Docoh
Loading...

JPM JPMorgan Chase & Co.

Filed: 3 Aug 20, 4:13pm
0000019617 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:InterestRateContractMember jpm:MeasurementInputInterestRateVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2020-06-30 0000019617 us-gaap:CommodityMember 2020-04-01 2020-06-30 0000019617 jpm:SeriesIPreferredStockMember 2019-01-01 2019-06-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended Commission file 
June 30, 2020
 number1-5805 
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
Delaware 13-2624428
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. employer
identification no.)
    
383 Madison Avenue,  
New York,New York 10179
(Address of principal executive offices) 
(Zip Code)

Registrant’s telephone number, including area code: (212) 270-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of each 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 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
Depositary Shares, each representing a one-four hundredth interest in a share of 4.75% Non-Cumulative Preferred Stock, Series GGJPM PR JThe 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
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer

Accelerated filer
    
Non-accelerated filerSmaller reporting company
    
  Emerging growth company
    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 
Number of shares of common stock outstanding as of June 30, 2020: 3,047,604,487
 



FORM 10-Q
TABLE OF CONTENTS
Page
Item 1. 
  
 93
 94
 95
 96
 97
 98
 188
 189
 191
Item 2. 
 3
 4
 5
 13
 18
 21
 22
 24
 48
 49
 55
 62
 67
 79
 80
 85
 86
 87
 88
 91
 92
Item 3.200
Item 4.200
 
Item 1.200
Item 1A.200
Item 2.201
Item 3.201
Item 4.201
Item 5.201
Item 6.202


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)

      Six months ended June 30,
2Q20
1Q20
4Q19
3Q19
2Q19
 2020
2019
Selected income statement data        
Total net revenue(a)
$32,980
$28,192
$28,285
$29,291
$28,747
 $61,172
$57,823
Total noninterest expense(a)
16,942
16,791
16,293
16,372
16,256
 33,733
32,604
Pre-provision profit(b)
16,038
11,401
11,992
12,919
12,491
 27,439
25,219
Provision for credit losses10,473
8,285
1,427
1,514
1,149
 18,758
2,644
Income before income tax expense5,565
3,116
10,565
11,405
11,342
 8,681
22,575
Income tax expense878
251
2,045
2,325
1,690
 1,129
3,744
Net income$4,687
$2,865
$8,520
$9,080
$9,652
 $7,552
$18,831
         
Earnings per share data        
Net income:     Basic$1.39
$0.79
$2.58
$2.69
$2.83
 $2.17
$5.48
         Diluted1.38
0.78
2.57
2.68
2.82
 2.17
5.46
Average shares: Basic3,076.3
3,095.8
3,140.7
3,198.5
3,250.6
 3,086.1
3,274.3
         Diluted3,081.0
3,100.7
3,148.5
3,207.2
3,259.7
 3,090.8
3,283.9
         
Market and per common share data        
Market capitalization286,658
274,323
429,913
369,133
357,479
 286,658
357,479
Common shares at period-end3,047.6
3,047.0
3,084.0
3,136.5
3,197.5
 3,047.6
3,197.5
Book value per share76.91
75.88
75.98
75.24
73.88
 76.91
73.88
Tangible book value per share (“TBVPS”)(b)
61.76
60.71
60.98
60.48
59.52
 61.76
59.52
Cash dividends declared per share0.90
0.90
0.90
0.90
0.80
 1.80
1.60
         
Selected ratios and metrics        
Return on common equity (“ROE”)(c)
7%4%14%15%16% 6%16%
Return on tangible common equity (“ROTCE”)(b)(c)
9
5
17
18
20
 7
20
Return on assets(b)
0.58
0.40
1.22
1.30
1.41
 0.50
1.40
Overhead ratio51
60
58
56
57
 55
56
Loans-to-deposits ratio51
55
61
62
63
 51
63
Liquidity coverage ratio (“LCR”) (average)117
114
116
115
113
 117
113
Common equity Tier 1 (“CET1”) capital ratio(d)
12.4
11.5
12.4
12.3
12.2
 12.4
12.2
Tier 1 capital ratio(d)
14.3
13.3
14.1
14.1
14.0
 14.3
14.0
Total capital ratio(d)
16.7
15.5
16.0
15.9
15.8
 16.7
15.8
Tier 1 leverage ratio(d)
6.9
7.5
7.9
7.9
8.0
 6.9
8.0
Supplementary leverage ratio (“SLR”)(d)
6.8
6.0
6.3
6.3
6.4
 6.8
6.4
         
Selected balance sheet data (period-end)        
Trading assets$526,042
$548,580
$411,103
$495,875
$523,373
 $526,042
$523,373
Investment securities, net of allowance for credit losses558,791
471,144
398,239
394,251
307,264
 558,791
307,264
Loans978,518
1,015,375
959,769
945,218
956,889
 978,518
956,889
Total assets3,213,115
3,139,431
2,687,379
2,764,661
2,727,379
 3,213,115
2,727,379
Deposits1,931,029
1,836,009
1,562,431
1,525,261
1,524,361
 1,931,029
1,524,361
Long-term debt317,003
299,344
291,498
296,472
288,869
 317,003
288,869
Common stockholders’ equity234,403
231,199
234,337
235,985
236,222
 234,403
236,222
Total stockholders’ equity264,466
261,262
261,330
264,348
263,215
 264,466
263,215
Headcount256,710
256,720
256,981
257,444
254,983
 256,710
254,983
         
Credit quality metrics        
Allowances for loan losses and lending-related commitments$34,301
$25,391
$14,314
$14,400
$14,295
 $34,301
$14,295
Allowance for loan losses to total retained loans3.32%2.32%1.39%1.42%1.39% 3.32%1.39%
Nonperforming assets$8,440
$6,421
$4,497
$5,343
$5,260
 $8,440
$5,260
Net charge-offs1,560
1,469
1,494
1,371
1,403
 3,029
2,764
Net charge-off rate0.64%0.62%0.63%0.58%0.60% 0.63%0.59%
Effective January 1, 2020, the Firm adopted the Financial Instruments – Credit Losses (“CECL”) accounting guidance. Refer to Note 1 for further information.
(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Tangible common equity (“TCE”) is also a non-GAAP financial measure. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 22-23 for a further discussion of these measures.
(c)Quarterly ratios are based upon annualized amounts.
(d)Reflects the relief provided by the Federal Reserve Board in response to the COVID-19 pandemic, including the CECL capital transition provisions that became effective in the first quarter of 2020. As of June 30, 2020, the SLR reflects the temporary exclusions of U.S. Treasury securities and deposits at Federal Reserve Banks. Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 11-12 and Capital Risk Management on pages 49-54 of this Form 10-Q for additional information. Refer to Capital Risk Management on pages 85-92 of JPMorgan Chase’s 2019 Form 10-K for additional information on the Firm’s capital metrics.

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 second quarter of 2020.
This Quarterly Report on Form 10-Q for the second quarter of 2020 (“Form 10-Q”) should be read together with JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”). Refer to the Glossary of terms and acronyms and line of business (“LOB”) metrics on pages 191-199 for definitions of terms and acronyms used throughout this Form 10-Q.
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management, speak only as of the date of this Form 10-Q and are subject to significant risks and uncertainties. For a discussion of certain of those risks and uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties, refer to Forward-looking Statements on page 92 of this Form 10-Q, Part II, Item 1A, Risk Factors on pages 200-201 of this Form 10-Q and Part I, Item 1A, Risk factors, on pages 6-28 of the 2019 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 $3.2 trillion in assets and $264.5 billion in stockholders’ equity as of June 30, 2020. 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 subsidiary is JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank N.A.”), a national banking association with U.S. branches in 38 states and Washington, D.C. as of June 30, 2020. JPMorgan Chase’s principal non-bank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiary outside the U.S. is J.P. Morgan Securities plc, a U.K.-based 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 26 of this Form 10-Q and Note 32 of JPMorgan Chase’s 2019 Form 10-K.
The Firm's website is www.jpmorganchase.com. JPMorgan Chase makes available on its website, free of charge, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after it electronically files or furnishes such material to the U.S. Securities and Exchange Commission (the “SEC”) at www.sec.gov. JPMorgan Chase also makes additional information about the Firm available on the Investor Relations section of its website at https://www.jpmorganchase.com/corporate/investor-relations/investor-relations.htm.


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 LOBs, this Form 10-Q and the 2019 Form 10-K should be read together and in their entirety.
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information.
Financial performance of JPMorgan Chase        
(unaudited)
As of or for the period ended,
(in millions, except per share data and ratios)
Three months ended June 30, Six months ended June 30,
2020
 2019
 Change
 2020
 2019
 Change
Selected income statement data           
Total net revenue(a)
$32,980
 $28,747
 15 % $61,172
 $57,823
 6 %
Total noninterest expense(a)
16,942
 16,256
 4
 33,733
 32,604
 3
Pre-provision profit16,038
 12,491
 28
 27,439
 25,219
 9
Provision for credit losses10,473
 1,149
 NM
 18,758
 2,644
 NM
Net income4,687
 9,652
 (51) 7,552
 18,831
 (60)
Diluted earnings per share$1.38
 $2.82
 (51) $2.17
 $5.46
 (60)
Selected ratios and metrics           
Return on common equity7% 16%   6% 16%  
Return on tangible common equity9
 20
   7
 20
  
Book value per share$76.91
 $73.88
 4
 $76.91
 $73.88
 4
Tangible book value per share61.76
 59.52
 4
 61.76
 59.52
 4
Capital ratios(b)
           
CET112.4% 12.2%   12.4% 12.2%  
Tier 1 capital14.3
 14.0
   14.3
 14.0
  
Total capital16.7
 15.8
   16.7
 15.8
  
(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Reflects the relief provided by the Federal Reserve Board in response to the COVID-19 pandemic, including the CECL capital transition provisions that became effective in the first quarter of 2020. Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 11-12 and Capital Risk Management on pages 49-54 of this Form 10-Q for additional information. Refer to Capital Risk Management on pages 85-92 of JPMorgan Chase’s 2019 Form 10-K for additional information on the Firm’s capital metrics.

Comparisons noted in the sections below are for the second quarter of 2020 versus the second quarter of 2019, unless otherwise specified.
Firmwide overview
JPMorgan Chase reported net income of $4.7 billion for the second quarter of 2020, or $1.38 per share, on net revenue of $33.0 billion. The Firm reported ROE of 7% and ROTCE of 9%. The Firm recorded a number of significant items in the second quarter of 2020, including an addition to the allowance for credit losses of $8.9 billion, $678 million of markups on held-for-sale positions, including unfunded commitments, in the bridge financing portfolio in CIB and CB, and a $510 million gain in Credit Adjustments & Other in CIB driven by funding spread tightening on derivatives.
Net income was down 51%, driven by an increase in the provision for credit losses across the Firm.
 
Total net revenue increased 15%. Noninterest revenue was $19.1 billion, up 33%, largely driven by higher CIB Markets revenue and Investment Banking fees. The increase in revenue also included $678 million of markups on held-for-sale positions, including unfunded commitments, in the bridge financing portfolio in CIB and CB, and a $510 million gain in Credit Adjustments & Other in CIB driven by funding spread tightening on derivatives. Net interest income was $13.9 billion, down 4%, with the impact of lower rates predominantly offset by higher net interest income in CIB Markets and balance sheet growth.
Noninterest expense was $16.9 billion, up 4%, predominantly driven by revenue-related expense, primarily compensation, partially offset by lower marketing expense in Card as a result of lower travel-related benefits and lower investments in marketing campaigns, as well as lower structural expense.


5


The provision for credit losses was $10.5 billion, up $9.3 billion from the prior year, driven by additions to the allowance for credit losses, reflecting further deterioration and increased uncertainty in the macroeconomic outlook as a result of the impact of the COVID-19 pandemic. The addition in the wholesale allowance was $4.6 billion across multiple industry sectors, and the addition in the consumer allowance was $4.4 billion, largely in Card.
The total allowance for credit losses was $34.3 billion at June 30, 2020, and the Firm had a loan loss coverage ratio of 3.32%, compared with 1.39% in the prior year, driven by the additions to allowance for credit losses and the adoption of CECL. The Firm’s nonperforming assets totaled $8.4 billion at June 30, 2020, an increase from $5.3 billion in the prior year. The increase was driven by downgrades in the wholesale portfolio across multiple industries on client credit deterioration, and the inclusion of purchased credit deteriorated loans in the mortgage portfolio, which are subject to nonaccrual loan treatment following the adoption of CECL.
Firmwide average loans of $1.0 trillion were up 4%, largely reflecting drawdowns on committed revolving credit facilities in March and higher loan balances in AWM, as well as loans originated under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). The loan growth was partially offset by lower loan balances in Home Lending and Card.
Firmwide average deposits of $1.9 trillion were up 25%, reflecting significant inflows across the Firm, primarily driven by the COVID-19 pandemic, as customers and clients looked to remain liquid as a result of market conditions.
 
Selected capital-related metrics
The Firm’s CET1 capital was $191 billion, and the Standardized and Advanced CET1 ratios were 12.4% and 13.2%, respectively.
The Firm’s SLR was 6.8%. As of June 30, 2020, the SLR reflects the temporary exclusions of U.S. Treasury securities and deposits at Federal Reserve Banks, as required by the Federal Reserve’s interim final rule issued on April 1, 2020. The Firm’s SLR excluding the temporary relief was 5.7%.
The Firm grew TBVPS, ending the second quarter of 2020 at $61.76, up 4% versus the prior year.
ROTCE and TBVPS are non-GAAP financial measures. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 22-23 for a further discussion of each of these measures.

6


Business segment highlights
Selected business metrics for each of the Firm’s four LOBs are presented below for the second quarter of 2020.
CCB
ROE
(2)%
 
Average deposits up 20%; client investment assets up 9%
Average loans down 7%; credit card sales volume down 23%
Provision for credit losses of $5.8 billion, predominantly driven by an addition to the allowance for credit losses of $4.6 billion
CIB
ROE
27%
 
#1 ranking for Global Investment Banking fees with 9.8% wallet share year-to-date
Total Markets revenue of $9.7 billion, up 79%, with Fixed Income Markets up 99% and Equity Markets up 38%
Provision for credit losses of $2.0 billion, predominantly driven by an addition to the allowance for credit losses of $1.8 billion
CB
ROE
(14)%
 
Gross Investment Banking revenue of $851 million, up 44%
Average loans up 13%; average deposits up 41%
Provision for credit losses of $2.4 billion driven by an addition to the allowance for credit losses
AWM
ROE
 24%
 
Assets under management (AUM) of $2.5 trillion, up 15%
Average loans up 12%; average deposits up 20%
Provision for credit losses of $223 million, driven by an addition to the allowance for credit losses
Refer to the Business Segment Results on pages 24-47 for a detailed discussion of results by business segment.
 
Credit provided and capital raised
JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided new and renewed credit and raised capital for wholesale and consumer clients during the first six months of 2020, consisting of:
$1.2 trillion 
Total credit provided and capital raised (including loans and commitments)(a)
    
 
$107
billion
 Credit for consumers
    
 
$11
billion
 Credit for U.S. small businesses
    
 $404 billion Credit for corporations
    
 $651 billion Capital raised for corporate clients and non-U.S. government entities
    
 $53 billion 
Credit and capital raised for nonprofit and U.S. government entities(b)
    
$28 billion 
Loans under the Small Business Administration’s Paycheck Protection
Program

(a)Excludes loans under the SBA’s PPP.
(b)Includes states, municipalities, hospitals and universities.


7


Recent events
On June 29, 2020, JPMorgan Chase announced that it had completed the 2020 Comprehensive Capital Analysis and Review (“CCAR”) stress test process. The Firm’s indicative Stress Capital Buffer (“SCB”) requirement is 3.3% and the Federal Reserve Board will provide the Firm with its final SCB requirement by August 31, 2020. The Firm’s Board of Directors currently intends to maintain the quarterly common stock dividend of $0.90 per share for the third quarter of 2020. Additionally, in June 2020, the Federal Reserve directed all large bank holding companies, including the Firm, to discontinue net share repurchases, at least through the end of the third quarter of 2020.

 
2020 outlook
These current expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management, speak only as of the date of this Form 10-Q, and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements on page 92 and Risk Factors on page 200 of this Form 10-Q and pages 6–28 of JPMorgan Chase’s 2019 Form 10-K for a further discussion of certain of those risks and uncertainties and the other factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results in the full year of 2020 will be in line with the outlook set forth below, and the Firm does not undertake to update any forward-looking statements.
JPMorgan Chase’s current outlook for the remainder of 2020 should be viewed against the backdrop of the global and U.S. economies, the COVID-19 pandemic, financial markets activity, the geopolitical environment, the competitive environment, client and customer activity levels, and regulatory and legislative developments in the U.S. and other countries where the Firm does business. Each of these factors will affect the performance of the Firm and its LOBs. The Firm will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the business, economic, regulatory and legal environments in which it operates. The outlook information contained in this Form 10-Q supersedes all outlook information furnished by the Firm in its periodic reports filed with the SEC prior to the date of this Form 10-Q.
Firmwide
Management expects full-year 2020 net interest income, on a managed basis, to be approximately $56 billion, market dependent.
Management expects adjusted expense for the full-year 2020 to be approximately $65 billion.




8


Business Developments
COVID-19 Pandemic
In the first quarter of 2020, in response to the COVID-19 pandemic, the Firm invoked resiliency plans to allow its businesses to remain operational, utilizing disaster recovery sites and implementing alternative work arrangements globally, including work from home.
The Firm also implemented strategies and procedures designed to help it respond to increased market volatility, client demand for credit and liquidity, distress in certain industries/sectors and the ongoing impacts to consumers and businesses.
In the second quarter, the Firm continued its focus on responding to the COVID-19 pandemic, including developing plans to return employees to the office. The Firm continues to actively monitor the dynamic health and safety situations at local and regional levels, and plans remain flexible to adapt as these situations evolve.
Supporting clients and customers
The Firm has continued to support its clients and customers during the challenging conditions caused by the COVID-19 pandemic, including by providing liquidity. Since March, the Firm has extended more than $350 billion of new and renewed credit to its clients and customers, of which approximately $300 billion was in the wholesale businesses.
The Firm is participating in a number of U.S government facilities and programs including the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”). At June 30, 2020, the Firm had approximately $28 billion of loans under the PPP. Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 11-12 for more information on U.S. Government facilities and programs.
In addition, in March 2020 the Firm began providing payment deferrals on loans and auto leases, refunded fees, and modified covenants for clients and customers.
In the consumer portfolio segment, through June 30, 2020, the Firm has provided customer assistance to over 2 million accounts, including refunding over $83 million in fees and granting payment deferrals on over $79 billion of loans and leases, of which $42 billion was for third-party mortgage loans serviced. As of June 30, 2020 the Firm had approximately $28 billion of retained loans that were still under payment deferral.
 
In the wholesale portfolio segment, through June 30, 2020, the Firm has provided client assistance to approximately 12,000 clients, primarily risk-rated clients in CCB. The majority of the client assistance was payment deferrals on approximately $23 billion of loans. As of June 30, 2020, there were approximately $17 billion of retained loans that were still under payment deferral.
Refer to Credit Portfolio on pages 60-61 for additional information on assistance granted to customers and clients. Refer to Consumer Credit portfolio on pages 62-66 and Wholesale Credit Portfolio on pages 67-76 for additional information on retained loans that were still under payment deferral as of June 30, 2020.
Approximately three-quarters of the Firm’s branch network is operational, and ATMs remain accessible. The Firm also continues to provide a wide range of banking services accessible to clients and customers online.
Protecting and supporting employees
In addition to widespread work from home arrangements, the Firm has taken actions to protect and support its employees. These actions include providing increased safety measures for those employees whose job functions require them to continue to be onsite, a special payment for certain eligible employees and expanded healthcare resources.
Supporting communities
Since March, the Firm has committed $250 million to help address humanitarian needs and long-term economic challenges posed by the COVID-19 pandemic on the communities in which the Firm operates. This includes a $200 million commitment to be deployed over time to support underserved small businesses and nonprofits and $50 million in grants to help vulnerable communities impacted by the pandemic.


9


Departure of the U.K. from the EU
The Firm continues to execute on its Firmwide Brexit Implementation program and remains 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. The Firm’s Brexit-related planning in the second half of 2020 will focus on the possibility that the U.K. will complete its departure from the EU without having agreed the terms of their future relationship, which is commonly referred to as “hard Brexit,” as the July 1, 2020 deadline for the U.K. to request an extension of the transition period has passed. This will require completion of the relocation of certain front office roles from the U.K. to EU locations, and finalization of the migration of EU clients and certain positions to EU entities by the end of 2020. The COVID-19 pandemic has added incremental risk to the Firm’s Brexit Implementation program due to the potential impact on its ability to execute changes such as relocation of employees given travel restrictions, or the ability of clients to be operationally ready to the extent that they have diverted resources during 2020 to address the effects of the pandemic.
 
Interbank Offered Rate (“IBOR”) transition
On March 12, 2020, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update providing optional expedients and exceptions for applying generally accepted accounting principles to contracts and hedge relationships affected by reference rate reform. This update provides for various elective options, referred to as “practical expedients,” that are intended to simplify the operational impact of applying U.S. GAAP to certain transactions. The Firm expects to apply certain of these practical expedients relating to the IBOR transition in the second half of 2020. Refer to Accounting and Reporting Developments on page 91 for additional information. The Firm continues to monitor the transition relief being considered by the International Accounting Standards Board (“IASB”) and U.S. Treasury Department regarding accounting and tax implications of reference rate reform.
The Firm also continues to develop and implement plans to appropriately mitigate the risks associated with IBOR discontinuation. Refer to Business Developments on page 47 of the 2019 Form 10-K for a discussion of the Firm’s initiatives to address the expected discontinuation of the London Interbank Offered Rate (“LIBOR”) and other IBORs.


