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JPMorgan Chase & Co. (JPM)

Filed: 1 May 19, 8:00pm
0000019617 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31 0000019617 jpm:RefreshedFicoScoresLessThan660Member jpm:ConsumerExcludingCreditCardLoanPortfolioSegmentMember us-gaap:ResidentialMortgageMember jpm:LTVGreaterthan125PercentMember 2018-12-31

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 endedCommission file
March 31, 2019number 1-5805
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
Delaware13-2624428
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer
identification no.)
  
383 Madison Avenue, New York, New York10179
(Address of principal executive offices)(Zip Code)
  
Registrant’s telephone number, including area code: (212) 270-6000

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. x Yes o 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). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filero
   
Non-accelerated filer o
Smaller reporting companyo
   
 Emerging growth companyo
   
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). o Yes x No

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockJPMThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.45% Non-Cumulative Preferred Stock, Series PJPM PR AThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.30% Non-Cumulative Preferred Stock, Series WJPM PR EThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.125% Non-Cumulative Preferred Stock, Series YJPM PR FThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.10% Non-Cumulative Preferred Stock, Series AAJPM PR GThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.15% Non-Cumulative Preferred Stock, Series BBJPM PR HThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.75% Non-Cumulative Preferred Stock, Series DDJPM PR DThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.00% Non-Cumulative Preferred Stock, Series EEJPM PR CThe New York Stock Exchange
Alerian MLP Index ETNs due May 24, 2024AMJNYSE Arca, Inc.
Guarantee of Callable Step-Up Fixed Rate Notes due April 26, 2028 of JPMorgan Chase Financial Company LLCJPM/28The New York Stock Exchange
Guarantee of Cushing 30 MLP Index ETNs due June 15, 2037 of JPMorgan Chase Financial Company LLCPPLNNYSE Arca, Inc.

 
Number of shares of common stock outstanding as of March 31, 2019: 3,243,972,971
 



FORM 10-Q
TABLE OF CONTENTS
Page
Item 1. 
  
 69
 70
 71
 72
 73
 74
 149
 150
 151
Item 2. 
 3
 4
 5
 9
 11
 14
 15
 17
 31
 32
 41
 43
 48
 57
 58
 63
 64
 67
 68
Item 3.159
Item 4.159
 
Item 1.159
Item 1A.159
Item 2.159
Item 3.160
Item 4.160
Item 5.160
Item 6.160


2


JPMorgan Chase & Co.
Consolidated financial highlights (unaudited)
As of or for the period ended, (in millions, except per share,
ratio, headcount data and where otherwise noted)

      
1Q19
4Q18
3Q18
2Q18
1Q18
 
Selected income statement data      
Total net revenue$29,123
$26,109
$27,260
$27,753
$27,907
 
Total noninterest expense16,395
15,720
15,623
15,971
16,080
 
Pre-provision profit12,728
10,389
11,637
11,782
11,827
 
Provision for credit losses1,495
1,548
948
1,210
1,165
 
Income before income tax expense11,233
8,841
10,689
10,572
10,662
 
Income tax expense2,054
1,775
2,309
2,256
1,950
 
Net income$9,179
$7,066
$8,380
$8,316
$8,712
 
Earnings per share data      
Net income:    Basic$2.65
$1.99
$2.35
$2.31
$2.38
 
 Diluted2.65
1.98
2.34
2.29
2.37
 
Average shares: Basic3,298.0
3,335.8
3,376.1
3,415.2
3,458.3
 
 Diluted3,308.2
3,347.3
3,394.3
3,434.7
3,479.5
 
Market and per common share data      
Market capitalization328,387
319,780
375,239
350,204
374,423
 
Common shares at period-end3,244.0
3,275.8
3,325.4
3,360.9
3,404.8
 
Book value per share71.78
70.35
69.52
68.85
67.59
 
Tangible book value per share (“TBVPS”)(a)
57.62
56.33
55.68
55.14
54.05
 
Cash dividends declared per share0.80
0.80
0.80
0.56
0.56
 
Selected ratios and metrics      
Return on common equity (“ROE”)(b)
16%12%14%14%15% 
Return on tangible common equity (“ROTCE”)(a)(b)
19
14
17
17
19
 
Return on assets(b)
1.39
1.06
1.28
1.28
1.37
 
Overhead ratio56
60
57
58
58
 
Loans-to-deposits ratio64
67
65
65
63
 
Liquidity coverage ratio (“LCR”) (average)111
113
115
115
115
 
Common equity Tier 1 (“CET1”) capital ratio(c)
12.1
12.0
12.0
12.0
11.8
 
Tier 1 capital ratio(c)
13.8
13.7
13.6
13.6
13.5
 
Total capital ratio(c)
15.7
15.5
15.4
15.5
15.3
 
Tier 1 leverage ratio(c)
8.1
8.1
8.2
8.2
8.2
 
Supplementary leverage ratio (“SLR”)6.4
6.4
6.5
6.5
6.5
 
Selected balance sheet data (period-end)      
Trading assets$533,402
$413,714
$419,827
$418,799
$412,282
 
Investment securities267,365
261,828
231,398
233,015
238,188
 
Loans956,245
984,554
954,318
948,414
934,424
 
Core loans905,943
931,856
899,006
889,433
870,536
 
Average core loans916,567
907,271
894,279
877,640
861,089
 
Total assets2,737,188
2,622,532
2,615,183
2,590,050
2,609,785
 
Deposits1,493,441
1,470,666
1,458,762
1,452,122
1,486,961
 
Long-term debt290,893
282,031
270,124
273,114
274,449
 
Common stockholders’ equity232,844
230,447
231,192
231,390
230,133
 
Total stockholders’ equity259,837
256,515
258,956
257,458
256,201
 
Headcount255,998
256,105
255,313
252,942
253,707
 
Credit quality metrics      
Allowance for credit losses$14,591
$14,500
$14,225
$14,367
$14,482
 
Allowance for loan losses to total retained loans1.43%1.39%1.39%1.41%1.44% 
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(d)
1.28
1.23
1.23
1.22
1.25
 
Nonperforming assets$5,616
$5,190
$5,034
$5,767
$6,364
 
Net charge-offs1,361
1,236
1,033
1,252
1,335
 
Net charge-off rate0.58%0.52%0.43%0.54%0.59% 
(a)TBVPS and ROTCE are non-GAAP financial measures. For a further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
(b)Quarterly ratios are based upon annualized amounts.
(c)Effective January 1, 2019, the capital adequacy of the Firm is now 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 and September 30, 2018, were the same on a fully phased-in and on a transitional basis. Refer to Capital Risk Management on pages 32–36 for additional information on Basel III.
(d)Excludes the impact of residential real estate purchased credit-impaired (“PCI”) loans, a non-GAAP financial measure. For a further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16, and the Allowance for credit losses on pages 55–56.

3


INTRODUCTION
The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) for the first quarter of 2019.
This Quarterly Report on Form 10-Q for the first 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, 2018 (“2018 Form 10-K”), to which reference is hereby made, and which is referred to throughout this Form 10-Q. Refer to the Glossary of terms and acronyms and line of business metrics on pages 151–158 for definitions of terms and acronyms used throughout this Form 10-Q.
This document 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. 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 68 of this Form 10-Q and Part I, Item 1A, Risk factors, on pages 7–28 of the 2018 Form 10-K.
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; JPMorgan Chase had $2.7 trillion in assets and $259.8 billion in stockholders’ equity as of March 31, 2019. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world’s most prominent corporate, institutional and government clients.
 
JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 27 states and Washington, D.C. as of March 31, 2019, 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. In January 2019, the OCC approved an application of merger which was filed by JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. and which contemplates that Chase Bank USA, N.A. will merge with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. Completion of the merger is expected to occur in the second quarter of 2019. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiary in the United Kingdom (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). 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 2018 Form 10-K.




4


EXECUTIVE OVERVIEW
This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of this 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 2018 Form 10-K should be read together and in their entirety.
Financial performance of JPMorgan Chase  
(unaudited)
As of or for the period ended,
(in millions, except per share data and ratios)
Three months ended March 31,
2019
 2018
 Change
Selected income statement data     
Total net revenue$29,123
 $27,907
 4%
Total noninterest expense16,395
 16,080
 2
Pre-provision profit12,728
 11,827
 8
Provision for credit losses1,495
 1,165
 28
Net income9,179
 8,712
 5
Diluted earnings per share$2.65
 $2.37
 12
Selected ratios and metrics     
Return on common equity16% 15%  
Return on tangible common equity19
 19
  
Book value per share$71.78
 $67.59
 6
Tangible book value per share57.62
 54.05
 7
Capital ratios(a)
     
CET112.1% 11.8%  
Tier 1 capital13.8
 13.5
  
Total capital15.7
 15.3
  
(a)Effective January 1, 2019, the capital adequacy of the Firm is now 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. Refer to Capital Risk Management on pages 32–36 for additional information on Basel III.


 
Comparisons noted in the sections below are for the first quarter of 2019 versus the first quarter of 2018, unless otherwise specified.
Firmwide overview
JPMorgan Chase reported strong results in the first quarter of 2019, with record net income and EPS of $9.2 billion, or $2.65 per share, on record net revenue of $29.1 billion. The Firm reported ROE of 16% and ROTCE of 19%.
The Firm had record net income of $9.2 billion, up 5%, driven by strong revenue growth, partially offset by increases in the provision for credit losses and noninterest expense.
Total net revenue increased 4%. Net interest income was $14.5 billion, up 9%, predominantly driven by the impact of higher rates, as well as balance sheet growth and change in mix. Noninterest revenue was $14.7 billion, up 1%. The prior year included $505 million of fair value gains related to the adoption of the recognition and measurement accounting guidance. Excluding these gains, noninterest revenue was up 4%, driven by higher auto lease income and investment banking fees, as well as the absence of net losses on investment securities and certain legacy private equity investments in the prior year, with lower Markets revenue more than offset by lower funding spreads on derivatives.
Noninterest expense was $16.4 billion, up 2%, driven by investments in the business, including technology, marketing, real estate and front office hires, as well as higher auto lease depreciation, partially offset by the absence of the prior-year FDIC surcharge and lower performance-based compensation.
The provision for credit losses was $1.5 billion, an increase of $330 million. The increase was driven by the wholesale portfolio, reflecting a net addition to the allowance for credit losses of $135 million on select Commercial and Industrial client downgrades. This compares to a net reduction in the allowance for credit losses of $170 million in the prior year driven by a single name in the Oil & Gas Portfolio.
The total allowance for credit losses was $14.6 billion at March 31, 2019, and the Firm had a loan loss coverage ratio, excluding the PCI portfolio, of 1.28%, compared with 1.25% in the prior year. The Firm’s nonperforming assets totaled $5.6 billion at March 31, 2019, a decrease from $6.4 billion in the prior year, reflecting improved credit performance in the consumer portfolio.
Firmwide average core loans increased 6%, and excluding CIB, core loans increased 5%.


5


Selected capital-related metrics
The Firm’s CET1 capital was $186 billion, and the Standardized and Advanced CET1 ratios were 12.1% and 13.0%, respectively.
The Firm’s supplementary leverage ratio (“SLR”) was 6.4% at March 31, 2019.
The Firm continued to grow tangible book value per share (“TBVPS”), ending the first quarter of 2019 at $57.62, up 7%.
ROTCE and TBVPS are non-GAAP financial measures. Core loans is a key performance measure. For a further discussion of each of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
Lines of business highlights
Selected business metrics for each of the Firm’s four lines of business are presented below for the first quarter of 2019.
CCB
ROE 30%
 
Average core loans up 4%; average deposits up 3%
Client investment assets of $312 billion, up 13%
Credit card sales volume up 10% and merchant processing volume up 13%
CIB
ROE 16%
 
Maintained #1 ranking for Global Investment Banking fees with 9.6% wallet share in the first quarter of 2019
Debt underwriting revenue of $935 million, up 21%; Advisory revenue of $644 million, up 12%
Total Markets revenue of $5.5 billion, down 17%, or 10% adjusted(a)
CB
ROE 19%
 
Record gross Investment Banking revenue of $818 million, up 44%
Strong credit performance with net charge-offs of 2 bps
AWM
ROE 25%
 
Average loan balances up 10%
���
Record assets under management (“AUM”) of $2.1 trillion, up 4%
(a)Adjusted Markets revenue excludes approximately $500 million of fair value gains related to the adoption of the recognition and measurement accounting guidance in the first quarter of 2018.
For a detailed discussion of results by line of business, refer to the Business Segment Results on pages 17–30.
 
Credit provided and capital raised
JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided credit and raised capital for wholesale and consumer clients during the first three months of 2019, consisting of:
$529 billion Total credit provided and capital raised
   
$55
billion
 Credit for consumers
   
$7
billion
 Credit for U.S. small businesses
   
$196 billion Credit for corporations
   
$256 billion Capital raised for corporate clients and non-U.S. government entities
   
$15 billion 
Credit and capital raised for U.S. government and nonprofit entities(a)
(a)Includes states, municipalities, hospitals and universities.

6


Recent events
On April 17, 2019, JPMorgan Chase announced that Jennifer A. Piepszak, formerly Chief Executive Officer (“CEO”) of Credit Card, would become Chief Financial Officer and a member of the Operating Committee reporting to the Firm’s CEO. Marianne Lake would continue as a member of the Operating Committee and would become CEO of Consumer Lending, which includes Credit Card, Home Lending and Auto, reporting to Gordon Smith, CEO of CCB. All changes became effective May 1, 2019.
On March 29, 2019, JPMorgan Chase announced that it has received approval from the China Securities Regulatory Commission to establish a new majority owned and controlled securities company in China, J.P. Morgan Securities (China) Company Limited.
On March 18, 2019, JPMorgan Chase announced a $350 million, five-year global initiative to prepare for the future of work and meet the growing demand for skilled workers. Building on the Firm’s original, five year $250 million commitment in 2013, this New Skills at Work investment will provide substantial support to community college and other non-traditional career pathway programs.
On March 13, 2019, Chase announced that it plans to expand its retail branches and open up to 90 branches this year in new markets.
On February 11, 2019, JPMorgan Chase announced Advancing Black Pathways to build on the Firm’s existing efforts helping black Americans achieve economic success. As part of this, the Firm is expanding its Entrepreneurs of Color Fund model to Greater Washington, D.C., providing capital and business training to underserved minority entrepreneurs in the region.
2019 outlook
There are no updates to the information provided in the 2019 outlook section of the 2018 Form 10-K.

7


Business Developments
Expected departure of 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 October 31, 2019.
The Firm continues to execute the relevant elements of its Firmwide Brexit Implementation program with the objective of delivering the Firm’s capabilities to its EU clients on “day one” of any departure by the U.K. from the EU, whether or not an agreement has been reached to allow an orderly withdrawal.
The principal operational risks associated with Brexit continue to be the 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 most 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 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 continuity of services to the Firm’s EU clients, including after any departure by the U.K. from the EU.
Client readiness
A significant proportion of the Firm’s EU client agreements 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. However, the Firm’s final staffing plan will depend upon 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.

8


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 months ended March 31, 2019 and 2018, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. For a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations, refer to pages 64–66 of this Form 10-Q and pages 141-143 of JPMorgan Chase’s 2018 Form 10-K.
Revenue     
 Three months ended March 31,
(in millions)2019
 2018
 Change
Investment banking fees$1,840
 $1,736
 6 %
Principal transactions4,076
 3,952
 3
Lending- and deposit-related fees1,482
 1,477
 
Asset management, administration and commissions4,114
 4,309
 (5)
Investment securities gains/(losses)13
 (245) NM
Mortgage fees and related income396
 465
 (15)
Card income1,274
 1,275
 
Other income(a)
1,475
 1,626
 (9)
Noninterest revenue14,670
 14,595
 1
Net interest income14,453
 13,312
 9
Total net revenue$29,123
 $27,907
 4 %
(a)Included operating lease income of $1.3 billion and $1.0 billion for the three months ended March 31, 2019 and 2018,
Investment banking fees increased, with overall share gains, reflecting:
higher debt underwriting fees driven by large acquisition financing deals
higher advisory fees compared to a strong prior year, driven by a higher number of large completed transactions
partially offset by
lower equity underwriting fees driven by declines in industry-wide fee levels.
For additional information, refer to CIB segment results on pages 21–25 and Note 5.
Principal transactions revenue increased reflecting in CIB:
a gain from lower funding spreads on derivatives in Credit Adjustments & Other, predominantly offset by
lower Fixed Income Markets revenue primarily driven by lower client activity in Currencies & Emerging Markets, and
lower Equity Markets revenue driven by lower client activity in derivatives compared to a strong prior year.
the increase in CIB was offset by
lower revenue related to hedges on certain investments in AWM, which was more than offset by higher investment valuation gains in other income, and
 
losses on cash deployment transactions in Treasury and Chief Investment Office (“CIO”), which were more than offset by the net interest income earned on those transactions.
The increase also reflects the absence of net losses on certain legacy private equity investments in the prior year in Corporate.
For additional information, refer to CIB, AWM and Corporate segment results on pages 21–25, pages 28–29 and page 30, and Note 5.
Asset management, administration and commissions revenue decreased reflecting:
lower asset management fees in AWM driven by lower average market levels
lower brokerage commissions in CIB and AWM on lower activity.
For additional information, refer to AWM and CIB segment results on pages 28–29 and pages 21–25, respectively, and Note 5.
For information on lending- and deposit-related fees, refer to the segment results for CCB on pages 28–29, CIB on pages 18–20 and CB on pages 21–25 and Note 5.
Investment securities gains/(losses) increased due to the absence of net losses related to the repositioning of the investment securities portfolio in the prior year. For additional information, refer to Corporate segment results on page 30 and Note 9.
Mortgage fees and related income decreased driven by:
lower net mortgage servicing revenue reflecting a lower level of third-party loans serviced and lower MSR risk management results
largely offset by
higher net mortgage production revenue reflecting higher mortgage production margins, as well as the impact of a loan sale.
For further information, refer to CCB segment results on pages 18–20, Note 5 and 14 .
For information on card income, refer to Note 5.

