | $ | 33 |
| | $ | — |
| | $ | 1,064 |
| $ | 1,097 |
| |
| | | | | | | | | | | | | | | | | | | | |
Lending-related commitments by impairment methodology | | | | | | | | | | | | | | | | | | | | |
Asset-specific | $ | — |
| $ | — |
| | $ | 252 |
| $ | 252 |
| | $ | — |
| | $ | — |
| | $ | 764 |
| $ | 764 |
| | $ | — |
| $ | — |
| | $ | 446 |
| $ | 446 |
| | $ | — |
| | $ | — |
| | $ | 252 |
| $ | 252 |
| |
Formula-based | 50,630 |
| 600,728 |
| | 397,064 |
| 1,048,422 |
| | 52,796 |
| (d) | 574,641 |
| | 371,616 |
| 999,053 |
| (d) | 53,591 |
| 645,880 |
| | 395,173 |
| 1,094,644 |
| | 50,630 |
| | 600,728 |
| | 397,064 |
| 1,048,422 |
| |
Total lending-related commitments | $ | 50,630 |
| $ | 600,728 |
| | $ | 397,316 |
| $ | 1,048,674 |
| | $ | 52,796 |
| (d) | $ | 574,641 |
| | $ | 372,380 |
| $ | 999,817 |
| (d) | $ | 53,591 |
| $ | 645,880 |
| | $ | 395,619 |
| $ | 1,095,090 |
| | $ | 50,630 |
| | $ | 600,728 |
| | $ | 397,316 |
| $ | 1,048,674 |
| |
| |
(a) | Write-offs of PCI loans are recorded against the allowance for loan losses when actual losses for a pool exceed estimated losses that were recorded as purchase accounting adjustments at the time of acquisition. A write-off of a PCI loan is recognized when the underlying loan is removed from a pool. |
| |
(b) | Includes risk-rated loans that have been placed on nonaccrual status and loans that have been modified in a TDR. |
| |
(c) | The asset-specific credit card allowance for loan losses is related to loans that have been modified in a TDR; such allowance is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates. |
| |
(d) | The prior period amounts have been revised to conform with the current period presentation. |
Note 13 – Variable interest entities
ForRefer to Note 1 of JPMorgan Chase’s 2018 Form 10-K for a further description of JPMorgan Chase’s accounting policies regarding consolidation of VIEs, refer to Note1of JPMorgan Chase’s 2017 Annual Report.VIEs.
The following table summarizes the most significant types of Firm-sponsored VIEs by business segment.
|
| | | |
Line of Business | Transaction Type | Activity | Form 10-Q page reference |
CCB | Credit card securitization trusts | Securitization of originated credit card receivables | 148139 |
| Mortgage securitization trusts | Servicing and securitization of both originated and purchased residential mortgages | 148-150139-141 |
CIB | Mortgage and other securitization trusts | Securitization of both originated and purchased residential and commercial mortgages, and other consumer loans | 148-150139-141 |
| Multi-seller conduits | Assist clients in accessing the financial markets in a cost-efficient manner and structures transactions to meet investor needs | 150141 |
| Municipal bond vehicles | Financing of municipal bond investments | 150141 |
The Firm also invests in and provides financing and other services to VIEs sponsored by third parties. Refer to pages 151-152142–143 of this Note for more information on the VIEs sponsored by third parties.
Significant Firm-sponsored VIEs
Credit card securitizations
ForRefer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for a more detailed discussion of JPMorgan Chase’s involvement with credit card securitizations, refer to Note 14 of JPMorgan Chase’s 2017 Annual Report.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 trusts, including its primary vehicle, the Chase Issuance Trust. Refer to the table on page 151142 of this Note for further information on
consolidated VIE assets and liabilities.
Firm-sponsored mortgage and other securitization trusts
The Firm securitizes (or has securitized) originated and purchased residential mortgages, commercial mortgages and other consumer loansprimarily 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.
ForRefer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for a detailed discussion of the Firm’s involvement with Firm-sponsored mortgage and other securitization trusts, as well as the accounting treatment relating to such trusts, refer to Note14 of JPMorgan Chase’s 2017 Annual Report.trusts.
The following table presents 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 transactions.contracts. In certain instances, the Firm’s only continuing involvement is servicing the loans. Refer to Securitization activity onpage 152143 of this Note for further information regarding the Firm’s cash flows associated with and interests retained in nonconsolidated VIEs, andpages 152-153143–144 of this Note for information on the Firm’s loan sales and securitization activity related to U.S. GSEs andgovernment agencies.
| | | Principal amount outstanding | | JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e) | Principal amount outstanding | | JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e) |
September 30, 2018 (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 | |
September 30, 2019 (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 | $ | 65,481 |
| $ | 3,314 |
| $ | 51,914 |
| | $ | 607 |
| $ | 704 |
| $ | — |
| $ | 1,311 |
| $ | 61,480 |
| $ | 2,966 |
| $ | 49,826 |
| | $ | 522 |
| $ | 728 |
| $ | — |
| $ | 1,250 |
|
Subprime | 17,278 |
| 19 |
| 15,950 |
| | 55 |
| — |
| — |
| 55 |
| 15,156 |
| — |
| 14,085 |
| | 16 |
| — |
| — |
| 16 |
|
Commercial and other(b) | 102,603 |
| — |
| 77,494 |
| | 497 |
| 869 |
| 216 |
| 1,582 |
| 101,624 |
| — |
| 86,302 |
| | 919 |
| 708 |
| 234 |
| 1,861 |
|
Total | $ | 185,362 |
| $ | 3,333 |
| $ | 145,358 |
| | $ | 1,159 |
| $ | 1,573 |
| $ | 216 |
| $ | 2,948 |
| $ | 178,260 |
| $ | 2,966 |
| $ | 150,213 |
| | $ | 1,457 |
| $ | 1,436 |
| $ | 234 |
| $ | 3,127 |
|
| | | Principal amount outstanding | | JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e) | Principal amount outstanding | | JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e) |
December 31, 2017 (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 | |
December 31, 2018 (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 | $ | 68,874 |
| $ | 3,615 |
| $ | 52,280 |
| | $ | 410 |
| $ | 943 |
| $ | — |
| $ | 1,353 |
| $ | 63,350 |
| $ | 3,237 |
| $ | 50,679 |
| | $ | 623 |
| $ | 647 |
| $ | — |
| $ | 1,270 |
|
Subprime | 18,984 |
| 7 |
| 17,612 |
| | 93 |
| — |
| — |
| 93 |
| 16,729 |
| 32 |
| 15,434 |
| | 53 |
| — |
| — |
| 53 |
|
Commercial and other(b) | 94,905 |
| 63 |
| 63,411 |
| | 745 |
| 1,133 |
| 157 |
| 2,035 |
| 102,961 |
| — |
| 79,387 |
| | 783 |
| 801 |
| 210 |
| 1,794 |
|
Total | $ | 182,763 |
| $ | 3,685 |
| $ | 133,303 |
| | $ | 1,248 |
| $ | 2,076 |
| $ | 157 |
| $ | 3,481 |
| $ | 183,040 |
| $ | 3,269 |
| $ | 145,500 |
| | $ | 1,459 |
| $ | 1,448 |
| $ | 210 |
| $ | 3,117 |
|
| |
(a) | Excludes U.S. GSEs and government agency securitizations and re-securitizations, which are not Firm-sponsored. Refer to pages 152-153143–144 of this Note for information on the Firm’s loan sales and securitization activity related to U.S. GSEs and government agencies. |
| |
(b) | Consists of securities backed by commercial loans (predominantly real estate)estate loans and non-mortgage-related consumer receivables purchased from third parties. |
| |
(c) | Excludes the following: retained servicing (refer to Note 14 for a discussion of MSRs); 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 (Refer to Note 4 for further information on derivatives); senior and subordinated securities of $75$168 million and $111$69 million, respectively, at September 30, 2018,2019, and $88$87 million and $48$28 million, respectively, at December 31, 2017,2018, which the Firm purchased in connection with CIB’s secondary market-making activities. |
| |
(d) | Includes interests held in re-securitization transactions. |
| |
(e) | As of September 30, 2018,2019, and December 31, 2017, 66%2018, 67% and 61%60%, 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 $1.2 billion and $1.3 billion of investment-grade, at both September 30, 2018 and December 31, 2017, and $34$55 million and $48$16 million of noninvestment-grade at September 30, 2018,2019, and December 31, 2017,2018, respectively. The retained interests in commercial and other securitizations trusts consisted of $1.2$1.3 billion and $1.6$1.2 billion of investment-grade retained interests at September 30, 2019 and $410December 31, 2018, and $567 million and $412$623 million of noninvestment-grade retained interests at September 30, 2018,2019, and December 31, 2017,2018, 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. ForCIB. Refer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for a more detailed description of the Firm’s involvement with residential mortgage securitizations, refer to Note14 of JPMorgan Chase’s 2017 Annual Report. securitizations. Refer to the table onpage 151142 of this Note for more information on the consolidated residential mortgage securitizations, and the table on the previous page of this Note for further information on interests held in nonconsolidated residential mortgage securitizations.
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. ForRefer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for a more detailed description of the Firm’s involvement with commercial mortgage and other consumer securitizations, refer to Note14 of JPMorgan Chase’s 2017 Annual Report. securitizations. Refer to the table onpage 151142 of this Note for more information on the consolidated commercial mortgage securitizations, and the table on the previous page of this Note for further information on interests held in nonconsolidated securitizations.
Re-securitizations
ForRefer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for a more detailed description of JPMorgan Chase’s participation in certain re-securitization transactions, refer to Note 14 of JPMorgan Chase’s 2017 Annual Report.transactions.
The following table presents the principal amount of securities transferred to re-securitization VIEs.
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Transfers of securities to VIEs | | | | | | | | | | | | | | |
Agency | $ | 2,540 |
| | $ | 1,477 |
| | $ | 11,321 |
| | $ | 6,163 |
| |
U.S. GSEs and government agencies | | $ | 5,377 |
| | $ | 2,540 |
| | $ | 12,444 |
| | $ | 11,321 |
|
The following table presents information on nonconsolidated re-securitization VIEs.
| | | Nonconsolidated re-securitization VIEs | Nonconsolidated re-securitization VIEs |
(in millions) | September 30, 2018 | | December 31, 2017 | September 30, 2019 |
| | December 31, 2018 |
|
Firm-sponsored private-label | | | | | | |
Assets held in VIEs with continuing involvement(a) | $ | 198 |
| | $ | 783 |
| $ | 21 |
| | $ | 118 |
|
Interest in VIEs | 10 |
| | 29 |
| — |
| | 10 |
|
Agency | | | | |
U.S. GSEs and government agencies | | | | |
Interest in VIEs | 2,263 |
| | 2,250 |
| 2,097 |
| | 3,058 |
|
| |
(a) | Represents the principal amount and includes the notional amount of interest-only securities. |
As of September 30, 2018,2019, and December 31, 2017,2018, 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
ForRefer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for a more detailed description of JPMorgan Chase’s principal involvement with Firm-administered Firm-administered multi-seller conduits, refer to Note14 of JPMorgan Chase’s 2017 Annual Report.conduits.
In the normal course of business, JPMorgan Chase makes markets in and invests in commercial paper issued by the Firm-administeredFirm-administered multi-seller conduits. The Firm held $18.7 $12.6 billion and $20.4$20.1 billionof the commercial paper issued by the Firm-administeredFirm-administered multi-seller conduits atSeptember 30, 2018,2019, and December 31, 2017,2018, 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-administeredFirm-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 $9.2 $8.5 billion and $8.8$8.0 billion at September 30, 2018,2019, and December 31, 2017,2018, respectively, and are reported as off-balance sheet lending-related commitments. Forcommitments in other unfunded commitments to extend credit. Refer to Note 22 for more information on off-balance sheet lending-related commitments, refer to Note20.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 Customercustomer TOB trusts and Non-Customernon-customer TOB trusts. Customer TOB trusts are sponsored by a third party;party, refer topages 151-152142–143 of this Note for further information.
The Firm serves as sponsor for all Non-Customernon-customer TOB transactions. ForRefer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for a more detailed description of JPMorgan Chase’s Municipal bond vehicles, refer to Note14 of JPMorgan Chase’s 2017 Annual Report. The Firm had no exposure to nonconsolidated Firm-sponsored municipal bond vehicles at September 30, 2018 and December 31, 2017, respectively.vehicles.
Refer topages 151-152of this Note for further information on consolidated municipal bond vehicles.
Consolidated VIE assets and liabilities
The following table presents information on assets and liabilities related to VIEs consolidated by the Firm as of September 30, 2018,2019, and December 31, 2017.2018.
| | | Assets | | Liabilities | Assets | | Liabilities |
September 30, 2018 (in millions) | Trading assets | Loans | Other(b) | Total assets(c) | | Beneficial interests in VIE assets(d) | Other(e) | Total liabilities | |
September 30, 2019 (in millions) | | Trading assets | Loans | Other(b) | Total assets(c) | | Beneficial interests in VIE assets(d) | Other(e) | Total liabilities |
VIE program type | | | | | | |
Firm-sponsored credit card trusts | $ | — |
| $ | 30,949 |
| $ | 504 |
| $ | 31,453 |
| | $ | 14,142 |
| $ | 12 |
| $ | 14,154 |
| $ | — |
| $ | 27,377 |
| $ | 370 |
| $ | 27,747 |
| | $ | 6,457 |
| $ | 6 |
| $ | 6,463 |
|
Firm-administered multi-seller conduits | 1 |
| 22,797 |
| 129 |
| 22,927 |
| | 4,304 |
| 30 |
| 4,334 |
| 3 |
| 22,708 |
| 334 |
| 23,045 |
| | 10,514 |
| 35 |
| 10,549 |
|
Municipal bond vehicles | 1,370 |
| — |
| 4 |
| 1,374 |
| | 1,344 |
| 2 |
| 1,346 |
| 1,280 |
| — |
| 3 |
| 1,283 |
| | 1,249 |
| 2 |
| 1,251 |
|
Mortgage securitization entities(a) | 62 |
| 3,368 |
| 37 |
| 3,467 |
| | 304 |
| 171 |
| 475 |
| 70 |
| 2,937 |
| 58 |
| 3,065 |
| | 295 |
| 137 |
| 432 |
|
Other | 134 |
| — |
| 1,733 |
| 1,867 |
| | 147 |
| 115 |
| 262 |
| 108 |
| — |
| 209 |
| 317 |
| | — |
| 121 |
| 121 |
|
Total | $ | 1,567 |
| $ | 57,114 |
| $ | 2,407 |
| $ | 61,088 |
| | $ | 20,241 |
| $ | 330 |
| $ | 20,571 |
| $ | 1,461 |
| $ | 53,022 |
| $ | 974 |
| $ | 55,457 |
| | $ | 18,515 |
| $ | 301 |
| $ | 18,816 |
|
| | | | | | |
| Assets | | Liabilities | Assets | | Liabilities |
December 31, 2017 (in millions) | Trading assets | Loans | Other(b) | Total assets(c) | | Beneficial interests in VIE assets(d) | Other(e) | Total liabilities | |
December 31, 2018 (in millions) | | Trading assets | Loans | Other(b) | Total assets(c) | | Beneficial interests in VIE assets(d) | Other(e) | Total liabilities |
VIE program type | | | | | | |
Firm-sponsored credit card trusts | $ | — |
| $ | 41,923 |
| $ | 652 |
| $ | 42,575 |
| | $ | 21,278 |
| $ | 16 |
| $ | 21,294 |
| $ | — |
| $ | 31,760 |
| $ | 491 |
| $ | 32,251 |
| | $ | 13,404 |
| $ | 12 |
| $ | 13,416 |
|
Firm-administered multi-seller conduits | — |
| 23,411 |
| 48 |
| 23,459 |
| | 3,045 |
| 28 |
| 3,073 |
| — |
| 24,411 |
| 300 |
| 24,711 |
| | 4,842 |
| 33 |
| 4,875 |
|
Municipal bond vehicles | 1,278 |
| — |
| 3 |
| 1,281 |
| | 1,265 |
| 2 |
| 1,267 |
| 1,779 |
| — |
| 4 |
| 1,783 |
| | 1,685 |
| 3 |
| 1,688 |
|
Mortgage securitization entities(a) | 66 |
| 3,661 |
| 55 |
| 3,782 |
| | 359 |
| 199 |
| 558 |
| 53 |
| 3,285 |
| 40 |
| 3,378 |
| | 308 |
| 161 |
| 469 |
|
Other | 105 |
| — |
| 1,916 |
| 2,021 |
| | 134 |
| 104 |
| 238 |
| 134 |
| — |
| 178 |
| 312 |
| | 2 |
| 103 |
| 105 |
|
Total | $ | 1,449 |
| $ | 68,995 |
| $ | 2,674 |
| $ | 73,118 |
| | $ | 26,081 |
| $ | 349 |
| $ | 26,430 |
| $ | 1,966 |
| $ | 59,456 |
| $ | 1,013 |
| $ | 62,435 |
| | $ | 20,241 |
| $ | 312 |
| $ | 20,553 |
|
| |
(a) | Includes residential and commercial mortgage securitizations. |
| |
(b) | Includes assets classified as cash and other assets on the Consolidated balance sheets. |
| |
(c) | The assets of the consolidated VIEs included in the program types above are used to settle the liabilities of those entities. The assets and liabilities include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation. |
| |
(d) | The interest-bearing beneficial interest liabilities issued by consolidated VIEs are classified in the line item on the Consolidated balance sheets titled, “Beneficial interests issued by consolidated variable interest entities.” The holders of these beneficial interests generally do not have recourse to the general credit of JPMorgan Chase. For conduits program-wide credit enhancements, referRefer to note 14 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for conduits program-wide credit enhancements. Included in beneficial interests in VIE assets are long-term beneficial interests of $14.6$6.8 billion and $21.8$13.7 billion at September 30, 2018,2019, and December 31, 2017, respectively.2018. |
| |
(e) | 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 construct, own and operate affordable housing,, wind,, solar and other alternative energy 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 $13.7 $17.0 billion and $13.4$16.5 billion, of which $3.2 $4.8 billion and $4.0 billion was unfunded at both September 30, 20182019 and December 31, 2017, 2018, respectively. In order to reduce the risk of loss, the Firm assesses each project and withholds varying amounts of its capital investment until qualification of the project qualifies for tax credits. ForRefer to Note 24 of JPMorgan Chase’s 2018 Form 10-K for further information on affordable housing tax credits, refercredits. Refer to Note24 22 of JPMorgan Chase’s 2017 Annual Report. Forthis Form 10-Q for more information on off-balance sheet lending-related commitments, refer to Note20 of this Form 10-Q.commitments.
Customer municipal bond vehicles (TOB trusts)
The Firm may provide various services to Customer TOB trusts, including remarketing agent, liquidity or tender option provider. In certain Customer TOB transactions, the
Firm, as liquidity provider, has entered into a reimbursement agreement with the Residual holder.
In those transactions, upon the termination of the vehicle, the Firm has recourse to the third partythird-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 September 30, 20182019 and
December 31, 20172018 was $5.0$5.3 billion and $5.3$4.8 billion, respectively. The fair value of assets held by such VIEs at September 30, 20182019 and December 31, 2017,2018, was $8.0$8.6 billion and $9.2 million, $7.7 billion, respectively. ForRefer to Note 22 for more information on off-balance sheet lending-related commitments, refer to Note20.commitments.
Loan securitizations
The Firm has securitized and sold a variety of loans, including residential mortgage, credit card, and commercial mortgage.For Refer to Note 14 of JPMorgan Chase’s 2018 Form 10-K for afurther description of the Firm’s accounting policies regarding securitizations, refer to Note14securitizations.
of JPMorgan Chase’s 2017 Annual Report.
Securitization activity
The following table provides information related to the Firm’s securitization activities for the three and nine months ended September 30, 2019 and 2018, and 2017, related to assets held in Firm-sponsoredFirm-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 September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
| 2018 | | 2017 | | 2018 | | 2017 | 2019 | | 2018 | | 2019 | | 2018 |
(in millions) | Residential mortgage(e) | Commercial and other(f) | | Residential mortgage(e) | Commercial and other(f) | | Residential mortgage(e) | Commercial and other(f) | | Residential mortgage(e) | Commercial and other(f) | Residential mortgage(e) | Commercial and other(f) | | Residential mortgage(e) | Commercial and other(f) | | Residential mortgage(e) | Commercial and other(f) | | Residential mortgage(e) | Commercial and other(f) |
Principal securitized | $ | 1,513 |
| $ | 3,533 |
| | $ | 1,017 |
| $ | 4,411 |
| | $ | 5,972 |
| $ | 8,705 |
| | $ | 3,066 |
| $ | 7,723 |
| $ | 3,225 |
| $ | 1,477 |
| | $ | 1,513 |
| $ | 3,533 |
| | $ | 7,132 |
| $ | 4,215 |
| | $ | 5,972 |
| $ | 8,705 |
|
All cash flows during the period(a): | | | | | | | | | | | | | | |
Proceeds received from loan sales as financial instruments(b)(c) | $ | 1,524 |
| $ | 3,558 |
| | $ | 1,053 |
| $ | 4,419 |
| | $ | 5,984 |
| $ | 8,745 |
| | $ | 3,136 |
| $ | 7,796 |
| $ | 3,327 |
| $ | 1,506 |
| | $ | 1,524 |
| $ | 3,558 |
| | $ | 7,337 |
| $ | 4,329 |
| | $ | 5,984 |
| $ | 8,745 |
|
Servicing fees collected(c)(d) | 43 |
| 1 |
| | 49 |
| 1 |
| | 134 |
| 1 |
| | 151 |
| 3 |
| 70 |
| — |
| | 80 |
| 1 |
| | 220 |
| 1 |
| | 240 |
| 1 |
|
Purchases of previously transferred financial assets (or the underlying collateral)(d) | — |
| — |
| | — |
| — |
| | — |
| — |
| | 1 |
| — |
| |
Cash flows received on interests | 99 |
| 99 |
| | 125 |
| 287 |
| | 328 |
| 230 |
| | 384 |
| 828 |
| 115 |
| 34 |
| | 99 |
| 99 |
| | 314 |
| 183 |
| | 328 |
| 230 |
|
| |
(a) | Excludes re-securitization transactions. |
| |
(b) | Predominantly includes Level 2 assets. |
| |
(c) | The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale. |
| |
(d) | The prior period amounts have been revised to conform with the current period presentation. |
| |
(d) | Includes cash paid by the Firm to reacquire assets from off–balance sheet, nonconsolidated entities – for example, loan repurchases due to representation and warranties and servicer “clean-up” calls. |
| |
(e) | Includes prime Alt-A, subprime, and option ARMs.mortgages only. Excludes loan securitization transactions entered into with Ginnie Mae, Fannie Maeactivity related to U.S. GSEs and Freddie Mac.government agencies. |
| |
(f) | Includes commercial mortgage and other consumer loans. |
Loans and excess MSRs sold to U.S. government-sponsored
enterprises, and loans in securitization transactions pursuant to
Ginnie Mae guidelines and other third-party-sponsored
securitization entities
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. government-sponsored enterprises 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 20 of this Form 10-Q, and Note 27 of JPMorgan Chase’s 2017 Annual Report for additional information aThe 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 20 of this Form 10-Q, and Note 27 of JPMorgan Chase’s 2017 Annual Report for additional information about the Firm’s loan sales- and securitization-related indemnifications. Refer to Note14for additional information about the impact of the Firm’s sale of certain excess MSRs. (“U.S. GSEs”).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 2022 of this Form 10-Q, and Note 27 of JPMorgan Chase’s 2017 Annual Report2018 Form 10-K for additional information
bout about the Firm’s loan sales- and securitization-related indemnifications. Refer to Note14for additional information about the impact of the Firm’sFirm’s sale of certain excess MSRs. about the Firm’s loan sales- and securitization-related indemnifications. Refer to Note14for 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, and other third-party-sponsored securitization entities.guidelines.
