Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended
Commission file
June 30, 2024
number
1-5805
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
Delaware
13-2624428
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
383 Madison Avenue,
New York,
New York
10179
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (212) 270-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock
JPM
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.75% Non-Cumulative Preferred Stock, Series DD
JPM PR D
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.00% Non-Cumulative Preferred Stock, Series EE
JPM PR C
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.75% Non-Cumulative Preferred Stock, Series GG
JPM PR J
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.55% Non-Cumulative Preferred Stock, Series JJ
JPM PR K
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.625% Non-Cumulative Preferred Stock, Series LL
JPM PR L
The New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.20% Non-Cumulative Preferred Stock, Series MM
JPM PR M
The New York Stock Exchange
Guarantee of Callable Fixed Rate Notes due June 10, 2032 of JPMorgan Chase Financial Company LLC
JPM/32
The New York Stock Exchange
Guarantee of Alerian MLP Index ETNs due January 28, 2044 of JPMorgan Chase Financial Company LLC
AMJB
NYSE Arca, Inc.
Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. ☒Yes☐No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes☐No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes☒No
Number of shares of common stock outstanding as of June 30, 2024: 2,845,164,727
As of or for the period ended, (in millions, except per share, ratio, employee data and where otherwise noted)
Six months ended June 30,
2Q24
1Q24
4Q23
3Q23
2Q23
2024
2023
Selected income statement data
Total net revenue
$
50,200
(e)
$
41,934
$
38,574
$
39,874
$
41,307
$
92,134
(e)
$
79,656
Total noninterest expense
23,713
(e)
22,757
24,486
21,757
20,822
46,470
(e)
40,929
Pre-provision profit(a)
26,487
19,177
14,088
18,117
20,485
45,664
38,727
Provision for credit losses
3,052
1,884
2,762
1,384
2,899
4,936
5,174
Income before income tax expense
23,435
17,293
11,326
16,733
17,586
40,728
33,553
Income tax expense
5,286
3,874
2,019
3,582
3,114
9,160
6,459
Net income
$
18,149
$
13,419
$
9,307
$
13,151
$
14,472
$
31,568
$
27,094
Earnings per share data
Net income: Basic
$
6.13
$
4.45
$
3.04
$
4.33
$
4.76
$
10.58
$
8.86
Diluted
6.12
4.44
3.04
4.33
4.75
10.56
8.85
Average shares: Basic
2,889.8
2,908.3
2,914.4
2,927.5
2,943.8
2,899.1
2,956.1
Diluted
2,894.9
2,912.8
2,919.1
2,932.1
2,948.3
2,903.9
2,960.5
Market and per common share data
Market capitalization
575,463
575,195
489,320
419,254
422,661
575,463
422,661
Common shares at period-end
2,845.1
2,871.6
2,876.6
2,891.0
2,906.1
2,845.1
2,906.1
Book value per share
111.29
106.81
104.45
100.30
98.11
111.29
98.11
Tangible book value per share (“TBVPS”)(a)
92.77
88.43
86.08
82.04
79.90
92.77
79.90
Cash dividends declared per share
1.15
1.15
1.05
1.05
1.00
2.30
2.00
Selected ratios and metrics
Return on common equity (“ROE”)(b)
23
%
17
%
12
%
18
%
20
%
20
%
19
%
Return on tangible common equity (“ROTCE”)(a)(b)
28
21
15
22
25
25
24
Return on assets(b)
1.79
1.36
0.95
1.36
1.51
1.58
1.45
Overhead ratio
47
54
63
55
50
50
51
Loans-to-deposits ratio
55
54
55
55
54
55
54
Firm Liquidity coverage ratio (“LCR”) (average)
112
112
113
112
112
112
112
JPMorgan Chase Bank, N.A. LCR (average)
125
129
129
123
129
125
129
Common equity Tier 1 (“CET1”) capital ratio(c)(d)
15.3
15.0
15.0
14.3
13.8
15.3
13.8
Tier 1 capital ratio(c)(d)
16.7
16.4
16.6
15.9
15.4
16.7
15.4
Total capital ratio(c)(d)
18.5
18.2
18.5
17.8
17.3
18.5
17.3
Tier 1 leverage ratio(c)
7.2
7.2
7.2
7.1
6.9
7.2
6.9
Supplementary leverage ratio (“SLR”)(c)
6.1
6.1
6.1
6.0
5.8
6.1
5.8
Selected balance sheet data (period-end)
Trading assets
$
733,882
$
754,409
$
540,607
$
601,993
$
636,996
$
733,882
$
636,996
Investment securities, net of allowance for credit losses
589,998
570,679
571,552
585,380
612,203
589,998
612,203
Loans
1,320,700
1,309,616
1,323,706
1,310,059
1,300,069
1,320,700
1,300,069
Total assets
4,143,003
4,090,727
3,875,393
3,898,333
3,868,240
4,143,003
3,868,240
Deposits
2,396,530
2,428,409
2,400,688
2,379,526
2,398,962
2,396,530
2,398,962
Long-term debt
394,028
395,872
391,825
362,793
364,078
394,028
364,078
Common stockholders’ equity
316,652
306,737
300,474
289,967
285,112
316,652
285,112
Total stockholders’ equity
340,552
336,637
327,878
317,371
312,516
340,552
312,516
Employees
313,206
311,921
309,926
308,669
300,066
313,206
300,066
Credit quality metrics
Allowances for credit losses
$
25,514
$
24,695
$
24,765
$
24,155
$
24,288
$
25,514
$
24,288
Allowance for loan losses to total retained loans
1.81
%
1.77
%
1.75
%
1.73
%
1.75
%
1.81
%
1.75
%
Nonperforming assets
$
8,423
$
8,265
$
7,597
$
8,131
$
7,838
$
8,423
$
7,838
Net charge-offs
2,231
1,956
2,164
1,497
1,411
4,187
2,548
Net charge-off rate
0.71
%
0.62
%
0.68
%
0.47
%
0.47
%
0.67
%
0.45
%
(a)Pre-provision profit, TBVPS and ROTCE are each non-GAAP financial measures. Tangible common equity (“TCE”) is also a non-GAAP financial measure. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 18-19 for a further discussion of these measures.
(b)Ratios are based upon annualized amounts.
(c)The ratios reflect the Current Expected Credit Losses (“CECL”) capital transition provisions. Refer to Note 21 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2023 Form 10-K for additional information.
(d)Reflects the Firm’s ratios under the Basel III Standardized approach. Refer to Capital Risk Management on pages 45-50 for additional information.
(e)Total net revenue included a $7.9 billion net gain related to Visa shares, and total noninterest expense included a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Executive Overview on pages 5-8, and Notes 2 and 5 of this Form 10-Q, as well as pages 8 and 100 of JPMorgan Chase’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 for further information.
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 2024.
This Quarterly Report on Form 10-Q for the second quarter of 2024 (“Form 10-Q”) should be read together with JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”). Refer to the Glossary of terms and acronyms and line of business metrics on pages 194-201 for definitions of terms and acronyms used throughout this Form 10-Q.
This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management, speak only as of the date of this Form 10-Q and are subject to significant risks and uncertainties. Refer to Forward-looking Statements on page 90of this Form 10-Q and Part I, Item 1A, Risk Factors on pages 9-33 of the 2023 Form 10-K for a discussion of certain of those risks and uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results will be in line with any outlook information set forth herein, and the Firm does not undertake to update any forward-looking statements.
JPMorgan Chase & Co. (NYSE: JPM), a financial holding company incorporated under Delaware law in 1968, is a leading financial services firm based in the United States of America (“U.S.”), with operations worldwide. JPMorgan Chase had $4.1 trillion in assets and $340.6 billion in stockholders’ equity as of June 30, 2024. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers, predominantly in the U.S., and many of the world’s most prominent corporate, institutional and government clients globally.
JPMorgan Chase’s principal bank subsidiary is JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 48 states and Washington, D.C. JPMorgan Chase’s principal non-bank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiaries outside the U.S. are J.P. Morgan Securities plc and J.P. Morgan SE (“JPMSE”), which are subsidiaries of JPMorgan Chase Bank, N.A. and are based in the United Kingdom (“U.K.”) and Germany, respectively.
Business Segment Reorganization: Effective in the second quarter of 2024, the Firm reorganized its reportable business segments by combining the former Corporate & Investment Bank and Commercial Banking business segments to form one reportable segment, the Commercial & Investment Bank (“CIB”). As a result of the reorganization, the Firm now has three reportable business segments, as well as a Corporate segment. The Firm’s consumer business is the Consumer & Community Banking (“CCB”) segment. The Firm’s wholesale businesses are the Commercial & Investment Bank (“CIB”) and Asset & Wealth Management (“AWM”) segments. Refer to Business Segment Results on pages 20-22 of this Form 10-Q and Recent events on page 52 of the 2023 Form 10-K for additional information on the reorganization, as well as Note 25 of this Form 10-Q and Note 32 of the 2023 Form 10-K, for a description of the Firm’s business segments and the products and services they provide to their respective client bases.
First Republic: On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank (the “First Republic acquisition”) from the Federal Deposit Insurance Corporation (“FDIC”). References in this Form 10-Q to "associated with First Republic," "related to First Republic," "impact of First Republic" or similar expressions refer to the relevant effects of the First Republic acquisition, as well as subsequent related business and activities, as applicable. Refer to Note 26 for additional information.
The Firm's website is www.jpmorganchase.com. JPMorgan Chase makes available on its website, free of charge, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after it electronically files or furnishes such material to the U.S. Securities and Exchange Commission (the “SEC”) at www.sec.gov. JPMorgan Chase makes new and important information about the Firm available on its website at https://www.jpmorganchase.com, including on the Investor Relations section of its website at https://www.jpmorganchase.com/ir. Information on the Firm's website, including documents on the website that are referenced in this Form 10-Q, is not incorporated by reference into this Form 10-Q or the Firm’s other filings with the SEC.
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, this Form 10-Q and the 2023 Form 10-K should be read together and in their entirety.
Financial performance of JPMorgan Chase
(unaudited)
As of or for the period ended,
(in millions, except per share data and ratios)
Three months ended June 30,
Six months ended June 30,
2024
2023
Change
2024
2023
Change
Selected income statement data
Noninterest revenue
$
27,454
$
19,528
41
%
$
46,306
$
37,166
25
%
Net interest income
22,746
21,779
4
45,828
42,490
8
Total net revenue
50,200
41,307
22
92,134
79,656
16
Total noninterest expense
23,713
20,822
14
46,470
40,929
14
Pre-provision profit
26,487
20,485
29
45,664
38,727
18
Provision for credit losses
3,052
2,899
5
4,936
5,174
(5)
Net income
18,149
14,472
25
31,568
27,094
17
Diluted earnings per share
6.12
4.75
29
10.56
8.85
19
Selected ratios and metrics
Return on common equity
23
%
20
%
20
%
19
%
Return on tangible common equity
28
25
25
24
Book value per share
$
111.29
$
98.11
13
$
111.29
$
98.11
13
Tangible book value per share
92.77
79.90
16
92.77
79.90
16
Capital ratios(a)(b)
CET1 capital
15.3
%
13.8
%
15.3
%
13.8
%
Tier 1 capital
16.7
15.4
16.7
15.4
Total capital
18.5
17.3
18.5
17.3
Memo:
NII excluding Markets(c)
$
22,938
$
22,370
3
$
45,958
$
43,306
6
NIR excluding Markets(c)
20,261
12,969
56
31,776
22,931
39
Markets(c)
7,793
7,062
10
15,806
15,500
2
Total net revenue - managed basis
$
50,992
$
42,401
20
$
93,540
$
81,737
14
(a)The ratios reflect the CECL capital transition provisions. Refer to Note 21 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2023 Form 10-K for additional information.
(b)Reflects the Firm’s ratios under the Basel III Standardized approach. Refer to Capital Risk Management on pages 45-50 for additional information.
(c)NII and NIR refer to net interest income and noninterest revenue, respectively. Markets consists of CIB's Fixed Income Markets and Equity Markets businesses.
First Republic: JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank from the FDIC on May 1, 2023. As a result, the current-quarter and year-to-date results include the three- and six-month impact of First Republic, respectively, compared with two months in the prior-year periods. Where meaningful to the results, this is referred to in this Form 10-Q as the "timing impact" of First Republic.
Visa shares: On April 8, 2024, Visa Inc. commenced an initial exchange offer for Visa Class B-1 common shares. On May 6, 2024, the Firm announced that Visa had accepted the Firm’s tender of its 37.2 million Visa Class B-1 common shares in exchange for a combination of Visa Class B-2 common shares and Visa Class C common shares (“Visa C shares”), resulting in a $7.9 billion net gain for the period ended June 30, 2024.
In addition, the Firm contributed $1.0 billion of Visa shares to the JPMorgan Chase Foundation. Refer to Principal Investment Risk and Market Risk Management on page 78 and pages 79-84, respectively, and Notes 2 and 5 for additional information.
Comparisons noted in the sections below are for the second quarter of 2024 versus the second quarter of 2023, unless otherwise specified.
Firmwide overview
For the second quarter of 2024, JPMorgan Chase reported net income of $18.1 billion, up 25%, earnings per share of $6.12, ROE of 23% and ROTCE of 28%. The Firm's results included the following in Corporate: a $7.9 billion net gain related to Visa shares, a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation, and $546 million of net investment securities losses.
5
•Total net revenue was $50.2 billion, up 22%, reflecting:
–Net interest income ("NII") of $22.7 billion, up 4%, driven by the impact of balance sheet mix and higher rates; higher revolving balances in Card Services; the timing impact of First Republic; and higher Markets net interest income, largely offset by deposit margin compression across the LOBs and lower average deposit balances in CCB. NII excluding Markets was $22.9 billion, up 3%.
–Noninterest revenue ("NIR") was $27.5 billion, up 41%, driven by the $7.9 billion net gain related to Visa shares, higher investment banking fees, higher asset management fees, lower net investment securities losses in Treasury and CIO, and higher Markets noninterest revenue. The prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with First Republic.
•Noninterest expense was $23.7 billion, up 14%, predominantly driven by higher compensation expense, including higher revenue-related compensation and growth in employees, as well as the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation.
•The provision for credit losses was $3.1 billion, reflecting $2.2 billion of net charge-offs and a net addition to the allowance for credit losses of $821 million. Net charge-offs increased by $820 million, predominantly driven by the seasoning of newer vintages and continued credit normalization in Card Services. The net addition to the allowance for credit losses included $609 million in consumer, primarily in Card Services, and $189 million in wholesale.
The provision in the prior year was $2.9 billion, reflecting a $1.5 billion net addition to the allowance for credit losses, including $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments, and $1.4 billion of net charge-offs.
•The total allowance for credit losses was $25.5 billion at June 30, 2024. The Firm had an allowance for loan losses to retained loans coverage ratio of 1.81%, compared with 1.75% in the prior year.
•The Firm’s nonperforming assets totaled $8.4 billion at June 30, 2024, up 7%, driven by wholesale nonaccrual loans, which reflect downgrades in Real Estate, concentrated in Office, partially offset by net sales of consumer nonaccrual loans. Refer to Wholesale Credit Portfolio and Consumer Credit Portfolio on pages 65-74 and pages 61-64, respectively, for additional information.
•Firmwide average loans of $1.3 trillion were up 6%, predominantly driven by higher loans in CCB and CIB, including the timing impact of First Republic.
•Firmwide average deposits of $2.4 trillion were down 1%, reflecting:
–a decline in CCB in existing accounts primarily due to increased customer spending,
predominantly offset by
–net issuances of structured notes in CIB as a result of client demand in Markets, and net inflows in Payments,
–the timing impact of First Republic, and
–an increase in Corporate related to the Firm's international consumer initiatives.
Refer to Liquidity Risk Management on pages 51-58 for additional information.
Selected capital and other metrics
•CET1 capital was $267 billion, and the Standardized and Advanced CET1 ratios were 15.3% and 15.5%, respectively.
•SLR was 6.1%.
•TBVPS grew 16%, ending the second quarter of 2024 at $92.77.
•As of June 30, 2024, the Firm had eligible end-of-period High Quality Liquid Assets (“HQLA”) of approximately $841 billion and unencumbered marketable securities with a fair value of approximately $623 billion, resulting in approximately $1.5 trillion of liquidity sources. Refer to Liquidity Risk Management on pages 51-58 for additional information.
Refer to Consolidated Results of Operations and Consolidated Balance Sheets Analysis on pages 9-14 and pages 15-16, respectively, for a further discussion of the Firm's results, including the provision for credit losses; and Notes 5 and 26 for additional information on First Republic.
Pre-provision profit, ROTCE, TCE, TBVPS, NII and NIR excluding Markets, and total net revenue on a managed basis are non-GAAP financial measures. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 18-19 for a further discussion of each of these measures.
6
Business segment highlights
Selected business metrics for each of the Firm’s lines of business ("LOB") are presented below for the second quarter of 2024.
CCB
ROE 30%
•Average deposits down 7% year-over-year ("YoY"), down 1% quarter-over-quarter ("QoQ"); client investment assets up 14%
•Average loans up 10% YoY including First Republic, flat QoQ; Card Services net charge-off rate of 3.50%
•Debit and credit card sales volume(a) up 7%
•Active mobile customers(b) up 7%
CIB
ROE 17%
•#1 ranking for Global Investment Banking fees with 9.5% wallet share YTD
•Markets revenue up 10%, with Fixed Income Markets up 5% and Equity Markets up 21%
•Average Banking & Payments loans up 2% YoY, flat QoQ; average client deposits(c) up 2% YoY, up 1% QoQ
AWM
ROE 32%
•Assets under management ("AUM") of $3.7 trillion, up 15%
•Average loans up 2% YoY, flat QoQ; average deposits up 7% YoY due to the allocation of First Republic deposits to AWM in 4Q23, flat QoQ
(a)Excludes Commercial Card.
(b)Users of all mobile platforms who have logged in within the past 90 days.
(c)Represents client deposits and other third-party liabilities pertaining to the Payments and Securities Services businesses.
Refer to the Business Segment Results on pages 20-43 for a detailed discussion of results by business segment.
Credit provided and capital raised
JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided new and renewed credit and raised capital for wholesale and consumer clients during the first six months of 2024, consisting of approximately:
$1.4
trillion
Total credit provided and capital raised (including loans and commitments)
$120
billion
Credit for consumers
$20
billion
Credit for U.S. small businesses
$1.3
trillion
Credit and capital for corporations and non-U.S. government entities(a)
$30
billion
Credit and capital for nonprofit and U.S. government entities(b)
(a)Credit and capital for corporations and non-U.S. government entities include Individuals and Individual Entities primarily consisting of Global Private Bank clients within AWM.
(b)Includes states, municipalities, hospitals and universities.
7
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 90of this Form 10-Q and Part I, Item 1A, Risk Factors on pages 9-33 of the 2023 Form 10-K for a further discussion of certain of those risks and uncertainties and the other factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results in 2024 will be in line with the outlook information set forth below, and the Firm does not undertake to update any forward-looking statements.
JPMorgan Chase’s current outlook for full-year 2024 should be viewed against the backdrop of the global and U.S. economies,financial markets activity, the geopolitical environment, the competitive environment, client and customer activity levels, and regulatory and legislative developments in the U.S. and other countries where the Firm does business. Each of these factors will affect the performance of the Firm. The Firm will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the business, economic, regulatory and legal environments in which it operates.
Full-year 2024
•Management expects net interest income, and net interest income excluding Markets, to be approximately $91 billion, market dependent.
•Management expects adjusted expense to be approximately $92 billion, market dependent.
•Management expects the net charge-off rate in Card Services to be approximately 3.40%.
Net interest income excluding Markets and adjusted expense are non-GAAP financial measures. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 18-19.
Business Developments
First Republic acquisition
On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank (the "First Republic acquisition") from the FDIC, as receiver.
The Firm continues to progress in the conversion of operations, and the integration of clients, products and services, associated with the First Republic acquisition to align with the Firm’s businesses and operations. The Firm expects that these actions will be substantially complete by the end of 2024.
Refer to Note 26 for additional information related to First Republic.
Regulatory developments
On June 21, 2024, the Federal Reserve and the FDIC announced joint determinations on the Firm’s 2023 resolution plan, which identified no deficiencies and one shortcoming that must be satisfactorily addressed in the Firm’s next resolution plan due on July 1, 2025.
Refer to Supervision and regulation on pages 4-8 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s resolution plan.
8
CONSOLIDATED RESULTS OF OPERATIONS
This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2024 and 2023, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment's results. Refer to pages 86-88 of this Form 10-Q and pages 155–158 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations.
Revenue
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
Change
2024
2023
Change
Investment banking fees
$
2,304
$
1,513
52
%
$
4,258
$
3,162
35
%
Principal transactions
6,814
6,910
(1)
13,604
14,525
(6)
Lending- and deposit-related fees
1,828
1,828
—
3,730
3,448
8
Asset management fees
4,302
3,774
14
8,448
7,239
17
Commissions and other fees
1,924
1,739
11
3,729
3,434
9
Investment securities losses
(547)
(900)
39
(913)
(1,768)
48
Mortgage fees and related income
348
278
25
623
499
25
Card income
1,332
1,094
22
2,550
2,328
10
Other income(a)(b)
9,149
(c)
3,292
(d)
178
10,277
(c)
4,299
(d)
139
Noninterest revenue
27,454
19,528
41
46,306
37,166
25
Net interest income
22,746
21,779
4
45,828
42,490
8
Total net revenue
$
50,200
$
41,307
22
%
$
92,134
$
79,656
16
%
(a) Included operating lease income of $689 million and $716 million for the three months ended June 30, 2024 and 2023, respectively, and $1.4 billion and $1.5 billion for the six months ended June 30, 2024 and 2023, respectively. Refer to Note 5 for additional information.
(b) Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures guidance, the amortization of certain of the Firm’s alternative energy tax-oriented investments that was previously recognized in other income is now being recognized in income tax expense. Refer to Notes 1, 5 and 13 for additional information.
(c) Included the net gain related to Visa shares of $7.9 billion for the three and six months ended June 30, 2024. Refer to Notes 2 and 5 for additional information.
(d) Included the preliminary estimated bargain purchase gain of $2.7 billion for the three and six months ended June 30, 2023, associated with the First Republic acquisition. Refer to Notes 5 and 26 for additional information.
Quarterly results
Investment banking fees increased in CIB reflecting:
•higher debt underwriting fees predominantly driven by higher industry-wide issuance in leveraged loans, high-yield bonds and high-grade bonds,
•higher equity underwriting fees driven by follow-on offerings, IPOs and private placements, reflecting wallet share gains amid favorable market conditions, and
•higher advisory fees driven by a higher number of large completed transactions compared with a challenging prior-year quarter.
Refer to CIB segment results on pages 28-35 and Note 5 for additional information.
Principal transactions revenue decreased, reflecting in CIB:
•lower Fixed Income Markets revenue in Rates, Currencies and Emerging Markets, and Commodities, partially offset by higher revenue in Securitized Products,
•a loss of $87 million in Credit Adjustments & Other in CIB, compared with a gain of $36 million in the prior year, and
•higher Equity Markets revenue in Prime Finance and Equity Derivatives.
The decrease in principal transactions revenue also included lower revenue in Treasury and CIO.
Principal transactions revenue in CIB generally has offsets across other revenue lines, including net interest income. The Firm assesses the performance of its Markets business on a total net revenue basis.
Refer to CIB and Corporate segment results on pages 28-35 and pages 41-43, respectively, and Note 5 for additional information.
Lending- and deposit-related fees was flat ashigher other lending- and deposit-related fees in CIB were offset by lower amortization in the current quarter associated with the purchase discount on certain short-dated First Republic lending-related commitments, predominantly in AWM. Refer to CCB, CIB and AWM segment results on pages 23-27, pages 28-35 and pages 36-40, respectively, and Note 5 for additional information.
Asset management feesincreased driven by higher average market levels and net inflows in AWM and CCB. Refer to CCB and AWM segment results on pages 23-27 and pages 36-40, respectively, and Note 5 for additional information.
Commissions and other fees increased and included higher brokerage commissions and fees in CIB and AWM, and higher annuity sales commissions in CCB. Refer to CCB, CIB and AWM segment results on pages 23-27, pages 28-35 and pages 36-40, respectively, and Note 5 for additional information.
9
Investment securities losses decreased related to sales of U.S. Treasuries and U.S. GSE and government agency MBS, associated with repositioning the investment securities portfolio in Treasury and CIO. Refer to Corporate segment results on pages 41-43 and Note 9 for additional information.
Mortgage fees and related income increased in Home Lending, predominantly reflecting higher production revenue. Refer to CCB segment results on pages 23-27 and Note 14 for additional information.
Card income increased in CCB, reflecting higher net interchange on increased debit and credit card sales volume, and higher annual fees, partially offset by an increase in amortization of new account origination costs, reflecting continued growth in Card Services.
The prior-year net interchange included an increase to the rewards liability due to adjustments to the terms of certain reward programs. Refer to CCB segment results on pages 23-27 and Note 5 for additional information.
Other income increased, reflecting:
•in Corporate
–the $7.9 billion net gain related to Visa shares;
–the prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition, and
•the impact of the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, resulting in the amortization of certain of the Firm's alternative energy tax-oriented investments previously recognized in other income now being recognized in income tax expense.
Refer to Notes 1, 5 and 13 for additional information on the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance; Notes 2 and 5 for additional information on Visa shares and; Note 26 for additional information on the First Republic acquisition.
Net interest income increased, driven by the impact of balance sheet mix and higher rates; higher revolving balances in Card Services; the timing impact of First Republic; and higher Markets net interest income, largely offset by deposit margin compression across the LOBs and lower average deposit balances in CCB.
The Firm’s average interest-earning assets were $3.5 trillion, up $166 billion, and the yield was 5.57%, up 56 basis points (“bps”). The net yield on these assets, on an FTE basis, was 2.62%, flat when compared to the prior year. The net yield excluding Markets was 3.86%, up 3 bps.
Refer to the Consolidated average balance sheets, interest and rates schedule on page 192 for further information. Net yield excluding Markets is a non-GAAP financial measure. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 18-19 for a further discussion of net yield excluding Markets.
Year-to-date results
Investment banking fees increased, reflecting in CIB:
•higher debt underwriting fees predominantly driven by higher industry-wide issuance in leveraged loans, high-grade bonds and high-yield bonds, and
•higher equity underwriting fees driven by higher IPOs, follow-on and convertible securities offerings.
Principal transactions revenue decreased predominantly in CIB, reflecting:
•lower Fixed Income Markets revenue in Rates, and Commodities, partially offset by higher revenue in Securitized Products,
•higher Equity Markets revenue in Prime Finance and Equity Derivatives, and
•losses of $102 million in Credit Adjustments & Other in CIB compared with losses of $117 million in the prior year.
Lending- and deposit-related fees increased, reflecting in CIB, higher lending-related fees, including loan commitment fees, and higher deposit-related fees, including cash management fees in Payments.
Asset management fees increased driven by higher average market levels and net inflows in AWM and CCB, as well as the timing impact of First Republic in CCB.
Commissions and other fees increased and included higher annuity sales commissions in CCB, as well as higher brokerage commissions and fees, and custody fees in CIB and AWM.
Investment securities losses decreased related to sales of U.S. GSE and government agency MBS and U.S. Treasuries, associated with repositioning the investment securities portfolio in Treasury and CIO.
Mortgage fees and related income increased in Home Lending, predominantly reflecting higher production revenue, which included the timing impact of First Republic.
Card income increased in CCB, reflecting higher net interchange on increased debit and credit card sales volume, as well as higher annual fees, largely offset by an increase in amortization of new account origination costs, reflecting continued growth in Card Services.
Other income increased, reflecting:
•in Corporate
–the $7.9 billion net gain related to Visa shares;
–the prior year included the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition, and
•the impact of the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, resulting in the amortization of certain of the Firm's alternative energy tax-oriented investments previously recognized in other income now being recognized in income tax expense.
10
The prior year included a gain of $339 million on the original minority interest in China International Fund Management ("CIFM") in AWM.
Refer to AWM segment results on pages 36-40 for additional information on CIFM.
Net interest income increased driven by the impact of balance sheet mix and higher rates; the timing impact of First Republic; higher revolving balances in Card Services; and higher Markets net interest income, partially offset by deposit margin compression across the LOBs and lower average deposit balances in CCB.
The Firm’s average interest-earning assets were $3.5 trillion, up $197 billion, and the yield was 5.56%, up 71 bps. The net yield on these assets, on an FTE basis, was 2.66%, an increase of 3 bps. The net yield excluding Markets was 3.85%, up 3 bps.
Refer to Executive Overview on pages 5-8 for additional information on the timing impact of First Republic.
11
Provision for credit losses
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
Change
2024
2023
Change
Consumer, excluding credit card
$
144
$
555
(74)
%
$
221
$
803
(72)
%
Credit card
2,429
1,324
83
4,266
2,546
68
Total consumer
2,573
1,879
37
4,487
3,349
34
Wholesale
456
1,007
(55)
400
1,811
(78)
Investment securities
23
13
77
49
14
250
Total provision for credit losses
$
3,052
$
2,899
5
%
$
4,936
$
5,174
(5)
%
Quarterly results
The provision for credit losses was $3.1 billion, reflecting $2.2 billion of net charge-offs and an $821 million net addition to the allowance for credit losses.
Net charge-offs included $2.0 billion in consumer, driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $267 million in wholesale.
The net addition to the allowance for credit losses included:
•$609 million in consumer, driven by Card Services, predominantly due to loan growth and updates to certain macroeconomic variables, and
•$189 million in wholesale, driven by the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates, as well as net downgrade activity, primarily in Real Estate, largely offset by the impact of changes in the loan and lending-related commitment portfolios.
The provision in the prior year was $2.9 billion, reflecting a $1.5 billion net addition to the allowance for credit losses and net charge-offs of $1.4 billion. The net addition included $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments.
Refer to CCB segment results on pages 23-27, CIB on pages 28-35, AWM on pages 36-40, Corporate on pages 41-43; Allowance for Credit Losses on pages 75-77; Critical Accounting Estimates Used by the Firm on pages 86-88; Notes 11 and 12 for additional information on the credit portfolio and the allowance for credit losses.
Year-to-date results
The provision for credit losses was $4.9 billion, reflecting $4.2 billion of net charge-offs and a $749 million net addition to the allowance for credit losses.
Net charge-offs included $3.8 billion in consumer, predominantly driven by Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $353 million in wholesale, primarily in Real Estate, concentrated in Office.
The net addition to the allowance for credit losses included:
•$653 million in consumer, reflecting a $753 million net addition in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $125 million net reduction in Home Lending, and
•$47 million in wholesale, driven by
–a net addition of $707 million, reflecting net downgrade activity, primarily in Real Estate, and the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $660 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios and updates to certain macroeconomic variables.
The provision in the prior year was $5.2 billion, reflecting a $2.6 billion net addition to the allowance for credit losses and net charge-offs of $2.5 billion. The net addition included $1.2 billion to establish the allowance for the First Republic loans and lending-related commitments in the second quarter of 2023.