9


Other income reflects:
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 in principal transactions revenue
which were more than offset by
the absence of the $505 million of fair value gains related to the adoption of the recognition and measurement accounting guidance in the first quarter of 2018.
For further information, refer to Note 5.
Net interest income increased driven by the impact of higher rates, as well as balance sheet growth and change in mix, partially offset by lower CIB Markets net interest income. The Firm’s average interest-earning assets were $2.3 trillion, up $110 billion, and the net interest yield on these assets, on a fully taxable-equivalent (“FTE”) basis, was 2.56%, an increase of 8 basis points. The net interest yield excluding CIB Markets was 3.43%, an increase of 30 basis points. Net interest yield excluding CIB markets is a non-GAAP financial measure. For a further discussion of this measure, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
Provision for credit losses    
 Three months ended March 31,
(in millions)

2019
 2018
 Change
Consumer, excluding credit card$114
 $146
 (22)%
Credit card1,202
 1,170
 3
Total consumer1,316
 1,316
 
Wholesale179
 (151) NM
Total provision for credit losses$1,495
 $1,165
 28 %
The provision for credit losses increased driven by wholesale, reflecting a net addition to the allowance for credit losses of $135 million on select Commercial and Industrial ("C&I") client downgrades. The prior period was a benefit reflecting a net reduction of $170 million in the allowance for credit losses driven by a single name in the Oil & Gas portfolio.
The total consumer provision was flat reflecting lower net charge-offs in the residential real estate and auto portfolios, offset by higher net charge-offs in the credit card portfolio, driven by loan growth.
For additional information on the credit portfolio and the allowance for credit losses, refer to the segment discussions of CCB on pages 18–20, CIB on pages 21–25, CB on pages 26–27, the Allowance for Credit Losses on pages 55–56 and Note 12.
 
Noninterest expense     
 Three months ended March 31,
(in millions)

2019
 2018
 Change
Compensation expense$8,937
 $8,862
 1 %
Noncompensation expense:     
Occupancy1,068
 888
 20
Technology, communications and equipment2,364
 2,054
 15
Professional and outside services2,039
 2,121
 (4)
Marketing879
 800
 10
Other expense(a)(b)
1,108
 1,355
 (18)
Total noncompensation expense7,458
 7,218
 3
Total noninterest expense$16,395
 $16,080
 2 %
(a)Included Firmwide legal expense/(benefit) of $(81) million and $70 million for the three months ended March 31, 2019 and 2018, respectively.
(b)Included FDIC-related expense of $143 million and $383 million for the three months ended March 31, 2019 and 2018, respectively.
Compensation expense increased driven by investments in the businesses, including front office hires, as well as technology staff, largely offset by lower performance-related compensation in CIB.
Noncompensation expense increased as a result of:
higher investments in the businesses, including real estate, technology, and marketing
higher depreciation expense from growth in auto operating lease volume in CCB
a contribution to the Firm’s Foundation
largely offset by
lower FDIC-related expense as a result of the elimination of the surcharge at the end of the third quarter of 2018, and
a net legal benefit compared with an expense in the prior year.
Income tax expense 
 Three months ended March 31,
(in millions)

2019
 2018
 Change
Income before income tax expense$11,233
 $10,662
 5%
Income tax expense2,054
 1,950
 5
Effective tax rate18.3% 18.3%  
The effective tax rate was in-line with the prior year and lower than the U.S. Federal statutory rate largely due to tax benefits related to the vesting of employee stock-based awards.

10


CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Consolidated balance sheets analysis
The following is a discussion of the significant changes between March 31, 2019, and December 31, 2018.
Selected Consolidated balance sheets data
(in millions)Mar 31,
2019

 Dec 31,
2018

Change
Assets    
Cash and due from banks$21,946
 $22,324
(2)%
Deposits with banks280,658
 256,469
9
Federal funds sold and securities purchased under resale agreements299,140
 321,588
(7)
Securities borrowed123,186
 111,995
10
Trading assets533,402
 413,714
29
Investment securities267,365
 261,828
2
Loans956,245
 984,554
(3)
Allowance for loan losses(13,533) (13,445)1
Loans, net of allowance for loan losses942,712
 971,109
(3)
Accrued interest and accounts receivable72,240
 73,200
(1)
Premises and equipment24,160
 14,934
62
Goodwill, MSRs and other intangible assets54,168
 54,349

Other assets118,211
 121,022
(2)
Total assets$2,737,188
 $2,622,532
4 %
Cash and due from banks and deposits with banks increased primarily as a result of a shift in the deployment of cash in Treasury and CIO from securities purchased under resale agreements to deposits with banks. Deposits with banks reflect the Firm’s placements of its excess cash with various central banks, including the Federal Reserve Banks.
Federal funds sold and securities purchased under resale agreements decreased primarily as a result of a shift in the deployment of cash in Treasury and CIO from securities purchased under resale agreements to deposits with banks, the impact of a decline in securities used to collateralize deposits in CB, and client-driven market-making activities in CIB. For additional information on the Firm’s Liquidity Risk Management, refer to pages 37–41.
Securities borrowed increased driven by higher demand for securities to cover short positions related to client-driven market-making activities in CIB.
Trading assets increased predominantly related to client-driven market-making activities in CIB, reflecting the impact of improved market conditions and when compared with lower levels at year-end. This resulted in higher levels of debt instruments in Fixed Income Markets, and equity instruments in Equity Markets, including prime brokerage. In addition, but to a lesser extent, trading assets increased in Treasury and CIO associated with the deployment of excess cash into short-term instruments. For additional information, refer to Notes 2 and 4.
Investment securities increased primarily reflecting net purchases of U.S. government agency mortgage-backed securities (“MBS”) in Treasury and CIO. For additional
 
information on Investment securities, refer to Corporate segment results on page 30, Investment Portfolio Risk Management on page 57, and Notes 2 and 9.
Loans decreased reflecting:
lower consumer loans due to a decline in the residential real estate portfolio, predominantly driven by a loan sale, and a seasonal decline in credit card balances and
lower loans across the wholesale businesses, primarily driven by a loan syndication in CIB, and seasonality and paydowns in AWM.
The allowance for loan losses was relatively flat, with the increase in the wholesale allowance reflecting a net addition to the allowance of $132 million on select C&I client downgrades, partially offset by a decline in the consumer allowance as a result of write-offs of PCI loans.
For a more detailed discussion of loans and the allowance for loan losses, refer to Credit and Investment Risk Management on pages 42–57, and Notes 2, 3, 11 and 12.
Accrued interest and accounts receivable was relatively flat and reflected lower client receivables related to client-driven activities in CIB, partially offset by higher receivables in CCB related to the timing of payment activities in Card Services, due to the end of the quarter falling on a weekend.
Premises and equipment increased due to the adoption of the new lease accounting guidance effective January 1, 2019. For additional information, refer to Note 16.
For information on Goodwill and MSRs, refer to Note 14.

11


Selected Consolidated balance sheets data (continued) 
(in millions)Mar 31,
2019

 Dec 31,
2018

Change
Liabilities    
Deposits$1,493,441
 $1,470,666
2%
Federal funds purchased and securities loaned or sold under repurchase agreements222,677
 182,320
22
Short-term borrowings71,305
 69,276
3
Trading liabilities156,907
 144,773
8
Accounts payable and other liabilities216,173
 196,710
10
Beneficial interests issued by consolidated variable interest entities (“VIEs”)25,955
 20,241
28
Long-term debt290,893
 282,031
3
Total liabilities2,477,351
 2,366,017
5
Stockholders’ equity259,837
 256,515
1
Total liabilities and stockholders’ equity$2,737,188
 $2,622,532
4%
Deposits increased driven by the impact of seasonality in CCB, short-term inflows and growth in time deposits in AWM, and the net issuance of structured notes in CIB. The increase was partially offset by a decline from seasonally higher year-end balances in CB, and lower deposits in Treasury Services in CIB. For more information, refer to the Liquidity Risk Management discussion on pages 37–41; and Notes 2 and 15.
Federal funds purchased and securities loaned or sold under repurchase agreements increased primarily due to client-driven market-making activities and higher secured financing of trading assets-debt and equity instruments in CIB.
Trading liabilities increased as a result of client-driven market-making activities in CIB, which resulted in higher levels of short positions in debt instruments in Fixed Income Markets, partially offset by a decline in equity instruments in prime brokerage.
For additional information, refer to Derivative contracts on pages 53–54, and Notes 2 and 4.
 
Accounts payable and other liabilities increased reflecting:
higher client payables related to client-driven market-making activities in CIB,
the impact of the adoption of the new lease accounting guidance, and
higher payables in CCB related to the timing of payment activities in Card Services, due to the end of the quarter falling on a weekend.
For additional information about Leases, refer to Note 16.
Beneficial interests issued by consolidated VIEs increased due to lower levels of CIB conduit-issued commercial paper held by the Firm, in line with the Firm’s short-term funding plans. For further information on Firm-sponsored VIEs and loan securitization trusts, refer to Off-Balance Sheet Arrangements on page 14 and Notes 13 and 22.
Long-term debt increased primarily driven by the net issuance of structured notes in CIB and senior debt in Treasury and CIO. For additional information on the Firm’s long-term debt activities, refer to Liquidity Risk Management on pages 37–41.
For information on changes in stockholders’ equity, refer to page 72, and on the Firm’s capital actions, refer to Capital actions on pages 34–35.


12


Consolidated cash flows analysis
The following is a discussion of cash flow activities during the three months ended March 31, 2019 and 2018.
(in millions) Three months ended March 31,
 2019
 2018
Net cash provided by/(used in)    
Operating activities $(80,880) $(35,109)
Investing activities 36,301
 (45,021)
Financing activities 69,435
 60,589
Effect of exchange rate changes on cash (1,045) 3,049
Net increase/(decrease) in cash and due from banks and deposits with banks $23,811
 $(16,492)
Operating activities
In 2019, cash used primarily reflected an increase in trading assets-debt and equity instruments and higher securities borrowed, partially offset by increased trading liabilities and accounts payable and other liabilities, and net proceeds from loans held-for-sale.
In 2018, cash used primarily reflected increases in trading assets-debt and equity instruments, and securities borrowed.
 
Investing activities
In 2019, cash provided reflected a decrease in securities purchased under resale agreements, and net proceeds from sales of loans held-for-investment.
In 2018, cash used reflected an increase in securities purchased under resale agreements, partially offset by lower investment securities.
Financing activities
In 2019, cash provided reflected higher securities loaned or sold under repurchase agreements and higher deposits.
In 2018, cash provided reflected higher deposits, and securities loaned or sold under repurchase agreements, partially offset by a decrease in long-term borrowings.
For both periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock.
* * *
For a further discussion of the activities affecting the Firm’s cash flows, refer to Consolidated Balance Sheets Analysis on pages 11–13, Capital Risk Management on pages 32–36, and Liquidity Risk Management on pages 37–41 of this Form 10-Q, and pages 95–100 of JPMorgan Chase’s 2018 Form 10-K.


13


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”).
Special-purpose entities
The Firm has 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 appropriate, against all SPE-related transactions and related exposures, such as derivative contracts 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 arrangementLocation of disclosurePage references
Special-purpose entities: variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEsRefer to Note 13123-128
Off-balance sheet lending-related financial instruments, guarantees, and other commitmentsRefer to Note 22140-143



14


EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE MEASURES
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 69-73.
In addition to analyzing the Firm’s results on a reported basis, the Firm also reviews and uses certain non-GAAP financial measures at the Firmwide and segment level. These non-GAAP measures include:
Firmwide “managed” basis results, including the overhead ratio, which include certain reclassifications to present total net revenue from investments that receive tax credits and tax-exempt securities on a basis comparable to taxable investments and securities (“FTE” basis)
 
Net interest income and net 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 a key performance measure utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio.
For a further discussion of management’s use of non-GAAP financial measures and key performance measures, 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.
The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
 Three months ended March 31,
 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$1,475
 $585
  $2,060
 $1,626
 $455
  $2,081
Total noninterest revenue14,670
 585
  15,255
 14,595
 455
  15,050
Net interest income14,453
 143
  14,596
 13,312
 158
  13,470
Total net revenue29,123
 728
  29,851
 27,907
 613
  28,520
Pre-provision profit12,728
 728
  13,456
 11,827
 613
  12,440
Income before income tax expense11,233
 728
  11,961
 10,662
 613
  11,275
Income tax expense$2,054
 $728
  $2,782
 $1,950
 $613
  $2,563
Overhead ratio56% NM
  55% 58% NM
  56%
(a)Predominantly recognized in CIB, CB and Corporate.
The following table provides information on net interest income and net yield excluding CIB’s Markets businesses.

(in millions, except rates)
Three months ended March 31,
2019
2018
 Change
Net interest income – managed basis(a)(b)
$14,596
$13,470
 8 %
Less: CIB Markets net interest income(c)
624
1,030
 (39)
Net interest income excluding CIB Markets(a)
$13,972
$12,440
 12
     
Average interest-earning assets$2,313,103
$2,203,413
 5
Less: Average CIB Markets interest-earning assets(c)
663,389
591,547
 12
Average interest-earning assets excluding CIB Markets$1,649,714
$1,611,866
 2 %
Net interest yield on average interest-earning assets – managed basis2.56%2.48%  
Net interest yield on average CIB Markets interest-earning assets(c)
0.38
0.71
  
Net interest yield on average interest-earning assets excluding CIB Markets3.43%3.13%  
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)For a reconciliation of net interest income on a reported and managed basis, refer to the table above relating to the reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
(c)For further information on CIB’s Markets businesses, refer to page 24.

15


The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
 Period-end Average 
(in millions, except per share and ratio data)Mar 31,
2019

Dec 31,
2018

 Three months ended March 31, 
 2019
2018
 
Common stockholders’ equity$232,844
$230,447
 $230,051
$227,615
 
Less: Goodwill47,474
47,471
 47,475
47,504
 
Less: Other intangible assets737
748
 744
845
 
Add: Certain Deferred tax liabilities(a)
2,293
2,280
 2,287
2,210
 
Tangible common equity$186,926
$184,508
 $184,119
$181,476
 
       
Return on tangible common equityNA
NA
 19%19% 
Tangible book value per share$57.62
$56.33
 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.


16


BUSINESS SEGMENT RESULTS
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 the Firm’s Operating Committee. Segment results are presented on a managed basis. For a definition of managed basis, refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures and Key Performance Measures on pages 15–16.
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. For further information about line of business capital, refer to Line of business equity on page 34. 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 assumptions and methodologies used in capital allocation are assessed and as a result, the capital allocated to lines of business may change. For additional information on business segment capital allocation, refer to Line of business equity on page 91 of JPMorgan Chase’s 2018 Form 10-K.
For a further discussion of those methodologies, refer to Business Segment Results – Description of business segment reporting methodology on pages 60–61 of JPMorgan Chase’s 2018 Form 10-K.
Segment results – managed basis
The following tables summarize the Firm’s results by segment for the periods indicated.
Three months ended March 31,Consumer & Community Banking Corporate & Investment Bank Commercial Banking
(in millions, except ratios)2019
2018
Change
 2019
2018
Change
 2019
2018
Change
Total net revenue$13,751
$12,597
9 % $9,848
$10,483
(6)% $2,338
$2,166
8
Total noninterest expense7,211
6,909
4
 5,453
5,659
(4) 873
844
3
Pre-provision profit/(loss)6,540
5,688
15
 4,395
4,824
(9) 1,465
1,322
11
Provision for credit losses1,314
1,317

 87
(158)NM
 90
(5)NM
Net income/(loss)3,963
3,326
19
 3,251
3,974
(18) 1,053
1,025
3
Return on equity (“ROE”)30%25%  16%22%  19%20% 
Three months ended March 31,Asset & Wealth Management Corporate Total
(in millions, except ratios)2019
2018
Change
 2019
2018
Change 2019
2018
Change
Total net revenue$3,489
$3,506

 $425
$(232)NM $29,851
$28,520
5
Total noninterest expense2,647
2,581
3
 211
87
143 16,395
16,080
2
Pre-provision profit/(loss)842
925
(9) 214
(319)NM 13,456
12,440
8
Provision for credit losses2
15
(87) 2
(4)NM 1,495
1,165
28
Net income/(loss)661
770
(14) 251
(383)NM 9,179
8,712
5
Return on equity (“ROE”)25%34%  NM
NM
  16%15% 
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the three months ended March 31, 2019 versus the corresponding period in the prior year, unless otherwise specified.