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| 2017 |
| | 2018 | 2017 | 2019 |
| 2018 |
| | 2019 | 2018 |
Carrying value of loans sold | $ | 11,968 |
| $ | 15,402 |
| | $ | 28,804 |
| $ | 44,282 |
| $ | 35,556 |
| $ | 11,968 |
| | $ | 73,873 |
| $ | 28,804 |
|
Proceeds received from loan sales as cash | 1 |
| 104 |
| | 1 |
| 117 |
| 3 |
| 1 |
| | 73 |
| 1 |
|
Proceeds from loan sales as securities(a)(b) | 11,713 |
| 15,093 |
| | 28,291 |
| 43,682 |
| 35,512 |
| 11,713 |
| | 73,172 |
| 28,291 |
|
Total proceeds received from loan sales(b)(c) | $ | 11,714 |
| $ | 15,197 |
| | $ | 28,292 |
| $ | 43,799 |
| $ | 35,515 |
| $ | 11,714 |
| | $ | 73,245 |
| $ | 28,292 |
|
Gains on loan sales(d)(e) | $ | 9 |
| $ | 41 |
| | $ | 32 |
| $ | 114 |
| $ | 342 |
| $ | 9 |
| | $ | 495 |
| $ | 32 |
|
| |
(a) | Predominantly includesIncludes securities from U.S. GSEs and Ginnie Mae that are generally sold shortly after receipt.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. |
| |
(c)(d) | Gains on loan sales include the value of MSRs. |
| |
(d)(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 Note20, 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.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. For additional information, referRefer 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 September 30, 20182019 and December 31, 2017. 2018. Substantially all of these loans and real estate are insured or guaranteed by U.S. government agencies.
| | (in millions) | Sep 30, 2018 |
| Dec 31, 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
|
Loans repurchased or option to repurchase(a) | $ | 7,207 |
| $ | 8,629 |
| $ | 4,761 |
| $ | 7,021 |
|
Real estate owned | 78 |
| 95 |
| 50 |
| 75 |
|
Foreclosed government-guaranteed residential mortgage loans(b) | 404 |
| 527 |
| 241 |
| 361 |
|
| |
(a) | Predominantly all of these amounts relate to loans that have been repurchased from Ginnie Mae loan pools. |
| |
(b) | Relates to voluntary repurchases of loans, which are included in accrued interest and accounts receivable. |
Loan delinquencies and liquidation losses
The table below includes information about components of nonconsolidated securitized financial assets held in Firm-sponsored Firm-sponsored private-label securitization entities, in which the Firm has continuing involvement, and delinquencies as of September 30, 2018,2019, and December 31, 2017.2018.
| | | | | | | Net liquidation losses(a) | | | | | Net liquidation losses(a) |
| Securitized assets | | 90 days past due | | Three months ended September 30, | | Nine months ended September 30, | Securitized assets | | 90 days past due | | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | Sep 30, 2018 |
| Dec 31, 2017 |
| | Sep 30, 2018 |
| Dec 31, 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| Sep 30, 2019 |
| Dec 31, 2018 |
| | Sep 30, 2019 |
| Dec 31, 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Securitized loans | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | |
Prime / Alt-A & option ARMs | $ | 51,914 |
| $ | 52,280 |
| | $ | 3,612 |
| $ | 4,870 |
| | $ | 182 |
| $ | 184 |
| | $ | 453 |
| $ | 622 |
| $ | 49,826 |
| $ | 50,679 |
| | $ | 2,679 |
| $ | 3,354 |
| | $ | 146 |
| $ | 182 |
| | $ | 474 |
| $ | 453 |
|
Subprime | 15,950 |
| 17,612 |
| | 2,637 |
| 3,276 |
| | 155 |
| 153 |
| | (307 | ) | 529 |
| 14,085 |
| 15,434 |
| | 1,962 |
| 2,478 |
| | 145 |
| 155 |
| | 456 |
| (307 | ) |
Commercial and other | 77,494 |
| 63,411 |
| | 526 |
| 957 |
| | 71 |
| 2 |
| | 119 |
| 59 |
| 86,302 |
| 79,387 |
| | 153 |
| 225 |
| | 118 |
| 71 |
| | 283 |
| 119 |
|
Total loans securitized | $ | 145,358 |
| $ | 133,303 |
| | $ | 6,775 |
| $ | 9,103 |
| | $ | 408 |
| $ | 339 |
| | $ | 265 |
| $ | 1,210 |
| $ | 150,213 |
| $ | 145,500 |
| | $ | 4,794 |
| $ | 6,057 |
| | $ | 409 |
| $ | 408 |
| | $ | 1,213 |
| $ | 265 |
|
| |
(a) | Includes liquidation gains as a result of private label mortgage settlement payments during the first quarter of 2018, which were reflected as asset recoveries by trustees. |
Note 14 – Goodwill and Mortgage servicing rights
ForRefer to Note 15 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the accounting policies related to goodwill and mortgage servicing rights, refer to Note15 of JPMorgan Chase’s 2017 Annual Report.rights.
Goodwill
The following table presents goodwill attributed to the business segments.
| | (in millions) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Consumer & Community Banking | $ | 30,995 |
| $ | 31,013 |
| $ | 31,038 |
| $ | 30,984 |
|
Corporate & Investment Bank | 6,771 |
| 6,776 |
| 6,941 |
| 6,770 |
|
Commercial Banking | 2,860 |
| 2,860 |
| 2,982 |
| 2,860 |
|
Asset & Wealth Management | 6,857 |
| 6,858 |
| 6,857 |
| 6,857 |
|
Total goodwill | $ | 47,483 |
| $ | 47,507 |
| $ | 47,818 |
| $ | 47,471 |
|
The following table presents changes in the carrying amount of goodwill.
| | | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
Balance at beginning of period | $ | 47,488 |
| | $ | 47,300 |
| | $ | 47,507 |
| | $ | 47,288 |
| $ | 47,477 |
| | $ | 47,488 |
| | $ | 47,471 |
| | $ | 47,507 |
|
Changes during the period from: | | | | | | | | | | | | | | |
Other(a) | (5 | ) | | 9 |
| | (24 | ) | | 21 |
| |
Business combinations(a) | | 348 |
| | — |
| | 348 |
| | — |
|
Other(b) | | (7 | ) | | (5 | ) | | (1 | ) | | (24 | ) |
Balance at September 30, | $ | 47,483 |
| | $ | 47,309 |
| | $ | 47,483 |
| | $ | 47,309 |
| $ | 47,818 |
| | $ | 47,483 |
| | $ | 47,818 |
| | $ | 47,483 |
|
| |
(a) | IncludesFor the three and nine months periods ended September 30, 2019, represents goodwill associated with the July 24, 2019 acquisition of InstaMed. This goodwill was allocated to CIB, CB and CCB. |
| |
(b) | Primarily relates to foreign currency remeasurement and other adjustments. |
Goodwill impairment testing
Refer to Impairment testing
For on pages 252–253 of JPMorgan Chase’s 2018 Form 10-K for a further description of the Firm’s goodwill impairment testing, including the primary method used to estimate the fair value of the reporting units, and the assumptions used in the goodwill impairment test, refertest.
The Firm reviewed current economic conditions, estimated market cost of equity, as well as actual and projections of business performance for all its businesses. Based upon such reviews, the Firm concluded that the goodwill allocated to Impairment testing on pages 244–245 of JPMorgan Chase’s 2017 Annual Report.
Goodwillits reporting units was not impaired atas of September 30, 2018,2019 or December 31, 2017,2018, nor was goodwill written off due to impairment during the nine months ended September 30, 20182019 or 2017.2018.
Declines in business performance, increases in credit losses, increases in equity 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 or their associated goodwill to decline in the future, which could result in a material impairment charge to earnings in a future period related to some portion of the associated goodwill.
Mortgage servicing rights
MSRs represent the fair value of expected future cash flows for performing servicing activities for others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the MSR asset against contractual servicing and ancillary fee income. MSRs are either purchased from third parties or recognized upon sale or securitization of mortgage loans if servicing is retained. ForRefer to Notes 2 and 15 of JPMorgan Chase’s 2018 Form 10-K for a further description of the MSR asset, interest rate risk management, and the valuation of MSRs, refer to Notes 2 and 15 of JPMorgan Chase’s 2017 Annual Report.MSRs.
The following table summarizes MSR activity for the three and nine months endedSeptember 30, 20182019 and 2017.2018. | | | As of or for the three months ended September 30, | | As of or for the nine months ended September 30, | | As of or for the three months ended September 30, | As of or for the nine months ended September 30, |
(in millions, except where otherwise noted) | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| | 2019 |
| 2018 |
| 2019 |
| | 2018 |
|
Fair value at beginning of period | $ | 6,241 |
| | $ | 5,753 |
| | $ | 6,030 |
| | $ | 6,096 |
| | $ | 5,093 |
| $ | 6,241 |
| $ | 6,130 |
| | $ | 6,030 |
|
MSR activity: | | | | | | | | | | | |
Originations of MSRs | 278 |
| | 253 |
| | 611 |
| | 624 |
| | 390 |
| 278 |
| 1,146 |
| | 611 |
|
Purchase of MSRs | 13 |
| | — |
| | 159 |
| | — |
| | (2 | ) | 13 |
| 104 |
| | 159 |
|
Disposition of MSRs(a) | (2 | ) | | (2 | ) | | (401 | ) | | (140 | ) | | (359 | ) | (2 | ) | (687 | ) | | (401 | ) |
Net additions/(dispositions) | 289 |
| | 251 |
| | 369 |
| | 484 |
| | 29 |
| 289 |
| 563 |
| | 369 |
|
| | | | | | | | | | | |
Changes due to collection/realization of expected cash flows | (195 | ) | | (200 | ) | | (542 | ) | | (619 | ) | | (256 | ) | (195 | ) | (702 | ) | | (542 | ) |
| | | | | | | | | | | |
Changes in valuation due to inputs and assumptions: | | | | | | | | | | | |
Changes due to market interest rates and other(b) | 150 |
| | (67 | ) | | 635 |
| | (188 | ) | | (433 | ) | 150 |
| (1,274 | ) | | 635 |
|
Changes in valuation due to other inputs and assumptions: | | | | | | | | | | | |
Projected cash flows (e.g., cost to service) | 14 |
| | (116 | ) | | 14 |
| | (102 | ) | | 17 |
| 14 |
| (333 | ) | (e) | 14 |
|
Discount rates | — |
| | — |
| | 24 |
| | (19 | ) | | — |
| — |
| 153 |
| | 24 |
|
Prepayment model changes and other(c) | (66 | ) | | 117 |
| | (97 | ) | | 86 |
| | (31 | ) | (66 | ) | (118 | ) | | (97 | ) |
Total changes in valuation due to other inputs and assumptions | (52 | ) | | 1 |
| | (59 | ) | | (35 | ) | | (14 | ) | (52 | ) | (298 | ) | | (59 | ) |
Total changes in valuation due to inputs and assumptions | 98 |
| | (66 | ) | | 576 |
| | (223 | ) | | (447 | ) | 98 |
| (1,572 | ) | | 576 |
|
Fair value at September 30, | $ | 6,433 |
| | $ | 5,738 |
| | $ | 6,433 |
| | $ | 5,738 |
| | $ | 4,419 |
| $ | 6,433 |
| $ | 4,419 |
| | $ | 6,433 |
|
| | | | | | | | | | | |
Change in unrealized gains/(losses) included in income related to MSRs held at September 30, | $ | 98 |
| | $ | (66 | ) | | $ | 576 |
| | $ | (223 | ) | | $ | (447 | ) | $ | 98 |
| $ | (1,572 | ) | | $ | 576 |
|
Contractual service fees, late fees and other ancillary fees included in income | 428 |
| | 463 |
| | 1,339 |
| | 1,427 |
| | 397 |
| 428 |
| 1,254 |
| | 1,339 |
|
Third-party mortgage loans serviced at September 30, (in billions) | 528 |
| | 558 |
| | 528 |
| | 558 |
| | 537 |
| 528 |
| 537 |
| | 528 |
|
Net servicer advances at September 30, (in billions)(d) | 3.1 |
| | 3.9 |
| | 3.1 |
| | 3.9 |
| | |
Servicer advances, net of an allowance for uncollectible amounts, at September 30, (in billions)(d) | | 2.0 |
| 3.1 |
| 2.0 |
| | 3.1 |
|
| |
(a) | 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. |
| |
(b) | Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and expected prepayments. |
| |
(c) | Represents changes in prepayments other than those attributable to changes in market interest rates. |
| |
(d) | Represents amounts the Firm pays as the servicer (e.g., scheduled principal and interest, taxes and insurance), which will generally be reimbursed within a short period of time after the advance from future cash flows from the trust or the underlying loans. The Firm’s credit risk associated with these servicer advances is minimal because reimbursement of the advances is typically senior to all cash payments to investors. In addition, the Firm maintains the right to stop payment to investors if the collateral is insufficient to cover the advance. However, certain of these servicer advances may not be recoverable if they were not made in accordance with applicable rules and agreements. |
| |
(e) | The decrease in projected cash flows was largely related to default servicing assumption updates. |
The following table presents the components of mortgage fees and related income (including the impact of MSR risk management activities) for the three and nine months ended September 30, 20182019 and 2017.2018.
| | | | Three months ended September 30, | | Nine months ended September 30, | | Three months ended September 30, | | Nine months ended September 30, |
(in millions) | | 2018 |
| | 2017 |
| | 2018 |
| | 2017 |
| | 2019 |
| | 2018 |
| | 2019 |
| | 2018 |
|
CCB mortgage fees and related income | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net production revenue | | $ | 108 |
| | $ | 158 |
| | $ | 296 |
| | $ | 451 |
| | $ | 738 |
| | $ | 108 |
| | $ | 1,291 |
| | $ | 296 |
|
| | | | | | | | | | | | | | | | |
Net mortgage servicing revenue: | | | | | | | | | | | | | | | | |
Operating revenue: | | | | | | | | | | | | | | | | |
Loan servicing revenue | | 435 |
| | 493 |
| | 1,389 |
| | 1,533 |
| | 351 |
| | 435 |
| | 1,172 |
| | 1,389 |
|
Changes in MSR asset fair value due to collection/realization of expected cash flows | | (195 | ) | | (200 | ) | | (542 | ) | | (617 | ) | | (256 | ) | | (195 | ) | | (702 | ) | | (542 | ) |
Total operating revenue | | 240 |
| | 293 |
| | 847 |
| | 916 |
| | 95 |
| | 240 |
| | 470 |
| | 847 |
|
Risk management: | | | | | | | | | | | | | | | | |
Changes in MSR asset fair value due to market interest rates and other(a) | | 150 |
| | (67 | ) | | 636 |
| | (188 | ) | | (433 | ) | | 150 |
| | (1,274 | ) | | 636 |
|
Other changes in MSR asset fair value due to other inputs and assumptions in model(b) | | (52 | ) | | 1 |
| | (59 | ) | | (35 | ) | | (14 | ) | | (52 | ) | | (298 | ) | | (59 | ) |
Change in derivative fair value and other | | (186 | ) | | 43 |
| | (671 | ) | | 91 |
| | 500 |
| | (186 | ) | | 1,372 |
| | (671 | ) |
Total risk management | | (88 | ) | | (23 | ) | | (94 | ) | | (132 | ) | | 53 |
| | (88 | ) | | (200 | ) | | (94 | ) |
Total net mortgage servicing revenue | | 152 |
| | 270 |
| | 753 |
| | 784 |
| | 148 |
| | 152 |
| | 270 |
| | 753 |
|
| | | | | | | | | | | | | | | | |
Total CCB mortgage fees and related income | | 260 |
| | 428 |
| | 1,049 |
| | 1,235 |
| | 886 |
| | 260 |
| | 1,561 |
| | 1,049 |
|
| | | | | | | | | | | | | | | | |
All other | | 2 |
| | 1 |
| | 2 |
| | 4 |
| | 1 |
| | 2 |
| | 1 |
| | 2 |
|
Mortgage fees and related income | | $ | 262 |
| | $ | 429 |
| | $ | 1,051 |
| | $ | 1,239 |
| | $ | 887 |
| | $ | 262 |
| | $ | 1,562 |
| | $ | 1,051 |
|
| |
(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). |
The table below outlines the key economic assumptions used to determine the fair value of the Firm’s MSRs at September 30, 2018,2019, and December 31, 2017,2018, and outlines hypothetical sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.
|
| | | | | | | | |
(in millions, except rates) | Sep 30, 2019 |
| | Dec 31, 2018 |
|
Weighted-average prepayment speed assumption (constant prepayment rate) | 13.81 | % | | 8.78 | % |
Impact on fair value of 10% adverse change | $ | (206 | ) | | $ | (205 | ) |
Impact on fair value of 20% adverse change | (393 | ) | | (397 | ) |
Weighted-average option adjusted spread(a)(b) | 8.26 | % | | 7.87 | % |
Impact on fair value of a 100 basis point adverse change | $ | (150 | ) | | $ | (235 | ) |
Impact on fair value of a 200 basis point adverse change | (289 | ) | | (452 | ) |
|
| | | | | | | | |
(in millions, except rates) | Sep 30, 2018 |
| | Dec 31, 2017 |
|
Weighted-average prepayment speed assumption (“CPR”) | 8.40 | % | | 9.35 | % |
Impact on fair value of 10% adverse change | $ | (194 | ) | | $ | (221 | ) |
Impact on fair value of 20% adverse change | (376 | ) | | (427 | ) |
Weighted-average option adjusted spread | 8.65 | % | | 9.04 | % |
Impact on fair value of a 100 basis point adverse change | $ | (251 | ) | | $ | (250 | ) |
Impact on fair value of a 200 basis point adverse change | (483 | ) | | (481 | ) |
CPR: Constant prepayment rate.
| |
(a) | Includes the impact of operational risk and regulatory capital. |
| |
(b) | The prior period amount has been revised to conform with the current period presentation. |
Changes in fair value based on variationvariations 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 this 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.
Note 15 – Deposits
ForRefer to Note 17 of JPMorgan Chase’s 2018 Form 10-K for further information on deposits, refer to Note17 of JPMorgan Chase’s 2017 Annual Report.deposits.
At September 30, 2018,2019, and December 31, 2017,2018, noninterest-bearing and interest-bearing deposits were as follows.
| | (in millions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
U.S. offices | | | | | | |
Noninterest-bearing | $ | 374,603 |
| | $ | 393,645 |
| |
Interest-bearing (included $16,526 and $14,947 at fair value)(a) | 814,988 |
| | 793,618 |
| |
Noninterest-bearing (included $23,225 and $17,204 at fair value)(a)(b) | | $ | 393,522 |
| | $ | 386,709 |
|
Interest-bearing (included $2,523 and $2,487 at fair value)(a)(b) | | 844,137 |
| | 813,881 |
|
Total deposits in U.S. offices | 1,189,591 |
| | 1,187,263 |
| 1,237,659 |
| | 1,200,590 |
|
Non-U.S. offices | | | | | | |
Noninterest-bearing | 19,127 |
| | 15,576 |
| |
Interest-bearing (included $3,974 and $6,374 at fair value)(a) | 250,044 |
| | 241,143 |
| |
Noninterest-bearing (included $2,289 and $2,367 at fair value)(a)(b) | | 21,455 |
| | 21,459 |
|
Interest-bearing (included $1,318 and $1,159 at fair value)(a)(b) | | 266,147 |
| | 248,617 |
|
Total deposits in non-U.S. offices | 269,171 |
| | 256,719 |
| 287,602 |
| | 270,076 |
|
Total deposits | $ | 1,458,762 |
| | $ | 1,443,982 |
| $ | 1,525,261 |
| | $ | 1,470,666 |
|
| |
(a) | Includes structured notes classified as deposits for which the fair value option has been elected. For a further discussion, referRefer to Note 3 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for a further discussion. |
| |
(b) | In the second quarter of 2019, the Firm reclassified balances related to certain structured notes from interest-bearing to noninterest-bearing deposits as the associated returns are recorded in principal transactions revenue and not in net interest income. This change was applied retrospectively and, accordingly, prior period amounts were revised to conform with the current presentation. |
Note 16 – Leases
Lease commitments
Effective January 1, 2019, the Firm adopted new guidance that requires lessees to recognize on the Consolidated balance sheets all leases with lease terms greater than twelve months as a lease liability with a corresponding right-of-use (“ROU”) asset. Accordingly, the Firm recognized operating lease liabilities and ROU assets of $8.2 billion and $8.1 billion, respectively. The adoption of the new lease guidance did not have a material impact on the Firm’s Consolidated statements of income. The change in accounting due to the adoption of the new lease guidance did not result in a material change to the future net minimum rental payments/receivables or to the net rental expense when compared to December 31, 2018.
Firm as lessee
At September 30, 2019, JPMorgan Chase and its subsidiaries were obligated under a number of noncancelable leases, predominantly operating leases for premises and equipment used primarily for business purposes. These leases generally have terms of 20 years or less, determined based on the contractual maturity of the lease, and include periods covered by options to extend or terminate the lease when the Firm is reasonably certain that it will exercise those options. None of these lease agreements impose restrictions on the Firm’s ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements. Certain of these leases contain escalation clauses that will increase rental payments based on maintenance, utility and tax increases, which are non-lease components. The Firm elected not to separate lease and non-lease components of a contract for its real estate leases. As such, real estate lease payments represent payments on both lease and non-lease components.
Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term. The future lease payments are discounted at a rate that represents the Firm’s collateralized borrowing rate for financing instruments of a similar term and are included in accounts payable and other liabilities. The operating lease ROU asset, included in premises and equipment, also includes any lease prepayments made, plus initial direct costs incurred, less any lease incentives received. Rental expense associated with operating leases is recognized on a straight-line basis over the lease term, and generally included in occupancy expense in the Consolidated statements of income.
The following tables provide information related to the Firm’s operating leases:
|
| | | |
As of September 30, (in millions, except where otherwise noted) | |
2019 |
Right-of-use assets | $ | 8,160 |
|
Lease liabilities | 8,425 |
|
| |
Weighted average remaining lease term (in years) | 8.7 |
|
Weighted average discount rate | 3.73 | % |
| |
Supplemental cash flow information | |
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows | $ | 1,177 |
|
Supplemental non-cash information | |
Right-of-use assets obtained in exchange for operating lease obligations | $ | 990 |
|
| |
|
| | | | | | |
(in millions) | Three months ended September 30, 2019 | Nine months ended September 30, 2019 |
Rental expense | | |
Gross rental expense | $ | 517 |
| $ | 1,537 |
|
Sublease rental income | (49 | ) | (137 | ) |
Net rental expense | $ | 468 |
| $ | 1,400 |
|
The following table presents future payments under operating leases as of September 30, 2019:
|
| | | |
Year ended December 31, (in millions) | |
2019 (excluding nine months ended September 30, 2019) | $ | 394 |
|
2020 | 1,569 |
|
2021 | 1,394 |
|
2022 | 1,198 |
|
2023 | 1,027 |
|
After 2023 | 4,442 |
|
Total future minimum lease payments | 10,024 |
|
Less: Imputed interest | (1,599 | ) |
Total | $ | 8,425 |
|
In addition to the table above, as of September 30, 2019, the Firm had additional future operating lease commitments of $1.3 billion that were signed but had not yet commenced. These operating leases will commence between 2019 and 2022 with lease terms up to 25 years.