12
Noninterest expense
(in millions)
Three months ended June 30,
Six months ended June 30,
2024
2023
Change
2024
2023
Change
Compensation expense
$
12,953
$
11,216
15
%
$
26,071
$
22,892
14
%
Noncompensation expense:
Occupancy
1,248
1,070
17
2,459
2,185
13
Technology, communications and equipment(a)
2,447
2,267
8
4,868
4,451
9
Professional and outside services
2,722
2,561
6
5,270
5,009
5
Marketing
1,221
1,122
9
2,381
2,167
10
Other expense
3,122
(d)
2,586
21
5,421
(d)
4,225
28
Total noncompensation expense
10,760
9,606
12
20,399
18,037
13
Total noninterest expense
$
23,713
$
20,822
14
%
$
46,470
$
40,929
14
%
Certain components of other expense(b)
Legal expense
$
317
$
420
$
245
$
596
FDIC-related expense
291
338
1,264
655
Operating losses(c)
323
304
622
603
(a)Includes depreciation expense associated with auto operating lease assets. Refer to Note 16 for additional information.
(b)Refer to Note 5 for additional information.
(c)Predominantly fraud losses in CCB associated with customer deposit accounts, credit and debit cards.
(d)Included a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
Quarterly results
Compensation expenseincreased driven by:
•higher volume- and revenue-related compensation across the LOBs,
•an increase in employees, primarily in front office and technology, and
•the impact of First Republic, predominantly in CCB and Corporate, as the prior-year expense related to individuals associated with First Republic who were not employees of the Firm until July 2023, was recognized in other expense in Corporate,
Noncompensation expense increased as a result of:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in Corporate,
•higher investments in technology and marketing, predominantly in CCB, and
•higher occupancy expense,
partially offset by
•lower legal expense, reflecting a decline in Corporate, largely offset by an increase in CIB, and
•the alignment of expense to compensation expense, as noted above, partially offset by the timing impact associated with First Republic.
Refer to Note 26 for additional information on the First Republic acquisition; Notes 2 and 5 for additional information on Visa shares and other expense.
Year-to-date results
Compensation expenseincreased driven by:
•higher volume- and revenue-related compensation across the LOBs,
•an increase in employees, primarily in front office and technology, and
•the impact of First Republic, predominantly in CCB and Corporate, as the prior-year expense related to individuals associated with First Republic who were not employees of the Firm until July 2023, was recognized in other expense in Corporate.
Noncompensation expense increased as a result of:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in Corporate,
•the $725 million increase to the FDIC special assessment recognized in the first quarter of 2024 in Corporate,
•higher investments in technology and marketing, predominantly in CCB,
•the timing impact associated with First Republic, partially offset by the alignment of expense to compensation expense, as noted above, and
•higher occupancy expense,
partially offset by
•lower legal expense in Corporate and CIB.
Refer to Executive Overview on pages 5-8 for additional information on the timing impact of First Republic.
13
Income tax expense
(in millions)
Three months ended June 30,
Six months ended June 30,
2024
2023
Change
2024
2023
Change
Income before income tax expense
$
23,435
$
17,586
33
%
$
40,728
$
33,553
21
%
Income tax expense
5,286
(a)
3,114
70
9,160
(a)
6,459
42
Effective tax rate
22.6
%
17.7
%
22.5
%
19.3
%
(a)Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures guidance, the amortization of certain of the Firm’s alternative energy tax-oriented investments is now being recognized in income tax expense. Refer to Notes 1, 5 and 13 for additional information.
Quarterly results
The effective tax rate increased driven by:
•the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, and
•changes in the level and mix of income and expenses subject to U.S. federal, state and local taxes, which included the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year included the impact of the income tax expense associated with the First Republic acquisition that was reflected in the preliminary estimated bargain purchase gain, which resulted in a reduction in the Firm's effective tax rate.
Year-to-date results
The effective tax rate increased driven by:
•the adoption of updates to the Accounting for Investments in Tax Credit Structures guidance on January 1, 2024, and
•changes in the level and mix of income and expenses subject to U.S. federal, state and local taxes, which included the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year included the impact of the income tax expense associated with the First Republic acquisition that was reflected in the preliminary estimated bargain purchase gain, which resulted in a reduction in the Firm's effective tax rate.
14
CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Consolidated balance sheets analysis
The following is a discussion of the significant changes between June 30, 2024 and December 31, 2023. Refer to pages 155–158 for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Balance Sheets.
Selected Consolidated balance sheets data
(in millions)
June 30, 2024
December 31, 2023
Change
Assets
Cash and due from banks
$
27,265
$
29,066
(6)
%
Deposits with banks
503,554
595,085
(15)
Federal funds sold and securities purchased under resale agreements
392,763
276,152
42
Securities borrowed
199,062
200,436
(1)
Trading assets
733,882
540,607
36
Available-for-sale securities
266,252
201,704
32
Held-to-maturity securities
323,746
369,848
(12)
Investment securities, net of allowance for credit losses
589,998
571,552
3
Loans
1,320,700
1,323,706
—
Allowance for loan losses
(22,991)
(22,420)
3
Loans, net of allowance for loan losses
1,297,709
1,301,286
—
Accrued interest and accounts receivable
135,692
107,363
26
Premises and equipment
30,582
30,157
1
Goodwill, MSRs and other intangible assets
64,525
64,381
—
Other assets
167,971
159,308
5
Total assets
$
4,143,003
$
3,875,393
7
%
Cash and due from banks and deposits with banks decreased driven by Markets activities in CIB and cash deployment in Treasury and CIO.
Federal funds sold and securities purchased under resale agreements increased driven by Markets, reflecting higher client-driven market-making activities and higher demand for securities to cover short positions, as well as when compared with seasonally lower levels at year-end.
Refer to Note 10 for additional information on securities purchased under resale agreements and securities borrowed.
Securities borroweddecreased driven by Markets, reflecting lower client-driven activities, predominantly offset by higher demand for securities to cover short positions.
Trading assets increased due to higher levels of equity and debt instruments in Markets related to client-driven market-making activities, and compared with seasonally lower levels at year-end; and to a lesser extent, an increase in short-term cash deployment in Treasury and CIO.
Refer to Notes 2 and 4 for additional information.
Investment securities increased due to:
•higher available-for-sale ("AFS") securities, reflecting net purchases, primarily U.S. Treasuries and non-U.S. government debt securities, partially offset by maturities and paydowns, and
•lower HTM securities primarily driven by maturities and paydowns.
Refer to Corporate segment results on pages 41-43, Investment Portfolio Risk Management on page 78, and Notes 2 and 9 for additional information.
Loans were relatively flat, and included:
•a decline in Home Lending as paydowns and loan sales outpaced originations, and
•higher loans in Card Services driven by growth in new accounts and revolving balances.
The allowance for loan losses increased, reflecting a net addition to the allowance for loan losses of $571 million, consisting of:
•$636 million in consumer, primarily in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $141 million net reduction in Home Lending,
partially offset by
•a net reduction of $65 million in wholesale, driven by
–a net reduction of $763 million, primarily due to the impact of changes in the loan portfolio and updates to certain macroeconomic variables,
predominantly offset by
–a net addition of $698 million, including net downgrade activity and the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates.
Refer to Consolidated Results of Operations and Credit and Investment Risk Management on pages 9-14 and pages 59-78, respectively, Critical Accounting Estimates Used by the Firm on pages 86-88, and Notes 2, 3, 11 and 12 for additional information on loans and the total allowance for credit losses; and Note 26 for additional information on the First Republic acquisition.
15
Accrued interest and accounts receivable increased predominantly driven by higher client activities in Markets.
Goodwill, MSRs and other intangible assets: refer to Note 14 for additional information.
Other assets increased predominantly as a result of higher deferred tax assets and the fair value of the Visa C shares. Refer to Notes 2 and 5 for additional information on Visa shares.
Selected Consolidated balance sheets data (continued)
(in millions)
June 30, 2024
December 31, 2023
Change
Liabilities
Deposits
$
2,396,530
$
2,400,688
—
%
Federal funds purchased and securities loaned or sold under repurchase agreements
400,832
216,535
85
Short-term borrowings
47,308
44,712
6
Trading liabilities
240,836
180,428
33
Accounts payable and other liabilities
295,813
290,307
2
Beneficial interests issued by consolidated variable interest entities (“VIEs”)
27,104
23,020
18
Long-term debt
394,028
391,825
1
Total liabilities
3,802,451
3,547,515
7
Stockholders’ equity
340,552
327,878
4
Total liabilities and stockholders’ equity
$
4,143,003
$
3,875,393
7
%
Deposits decreased, reflecting:
•a decline in CCB in existing accounts, primarily driven by seasonal tax outflows and migration into higher-yielding investments, largely offset by new accounts,
predominantly offset by
•higher deposits in CIB due to net inflows in Securities Services and Payments, partially offset by net maturities of structured notes in Markets,
•higher deposits in Corporate predominantly driven by new product offerings related to the Firm's international consumer initiatives, and
•higher balances in AWM driven by new product offerings, and an increase in deposits in existing accounts due to a change in product offerings associated with First Republic, predominantly offset by continued migration into higher-yielding investments.
Federal funds purchased and securities loaned or sold under repurchase agreements increased driven by Markets, reflecting higher client-driven market-making activities and higher secured financing of trading assets, as well as when compared with seasonally lower levels at year-end.
Short-term borrowings increased driven by higher net issuance of structured notes in Markets.
Refer to Liquidity Risk Management on pages 51-58 for additional information on deposits, federal funds purchased and securities loaned or sold under repurchase agreements, and short-term borrowings; Notes 2 and 15 for deposits and Note 10 for federal funds purchased and securities loaned or sold under repurchase agreements; Note 26 for additional information on the First Republic acquisition.
Trading liabilitiesincreased due to client-driven market-making activities in Fixed Income Markets, which resulted in higher levels of short positions in debt instruments, and compared with seasonally lower levels at year-end. Refer to Notes 2 and 4 for additional information.
Accounts payable and other liabilities increased due to higher client activities in Payments and Markets.
Beneficial interests issued by consolidated VIEs increased driven by the issuance of credit card securitizations in Treasury and CIO, and higher levels of Firm-administered multi-seller conduit commercial paper held by third parties in CIB, in line with the Firm’s funding plans.
Refer to Liquidity Risk Management on pages 51-58 and Notes 13 and 22 for additional information, specifically Firm-sponsored VIEs and loan securitization trusts.
Long-term debt increased driven by net issuances of structured notes in CIB due to client demand, and net issuances of long-term debt in Treasury and CIO, largely offset by lower FHLB advances. Refer to Liquidity Risk Management on pages 51-58; and Note 26 for additional information on the First Republic acquisition.
Stockholders’ equity increased reflecting net income, largely offset by the impact of capital actions, including repurchases of common shares, common and preferred stock dividend payments and net redemption of preferred stock. Refer to Consolidated statements of changes in stockholders’ equity on page 94,Capital Actions on page 49, and Note 19 for additional information.
16
Consolidated cash flows analysis
The following is a discussion of cash flow activities during the six months ended June 30, 2024 and 2023.
(in millions)
Six months ended June 30,
2024
2023
Net cash provided by/(used in)
Operating activities
$
(115,689)
$
(92,376)
Investing activities
(137,618)
5,551
Financing activities
168,406
14,642
Effect of exchange rate changes on cash
(8,431)
72
Net decrease in cash and due from banks and deposits with banks
$
(93,332)
$
(72,111)
Operating activities
•In 2024, cash used resulted from higher trading assets and higher accrued interest and accounts receivable, partially offset by higher trading liabilities and higher accounts payable and other liabilities.
•In 2023, cash used resulted from higher trading assets and lower accounts payable and other liabilities, partially offset by lower other assets, securities borrowed, and accrued interest and accounts receivable.
Investing activities
•In 2024, cash used resulted from higher securities purchased under resale agreements and net purchases of investment securities.
•In 2023, cash provided reflected net proceeds from investment securities, largely offset by higher net originations of loans, higher securities purchased under resale agreements, and net cash used in the First Republic acquisition.
Financing activities
•In 2024, cash provided reflected higher securities loaned or sold under repurchase agreements and net proceeds from long-and short-term borrowings, partially offset by lower deposits and net redemption of preferred stock.
•In 2023, cash provided reflected higher securities loaned or sold under repurchase agreements, largely offset by net activity in deposits, which included the impact of the repayment of the deposits provided to First Republic Bank by the consortium of large U.S. banks that the Firm assumed as part of the First Republic acquisition, as well as net payments on long- and short-term borrowings.
•For both periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock.
* * *
Refer to Consolidated Balance Sheets Analysis on pages 15-16, Capital Risk Management on pages 45-50, and Liquidity Risk Management on pages 51-58, and the Consolidated Statements of Cash Flows on page 95 of this Form 10-Q, and pages 102–109 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the activities affecting the Firm’s cash flows.
17
EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 91-95.
In addition to analyzing the Firm’s results on a reported basis, the Firm also reviews and uses certain non-GAAP financial measures at the Firmwide and segment level. These non-GAAP measures include:
•Firmwide “managed” basis results, including the overhead ratio, which include certain reclassifications to present total net revenue from investments that receive tax credits and tax-exempt securities on a basis comparable to taxable investments and securities (“FTE” basis). The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the LOBs;
•Pre-provision profit, which represents total net revenue less total noninterest expense;
•Net interest income, net yield, and noninterest revenue excluding Markets;
•TCE, ROTCE, and TBVPS; and
•Adjusted expense, which represents noninterest expense excluding Firmwide legal expense.
Refer to Explanation and Reconciliation of the Firm’s Use Of Non-GAAP Financial Measures and Key Performance Measures on pages 62–64 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of management’s use of non-GAAP financial measures.
The following summary tables provide a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
Three months ended June 30,
2024
2023
(in millions, except ratios)
Reported
Fully taxable-equivalent adjustments(b)
Managed basis
Reported
Fully taxable-equivalent adjustments(b)
Managed basis
Other income
$
9,149
(a)
$
677
(a)
$
9,826
$
3,292
$
990
$
4,282
Total noninterest revenue
27,454
677
28,131
19,528
990
20,518
Net interest income
22,746
115
22,861
21,779
104
21,883
Total net revenue
50,200
792
50,992
41,307
1,094
42,401
Total noninterest expense
23,713
NA
23,713
20,822
NA
20,822
Pre-provision profit
26,487
792
27,279
20,485
1,094
21,579
Provision for credit losses
3,052
NA
3,052
2,899
NA
2,899
Income before income tax expense
23,435
792
24,227
17,586
1,094
18,680
Income tax expense
5,286
(a)
792
(a)
6,078
3,114
1,094
4,208
Net income
$
18,149
NA
$
18,149
$
14,472
NA
$
14,472
Overhead ratio
47
%
NM
47
%
50
%
NM
49
%
Six months ended June 30,
2024
2023
(in millions, except ratios)
Reported
Fully taxable-equivalent adjustments(b)
Managed basis
Reported
Fully taxable-equivalent adjustments(b)
Managed basis
Other income
$
10,277
(a)
$
1,170
(a)
$
11,447
$
4,299
$
1,857
$
6,156
Total noninterest revenue
46,306
1,170
47,476
37,166
1,857
39,023
Net interest income
45,828
236
46,064
42,490
224
42,714
Total net revenue
92,134
1,406
93,540
79,656
2,081
81,737
Total noninterest expense
46,470
NA
46,470
40,929
NA
40,929
Pre-provision profit
45,664
1,406
47,070
38,727
2,081
40,808
Provision for credit losses
4,936
NA
4,936
5,174
NA
5,174
Income before income tax expense
40,728
1,406
42,134
33,553
2,081
35,634
Income tax expense
9,160
(a)
1,406
(a)
10,566
6,459
2,081
8,540
Net Income
$
31,568
NA
$
31,568
$
27,094
NA
$
27,094
Overhead ratio
50
%
NM
50
%
51
%
NM
50
%
(a)Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures guidance, under the modified retrospective method.Refer to Notes 1, 5 and 13 for additional information.
(b)Predominantly recognized in CIB and Corporate.
18
The following table provides information on net interest income, net yield, and noninterest revenue excluding Markets.
(in millions, except rates)
Three months ended June 30,
Six months ended June 30,
2024
2023
Change
2024
2023
Change
Net interest income – reported
$
22,746
$
21,779
4
%
$
45,828
$
42,490
8
%
Fully taxable-equivalent adjustments
115
104
11
236
224
5
Net interest income – managed basis(a)
$
22,861
$
21,883
4
$
46,064
$
42,714
8
Less: Markets net interest income(b)
(77)
(487)
84
106
(592)
NM
Net interest income excluding Markets(a)
$
22,938
$
22,370
3
$
45,958
$
43,306
6
Average interest-earning assets
$
3,509,725
$
3,343,780
5
$
3,477,620
$
3,280,619
6
Less: Average Markets interest-earning assets(b)
1,116,853
1,003,877
11
1,073,964
993,283
8
Average interest-earning assets excluding Markets
$
2,392,872
$
2,339,903
2
$
2,403,656
$
2,287,336
5
Net yield on average interest-earning assets – managed basis
2.62
%
2.62
%
2.66
%
2.63
%
Net yield on average Markets interest-earning assets(b)
(0.03)
(0.19)
0.02
(0.12)
Net yield on average interest-earning assets excluding Markets
3.86
%
3.83
%
3.85
%
3.82
%
Noninterest revenue – reported(c)
$
27,454
$
19,528
41
$
46,306
$
37,166
25
Fully taxable-equivalent adjustments(c)
677
990
(32)
1,170
1,857
(37)
Noninterest revenue – managed basis
$
28,131
$
20,518
37
$
47,476
$
39,023
22
Less: Markets noninterest revenue(b)(d)
7,870
7,549
4
15,700
16,092
(2)
Noninterest revenue excluding Markets
$
20,261
$
12,969
56
$
31,776
$
22,931
39
Memo: Total Markets net revenue(b)
$
7,793
$
7,062
10
$
15,806
$
15,500
2
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)Refer to page 34 for further information on Markets.
(c)Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures guidance, under the modified retrospective method.Refer to Notes 1, 5 and 13 for additional information.
(d)Includes the markets-related revenues of the former Commercial Banking business segment. Prior-period amounts have been revised to conform with the current presentation.
The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
Period-end
Average
(in millions, except per share and ratio data)
June 30, 2024
Dec 31, 2023
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Common stockholders’ equity
$
316,652
$
300,474
$
308,763
$
277,885
$
304,519
$
274,560
Less: Goodwill
52,620
52,634
52,618
52,342
52,616
52,031
Less: Other intangible assets
3,058
3,225
3,086
2,191
3,122
1,746
Add: Certain deferred tax liabilities(a)
2,969
2,996
2,975
2,902
2,982
2,727
Tangible common equity
$
263,943
$
247,611
$
256,034
$
226,254
$
251,763
$
223,510
Return on tangible common equity
NA
NA
28
%
25
%
25
%
24
%
Tangible book value per share
$
92.77
$
86.08
NA
NA
NA
NA
(a)Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.
19
BUSINESS SEGMENT RESULTS
The Firm is managed on an LOB basis. Effective in the second quarter of 2024, the Firm reorganized its reportable business segments by combining the former Corporate & Investment Bank and Commercial Banking business segments to form one reportable segment, the Commercial & Investment Bank (“CIB”). As a result of the reorganization, the Firm now has three reportable business segments: Consumer & Community Banking, Commercial & Investment Bank, and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. Refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures on pages 18-19 for a definition of managed basis.
The following table depicts the Firm’s reportable business segments.
Description of business segment reporting methodology
Results of the business segments are intended to present each segment as if it were a stand-alone business. The management reporting process that derives business segment results includes the allocation of certain income and expense items. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and therefore further refinements may be implemented in future periods. The Firm also assesses the level of capital required for each LOB on at least an annual basis. The Firm’s LOBs also provide various business metrics which are utilized by the Firm and its investors and analysts in assessing performance.
Revenue sharing
When business segments or businesses within each segment join efforts to sell products and services to the Firm’s clients and customers, the participating businesses may agree to share revenue from those transactions. Revenue is generally recognized in the segment responsible for the related product or service, with allocations to the other segments/businesses involved in the transaction. The segment and business results reflect these revenue-sharing agreements.
Funds transfer pricing
Funds transfer pricing (“FTP”) is the process by which the Firm allocates interest income and expense to the LOBs and Other Corporate and transfers the primary interest rate risk and liquidity risk to Treasury and CIO.
The funds transfer pricing process considers the interest rate and liquidity risk characteristics of assets and liabilities and off-balance sheet products. Periodically the methodology and assumptions utilized in the FTP process are adjusted to reflect economic conditions and other factors, which may impact the allocation of net interest income to the segments.
Foreign exchange risk
Foreign exchange risk is transferred from the LOBs and Other Corporate to Treasury and CIO for certain revenues and expenses. Treasury and CIO manages these risks centrally and reports the impact of foreign exchange rate movements related to the transferred risk in its results. Refer to Market Risk Management on pages 79-84 for additional information.
20
Capital allocation
The amount of capital assigned to each business segment is referred to as equity. At least annually, the assumptions, judgments and methodologies used to allocate capital are reassessed and, as a result, the capital allocated to the LOBs may change. Refer to Line of business equity on page 48, and page 98 of JPMorgan Chase’s 2023 Form 10-K for additional information on capital allocation.
Refer to Business Segment Results – Description of business segment reporting methodology on pages 65–85 and Note 32 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of those methodologies.
21
Segment results – managed basis
The following tables summarize the Firm’s results by segment for the periods indicated.
Three months ended June 30,
Consumer & Community Banking
Commercial & Investment Bank
Asset & Wealth Management
(in millions, except ratios)
2024
2023
Change
2024
2023
Change
2024
2023
Change
Total net revenue
$
17,701
$
17,233
3
%
$
17,917
$
16,507
9
%
$
5,252
$
4,943
6
%
Total noninterest expense
9,425
8,313
13
9,166
8,194
12
3,543
3,163
12
Pre-provision profit/(loss)
8,276
8,920
(7)
8,751
8,313
5
1,709
1,780
(4)
Provision for credit losses
2,643
1,862
42
384
1,135
(66)
20
145
(86)
Net income/(loss)
4,210
5,306
(21)
5,897
5,300
11
1,263
1,226
3
Return on equity (“ROE”)
30
%
38
%
17
%
15
%
32
%
29
%
Three months ended June 30,
Corporate
Total
(in millions, except ratios)
2024
2023
Change
2024
2023
Change
Total net revenue
$
10,122
(a)
$
3,718
172
%
$
50,992
(a)
$
42,401
20
%
Total noninterest expense
1,579
(b)
1,152
37
23,713
(b)
20,822
14
Pre-provision profit/(loss)
8,543
2,566
233
27,279
21,579
26
Provision for credit losses
5
(243)
NM
3,052
2,899
5
Net income/(loss)
6,779
2,640
157
18,149
14,472
25
ROE
NM
NM
23
%
20
%
Six months ended June 30,
Consumer & Community Banking
Commercial & Investment Bank
Asset & Wealth Management
(in millions, except ratios)
2024
2023
Change
2024
2023
Change
2024
2023
Change
Total net revenue
$
35,354
$
33,689
5
%
$
35,501
$
33,618
6
%
$
10,361
$
9,727
7
%
Total noninterest expense
18,722
16,378
14
17,890
16,985
5
7,003
6,254
12
Pre-provision profit/(loss)
16,632
17,311
(4)
17,611
16,633
6
3,358
3,473
(3)
Provision for credit losses
4,556
3,264
40
385
1,610
(76)
(37)
173
NM
Net income/(loss)
9,041
10,549
(14)
12,519
11,068
13
2,553
2,593
(2)
ROE
33
%
39
%
18
%
16
%
32
%
31
%
Six months ended June 30,
Corporate
Total
(in millions, except ratios)
2024
2023
Change
2024
2023
Change
Total net revenue
$
12,324
(a)
$
4,703
162
%
$
93,540
(a)
$
81,737
14
%
Total noninterest expense
2,855
(b)
1,312
118
46,470
(b)
40,929
14
Pre-provision profit/(loss)
9,469
3,391
179
47,070
40,808
15
Provision for credit losses
32
127
(75)
4,936
5,174
(5)
Net income/(loss)
7,455
2,884
158
31,568
27,094
17
ROE
NM
NM
20
%
19
%
(a)Included $7.9 billion net gain related to Visa shares. Refer to Note 2 for additional information.
(b)Included $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
The following sections provide a comparative discussion of the Firm’s results by segment as of or for the three and six months ended June 30, 2024 and 2023, unless otherwise specified.
22
CONSUMER & COMMUNITY BANKING
Refer to pages 68-71 of JPMorgan Chase's 2023 Form 10-K and Line of Business Metrics on page 200 for a further discussion of the business profile of CCB.
Selected income statement data
Three months ended June 30,
Six months ended June 30,
(in millions, except ratios)
2024
2023
Change
2024
2023
Change
Revenue
Lending- and deposit-related fees
$
830
$
841
(1)
%
$
1,652
$
1,664
(1)
%
Asset management fees
978
816
20
1,925
1,492
29
Mortgage fees and related income
346
274
26
620
497
25
Card income
741
483
53
1,423
1,222
16
All other income(a)
1,101
1,129
(2)
2,321
2,291
1
Noninterest revenue
3,996
3,543
13
7,941
7,166
11
Net interest income
13,705
13,690
—
27,413
26,523
3
Total net revenue
17,701
17,233
3
35,354
33,689
5
Provision for credit losses
2,643
1,862
42
4,556
3,264
40
Noninterest expense
Compensation expense
4,240
3,628
17
8,469
7,173
18
Noncompensation expense(b)
5,185
4,685
11
10,253
9,205
11
Total noninterest expense
9,425
(d)
8,313
13
18,722
(d)
16,378
14
Income before income tax expense
5,633
7,058
(20)
12,076
14,047
(14)
Income tax expense
1,423
1,752
(19)
3,035
3,498
(13)
Net income
$
4,210
$
5,306
(21)
$
9,041
$
10,549
(14)
Revenue by business
Banking & Wealth Management
$
10,375
$
10,936
(5)
$
20,699
$
20,977
(1)
Home Lending
1,319
1,007
31
2,505
1,727
45
Card Services & Auto
6,007
5,290
14
12,150
10,985
11
Mortgage fees and related income details:
Production revenue
157
102
54
287
177
62
Net mortgage servicing revenue(c)
189
172
10
333
320
4
Mortgage fees and related income
$
346
$
274
26
%
$
620
$
497
25
%
Financial ratios
Return on equity
30
%
38
%
33
%
39
%
Overhead ratio
53
48
53
49
(a)Primarily includes operating lease income and commissions and other fees. Operating lease income was $682 million and $704 million for the three months ended June 30, 2024 and 2023, respectively, and $1.3 billion and $1.4 billion for the six months ended June 30, 2024 and 2023, respectively.
(b)Included depreciation expense on leased assets of $430 million and $445 million for the three months ended June 30, 2024 and 2023, respectively, and $857 million and $852 million for the six months ended June 30, 2024 and 2023, respectively.
(c)Included MSR risk management results of $39 million and $25 million for the three months ended June 30, 2024 and 2023, respectively, and $38 million and $13 million for the six months ended June 30, 2024 and 2023, respectively.
(d)In the second quarter of 2023, substantially all of the expense associated with First Republic was reported in Corporate. Commencing in the third quarter of 2023, the expense is aligned to the appropriate LOB.
23
Quarterly results
Net income was $4.2 billion, down 21%.
Net revenue was $17.7 billion, up 3%.
Net interest income was $13.7 billion, flat when compared with the prior year, reflecting:
•higher Card Services NII on higher revolving balances, and
•the timing impact of First Republic in Home Lending,
offset by
•lower NII in Banking & Wealth Management ("BWM"), reflecting lower average deposits and deposit margin compression.
Noninterest revenue was $4.0 billion, up 13%, predominantly driven by:
•higher card income reflecting higher net interchange on increased debit and credit card sales volume, and higher annual fees, partially offset by an increase in amortization related to new account origination costs, reflecting continued growth in the portfolio. Prior-year net interchange included an increase to the rewards liability due to adjustments to the terms of certain reward programs; and
•higher asset management fees, predominantly driven by higher average market levels.
Refer to Note 5 for additional information on card income, asset management fees, and commissions and other fees; and Critical Accounting Estimates on pages 86-88 for additional information on the credit card rewards liability.
Noninterest expense was $9.4 billion, up 13%, reflecting First Republic-related expense that was aligned to CCB from Corporate starting in the third quarter of 2023, impacting both compensation and noncompensation expense.
The increase in expense also reflected:
•higher compensation expense, largely driven by higher revenue-related compensation, primarily for advisors and bankers, and an increase in employees, including in technology, and
•higher noncompensation expense, largely driven by continued investments in technology and marketing.
The provision for credit losses was $2.6 billion, reflecting:
•net charge-offs of $2.1 billion, up $813 million, predominantly driven by $706 million in Card Services, primarily due to the seasoning of newer vintages and continued credit normalization, and
•a $579 million net addition to the allowance for credit losses, primarily in Card Services, predominantly driven by loan growth and updates to certain macroeconomic variables.
The provision in the prior year was $1.9 billion, reflecting net charge-offs of $1.3 billion and a $611 million net addition to the allowance for credit losses, including $408 million to establish the allowance for the First Republic loans and lending-related commitments, and $203 million in Card Services.
Refer to Credit and Investment Risk Management on pages 59-78 and Allowance for Credit Losses on pages 75-77 for a further discussion of the credit portfolios and the allowance for credit losses.
Year-to-date results
Net income was $9.0 billion, down 14%.
Net revenue was $35.4 billion, up 5%.
Net interest income was $27.4 billion, up 3%, driven by:
•higher Card Services NII on higher revolving balances, and
•the timing impact of First Republic in Home Lending,
largely offset by
•lower NII in BWM, reflecting lower average deposits and deposit margin compression.
Noninterest revenue was $7.9 billion, up 11%, predominantly driven by:
•higher asset management fees reflecting higher average market levels, including the timing impact of First Republic and, to a lesser extent, net inflows, as well as higher commissions from annuity sales in BWM,
•higher card income driven by higher net interchange on increased debit and credit card sales volume, as well as higher annual fees, largely offset by an increase in amortization related to new account origination costs, reflecting continued growth in the portfolio, and
•higher production revenue in Home Lending, including the timing impact of First Republic.
Refer to Executive Overview on pages 5-8 and Note 26 for additional information on First Republic.
Noninterest expense was $18.7 billion, up 14%, reflecting First Republic-related expense that was aligned to CCB from Corporate starting in the third quarter of 2023, impacting both compensation and noncompensation expense.
The increase in expense also reflected:
•higher compensation expense, largely driven by higher revenue-related compensation, primarily for advisors and bankers, and an increase in employees, including in technology, and
•higher noncompensation expense, largely driven by continued investments in technology and marketing.