10


Regulatory Developments Relating to the COVID-19 Pandemic
Since March 2020, the U.S. government as well as central banks and banking authorities around the world have taken and continue to take actions to help individuals, households and businesses that have been adversely affected by the economic disruption caused by the COVID-19 pandemic. The CARES Act, which was signed into law on March 27, 2020, provides, among other things, funding to support loan facilities to assist consumers and businesses. Set forth below is a summary as of the date of this Form 10-Q of U.S. government actions currently impacting the Firm and U.S. government programs in which the Firm is participating to support individuals, businesses, and the broader economy. The Firm will continue to assess ongoing developments in government actions in response to the COVID-19 pandemic.
U.S. government actions
Eligible retained income definition. On March 17, 2020, the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (“Federal Reserve”), and the Federal Deposit Insurance Corporation (“FDIC”), collectively the “federal banking agencies,” issued an interim final rule that revised the definition of “eligible retained income” in the regulatory capital rules that apply to all U.S. banking organizations. On March 23, 2020, the Federal Reserve issued an interim final rule that revised the definition of “eligible retained income” for purposes of the total loss-absorbing capacity (“TLAC”) buffer requirements that apply to global systemically important banking organizations. The revised definition of eligible retained income makes any automatic limitations on payout distributions that could apply under the agencies’ capital rules or TLAC rule take effect on a more graduated basis in the event that a banking organization’s capital, leverage and TLAC ratios were to decline below regulatory requirements (including buffers). The March 17, 2020 interim final rule was issued, in conjunction with an interagency statement encouraging banking organizations to use their capital and liquidity buffers, to further support banking organizations’ abilities to lend to households and businesses affected by the COVID-19 pandemic.
Reserve requirements. On March 26, 2020, the Federal Reserve reduced reserve requirement ratios to zero percent, effectively eliminating the reserve requirement for all depository institutions, an action that freed up liquidity in the banking system to support lending to households and businesses.
Refer to Liquidity Risk Management on pages 55-59 and Note 21 for additional information on the reduction to the reserve requirement.
Regulatory Capital - Current Expected Credit Losses (“CECL”) transition delay. On March 31, 2020, the federal banking agencies issued an interim final rule that provided banking organizations with the option to delay the effects of CECL on regulatory capital for two years, followed by a three-year
 
transition period (“CECL capital transition provisions”). The Firm elected to apply the CECL capital transition provisions.
Refer to Capital Risk Management on pages 49-54 and Note 22 on pages 176-177 for additional information on the CECL capital transition provisions and the impact to the Firm’s capital metrics.
Supplementary leverage ratio (“SLR”) temporary revision. On April 1, 2020, the Federal Reserve issued an interim final rule that requires, on a temporary basis, the calculation of total leverage exposure for purposes of calculating the SLR for bank holding companies, to exclude the on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks. These exclusions became effective April 1, 2020, and will remain in effect through March 31, 2021.
Refer to Capital Risk Management on pages 49-54 and Note 22 for additional information on the Firm’s SLR.
Loan modifications. On April 7, 2020, the federal banking agencies along with the National Credit Union Administration, and the Consumer Financial Protection Bureau, in consultation with the state financial regulators, issued an interagency statement revising a March 22, 2020 interagency statement on loan modifications and the reporting for financial institutions working with customers affected by the COVID-19 pandemic (the “IA Statement”). The IA Statement reconfirmed that efforts to work with borrowers where the loans are prudently underwritten, and not considered past due or carried on nonaccrual status, should not result in the loans automatically being considered modified in a troubled debt restructuring (“TDR”) for accounting and financial reporting purposes, or for purposes of their respective risk-based capital rules, which would otherwise require financial institutions subject to the capital rules to hold more capital. The IA Statement also clarified the interaction between its previous guidance and Section 4013 of the CARES Act, which provides certain financial institutions with the option to suspend the application of accounting guidance for TDRs for a limited period of time for loan modifications made to address the effects of the COVID-19 pandemic.
The Firm has granted various forms of assistance to customers and clients impacted by the COVID-19 pandemic, including payment deferrals and covenant modifications. The majority of the Firm’s COVID-19 related loan modifications have not been considered TDRs as:
they represent short-term or other insignificant modifications, whether under the Firm’s regular loan modification assessments or the IA Statement guidance, or
the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided under section 4013 of the CARES Act.
To the extent that certain modifications do not meet any of the above criteria, the Firm accounts for them as TDRs. Refer to Credit Portfolio on pages 60-61 and Note 12 for

11


additional information on the Firm’s loan modification activities.
U.S. government facilities and programs. Beginning in March 2020, the Federal Reserve announced a suite of facilities using its emergency lending powers under section 13(3) of the Federal Reserve Act to support the flow of credit to individuals, households and businesses adversely affected by the COVID-19 pandemic and to support the broader economy. These facilities include the Money Market Mutual Fund Liquidity Facility (“MMLF”), Main Street Lending Facilities, Primary Dealer Credit Facility (“PDCF”), Commercial Paper Funding Facility (“CPFF”), Secondary Market Corporate Credit Facility (“SMCCF”) and Term Asset-Backed Securities Loan Facility (“TALF”). In addition, beginning April 3, 2020, the PPP, established by the CARES Act and administered by the SBA, authorized eligible lenders to provide nonrecourse loans to eligible borrowers until August 8, 2020 to provide an incentive for these businesses to keep their workers on their payroll. The Firm has participated and is participating in certain of these facilities and programs, as needed, to assist its clients and customers or to support the broader economy.
Refer to Capital Risk Management on pages 49-54, Liquidity Risk Management on pages 55-59, Note 22 and Note 24 for additional information on the Firm’s participation in the MMLF. Refer to Liquidity Risk Management on pages 55-59 for additional information on the Firm’s participation in the PDCF. Refer to Business Developments on pages 9-10, Capital Risk Management on pages 49-54, Credit Portfolio on pages 60-61 and Note 22 for additional information on the Firm’s participation in the PPP.


12


CONSOLIDATED RESULTS OF OPERATIONS
This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2020 and 2019, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. Refer to pages 88-90 of this Form 10-Q and pages 136–138 of JPMorgan Chase’s 2019 Form 10-K for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations.
Revenue           
 Three months ended June 30, Six months ended June 30,
(in millions)2020
 2019
 Change
 2020
 2019
 Change
Investment banking fees$2,850
 $1,851
 54 % $4,716
 $3,691
 28 %
Principal transactions7,621
 3,714
 105
 10,558
 7,790
 36
Lending- and deposit-related fees(a)
1,431
 1,624
 (12) 3,137
 3,183
 (1)
Asset management, administration and commissions(a)
4,266
 4,264
 
 8,806
 8,301
 6
Investment securities gains26
 44
 (41) 259
 57
 354
Mortgage fees and related income917
 279
 229
 1,237
 675
 83
Card income(b)
974
 1,281
 (24) 1,969
 2,508
 (21)
Other income(c)
1,042
 1,292
 (19) 2,198
 2,767
 (21)
Noninterest revenue19,127
 14,349
 33
 32,880
 28,972
 13
Net interest income13,853
 14,398
 (4) 28,292
 28,851
 (2)
Total net revenue$32,980
 $28,747
 15 % $61,172
 $57,823
 6 %
(a) In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(b) In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(c) Included operating lease income of $1.4 billion and $1.3 billion for the three months ended June 30, 2020 and 2019, respectively and $2.8 billion and$2.6 billion for the six months ended June 30, 2020 and 2019, respectively.
Quarterly results
Investment banking fees increased, driven by CIB, reflecting:
higher debt underwriting fees due to increased industry-wide fees and wallet share gains in both investment-grade and high-yield bonds
higher equity underwriting fees due to increased industry-wide fees and wallet share gains, primarily in follow-on offerings and convertible securities markets
the increased activity in debt and equity underwriting reflected clients seeking access to liquidity as a result of the COVID-19 pandemic
higher advisory fees driven by a few large completed transactions.
Refer to CIB segment results on pages 31-37 and Note 6 for additional information.
Principal transactions revenue increased and included two significant items, both of which represent reversals of a portion of the losses that were recognized in the first quarter of 2020:
$678 million of markups on held-for-sale positions, including unfunded commitments, in the bridge financing portfolio in CIB and CB, compared with $896 million of markdowns in the first quarter of 2020, and
a $510 million gain in Credit Adjustments & Other in CIB driven by funding spread tightening on derivatives, compared with a $951 million loss in the first quarter of 2020.
 
Excluding these two items, principal transactions revenue increased in CIB driven by strong client activity in Fixed Income Markets primarily in Rates, Currencies & Emerging Markets, and Credit; and in Equity Markets related to derivatives and Cash Equities. The prior year included a gain from the initial public offering (“IPO”) of Tradeweb.
The increase in principal transactions revenue also reflected net gains on certain legacy private equity investments in Corporate, compared with net losses in the prior year.
Principal transactions revenue in CIB may in certain cases have offsets across other revenue lines, including net interest income. The Firm assesses its CIB Markets business performance on a total revenue basis.
Refer to CIB, CB and Corporate segment results on pages 31-37, pages 38-41 and page 46, and Note 6 for additional information.
Lending- and deposit-related fees decreased due to lower deposit-related fees in CCB, reflecting lower transaction activity and the impact of fee refunds related to the COVID-19 pandemic, partially offset by higher cash management fees in CIB and CB. Refer to CCB segment results on pages 26-30, CIB on pages 31-37 and CB on pages 38-41, respectively, and Note 6 for additional information.
For information on asset management, administration and commissions revenue, refer to CCB, CIB and AWM segment results on pages 26-30, pages 31-37 and pages 42-45, respectively, and Note 6.

13


Refer to Corporate segment results on page 46 and Note 10 for information on investment securities gains.
Mortgage fees and related income increased due to:
higher net mortgage production revenue reflecting higher production margins, partially offset by the absence of gains on loan sales in the prior year in Home Lending, and
higher net mortgage servicing revenue reflecting higher MSR risk management results due to the absence of losses resulting from updates to model inputs in the prior year partially offset by lower operating revenue reflecting a lower level of third-party loans serviced.
Refer to CCB segment results on pages 26-30, Note 6 and 15 for further information.
Card income decreased due to lower net interchange income reflecting lower card sales volumes that began in March as a result of the COVID-19 pandemic, partially offset by higher annual fees and lower acquisition costs.
Refer to CCB, CIB and CB segment results on pages 26-30, pages 31-37 and pages 38-41, as well as and Note 6 for further information.
Other income decreased, reflecting:
higher costs associated with using forward contracts to hedge certain non-U.S. dollar-denominated net investment exposures in Treasury and CIO,
increased amortization on higher levels of alternative energy investments in CIB. The increased amortization was more than offset by lower income tax expense from the associated tax credits
lower market-driven results on certain investments in Corporate
partially offset by
higher operating lease income from growth in auto operating lease volume in CCB
Refer to Note 17 for further information.
Net interest income decreased due to the impact of lower rates, predominantly offset by higher net interest income in CIB Markets and balance sheet growth.
The Firm’s average interest-earning assets were $2.8 trillion, up $481 billion, and the yield was 2.31%, down 142 bps, primarily due to lower rates. The net yield on these assets, on an FTE basis, was 1.99%, a decrease of 50 bps. The net yield excluding CIB Markets was 2.27%, down 108 bps.
Net yield excluding CIB Markets is a non-GAAP financial measure. Refer to the Consolidated average balance sheets, interest and rates schedule on pages 189–190 for further details; and the Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 22-23 for a further discussion of Net interest yield excluding CIB markets.
 
Year-to-date results
Investment banking fees increased, driven by CIB, reflecting:
higher debt underwriting fees due to increased industry-wide fees and wallet share gains in investment-grade bonds, and for high-yield bonds, after the markets stabilized in the second quarter of 2020
higher equity underwriting fees due to increased industry-wide fees and wallet share gains, primarily in follow-on offerings and convertible securities markets
the increased activity in debt and equity underwriting reflected clients seeking access to liquidity as a result of the COVID-19 pandemic
partially offset by
lower advisory fees driven by a lower number of completed transactions.
Principal transactions revenue increased despite the year-to-date results of the two significant items noted below:
a $441 million net loss in CIB’s Credit Adjustments & Other predominantly driven by losses on certain components of fair value option elected liabilities, as well as the impact of funding spread widening on derivatives, and
$218 million of net markdowns on held-for-sale positions, including unfunded commitments, in the bridge financing portfolio in CIB and CB.
Excluding these two items, principal transactions revenue increased in CIB, driven by strong client activity in Fixed Income Markets primarily in Rates, Currencies & Emerging Markets, and Credit; and in Equity Markets related to derivatives and Cash Equities.
Lending- and deposit-related fees was relatively flat as the lower deposit-related fees in CCB, reflecting lower transaction activity and the impact of fee refunds related to the COVID-19 pandemic, was offset by higher cash management fees in CIB and CB.
Asset management, administration and commissions revenue increased driven by:
higher brokerage commissions in CIB and AWM on higher client-driven volume, and
higher asset management fees in AWM as a result of inflows into liquidity products, and in CCB related to a higher level of investment assets,
partially offset by
lower volume of annuity sales in CCB.
Investment securities gains in both periods reflected the impact of repositioning the investment securities portfolio.
Mortgage fees and related income increased due to:
higher net mortgage production revenue reflecting higher mortgage production volumes and margins, partially offset by the absence of gains on loan sales in the prior year in Home Lending, and


14


higher net mortgage servicing revenue reflecting higher MSR risk management results due to the absence of losses resulting from updates to model inputs in the prior year, predominantly offset by lower operating revenue reflecting a lower level of third-party loans serviced and faster prepayment speeds on lower rates.
Card income decreased due to lower net interchange income reflecting lower card sales volumes that began in March as a result of the COVID-19 pandemic, partially offset by higher annual fees.
Other income decreased reflecting:
net losses on certain equity investments in CIB, compared with net gains in the prior year
net valuation losses on certain investments in AWM, compared with gains in the prior year
increased amortization on higher levels of alternative energy investments in CIB. The increased amortization is
 
more than offset by lower income tax expense from the associated tax credits, and
higher costs associated with using forward contracts to hedge certain non-U.S. dollar-denominated net investment exposures in Treasury and CIO,
partially offset by
higher operating lease income from growth in auto operating lease volume in CCB
Net interest income decreased due to the impact of lower rates, predominantly offset by higher net interest income in CIB Markets and balance sheet growth.
The Firm’s average interest-earning assets were $2.6 trillion, up $324 billion, and the yield was 2.70%, down 106 bps, primarily due to lower rates. The net yield on these assets, on an FTE basis, was 2.17%, a decrease of 36 bps. The net yield excluding CIB Markets was 2.61%, down 78 bps.
Provision for credit losses          
 Three months ended June 30, Six months ended June 30,
(in millions)

2020
 2019
 Change 2020
 2019
 Change
Consumer, excluding credit card$1,591
 $(366) NM $2,210
 $(246) NM
Credit card4,028
 1,440
 180 9,091
 2,642
 244
Total consumer5,619
 1,074
 423 11,301
 2,396
 372
Wholesale4,850
 75
 NM 7,444
 248
 NM
Investment securities4
 NA
 NM 13
 NA
 NM
Total provision for credit losses$10,473
 $1,149
 NM $18,758
 $2,644
 NM
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
Quarterly results
The provision for credit losses increased driven by the further deterioration and increased uncertainty in the macroeconomic environment as a result of the impact of the COVID-19 pandemic in wholesale and consumer.
The increase in wholesale reflects a net addition of $4.6 billion to the allowance for credit losses across the LOBs impacting multiple industry sectors.
The increase in consumer was driven by:
additions of $4.4 billion to the allowance for credit losses, consisting of $2.9 billion for Card, $900 million for Home Lending, $285 million for Auto, and $272 million for CBB,
partially offset by
lower net charge-offs in Card reflecting higher recoveries.
The prior year included a $234 million net reduction in the allowance for credit losses.
Refer to CCB segment results on pages 26-30, CIB on pages 31-37, CB on pages 38-41, AWM on pages 42-45, the Allowance for Credit Losses on pages 77-78, and Note 13 for additional information on the credit portfolio and the allowance for credit losses.
 
Year-to-date results
The provision for credit losses increased driven by the deterioration and uncertainty in the macroeconomic environment as a result of the impact of the COVID-19 pandemic in consumer and wholesale.
The increase in consumer was driven by:
additions of $8.7 billion to the allowance for credit losses, consisting of $6.6 billion for Card, $1.2 billion for Home Lending, $520 million for Auto, and $352 million for CBB,
partially offset by
lower net charge-offs reflecting higher recoveries in Home Lending on a loan sale in the first quarter of 2020, and in Card, largely offset by higher charge-offs in Card on loan growth in the prior year.
The prior year included a $221 million net reduction in the allowance for credit losses.
The increase in wholesale reflects a net addition of $7.0 billion to the allowance for credit losses across the LOBs impacting multiple industry sectors.

15


Noninterest expense           
 Three months ended June 30, Six months ended June 30,
(in millions)

2020
 2019
 Change
 2020
 2019
 Change
Compensation expense$9,509
 $8,547
 11 % $18,404
 $17,484
 5 %
Noncompensation expense:           
Occupancy1,080
 1,060
 2
 2,146
 2,128
 1
Technology, communications and equipment2,590
 2,378
 9
 5,168
 4,742
 9
Professional and outside services1,999
 2,212
 (10) 4,027
 4,251
 (5)
Marketing(a)
481
 777
 (38) 1,281
 1,609
 (20)
Other expense(b)(c)
1,283
 1,282
 
 2,707
 2,390
 13
Total noncompensation expense7,433
 7,709
 (4) 15,329
 15,120
 1
Total noninterest expense$16,942
 $16,256
 4 % $33,733
 $32,604
 3 %
(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Included Firmwide legal expense/(benefit) of $118 million and $69 million for the three months ended June 30, 2020 and 2019, respectively, and $315 million and $(12) million for the six months ended June 30, 2020 and 2019, respectively.
(c)Included FDIC-related expense of $218 million and $121 million for the three months ended June 30, 2020 and 2019, respectively, and $317 million and $264 million for the six months ended June 30, 2020 and 2019, respectively.
Quarterly results
Compensation expense increased driven by higher revenue-related expense in CIB.
Noncompensation expense decreased as a result of:
lower marketing expense in Card as a result of lower travel-related benefits and investments in marketing campaigns
lower structural expense, including lower travel and entertainment across the businesses, as well as lower payment processing costs,
partially offset by
higher volume-related expense, including depreciation from growth in auto lease assets in CCB, and brokerage expense in CIB
higher investments in the businesses, including technology.

 
Year-to-date results
Compensation expense increased driven by higher revenue-related expense in CIB, partially offset by lower structural compensation expense in Corporate.
Noncompensation expense increased as a result of:
higher legal expense primarily in CIB and Corporate
higher volume-related expense, including depreciation from growth in auto lease assets in CCB, and brokerage expense in CIB
higher investments in the businesses, including technology,
partially offset by
lower marketing expense in Card as a result of lower travel-related benefits and investments in marketing campaigns
lower structural expense, including lower travel and entertainment across the businesses, as well as lower payment processing costs.

16


Income tax expense       
 Three months ended June 30, Six months ended June 30,
(in millions)

2020
 2019
 Change
 2020
 2019
 Change
Income before income tax expense$5,565
 $11,342
 (51)% $8,681
 $22,575
 (62)%
Income tax expense878
 1,690
 (48) 1,129
 3,744
 (70)
Effective tax rate15.8% 14.9%   13.0% 16.6%  
Quarterly results
The effective tax rate increased as the reduction in income tax expense due to the impact of changes in the level and mix of income and expenses subject to U.S. federal, and state and local taxes was more than offset by the absence of the $768 million of tax benefits recorded in the prior year related to the resolution of certain tax audits.
 
Year-to-date results
The effective tax rate decreased driven by changes in the level and mix of income and expenses subject to U.S. federal, and state and local taxes, as well as the more significant effect of certain tax benefits on a lower level of pre-tax income. The decrease was partially offset by the recognition of $874 million of tax benefits recorded in the prior year related to the resolution of certain tax audits.