17



CONSUMER & COMMUNITY BANKING
For a discussion of the business profile of CCB, refer to pages 62–65 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 156.
Selected income statement data    
 Three months ended March 31,
(in millions, except ratios)2019
 2018
 Change
Revenue     
Lending- and deposit-related fees$873
 $857
 2 %
Asset management, administration and commissions618
 575
 7
Mortgage fees and related income396
 465
 (15)
Card income1,168
 1,170
 
All other income1,278
 1,072
 19
Noninterest revenue4,333
 4,139
 5
Net interest income9,418
 8,458
 11
Total net revenue13,751
 12,597
 9
      
Provision for credit losses1,314
 1,317
 
      
Noninterest expense     
Compensation expense2,708
 2,660
 2
Noncompensation expense(a)
4,503
 4,249
 6
Total noninterest expense7,211
 6,909
 4
Income before income tax expense5,226
 4,371
 20
Income tax expense1,263
 1,045
 21
Net income$3,963
 $3,326
 19
      
Revenue by line of business     
Consumer & Business Banking$6,568
 $5,722
 15
Home Lending1,346
 1,509
 (11)
Card, Merchant Services & Auto5,837
 5,366
 9
      
Mortgage fees and related income details:     
Net production revenue200
 95
 111
Net mortgage servicing revenue(b)
196
 370
 (47)
Mortgage fees and related income$396
 $465
 (15)%
      
Financial ratios     
Return on equity30% 25%  
Overhead ratio52
 55
  
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)Included operating lease depreciation expense of $969 million and $777 million for the three months ended March 31, 2019 and 2018, respectively.
(b)Included MSR risk management results of $(9) million and $17 million for the three months ended March 31, 2019 and 2018, respectively.

 
Quarterly results
Net income was $4.0 billion, an increase of 19%.
Net revenue was $13.8 billion, an increase of 9%.
Net interest income was $9.4 billion, up 11%, driven by:
higher deposit margins and balance growth in CBB, as well as higher loan balances and margin expansion in Card,
partially offset by
higher rates driving loan spread compression in Home Lending.
Noninterest revenue was $4.3 billion, up 5%, driven by:
higher auto lease volume and
higher net mortgage production revenue reflecting higher mortgage production margins, as well as the impact of a loan sale,
partially offset by
lower net mortgage servicing revenue reflecting a lower level of third-party loans serviced and lower MSR risk management 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 $7.2 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 the absence of the prior-year FDIC surcharge.
The provision for credit losses was $1.3 billion, flat compared with the prior year, reflecting:
lower net charge-offs in the residential real estate and auto portfolios, offset by higher net charge-offs in the credit card portfolio, driven by loan growth.


18



Selected metrics     
 As of or for the three months
ended March 31,
(in millions, except headcount)2019
 2018
 Change
Selected balance sheet data (period-end)     
Total assets$552,486
 $540,659
 2 %
Loans:     
Consumer & Business Banking26,492
 25,856
 2
Home equity34,417
 40,777
 (16)
Residential mortgage196,182
 199,548
 (2)
Home Lending230,599
 240,325
 (4)
Card150,527
 140,414
 7
Auto62,786
 66,042
 (5)
Total loans470,404
 472,637
 
Core loans420,417
 409,296
 3
Deposits702,587
 685,170
 3
Equity52,000
 51,000
 2
      
Selected balance sheet data (average)     
Total assets$553,832
 $538,938
 3
Loans:     
Consumer & Business Banking26,488
 25,845
 2
Home equity35,224
 41,786
 (16)
Residential mortgage203,725
 198,653
 3
Home Lending238,949
 240,439
 (1)
Card151,134
 142,927
 6
Auto62,763
 65,863
 (5)
Total loans479,334
 475,074
 1
Core loans428,215
 410,147
 4
Deposits681,013
 659,599
 3
Equity52,000
 51,000
 2
      
Headcount(a)
128,419
 133,408
 (4)%
(a)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 March 31,
(in millions, except ratio data)2019

2018
 Change
Credit data and quality statistics     
Nonaccrual loans(a)(b)
$3,265

$4,104

(20)%
      
Net charge-offs/(recoveries)(c)
     
Consumer & Business Banking59
 53
 11
Home equity
 16
 NM
Residential mortgage(5) 2
 NM
Home Lending(5) 18
 NM
Card1,202
 1,170
 3
Auto58
 76
 (24)
Total net charge-offs/(recoveries)$1,314
 $1,317
 
      
Net charge-off/(recovery) rate(c)
     
Consumer & Business Banking0.90 % 0.83%  
Home equity(d)

 0.21
  
Residential mortgage(d)
(0.01) 
  
Home Lending(d)
(0.01) 0.03
  
Card3.23
 3.32
  
Auto0.37
 0.47
  
Total net charge-off/(recovery) rate(d)
1.17
 1.20
  
      
30+ day delinquency rate     
Home Lending(e)(f)
0.77 % 0.98%  
Card1.85
 1.82
  
Auto0.63
 0.71
  
      
90+ day delinquency rate — Card0.97
 0.95
  
      
Allowance for loan losses     
Consumer & Business Banking$796
 $796
 
Home Lending, excluding PCI loans1,003
 1,003
 
Home Lending — PCI loans(c)
1,738
 2,205
 (21)
Card5,183
 4,884
 6
Auto465
 464
 
Total allowance for loan losses(c)
$9,185
 $9,352
 (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 March 31, 2019 and 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.2 billion and $4.0 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 March 31, 2019 and 2018, excluded $50 million and $20 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, refer to Summary of changes in the allowance for credit losses on page 56.
(d)Excludes the impact of PCI loans. For the three months ended March 31, 2019 and 2018, the net charge-off/(recovery) rates including the impact of PCI loans were as follows: (1) home equity of –% and 0.16%, respectively; (2) residential mortgage of (0.01)% and –%, respectively; (3) Home Lending of (0.01)% and 0.03%, respectively; and (4) total CCB of 1.11% and 1.12%, respectively.
(e)At March 31, 2019 and 2018, excluded mortgage loans insured by U.S. government agencies of $3.2 billion and $5.7 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 8.90% and 9.49% at March 31, 2019 and 2018, respectively.

19



Selected metrics    
 As of or for the three months
ended March 31,
(in billions, except ratios and where otherwise noted)2019
 2018
 Change
Business Metrics     
Number of branches5,028
 5,106
 (2)%
Active digital customers
(in thousands)(a)
50,651
 47,911
 6
Active mobile customers
(in thousands)(b)
34,371
 30,924
 11
Debit and credit card sales volume$255.1

$232.4

10
      
Consumer & Business Banking     
Average deposits$668.5
 $646.4
 3
Deposit margin2.62% 2.20%  
Business banking origination volume$1.5
 $1.7
 (11)
Client investment assets312.3
 276.2
 13
      
Home Lending     
Mortgage origination volume by channel     
Retail$7.9
 $8.3
 (5)
Correspondent7.1
 9.9
 (28)
Total mortgage origination volume(c)
$15.0
 $18.2
 (18)
      
Total loans serviced (period-end)$791.5
 $804.9
 (2)
Third-party mortgage loans serviced (period-end)529.6
 539.0
 (2)
MSR carrying value (period-end)6.0
 6.2
 (3)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end)1.13% 1.15%  
      
MSR revenue multiple(d)
3.32x 3.19x  
      
Card, excluding Commercial Card     
Credit card sales volume$172.5
 $157.1
 10
      
Card Services     
Net revenue rate11.63% 11.61%  
      
Merchant Services     
Merchant processing volume$356.5
 $316.3
 13
      
Auto     
Loan and lease origination volume$7.9
 $8.4
 (6)
Average auto operating lease assets20.8
 17.6
 18 %
(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 $16.4 billion and $20.0 billion for the three months ended March 31, 2019 and 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).


20


CORPORATE & INVESTMENT BANK
For a discussion of the business profile of CIB, refer to pages 66–70 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 156.
Selected income statement data  
 Three months ended March 31,
(in millions, except ratios)2019 2018 Change
Revenue     
Investment banking fees$1,844
 $1,696
 9 %
Principal transactions4,163
 4,029
 3
Lending- and deposit-related fees361
 381
 (5)
Asset management, administration and commissions1,101
 1,131
 (3)
All other income194
 680
 (71)
Noninterest revenue7,663
 7,917
 (3)
Net interest income2,185
 2,566
 (15)
Total net revenue(a)
9,848
 10,483
 (6)
      
Provision for credit losses87
 (158) NM
      
Noninterest expense     
Compensation expense2,949
 3,036
 (3)
Noncompensation expense2,504
 2,623
 (5)
Total noninterest expense5,453
 5,659
 (4)
Income before income tax expense4,308
 4,982
 (14)
Income tax expense1,057
 1,008
 5
Net income$3,251
 $3,974
 (18)%
Financial ratios     
Return on equity16% 22%  
Overhead ratio55
 54
  
Compensation expense as percentage of total net revenue30
 29
  
(a)Includes 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 $539 million and $405 million for the three months ended March 31, 2019 and 2018, respectively.



 
Selected income statement data  
 Three months ended March 31,
(in millions)2019 2018 Change
Revenue by business     
Investment Banking$1,745
 $1,587
 10 %
Treasury Services1,147
 1,116
 3
Lending340
 302
 13
Total Banking3,232
 3,005
 8
Fixed Income Markets3,725
 4,553
 (18)
Equity Markets1,741
 2,017
 (14)
Securities Services1,014
 1,059
 (4)
Credit Adjustments & Other(a)
136
 (151) NM
Total Markets & Investor Services6,616
 7,478
 (12)
Total net revenue$9,848
 $10,483
 (6)%
(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.
Quarterly results
Net income was $3.3 billion, down 18%.
Net revenue was $9.8 billion, down 6%.
Banking revenue was $3.2 billion, up 8%.
Investment Banking revenue was $1.7 billion, up 10%, predominantly driven by higher debt underwriting and advisory fees, partially offset by lower equity underwriting fees. The Firm maintained its #1 ranking for Global Investment Banking fees with overall share gains, according to Dealogic.
Debt underwriting fees were $935 million, up 21%, driven by large acquisition financing deals.
Advisory fees were $644 million, up 12% compared to a strong prior year, driven by a higher number of large completed transactions.
Equity underwriting fees were $265 million, down 23%, driven by declines in industry-wide fee levels.
Treasury Services revenue was $1.1 billion, up 3%, driven by growth in operating deposits as well as higher fees on increased payments volume partially offset by deposit margin compression.
Lending revenue was $340 million, up 13%, driven by higher net interest income reflecting growth in loan balances.
Markets & Investor Services revenue was $6.6 billion, down 12%. Markets revenue of $5.5 billion was down 17%, on lower Fixed Income and Equity Markets revenue. Prior year results included approximately $500 million of fair value gains related to the adoption of the recognition and measurement accounting guidance. Excluding these gains, total Markets revenue was down 10%, Fixed Income

21


Markets revenue was down 8%, and Equity Markets revenue was down 13%.
Fixed Income Markets revenue was $3.7 billion reflecting lower client activity in Currencies & Emerging Markets and Rates compared to the prior year, which benefited from strong performance. This decline was partially offset by improved performance in Credit Trading and Commodities from higher client flows.
Equity Markets revenue was $1.7 billion, compared to a strong prior year, reflecting lower client activity, predominantly in derivatives.
Securities Services revenue was $1.0 billion, down 4%, predominantly driven by fee and deposit margin compression, lower market levels, and the impact of a business exit, largely offset by increased client activity.
Credit Adjustments & Other was a gain of $136 million, predominantly driven by the impact of lower funding spreads on derivatives.
The provision for credit losses was $87 million, largely driven by a net addition to the allowance for credit losses on select C&I client downgrades. The prior year was a benefit of $158 million, driven by a reduction in the allowance for credit losses in the Oil & Gas portfolio related to a single name.
Noninterest expense was $5.5 billion, down 4%, driven by lower performance-related compensation expense and the absence of the prior year FDIC surcharge, partially offset by higher investments in technology.
 
Selected metrics    
 As of or for the three months
ended March 31,
(in millions, except headcount)2019 2018 Change
Selected balance sheet data (period-end)     
Assets$1,006,111
 $909,845
 11 %
Loans:     
Loans retained(a)
127,086
 112,626
 13
Loans held-for-sale and loans at fair value7,783
 6,122
 27
Total loans134,869
 118,748
 14
Core loans134,692
 118,434
 14
Equity80,000
 70,000
 14
Selected balance sheet data (average)     
Assets$959,842
 $910,146
 5
Trading assets-debt and equity instruments381,312
 354,869
 7
Trading assets-derivative receivables50,609
 60,161
 (16)
Loans:     
Loans retained(a)
$126,990
 $109,355
 16
Loans held-for-sale and loans at fair value8,615
 5,480
 57
Total loans$135,605
 $114,835
 18
Core loans135,420
 114,514
 18
Equity80,000
 70,000
 14
Headcount(b)
54,697
 51,291
 7 %
(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.

22


Selected metrics     
 As of or for the three months
ended March 31,
(in millions, except ratios)2019 2018 Change
Credit data and quality statistics     
Net charge-offs/(recoveries)$30
 $20
 50 %
Nonperforming assets:     
Nonaccrual loans:     
Nonaccrual loans retained(a)
$812
 $668
 22 %
Nonaccrual loans held-for-sale and loans at fair value
313
 29
 NM
Total nonaccrual loans1,125
 697
 61
Derivative receivables44
 132
 (67)
Assets acquired in loan satisfactions58
 91
 (36)
Total nonperforming assets$1,227
 $920
 33
Allowance for credit losses:     
Allowance for loan losses$1,252
 $1,128
 11
Allowance for lending-related commitments758
 800
 (5)
Total allowance for credit losses$2,010
 $1,928
 4 %
Net charge-off/(recovery) rate(b)
0.10% 0.07%  
Allowance for loan losses to period-end loans retained0.99
 1.00
  
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits(c)
1.34
 1.46
  
Allowance for loan losses to nonaccrual loans retained(a)
154
 169
  
Nonaccrual loans to total period-end loans0.83% 0.59%  
(a)Allowance for loan losses of $252 million and $298 million were held against these nonaccrual loans at March 31, 2019 and 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    
 Three months ended March 31,
(in millions)2019 2018 Change
Advisory$644
 $575
 12 %
Equity underwriting265
 346
 (23)
Debt underwriting(a)
935
 775
 21
Total investment banking fees$1,844
 $1,696
 9 %
(a)Includes loan syndications.
 
League table results – wallet share    
 Three months ended March 31, 2019 Full-year 2018
 RankShare RankShare
Based on fees(a)
       
Long-term debt(b)
       
Global#1
 7.4 #1
 7.2
U.S.1
 11.0 1
 11.2
Equity and equity-related(c)
       
Global3
 8.6 1
 9.0
U.S.1
 12.4 1
 12.3
M&A(d)
       
Global2
 10.5 2
 8.7
U.S.2
 10.9 2
 9.0
Loan syndications       
Global1
 13.0 1
 9.5
U.S.1
 15.6 1
 12.0
Global investment banking fees(e)
#1
 9.6 #1
 8.6
(a)Source: Dealogic as of April 1, 2019. Reflects the ranking of revenue wallet and market share.
(b)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 excludes 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.


23


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. For a description of the composition of these income statement line items, refer to Notes 5 and 6. For further information, refer to Markets revenue on page 69 of JPMorgan Chase’s 2018 Form 10-K.
For the periods presented below, the predominant source of principal transactions revenue was the amount recognized upon executing new transactions.
 Three months ended March 31, Three months ended March 31,
 2019 2018

(in millions)
Fixed Income MarketsEquity MarketsTotal Markets Fixed Income MarketsEquity MarketsTotal Markets
Principal transactions$2,482
$1,557
$4,039
 $2,732
$1,612
$4,344
Lending- and deposit-related fees49
2
51
 47
1
48
Asset management, administration and commissions103
434
537
 113
458
571
All other income219
(4)215
 560
17
577
Noninterest revenue2,853
1,989
4,842
 3,452
2,088
5,540
Net interest income(a)
872
(248)624
 1,101
(71)1,030
Total net revenue$3,725
$1,741
$5,466
 $4,553
$2,017
$6,570
(a)Declines in Markets net interest income were driven by higher funding costs.

24


Selected metrics     
 As of or for the three months
ended March 31,
(in millions, except where otherwise noted)2019 2018 Change
Assets under custody (“AUC”) by asset class (period-end)
(in billions):
     
Fixed Income$12,772
 $13,145
 (3)%
Equity9,028
 8,241
 10
Other(a)
2,916
 2,640
 10
Total AUC$24,716

$24,026
 3
Client deposits and other third-party liabilities (average)(b)
$444,055

$423,301
 5 %
(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b)Client deposits and other third-party liabilities pertain to the Treasury Services and Securities Services businesses.
 