The provision for credit losses was $4.6 billion, reflecting:
•net charge-offs of $3.9 billion, up $1.6 billion, including $1.5 billion in Card Services, reflecting the seasoning of newer vintages and continued credit normalization, and $85 million in Auto, driven by a decline in used vehicle valuations, and
•a $613 million net addition to the allowance for credit losses, consisting of:
–$753 million in Card Services, predominantly due to the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables,
partially offset by
24
–a $125 million net reduction in Home Lending, primarily due to improvements in the outlook for home prices in the first quarter of 2024.
The provision in the prior year was $3.3 billion, reflecting net charge-offs of $2.3 billion, a $553 million net addition to the allowance for credit losses, predominantly driven by Card Services, and a $408 million net addition to the allowance for credit losses to establish the allowance for the First Republic loans and lending-related commitments in the second quarter of 2023.
Selected metrics
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in millions, except employees)
2024
2023
Change
2024
2023
Change
Selected balance sheet data (period-end)
Total assets
$
638,493
$
620,193
3
%
$
638,493
$
620,193
3
%
Loans:
Banking & Wealth Management
31,078
30,959
—
31,078
30,959
—
Home Lending(a)
250,032
262,432
(5)
250,032
262,432
(5)
Card Services
216,213
191,353
13
216,213
191,353
13
Auto
75,310
73,587
2
75,310
73,587
2
Total loans
572,633
558,331
3
572,633
558,331
3
Deposits(b)
1,069,753
1,173,514
(9)
1,069,753
1,173,514
(9)
Equity
54,500
55,500
(2)
54,500
55,500
(2)
Selected balance sheet data (average)
Total assets
$
628,757
$
576,417
9
$
628,309
$
541,788
16
Loans:
Banking & Wealth Management
31,419
30,628
3
31,330
29,572
6
Home Lending(c)
254,385
229,569
11
256,126
201,005
27
Card Services
210,119
187,028
12
207,410
183,758
13
Auto
75,804
71,083
7
76,535
69,920
9
Total loans
571,727
518,308
10
571,401
484,255
18
Deposits(b)
1,073,544
1,157,309
(7)
1,076,393
1,135,261
(5)
Equity
54,500
54,346
—
54,500
53,180
2
Employees
143,412
137,087
5
%
143,412
137,087
5
%
(a)At June 30, 2024 and 2023, Home Lending loans held-for-sale and loans at fair value were $5.9 billion and $3.9 billion, respectively.
(b)In the fourth quarter of 2023, CCB transferred approximately $18.8 billion of deposits associated with First Republic to AWM and CIB. Refer to page 67 of the Firm’s 2023 Form 10-K for additional information.
(c)Average Home Lending loans held-for sale and loans at fair value were $7.7 billion and $5.3 billion for the three months ended June 30, 2024 and 2023, respectively, and $6.2 billion and $4.4 billion for the six months ended June 30, 2024 and 2023, respectively.
25
Selected metrics
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in millions, except ratio data)
2024
2023
Change
2024
2023
Change
Credit data and quality statistics
Nonaccrual loans(a)
$
3,413
$
3,823
(11)
%
$
3,413
$
3,823
(11)
%
Net charge-offs/(recoveries)
Banking & Wealth Management
176
92
91
255
171
49
Home Lending
(40)
(28)
(43)
(47)
(46)
(2)
Card Services
1,830
1,124
63
3,518
2,046
72
Auto
98
63
56
217
132
64
Total net charge-offs/(recoveries)
$
2,064
$
1,251
65
$
3,943
$
2,303
71
Net charge-off/(recovery) rate
Banking & Wealth Management
2.25
%
1.20
%
1.64
%
1.17
%
Home Lending
(0.07)
(0.05)
(0.04)
(0.05)
Card Services
3.50
2.41
3.41
2.25
Auto
0.52
0.36
0.57
0.38
Total net charge-off/(recovery) rate
1.47
%
0.98
%
1.40
%
0.97
%
30+ day delinquency rate
Home Lending(b)
0.70
%
0.58
%
0.70
%
0.58
%
Card Services
2.08
1.70
2.08
1.70
Auto
1.12
0.92
1.12
0.92
90+ day delinquency rate - Card Services
1.07
%
0.84
%
1.07
%
0.84
%
Allowance for loan losses
Banking & Wealth Management
$
685
$
731
(6)
$
685
$
731
(6)
Home Lending
437
777
(44)
437
777
(44)
Card Services
13,206
11,600
14
13,206
11,600
14
Auto
742
717
3
742
717
3
Total allowance for loan losses
$
15,070
$
13,825
9
%
$
15,070
$
13,825
9
%
(a)At June 30, 2024 and 2023, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $96 million and $139 million, respectively. These amounts have been excluded based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.
(b)At June 30, 2024 and 2023, excluded mortgage loans insured by U.S. government agencies of $137 million and $195 million, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.
26
Selected metrics
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in billions, except ratios and where otherwise noted)
2024
2023
Change
2024
2023
Change
Business Metrics
Number of branches
4,884
4,874
—
%
4,884
4,874
—
%
Active digital customers (in thousands)(a)
69,011
65,559
5
69,011
65,559
5
Active mobile customers (in thousands)(b)
55,564
51,963
7
55,564
51,963
7
Debit and credit card sales volume
$
453.7
$
424.0
7
$
874.4
$
811.3
8
Total payments transaction volume (in trillions)(c)
1.6
1.5
7
3.1
2.9
7
Banking & Wealth Management
Average deposits
$
1,058.9
$
1,142.8
(7)
$
1,062.2
$
1,120.7
(5)
Deposit margin
2.72
%
2.83
%
2.71
%
2.81
%
Business Banking average loans
$
19.5
$
19.6
(1)
$
19.5
$
19.8
(2)
Business banking origination volume
1.3
1.3
3
2.4
2.3
6
Client investment assets(d)
1,013.7
892.9
14
1,013.7
892.9
14
Number of client advisors
5,672
5,153
10
5,672
5,153
10
Home Lending
Mortgage origination volume by channel
Retail
$
6.9
$
7.3
(5)
$
11.3
$
10.9
4
Correspondent
3.8
3.9
(3)
6.0
6.0
—
Total mortgage origination volume(e)
$
10.7
$
11.2
(4)
$
17.3
$
16.9
2
Third-party mortgage loans serviced (period-end)
$
642.8
$
604.5
6
642.8
$
604.5
6
MSR carrying value (period-end)
8.8
8.2
7
8.8
8.2
7
Card Services
Sales volume, excluding commercial card
$
316.6
$
294.0
8
$
607.6
$
560.2
8
Net revenue rate
9.61
%
9.11
%
9.85
%
9.73
%
Net yield on average loans
9.46
9.31
9.67
9.60
Auto
Loan and lease origination volume
$
10.8
$
12.0
(10)
$
19.7
$
21.2
(7)
Average auto operating lease assets
10.7
11.0
(3)
%
10.6
11.3
(6)
%
(a)Users of all web and/or mobile platforms who have logged in within the past 90 days.
(b)Users of all mobile platforms who have logged in within the past 90 days.
(c)Total payments transaction volume includes debit and credit card sales volume and gross outflows of ACH, ATM, teller, wires, BillPay, PayChase, Zelle, person-to-person and checks.
(d)Includes assets invested in managed accounts and J.P. Morgan mutual funds where AWM is the investment manager. Refer to AWM segment results on pages 36-40 for additional information.
(e)Firmwide mortgage origination volume was $12.3 billion and $13.0 billion for the three months ended June 30, 2024 and 2023, respectively, and $19.9 billion and $19.8 billion for the six months ended June 30, 2024 and 2023, respectively.
27
COMMERCIAL & INVESTMENT BANK(a)
The Commercial & Investment Bank is comprised of the Banking & Payments and Markets & Securities Services businesses. These businesses offer investment banking, lending, payments, market-making, financing, custody and securities products and services to a global base of corporate and institutional clients. Banking & Payments offers products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, and loan origination and syndication. Banking & Payments also provides services that enable clients to manage payments globally across liquidity and account solutions, commerce solutions, clearing, trade, and working capital. Markets & Securities Services includes Markets, which is a global market-maker across products, including cash and derivative instruments, and also offers sophisticated risk management solutions, lending, prime brokerage, clearing and research. Markets & Securities Services also includes Securities Services, a leading global custodian that provides custody, fund services, liquidity and trading services, and data solutions products.
(a)Reflects the reorganization of the Firm's business segments. Refer to Business Segment Results on pages 20-22 for additional information.
Refer to Line of Business Metrics on page 200 for a further discussion of the business profile of CIB.
Selected income statement data
Three months ended June 30,
Six months ended June 30,
(in millions, except ratios)
2024
2023
Change
2024
2023
Change
Revenue
Investment banking fees
$
2,356
$
1,569
50
%
$
4,370
$
3,235
35
%
Principal transactions
6,691
6,742
(1)
13,325
14,174
(6)
Lending- and deposit-related fees
924
782
18
1,897
1,548
23
Commissions and other fees
1,337
1,238
8
2,609
2,487
5
Card income
579
601
(4)
1,104
1,089
1
All other income
857
705
22
1,600
1,408
14
Noninterest revenue
12,744
11,637
10
24,905
23,941
4
Net interest income
5,173
4,870
6
10,596
9,677
9
Total net revenue(a)
17,917
16,507
9
35,501
33,618
6
Provision for credit losses
384
1,135
(66)
385
1,610
(76)
Noninterest expense
Compensation expense
4,752
4,117
15
9,648
8,843
9
Noncompensation expense
4,414
4,077
8
8,242
8,142
1
Total noninterest expense
9,166
8,194
12
17,890
16,985
5
Income before income tax expense
8,367
7,178
17
17,226
15,023
15
Income tax expense
2,470
1,878
32
4,707
3,955
19
Net income
$
5,897
$
5,300
11
%
$
12,519
$
11,068
13
%
Financial ratios
Return on equity
17
%
15
%
18
%
16
%
Overhead ratio
51
50
50
51
Compensation expense as percentage of total net revenue
27
25
27
26
(a)Included tax equivalent adjustments primarily from income tax credits from investments in alternative energy, affordable housing and new markets, income from tax-exempt securities and loans, and the related amortization and other tax benefits of the investments in alternative energy and affordable housing of $737 million and $1.0 billion for the three months ended June 30, 2024 and 2023, respectively, and $1.3 billion and $2.0 billion for the six months ended June 30, 2024 and 2023, respectively. Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method guidance, under the modified retrospective method. Refer to Notes 1, 5 and 13 for additional information.
28
Selected income statement data
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
Change
2024
2023
Change
Revenue by business
Investment Banking
$
2,464
$
1,687
46
%
$
4,680
$
3,475
35
%
Payments
4,546
4,714
(4)
9,012
9,145
(1)
Lending
1,936
1,749
11
3,660
3,199
14
Other
4
38
(89)
1
47
(98)
Total Banking & Payments
8,950
8,188
9
17,353
15,866
9
Fixed Income Markets
4,822
4,608
5
10,149
10,361
(2)
Equity Markets
2,971
2,454
21
5,657
5,139
10
Securities Services
1,261
1,221
3
2,444
2,369
3
Credit Adjustments & Other(a)
(87)
36
NM
(102)
(117)
13
Total Markets & Securities Services
8,967
8,319
8
18,148
17,752
2
Total net revenue
$
17,917
$
16,507
9
%
$
35,501
$
33,618
6
%
(a)Consists primarily of centrally managed credit valuation adjustments (“CVA”), funding valuation adjustments (“FVA”) on derivatives, other valuation adjustments, and certain components of fair value option elected liabilities, which are primarily reported in principal transactions revenue. Results are presented net of associated hedging activities and net of CVA and FVA amounts allocated to Fixed Income Markets and Equity Markets. Refer to Notes 2, 3 and 19 for additional information.
Banking & Payments Revenue by Client Coverage Segment: (a)
Global Corporate Banking & Global Investment Banking provides banking products and services generally to large corporations, financial institutions and merchants.
Commercial Banking provides banking products and services generally to middle market clients, including start-ups, small and mid-sized companies, local governments, municipalities, and nonprofits, as well as to commercial real estate clients.
Other includes amounts related to credit protection purchased against certain retained loans and lending-related commitments in Lending, the impact of equity investments in Payments and revenues not aligned with a primary client coverage segment.
(a)Global Banking is a client coverage view within the Banking & Payments business and is comprised of the Global Corporate Banking, Global Investment Banking and Commercial Banking client coverage segments.
Selected income statement data
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
Change
2024
2023
Change
Banking & Payments revenue by client coverage segment
Global Corporate Banking & Global Investment Banking
$
6,141
$
5,452
13
%
$
11,961
$
10,816
11
%
Commercial Banking
2,860
2,801
2
5,697
5,227
9
Middle Market Banking
1,936
1,996
(3)
3,863
3,781
2
Commercial Real Estate Banking
924
805
15
1,834
1,446
27
Other
(51)
(65)
22
(305)
(177)
(72)
Total Banking & Payments revenue
$
8,950
$
8,188
9
%
$
17,353
$
15,866
9
%
29
Quarterlyresults
Net income was $5.9 billion, up 11%.
Net revenue was $17.9 billion, up 9%.
Banking & Payments revenue was $9.0 billion, up 9%.
•Investment Banking revenue was $2.5 billion, up 46%, driven by higher Investment Banking fees, up 50%, reflecting higher fees across products. The Firm ranked #1 for Global Investment Banking fees, according to Dealogic.
–Debt underwriting fees were $1.1 billion, up 51%, predominantly driven by higher industry-wide issuance in leveraged loans, high-yield bonds and high-grade bonds.
–Equity underwriting fees were $495 million, up 56%, driven by follow-on offerings, IPOs and private placements, reflecting wallet share gains amid favorable market conditions.
–Advisory fees were $785 million, up 45%, driven by a higher number of large completed transactions compared with a challenging prior-year quarter.
•Payments revenue was $4.5 billion, down 4%, driven by deposit margin compression reflecting higher rates paid and higher deposit-related client credits, largely offset by fee growth due to higher volumes.
•Lending revenue was $1.9 billion, up 11%, predominantly driven by the impact of the First Republic acquisition, lower fair value losses on credit protection purchased against certain retained loans and lending-related commitments, and the impact of higher rates.
Markets & Securities Services revenue was $9.0 billion, up 8%. Markets revenue was $7.8 billion, up 10%.
•Equity Markets revenue was $3.0 billion, up 21%, driven by strong performance in Equity Derivatives and Prime Finance.
•Fixed Income Markets revenue was $4.8 billion, up 5%, largely driven by Securitized Products.
•Securities Services revenue was $1.3 billion, up 3%, driven by higher volumes and market levels, largely offset by deposit margin compression.
•Credit Adjustments & Other was a loss of $87 million, compared with a gain of $36 million in the prior year.
Noninterest expense was $9.2 billion, up 12%, predominantly driven by higher compensation, primarily revenue-related compensation, higher legal expense and higher volume-related non-compensation expense.
The provision for credit losses was $384 million, reflecting:
•a $220 million net addition to the allowance for credit losses, driven by the impact of incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates, as well as net downgrade activity, primarily in Real Estate, largely offset by the impact of changes in the loan and lending-related commitment portfolios, and
•net charge-offs of $164 million, of which approximately half was in Office.
The provision in the prior year was $1.1 billion, reflecting an addition of $608 million to establish the allowance for the First Republic loans and lending-related commitments. The net addition also reflected $389 million driven by updates to certain assumptions related to office real estate, as well as net downgrade activity in Middle Market Banking.
Refer to Credit and Investment Risk Management on pages 59-78, Allowance for Credit Losses on pages 75-77, and Critical Accounting Estimates on pages 86-88 for a further discussion of the credit portfolios and the allowance for credit losses.
Year-to-date results
Net income of $12.5 billion, up 13%.
Net revenue was $35.5 billion, up 6%.
Banking & Payments revenue was $17.4 billion, up 9%.
•Investment Banking revenue was $4.7 billion, up 35%. Investment Banking fees were up 35%, driven by higher fees across products. The Firm ranked #1 for Global Investment Banking fees, according to Dealogic.
–Debt underwriting fees were $2.1 billion, up 54%, predominantly driven by higher industry-wide issuances in leveraged loans, high-grade bonds and high-yield bonds.
–Equity underwriting fees were $850 million, up 54%, driven by higher IPOs, follow-on and convertible securities offerings.
–Advisory fees were $1.4 billion, up 7%.
•Payments revenue was $9.0 billion, down 1%, driven by deposit margin compression reflecting higher rates paid and higher deposit-related client credits, largely offset by fee growth.
•Lending revenue was $3.7 billion, up 14%, driven by the impact of the First Republic acquisition, and the impact of higher rates, partially offset by fair value losses on credit protection purchased against certain retained loans and lending-related commitments.
Markets & Securities Services revenue was $18.1 billion, up 2%. Markets revenue was $15.8 billion, up 2%.
•Equity Markets revenue was $5.7 billion, up 10%, driven by higher revenue in Equity Derivatives, and Prime Finance.
•Fixed Income Markets revenue was $10.1 billion, down 2%, driven by lower revenues in Rates and Commodities, largely offset by higher revenue in Securitized Products.
•Securities Services revenue was $2.4 billion, up 3%, driven by higher volumes and market levels, largely offset by deposit margin compression.
•Credit Adjustments & Other was a loss of $102 million, compared with a loss of $117 million in the prior year.
Noninterest expense was $17.9 billion, up 5%, predominantly driven by higher compensation expense, primarily revenue-related compensation.
30
The provision for credit losses was $385 million, reflecting:
•net charge-offs of $233 million, of which approximately half was in Office, and
•a $152 million net addition to the allowance for credit losses, driven by
–a net addition of $772 million, reflecting net downgrade activity, primarily in Real Estate, and included approximately $170 million associated with incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $620 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios.
The provision in the prior year was $1.6 billion, reflecting an addition of $608 million to establish the allowance for the First Republic loans and lending-related commitments, in the second quarter of 2023. The net addition also reflected $768 million driven by a deterioration in the Firm's weighted-average economic outlook, including updates to certain assumptions related to office real estate, as well as net downgrade activity.
Selected metrics
(in millions, except employees)
As of or for the three months ended June 30,
As of or for the six months ended June 30,
2024
2023
Change
2024
2023
Change
Selected balance sheet data (period-end)
Total assets
$
1,939,038
$
1,737,334
12
%
$
1,939,038
$
1,737,334
12
%
Loans:
Loans retained
475,880
476,574
—
475,880
476,574
—
Loans held-for-sale and loans at fair value(a)
41,737
40,499
3
41,737
40,499
3
Total loans
517,617
517,073
—
517,617
517,073
—
Equity
132,000
138,000
(4)
132,000
138,000
(4)
Banking & Payments loans by client coverage segment (period-end)(b)
Global Corporate Banking & Global Investment Banking
$
132,592
$
133,535
(1)
%
$
132,592
$
133,535
(1)
%
Commercial Banking
220,222
222,782
(1)
220,222
222,782
(1)
Middle Market Banking
75,488
79,885
(6)
75,488
79,885
(6)
Commercial Real Estate Banking
144,734
142,897
1
144,734
142,897
1
Other
266
371
(28)
266
371
(28)
Total Banking & Payments loans
353,080
356,688
(1)
353,080
356,688
(1)
Selected balance sheet data (average)
Total assets
$
1,915,880
$
1,752,732
9
$
1,854,999
$
1,719,118
8
Trading assets-debt and equity instruments
638,473
533,092
20
609,686
511,066
19
Trading assets-derivative receivables
58,850
63,118
(7)
58,059
63,578
(9)
Loans:
Loans retained
$
471,861
$
459,244
3
$
471,524
$
440,914
7
Loans held-for-sale and loans at fair value(a)
42,868
38,858
10
43,202
41,278
5
Total loans
$
514,729
$
498,102
3
$
514,726
$
482,192
7
Deposits(c)
1,046,993
998,014
5
1,046,391
981,861
7
Equity
132,000
137,505
(4)
132,000
137,005
(4)
Banking & Payments loans by client coverage segment (average)(b)
Global Corporate Banking & Global Investment Banking
$
130,320
$
131,852
(1)
%
$
128,861
$
131,118
(2)
%
Commercial Banking
220,767
211,431
4
221,545
196,385
13
Middle Market Banking
76,229
78,037
(2)
77,296
75,547
2
Commercial Real Estate Banking
144,538
133,394
8
144,249
120,838
19
Other
360
227
59
475
218
118
Total Banking & Payments loans
$
351,447
$
343,510
2
$
350,881
$
327,721
7
Employees
93,387
90,813
3
%
93,387
90,813
3
%
(a)Loans held-for-sale and loans at fair value primarily reflect lending-related positions originated and purchased in Markets, including loans held for securitization.
(b)Refer to page 29 for a description of each of the client coverage segments.
(c)In the fourth quarter of 2023, certain deposits associated with First Republic were transferred to CIB from CCB.
31
Selected metrics
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in millions, except ratios)
2024
2023
Change
2024
2023
Change
Credit data and quality statistics
Net charge-offs/(recoveries)
$
164
$
156
5
%
$
233
$
243
(4)
%
Nonperforming assets:
Nonaccrual loans:
Nonaccrual loans retained(a)
$
2,631
$
1,992
32
$
2,631
$
1,992
32
Nonaccrual loansheld-for-sale and loans at fair value(b)
988
818
21
988
818
21
Total nonaccrual loans
3,619
2,810
29
3,619
2,810
29
Derivative receivables
290
286
1
290
286
1
Assets acquired in loan satisfactions
220
133
65
220
133
65
Total nonperforming assets
$
4,129
$
3,229
28
$
4,129
$
3,229
28
Allowance for credit losses:
Allowance for loan losses
$
7,344
$
7,260
1
$
7,344
$
7,260
1
Allowance for lending-related commitments
1,930
2,008
(4)
1,930
2,008
(4)
Total allowance for credit losses
$
9,274
$
9,268
—
%
$
9,274
$
9,268
—
%
Net charge-off/(recovery) rate(c)
0.14
%
0.14
%
0.10
%
0.11
%
Allowance for loan losses to period-end loans retained
1.54
1.52
1.54
1.52
Allowance for loan losses to nonaccrual loans retained(a)
279
364
279
364
Nonaccrual loans to total period-end loans
0.70
%
0.54
%
0.70
%
0.54
%
(a)Allowance for loan losses of $452 million and $350 million were held against these nonaccrual loans at June 30, 2024 and 2023, respectively.
(b)At June 30, 2024 and 2023, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $42 million and $76 million, respectively. These amounts have been excluded based upon the government guarantee.
(c)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.
Investment banking fees
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
Change
2024
2023
Change
Advisory
$
785
$
540
45
%
$
1,383
$
1,296
7
%
Equity underwriting
495
318
56
850
553
54
Debt underwriting(a)
1,076
711
51
2,137
1,386
54
Total investment banking fees
$
2,356
$
1,569
50
%
$
4,370
$
3,235
35
%
(a)Represents long-term debt and loan syndications.
32
League table results – wallet share
Three months ended June 30,
Six months ended June 30,
Full-year 2023
2024
2023
2024
2023
Rank
Share
Rank
Share
Rank
Share
Rank
Share
Rank
Share
Based on fees(a)
M&A(b)
Global
#
1
10.5
%
#
1
8.1
%
#
1
9.9
%
#
1
8.8
%
#
2
9.0
%
U.S.
1
14.0
2
10.7
1
11.8
2
11.3
2
11.0
Equity and equity-related(c)
Global
1
13.6
1
7.6
1
11.3
1
7.1
1
7.7
U.S.
1
17.0
1
15.0
1
14.5
1
14.0
1
14.3
Long-term debt(d)
Global
1
7.2
1
6.6
1
7.5
1
6.5
1
7.0
U.S.
1
10.3
1
10.7
1
11.0
1
10.2
1
10.9
Loan syndications
Global
1
11.0
1
12.8
1
11.5
1
12.5
1
11.9
U.S.
1
13.1
1
16.7
1
13.9
1
16.9
1
15.1
Global investment banking fees(e)
#
1
9.9
%
#
1
8.1
%
#
1
9.5
%
#
1
8.2
%
#
1
8.6
%
(a)Source: Dealogic as of July 1, 2024. Reflects the ranking of revenue wallet and market share.
(b)Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.
(c)Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.
(d)Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”); and exclude money market, short-term debt and U.S. municipal securities.
The following table summarizes selected income statement data for the Markets businesses. Markets includes both Fixed Income Markets and Equity Markets. Markets revenue consists of principal transactions, fees, commissions and other income, as well as net interest income. The Firm assesses its Markets business performance on a total revenue basis, as offsets generally occur across revenue line items. For example, securities that generate net interest income may be risk-managed by derivatives that
are reflected at fair value in principal transactions revenue. Refer to Notes 5 and 6 for a description of the composition of these income statement line items. Refer to Markets revenue on page 75 of JPMorgan Chase’s 2023 Form 10-K for further information.
For the periods presented below, the primary source of principal transactions revenue was the amount recognized upon executing new transactions.
Three months ended June 30,
Three months ended June 30,
2024
2023
(in millions)
Fixed Income Markets
Equity Markets
Total Markets
Fixed Income Markets
Equity Markets
Total Markets
Principal transactions
$
2,021
$
4,571
$
6,592
$
3,120
$
3,350
$
6,470
Lending- and deposit-related fees
81
22
103
76
7
83
Commissions and other fees
150
522
672
151
472
623
All other income
533
(30)
503
410
(37)
373
Noninterest revenue
2,785
5,085
7,870
3,757
3,792
7,549
Net interest income(a)
2,037
(2,114)
(77)
851
(1,338)
(487)
Total net revenue
$
4,822
$
2,971
$
7,793
$
4,608
$
2,454
$
7,062
Six months ended June 30,
Six months ended June 30,
2024
2023
(in millions)
Fixed Income Markets
Equity Markets
Total Markets
Fixed Income Markets
Equity Markets
Total Markets
Principal transactions
$
4,824
$
8,385
$
13,209
$
7,518
$
6,379
$
13,897
Lending- and deposit-related fees
203
40
243
146
14
160
Commissions and other fees
309
1,036
1,345
295
994
1,289
All other income
955
(52)
903
795
(49)
746
Noninterest revenue
6,291
9,409
15,700
8,754
7,338
16,092
Net interest income(a)
3,858
(3,752)
106
1,607
(2,199)
(592)
Total net revenue
$
10,149
$
5,657
$
15,806
$
10,361
$
5,139
$
15,500
(a)The decline in Equity Markets net interest income was driven by higher funding costs.
Selected metrics
(in millions, except where otherwise noted)
As of or for the three months ended June 30,
As of or for the six months ended June 30,
2024
2023
Change
2024
2023
Change
Assets under custody (“AUC”) by asset class (period-end)
(in billions):
Fixed Income
$
16,012
$
14,708
9
%
$
16,012
$
14,708
9
%
Equity
14,101
11,892
19
14,101
11,892
19
Other(a)
3,911
3,824
2
3,911
3,824
2
Total AUC
$
34,024
$
30,424
12
$
34,024
$
30,424
12
Client deposits and other third-party liabilities (average)(b)
$
936,725
$
922,702
2
%
$
934,164
$
911,265
3
%
(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.
(b)Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses.
34
International metrics
(in millions, except where otherwise noted)
As of or for the three months ended June 30,
As of or for the six months ended June 30,
2024
2023
Change
2024
2023
Change
Total net revenue(a)
Europe/Middle East/Africa
$
4,269
$
3,980
7
%
$
8,441
$
8,413
—
%
Asia-Pacific
2,162
1,959
10
4,303
4,155
4
Latin America/Caribbean
551
559
(1)
1,274
1,138
12
Total international net revenue
6,982
6,498
7
14,018
13,706
2
North America
10,935
10,009
9
21,483
19,912
8
Total net revenue
$
17,917
$
16,507
9
$
35,501
$
33,618
6
Loans retained (period-end)(a)
Europe/Middle East/Africa
$
44,227
$
41,539
6
$
44,227
$
41,539
6
Asia-Pacific
15,753
15,913
(1)
15,753
15,913
(1)
Latin America/Caribbean
8,645
9,056
(5)
8,645
9,056
(5)
Total international loans
68,625
66,508
3
68,625
66,508
3
North America
407,255
410,066
(1)
407,255
410,066
(1)
Total loans retained
$
475,880
$
476,574
—
$
475,880
$
476,574
—
Client deposits and other third-party liabilities (average)(b)
Europe/Middle East/Africa
$
259,425
$
245,892
6
$
260,439
$
247,200
5
Asia-Pacific
136,294
136,371
—
136,769
135,111
1
Latin America/Caribbean
42,457
39,615
7
41,863
39,513
6
Total international
$
438,176
$
421,878
4
$
439,071
$
421,824
4
North America
498,549
500,824
—
495,093
489,441
1
Total client deposits and other third-party liabilities
$
936,725
$
922,702
2
$
934,164
$
911,265
3
AUC (period-end)(b)
(in billions)
North America
$
22,817
$
20,512
11
$
22,817
$
20,512
11
All other regions
11,207
9,912
13
11,207
9,912
13
Total AUC
$
34,024
$
30,424
12
%
$
34,024
$
30,424
12
%
(a)Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking location, or domicile of the client, as applicable.
(b)Client deposits and other third-party liabilities pertaining to the Payments and Securities Services businesses, and AUC, are based on the domicile of the client or booking location, as applicable.
35
ASSET & WEALTH MANAGEMENT
Refer to pages 81–83 of JPMorgan Chase’s 2023 Form 10-K and Line of Business Metrics on page 201 for a discussion of the business profile of AWM.
Selected income statement data
(in millions, except ratios)
Three months ended June 30,
Six months ended June 30,
2024
2023
Change
2024
2023
Change
Revenue
Asset management fees
$
3,304
$
2,932
13
%
$
6,474
$
5,714
13
%
Commissions and other fees
232
194
20
425
354
20
All other income
97
232
(58)
248
623
(60)
Noninterest revenue
3,633
3,358
8
7,147
6,691
7
Net interest income
1,619
1,585
2
3,214
3,036
6
Total net revenue
5,252
4,943
6
10,361
9,727
7
Provision for credit losses
20
145
(86)
(37)
173
NM
Noninterest expense
Compensation expense
1,960
1,746
12
3,932
3,481
13
Noncompensation expense
1,583
1,417
12
3,071
2,773
11
Total noninterest expense
3,543
3,163
12
7,003
6,254
12
Income before income tax expense
1,689
1,635
3
3,395
3,300
3
Income tax expense
426
409
4
842
707
19
Net income
$
1,263
$
1,226
3
$
2,553
$
2,593
(2)
Revenue by line of business
Asset Management
$
2,437
$
2,128
15
$
4,763
$
4,562
4
Global Private Bank
2,815
2,815
—
5,598
5,165
8
Total net revenue
$
5,252
$
4,943
6
%
$
10,361
$
9,727
7
%
Financial ratios
Return on equity
32
%
29
%
32
%
31
%
Overhead ratio
67
64
68
64
Pre-tax margin ratio:
Asset Management
30
27
29
32
Global Private Bank
34
37
36
35
Asset & Wealth Management
32
33
33
34
Quarterly results
Net income was $1.3 billion, up 3%.