Firm as lessor
The Firm provides auto and equipment lease financing to its customers through lease arrangements with lease terms that may contain renewal, termination and/or purchase options. Generally, the Firm’s lease financings are operating leases. These assets are recognized in other assets on the Firm’s Consolidated balance sheets and are depreciated on a straight-line basis over the lease term to reduce the asset to its estimated residual value. Depreciation expense is included in technology, communications and equipment
expense in the Consolidated statements of income. The Firm’s lease income is generally recognized on a straight-line basis over the lease term and is included in other income in the Consolidated statements of income.
On a periodic basis, the Firm assesses leased assets for impairment, and if the carrying amount of the leased asset exceeds the undiscounted cash flows from the lease payments and the estimated residual value upon disposition of the leased asset, an impairment loss is recognized.
The risk of loss on auto and equipment leased assets relating to the residual value of the leased assets is monitored through projections of the asset residual values at lease origination and periodic review of residual values, and is mitigated through arrangements with certain manufacturers or lessees.
The following table presents the carrying value of assets subject to leases reported on the Consolidated balance sheets:
|
| | | | | | | |
(in millions) | | September 30, 2019 | December 31, 2018 |
Carrying value of assets subject to operating leases, net of accumulated depreciation | | $ | 22,953 |
| $ | 21,428 |
|
Accumulated depreciation | | 5,848 |
| 5,303 |
|
The following table presents the Firm’s operating lease income and the related depreciation expense on the Consolidated statements of income:
|
| | | | | | | | | | | | | |
| | Three months ended September 30, | Nine months ended September 30, |
(in millions) | | 2019 |
| 2018 |
| 2019 |
| 2018 |
|
Operating lease income | | $ | 1,384 |
| $ | 1,157 |
| $ | 4,027 |
| $ | 3,316 |
|
Depreciation expense | | 1,053 |
| 901 |
| 3,038 |
| 2,564 |
|
The following table presents future receipts under operating leases as of September 30, 2019:
|
| | | |
Year ended December 31, (in millions) | |
2019 (excluding nine months ended September 30, 2019) | $ | 1,121 |
|
2020 | 3,785 |
|
2021 | 2,303 |
|
2022 | 660 |
|
2023 | 74 |
|
After 2023 | 137 |
|
Total future minimum lease payments | $ | 8,080 |
|
Note 17 - Preferred stock
Refer to Note 20 of JPMorgan Chase’s 2018 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 September 30, 2019 and December 31, 2018, and the quarterly dividend declarations for the three and nine months ended September 30, 2019 and 2018.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| Shares | Carrying value (in millions) | | Contractual rate in effect at September 30, 2019 | Earliest redemption date(b) | Floating annualized rate of three-month LIBOR/Term SOFR plus: | Dividend declared per share(c) | |
| September 30, 2019(a) | December 31, 2018(a) | September 30, 2019 | December 31, 2018 | Issue date | Three months ended September 30, | Nine months ended September 30, | |
| 2019 | 2018 | 2019 | 2018 | |
Fixed-rate: | | | | | | | | | | | | | |
Series P | 90,000 |
| 90,000 |
| $ | 900 |
| $ | 900 |
| 2/5/2013 | 5.450 | % | 3/1/2018 | NA | $ | 136.25 |
| $136.25 | $ | 408.75 |
| $408.75 | |
Series T | — |
| 92,500 |
| — |
| 925 |
| 1/30/2014 | — |
| 3/1/2019 | NA | NA | 167.50 | 167.50 | 502.50 | |
Series W | — |
| 88,000 |
| — |
| 880 |
| 6/23/2014 | — |
| 9/1/2019 | NA | NA | 157.50 | 472.50 | 472.50 | |
Series Y | 143,000 |
| 143,000 |
| 1,430 |
| 1,430 |
| 2/12/2015 | 6.125 |
| 3/1/2020 | NA | 153.13 |
| 153.13 | 459.39 | 459.39 | |
Series AA | 142,500 |
| 142,500 |
| 1,425 |
| 1,425 |
| 6/4/2015 | 6.100 |
| 9/1/2020 | NA | 152.50 |
| 152.50 | 457.50 | 457.50 | |
Series BB | 115,000 |
| 115,000 |
| 1,150 |
| 1,150 |
| 7/29/2015 | 6.150 |
| 9/1/2020 | NA | 153.75 |
| 153.75 | 461.25 | 461.25 | |
Series DD | 169,625 |
| 169,625 |
| 1,696 |
| 1,696 |
| 9/21/2018 | 5.750 |
| 12/1/2023 | NA | 143.75 |
| NA | 431.25 | NA | |
Series EE | 185,000 |
| — |
| 1,850 |
| — |
| 1/24/2019 | 6.000 |
| 3/1/2024 | NA | 150.00 |
| NA | 361.67 | NA | |
| | | | | | | | | | | | | |
Fixed-to-floating-rate: | | | | | | | | | | | | | |
Series I | 430,375 |
| 430,375 |
| $ | 4,304 |
| $ | 4,304 |
| 4/23/2008 | LIBOR + 3.47% |
| 4/30/2018 | LIBOR + 3.47% | $ | 146.58 |
| $148.45 | $ | 455.09 |
| $493.29 | (d) |
Series Q | 150,000 |
| 150,000 |
| 1,500 |
| 1,500 |
| 4/23/2013 | 5.150 |
| 5/1/2023 | LIBOR + 3.25 | 128.75 |
| 128.75 | 386.25 | 386.25 | |
Series R | 150,000 |
| 150,000 |
| 1,500 |
| 1,500 |
| 7/29/2013 | 6.000 |
| 8/1/2023 | LIBOR + 3.30 | 150.00 |
| 150.00 | 450.00 | 450.00 | |
Series S | 200,000 |
| 200,000 |
| 2,000 |
| 2,000 |
| 1/22/2014 | 6.750 |
| 2/1/2024 | LIBOR + 3.78 | 168.75 |
| 168.75 | 506.25 | 506.25 | |
Series U | 100,000 |
| 100,000 |
| 1,000 |
| 1,000 |
| 3/10/2014 | 6.125 |
| 4/30/2024 | LIBOR + 3.33 | 153.13 |
| 153.13 | 459.38 | 459.38 | |
Series V | 250,000 |
| 250,000 |
| 2,500 |
| 2,500 |
| 6/9/2014 | LIBOR + 3.32% |
| 7/1/2019 | LIBOR + 3.32 | 144.11 |
| 125.00 | 394.11 | 375.00 | (e) |
Series X | 160,000 |
| 160,000 |
| 1,600 |
| 1,600 |
| 9/23/2014 | 6.100 |
| 10/1/2024 | LIBOR + 3.33 | 152.50 |
| 152.50 | 457.50 | 457.50 | |
Series Z | 200,000 |
| 200,000 |
| 2,000 |
| 2,000 |
| 4/21/2015 | 5.300 |
| 5/1/2020 | LIBOR + 3.80 | 132.50 |
| 132.50 | 397.50 | 397.50 | |
Series CC | 125,750 |
| 125,750 |
| 1,258 |
| 1,258 |
| 10/20/2017 | 4.625 |
| 11/1/2022 | LIBOR + 2.58 | 115.63 |
| 115.63 | 346.88 | 346.88 | |
Series FF | 225,000 |
| — |
| 2,250 |
| — |
| 7/31/2019 | 5.000 |
| 8/1/2024 | SOFR + 3.38 | 126.39 |
| NA | 126.39 | NA | (f) |
Total preferred stock | 2,836,250 |
| 2,606,750 |
| $ | 28,363 |
| $ | 26,068 |
| | | | | | | | | |
| |
(a) | Represented by depositary shares. |
| |
(b) | Fixed-to-floating rate notes convert to a floating rate at the earliest redemption date. |
| |
(c) | Dividends are declared quarterly. Dividends are payable quarterly on fixed-rate preferred stock. Dividends are payable semiannually on fixed-to-floating-rate preferred stock while at a fixed rate, and payable quarterly after converting to a floating rate. |
| |
(d) | Prior to April 30, 2018, the dividend rate was fixed at 7.90%. |
| |
(e) | Prior to July 1, 2019, the dividend rate was fixed at 5%. |
| |
(f) | Dividends in the amount of $126.39 per share were declared on September 9, 2019 and include dividends from the original issue date of July 31, 2019 through October 31, 2019. |
On October 31, 2019, the Firm announced and priced an offering of depositary shares representing $900 million of 4.75% non-cumulative preferred stock, Series GG. This issuance is expected to close on November 7, 2019. On November 1, 2019, the Firm announced that it will redeem all $900 million of its 5.45% non-cumulative preferred stock, Series P on December 1, 2019.
On October 30, 2019, the Firm redeemed $1.37 billion of its Series I fixed-to-floating rate non-cumulative perpetual preferred stock.
On September 1, 2019, the Firm redeemed all $880 million of its 6.3% non-cumulative preferred stock, series W.
On July 31, 2019, the Firm issued $2.25 billion of fixed-to-floating rate non-cumulative preferred stock, Series FF.
On January 24, 2019, the Firm issued $1.85 billion of 6.00% non-cumulative preferred stock, Series EE, and on March 1, 2019, the Firm redeemed all $925 million of its 6.70% non-cumulative preferred stock, Series T.
Note 18 – Earnings per share
ForRefer to Note 22 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the computation of basic and diluted earnings per share (“EPS”), refer to Note 22 of JPMorgan Chase’s 2017 Annual Report.. The following table presents the calculation of basic and diluted EPS for the three and nine months ended September 30, 20182019 and 2017.2018.
| | (in millions, except per share amounts) | Three months ended September 30, | | Nine months ended September 30, | Three months ended September 30, | | Nine months ended September 30, |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Basic earnings per share | | | | | | |
Net income | $ | 8,380 |
| $ | 6,732 |
| | $ | 25,408 |
| $ | 20,209 |
| $ | 9,080 |
| $ | 8,380 |
| | $ | 27,911 |
| $ | 25,408 |
|
Less: Preferred stock dividends | 379 |
| 412 |
| | 1,167 |
| 1,235 |
| 423 |
| 379 |
| | 1,201 |
| 1,167 |
|
Net income applicable to common equity | 8,001 |
| 6,320 |
| | 24,241 |
| 18,974 |
| 8,657 |
| 8,001 |
| | 26,710 |
| 24,241 |
|
Less: Dividends and undistributed earnings allocated to participating securities | 53 |
| 58 |
| | 174 |
| 188 |
| 51 |
| 53 |
| | 159 |
| 174 |
|
Net income applicable to common stockholders | $ | 7,948 |
| $ | 6,262 |
| | $ | 24,067 |
| $ | 18,786 |
| $ | 8,606 |
| $ | 7,948 |
| | $ | 26,551 |
| $ | 24,067 |
|
| | | | | | |
Total weighted-average basic shares outstanding | 3,376.1 |
| 3,534.7 |
| | 3,416.5 |
| 3,570.9 |
| 3,198.5 |
| 3,376.1 |
| | 3,248.7 |
| 3,416.5 |
|
Net income per share | $ | 2.35 |
| $ | 1.77 |
| | $ | 7.04 |
| $ | 5.26 |
| $ | 2.69 |
| $ | 2.35 |
| | $ | 8.17 |
| $ | 7.04 |
|
| | | | | | |
Diluted earnings per share | | | | | | |
Net income applicable to common stockholders | $ | 7,948 |
| $ | 6,262 |
| | $ | 24,067 |
| $ | 18,786 |
| $ | 8,606 |
| $ | 7,948 |
| | $ | 26,551 |
| $ | 24,067 |
|
Total weighted-average basic shares outstanding | 3,376.1 |
| 3,534.7 |
| | 3,416.5 |
| 3,570.9 |
| 3,198.5 |
| 3,376.1 |
| | 3,248.7 |
| 3,416.5 |
|
Add: Employee stock options, SARs, warrants and unvested PSUs | 18.2 |
| 24.9 |
| | 19.7 |
| 26.1 |
| 8.7 |
| 18.2 |
| | 9.3 |
| 19.7 |
|
Total weighted-average diluted shares outstanding | 3,394.3 |
| 3,559.6 |
| | 3,436.2 |
| 3,597.0 |
| 3,207.2 |
| 3,394.3 |
| | 3,258.0 |
| 3,436.2 |
|
Net income per share | $ | 2.34 |
| $ | 1.76 |
| | $ | 7.00 |
| $ | 5.22 |
| $ | 2.68 |
| $ | 2.34 |
| | $ | 8.15 |
| $ | 7.00 |
|
Note 1719 – 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 loss and prior service costs/(credit) related to the Firm’s defined benefit pension and OPEB plans.plans, and on fair value option-elected liabilities arising from changes in the Firm’s own credit risk (DVA).
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the three months ended September 30, 2018 (in millions) | Unrealized gains/(losses) on investment securities | | Translation adjustments, net of hedges | | Fair value hedges(b) | Cash flow hedges | | Defined benefit pension and OPEB plans | DVA on fair value option elected liabilities | Accumulated other comprehensive income/(loss) |
|
| Balance at July 1, 2018 | | $ | 1,599 |
| | | | $ | (632 | ) | | | $ | (162 | ) | | $ | (147 | ) | | | | $ | (1,876 | ) | | | $ | 80 |
| | | $ | (1,138 | ) | |
| Net change | | (819 | ) | | | | (31 | ) | | | 34 |
| | (88 | ) | | | | 19 |
| | | (402 | ) | | | (1,287 | ) | |
| Balance at September 30, 2018 | | $ | 780 |
| | | | $ | (663 | ) | | | $ | (128 | ) | | $ | (235 | ) | | | | $ | (1,857 | ) | | | $ | (322 | ) | | | $ | (2,425 | ) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the three months ended September 30, 2017 (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 July 1, 2017 | | $ | 2,219 |
| | | | $ | (157 | ) | | | NA |
| | $ | 44 |
| | | | $ | (2,255 | ) | | | $ | (243 | ) | | | $ | (392 | ) | |
| Net change | | 147 |
| | | | — |
| | | NA |
| | 26 |
| | | | 22 |
| | | (112 | ) | | | 83 |
| |
| Balance at September 30, 2017 | | $ | 2,366 |
| | | | $ | (157 | ) | | | NA |
| | $ | 70 |
| | | | $ | (2,233 | ) | | | $ | (355 | ) | | | $ | (309 | ) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the nine months ended September 30, 2018 (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, 2018 | | $ | 2,164 |
| | | | $ | (470 | ) | | | $ | — |
| | $ | 76 |
| | | | $ | (1,521 | ) | | | $ | (368 | ) | | | $ | (119 | ) | |
| Cumulative effect of changes in accounting principles(a):
| | | | | | | | | | | | | | | | | | | | | | |
| Premium amortization on purchased callable debt securities | | 261 |
| | | | — |
| | | — |
| | — |
| | | | — |
| | | — |
| | | 261 |
| |
| Hedge accounting | | 169 |
| | | | — |
| | | (54 | ) | | — |
| | | | — |
| | | — |
| | | 115 |
| |
| Reclassification of certain tax effects from AOCI | | 466 |
| | | | (277 | ) | | | — |
| | 16 |
| | | | (414 | ) | | | (79 | ) | | | (288 | ) | |
| Net change | | (2,280 | ) | | | | 84 |
| | | (74 | ) | | (327 | ) | | | | 78 |
| | | 125 |
| | | (2,394 | ) | |
| Balance at September 30, 2018 | | $ | 780 |
| | | | $ | (663 | ) | | | $ | (128 | ) | | $ | (235 | ) | | | | $ | (1,857 | ) | | | $ | (322 | ) | | | $ | (2,425 | ) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the nine months ended September 30, 2017 (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, 2017 | | $ | 1,524 |
| | | | $ | (164 | ) | | | NA |
| | $ | (100 | ) | | | | $ | (2,259 | ) | | | $ | (176 | ) | | | $ | (1,175 | ) | |
| Net change | | 842 |
| | | | 7 |
| | | NA |
| | 170 |
| | | | 26 |
| | | (179 | ) | | | 866 |
| |
| Balance at September 30, 2017 | | $ | 2,366 |
| | | | $ | (157 | ) | | | NA |
| | $ | 70 |
| | | | $ | (2,233 | ) | | | $ | (355 | ) | | | $ | (309 | ) | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the three months ended September 30, 2019 (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 July 1, 2019 | | $ | 3,709 |
| | | | $ | (652 | ) | | | $ | (73 | ) | | $ | 126 |
| | | | $ | (2,231 | ) | | | $ | 235 |
| | | $ | 1,114 |
| |
| Net change | | 479 |
| | | | (165 | ) | | | (1 | ) | | 195 |
| | | | 46 |
| | | 132 |
| | | 686 |
| |
| Balance at September 30, 2019 | | $ | 4,188 |
| | | | $ | (817 | ) | | | $ | (74 | ) | | $ | 321 |
| | | | $ | (2,185 | ) | | | $ | 367 |
| | | $ | 1,800 |
| |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the three months ended September 30, 2018 (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 July 1, 2018 | | $ | 1,599 |
| | | | $ | (632 | ) | | | (162 | ) | | $ | (147 | ) | | | | $ | (1,876 | ) | | | $ | 80 |
| | | $ | (1,138 | ) | |
| Net change | | (819 | ) | | | | (31 | ) | | | 34 |
| | (88 | ) | | | | 19 |
| | | (402 | ) | | | (1,287 | ) | |
| Balance at September 30, 2018 | | $ | 780 |
| | | | $ | (663 | ) | | | $ | (128 | ) | | $ | (235 | ) | | | | $ | (1,857 | ) | | | $ | (322 | ) | | | $ | (2,425 | ) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the nine months ended September 30, 2019 (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, 2019 | | $ | 1,202 |
| | | | $ | (727 | ) | | | $ | (161 | ) | | $ | (109 | ) | | | | $ | (2,308 | ) | | | $ | 596 |
| | | $ | (1,507 | ) | |
| Net change | | 2,986 |
| | | | (90 | ) | | | 87 |
| | 430 |
| | | | 123 |
| | | (229 | ) | | | 3,307 |
| |
| Balance at September 30, 2019 | | $ | 4,188 |
| | | | $ | (817 | ) | | | $ | (74 | ) | | $ | 321 |
| | | | $ | (2,185 | ) | | | $ | 367 |
| | | $ | 1,800 |
| |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of or for the nine months ended September 30, 2018 (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, 2018 | | $ | 2,164 |
| | | | $ | (470 | ) | | | $ | — |
| | $ | 76 |
| | | | $ | (1,521 | ) | | | $ | (368 | ) | | | $ | (119 | ) | |
| Cumulative effect of changes in accounting principles(a) | | 896 |
| | | | (277 | ) | | | $ | (54 | ) | | 16 |
| | | | (414 | ) | | | (79 | ) | | | 88 |
| |
| Net change | | (2,280 | ) | | | | 84 |
| | | (74 | ) | | (327 | ) | | | | 78 |
| | | 125 |
| | | (2,394 | ) | |
| Balance at September 30, 2018 | | $ | 780 |
| | | | $ | (663 | ) | | | $ | (128 | ) | | $ | (235 | ) | | | | $ | (1,857 | ) | | | $ | (322 | ) | | | $ | (2,425 | ) | |
| |
(a) | Represents the adjustment to AOCI as a result of the new accounting standards adopted in the first quarter of 2018.2018, refer to Note 1 of JPMorgan Chase’s 2018 Form 10-K. |
| |
(b) | Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. The initial cost of cross-currency basis spreads is recognized in earnings as part of the accrual of interest on the cross currency swap. |
The following table presents the pre-tax and after-tax changes in the components of OCI. | | | 2018 | | 2017 | 2019 | | 2018 |
Three months ended September 30, (in millions) | Pre-tax | | Tax effect | | After-tax | | Pre-tax | | Tax effect | | After-tax | 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 | $ | (1,117 | ) | | $ | 262 |
| | $ | (855 | ) | | $ | 232 |
| | $ | (86 | ) | | $ | 146 |
| $ | 708 |
| | $ | (169 | ) | | $ | 539 |
| | $ | (1,117 | ) | | $ | 262 |
| | $ | (855 | ) |
Reclassification adjustment for realized (gains)/losses included in net income(a) | 46 |
| | (10 | ) | | 36 |
| | 1 |
| | — |
| | 1 |
| (78 | ) | | 18 |
| | (60 | ) | | 46 |
| | (10 | ) | | 36 |
|
Net change | (1,071 | ) | | 252 |
| | (819 | ) | | 233 |
| | (86 | ) | | 147 |
| 630 |
| | (151 | ) | | 479 |
| | (1,071 | ) | | 252 |
| | (819 | ) |
Translation adjustments: | | | | | | | | | | | | | | | | | | | | | | |
Translation | (314 | ) | | 45 |
| | (269 | ) | | 286 |
| | (106 | ) | | 180 |
| (861 | ) | | 40 |
| | (821 | ) | | (314 | ) | | 45 |
| | (269 | ) |
Hedges | 311 |
| | (73 | ) | | 238 |
| | (286 | ) | | 106 |
| | (180 | ) | 866 |
| | (210 | ) | | 656 |
| | 311 |
| | (73 | ) | | 238 |
|
Net change | (3 | ) | | (28 | ) | | (31 | ) | | — |
| | — |
| | — |
| 5 |
| | (170 | ) | | (165 | ) | | (3 | ) | | (28 | ) | | (31 | ) |
Fair value hedges, net change(b):
| 45 |
| | (11 | ) | | 34 |
| | NA |
| | NA |
| | NA |
| (1 | ) | | — |
| | (1 | ) | | 45 |
| | (11 | ) | | 34 |
|
Cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | |
Net unrealized gains/(losses) arising during the period | (122 | ) | | 27 |
| | (95 | ) | | 29 |
| | (11 | ) | | 18 |
| 222 |
| | (55 | ) | | 167 |
| | (122 | ) | | 27 |
| | (95 | ) |
Reclassification adjustment for realized (gains)/losses included in net income(c) | 9 |
| | (2 | ) | | 7 |
| | 10 |
| | (2 | ) | | 8 |
| 37 |
| | (9 | ) | | 28 |
| | 9 |
| | (2 | ) | | 7 |
|
Net change | (113 | ) | | 25 |
| | (88 | ) | | 39 |
| | (13 | ) | | 26 |
| 259 |
| | (64 | ) | | 195 |
| | (113 | ) | | 25 |
| | (88 | ) |
Defined benefit pension and OPEB plans: | | | | | | | | | | | | | | | | | | | | | | |
Net gains/(losses) arising during the period | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
Net gain/(loss) arising during the period | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Reclassification adjustments included in net income(d): | | | | | | | | | | | | | | | | | | | | | | |
Amortization of net loss | 26 |
| | (6 | ) | | 20 |
| | 63 |
| | (23 | ) | | 40 |
| 42 |
| | (10 | ) | | 32 |
| | 26 |
| | (6 | ) | | 20 |
|