International metrics     
 As of or for the three months
ended March 31,
(in millions, except where
 otherwise noted)
2019 
2018(c)
 Change
Total net revenue(a)
     
Europe/Middle East/Africa$3,153
 $3,693
 (15)%
Asia/Pacific1,419
 1,422
 
Latin America/Caribbean403
 436
 (8)
Total international net revenue4,975
 5,551
 (10)
North America4,873
 4,932
 (1)
Total net revenue$9,848
 $10,483
 (6)
      
Loans retained (period-end)(a)
    
Europe/Middle East/Africa$26,359
 $26,483
 
Asia/Pacific18,006
 16,179
 11
Latin America/Caribbean7,397
 6,321
 17
Total international loans51,762
 48,983
 6
North America75,324
 63,643
 18
Total loans retained(a)
$127,086
 $112,626
 13
      
Client deposits and other third-party liabilities (average)(b)
     
Europe/Middle East/Africa$164,138
 $159,483
 3
Asia/Pacific85,082
 83,599
 2
Latin America/Caribbean27,484
 25,480
 8
Total international$276,704
 $268,562
 3
North America167,351
 154,739
 8
Total client deposits and other third-party liabilities$444,055
 $423,301
 5
      
AUC (period-end)(b)
(in billions)
     
North America$15,352
 $14,493
 6
All other regions9,364
 9,533
 (2)
Total AUC$24,716
 $24,026
 3 %
(a)Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking location, or domicile of the client, as applicable.
(b)Client deposits and other third-party liabilities pertaining to the Treasury Services and Securities Services businesses, and AUC, are based on the domicile of the client.
(c)The prior period amounts have been revised to conform with the current period presentation.

25


COMMERCIAL BANKING
For a discussion of the business profile of CB, refer to pages 71-73 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 157.
Selected income statement data
 Three months ended March 31,
(in millions)2019
 2018
 Change
Revenue     
Lending- and deposit-related fees$227
 $226
 %
All other income(a)
431
 323
 33
Noninterest revenue658
 549
 20
Net interest income1,680
 1,617
 4
Total net revenue(b)
2,338
 2,166
 8
      
Provision for credit losses90
 (5) NM
      
Noninterest expense     
Compensation expense449
 421
 7
Noncompensation expense424
 423
 
Total noninterest expense873
 844
 3
      
Income before income tax expense1,375
 1,327
 4
Income tax expense322
 302
 7
Net income$1,053
 $1,025
 3%
(a)Includes revenue from investment banking products, commercial card 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 $94 million and $103 million for the three months ended March 31, 2019 and 2018, respectively.
Quarterly results
Net income was $1.1 billion, an increase of 3%.
Net revenue was $2.3 billion, up 8%. Net interest income was $1.7 billion, up 4%, driven by higher deposit margins, partially offset by lower deposit balances. Noninterest revenue was $658 million, an increase of 20%, driven by higher investment banking revenue due to a number of large investment banking transactions.
Noninterest expense was $873 million, up 3%, driven by continued investments in technology and banker coverage.
The provision for credit losses was $90 million, predominantly driven by a net addition to the allowance for credit losses on select C&I client downgrades.

 
Commercial 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 Real Estate Banking.(a) Other includes amounts not aligned with a primary client segment.
Middle Market Banking covers midsized corporations, local governments and nonprofit clients.
Corporate Client Banking covers large corporations.
Commercial Real Estate Banking covers investors, developers, and owners of multifamily, office, retail, industrial and affordable housing properties.
Selected income statement data (continued)
 Three months ended March 31,
(in millions, except ratios)2019
 2018
 Change
Revenue by product     
Lending$1,012
 $999
 1 %
Treasury services1,029
 972
 6
Investment banking(b)
289
 184
 57
Other8
 11
 (27)
Total Commercial Banking net revenue$2,338
 $2,166
 8
      
Investment banking revenue, gross(c)
$818
 $569
 44
      
Revenue by client segments     
Middle Market Banking$951
 $895
 6
Corporate Client Banking816
 687
 19
Commercial Real Estate Banking(a)
547
 560
 (2)
Other(a)
24
 24
 
Total Commercial Banking net revenue$2,338
 $2,166
 8 %
      
Financial ratios     
Return on equity19% 20%  
Overhead ratio37
 39
  
(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.
(b)Includes CB’s share of revenue from investment banking products sold to CB clients through the CIB.
(c)For discussion of revenue sharing, refer to page 60 of the 2018 Form 10-K.





26


Selected metrics  
 As of or for the three months
ended March 31,
(in millions, except headcount)2019
2018
Change
Selected balance sheet data (period-end)   
Total assets$216,111
$220,880
(2)%
Loans:   
Loans retained204,927
202,812
1
Loans held-for-sale and loans at fair value410
2,473
(83)
Total loans$205,337
$205,285

Core loans205,199
205,087

Equity22,000
20,000
10
    
Period-end loans by client segment   
Middle Market Banking$56,846
$57,835
(2)
Corporate Client Banking46,897
47,562
(1)
Commercial Real Estate Banking(a)
100,622
98,395
2
Other(a)
972
1,493
(35)
Total Commercial Banking loans$205,337
$205,285

    
Selected balance sheet data (average)   
Total assets$218,297
$217,159
1
Loans:   
Loans retained204,462
201,966
1
Loans held-for-sale and loans at fair value1,634
406
302
Total loans$206,096
$202,372
2
Core loans205,949
202,161
2
    
Average loans by client segment   
Middle Market Banking$56,723
$56,754

Corporate Client Banking48,141
45,760
5
Commercial Real Estate Banking(a)
100,264
98,398
2
Other(a)
968
1,460
(34)
Total Commercial Banking loans$206,096
$202,372
2
    
Client deposits and other third-party liabilities$167,260
$175,618
(5)
Equity22,000
20,000
10
    
Headcount11,033
10,372
6 %
(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)  
 As of or for the three months
ended March 31,
(in millions, except ratios)2019
2018
Change
Credit data and quality statistics   
Net charge-offs/(recoveries)$11
$
NM
Nonperforming assets   
Nonaccrual loans:   
Nonaccrual loans retained(a)
$544
$666
(18)%
Nonaccrual loans held-for-sale and loans at fair value


Total nonaccrual loans$544
$666
(18)
Assets acquired in loan satisfactions
1
NM
Total nonperforming assets$544
$667
(18)
Allowance for credit losses:   
Allowance for loan losses$2,766
$2,591
7
Allowance for lending-related commitments250
263
(5)
Total allowance for credit losses$3,016
$2,854
6 %
Net charge-off/(recovery) rate(b)
0.02%
 
Allowance for loan losses to period-end loans retained
1.35
1.28
 
Allowance for loan losses to nonaccrual loans retained(a)
508
389
 
Nonaccrual loans to period-end total loans0.26
0.32
 
(a)Allowance for loan losses of $132 million and $116 million was held against nonaccrual loans retained at March 31, 2019 and 2018, respectively.
(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.


27


ASSET & WEALTH MANAGEMENT
For a discussion of the business profile of AWM, refer to pages 74–76 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on pages 157–158.
Selected income statement data
(in millions, except ratios)Three months ended March 31,
2019
2018
Change
Revenue   
Asset management, administration and commissions$2,416
$2,528
(4)%
All other income177
102
74
Noninterest revenue2,593
2,630
(1)
Net interest income896
876
2
Total net revenue3,489
3,506

    
Provision for credit losses2
15
(87)
    
Noninterest expense   
Compensation expense1,462
1,392
5
Noncompensation expense1,185
1,189

Total noninterest expense2,647
2,581
3
    
Income before income tax expense840
910
(8)
Income tax expense179
140
28
Net income$661
$770
(14)
    
Revenue by line of business   
Asset Management$1,761
$1,787
(1)
Wealth Management1,728
1,719
1
Total net revenue$3,489
$3,506

    
Financial ratios   
Return on equity25%34% 
Overhead ratio76
74
 
Pre-tax margin ratio:   
Asset Management23
26
 
Wealth Management25
26
 
Asset & Wealth Management24
26
 
Quarterly results
Net income was $661 million, a decrease of 14%.
Net revenue of $3.5 billion was flat. Net interest income was $896 million, up 2%, driven by loan growth. Noninterest revenue was $2.6 billion, down 1%, driven by lower management fees on lower average market levels and lower brokerage activity, predominantly offset by higher net investment valuation gains.
Noninterest expense was $2.6 billion, up 3%, predominantly driven by continued investments in the business, and other headcount related costs, partially offset by lower external fees.
 
Selected metrics   
 As of or for the three months
ended March 31,
(in millions, except ranking data, headcount and ratios)2019
2018
Change
% of JPM mutual fund assets rated as 4- or 5-star(a)
60%58% 
% of JPM mutual fund assets ranked in 1st or 2nd quartile:(b)
   
1 year72
61
 
3 years78
67
 
5 years86
82
 
    
Selected balance sheet data (period-end)   
Total assets$165,865
$158,439
5 %
Loans143,750
136,030
6
Core loans143,750
136,030
6
Deposits143,348
147,238
(3)
Equity10,500
9,000
17
    
Selected balance sheet data (average)   
Total assets$167,358
$154,345
8
Loans145,406
132,634
10
Core loans145,406
132,634
10
Deposits138,235
144,199
(4)
Equity10,500
9,000
17
    
Headcount24,347
23,268
5
    
Number of Wealth Management client advisors2,877
2,640
9
    
Credit data and quality statistics   
Net charge-offs$4
$1
300
Nonaccrual loans285
359
(21)
Allowance for credit losses:   
Allowance for loan losses$325
$301
8
Allowance for lending-related commitments18
13
38
Total allowance for credit losses$343
$314
9 %
Net charge-off rate0.01%
 
Allowance for loan losses to period-end loans0.23
0.22
 
Allowance for loan losses to nonaccrual loans114
84
 
Nonaccrual loans to period-end loans0.20
0.26
 
(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.

28


Client assets
Client assets of $2.9 trillion and assets under management of $2.1 trillion were both up 4%, predominantly driven by net inflows into liquidity and long-term products.
Client assets   
 March 31,
(in billions)2019
2018
Change
Assets by asset class   
Liquidity$476
$432
10 %
Fixed income495
467
6
Equity427
432
(1)
Multi-asset and alternatives698
685
2
Total assets under management2,096
2,016
4
Custody/brokerage/administration/deposits801
772
4
Total client assets$2,897
$2,788
4
    
Memo:   
Alternatives client assets (a)
$172
$169
2
    
Assets by client segment   
Private Banking$597
$537
11
Institutional943
937
1
Retail556
542
3
Total assets under management$2,096
$2,016
4
    
Private Banking$1,371
$1,285
7
Institutional965
958
1
Retail561
545
3
Total client assets$2,897
$2,788
4 %
(a)Represents assets under management, as well as client balances in brokerage accounts
Client assets (continued)  


Three months ended
March 31,
(in billions)2019
2018
Assets under management rollforward  
Beginning balance$1,987
$2,034
Net asset flows:  
Liquidity(5)(21)
Fixed income19
(5)
Equity(6)5
Multi-asset and alternatives(3)16
Market/performance/other impacts104
(13)
Ending balance, March 31$2,096
$2,016
   
Client assets rollforward  
Beginning balance$2,733
$2,789
Net asset flows9
14
Market/performance/other impacts155
(15)
Ending balance, March 31$2,897
$2,788
 
International metrics   
 As of or for the three months
ended March 31,
(in millions)2019
2018
Change
Total net revenue (a)
   
Europe/Middle East/Africa$662
$726
(9)%
Asia/Pacific358
393
(9)
Latin America/Caribbean221
227
(3)
Total international net revenue1,241
1,346
(8)
North America2,248
2,160
4
Total net revenue(a)
$3,489
$3,506

(a)Regional revenue is based on the domicile of the client.
 As of or for the three months
ended March 31,
(in billions)2019
2018
Change
Assets under management   
Europe/Middle East/Africa$367
$378
(3)%
Asia/Pacific177
171
4
Latin America/Caribbean66
59
12
Total international assets under management610
608

North America1,486
1,408
6
Total assets under management$2,096
$2,016
4
    
Client assets   
Europe/Middle East/Africa$432
$435
(1)
Asia/Pacific243
237
3
Latin America/Caribbean165
156
6
Total international client assets840
828
1
North America2,057
1,960
5
Total client assets$2,897
$2,788
4 %

29


CORPORATE
For a discussion of Corporate, refer to pages 77–78 of JPMorgan Chase’s 2018 Form 10-K.
Selected income statement and balance sheet data
 As of or for the three months
ended March 31,
(in millions, except headcount)2019
2018
 Change
Revenue    
Principal transactions$(62)$(144) 57 %
Investment securities gains/(losses)13
(245) NM
All other income57
204
 (72)
Noninterest revenue8
(185) NM
Net interest income417
(47) NM
Total net revenue(a)
425
(232) NM
     
Provision for credit losses2
(4) NM
     
Noninterest expense(b)
211
87
 143
Income/(loss) before income tax expense/(benefit)212
(315) NM
Income tax expense/(benefit)(39)68
 NM
Net income/(loss)$251
$(383) NM
Total net revenue    
Treasury and CIO$511
$(38) NM
Other Corporate(86)(194) 56
Total net revenue$425
$(232) NM
Net income/(loss)    
Treasury and CIO$334
$(187) NM
Other Corporate(83)(196) 58
Total net income/(loss)$251
$(383) NM
Total assets (period-end)$796,615
$779,962
 2
Loans (period-end)1,885
1,724
 9
Core loans(c)
1,885
1,689
 12
Headcount37,502
35,368
 6 %
(a)Included tax-equivalent adjustments, driven by tax-exempt income from municipal bond investments, of $86 million and $98 million for the three months ended March 31, 2019 and 2018, respectively.
(b)Included a net legal benefit of $(90) million and $(42) million for the three months ended March 31, 2019 and 2018, respectively.
(c)Average core loans were $1.6 billion for both the three months ended March 31, 2019 and 2018.

Quarterly results
Net income was $251 million, compared with a net loss of $383 million in the prior year.
Net revenue was $425 million, compared with a net loss of $232 million in the prior year. This increase was driven by higher net interest income on higher rates, and the net benefit of cash deployment transactions, as well as the absence of net losses on investment securities and certain legacy private equity investments in the prior year.
Noninterest expense of $211 million included a contribution to the JPMorgan Chase Foundation of $100 million.
The current period income tax benefit is predominantly driven by the settlement of certain tax audits.
 
Treasury and CIO overview
At March 31, 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.
For further information on liquidity and funding risk, refer to Liquidity Risk Management on pages 37–41. For information on interest rate, foreign exchange and other risks, refer to Market Risk Management on pages 58–62.
Selected income statement and balance sheet data
 As of or for the three months
ended March 31,
(in millions)2019
 2018
 Change
Investment securities gains/(losses)$13
 $(245) NM
Available-for-sale (“AFS”) investment securities (average)$226,605
 $204,323
 11 %
Held-to-maturity (“HTM”) investment securities (average)31,082
 34,020
 (9)
Investment securities portfolio (average)$257,687
 $238,343
 8
AFS investment securities (period-end)$234,832
 $207,703
 13
HTM investment securities (period-end)30,849
 29,042
 6
Investment securities portfolio (period-end)$265,681
 $236,745
 12 %


30


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.
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 risk management governance and oversight framework involves understanding drivers of risks, types of risks, and impacts of risks. jpmcgovernance.jpg
For a further discussion of Enterprise-wide risk management governance and oversight, refer to pages 79-83 of JPMorgan Chase’s 2018 Form 10-K.
 
Governance and Oversight Functions
The following sections of this Form 10-Q and the 2018 Form 10-K discuss the risk governance and oversight functions in place to manage the risks inherent in the Firm’s business activities.
Risk governance and oversight functionsForm 10-Q page referenceForm 10-K page reference
Strategic risk 84
Capital risk32–3685–94
Liquidity risk37–4195–100
Reputation risk 101
Consumer credit risk43–47106-111
Wholesale credit risk48–54112-119
Investment portfolio risk57123
Market risk58–62124-131
Country risk63132–133
Operational risk 134-136
Compliance risk 137
Conduct risk 138
Legal risk 139
Estimations and Model risk 140

31


CAPITAL RISK MANAGEMENT
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.
For a further discussion of the Firm’s Capital Risk Management, including capital planning and stress testing, refer to pages 85-94 of JPMorgan Chase’s
2018 Form 10-K, Note 21 of this Form 10-Q, and the Firm’s Pillar 3 Regulatory Capital Disclosures reports,
which are available on the Firm’s website (https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).
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. Two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III Standardized”), and an advanced approach (“Basel III Advanced”). Effective January 1, 2019, the capital adequacy of the Firm is now
 
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. The Firm’s Basel III Standardized risk-based ratios are currently more binding than the Basel III Advanced risk-based ratios, and the Firm expects that this will remain the case for the foreseeable future.
Basel III also includes a requirement for Advanced Approach banking organizations, including the Firm, to calculate the supplementary leverage ratio (“SLR”). For additional information on SLR, refer to page 91 of the Firm’s 2018 Form 10-K.
In addition to meeting the capital ratio requirements of Basel III, the Firm and its IDI subsidiaries also must maintain minimum capital and leverage ratios in order to be “well-capitalized” under the regulations issued by the Federal Reserve and the Prompt Corrective Action requirements of the FDIC Improvement Act respectively.
The following tables present the Firm’s risk-based and leverage-based capital metrics under both the Basel III Standardized and Advanced Approaches. The Firm’s Basel III ratios exceeded regulatory minimums as of March 31, 2019 and December 31, 2018. For a further discussion of these capital metrics, refer to Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K.
 March 31, 2019 December 31, 2018
(in millions)Standardized Advanced Minimum capital ratios 
Standardized(b)
 
Advanced(b)
 Minimum capital ratios
Risk-based capital metrics:           
CET1 capital$186,116
 $186,116
   $183,474
 $183,474
  
Tier 1 capital212,644
 212,644
   209,093
 209,093
  
Total capital241,483
 231,454
   237,511
 227,435
  
Risk-weighted assets1,542,903
 1,432,526
   1,528,916
 1,421,205
  
CET1 capital ratio12.1% 13.0% 10.5% 12.0% 12.9% 9.0%
Tier 1 capital ratio13.8
 14.8
 12.0
 13.7
 14.7
 10.5
Total capital ratio15.7
 16.2
 14.0
 15.5
 16.0
 12.5
Leverage-based capital metrics:           
Adjusted average assets(a)
$2,637,741
 $2,637,741
   $2,589,887
 $2,589,887
  
Tier 1 leverage ratio8.1% 8.1% 4.0% 8.1% 8.1% 4.0%
Total leverage exposureNA
 $3,309,501
   NA
 $3,269,988
  
SLRNA
 6.4% 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)The Firm’s capital ratios as of December 31, 2018 were equivalent whether calculated on a transitional or fully phased-in basis.