Net revenue was $5.3 billion, up 6%. Net interest income was $1.6 billion, up 2%. Noninterest revenue was $3.6 billion, up 8%.
Revenue from Asset Management was $2.4 billion, up 15%, predominantly driven by:
•higher asset management fees reflecting higher average market levels and strong net inflows, and
•higher performance fees.
Revenue from Global Private Bank of $2.8 billion was flat when compared with the prior year, and reflected:
•higher net interest income, driven by higher average deposits associated with First Republic which were transferred to AWM from CCB in the fourth quarter of 2023, and wider spreads on loans, offset by deposit margin compression reflecting higher rates paid, and
•lower noninterest revenue, driven by the amortization of the purchase discount on certain acquired short-dated lending-related commitments associated with First
Republic, predominantly offset by higher management fees due to strong net inflows and higher average market levels, and higher brokerage fees.
Noninterest expense was $3.5 billion, up 12%, predominantly driven by:
•higher compensation, including revenue-related compensation and continued growth in private banking advisor teams, and
•higher legal expense and distribution fees.
The provision for credit losses was $20 million.
The provision in the prior year was $145 million.
Refer to Note 5 for additional information on lending related fees.
Refer to Credit and Investment Risk Management on pages 59-78 and Allowance for Credit Losses on pages 75-77 for further discussions of the credit portfolios and the allowance for credit losses.
36
Year-to-date results
Net income was $2.6 billion, down 2%.
Net revenue was $10.4 billion, up 7%. Net interest income was $3.2 billion, up 6%. Noninterest revenue was $7.1 billion, up 7%.
Revenue from Asset Management was $4.8 billion, up 4%, driven by:
•higher asset management fees reflecting strong net inflows and higher average market levels, and
•higher performance fees.
The prior year included a gain of $339 million on the original minority interest in CIFM upon the Firm's acquisition of the remaining 51% interest in the entity.
Revenue from Global Private Bank was $5.6 billion, up 8%, driven by:
•higher noninterest revenue, reflecting:
–higher management fees on strong net inflows and higher average market levels, as well as higher brokerage fees,
partially offset by
–the amortization of the purchase discount on certain acquired short-dated lending-related commitments associated with First Republic, and
•higher net interest income, driven by:
–higher loans associated with First Republic and wider spreads on loans,
largely offset by
–the net impact of deposit margin compression reflecting higher rates paid, and higher average deposits associated with First Republic which were transferred to AWM from CCB in the fourth quarter of 2023.
Noninterest expense was $7.0 billion, up 12%, predominantly driven by:
•higher compensation, including revenue-related compensation, and continued growth in private banking advisor teams, and
•higher legal expense, and distribution fees.
The provision for credit losses was a net benefit of $37 million.
The provision in the prior year was $173 million, predominantly driven by a $146 million addition to the allowance for credit losses to establish the allowance for the First Republic loans and lending-related commitments in the second quarter of 2023.
37
Selected metrics
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in millions, except ranking data, ratios and employees)
2024
2023
Change
2024
2023
Change
% of JPM mutual fund assets and ETFs rated as 4- or 5-star(a)
71
%
70
%
71
%
70
%
% of JPM mutual fund assets and ETFs ranked in 1st or 2nd quartile:(b)
1 year
64
58
64
58
3 years
73
68
73
68
5 years
74
80
74
80
Selected balance sheet data (period-end)(c)
Total assets
$
247,353
$
247,118
—
%
$
247,353
$
247,118
—
%
Loans
228,042
222,493
2
228,042
222,493
2
Deposits(d)
236,492
199,763
18
236,492
199,763
18
Equity
15,500
17,000
(9)
15,500
17,000
(9)
Selected balance sheet data (average)(c)
Total assets
$
242,155
$
238,987
1
$
241,770
$
233,933
3
Loans
224,122
219,469
2
223,775
215,491
4
Deposits(d)
227,423
211,872
7
227,573
218,078
4
Equity
15,500
16,670
(7)
15,500
16,337
(5)
Employees
28,579
26,931
6
28,579
26,931
6
Number of Global Private Bank client advisors
3,509
3,214
9
3,509
3,214
9
Credit data and quality statistics(c)
Net charge-offs/(recoveries)
$
3
$
2
50
$
11
$
—
NM
Nonaccrual loans
745
615
21
745
615
21
Allowance for credit losses:
Allowance for loan losses
$
575
$
649
(11)
$
575
$
649
(11)
Allowance for lending-related commitments
40
39
3
40
39
3
Total allowance for credit losses
$
615
$
688
(11)
%
$
615
$
688
(11)
%
Net charge-off/(recovery) rate
0.01
%
—
%
0.01
%
—
%
Allowance for loan losses to period-end loans
0.25
0.29
0.25
0.29
Allowance for loan losses to nonaccrual loans
77
106
77
106
Nonaccrual loans to period-end loans
0.33
0.28
0.33
0.28
(a)Represents the Morningstar Rating for all domiciled funds except for Japan domiciled funds which use Nomura. Includes only Asset Management retail active open-ended mutual funds and active ETFs that have a rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds. Prior-period amounts have been revised to conform with the current presentation.
(b)Quartile ranking sourced from Morningstar, Lipper and Nomura based on country of domicile. Includes only Asset Management retail active open-ended mutual funds and active ETFs that are ranked by the aforementioned sources. Excludes money market funds, Undiscovered Managers Fund, and Brazil domiciled funds. Prior-period amounts have been revised to conform with the current presentation.
(c)Loans, deposits and related credit data and quality statistics relate to the Global Private Bank business.
(d)In the fourth quarter of 2023, certain deposits associated with First Republic were transferred to AWM from CCB.
38
Client assets
Assets under management were $3.7 trillion, up 15%, while client assets were $5.4 trillion, up 18%, each driven by higher market levels and continued net inflows.
Client assets
As of June 30,
(in billions)
2024
2023
Change
Assets by asset class
Liquidity
$
953
$
826
15
%
Fixed income
785
718
9
Equity
1,017
792
28
Multi-asset
719
647
11
Alternatives
208
205
1
Total assets under management
3,682
3,188
15
Custody/brokerage/administration/deposits
1,705
1,370
24
Total client assets(a)
$
5,387
$
4,558
18
Assets by client segment
Private Banking
$
1,097
$
881
25
Global Institutional
1,540
1,423
8
Global Funds
1,045
884
18
Total assets under management
$
3,682
$
3,188
15
Private Banking
$
2,681
$
2,170
24
Global Institutional
1,654
1,497
10
Global Funds
1,052
891
18
Total client assets(a)
$
5,387
$
4,558
18
%
(a)Includes CCB client investment assets invested in managed accounts and J.P. Morgan mutual funds where AWM is the investment manager.
Client assets (continued)
Three months ended June 30,
Six months ended June 30,
(in billions)
2024
2023
2024
2023
Assets under management rollforward
Beginning balance
$
3,564
$
3,006
$
3,422
$
2,766
Net asset flows:
Liquidity
16
60
12
153
Fixed income
22
37
36
63
Equity
31
20
52
42
Multi-asset
(3)
3
(5)
1
Alternatives
2
1
3
2
Market/performance/other impacts
50
61
162
161
Ending balance, June 30
$
3,682
$
3,188
$
3,682
$
3,188
Client assets rollforward
Beginning balance
$
5,219
$
4,347
$
5,012
$
4,048
Net asset flows
79
112
122
264
Market/performance/other impacts
89
99
253
246
Ending balance, June 30
$
5,387
$
4,558
$
5,387
$
4,558
Selected Firmwide Metrics - Wealth Management
As of June 30,
2024
2023
Change
Client assets (in billions)(a)
$
3,427
$
2,862
20
%
Number of client advisors
9,181
8,367
10
(a) Consists of Global Private Bank in AWM and client investment assets in J.P. Morgan Wealth Management in CCB.
39
International
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
Change
2024
2023
Change
Total net revenue(a)
Europe/Middle East/Africa
$
852
$
853
—
%
$
1,705
$
1,700
—
%
Asia-Pacific
512
497
3
983
974
1
Latin America/Caribbean
270
247
9
531
487
9
Total international net revenue
1,634
1,597
2
3,219
3,161
2
North America
3,618
3,346
8
7,142
6,566
9
Total net revenue(a)
$
5,252
$
4,943
6
%
$
10,361
$
9,727
7
%
(a)Regional revenue is based on the domicile of the client.
As of June 30,
As of June 30,
(in billions)
2024
2023
Change
2024
2023
Change
Assets under management
Europe/Middle East/Africa
$
566
$
527
7
%
$
566
$
527
7
%
Asia-Pacific
273
252
8
273
252
8
Latin America/Caribbean
95
79
20
95
79
20
Total international assets under management
934
858
9
934
858
9
North America
2,748
2,330
18
2,748
2,330
18
Total assets under management
$
3,682
$
3,188
15
$
3,682
$
3,188
15
Client assets
Europe/Middle East/Africa
$
789
$
663
19
$
789
$
663
19
Asia-Pacific
423
378
12
423
378
12
Latin America/Caribbean
246
217
13
246
217
13
Total international client assets
1,458
1,258
16
1,458
1,258
16
North America
3,929
3,300
19
3,929
3,300
19
Total client assets
$
5,387
$
4,558
18
%
$
5,387
$
4,558
18
%
40
CORPORATE
Refer to pages 84–85 of JPMorgan Chase’s 2023 Form 10-K for a discussion of Corporate.
Selected income statement and balance sheet data
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in millions, except employees)
2024
2023
Change
2024
2023
Change
Revenue
Principal transactions
$
60
$
113
(47)
%
$
125
$
195
(36)
%
Investment securities losses
(546)
(900)
39
(912)
(1,768)
48
All other income
8,244
(c)
2,767
(e)
198
8,270
(c)
2,798
(e)
196
Noninterest revenue
7,758
1,980
292
7,483
1,225
NM
Net interest income
2,364
1,738
36
4,841
3,478
39
Total net revenue(a)
10,122
3,718
172
12,324
4,703
162
Provision for credit losses
5
(243)
NM
32
127
(75)
Noninterest expense
1,579
(d)
1,152
(f)
37
2,855
(d)(h)
1,312
(f)
118
Income/(loss) before income tax expense/(benefit)
8,538
2,809
204
9,437
3,264
189
Income tax expense/(benefit)
1,759
169
(g)
NM
1,982
380
(g)
422
Net income/(loss)
$
6,779
$
2,640
157
$
7,455
$
2,884
158
Total net revenue
Treasury and CIO
$
2,084
$
1,261
65
$
4,401
$
2,367
86
Other Corporate
8,038
2,457
227
7,923
2,336
239
Total net revenue
$
10,122
$
3,718
172
$
12,324
$
4,703
162
Net income/(loss)
Treasury and CIO
$
1,513
$
1,057
43
$
3,154
$
1,681
88
Other Corporate
5,266
1,583
233
4,301
(h)
1,203
258
Total net income/(loss)
$
6,779
$
2,640
157
$
7,455
$
2,884
158
Total assets (period-end)
$
1,318,119
$
1,263,595
4
$
1,318,119
$
1,263,595
4
Loans (period-end)
2,408
2,172
11
2,408
2,172
11
Deposits (period-end)(b)
26,073
21,083
24
26,073
21,083
24
Employees
47,828
45,235
6
%
47,828
45,235
6
%
(a)Included tax-equivalent adjustments, predominantly driven by tax-exempt income from municipal bonds, of $45 million for both the three months ended June 30, 2024 and 2023, and $94 million and $101 million for the six months ended June 30, 2024 and 2023, respectively.
(b)Predominantly relates to the Firm's international consumer initiatives.
(c)Included the net gain related to Visa shares of $7.9 billion for the three and six months ended June 30, 2024. Refer to Notes 2 and 5 for additional information.
(d)Included a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
(e)Included the preliminary estimated bargain purchase gain of $2.7 billion associated with First Republic.
(f)In the second quarter of 2023, substantially all of the expense associated with First Republic was reported in Corporate. Commencing in the third quarter of 2023, the expense is aligned to the appropriate LOBs.
(g)Income taxes associated with the First Republic acquisition were reflected in the preliminary estimated bargain purchase gain.
(h)Includes the increase to the FDIC special assessment. Refer to Note 5 for additional information.
Quarterly results
Net income was $6.8 billion, compared with $2.6 billion in the prior year.
Net revenue was $10.1 billion, compared with $3.7 billion in the prior year.
Net interest income was $2.4 billion, up 36%, due to the impact of balance sheet mix and higher rates.
Noninterest revenue was $7.8 billion, compared with $2.0 billion in the prior year. Excluding the $7.9 billion net gain related to Visa shares in the current quarter and the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisition in the prior year, revenue was up $683 million, largely driven by:
•lower investment securities losses related to sales of U.S. Treasuries and U.S. GSE and government agency MBS, associated with repositioning the investment securities portfolio in Treasury and CIO, and
•measurement period adjustments resulting in an increase to the estimated bargain purchase gain associated with the First Republic acquisition.
Noninterest expense was $1.6 billion, up 37%, driven by:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation,
largely offset by
•lower expense associated with the First Republic acquisition as substantially all the expense was reported in Corporate in the second quarter of 2023 and
41
subsequently aligned to the appropriate LOBs starting in the third quarter of 2023, and
•lower legal expense.
The provision for credit losses was $5 million.
The provision in the prior year was a net benefit of $243 million, reflecting a reduction in the allowance for credit losses associated with the deposit placed with First Republic Bank in the first quarter of 2023.
The current period income tax expense was driven by changes in the level and mix of income and expenses subject to U.S. federal and state and local taxes,including the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year tax expense benefited from the income tax expense associated with the First Republic acquisition reflected in the preliminary estimated bargain purchase gain.
Refer to Note 9 for additional information on the investment securities portfolio, and Note 12 for additional information on the allowance for credit losses.
Year-to-date results
Net income was $7.5 billion, compared with $2.9 billion in the prior year.
Net revenue was $12.3 billion, compared with $4.7 billion in the prior year.
Net interest income was $4.8 billion, up 39%, primarily due to the impact of balance sheet mix and higher rates.
Noninterest revenue was $7.5 billion, compared with $1.2 billion in the prior year. Excluding the $7.9 billion net gain related to Visa shares in the current quarter and the preliminary estimated bargain purchase gain of $2.7 billion associated with the First Republic acquisitionin the prior year, revenue was up $1.2 billion, predominantly driven by:
•lower investment securities losses related to sales of U.S. GSE and government agency MBS and U.S. Treasuries, associated with repositioning the investment securities portfolio in Treasury and CIO, and
•higher revenue associated with the Firm's international consumer initiatives.
Noninterest expense was $2.9 billion, up 118%, driven by:
•the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation,
•the $725 million increase to the FDIC special assessment recognized in the first quarter of 2024, and
•higher costs associated with the Firm's international consumer initiatives,
partially offset by
•lower legal expense, and
•lower expense associated with the First Republic acquisition as substantially all the expense was reported in Corporate in the second quarter of 2023 and subsequently aligned to the appropriate LOBs starting in the third quarter of 2023.
Refer to Note 5 for additional information on the FDIC special assessment.
The provision for credit losses was $32 million.
The provision in the prior year was $127 million.
Refer to Note 9 for additional information on the investment securities portfolio, and Note 12 for additional information on the allowance for credit losses.
The current period income tax expense was driven by changes in the level and mix of income and expenses subject to U.S. federal and state and local taxes, including the impact of the net gain on Visa shares and the contribution of Visa shares to the JPMorgan Chase Foundation.
The prior year tax expense benefited from the income tax expense associated with the First Republic acquisition reflected in the preliminary estimated bargain purchase gain.
Other Corporate also reflects the Firm's international consumer initiatives, which includes Chase U.K., Nutmeg, and an ownership stake in C6 Bank.
42
Treasury and CIO overview
At June 30, 2024, the average credit rating of the Treasury and CIO investment securities comprising the portfolio in the table below was AA+ (based upon external ratings where available and, where not available, based primarily upon internal risk ratings). Refer to Note 9 for further information on the Firm’s investment securities portfolio and internal risk ratings.
Refer to Liquidity Risk Management on pages 51-58 for further information on liquidity and funding risk. Refer to Market Risk Management on pages 79-84 for information on interest rate and foreign exchange risks.
Selected income statement and balance sheet data
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in millions)
2024
2023
Change
2024
2023
Change
Investment securities losses
$
(546)
$
(900)
39
%
$
(912)
$
(1,768)
48
%
Available-for-sale securities (average)
$
247,304
$
198,620
25
$
235,124
$
200,687
17
Held-to-maturity securities (average)
330,347
410,594
(20)
342,553
413,953
(17)
Investment securities portfolio (average)
$
577,651
$
609,214
(5)
$
577,677
$
614,640
(6)
Available-for-sale securities (period-end)
$
263,624
$
201,211
31
$
263,624
$
201,211
31
Held-to-maturity securities (period-end)
323,746
408,941
(21)
323,746
408,941
(21)
Investment securities portfolio, net of allowance for credit losses (period-end)(a)
$
587,370
$
610,152
(4)
%
$
587,370
$
610,152
(4)
%
(a)As of June 30, 2024 and 2023, the allowance for credit losses on investment securities was $125 million and $74 million, respectively.
43
FIRMWIDE RISK MANAGEMENT
Risk is an inherent part of JPMorgan Chase’s business activities. When the Firm extends a consumer or wholesale loan, advises customers and clients on their investment decisions, makes markets in securities, or offers other products or services, the Firm takes on some degree of risk. The Firm’s overall objective is to manage its business, and the associated risks, in a manner that balances serving the interests of its clients, customers and investors, and protecting the safety and soundness of the Firm.
The Firm believes that effective risk management requires, among other things:
•Acceptance of responsibility, including identification and escalation of risks by all individuals within the Firm;
•Ownership of risk identification, assessment, data and management within each of the LOBs and Corporate; and
•A Firmwide risk governance and oversight structure.
The Firm follows a disciplined and balanced compensation framework with strong internal governance and independent oversight by the Board of Directors (the “Board”). The impact of risk and control issues is carefully considered in the Firm’s performance evaluation and incentive compensation processes.
Risk governance framework
The Firm’s risk governance framework involves understanding drivers of risks, types of risks, and impacts of risks.
Refer to pages 86–89 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of Firmwide risk management governance and oversight.
Risk governance and oversight functions
The following sections of this Form 10-Q and the 2023 Form 10-K discuss the risk governance and oversight functions in place to manage the risks inherent in the Firm’s business activities.
Risk governance and oversight functions
Form 10-Q page reference
Form 10-K page reference
Strategic Risk
90
Capital Risk
45–50
91–101
Liquidity Risk
51–58
102-109
Reputation Risk
110
Consumer Credit Risk
61–64
114-119
Wholesale Credit Risk
65–74
120-130
Investment Portfolio Risk
78
134
Market Risk
79–84
135-143
Country Risk
85
144-145
Climate Risk
146
Operational Risk
147-150
Compliance Risk
151
Conduct Risk
152
Legal Risk
153
Estimations and Model Risk
154
44
CAPITAL RISK MANAGEMENT
Capital risk is the risk that the Firm has an insufficient level or composition of capital to support the Firm’s business activities and associated risks during normal economic environments and under stressed conditions.
Refer to pages 91-101 of JPMorgan Chase’s 2023 Form 10-K, Note 21 of this Form 10-Q and the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for a further discussion of the Firm’s capital risk.
Basel III Overview
The capital rules under Basel III establish minimum capital ratios and overall capital adequacy standards for large and internationally active U.S. Bank Holding Companies (“BHCs”) and banks, including the Firm and JPMorgan Chase Bank, N.A. The minimum amount of regulatory capital that must be held by BHCs and banks is determined by calculating risk-weighted assets ("RWA"), which are on-balance sheet assets and off-balance sheet exposures, weighted according to risk. Under the rules currently in effect, two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III Standardized”), and an advanced approach (“Basel III Advanced”).
For each of these risk-based capital ratios, the capital adequacy of the Firm is evaluated against the lower of the Standardized or Advanced approaches compared to their respective regulatory capital ratio requirements.
In July 2023, the Board of Governors of the Federal Reserve System (the "Federal Reserve"), the Office of the Comptroller of the Currency ("OCC"), and the FDIC released a proposal to amend the risk-based capital framework, entitled "Regulatory capital rule: Amendments applicable to large banking organizations and to banking organizations with significant trading activity", which is referred to in this Form 10-Q as the "U.S. Basel III proposal". Under the proposal, changes to the framework would include replacement of the Advanced approach with an expanded risk-based approach, which would not permit the use of internal models for the calculation of RWA, other than for market risk. In addition, the stress capital buffer requirement would be applicable to both the expanded risk-based approach and the Standardized approach. The proposal would significantly revise risk-based capital requirements for all banks with assets of $100 billion or more, including the Firm and other U.S. global systemically important banks ("GSIBs"). The proposed effective date is July 1, 2025, with a three-year transition period applicable to the expanded risk-based approach.
Under the requirements of the U.S. Basel III proposal, the new expanded risk-based approach, when fully phased-in, would be the Firm's binding constraint. The Firm is managing its CET1 capital in anticipation of the finalization of the U.S. Basel III proposal.
Refer to page 92 of JPMorgan Chase’s 2023 Form 10-K for additional information on the U.S. Basel III proposal.
As of June 30, 2024, the Advanced Total Capital ratio is the most binding constraint of the Firm's Basel III risk-based ratios. However, as of June 30, 2024, with respect to the CET1 and Tier 1 risk-based ratios, the Standardized ratios are more binding than the Advanced ratios.
Basel III also includes a requirement for Advanced Approaches banking organizations, including the Firm, to calculate its SLR.
Refer to page 48 of this Form 10-Q and page 98 of JPMorgan Chase's 2023 Form 10-K for additional information on SLR.
Refer to page 93 of JPMorgan Chase's 2023 Form 10-K for information on Other Key Regulatory Developments.
45
Selected capital and RWA data
The following tables present the Firm’s risk-based capital metrics under both the Basel III Standardized and Advanced approaches and leverage-based capital metrics. Refer to Capital Risk Management on pages 91-101 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of these capital metrics. Refer to Note 21 for JPMorgan Chase Bank, N.A.’s risk-based and leverage-based capital metrics.
Standardized
Advanced
(in millions, except ratios)
June 30, 2024
December 31, 2023
Capital ratio requirements(b)
June 30, 2024
December 31, 2023
Capital ratio requirements(b)
Risk-based capital metrics:(a)
CET1 capital
$
267,196
$
250,585
$
267,196
$
250,585
Tier 1 capital
290,442
277,306
290,442
277,306
Total capital
322,175
308,497
308,639
(c)
295,417
(c)
Risk-weighted assets
1,743,481
1,671,995
1,726,204
(c)
1,669,156
(c)
CET1 capital ratio
15.3
%
15.0
%
11.9
%
15.5
%
15.0
%
11.5
%
Tier 1 capital ratio
16.7
16.6
13.4
16.8
16.6
13.0
Total capital ratio
18.5
18.5
15.4
17.9
17.7
15.0
(a)The capital metrics reflect the CECL capital transition provisions. As of June 30, 2024, CET1 capital reflected the remaining $720 million CECL benefit and will be fully phased in as of January 1, 2025; as of December 31, 2023, CET1 capital reflected a $1.4 billion benefit. Refer to Note 21 for additional information.
(b)Represents minimum requirements and regulatory buffers applicable to the Firm for the period ended June 30, 2024. For the period ended December 31, 2023, the Basel III Standardized CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 11.4%, 12.9%, and 14.9%, respectively; the Basel III Advanced CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 11.0%, 12.5%, and 14.5%, respectively. Refer to Note 21 for additional information.
(c)Includes the impacts of certain assets associated with First Republic to which the Standardized approach has been applied as permitted by the transition provisions in the U.S. capital rules. Refer to Note 26 of this Form 10-Q and page 96 of JPMorgan Chase’s 2023 Form 10-K for additional information on First Republic.
Three months ended (in millions, except ratios)
June 30, 2024
December 31, 2023
Capital ratio requirements(c)
Leverage-based capital metrics:(a)
Adjusted average assets(b)
$
4,016,654
$
3,831,200
Tier 1 leverage ratio
7.2
%
7.2
%
4.0
%
Total leverage exposure
$
4,768,202
$
4,540,465
SLR
6.1
%
6.1
%
5.0
%
(a)The capital metrics reflect the CECL capital transition provisions. Refer to Note 21 for additional information.
(b)Adjusted average assets, for purposes of calculating the leverage ratios, includes quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill, inclusive of estimated equity method goodwill, and other intangible assets.
(c)Represents minimum requirements and regulatory buffers applicable to the Firm. Refer to Note 21 for additional information.
46
Capital components
The following table presents reconciliations of total stockholders’ equity to Basel III CET1 capital, Tier 1 capital and Total capital as of June 30, 2024 and December 31, 2023.
(in millions)
June 30, 2024
December 31, 2023
Total stockholders’ equity
$
340,552
$
327,878
Less: Preferred stock
23,900
27,404
Common stockholders’ equity
316,652
300,474
Add:
Certain deferred tax liabilities(a)
2,969
2,996
Other CET1 capital adjustments(b)
4,827
4,717
Less:
Goodwill(c)
54,194
54,377
Other intangible assets
3,058
3,225
Standardized/Advanced CET1 capital
$
267,196
$
250,585
Add: Preferred stock
23,900
27,404
Less: Other Tier 1 adjustments
654
683
Standardized/Advanced Tier 1 capital
$
290,442
$
277,306
Long-term debt and other instruments qualifying as Tier 2 capital
$
11,587
$
11,779
Qualifying allowance for credit losses(d)
20,847
20,102
Other
(701)
(690)
Standardized Tier 2 capital
$
31,733
$
31,191
Standardized Total capital
$
322,175
$
308,497
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital(e)(f)
(13,536)
(13,080)
Advanced Tier 2 capital
$
18,197
$
18,111
Advanced Total capital
$
308,639
$
295,417
(a)Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating CET1 capital.
(b)As of June 30, 2024 and December 31, 2023, included a net benefit associated with cash flow hedges and debit valuation adjustments ("DVA") related to structured notes recorded in AOCI of $5.1 billion and $4.3 billion and the benefit from the CECL capital transition provisions of $720 million and $1.4 billion, respectively.
(c)Goodwill deducted from capital includes goodwill associated with equity method investments in nonconsolidated financial institutions based on regulatory requirements. Refer to page 78 for additional information on principal investment risk.
(d)Represents the allowance for credit losses eligible for inclusion in Tier 2 capital up to 1.25% of credit risk RWA, including the impact of the CECL capital transition provision with any excess deducted from RWA. Refer to Note 21 for additional information on the CECL capital transition.
(e)Represents an adjustment to qualifying allowance for credit losses for the excess of eligible credit reserves over expected credit losses up to 0.6% of credit risk RWA, including the impact of the CECL capital transition provision with any excess deducted from RWA.
(f)As of June 30, 2024 and December 31, 2023, included an incremental $596 million and $655 million allowance for credit losses, respectively, on certain assets associated with First Republic to which the Standardized approach has been applied, as permitted by the transition provisions in the U.S. capital rules.
Capital rollforward
The following table presents the changes in Basel III CET1 capital, Tier 1 capital and Tier 2 capital for the six months ended June 30, 2024.
Six months ended June 30, (in millions)
2024
Standardized/Advanced CET1 capital at December 31, 2023
$
250,585
Net income applicable to common equity
30,854
Dividends declared on common stock
(6,670)
Net purchase of treasury stock
(7,150)
Changes in additional paid-in capital
200
Changes related to AOCI applicable to capital:
Unrealized gains/(losses) on investment securities
249
Translation adjustments, net of hedges(a)
(360)
Fair value hedges
(13)
Defined benefit pension and other postretirement employee benefit (“OPEB”) plans
23
Changes related to other CET1 capital adjustments(b)
(522)
Change in Standardized/Advanced CET1 capital
16,611
Standardized/Advanced CET1 capital at June 30, 2024
$
267,196
Standardized/Advanced Tier 1 capital at December 31, 2023
$
277,306
Change in CET1 capital(b)
16,611
Net redemptions of noncumulative perpetual preferred stock
(3,504)
Other
29
Change in Standardized/Advanced Tier 1 capital
13,136
Standardized/Advanced Tier 1 capital at June 30, 2024
$
290,442
Standardized Tier 2 capital at December 31, 2023
$
31,191
Change in long-term debt and other instruments qualifying as Tier 2
(192)
Change in qualifying allowance for credit losses(b)
745
Other
(11)
Change in Standardized Tier 2 capital
542
Standardized Tier 2 capital at June 30, 2024
$
31,733
Standardized Total capital at June 30, 2024
$
322,175
Advanced Tier 2 capital at December 31, 2023
$
18,111
Change in long-term debt and other instruments qualifying as Tier 2
(192)
Change in qualifying allowance for credit losses(b)(c)
289
Other
(11)
Change in Advanced Tier 2 capital
86
Advanced Tier 2 capital at June 30, 2024
$
18,197
Advanced Total capital at June 30, 2024
$
308,639
(a)Includes foreign currency translation adjustments and the impact of related derivatives.
(b)Includes the impact of the CECL capital transition provisions and the cumulative effect of changes in accounting principles. Refer to Note 1 for additional information on changes in accounting principles and Note 21 for additional information on the CECL capital transition.
(c)As of June 30, 2024 and December 31, 2023, included an incremental $596 million and $655 million allowance for credit losses, respectively, on certain assets associated with First Republic to which the Standardized approach has been applied, as permitted by the transition provisions in the U.S. capital rules.
47
RWA rollforward
The following table presents changes in the components of RWA under Basel III Standardized and Advanced approaches for the six months ended June 30, 2024. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.
Standardized
Advanced
Six months ended June 30, 2024 (in millions)
Credit risk RWA(c)
Market risk RWA
Total RWA
Credit risk RWA(c)(d)
Market risk RWA
Operational risk RWA
Total RWA
December 31, 2023
$
1,603,851
$
68,144
$
1,671,995
$
1,155,261
$
68,603
$
445,292
$
1,669,156
Model & data changes(a)
6,892
—
6,892
3,032
—
—
3,032
Movement in portfolio levels(b)
51,945
12,649
64,594
52,323
12,748
(11,055)
54,016
Changes in RWA
58,837
12,649
71,486
55,355
12,748
(11,055)
57,048
June 30, 2024
$
1,662,688
$
80,793
$
1,743,481
$
1,210,616
$
81,351
$
434,237
$
1,726,204
(a)Model & data changes refer to material movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance (exclusive of rule changes).
(b)Movement in portfolio levels (inclusive of rule changes) refers to: for Credit risk RWA, changes in book size, changes in composition and credit quality, market movements, impacts related to Visa shares and deductions for excess eligible allowances for credit losses not eligible for inclusion in Tier 2 capital; for Market risk RWA, changes in position, market movements, and changes in the Firm’s regulatory multiplier from Regulatory VaR backtesting exceptions; and for Operational risk RWA, updates to cumulative losses and macroeconomic model inputs.