17


CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information.
Consolidated balance sheets analysis
The following is a discussion of the significant changes between June 30, 2020, and December 31, 2019.
Selected Consolidated balance sheets data
(in millions)June 30,
2020

 December 31,
2019

Change
Assets    
Cash and due from banks$20,544
 $21,704
(5)%
Deposits with banks473,185
 241,927
96
Federal funds sold and securities purchased under resale agreements256,980
 249,157
3
Securities borrowed142,704
 139,758
2
Trading assets526,042
 411,103
28
Available-for-sale securities485,883
 350,699
39
Held-to-maturity securities, net of allowance for credit losses72,908
 47,540
53
Investment securities, net of allowance for credit losses558,791
 398,239
40
Loans978,518
 959,769
2
Allowance for loan losses(32,092) (13,123)145
Loans, net of allowance for loan losses946,426
 946,646

Accrued interest and accounts receivable72,260
 72,861
(1)
Premises and equipment26,301
 25,813
2
Goodwill, MSRs and other intangible assets51,669
 53,341
(3)
Other assets138,213
 126,830
9
Total assets$3,213,115
 $2,687,379
20 %
Cash and due from banks and deposits with banks increased primarily as a result of significant deposit inflows, which also funded asset growth across the Firm, including in investment securities. Deposits with banks reflect the Firm’s placements of its excess cash with various central banks, including the Federal Reserve Banks.
Refer to Liquidity Risk Management on pages 55-59 and Note 11 for information on federal funds sold and securities purchased under resale agreements.
Trading assets increased compared with lower levels at year-end predominantly due to client-driven market-making activities in debt instruments in Fixed Income Markets, as well as higher derivative receivables in CIB as a result of market movements.
Refer to Notes 2 and 5 for additional information.
Investment securities increased, reflecting net purchases of U.S. Treasuries and U.S. GSE and government agency MBS in the available-for-sale (“AFS”) portfolio, driven by interest rate risk management activities and cash deployment, partially offset by a non-cash transfer of $26 billion of U.S. GSE and government agency MBS from the AFS to the held-to-maturity (“HTM”) portfolio, resulting in a comparable increase in HTM.
Refer to Corporate segment results on page 46, Investment Portfolio Risk Management on page 79, and Notes 2 and 10 for additional information on Investment securities.
 
Loans increased, reflecting:
the outstanding loans from the March drawdown activity on committed revolving credit facilities in CIB and CB, as a result of the COVID-19 pandemic, and the impact of the PPP loans in CBB and CB,
partially offset by
lower loans in Card due to the decline in sales volume that began in March as a result of the COVID-19 pandemic, as well as the impact of seasonality; and lower loans in Home Lending primarily due to net repayments.
The allowance for loan losses increased primarily reflecting the deterioration and uncertainty in the macroeconomic environment as a result of the impact of the COVID-19 pandemic, consisting of:
a $8.6 billion addition in consumer, predominantly in the credit card and residential real estate portfolios
a net $6.2 billion addition in wholesale, across the LOBs impacting multiple industry sectors, and
a net $4.2 billion addition as a result of the adoption of CECL.
There were also additions to the allowance for lending-related commitments, which is included in other liabilities on the consolidated balance sheets, of $920 million related to the impact of the COVID-19 pandemic, and $98 million related to the adoption of CECL, resulting in total additions to the allowance for credit losses of $15.7 billion and $4.3 billion, respectively, as of June 30, 2020.

18


Refer to Credit and Investment Risk Management on pages 60-79, and Notes 1, 2, 3, 12 and 13 for a more detailed discussion of loans and the allowance for loan losses.
Goodwill, MSRs and other intangibles decreased reflecting lower MSRs as a result of faster prepayment speeds on lower rates and the realization of expected cash flows, partially offset by net additions to the MSRs. Refer to Note 15 for additional information.
 
Other assets increased reflecting higher cash collateral placed with central counterparties, and the Firm’s participation in the Federal Reserve Bank of Boston’s (“FRBB”) MMLF. The assets purchased from money market mutual fund clients related to the MMLF were funded by nonrecourse advances from the FRBB, which are recorded in short-term borrowings. Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 11-12 and Liquidity Risk Management on pages 55-59 for additional information.
Selected Consolidated balance sheets data (continued) 
(in millions)June 30,
2020

 December 31,
2019

Change
Liabilities    
Deposits$1,931,029
 $1,562,431
24%
Federal funds purchased and securities loaned or sold under repurchase agreements235,647
 183,675
28
Short-term borrowings48,014
 40,920
17
Trading liabilities165,212
 119,277
39
Accounts payable and other liabilities230,916
 210,407
10
Beneficial interests issued by consolidated variable interest entities (“VIEs”)20,828
 17,841
17
Long-term debt317,003
 291,498
9
Total liabilities2,948,649
 2,426,049
22
Stockholders’ equity264,466
 261,330
1
Total liabilities and stockholders’ equity$3,213,115
 $2,687,379
20%
Deposits increased reflecting significant inflows across the LOBs primarily driven by the COVID-19 pandemic, as customers and clients looked to remain liquid as a result of market conditions.
In the wholesale businesses, the inflows principally occurred in March, and in general were maintained through the second quarter.
In CCB, the increase was driven by the continued growth in both existing and new accounts, as well as COVID-19 related factors, such as the government stimulus for consumers and small businesses, lower consumer spending, and delays in tax payments.
Refer to Liquidity Risk Management on pages 55-59 and Notes 2 and 16 for additional information.
Federal funds purchased and securities loaned or sold under repurchase agreements increased reflecting:
in CIB, a net increase related to client-driven market-making activities, and higher secured financing of trading assets, partially offset by a decline in the Firm's participation in the Federal Reserve's open market operations, and
in Treasury and CIO, higher secured financing of AFS investment securities. Refer to Liquidity Risk Management on pages 55-59 and Note 11 for additional information.
Short-term borrowings increased driven by the Firm’s participation in the FRBB’s MMLF, as well as a change in mix of funding sources in CIB activities from securities sold under repurchase agreements in CIB. The nonrecourse advances from the FRBB funded the assets purchased from money market mutual fund clients related to the MMLF, which are recorded in other assets.
 
Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 11-12 and Liquidity Risk Management on pages 55-59 for additional information.
Trading liabilities increased in CIB as a result of client-driven market-making activities, which resulted in higher levels of short positions in debt instruments in Fixed Income Markets, as well as higher derivative payables as a result of market movements. Refer to Notes 2 and 5 for additional information.
Accounts payable and other liabilities increased reflecting higher client payables related to client-driven activities in CIB.
Beneficial interests issued by consolidated VIEs increased reflecting higher levels of Firm-administered multi-seller conduit commercial paper held by third parties.
Refer to Off-Balance Sheet Arrangements on page 21 and Notes 14 and 23 for further information on Firm-sponsored VIEs and loan securitization trusts.
Long-term debt increased as a result of higher FHLB net advances, net issuance of senior and subordinated debt, and higher fair value hedge accounting adjustments related to lower interest rates. Refer to Liquidity Risk Management on pages 55-59 for additional information on the Firm’s long-term debt activities.
Stockholders’ equity increased reflecting the net impact of capital actions, net income, the adoption of CECL and an increase in accumulated other comprehensive income (“AOCI”). The increase in AOCI was driven by net unrealized gains on AFS securities, and higher valuation of interest rate cash flow hedges. Refer to page 96 for information on changes in stockholders’ equity and Capital actions on page 53.

19


Consolidated cash flows analysis
The following is a discussion of cash flow activities during the six months ended June 30, 2020 and 2019.
(in millions) Six months ended June 30,
 2020
 2019
Net cash provided by/(used in)    
Operating activities $(37,032) $(94,734)
Investing activities (183,617) 27,424
Financing activities 451,436
 56,469
Effect of exchange rate changes on cash (689) 86
Net increase/(decrease) in cash and due from banks and deposits with banks $230,098
 $(10,755)
Operating activities
In 2020, cash used resulted from higher trading assets and other assets, largely offset by higher trading liabilities and accounts payable and other liabilities.
In 2019, cash used primarily resulted from higher trading assets-debt and equity instruments and securities borrowed, partially offset by increased trading liabilities and accounts payable and other liabilities, and net proceeds from loans held-for-sale.
 
Investing activities
In 2020, cash used was driven by net purchases of investment securities and net loan originations.
In 2019, cash provided resulted from a decrease in securities purchased under resale agreements, and net proceeds from sales of loans held-for-investment, partially offset by net purchases of investment securities.
Financing activities
In 2020, cash provided was due to higher deposits, an increase in federal funds purchased and securities loaned or sold under repurchase agreements, and net proceeds from long-term borrowings.
In 2019, cash provided resulted from higher securities loaned or sold under repurchase agreements and higher deposits.
For both periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock. On March 15, 2020, in response to the COVID-19 pandemic, the Firm temporarily suspended repurchases of its common equity. Additionally, in June 2020, the Federal Reserve directed all large bank holding companies, including the Firm, to discontinue net share repurchases, at least through the end of the third quarter of 2020.
* * *
Refer to Consolidated Balance Sheets Analysis on pages 18-19, Capital Risk Management on pages 49-54, and Liquidity Risk Management on pages 55-59 of this Form 10-Q, and pages 93–98 of JPMorgan Chase’s 2019 Form 10-K for a further discussion of the activities affecting the Firm’s cash flows.

20


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 as 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.
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. Refer to Note 1 for additional 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 14162-167
Off-balance sheet lending-related financial instruments, guarantees, and other commitmentsRefer to Note 23178-181



21


EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 93-97.
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)
 
Pre-provision profit, which represents total net revenue less noninterest expense
Net interest income and net yield excluding CIB’s Markets businesses
Tangible common equity (“TCE”), ROTCE, and TBVPS
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits.
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 2019 Form 10-K for a further discussion of management’s use of non-GAAP financial measures.
The following summary tables provide a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
 Three months ended June 30,
 2020 2019
(in millions, except ratios)Reported 
Fully taxable-equivalent adjustments(b)
 Managed
basis
 Reported 
Fully taxable-equivalent adjustments(b)
 Managed
basis
Other income$1,042
 $730
  $1,772
 $1,292
 $596
  $1,888
Total noninterest revenue(a)
19,127
 730
  19,857
 14,349
 596
  14,945
Net interest income13,853
 107
  13,960
 14,398
 138
  14,536
Total net revenue32,980
 837
  33,817
 28,747
 734
  29,481
Total noninterest expense(a)
16,942
 NA
  16,942
 16,256
 NA
  16,256
Pre-provision profit16,038
 837
  16,875
 12,491
 734
  13,225
Provision for credit losses10,473
 NA
  10,473
 1,149
 NA
  1,149
Income before income tax expense5,565
 837
  6,402
 11,342
 734
  12,076
Income tax expense878
 837
  1,715
 1,690
 734
  2,424
Net income$4,687
 NA
  $4,687
 $9,652
 NA
  $9,652
              
Overhead ratio51% NM
  50% 57% NM
  55%
              
 Six months ended June 30,
 2020 2019
(in millions, except ratios)Reported 
Fully taxable-equivalent adjustments(b)
 Managed
basis
 Reported 
Fully taxable-equivalent adjustments(b)
 Managed
basis
Other income$2,198
 $1,438
  $3,636
 $2,767
 $1,181
  $3,948
Total noninterest revenue(a)
32,880
 1,438
  34,318
 28,972
 1,181
  30,153
Net interest income28,292
 217
  28,509
 28,851
 281
  29,132
Total net revenue61,172
 1,655
  62,827
 57,823
 1,462
  59,285
Total noninterest expense(a)
33,733
 NA
  33,733
 32,604
 NA
  32,604
Pre-provision profit27,439
 1,655
  29,094
 25,219
 1,462
  26,681
Provision for credit losses18,758
 NA
  18,758
 2,644
 NA
  2,644
Income before income tax expense8,681
 1,655
  10,336
 22,575
 1,462
  24,037
Income tax expense1,129
 $1,655
  2,784
 3,744
 1,462
  5,206
Net Income$7,552
 NA
  $7,552
 $18,831
 NA
  $18,831
              
Overhead ratio55% NM
  54% 56% NM
  55%
(a)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(b)Predominantly recognized in CIB, CB and Corporate.

22


The following table provides information on net interest income and net yield excluding CIB’s Markets businesses.

(in millions, except rates)
Three months ended June 30, Six months ended June 30,
2020
2019
 Change
 20202019 Change
Net interest income – reported$13,853
$14,398
 (4)% $28,292
$28,851
 (2)%
Fully taxable-equivalent adjustments107
138
 (22) 217
281
 (23)
Net interest income – managed basis(a)
$13,960
$14,536
 (4) $28,509
$29,132
 (2)
Less: CIB Markets net interest income(b)
2,536
624
 306
 4,132
1,248
 231
Net interest income excluding CIB Markets(a)
$11,424
$13,912
 (18) $24,377
$27,884
 (13)
          
Average interest-earning assets$2,819,855
$2,339,094
 21
 $2,642,794
$2,319,105
 14
Less: Average CIB Markets interest-earning assets(b)
795,677
673,480
 18
 765,856
661,397
 16
Average interest-earning assets excluding CIB Markets$2,024,178
$1,665,614
 22% $1,876,938
$1,657,708
 13 %
Net yield on average interest-earning assets – managed basis1.99%2.49%   2.17%2.53%  
Net yield on average CIB Markets interest-earning assets(b)
1.28
0.37
   1.08
0.38
  
Net yield on average interest-earning assets excluding CIB Markets2.27%3.35%   2.61%3.39%  
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)Refer to page 36 for further information on CIB’s Markets businesses.

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)Jun 30,
2020

Dec 31,
2019

 Three months ended June 30, Six months ended June 30,
 2020
2019
 2020
2019
Common stockholders’ equity$234,403
$234,337
 $234,408
$233,026
 $234,469
$231,547
Less: Goodwill47,811
47,823
 47,805
47,472
 47,808
47,474
Less: Other intangible assets778
819
 791
741
 802
741
Add: Certain deferred tax liabilities(a)
2,397
2,381
 2,393
2,304
 2,388
2,296
Tangible common equity$188,211
$188,076
 $188,205
$187,117
 $188,247
$185,628
         
Return on tangible common equityNA
NA
 9%20% 7%20%
Tangible book value per share$61.76
$60.98
 NA
NA
 N/A
N/A
(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.

23


BUSINESS SEGMENT RESULTS
The Firm is managed on an LOB basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. Refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures on pages 22-23 for a definition of managed basis.
Description of business segment reporting methodology
Results of the business segments are intended to present each segment as if it were a stand-alone business. The management reporting process that derives business segment results includes the allocation of certain income and expense items. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods. The Firm’s LOBs also provide various business metrics which are utilized by the Firm and its investors and analysts in assessing performance.
Revenue sharing
When business segments join efforts to sell products and services to the Firm’s clients, the participating business segments may agree to share revenue from those transactions. Revenue and expense are generally recognized in the segment responsible for the related product or service, with allocations to the other segment(s)
 
involved in the transaction. The segment results reflect these revenue-sharing agreements.
Business segment capital allocation
The amount of capital assigned to each business is referred to as equity. Periodically, the assumptions and methodologies used to allocate capital are assessed and as a result, the capital allocated to the LOBs may change. Refer to Line of business equity on page 90 of JPMorgan Chase’s 2019 Form 10-K for additional information on business segment capital allocation.
Refer to Business Segment Results – Description of business segment reporting methodology on pages 60–61 of JPMorgan Chase’s 2019 Form 10-K for a further discussion of those methodologies.
Business segment changes
In the first quarter of 2020, the Firm began reporting a Wholesale Payments business unit within CIB following a realignment of the Firm’s wholesale payments businesses. The Wholesale Payments business comprises:
Merchant Services, which was realigned from CCB to CIB
Treasury Services and Trade Finance in CIB. Trade Finance was previously reported in Lending in CIB.
In connection with the alignment of Wholesale Payments, the assets, liabilities and headcount associated with the Merchant Services business were realigned to CIB from CCB, and the revenue and expenses of the Merchant Services business is reported across CCB, CIB and CB based primarily on client relationships. Prior periods have been revised to reflect this realignment and revised allocation methodology.

 JPMorgan Chase
  
 Consumer Businesses Wholesale Businesses
  
 Consumer & Community Banking Corporate & Investment Bank Commercial Banking Asset & Wealth Management
              
 Consumer &
Business Banking
 Home Lending Card & Auto Banking Markets &
Securities Services
  • Middle Market Banking  • Asset Management
 
 • Consumer Banking/Chase Wealth Management
 • Business Banking
 
 • Home Lending Production
 • Home Lending Servicing
 • Real Estate Portfolios
 • Credit Card
 • Auto

 • Investment Banking
 • Wholesale Payments
 • Lending
 • Fixed Income Markets • Corporate Client Banking
 • Wealth Management

 
 • Equity Markets
 • Securities Services
 • Credit Adjustments & Other
 • Commercial Real Estate Banking
 
 

24


Segment results – managed basis
The following tables summarize the Firm’s results by segment for the periods indicated.
Three months ended June 30,
Consumer & Community Banking(a)
 Corporate & Investment Bank Commercial Banking
(in millions, except ratios)2020
2019
Change
 2020
2019
Change 2020
2019
Change
Total net revenue$12,217
$13,484
(9)% $16,352
$9,831
66 $2,392
$2,285
5 %
Total noninterest expense6,626
6,836
(3) 6,764
5,661
19 899
931
(3)
Pre-provision profit/(loss)5,591
6,648
(16) 9,588
4,170
130 1,493
1,354
10
Provision for credit losses5,828
1,120
420
 1,987

NM 2,431
29
NM
Net income/(loss)(176)4,157
NM
 5,464
2,946
85 (691)1,002
NM
Return on equity (“ROE”)(2)%31%  27%14%  (14)%17% 
Three months ended June 30,Asset & Wealth Management Corporate 
Total(a)
(in millions, except ratios)2020
2019
Change
 2020
2019
Change
 2020
2019
Change
Total net revenue$3,610
$3,559
1 % $(754)$322
NM
 $33,817
$29,481
15 %
Total noninterest expense2,506
2,596
(3) 147
232
(37) 16,942
16,256
4
Pre-provision profit/(loss)1,104
963
15
 (901)90
NM
 16,875
13,225
28
Provision for credit losses223
2
NM
 4
(2)NM
 10,473
1,149
NM
Net income/(loss)658
719
(8) (568)828
NM
 4,687
9,652
(51)
ROE24%27%  NM
NM
  7%16% 
Six months ended June 30,
Consumer & Community Banking(a)
 Corporate & Investment Bank Commercial Banking
(in millions, except ratios)2020
2019
Change
 2020
2019
Change 2020
2019
Change
Total net revenue$25,329
$26,927
(6)% $26,300
$19,865
32 $4,570
$4,698
(3)%
Total noninterest expense13,728
13,759

 12,660
11,290
12 1,887
1,869
1
Pre-provision profit/(loss)11,601
13,168
(12) 13,640
8,575
59 2,683
2,829
(5)
Provision for credit losses11,600
2,434
377
 3,388
87
NM 3,441
119
NM
Net income/(loss)15
8,104
(100) 7,452
6,206
20 (544)2,062
NM
ROE(1)%31%  18%15%  (6)%18% 
Six months ended June 30,Asset & Wealth Management Corporate 
Total(a)
(in millions, except ratios)2020
2019
Change
 2020
2019
Change
 2020
2019
Change
Total net revenue$7,216
$7,048
2 % $(588)$747
NM
 $62,827
$59,285
6 %
Total noninterest expense5,165
5,243
(1) 293
443
(34) 33,733
32,604
3
Pre-provision profit/(loss)2,051
1,805
14
 (881)304
NM
 29,094
26,681
9
Provision for credit losses317
4
NM
 12

NM
 18,758
2,644
NM
Net income/(loss)1,322
1,380
(4) (693)1,079
NM
 7,552
18,831
(60)
ROE24%26%  NM
NM
  6%16% 
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
(a)
In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the three and six months ended June 30, 2020 versus the corresponding periods in the prior year, unless otherwise specified.

25



CONSUMER & COMMUNITY BANKING
Consumer & Community Banking offers services to consumers and businesses through bank branches, ATMs, digital (including mobile and online) and telephone banking. CCB is organized into Consumer & Business Banking (including Consumer Banking/Chase Wealth Management and Business Banking), Home Lending (including Home Lending Production, Home Lending Servicing and Real Estate Portfolios) and Card & Auto. Consumer & Business Banking offers deposit and investment products and services to consumers, and lending, deposit, and cash management and payment solutions to small businesses. Home Lending includes mortgage origination and servicing activities, as well as portfolios consisting of residential mortgages and home equity loans. Card & Auto issues credit cards to consumers and small businesses and originates and services auto loans and leases.
 

Refer to Line of Business Metrics on page 197 for a further discussion of the business profile of CCB.
Selected income statement data          
 Three months ended June 30, Six months ended June 30,
(in millions, except ratios)2020
 2019
 Change
 2020
 2019
 Change
Revenue           
Lending- and deposit-related fees(a)
$617
 $971
 (36)% $1,589
 $1,880
 (15)%
Asset management, administration and commissions(a)
536
 620
 (14) 1,121
 1,201
 (7)
Mortgage fees and related income917
 279
 229
 1,237
 675
 83
Card income(b)
733
 913
 (20) 1,442
 1,775
 (19)
All other income1,313
 1,321
 (1) 2,686
 2,611
 3
Noninterest revenue4,116
 4,104
 
 8,075
 8,142
 (1)
Net interest income8,101
 9,380
 (14) 17,254
 18,785
 (8)
Total net revenue12,217
 13,484
 (9) 25,329
 26,927
 (6)
            
Provision for credit losses5,828
 1,120
 420
 11,600
 2,434
 377
            
Noninterest expense           
Compensation expense2,557
 2,531
 1
 5,154
 5,097
 1
Noncompensation expense(b)(c)
4,069
 4,305
 (5) 8,574
 8,662
 (1)
Total noninterest expense6,626
 6,836
 (3) 13,728
 13,759
 
Income/(loss) before income tax expense/(benefit)(237) 5,528
 NM
 1
 10,734
 (100)
Income tax expense/(benefit)(61) 1,371
 NM
 (14) 2,630
 NM
Net income/(loss)$(176) $4,157
 NM
 $15
 $8,104
 (100)
            
Revenue by line of business           
Consumer & Business Banking$5,107
 $6,897
 (26) $11,198
 $13,558
 (17)
Home Lending1,687
 1,118
 51
 2,848
 2,464
 16
Card & Auto(b)
5,423
 5,469
 (1) 11,283
 10,905
 3
            
Mortgage fees and related income details:           
Net production revenue742
 353
 110
 1,061
 553
 92
Net mortgage servicing revenue(d)
175
 (74) NM
 176
 122
 44
Mortgage fees and related income$917
 $279
 229 % $1,237
 $675
 83 %
            
Financial ratios           
Return on equity(2)% 31%   (1)% 31%  
Overhead ratio54
 51
   54
 51
  
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
(a)In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(b)
In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(c)Included depreciation expense on leased assets of $1.1 billion and $957 million for the three months ended June 30, 2020 and 2019, respectively, and $2.2 billion and $1.9 billion for six months ended June 30, 2020 and 2019, respectively.
(d)Included MSR risk management results of $79 million and $(244) million for the three months ended June 30, 2020 and 2019, respectively, and $(11) million and $(253) million for six months ended June 30, 2020 and 2019, respectively.