32


Capital components
The following table presents reconciliations of total stockholders’ equity to Basel III CET1 capital, Tier 1 capital and Total capital as of March 31, 2019 and December 31, 2018.
(in millions)March 31, 2019
December 31, 2018
Total stockholders’ equity$259,837
$256,515
Less: Preferred stock26,993
26,068
Common stockholders’ equity232,844
230,447
Less:  
Goodwill47,474
47,471
Other intangible assets737
748
Other CET1 capital adjustments810
1,034
Add:  
Deferred tax liabilities(a)
2,293
2,280
Standardized/Advanced CET1 capital186,116
183,474
Preferred stock26,993
26,068
Less: Other Tier 1 adjustments465
449
Standardized/Advanced Tier 1 capital$212,644
$209,093
Long-term debt and other instruments qualifying as Tier 2 capital$14,105
$13,772
Qualifying allowance for credit losses14,591
14,500
Other143
146
Standardized Tier 2 capital$28,839
$28,418
Standardized Total capital$241,483
$237,511
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital(10,029)(10,076)
Advanced Tier 2 capital$18,810
$18,342
Advanced Total capital$231,454
$227,435
(a)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 CET1 capital.
 
Capital rollforward
The following table presents the changes in Basel III CET1 capital, Tier 1 capital and Tier 2 capital for the three months ended March 31, 2019.
Three months ended March 31,
(in millions)
2019
Standardized/Advanced CET1 capital at December 31, 2018$183,474
Net income applicable to common equity8,805
Dividends declared on common stock(2,632)
Net purchase of treasury stock(3,795)
Changes in additional paid-in capital(992)
Changes related to AOCI811
Adjustment related to DVA(a)
719
Changes related to other CET1 capital adjustments(274)
Change in Standardized/Advanced CET1 capital2,642
Standardized/Advanced CET1 capital at March 31, 2019$186,116
  
Standardized/Advanced Tier 1 capital at December 31, 2018$209,093
Change in CET1 capital2,642
Net issuance of noncumulative perpetual preferred stock925
Other(16)
Change in Standardized/Advanced Tier 1 capital3,551
Standardized/Advanced Tier 1 capital at March 31, 2019$212,644
  
Standardized Tier 2 capital at December 31, 2018$28,418
Change in long-term debt and other instruments qualifying as Tier 2333
Change in qualifying allowance for credit losses91
Other(3)
Change in Standardized Tier 2 capital421
Standardized Tier 2 capital at March 31, 2019$28,839
Standardized Total capital at March 31, 2019$241,483
  
Advanced Tier 2 capital at December 31, 2018$18,342
Change in long-term debt and other instruments qualifying as Tier 2333
Change in qualifying allowance for credit losses138
Other(3)
Change in Advanced Tier 2 capital468
Advanced Tier 2 capital at March 31, 2019$18,810
Advanced Total capital at March 31, 2019$231,454
(a)Includes DVA related to structured notes recorded in AOCI.


33


RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced for the three months ended March 31, 2019. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.
 Standardized Advanced 
Three months ended March 31, 2019
(in millions)
Credit risk RWAMarket risk RWATotal RWA Credit risk RWAMarket 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)
(3,666)(2,153)(5,819) (1,753)(2,153)
(3,906)
Portfolio runoff(b)
(1,400)
(1,400) (1,200)

(1,200)
Movement in portfolio levels(c)
14,777
6,429
21,206
 9,782
6,408
237
16,427
Changes in RWA9,711
4,276
13,987
 6,829
4,255
237
11,321
March 31, 2019$1,432,764
$110,139
$1,542,903
 $933,476
$110,231
$388,819
$1,432,526
(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
For additional information, refer to Capital Risk Management on page 88 of JPMorgan Chase’s 2018 Form 10-K.
The following table presents the components of the Firm’s SLR as of March 31, 2019 and December 31, 2018.
(in millions, except ratio)March 31,
2019

December 31,
2018

Tier 1 capital$212,644
$209,093
Total average assets2,684,714
2,636,505
Less: Adjustments for deductions from Tier 1 capital46,973
46,618
Total adjusted average assets(a)
2,637,741
2,589,887
Off-balance sheet exposures(b)
671,760
680,101
Total leverage exposure$3,309,501
$3,269,988
SLR6.4%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.
For JPMorgan Chase Bank, N.A.’s and Chase Bank USA, N.A.’s SLR ratios, refer to Note 21.
Line of business equity
Each business segment is allocated capital by taking into consideration capital levels of similarly rated peers and applicable regulatory capital requirements. Effective 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. For additional information, refer to page 91 of JPMorgan Chase’s 2018 Form 10-K.
 
The following table represents the capital allocated to each business segment:

(in billions)
March 31,
2019

 December 31,
2018

Consumer & Community Banking$52.0
 $51.0
Corporate & Investment Bank80.0
 70.0
Commercial Banking22.0
 20.0
Asset & Wealth Management10.5
 9.0
Corporate68.3
 80.4
Total common stockholders’ equity$232.8
 $230.4
Planning and stress testing
Comprehensive Capital Analysis and Review (“CCAR”)
The Federal Reserve requires large bank holding companies, including the Firm, to submit on an annual basis a capital plan that has been reviewed and approved by the Board of Directors. Through CCAR, the Federal Reserve evaluates each bank holding company’s (“BHC”) capital adequacy and internal capital adequacy assessment processes (“ICAAP”), as well as its plans to make capital distributions, such as dividend payments or stock repurchases.
On April 5, 2019, the Firm submitted its 2019 Capital Plan to the Federal Reserve under the Federal Reserve’s 2019 CCAR process. The Firm anticipates that the Federal Reserve will respond to its capital plan submissions by June 28, 2019.
Capital actions
Preferred stock
Preferred stock dividends declared were $374 million for the three months ended March 31, 2019.
On January 24, 2019, the Firm issued $1.85 billion of 6.00% non-cumulative preferred stock, Series EE. On March 1, 2019, the Firm redeemed $925 million of its 6.70% non-cumulative preferred stock, Series T. For additional information on the Firm’s preferred stock, refer to Note 17 of this Form 10-Q and Note 20 of JPMorgan Chase’s 2018 Form 10-K.

34


Common stock dividends
The Firm’s quarterly common stock dividend is currently $0.80 per share. The Firm’s dividends are subject to the Board of Directors’ approval on a quarterly basis.
Common equity
Effective June 28, 2018, the Firm’s Board of Directors authorized the repurchase of up to $20.7 billion of common equity between July 1, 2018 and June 30, 2019, as part of the 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 months ended March 31, 2019 and 2018. There were no repurchases of warrants during the three months ended March 31, 2018 and any warrants that were not exercised on or before October 29, 2018 have expired.

Three months ended
March 31,
(in millions)2019
2018
Total shares of common stock repurchased49.5
41.4
Aggregate common stock repurchases$5,091
$4,671
For additional information regarding repurchases of the Firm’s equity securities, refer to Part II, Item 2: Unregistered Sales of Equity Securities and Use of Proceeds and Part II, Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities on page 159 of this Form 10-Q and page 30 of JPMorgan Chase’s 2018 Form 10-K, respectively.

 
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 March 31, 2019, the Firm was compliant with the requirements of the TLAC rule. For additional information, refer to page 93 of JPMorgan Chase’s 2018 Form 10-K.
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.
March 31, 2019 
(in billions, except ratio)Eligible External TLACEligible LTD
Total eligible TLAC & LTD$382.7
$160.5
% of RWA24.8%10.4%
Minimum requirement23.0
9.5
Surplus/(shortfall)$27.8
$13.9
   
% of total leverage exposure11.6%4.8%
Minimum requirement9.5
4.5
Surplus/(shortfall)$68.3
$11.5
For information on the financial consequences to holders of
the Firm’s debt and equity securities in a resolution
scenario, refer to Part I, Item 1A: Risk Factors on pages
7-28 of the Firm’s 2018 Form 10-K.


35


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”).
For a discussion on J.P. Morgan Securities’ capital requirements, refer to Capital risk management on pages 85-94 of the Firm’s 2018 Form 10-K.
The following table presents J.P. Morgan Securities’ net capital information:
March 31, 2019 
(in millions)Actual
Minimum
Net Capital$18,067
$3,160

 

J.P. Morgan Securities plc
J.P. Morgan Securities plc is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. and has authority to engage in banking, investment banking and broker-dealer activities. J.P. Morgan Securities plc is jointly regulated by the U.K. Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”).
For a further discussion on J.P. Morgan Securities plc, refer to Capital risk management on pages 85-94 of the Firm’s 2018 Form 10-K.
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 March 31, 2019, J.P. Morgan Securities plc was compliant with the requirements of the MREL rule. For additional information on MREL, refer to Supervision and Regulation on pages 1-6 of the Firm’s 2018 Form 10-K.
The following table presents J.P. Morgan Securities plc’s capital information:
March 31, 2019  
(in millions, except ratios)Estimated
Minimum ratios
Total capital$55,732
 
CET1 ratio18.1%4.5
Total capital ratio23.1%8.0


36


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, refer to pages 95–100 of JPMorgan Chase’s 2018 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).
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-quality liquid securities as defined in the LCR rule.
Under the LCR rule, the amounts of HQLA held by JPMorgan Chase Bank N.A. and Chase Bank USA, N.A that are in excess of each entity’s standalone 100% minimum LCR requirement, and that are 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%.
The following table summarizes the Firm’s average LCR for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018 based on the Firm’s interpretation of the finalized LCR framework.
 Three months ended
Average amount
(in millions)
March 31, 2019December 31, 2018March 31, 2018
HQLA   
Eligible cash(a)
$216,787
$297,069
$358,257
Eligible securities(b)(c)
303,249
232,201
180,765
Total HQLA(d)
$520,036
$529,270
$539,022
Net cash outflows$467,329
$467,704
$467,629
LCR111%113%115%
Net excess HQLA(d)
$52,707
$61,566
$71,393
(a)Represents cash on deposit at central banks, primarily Federal Reserve Banks.
(b)Predominantly U.S. Treasuries, U.S. 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 decreased during the three months ended March 31, 2019, compared with the three-month period ended December 31, 2018 and the prior year period due to a decrease in the average amount of HQLA. The decrease in HQLA was driven by a decrease in the amount of HQLA in JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. that was determined to be transferable to non-bank affiliates based on a change in the Firm’s interpretation of amounts available for transfer during the three months ended December 31, 2018. This change in interpretation had no impact on the HQLA in JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A., which was relatively unchanged over both periods.
The Firm’s average LCR may fluctuate 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.
Other liquidity sources
As of March 31, 2019, in addition to assets reported in the Firm’s HQLA under the LCR rule, the Firm had approximately $281 billion of unencumbered marketable securities, such as equity securities and fixed income debt securities, available to raise liquidity, if required. 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 March 31, 2019, the Firm also had approximately $265 billion of available borrowing capacity at FHLBs, discount windows at Federal Reserve Banks 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 Federal Reserve Bank discount windows. Although available, the Firm does not view the borrowing capacity at the Federal Reserve Bank discount windows and the various other central banks as a primary source of liquidity.

37


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 stable deposits as well as secured and unsecured funding in the capital markets. The Firm’s loan portfolio is 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 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 March 31, 2019, and December 31, 2018, and the average deposit balances for the three months ended March 31, 2019 and 2018, respectively.
 March 31, 2019
December 31, 2018
 Three months ended March 31,
Deposits Average
(in millions) 2019
2018
Consumer & Community Banking$702,587
$678,854
 $681,013
$659,599
Corporate & Investment Bank485,869
482,084
 492,354
465,822
Commercial Banking161,096
170,859
 167,177
175,523
Asset & Wealth Management143,348
138,546
 138,235
144,199
Corporate541
323
 963
865
Total Firm$1,493,441
$1,470,666
 $1,479,742
$1,446,008
Deposits provide a stable source of funding and reduce the Firm’s reliance on the wholesale funding markets. A significant portion of the Firm’s deposits are consumer 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 March 31, 2019 and December 31, 2018.
(in billions except ratios)March 31, 2019
 December 31, 2018
Deposits$1,493.4
 $1,470.7
Deposits as a % of total liabilities60% 62%
Loans$956.2
 $984.6
Loans-to-deposits ratio64% 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 March 31, 2019 in CIB and CCB, partially offset by declines in CB and AWM.
The increase in CIB reflected growth in operating deposits in Treasury Services. The increase in CCB was driven by growth in new accounts.
The decrease in CB was primarily driven by migration of non-operating deposits. The decrease in AWM was largely driven by migration predominantly into the Firm’s investment-related products.
For further information on deposit and liability balance trends, refer to the discussion of the Firm’s Business Segment Results and the Consolidated Balance Sheets Analysis on pages 17–30 and pages 11–13, respectively.

38


The following table summarizes short-term and long-term funding, excluding deposits, as of March 31, 2019, and December 31, 2018, and average balances for the three months ended March 31, 2019 and 2018, respectively. For additional information, refer to the Consolidated Balance Sheets Analysis on pages 11–13 and Note 10.
 March 31, 2019December 31, 2018 Three months ended March 31,
Sources of funds (excluding deposits)Average
(in millions)2019
2018
Commercial paper$26,563
$30,059
 $28,731
$25,993
Other borrowed funds(a)
9,648
8,789
 10,247
12,147
Total short-term unsecured funding(a)
$36,211
$38,848
 $38,978
$38,140
Securities sold under agreements to repurchase(b)
$208,338
$171,975
 $197,454
$184,396
Securities loaned(b)
13,577
9,481
 10,781
10,526
Other borrowed funds(a)(c)
35,094
30,428
 35,583
19,463
Obligations of Firm-administered multi-seller conduits(d)
$10,788
$4,843
 $7,386
$3,116
Total short-term secured funding(a)
$267,797
$216,727
 $251,204
$217,501
      
Senior notes$167,030
$162,733
 $162,952
$150,218
Trust preferred securities

 
688
Subordinated debt16,945
16,743
 16,722
16,231
Structured notes(e)
59,634
53,090
 57,395
47,001
Total long-term unsecured funding$243,609
$232,566
 $237,069
$214,138
      
Credit card securitization(d)
$13,416
$13,404
 $13,409
$18,665
Federal Home Loan Bank (“FHLB”) advances42,453
44,455
 43,965
60,385
Other long-term secured funding(f)
4,831
5,010
 4,891
4,482
Total long-term secured funding$60,700
$62,869
 $62,265
$83,532
      
Preferred stock(g)
$26,993
$26,068
 $27,126
$26,068
Common stockholders’ equity(g)
$232,844
$230,447
 $230,051
$227,615
(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.
(c)Includes FHLB advances with original maturities of less than one year of $14.9 billion and $11.4 billion as of March 31, 2019 and December 31, 2018, respectively.
(d)Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.
(e)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(f)Includes long-term structured notes which are secured.
(g)For additional information on preferred stock and common stockholders’ equity refer to Capital Risk Management on pages 32–36, Consolidated statements of changes in stockholders’ equity, and Note 20 and Note 21 of JPMorgan Chase’s 2018 Form 10-K.
Short-term funding
The Firm’s sources of short-term secured funding primarily consist of securities loaned or sold under agreements to repurchase. These instruments are secured predominantly by high-quality securities collateral, including government-issued debt and 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 March 31, 2019, from December 31, 2018, reflected client-driven market-making activities and higher secured financing of trading assets-debt and equity instruments in CIB.
 
The balances associated with securities loaned or sold under agreements to repurchase fluctuate over time due to customers’ investment and financing activities, the Firm’s demand for financing, the ongoing management of the mix of the Firm’s liabilities, including its secured and unsecured financing (for both the investment securities and market-making portfolios), and other market and portfolio factors.
The Firm’s sources of short-term unsecured funding primarily consist of issuance of wholesale commercial paper. The decrease in commercial paper was due to lower net issuance primarily for short-term liquidity management.