(c)As of June 30, 2024 and December 31, 2023, the Basel III Standardized Credit risk RWA included wholesale and retail off balance-sheet RWA of $209.9 billion and $208.5 billion, respectively; and the Basel III Advanced Credit risk RWA included wholesale and retail off balance-sheet RWA of $196.2 billion and $188.5 billion, respectively.
(d)As of June 30, 2024 and December 31, 2023, Credit risk RWA reflected approximately $47.7 billion and $52.4 billion, respectively, of RWA calculated under the Standardized approach for certain assets associated with First Republic as permitted by the transition provisions in the U.S. capital rules.
Refer to the Firm’s Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for further information on Credit risk RWA, Market risk RWA and Operational risk RWA.
Supplementary leverage ratio
Refer to Supplementary Leverage Ratio on page 98 of JPMorgan Chase’s 2023 Form 10-K for additional information.
The following table presents the components of the Firm’s SLR.
Three months ended (in millions, except ratio)
June 30, 2024
December 31, 2023
Tier 1 capital
$
290,442
$
277,306
Total average assets
4,071,443
3,885,632
Less: Regulatory capital adjustments(a)
54,789
54,432
Total adjusted average assets(b)
4,016,654
3,831,200
Add: Off-balance sheet exposures(c)
751,548
709,265
Total leverage exposure
$
4,768,202
$
4,540,465
SLR
6.1
%
6.1
%
(a)For purposes of calculating the SLR, includes quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill, inclusive of estimated equity method goodwill, other intangible assets and adjustments for the CECL capital transition provisions. Refer to Note 21 for additional information on the CECL capital transition.
(b)Adjusted average assets used for the calculation of Tier 1 leverage ratio.
(c)Off-balance sheet exposures are calculated as the average of the three month-end spot balances on applicable regulatory exposures during the reporting quarter. Refer to the Firm’s Pillar 3 Regulatory Capital Disclosures reports for additional information.
Line of business equity
Each business segment is allocated capital by taking into consideration a variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. The capital that the Firm has accumulated to meet the increased requirements of the U.S. Basel III proposal has generally been retained in Corporate. Refer to line of business equity on page 98 of JPMorgan Chase’s 2023 Form 10-K for additional information on capital allocation.
The following table presents the capital allocated to each business segment.
Line of business equity (Allocated capital)
(in billions)
June 30, 2024
December 31, 2023
Consumer & Community Banking
$
54.5
$
55.5
Commercial & Investment Bank
132.0
138.0
Asset & Wealth Management
15.5
17.0
Corporate
114.7
90.0
Total common stockholders’ equity
$
316.7
$
300.5
48
Capital actions
Common stock dividends
The Firm’s common stock dividends are planned as part of the Capital Management governance framework in line with the Firm’s capital management objectives.
On June 28, 2024, the Firm announced that its Board of Directors intends to increase the quarterly common stock dividend to $1.25 per share (up from the current $1.15 per share) for the third quarter of 2024. On May 20, 2024, the Firm announced that its Board of Directors had declared a quarterly common stock dividend of $1.15 per share, payable on July 31, 2024. The Firm’s dividends are subject to approval by the Board of Directors on a quarterly basis.
Common stock
On June 28, 2024, the Firm announced that its Board of Directors had authorized a new $30 billion common share repurchase program, effective July 1, 2024. Through June 30, 2024, the Firm was authorized to purchase up to $30 billion of common shares under its previously-approved common share repurchase program that was announced on April 13, 2022.
The following table sets forth the Firm’s repurchases of common stock for the three and six months ended June 30, 2024 and 2023.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Total number of shares of common stock repurchased
27.0
16.7
42.9
38.7
Aggregate purchase price of common stock repurchases(a)
$
5,318
$
2,293
$
8,167
$
5,233
(a)Excludes excise tax and commissions. As part of the Inflation Reduction Act of 2022, a 1% excise tax was imposed on net share repurchases effective January 1, 2023.
The Board of Directors’ authorization to repurchase common shares is utilized at management’s discretion. The $30 billion common share repurchase program approved by the Board of Directors does not establish specific price targets or timetables. Management determines the amount and timing of common share repurchases based on various factors, including market conditions; legal and regulatory considerations affecting the amount and timing of repurchase activity; the Firm’s capital position (taking into account goodwill and intangibles); internal capital generation; current and proposed future capital requirements; and other investment opportunities. The amount of common shares that the Firm repurchases in any period may be substantially more or less than the amounts estimated or actually repurchased in prior periods, reflecting the dynamic nature of the decision-making process.
Refer to Capital actions on page 99 of JPMorgan Chase’s 2023 Form 10-K for additional information.
Refer to Part II, Item 2: Unregistered Sales of Equity Securities and Use of Proceeds and Part II, Item 5: Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities on pages 202-203 of this Form 10-Q and page 35 of JPMorgan Chase’s 2023 Form 10-K, respectively, for additional information regarding repurchases of the Firm’s equity securities.
Preferred stock
Preferred stock dividends were $317 million and $373 million, and $714 million and $729 million, for the three and six months ended June 30, 2024 and 2023, respectively.
During the six months ended and subsequent to June 30, 2024, the Firm issued and redeemed certain series of non-cumulative preferred stock. Refer to Note 17 of this Form 10-Q and Note 21 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s preferred stock, including the issuance and redemption of preferred stock.
Subordinated Debt
Refer to Long-term funding on page 57 of this Form 10-Q and Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s subordinated debt.
Capital planning and stress testing
Comprehensive Capital Analysis and Review
On April 5, 2024, the Firm submitted its 2024 Capital Plan to the Federal Reserve. On June 28, 2024, the Firm announced that its preliminary Stress Capital Buffer ("SCB") requirement provided by the Federal Reserve is 3.3% (up from the current 2.9%), and the Firm’s Standardized CET1 capital ratio requirement, including regulatory buffers, is 12.3% (up from the current 11.9%). In addition, consistent with the Firm's press release on June 26, 2024 regarding the potential for higher stress losses, should the Federal Reserve modify the Firm’s stress results, the Firm’s Standardized CET1 capital ratio requirement would likely be modestly higher than 12.3%. The Federal Reserve will provide the Firm with its final SCB requirement by August 31, 2024, and that requirement will become effective on October 1, 2024, and will remain in effect until September 30, 2025.
Refer to Capital planning and stress testing on pages 91-92 of JPMorgan Chase’s 2023 Form 10-K for additional information on CCAR.
Other capital requirements
Total Loss-Absorbing Capacity
The Federal Reserve’s total loss-absorbing capacity ("TLAC") rule requires the U.S. GSIB top-tier holding companies, including the Firm, to maintain minimum levels of external TLAC and eligible long-term debt ("eligible LTD").
The following table presents the eligible external TLAC and eligible LTD amounts, as well as a representation of these amounts as a percentage of the Firm’s total RWA and total leverage exposure applying the impact of the CECL capital transition provisions as of June 30, 2024 and December 31, 2023.
49
June 30, 2024
December 31, 2023
(in billions, except ratio)
External TLAC
LTD
External TLAC
LTD
Total eligible amount
$
533.9
$
228.0
$
513.8
$
222.6
% of RWA
30.6
%
13.1
%
30.7
%
13.3
%
Regulatory requirements
23.0
10.5
23.0
10.0
Surplus/(shortfall)
$
132.9
$
44.9
$
129.2
$
55.4
% of total leverage exposure
11.2
%
4.8
%
11.3
%
4.9
%
Regulatory requirements
9.5
4.5
9.5
4.5
Surplus/(shortfall)
$
81.0
$
13.4
$
82.5
$
18.3
Effective January 1, 2024, the Firm's regulatory requirement for its eligible LTD to RWA ratio increased by 50 bps to 10.5%, due to the increase in the Firm’s GSIB Method 2 requirements. The Firm's regulatory requirement for its TLAC to RWA ratio remained at 23.0%. Refer to Risk-based Capital Regulatory Requirements on pages 94-95 of JPMorgan Chase’s 2023 Form 10-K for further information on the GSIB surcharge.
Refer to Liquidity Risk Management on pages 51-58 for further information on long-term debt issued by the Parent Company.
Refer to Part I, Item 1A: Risk Factors on pages 9-33 of JPMorgan Chase’s 2023 Form 10-K for information on the financial consequences to holders of the Firm’s debt and equity securities in a resolution scenario.
Refer to other capital requirements on page 100 of JPMorgan Chase’s 2023 Form 10-K for additional information on TLAC.
U.S. broker-dealer regulatory capital
J.P. Morgan Securities
JPMorgan Chase’s principal U.S. broker-dealer subsidiary is J.P. Morgan Securities. J.P. Morgan Securities is subject to the regulatory capital requirements of Rule 15c3-1 under the Securities Exchange Act of 1934 (the “Net Capital Rule”). J.P. Morgan Securities is also registered as a futures commission merchant and is subject to regulatory capital requirements, including those imposed by the SEC, the Commodity Futures Trading Commission (“CFTC”), the Financial Industry Regulatory Authority (“FINRA”) and the National Futures Association (“NFA”).
The following table presents J.P. Morgan Securities’ net capital.
June 30, 2024
(in millions)
Actual
Minimum
Net Capital
$
24,652
$
5,585
Non-U.S. subsidiary regulatory capital
J.P. Morgan Securities plc
J.P. Morgan Securities plc is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. and has authority to engage in banking, investment banking and broker-dealer activities.
J.P. Morgan Securities plc is jointly regulated in the U.K. by the Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”). J.P. Morgan Securities plc is subject to the European Union (“EU”) Capital Requirements Regulation (“CRR”), as adopted in the U.K., and the PRA capital rules, each of which have implemented Basel III and thereby subject J.P. Morgan Securities plc to its requirements.
The Bank of England requires that U.K. banks, including U.K. regulated subsidiaries of overseas groups, maintain minimum requirements for own funds and eligible liabilities (“MREL”). As of June 30, 2024, J.P. Morgan Securities plc was compliant with its MREL requirements.
The following table presents J.P. Morgan Securities plc’s risk-based and leverage-based capital metrics.
June 30, 2024
Regulatory Minimum ratios(a)
(in millions, except ratios)
Estimated
Total capital
$
53,656
CET1 capital ratio
16.1
%
4.5
%
Tier 1 capital ratio
20.8
6.0
Total capital ratio
25.5
8.0
Tier 1 leverage ratio
6.2
3.3
(b)
(a)Represents minimum Pillar 1 requirements specified by the PRA. J.P. Morgan Securities plc's capital ratios as of June 30, 2024 exceeded the minimum requirements, including the additional capital requirements specified by the PRA.
(b)At least 75% of the Tier 1 leverage ratio minimum must be met with CET1 capital.
J.P. Morgan SE
JPMSE is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. and has authority to engage in banking, investment banking and markets activities. JPMSE is regulated by the European Central Bank as well as the local regulators in each of the countries in which it operates, and it is subject to EU capital requirements under Basel III.
JPMSE is required by the EU Single Resolution Board to maintain MREL. As of June 30, 2024, JPMSE was compliant with its MREL requirements.
The following table presents JPMSE’s risk-based and leverage-based capital metrics.
June 30, 2024
Regulatory Minimum ratios(a)
(in millions, except ratios)
Estimated
Total capital
$
44,850
CET1 capital ratio
19.4
%
4.5
%
Tier 1 capital ratio
19.4
6.0
Total capital ratio
33.5
8.0
Tier 1 leverage ratio
6.3
3.0
(a)Represents minimum Pillar 1 requirements specified by the EU CRR. J.P. Morgan SE’s capital and leverage ratios as of June 30, 2024 exceeded the minimum requirements, including the additional capital requirements specified by EU regulators.
Refer to U.S. broker-dealer and Non-U.S. subsidiary regulatory capital on page 101 of JPMorgan Chase’s 2023 Form 10-K for further information.
50
LIQUIDITY RISK MANAGEMENT
Liquidity risk is the risk that the Firm will be unable to meet its cash and collateral needs as they arise or that it does not have the appropriate amount, composition and tenor of funding and liquidity to support its assets and liabilities. Refer to pages 102–109 of JPMorgan Chase’s 2023 Form 10-K and the Firm’s U.S. LCR Disclosure reports, which are available on the Firm’s website, for a further discussion of the Firm’s liquidity risk.
LCR and HQLA
The LCR rule requires that the Firm and JPMorgan Chase Bank, N.A. maintain an amount of eligible HQLA that is sufficient to meet their respective estimated total net cash outflows over a prospective 30 calendar-day period of significant stress.
Under the LCR rule, the amount of eligible HQLA held by JPMorgan Chase Bank, N.A. that is in excess of its stand-alone 100% minimum LCR requirement, and that is not transferable to non-bank affiliates, must be excluded from the Firm’s reported eligible HQLA. The LCR for both the Firm and JPMorgan Chase Bank, N.A. is required to be a minimum of 100%.
The following table summarizes the Firm and JPMorgan Chase Bank, N.A.’s average LCR for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023 based on the Firm’s interpretation of the LCR framework.
Three months ended
Average amount (in millions)
June 30, 2024
March 31, 2024
June 30, 2023
JPMorgan Chase & Co.:
HQLA
Eligible cash(a)
$
461,392
$
483,292
$
440,294
Eligible securities(b)(c)
356,815
313,818
327,837
Total HQLA(d)
$
818,207
$
797,110
$
768,131
Net cash outflows
$
732,179
$
711,611
$
683,446
LCR
112
%
112
%
112
%
Net excess eligible HQLA(d)
$
86,028
$
85,499
$
84,685
JPMorgan Chase Bank N.A.:
LCR
125
%
129
%
129
%
Net excess eligible HQLA
$
189,124
$
221,104
$
211,233
(a)Represents cash on deposit at central banks, primarily the Federal Reserve Banks.
(b)Eligible HQLA securities may be reported in securities borrowed or purchased under resale agreements, trading assets, or investment securities on the Firm’s Consolidated balance sheets. For purposes of calculating the LCR, HQLA securities are included at fair value, which may differ from the accounting treatment under U.S. GAAP.
(c)Predominantly U.S. Treasuries, U.S. GSE and government agency MBS, and sovereign bonds net of regulatory haircuts under the LCR rule.
(d)Excludes average excess eligible HQLA at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates.
JPMorgan Chase Bank, N.A.’s average LCR for the three months ended June 30, 2024 decreased compared with the three months ended March 31, 2024, due to a decrease in JPMorgan Chase Bank, N.A.'s HQLA, primarily from a reduction in cash due to a decline in deposits and the impact of CIB markets activities.
JPMorgan Chase Bank, N.A.’s average LCR for the three months ended June 30, 2024 decreased compared with the three months ended June 30, 2023, reflecting the timing impact associated with the First Republic acquisition.
Refer to Executive Overview on pages 5-8 and Note 26 for additional information on First Republic.
Each of the Firm and JPMorgan Chase Bank, N.A.'s average LCR may fluctuate from period to period due to changes in their respective eligible HQLA and estimated net cash outflows as a result of ongoing business activity and from the impacts of Federal Reserve actions as well as other factors.
Refer to page 103 of JPMorgan Chase’s 2023 Form 10-K and the Firm’s U.S. LCR Disclosure reports for additional information on HQLA and net cash outflows.
Internal stress testing
The Firm conducts internal liquidity stress testing to monitor liquidity positions at the Firm and its material legal entities under a variety of adverse scenarios, including scenarios analyzed as part of the Firm’s resolution and recovery planning. Internal stress tests are produced on a regular basis, and other stress tests are performed in response to specific market events or concerns. Results of stress tests are considered in the formulation of the Firm’s funding plan and assessment of its liquidity position.
The Firm maintains liquidity at the Parent Company, the Intermediate Holding Company (“IHC”), and operating subsidiaries at levels sufficient to comply with liquidity risk tolerances and minimum liquidity requirements, and to manage through periods of stress when access to normal funding sources may be disrupted.
51
Liquidity sources
In addition to the assets reported in the Firm’s eligible HQLA discussed above, the Firm had unencumbered marketable securities, such as equity and debt securities, that the Firm believes would be available to raise liquidity. This includes excess eligible HQLA securities at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates. The fair value of these securities was approximately $623 billion and $649 billion as of June 30, 2024 and December 31, 2023, respectively, although the amount of liquidity that could be raised at any particular time would be dependent on prevailing market conditions. The decrease compared to December 31, 2023, was driven by decreases in excess eligible HQLA securities at JPMorgan Chase Bank, N.A. and in unencumbered AFS securities, largely offset by an increase in CIB trading assets.
As of June 30, 2024 and December 31, 2023, the Firm had approximately $1.5 trillion and $1.4 trillion of available cash and securities, respectively, comprised of eligible end-of-period HQLA, excluding the impact of regulatory haircuts, of approximately $841 billion and $798 billion, respectively, and unencumbered marketable securities with a fair value of approximately $623 billion and $649 billion, respectively.
The Firm also had available borrowing capacity at the FHLB and the discount window at the Federal Reserve Banks as a result of collateral pledged by the Firm to such banks of approximately $366 billion and $340 billion as of June 30, 2024 and December 31, 2023, respectively. This borrowing capacity excludes the benefit of cash and securities reported in the Firm’s eligible HQLA or other unencumbered securities that are currently pledged at the Federal Reserve Banks discount window and other central banks. Available borrowing capacity increased from December 31, 2023 predominantly due to a higher amount of commercial loans and mortgages pledged at the Federal Reserve Banks. Although available, the Firm does not view this borrowing capacity at the Federal Reserve Banks discount window and the other central banks as a primary source of liquidity.
NSFR
The net stable funding ratio (“NSFR”) is a liquidity requirement for large banking organizations that is intended to measure the adequacy of “available” stable funding that is sufficient to meet their “required” amounts of stable funding over a one-year horizon.
For the three months ended June 30, 2024, both the Firm and JPMorgan Chase Bank, N.A. were compliant with the 100% minimum NSFR requirement, based on the Firm's interpretation of the final rule. Refer to the Firm's U.S. NSFR Disclosure report on the Firm’s website for additional information.
52
Funding
Sources of funds
Management believes that the Firm’s unsecured and secured funding capacity is sufficient to meet its on- and off-balance sheet obligations, which includes both short- and long-term cash requirements.
The Firm funds its global balance sheet through diverse sources of funding including stable deposits, secured and unsecured funding in the capital markets and stockholders’ equity. Deposits are the primary funding source for JPMorgan Chase Bank, N.A. Additionally, JPMorgan Chase Bank, N.A. may access funding through short- or long-term secured borrowings, the issuance of unsecured long-term
debt, or from borrowings from the IHC. The Firm’s non-bank subsidiaries are primarily funded from long-term unsecured borrowings and short-term secured borrowings which are primarily securities loaned or sold under repurchase agreements. Excess funding is invested by Treasury and CIO in the Firm’s investment securities portfolio or deployed in cash or other short-term liquid investments based on their interest rate and liquidity risk characteristics.
Refer to Note 22 for additional information on off-balance sheet obligations.
Deposits
The table below summarizes, by LOB and Corporate, the period-end deposit balances as of June 30, 2024 and December 31, 2023, and the average deposit balances for the three and six months ended June 30, 2024 and 2023, respectively.
June 30, 2024
December 31, 2023
Average
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Consumer & Community Banking(a)
$
1,069,753
$
1,094,738
$
1,073,544
$
1,157,309
$
1,076,393
$
1,135,261
Commercial & Investment Bank(a)
1,064,212
1,050,892
1,046,993
998,014
1,046,391
981,861
Asset & Wealth Management(a)
236,492
233,232
227,423
211,872
227,573
218,078
Corporate
26,073
21,826
23,223
20,219
22,628
18,931
Total Firm
$
2,396,530
$
2,400,688
$
2,371,183
$
2,387,414
$
2,372,985
$
2,354,131
(a)In the fourth quarter of 2023, CCB transferred deposits associated with First Republic to AWM and CIB. Refer to page 67 of the Firm’s 2023 Form 10-K for additional information.
The Firm believes that deposits provide a stable source of funding and reduce the Firm’s reliance on the wholesale funding markets. A significant portion of the Firm’s deposits are consumer deposits and wholesale operating deposits, which are both considered to be stable sources of liquidity. Wholesale operating deposits are generally considered to be stable sources of liquidity because they are generated from customers that maintain operating service relationships with the Firm.
The Firm believes that average deposit balances are generally more representative of deposit trends than period-end deposit balances. However, during periods of market disruption, average deposit trends may be impacted.
Average deposits were lower for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, reflecting:
•a decline in CCB in existing accounts primarily due to increased customer spending, partially offset by new accounts,
predominantly offset by
•net issuances of structured notes in CIB as a result of client demand in Markets; and net inflows in Payments, which included the retention of inflows associated with disruptions in the market in the first quarter of 2023, predominantly offset by deposit attrition, which included actions taken to reduce certain deposits,
•the timing impact of First Republic, and
•an increase in Corporate related to the Firm's international consumer initiatives, including new product offerings in the second quarter of 2024.
Excluding the impact of First Republic, AWM was relatively flat, reflecting an increase from new product offerings, offset by continued migration into higher-yielding investments.
Average deposits were higher for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, reflecting:
•net issuances of structured notes in CIB as a result of client demand in Markets; and net inflows in Payments, which included the retention of inflows associated with disruptions in the market in the first quarter of 2023, largely offset by deposit attrition, which included actions taken to reduce certain deposits,
•the timing impact of First Republic, and
• an increase in Corporate related to the Firm's international consumer initiatives, including new product offerings in the second quarter of 2024,
predominantly offset by
•a decline in CCB in existing accounts primarily due to increased customer spending, partially offset by new accounts, and
•excluding the impact of First Republic, a decline in AWM, driven by continued migration into higher-yielding investments, predominantly offset by new product offerings.
53
Period-end deposits decreased from December 31, 2023, reflecting:
•a decline in CCB in existing accounts, primarily driven by seasonal tax outflows and migration into higher-yielding investments, largely offset by new accounts,
predominantly offset by
•higher deposits in CIB due to net inflows in Securities Services and Payments, partially offset by net maturities of structured notes in Markets,
•higher deposits in Corporate predominantly driven by new product offerings related to the Firm's international consumer initiatives, and
•higher balances in AWM driven by new product offerings, and an increase in deposits in existing accounts due to a change in product offerings associated with First Republic, predominantly offset by continued migration into higher-yielding investments.
Refer to the Firm’s Consolidated Balance Sheets Analysis and the Business Segment Results on pages 15-16 and pages 20-43, respectively, for further information on deposit and liability balance trends, as well as Note 26 for additional information on the First Republic acquisition. Refer to Note 3 for further information on structured notes.
Certain deposits are covered by insurance protection that provides additional funding stability and results in a benefit to the LCR. Deposit insurance protection may be available to depositors in the countries in which the deposits are placed. For example, the Federal Deposit Insurance Corporation (“FDIC”) provides deposit insurance protection for deposits placed in a U.S. depository institution. Refer to pages 105–106 of JPMorgan Chase's 2023 Form 10-K for additional information on the Firm's total uninsured deposits.
The table below presents an estimate of uninsured U.S. and non-U.S. time deposits, and their remaining maturities. The Firm’s estimates of its uninsured U.S. time deposits are based on data that the Firm calculates periodically under applicable FDIC regulations. For purposes of this presentation, all non-U.S. time deposits are deemed to be uninsured.
(in millions)
June 30, 2024
December 31, 2023
U.S.
Non-U.S.
U.S.
Non-U.S.
Three months or less
$
101,270
$
81,154
$
82,719
$
77,466
Over three months but within 6 months
19,080
14,486
17,736
5,358
Over six months but within 12 months
12,853
4,029
10,294
4,820
Over 12 months
866
1,819
710
2,543
Total
$
134,069
(a)
$
101,488
$
111,459
$
90,187
(a)At June 30, 2024, includes $10 billion of derivatives cash collateral reflecting a change in methodology for calculating uninsured deposits.
The table below shows the loan and deposit balances, the loans-to-deposits ratios, and deposits as a percentage of total liabilities, as of June 30, 2024 and December 31, 2023.
(in billions except ratios)
June 30, 2024
December 31, 2023
Deposits
$
2,396.5
$
2,400.7
Deposits as a % of total liabilities
63
%
68
%
Loans
$
1,320.7
$
1,323.7
Loans-to-deposits ratio
55
%
55
%
54
The following table provides a summary of the average balances and average interest rates of JPMorgan Chase’s deposits for the three and six months ended June 30, 2024 and 2023.
(Unaudited) (in millions, except interest rates)
Average balances
Three months ended
Six months ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
U.S. offices
Noninterest-bearing
$
623,139
$
646,767
$
623,626
$
635,748
Interest-bearing
Demand(a)
278,260
286,453
278,479
283,524
Savings(b)
793,968
883,737
802,406
887,257
Time
221,478
138,985
215,146
118,960
Total interest-bearing deposits
1,293,706
1,309,175
1,296,031
1,289,741
Total deposits in U.S. offices
1,916,845
1,955,942
1,919,657
1,925,489
Non-U.S. offices
Noninterest-bearing
25,188
24,948
24,860
25,390
Interest-bearing
Demand
337,776
320,822
337,983
320,527
Time
91,374
85,702
90,485
82,725
Total interest-bearing deposits
429,150
406,524
428,468
403,252
Total deposits in non-U.S. offices
454,338
431,472
453,328
428,642
Total deposits
$
2,371,183
$
2,387,414
$
2,372,985
$
2,354,131
(Unaudited)
Average interest rates
Three months ended
Six months ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
U.S. offices
Noninterest-bearing
NA
NA
NA
NA
Interest-bearing
Demand(a)
3.98
%
3.41
%
3.92
%
3.09
%
Savings(b)
1.41
1.04
1.37
0.97
Time
5.11
4.53
5.11
4.52
Total interest-bearing deposits
2.57
1.93
2.55
1.75
Total deposits in U.S. offices
1.73
1.28
1.71
1.19
Non-U.S. offices
Noninterest-bearing
NA
NA
NA
NA
Interest-bearing
Demand
3.26
2.53
3.26
2.38
Time
6.15
5.66
6.17
5.32
Total interest-bearing deposits
3.86
3.21
3.86
2.98
Total deposits in non-U.S. offices
3.66
3.01
3.66
2.80
Total deposits
2.09
%
1.60
%
2.09
%
1.47
%
(a)Includes Negotiable Order of Withdrawal accounts, and certain trust accounts.
(b)Includes Money Market Deposit Accounts.
Refer to Note 15for additional information on deposits.
55
The following table summarizes short-term and long-term funding, excluding deposits, as of June 30, 2024 and December 31, 2023, and average balances for the three and six months ended June 30, 2024 and 2023, respectively. Refer to the Consolidated Balance Sheets Analysis on pages 15-16 and Note 10 for additional information.
Sources of funds (excluding deposits)
June 30, 2024
December 31, 2023
Average
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Commercial paper
$
10,059
$
14,737
$
11,273
$
11,057
$
12,423
$
11,930
Other borrowed funds
11,158
8,200
11,860
9,791
10,889
9,931
Federal funds purchased
1,361
787
1,594
1,564
1,601
1,729
Total short-term unsecured funding
$
22,578
$
23,724
$
24,727
$
22,412
$
24,913
$
23,590
Securities sold under agreements to repurchase(a)
$
395,959
$
212,804
$
369,206
$
258,297
$
329,212
$
252,322
Securities loaned(a)
3,512
2,944
4,571
3,857
4,364
3,994
Other borrowed funds
26,091
21,775
24,310
21,179
23,241
22,037
Obligations of Firm-administered multi-seller conduits(b)
19,437
17,781
18,615
12,741
19,581
11,622
Total short-term secured funding
$
444,999
$
255,304
$
416,702
$
296,074
$
376,398
$
289,975
Senior notes
$
193,509
$
191,202
$
195,954
$
180,712
$
194,149
$
182,830
Subordinated debt
19,591
19,708
19,574
20,543
19,611
21,182
Structured notes(c)
91,561
86,056
90,554
75,075
89,019
74,413
Total long-term unsecured funding
$
304,661
$
296,966
$
306,082
$
276,330
$
302,779
$
278,425
Credit card securitization(b)
$
5,315
$
2,998
$
5,302
$
999
$
4,935
$
1,087
FHLB advances
35,628
41,246
37,559
(g)
28,420
39,022
(g)
19,804
Purchase Money Note(d)
49,097
48,989
49,062
32,745
49,035
16,463
Other long-term secured funding(e)
4,642
4,624
4,807
4,667
4,801
4,383
Total long-term secured funding
$
94,682
$
97,857
$
96,730
$
66,831
$
97,793
$
41,737
Preferred stock(f)
$
23,900
$
27,404
$
25,867
$
27,404
$
26,910
$
27,404
Common stockholders’ equity(f)
$
316,652
$
300,474
$
308,763
$
277,885
$
304,519
$
274,560
(a)Primarily consists of short-term securities loaned or sold under agreements to repurchase.
(b)Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.
(c)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
(d)Reflects the Purchase Money Note associated with the First Republic acquisition on May 1, 2023. Refer to Note 26 for additional information.
(e)Includes long-term structured notes which are secured.
(f)Refer to Capital Risk Management on pages 45-50 and Consolidated statements of changes in stockholders’ equity on page 94 of this Form 10-Q, and Note 21 and Note 22 of JPMorgan Chase’s 2023 Form 10-K for additional information on preferred stock and common stockholders’ equity.
(g)Includes the timing impact of First Republic. Refer to Executive Overview on pages 5-8 and Note 26 of this Form 10-Q, and pages 102-109 of JPMorgan Chase's 2023 Form 10-K for additional information.
Short-term funding
The Firm’s sources of short-term secured funding primarily consist of securities loaned or sold under agreements to repurchase. These instruments are secured predominantly by high-quality securities collateral, including government-issued debt and U.S. GSE and government agency MBS. Securities sold under agreements to repurchase increased at June 30, 2024, compared with December 31, 2023, driven by Markets, reflecting higher client-driven market-making activities and higher secured financing of trading assets, as well as when compared with seasonally lower levels at year-end.
The increase in secured other borrowed funds at June 30, 2024 from December 31, 2023 was predominantly due to higher financing requirements in Markets. For the average three months ended June 30, 2024, compared to the prior year period, the increase was due to higher financing requirements in Markets, partially offset by maturities in Treasury and CIO.
The balances associated with securities loaned or sold under agreements to repurchase fluctuate over time due to
investment and financing activities of clients, the Firm’s demand for financing, the ongoing management of the mix of the Firm’s liabilities, including its secured and unsecured financing (for both the investment securities and market-making portfolios), and other market and portfolio factors.
The Firm’s sources of short-term unsecured funding primarily consist of issuances of wholesale commercial paper and other borrowed funds.
The decrease in commercial paper at June 30, 2024 from December 31, 2023 was due to lower issuances primarily as a result of short-term liquidity management.
The increase in unsecured other borrowed funds at June 30, 2024 from December 31, 2023 was predominantly driven by higher net issuances of structured notes in CIB, due to client demand.