Prior service costs/(credits) | (7 | ) | | 2 |
| | (5 | ) | | (9 | ) | | 3 |
| | (6 | ) | |
Amortization of prior service cost/(credit) | | — |
| | — |
| | — |
| | (7 | ) | | 2 |
| | (5 | ) |
Foreign exchange and other | 7 |
| | (3 | ) | | 4 |
| | (19 | ) | | 7 |
| | (12 | ) | 18 |
| | (4 | ) | | 14 |
| | 7 |
| | (3 | ) | | 4 |
|
Net change | 26 |
| | (7 | ) | | 19 |
| | 35 |
| | (13 | ) | | 22 |
| 60 |
| | (14 | ) | | 46 |
| | 26 |
| | (7 | ) | | 19 |
|
DVA on fair value option elected liabilities, net change: | (527 | ) | | 125 |
| | (402 | ) | | (178 | ) | | 66 |
| | (112 | ) | 173 |
| | (41 | ) | | 132 |
| | (527 | ) | | 125 |
| | (402 | ) |
Total other comprehensive income/(loss) | $ | (1,643 | ) | | $ | 356 |
| | $ | (1,287 | ) | | $ | 129 |
| | $ | (46 | ) | | $ | 83 |
| $ | 1,126 |
| | $ | (440 | ) | | $ | 686 |
| | $ | (1,643 | ) | | $ | 356 |
| | $ | (1,287 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| 2018 | | 2017 | 2019 | | 2018 |
Nine months ended September 30, (in millions) | Pre-tax | | Tax effect | | After-tax | | Pre-tax | | Tax effect | | After-tax | 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 | $ | (3,351 | ) | | $ | 787 |
| | $ | (2,564 | ) | | $ | 1,294 |
| | $ | (476 | ) | | $ | 818 |
| $ | 4,074 |
| | $ | (985 | ) | | $ | 3,089 |
| | $ | (3,351 | ) | | $ | 787 |
| | $ | (2,564 | ) |
Reclassification adjustment for realized (gains)/losses included in net income(a) | 371 |
| | (87 | ) | | 284 |
| | 38 |
| | (14 | ) | | 24 |
| (135 | ) | | 32 |
| | (103 | ) | | 371 |
| | (87 | ) | | 284 |
|
Net change | (2,980 | ) | | 700 |
| | (2,280 | ) | | 1,332 |
| | (490 | ) | | 842 |
| 3,939 |
| | (953 | ) | | 2,986 |
| | (2,980 | ) | | 700 |
| | (2,280 | ) |
Translation adjustments(e): | | | | | | | | | | | | |
Translation adjustments(e): | | | | | | | | | | | | |
Translation | (981 | ) | | 188 |
| | (793 | ) | | 1,185 |
| | (448 | ) | | 737 |
| (697 | ) | | 76 |
| | (621 | ) | | (981 | ) | | 188 |
| | (793 | ) |
Hedges | 1,149 |
| | (272 | ) | | 877 |
| | (1,161 | ) | | 431 |
| | (730 | ) | 700 |
| | (169 | ) | | 531 |
| | 1,149 |
| | (272 | ) | | 877 |
|
Net change | 168 |
| | (84 | ) | | 84 |
| | 24 |
| | (17 | ) | | 7 |
| 3 |
| | (93 | ) | | (90 | ) | | 168 |
| | (84 | ) | | 84 |
|
Fair value hedges, net change(b): | (96 | ) | | 22 |
| | (74 | ) | | NA |
| | NA |
| | NA |
| 114 |
| | (27 | ) | | 87 |
| | (96 | ) | | 22 |
| | (74 | ) |
Cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | |
Net unrealized gains/(losses) arising during the period | (365 | ) | | 85 |
| | (280 | ) | | 111 |
| | (42 | ) | | 69 |
| 464 |
| | (112 | ) | | 352 |
| | (365 | ) | | 85 |
| | (280 | ) |
Reclassification adjustment for realized (gains)/losses included in net income(c) | (62 | ) | | 15 |
| | (47 | ) | | 160 |
| | (59 | ) | | 101 |
| 102 |
| | (24 | ) | | 78 |
| | (62 | ) | | 15 |
| | (47 | ) |
Net change | (427 | ) | | 100 |
| | (327 | ) | | 271 |
| | (101 | ) | | 170 |
| 566 |
| | (136 | ) | | 430 |
| | (427 | ) | | 100 |
| | (327 | ) |
Defined benefit pension and OPEB plans: | | | | | | | | | | | | | | | | | | | | | | |
Net gains/(losses) arising during the period | 25 |
| | (6 | ) | | 19 |
| | (52 | ) | | 19 |
| | (33 | ) | |
Net gain/(loss) arising during the period | | 2 |
| | (2 | ) | | — |
| | 25 |
| | (6 | ) | | 19 |
|
Reclassification adjustments included in net income(d): | | | | | | | | | | | | | | | | | | | | | | |
Amortization of net loss | 78 |
| | (18 | ) | | 60 |
| | 187 |
| | (69 | ) | | 118 |
| 125 |
| | (26 | ) | | 99 |
| | 78 |
| | (18 | ) | | 60 |
|
Prior service costs/(credits) | (19 | ) | | 5 |
| | (14 | ) | | (27 | ) | | 10 |
| | (17 | ) | |
Amortization of prior service cost/(credit) | | 2 |
| | (1 | ) | | 1 |
| | (19 | ) | | 5 |
| | (14 | ) |
Settlement (gain)/loss
| — |
| | — |
| | — |
| | (3 | ) | | 1 |
| | (2 | ) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Foreign exchange and other | 19 |
| | (6 | ) | | 13 |
| | (51 | ) | | 11 |
| | (40 | ) | 19 |
| | 4 |
| | 23 |
| | 19 |
| | (6 | ) | | 13 |
|
Net change | 103 |
| | (25 | ) | | 78 |
| | 54 |
| | (28 | ) | | 26 |
| 148 |
| | (25 | ) | | 123 |
| | 103 |
| | (25 | ) | | 78 |
|
DVA on fair value option elected liabilities, net change: | $ | 163 |
| | $ | (38 | ) | | $ | 125 |
| | $ | (283 | ) | | $ | 104 |
| | $ | (179 | ) | $ | (296 | ) | | $ | 67 |
| | $ | (229 | ) | | $ | 163 |
| | $ | (38 | ) | | $ | 125 |
|
Total other comprehensive income/(loss) | $ | (3,069 | ) | | $ | 675 |
| | $ | (2,394 | ) | | $ | 1,398 |
| | $ | (532 | ) | | $ | 866 |
| $ | 4,474 |
| | $ | (1,167 | ) | | $ | 3,307 |
| | $ | (3,069 | ) | | $ | 675 |
| | $ | (2,394 | ) |
| |
(a) | The pre-tax amount is reported in investmentInvestment securities lossesgains/(losses) in the Consolidated statements of income. |
| |
(b) | Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. The initial cost of cross-currency basis spreads is recognized in earnings as part of the accrual of interest on the cross currency swap. |
| |
(c) | The pre-tax amounts are predominantly recorded in noninterest revenue, net interest income and compensation expense in the Consolidated statements of income. |
| |
(d) | The pre-tax amount is reported in other expense in the Consolidated statements of income. |
| |
(e) | 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 nine months ended September 30, 2019, the Firm reclassified net pre-tax gains of $6 million to other income and $1 million to other expense, respectively. These amounts, which related to the liquidation of certain legal entities, are comprised of $5 million related to net investment hedge gains and $2 million related to cumulative translation adjustments. During the nine months ended September 30, 2018, the Firm reclassified a net pre-tax loss of $174 million to other expense related to the liquidation of a legal entity, $23 million related to net investment hedge losses and $151 million related to cumulative translation adjustments. During the nine months ended September 30, 2017, the Firm reclassified a net pre-tax loss of $25 million to other expense related to the liquidation of a legal entity, $47 million related to net investment hedge gains and $72 million related to cumulative translation adjustments. |
Note 1820 – Restricted cash and other restricted
assets
ForRefer to Note 25 of JPMorgan Chase’s 2018 Form 10-K for a detailed discussion of the Firm’s restricted cash and other restricted assets, refer to Note 25 of JPMorgan Chase’s 2017 Annual Report.assets.
As a resultCertain of the adoptionFirm’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 restrictedFirm’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 accounting guidance in the first quarter of 2018, restricted cash is included with unrestricted cash when reconciling the beginning and ending cash balances on the Consolidated statements of cash flows.other assets.
The following table presents the components of the Firm’s restricted cash: | | (in billions) | September 30, 2018 |
| December 31, 2017 |
| September 30, 2019 |
| December 31, 2018 |
|
Cash reserves – Federal Reserve Banks | $ | 23.6 |
| $ | 25.7 |
| $ | 26.7 |
| $ | 22.1 |
|
Segregated for the benefit of securities and futures brokerage customers | 15.3 |
| 16.8 |
| 16.8 |
| 14.6 |
|
Cash reserves at non-U.S. central banks and held for other general purposes | 3.3 |
| 3.3 |
| 3.6 |
| 4.1 |
|
Total restricted cash(a) | $ | 42.2 |
| $ | 45.8 |
| $ | 47.1 |
| $ | 40.8 |
|
| |
(a) | Comprises $40.7$45.9 billion and $44.8$39.6 billion in deposits with banks as of September 30, 2019 and $1.5 billionDecember 31, 2018, respectively, and $1.0$1.2 billion in cash and due from banks as of September 30, 2019 and December 31, 2018, on the Consolidated balance sheets as of September 30, 2018 and December 31, 2017, respectively.sheets. |
Also, as of September 30, 20182019 and December 31, 2017,2018, the Firm had:had the following other restricted assets:
Cash and securities pledged with clearing organizations for the benefit of customers of $18.8$23.6 billion and $18.0$20.6 billion, respectively.
Securities with a fair value of $2.2$13.1 billion and $3.5$9.7 billion, respectively, were also restricted in relation to customer activity.
Note 1921 – Regulatory capital
For a detailed discussion on regulatory capital, referRefer to Note 26 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for a detailed discussion on regulatory capital.
The Federal Reserve establishes capital requirements, including well-capitalized standards, for the consolidated financial holding company. The Office of the Comptroller of the Currency (“OCC”) establishes similar minimum capital requirements and standards for the Firm’s insured depository institutions (“IDI”), including JPMorgan Chase Bank, N.A.
Effective January 1, 2019, the capital adequacy of the Firm and JPMorgan Chase Bank, USA, N.A. is evaluated against the fully phased-in measures under Basel III and represents the lower of the Standardized or Advanced approaches. During 2018, the required capital measures were subject to the transitional rules and as of December 31, 2018 were the same on a fully phased-in and on a transitional basis.
Under the risk-based capital and leverage-based guidelines of the Federal Reserve, JPMorgan Chase is required to maintain minimum ratios for CET1, Tier 1, Total, Tier 1 leverage and the SLR. Failure to meet these minimum requirements could cause the Federal Reserve to take action. IDI subsidiaries are also subject to these capital requirements by their respective primary regulators.
The following table represents the minimum and well-capitalized ratios to which the Firm and its IDI subsidiaries were subject as of September 30, 2018.2019.
| | | Minimum capital ratios | | Well-capitalized ratios | Minimum capital ratios | | Well-capitalized ratios |
| BHC(a)(e)(f) |
| IDI(b)(e)(f) |
| | BHC(c) |
| IDI(d) |
| BHC(a)(e)(f) |
| IDI(b)(e)(f) |
| | BHC(c) | IDI(d) |
|
Capital ratios | | | | | | |
CET1 | 9.0 | % | 6.375 | % | | — | % | 6.5 | % | 10.5 | % | 7.0 | % | | N/A | 6.5 | % |
Tier 1 | 10.5 |
| 7.875 |
| | 6.0 |
| 8.0 |
| 12.0 |
| 8.5 |
| | 6.0 | 8.0 |
|
Total | 12.5 |
| 9.875 |
| | 10.0 |
| 10.0 |
| 14.0 |
| 10.5 |
| | 10.0 | 10.0 |
|
Tier 1 leverage | 4.0 |
| 4.0 |
| | 5.0 |
| 5.0 |
| 4.0 |
| 4.0 |
| | N/A | 5.0 |
|
SLR | 5.0 |
| 6.0 |
| | — |
| 6.0 |
| 5.0 |
| 6.0 |
| | N/A | 6.0 |
|
Note: The table above is as defined by the regulations issued by the Federal Reserve, OCC and FDIC and to which the Firm and its IDI subsidiaries are subject.
| |
(a) | Represents the Transitional minimum capital ratios applicable to the Firm under Basel III at September 30, 2018. At September 30, 2018, theIII. The CET1 minimum capital ratio includes 1.875% resulting from the phase in of the Firm’s 2.5%a capital conservation buffer of 2.5% and 2.625% resulting from the phase inGSIB surcharge of the Firm’s 3.5% GSIB surcharge.as calculated under Method 2. |
| |
(b) | Represents requirements for JPMorgan Chase’s IDI subsidiaries. The CET1 minimum capital ratio includes 1.875% resulting from the phase in of the 2.5%a capital conservation buffer of 2.5% that is applicable to the IDI subsidiaries. The IDI subsidiaries are not subject to the GSIB surcharge. |
| |
(c) | Represents requirements for bank holding companies pursuant to regulations issued by the Federal Reserve. |
| |
(d) | Represents requirements for IDI subsidiaries pursuant to regulations issued under the FDIC Improvement Act. |
| |
(e) | For the period ended December 31, 2017,2018, the CET1, Tier 1, Total and Tier 1 leverage minimum capital ratios applicable to the Firm were 7.5%, 9.0%, 11.0%10.5%, 12.5%, and 4.0%, and the CET1, Tier 1, Total and Tier 1 leverage minimum capital ratios applicable to the Firm’s IDI subsidiaries were 5.75%6.375%, 7.25%7.875%, 9.25%9.875%, and 4.0%, respectively. |
| |
(f) | Represents minimum SLR requirement of 3.0%, as well as, supplementary leverage buffers of 2.0% and 3.0% for BHC and IDI, respectively. |
The following tables present the risk-based and leverage-based capital metrics for JPMorgan Chase and its significant IDI subsidiariesJPMorgan Chase Bank, N.A. under both the Basel III Standardized and Basel III Advanced Approaches. As of September 30, 20182019 and December 31, 2017, 2018, JPMorgan Chase and all of its IDI subsidiariesJPMorgan Chase Bank, N.A. were well-capitalized and met all capital requirements to which each was subject.
| | September 30, 2018 (in millions, except ratios) | Basel III Standardized Transitional | | Basel III Advanced Transitional | |
JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | Chase Bank USA, N.A. | | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | Chase Bank USA, N.A. | |
September 30, 2019 (in millions, except ratios) | | Basel III Standardized Fully Phased-In | | Basel III Advanced Fully Phased-In |
| JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. |
Regulatory capital | | | | | | |
CET1 capital | $ | 184,972 |
| $ | 188,608 |
| $ | 23,136 |
| | $ | 184,972 |
| $ | 188,608 |
| $ | 23,136 |
| $ | 188,151 |
| $ | 205,347 |
| | $ | 188,151 |
| $ | 205,347 |
|
Tier 1 capital | 210,589 |
| 188,608 |
| 23,136 |
| | 210,589 |
| 188,608 |
| 23,136 |
| 214,831 |
| 205,347 |
| | 214,831 |
| 205,347 |
|
Total capital | 238,303 |
| 199,634 |
| 28,026 |
| | 228,574 |
| 193,613 |
| 26,636 |
| 243,500 |
| 223,038 |
| | 233,203 |
| 212,919 |
|
| | | | | | |
Assets | | | | | | |
Risk-weighted | 1,545,326 |
| 1,362,039 |
| 109,138 |
| | 1,438,529 |
| 1,211,473 |
| 182,177 |
| 1,527,762 |
| 1,445,648 |
| | 1,435,693 |
| 1,302,749 |
|
Adjusted average(a) | 2,552,612 |
| 2,141,332 |
| 116,411 |
| | 2,552,612 |
| 2,141,332 |
| 116,411 |
| 2,717,852 |
| 2,339,858 |
| | 2,717,852 |
| 2,339,858 |
|
| | | | | | |
Capital ratios(b) | | | | | | |
CET1 | 12.0 | % | 13.8 | % | 21.2 | % | | 12.9 | % | 15.6 | % | 12.7 | % | 12.3 | % | 14.2 | % | | 13.1 | % | 15.8 | % |
Tier 1 | 13.6 |
| 13.8 |
| 21.2 |
| | 14.6 |
| 15.6 |
| 12.7 |
| 14.1 |
| 14.2 |
| | 15.0 |
| 15.8 |
|
Total | 15.4 |
| 14.7 |
| 25.7 |
| | 15.9 |
| 16.0 |
| 14.6 |
| 15.9 |
| 15.4 |
| | 16.2 |
| 16.3 |
|
Tier 1 leverage(c) | 8.2 |
| 8.8 |
| 19.9 |
| | 8.2 |
| 8.8 |
| 19.9 |
| 7.9 |
| 8.8 |
| | 7.9 |
| 8.8 |
|
| | December 31, 2017 (in millions, except ratios) | Basel III Standardized Transitional | | Basel III Advanced Transitional | |
JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | Chase Bank USA, N.A. | | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | Chase Bank USA, N.A. | |
December 31, 2018 (in millions, except ratios) | | Basel III Standardized Transitional | | Basel III Advanced Transitional |
| JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A.(d) | | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A.(d) |
Regulatory capital | | | | | | | | | | |
CET1 capital | $ | 183,300 |
| $ | 184,375 |
| | $ | 21,600 |
| | $ | 183,300 |
| $ | 184,375 |
| | $ | 21,600 |
| $ | 183,474 |
| $ | 211,671 |
| | $ | 183,474 |
| $ | 211,671 |
|
Tier 1 capital | 208,644 |
| 184,375 |
| | 21,600 |
| | 208,644 |
| 184,375 |
| | 21,600 |
| 209,093 |
| 211,671 |
| | 209,093 |
| 211,671 |
|
Total capital | 238,395 |
| 195,839 |
| | 27,691 |
| | 227,933 |
| 189,510 |
| (d) | 26,250 |
| 237,511 |
| 229,952 |
| | 227,435 |
| 220,025 |
|
| | | | | | | | | | |
Assets | | | | | | | | | | |
Risk-weighted | 1,499,506 |
| 1,338,970 |
| (d) | 113,108 |
| | 1,435,825 |
| 1,241,916 |
| (d) | 190,523 |
| 1,528,916 |
| 1,446,529 |
| | 1,421,205 |
| 1,283,146 |
|
Adjusted average(a) | 2,514,270 |
| 2,116,031 |
| | 126,517 |
| | 2,514,270 |
| 2,116,031 |
| | 126,517 |
| 2,589,887 |
| 2,250,480 |
| | 2,589,887 |
| 2,250,480 |
|
| | | | | | | | | | |
Capital ratios(b) | | | | | | | | | | |
CET1 | 12.2 | % | 13.8 | % | | 19.1 | % | | 12.8 | % | 14.8 | % | (d) | 11.3 | % | 12.0 | % | 14.6 | % | | 12.9 | % | 16.5 | % |
Tier 1 | 13.9 |
| 13.8 |
| | 19.1 |
| | 14.5 |
| 14.8 |
| (d) | 11.3 |
| 13.7 |
| 14.6 |
| | 14.7 |
| 16.5 |
|
Total | 15.9 |
| 14.6 |
| (d) | 24.5 |
| | 15.9 |
| 15.3 |
| (d) | 13.8 |
| 15.5 |
| 15.9 |
| | 16.0 |
| 17.1 |
|
Tier 1 leverage(c) | 8.3 |
| 8.7 |
| | 17.1 |
| | 8.3 |
| 8.7 |
| | 17.1 |
| 8.1 |
| 9.4 |
| | 8.1 |
| 9.4 |
|
| |
(a) | Adjusted average assets, for purposes of calculating the Tier 1 leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets. |
| |
(b) | For each of the risk-based capital ratios, the capital adequacy of the Firm and its IDI subsidiariesJPMorgan Chase Bank, N.A. is evaluated against the lower of the two ratios as calculated under Basel III approaches (Standardized or Advanced). |
| |
(c) | The Tier 1 leverage ratio is not a risk-based measure of capital. |
| |
(d) | On May 18, 2019, Chase Bank USA, N.A. merged with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A as the surviving entity. The prior periodDecember 31, 2018 amounts have been revised to conform withreported for JPMorgan Chase Bank, N.A. retrospectively reflect the current period presentation.impact of the merger. |
|
| | | | | | | | | | | | | |
| September 30, 2019 | | December 31, 2018 |
| Basel III Advanced Fully Phased-In | | Basel III Advanced Fully Phased-In |
(in millions, except ratios) | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A.(a) |
Total leverage exposure | $ | 3,404,535 |
| $ | 3,007,280 |
| | $ | 3,269,988 |
| $ | 2,915,541 |
|
SLR | 6.3 | % | 6.8 | % | | 6.4 | % | 7.3 | % |
|
| | | | | | | | | | | | | | | | | | | |
| September 30, 2018 | | December 31, 2017 |
| Basel III Advanced Fully Phased-In | Basel III Advanced Transitional |
(in millions, except ratios) | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | Chase Bank USA, N.A. | | JPMorgan Chase & Co. | JPMorgan Chase Bank, N.A. | Chase Bank USA, N.A. |
Total leverage exposure(a) | $ | 3,235,518 |
| $ | 2,765,905 |
| $ | 175,153 |
| | $ | 3,204,463 |
| $ | 2,775,041 |
| $ | 182,803 |
|
SLR(a) | 6.5 | % | 6.8 | % | 13.2 | % | | 6.5 | % | 6.6 | % | 11.8 | % |
| |
(a) | Effective January 1, 2018,On May 18, 2019, Chase Bank USA, N.A. merged with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A as the SLR was fully phased-in under Basel III.surviving entity. The December 31, 20172018 amounts were calculated underreported for JPMorgan Chase Bank, N.A. retrospectively reflect the Basel III Transitional rules.impact of the merger. |
Note 2022 – 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 are refinanced, extended, cancelled, or expire 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. ForRefer to Note 27 of JPMorgan Chase’s 2018 Form 10-K for a further discussion of lending-related commitments and guarantees, and the Firm’s related accounting policies, refer to Note27 of JPMorgan Chase’s 2017 Annual Report.policies.