39


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. 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 following table summarizes long-term unsecured issuance and maturities or redemptions for the three months ended March 31, 2019 and 2018. For additional information on the IHC and long-term debt, refer to Liquidity Risk Management and Note 19 of JPMorgan Chase’s 2018 Form 10-K.
Long-term unsecured funding    
 Three months ended March 31, Three months ended March 31,
 2019
2018
 2019
2018
(Notional in millions)
Parent Company(b)
 
Subsidiaries(b)
Issuance     
Senior notes issued in the U.S. market$4,250
$4,000
 $1,750
$4,011
Senior notes issued in non-U.S. markets2,248

 

Total senior notes6,498
4,000
 1,750
4,011
Structured notes(a)
1,185
831
 6,116
6,958
Total long-term unsecured funding – issuance$7,683
$4,831
 $7,866
$10,969
      
Maturities/redemptions     
Senior notes$3,750
$14,059
 $1,815
$65
Subordinated debt146

 

Structured notes628
815
 3,833
4,712
Total long-term unsecured funding – maturities/redemptions$4,524
$14,874
 $5,648
$4,777
(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 Firm raises 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 months ended March 31, 2019 and 2018, respectively.
Long-term secured funding   
 Three months ended March 31,
 Issuance Maturities/Redemptions
(in millions)20192018 20192018
Credit card securitization$
$
 $
$4,400
FHLB advances
4,000
 2,001
7,751
Other long-term secured funding(a)
35
121
 246
16
Total long-term secured funding$35
$4,121
 $2,247
$12,167
(a)Includes long-term structured notes which are secured.

The Firm’s wholesale businesses also securitize loans for client-driven transactions; those client-driven loan securitizations are not considered to be a source of funding for the Firm and are not included in the table above. For further description of the client-driven loan securitizations, refer to Note 14 of JPMorgan Chase’s 2018 Form 10-K.

40


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. 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 14, and liquidity risk and credit-related contingent features in Note 4.

The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of March 31, 2019, were as follows.
 JPMorgan Chase & Co. 
JPMorgan Chase Bank, N.A.
Chase Bank USA, N.A.
 
J.P. Morgan Securities LLC
J.P. Morgan Securities plc
March 31, 2019Long-term issuerShort-term issuerOutlook Long-term issuerShort-term issuerOutlook Long-term issuerShort-term issuerOutlook
Moody’s Investors ServiceA2P-1Stable Aa2P-1Stable Aa3P-1Stable
Standard & Poor’sA-A-2Stable A+A-1Stable A+A-1Stable
Fitch RatingsAA-F1+Stable AAF1+Stable AAF1+Stable
For a discussion of the factors that could affect credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries, refer to page 100 of the Firm’s 2018 10-K.


41


CREDIT AND INVESTMENT RISK MANAGEMENT
Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk,
wholesale credit risk, and investment portfolio risk. For a further discussion of Credit Risk refer to pages 42–57.
For a further discussion on Investment Portfolio Risk, refer to page 57. 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 102-123 of JPMorgan Chase’s 2018 Form 10-K.

CREDIT PORTFOLIO
Credit risk is the risk associated with the default or change in credit profile of a client, counterparty or customer.
In the following tables, 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. For further information regarding these loans, refer to Notes 2 and 3. For additional information on the Firm’s loans, lending-related commitments and derivative receivables, including the Firm’s accounting policies, refer to Notes 11, 22, and 4, respectively.
For further information regarding the credit risk inherent in the Firm’s cash placed with banks, refer to Wholesale credit exposure – industry exposures on pages 50–52; for information regarding the credit risk inherent in the Firm’s investment securities portfolio, refer to Note 9 of this Form 10-Q, and Note 10 of JPMorgan Chase’s 2018 Form 10-K; and for information regarding the credit risk inherent in the securities financing portfolio, refer to Note 10 of this Form 10-Q, and Note 11 of JPMorgan Chase’s 2018 Form 10-K.
For a further discussion of the consumer credit environment and consumer loans, refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K and Note 11 of this Form 10-Q. For a further discussion of the wholesale credit environment and wholesale loans, refer to Wholesale Credit Portfolio on pages 112–119 of JPMorgan Chase’s 2018 Form 10-K and Note 11 of this Form 10-Q.
Total credit portfolio    
 Credit exposure 
Nonperforming(d)(e)
(in millions)Mar 31,
2019

Dec 31,
2018

 Mar 31,
2019

Dec 31,
2018

Loans retained$943,841
$969,415
 $4,959
$4,611
Loans held-for-sale8,685
11,988
 129

Loans at fair value3,719
3,151
 184
220
Total loans–reported956,245
984,554
 5,272
4,831
Derivative receivables50,333
54,213
 44
60
Receivables from customers and other(a)
20,952
30,217
 

Total credit-related assets1,027,530
1,068,984
 5,316
4,891
Assets acquired in loan satisfactions     
Real estate ownedNA
NA
 269
269
OtherNA
NA
 31
30
Total assets acquired in loan satisfactions
NA
NA
 300
299
Lending-related commitments1,060,801
1,039,258
 455
469
Total credit portfolio$2,088,331
$2,108,242
 $6,071
$5,659
Credit derivatives used
in credit portfolio management activities(b)
$(14,490)$(12,682) $
$
Liquid securities and other cash collateral held against derivatives(c)
(13,976)(15,322) NA
NA
 
(in millions,
except ratios)
Three months ended
March 31,
2019
2018
Net charge-offs$1,361
$1,335
Average retained loans  
Loans956,557
920,428
Loans – reported, excluding
residential real estate PCI loans
932,925
890,376
Net charge-off rates  
Loans0.58%0.59%
Loans – excluding PCI0.59
0.61
(a)Receivables from customers and other primarily represents held-for-investment margin loans to brokerage customers.
(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, refer to Credit derivatives on page 54 and Note 4.
(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 March 31, 2019, and December 31, 2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.2 billion and $2.6 billion, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $69 million and $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”).


42


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, refer to Note 11 of this Form 10-Q and Consumer Credit Portfolio on pages 106–111 and Note 12 of JPMorgan Chase’s 2018 Form 10-K. For further information on lending-related commitments, refer to Note 22 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2018 Form 10-K.
The following table presents consumer credit-related information with respect to the credit portfolio held by CCB, prime mortgage and home equity loans held by AWM, and prime mortgage loans held by Corporate. For further information about the Firm’s nonaccrual and charge-off accounting policies, refer to Note 12 of JPMorgan Chase’s 2018 Form 10-K.
Consumer credit portfolio          
      Three months ended March 31,

(in millions, except ratios)
Credit exposure 
Nonaccrual loans(f)(g)
 
Net charge-offs/(recoveries)(h)
 
Net charge-off/(recoveries) rate(h)(i)
Mar 31,
2019

Dec 31,
2018

 Mar 31,
2019

Dec 31,
2018

 2019
2018
 2019
2018
Consumer, excluding credit card           
Loans, excluding PCI loans and loans held-for-sale           
Residential mortgage$220,158
$231,078
 $1,755
$1,765
 $(3)$
 (0.01)%%
Home equity27,072
28,340
 1,276
1,323
 1
17
 0.01
0.21
Auto(a)(b)
62,786
63,573
 111
128
 58
76
 0.37
0.47
Consumer & Business Banking(b)(c)
26,492
26,612
 247
245
 59
53
 0.90
0.83
Total loans, excluding PCI loans and loans held-for-sale336,508
349,603
 3,389
3,461
 115
146
 0.13
0.17
Loans – PCI           
Home equity8,584
8,963
 NA
NA
 NA
NA
 NA
NA
Prime mortgage4,529
4,690
 NA
NA
 NA
NA
 NA
NA
Subprime mortgage1,909
1,945
 NA
NA
 NA
NA
 NA
NA
Option ARMs8,185
8,436
 NA
NA
 NA
NA
 NA
NA
Total loans – PCI23,207
24,034
 NA
NA
 NA
NA
 NA
NA
Total loans – retained359,715
373,637
 3,389
3,461
 115
146
 0.13
0.16
Loans held-for-sale4,199
95
 

 NA
NA
 NA
NA
Total consumer, excluding credit card loans363,914
373,732
 3,389
3,461
 115
146
 0.13
0.16
Lending-related commitments(d)
48,922
46,066
         
Receivables from customers20
154
         
Total consumer exposure, excluding credit card412,856
419,952
         
Credit card           
Loans retained(e)
150,515
156,616
 

 1,202
1,170
 3.23
3.32
Loans held-for-sale12
16
 

 NA
NA
 NA
NA
Total credit card loans150,527
156,632
 

 1,202
1,170
 3.23
3.32
Lending-related commitments(d)
626,922
605,379
         
Total credit card exposure777,449
762,011
         
Total consumer credit portfolio$1,190,305
$1,181,963
 $3,389
$3,461
 $1,317
$1,316
 1.02 %1.04%
Memo: Total consumer credit portfolio, excluding PCI$1,167,098
$1,157,929
 $3,389
$3,461
 $1,317
$1,316
 1.07 %1.10%
(a)At March 31, 2019, and December 31, 2018, excluded operating lease assets of $21.1 billion and $20.5 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. For further information, refer to Note 16.
(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)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, refer to Note 22.
(e)Includes billed interest and fees net of an allowance for uncollectible interest and fees.
(f)At March 31, 2019 and December 31, 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.2 billion and $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.
(g)Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.
(h)Net charge-offs/(recoveries) and the net charge-off/(recovery) rates excluded write-offs in the PCI portfolio of $50 million and $20 million for the three months ended March 31, 2019 and 2018, respectively. These write-offs decreased the allowance for loan losses for PCI loans. Refer to Allowance for Credit Losses on pages 55–56 for further information.
(i)Average consumer loans held-for-sale were $1.2 billion and $234 million for the three months ended March 31, 2019 and 2018, respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.

43


Consumer, excluding credit card
Portfolio analysis
Loan balances decreased from December 31, 2018 predominantly due to lower residential real estate loans. The credit performance of the portfolio continues to benefit from a strong labor market and increasing home prices.
The following discussions provide information concerning individual loan products, excluding PCI loans which are addressed separately. For further information about this portfolio, including information about delinquencies, loan modifications and other credit quality indicators, refer to Note 11 of this Form 10-Q.
Residential mortgage: The residential mortgage portfolio, including loans held-for-sale, predominantly consists of prime mortgage loans. The residential mortgage portfolio decreased from December 31, 2018 driven by a loan sale as well as paydowns, partially offset by originations of prime mortgage loans that have been retained on the balance sheet.
At March 31, 2019, and December 31, 2018, the Firm’s residential mortgage portfolio included $21.8 billion and $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, predominantly in AWM. Performance of this portfolio for the three months ended March 31, 2019 was in line with the performance of the broader residential mortgage portfolio for the 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)March 31,
2019

December 31,
2018

Current$2,463
$2,884
30-89 days past due1,074
1,528
90 or more days past due2,168
2,600
Total government guaranteed loans$5,705
$7,012
Home equity: The home equity portfolio declined from December 31, 2018 primarily reflecting loan paydowns.
At March 31, 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 $24 billion at March 31, 2019. This amount included $11 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.
For further information on the Firm’s home equity portfolio, refer to Note 11 of this Form 10-Q and Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K.
Auto: The auto loan portfolio, which predominantly consists of prime-quality loans, declined when compared with December 31, 2018, as paydowns and charge-offs or liquidation of delinquent loans were predominantly offset by new originations.
Consumer & Business Banking: Consumer & Business Banking loans were flat when compared with December 31, 2018 as paydowns and charge-offs of delinquent loans were predominantly offset by loan originations. Net charge-offs for the three months ended March 31, 2019 increased when compared with the same period in the prior year due 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, 2018 due to portfolio run off. As of March 31, 2019, approximately 10% of the option ARM PCI loans were delinquent and approximately 69% 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.

44


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)
(in billions)Mar 31,
2019

 Dec 31,
2018

 Mar 31,
2019

 Dec 31,
2018

Home equity$14.3
 $14.1
 $13.0
 $13.0
Prime mortgage4.1
 4.1
 3.9
 3.9
Subprime mortgage3.4
 3.3
 3.2
 3.2
Option ARMs10.3
 10.3
 9.9
 9.9
Total$32.1
 $31.8
 $30.0
 $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 $496 million and $512 million at March 31, 2019, and December 31, 2018, respectively.
(b)Represents both realization of loss upon loan resolution and any principal forgiven upon modification.
Geographic composition of residential real estate loans
For information on the geographic composition of the Firm’s residential real estate loans, refer to Note 11.
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 information on current estimated LTVs of the Firm’s residential real estate loans, refer to Note 11.
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. Performance metrics for modifications to the residential real estate portfolios as measured through redefault rates, were not materially different from December 31, 2018. For further information on the Firm’s redefault rates, refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K.
Certain modified loans have interest rate reset provisions (“step-rate modifications”) 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 March 31, 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 $1.5 billion and $2.9 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 March 31, 2019, and December 31, 2018, relating to modified retained residential real estate loans for which concessions have been granted to borrowers experiencing financial difficulty. For further information on modifications for the three months ended March 31, 2019 and 2018, refer to Note 11.
Modified residential real estate loans
 March 31, 2019 December 31, 2018
(in millions)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$4,499
$1,456
 $4,565
$1,459
Home equity1,996
960
 2,012
955
Total modified residential real estate loans, excluding PCI loans$6,495
$2,416
 $6,577
$2,414
Modified PCI loans(c)
     
Home equity$2,061
NA
 $2,086
NA
Prime mortgage3,115
NA
 3,179
NA
Subprime mortgage2,014
NA
 2,041
NA
Option ARMs6,262
NA
 6,410
NA
Total modified PCI loans$13,452
NA
 $13,716
NA
(a)Amounts represent the carrying value of modified residential real estate loans.
(b)At March 31, 2019, and December 31, 2018, $3.3 billion and $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. For additional information about sales of loans in securitization transactions with Ginnie Mae, refer to Note 13.
(c)Amounts represent the unpaid principal balance of modified PCI loans.
(d)At March 31, 2019, and December 31, 2018, nonaccrual loans included $1.9 billion and $2.0 billion, respectively, of troubled debt restructurings (“TDRs”) for which the borrowers were less than 90 days past due. For additional information about loans modified in a TDR that are on nonaccrual status, refer to Note 11.

45


Nonperforming assets
The following table presents information as of March 31, 2019, and December 31, 2018, about consumer, excluding credit card, nonperforming assets.
Nonperforming assets(a)
   
(in millions)March 31,
2019

 December 31,
2018

Nonaccrual loans(b)
   
Residential real estate$3,031
 $3,088
Other consumer358
 373
Total nonaccrual loans3,389
 3,461
Assets acquired in loan satisfactions   
Real estate owned211
 210
Other31
 30
Total assets acquired in loan satisfactions242
 240
Total nonperforming assets$3,631
 $3,701
(a)At March 31, 2019, and December 31, 2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $2.2 billion and $2.6 billion, respectively, and REO insured by U.S. government agencies of $69 million and $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.
Nonaccrual loans in the residential real estate portfolio at March 31, 2019 decreased to $3.0 billion from $3.1 billion at December 31, 2018, of which 23% and 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 31% and 32% to the estimated net realizable value of the collateral at March 31, 2019, and December 31, 2018, respectively.
Nonaccrual loans: The following table presents changes in consumer, excluding credit card, nonaccrual loans for the three months ended March 31, 2019 and 2018.
Nonaccrual loan activity  
Three months ended March 31,
(in millions)
 2019
2018
Beginning balance $3,461
$4,209
Additions 581
911
Reductions:   
Principal payments and other(a)
 235
340
Charge-offs 106
140
Returned to performing status 242
309
Foreclosures and other liquidations 70
71
Total reductions 653
860
Net changes (72)51
Ending balance $3,389
$4,260
(a)Other reductions includes loan sales.
Active and suspended foreclosure: For information on loans that were in the process of active or suspended foreclosure, refer to Note 11.

46


Credit card
Total credit card loans decreased from December 31, 2018 due to seasonality. The March 31, 2019 30+ day delinquency rate increased to 1.85% from 1.83% at December 31, 2018, and the March 31, 2019 90+ day delinquency rate increased to 0.97% from 0.92% at December 31, 2018, in line with expectations. Net charge-offs increased for the three months ended March 31, 2019 when compared with the same period in the prior year primarily due to loan growth.
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 reduces interest income, for the estimated uncollectible portion of accrued and billed interest and fee income.
Geographic and FICO composition of credit card loans
For information on the geographic and FICO composition of the Firm’s credit card loans, refer to Note 11.
Modifications of credit card loans
At March 31, 2019 and December 31, 2018, the Firm had $1.4 billion and $1.3 billion, respectively, of credit card loans outstanding that have been modified in TDRs. For additional information about loan modification programs to borrowers, refer to Note 11.

47


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 quality of the wholesale portfolio was stable for the three months ended March 31, 2019, characterized by low levels of criticized exposure, nonaccrual loans and charge-offs. Refer to the industry discussion on pages 50–52 for further information. Retained loans decreased, predominantly driven by Wealth Management clients globally in AWM, and held-for-sale loans decreased, driven by a loan syndication in 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, and excludes all exposure managed by CCB.
Wholesale credit portfolio
 Credit exposure 
Nonperforming(c)
(in millions)Mar 31,
2019

Dec 31,
2018

 Mar 31,
2019

Dec 31,
2018

Loans retained$433,611
$439,162
 $1,570
$1,150
Loans held-for-sale4,474
11,877
 129

Loans at fair value3,719
3,151
 184
220
Loans – reported441,804
454,190
 1,883
1,370
Derivative receivables50,333
54,213
 44
60
Receivables from customers and other(a)
20,932
30,063
 

Total wholesale credit-related assets513,069
538,466
 1,927
1,430
Lending-related commitments384,957
387,813
 455
469
Total wholesale credit exposure$898,026
$926,279
 $2,382
$1,899
Credit derivatives used in credit portfolio management activities(b)
$(14,490)$(12,682) $
$
Liquid securities and other cash collateral held against derivatives(13,976)(15,322) NA
NA
(a)Receivables from customers and other include $20.9 billion and $30.1 billion of held-for-investment margin loans at March 31, 2019, and December 31, 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, refer to Credit derivatives on page 54, and Note 4.
(c)Excludes assets acquired in loan satisfactions.