56
Long-term funding
Long-term funding provides an additional source of stable funding and liquidity for the Firm. The Firm’s long-term funding plan is driven primarily by expected client activity, liquidity considerations and regulatory requirements, including TLAC. Long-term funding objectives include maintaining diversification, maximizing market access and optimizing funding costs. The Firm evaluates various funding markets, tenors and currencies in creating its optimal long-term funding plan.
Unsecured funding and issuance
The significant majority of the Firm’s total outstanding long-term debt has been issued by the Parent Company to provide flexibility in support of the funding needs of both bank and non-bank subsidiaries. The Parent Company advances substantially all net funding proceeds to its subsidiary, the IHC. The IHC does not issue debt to external counterparties. For the three and six months ended June 30, 2024, the increase in average structured notes compared to the prior year periods was attributable to net issuances of structured notes in Markets due to client demand.
The following table summarizes long-term unsecured issuance and maturities or redemptions for the three and six months ended June 30, 2024 and 2023. Refer to Liquidity Risk Management on pages 102–109 and Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information on the IHC and long-term debt.
Long-term unsecured funding
Three months ended June 30,
Six months ended June 30,
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
2024
2023
2024
2023
(Notional in millions)
Parent Company
Subsidiaries
Issuance
Senior notes issued in the U.S. market
$
9,000
$
2,500
$
17,500
$
2,500
$
—
$
—
$
—
$
—
Senior notes issued in non-U.S. markets
1,906
—
4,079
—
—
—
—
—
Total senior notes
10,906
2,500
21,579
2,500
—
—
—
—
Structured notes(a)
734
563
1,602
1,444
12,917
7,947
27,868
15,665
Total long-term unsecured funding – issuance
$
11,640
$
3,063
$
23,181
$
3,944
$
12,917
$
7,947
$
27,868
$
15,665
Maturities/redemptions
Senior notes
$
9,501
$
6,335
$
16,669
$
13,433
$
—
$
2
$
65
$
67
Subordinated debt
22
2,027
35
2,027
—
—
—
—
Structured notes
293
324
510
771
11,902
6,479
23,408
13,981
Total long-term unsecured funding – maturities/redemptions
$
9,816
$
8,686
$
17,214
$
16,231
$
11,902
$
6,481
$
23,473
$
14,048
(a)Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.
Secured funding and issuance
The Firm can also raise secured long-term funding through securitization of consumer credit card loans and FHLB advances. The following table summarizes the securitization issuance, the FHLB advances, and their respective maturities or redemptions, as applicable for the three and six months ended June 30, 2024 and 2023, respectively.
Long-term secured funding
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
2024
2023
2024
2023
(in millions)
Issuance
Maturities/Redemptions
Issuance
Maturities/Redemptions
Credit card securitization
$
—
$
—
$
—
$
—
$
2,348
$
—
$
—
$
1,000
FHLB advances
—
25,775
3,601
(c)
602
—
25,775
5,648
(c)
604
Purchase Money Note(a)
—
50,000
—
—
—
50,000
—
—
Other long-term secured funding(b)
166
591
133
58
720
742
370
112
Total long-term secured funding
$
166
$
76,366
$
3,734
$
660
$
3,068
$
76,517
$
6,018
$
1,716
(a)Reflects the Purchase Money Note associated with the First Republic acquisition. Refer to Note 26 for more information.
(b)Includes long-term structured notes that are secured.
(c)Includes FHLB advances associated with the First Republic acquisition on May 1, 2023. Refer to Note 26 for more information.
The Firm’s wholesale businesses also securitize loans for client-driven transactions; those client-driven loan securitizations are not considered to be a source of funding for the Firm and are not included in the table above. Refer to Note 14 of JPMorgan Chase’s 2023 Form 10-K for a further description of client-driven loan securitizations.
57
Credit ratings
The cost and availability of financing are influenced by credit ratings. Reductions in these ratings could have an adverse effect on the Firm’s access to liquidity sources, increase the cost of funds, trigger additional collateral or funding requirements and decrease the number of investors and counterparties willing to lend to the Firm. The nature and magnitude of the impact of ratings downgrades depends on numerous contractual and behavioral factors, which the Firm believes are incorporated in its liquidity risk
and stress testing metrics. The Firm believes that it maintains sufficient liquidity to withstand a potential decrease in funding capacity due to ratings downgrades.
Additionally, the Firm’s funding requirements for VIEs and other third-party commitments may be adversely affected by a decline in credit ratings. Refer to Notes 4 and 13 for additional information.
The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of June 30, 2024, were as follows:
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
J.P. Morgan Securities LLC J.P. Morgan Securities plc J.P. Morgan SE
June 30, 2024
Long-term issuer
Short-term issuer
Outlook
Long-term issuer
Short-term issuer
Outlook
Long-term issuer
Short-term issuer
Outlook
Moody’s Investors Service
A1
P-1
Stable
Aa2
P-1
Negative
Aa3
P-1
Stable
Standard & Poor’s (a)
A-
A-2
Positive
A+
A-1
Positive
A+
A-1
Positive
Fitch Ratings
AA-
F1+
Stable
AA
F1+
Stable
AA
F1+
Stable
(a) On April 1, 2024, Standard & Poor's affirmed the credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries, and revised the outlook from stable to positive for the entities listed above.
Refer to page 109 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the factors that could affect the credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries.
58
CREDIT AND INVESTMENT RISK MANAGEMENT
Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk,
wholesale credit risk, and investment portfolio risk. Refer to Consumer Credit Portfolio, Wholesale Credit Portfolio and
Allowance for Credit Losses on pages 61-77 for a further discussion of Credit Risk.
Refer to page 78 for a further discussion of Investment Portfolio Risk. Refer to Credit and Investment Risk Management on pages 111–134 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s Credit and Investment Risk Management framework.
59
CREDIT PORTFOLIO
Credit risk is the risk associated with the default or change in credit profile of a client, counterparty or customer.
In the following tables, total loans include loans retained (i.e., held-for-investment); loans held-for-sale; and certain loans accounted for at fair value. The following tables do not include loans which the Firm accounts for at fair value and classifies as trading assets; refer to Notes 2 and 3 for further information regarding these loans. Refer to Notes 11, 22 and 4 for additional information on the Firm’s loans, lending-related commitments and derivative receivables.
Refer to Note 9 for information regarding the credit risk inherent in the Firm’s investment securities portfolio; and refer to Note 10 for information regarding credit risk inherent in the securities financing portfolio. Refer to Consumer Credit Portfolio on pages 61-64 and Note 11 for further discussions of the consumer credit environment, consumer loans and nonperforming exposure. Refer to Wholesale Credit Portfolio on pages 65-74 and Note 11 for further discussions of the wholesale credit environment, wholesale loans and nonperforming exposure.
Total credit portfolio
Credit exposure
Nonperforming(c)
(in millions)
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
Loans retained
$
1,273,047
$
1,280,870
$
6,712
$
5,989
Loans held-for-sale
9,403
3,985
159
184
Loans at fair value
38,250
38,851
920
744
Total loans
1,320,700
1,323,706
7,791
6,917
Derivative receivables
54,673
54,864
290
364
Receivables from customers(a)
56,018
47,625
—
—
Total credit-related assets
1,431,391
1,426,195
8,081
7,281
Assets acquired in loan satisfactions
Real estate owned
NA
NA
303
274
Other
NA
NA
39
42
Totalassets acquired in loan satisfactions
NA
NA
342
316
Lending-related commitments
1,556,962
1,497,847
541
464
Total credit portfolio
$
2,988,353
$
2,924,042
$
8,964
$
8,061
Credit derivatives and credit-related notes used in credit portfolio management activities(b)
$
(42,509)
$
(37,779)
$
—
$
—
Liquid securities and other cash collateral held against derivatives
(24,211)
(22,461)
NA
NA
(a)Receivables from customers reflect held-for-investment margin loans to brokerage clients in CIB, CCB and AWM; these are reported within accrued interest and accounts receivable on the Consolidated balance sheets.
(b)Represents the net notional amount of protection purchased and sold through credit derivatives and credit-related notes used to manage credit exposures.
(c)At June 30, 2024 and December 31, 2023, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $138 million and $182 million, respectively. These amounts have been excluded based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.
The following table provides information about the Firm’s net charge-offs and recoveries.
(in millions, except ratios)
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Net charge-offs
$
2,231
$
1,411
$
4,187
$
2,548
Average retained loans
1,262,029
1,194,044
1,262,644
1,138,550
Net charge-off rates
0.71
%
0.47
%
0.67
%
0.45
%
60
CONSUMER CREDIT PORTFOLIO
The Firm’s retained consumer portfolio consists primarily of loans and lending-related commitments for residential real estate, credit card, and scored auto and business banking. The consumer credit portfolio also includes loans at fair value, predominantly in residential real estate. The Firm’s focus is on serving primarily the prime segment of the consumer credit market. Refer to Note 11 of this Form 10-Q; and Consumer Credit Portfolio on pages 114–119 and Note 12 of JPMorgan Chase's 2023 Form 10-K for further information on consumer loans, as well as the Firm’s nonaccrual and charge-off accounting policies. Refer to Note 22 of this Form 10-Q and Note 28 of JPMorgan Chase's 2023 Form 10-K for further information on lending-related commitments.
The following tables present consumer credit-related information with respect to the scored credit portfolios held in CCB, AWM, CIB and Corporate.
Consumer credit portfolio
(in millions)
Credit exposure
Nonaccrual loans(i)
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
Consumer, excluding credit card
Residential real estate(a)
$
314,843
$
326,409
$
3,231
$
3,466
Auto and other(b)(c)
67,952
70,866
192
177
Total loans – retained
382,795
397,275
3,423
3,643
Loans held-for-sale
1,366
487
86
95
Loans at fair value(d)
12,794
12,331
296
465
Total consumer, excluding credit card loans
396,955
410,093
3,805
4,203
Lending-related commitments(e)
47,215
45,403
Total consumer exposure, excluding credit card
444,170
455,496
Credit card
Loans retained(f)
216,100
211,123
NA
NA
Total credit card loans
216,100
211,123
NA
NA
Lending-related commitments(e)(g)
964,727
915,658
Total credit card exposure
1,180,827
1,126,781
Total consumer credit portfolio
$
1,624,997
$
1,582,277
$
3,805
$
4,203
Credit-related notes used in credit portfolio management activities(h)
$
(620)
$
(790)
Three months ended June 30,
(in millions, except ratios)
Net charge-offs/(recoveries)
Average loans - retained
Net charge-off/(recovery) rate(j)
2024
2023
2024
2023
2024
2023
Consumer, excluding credit card
Residential real estate
$
(37)
$
(25)
$
317,249
$
293,073
(0.05)
%
(0.03)
%
Auto and other
172
147
68,413
66,470
1.01
0.89
Total consumer, excluding credit card - retained
135
122
385,662
359,543
0.14
0.14
Credit card - retained
1,829
1,124
210,020
187,027
3.50
2.41
Total consumer - retained
$
1,964
$
1,246
$
595,682
$
546,570
1.33
%
0.91
%
Six months ended June 30,
(in millions, except ratios)
Net charge-offs/(recoveries)
Average loans - retained
Net charge-off/(recovery) rate(j)
2024
2023
2024
2023
2024
2023
Consumer, excluding credit card
Residential real estate
$
(43)
$
(45)
$
320,468
$
265,082
(0.03)
%
(0.03)
%
Auto and other
361
299
69,379
65,145
1.05
0.93
Total consumer, excluding credit card - retained
318
254
389,847
330,227
0.16
0.16
Credit card - retained
3,516
2,046
207,329
183,757
3.41
2.25
Total consumer - retained
$
3,834
$
2,300
$
597,176
$
513,984
1.29
%
0.90
%
(a)Includes scored mortgage and home equity loans held in CCB and AWM.
(b)At June 30, 2024 and December 31, 2023, excluded operating lease assets of $11.0 billion and $10.4 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. Refer to Note 16 for further information.
(c)Includes scored auto and business banking loans, and overdrafts.
(d)Includes scored mortgage loans held in CCB and CIB, and other consumer unsecured loans in CIB.
(e)Credit card, home equity and certain business banking lending-related commitments represent the total available lines of credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card commitments, and if certain conditions are met, home equity commitments and certain business banking commitments, the Firm can reduce or cancel these lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. Refer to Note 22 for further information.
(f)Includes billed interest and fees.
(g)Also includes commercial card lending-related commitments primarily in CIB.
61
(h)Represents the notional amount of protection obtained through the issuance of credit-related notes that reference certain pools of residential real estate and auto loans in the retained consumer portfolio.
(i)At June 30, 2024 and December 31, 2023, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $138 million and $182 million, respectively. These amounts have been excluded from nonaccrual loans based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status, as permitted by regulatory guidance.
(j)Average consumer loans held-for-sale and loans at fair value were $17.3 billion and $13.3 billion for the three months ended June 30, 2024 and 2023, respectively, and $16.2 billion and $12.4 billion for the six months ended June 30, 2024 and 2023, respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.
Consumer, excluding credit card
Portfolio analysis
Loans decreased from December 31, 2023 predominantly driven by retained residential real estate loans.
Residential real estate: The residential real estate portfolio, including loans held-for-sale and loans at fair value, predominantly consists of prime mortgage loans and home equity lines of credit.
Retained loans decreased compared to December 31, 2023, predominantly driven by paydowns and loan sales, net of originations. Net recoveries were higher for the three months ended June 30, 2024 compared to the same period in the prior year due to loan sales.
Loans held-for-sale increased from December 31, 2023, predominantly driven by a transfer of certain retained loans in anticipation of securitization.
Nonaccrual loans at fair value decreased compared to December 31, 2023, predominantly driven by net sales in CIB.
At June 30, 2024 and December 31, 2023, the carrying value of interest-only residential mortgage loans was $89.6 billion and $90.6 billion, respectively. These loans have an interest-only payment period generally followed by an adjustable-rate or fixed-rate fully amortizing payment period to maturity and are typically originated as higher-balance loans to higher-income borrowers. The credit performance of this portfolio is comparable with the performance of the broader prime mortgage portfolio.
The carrying value of home equity lines of credit outstanding was $15.0 billion at June 30, 2024. The carrying value of home equity lines of credit outstanding included $4.0 billion of HELOCs that have recast from interest-only to fully amortizing payments or have been modified and $3.9 billion of interest-only balloon HELOCs, which primarily mature after 2030. The Firm manages the risk of HELOCs during their revolving period by closing or reducing the undrawn line to the extent permitted by law when borrowers are exhibiting a material deterioration in their credit risk profile.
The following table provides a summary of the Firm’s residential mortgage portfolio insured and/or guaranteed by U.S. government agencies, predominantly loans held-for-sale and loans at fair value. The Firm monitors its exposure to certain potential unrecoverable claim payments related to government-insured loans and considers this exposure in estimating the allowance for loan losses.
(in millions)
June 30, 2024
December 31, 2023
Current
$
406
$
446
30-89 days past due
77
102
90 or more days past due
138
182
Total government guaranteed loans
$
621
$
730
Geographic composition and current estimated loan-to-value ratio of residential real estate loans
Refer to Note 11 for information on the geographic composition and current estimated LTVs of the Firm’s residential real estate loans.
Modified residential real estate loans
For the three and six months ended June 30, 2024, residential real estate financial difficulty modifications ("FDMs") were $68 million and $98 million, respectively, and $35 million and $75 million for the three and six months ended June 30, 2023, respectively. Loans subject to trial modification where the terms of the loans have not been permanently modified, and loans subject to discharge under Chapter 7 bankruptcy proceedings ("Chapter 7 loans"), were not material for the three and six months ended June 30, 2024 and 2023. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K and Note 11 of this Form 10-Q for further information.
62
Auto and other: The auto and other loan portfolio, including loans at fair value, generally consists of prime-quality scored auto and business banking loans, other consumer unsecured loans, and overdrafts. The portfolio decreased when compared to December 31, 2023, predominantly due to loan securitizations. Net charge-offs increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year predominantly due to higher scored auto net charge-offs of $37 million and $87 million, respectively, reflecting a decline in used vehicle valuations. Refer to Note 13 for further information on securitization activity.
Nonperforming assets
The following table presents information as of June 30, 2024 and December 31, 2023, about consumer, excluding credit card, nonperforming assets.
Nonperforming assets(a)
(in millions)
June 30, 2024
December 31, 2023
Nonaccrual loans
Residential real estate
$
3,592
$
4,015
Auto and other
213
188
Total nonaccrual loans
3,805
4,203
Assets acquired in loan satisfactions
Real estate owned
89
120
Other
39
42
Total assets acquired in loan satisfactions
128
162
Total nonperforming assets
$
3,933
$
4,365
(a)At June 30, 2024 and December 31, 2023, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $138 million and $182 million, respectively. These amounts have been excluded based upon the government guarantee.
Nonaccrual loans
The following table presents changes in consumer, excluding credit card, nonaccrual loans for the six months ended June 30, 2024 and 2023.
Nonaccrual loan activity
Six months ended June 30, (in millions)
2024
2023
Beginning balance
$
4,203
$
4,325
Additions
1,447
1,290
Reductions:
Principal payments and other
473
452
Sales
539
34
Charge-offs
304
202
Returned to performing status
444
573
Foreclosures and other liquidations
85
89
Total reductions
1,845
1,350
Net changes
(398)
(60)
Ending balance
$
3,805
$
4,265
Refer to Note 11 for further information about the consumer credit portfolio, including information about delinquencies, other credit quality indicators, loan modifications and loans that were in the process of active or suspended foreclosure.
63
Credit card
Total credit card loans increased from December 31, 2023 reflecting growth from new accounts and revolving balances. The June 30, 2024 30+ day delinquency rate of 2.08% decreased from 2.14% at December 31, 2023, and the June 30, 2024 90+ day delinquency rate of 1.07% was relatively flat compared to 1.05% at December 31, 2023, reflecting seasonality, in line with expectations. Net charge-offs increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year as newer vintages season and credit normalization continues.
Consistent with the Firm’s policy, all credit card loans typically remain on accrual status until charged off. However, the Firm’s allowance for loan losses includes the estimated uncollectible portion of accrued and billed interest and fee income. Refer to Note 11 for further information about this portfolio, including information about delinquencies.
Geographic and FICO composition of credit card loans
Refer to Note 11 for information on the geographic and FICO composition of the Firm’s credit card loans.
Modified credit card loans
For the three and six months ended June 30, 2024, credit card FDMs were $259 million and $491 million, respectively, and $181 million and $326 million for the three and six months ended June 30, 2023, respectively. FDMs increased for the three and six months ended June 30, 2024 compared to the same periods in the prior year due to higher delinquencies, reflecting growth in the portfolio.
Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K and Note 11 of this Form 10-Q for further information.
64
WHOLESALE CREDIT PORTFOLIO
In its wholesale businesses, the Firm is exposed to credit risk primarily through its underwriting, lending, market-making, and hedging activities with and for clients and counterparties, as well as through various operating services (such as cash management and clearing activities), securities financing activities and cash placed with banks. A portion of the loans originated or acquired by the Firm’s wholesale businesses is generally retained on the balance sheet. The Firm distributes a significant percentage of the loans that it originates into the market as part of its syndicated loan business and to manage portfolio concentrations and credit risk. The wholesale portfolio is actively managed, in part by conducting ongoing, in-depth reviews of client credit quality and transaction structure inclusive of collateral where applicable, and of industry, product and client concentrations. Refer to the industry discussion on pages 68-71 for further information.
The Firm’s wholesale credit portfolio includes exposure held in CIB, AWM and Corporate, and risk-rated exposure held in CCB, for which the wholesale methodology is applied when determining the allowance for loan losses. The Firm continues to convert certain operations, and to integrate clients, products and services, associated with First Republic. Accordingly, reporting classifications and internal risk rating profiles in the wholesale portfolio may change in future periods. Refer to Business Developments on page 8 for additional information.
As of June 30, 2024, lending-related commitments increased by $8.2 billion, driven by Technology, Media & Telecommunications, including held-for-sale commitments, and SPEs, partially offset by a decrease in Asset Managers.
As of June 30, 2024, nonperforming exposure increased by $1.3 billion, predominantly driven by Real Estate, concentrated in Office, and in Industrials, resulting from downgrades. For the six months ended June 30, 2024, wholesale net charge-offs were $353 million, largely in Real Estate, concentrated in Office, and Individuals.
Wholesale credit portfolio
Credit exposure
Nonperforming
(in millions)
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
Loans retained
$
674,152
$
672,472
$
3,289
$
2,346
Loans held-for-sale
8,037
3,498
73
89
Loans at fair value
25,456
26,520
624
279
Loans
707,645
702,490
3,986
2,714
Derivative receivables
54,673
54,864
290
364
Receivables from customers(a)
56,018
47,625
—
—
Total wholesale credit-related assets
818,336
804,979
4,276
3,078
Assets acquired in loan satisfactions
Real estate owned
NA
NA
214
154
Other
NA
NA
—
—
Total assets acquired in loan satisfactions
NA
NA
214
154
Lending-related commitments
545,020
536,786
541
464
Total wholesale credit portfolio
$
1,363,356
$
1,341,765
$
5,031
$
3,696
Credit derivatives and credit-related notes used in credit portfolio management activities(b)
$
(41,889)
$
(36,989)
$
—
$
—
Liquid securities and other cash collateral held against derivatives
(24,211)
(22,461)
NA
NA
(a)Receivables from customers reflect held-for-investment margin loans to brokerage clients in CIB, CCB and AWM; these are reported within accrued interest and accounts receivable on the Consolidated balance sheets.
(b)Represents the net notional amount of protection purchased and sold through credit derivatives and credit-related notes used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. Refer to Credit derivatives on page 74 and Note 4 for additional information.
65
Wholesale credit exposure – maturity and ratings profile
The following tables present the maturity and internal risk ratings profiles of the wholesale credit portfolio as of June 30, 2024 and December 31, 2023. The Firm generally considers internal ratings with qualitative characteristics equivalent to BBB-/Baa3 or higher as investment grade, and takes into consideration collateral and structural support when determining the internal risk rating for each credit facility. Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for further information on internal risk ratings.
Maturity profile(d)
Ratings profile
1 year or less
After 1 year through 5 years
After 5 years
Total
Investment-grade
Noninvestment-grade
Total
Total % of IG
June 30, 2024,
(in millions, except ratios)
Loans retained
$
220,191
$
277,969
$
175,992
$
674,152
$
454,958
$
219,194
$
674,152
67
%
Derivative receivables
54,673
54,673
Less: Liquid securities and other cash collateral held against derivatives
(24,211)
(24,211)
Total derivative receivables, net of collateral
7,476
8,446
14,540
30,462
23,445
7,017
30,462
77
Lending-related commitments
145,054
374,870
25,096
545,020
351,961
193,059
545,020
65
Subtotal
372,721
661,285
215,628
1,249,634
830,364
419,270
1,249,634
66
Loans held-for-sale and loans at fair value(a)
33,493
33,493
Receivables from customers
56,018
56,018
Total exposure – net of liquid securities and other cash collateral held against derivatives
$
1,339,145
$
1,339,145
Credit derivatives and credit-related notes used in credit portfolio management activities(b)(c)
$
(8,526)
$
(27,870)
$
(5,493)
$
(41,889)
$
(33,333)
$
(8,556)
$
(41,889)
80
%
66
(continued from previous page)
Maturity profile(d)
Ratings profile
1 year or less
After 1 year through 5 years
After 5 years
Total
Investment-grade
Noninvestment-grade
Total
Total % of IG
December 31, 2023 (in millions, except ratios)
Loans retained
$
211,104
$
280,821
$
180,547
$
672,472
$
458,838
$
213,634
$
672,472
68
%
Derivative receivables
54,864
54,864
Less: Liquid securities and other cash collateral held against derivatives
(22,461)
(22,461)
Total derivative receivables, net of collateral
8,007
8,970
15,426
32,403
24,919
7,484
32,403
77
Lending-related commitments
143,337
368,646
24,803
536,786
341,611
195,175
536,786
64
Subtotal
362,448
658,437
220,776
1,241,661
825,368
416,293
1,241,661
66
Loans held-for-sale and loans at fair value(a)
30,018
30,018
Receivables from customers
47,625
47,625
Total exposure – net of liquid securities and other cash collateral held against derivatives
$
1,319,304
$
1,319,304
Credit derivatives and credit-related notes used in credit portfolio management activities(b)(c)
$
(3,311)
$
(28,353)
$
(5,325)
$
(36,989)
$
(28,869)
$
(8,120)
$
(36,989)
78
%
(a)Loans held-for-sale are primarily related to syndicated loans and loans transferred from the retained portfolio.
(b)These derivatives do not qualify for hedge accounting under U.S. GAAP.
(c)The notional amounts are presented on a net basis by underlying reference entity and the ratings profile shown is based on the ratings of the reference entity on which protection has been purchased. Predominantly all of the credit derivatives entered into by the Firm where it has purchased protection used in credit portfolio management activities are executed with investment-grade counterparties. In addition, the Firm obtains credit protection against certain loans in the retained loan portfolio through the issuance of credit-related notes.
(d)The maturity profile of retained loans, lending-related commitments and derivative receivables is generally based on remaining contractual maturity. Derivative contracts that are in a receivable position at June 30, 2024, may become payable prior to maturity based on their cash flow profile or changes in market conditions.
67
Wholesale credit exposure – industry exposures
The Firm focuses on the management and diversification of its industry exposures, and pays particular attention to industries with actual or potential credit concerns.
Exposures that are deemed to be criticized align with the U.S. banking regulators’ definition of criticized exposures, which consist of the special mention, substandard and doubtful categories. Total criticized exposure, excluding loans held-for-sale and loans at fair value, was $46.8 billion and $41.4 billion as of June 30, 2024 and December 31, 2023, representing approximately 3.7% and 3.3% of total wholesale credit exposure, respectively; of the $46.8 billion, $42.7 billion was performing. The increase in criticized exposure was driven by net downgrades in Real Estate, concentrated in Office and Multifamily, and held-for-sale commitments in Technology and Media.
The table below summarizes by industry the Firm’s exposures as of June 30, 2024 and December 31, 2023. The industry of risk category is generally based on the client or counterparty’s primary business activity. Refer to Note 4 of JPMorgan Chase's 2023 Form 10-K for additional information on industry concentrations.
Wholesale credit exposure – industries(a)
Selected metrics
30 days or more past due and accruing loans
Net charge-offs/ (recoveries)
Credit derivative and credit-related notes(h)
Liquid securities and other cash collateral held against derivative receivables
Noninvestment-grade
As of or for the six months ended
Credit exposure(f)(g)
Investment- grade
Noncriticized
Criticized performing
Criticized nonperforming
June 30, 2024
(in millions)
Real Estate
$
206,154
$
143,402
$
50,643
$
10,939
$
1,170
$
822
$
129
$
(592)
$
—
Individuals and Individual Entities(b)
141,591
112,521
28,296
228
546
717
116
—
—
Consumer & Retail
126,681
59,361
59,008
7,735
577
231
60
(4,213)
—
Asset Managers
126,282
87,712
38,459
109
2
335
1
—
(7,712)
Technology, Media & Telecommunications
86,677
48,518
25,979
11,838
342
40
32
(4,521)
—
Industrials
73,469
38,084
31,433
3,637
315
195
4
(2,190)
—
Banks & Finance Companies
64,744
35,205
29,377
155
7
2
—
(588)
(594)
Healthcare
63,662
42,677
17,312
3,167
506
100
22
(3,343)
(2)
Utilities
37,380
26,476
9,919
843
142
1
(2,493)
—
State & Municipal Govt(c)
36,344
34,256
2,067
16
5
121
—
(3)
—
Automotive
34,674
22,868
10,995
671
140
43
1
(1,047)
—
Oil & Gas
33,593
20,072
13,136
335
50
8
(2)
(1,910)
—
Insurance
23,519
16,290
6,979
217
33
5
—
(1,124)
(7,834)
Chemicals & Plastics
21,996
11,308
9,397
1,135
156
15
—
(1,078)
—
Transportation
17,339
10,155
6,739
392
53
43
(7)
(556)
—
Central Govt
16,444
16,021
297
126
—
2
—
(2,084)
(1,947)
Metals & Mining
16,277
8,266
7,373
595
43
6
—
(217)
(1)
Securities Firms
9,486
4,659
4,824
3
—
—
—
(12)
(2,597)
Financial Markets Infrastructure
5,381
5,067
314
—
—
—
—
(2)
—
All other(d)
132,152
110,850
20,735
534
33
188
(3)
(15,916)
(3,524)
Subtotal
$
1,273,845
$
853,768
$
373,282
$
42,675
$
4,120
$
2,874
$
353
$
(41,889)
$
(24,211)
Loans held-for-sale and loans at fair value
33,493
Receivables from customers
56,018
Total(e)
$
1,363,356
68
(continued from previous page)
Selected metrics
30 days or more past due and accruing loans
Net charge-offs/ (recoveries)
Credit derivative and credit-related notes(h)
Liquid securities and other cash collateral held against derivative receivables
Noninvestment-grade
As of or for the year ended
Credit exposure(f)(g)
Investment- grade
Noncriticized
Criticized performing
Criticized nonperforming
December 31, 2023
(in millions)
Real Estate
$
208,261
$
148,866
$
50,190
$
8,558
$
647
$
717
$
275
$
(574)
$
—
Individuals and Individual Entities(b)
145,849
110,673
34,261
334
581
861
10
—
—
Consumer & Retail
127,086
60,168
58,606
7,863
449
318
161
(4,204)
—
Asset Managers
129,574
83,857
45,623
90
4
201
1
—
(7,209)
Technology, Media & Telecommunications
77,296
40,468
27,094
9,388
346
36
81
(4,287)
—
Industrials
75,092
40,951
30,586
3,419
136
213
31
(2,949)
—
Banks & Finance Companies
57,177
33,881
22,744
545
7
9
277
(511)
(412)
Healthcare
65,025
43,163
18,396
3,005
461
130
17
(3,070)
—
Utilities
36,061
25,242
9,929
765
125
1
(3)
(2,373)
—
State & Municipal Govt(c)
35,986
33,561
2,390
27
8
31
—
(4)
—
Automotive
33,977
23,152
10,060
640
125
59
—
(653)
—
Oil & Gas
34,475
18,276
16,076
111
12
45
11
(1,927)
(5)
Insurance
20,501
14,503
5,700
298
—
2
—
(961)
(6,898)
Chemicals & Plastics
20,773
11,353
8,352
916
152
106
2
(1,045)
—
Transportation
16,060
8,865
5,943
1,196
56
23
(26)
(574)
—
Central Govt
17,704
17,264
312
127
1
—
—
(3,490)
(2,085)
Metals & Mining
15,508
8,403
6,514
536
55
12
44
(229)
—
Securities Firms
8,689
4,570
4,118
1
—
—
—
(14)
(2,765)
Financial Markets Infrastructure
4,251
4,052
199
—
—
—
—
—
—
All other(d)
134,777
115,711
18,618
439
9
21
(2)
(10,124)
(3,087)
Subtotal
$
1,264,122
$
846,979
$
375,711
$
38,258
$
3,174
$
2,785
$
879
$
(36,989)
$
(22,461)
Loans held-for-sale and loans at fair value
30,018
Receivables from customers
47,625
Total(e)
$
1,341,765
(a)The industry rankings presented in the table as of December 31, 2023, are based on the industry rankings of the corresponding exposures as of June 30, 2024, not actual rankings of such exposures as of December 31, 2023.