26



Quarterly results
Net loss was $176 million, compared with net income of $4.2 billion in the prior year, predominantly driven by an increase in the provision for credit losses.
Net revenue was $12.2 billion, a decrease of 9%.
Net interest income was $8.1 billion, down 14%, driven by:
the impact of deposit margin compression in CBB and lower loans in Card,
partially offset by
growth in deposits in CBB and loan margin expansion in Card.
Noninterest revenue was $4.1 billion, flat compared to the prior year, reflecting:
higher net mortgage production revenue reflecting higher production margins, partially offset by the absence of gains on loan sales in the prior year, and
higher net mortgage servicing revenue reflecting higher MSR risk management results due to the absence of losses resulting from updates to model inputs in the prior year partially offset by lower operating revenue reflecting a lower level of third-party loans serviced,
offset by
lower deposit-related fees due to lower transaction activity and the impact of fee refunds related to the COVID-19 pandemic,
lower card income due to lower net interchange income reflecting lower card sales volumes that began in March as a result of the COVID-19 pandemic, partially offset by higher annual fees and lower acquisition costs, and
lower volume of annuity sales.
Refer to Note 15 for further information regarding changes in the value of the MSR asset and related hedges, and mortgage fees and related income.
Noninterest expense was $6.6 billion, down 3%, driven by lower marketing expense on lower travel-related benefits and lower investments in marketing campaigns, as well as lower structural expense, including lower payment processing costs.
The provision for credit losses was $5.8 billion, an increase of $4.7 billion from the prior year, driven by:
additions to the allowance for credit losses as a result of the impact of the COVID-19 pandemic, consisting of: $2.9 billion for Card, $900 million for Home Lending, $490 million for CBB, and $310 million for Auto,
partially offset by
lower net charge-offs in Card reflecting higher recoveries.
The prior year included a $200 million net reduction in the allowance for credit losses.
Refer to Credit and Investment Risk Management on pages 60-79 and Allowance for Credit Losses on pages 77-78 for further discussions of the credit portfolios and the allowance for credit losses.
 
Year-to-date results
Net income was $15 million, compared to $8.1 billion in the prior year, predominantly driven by an increase in the provision for credit losses.
Net revenue was $25.3 billion, a decrease of 6%.
Net interest income was $17.3 billion, down 8%, driven by:
the impact of deposit margin compression in CBB, and lower loans in Home Lending predominantly due to prior year loan sales,
partially offset by
growth in deposits in CBB, and loan margin expansion in Card.
Noninterest revenue was $8.1 billion, relatively flat, driven by:
lower card income due to lower net interchange income reflecting lower card sales volumes that began in March as a result of the COVID-19 pandemic, partially offset by higher annual fees,
lower deposit-related fees due to lower transaction activity and the impact of fee refunds related to the COVID-19 pandemic, and
lower volume of annuity sales,
offset by
higher net mortgage production revenue reflecting higher mortgage production volumes and margins, partially offset by the absence of gains on loan sales in the prior year,
higher auto lease volume, and
higher net mortgage servicing revenue reflecting higher MSR risk management results due to the absence of losses resulting from updates to model inputs in the prior year, predominantly offset by lower operating revenue reflecting a lower level of third-party loans serviced and faster prepayment speeds on lower rates.
Noninterest expense was $13.7 billion, flat compared to the prior year, reflecting:
lower structural expenses, including lower payment processing costs, and
lower marketing expenses on lower travel-related benefits and investments in marketing campaigns,
offset by
higher volume- and revenue-related expense, including depreciation on auto lease assets, and investments in the business.
The provision for credit losses was $11.6 billion, an increase of $9.2 billion from the prior year, driven by:
additions to the allowance for credit losses as a result of the impact of the COVID-19 pandemic, consisting of: $6.6 billion for Card, $1.2 billion for Home Lending, $649 million for CBB, and $560 million for Auto,
partially offset by
lower net charge-offs reflecting higher recoveries in Home Lending on a loan sale in the first quarter of 2020, and in Card, largely offset by higher charge-offs in Card on loan growth in the prior year.
The prior year included a $200 million net reduction in the allowance for credit losses.

27



Selected metrics           
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except headcount)2020
 2019
 Change
 2020 2019 Change
Selected balance sheet data (period-end)           
Total assets$492,251
 $536,758
 (8)% $492,251
 $536,758
 (8)%
Loans:           
Consumer & Business Banking46,910
(b) 
26,616
 76
 46,910
(b) 
26,616
 76
Home Lending188,576
 219,533
 (14) 188,576
 219,533
 (14)
Card141,656
 157,576
 (10) 141,656
 157,576
 (10)
Auto59,287
 62,073
 (4) 59,287
 62,073
 (4)
Total loans436,429
 465,798
 (6) 436,429
 465,798
 (6)
Deposits876,991
 695,096
 26
 876,991
 695,096
 26
Equity52,000
 52,000
 
 52,000
 52,000
 
Selected balance sheet data (average)           
Total assets$498,140
 $534,612
 (7) $507,676
 $540,296
 (6)
Loans:           
Consumer & Business Banking41,198
 26,570
 55
 34,230
 26,529
 29
Home Lending192,716
 224,685
 (14) 195,379
 231,778
 (16)
Card142,377
 153,746
 (7) 152,518
 152,447
 
Auto60,306
 62,236
 (3) 60,599
 62,498
 (3)
Total loans436,597
 467,237
 (7) 442,726
 473,252
 (6)
Deposits831,996
 690,892
 20
 782,822
 685,980
 14
Equity52,000
 52,000
 
 52,000
 52,000
 
            
Headcount(a)
122,089
 123,580
 (1)% 122,089
 123,580
 (1)%
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation, including a decrease to period-end assets and headcount of $13.9 billion and 4,152, respectively, as of June 30, 2019.
(a)
During the second quarter of 2020, certain technology and support functions, comprising approximately 850 staff, were transferred from AWM to CCB as part of the ongoing reorganization of the U.S. Wealth Management business.
(b)At June 30, 2020, included $19.9 billion of loans in Business Banking under the PPP. Refer to Credit Portfolio on pages 60-61 for a further discussion of the PPP.

28



Selected metrics          
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except ratio data)2020
 2019
 Change
 2020 2019 Change
Credit data and quality statistics           
Nonaccrual loans(a)(b)
$4,407
(e) 
$3,142
 40 %
$4,407
(e) 
$3,142

40 %
            
Net charge-offs/(recoveries)           
Consumer & Business Banking60
 66
 (9) 134
 125
 7
Home Lending(5) (28) 82
 (127) (33) (285)
Card1,178
 1,240
 (5) 2,491
 2,442
 2
Auto45
 42
 7
 93
 100
 (7)
Total net charge-offs/(recoveries)$1,278
 $1,320
 (3) $2,591
 $2,634
 (2)
            
Net charge-off/(recovery) rate           
Consumer & Business Banking0.59%
(f) 
1.00%   0.79 %
(f) 
0.95%  
Home Lending(0.01) (0.05)   (0.13) (0.03)  
Card3.33
 3.24
   3.28
 3.23
  
Auto0.30
 0.27
   0.31
 0.32
  
Total net charge-off/(recovery) rate1.18% 1.14%   1.18
 1.13
  
            
30+ day delinquency rate           
Home Lending(c)(d)
1.30%
(g) 
1.55%   1.30 %
(g) 
1.55%  
Card1.71
(g) 
1.71
   1.71
(g) 
1.71
  
Auto0.54
(g) 
0.82
   0.54
(g) 
0.82
  
            
90+ day delinquency rate — Card0.93%
(g) 
0.87%   0.93
(g) 
0.87
  
            
Allowance for loan losses           
Consumer & Business Banking$1,370
 $796
 72
 $1,370
 $796
 72
Home Lending2,957
 2,302
 28
 2,957
 2,302
 28
Card17,800
 5,383
 231
 17,800
 5,383
 231
Auto1,044
 465
 125
 1,044
 465
 125
Total allowance for loan losses$23,171
 $8,946
 159 % $23,171
 $8,946
 159 %
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. The adoption resulted in a change in the accounting for PCI loans, which are considered purchased credit deteriorated (“PCD”) loans under CECL. Refer to Note 1 for further information.
(a)At June 30, 2020, nonaccrual loans included $1.3 billion of PCD loans. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
(b)At June 30, 2020 and 2019, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $561 million and $1.8 billion, respectively. These amounts have been excluded based upon the government guarantee.
(c)At June 30, 2020, the 30+ day delinquency rates included PCD loans. The rate prior to January 1, 2020 was revised to include the impact of PCI loans.
(d)At June 30, 2020 and 2019, excluded mortgage loans insured by U.S. government agencies of $826 million and $2.9 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.
(e)Generally excludes loans that were under payment deferral programs offered in response to the COVID-19 pandemic. Refer to Consumer Credit Portfolio on pages 62-66 for further information on consumer payment assistance activity.
(f)At June 30, 2020, included $19.9 billion of loans in Business Banking under the PPP. Given that PPP loans are guaranteed by the SBA, the Firm does not expect to realize material credit losses on these loans. Refer to Credit Portfolio on pages 60-61 for a further discussion of the PPP.
(g)At June 30, 2020, the principal balance of loans in Home Lending, Card and Auto under payment deferral programs offered in response to the COVID-19 pandemic were $18.2 billion, $4.4 billion and $12.3 billion, respectively. Loans that are performing according to their modified terms are generally not considered delinquent. Refer to Consumer Credit Portfolio on pages 62-66 for further information on consumer payment assistance activity.


29



Selected metrics          
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in billions, except ratios and where otherwise noted)2020
 2019
 Change
 2020
 2019
 Change
Business Metrics           
Number of branches4,923
 4,970
 (1)% 4,923
 4,970
 (1)%
Active digital customers (in thousands)(a)
54,471
 51,032
 7
 54,471
 51,032
 7
Active mobile customers (in thousands)(b)
39,024
 35,392
 10
 39,024
 35,392
 10
Debit and credit card sales volume$237.6
 $281.5
 (16) $503.6

$536.6
 (6)
            
Consumer & Business Banking           
Average deposits$813.2
 $676.7
 20
 $766.0
 $672.6
 14
Deposit margin1.52% 2.60%   1.77% 2.61%  
Business banking origination volume$23.0
(f) 
$1.7
 NM
 $24.5
(f) 
$3.2
 NM
Client investment assets356.1
 328.1
 9
 356.1
 328.1
 9
            
Home Lending           
Mortgage origination volume by channel           
Retail$18.0
 $12.5
 44
 $32.1
 $20.4
 57
Correspondent6.2
 12.0
 (48) 20.2
 19.1
 6
Total mortgage origination volume(c)
$24.2
 $24.5
 (1) $52.3
 $39.5
 32
            
Total loans serviced (period-end)$683.7
 $780.1
 (12) $683.7
 $780.1
 (12)
Third-party mortgage loans serviced (period-end)482.4
 526.6
 (8) 482.4
 526.6
 (8)
MSR carrying value (period-end)3.1
 5.1
 (39) 3.1
 5.1
 (39)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end)0.64% 0.97%   0.64% 0.97%  
            
MSR revenue multiple(d)
2.29x 2.69x   2.21x 2.77x  
            
Credit Card           
Credit card sales volume, excluding Commercial Card$148.5
 $192.5
 (23) $327.6
 $365.0
 (10)
Net revenue rate(e)
11.02% 10.31%   10.76% 10.43%  
            
Auto           
Loan and lease origination volume$7.7
 $8.5
 (9) $16.0
 $16.4
 (2)
Average auto operating lease assets22.6
 21.3
 6 % 22.8
 21.1
 8 %
(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 $28.3 billion and $26.3 billion for the three months ended June 30, 2020 and 2019, respectively and $60.2 billion and $42.7 billion for the six months ended June 30, 2020 and 2019, 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).
(e)In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation.
(f)Included $21.5 billion of origination volume under the PPP for the three and six months ended June 30, 2020. Refer to Credit Portfolio on pages 60-61 for a further discussion of the PPP.

30


CORPORATE & INVESTMENT BANK
The Corporate & Investment Bank, which consists of Banking and Markets & Securities Services, offers a broad suite of investment banking, market-making, prime brokerage, and treasury and securities products and services to a global client base of corporations, investors, financial institutions, merchants, government and municipal entities. Banking offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, as well as loan origination and syndication. Banking also includes Wholesale Payments, which provides payments services enabling clients to manage payments and receipts globally, and cross-border financing. Markets & Securities Services includes Markets, a global market-maker in cash securities and derivative instruments, which also offers sophisticated risk management solutions, prime brokerage, and research. Markets & Securities Services also includes Securities Services, a leading global custodian which provides custody, fund accounting and administration, and securities lending products principally for asset managers, insurance companies and public and private investment funds.
 

Refer to Line of Business Metrics on page 197 for a further discussion of the business profile of CIB.
Selected income statement data        
 Three months ended June 30, Six months ended June 30,
(in millions, except ratios)2020 2019 Change 2020 2019 Change
Revenue           
Investment banking fees$2,847
 $1,846
 54 % $4,754
 $3,690
 29 %
Principal transactions7,400
 3,885
 90
 10,588
 8,049
 32
Lending- and deposit-related fees(a)
500
 412
 21
 950
 808
 18
Asset management, administration and commissions(a)

1,146
 1,112
 3
 2,407
 2,179
 10
All other income380
 405
 (6) 415
 770
 (46)
Noninterest revenue12,273
 7,660
 60
 19,114
 15,496
 23
Net interest income4,079
 2,171
 88
 7,186
 4,369
 64
Total net revenue(b)
16,352
 9,831
 66
 26,300
 19,865
 32
            
Provision for credit losses1,987
 
 NM
 3,388
 87
 NM
            
Noninterest expense           
Compensation expense3,997
 2,839
 41
 7,003
 5,930
 18
Noncompensation expense2,767
 2,822
 (2) 5,657
 5,360
 6
Total noninterest expense6,764
 5,661
 19
 12,660
 11,290
 12
Income before income tax expense7,601
 4,170
 82
 10,252
 8,488
 21
Income tax expense2,137
 1,224
 75
 2,800
 2,282
 23
Net income$5,464
 $2,946
 85 % $7,452
 $6,206
 20 %
Financial ratios           
Return on equity27% 14%   18% 15%  
Overhead ratio41
 58
   48
 57
  
Compensation expense as percentage of total net revenue24
 29
   27
 30
  
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
(a)In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(b)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 $686 million and $547 million for the three months ended June 30, 2020 and 2019, respectively, and $1.4 billion and $1.1 billion for the six months ended June 30, 2020 and 2019, respectively.

31


Selected income statement data        
 Three months ended June 30, Six months ended June 30,
(in millions)2020 2019 Change 2020 2019 Change
Revenue by business           
Investment Banking$3,401
 $1,776
 91 % $4,287
 $3,521
 22 %
Wholesale Payments
1,356
 1,402
 (3) 2,715
 2,817
 (4)
Lending270
 260
 4
 620
 518
 20
Total Banking5,027
 3,438
 46
 7,622
 6,856
 11
Fixed Income Markets7,338
 3,690
 99
 12,331
 7,415
 66
Equity Markets2,380
 1,728
 38
 4,617
 3,469
 33
Securities Services1,097
 1,045
 5
 2,171
 2,059
 5
Credit Adjustments & Other(a)
510
 (70) NM
 (441) 66
 NM
Total Markets & Securities Services11,325
 6,393
 77
 18,678
 13,009
 44
Total net revenue$16,352
 $9,831
 66 % $26,300
 $19,865
 32 %
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
(a)Includes credit valuation adjustments (“CVA”) managed centrally within CIB and funding valuation adjustments (“FVA”) on derivatives and certain components of fair value option elected liabilities, which are primarily reported in principal transactions revenue. Results are presented net of associated hedging activities and net of CVA and FVA amounts allocated to Fixed Income Markets and Equity Markets.
Quarterly results
Net income was $5.5 billion, up 85%, with record revenue more than offsetting higher noninterest expense and an increase in the provision for credit losses.
Net revenue was $16.4 billion, up 66%.
Banking revenue was $5.0 billion, up 46%.
Investment Banking revenue was $3.4 billion, up 91%, driven by higher Investment Banking fees, up 54%, reflecting higher fees across products, as well as $659 million of markups on held-for-sale positions, including unfunded commitments, in the bridge financing portfolio as a result of improved market conditions. The Firm maintained its #1 ranking for Global Investment Banking fees, according to Dealogic.
Debt underwriting fees were $1.3 billion, up 55%, driven by increased industry-wide fees and wallet share gains in both investment-grade and high-yield bonds.
Equity underwriting fees were $977 million, up 93%, driven by both increased industry-wide fees and wallet share gains primarily in follow-on offerings and convertible securities markets.
The increased activity in debt and equity underwriting reflected clients seeking access to liquidity as a result of the COVID-19 pandemic.
Advisory fees were $602 million, up 15%, driven by a few large completed transactions.
Wholesale Payments revenue was $1.4 billion, down 3%, driven by a reporting re-classification for certain expenses which are now reported as a reduction of revenue in Merchant Services. In addition, the impact of higher deposit balances was predominantly offset by deposit margin compression.
Lending revenue was $270 million, up 4%, with higher net interest income on higher loan balances, as well as
 
higher fees, offset by fair value losses on hedges of accrual loans.
Markets & Securities Services revenue was $11.3 billion, up 77%. Markets revenue was $9.7 billion, up 79%.
Fixed Income Markets revenue was $7.3 billion, up 99%, or up 120% excluding a gain from the IPO of Tradeweb in the prior year, driven by strong performance across products, primarily in Rates, Currencies & Emerging Markets, and Credit.
Equity Markets revenue was $2.4 billion, up 38%, predominantly driven by strong client activity in derivatives and Cash Equities.
Securities Services revenue was $1.1 billion, up 5%, predominantly driven by deposit balance and fee growth partially offset by deposit margin compression.
Credit Adjustments & Other was a gain of $510 million, driven by funding spread tightening on derivatives.
Noninterest expense was $6.8 billion, up 19%, driven by higher revenue-related compensation expense.
The provision for credit losses was $2.0 billion, predominantly driven by net additions to the allowance for credit losses as a result of the impact of the COVID-19 pandemic across multiple industry sectors.
Year-to-date results
Net income was $7.5 billion, up 20%, with revenue more than offsetting higher noninterest expense and an increase in the provision for credit losses.
Net revenue was $26.3 billion, up 32%.
Banking revenue was $7.6 billion, up 11%.
Investment Banking revenue was $4.3 billion, up 22%, driven by higher Investment Banking fees, up 29%, reflecting higher debt and equity underwriting fees, partially offset by lower advisory fees, as well as $161 million of net markdowns on held-for-sale positions,

32


including unfunded commitments, in the bridge financing portfolio. The Firm maintained its #1 ranking for Global Investment Banking fees, according to Dealogic.
Debt underwriting fees were $2.3 billion, up 34%, driven by increased industry-wide fees and wallet share gains in investment-grade bonds, and for high-yield bonds, after the markets stabilized in the second quarter of 2020.
Equity underwriting fees were $1.3 billion, up 70%, driven by both increased industry-wide fees and wallet share gains primarily in follow-on offerings and convertible securities markets.
The increased activity in debt and equity underwriting reflected clients seeking access to liquidity as a result of the COVID-19 pandemic.
Advisory fees of $1.1 billion were down 5%, driven by lower number of completed transactions.
Wholesale payments revenue was $2.7 billion, down 4%, driven by a reporting re-classification for certain expenses which are now reported as a reduction of revenue in Merchant Services. In addition, the impact of higher balances and fee growth was predominantly offset by deposit margin compression.
Lending revenue was $620 million, up 20%, driven by higher net interest income on higher loan balances, as well as higher fees.
 