48


The following tables present the maturity and ratings profiles of the wholesale credit portfolio as of March 31, 2019, and December 31, 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. For additional information on wholesale loan portfolio risk ratings, refer to Note 12 of JPMorgan Chase’s 2018 Form 10-K.
Wholesale credit exposure – maturity and ratings profile      
 
Maturity profile(d)
 Ratings profile
 Due in 1 year or lessDue after 1 year through 5 yearsDue after 5 yearsTotal Investment-grade Noninvestment-gradeTotalTotal % of IG
March 31, 2019
(in millions, except ratios)
 AAA/Aaa to BBB-/Baa3 BB+/Ba1 & below
Loans retained$130,048
$200,469
$103,094
$433,611
 $332,514
 $101,097
$433,611
77%
Derivative receivables   50,333
    50,333
 
Less: Liquid securities and other cash collateral held against derivatives   (13,976)    (13,976) 
Total derivative receivables, net of all collateral10,007
8,674
17,676
36,357
 29,689
 6,668
36,357
82
Lending-related commitments71,622
302,913
10,422
384,957
 293,073
 91,884
384,957
76
Subtotal211,677
512,056
131,192
854,925
 655,276
 199,649
854,925
77
Loans held-for-sale and loans at fair value(a)
   8,193
    8,193
 
Receivables from customers and other   20,932
    20,932
 
Total exposure – net of liquid securities and other cash collateral held against derivatives   $884,050
    $884,050
 
Credit derivatives used in credit portfolio management activities(b)(c)
$(1,238)$(7,087)$(6,165)$(14,490) $(12,987) $(1,503)$(14,490)90%
 
Maturity profile(d)
 Ratings profile
 Due in 1 year or lessDue after 1 year through 5 yearsDue after 5 yearsTotal Investment-grade Noninvestment-gradeTotalTotal % of IG
December 31, 2018
(in millions, except ratios)
 AAA/Aaa to BBB-/Baa3 BB+/Ba1 & below
Loans retained$138,458
$196,974
$103,730
$439,162
 $339,729
 $99,433
$439,162
77%
Derivative receivables   54,213
    54,213
 
Less: Liquid securities and other cash collateral held against derivatives   (15,322)    (15,322) 
Total derivative receivables, net of all collateral11,038
9,169
18,684
38,891
 31,794
 7,097
38,891
82
Lending-related commitments79,400
294,855
13,558
387,813
 288,724
 99,089
387,813
74
Subtotal228,896
500,998
135,972
865,866
 660,247
 205,619
865,866
76
Loans held-for-sale and loans at fair value(a)
   15,028
    15,028
 
Receivables from customers and other   30,063
    30,063
 
Total exposure – net of liquid securities and other cash collateral held against derivatives   $910,957
    $910,957
 
Credit derivatives used in credit portfolio management activities(b)(c)
$(447)$(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 March 31, 2019, may become payable prior to maturity based on their cash flow profile or changes in market conditions.

49


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 $12.6 billion at March 31, 2019, compared with $12.1 billion at December 31, 2018. The increase was driven by select client downgrades across a number of sectors.
Below are summaries of the Firm’s exposures as of March 31, 2019, and December 31, 2018. The industry of risk category is generally based on the client or counterparty’s primary business activity. For additional information on industry concentrations, refer to Note 4 of JPMorgan Chase’s 2018 Form 10-K.

Wholesale credit exposure – industries(a)
         
      Selected metrics
        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
As of or for the three months ended
Credit exposure(f)
Investment- grade Noncriticized Criticized performingCriticized nonperforming
March 31, 2019
(in millions)
Real Estate$143,322
$117,700
 $24,411
 $1,099
$112
$173
$
$(2)$(1)
Individuals and Individual Entities(b)
94,490
83,570
 10,347
 239
334
1,411
2

(876)
Consumer & Retail87,127
54,261
 30,564
 2,127
175
56
9
(237)(6)
Technology, Media &
Telecommunications
64,629
41,182
 21,013
 2,305
129
5
11
(772)(4)
Industrials57,857
37,773
 18,372
 1,534
178
170

(479)(34)
Banks & Finance Cos48,425
32,849
 15,373
 198
5
3

(553)(2,829)
Healthcare44,920
34,357
 9,779
 687
97
45
9
(190)(157)
Oil & Gas44,136
24,937
 17,398
 1,157
644

(1)(398)(8)
Asset Managers43,884
38,396
 5,455
 4
29
114


(4,824)
Utilities29,005
23,370
 5,219
 165
251
2
18
(206)(58)
Automotive28,483
21,635
 6,505
 343

8

(149)
State & Municipal Govt(c)
27,135
26,530
 602
 3

7

(34)(19)
Central Govt16,976
16,676
 300
 

3

(8,020)(1,700)
Metals & Mining16,347
8,687
 7,365
 268
27
2
(1)(146)(4)
Chemicals & Plastics16,325
11,870
 4,321
 134

3

(10)
Transportation15,952
10,173
 5,413
 293
73
32

(26)(36)
Insurance12,718
9,742
 2,962
 
14
1

(36)(2,129)
Financial Markets Infrastructure5,955
5,737
 218
 




(6)
Securities Firms3,980
2,623
 1,357
 



(158)(479)
All other(d)
67,235
65,493
 1,735
 6
1

(3)(3,074)(806)
Subtotal$868,901
$667,561
 $188,709
 $10,562
$2,069
$2,035
$44
$(14,490)$(13,976)
Loans held-for-sale and loans at fair value8,193
          
Receivables from customers and other20,932
          
Total(e)
$898,026
          

50













(continued from previous page)          








Selected metrics








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
As of or for the year ended
Credit exposure(f)
Investment- grade
Noncriticized
Criticized performingCriticized nonperforming
December 31, 2018
(in millions)
Real Estate$143,316
$117,988

$24,174

$1,019
$135
$70
$(20)$(2)$(1)
Individuals and Individual Entities(b)
97,077
86,581
 10,164
 174
158
703
12

(915)
Consumer & Retail94,815
60,678

31,901

2,033
203
43
55
(248)(14)
Technology, Media & Telecommunications72,646
46,334
 24,081
 2,170
61
8
12
(1,011)(12)
Industrials58,528
38,487

18,594

1,311
136
171
20
(207)(29)
Banks & Finance Cos49,920
34,120
 15,496
 299
5
11

(575)(2,290)
Healthcare48,142
36,687

10,625

761
69
23
(5)(150)(133)
Oil & Gas42,600
23,356

17,451

1,158
635
6
36
(248)
Asset Managers42,807
36,722

6,067

4
14
10


(5,829)
Utilities28,172
23,558

4,326

138
150

38
(142)(60)
Automotive17,339
9,637

7,310

392

1

(125)
State & Municipal Govt(c)
27,351
26,746

603

2

18
(1)
(42)
Central Govt18,456
18,251
 124
 81

4

(7,994)(2,130)
Metals & Mining15,359
8,188

6,767

385
19
1

(174)(22)
Chemicals & Plastics16,035
11,490

4,427

118

4



Transportation15,660
10,508

4,699

393
60
21
6
(31)(112)
Insurance12,639
9,777

2,830


32


(36)(2,080)
Financial Markets Infrastructure7,484
6,746

738






(26)
Securities Firms4,558
3,099

1,459





(158)(823)
All other(d)
68,284
64,664

3,606

12
2
2
2
(1,581)(804)
Subtotal$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 value15,028

















Receivables from customers and other30,063


















Total(e)
$926,279
          
(a)The industry rankings presented in the table as of December 31, 2018, are based on the industry rankings of the corresponding exposures at March 31, 2019, not actual rankings of such exposures at December 31, 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 March 31, 2019, and December 31, 2018, noted above, the Firm held: $6.8 billion and $7.8 billion, respectively, of trading securities; $34.5 billion and $37.7 billion, respectively, of AFS securities; and $4.8 billion at both periods of held-to-maturity (“HTM”) securities, issued by U.S. state and municipal governments. For further information, refer to Note 2 and Note 9.
(d)All other includes: SPEs and Private education and civic organizations, representing approximately 91% and 9%, respectively, at March 31, 2019, and 92% and 8%, respectively, at December 31, 2018.
(e)
Excludes cash placed with banks of $294.9 billion and $268.1 billion, at March 31, 2019, and December 31, 2018, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks.
(f)Credit exposure is net of risk participations and excludes the benefit of credit derivatives used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
(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.

51


Real Estate
Presented below is additional information on the Real Estate industry, to which the Firm has significant exposure.
Real Estate exposure and the investment grade percentage of the portfolio remained flat for the three months ended March 31, 2019 at $143.3 billion and 82% respectively. For further information on Real Estate loans, refer to Note 11.
 March 31, 2019 
(in millions, except ratios)Loans and Lending-related Commitments Derivative Receivables Credit exposure % Investment-grade
% Drawn(c)
Multifamily(a)
$85,970
 $56
 $86,026
 89% 92% 
Other57,053
 243
 57,296
 72
 64
 
Total Real Estate Exposure(b)
143,023
 299
 143,322
 82
 81
 
           
 December 31, 2018 
(in millions, except ratios)Loans and Lending-related Commitments 
Derivative
Receivables
 Credit exposure 
% Investment-
grade
% Drawn(c)
Multifamily(a)
$85,683
 $33
 $85,716
 89% 92% 
Other57,469
 131
 57,600
 72
 63
 
Total Real Estate Exposure(b)
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. For a further discussion on loans, including information on credit quality indicators and sales of loans, refer to Note 11.
The following table presents the change in the nonaccrual loan portfolio for the three months ended March 31, 2019 and 2018.
Wholesale nonaccrual loan activity
Three months ended March 31,
(in millions)
 2019
2018
Beginning balance $1,370
$1,734
Additions 773
313
Reductions:   
Paydowns and other 181
182
Gross charge-offs 51
55
Returned to performing status 23
117
Sales 5
70
Total reductions 260
424
Net changes 513
(111)
Ending balance $1,883
$1,623
 
The following table presents net charge-offs/recoveries, which are defined as gross charge-offs less recoveries, for the three months ended March 31, 2019 and 2018. The amounts in the table below do not include gains or losses from sales of nonaccrual loans.
Wholesale net charge-offs/(recoveries)
(in millions, except ratios)Three months ended
March 31,
2019
2018
Loans – reported  
Average loans retained$434,660
$404,859
Gross charge-offs52
65
Gross recoveries(8)(46)
Net charge-offs/(recoveries)44
19
Net charge-off/(recovery) rate0.04%0.02%

52


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 fulfill 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. For further information on wholesale lending-related commitments, refer to Note 22 .
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. For a further discussion of derivative contracts, refer to Note 4.
The following table summarizes the net derivative receivables for the periods presented.
Derivative receivables  
(in millions)March 31,
2019

December 31,
2018

Total, net of cash collateral50,333
54,213
Liquid securities and other cash collateral held against derivative receivables(a)
(13,976)(15,322)
Total, net of collateral$36,357
$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 $50.3 billion and $54.2 billion at March 31, 2019, and December 31, 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 $14.0 billion and $15.3 billion at March 31, 2019, and December 31, 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-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 contracts 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. For additional information on the Firm’s use of collateral agreements, refer to Note 4.


















53


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     
Rating equivalent
March 31, 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$11,249
31% $11,831
31%
A+/A1 to A-/A35,072
14
 7,428
19
BBB+/Baa1 to BBB-/Baa313,368
37
 12,536
32
BB+/Ba1 to B-/B35,994
16
 6,373
16
CCC+/Caa1 and below674
2
 723
2
Total$36,357
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 derivative 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 March 31, 2019, and December 31, 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)
(in millions)March 31,
2019

 December 31,
2018

Credit derivatives used to manage:   
Loans and lending-related commitments$1,529
 $1,272
Derivative receivables12,961
 11,410
Credit derivatives used in credit portfolio management activities$14,490
 $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.
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 2018 Form 10-K.

54


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.
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 64–66 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.
At least quarterly, the allowance for credit losses is reviewed by the CRO, the CFO and the Controller of the Firm. As of March 31, 2019, JPMorgan Chase deemed the allowance for credit losses to be appropriate and sufficient to absorb probable credit losses inherent in the portfolio.
 
The allowance for credit losses was relatively flat compared with December 31, 2018, with the increase in the wholesale allowance reflecting a net addition to the allowance of $135 million on select C&I client downgrades, partially offset by a decline in the consumer allowance as a result of write-offs of PCI loans.
For additional information on the consumer and wholesale credit portfolios, refer to Consumer Credit Portfolio on pages 43–47, Wholesale Credit Portfolio on pages 48–54 and Note 11.


55


Summary of changes in the allowance for credit losses     
 2019 2018
Three months ended March 31,
Consumer, excluding
credit card
Credit cardWholesaleTotal 
Consumer, excluding
credit card
Credit cardWholesaleTotal
(in millions, except ratios) 
Allowance for loan losses         
Beginning balance at January 1,$4,146
$5,184
$4,115
$13,445
 $4,579
$4,884
$4,141
$13,604
Gross charge-offs246
1,344
52
1,642
 284
1,291
65
1,640
Gross recoveries(131)(142)(8)(281) (138)(121)(46)(305)
Net charge-offs115
1,202
44
1,361
 146
1,170
19
1,335
Write-offs of PCI loans(a)
50


50
 20


20
Provision for loan losses114
1,202
176
1,492
 146
1,170
(189)1,127
Other2
(1)6
7
 1

(2)(1)
Ending balance at March 31,$4,097
$5,183
$4,253
$13,533
 $4,560
$4,884
$3,931
$13,375
Impairment methodology         
Asset-specific(b)
$151
$461
$417
$1,029
 $266
$393
$474
$1,133
Formula-based2,208
4,722
3,836
10,766
 2,089
4,491
3,457
10,037
PCI1,738


1,738
 2,205


2,205
Total allowance for loan losses$4,097
$5,183
$4,253
$13,533
 $4,560
$4,884
$3,931
$13,375
Allowance for lending-related commitments         
Beginning balance at January 1,$33
$
$1,022
$1,055
 $33
$
$1,035
$1,068
Provision for lending-related commitments

3
3
 

38
38
Other



 

1
1
Ending balance at March 31,$33
$
$1,025
$1,058
 $33
$
$1,074
$1,107
Impairment methodology         
Asset-specific$
$
$114
$114
 $
$
$167
$167
Formula-based33

911
944
 33

907
940
Total allowance for lending-related commitments(c)
$33
$
$1,025
$1,058
 $33
$
$1,074
$1,107
Total allowance for credit losses$4,130
$5,183
$5,278
$14,591
 $4,593
$4,884
$5,005
$14,482
Memo:         
Retained loans, end of period$359,715
$150,515
$433,611
$943,841
 $373,243
$140,348
$412,020
$925,611
Retained loans, average370,777
151,120
434,660
956,557
 372,739
142,830
404,859
920,428
PCI loans, end of period23,207


23,207
 29,505

3
29,508
Credit ratios         
Allowance for loan losses to retained loans1.14%3.44%0.98%1.43% 1.22%3.48%0.95%1.44%
Allowance for loan losses to retained nonaccrual loans(d)
121
NM
271
273
 108
NM
247
230
Allowance for loan losses to retained nonaccrual loans excluding credit card121
NM
271
168
 108
NM
247
146
Net charge-off rates0.13
3.23
0.04
0.58
 0.16
3.32
0.02
0.59
Credit ratios, excluding residential real estate PCI loans         
Allowance for loan losses to retained loans0.70
3.44
0.98
1.28
 0.69
3.48
0.95
1.25
Allowance for loan losses to retained nonaccrual loans(d)
70
NM
271
238
 56
NM
247
192
Allowance for loan losses to retained nonaccrual loans excluding credit card70
NM
271
133
 56
NM
247
108
Net charge-off rates0.13%3.23%0.04%0.59% 0.17%3.32%0.02%0.61%
Note: In the table above, the financial measures which exclude the impact of PCI loans are non-GAAP financial measures.
(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. 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.
(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.





56


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 various LOBs and Corporate in predominantly privately-held financial 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 minimized given that Treasury and CIO substantially invest in high-quality securities. At March 31, 2019, the investment securities portfolio was $265.7 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). For further information on the investment securities portfolio, refer to Corporate segment results on page 30 and Note 9. For further information on the market risk inherent in the portfolio, refer to Market Risk Management on pages 58–62. For further information on related liquidity risk, refer to Liquidity Risk on pages 37–41.