(b)Individuals and Individual Entities predominantly consists of Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB, and includes exposure to personal investment companies and personal and testamentary trusts.
(c)In addition to the credit risk exposure to states and municipal governments (both U.S. and non-U.S.) at June 30, 2024 and December 31, 2023 noted above, the Firm held: $6.4 billion and $5.9 billion, respectively, of trading assets; $17.2 billion and $21.4 billion, respectively, of AFS securities; and $9.5 billion and $9.9 billion, respectively, of HTM securities, issued by U.S. state and municipal governments. Refer to Notes 2 and 9 for further information.
(d)All other includes: SPEs and Private education and civic organizations, representing approximately 94% and 6%, respectively, at both June 30, 2024 and December 31, 2023. Refer to Note 13 for more information on exposures to SPEs.
(e)Excludes cash placed with banks of $521.8 billionand $614.1 billion, at June 30, 2024 and December 31, 2023, respectively, which is predominantly placed with various central banks, primarily Federal Reserve Banks.
(f)Credit exposure is net of risk participations and excludes the benefit of credit derivatives and credit-related notes used in credit portfolio management activities held against derivative receivables or loans and liquid securities and other cash collateral held against derivative receivables.
(g)Credit exposure includes held-for-sale and fair value option elected lending-related commitments.
(h)Represents the net notional amounts of protection purchased and sold through credit derivatives and credit-related notes used to manage the credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. The All other category includes purchased credit protection on certain credit indices.
69
Presented below is additional detail on certain of the Firm’s industry exposures.
Real Estate
Real Estate exposure was $206.2 billion as of June 30, 2024. Criticized exposure increased by $2.9 billion from $9.2 billion at December 31, 2023 to $12.1 billion at June 30, 2024, predominantly driven by net downgrades, concentrated in Office and Multifamily.
June 30, 2024
(in millions, except ratios)
Loans and Lending-related Commitments
Derivative Receivables
Credit exposure
% Investment-grade
% Drawn(d)
Multifamily(a)
$
122,986
$
5
$
122,991
77
%
91
%
Industrial
20,862
9
20,871
65
70
Office
16,435
25
16,460
47
84
Other Income Producing Properties(b)
14,657
156
14,813
51
64
Services and Non Income Producing
14,547
66
14,613
63
51
Retail
11,977
20
11,997
75
74
Lodging
4,398
11
4,409
30
54
Total Real Estate Exposure(c)
$
205,862
$
292
$
206,154
70
%
81
%
December 31, 2023
(in millions, except ratios)
Loans and Lending-related Commitments
Derivative Receivables
Credit exposure
% Investment- grade
% Drawn(d)
Multifamily(a)
$
121,946
$
21
$
121,967
79
%
90
%
Industrial
20,254
18
20,272
70
72
Office
16,462
32
16,494
51
81
Other Income Producing Properties(b)
15,542
208
15,750
55
63
Services and Non Income Producing
16,145
74
16,219
62
46
Retail
12,763
48
12,811
75
73
Lodging
4,729
19
4,748
30
48
Total Real Estate Exposure
$
207,841
$
420
$
208,261
71
%
80
%
(a)Multifamily exposure is largely in California.
(b)Other Income Producing Properties consists of clients with diversified property types or other property types outside of categories listed in the table above.
(c)Real Estate exposure is approximately 83% secured; unsecured exposure is predominantly investment-grade largely to Real Estate Investment Trusts (“REITs”) and Real Estate Operating Companies (“REOCs”) whose underlying assets are generally diversified.
(d)Represents drawn exposure as a percentage of credit exposure.
70
Consumer & Retail
Consumer & Retail exposure was $126.7 billion as of June 30, 2024. Criticized exposure was $8.3 billion at both June 30, 2024 and December 31, 2023.
June 30, 2024
(in millions, except ratios)
Loans and Lending-related Commitments
Derivative Receivables
Credit exposure
% Investment-grade
% Drawn(d)
Business and Consumer Services
$
35,757
$
309
$
36,066
42
%
41
%
Retail(a)
35,769
248
36,017
51
32
Food and Beverage
30,619
544
31,163
58
39
Consumer Hard Goods
13,343
177
13,520
42
33
Leisure(b)
9,777
138
9,915
21
42
Total Consumer & Retail(c)
$
125,265
$
1,416
$
126,681
47
%
37
%
December 31, 2023
(in millions, except ratios)
Loans and Lending-related Commitments
Derivative Receivables
Credit exposure
% Investment- grade
% Drawn(d)
Business and Consumer Services
$
34,822
$
392
$
35,214
42
%
42
%
Retail(a)
36,042
334
36,376
51
30
Food and Beverage
32,256
930
33,186
57
36
Consumer Hard Goods
13,169
197
13,366
43
33
Leisure(b)
8,784
160
8,944
25
47
Total Consumer & Retail
$
125,073
$
2,013
$
127,086
47
%
36
%
(a)Retail consists of Home Improvement & Specialty Retailers, Restaurants, Supermarkets, Discount & Drug Stores, Specialty Apparel and Department Stores.
(b)Leisure consists of Gaming, Arts & Culture, Travel Services and Sports & Recreation. As of June 30, 2024, approximately 92% of the noninvestment-grade Leisure portfolio is secured.
(c)Consumer & Retail exposure is approximately 60% secured; unsecured exposure is approximately 80% investment-grade.
(d)Represents drawn exposure as a percent of credit exposure.
Oil & Gas
Oil & Gas exposure was $33.6 billion as of June 30, 2024. Criticized exposure was $385 million at June 30, 2024 and $123 million at December 31, 2023.
June 30, 2024
(in millions, except ratios)
Loans and Lending-related Commitments
Derivative Receivables
Credit exposure
% Investment-grade
% Drawn(c)
Exploration & Production (“E&P”) and Oil field Services
$
17,030
$
792
$
17,822
58
%
27
%
Other Oil & Gas(a)
15,622
149
15,771
61
22
Total Oil & Gas(b)
$
32,652
$
941
$
33,593
60
%
25
%
December 31, 2023
(in millions, except ratios)
Loans and Lending-related Commitments
Derivative Receivables
Credit exposure
% Investment- grade
% Drawn(c)
Exploration & Production (“E&P”) and Oil field Services
$
18,121
$
536
$
18,657
51
%
26
%
Other Oil & Gas(a)
15,649
169
15,818
55
22
Total Oil & Gas
$
33,770
$
705
$
34,475
53
%
25
%
(a)Other Oil & Gas includes Integrated Oil & Gas companies, Midstream/Oil Pipeline companies and refineries.
(b)Oil & Gas exposure is approximately 34% secured, approximately half of which is reserve-based lending to the Exploration & Production sub-sector; unsecured exposure is approximately 69% investment-grade.
(c)Represents drawn exposure as a percent of credit exposure.
71
Loans
In its wholesale businesses, the Firm provides loans to a variety of clients, ranging from large corporate and institutional clients to high-net-worth individuals. Refer to Note 11 for a further discussion on loans, including information about delinquencies, loan modifications and other credit quality indicators.
The following table presents the change in the nonaccrual loan portfolio for the six months ended June 30, 2024 and 2023. Since June 30, 2023, nonaccrual loan exposure increased by $978 million, predominantly driven by Real Estate, concentrated in Office, resulting from downgrades.
Wholesale nonaccrual loan activity
Six months ended June 30, (in millions)
2024
2023
Beginning balance
$
2,714
$
2,395
Additions
2,825
1,649
Reductions:
Paydowns and other
885
618
Gross charge-offs
438
281
Returned to performing status
190
85
Sales
40
52
Total reductions
1,553
1,036
Net changes
1,272
613
Ending balance
$
3,986
$
3,008
The following table presents net charge-offs/recoveries, which are defined as gross charge-offs less recoveries, for the three and six months ended June 30, 2024 and 2023. The amounts in the table below do not include gains or losses from sales of nonaccrual loans recognized in noninterest revenue.
Wholesale net charge-offs/(recoveries)
(in millions, except ratios)
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Loans
Average loans retained
$
666,347
$
647,474
$
665,468
$
624,566
Gross charge-offs
312
189
448
294
Gross recoveries collected
(45)
(24)
(95)
(46)
Net charge-offs/(recoveries)
267
165
353
248
Net charge-off/(recovery) rate
0.16
%
0.10
%
0.11
%
0.08
%
Modified wholesale loans
The amortized cost of wholesale FDMs for the three and six months ended June 30, 2024 were $740 million and $1.2 billion, respectively, of which $167 million and $293 million, respectively, were nonaccrual loan exposure. The amortized cost of wholesale FDMs for the three and six months ended June 30, 2023 were $673 million and $854 million, respectively, of which $353 millionand $442 million, respectively, were nonaccrual loan exposure. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K and Note 11 of this Form 10-Q for further information.
72
Lending-related commitments
The Firm uses lending-related financial instruments, such as commitments (including revolving credit facilities) and guarantees, to address the financing needs of its clients. The contractual amounts of these financial instruments represent the maximum possible credit risk should the clients draw down on these commitments or when the Firm fulfills its obligations under these guarantees, and the clients subsequently fail to perform according to the terms of these contracts. Most of these commitments and guarantees have historically been refinanced, extended, cancelled, or expired without being drawn upon or a default occurring. As a result, the Firm does not believe that the total contractual amount of these wholesale lending-related commitments is representative of the Firm’s expected future credit exposure or funding requirements. Refer to Note 22 for further information on wholesale lending-related commitments.
Receivables from customers
Receivables from customers reflect held-for-investment margin loans to brokerage clients in CIB, CCB and AWM that are collateralized by assets maintained in the clients’ brokerage accounts (including cash on deposit, and primarily liquid and readily marketable debt or equity securities). To manage its credit risk, the Firm establishes margin requirements and monitors the required margin levels on an ongoing basis, and requires clients to deposit additional cash or other collateral, or to reduce positions, when appropriate. Credit risk arising from lending activities subject to collateral maintenance requirements is generally mitigated by factors such as the short-term nature of the activity, the fair value of collateral held and the Firm’s right to call for, and the borrower’s obligation to provide, additional margin when the fair value of the collateral declines. Because of these mitigating factors, these receivables generally do not require an allowance for credit losses. However, if in management’s judgment, an allowance for credit losses is required, the Firm estimates expected credit losses based on the value of the collateral and probability of borrower default. These receivables are reported within accrued interest and accounts receivable on the Firm’s Consolidated balance sheets.
Refer to Note 13of JPMorgan Chase's 2023 Form 10-K for further information on the Firm’s accounting policies for the allowance for credit losses.
Derivative contracts
Derivatives enable clients and counterparties to manage risk, including credit risk and risks arising from fluctuations in interest rates, foreign exchange and equities and commodities prices. The Firm makes markets in derivatives in order to meet these needs and uses derivatives to manage certain risks associated with net open risk positions from its market-making activities, including the counterparty credit risk arising from derivative receivables. The Firm also uses derivative instruments to manage its own credit risk and other market risk exposure. The nature of the counterparty and the settlement mechanism of the
derivative affect the credit risk to which the Firm is exposed. For over-the-counter ("OTC") derivatives, the Firm is exposed to the credit risk of the derivative counterparty. For exchange-traded derivatives (“ETD”), such as futures and options, and cleared over-the-counter (“OTC-cleared”) derivatives, the Firm can also be exposed to the credit risk of the relevant CCP. Where possible, the Firm seeks to mitigate its credit risk exposures arising from derivative contracts through the use of legally enforceable master netting arrangements and collateral agreements. The percentage of the Firm’s OTC derivative transactions subject to collateral agreements — excluding foreign exchange spot trades, which are not typically covered by collateral agreements due to their short maturity and centrally cleared trades that are settled daily — was approximately 87% at both June 30, 2024 and December 31, 2023. Refer to Note 4 for additional information on the Firm’s use of collateral agreements and for a further discussion of derivative contracts, counterparties and settlement types.
The fair value of derivative receivables reported on the Consolidated balance sheets was $54.7 billion and $54.9 billion at June 30, 2024 and December 31, 2023, respectively. The decrease was primarily as a result of market movements. Derivative receivables represent the fair value of the derivative contracts after giving effect to legally enforceable master netting agreements and the related cash collateral held by the Firm.
In addition, the Firm holds liquid securities and other cash collateral that may be used as security when the fair value of the client’s exposure is in the Firm’s favor. For these purposes, the definition of liquid securities is consistent with the definition of high quality liquid assets as defined in the LCR rule.
In management’s view, the appropriate measure of current credit risk should also take into consideration other collateral, which generally represents securities that do not qualify as high quality liquid assets under the LCR rule. The benefits of these additional collateral amounts for each counterparty are subject to a legally enforceable master netting agreement and limited to the net amount of the derivative receivables for each counterparty.
The Firm also holds additional collateral (primarily cash, G7 government securities, other liquid government agency and guaranteed securities, and corporate debt and equity securities) delivered by clients at the initiation of transactions, as well as collateral related to contracts that have a non-daily call frequency and collateral that the Firm has agreed to return but has not yet settled as of the reporting date. Although this collateral does not reduce the receivables balances and is not included in the tables below, it is available as security against potential exposure that could arise should the fair value of the client’s derivative contracts move in the Firm’s favor. Refer to Note 4 for additional information on the Firm’s use of collateral agreements for derivative transactions.
73
The following tables summarize the net derivative receivables and the internal ratings profile for the periods presented.
Derivative receivables
(in millions)
June 30, 2024
December 31, 2023
Total, net of cash collateral
$
54,673
$
54,864
Liquid securities and other cash collateral held against derivative receivables
(24,211)
(22,461)
Total, net of liquid securities and other cash collateral
$
30,462
$
32,403
Other collateral held against derivative receivables
(1,064)
(993)
Total, net of collateral
$
29,398
$
31,410
Ratings profile of derivative receivables
June 30, 2024
December 31, 2023
(in millions, except ratios)
Exposure net of collateral
% of exposure net of collateral
Exposure net of collateral
% of exposure net of collateral
Investment-grade
$
22,482
76
%
$
24,004
76
%
Noninvestment-grade
6,916
24
7,406
(a)
24
Total
$
29,398
100
%
$
31,410
100
%
Credit portfolio management activities
The Firm uses credit derivatives for two primary purposes: first, in its capacity as a market-maker, and second, as an end-user, to manage the Firm’s own credit risk associated with traditional lending activities (loans and lending-related commitments) and derivatives counterparty exposure in the Firm’s wholesale businesses. In addition, the Firm obtains credit protection against certain loans in the retained wholesale portfolio through the issuance of credit-related notes. Information on credit portfolio management activities is provided in the table below.
Credit derivatives and credit-related notes used in credit portfolio management activities
Notional amount of protection
purchased and sold(a)
(in millions)
June 30, 2024
December 31, 2023
Credit derivatives and credit-related notes used to manage:
Loans and lending-related commitments
$
24,386
$
24,157
Derivative receivables
17,503
12,832
Credit derivatives and credit-related notes used in credit portfolio management activities
$
41,889
$
36,989
(a)Amounts are presented net, considering the Firm’s net protection purchased or sold with respect to each underlying reference entity or index.
Refer to Credit derivatives in Note 4 of this Form 10-Q and Note 5 of JPMorgan Chase’s 2023 Form 10-K for further information on credit derivatives and derivatives used in credit portfolio management activities.
74
ALLOWANCE FOR CREDIT LOSSES
The Firm’s allowance for credit losses represents management's estimate of expected credit losses over the remaining expected life of the Firm's financial assets measured at amortized cost and certain off-balance sheet lending-related commitments. The Firm's allowance for credit losses generally consists of:
•the allowance for loan losses, which covers the Firm’s retained loan portfolios (scored and risk-rated) and is presented separately on the Consolidated balance sheets,
•the allowance for lending-related commitments, which is reflected in accounts payable and other liabilities on the Consolidated balance sheets, and
•the allowance for credit losses on investment securities, which is reflected in investment securities on the Consolidated balance sheets.
Discussion of changes in the allowance
The allowance for credit losses as of June 30, 2024 was $25.5 billion, reflecting a net addition of $749 million from December 31, 2023.
The net addition to the allowance for credit losses included:
•$653 million in consumer, reflecting a $753 million net addition in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $125 million net reduction in Home Lending, and
•$47 million in wholesale, driven by
–a net addition of$707 million, reflecting net downgrade activity, primarily in Real Estate, and included approximately $200 million associated with incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $660 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios and updates to certain macroeconomic variables.
The Firm has maintained the additional weight placed on the adverse scenarios in the first quarter of 2023 to reflect ongoing uncertainties and downside risks related to the geopolitical and macroeconomic environment.
The Firm's allowance for credit losses is estimated using a weighted average of five internally developed macroeconomic scenarios. The adverse scenarios incorporate more punitive macroeconomic factors than the central case assumptions provided in the table below, resulting in a weighted average U.S. unemployment rate peaking at 5.3% in the second quarter of 2025, and a weighted average U.S. real GDP level that is 2.1% lower than the central case at the end of the fourth quarter of 2025.
The following table presents the Firm’s central case assumptions for the periods presented:
Central case assumptions at June 30, 2024
4Q24
2Q25
4Q25
U.S. unemployment rate(a)
4.1
%
4.1
%
4.0
%
YoY growth in U.S. real GDP(b)
1.5
%
1.6
%
1.9
%
Central case assumptions at December 31, 2023
2Q24
4Q24
2Q25
U.S. unemployment rate(a)
4.1
%
4.4
%
4.1
%
YoY growth in U.S. real GDP(b)
1.8
%
0.7
%
1.0
%
(a)Reflects quarterly average of forecasted U.S. unemployment rate.
(b)The year over year growth in U.S. real GDP in the forecast horizon of the central scenario is calculated as the percentage change in U.S. real GDP levels from the prior year.
Subsequent changes to this forecast and related estimates will be reflected in the provision for credit losses in future periods.
Refer to Note 13 and Note 10 of JPMorgan Chase's 2023 Form 10-K for a description of the policies, methodologies and judgments used to determine the Firm’s allowance for credit losses on loans, lending-related commitments, and investment securities.
Refer to Consumer Credit Portfolio on pages 61-64, Wholesale Credit Portfolio on pages 65-74 and Note 11 for additional information on the consumer and wholesale credit portfolios.
Refer to Critical Accounting Estimates Used by the Firm on pages 86-88 for further information on the allowance for credit losses and related management judgments.
75
Allowance for credit losses and related information
2024
2023
Six months ended June 30,
Consumer, excluding credit card
Credit card
Wholesale
Total
Consumer, excluding credit card
Credit card
Wholesale
Total
(in millions, except ratios)
Allowance for loan losses
Beginning balance at January 1,
$
1,856
$
12,450
$
8,114
$
22,420
$
2,040
$
11,200
$
6,486
$
19,726
Cumulative effect of a change in accounting principle(a)
NA
NA
NA
NA
(489)
(100)
2
(587)
Gross charge-offs
661
3,998
448
5,107
501
2,432
294
3,227
Gross recoveries collected
(343)
(482)
(95)
(920)
(247)
(386)
(46)
(679)
Net charge-offs
318
3,516
353
4,187
254
2,046
248
2,548
Provision for loan losses
204
4,266
288
4,758
751
2,546
2,067
5,364
Other
1
—
(1)
—
—
—
25
25
Ending balance at June 30,
$
1,743
$
13,200
$
8,048
$
22,991
$
2,048
$
11,600
$
8,332
$
21,980
Allowance for lending-related commitments
Beginning balance at January 1,
$
75
$
—
$
1,899
$
1,974
$
76
$
—
$
2,306
$
2,382
Provision for lending-related commitments
17
—
77
94
52
—
(253)
(201)
Other
—
—
—
—
1
—
4
5
Ending balance at June 30,
$
92
$
—
$
1,976
$
2,068
$
129
$
—
$
2,057
$
2,186
Impairment methodology
Asset-specific(b)
$
(856)
$
—
$
562
$
(294)
$
(971)
$
—
$
478
$
(493)
Portfolio-based
2,599
13,200
7,486
23,285
3,019
11,600
7,854
22,473
Total allowance for loan losses
$
1,743
$
13,200
$
8,048
$
22,991
$
2,048
$
11,600
$
8,332
$
21,980
Impairment methodology
Asset-specific
$
—
$
—
$
107
$
107
$
—
$
—
$
65
$
65
Portfolio-based
92
—
1,869
1,961
129
—
1,992
2,121
Total allowance for lending-related commitments
$
92
$
—
$
1,976
$
2,068
$
129
$
—
$
2,057
$
2,186
Total allowance for investment securities
NA
NA
NA
$
177
NA
NA
NA
$
104
Total allowance for credit losses(c)
$
1,835
$
13,200
$
10,024
$
25,236
$
2,177
$
11,600
$
10,389
$
24,270
Memo:
Retained loans, end-of-period
$
382,795
$
216,100
$
674,152
$
1,273,047
$
396,195
$
191,348
$
668,145
$
1,255,688
Retained loans, average
389,847
207,329
665,468
1,262,644
330,227
183,757
624,566
1,138,550
Credit ratios
Allowance for loan losses to retained loans
0.46
%
6.11
%
1.19
%
1.81
%
0.52
%
6.06
%
1.25
%
1.75
%
Allowance for loan losses to retained nonaccrual loans(d)
51
NA
245
343
54
NA
321
345
Allowance for loan losses to retained nonaccrual loans excluding credit card
51
NA
245
146
54
NA
321
163
Net charge-off/(recovery) rates
0.16
3.41
0.11
0.67
0.16
2.25
0.08
0.45
(a)Represents the impact to the allowance for loan losses upon the Firm's adoption of changes to the TDR accounting guidance on January 1, 2023. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K for further information.
(b)Includes collateral-dependent loans, including those for which foreclosure is deemed probable, and nonaccrual risk-rated loans.
(c)At June 30, 2024 and 2023, in addition to the allowance for credit losses in the table above, the Firm also had an allowance for credit losses of $278 million and $18 million, respectively, associated with certain accounts receivable in CIB.
(d)The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.
76
Allocation of allowance for loan losses
The table below presents a breakdown of the allowance for loan losses by loan class. Refer to Note 11 for further information on loan classes.
June 30, 2024
December 31, 2023
(in millions, except ratios)
Allowance for loan losses
Percent of retained loans to total retained loans
Allowance for loan losses
Percent of retained loans to total retained loans
Residential real estate
$
659
25
%
$
817
25
%
Auto and other
1,084
5
1,039
6
Consumer, excluding credit card
1,743
30
1,856
31
Credit card
13,200
17
12,450
16
Total consumer
14,943
47
14,306
47
Secured by real estate
2,961
13
2,997
13
Commercial and industrial
3,500
13
3,519
13
Other
1,587
27
1,598
27
Total wholesale
8,048
53
8,114
53
Total
$
22,991
100
%
$
22,420
100
%
77
INVESTMENT PORTFOLIO RISK MANAGEMENT
Investment portfolio risk is the risk associated with the loss of principal or a reduction in expected returns on investments arising from the investment securities portfolio or from principal investments. The investment securities portfolio is predominantly held by Treasury and CIO in connection with the Firm’s balance sheet and asset-liability management objectives. Principal investments are predominantly privately-held financial instruments and are managed in the LOBs and Corporate. Investments are typically intended to be held over extended periods and, accordingly, the Firm has no expectation for short-term realized gains with respect to these investments.
Investment securities risk
Investment securities risk includes the exposure associated with a default in the payment of principal and interest. This risk is mitigated given that the investment securities portfolio held by Treasury and CIO predominantly consists of high-quality securities. At June 30, 2024, the Treasury and CIO investment securities portfolio, net of the allowance for credit losses, was $587.4 billion, and the average credit rating of the securities comprising the portfolio was AA+ (based upon external ratings where available, and where not available, based primarily upon internal risk ratings). Refer to Corporate segment results on pages 41-43 and Note 9 for further information on the investment securities portfolio and internal risk ratings. Refer to Liquidity Risk Management on pages 51-58 for further information on related liquidity risk. Refer to Market Risk Management on pages 79-84 for further information on the market risk inherent in the portfolio.
Principal investment risk
Principal investments are typically privately-held financial instruments representing ownership interests or other forms of junior capital. In general, principal investments include tax-oriented investments and investments made to enhance or accelerate the Firm’s business strategies and exclude those that are consolidated on the Firm's balance sheets. These investments are made by dedicated investing businesses or as part of a broader business strategy. The Firm’s principal investments are managed by the LOBs and Corporate and are reflected within their respective financial results. The Firm’s investments will continue to evolve based on market circumstances and in line with its strategic initiatives, including the Firm’s environmental and social goals.
The table below presents the aggregate carrying values of the principal investment portfolios as of June 30, 2024 and December 31, 2023.
(in billions)
June 30, 2024
December 31, 2023
Tax-oriented investments, primarily in alternative energy and affordable housing(a)
$
31.8
$
28.8
Private equity, various debt and equity instruments, and real assets
13.4
(b)
10.5
Total carrying value
$
45.2
$
39.3
(a)Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures guidance. Refer to Note 13 for additional information.
(b)The increase from December 31, 2023 is primarily due to the Visa C shares held at fair value. Refer to Market Risk Management on pages 79-84 and Note 2 on page 111 for additional information.
Refer to page 134 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s Investment Portfolio Risk Management governance and oversight.
78
MARKET RISK MANAGEMENT
Market risk is the risk associated with the effect of changes in market factors such as interest and foreign exchange rates, equity and commodity prices, credit spreads or implied volatilities, on the value of assets and liabilities held for both the short and long term. Refer to Market Risk Management on pages 135–143 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s Market Risk Management organization, market risk measurement, risk monitoring and control, and predominant business activities that give rise to market risk.
Models used to measure market risk are inherently imprecise and are limited in their ability to measure certain risks or to predict losses. This imprecision may be heightened when sudden or severe shifts in market conditions occur. For additional discussion on model uncertainty refer to Estimations and Model Risk Management on page 154 of JPMorgan Chase’s 2023 Form 10-K.
Market Risk Management periodically reviews the Firm’s existing market risk measures to identify opportunities for enhancement, and to the extent appropriate, will calibrate those measures accordingly over time.
Value-at-risk
JPMorgan Chase utilizes value-at-risk (“VaR”), a statistical risk measure, to estimate the potential loss from adverse market moves in the current market environment. The Firm has a single VaR framework used as a basis for calculating Risk Management VaR and Regulatory VaR.
The Firm’s Risk Management VaR is calculated assuming a one-day holding period and an expected tail-loss methodology which approximates a 95% confidence level. For risk management purposes, the Firm believes this methodology provides a daily measure of risk that is closely aligned to risk management decisions made by the LOBs and Corporate and, along with other market risk measures, provides the appropriate information needed to respond to risk events. The Firm calculates separately a daily aggregated VaR in accordance with regulatory rules (“Regulatory VaR”), which is used to derive the Firm’s regulatory VaR-based capital requirements under Basel III.
The Firm’s VaR model calculations are periodically evaluated and enhanced in response to changes in the composition of the Firm’s portfolios, changes in market conditions, improvements in the Firm’s modeling techniques and measurements, and other factors. Such changes may affect historical comparisons of VaR results. Refer to Estimations and Model Risk Management on page 154 of JPMorgan Chase’s 2023 Form 10-K for information regarding model reviews and approvals.
Refer to page 137 of JPMorgan Chase’s 2023 Form 10-K for further information regarding VaR, including the inherent limitations, and the key differences between Risk Management VaR and Regulatory VaR. Refer to JPMorgan Chase’s Basel III Pillar 3 Regulatory Capital Disclosures reports, which are available on the Firm’s website, for additional information on Regulatory VaR and the other components of market risk regulatory capital for the Firm (e.g., VaR-based measure, stressed VaR-based measure and the respective backtesting). Refer to Other risk measures on pages 140–143 of JPMorgan Chase’s 2023 Form 10-K for further information regarding nonstatistical market risk measures used by the Firm.
79
Corporate VaR, Daily Risk Management VaR and VaR backtesting exceptions reflect the impact of Visa C shares that are held at fair value and therefore captured in VaR. Refer to Note 2 on page 111 for additional information.
The table below shows the results of the Firm’s Risk Management VaR measure using a 95% confidence level. VaR can vary significantly as positions change, market volatility fluctuates, and diversification benefits change.
Total VaR
Three months ended
June 30, 2024
March 31, 2024
June 30, 2023
(in millions)
Avg.
Min
Max
Avg.
Min
Max
Avg.
Min
Max
CIB trading VaR by risk type(a)
Fixed income
$
31
$
26
$
37
$
35
$
30
$
39
$
57
$
50
$
66
Foreign exchange
18
15
23
13
8
19
12
7
24
Equities
7
5
11
6
4
13
8
5
11
Commodities and other
9
7
11
7
6
10
12
8
17
Diversification benefit to CIB trading VaR(b)
(32)
NM
NM
(29)
NM
NM
(48)
NM
NM
CIB trading VaR
33
28
37
32
27
40
41
31
50
Credit Portfolio VaR(c)
21
18
25
24
20
28
14
11
18
Diversification benefit to CIB VaR(b)
(16)
NM
NM
(15)
NM
NM
(11)
NM
NM
CIB VaR
38
33
43
41
36
50
44
34
55
CCB VaR
2
1
4
3
1
6
9
6
14
AWM VaR(d)
8
7
9
9
9
10
NM
NM
NM
Corporate VaR(d)(e)
48
7
102
10
9
11
13
11
15
Diversification benefit to other VaR(b)
(9)
NM
NM
(8)
NM
NM
(7)
NM
NM
Other VaR
49
10
101
14
12
16
15
13
19
Diversification benefit to CIB and other VaR(b)
(31)
NM
NM
(7)
NM
NM
(12)
NM
NM
Total VaR
$
56
$
39
$
91
$
48
$
43
$
58
$
47
$
36
$
56
(a)The impact of the business segment reorganization was not material to Total CIB VaR. Prior periods have not been revised. Refer to Business Segment Results on page 20 for additional information.
(b)Diversification benefit represents the difference between the portfolio VaR and the sum of its individual components. This reflects the non-additive nature of VaR due to imperfect correlation across LOBs, Corporate, and risk types. For maximum and minimum VaR, diversification benefit is not meaningful as the maximum and minimum VaR for each portfolio may have occurred on different trading days than the components.
(c)Includes the derivative CVA, hedges of the CVA and credit protection purchased against certain retained loans and lending-related commitments, which are reported in principal transactions revenue. This VaR does not include the retained loan portfolio, which is not reported at fair value. In line with the Firm's internal model governance, the credit risk component of CVA related to certain counterparties was removed from Credit Portfolio VaR due to the widening of the credit spreads for those counterparties to elevated levels. The related hedges were also removed to maintain consistency. This exposure is now reflected in other sensitivity-based measures.