Markets & Securities Services revenue was $18.7 billion, up 44%. Markets revenue was $16.9 billion, up 56%.
Fixed Income Markets revenue was $12.3 billion, up 66%, driven by strong client activity across products primarily in Rates, Currencies & Emerging Markets, and Credit.
Equity Markets revenue was $4.6 billion, up 33%, driven by strong client activity in derivatives and Cash Equities.
Securities Services revenue was $2.2 billion, up 5%, predominantly driven by deposit balance and fee growth partially offset by deposit margin compression.
Credit Adjustments & Other was a net loss of $441 million, predominantly driven by losses on certain components of fair value option elected liabilities, as well as the impact of funding spread widening on derivatives
Noninterest expense was $12.7 billion, up 12%, predominantly driven by higher revenue-related compensation expense.
The provision for credit losses was $3.4 billion, compared with $87 million in the prior year. The increase was predominantly driven by net additions to the allowance for credit losses as a result of the impact of the COVID-19 pandemic across multiple industry sectors.
Refer to Credit and Investment Risk Management on pages 60-79 and Allowance for Credit Losses on pages 77-78 for further discussions of the credit portfolios and the allowance for credit losses.
Selected metrics          
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except headcount)2020 2019 Change 2020 2019 Change
Selected balance sheet data (period-end)           
Assets$1,080,761
 $976,430
 11% $1,080,761
 $976,430
 11%
Loans:           
Loans retained(a)
140,770
 123,074
 14
 140,770
 123,074
 14
Loans held-for-sale and loans at fair value10,241
 6,838
 50
 10,241
 6,838
 50
Total loans151,011
 129,912
 16
 151,011
 129,912
 16
Equity80,000
 80,000
 
 80,000
 80,000
 
Selected balance sheet data (average)           
Assets$1,167,807
 $1,000,517
 17
 $1,125,314
 $984,165
 14
Trading assets-debt and equity instruments450,507
 421,775
 7
 438,911
 401,656
 9
Trading assets-derivative receivables76,710
 48,815
 57
 65,922
 49,707
 33
Loans:           
Loans retained(a)
$154,038
 $124,194
 24
 $141,438
 $125,585
 13
Loans held-for-sale and loans at fair value8,399
 7,763
 8
 9,108
 8,186
 11
Total loans$162,437
 $131,957
 23
 $150,546
 $133,771
 13
Equity80,000
 80,000
 
 80,000
 80,000
 
Headcount60,950
 59,111
 3% 60,950
 59,111
 3%
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation, including an increase to period-end assets and headcount of $13.9 billion and 4,152, respectively, as of June 30, 2019.
(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.

33


Selected metrics           
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except ratios)2020 2019 Change 2020 2019 Change
Credit data and quality statistics           
Net charge-offs/(recoveries)$204
 $72
 183 % $259
 $102
 154 %
Nonperforming assets:           
Nonaccrual loans:           
Nonaccrual loans retained(a)
$1,195
 $569
 110 % $1,195
 $569
 110
Nonaccrual loans held-for-sale and loans at fair value
250
 370
 (32) 250
 370
 (32)
Total nonaccrual loans1,445
 939
 54
 1,445
 939
 54
Derivative receivables108
 39
 177
 108
 39
 177
Assets acquired in loan satisfactions35
 58
 (40) 35
 58
 (40)
Total nonperforming assets$1,588
 $1,036
 53
 $1,588
 $1,036
 53
Allowance for credit losses:           
Allowance for loan losses$3,440
 $1,131
 204
 $3,440
 $1,131
 204
Allowance for lending-related commitments1,233
 807
 53
 1,233
 807
 53
Total allowance for credit losses$4,673
 $1,938
 141 % $4,673
 $1,938
 141 %
Net charge-off/(recovery) rate(b)
0.53% 0.23%   0.37% 0.16%  
Allowance for loan losses to period-end loans retained2.44
 0.92
   2.44
 0.92
  
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits(c)
3.27
 1.27
   3.27
 1.27
  
Allowance for loan losses to nonaccrual loans retained(a)
288
 199
   288
 199
  
Nonaccrual loans to total period-end loans0.96% 0.72%   0.96% 0.72%  
(a)Allowance for loan losses of $340 million and $147 million were held against these nonaccrual loans at June 30, 2020 and 2019, 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 June 30, Six months ended June 30,
(in millions)2020 2019 Change 2020 2019 Change
Advisory$602
 $525
 15 $1,105
 $1,169
 (5)%
Equity underwriting977
 505
 93 1,308
 770
 70
Debt underwriting(a)
1,268
 816
 55 2,341
 1,751
 34
Total investment banking fees$2,847
 $1,846
 54 $4,754
 $3,690
 29 %
(a)Represents long-term debt and loan syndications.

34


League table results – wallet share            
 Three months ended June 30, Six months ended June 30, Full-year 2019
 2020 2019 2020 2019 
 Rank Share Rank Share Rank Share Rank Share Rank Share
Based on fees(a)
                  
M&A(b)
                   
Global#1
 10.6 #2
 8.8 #2
 9.2 #2
 9.3 #2
 9.0%
U.S.4
 8.8 2
 8.8 2
 8.8 2
 9.5 2
 9.3
Equity and equity-related(c)
                   
Global2
 11.8 2
 9.6 2
 10.9 2
 9.3 1
 9.3
U.S.2
 13.2 2
 11.4 2
 12.9 2
 11.7 2
 13.2
Long-term debt(d)
                   
Global1
 10.0 1
 7.4 1
 9.5 1
 7.6 1
 7.8
U.S.1
 13.4 1
 11.4 1
 12.9 1
 11.6 1
 12.0
Loan syndications                   
Global1
 8.7 1
 9.0 1
 9.9 1
 11.1 1
 10.1
U.S.3
 9.2 2
 10.2 1
 9.8 1
 13.4 1
 12.5
Global investment banking fees(e)
#1
 10.6 #1
 8.6 #1
 9.8 #1
 9.1 #1
 8.9%
(a)Source: Dealogic as of July 1, 2020. Reflects the ranking of revenue wallet and market share.
(b)Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.
(c)Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.
(d)Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, ABS and mortgage-backed securities (“MBS”); and exclude money market, short-term debt, and U.S. municipal securities.
(e)Global investment banking fees exclude money market, short-term debt and shelf deals.

35


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. Refer to Notes 6 and 7 for a description of the composition of these income statement line items. Refer to Markets revenue on page 69 of JPMorgan Chase’s 2019 Form 10-K for further information.
For the periods presented below, the predominant source of principal transactions revenue was the amount recognized upon executing new transactions.
 Three months ended June 30, Three months ended June 30,
 2020 2019

(in millions)
Fixed Income MarketsEquity
Markets
Total
Markets
 Fixed Income MarketsEquity
Markets
Total
Markets
Principal transactions$4,651
$1,737
$6,388
 $2,431
$1,608
$4,039
Lending- and deposit-related fees48
2
50
 49
2
51
Asset management, administration and commissions93
497
590
 97
453
550
All other income176
(22)154
 173
(19)154
Noninterest revenue4,968
2,214
7,182
 2,750
2,044
4,794
Net interest income2,370
166
2,536
 940
(316)624
Total net revenue$7,338
$2,380
$9,718
 $3,690
$1,728
$5,418
        
 Six months ended June 30, Six months ended June 30,
 2020 2019

(in millions)
Fixed Income Markets
Equity
Markets
Total
Markets
 Fixed Income Markets
Equity
Markets
Total
Markets
Principal transactions$7,794
$3,460
$11,254
 $4,913
$3,165
$8,078
Lending- and deposit-related fees95
4
99
 98
4
102
Asset management, administration and commissions204
1,105
1,309
 200
887
1,087
All other income177
(23)154
 392
(23)369
Noninterest revenue8,270
4,546
12,816
 5,603
4,033
9,636
Net interest income4,061
71
4,132
 1,812
(564)1,248
Total net revenue$12,331
$4,617
$16,948
 $7,415
$3,469
$10,884
CIB Markets had one loss day in the second quarter of 2020 and three loss days for the six months ended June 30, 2020. Loss days represent the number of days for which CIB Markets, which consists of Fixed Income Markets and Equity Markets, posted losses to total net revenue. The loss days determined under this measure differ from the measure used to determine backtesting gains and losses. Daily backtesting gains and losses include positions in the Firm’s Risk Management value-at-risk (“VaR”) measure and exclude select components of total net revenue, which may more than offset backtesting gains or losses on a particular day. For more information on daily backtesting gains and losses, refer to the VaR discussion on pages 80-82
Selected metrics           
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except where otherwise noted)2020 2019 Change 2020 2019 Change
Assets under custody (“AUC”) by asset class (period-end)
(in billions):
           
Fixed Income$15,023
 $13,056
 15 % $15,023
 $13,056
 15 %
Equity9,288
 9,352
 (1) 9,288
 9,352
 (1)
Other(a)
3,136
 3,042
 3
 3,136
 3,042
 3
Total AUC$27,447

$25,450
 8
 $27,447
 $25,450
 8
Merchant processing volume (in billions)(b)
$371.9
 $371.6
 
 $746.7
 $728.1
 3
Client deposits and other third-party liabilities (average)(c)
$607,902

$458,237
 33 % $561,183
 $451,185
 24 %
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b)Represents total merchant processing volume across CIB, CCB and CB.
(c)Client deposits and other third-party liabilities pertain to the Wholesale Payments and Securities Services businesses.

36


International metrics           
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except where
 otherwise noted)
2020 
2019(c)
 Change 2020 
2019(c)
 Change
Total net revenue(a)
           
Europe/Middle East/Africa$4,976
 $2,898
 72 % $7,566
 $6,078
 24 %
Asia-Pacific2,196
 1,276
 72
 3,972
 2,683
 48
Latin America/Caribbean587
 379
 55
 1,094
 785
 39
Total international net revenue7,759
 4,553
 70
 12,632
 9,546
 32
North America8,593
 5,278
 63
 13,668
 10,319
 32
Total net revenue$16,352
 $9,831
 66
 $26,300
 $19,865
 32
            
Loans retained (period-end)(a)
          
Europe/Middle East/Africa$28,973
 $27,843
 4
 $28,973
 $27,843
 4
Asia-Pacific13,644
 15,302
 (11) 13,644
 15,302
 (11)
Latin America/Caribbean8,190
 7,090
 16
 8,190
 7,090
 16
Total international loans50,807
 50,235
 1
 50,807
 50,235
 1
North America89,963
 72,839
 24
 89,963
 72,839
 24
Total loans retained$140,770
 $123,074
 14
 $140,770
 $123,074
 14
            
Client deposits and other third-party liabilities (average)(b)
           
Europe/Middle East/Africa$216,211
 $175,189
 23
 $203,594
 $169,694
 20
Asia-Pacific125,839
 86,889
 45
 114,816
 85,990
 34
Latin America/Caribbean36,339
 28,860
 26
 33,598
 28,175
 19
Total international$378,389
 $290,938
 30
 $352,008
 $283,859
 24
North America229,513
 167,299
 37
 209,175
 167,326
 25
Total client deposits and other third-party liabilities$607,902
 $458,237
 33
 $561,183
 $451,185
 24
            
AUC (period-end)(b)
(in billions)
           
North America$17,734
 $15,875
 12
 $17,734
 $15,875
 12
All other regions9,713
 9,575
 1
 9,713
 9,575
 1
Total AUC$27,447
 $25,450
 8 % $27,447
 $25,450
 8 %
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. Prior-period amounts have been revised to conform with the current presentation.
(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 Wholesale Payments and Securities Services businesses, and AUC, are based on the domicile of the client.
(c)Prior-period amounts have been revised to conform with the current presentation.

37


COMMERCIAL BANKING
Commercial Banking provides comprehensive financial solutions, including lending, wholesale payments, investment banking and asset management products across three primary client segments: Middle Market Banking, Corporate Client Banking and Commercial Real Estate Banking. Other includes amounts not aligned with a primary client segment.
Middle Market Banking covers small and midsized companies, local governments and nonprofit clients.
Corporate Client Banking covers large corporations.
Commercial Real Estate Banking covers investors, developers, and owners of multifamily, office, retail, industrial and affordable housing properties.
 

Refer to Line of Business Metrics on page 198 for a discussion of the business profile of CB.
Selected income statement data      
 Three months ended June 30, Six months ended June 30,
(in millions)2020
 2019
 Change
 2020
 2019
 Change
Revenue           
Lending- and deposit-related fees(a)
$297
 $224
 33 % $558
 $457
 22 %
All other income(a)
518
 399
 30
 878
 899
 (2)
Noninterest revenue815
 623
 31
 1,436
 1,356
 6
Net interest income1,577
 1,662
 (5) 3,134
 3,342
 (6)
Total net revenue(b)
2,392
 2,285
 5
 4,570
 4,698
 (3)
            
Provision for credit losses2,431
 29
 NM
 3,441
 119
 NM
            
Noninterest expense           
Compensation expense430
 438
 (2) 902
 887
 2
Noncompensation expense469
 493
 (5) 985
 982
 
Total noninterest expense899
 931
 (3) 1,887
 1,869
 1
            
Income/(loss) before income tax expense/(benefit)(938) 1,325
 NM
 (758) 2,710
 NM
Income tax expense/(benefit)(247) 323
 NM
 (214) 648
 NM
Net income/(loss)$(691) $1,002
 NM
 $(544) $2,062
 NM
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB and the revenue and expense of the business is reported across CCB, CIB and CB based primarily on client relationship. In conjunction with this realignment, treasury services product revenue has been renamed wholesale payments. Prior-period revenue and expense amounts have been revised to conform with the current presentation.
(a)In the first quarter of 2020, the Firm reclassified certain fees from asset management, administration and commissions (which are included in all other income) to lending- and deposit-related fees. Prior-period amounts have been revised to conform with the current presentation.
(b)Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community development entities and in entities established for rehabilitation of historic properties, as well as tax-exempt income related to municipal financing activities of $80 million and $100 million for the three months ended June 30, 2020 and 2019, respectively, and $161 million and $194 million for the six months ended June 30, 2020 and 2019, respectively.
Quarterly results
Net loss was $691 million, driven by an increase in the provision for credit losses.
Net revenue was $2.4 billion, up 5%. Net interest income was $1.6 billion, down 5%, driven by lower deposit margin, largely offset by higher deposit and loan balances. Noninterest revenue was $815 million, up 31%, driven by a gain on a strategic investment, higher deposit related fees, and investment banking revenue, partially offset by lower card income predominantly due to lower volumes as a result of the COVID-19 pandemic.
Noninterest expense was $899 million, down 3%, driven by lower structural expense.
 
The provision for credit losses was $2.4 billion, compared with $29 million in the prior year. The increase was driven by net additions to the allowance for credit losses as a result of the impact of the COVID-19 pandemic across multiple industry sectors.
Year-to-date results
Net loss was $544 million, driven by an increase in the provision for credit losses.
Net revenue was $4.6 billion, down 3%. Net interest income was $3.1 billion, down 6%, driven by lower deposit margin largely offset by higher deposit and loan balances. Noninterest revenue was $1.4 billion, up 6%, driven by higher deposit related fees and a gain on a strategic investment, largely offset by lower card income primarily

38


due to lower volumes as a result of the COVID-19 pandemic and a $57 million mark down of a held-for-sale position.
Noninterest expense was $1.9 billion, relatively flat, driven by investments in the business largely offset by lower structural expense.
The provision for credit losses was $3.4 billion, compared with $119 million in the prior year. The increase was driven by net additions to the allowance for credit losses as a result of the impact of the COVID-19 pandemic across multiple industry sectors.
 
Refer to Credit and Investment Risk Management on pages 60-79 and Allowance for Credit Losses on pages 77-78 for further discussions of the credit portfolios and the allowance for credit losses.


CB product revenue consists of the following:
Lending includes a variety of financing alternatives, which are primarily provided on a secured basis; collateral includes receivables, inventory, equipment, real estate or other assets. Products include term loans, revolving lines of credit, bridge financing, asset-based structures, leases, and standby letters of credit.
Wholesale payments includes revenue from a broad range of products and services that enable CB clients to manage payments and receipts, as well as invest and manage funds.
Investment banking includes revenue from a range of products providing CB clients with sophisticated capital-raising alternatives, as well as balance sheet and risk management tools through advisory, equity underwriting, and loan syndications. Revenue from Fixed Income and Equity Markets products used by CB clients is also included.
Other product revenue primarily includes tax-equivalent adjustments generated from Community Development Banking activities and certain income derived from principal transactions.
Selected income statement data (continued)      
 Three months ended June 30, Six months ended June 30,
(in millions, except ratios)2020
 2019
 Change
 2020
 2019
 Change
Revenue by product           
Lending$1,127
 $1,012
 11 % $2,081
 $2,024
 3 %
Wholesale payments917
 1,063
 (14) 1,908
 2,167
 (12)
Investment banking(a)
256
 193
 33
 491
 482
 2
Other92
 17
 441
 90
 25
 260
Total Commercial Banking net revenue$2,392
 $2,285
 5
 $4,570
 $4,698
 (3)
            
Investment banking revenue, gross(b)
$851
 $592
 44
 $1,537
 $1,410
 9
            
Revenue by client segments           
Middle Market Banking$866
 $961
 (10) $1,812
 $1,935
 (6)
Corporate Client Banking859
 744
 15
 1,540
 1,595
 (3)
Commercial Real Estate Banking566
 538
 5
 1,107
 1,085
 2
Other101
 42
 140
 111
 83
 34
Total Commercial Banking net revenue$2,392
 $2,285
 5 % $4,570
 $4,698
 (3)%
            
Financial ratios           
Return on equity(14)% 17%   (6)% 18%  
Overhead ratio38
 41
   41
 40
  
In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB and the revenue and expense of the business is reported across CCB, CIB and CB based primarily on client relationship. In conjunction with this realignment, treasury services product revenue has been renamed wholesale payments. Prior-period revenue and expense amounts have been revised to conform with the current presentation.
(a)Includes CB’s share of revenue from investment banking products sold to CB clients through the CIB.
(b)Refer to Business Segment Results on page 24 for discussion of revenue sharing.

39


Selected metrics        
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except headcount)2020
 2019
Change
 2020
 2019
Change
Selected balance sheet data (period-end)         
Total assets$234,934
 $220,712
6 % $234,934
 $220,712
6 %
Loans:         
Loans retained223,192
 208,323
7
 223,192
 208,323
7
Loans held-for-sale and loans at fair value917
 1,284
(29) 917
 1,284
(29)
Total loans$224,109
 $209,607
7
 $224,109
 $209,607
7
Equity22,000
 22,000

 22,000
 22,000

          
Period-end loans by client segment         
Middle Market Banking$64,211
(a) 
$56,346
14
 $64,211
(a) 
$56,346
14
Corporate Client Banking56,182
 51,500
9
 56,182
 51,500
9
Commercial Real Estate Banking103,117
 100,751
2
 103,117
 100,751
2
Other599
 1,010
(41) 599
 1,010
(41)
Total Commercial Banking loans$224,109
(a) 
$209,607
7
 $224,109
(a) 
$209,607
7
          
Selected balance sheet data (average)         
Total assets$247,512
 $218,760
13
 $236,792
 $218,530
8
Loans:         
Loans retained233,044
 206,771
13
 221,516
 205,623
8
Loans held-for-sale and loans at fair value502
 701
(28) 1,167
 1,165

Total loans$233,546
 $207,472
13
 $222,683
 $206,788
8
          
Average loans by client segment         
Middle Market Banking$66,279
 $57,155
16
 $61,162
 $56,940
7
Corporate Client Banking63,308
 48,656
30
 58,170
 48,400
20
Commercial Real Estate Banking103,516
 100,671
3
 102,521
 100,469
2
Other443
 990
(55) 830
 979
(15)
Total Commercial Banking loans$233,546
 $207,472
13
 $222,683
 $206,788
8
          
Client deposits and other third-party liabilities$236,968
 $168,247
41
 $212,888
 $167,756
27
Equity22,000
 22,000

 22,000
 22,000

          
Headcount11,802
 11,248
5 % 11,802
 11,248
5 %
(a)At June 30, 2020, total loans included $6.5 billion of loans under the PPP, of which $6.3 billion were in Middle Market Banking. Refer to Credit Portfolio on pages 60-61 for a further discussion of the PPP.

40


Selected metrics (continued)        
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except ratios)2020
2019
Change
 2020
 2019
 Change
Credit data and quality statistics         
Net charge-offs/(recoveries)$79
$15
427% $179
 $26
 NM
Nonperforming assets         
Nonaccrual loans:         
Nonaccrual loans retained(a)
$1,377
$614
124% $1,377
 $614
 124%
Nonaccrual loans held-for-sale and loans at fair value


 
 
 
Total nonaccrual loans$1,377
$614
124
 $1,377
 $614
 124
Assets acquired in loan satisfactions24
20
20
 24
 20
 20
Total nonperforming assets$1,401
$634
121
 $1,401
 $634
 121
Allowance for credit losses:         
Allowance for loan losses$4,830
$2,756
75
 $4,830
 $2,756
 75
Allowance for lending-related commitments707
274
158
 707
 274
 158
Total allowance for credit losses$5,537
$3,030
83% $5,537
 $3,030
 83%
Net charge-off/(recovery) rate(b)
0.14%0.03%  0.16% 0.03%  
Allowance for loan losses to period-end loans retained2.16
1.32
  2.16
 1.32
  
Allowance for loan losses to nonaccrual loans retained(a)
351
449
  351
 449
  
Nonaccrual loans to period-end total loans0.61
0.29
  0.61
 0.29
  
(a)Allowance for loan losses of $287 million and $125 million was held against nonaccrual loans retained at June 30, 2020 and 2019, respectively.
(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.