 
Principal investment risk
Principal investments are typically private non-traded financial instruments representing ownership or other forms of junior capital. Principal investments cover multiple asset classes and are made either in stand-alone investing businesses or as part of a broader business platform. In general, new principal investments include 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 their respective financial results.
As of March 31, 2019 and December 31, 2018, the aggregate carrying values of the principal investment portfolios were $22.4 billion and $22.2 billion, respectively, which included tax-oriented investments (e.g., affordable housing and alternative energy investments) of $16.4 billion and $16.6 billion, respectively, and private equity, various debt and equity instruments, and real assets of $6.0 billion and $5.6 billion, respectively.
For a discussion of the Firm’s Investment Portfolio Risk Management governance and oversight, refer to page 123 of JPMorgan Chase’s 2018 Form 10-K.


57


MARKET RISK MANAGEMENT
Market risk is the risk associated with the effect of changes in market factors such as interest and foreign exchange rates, equity and commodity prices, credit spreads or implied volatilities, on the value of assets and liabilities held for both the short and long term. For discussion of the Firm’s Market Risk Management organization, market risk measurement, risk monitoring and control, and predominant business activities that give rise to market risk, refer to Market Risk Management on pages 124–131 of JPMorgan Chase’s 2018 Form 10-K.
Value-at-risk
JPMorgan Chase utilizes value-at-risk (“VaR”), a statistical risk measure, to estimate the potential loss from adverse market moves in the current market environment. The Firm has a single VaR framework used as a basis for calculating Risk Management VaR and Regulatory VaR.
The Firm’s Risk Management VaR is calculated assuming a one-day holding period and an expected tail-loss methodology which approximates a 95% confidence level. For risk management purposes, the Firm believes this methodology provides a daily measure of risk that is closely aligned to risk management decisions made by the lines of business and Corporate, and provides the appropriate information needed to respond to risk events. The Firm calculates separately a daily aggregated VaR in accordance with regulatory rules (“Regulatory VaR”), which is used to derive the Firm’s regulatory VaR-based capital requirements under Basel III.
 
The Firm’s VaR model calculations are periodically evaluated and enhanced in response to changes in the composition of the Firm’s portfolios, changes in market conditions, improvements in the Firm’s modeling techniques and measurements, and other factors. Such changes may affect historical comparisons of VaR results. For information regarding model reviews and approvals, refer to Estimations and Model Risk Management on page 140 of JPMorgan 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, refer to page 126 of JPMorgan Chase’s 2018 Form 10-K. For additional information on Regulatory VaR and the other components of market risk regulatory capital for the Firm (e.g., VaR-based measure, stressed VaR-based measure and the respective backtesting), refer to JPMorgan Chase’s Basel III Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website at:
(http://investor.shareholder.com/jpmorganchase/basel.cfm). For further information regarding nonstatistical market risk measures used by the Firm, refer to Other risk measures on pages 129-131 of JPMorgan Chase’s 2018 Form 10-K.


58


The table below shows the results of the Firm’s Risk Management VaR measure using a 95% confidence level.
Total VaR




















Three months ended

March 31, 2019
December 31, 2018
March 31, 2018
(in millions) Avg.MinMax
 Avg.MinMax
 Avg.MinMax

CIB trading VaR by risk type



















Fixed income$44

$38

$50


$37

$28

$46


$34

$30

$39

Foreign exchange9

4

15


6

3

10


9

6

15

Equities16

13

22


20

16

26


17

15

22

Commodities and other10

9

12


11

9

13


5

4

6

Diversification benefit to CIB trading VaR(32)
(a) 
 NM
(b) 
 NM
(b) 

(25)
(a) 
NM
(b) 
NM
(b) 

(25)
(a) 
 NM
(b) 
 NM
(b) 
CIB trading VaR47

36
(b) 
61
(b) 

49

32
(b) 
58
(b) 

40

35
(b) 
49
(b) 
Credit portfolio VaR5

4

6


4

3

4


3

3

4

Diversification benefit to CIB VaR(4)
(a) 
 NM
(b) 
 NM
(b) 

(4)
(a) 
NM
(b) 
NM
(b) 

(3)
(a) 
NM
(b) 
NM
(b) 
CIB VaR48

37
(b) 
63
(b) 

49

32
(b) 
59
(b) 

40

35
(b) 
51
(b) 






























CCB VaR2

1

3


1



2


1

1

2

Corporate VaR10

9

12


11

9

13


12

10

14

Diversification benefit to other VaR(2)
(a) 
 NM
(b) 
 NM
(b) 

(1)
(a) 
NM
(b) 
NM
(b) 

(1)
(a) 
NM
(b) 
NM
(b) 
Other VaR10

9
(b) 
11
(b) 

11

9
(b) 
13
(b) 

12

10
(b) 
14
(b) 
Diversification benefit to CIB and other VaR(6)
(a) 
 NM
(b) 
 NM
(b)��

(9)
(a) 
NM
(b) 
NM
(b) 

(9)
(a) 
NM
(b) 
NM
(b) 
Total VaR$52

$40
(b) 
$65
(b) 

$51

$34
(b) 
$62
(b) 

$43

$37
(b) 
$53
(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 was relatively flat for the three months ended March 31, 2019 as compared with the prior quarter. This reflects changes in the risk profile for Fixed Income and Foreign Exchange risk types, offset by reductions in Equities risk type.


 
Year over year results
Average total VaR increased by $9 million for the three months ended March 31, 2019, compared with the same period in the prior year. The increase in average total VaR is primarily due to increased volatility and changes in the risk profile for Fixed Income and Commodities risk types.
VaR can vary significantly as positions change, market volatility fluctuates, and diversification benefits change.

59


VaR back-testing
The Firm evaluates the effectiveness of its VaR methodology by 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, 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 three months ended March 31, 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 for the three months ended March 31, 2019, the Firm observed one VaR back-testing exception and posted market risk-related gains on 45 of the 63 days.
Daily Market Risk-Related Gains and Losses
vs. Risk Management VaR (1-day, 95% Confidence level)
Three months ended March 31, 2019
 
Market Risk-Related Gains and Losses
 
Risk Management VaR
chart-48223b94156657ccaa9.jpg
JanuaryFebruaryMarch


60


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 as well as from the investment securities portfolio. The Firm evaluates its structural interest rate risk exposure through earnings-at-risk, which measures the extent to which changes in interest rates will affect the Firm’s net interest income and interest rate-sensitive fees. For a summary by line of business and Corporate, identifying positions included in earnings-at-risk, refer to the table on page 125 of JPMorgan Chase’s 2018 Form 10-K.
The Firm generates a baseline for net interest income and certain interest rate-sensitive fees, and then conducts simulations of changes for interest rate-sensitive assets and liabilities denominated in U.S. dollars and other currencies (“non-U.S. dollar” currencies). This simulation primarily includes retained loans, deposits, deposits with banks, investment securities, long term debt and any related interest rate hedges, and excludes other positions in risk management VaR and other sensitivity-based measures as described on page 125 of JPMorgan Chase’s 2018 Form 10-K.
Earnings-at-risk scenarios estimate the potential change in this 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 holding short-term rates constant and decreasing long-term rates or increasing short-term rates and holding long-term rates constant. These scenarios consider the impact on exposures as a result of changes in interest rates from baseline rates, as well as pricing sensitivities of deposits, optionality and changes in product mix. The scenarios include 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 the interest rates used in the scenarios compared with underlying contractual rates, the time since origination, and other factors which are updated periodically based on historical experience. The pricing sensitivity of deposits in the baseline and scenarios use assumed rates paid which may differ from actual rates paid due to timing lags and other factors. The Firm’s earnings-at-risk scenarios are periodically evaluated and enhanced in response to changes in the composition of the Firm’s balance sheet, changes in market conditions, improvements in the Firm’s simulation and other factors.
 
The Firm’s U.S. dollar sensitivities are presented in the table below.
(in billions)March 31, 2019
 December 31, 2018
Parallel shift:   
+100 bps shift in rates$1.2
 $0.9
-100 bps shift in rates(2.5) (2.1)
Steeper yield curve:   
+100 bps shift in long-term rates0.7
 0.5
-100 bps shift in short-term rates(1.3) (1.2)
Flatter yield curve:   
+100 bps shift in short-term rates0.5
 0.4
-100 bps shift in long-term rates(1.2) (0.9)
The Firm’s sensitivity to rates is largely a result of assets repricing at a faster pace than deposits.
The Firm’s net U.S. dollar sensitivities as of March 31, 2019 increased when compared to December 31, 2018 primarily as a result of updating the Firm’s baseline to reflect lower interest rates.
The Firm’s non-U.S. dollar sensitivities are presented in the table below.
(in billions)March 31, 2019
 
December 31,
2018

Parallel shift:   
+100 bps shift in rates$0.6
 $0.5
Flatter yield curve:   
+100 bps shift in short-term rates0.6
 0.5
The results of the non-U.S. dollar interest rate scenario involving a steeper yield curve with long-term rates rising by 100 basis points and short-term rates staying at current levels were not material to the Firm’s earnings-at-risk at March 31, 2019 and December 31, 2018.



61


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. For additional information on the positions
 
captured in other sensitivity-based measures, refer to the table Predominant business activities that give rise to market risk on page 125 of JPMorgan Chase’s 2018 Form 10-K.
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 March 31, 2019 and December 31, 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)
     March 31, 2019
 December 31, 2018
Activity 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 $(112) $(102)
Other investments Consists of privately held equity and other investments held at fair value 10% decline in market value (221) (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 (14) (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 17
 17
Derivatives – funding spread risk Impact of changes in the spread related to derivatives FVA 1 basis point parallel increase in spread (4) (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 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
(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.


62


COUNTRY RISK MANAGEMENT
The Firm, through its lines of business and Corporate, may be exposed to country risk resulting from financial, economic, political or other significant developments which adversely affect the value of the Firm’s exposures related to a particular country or set of countries. The Country Risk Management group actively monitors the various portfolios which may be impacted by these developments and measures the extent to which the Firm’s exposures are diversified given the Firm’s strategy and risk tolerance relative to a country.
For a further discussion of the Firm’s country risk management, refer to pages 132–133 of JPMorgan Chase’s 2018 Form 10-K.
 
The following table presents the Firm’s top 20 exposures by country (excluding the U.S.) as of March 31, 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)
March 31, 2019 
December 31, 2018(f)
 
Lending and deposits(b)
Trading and investing(c)(d)
Other(e)
Total exposure Total exposure
Germany$59.4
$11.2
$0.2
$70.8
 $62.1
United Kingdom31.8
10.2
1.4
43.4
 40.7
Japan29.7
6.0
0.3
36.0
 29.1
China9.8
7.5
2.5
19.8
 19.3
Switzerland10.1
0.5
5.6
16.2
 12.8
Canada12.1
3.1

15.2
 14.3
India6.2
4.8
2.0
13.0
 11.8
Luxembourg11.2
0.5

11.7
 11.0
Australia6.9
4.1

11.0
 13.0
Brazil5.0
5.6

10.6
 7.3
France9.5
(0.1)0.9
10.3
 17.9
Netherlands5.4
1.2
2.5
9.1
 5.8
Italy2.5
4.1
0.1
6.7
 6.4
Singapore3.9
1.3
1.3
6.5
 6.8
South Korea4.2
2.0
0.3
6.5
 7.6
Spain3.6
2.3

5.9
 5.1
Saudi Arabia4.8
0.4

5.2
 5.3
Mexico4.3
0.5

4.8
 5.5
Belgium3.5
1.0

4.5
 2.3
Hong Kong2.1
1.2
0.8
4.1
 5.4
(a)Country exposures presented in the table reflect 87% of total firmwide non-U.S. exposure, where exposure is attributed to a specific country, at both March 31, 2019, and December 31, 2018.
(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 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)Predominantly includes physical commodity inventory.
(f)The country rankings presented in the table as of December 31, 2018, are based on the country rankings of the corresponding exposures at March 31, 2019, not actual rankings of such exposures at December 31, 2018.


63


CRITICAL ACCOUNTING ESTIMATES USED BY THE FIRM
JPMorgan Chase’s accounting policies and use of estimates are integral to understanding its reported results. The Firm’s most complex accounting estimates require management’s judgment to ascertain the appropriate carrying value of assets and liabilities. The Firm has established policies and control procedures intended to ensure that estimation methods, including any judgments made as part of such methods, are well-controlled, independently reviewed and applied consistently from period to period. The methods used and judgments made reflect, among other factors, the nature of the assets or liabilities and the related business and risk management strategies, which may vary across the Firm’s businesses and portfolios. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The Firm believes its estimates for determining the carrying value of its assets and liabilities are appropriate. The following is a brief description of the Firm’s critical accounting estimates involving significant judgments.
Allowance for credit losses
The Firm’s allowance for credit losses 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. For further information on these components, areas of judgment and methodologies used in establishing the Firm’s allowance for credit losses, refer to pages 120–122, page 141 and Note 13 of JPMorgan Chase’s 2018 Form 10-K; and refer to Allowance for credit losses on pages 55–56 and Note 12 of this Form 10-Q.
As noted in the discussion on page 141 of JPMorgan Chase’s 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.
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 March 31, 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 expectations could imply:
an increase to modeled credit loss estimates of approximately $225 million for PCI loans.
an increase to modeled annual credit loss estimates of approximately $50 million for residential real estate loans, excluding PCI loans.
For credit card loans, a 100 basis point increase in unemployment rates from expectations could imply an increase to modeled annual credit loss estimates of approximately $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 $1.7 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.

64


Fair value
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, refer to Note 2.
March 31, 2019
(in billions, except ratios)
Total assets at fair value Total level 3 assets
Trading–debt and equity instruments$483.0
  $4.2
Derivative receivables(a)
50.3
  5.9
Trading assets533.3
  10.1
AFS securities236.5
  
Loans3.7
  0.1
MSRs6.0
  6.0
Other29.2
  0.9
Total assets measured at fair value on a recurring basis
$808.7
  $17.1
Total assets measured at fair value on a nonrecurring basis1.0
  0.5
Total assets measured at fair value
$809.7
  $17.6
Total Firm assets$2,737.2
   
Level 3 assets as a percentage of total Firm assets(a)
   0.6%
Level 3 assets as a percentage of total Firm assets at fair value(a)
   2.2%
(a)For purposes of the table above, the derivative receivables total reflects the impact of netting adjustments; however, the $5.9 billion of derivative receivables classified as level 3 does not reflect the netting adjustment as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.
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. For a further discussion of the valuation of level 3 instruments, including unobservable inputs used, refer to Note 2.
 
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. For a further discussion of valuation adjustments applied by the Firm refer to Note 2.
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. 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.
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. For a description of the significant valuation judgments associated with goodwill impairment, refer to Goodwill impairment on page 142 of JPMorgan Chase’s 2018 Form 10-K.
For the three months ended March 31, 2019, 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 its reporting units was not impaired as of March 31, 2019.
Declines in business performance, increases in credit losses, increases in capital requirements, as well as deterioration in economic or market conditions, adverse regulatory or legislative changes or increases in the estimated market cost of equity, could cause the estimated fair values of the Firm’s reporting units 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.

65


Credit card rewards liability
JPMorgan Chase offers credit cards with various rewards programs which allow cardholders to earn rewards points based on their account activity and the terms and conditions of the rewards program. Generally, there are no limits on the points that an eligible cardholder can earn, nor do the points expire, and the points can be redeemed for a variety of rewards, including cash (predominantly in the form of account credits), gift cards and travel. The Firm maintains a rewards liability which represents the estimated cost of rewards points earned and expected to be redeemed by cardholders. The 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 billion at both March 31, 2019 and December 31, 2018, and is recorded in accounts payable and other liabilities on the Consolidated balance sheets.
Income taxes
For a description of the significant assumptions, judgments and interpretations associated with the accounting for income taxes, refer to Income taxes on page 143 of JPMorgan Chase’s 2018 Form 10-K.
Litigation reserves
For a description of the significant estimates and judgments associated with establishing litigation reserves, refer to Note 24 of this Form 10-Q, and Note 29 of JPMorgan Chase’s 2018 Form 10-K.

66


ACCOUNTING AND REPORTING DEVELOPMENTS
Financial Accounting Standards Board (“FASB”) Standards Adopted January 1, 2019
     
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.
 • Expands qualitative and quantitative leasing disclosures.

 
• Adopted January 1, 2019.
The Firm elected the available practical expedient to not reassess whether existing contracts 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.
 • For further information, refer to Note 16.
 




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 an increase in the recorded 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 test and refine 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. The Firm currently intends to estimate losses over a two-year forecast period using the 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 Firm currently expects the increase in the allowance to be in the range of $4-6 billion, primarily driven by Card. This estimate is subject 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, the macroeconomic conditions and forecasts at that 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.

67


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;
 
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 2018 Form 10-K.
Any forward-looking statements made by or on behalf of the Firm speak only as of the date they are made, and JPMorgan Chase does not undertake to update any forward-looking statements. The reader should, however, consult any further disclosures of a forward-looking nature the Firm may make in any subsequent Form 10-Ks, Form 10-Qs, or Current Reports on Form 8-K.

68



JPMorgan Chase & Co.
Consolidated statements of income (unaudited)
  Three months ended
March 31,
(in millions, except per share data) 2019
 2018
Revenue    
Investment banking fees $1,840
 $1,736
Principal transactions 4,076
 3,952
Lending- and deposit-related fees 1,482
 1,477
Asset management, administration and commissions 4,114
 4,309
Investment securities gains/(losses) 13
 (245)
Mortgage fees and related income 396
 465
Card income 1,274
 1,275
Other income 1,475
 1,626
Noninterest revenue 14,670
 14,595
Interest income 21,894
 17,695