To provide for probable credit losses inherent 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 September 30, 2018,2019, and December 31, 2017.2018. The amounts in the table below for credit card and home equity lending-related commitments represent the total available credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit for these products will be utilized at the same time. The Firm can reduce or cancel credit card lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. In addition, the Firm typically closes credit card lines when the borrower is 60 days or more past due. The Firm may reduce or close HELOCs when there are significant decreases in the value of the underlying property, or when there has been a demonstrable decline in the creditworthiness of the borrower.
| | Off–balance sheet lending-related financial instruments, guarantees and other commitments | Off–balance sheet lending-related financial instruments, guarantees and other commitments |
| Off–balance sheet lending-related financial instruments, guarantees and other commitments |
|
| Contractual amount |
| Carrying value(g) | Contractual amount |
| Carrying value(g) |
| September 30, 2018 |
| Dec 31, 2017 |
|
| Sep 30, 2018 |
| Dec 31, 2017 |
| September 30, 2019 |
| Dec 31, 2018 |
|
| Sep 30, 2019 |
| Dec 31, 2018 |
|
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 |
|
| 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: | | | | | | | | | | |
Home equity | $ | 916 |
| $ | 1,110 |
| $ | 1,693 |
| $ | 16,942 |
| $ | 20,661 |
|
| $ | 20,360 |
|
| $ | 12 |
| $ | 12 |
| $ | 597 |
| $ | 1,156 |
| $ | 2,353 |
| $ | 17,077 |
| $ | 21,183 |
| | $ | 20,901 |
| | $ | 12 |
| $ | 12 |
|
Residential mortgage(a) | 6,955 |
| — |
| — |
| 12 |
| 6,967 |
|
| 5,736 |
|
| — |
| — |
| 10,904 |
| — |
| — |
| 12 |
| 10,916 |
| | 5,481 |
| | — |
| — |
|
Auto | 7,911 |
| 1,430 |
| 200 |
| 89 |
| 9,630 |
|
| 9,255 |
|
| 2 |
| 2 |
| 8,062 |
| 1,238 |
| 118 |
| 49 |
| 9,467 |
| | 8,011 |
| | 2 |
| 2 |
|
Consumer & Business Banking | 12,127 |
| 647 |
| 111 |
| 487 |
| 13,372 |
|
| 13,202 |
|
| 19 |
| 19 |
| 10,324 |
| 643 |
| 106 |
| 952 |
| 12,025 |
| | 11,673 |
| | 19 |
| 19 |
|
Total consumer, excluding credit card | 27,909 |
| 3,187 |
| 2,004 |
| 17,530 |
| 50,630 |
|
| 48,553 |
|
| 33 |
| 33 |
| 29,887 |
| 3,037 |
| 2,577 |
| 18,090 |
| 53,591 |
| | 46,066 |
| | 33 |
| 33 |
|
Credit card | 600,728 |
| — |
| — |
| — |
| 600,728 |
|
| 572,831 |
|
| — |
| — |
| 645,880 |
| — |
| — |
| — |
| 645,880 |
| | 605,379 |
| | — |
| — |
|
Total consumer(b) | 628,637 |
| 3,187 |
| 2,004 |
| 17,530 |
| 651,358 |
|
| 621,384 |
|
| 33 |
| 33 |
| 675,767 |
| 3,037 |
| 2,577 |
| 18,090 |
| 699,471 |
| | 651,445 |
| | 33 |
| 33 |
|
Wholesale: | | | | | | | | | | |
Other unfunded commitments to extend credit(c) | 74,427 |
| 128,149 |
| 148,414 |
| 10,995 |
| 361,985 |
|
| 331,160 |
|
| 886 |
| 840 |
| 55,258 |
| 128,911 |
| 161,963 |
| 11,200 |
| 357,332 |
| | 351,490 |
| | 912 |
| 852 |
|
Standby letters of credit and other financial guarantees(c) | 14,561 |
| 9,810 |
| 5,038 |
| 2,339 |
| 31,748 |
|
| 35,226 |
|
| 585 |
| 636 |
| 16,373 |
| 10,525 |
| 5,349 |
| 1,842 |
| 34,089 |
| | 33,498 |
| | 605 |
| 521 |
|
Other letters of credit(c) | 3,344 |
| 137 |
| 102 |
| — |
| 3,583 |
|
| 3,712 |
|
| 7 |
| 3 |
| 3,853 |
| 305 |
| 40 |
| — |
| 4,198 |
| | 2,825 |
| | 5 |
| 3 |
|
Total wholesale(d)(b) | 92,332 |
| 138,096 |
| 153,554 |
| 13,334 |
| 397,316 |
|
| 370,098 |
|
| 1,478 |
| 1,479 |
| 75,484 |
| 139,741 |
| 167,352 |
| 13,042 |
| 395,619 |
| | 387,813 |
| | 1,522 |
| 1,376 |
|
Total lending-related | $ | 720,969 |
| $ | 141,283 |
| $ | 155,558 |
| $ | 30,864 |
| $ | 1,048,674 |
|
| $ | 991,482 |
|
| $ | 1,511 |
| $ | 1,512 |
| $ | 751,251 |
| $ | 142,778 |
| $ | 169,929 |
| $ | 31,132 |
| $ | 1,095,090 |
| | $ | 1,039,258 |
| | $ | 1,555 |
| $ | 1,409 |
|
Other guarantees and commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | |
Securities lending indemnification agreements and guarantees(e)(d) | $ | 202,622 |
| $ | — |
| $ | — |
| $ | — |
| $ | 202,622 |
|
| $ | 179,490 |
|
| $ | — |
| $ | — |
| $ | 214,338 |
| $ | — |
| $ | — |
| $ | — |
| $ | 214,338 |
| | $ | 186,077 |
| | $ | — |
| $ | — |
|
Derivatives qualifying as guarantees | 2,800 |
| 361 |
| 12,384 |
| 40,349 |
| 55,894 |
|
| 57,174 |
|
| 370 |
| 304 |
| 1,772 |
| 196 |
| 12,081 |
| 40,369 |
| 54,418 |
| | 55,271 |
| | 231 |
| 367 |
|
Unsettled reverse repurchase and securities borrowing agreements | 119,762 |
| — |
| — |
| — |
| 119,762 |
|
| 76,859 |
|
| — |
| — |
| |
Unsettled repurchase and securities lending agreements | 92,115 |
| — |
| — |
| — |
| 92,115 |
|
| 44,205 |
|
| — |
| — |
| |
Unsettled resale and securities borrowed agreements | | 122,946 |
| 1,125 |
| 66 |
| — |
| 124,137 |
| | 102,008 |
| | — |
| — |
|
Unsettled repurchase and securities loaned agreements | | 120,679 |
| 670 |
| — |
| — |
| 121,349 |
| | 57,732 |
| | — |
| — |
|
Loan sale and securitization-related indemnifications: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | |
Mortgage repurchase liability | NA |
| NA |
| NA |
| NA |
| NA |
|
| NA |
|
| 89 |
| 111 |
| NA |
| NA |
| NA |
| NA |
| NA |
| | NA |
| | 61 |
| 89 |
|
Loans sold with recourse | NA |
| NA |
| NA |
| NA |
| 1,066 |
|
| 1,169 |
|
| 33 |
| 38 |
| NA |
| NA |
| NA |
| NA |
| 1,001 |
| | 1,019 |
| | 27 |
| 30 |
|
Exchange & clearing house guarantees and commitments(e) | | 161,580 |
| — |
| — |
| — |
| 161,580 |
| | 58,960 |
| | — |
| — |
|
Other guarantees and commitments(f) | 10,091 |
| 1,443 |
| 384 |
| 2,641 |
| 14,559 |
|
| 11,867 |
|
| (53 | ) | (76 | ) | 4,098 |
| 590 |
| 260 |
| 2,832 |
| 7,780 |
| | 8,183 |
| | (89 | ) | (73 | ) |
| |
(a) | Includes certain commitments to purchase loans from correspondents. |
| |
(b) | Predominantly all consumer and wholesale lending-related commitments are in the U.S. |
| |
(c) | At September 30, 2018,2019, and December 31, 2017,2018, reflected the contractual amount net of risk participations totaling $287$198 million and $334$282 million respectively, for other unfunded commitments to extend credit; $9.9$9.7 billion and $10.4 billion, respectively, for standby letters of credit and other financial guarantees; and $469$705 million and $405$385 million, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk participations. |
| |
(d) | At both September 30, 2018,2019, and December 31, 2017, the U.S. portion of the contractual amount of total wholesale lending-related commitments was 76%. |
| |
(e) | At September 30, 2018, and December 31, 2017, collateral held by the Firm in support of securities lending indemnification agreements was $214.3$226.5 billion and $188.7$195.6 billion, respectively. Securities lending collateral primarily consists of cash, G7 government securities, and securities issued by governments that are members of G7U.S. GSEs and U.S. government agencies. |
| |
(f)(e) | At September 30, 2018, 2019, and December 31, 2017, 2018, 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. |
| |
(f) | At September 30, 2019, and December 31, 2018, primarily includes letters of credit hedged by derivative transactions and managed on a market risk basis, and unfunded commitments related to institutional lending and commitments associated with the Firm’s membership in certain clearing houses.lending. Additionally, includes unfunded commitments predominantly related to certain tax-oriented equity investments. |
| |
(g) | For lending-related products, the carrying value represents the allowance for lending-related commitments and the guarantee liability; for derivative-related products, the carrying value represents the fair value. |
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.
The Firm acts as a settlement and custody bank in the U.S. tri-party repurchase transaction market. In its role as settlement and custody bank, the Firm in part is exposed to the intra-day credit risk of its cash borrower clients, usually broker-dealers. This exposure arises under secured
clearance advance facilities that the Firm extended to its clients (i.e., cash borrowers); these facilities contractually limit the Firm’s intra-day credit risk to the facility amount
and must be repaid by the end of the day. As of December 31, 2017 the secured clearance advance facility maximum outstanding commitment amount was$1.5 billion. As of September 30, 2018 the Firm no longer offers such arrangements to its clients.
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 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 arrangementsas of September 30, 2018,2019, and December 31, 2017.2018.
Standby letters of credit, other financial guarantees and other letters of credit
| | | September 30, 2018 | | December 31, 2017 | September 30, 2019 | | December 31, 2018 |
(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 | 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) | $ | 25,038 |
| | $ | 2,507 |
| | $ | 28,492 |
| | $ | 2,646 |
| $ | 27,131 |
| | $ | 3,249 |
| | $ | 26,420 |
| | $ | 2,079 |
|
Noninvestment-grade(a) | 6,710 |
| | 1,076 |
| | 6,734 |
| | 1,066 |
| 6,958 |
| | 949 |
| | 7,078 |
| | 746 |
|
Total contractual amount | $ | 31,748 |
| | $ | 3,583 |
| | $ | 35,226 |
| | $ | 3,712 |
| $ | 34,089 |
| | $ | 4,198 |
| | $ | 33,498 |
| | $ | 2,825 |
|
| | | | | | | | | | | | | | |
Allowance for lending-related commitments | $ | 171 |
| | $ | 7 |
| | $ | 192 |
| | $ | 3 |
| $ | 215 |
| | $ | 5 |
| | $ | 167 |
| | $ | 3 |
|
Guarantee liability | 414 |
| | — |
| | 444 |
| | — |
| 390 |
| | — |
| | 354 |
| | — |
|
Total carrying value | $ | 585 |
| | $ | 7 |
| | $ | 636 |
| | $ | 3 |
| $ | 605 |
| | $ | 5 |
| | $ | 521 |
| | $ | 3 |
|
| | | | | | | | | | | | | | |
Commitments with collateral | $ | 16,074 |
| | $ | 559 |
| | $ | 17,421 |
| | $ | 878 |
| $ | 17,690 |
| | $ | 877 |
| | $ | 17,400 |
| | $ | 583 |
|
| |
(a) | The ratings scale is based on the Firm’s internal ratings which generally correspond to ratings as defined by S&P and Moody’s. |
Derivatives qualifying as guarantees
The Firm transacts in certain derivative contracts that have the characteristics of a guarantee under U.S. GAAP. ForRefer to Note 27 of JPMorgan Chase’s 2018 Form 10-K for further information on these derivatives, refer to Note27 of JPMorgan Chase’s 2017 Annual Report.derivatives.
The following table summarizes the derivatives qualifying as guarantees as of September 30, 20182019, and December 31, 2017.2018.
| | (in millions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Notional amounts | | | | | | |
Derivative guarantees | $ | 55,894 |
| | $ | 57,174 |
| $ | 54,418 |
| | $ | 55,271 |
|
Stable value contracts with contractually limited exposure | 28,574 |
| | 29,104 |
| 28,886 |
| | 28,637 |
|
Maximum exposure of stable value contracts with contractually limited exposure | 2,954 |
| | 3,053 |
| 2,960 |
| | 2,963 |
|
| | | | | | |
Fair value | | | | | | |
Derivative payables | 370 |
| | 304 |
| 231 |
| | 367 |
|
Derivative receivables | — |
| | — |
| — |
| | — |
|
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. ForRefer to Note 4 for a further discussion of credit derivatives, refer to Note4.derivatives.
Loan sales- and securitization-related indemnifications
In connection with the Firm’s mortgage loan sale and securitization activities with GSEs and in certain private label transactions, 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. Further, although the Firm’s securitizations are predominantly nonrecourse, the Firm does provide recourse servicing in certain limited cases where it agrees to share credit risk with the owner of the mortgage loans. For additional information, referRefer to Note27 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for additional information.
The liability related to repurchase demands associated with private label securitizations is separately evaluated by the Firm in establishing its litigation reserves. For additional information regarding litigation, referRefer to Note22 24 of this Form 10-Q and Note 29 of JPMorgan Chase’s 2017 Annual Report.2018 Form 10-K for additional information regarding litigation.
Sponsored member repo program
In 2018 the Firm commenced the sponsored member repo program, wherein the Firm acts as a sponsoring member to clear eligible overnight 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 overnight 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 157. Refer to Note 11 of JPMorgan Chase’s 2018 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 subsidiarysubsidiaries
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 theseCompany. These guarantees, which rank on a parity with the Firm’s unsecured and unsubordinated indebtedness.indebtedness, are not included in the table on page 157 of this Note. Refer to Note 19 of JPMorgan Chase’s 2018 Form 10-K for additional information.
Note 2123 – Pledged assets and collateral
ForRefer to Note 28 of JPMorgan Chase’s 2018 Form 10-K for a discussion of the Firm’s pledged assets and collateral, refer to Note28 of JPMorgan Chase’s 2017 Annual Report.collateral.
Pledged assets
The Firm may pledge financial assets that it owns to maintain potential borrowing capacity at discount windows with Federal Reserve banks, various other central banks and FHLBs. Additionally, pledged assets are used for other purposes, including to secure borrowings and public deposits, collateralize repurchase and other securities financing agreements, andto cover customer 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’sFirm’s pledged assets.
| | (in billions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Assets that may be sold or repledged or otherwise used by secured parties | $ | 130.7 |
| | $ | 135.8 |
| $ | 154.2 |
| | $ | 104.0 |
|
Assets that may not be sold or repledged or otherwise used by secured parties | 76.2 |
| | 68.1 |
| 94.5 |
| | 83.7 |
|
Assets pledged at Federal Reserve banks and FHLBs | 488.9 |
| | 493.7 |
| 487.1 |
| | 475.3 |
|
Total assets pledged | $ | 695.8 |
| | $ | 697.6 |
| $ | 735.8 |
| | $ | 663.0 |
|
Total assets pledged do not include assets of consolidated VIEs; these assets are used to settle the liabilities of those entities. Refer to Note 13for additional information on assets and liabilities of consolidated VIEs. ForRefer to Note 10 for additional information on the Firm’sFirm’s securities financing activities, referactivities. Refer to Note10. For additional information on the Firm’s long-term debt, refer to Note 19 of JPMorgan Chase’s 2017 Annual Report.2018 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, securities borrowing agreements,prime brokerage-related held-for-investment customer margin loansreceivables and derivative agreements.contracts. Collateral is generally used under repurchase agreements,and other securities lendingfinancing agreements, or to cover customer short sales and to collateralize depositsderivative contracts and derivative agreements.deposits.
The following table presents the fair value of collateral accepted.
| | (in billions) | September 30, 2018 |
| | December 31, 2017 |
| September 30, 2019 |
| | December 31, 2018 |
|
Collateral permitted to be sold or repledged, delivered, or otherwise used | $ | 1,114.1 |
| | $ | 968.8 |
| $ | 1,264.1 |
| | $ | 1,245.3 |
|
Collateral sold, repledged, delivered or otherwise used | 927.5 |
| | 771.0 |
| 1,017.3 |
| | 998.3 |
|
Certain prior period amounts for both collateral and pledged assets (including the corresponding pledged assets parenthetical disclosure for trading assets and other assets on the Consolidated balance sheets) have been revised to conform with the current period presentation.
Note 2224 – Litigation
Contingencies
As of September 30, 2018,2019, the Firm and its subsidiaries and affiliates are defendants, or putative defendants or respondents in numerous legal proceedings, including private, civil litigations and regulatory/government investigations. The litigations range from individual actions involving a single plaintiff to class action lawsuits with potentially millions of class members. Investigations 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 $1.6$1.3 billion at September 30, 2018.2019. This estimated aggregate range of reasonably possible losses was based upon currentlyinformation available informationas 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 attendant 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.
American Depositary Receipts Pre-Release Inquiry.Federal Republic of Nigeria Litigation. JPMorgan Chase Bank, N.A. operated an escrow and depository account for the Federal Government of Nigeria (“FGN”) and two major international oil companies. The Staff of the U.S. Securities and Exchange Commission’s Enforcement Division has been investigating depositary banks and broker-dealers, including the Firm,account held approximately $1.1 billion in connection with activity relatinga dispute among the clients over rights to pre-released American Depositary Receipts.an oil field. Following the settlement of the dispute, JPMorgan Chase Bank, N.A. paid out the monies in the account in 2011 and 2013 in accordance with directions received from its clients. In November 2017, the Federal Republic of Nigeria (“FRN”) commenced a claim in the English High Court for approximately $875 million in payments made out of the accounts. The Staff’s investigation focusesFRN, claiming to be the same entity as the FGN, alleges that the payments were instructed as part of a complex fraud not involving JPMorgan Chase Bank, N.A., but that JPMorgan Chase Bank, N.A. was or should have been on notice that the period of 2011 to 2015.payments may be fraudulent. JPMorgan Chase Bank, N.A. applied for summary judgment and was unsuccessful. The Firm continues to cooperate with this investigationclaim is ongoing and is currently engaged in settlement discussions. There is no assurance that such discussions will result in a settlement.trial date has been set.
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. FX-related investigations and inquiries by government authorities, including competition authorities, are ongoing, and the Firm is cooperating with and working to resolve those matters. In May 2015, the Firm pleaded guilty to a single violation of federal antitrust law. In January 2017, the Firm was sentenced, with judgment entered thereafter and a term of probation ending in January 2020. The Department of Labor has granted the Firm a five-year exemption of disqualification that allows the Firm and its affiliates to continue to rely on the Qualified Professional Asset Manager exemption under the Employee Retirement Income Security Act (“ERISA”) until January 2023. The Firm will need to reapply in due course for a further exemption to cover the remainder of the ten-year disqualification period. In addition, the Firm has paid fines totaling approximately $265 million in connection with the settlement of FX-related investigations conducted by the European Commission and the Swiss Competition Commission which were announced in May 2019 and June 2019, respectively. Separately, in February 2017 the South Africa Competition Commission referred its FX investigation of the Firm and other banks to the South Africa Competition Tribunal, which is conducting civil proceedings concerning that matter.
The Firm is also one of a number of foreign exchange dealers named as defendants in a class action filed inIn August 2018, the United States District Court for the Southern District of New York granted final approval to the Firm’s settlement of a consolidated class action brought by U.S.-based plaintiffs, which principally allegingalleged violations of
federal antitrust laws based on an alleged conspiracy to manipulate foreign exchange rates (the “U.S. class action”). In January 2015, the Firm entered into a settlement agreement in the U.S. class action. Following this settlement, a numberand also sought damages on behalf of additional putative class actions were filed seeking damages for persons who transacted in FX futures and options on futuresfutures. Certain members of the settlement class filed requests to the Court to be excluded from the class, and certain of them filed a complaint against the Firm and a number of other foreign exchange dealers in November 2018 (the “exchanged-based actions”“opt-out action”),. The 2 FX-related actions brought by participants or beneficiaries of qualified ERISA plans have been dismissed. Putative class actions on behalf of consumers who purchased foreign currencies at allegedly inflated rates (the “consumer action”), participants or beneficiaries of qualified ERISA plans (the “ERISA actions”), and purported indirect purchasers of FX instruments (the “indirect purchaser action”). Since then, the Firm has entered into a revised settlement agreement to resolve the consolidated U.S. class action, including the exchange-based actions. The Court granted final approval of
that settlement agreement in August 2018. Certain members of the settlement class have filed requests to the Court to be excluded from the class. The District Court has dismissed one of the ERISA actions, and the United States Court of Appeals for the Second Circuit affirmed that dismissal in July 2018. The District Court has also dismissed the indirect purchaser action, and the plaintiffs have sought leave to replead their complaint. The consumer action and a second ERISA action remain pending in the District Court.
General Motors Litigation. JPMorgan Chase Bank, N.A. participated In addition, some FX related individual and putative class actions have been filed outside the U.S., including in the U.K., Israel and was the Administrative Agent on behalf of a syndicate of lenders on, a $1.5 billion syndicated Term Loan facility (“Term Loan”) for General Motors Corporation (“GM”). In July 2009, in connection with the GM bankruptcy proceedings, the Official Committee of Unsecured Creditors of Motors Liquidation Company (“Creditors Committee”) filed a lawsuit against JPMorgan Chase Bank, N.A., in its individual capacity and as Administrative Agent for other lenders on the Term Loan, seeking to hold the underlying lien invalidAustralia, which are based on the filing of a UCC-3 termination statement relating to the Term Loan. In January 2015, following several court proceedings, the United States Court of Appeals for the Second Circuit reversed the Bankruptcy Court’s dismissal of the Creditors Committee’s claim and remanded the case to the Bankruptcy Court with instructions to enter partial summary judgment for the Creditors Committee as to the termination statement. The proceedings in the Bankruptcy Court continue with respect to, among other things, additional defenses asserted by JPMorgan Chase Bank, N.A. and the value of additional collateral on the Term Loan that was unaffected by the filing of the termination statement at issue. In connection with that additional collateral, a trial in the Bankruptcy Court regarding the value of certain representative assets concluded in May 2017, and a ruling was issued in September 2017. The Bankruptcy Court found that 33 of the 40 representative assets are fixtures and that these fixtures generally should be valued on a “going concern” basis. The Creditors Committee sought leave to appeal the Bankruptcy Court’s ruling that the fixtures should be valued on a “going concern” basis rather than on a liquidation basis, and in September 2018, the District Court denied that request. In addition, certain Term Loan lenders filed cross-claims in the Bankruptcy Court against JPMorgan Chase Bank, N.A. seeking indemnification and asserting various claims. The parties have engaged in mediation concerning, among other things, the characterization and value of the remaining additional collateral, in light of the Bankruptcy Court’s ruling regarding the representative assets, as well as other issues, including the cross-claims. In September 2018, the Bankruptcy Court approved a schedule for continued proceedings concerning issues that the parties have been unable to resolve through mediation.similar alleged underlying conduct.
Interchange Litigation. A group of merchants and retail associations filed a series of class action complaints alleging that Visa and MasterCard,Mastercard, as well as certain banks, conspired to set the price of credit and debit card
interchange fees and enacted respective rules in violation of antitrust laws. The parties settled the cases for a cash payment, a temporary reduction of credit card interchange, and modifications to certain credit card network rules. In December 2013, the District Court granted final approval of the settlement.
A number of merchants appealed the settlement to the United States Court of Appeals for the Second Circuit, which, in June 2016, vacated the District Court’s certification of the class action and reversed the approval of the class settlement. In March 2017, the U.S. Supreme Court declined petitions seeking review of the decision of the Court of Appeals. The case was remanded to the District Court for further proceedings consistent with the appellate decision. The original class action was divided into two2 separate actions, one seeking primarily monetary relief and the other seeking primarily injunctive relief. In September 2018, the parties to the class action seeking monetary relief finalized an agreement which amends and supersedes the prior settlement agreement, and the plaintiffs filed a motion seeking preliminary approval of the modified settlement. ThisPursuant to this settlement, provides for the defendants to contributehave collectively contributed an additional $900 million to the approximately $5.3 billion currentlypreviously held in escrow from the original settlement. Upon preliminary approvalIn January 2019, the amended agreement was preliminarily approved by the District Court, $600 millionand formal notice of that additional amount will be funded from the litigation escrow account established under the Visa defendants’ Retrospective Responsibility Plan, and $300 million will be paid by Mastercard and certain banksclass settlement has been completed in accordance with an agreement among themselves regarding their respective shares. In June 2018, Visa deposited an additional $600 million into its litigation escrow account, whichthe District Court’s order. A fairness hearing is scheduled before the District Court in turn led to a corresponding change in the conversion rate of Visa Class B to Class A shares. Of the Mastercard-related portion, the Firm’s share is approximately $36 million.November 2019. The class action seeking primarily injunctive relief continues separately.