41


ASSET & WEALTH MANAGEMENT
Refer to pages 74–76 of JPMorgan Chase’s 2019 Form 10-K and Line of Business Metrics on pages 198-199 for a discussion of the business profile of AWM.
Selected income statement data    
(in millions, except ratios)Three months ended June 30, Six months ended June 30,
2020
2019
Change
 2020
2019
Change
Revenue       
Asset management, administration and commissions$2,589
$2,568
1 % $5,295
$4,984
6 %
All other income131
115
14
 134
292
(54)
Noninterest revenue2,720
2,683
1
 5,429
5,276
3
Net interest income890
876
2
 1,787
1,772
1
Total net revenue3,610
3,559
1
 7,216
7,048
2
        
Provision for credit losses223
2
NM
 317
4
NM
        
Noninterest expense       
Compensation expense1,315
1,406
(6) 2,726
2,868
(5)
Noncompensation expense1,191
1,190

 2,439
2,375
3
Total noninterest expense2,506
2,596
(3) 5,165
5,243
(1)
        
Income before income tax expense881
961
(8) 1,734
1,801
(4)
Income tax expense223
242
(8) 412
421
(2)
Net income$658
$719
(8) $1,322
$1,380
(4)
        
Revenue by line of business       
Asset Management$1,780
$1,785

 $3,520
$3,546
(1)
Wealth Management1,830
1,774
3
 3,696
3,502
6
Total net revenue$3,610
$3,559
1 % $7,216
$7,048
2 %
        
Financial ratios       
Return on equity24%27%  24%26% 
Overhead ratio69
73
  72
74
 
Pre-tax margin ratio:       
Asset Management30
25
  26
24
 
Wealth Management19
29
  22
27
 
Asset & Wealth Management24
27
  24
26
 
Quarterly results
Net income was $658 million, down 8%.
Net revenue was $3.6 billion, up 1%. Net interest income was $890 million, up 2%, reflecting higher deposit and loan balances, offset by deposit margin compression. Noninterest revenue was $2.7 billion, up 1%, as a result of increased brokerage commissions on higher client-driven volume partially offset by lower asset management fees as a shift in the mix toward lower yield products was predominantly offset by strong net inflows into liquidity products over the past year.
Revenue from Asset Management of $1.8 billion, was flat versus the prior year.
Revenue from Wealth Management was $1.8 billion, up 3%, driven by higher deposit and loan balances, as well as increased brokerage commissions on higher client-driven volume, largely offset by deposit margin compression.
Noninterest expense of $2.5 billion was down 3%, as lower structural as well as volume-and revenue-related expense, were partially offset by higher investments.
 
The provision for credit losses was $223 million, driven by additions to the allowance for credit losses predominantly as a result of the impact of the COVID-19 pandemic.
Refer to Credit and Investment Risk Management on pages 60-79 and Allowance for Credit Losses on pages 77-78 for further discussions of the credit portfolios and the allowance for credit losses.
Year-to-date results
Net income was $1.3 billion, a decrease of 4%.
Net revenue was $7.2 billion, an increase of 2%. Net interest income was $1.8 billion, up 1%, reflecting higher deposit and loan balances, offset by deposit margin compression. Noninterest revenue was $5.4 billion, up 3%, driven by increased brokerage commissions on higher client-driven volume, and higher asset management fees as a result of net inflows into liquidity products partially offset by net valuation losses on certain investments, compared with gains in the prior year.

42


Revenue from Asset Management was $3.5 billion, down 1%, driven by net valuation losses on certain investments, compared with gains in the prior year, predominantly offset by higher asset management fees as a result of net inflows into liquidity products.
Revenue from Wealth Management was $3.7 billion, up 6%, largely driven by higher deposit and loan balances as well as increased brokerage commissions on higher client-driven volume, largely offset by deposit margin compression.
 
Noninterest expense was $5.2 billion, a decrease of 1%, as lower structural as well as volume-and revenue-related expense, were largely offset by higher investments.
The provision for credit losses was $317 million, driven by additions to the allowance for credit losses predominantly as a result of the impact of the COVID-19 pandemic.
Selected metrics       
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except ranking data, headcount and ratios)2020
2019
Change
 2020
2019
Change
% of JPM mutual fund assets rated as 4- or 5-star(a)
54%63%  54%63% 
% of JPM mutual fund assets ranked in 1st or 2nd quartile:(b)
       
1 year54
78
  54
78
 
3 years69
75
  69
75
 
5 years72
82
  72
82
 
        
Selected balance sheet data (period-end)(c)
       
Total assets$183,189
$172,149
6 % $183,189
$172,149
6 %
Loans165,299
149,877
10
 165,299
149,877
10
Deposits169,537
136,225
24
 169,537
136,225
24
Equity10,500
10,500

 10,500
10,500

        
Selected balance sheet data (average)(c)
       
Total assets$182,318
$167,544
9
 $182,817
$167,452
9
Loans163,440
146,494
12
 162,631
145,953
11
Deposits168,573
140,317
20
 159,602
139,282
15
Equity10,500
10,500

 10,500
10,500

        
Headcount(d)
22,949
23,683
(3) 22,949
23,683
(3)
        
Number of Wealth Management client advisors2,869
2,735
5
 2,869
2,735
5
        
Credit data and quality statistics(c)
       
Net charge-offs/(recoveries)$(2)$(3)33
 $
$1
NM
Nonaccrual loans775
127
NM
 775
127
NM
Allowance for credit losses:       
Allowance for loan losses$648
$331
96
 $648
$331
96
Allowance for lending-related commitments28
17
65
 28
17
65
Total allowance for credit losses$676
$348
94 % $676
$348
94 %
Net charge-off rate
(0.01)%  

 
Allowance for loan losses to period-end loans0.39
0.22
  0.39
0.22
 
Allowance for loan losses to nonaccrual loans84
261
  84
261
 
Nonaccrual loans to period-end loans0.47
0.08
  0.47
0.08
 
(a)Represents the Nomura “star rating” for Japan domiciled funds and Morningstar for all other domiciled funds. Includes only Asset Management retail open-ended mutual funds that have a rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds.
(b)Quartile ranking sourced from Lipper, Morningstar, Nomura and Fund Doctor based on country of domicile. Includes only Asset Management retail open-ended mutual funds that are ranked by the aforementioned sources. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds.
(c)Loans, deposits and related credit data and quality statistics relate to the Wealth Management business.
(d)During the second quarter of 2020, certain technology and support functions, comprising approximately 850 staff, were transferred from AWM to CCB as part of the ongoing reorganization of the U.S. Wealth Management business.

43


Client assets
Client assets of $3.4 trillion and assets under management of $2.5 trillion were up 12% and 15%, respectively, driven by cumulative net inflows into liquidity and long term products as well as higher market levels.
Client assets   
 As of June 30,
(in billions)2020
2019
Change
Assets by asset class   
Liquidity$707
$481
47%
Fixed income629
543
16
Equity457
441
4
Multi-asset and alternatives718
713
1
Total assets under management2,511
2,178
15
Custody/brokerage/administration/deposits859
820
5
Total client assets$3,370
$2,998
12
    
Memo:   
Alternatives client assets (a)
$188
$177
6
    
Assets by client segment   
Private Banking$677
$617
10
Institutional1,218
991
23
Retail616
570
8
Total assets under management$2,511
$2,178
15
    
Private Banking$1,500
$1,410
6
Institutional1,249
1,013
23
Retail621
575
8
Total client assets$3,370
$2,998
12%
(a)Represents assets under management, as well as client balances in brokerage accounts
Client assets (continued)     


Three months ended
June 30,
Six months ended
June 30,
(in billions)2020
2019
 2020
2019
Assets under management rollforward     
Beginning balance$2,239
$2,096
 $2,364
$1,987
Net asset flows:     
Liquidity95
4
 170
(1)
Fixed income17
37
 18
56
Equity11
(1) 10
(7)
Multi-asset and alternatives1

 (1)(3)
Market/performance/other impacts148
42
 (50)146
Ending balance, June 30$2,511
$2,178
 $2,511
$2,178
      
Client assets rollforward     
Beginning balance$3,002
$2,897
 $3,226
$2,733
Net asset flows138
52
 223
61
Market/performance/other impacts230
49
 (79)204
Ending balance, June 30$3,370
$2,998
 $3,370
$2,998

44


International metrics       
 Three months ended June 30, Six months ended June 30,
(in millions)2020
2019
Change 2020
2019
Change
Total net revenue (a)
       
Europe/Middle East/Africa$719
$714
1 $1,342
$1,409
(5)%
Asia-Pacific378
376
1 778
740
5
Latin America/Caribbean198
179
11 386
361
7
Total international net revenue1,295
1,269
2 2,506
2,510

North America2,315
2,290
1 4,710
4,538
4
Total net revenue(a)
$3,610
$3,559
1 $7,216
$7,048
2 %
(a)Regional revenue is based on the domicile of the client.
 As of June 30, As of June 30,
(in billions)2020
2019
Change
 2020
2019
Change
Assets under management       
Europe/Middle East/Africa$446
$392
14% $446
$392
14%
Asia-Pacific205
183
12
 205
183
12
Latin America/Caribbean64
56
14
 64
56
14
Total international assets under management715
631
13
 715
631
13
North America1,796
1,547
16
 1,796
1,547
16
Total assets under management$2,511
$2,178
15
 $2,511
$2,178
15
        
Client assets       
Europe/Middle East/Africa$537
$478
12
 $537
$478
12
Asia-Pacific286
257
11
 286
257
11
Latin America/Caribbean148
136
9
 148
136
9
Total international client assets971
871
11
 971
871
11
North America2,399
2,127
13
 2,399
2,127
13
Total client assets$3,370
$2,998
12% $3,370
$2,998
12%


















45


CORPORATE
Refer to pages 77–78 of JPMorgan Chase’s 2019 Form 10-K for a discussion of Corporate.
Selected income statement and balance sheet data      
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions, except headcount)2020
2019
 Change
 2020
 2019
 Change
Revenue          
Principal transactions$(2)$(175) 99 % $(115) $(237) 51 %
Investment securities gains26
44
 (41)% 259
 57
 354 %
All other income(91)6
 NM
 120
 63
 90
Noninterest revenue(67)(125) 46 % 264
 (117) NM
Net interest income(687)447
 NM
 (852) 864
 NM
Total net revenue(a)
(754)322
 NM
 (588) 747
 NM
           
Provision for credit losses4
(2) NM
 12
 
 NM
           
Noninterest expense(b)
147
232
 (37)% 293
 443
 (34)
Income/(loss) before income tax expense/(benefit)(905)92
 NM
 (893) 304
 NM
Income tax expense/(benefit)(337)(736) 54
 (200) (775) 74 %
Net income/(loss)$(568)$828
 NM
 $(693) $1,079
 NM
Total net revenue          
Treasury and CIO$(671)$618
 NM
 $(502) $1,129
 NM
Other Corporate(83)(296) 72
 (86) (382) 77
Total net revenue$(754)$322
 NM
 $(588) $747
 NM
Net income/(loss)          
Treasury and CIO$(550)$462
 NM
 $(467) $796
 NM
Other Corporate(18)366
 NM
 (226) 283
 NM
Total net income/(loss)$(568)$828
 NM
 $(693) $1,079
 NM
Total assets (period-end)$1,221,980
$821,330
 49
 $1,221,980
 $821,330
 49
Loans (period-end)1,670
1,695
 (1) 1,670
 1,695
 (1)
Headcount38,920
37,361
 4 % 38,920
 37,361
 4 %
(a)Included tax-equivalent adjustments, driven by tax-exempt income from municipal bonds, of $63 million and $81 million for the three months ended June 30, 2020 and 2019, respectively, and $124 million and $167 million for the six months ended June 30, 2020 and 2019, respectively.
(b)Included a net legal benefit of $(12) million and $(67) million for the three months ended June 30, 2020 and 2019, respectively, and $(32) million and $(157) million for the six months ended June 30, 2020 and 2019, respectively.
Quarterly results
Net loss was $568 million compared with net income of $828 million in the prior year.
Net revenue was a loss of $754 million, down $1.1 billion, driven by lower net interest income on lower rates. The current quarter also included small net gains on certain legacy private equity investments compared to losses in the prior year.
Noninterest expense of $147 million was down $85 million due to lower structural expense, partially offset by a lower net legal benefit compared to the prior year.
The current period income tax benefit was predominantly driven by the change in the level and mix of income and expenses subject to U.S. federal, and state and local taxes. The prior period included tax benefits of $742 million related to the resolution of certain tax audits.
 
Year-to-date results
Net loss was $693 million compared with net income of $1.1 billion in the prior year.
Net revenue was a loss of $588 million, compared with $747 million in the prior year. The decrease was driven by lower net interest income on lower rates, partially offset by higher noninterest revenue primarily due to higher net investment securities gains reflecting the impact of repositioning the investment securities portfolio.
Noninterest expense of $293 million was down $150 million due to lower structural expense, partially offset by a lower net legal benefit compared to the prior year.
The current period income tax benefit was driven by the change in the level and mix of income and expenses subject to U.S. federal, and state and local taxes as well as other tax adjustments, partially offset by the impact of the Firm’s estimated full-year expected tax rate relative to the level of year-to-date pretax income. The prior period included tax benefits of $825 million related to the resolution of certain tax audits.

46


Treasury and CIO overview
At June 30, 2020, the average credit rating of the Treasury and CIO investment securities comprising the portfolio in the table below was AA+ (based upon external ratings where available and, where not available, based primarily upon internal risk ratings). Refer to Note 10 for further information on the Firm’s investment securities portfolio and internal risk ratings.
Refer to Liquidity Risk Management on pages 55-59 for further information on liquidity and funding risk. Refer to Market Risk Management on pages 80-84 for information on interest rate, foreign exchange and other risks.
Selected income statement and balance sheet data      
 As of or for the three months
ended June 30,
 As of or for the six months
ended June 30,
(in millions)2020
 2019
 Change
 2020
 2019
 Change
Investment securities gains$26
 $44
 (41)% $259
 $57
 354
Available-for-sale securities (average)$426,470
 $248,612
 72 % $399,712
 $237,669
 68
Held-to-maturity securities (average)71,713
 30,929
 132
 59,193
 31,005
 91
Investment securities portfolio (average)$498,183
 $279,541
 78
 $458,905
 $268,674
 71
Available-for-sale securities (period-end)$483,752
 $274,533
 76
 $483,752
 $274,533
 76
Held-to-maturity securities, net of allowance for credit losses (period-end)(a)(b)
72,908
 30,907
 136
 72,908
 30,907
 136
Investment securities portfolio, net of allowance for credit losses (period-end)(a)
$556,660
 $305,440
 82 % $556,660
 $305,440
 82
(a)At June 30, 2020, the allowance for credit losses on HTM securities was $23 million.
(b)During the first quarter of 2020, the Firm transferred $26.1 billion of U.S. GSE and government agency MBS from AFS to HTM for capital management purposes.
Refer to Note 10 for further information.


47


FIRMWIDE RISK MANAGEMENT
Risk is an inherent part of JPMorgan Chase’s business activities. When the Firm extends a consumer or wholesale loan, advises customers and clients on their investment decisions, makes markets in securities, or offers other products or services, the Firm takes on some degree of risk. The Firm’s overall objective is to manage its 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, among other things:
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 LOBs and Corporate; and
Firmwide structures for risk governance.
The Firm strives for continual improvement in its 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 oversight by the Board of Directors (the “Board”). The impact of risk and control issues is carefully considered in the Firm’s performance evaluation and incentive compensation processes.
Risk governance and oversight framework
The Firm’s risk management governance and oversight framework involves understanding drivers of risks, types of risks, and impacts of risks.
jpmcgovernancea07.jpg
Refer to pages 79-83 of JPMorgan Chase’s 2019 Form 10-K for a further discussion of Firmwide risk management governance and oversight.
 
Risk governance and oversight functions
The following sections of this Form 10-Q and the 2019 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 risk49–5485–92
Liquidity risk55–5993–98
Reputation risk 99
Consumer credit risk62-66103–107
Wholesale credit risk67-76108–115
Investment portfolio risk79118
Market risk80-84119–126
Country risk85127–128
Operational risk86129–135
Compliance risk 132
Conduct risk 133
Legal risk 134
Estimations and Model risk87135

48


CAPITAL RISK MANAGEMENT
Capital risk is the risk the Firm has an insufficient level or composition of capital to support the Firm’s business activities and associated risks during normal economic environments and under stressed conditions.
Refer to pages 85–92 of JPMorgan Chase’s 2019 Form
10-K, Note 22 of this Form 10-Q and the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for further discussion of the Firm’s Capital Risk Management, including capital planning and stress testing.
COVID-19 Pandemic
The Firm has been impacted by recent market events as a result of the COVID-19 pandemic, but remains well-capitalized. However, the continuation or further deterioration of the current macroeconomic environment could result in impacts to the Firm’s capital and leverage position.
Basel III Overview
The capital rules under Basel III establish minimum capital ratios and overall capital adequacy standards for large and internationally active U.S. bank holding companies (“BHC”) and banks, including the Firm and its insured depository institution (“IDI”) subsidiaries, including JPMorgan Chase Bank, N.A. The minimum amount of regulatory capital that must be held by BHCs and banks is determined by calculating risk-weighted assets (“RWA”), which are on-balance sheet assets and off-balance sheet exposures, weighted according to risk. Two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III Standardized”), and an advanced approach (“Basel III Advanced”). For each of the risk-based capital ratios, the capital adequacy of the Firm is evaluated against the lower of the Standardized or Advanced approaches.
The Firm’s Basel III Standardized-risk-based ratios are currently more binding than the Basel III Advanced-risk-based ratios.
Basel III also includes a requirement for Advanced Approach banking organizations, including the Firm, to calculate the SLR. Refer to SLR on page 90 of JPMorgan Chase’s 2019 Form 10-K for additional information.
Key Regulatory Developments
Current Expected Credit Losses. As disclosed in the Firm’s 2019 Form 10-K, the Firm initially elected to phase-in the January 1, 2020 (“day 1”) CECL adoption impact to retained earnings of $2.7 billion to CET1 capital, at 25% per year in each of 2020 to 2023. As part of their response to the impact of the COVID-19 pandemic, on March 31, 2020, the federal banking agencies issued an interim final rule that provided the option to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period (“CECL capital transition provisions”).
 
The interim final rule provides a uniform approach for estimating the effects of CECL compared to the legacy incurred loss model during the first two years of the transition period (the “day 2” transition amount), whereby the Firm may exclude from CET1 capital 25% of the change in the allowance for credit losses (excluding allowances on PCD loans). The cumulative day 2 transition amount as at December 31, 2021 that is not recognized in CET1 capital as well as the $2.7 billion day 1 impact, will be phased into CET1 capital at 25% per year beginning January 1, 2022. The Firm has elected to apply the CECL capital transition provisions, and accordingly, for the period ended June 30, 2020, the capital metrics of the Firm exclude $6.5 billion, which is the $2.7 billion day 1 impact to retained earnings and 25% of the $15.7 billion increase in the allowance for credit losses (excluding allowances on PCD loans).
The impacts of the CECL capital transition provisions on Tier 2 capital, adjusted average assets, and total leverage exposure have also been incorporated into the Firm’s capital metrics. Refer to Note 1 for further information on the CECL accounting guidance.
Money Market Mutual Fund Liquidity Facility. On March 18, 2020, the Federal Reserve established the MMLF facility, authorized through September 30, 2020, to enhance the liquidity and functioning of money markets. On July 28, 2020, the Federal Reserve announced that it was extending the MMLF through December 31, 2020. Under the MMLF, the FRBB makes nonrecourse advances to participating financial institutions to purchase certain types of assets from eligible money market mutual fund clients. These assets, which are reflected in other assets on the Firm’s Consolidated balance sheets, are pledged to the FRBB as collateral. On March 23, 2020, the federal banking agencies issued an interim final rule to neutralize the effects of purchasing assets through the program on risk-based and leverage-based capital ratios. As of June 30, 2020, the Firm excluded assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF in the amount of $3.8 billion from its RWA and $7.8 billion from adjusted average assets and total leverage exposure.
Supplementary leverage ratio temporary revision. On April 1, 2020, the Federal Reserve issued an interim final rule that requires, on a temporary basis, the calculation of total leverage exposure for purposes of calculating the SLR for bank holding companies, to exclude the on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks. These exclusions became effective April 1, 2020, and will remain in effect through March 31, 2021.
On June 1, 2020, the Federal Reserve, OCC and FDIC issued an interim final rule that provides IDI subsidiaries with an option to apply this temporary exclusion subject to certain

49


restrictions. As of June 30, 2020, JPMorgan Chase Bank, N.A. has not elected to apply this exclusion.
Paycheck Protection Program. On April 13, 2020, the federal banking agencies issued an interim final rule to neutralize the regulatory capital effects of participating in the PPP on risk-based capital ratios by applying a zero percent risk weight to loans originated under the program. As of June 30, 2020, the Firm had approximately $28 billion of loans under the program.
The interim rule also provides that if the PPP loan is pledged as collateral for a non-recourse loan under the Federal Reserve’s Paycheck Protection Program Lending (“PPPL”) Facility, the PPP loans can be excluded from leverage-based capital ratios. As of June 30, 2020, the Firm had not participated in the PPPL Facility.
Refer to Regulatory Developments Relating to the COVID-19 Pandemic on pages 11-12 for additional information on
 
regulatory actions and significant financing programs that the U.S. government and regulators have introduced to address the effects of the COVID-19 pandemic.
Stress Capital Buffer. On March 4, 2020, the Federal Reserve issued the final rule introducing the SCB framework for the Basel III Standardized approach that is designed to more closely integrate the results of the quantitative assessment in the annual CCAR with the ongoing minimum capital requirements for BHCs under the U.S. Basel III rules. The final rule replaces the static 2.5% CET1 capital conservation buffer in the Standardized approach with a dynamic institution-specific SCB. The final rule does not apply to the Advanced approach capital requirements. The SCB requirement for BHCs will be effective on October 1 of each year and is expected to remain in effect until September 30 of the following year.
The following tables present the Firm’s risk-based and leverage-based capital metrics under both the Basel III Standardized and Advanced Approaches. Refer to Capital Risk Management on pages 85–92 of JPMorgan Chase’s 2019 Form 10-K for a further discussion of these capital metrics.
 
June 30, 2020(c)(d)
 December 31, 2019  
(in millions, except ratios)StandardizedAdvanced StandardizedAdvanced 
Minimum capital ratios(e)
Risk-based capital metrics:       
CET1 capital$190,867
$190,867
 $187,753
$187,753
  
Tier 1 capital220,674
220,674
 214,432
214,432
  
Total capital256,667
244,112
 242,589
232,112
  
Risk-weighted assets1,541,365
1,450,587
 1,515,869
1,397,878
  
CET1 capital ratio12.4%13.2% 12.4%13.4% 10.5%
Tier 1 capital ratio14.3
15.2
 14.1
15.3
 12.0
Total capital ratio16.7
16.8
 16.0
16.6
 14.0
Leverage-based capital metrics:       
Adjusted average assets(a)
$3,176,729
$3,176,729
 $2,730,239
$2,730,239
  
Tier 1 leverage ratio6.9%6.9% 7.9%7.9% 4.0%
Total leverage exposure(b)
NA
$3,228,424
 NA
$3,423,431
  
SLR(b)
NA
6.8% NA
6.3% 5.0%
(a)Adjusted average assets, for purposes of calculating the leverage ratios, 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)As of June 30, 2020, total leverage exposure for purposes of calculating the SLR excludes U.S. Treasury securities and deposits at Federal Reserve Banks, as provided by the interim final rule issued by the Federal Reserve on April 1, 2020.
(c)As of June 30, 2020, the capital metrics reflect the CECL capital transition provisions.
(d)As of June 30, 2020, the capital metrics reflect the exclusion of assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF. Additionally, loans originated under the PPP receive a zero percent risk weight.
(e)Represents minimum requirements and regulatory buffers applicable to the Firm. Refer to Note 22 for additional information.

50


Capital components
The following table presents reconciliations of total stockholders’ equity to Basel III CET1 capital, Tier 1 capital and Total capital as of June 30, 2020 and December 31, 2019.
(in millions)June 30, 2020
December 31, 2019
Total stockholders’ equity$264,466
$261,330
Less: Preferred stock30,063
26,993
Common stockholders’ equity234,403
234,337
Add:  
Certain deferred tax liabilities(a)
2,397
2,381
Less:  
Goodwill47,811
47,823
Other intangible assets778
819
Other CET1 capital adjustments(b)
(2,656)323
Standardized/Advanced CET1 capital190,867
187,753
Preferred stock30,063
26,993
Less: Other Tier 1 adjustments256
314
Standardized/Advanced Tier 1 capital$220,674
$214,432
Long-term debt and other instruments qualifying as Tier 2 capital$17,894
$13,733
Qualifying allowance for credit losses(c)
18,006
14,314
Other93
110
Standardized Tier 2 capital$35,993
$28,157
Standardized Total capital$256,667
$242,589
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital(d)
(12,555)(10,477)
Advanced Tier 2 capital$23,438
$17,680
Advanced Total capital$244,112
$232,112
(a)
Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating CET1 capital.
(b)
As of June 30, 2020, the impact of the CECL capital transition provision was an increase in CET1 capital of $6.5 billion.
(c)Represents the allowance for credit losses eligible for inclusion in Tier 2 capital up to 1.25% of credit risk RWA, including the impact of the CECL capital transition provision with any excess deducted from RWA.
(d)Represents an adjustment to qualifying allowance for credit losses for the excess of eligible credit reserves over expected credit losses up to 0.6% of credit risk RWA, including the impact of the CECL capital transition provision with any excess deducted from RWA.
 
Capital rollforward
The following table presents the changes in Basel III CET1 capital, Tier 1 capital and Tier 2 capital for the six months ended June 30, 2020.
Six months ended June 30,
(in millions)
2020
Standardized/Advanced CET1 capital at December 31, 2019$187,753
Net income applicable to common equity6,730
Dividends declared on common stock(5,559)
Net purchase of treasury stock(5,288)
Changes in additional paid-in capital(397)
Changes related to AOCI7,220
Adjustment related to AOCI(a)
(3,415)
Changes related to other CET1 capital adjustments(b)
3,823
Change in Standardized/Advanced CET1 capital3,114
Standardized/Advanced CET1 capital at June 30, 2020$190,867
  
Standardized/Advanced Tier 1 capital at December 31, 2019$214,432
Change in CET1 capital(b)
3,114
Net issuance of noncumulative perpetual preferred stock3,070
Other58
Change in Standardized/Advanced Tier 1 capital6,242
Standardized/Advanced Tier 1 capital at June 30, 2020$220,674
  
Standardized Tier 2 capital at December 31, 2019$28,157
Change in long-term debt and other instruments qualifying as Tier 24,162
Change in qualifying allowance for credit losses(b)
3,692
Other(18)
Change in Standardized Tier 2 capital7,836
Standardized Tier 2 capital at June 30, 2020$35,993
Standardized Total capital at June 30, 2020$256,667
  
Advanced Tier 2 capital at December 31, 2019$17,680
Change in long-term debt and other instruments qualifying as Tier 24,162
Change in qualifying allowance for credit losses(b)
1,614
Other(18)
Change in Advanced Tier 2 capital5,758
Advanced Tier 2 capital at June 30, 2020$23,438
Advanced Total capital at June 30, 2020$244,112
(a)Includes cash flow hedges and DVA related to structured notes recorded in AOCI.
(b)Includes the impact of the CECL capital transition provisions.

51


RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced approaches for the six months ended June 30, 2020. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.
 Standardized Advanced 
Six months ended June 30, 2020
(in millions)
Credit risk RWAMarket risk RWATotal RWA Credit risk RWAMarket risk RWA
Operational risk
RWA
Total RWA
December 31, 2019$1,440,220
$75,649
$1,515,869
 $932,948
$75,652
$389,278
$1,397,878
Model & data changes(a)
300
(15,200)(14,900) (6,300)(15,200)
(21,500)
Portfolio runoff(b)
(2,500)
(2,500) (2,200)

(2,200)
Movement in portfolio levels(c)
(5,799)48,695
42,896
 31,270
48,872
(3,733)76,409
Changes in RWA(7,999)33,495
25,496
 22,770
33,672
(3,733)52,709
June 30, 2020$1,432,221
$109,144
$1,541,365
 $955,718
$109,324
$385,545
$1,450,587
(a)
Model & data changes refer to material movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance (exclusive of rule changes).
(b)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; updates to cumulative losses for operational risk RWA; and deductions to credit risk RWA for excess eligible credit reserves not eligible for inclusion in Tier 2 capital.
Supplementary leverage ratio
Refer to Supplementary Leverage Ratio on pages 87-88 of JPMorgan Chase’s 2019 Form 10-K for additional information.
The following table presents the components of the Firm’s SLR.
(in millions, except ratio)June 30,
2020

December 31,
2019

Tier 1 capital$220,674
$214,432
Total average assets3,229,268
2,777,270
Less: Regulatory capital adjustments(a)
52,539
47,031
Total adjusted average assets(b)
3,176,729
2,730,239
Add: Off-balance sheet exposures(c)
670,606
693,192
Less: Exclusion for U.S Treasuries and Federal Reserve Bank deposits618,911

Total leverage exposure$3,228,424
$3,423,431
SLR6.8%6.3%
(a)
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. As of June 30, 2020, includes adjustments for the CECL capital transition provisions and the exclusion of assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF.
(b)Adjusted average assets used for the calculation of Tier 1 leverage ratio.
(c)Off-balance sheet exposures are calculated as the average of the three month-end spot balances during the reporting quarter.
Refer to Note 22 for JPMorgan Chase Bank, N.A.’s SLR ratios.
Line of business equity
Each business segment is allocated capital by taking into consideration a variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. Refer to line of business equity on page 90 of JPMorgan Chase’s 2019 Form 10-K for additional information on capital allocation.
 
The following table presents the capital allocated to each business segment:

(in billions)
June 30,
2020

 December 31,
2019

Consumer & Community Banking$52.0
 $52.0
Corporate & Investment Bank80.0
 80.0
Commercial Banking22.0
 22.0
Asset & Wealth Management10.5
 10.5
Corporate69.9
 69.8
Total common stockholders’ equity$234.4
 $234.3
Planning and stress testing
Comprehensive Capital Analysis and Review
On June 29, 2020, the Firm announced that it had completed the 2020 CCAR stress test process. The Firm’s indicative SCB requirement is 3.3% and the Federal Reserve will provide the Firm with its final SCB requirement by August 31, 2020. The SCB requirement will become effective on October 1, 2020 and will remain in effect until September 30, 2021. The SCB will be integrated into the Firm’s ongoing Standardized risk-based capital requirements, increasing the minimum CET1 capital ratio to 11.3% (up from 10.5%).
The Federal Reserve has determined that changes in financial markets or the macroeconomic outlook due to the COVID-19 pandemic could have a material effect on a firm’s risk profile and financial condition and therefore is requiring all large bank holding companies, including the Firm, to update and resubmit their capital plans later this year.
Refer to Key Regulatory Developments on pages 49-50 of this Form 10-Q and capital planning and stress testing on pages 85-86 of JPMorgan Chase’s 2019 Form 10-K for additional information.

52


Capital actions
Preferred stock
Preferred stock dividends declared were $401 million and $822 million for the three and six months ended June 30, 2020.
During the three months ended June 30, 2020, the Firm did not issue or redeem any preferred stock. Refer to Note 18 of this Form 10-Q and Note 21 of JPMorgan Chase’s 2019 Form 10-K for additional information on the Firm’s preferred stock, including the issuance and redemption of preferred stock during the three months ended March 31, 2020.
Common stock dividends
The Firm’s quarterly common stock dividend is currently $0.90 per share. The Firm intends to maintain the quarterly common stock dividend for the third quarter of 2020 subject to the approval of the Board of Directors.
Common equity
On March 15, 2020, in response to the COVID-19 pandemic, the Firm temporarily suspended repurchases of its common equity. In June 2020, the Federal Reserve directed all large bank holding companies, including the Firm, to discontinue net share repurchases, at least through the end of the third quarter of 2020.
The following table sets forth the Firm’s repurchases of common equity for the three and six months ended June 30, 2020 and 2019.

Three months ended
June 30,

Six months ended
June 30,
(in millions)2020
2019

2020
2019
Total number of shares of common stock repurchased
47.5

50.0
97.0
Aggregate purchase price of common stock repurchases$
$5,210

$6,397
$10,301
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 201 of this Form 10-Q and page 30 of JPMorgan Chase’s 2019 Form 10-K, respectively, for additional information regarding repurchases of the Firm’s equity securities.

 
Other capital requirements
Total Loss-Absorbing Capacity (“TLAC”)
The Federal Reserve’s TLAC rule requires the U.S. global systemically important bank (“GSIB”) top-tier holding companies, including the Firm, to maintain minimum levels of external TLAC and eligible long-term debt (“eligible LTD”).
Refer to other capital requirements on page 91 of JPMorgan Chase’s 2019 Form 10-K for additional information on TLAC.
The following table presents the TLAC and external long-term debt minimum requirements including applicable regulatory buffers, as of June 30, 2020 and December 31, 2019.
 Minimum Requirements
TLAC to RWA23.0%
TLAC to leverage exposure9.5
External long-term debt to RWA9.5
External long-term debt to leverage4.5
The following table presents the eligible external TLAC and eligible LTD amounts, as well as a representation of the amounts as a percentage of the Firm’s total RWA and total leverage exposure applying the impact of the CECL capital transition provisions as of June 30, 2020.
 June 30, 2020December 31, 2019
(in billions, except ratio)Eligible external TLACEligible LTDEligible external TLACEligible LTD
Total eligible TLAC & LTD$407.1
$179.6
$386.4
$161.8
% of RWA26.4%11.7%25.5%10.7%
Surplus/(shortfall)$52.5
$33.2
$37.7
$17.8
     
% of total leverage exposure12.6%5.6%11.3%4.7%
Surplus/(shortfall)$100.4
$34.3
$61.2
$7.8
Refer to Part I, Item 1A: Risk Factors on pages 6–28 of JPMorgan Chase’s 2019 Form 10-K for information on the financial consequences to holders of the Firm’s debt and equity securities in a resolution scenario.

53


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 the Rules of the Commodity Futures Trading Commission (“CFTC”).
Refer to Capital risk management on pages 85–92 of JPMorgan Chase’s 2019 Form 10-K for a discussion on J.P. Morgan Securities’ capital requirements.
The following table presents J.P. Morgan Securities’ net capital:
June 30, 2020 
(in millions)
Actual(a)

Minimum
Net Capital$27,714
$5,462
(a)Net capital reflects the exclusion of assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF.

 

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”).
Refer to Capital risk management on pages 85–92 of JPMorgan Chase’s 2019 Form 10-K for a further discussion on J.P. Morgan Securities plc.
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 June 30, 2020, J.P. Morgan Securities plc was compliant with the requirements of the MREL rule. Refer to Supervision and Regulation on pages 1–6 of JPMorgan Chase’s 2019 Form 10-K for additional information on MREL.
The following table presents J.P. Morgan Securities plc’s capital metrics:
June 30, 2020  
(in millions, except ratios)Estimated
Minimum ratios
Total capital$55,188
 
CET1 ratio17.6%4.5%
Total capital ratio22.5%8.0%




54


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. Refer to pages 93–98 of JPMorgan Chase’s 2019 Form 10-K and the Firm’s U.S. LCR Disclosure reports, which are available on the Firm’s website for a further discussion of the Firm’s Liquidity Risk Management.
LCR and HQLA
The LCR rule requires that the Firm maintain an amount of unencumbered High Quality Liquid Assets (“HQLA”) that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of significant stress. Under the LCR rule, the amount of HQLA held by JPMorgan Chase Bank, N.A. that is in excess of its stand-alone 100% minimum LCR requirement, and that is not transferable to non-bank affiliates, must be excluded from the Firm’s reported HQLA. The LCR is required to be a minimum of 100%. Refer to page 94 of JPMorgan Chase’s 2019 Form 10-K and the Firm’s U.S. LCR Disclosure reports for additional information on HQLA and net cash outflows.
The following table summarizes the Firm’s average LCR for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019 based on the Firm’s interpretation of the finalized LCR framework.
 Three months ended
Average amount
(in millions)
June 30,
2020
March 31, 2020June 30,
2019
HQLA   
Eligible cash(a)
$426,053
$205,027
$219,838
Eligible securities(b)(c)
225,135
343,124
317,439
Total HQLA(d)
$651,188
$548,151
$537,277
Net cash outflows$556,395
$482,372
$477,442
LCR117%114%113%
Net excess HQLA(d)
$94,793
$65,779
$59,835
(a)
Represents cash on deposit at central banks, primarily the Federal Reserve Banks.
(b)Predominantly U.S. Treasuries, U.S. GSE and government agency MBS, and sovereign bonds net of applicable haircuts under the LCR rule.
(c)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. that are not transferable to non-bank affiliates.
The Firm’s average LCR increased during the three months ended June 30, 2020, compared with the three-month period ended March 31, 2020, largely due to long-term debt issuances and a benefit from the return of funding to the Parent Company from JPMorgan Chase Bank, N.A. as a result of the bank’s strong liquidity position. Liquidity in JPMorgan Chase Bank, N.A. increased during the quarter primarily due to deposits net of loan growth. Deposits increased in the second quarter as a result of market conditions driven by the COVID-19 pandemic. Additionally, effective March 26, 2020, the Federal Reserve, in response
 
to the COVID-19 pandemic, reduced reserve requirements to zero percent, which increased JPMorgan Chase Bank, N.A.’s average HQLA by approximately $25 billion in the second quarter. However, these increases in excess liquidity in JPMorgan Chase Bank, N.A. are excluded from the Firm’s reported LCR under the LCR rule. Refer to Note 21 for additional information.
The Firm's average LCR increased during the three months ended June 30, 2020, compared with the prior year period, primarily due to an increase in the average amount of reportable HQLA as a result of increased cash from unsecured long-term debt issuances.
The Firm’s average LCR fluctuates from period to period, due to changes in its HQLA and estimated net cash outflows as a result of ongoing business activity.
Other liquidity sources
In addition to the assets reported in the Firm’s HQLA above, the Firm had unencumbered marketable securities, such as equity securities and fixed income debt securities, that the Firm believes would be available to raise liquidity. This includes securities included as part of the excess HQLA at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates, as described above. The fair value of these securities was approximately $606 billion and $315 billion as of June 30, 2020 and December 31, 2019, respectively, although the amount of liquidity that could be raised would be dependent on prevailing market conditions. The fair value increased compared to December 31, 2019, due to an increase in excess HQLA at JPMorgan Chase Bank, N.A. which was primarily a result of increased deposits as noted above.
The Firm also had available borrowing capacity at FHLBs and the discount window at the Federal Reserve Bank as a result of collateral pledged by the Firm to such banks of approximately $281 billion and $322 billion as of June 30, 2020 and December 31, 2019, respectively. This borrowing capacity excludes the benefit of cash and securities reported in the Firm’s HQLA or other unencumbered securities that are currently pledged at the Federal Reserve Bank discount window and other central banks. Available borrowing capacity decreased from December 31, 2019 primarily due to lower credit card receivable balances and lower collateral values due to a decline in their fair value, both driven by the COVID-19 pandemic. Although available, the Firm does not view this borrowing capacity at the Federal Reserve Bank discount window and the other central banks as a primary source of liquidity.

55


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, secured and unsecured funding in the capital markets and stockholders’ equity. Deposits are the primary funding source for JPMorgan Chase Bank, N.A. Additionally, JPMorgan Chase Bank, N.A. may also access funding through short- or long-term secured borrowings, through the issuance of
 
unsecured long-term debt, or from borrowings from the Parent Company or the Intermediate Holding Company (“IHC”). The Firm’s non-bank subsidiaries are primarily funded from long-term unsecured borrowings and short-term secured borrowings, primarily securities loaned or sold under repurchase agreements. Excess funding is invested by Treasury and CIO in the Firm’s investment securities portfolio or deployed in cash or other short-term liquid investments based on their interest rate and liquidity risk characteristics.
Deposits
The table below summarizes, by the LOBs and Corporate, the deposit balances as of June 30, 2020, and December 31, 2019, and the average deposit balances for the three and six months ended June 30, 2020 and 2019, respectively.
 June 30, 2020
December 31, 2019
  Three months ended June 30, Six months ended June 30,
Deposits  Average Average
(in millions)  2020
2019
 2020
2019
Consumer & Community Banking$876,991
$718,354
(a) 
 $831,996
$690,892
 $782,822
$685,980
Corporate & Investment Bank643,133
511,905
(a) 
 652,464
512,098
 607,345
502,280
Commercial Banking240,440
184,115
  236,753
168,194
 212,718
167,688
Asset & Wealth Management169,537
147,804
  168,573
140,317
 159,602
139,282
Corporate928
253
  731
793
 864
878
Total Firm$1,931,029
$1,562,431
  $1,890,517
$1,512,294
 $1,763,351
$1,496,108
(a)In the first quarter of 2020, the Merchant Services business was realigned from CCB to CIB as part of the Firm’s Wholesale Payments business. The prior- period amounts were revised to conform with the current presentation.
Deposits provide a stable source of funding and reduce the Firm’s reliance on the wholesale funding markets. A significant portion of the Firm’s deposits are consumer deposits and wholesale operating deposits, which are both considered to be stable sources of liquidity. Wholesale operating deposits are considered to be stable sources of liquidity because they are generated from customers that maintain operating service relationships with the Firm.
The table below shows the loan and deposit balances, the loans-to-deposits ratios, and deposits as a percentage of total liabilities, as of June 30, 2020 and December 31, 2019.
(in billions except ratios)June 30, 2020
 December 31, 2019
Deposits$1,931.0
 $1,562.4
Deposits as a % of total liabilities65% 64%
Loans$978.5
 $959.8
Loans-to-deposits ratio51% 61%
The Firm believes that average deposit balances are generally more representative of deposit trends than period-end deposit balances, over time. However, during periods of market disruption those trends could be affected.
 
Average deposits increased for the three and six months ended June 30, 2020, reflecting significant inflows across the LOBs primarily driven by the COVID-19 pandemic, as customers and clients looked to remain liquid as a result of market conditions. In the wholesale businesses, the inflows principally occurred in March, and in general were maintained through the second quarter. In CCB, the increase was driven by the continued growth in both existing and new accounts, as well as COVID-19 related factors, such as the government stimulus for consumers and small businesses, lower consumer spending and delays in tax payments.
Refer to the discussion of the Firm’s Business Segment Results and the Consolidated Balance Sheets Analysis on pages 24-47 and pages 18-19, respectively, for further information on deposit and liability balance trends.