In addition, certain merchants have filed individual actions raising similar allegations against Visa and Mastercard, as well as against the Firm and other banks, and those actions are proceeding.
LIBOR and Other Benchmark Rate Investigations and Litigation. JPMorgan Chase has received subpoenas and requests for documents and, in some cases, interviews, from federal and state agencies and entities, including the U.S. Commodity Futures Trading Commission (“CFTC”) and various state attorneys general, as well as the European Commission (“EC”), the Swiss Competition Commission (“ComCo”) and other regulatory authorities and banking associations around the world relating primarily to the process by which interest rates were submitted to the British Bankers Association (“BBA”) in connection with the setting of the BBA’s London Interbank Offered Rate (“LIBOR”) for various currencies, principally in 2007 and 2008. Some of the inquiries also relate to similar processes by which information on rates was submitted to the European Banking Federation (“EBF”) in connection with
the setting of the EBF’s Euro Interbank Offered RatesRate (“EURIBOR”) and to the Japanese Bankers’ Association for the setting of Tokyo Interbank Offered Rates (“TIBOR”) during similar time periods, as well as processes for the setting of U.S. dollar ISDAFIX rates and other reference rates in various parts of the world during similar time periods, including through 2012.. The Firm continues to cooperate with these investigations to the extent that they are ongoing. The Firm has recently reached a resolution with the CFTC concerning the CFTC’s U.S. dollar ISDAFIX-related investigation. As previously reported, the Firm has resolved EC inquiries relating to Yen LIBOR and Swiss Franc LIBOR. In December 2016, the Firm resolved ComCo inquiries relating to these same rates. ComCo’s investigation relating to EURIBOR, to which the Firm and other banks are subject, continues. In December 2016, the EC issued a decision against the Firm and other banks finding an infringement of European antitrust rules relating to EURIBOR. The Firm has filed an appeal of that decision with the European General Court, and that appeal is pending.
In addition, the Firm has been named as a defendant along with other banks in a series of individual and putative class actions filedrelated to benchmarks, including U.S. dollar LIBOR during the period that it was administered by the BBA and, in various United States District Courts.a separate consolidated putative class action, during the period that it was administered by ICE Benchmark Administration. These actions have been filed, or consolidated for pre-trial purposes, in the United States District Court for the Southern District of New York. In these actions, plaintiffs make varying allegations that in various periods, starting in 2000 or later, defendants either individually or collectively manipulated various benchmark rates by submitting rates that were artificially low or high. Plaintiffs allege that they transacted in loans, derivatives or other financial instruments whose values are affected by changes in these rates and assert a variety of claims including antitrust claims seeking treble damages. These mattersactions are in various stages of litigation.
The Firm has agreed to settle putative class actions related to exchange-traded Eurodollar futures contracts, Swiss franc LIBOR, EURIBOR, the Singapore Interbank Offered Rate, the Singapore Swap Offer Rate and the Australian Bank Bill Swap Reference Rate. Those settlements are all subject to further documentation and court approval.
In actions related to U.S. dollar LIBOR during the period that it was administered by the BBA, the District Court dismissed certain claims, including antitrust claims brought by some plaintiffs whom the District Court found did not have standing to assert such claims, and permitted certain claims to proceed, including antitrust, claims, claims underCommodity Exchange Act, Section 10(b) of the CommoditySecurities Exchange Act and common law claims to proceed.claims. The plaintiffs whose antitrust claims were dismissed for lack of standing have filed an appeal. In February 2018, as to those actions which the Firm has not agreed to settle, theThe District Court (i) granted class certification with respect to certainof antitrust claims related to bonds and interest rate swaps sold directly by the defendants (ii)and denied class certification with respectmotions filed by other plaintiffs. The Firm has agreed to state common law claims brought bysettle putative class
actions related to Swiss franc LIBOR, the holdersSingapore Interbank Offered Rate, the Singapore Swap Offer Rate and the Australian Bank Bill Swap Reference Rate, as well as certain of those bonds and swaps and (iii) denied class certification with respect to the putative class actionactions related to LIBOR-based loans held byU.S. dollar LIBOR. The District Court declined to grant preliminary approval to the settlement involving the Singapore Interbank Offered Rate and the Singapore Swap Offer Rate and instead dismissed the litigation after concluding that the plaintiff lending institutions.
lacked standing. Plaintiff’s appeal of the District Court’s decision is pending. The remaining settlements are all subject to further documentation and court approval.Metals Investigations and Litigation. Various authorities, including the Department of Justice’s Criminal Division, are conducting investigations relating to trading practices in the metals markets and related conduct. The Firm is oneresponding to and cooperating with these investigations. Several putative class action complaints have been filed in the United States District Court for the Southern District of New York against the Firm and certain former employees, alleging a precious metals futures and options price manipulation scheme in violation of the defendants in a numberCommodity Exchange Act. Some of the complaints also allege unjust enrichment and deceptive acts or practices under the General Business Law of the State of New York. The Court consolidated these putative class actions alleging thatin February 2019. The Firm is also a defendant banks and ICAP conspired to manipulatein a consolidated action filed in the U.S. dollar ISDAFIX rates. In April 2016,United States District Court for the Firm settled this litigation, along with certain other banks. Those settlements have been preliminarily approved by the Court.
Municipal Derivatives Litigation. Several civil actions were commenced inSouthern District of New York and Alabama courts against the Firm relating to certain Jefferson County, Alabama (the “County”) warrant underwritings and swap transactions. The claimsalleging monopolization of silver futures in the civil actions generally alleged that the Firm made payments to certain third parties in exchange for being chosen to underwrite more than $3.0 billion in warrants issued by the County and to act as the counterparty for certain swaps executed by the County. The County filed for bankruptcy in November 2011. In June 2013, the County filed a Chapter 9 Plan of Adjustment, as amended (the “Plan of Adjustment”), which provided that all the above-described actions against the Firm would be released and dismissed with prejudice. In November 2013, the Bankruptcy Court confirmed the Plan of Adjustment, and in December 2013, certain sewer rate payers filed an appeal challenging the confirmationviolation of the Plan of Adjustment. All conditions to the Plan of Adjustment’s effectiveness, including the dismissal of the actions against the Firm, were satisfied or waived and the transactions contemplated by the Plan of Adjustment occurred in December 2013. Accordingly, all the above-described actions against the Firm have been dismissed pursuant to the terms of the Plan of Adjustment. The appeal of the Bankruptcy Court’s order confirming the Plan of Adjustment was dismissed in August 2018, but appellants have filed a motion for rehearing which remains pending.Sherman Act.
Wendel. Since 2012, the French criminal authorities have been investigating a series of transactions entered into by senior managers of Wendel Investissement (“Wendel”) during the period from 2004 through 2007 to restructure their shareholdings in Wendel. JPMorgan Chase Bank, N.A., Paris branch provided financing for the transactions to a number of managers of Wendel in 2007. JPMorgan Chase has cooperated with the investigation. The investigating judges issued an ordonnance de renvoi in November 2016, referring JPMorgan Chase Bank, N.A. to the French tribunal correctionnel for alleged complicity in tax fraud. No date for trial has been set by the court. The Firm has been successful in legal challenges made to the Court of Cassation, France’s highest court, with respect to the criminal proceedings. In January 2018, the Paris Court of Appeal issued a decision cancelling the mise en examen of JPMorgan Chase Bank, N.A. TheIn September 2018, the Court of Cassation, France’s highest court, ruled in September 2018 that a mise en examen is a prerequisite for an ordonnance de renvoi and remanded the case to the Court of Appeal. In June 2019, the Court of Appeal declined to consider JPMorgan Chase Bank, N.A.’s application for the annulment ofannul the ordonnance de renvoireferring JPMorgan Chase Bank, N.A. to the French tribunal correctionnel., and the Firm has reapplied to the Court of Cassation for a determination as to whether the Court of Appeal’s decision is consistent with the Court of Cassation’s September 2018 ruling. Any further actions in the criminal proceedings are stayed pending the outcome of that
application. In addition, a number of the managers have commenced civil proceedings against JPMorgan Chase Bank, N.A. The claims are separate, involve
different allegations and are at various stages of proceedings.
* * *
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, upwards or downward, as appropriate, based on management’s best judgment after consultation with counsel. The Firm’s legal expense/(benefit) was $20$10 million and $(107)$20 million for the three months ended September 30, 20182019 and 2017,2018, respectively, and $90$(2) million and $172$90 million for the nine months ended September 30, 2019 and 2018, and 2017.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 2325 – Business segments
The Firm is managed on a line of business basis. There are four4 major reportable business segments - Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. Results of these lines of businessthe Firm’s Operating Committee. Segment results are presented on a managed basis. ForRefer to Segment results below, and Note 31 of JPMorgan Chase’s 2018 Form 10-K for a further discussion concerning JPMorgan Chase’s business segments, refer to Segment results below, and Note 31 of JPMorgan Chase’s 2017 Annual Report.segments.
Segment results
The following table providestables provide a summary of the Firm’s segment results as of or for the three and nine months ended September 30, 20182019 and 2017,2018, 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 (and each of the reportable business segments) on an FTE basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. This allows management Refer to assessNote 31 of JPMorgan Chase’s 2018 Form 10-K for additional information on the comparability of revenue from year-to-year arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.Firm’s managed basis.
Business segment capital allocation
The amount of capital assigned to each business is referred to as equity. On at least an annual basis, the Firm assesses the level of capital required for each line of business as well as the assumptions and methodologies used in capital allocation are assessed and as a result, the capital allocated to allocate capital. Forlines of business may change. Refer to Line of business equity on page 91 of JPMorgan Chase’s 2018 Form 10-K for additional information on business segment capital allocation, refer to Line of business equity on pages 88-89 of JPMorgan Chase’s 2017 Annual Report.allocation.
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note1.
Net income in 2018 for the business segments reflects the favorable impact of the reduction in the U.S. federal statutory income tax rate as a result of the TCJA.
| | Segment results and reconciliation(a) | Segment results and reconciliation(a) | Segment results and reconciliation(a) |
As of or for the three months ended September 30, (in millions, except ratios) | Consumer & Community Banking | | Corporate & Investment Bank | | Commercial Banking | | Asset & Wealth Management | Consumer & Community Banking | | Corporate & Investment Bank | | Commercial Banking | | Asset & Wealth Management |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Noninterest revenue | $ | 4,176 |
| $ | 3,898 |
| | $ | 6,505 |
| $ | 6,119 |
| | $ | 576 |
| $ | 592 |
| | $ | 2,680 |
| $ | 2,617 |
| $ | 5,095 |
| $ | 4,176 |
| | $ | 7,182 |
| $ | 6,505 |
| | $ | 599 |
| $ | 576 |
| | $ | 2,713 |
| $ | 2,680 |
|
Net interest income | 9,114 |
| 8,135 |
| | 2,300 |
| 2,496 |
| | 1,695 |
| 1,554 |
| | 879 |
| 855 |
| 9,164 |
| 9,114 |
| | 2,156 |
| 2,300 |
| | 1,608 |
| 1,695 |
| | 855 |
| 879 |
|
Total net revenue | 13,290 |
| 12,033 |
| | 8,805 |
| 8,615 |
| | 2,271 |
| 2,146 |
| | 3,559 |
| 3,472 |
| 14,259 |
| 13,290 |
| | 9,338 |
| 8,805 |
| | 2,207 |
| 2,271 |
| | 3,568 |
| 3,559 |
|
Provision for credit losses | 980 |
| 1,517 |
| | (42 | ) | (26 | ) | | (15 | ) | (47 | ) | | 23 |
| 8 |
| 1,311 |
| 980 |
| | 92 |
| (42 | ) | | 67 |
| (15 | ) | | 44 |
| 23 |
|
Noninterest expense | 6,982 |
| 6,495 |
| | 5,175 |
| 4,793 |
| | 853 |
| 800 |
| | 2,585 |
| 2,408 |
| 7,290 |
| 6,982 |
| | 5,348 |
| 5,175 |
| | 881 |
| 853 |
| | 2,622 |
| 2,585 |
|
Income before income tax expense | 5,328 |
| 4,021 |
| | 3,672 |
| 3,848 |
| | 1,433 |
| 1,393 |
| | 951 |
| 1,056 |
| 5,658 |
| 5,328 |
| | 3,898 |
| 3,672 |
| | 1,259 |
| 1,433 |
| | 902 |
| 951 |
|
Income tax expense | 1,242 |
| 1,468 |
| | 1,046 |
| 1,302 |
| | 344 |
| 512 |
| | 227 |
| 382 |
| 1,385 |
| 1,242 |
| | 1,089 |
| 1,046 |
| | 322 |
| 344 |
| | 234 |
| 227 |
|
Net income | $ | 4,086 |
| $ | 2,553 |
| | $ | 2,626 |
| $ | 2,546 |
| | $ | 1,089 |
| $ | 881 |
| | $ | 724 |
| $ | 674 |
| $ | 4,273 |
| $ | 4,086 |
| | $ | 2,809 |
| $ | 2,626 |
| | $ | 937 |
| $ | 1,089 |
| | $ | 668 |
| $ | 724 |
|
Average equity | $ | 51,000 |
| $ | 51,000 |
| | $ | 70,000 |
| $ | 70,000 |
| | $ | 20,000 |
| $ | 20,000 |
| | $ | 9,000 |
| $ | 9,000 |
| $ | 52,000 |
| $ | 51,000 |
| | $ | 80,000 |
| $ | 70,000 |
| | $ | 22,000 |
| $ | 20,000 |
| | $ | 10,500 |
| $ | 9,000 |
|
Total assets | 560,432 |
| 537,459 |
| | 928,148 |
| 851,808 |
| | 217,194 |
| 220,064 |
| | 166,716 |
| 149,170 |
| 532,487 |
| 560,432 |
| | 1,023,132 |
| 928,148 |
| | 222,483 |
| 217,194 |
| | 174,226 |
| 166,716 |
|
Return on equity | 31 | % | 19 | % | | 14 | % | 13 | % | | 21 | % | 17 | % | | 31 | % | 29 | % | |
ROE | | 32 | % | 31 | % | | 13 | % | 14 | % | | 16 | % | 21 | % | | 24 | % | 31 | % |
Overhead ratio | 53 |
| 54 |
| | 59 |
| 56 |
| | 38 |
| 37 |
| | 73 |
| 69 |
| 51 |
| 53 |
| | 57 |
| 59 |
| | 40 |
| 38 |
| | 73 |
| 73 |
|
| | As of or for the three months ended September 30, (in millions, except ratios) | Corporate | | Reconciling Items(a) | | Total | Corporate | | Reconciling Items(a) | | Total |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Noninterest revenue | $ | (177 | ) | $ | 109 |
| | $ | (408 | ) | $ | (555 | ) | | $ | 13,352 |
| $ | 12,780 |
| $ | 120 |
| $ | (177 | ) | | $ | (596 | ) | $ | (408 | ) | | $ | 15,113 |
| $ | 13,352 |
|
Net interest income | 74 |
| 77 |
| | (154 | ) | $ | (319 | ) | | 13,908 |
| 12,798 |
| 572 |
| 74 |
| | (127 | ) | (154 | ) | | 14,228 |
| 13,908 |
|
Total net revenue | (103 | ) | 186 |
| | (562 | ) | $ | (874 | ) | | 27,260 |
| 25,578 |
| 692 |
| (103 | ) | | (723 | ) | (562 | ) | | 29,341 |
| 27,260 |
|
Provision for credit losses | 2 |
| — |
| | — |
| — |
| | 948 |
| 1,452 |
| — |
| 2 |
| | — |
| — |
| | 1,514 |
| 948 |
|
Noninterest expense | 28 |
| 74 |
| | — |
| — |
| | 15,623 |
| 14,570 |
| 281 |
| 28 |
| | — |
| — |
| | 16,422 |
| 15,623 |
|
Income/(loss) before income tax expense/(benefit) | (133 | ) | 112 |
| | (562 | ) | (874 | ) | | 10,689 |
| 9,556 |
| 411 |
| (133 | ) | | (723 | ) | (562 | ) | | 11,405 |
| 10,689 |
|
Income tax expense/(benefit) | 12 |
| 34 |
| | (562 | ) | (874 | ) | | 2,309 |
| 2,824 |
| 18 |
| 12 |
| | (723 | ) | (562 | ) | | 2,325 |
| 2,309 |
|
Net income/(loss) | $ | (145 | ) | $ | 78 |
| | $ | — |
| $ | — |
| | $ | 8,380 |
| $ | 6,732 |
| $ | 393 |
| $ | (145 | ) | | $ | — |
| $ | — |
| | $ | 9,080 |
| $ | 8,380 |
|
Average equity | $ | 80,439 |
| $ | 81,861 |
| | $ | — |
| $ | — |
| | $ | 230,439 |
| $ | 231,861 |
| $ | 71,113 |
| $ | 80,439 |
| | $ | — |
| $ | — |
| | $ | 235,613 |
| $ | 230,439 |
|
Total assets | 742,693 |
| 804,573 |
| | NA |
| NA |
| | 2,615,183 |
| 2,563,074 |
| 812,333 |
| 742,693 |
| | NA |
| NA |
| | 2,764,661 |
| 2,615,183 |
|
Return on equity | NM |
| NM |
| | NM |
| NM |
| | 14 | % | 11 | % | |
ROE | | NM |
| NM |
| | NM |
| NM |
| | 15 | % | 14 | % |
Overhead ratio | NM |
| NM |
| | NM |
| NM |
| | 57 |
| 57 |
| NM |
| NM |
| | NM |
| NM |
| | 56 |
| 57 |
|
| |
(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. |
| | Segment results and reconciliation(a) | Segment results and reconciliation(a) | Segment results and reconciliation(a) |
As of or for the nine months ended September 30, (in millions, except ratios) | Consumer & Community Banking | | Corporate & Investment Bank | | Commercial Banking | | Asset & Wealth Management | Consumer & Community Banking | | Corporate & Investment Bank | | Commercial Banking | | Asset & Wealth Management |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Noninterest revenue | $ | 12,063 |
| $ | 10,899 |
| | $ | 21,954 |
| $ | 19,598 |
| | $ | 1,758 |
| $ | 1,774 |
| | $ | 7,997 |
| $ | 7,677 |
| $ | 13,868 |
| $ | 12,063 |
| | $ | 22,328 |
| $ | 21,954 |
| | $ | 1,806 |
| $ | 1,758 |
| | $ | 7,989 |
| $ | 7,997 |
|
Net interest income | 26,321 |
| 23,516 |
| | 7,257 |
| 7,541 |
| | 4,995 |
| 4,478 |
| | 2,640 |
| 2,520 |
| 27,975 |
| 26,321 |
| | 6,499 |
| 7,257 |
| | 4,950 |
| 4,995 |
| | 2,627 |
| 2,640 |
|
Total net revenue | 38,384 |
| 34,415 |
| | 29,211 |
| 27,139 |
| | 6,753 |
| 6,252 |
| | 10,637 |
| 10,197 |
| 41,843 |
| 38,384 |
| | 28,827 |
| 29,211 |
| | 6,756 |
| 6,753 |
| | 10,616 |
| 10,637 |
|
Provision for credit losses | 3,405 |
| 4,341 |
| | (142 | ) | (175 | ) | | 23 |
| (214 | ) | | 40 |
| 30 |
| 3,745 |
| 3,405 |
| | 179 |
| (142 | ) | | 186 |
| 23 |
| | 48 |
| 40 |
|
Noninterest expense | 20,770 |
| 19,390 |
| | 16,237 |
| 14,854 |
| | 2,541 |
| 2,415 |
| | 7,732 |
| 7,606 |
| 21,663 |
| 20,770 |
| | 16,288 |
| 16,237 |
| | 2,618 |
| 2,541 |
| | 7,865 |
| 7,732 |
|
Income before income tax expense | 14,209 |
| 10,684 |
| | 13,116 |
| 12,460 |
| | 4,189 |
| 4,051 |
| | 2,865 |
| 2,561 |
| 16,435 |
| 14,209 |
| | 12,360 |
| 13,116 |
| | 3,952 |
| 4,189 |
| | 2,703 |
| 2,865 |
|
Income tax expense | 3,385 |
| 3,920 |
| | 3,318 |
| 3,963 |
| | 988 |
| 1,469 |
| | 616 |
| 878 |
| 4,025 |
| 3,385 |
| | 3,365 |
| 3,318 |
| | 966 |
| 988 |
| | 655 |
| 616 |
|
Net income | $ | 10,824 |
| $ | 6,764 |
| | $ | 9,798 |
| $ | 8,497 |
| | $ | 3,201 |
| $ | 2,582 |
| | $ | 2,249 |
| $ | 1,683 |
| $ | 12,410 |
| $ | 10,824 |
| | $ | 8,995 |
| $ | 9,798 |
| | $ | 2,986 |
| $ | 3,201 |
| | $ | 2,048 |
| $ | 2,249 |
|
Average equity | $ | 51,000 |
| $ | 51,000 |
| | $ | 70,000 |
| $ | 70,000 |
| | $ | 20,000 |
| $ | 20,000 |
| | $ | 9,000 |
| $ | 9,000 |
| $ | 52,000 |
| $ | 51,000 |
| | $ | 80,000 |
| $ | 70,000 |
| | $ | 22,000 |
| $ | 20,000 |
| | $ | 10,500 |
| $ | 9,000 |
|
Total assets | 560,432 |
| 537,459 |
| | 928,148 |
| 851,808 |
| | 217,194 |
| 220,064 |
| | 166,716 |
| 149,170 |
| 532,487 |
| 560,432 |
| | 1,023,132 |
| 928,148 |
| | 222,483 |
| 217,194 |
| | 174,226 |
| 166,716 |
|
Return on equity | 27 | % | 17 | % | | 18 | % | 15 | % | | 20 | % | 16 | % | | 32 | % | 24 | % | 31 | % | 27 | % | | 14 | % | 18 | % | | 17 | % | 20 | % | | 25 | % | 32 | % |
Overhead ratio | 54 |
| 56 |
| | 56 |
| 55 |
| | 38 |
| 39 |
| | 73 |
| 75 |
| 52 |
| 54 |
| | 57 |
| 56 |
| | 39 |
| 38 |
| | 74 |
| 73 |
|
| | As of or for the nine months ended September 30, (in millions, except ratios) | Corporate | | Reconciling Items(a) | | Total | Corporate | | Reconciling Items(a) | | Total |
2018 |
| 2017 |
| | 2018 |
| 2017 |
| | 2018 |
| 2017 |
| 2019 |
| 2018 |
| | 2019 |
| 2018 |
| | 2019 |
| 2018 |
|
Noninterest revenue | $ | (220 | ) | $ | 963 |
| | $ | (1,337 | ) | $ | (1,733 | ) | | $ | 42,215 |
| $ | 39,178 |
| $ | 3 |
| $ | (220 | ) | | $ | (1,777 | ) | $ | (1,337 | ) | | $ | 44,217 |
| $ | 42,215 |
|
Net interest income | (35 | ) | 2 |
| | (473 | ) | $ | (987 | ) | | 40,705 |
| 37,070 |
| 1,436 |
| (35 | ) | | (408 | ) | (473 | ) | | 43,079 |
| 40,705 |
|
Total net revenue | (255 | ) | 965 |
| | (1,810 | ) | $ | (2,720 | ) | | 82,920 |
| 76,248 |
| 1,439 |
| (255 | ) | | (2,185 | ) | (1,810 | ) | | 87,296 |
| 82,920 |
|
Provision for credit losses | (3 | ) | — |
| | — |
| — |
| | 3,323 |
| 3,982 |
| — |
| (3 | ) | | — |
| — |
| | 4,158 |
| 3,323 |
|
Noninterest expense | 394 |
| 355 |
| | — |
| — |
| | 47,674 |
| 44,620 |
| 724 |
| 394 |
| | — |
| — |
| | 49,158 |
| 47,674 |
|
Income/(loss) before income tax expense/(benefit) | (646 | ) | 610 |
| | (1,810 | ) | (2,720 | ) | | 31,923 |
| 27,646 |
| 715 |
| (646 | ) | | (2,185 | ) | (1,810 | ) | | 33,980 |
| 31,923 |
|
Income tax expense/(benefit) | 18 |
| (73 | ) | | (1,810 | ) | (2,720 | ) | | 6,515 |
| 7,437 |
| (757 | ) | 18 |
| | (2,185 | ) | (1,810 | ) | | 6,069 |
| 6,515 |
|
Net income/(loss) | $ | (664 | ) | $ | 683 |
| | $ | — |
| $ | — |
| | $ | 25,408 |
| $ | 20,209 |
| $ | 1,472 |
| $ | (664 | ) | | $ | — |
| $ | — |
| | $ | 27,911 |
| $ | 25,408 |
|
Average equity | $ | 78,995 |
| $ | 79,937 |
| | $ | — |
| $ | — |
| | $ | 228,995 |
| $ | 229,937 |
| $ | 68,417 |
| $ | 78,995 |
| | $ | — |
| $ | — |
| | $ | 232,917 |
| $ | 228,995 |
|
Total assets | 742,693 |
| 804,573 |
| | NA |
| NA |
| | 2,615,183 |
| 2,563,074 |
| 812,333 |
| 742,693 |
| | NA |
| NA |
| | 2,764,661 |
| 2,615,183 |
|
Return on equity | NM |
| NM |
| | NM |
| NM |
| | 14 | % | 11 | % | NM |
| NM |
| | NM |
| NM |
| | 15 | % | 14 | % |
Overhead ratio | NM |
| NM |
| | NM |
| NM |
| | 57 |
| 59 |
| NM |
| NM |
| | NM |
| NM |
| | 56 |
| 57 |
|
| |
(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. |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and StockholdersShareholders 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 September 30, 2018,2019, and the related consolidated statements of income, and comprehensive income, and changes in stockholders’ equity for the three-month and nine-month periods ended September 30, 20182019 and 20172018 and the consolidated statements of changes in stockholders’ equity and of cash flows for the nine-month periods ended September 30, 20182019 and 2017,2018, 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, 2017,2018, 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 27, 2018,26, 2019, 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, 2017,2018, 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.