56


The following table summarizes short-term and long-term funding, excluding deposits, as of June 30, 2020, and December 31, 2019, and average balances for the three and six months ended June 30, 2020 and 2019, respectively. Refer to the Consolidated Balance Sheets Analysis on pages 18-19 and Note 11 for additional information.
 June 30, 2020December 31, 2019 Three months ended June 30, Six months ended June 30,
Sources of funds (excluding deposits)Average Average
(in millions)2020
2019
 2020
2019
Commercial paper$13,988
$14,754
 $14,032
$26,030
 $14,003
$27,373
Other borrowed funds8,447
7,544
 8,613
11,818
 8,853
11,037
Total short-term unsecured funding$22,435
$22,298
 $22,645
$37,848
 $22,856
$38,410
Securities sold under agreements to repurchase(a)
$229,320
$175,709
 $268,281
$218,057
 $251,338
$207,812
Securities loaned(a)
4,246
5,983
 5,950
8,090
 6,649
9,428
Other borrowed funds(b)
25,579
18,622
 28,206
27,840
 23,983
31,690
Obligations of Firm-administered multi-seller conduits(c)
$12,666
$9,223
 $12,428
$13,356
 $11,163
$10,387
Total short-term secured funding$271,811
$209,537
 $314,865
$267,343
 $293,133
$259,317
         
Senior notes$180,532
$166,185
 $177,972
$167,376
 $171,857
$165,176
Subordinated debt22,320
17,591
 20,934
17,056
 19,545
16,890
Structured notes(d)
73,833
74,724
 71,561
62,284
 72,205
59,853
Total long-term unsecured funding$276,685
$258,500
 $270,467
$246,716
 $263,607
$241,919
         
Credit card securitization(c)
$5,789
$6,461
 $5,907
$11,671
 $6,039
$12,535
FHLB advances36,129
28,635
 36,130
34,541
 31,629
39,227
Other long-term secured funding(e)
4,189
4,363
 4,233
4,680
 4,320
4,785
Total long-term secured funding$46,107
$39,459
 $46,270
$50,892
 $41,988
$56,547
         
Preferred stock(f)
$30,063
$26,993
 $30,063
$26,993
 $29,734
$27,059
Common stockholders’ equity(f)
$234,403
$234,337
 $234,408
$233,026
 $234,469
$231,547
(a)Primarily consists of short-term securities loaned or sold under agreements to repurchase.
(b)Effective March 2020, includes nonrecourse advances provided under the MMLF.
(c)Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.
(d)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(e)Includes long-term structured notes which are secured.
(f)Refer to Capital Risk Management on pages 49-54 and Consolidated statements of changes in stockholders’ equity on page 96 of this Form 10-Q, and Note 21 and Note 22 of JPMorgan Chase’s 2019 Form 10-K for additional information on preferred stock and common stockholders’ equity.
Short-term funding
The Firm’s sources of short-term secured funding primarily consist of securities loaned or sold under agreements to repurchase. These instruments are secured predominantly by high-quality securities collateral, including government-issued debt and U.S. GSE and government agency MBS. Securities sold under agreements to repurchase increased at June 30, 2020, compared with December 31, 2019, reflecting in CIB, a net increase related to client-driven market-making activities, and higher secured financing of trading assets, partially offset by a decline in the Firm's participation in the Federal Reserve's open market operations, and in Treasury and CIO, higher secured financing of AFS investment securities.
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.
As of June 30, 2020, the Firm participated in the MMLF government facility. The secured nonrecourse advances under the MMLF are included in other borrowed funds. Refer to Capital Risk Management on pages 49-54 for additional information on the MMLF.
 
The PDCF was established by the Federal Reserve on March 20, 2020, to allow primary dealers to support smooth market functioning by facilitating the availability of credit to businesses and households. Under the PDCF, the Federal Reserve Bank of New York (“FRBNY”) provides collateralized financing on a term basis to primary dealers. These financing transactions were reported as securities sold under agreements to repurchase. On July 28, 2020, the Federal Reserve announced that it was extending through December 31, 2020 the PDCF, which was previously scheduled to expire on or around September 30, 2020. The Firm participated in the PDCF in the first quarter of 2020, and ceased its participation in May 2020 as the secured financing market normalized.
The Firm also continues to participate in the Federal Reserve’s open market operations.
The Firm’s sources of short-term unsecured funding primarily consist of issuance of wholesale commercial paper. The decrease in commercial paper at June 30, 2020, from December 31, 2019 and for the average three and six months ended June 30, 2020 compared to the prior year period, was due to lower net issuance primarily for short-term liquidity management.

57


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 flexibility in support of both bank and non-bank subsidiary funding needs. The Parent Company advances substantially all net funding proceeds to its subsidiary, the IHC. The IHC does not issue debt to external counterparties. The following table summarizes long-term unsecured issuance and maturities or redemptions for the three and six months ended June 30, 2020 and 2019. Refer to Liquidity Risk Management on pages 93–98 and Note 20 of JPMorgan Chase’s 2019 Form 10-K for additional information on the IHC and long-term debt.
Long-term unsecured funding          
 Three months ended June 30, Six months ended June 30, Three months ended June 30, Six months ended June 30,
 2020
2019
 2020
2019
 2020
2019
 2020
2019
(Notional in millions)Parent Company Subsidiaries
Issuance           
Senior notes issued in the U.S. market$13,500
$4,000
 $18,750
$8,250
 $
$
 $
$1,750
Senior notes issued in non-U.S. markets

 1,355
2,248
 

 

Total senior notes13,500
4,000
 20,105
10,498
 

 
1,750
Subordinated debt3,000

 3,000

 

 

Structured notes(a)
2,526
631
 5,308
1,816
 3,862
9,016
 13,114
15,132
Total long-term unsecured funding – issuance$19,026
$4,631
 $28,413
$12,314
 $3,862
$9,016
 $13,114
$16,882
            
Maturities/redemptions           
Senior notes$2,618
$4,157
 $8,084
$7,907
 $3,572
$1
 $7,637
$1,816
Subordinated debt

 
146
 

 

Structured notes1,309
331
 2,834
959
 5,355
4,327
 14,737
8,160
Total long-term unsecured funding – maturities/redemptions$3,927
$4,488
 $10,918
$9,012
 $8,927
$4,328
 $22,374
$9,976
(a)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
The Firm can also raise secured long-term funding through securitization of consumer credit card loans and FHLB advances. The following table summarizes the securitization issuance and FHLB advances and their respective maturities or redemptions for the three and six months ended June 30, 2020 and 2019, respectively.
Long-term secured funding         
 Three months ended June 30, Six months ended June 30,
 Issuance Maturities/Redemptions Issuance Maturities/Redemptions
(in millions)20202019 20202019 2020
2019
 2020
2019
Credit card securitization$
$
 $774
$4,125
 $1,000
$
 $1,674
$4,125
FHLB advances

 2
12,804
 15,000

 7,505
14,805
Other long-term secured funding(a)
89
18
 229
207
 323
53
 434
453
Total long-term secured funding$89
$18
 $1,005
$17,136
 $16,323
$53
 $9,613
$19,383
(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. Refer to Note 14 of JPMorgan Chase’s 2019 Form 10-K for further description of the client-driven loan securitizations.

58


Credit ratings
The cost and availability of financing are influenced by credit ratings. Reductions in these ratings could have an adverse effect on the Firm’s access to liquidity sources, increase the cost of funds, trigger additional collateral or funding requirements and decrease the number of investors and counterparties willing to lend to the Firm. The nature and magnitude of the impact of ratings downgrades depends on numerous contractual and behavioral factors, which the Firm believes are incorporated in its liquidity risk and stress testing metrics. The Firm believes that it maintains sufficient liquidity to withstand a potential decrease in funding capacity due to ratings downgrades.
 
Additionally, the Firm’s funding requirements for VIEs and other third-party commitments may be adversely affected by a decline in credit ratings. Refer to SPEs on page 21, and liquidity risk and credit-related contingent features in Note 5 for additional information on the impact of a credit ratings downgrade on the funding requirements for VIEs, and on derivatives and collateral agreements.

The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of June 30, 2020 were as follows:
 JPMorgan Chase & Co. JPMorgan Chase Bank, N.A. 
J.P. Morgan Securities LLC
J.P. Morgan Securities plc
June 30, 2020Long-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 Ratings(a)
AA-F1+Negative AAF1+Negative AAF1+Negative
(a) On April 18, 2020, Fitch affirmed the credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries but revised the outlook on the credit ratings from stable to negative given expectations that credit fundamentals will deteriorate as a result of the COVID-19 pandemic.
Refer to page 98 of JPMorgan Chase’s 2019 Form 10-K 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.


59


CREDIT AND INVESTMENT RISK MANAGEMENT
Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk,
wholesale credit risk, and investment portfolio risk. Refer to pages 60-78 for a further discussion of Credit Risk.
 
Refer to page 79 for a further discussion of Investment Portfolio Risk. Refer to Credit and Investment Risk Management on pages 100–118 of JPMorgan Chase’s 2019 Form 10-K for a further discussion of the Firm’s Credit and Investment Risk Management framework.

CREDIT PORTFOLIO
Credit risk is the risk associated with the default or change in credit profile of a client, counterparty or customer.
Effective January 1, 2020, the Firm adopted the CECL accounting guidance. The adoption resulted in a change in the accounting for PCI loans, which are considered PCD loans under CECL. In conjunction with the adoption of CECL, the Firm reclassified risk-rated loans and lending-related commitments from the consumer, excluding credit card portfolio segment to the wholesale portfolio segment, to align with the methodology applied when determining the allowance. Prior-period amounts have been revised to conform with the current presentation. Refer to Note 1 for further information.
The Firm has granted various forms of assistance to customers and clients impacted by the COVID-19 pandemic, including payment deferrals and covenant modifications. The majority of the Firm’s COVID-19 related loan modifications have not been considered TDRs as:
they represent short-term or other insignificant modifications, whether under the Firm’s regular loan modification assessments or the IA Statement guidance, or
the Firm has elected to apply the option to suspend the application of accounting guidance for TDRs as provided under section 4013 of the CARES Act.
To the extent that certain modifications do not meet any of the above criteria, the Firm accounts for them as TDRs. The Firm considers expected losses of principal and accrued interest associated with all COVID-19 related loan modifications in its allowance for credit losses. Refer to Business Developments on pages 9-10 for more information on customer and client assistance granted. Refer to Notes 12 and 13 for further information on the Firm’s accounting
 
policies on loan modifications and the allowance for credit losses.
The effectiveness of the Firm’s actions in helping borrowers recover and in mitigating the Firm’s credit losses remains uncertain in light of the unpredictable nature and duration of the COVID-19 pandemic. Assistance provided in response to the COVID-19 pandemic could delay the recognition of delinquencies, nonaccrual status, and net charge-offs for those customers and clients who would have otherwise moved into past due or nonaccrual status. Refer to Consumer Credit Portfolio on pages 62-66 and Wholesale Credit Portfolio on pages 67-76 for information on loan modifications as of June 30, 2020.
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; refer to Notes 2 and 3 for further information regarding these loans. Refer to Notes 12, 23, and 5 for additional information on the Firm’s loans, lending-related commitments and derivative receivables, including the Firm’s accounting policies.
Refer to Note 10 for information regarding the credit risk inherent in the Firm’s investment securities portfolio; and refer to Note 11 for information regarding the credit risk inherent in the securities financing portfolio. Refer to Consumer Credit Portfolio on pages 62-66 and Note 12 for further discussions of the consumer credit environment and consumer loans. Refer to Wholesale Credit Portfolio on pages 67-76 and Note 12 for further discussions of the wholesale credit environment and wholesale loans.



60


Total credit portfolio    
 Credit exposure 
Nonperforming(d)(e)
(in millions)Jun 30,
2020

Dec 31,
2019

 Jun 30,
2020

Dec 31,
2019

Loans retained$965,448
$945,601
 $7,669
$3,983
Loans held-for-sale7,147
7,064
 245
7
Loans at fair value5,923
7,104
 130
90
Total loans–reported978,518
959,769
 8,044
4,080
Derivative receivables74,846
49,766
 108
30
Receivables from customers and other(a)
22,403
33,706
 

Total credit-related assets1,075,767
1,043,241
 8,152
4,110
Assets acquired in loan satisfactions     
Real estate ownedNA
NA
 284
344
OtherNA
NA
 4
43
Total assets acquired in loan satisfactions
NA
NA
 288
387
Lending-related commitments1,124,677
1,104,199
 762
474
Total credit portfolio$2,200,444
$2,147,440
 $9,202
$4,971
Credit derivatives used
in credit portfolio management activities(b)
$(16,542)$(18,030) $
$
Liquid securities and other cash collateral held against derivatives(c)
(21,501)(16,009) NA
NA
(in millions,
except ratios)
Three months ended June 30, Six months ended
June 30,
2020
2019
 2020
2019
Net charge-offs$1,560
$1,403
 $3,029
$2,764
Average retained loans986,804
945,209
 967,719
950,852
Net charge-off rates0.64%0.60% 0.63%0.59%
(a)Receivables from customers and other primarily represents brokerage-related held-for-investment customer receivables.
(b)Represents the net notional amount of protection purchased and sold through credit derivatives used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. Refer to Credit derivatives on page 76 and Note 5 for additional information.
(c)Includes collateral related to derivative instruments where appropriate legal opinions have not been either sought or obtained with respect to master netting agreements.
(d)At June 30, 2020, and December 31, 2019, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $561 million and $961 million, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $13 million and $41 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”).
(e)At June 30, 2020, nonperforming loans included $1.3 billion of PCD loans on nonaccrual status. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
 
Paycheck Protection Program
The PPP, established by the CARES Act and implemented by the SBA, provides the Firm with delegated authority to process and originate PPP loans until August 8, 2020. When certain criteria are met, PPP loans are subject to forgiveness and the Firm will receive payment of the forgiveness amount from the SBA. The term for PPP loans issued before June 5, 2020 is two years (with an option to extend to five years) and five years for those originated on or after June 5, 2020. PPP loan terms provide borrowers with an automatic payment deferral of principal and interest. Given that PPP loans are guaranteed by the SBA, the Firm does not expect to realize material credit losses on these loans. PPP processing fees are deferred and accreted into interest income over the contractual life of the loans.
At June 30, 2020, the Firm had approximately $28 billion of loans under the PPP, of which $20 billion and $8 billion are in Consumer and Wholesale, respectively. The impact on interest income related to PPP loans was not material for the three months ended June 30, 2020.

61


CONSUMER CREDIT PORTFOLIO
The Firm’s retained consumer portfolio consists primarily of residential real estate loans, credit card loans, scored auto and business banking loans, as well as associated lending-related commitments. The Firm’s focus is on serving primarily the prime segment of the consumer credit market. Refer to Note 12 for further information on consumer loans, as well as the Firm’s nonaccrual and charge-off accounting policies. Refer to Note 23 for further information on lending-related commitments.
Continued weakness in the macroeconomic environment driven by the impacts of the COVID-19 pandemic, resulted in an additional increase in the allowance for credit losses. The continuation or worsening of the effects of the COVID-19 pandemic on the macroeconomic environment and the extent to which customer assistance and government stimulus efforts are effective could result in further impacts to credit quality metrics, including delinquencies, nonaccrual loans and charge-offs.
The following table presents consumer credit-related information with respect to the scored credit portfolios held in CCB, AWM and Corporate.
Consumer credit portfolio                  
      Three months ended June 30, Six months ended June 30,

(in millions, except ratios)
Credit exposure 
Nonaccrual loans(h)(i)(j)
 Net charge-offs/(recoveries) 
Net charge-off/(recovery) rate(k)
 Net charge-offs/(recoveries) 
Net charge-off/(recovery) rate(k)
Jun 30,
2020

Dec 31,
2019

 Jun 30,
2020

Dec 31,
2019

 2020
2019
 2020
 2019
 2020
2019
 2020
 2019
Consumer, excluding credit card                   
Residential real estate(a)
$235,381
$243,317
 $4,106
$2,780
 $(5)$(29) (0.01)% (0.04)% $(125)$(31) (0.10)% (0.02)%
Auto and other(b)(c)(d)
71,624
51,682
 140
146
 88
97
 0.54
(d) 
0.75
 202
206
 0.70
(d) 
0.80
Total loans – retained307,005
294,999
 4,246
2,926
 83
68
 0.11
 0.09
 77
175
 0.05
 0.11
Loans held-for-sale1,912
3,002
 
2
 NA
NA
 NA NA
 NA
NA
 NA NA
Total consumer, excluding credit card loans308,917
298,001
 4,246
2,928
 83
68
 0.11
 0.09
 77
175
 0.05
 0.11
Lending-related commitments(e)
45,348
40,169
                 
Total consumer exposure, excluding credit card354,265
338,170
                 
Credit card                   
Loans retained(f)
141,656
168,924
 

 1,178
1,240
 3.33
 3.24
 2,491
2,442
 3.28
 3.23
Loans held-for-sale

 

 NA
NA
 NA NA
 NA
NA
 NA NA
Total credit card loans141,656
168,924
 

 1,178
1,240
 3.33
 3.24
 2,491
2,442
 3.28
 3.23
Lending-related commitments(e)(g)
673,836
650,720
                 
Total credit card exposure(g)
815,492
819,644
                 
Total consumer credit portfolio(g)
$1,169,757
$1,157,814
 $4,246
$2,928
 $1,261
$1,308
 1.14 % 1.11 % $2,568
$2,617
 1.14 % 1.10 %
(a)Includes scored mortgage and home equity loans held in CCB and AWM, and scored mortgage loans held in Corporate.
(b)At June 30, 2020 and December 31, 2019, excluded operating lease assets of $22.2 billion and $22.8 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. Refer to Note 17 for further information.
(c)Includes scored auto and business banking loans and overdrafts.
(d)At June 30, 2020, included $19.9 billion of loans in Business Banking under the PPP. Given that PPP loans are guaranteed by the SBA, the Firm does not expect to realize material credit losses on these loans. Refer to Credit Portfolio on pages 60-61 for a further discussion of the PPP.
(e)Credit card, home equity and certain business banking lending-related commitments represent the total available lines of credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card commitments, and if certain conditions are met, home equity commitments and certain business banking commitments, the Firm can reduce or cancel these lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. Refer to Note 23 for further information.
(f)Includes billed interest and fees.
(g)Also includes commercial card lending-related commitments primarily in CB and CIB.
(h)At June 30, 2020 and December 31, 2019, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $561 million and $961 million, respectively. These amounts have been excluded from nonaccrual loans based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status, as permitted by regulatory guidance issued by the FFIEC.
(i)At June 30, 2020, nonaccrual loans included $1.3 billion of PCD loans. Prior to the adoption of CECL, nonaccrual loans excluded PCI loans as the Firm recognized interest income on each pool of PCI loans as each of the pools was performing.
(j)Generally excludes loans that were under payment deferral programs offered in response to the COVID-19 pandemic.
(k)Average consumer loans held-for-sale were $1.9 billion and $1.2 billion for the three months ended June 30, 2020 and 2019, respectively, and were $2.2 billion and $1.2 billion for the six months ended June 30, 2020 and 2019, respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.


62


Consumer assistance
In March 2020, the Firm began providing assistance to customers in response to the COVID-19 pandemic, predominantly in the form of payment deferrals.
Predominantly all accounts that requested payment assistance were less than 30 days past due at the time of enrollment. Although borrowers are not required to make payments while still under payment deferral, on approximately 50% of accounts with payment assistance offered, borrowers have made at least one payment between March 2020 and June 30, 2020. The Firm continues to monitor the credit risk associated with loans subject to deferrals throughout the deferral period and on an ongoing basis after the borrowers are required to resume making regularly scheduled payments.
The following table presents information related to the $28 billion unpaid principal balance of retained loans still under payment deferral as of June 30, 2020.
As of June 30, 2020
(in millions, except ratios)
Loan balance(a)
Percent of loan class balance(b)
Type of modifications
Residential real estate$20,548
8.7%Rolling three month deferral up to one year; final work-out is determined at the end of the deferral period; Generally deferred payments are required to be paid at the end of the loan term
Auto and other3,357
4.6
Auto: Three month deferral with automatic maturity extension
Business Banking: Three month deferral with automatic deferment to either maturity (loan) or one year forward (line)
Credit card4,384
3.1
Three month minimum payment waiver with potential one month extensions totaling six months;
Interest continues to accrue during the deferral period and is added to the principal balance
Total consumer$28,289
6.3% 
(a)Excludes $7.5 billion of loans which were previously under payment deferral, with predominantly all returning to their original loan terms prior to June 30, 2020. Also excludes risk-rated business banking and auto dealer loans held in CCB and auto operating lease assets that were still under payment deferral as of June 30, 2020. Auto operating lease asset payment assistance consists of a three month payment deferral. Deferrals do not extend the term of the lease and all deferred payments are due at the end of the lease term.
(b)Represents the unpaid principal balance of retained loans which were still under payment deferral as of June 30, 2020, divided by the total unpaid principal balance of the respective loan classes retained loans as of June 30, 2020.

63


Consumer, excluding credit card
Portfolio analysis
Loan balances increased from December 31, 2019 due to PPP loan originations in Business Banking, partially offset by lower residential real estate loans, reflecting paydowns and loan sales.
Residential real estate: The residential real estate portfolio, including loans held-for-sale, predominantly consists of prime mortgage loans and home equity lines of credit. The portfolio decreased from December 31, 2019 driven by paydowns and loan sales in Home Lending, largely offset by originations of prime mortgage loans that have been retained on the balance sheet. Net recoveries for the three months ended June 30, 2020 were lower when compared with the same period in the prior year as the current quarter included losses associated with the purchased credit deteriorated portfolio as