October 31, 2018November 4, 2019
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 September 30, 2018 | | Three months ended September 30, 2017 | Three months ended September 30, 2019 | | Three months ended September 30, 2018 |
| Average balance | Interest(f) | | Rate (annualized) | | Average balance | Interest(f) | | Rate (annualized) | Average balance | Interest(g) | | Rate (annualized) | | Average balance | Interest(g) | | Rate (annualized) |
Assets | | | | | | | | | | | | |
Deposits with banks | $ | 408,595 |
| $ | 1,585 |
| | 1.54 | % | | $ | 456,673 |
| $ | 1,259 |
| | 1.09 | | $ | 267,578 |
| $ | 898 |
| | 1.33 | % | | $ | 408,595 |
| $ | 1,585 |
| | 1.54 | |
Federal funds sold and securities purchased under resale agreements | 208,439 |
| 952 |
| | 1.81 |
| | 188,594 |
| 622 |
| | 1.31 | | 276,721 |
| 1,542 |
| | 2.21 |
| | 208,439 |
| 952 |
| | 1.81 | |
Securities borrowed(a) | 117,057 |
| 200 |
| | 0.68 |
| | 95,597 |
| — |
|
| — | | 139,939 |
| 434 |
| | 1.23 |
| | 117,057 |
| 248 |
|
| 0.84 | |
Trading assets – debt instruments(a) | 258,027 |
| 2,170 |
| | 3.34 |
| | 240,876 |
| 1,974 |
| | 3.25 | | 339,198 |
| 2,671 |
| | 3.12 |
| | 241,074 |
| 2,170 |
| | 3.57 | |
Taxable securities | 187,942 |
| 1,402 |
| | 2.96 |
| | 216,011 |
| 1,362 |
| | 2.50 | | 308,619 |
| 2,132 |
| | 2.74 |
| | 187,942 |
| 1,402 |
| | 2.96 | |
Nontaxable securities(a)(b) | 42,045 |
| 490 |
| | 4.62 |
| | 45,106 |
| 676 |
| | 5.95 | | 34,515 |
| 396 |
| | 4.55 |
| | 42,045 |
| 490 |
| | 4.62 | |
Total investment securities | 229,987 |
| 1,892 |
| | 3.26 |
| (g) | | 261,117 |
| 2,038 |
| | 3.10 | (g) | 343,134 |
| 2,528 |
| | 2.92 |
| (h) | | 229,987 |
| 1,892 |
| | 3.26 | (h) |
Loans | 951,724 |
| 12,250 |
| | 5.11 |
| | 909,580 |
| 10,591 |
| | 4.62 | | 947,280 |
| 12,623 |
| | 5.29 |
| | 951,724 |
| 12,250 |
| | 5.11 | |
All other interest-earning assets(b)(c) | 46,429 |
| 945 |
| | 8.07 |
| | 41,737 |
| 522 |
| | 4.96 | | 51,304 |
| 552 |
| | 4.27 |
| | 46,429 |
| 496 |
| | 4.23 | |
Total interest-earning assets(a) | 2,220,258 |
| 19,994 |
| | 3.57 |
| | 2,194,174 |
| 17,006 |
| | 3.07 | | 2,365,154 |
| 21,248 |
| | 3.56 |
| | 2,203,305 |
| 19,593 |
| | 3.53 | |
Allowance for loan losses | (13,207 | ) | | | | | (13,290 | ) | | | (13,142 | ) | | | | | (13,207 | ) | | |
Cash and due from banks | 21,101 |
| | | | | 20,289 |
| | | 20,375 |
| | | | | 21,101 |
| | |
Trading assets – equity instruments | 102,962 |
| | | | | 119,463 |
| | | |
Trading assets – equity and other instruments(a) | | 113,980 |
| | | | | 119,915 |
| | |
Trading assets – derivative receivables | 62,075 |
| | | | | 59,839 |
| | | 57,062 |
| | | | | 62,075 |
| | |
Goodwill, MSRs and other intangible assets
| 54,652 |
| | | | | 53,788 |
| | | 53,125 |
| | | | | 54,652 |
| | |
Other assets | 151,780 |
| | | | | 134,968 |
| | | |
All other noninterest-earning assets | | 168,498 |
| | | | | 151,780 |
| | |
Total assets | $ | 2,599,621 |
| | | | | $ | 2,569,231 |
| | | $ | 2,765,052 |
| | | | | $ | 2,599,621 |
| | |
Liabilities | | | | | | | | | | | | |
Interest-bearing deposits(a) | $ | 1,057,262 |
| $ | 1,621 |
| | 0.61 | % | | $ | 1,029,534 |
| $ | 837 |
| | 0.32 | | $ | 1,123,452 |
| $ | 2,409 |
| | 0.85 | % | | $ | 1,041,896 |
| $ | 1,621 |
| | 0.62 | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 184,377 |
| 827 |
| | 1.78 |
| | 181,851 |
| 451 |
| | 0.98 | | 239,698 |
| 1,241 |
| | 2.05 |
| | 184,377 |
| 827 |
| | 1.78 | |
Short-term borrowings(c)(d) | 61,042 |
| 288 |
| | 1.87 |
| | 52,958 |
| 149 |
| | 1.12 | | 44,814 |
| 261 |
| | 2.31 |
| | 52,779 |
| 288 |
| | 2.17 | |
Trading liabilities – debt and other interest-bearing liabilities(d)(e) | 177,091 |
| 1,018 |
| | 2.28 |
| | 168,738 |
| 570 |
| | 1.34 | | |
Trading liabilities – debt and all other interest-bearing liabilities(a)(e)(f) | | 183,369 |
| 660 |
| | 1.43 |
| | 176,795 |
| 617 |
| | 1.39 | |
Beneficial interests issued by consolidated VIEs | 19,921 |
| 122 |
| | 2.41 |
| | 29,832 |
| 123 |
| | 1.62 | | 21,123 |
| 134 |
| | 2.53 |
| | 19,921 |
| 122 |
| | 2.41 | |
Long-term debt(a) | 275,979 |
| 2,056 |
| | 2.96 |
| | 294,626 |
| 1,759 |
| | 2.37 | | 248,985 |
| 2,188 |
| | 3.49 |
| | 241,878 |
| 2,056 |
| | 3.37 | |
Total interest-bearing liabilities(a) | 1,775,672 |
| 5,932 |
| | 1.33 |
| | 1,757,539 |
| 3,889 |
| | 0.88 | | 1,861,441 |
| 6,893 |
| | 1.47 |
| | 1,717,646 |
| 5,531 |
| | 1.28 | |
Noninterest-bearing deposits(a) | 395,600 |
| | | | | 401,489 |
| | | 407,428 |
| | | | | 410,966 |
| | |
Trading liabilities – equity instruments(e) | 36,309 |
| | | | | 20,905 |
| | | |
Trading liabilities – equity and other instruments(a)(f) | | 31,310 |
| | | | | 36,605 |
| | |
Trading liabilities – derivative payables | 44,810 |
| | | | | 44,627 |
| | | 45,987 |
| | | | | 44,810 |
| | |
All other liabilities, including the allowance for lending-related commitments(a) | 90,539 |
| | | | | 86,742 |
| | | 155,032 |
| | | | | 132,903 |
| | |
Total liabilities | 2,342,930 |
| | | | | 2,311,302 |
| | | 2,501,198 |
| | | | | 2,342,930 |
| | |
Stockholders’ equity | | | | | | | | | | | | |
Preferred stock | 26,252 |
| | | | | 26,068 |
| | | 28,241 |
| | | | | 26,252 |
| | |
Common stockholders’ equity | 230,439 |
| | | | | 231,861 |
| | | 235,613 |
| | | | | 230,439 |
| | |
Total stockholders’ equity | 256,691 |
| | | | | 257,929 |
| | | 263,854 |
| | | | | 256,691 |
| | |
Total liabilities and stockholders’ equity | $ | 2,599,621 |
| | | | | $ | 2,569,231 |
| | | $ | 2,765,052 |
| | | | | $ | 2,599,621 |
| | |
Interest rate spread(a) | | | 2.24 | % | | | | 2.19 | | | | 2.09 | % | | | | 2.25 | |
Net interest income and net yield on interest-earning assets(a) | | $ | 14,062 |
| | 2.51 |
| | | $ | 13,117 |
| | 2.37 | | | $ | 14,355 |
| | 2.41 |
| | | $ | 14,062 |
| | 2.53 | |
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.
(a) Represents securities which are tax-exempt for U.S. federal income tax purposes.
(b) Includes held-for-investment margin loans, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated balance sheets.
(c) Includes commercial paper.
(d) Other interest-bearing liabilities include brokerage customer payables.
(e) The combined balance of trading liabilities – debt and equity instruments were $106.4 billion and $89.4 billion for the three months ended September 30, 2018 and 2017, respectively.
(f) Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(g) For the three months ended September 30, 2018 and 2017, the annualized rates for securities, based on amortized cost, were 3.29% and 3.14%, respectively; this does not give effect to changes in fair value that are reflected in AOCI.
| |
(a) | In the second quarter of 2019, the Firm implemented certain presentation changes that impacted interest income and interest expense, but had no effect on net interest income. These changes were made to align the accounting treatment between the balance sheet and the related interest income or expense, primarily by offsetting interest income and expense for certain prime brokerage-related held-for-investment customer receivables and payables that are currently presented as a single margin account on the balance sheet. In addition, the Firm reclassified balances related to certain instruments and structured notes from interest-earning/bearing to noninterest-earning/bearing assets and liabilities as the associated returns are recorded in principal transactions revenue and not in net interest income. These changes were applied retrospectively and, accordingly, prior period amounts were revised to conform with the current presentation. |
| |
(b) | Represents securities which are tax-exempt for U.S. federal income tax purposes. |
| |
(c) | Includes prime 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) | Includes commercial paper. |
| |
(e) | Other interest-bearing liabilities include prime brokerage-related customer payables. |
| |
(f) | The combined balance of trading liabilities – debt and equity instruments were $102.3 billion and $106.4 billion for the three months ended September 30, 2019 and 2018, respectively. |
| |
(g) | Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable. |
| |
(h) | The annualized rate for securities based on amortized cost was 2.97% and 3.29% for the three months ended September 30, 2019 and 2018, 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) | | | | | | | |
| Nine months ended September 30, 2018 | | Nine months ended September 30, 2017 | Nine months ended September 30, 2019 | | Nine months ended September 30, 2018 |
| Average balance | Interest(f) | | Rate (annualized) | | Average balance | Interest(f) | | Rate (annualized) | Average balance | Interest(g) | | Rate (annualized) | | Average balance | Interest(g) | | Rate (annualized) |
Assets | | | | | | | | | | | | | | |
Deposits with banks | $ | 419,392 |
| $ | 4,449 |
| | 1.42 | % | | $ | 439,974 |
| $ | 3,002 |
| | 0.91 | % | | $ | 282,483 |
| $ | 3,200 |
| | 1.51 | % | | $ | 419,392 |
| $ | 4,449 |
| | 1.42 | |
Federal funds sold and securities purchased under resale agreements | 203,969 |
| 2,490 |
| | 1.63 |
| | 192,922 |
| 1,676 |
| | 1.16 |
| | 284,616 |
| 4,865 |
| | 2.29 |
| | 203,969 |
| 2,490 |
| | 1.63 | |
Securities borrowed(a) | 113,112 |
| 410 |
| | 0.49 |
| | 93,708 |
| (65 | ) | (h) | (0.09 | ) | | 129,915 |
| 1,298 |
| | 1.34 |
| | 113,112 |
| 549 |
| | 0.65 | |
Trading assets – debt instruments(a) | 256,872 |
| 6,415 |
| | 3.34 |
| | 233,884 |
| 5,691 |
| | 3.25 |
| | 337,879 |
| 8,380 |
| | 3.32 |
| | 240,404 |
| 6,415 |
| | 3.57 | |
Taxable securities | 190,970 |
| 4,098 |
| | 2.87 |
| | 228,580 |
| 4,202 |
| | 2.46 |
| | 258,406 |
| 5,712 |
| | 2.96 |
| | 190,970 |
| 4,098 |
| | 2.87 | |
Nontaxable securities(a)(b) | 42,911 |
| 1,494 |
| | 4.65 |
| | 45,123 |
| 2,086 |
| | 6.18 |
| | 36,490 |
| 1,271 |
| | 4.66 |
| | 42,911 |
| 1,494 |
| | 4.65 | |
Total investment securities | 233,881 |
| 5,592 |
| | 3.20 |
| (g) | | 273,703 |
| 6,288 |
| | 3.07 |
| (g) | 294,896 |
| 6,983 |
| | 3.17 |
| (h) | | 233,881 |
| 5,592 |
| | 3.20 | (h) |
Loans | 939,408 |
| 35,047 |
| | 4.99 |
| | 902,216 |
| 30,479 |
| | 4.52 |
| | 956,641 |
| 38,313 |
| | 5.35 |
| | 939,408 |
| 35,047 |
| | 4.99 | |
All other interest-earning assets(b)(c) | 48,743 |
| 2,474 |
| | 6.79 |
| | 41,113 |
| 1,295 |
| | 4.21 |
| | 48,193 |
| 1,482 |
| | 4.11 |
| | 48,743 |
| 1,430 |
| | 3.92 | |
Total interest-earning assets(a) | 2,215,377 |
| 56,877 |
| | 3.43 |
| | 2,177,520 |
| 48,366 |
| | 2.97 |
| | 2,334,623 |
| 64,521 |
| | 3.69 |
| | 2,198,909 |
| 55,972 |
| | 3.40 | |
Allowance for loan losses | (13,303 | ) | | | | | (13,453 | ) | | | | | (13,366 | ) | | | | | (13,303 | ) | | |
Cash and due from banks | 21,771 |
| | | | | 20,003 |
| | | | | 20,824 |
| | | | | 21,771 |
| | |
Trading assets – equity instruments | 107,580 |
| | | | | 120,307 |
| | | | | |
Trading assets – equity and other instruments(a) | | 114,394 |
| | | | | 124,048 |
| | |
Trading assets – derivative receivables | 61,188 |
| | | | | 59,824 |
| | | | | 54,098 |
| | | | | 61,188 |
| | |
Goodwill, MSRs and other intangible assets
| 54,656 |
| | | | | 53,978 |
| | | | | 53,853 |
| | | | | 54,656 |
| | |
Other assets | 152,325 |
| | | | | 135,830 |
| | | | | |
All other noninterest-earning assets | | 165,475 |
| | | | | 152,325 |
| | |
Total assets | $ | 2,599,594 |
| | | | | $ | 2,554,009 |
| | | | | $ | 2,729,901 |
| | | | | $ | 2,599,594 |
| | |
Liabilities | | | | | | | | | | | | | | |
Interest-bearing deposits(a) | $ | 1,054,419 |
| $ | 4,021 |
| | 0.51 | % | | $ | 1,007,345 |
| $ | 1,949 |
| | 0.26 | % | | $ | 1,102,751 |
| $ | 7,010 |
| | 0.85 | % | | $ | 1,039,646 |
| $ | 4,021 |
| | 0.52 | |
Federal funds purchased and securities loaned or sold under repurchase agreements | 190,832 |
| 2,164 |
| | 1.52 |
| | 189,236 |
| 1,131 |
| | 0.80 |
| | 225,471 |
| 3,577 |
| | 2.12 |
| | 190,832 |
| 2,164 |
| | 1.52 | |
Short-term borrowings(c)(d) | 60,341 |
| 757 |
| | 1.68 |
| | 44,273 |
| 318 |
| | 0.96 |
| | 56,635 |
| 1,051 |
| | 2.48 |
| | 51,349 |
| 757 |
| | 1.97 | |
Trading liabilities – debt and other interest-bearing liabilities(d)(e) | 176,507 |
| 2,579 |
| | 1.95 |
| | 172,949 |
| 1,490 |
| | 1.15 |
| | |
Trading liabilities – debt and all other interest-bearing liabilities(a)(e)(f) | | 186,167 |
| 2,141 |
| | 1.54 |
| | 176,104 |
| 1,674 |
| | 1.27 | |
Beneficial interests issued by consolidated VIEs | 21,449 |
| 366 |
| | 2.28 |
| | 34,197 |
| 386 |
| | 1.51 |
| | 23,549 |
| 459 |
| | 2.61 |
| | 21,449 |
| 366 |
| | 2.28 | |
Long-term debt(a) | 276,865 |
| 5,812 |
| | 2.81 |
| | 294,248 |
| 5,035 |
| | 2.29 |
| | 247,782 |
| 6,796 |
| | 3.67 |
| | 244,307 |
| 5,812 |
| | 3.18 | |
Total interest-bearing liabilities(a) | 1,780,413 |
| 15,699 |
| | 1.18 |
| | 1,742,248 |
| 10,309 |
| | 0.79 |
| | 1,842,355 |
| 21,034 |
| | 1.53 |
| | 1,723,687 |
| 14,794 |
| | 1.15 | |
Noninterest-bearing deposits(a) | 398,728 |
| | | | | 403,704 |
| | | | | 405,075 |
| | | | | 413,501 |
| | |
Trading liabilities – equity instruments(e) | 33,206 |
| | | | | 20,441 |
| | | | | |
Trading liabilities – equity and other instruments(a)(f) | | 32,059 |
| | | | | 33,607 |
| | |
Trading liabilities – derivative payables | 42,919 |
| | | | | 45,900 |
| | | | | 41,952 |
| | | | | 42,919 |
| | |
All other liabilities, including the allowance for lending-related commitments(a) | 89,203 |
| | | | | 85,711 |
| | | | | 148,086 |
| | | | | 130,755 |
| | |
Total liabilities | 2,344,469 |
| | | | | 2,298,004 |
| | | | | 2,469,527 |
| | | | | 2,344,469 |
| | |
Stockholders’ equity | | | | | | | | | | | | | | |
Preferred stock | 26,130 |
| | | | | 26,068 |
| | | | | 27,457 |
| | | | | 26,130 |
| | |
Common stockholders’ equity | 228,995 |
| | | | | 229,937 |
| | | | | 232,917 |
| | | | | 228,995 |
| | |
Total stockholders’ equity | 255,125 |
| | | | | 256,005 |
| | | | | 260,374 |
| | | | | 255,125 |
| | |
Total liabilities and stockholders’ equity | $ | 2,599,594 |
| | | | | $ | 2,554,009 |
| | | | | $ | 2,729,901 |
| | | | | $ | 2,599,594 |
| | |
Interest rate spread(a) | | | 2.25 | % | | | | 2.18 | % | | | | 2.16 | % | | | | 2.25 | |
Net interest income and net yield on interest-earning assets(a) | | $ | 41,178 |
| | 2.49 |
| | | $ | 38,057 |
| | 2.34 |
| | | $ | 43,487 |
| | 2.49 |
| | | $ | 41,178 |
| | 2.50 | |
Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively | |
(a) | In the second quarter of 2019, the Firm implemented certain presentation changes that impacted interest income and interest expense, but had no effect on net interest income. These changes were made to align the accounting treatment between the balance sheet and the related interest income or expense, primarily by offsetting interest income and expense for certain prime brokerage-related held-for-investment customer receivables and payables that are currently presented as a single margin account on the balance sheet. In addition, the Firm reclassified balances related to certain instruments and structured notes from interest-earning/bearing to noninterest-earning/bearing assets and accordingly, prior period amounts were revised. For additional information, refer to Note 1. (a) Represents securities which are tax-exempt for U.S. federal income tax purposes.
(b) Includes held-for-investment margin loans, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated balance sheets.
(c) Includes commercial paper.
(d) Other interest-bearing liabilities include brokerage customer payables.
(e) The combined balance of trading liabilities – debt and equity instruments were $105.1 billion and $91.3 billion for the nine months ended September 30, 2018 and 2017, respectively.
(f) Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(g) For the nine months ended September 30, 2018 and 2017, the annualized rates for securities, based on amortized cost, were 3.23% and 3.11%, respectively; this does not give effect to changes in fair value that are reflected in AOCI.
(h) Negative interest income and yield is related to client-driven demand for certain securities combined with the impact of low interest rates; this is matched book activity and the negative interest expense on the corresponding securities loaned is recognized in interest expense and reported within trading liabilities – debt and other interest-bearing liabilities as the associated returns are recorded in principal transactions revenue and not in net interest income. These changes were applied retrospectively and, accordingly, prior period amounts were revised to conform with the current presentation.
|
| |
(b) | Represents securities which are tax-exempt for U.S. federal income tax purposes. |
| |
(c) | Includes prime 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) | Includes commercial paper. |
| |
(e) | Other interest-bearing liabilities include prime brokerage-related customer payables. |
| |
(f) | The combined balance of trading liabilities – debt and equity instruments were $106.8 billion and $105.1 billion for the nine months ended September 30, 2019 and 2018, respectively. |
| |
(g) | Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable. |
| |
(h) | The annualized rate for securities based on amortized cost was 3.20% and 3.23% for the nine months ended September 30, 2019 and 2018, respectively, and does not give effect to changes in fair value that are reflected in AOCI. |
|
| | | | |
GLOSSARY OF TERMS AND ACRONYMS |
2017 Annual Report or 20172018 Form 10-K: Annual report on Form 10-K for year ended December 31, 2017,2018, filed with the U.S. Securities and Exchange Commission.
ABS: 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.
AOCI: AOCI: Accumulated other comprehensive income/(loss)
ARM(s): Adjustable rate mortgage(s)
AWM: Asset & Wealth Management
Beneficial interests issued by consolidated VIEs:VIEs: represents the interest of third-party holders of debt, equity securities, or other obligations, issued by VIEs that JPMorgan Chase consolidates.
Benefit obligation:obligation: refers to the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for OPEB plans.
BHC: Bank holding company
CB: Commercial Banking
CBB: Consumer & Business Banking
CCAR: Comprehensive Capital Analysis and Review
CCB: Consumer & Community Banking
CCP: “Central counterparty”CDS is a clearing house that interposes itself between counterparties to contracts traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer and thereby ensuring the future performance of open contracts. A CCP becomes counterparty to trades with market participants through novation, an open offer system, or another legally binding arrangement.
CDS: : Credit default swaps
CEO: Chief Executive Officer
CET1 Capital: Common equity Tier 1 Capital
CFTC:CFTC: Commodity Futures Trading Commission
CFO: Chief Financial Officer
Chase Bank USA, N.A.:Chase Bank USA, National Association
CIB: Corporate & Investment Bank
CIO: Chief Investment Office
Client deposits and other third partythird-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.
CLO:CLTV Collateralized loan obligations
CLTV: : Combined loan-to-value
Collateral-dependent:Collateral-dependent: A loan is considered to be collateral-dependent when repayment of the loan is expected to be provided solely by the underlying collateral, rather than by cash flows from the borrower’s operations, income or other resources.
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.
Core loans: represents loans considered central to the Firm’s ongoing businesses; core loans excludeexcludes loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit.
Credit derivatives:derivatives: Financial instruments whose value is derived from the credit risk associated with the debt of a third partythird-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: Criticized loans, lending-related commitments and derivative receivables that are classified as special mention, substandard and doubtful categories for regulatory purposes and are generally consistent with a rating of CCC+/Caa1 and below, as defined by S&P and Moody’s.
CRO: Chief Risk Officer
CVA: Credit valuation adjustment
DFAST:DVA: Dodd-Frank Act Stress Test
Dodd-Frank Act: Wall Street Reform and Consumer Protection Act
DOJ: U.S. Department of Justice
DOL: U.S.Department of Labor
DVA: Debit valuation adjustment
EC: EC: European Commission
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.
ERISA: Employee Retirement Income Security Act of 1974
EPS: Earnings per share
Exchange-traded derivatives: Derivative contracts that are executed on an exchange and settled via a central clearing house.
Fannie Mae:Mae: Federal National Mortgage Association
FASB: FASB: Financial Accounting Standards Board
FCA:FCA: Financial Conduct Authority
FCC:FDIC Firmwide Control Committee
FDIA: Federal Depository Insurance Act
FDIC: : Federal Deposit Insurance Corporation
Federal Reserve: The Board of the Governors of the Federal Reserve System
Fee share: Proportion of fee revenue based on estimates of investment banking fees generated across the industry from investment banking transactions in M&A, equity and debt underwriting, and loan syndications. Source: Dealogic, a third party provider of investment banking fee competitive analysis and volume-based league tables for the above noted industry products.
FFELP: Federal Family Education Loan Program
FFIEC: Federal Financial Institutions Examination Council
FHA: FHA: Federal Housing Administration
FHLB: 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.
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: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.
FSB: Financial Stability Board
FTE: Fully taxable-equivalent
FVA: Funding valuation adjustment
FX: FX: Foreign exchange
G7: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: Securities issued by the government of one of the G7 nations.
Ginnie Mae:Mae: Government National Mortgage Association
GSE: GSIB:Fannie Mae and Freddie Mac
GSIB: Global systemically important banks
HAMP: HELOANHome affordable modification program
Headcount-related expense: Includes salary and benefits (excluding performance-based incentives), and other noncompensation costs related to employees.
HELOAN: : Home equity loan
HELOC: HELOC: Home equity line of credit
Home equity – senior lien:lien: represents loans and commitments where JPMorgan Chase holds the first security interest on the property.
Home equity – junior lien:lien: represents loans and commitments where JPMorgan Chase holds a security interest that is subordinate in rank to other liens.
HQLA: High qualityHigh-quality liquid assets
HTM: HTM: Held-to-maturity
IDI: IDI: Insured depository institutions
IHC: JPMorgan Chase Holdings LLC, an intermediate holding company
Impaired loan:loan: Impaired loans are loans measured at amortized cost, for which it is probable that the Firm will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Impaired loans include the following:
All wholesale nonaccrual loans
All TDRs (both wholesale and consumer), including ones that have returned to accrual status
Investment-grade:IPO: Initial public offering
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.
IR: Interest rate
ISDA: ISDA: International Swaps and Derivatives Association
JPMorgan Chase: JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.: JPMorgan Chase Bank, National Association
J.P. Morgan Securities: J.P. Morgan Securities LLC
LCR: Liquidity coverage ratio
LGD: Loss given default
LIBOR:LIBOR: London Interbank Offered Rate
LLC:LLC: Limited Liability Company
LOB: LOB: Line of business
Loss emergence period: represents the time period between the date at which the loss is estimated to have been incurred and the ultimate realization of that loss.
LTIP: Long-term incentive plan
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.
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.
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).
Measurement alternative: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.
MBS:Mortgage-backed securities
MD&A: Management’s discussion and analysis
Moody’s: Moody’s: Moody’s Investor Services
Mortgage product types: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
PrimePrime 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.
MSA:Metropolitan statistical areas
MSR: MSR: Mortgage servicing rights
NA: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:
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• | Interchange income:income: Fees earned by credit and debit card issuers on sales transactions. |
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• | Rewards costscosts:: The cost to the Firm for points earned by cardholders enrolled in credit card rewards programs. |
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• | Partner paymentspayments:: 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.
NM:NM: Not meaningful
NOL:Nonaccrual loans: Net operating loss
Nonaccrual loans:Loans for which interest income is not recognized on an accrual basis. Loans (other than credit card loans and certain consumer loans insured by U.S. government agencies) are placed on nonaccrual status when full payment of principal and interest is not expected, regardless of delinquency status, or when principal and interest 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.
OCC: OCC: Office of the Comptroller of the Currency
OCI: OCI: Other comprehensive income/(loss)
OEP: OPEBOne Equity Partners
OIS: Overnight index swap
OPEB: : Other postretirement employee benefit
OTC: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: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.
OTTI: OTTI: Other-than-temporary impairment
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.
PCA: PCIPrompt corrective action
PCI:: “Purchased credit-impaired” loans represents certain loans that were acquired and deemed to be credit-impaired on the acquisition date in accordance with the guidance of the FASB. The guidance allows purchasers to aggregate credit-impaired loans acquired in the same fiscal quarter into one or more pools, provided that the loans have
common risk characteristics (e.g., product type, LTV ratios, FICO scores, past due status, geographic location). A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.
PD: Probability of default
PRA: Prudential RegulatoryRegulation Authority
Pre-provision profit/(loss): represents total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.
Principal transactions revenue: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
Receivables from customers: primarily represents margin loans toprime brokerage-related held-for-investment customer receivables from brokerage customers that are collateralized through assets maintained in the clients’ brokerage accounts, as such no allowance is held against these receivables. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
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: 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: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:RWA: “Risk-weighted assets”: Basel III establishes two comprehensive approaches for calculating RWA (a Standardized approach and an Advanced approach) which include capital requirements forcredit risk, market risk, and in the case of Basel III Advanced, also operational risk.Key differences in the calculation of credit risk RWA between the Standardized and Advanced approaches are that for Basel III Advanced, credit risk RWA is based on risk-sensitive approaches which largely rely on the use of internal credit models and parameters, whereas for Basel III Standardized, credit risk RWA is generally based on supervisory risk-weightings which vary primarily by counterparty type and asset class. Market risk RWA is calculated on a generally consistent basis between Basel III Standardized and Basel III Advanced.
S&P: Standard and Poor’s 500 Index
SAR(s): Stock appreciation rights
SCCL: Single-counterparty credit limits
Scored portfolio: The scored portfolio predominantly includes residential real estate loans, credit card loans and certain auto and business banking loans where credit loss estimates are based on statistical analysis of credit losses over discrete periods of time. The statistical analysis uses portfolio modeling, credit scoring and decision-support tools.
SEC: S&PU.S.: Standard and Poors
SAR(s): Stock appreciation rights
SEC: U.S. Securities and Exchange Commission
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 Deals: Shelf offerings are SEC provisions that allow issuers to register for new securities without selling the entire issuance at once. Since these issuances are filed with the SEC but are not yet priced in the market, they are not included in the league tables until the actual securities are issued.
Single-name: Single-name: Single reference-entities
SLR: SLR: Supplementary leverage ratio
SMBS: Stripped mortgage-backed securities
SPEs: 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: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, 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, whic
hwhich 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:TDR: “Troubled“Troubled debt restructuring” is deemed to occur when the Firm modifies the original terms of a loan agreement by granting a concession to a borrower that is experiencing financial difficulty.
TLAC: Total Loss Absorbing Capacity
U.K.: United Kingdom
Unaudited:Unaudited: Financial statements and information that have not been subjected to auditing procedures sufficient to permit an independent certified public accountant to express an opinion.
U.S.:: United States of America
U.S. GAAP: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. GAAP: Accounting principles generally accepted in the United States of America.
U.S. GSE(s): “U.S.“U.S. government-sponsored enterprises”:In the U.S., GSEs 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 which is directly owned by the U.S. Department of Housing and Urban Development.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:Treasury: U.S. Department of the Treasury
VA: 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: VIEs: Variable interest entities
Warehouse loans:loans: consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets.
Washington Mutual transaction:On September 25, 2008, JPMorgan Chase acquired certain of the assets of the banking operations of Washington Mutual Bank (“Washington Mutual”) from the FDIC.
CONSUMER & COMMUNITY BANKING (“CCB”)
Debit and credit card sales volume: Dollar amount of cardmember purchases, net of returns.
Deposit margin/deposit spread: represents net interest income expressed as a percentage of average deposits.
Home Lending Production and Home Lending Servicing revenue comprises the following:
Net production revenue: includes net gains or losses on originations and sales of mortgage loans, other production-related fees and losses related to the repurchase of previously-sold loans.
Net mortgage servicing revenue: includes the following components:Includes
a) Operatingoperating revenue predominantly represents the return on Home Lending Servicing’s MSR asset and includes:
Actual gross income earned from servicing third-party
mortgage loans such as contractually specified servicing fees and ancillary income; andwhich is recognized over the period in
The changewhich the service is provided, changes in the fair value of
MSRs, the MSR asset due to the collection or realizationimpact of expected cash flows.
b) Risk management represents the components of Home Lending Servicing’s MSR asset that are subject to ongoing risk management activities together
associated with derivativesMSRs and other instruments used in thosegains 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 loans insured by U.S. government agencies.
Net production revenue: Includes fees and income
recognized as earned on mortgage loans originated with the
intent to sell; the impact of risk management activities.activities
associated with the mortgage pipeline and warehouse
loans; and changes in the fair value of any residual interests
held from mortgage securitizations. Net production revenue
also includes gains and losses on sales and lower of cost or fair value adjustments on mortgage loans (excluding certain loans insured by U.S. government agencies) held-for-sale and changes in fair value on mortgage loans originated with the intent to sell and measured at fair value 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: includes the Credit Card and Merchant Services businesses.
Credit Card: is a business that primarily issues credit cards to consumers and small businesses.
Merchant Services: is a business that primarily processes transactions for merchants.
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.
CORPORATE & INVESTMENT BANK (“CIB”)
Definition of selected CIB revenue:
Investment Banking: incorporates all revenue associated with investment banking activities, and is reported net of investment banking revenue shared with other lines of business.
Treasury Services: offers a broad range of products and services that enable clients to manage payments and receipts, as well as invest and manage funds. Products include U.S. dollar and multi-currency clearing, ACH, lockbox, disbursement and reconciliation services, check deposits, and currency-related services.
Lending: includes net interest income, fees, gains or losses on loan sale activity, gains or losses on securities received as part of a loan restructuring, and the risk management results related to the credit portfolio. Lending also includes Trade Finance, which includes loans tied directly to goods crossing borders, export/import loans, commercial letters of credit, standby letters of credit, and supply chain finance.
Fixed Income Markets: primarily includes revenue related to market-making across global fixed income markets, including foreign exchange, interest rate, credit and commodities markets.
Equity Markets: primarily includes revenue related to market-making across global equity products, including cash instruments, derivatives, convertibles and prime brokerage.
Securities Services: primarily includes custody, fund accounting and administration, and securities lending products sold principally to asset managers, insurance companies and public and private investment funds. Also includes clearance, collateral management and depositary receipts businessbusinesses which provides broker-dealer clearing and custody services, including tri-party repo transactions,provide collateral management products, and depositary bank services for American and global depositary receipt programs.
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.
COMMERCIAL BANKING (“CB”)
CB is divided into fourCommercial Banking provides comprehensive financial solutions, including lending, treasury services, investment banking and asset management products across three primary client segments: Middle Market Banking, Corporate Client Banking and Commercial Term Lending, and Real Estate Banking.Banking. Other includes amounts not aligned with a primary client segment.
Middle Market Banking: covers corporate, municipalsmall business and midsized corporations, local governments and nonprofit clients, with annual revenue generally ranging between $20 million and $500 million.clients.
Corporate Client Banking: covers clients with annual revenue generally ranging between $500 million and $2 billion and focuses on clients that have broader investment banking needs.large corporations.
Commercial Term Lending: primarily provides term financing to real estate investors/owners for multifamily properties as well as office, retail and industrial properties.
Real Estate Banking: provides full-service banking to coversinvestors, developers, and developersowners of institutional-grade real estate investmentmultifamily, office, retail, industrial and affordable housing properties.
Other: primarily includes lending and investment-related activities within the Community Development Banking business.
CB product revenue comprises the following:
Lending: includes a variety of financing alternatives, which are primarily provided on a secured basis; collateral includes receivables, inventory, equipment, real estate or other assets. Products include term loans, revolving lines of credit, bridge financing, asset-based structures, leases, and standby letters of credit.
Treasury services: includes revenue from a broad range of products and services that enable CB clients to manage payments and receipts, as well as invest and manage funds.
Investment banking: includes revenue from a range of products providing CB clients with sophisticated capital-raising alternatives, as well as balance sheet and risk management tools through advisory, equity underwriting, and loan syndications. Revenue from fixed income and equity market products used by CB clients is also included.
Other: product revenue primarily includes tax-equivalent adjustments generated from Community Development Banking activity and certain income derived from principal transactions.
ASSET & WEALTH MANAGEMENT (“AWM”)
Assets under management (“AUM”): represent assets managed by AWM on behalf of its Private Banking, Institutional and Retail clients.
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: provides comprehensive global investment services - including asset management, pension analytics, asset-liability management and active risk-budgeting strategies.
Wealth Management: offers investment advice and wealth management, including investment management, capital markets and risk management, tax and estate planning, banking, lending and specialty-wealth advisory services.
AWM’s client segments consist of the following:
Private Banking: clients include high- and ultra-high-net-worth individuals, families, money managers, business owners and small corporations worldwide.
Institutional: clients include both corporate and public institutions, endowments, foundations, nonprofit organizations and governments worldwide.
Retail: clients include financial intermediaries and individual investors.
Asset Management has two high-level measures of its overall fund performance:
Percentage of mutual fund assets under management in funds rated 4- or 5-star: Mutual fund rating services rank funds based on their risk-adjusted performance over various periods. A 5-star rating is the best rating and represents the top 10% of industry-wide ranked funds.
A 4-star rating represents the next 22.5% of industry-wide ranked funds. A 3-star rating represents the next 35% of industry-wide ranked funds. A 2-star rating represents the next 22.5% of industry-wide ranked funds. A 1-star rating is the worst rating and represents the bottom 10% of industry-wide ranked funds. The “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 given at the individual share class level. The Nomura “star rating” is based on three-year risk-adjusted performance only. Funds with fewer than three years of history are not rated and
hence excluded from this analysis. All ratings, the assigned peer categories and the asset values used to derive this analysis are sourced from these fund rating providers. The data providers re-denominate the asset values into U.S. dollars. This % 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 where Nomura provides ratings at the fund level. The “primary share class”, as defined by Morningstar, denotes the share class recommended as being the best proxy for the portfolio and in most cases will be the most retail version (based upon annual management charge, minimum investment, currency and other factors). The performance data could have been different if all funds/accounts would have been included. Past performance is not indicative of future results.
Percentage of mutual fund assets under management in funds ranked in the 1st or 2nd quartile (one, three, and five years): All quartile rankings, the assigned peer categories and the asset values used to derive this analysis are sourced from the fund ranking providers. Quartile rankings are done on the net-of-fee absolute return of each fund. The data providers re-denominate the asset values into U.S. dollars. This % of AUM is based on fund performance and associated peer rankings at the share class level for U.S. domiciled funds, at a “primary share class” level to represent the quartile ranking of the U.K., Luxembourg and Hong Kong funds and at the fund level for all other funds. The “primary share class”, as defined by Morningstar, denotes the share class recommended as being the best proxy for the portfolio and in most cases will be the most retail version (based upon annual management charge, minimum investment, currency and other factors). Where peer group rankings given for a fund are in more than one “primary share class” territory both rankings are included to reflect local market competitiveness (applies to “Offshore Territories” and “HK SFC Authorized” funds only). The performance data could have been different if all funds/accounts would have been included. Past performance is not indicative of future results.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of the quantitative and qualitative disclosures about market risk, referRefer to the Market Risk Management section of Management’s discussion and analysis and pages 121-128124–131 of JPMorgan Chase’s 2017 Annual Report.2018 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 Certification statements issued by the Chairman and Chief Executive Officer and Chief Financial Officer.
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 misstatements. In addition, in a firm as large and complex as JPMorgan Chase, lapses or deficiencies in internal controls do 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 controls in the future. For further information, referRefer to “Management’s report on internal control over financial reporting” on page 146148 of JPMorgan Chase’s 2017 Annual Report.2018 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 September 30, 2018,2019, 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.
ForRefer 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 2017 Annual Report on2018 Form 10-K, refer to the discussion of the Firm’s material legal proceedings in Note 22 of this Form 10-Q.10-K.
Item 1A. Risk Factors.
ForRefer to Part I, Item 1A: Risk Factors on pages 7–28 of JPMorgan Chase’s 2018 Form 10-K and Forward-Looking Statements on page 79 of this Form 10-Q for a discussion of certain risk factors affecting the Firm, refer to Part I, Item 1A: Risk Factors on pages 8–26 of JPMorgan Chase’s 2017 Annual Report on Form 10-K and Forward-Looking Statements on page 85 of this Form 10-Q.Firm.
Supervision and regulation
For information on Supervision and Regulation, referRefer to Recent regulatory developments on page 44 of this Form 10-Q and the Supervision and regulation section on pages 1–86 of JPMorgan Chase’s 20172018 Form 10-K.10-K for information on Supervision and Regulation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The Firm did not have any unregistered sale of equity securities during the three months ended September 30, 2018.2019.
Repurchases under the common equity repurchase program
ForRefer to Capital Risk Management on pages 45–49 of this Form 10-Q and pages 85-94 of JPMorgan Chase’s 2018 Form 10-K for information regarding repurchases under the Firm’s common equity repurchase program, refer to Capital Risk Management on pages 44-48 of this Form 10-Q and pages 82-91 of JPMorgan Chase’s 2017 10-K.program.
Shares repurchased, on a settlement-date basis, pursuant to the common equity repurchase program during the nine months ended September 30, 2018,2019, were as follows.
| | Nine months ended September 30, 2018 | Total shares of common stock repurchased | | Average price paid per share of common stock(a) | | Aggregate repurchases of common equity (in millions)(a) | | Dollar value of remaining authorized repurchase (in millions)(a) | | |
Nine months ended September 30, 2019 | | Total shares of common stock repurchased | | Average price paid per share of common stock(a) | | Aggregate repurchases of common equity (in millions)(a) | | Dollar value of remaining authorized repurchase (in millions)(a) | |
First quarter | 41,419,035 |
| | $ | 112.78 |
| | $ | 4,671 |
| | $ | 5,156 |
| (b) | 49,534,646 |
| | $ | 102.78 |
| | $ | 5,091 |
| | $ | 5,290 |
| |
Second quarter | 45,299,370 |
| | 109.67 |
| | 4,968 |
| | 188 |
| (c) | 47,434,255 |
| | 109.83 |
| | 5,210 |
| | 80 |
| (b) |
July | 15,450,734 |
| | 107.83 |
| | 1,666 |
| | 19,059 |
| | 16,285,176 |
| | 114.39 |
| | 1,863 |
| | 27,537 |
| |
August | 12,302,781 |
| | 115.67 |
| | 1,423 |
| | 17,636 |
| | 29,005,310 |
| | 108.78 |
| | 3,155 |
| | 24,382 |
| |
September | 11,528,761 |
| | 115.07 |
| | 1,327 |
| | 16,309 |
| | 16,720,914 |
| | 115.53 |
| | 1,931 |
| | 22,451 |
| (c) |
Third quarter | 39,282,276 |
| | 112.41 |
| | 4,416 |
| | 16,309 |
| | 62,011,400 |
| | 112.07 |
| | 6,949 |
| | 22,451 |
| (c) |
Year-to-date | 126,000,681 |
| | $ | 111.55 |
| | $ | 14,055 |
| | $ | 16,309 |
| | 158,980,301 |
| | $ | 108.51 |
| | $ | 17,250 |
| | $ | 22,451 |
| (c) |
| |
(a) | Excludes commissions cost. |
| |
(b) | Represents the amount remaining under the $19.4 billion repurchase program that was authorized by the Board of Directors on June 28, 2017. |
| |
(c) | The $188$80 million unused portion under the prior Board authorization was canceled when the $20.7$29.4 billion repurchase program was authorized.authorized by the Board of Directors on June 27, 2019. |
| |
(c) | Represents the amount remaining under the $29.4 billion repurchase program. |
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
|
| | |
Exhibit No. | | Description of Exhibit |
| | |
10.1 | | |
| | |
15 | | |
| | |
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 inlineInline 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). |
| |
(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 September 30, 2018,2019, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated statements of income (unaudited) for the three and nine months ended September 30, 20182019 and 2017,2018, (ii) the Consolidated statements of comprehensive income (unaudited) for the three and nine months ended September 30, 20182019 and 2017,2018, (iii) the Consolidated balance sheets (unaudited) as of September 30, 2018,2019, and December 31, 2017,2018, (iv) the Consolidated statements of changes in stockholders’ equity (unaudited) for the three and nine months ended September 30, 20182019 and 2017,2018, (v) the Consolidated statements of cash flows (unaudited) for the nine months ended September 30, 20182019 and 2017,2018, 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/ Nicole Giles |
| Nicole Giles |
| Managing Director and CorporateFirmwide Controller |
| (Principal Accounting Officer) |
|
| |
Date: | October 31, 2018November 4, 2019 |
INDEX TO EXHIBITS
|
| | |
Exhibit No. | | Description of Exhibit |
| | |
10.1 | | |
| | |
15 | | |
| | |
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 inlineInline XBRL document. |
101.SCH | | XBRL Taxonomy Extension Schema Document. |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
| | |
† | | 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. |