(d)In the second quarter of 2024, the presentation of Corporate and other LOB VaR was updated to disaggregate AWM VaR due to the increase associated with credit protection purchased against certain retained loans and lending-related commitments. The VaR does not include the retained loan portfolio, which is not reported at fair value.
(e)Includes Visa C shares and a legacy private equity position which is publicly traded.
Quarter over quarter results
Average total VaR for the three months ended June 30, 2024 increased by $8 million, when compared with March 31, 2024, predominantly due to the impact of the Visa C shares in Corporate VaR. Average CIB VaR for the three months ended June 30, 2024 decreased by $3 million, when compared to March 31, 2024 due to volatility rolling out of the one-year historical look-back period impacting Fixed Income and Credit Portfolio VaR.
Year over year results
Average total VaR for the three months ended June 30, 2024 increased by $9 million, compared with the same period in the prior year predominantly due to the impact of the Visa C shares in Corporate VaR. Average CIB VaR for the three months ended June 30, 2024 decreased by $6 million, compared with the same period in the prior year driven by volatility rolling out of the one-year historical look-back period impacting Fixed Income partially offset by an increase associated with credit protection purchased against certain retained loans and lending-related commitments within Credit Portfolio VaR.
80
The following graph presents daily Risk Management VaR for the five trailing quarters. The increase in VaR and subsequent decline observed in the second quarter of 2024 was primarily driven by changes in Visa C share exposure in the Firm's Corporate VaR.
Daily Risk Management VaR
Second Quarter 2023
Third Quarter 2023
Fourth Quarter 2023
First Quarter 2023
Second Quarter 2024
VaR backtesting
The Firm performs daily VaR model backtesting, which compares the daily Risk Management VaR results with the daily gains and losses that are utilized for VaR backtesting purposes. The gains and losses depicted in the chart below do not reflect the Firm’s reported revenue as they exclude certain components of total net revenue, such as those associated with the execution of new transactions (i.e., intraday client-driven trading and intraday risk management activities), fees, commissions, other valuation adjustments and net interest income. These excluded components of total net revenue may more than offset the backtesting gain or loss on a particular day. The definition of backtesting gains and losses above is consistent with the requirements for backtesting under Basel III capital rules.
A backtesting exception occurs when the daily backtesting loss exceeds the daily Risk Management VaR for the prior day. Under the Firm’s Risk Management VaR methodology, assuming current changes in market values are consistent with the historical changes used in the simulation, the Firm would expect to incur VaR backtesting exceptions five times every 100 trading days on average. The number of VaR backtesting exceptions observed can differ from the statistically expected number of backtesting exceptions if the current level of market volatility is materially different from the level of market volatility during the 12 months of historical data used in the VaR calculation.
For the 12 months ended June 30, 2024, the Firm posted backtesting gains on 152 of the 258 days, and observed 14 VaR backtesting exceptions. For the three months ended June 30, 2024, the Firm posted backtesting gains on 42 of the 65 days, and the Firm observed five VaR backtesting exceptions primarily driven by price changes in Visa C shares.
The following chart presents the distribution of Firmwide daily backtesting gains and losses for the trailing 12 months and three months ended June 30, 2024. The daily backtesting losses are displayed as a percentage of the corresponding daily Risk Management VaR. The count of days with backtesting losses are shown in aggregate, in fifty percentage point intervals. Backtesting exceptions are displayed within the intervals that are greater than one hundred percent. The results in the chart below differ from the results of backtesting disclosed in the Market Risk section of the Firm’s Basel III Pillar 3 Regulatory Capital Disclosures reports, which are based on Regulatory VaR applied to the Firm’s covered positions.
Distribution of Daily Backtesting Gains and Losses
81
Structural interest rate risk management
The effect of interest rate exposure on the Firm’s reported net income is important as interest rate risk represents one of the Firm’s significant market risks. Interest rate risk arises not only from trading activities which are included in VaR, but also from the Firm’s traditional banking activities, which include extension of loans and credit facilities, taking deposits, issuing debt, as well as the investment securities portfolio, and associated derivative instruments.
Refer to the table on page 136 of JPMorgan Chase’s 2023 Form 10-K for a summary by LOB and Corporate identifying positions included in earnings-at-risk.
Earnings-at-Risk
One way that the Firm evaluates its structural interest rate risk is through earnings-at-risk. Earnings-at-risk estimates the Firm’s interest rate exposure for a given interest rate scenario. It is presented as a sensitivity to a baseline, which includes net interest income and certain interest rate sensitive fees. The baseline uses market interest rates and, in the case of deposits, pricing assumptions. The Firm conducts simulations of changes to this baseline for interest rate-sensitive assets and liabilities denominated in U.S. dollars and other currencies (“non-U.S. dollar” currencies). These simulations primarily include retained loans, deposits, deposits with banks, investment securities, long-term debt and any related interest rate hedges, and funds transfer pricing of other positions in risk management VaR and other sensitivity-based measures as described on page 136 of JPMorgan Chase’s 2023 Form 10-K. These simulations exclude hedges of exposure from non-U.S. dollar foreign exchange risk arising from the Firm’s capital investments. The inclusion of the hedges in these simulations would increase U.S. dollar sensitivities and decrease non-U.S. dollar sensitivities. Refer to non-U.S. dollar foreign exchange risk on page 143 of JPMorgan Chase’s 2023 Form 10-K for more information.
Earnings-at-risk scenarios estimate the potential change to a net interest income baseline, over the following 12 months utilizing multiple assumptions. These scenarios include a parallel shift involving changes to both short-term and long-term rates by an equal amount; a steeper yield curve involving holding short-term rates constant and increasing long-term rates; and a flatter yield curve involving increasing short-term rates and holding long-term rates constant or holding short-term rates constant and decreasing long-term rates. These scenarios consider many different factors, including:
•The impact on exposures as a result of instantaneous changes in interest rates from baseline rates.
•Forecasted balance sheet, as well as modeled prepayment and reinvestment behavior, but excluding assumptions about actions that could be taken by the Firm or its clients and customers in response to instantaneous rate changes. Mortgage prepayment assumptions are based on the interest rates used in the scenarios compared with underlying contractual rates, the time since origination, and other factors which are updated periodically based on historical experience. Deposit forecasts are a key assumption in the Firm's earnings-at-risk. The baseline reflects certain assumptions relating to the reversal of Quantitative Easing that are highly uncertain and require management judgment. Therefore, the actual amount of deposits held by the Firm, at any particular time, could be impacted by actions the Federal Reserve may take as part of monetary policy, including through the use of the Reverse Repurchase Facility. In addition, there are other factors that impact the amount of deposits held at the Firm such as the level of loans across the industry and competition for deposits.
•The pricing sensitivity of deposits, known as deposit betas, represent the amount by which deposit rates paid could change upon a given change in market interest rates. Actual deposit rates paid may differ from the modeled assumptions, primarily due to customer behavior and competition for deposits.
The Firm performs sensitivity analyses of the assumptions used in earnings-at-risk scenarios, including with respect to deposit betas and forecasts of deposit balances, both of which are especially significant in the case of consumer deposits. The results of these sensitivity analyses are reported to the CTC Risk Committee and the Board Risk Committee.
The Firm’s earnings-at-risk scenarios are periodically evaluated and enhanced in response to changes in the composition of the Firm’s balance sheet, changes in market conditions, improvements in the Firm’s simulation and other factors. In the second quarter of 2024, the Firm updated certain deposit rates paid assumptions which take into account observed pricing and client and customer behavior during the most recent economic cycle. These updated deposit rates paid assumptions impacted the U.S. dollar scenarios, resulting in an increase in positive sensitivity in higher interest rate scenarios, and an increase in negative sensitivity in lower interest rate scenarios. While a relevant measure of the Firm’s interest rate exposure, the earnings-at-risk analysis does not represent a forecast of the Firm’s net interest income (Refer to Outlook on page 8 for additional information).
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The Firm’s U.S. dollar and non-U.S. dollar sensitivities are presented in the table below.
(In billions)
June 30, 2024
December 31, 2023
U.S. dollar:
Parallel shift: (a)
+100 bps shift in rates
$
2.8
$
2.4
-100 bps shift in rates
(2.5)
(2.1)
+200 bps shift in rates
5.5
4.8
-200 bps shift in rates
(4.8)
(4.6)
Steeper yield curve:
+100 bps shift in long-term rates
1.5
0.6
-100 bps shift in short-term rates
(1.0)
(1.5)
Flatter yield curve:
+100 bps shift in short-term rates
1.3
1.8
-100 bps shift in long-term rates
(1.5)
(0.5)
Non-U.S. dollar:
Parallel shift: (a)
+100 bps shift in rates
$
0.7
$
0.7
-100 bps shift in rates
(0.7)
(0.7)
(a)Reflects the simultaneous shift of U.S. dollar and non-U.S. dollar rates.
The change in the Firm’s U.S. dollar sensitivities as of June 30, 2024 compared to December 31, 2023, reflected the impact of changes in the Firm’s actual and forecasted balance sheet and the update in the second quarter of 2024 of the deposit rates paid assumptions for certain consumer and wholesale deposit products based upon observed pricing and client and customer behavior during the most recent economic cycle. In the absence of this update, the Firm’s U.S. dollar sensitivities as of June 30, 2024, would have been lower by approximately $900 million and $1.9 billion to the +100 basis points and +200 basis points shifts, respectively, in short-term and parallel rate scenarios and higher by approximately $1.0 billion and $1.8 billion to the -100 basis points and -200 basis points shifts, respectively, in short-term and parallel rate scenarios.
Economic Value Sensitivity
In addition to earnings-at-risk, which is measured as a sensitivity to a baseline of earnings over the next 12 months, the Firm also measures Economic Value Sensitivity (“EVS”). EVS stress tests the longer-term economic value of equity by measuring the sensitivity of the Firm’s current balance sheet, primarily retained loans, deposits, debt and investment securities as well as related hedges, under various interest rate scenarios. The Firm's pricing and cash flow assumptions associated with deposits, as well as prepayment assumptions for loans and securities, are significant factors in the EVS measure. In accordance with the CTC interest rate risk management policy, the Firm has established limits on EVS as a percentage of TCE.
Certain assumptions used in the EVS measure may differ from those required in the fair value disclosure. For example, certain assets and liabilities with no stated maturity, such as credit card receivables and deposits, have longer assumed durations in the EVS measure. Additional information on long-term debt and held to maturity investment securities is disclosed on page 112 in Note 2 financial instruments that are not carried at fair value on the Consolidated balance sheets.
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Other sensitivity-based measures
The Firm quantifies the market risk of certain debt and equity and credit and funding-related exposures by assessing the potential impact on net revenue, other comprehensive income (“OCI”) and noninterest expense due to changes in relevant market variables. Refer to the predominant business activities that give rise to market risk on page 136 of JPMorgan Chase’s 2023 Form 10-K for additional information on the positions captured in other sensitivity-based measures.
The table below represents the potential impact to net revenue, OCI or noninterest expense for market risk-sensitive instruments that are not included in VaR or earnings-at-risk. Where appropriate, instruments used for hedging purposes are reported net of the positions being hedged. The sensitivities disclosed in the table below may not be representative of the actual gain or loss that would have been realized at June 30, 2024 and December 31, 2023, as the movement in market parameters across maturities may vary and are not intended to imply management’s expectation of future changes in these sensitivities.
Gain/(loss) (in millions)
June 30, 2024
December 31, 2023
Activity
Description
Sensitivity measure
Debt and equity(a)
Asset Management activities
Consists of seed capital and related hedges; fund co-investments(c); and certain deferred compensation and related hedges(d)
10% decline in market value
$
(56)
$
(61)
Other debt and equity
Consists of certain real estate-related fair value option elected loans, privately held equity and other investments held at fair value(c)
10% decline in market value
(955)
(1,044)
Credit- and funding-related exposures
Non-USD LTD cross-currency basis
Represents the basis risk on derivatives used to hedge the foreign exchange risk on the non-USD LTD(e)
1 basis point parallel tightening of cross currency basis
Primarily represents the foreign exchange revaluation on the fair value of the derivative hedges(e)
10% depreciation of currency
18
16
Derivatives – funding spread risk
Impact of changes in the spread related to derivatives FVA(c)
1 basis point parallel increase in spread
(2)
(3)
CVA - counterparty credit risk(b)
Credit risk component of CVA and associated hedges
10% credit spread widening
—
—
Fair value option elected liabilities – funding spread risk
Impact of changes in the spread related to fair value option elected liabilities DVA(e)
1 basis point parallel increase in spread
46
46
Fair value option elected liabilities – interest rate sensitivity
Interest rate sensitivity on fair value option elected liabilities resulting from a change in the Firm’s own credit spread(e)
1 basis point parallel increase in spread
—
—
Interest rate sensitivity related to risk management of changes in the Firm’s own credit spread on the fair value option elected liabilities noted above(c)
1 basis point parallel increase in spread
—
—
(a)Excludes equity securities without readily determinable fair values that are measured under the measurement alternative. Refer to Note 2 for additional information.
(b)In line with the Firm's internal model governance, the credit risk component of CVA related to certain counterparties was removed from Credit Portfolio VaR due to the widening of the credit spreads for those counterparties to elevated levels. The related hedges were also removed to maintain consistency. This exposure is now reflected in other sensitivity-based measures.
(c)Impact recognized through net revenue.
(d)Impact recognized through noninterest expense.
(e)Impact recognized through OCI.
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COUNTRY RISK MANAGEMENT
The Firm, through its LOBs and Corporate, may be exposed to country risk resulting from financial, economic, political or other significant developments which adversely affect the value of the Firm’s exposures related to a particular country or set of countries. The Country Risk Management group actively monitors the various portfolios which may be impacted by these developments and measures the extent to which the Firm’s exposures are diversified given the Firm’s strategy and risk tolerance relative to a country.
Refer to pages 144–145 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s country risk management.
Risk Reporting
The following table presents the Firm’s top 20 exposures by country (excluding the U.S.) as of June 30, 2024 and their comparative exposures as of December 31, 2023. The top 20 country exposures represent the Firm’s largest total exposures by individual country. Country exposures may fluctuate from period to period due to a variety of factors, including client activity, market flows and liquidity management activities undertaken by the Firm.
The increase in exposure to Germany when compared to December 31, 2023, was driven by an increase in cash placed with the central bank of Germany primarily due to client-driven market-making activities and higher client deposits in CIB.
The Firm continues to monitor its exposure to Russia, which corresponds to cash placed with the central bank, but which excludes deposits placed on behalf of clients at the Deposit Insurance Agency of Russia. The Firm currently believes that its remaining exposure to Russia is not material. Refer to Note 24 on pages 183-184 for information concerning Russian litigation.
Top 20 country exposures (excluding the U.S.)(a)
(in billions)
June 30, 2024
December 31, 2023(f)
Deposits with banks(b)
Lending(c)
Trading and investing(d)
Other(e)
Total exposure
Total exposure
Germany
$
90.8
$
12.7
$
2.6
$
0.7
$
106.8
$
84.8
United Kingdom
27.5
22.8
24.9
3.1
78.3
77.1
Japan
33.3
2.5
3.9
0.4
40.1
36.0
Brazil
6.5
4.6
7.7
—
18.8
16.7
Australia
6.3
8.8
3.4
0.1
18.6
18.3
France
0.5
11.8
4.3
0.8
17.4
10.1
Canada
2.4
11.1
3.5
0.2
17.2
16.0
China
2.8
5.7
4.6
0.1
13.2
14.0
Switzerland
5.6
4.5
0.4
2.3
12.8
10.9
South Korea
0.6
3.3
7.5
0.5
11.9
7.8
India
1.8
5.0
4.5
0.3
11.6
9.7
Italy
—
10.0
0.7
0.3
11.0
6.0
Saudi Arabia
1.1
5.2
2.9
—
9.2
7.7
Singapore
1.5
2.6
4.2
0.4
8.7
9.8
Belgium
5.0
2.3
0.6
—
7.9
8.0
Mexico
1.5
3.4
2.5
—
7.4
8.2
Netherlands
—
7.5
(0.6)
0.2
7.1
5.6
Spain
0.2
4.8
0.6
—
5.6
6.3
Sweden
—
3.6
0.3
—
3.9
3.1
Luxembourg
0.9
1.6
1.0
—
3.5
4.0
(a)Country exposures presented in the table reflect 89% and 87% of total Firmwide non-U.S. exposure, where exposure is attributed to an individual country based on the Firm’s internal country risk management approach, at June 30, 2024 and December 31, 2023, respectively.
(b)Predominantly represents cash placed with central banks.
(c)Includes loans and accrued interest receivable, lending-related commitments (net of eligible collateral and the allowance for credit losses). Excludes intra-day and operating exposures, such as those from settlement and clearing activities.
(d)Includes market-making positions and hedging, investment securities, and counterparty exposure on derivative and securities financings net of eligible collateral. Market-making positions and hedging includes exposure from single reference entity (“single-name”), index and other multiple reference entity transactions for which one or more of the underlying reference entities is in a country listed in the above table.
(e)Includes physical commodities inventory and clearing house guarantee funds.
(f)The country rankings presented in the table as of December 31, 2023, are based on the country rankings of the corresponding exposures at June 30, 2024, not actual rankings of such exposures at December 31, 2023.
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CRITICAL ACCOUNTING ESTIMATES USED BY THE FIRM
JPMorgan Chase’s accounting policies and use of estimates are integral to understanding its reported results. The Firm’s most complex accounting estimates require management’s judgment to ascertain the appropriate carrying value of assets and liabilities. The Firm has established policies and control procedures intended to ensure that estimation methods, including any judgments made as part of such methods, are well-controlled, independently reviewed and applied consistently from period to period. The methods used and judgments made reflect, among other factors, the nature of the assets or liabilities and the related business and risk management strategies, which may vary across the Firm’s businesses and portfolios. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The Firm believes its estimates for determining the carrying value of its assets and liabilities are appropriate. The following is a brief description of the Firm’s critical accounting estimates involving significant judgments.
Allowance for credit losses
The Firm’s allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of the Firm’s financial assets measured at amortized cost and certain off-balance sheet lending-related commitments. The allowance for credit losses generally comprises:
•The allowance for loan losses, which covers the Firm’s retained loan portfolios (scored and risk-rated),
•The allowance for lending-related commitments, and
•The allowance for credit losses on investment securities.
The allowance for credit losses involves significant judgment on a number of matters including development and weighting of macroeconomic forecasts, incorporation of historical loss experience, assessment of risk characteristics, assignment of risk ratings, valuation of collateral, and the determination of remaining expected life. Refer to Note 10 and Note 13 of JPMorgan Chase's 2023 Form 10-K for further information on these judgments as well as the Firm’s policies and methodologies used to determine the Firm’s allowance for credit losses, and Allowance for credit losses on pages 75-77 and Note 12 of this Form 10-Q for further information.
One of the most significant judgments involved in estimating the Firm’s allowance for credit losses relates to the macroeconomic forecasts used to estimate credit losses over the eight-quarter forecast period within the Firm’s methodology. The eight-quarter forecast incorporates hundreds of macroeconomic variables ("MEVs") that are relevant for exposures across the Firm, with modeled credit losses being driven primarily by a subset of less than twenty variables. The specific variables that have the greatest effect on the modeled losses vary by portfolio and geography.
•Key MEVs for the consumer portfolio include regional U.S. unemployment rates and U.S. HPI.
•Key MEVs for the wholesale portfolio include U.S. unemployment, U.S. real GDP, U.S. equity prices, U.S. interest rates, U.S. corporate credit spreads, oil prices, U.S. commercial real estate prices and U.S. HPI.
Changes in the Firm’s assumptions and forecasts of economic conditions could significantly affect its estimate of expected credit losses in the portfolio at the balance sheet date or lead to significant changes in the estimate from one reporting period to the next.
As a result of the First Republic acquisition, the Firm recorded an allowance for credit losses for the loans acquired and lending-related commitments assumed as of May 1, 2023. Given the differences in risk rating methodologies for the First Republic portfolio, and the ongoing integration of products and systems, the allowance for credit losses for the acquired wholesale portfolio was measured based on other facilities underwritten by the Firm with similar risk characteristics and not based on modeled estimates. The acquired wholesale portfolio was incorporated into the Firm's modeled credit loss estimates commencing in the second quarter of 2024, and therefore is now reflected in the wholesale sensitivity analysis below, resulting in an increase of approximately $200 million. Refer to Note 26 for additional information on the First Republic acquisition.
It is difficult to estimate how potential changes in any one factor or input might affect the overall allowance for credit losses because management considers a wide variety of factors and inputs in estimating the allowance for credit losses. Changes in the factors and inputs considered may not occur at the same rate and may not be consistent across all geographies or product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others.
To consider the impact of a hypothetical alternate macroeconomic forecast, the Firm compared the modeled credit losses determined using its central and relative adverse macroeconomic scenarios, which are two of the five scenarios considered in estimating the allowances for loan losses and lending-related commitments. The central and relative adverse scenarios each included a full suite of MEVs, but differed in the levels, paths and peaks/troughs of those variables over the eight-quarter forecast period.
For example, compared to the Firm’s central scenario shown on page 75 and in Note 12, the Firm’s relative adverse scenario assumes an elevated U.S. unemployment rate, averaging approximately 2.2% higher over the eight-quarter forecast, with a peak difference of approximately 3.0% in the second quarter of 2025.
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This analysis is not intended to estimate expected future changes in the allowance for credit losses, for a number of reasons, including:
•The allowance as of June 30, 2024, reflects credit losses beyond those estimated under the central scenario due to the weight placed on the adverse scenarios.
•The impacts of changes in many MEVs are both interrelated and nonlinear, so the results of this analysis cannot be simply extrapolated for more severe changes in macroeconomic variables.
•Expectations of future changes in portfolio composition and borrower behavior can significantly affect the allowance for credit losses.
To demonstrate the sensitivity of credit loss estimates to macroeconomic forecasts as of June 30, 2024, the Firm compared the modeled estimates under its relative adverse scenario to its central scenario. Without considering offsetting or correlated effects in other qualitative components of the Firm’s allowance for credit losses, the comparison between these two scenarios for the exposures below reflect the following differences:
•An increase of approximately $750 million for residential real estate loans and lending-related commitments
•An increase of approximately $3.8 billion for credit card loans
▪An increase of approximately $4.3 billion for wholesale loans and lending-related commitments
This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall allowance for credit losses as it does not reflect any potential changes in other adjustments to the quantitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these modeled lifetime loss estimates based on then-current circumstances and conditions.
Recognizing that forecasts of macroeconomic conditions are inherently uncertain, the Firm believes that its process to consider the available information and associated risks and uncertainties is appropriately governed and that its estimates of expected credit losses were reasonable and appropriate for the period ended June 30, 2024.
Fair value
JPMorgan Chase carries a portion of its assets and liabilities at fair value. The majority of such assets and liabilities are measured at fair value on a recurring basis, including derivatives, structured note products and certain securities financing agreements. Certain assets and liabilities are measured at fair value on a nonrecurring basis, including certain mortgage, home equity and other loans, where the carrying value is based on the fair value of the underlying collateral.
Assets measured at fair value
The following table includes the Firm’s assets measured at fair value and the portion of such assets that are classified within level 3 of the fair value hierarchy. Refer to Note 2 for further information.
June 30, 2024 (in millions, except ratios)
Total assets at fair value
Total level 3 assets
Federal funds sold and securities purchased under resale agreements
$
379,930
$
—
Securities borrowed
87,652
—
Trading assets:
Trading–debt and equity instruments
679,164
2,301
Derivative receivables(a)
54,673
10,246
Total trading assets
733,837
12,547
AFS securities
266,252
—
Loans
38,250
2,993
MSRs
8,847
8,847
Other
16,269
1,202
Total assets measuredat fair value on a recurring basis
1,531,037
25,589
Total assets measured at fair value on a nonrecurring basis
2,145
1,279
Total assets measuredat fair value
$
1,533,182
$
26,868
Total Firm assets
$
4,143,003
Level 3 assets at fair value as a percentage of total Firm assets(a)
1
%
Level 3 assets at fair value as a percentage of total Firm assets at fair value(a)
2
%
(a)For purposes of the table above, the derivative receivables total reflects the impact of netting adjustments; however, the $10.2 billion of derivative receivables classified as level 3 does not reflect the netting adjustment as such netting is not relevant to a presentation based on the transparency of inputs to the valuation of an asset. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.
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Valuation
Estimating fair value requires the application of judgment. The type and level of judgment required is largely dependent on the amount of observable market information available to the Firm. For instruments valued using internally developed valuation models and other valuation techniques that use significant unobservable inputs and are therefore classified within level 3 of the fair value hierarchy, judgments used to estimate fair value are more significant than those required when estimating the fair value of instruments classified within levels 1 and 2.
In arriving at an estimate of fair value for an instrument within level 3, management must first determine the appropriate valuation model or other valuation technique to use. Second, the lack of observability of certain significant inputs requires management to assess relevant empirical data in deriving valuation inputs including, for example, transaction details, yield curves, interest rates, prepayment speeds, default rates, volatilities, correlations, prices (such as commodity, equity or debt prices), valuations of comparable instruments, foreign exchange rates and credit curves. Refer to Note 2 for a further discussion of the valuation of level 3 instruments, including unobservable inputs used.
For instruments classified in levels 2 and 3, management judgment must be applied to assess the appropriate level of valuation adjustments to reflect counterparty credit quality, the Firm’s creditworthiness, market funding rates, liquidity considerations, unobservable parameters, and for portfolios that meet specified criteria, the size of the net open risk position. The judgments made are typically affected by the type of product and its specific contractual terms, and the level of liquidity for the product or within the market as a whole. In periods of heightened market volatility and uncertainty judgments are further affected by the wider variation of reasonable valuation estimates, particularly for positions that are less liquid. Refer to Note 2 for a further discussion of valuation adjustments applied by the Firm.
Imprecision in estimating unobservable market inputs or other factors can affect the amount of gain or loss recorded for a particular position. Furthermore, while the Firm believes its valuation methods are appropriate and consistent with those of other market participants, the methods and assumptions used reflect management judgment and may vary across the Firm’s businesses and portfolios.
The Firm uses various methodologies and assumptions in the determination of fair value. The use of methodologies or assumptions different than those used by the Firm could result in a different estimate of fair value at the reporting date. Refer to Note 2 for a detailed discussion of the Firm’s valuation process and hierarchy, and its determination of fair value for individual financial instruments.
Credit card rewards liability
The credit card rewards liability was $13.8 billion and $13.2 billion at June 30, 2024 and December 31, 2023, respectively, and is recorded in accounts payable and other liabilities on the Consolidated balance sheets. Refer to pages 157-158 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant assumptions and sensitivities, associated with the Firm’s credit card rewards liability.
Income taxes
Refer to Income taxes on page 158 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant assumptions, judgments and interpretations associated with the accounting for income taxes.
Goodwill impairment
Management applies significant judgment when testing goodwill for impairment. Refer to Goodwill impairment on page 157 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant valuation judgments associated with goodwill impairment.
Refer to Note 14 for additional information on goodwill, including the goodwill impairment assessment as of June 30, 2024.
Litigation reserves
Refer to Note 24 of this Form 10-Q, and Note 30 of JPMorgan Chase’s 2023 Form 10-K for a description of the significant estimates and judgments associated with establishing litigation reserves.
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ACCOUNTING AND REPORTING DEVELOPMENTS
FASB Standards Adopted since January 1, 2024
Standard
Summary of guidance
Effects on financial statements
Fair Value Measurement: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions
Issued June 2022
•Clarifies that a contractual sale restriction is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.
•Requires disclosure for investments in equity securities subject to contractual sale restrictions, including: 1) fair value of these investments, 2) nature and remaining duration of the restriction(s) and 3) circumstances that could cause a lapse in the restriction(s).
•Adopted prospectively on January 1, 2024, with no impact to the Firm’s consolidated financial statements.
Investments - Equity Method and Joint Ventures: Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
Issued March 2023
•Expands the ability to elect proportional amortization on a program-by-program basis, for additional types of tax-oriented investments (beyond affordable housing tax credit investments).
•May be adopted using a full retrospective method, or a modified retrospective method wherein the effect of adoption is reflected as an adjustment to retained earnings at the effective date.
•Adopted under the modified retrospective method on January 1, 2024.
•Refer to Note 1 for further information.
FASB Standards Issued but not yet Adopted
Standard
Summary of guidance
Effects on financial statements
Segment Reporting: Improvements to Reportable Segment Disclosures
Issued November 2023
•Requires disclosure of significant segment expenses that are readily provided to the chief operating decision maker (“CODM”) and included in segment profit or loss.
•Requires disclosure of the composition and aggregate amount of other segment items, which represent the difference between profit or loss and segment revenues less significant segment expenses.
•Requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported segment measures in assessing segment performance and deciding how to allocate resources.
•Required effective date: Annual financial statements for the year ending December 31, 2024 and for interim financial statements thereafter.(a)
•The Firm is currently assessing the potential impact on its segment disclosures.
Income Taxes: Improvements to Income Tax Disclosures
Issued December 2023
•Requires disclosure of income taxes paid disaggregated by 1) federal, state, and foreign taxes and 2) individual jurisdiction on the basis of a quantitative threshold of equal to or greater than 5 percent of total income taxes paid (net of refunds received).
•Requires disclosure of the effective tax rate reconciliation by specific categories, at a minimum, with accompanying qualitative disclosures, and separate disclosure of reconciling items based on quantitative thresholds.
•Requires categories within the effective tax rate reconciliation to be further disaggregated if quantitative thresholds are met.
•Required effective date: Annual financial statements for the year ending December 31, 2025.(a)
•The guidance can be applied on a prospective basis with the option to apply the standard retrospectively.
•The Firm is evaluating the potential impact on the Consolidated Financial Statements disclosures, as well as the Firm’s planned date of adoption.
(a) Early adoption is permitted.
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FORWARD-LOOKING STATEMENTS
From time to time, the Firm has made and will make forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “estimate,” “intend,” “plan,” “goal,” “believe,” or other words of similar meaning. Forward-looking statements provide JPMorgan Chase’s current expectations or forecasts of future events, circumstances, results or aspirations. JPMorgan Chase’s disclosures in this Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Firm also may make forward-looking statements in its other documents filed or furnished with the SEC. In addition, the Firm’s senior management may make forward-looking statements orally to investors, analysts, representatives of the media and others.
All forward-looking statements are, by their nature, subject to risks and uncertainties, many of which are beyond the Firm’s control. JPMorgan Chase’s actual future results may differ materially from those set forth in its forward-looking statements. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ from those in the forward-looking statements:
•Local, regional and global business, economic and political conditions and geopolitical events, including geopolitical tensions and hostilities;
•Changes in laws, rules and regulatory requirements, including capital and liquidity requirements affecting the Firm’s businesses, and the ability of the Firm to address those requirements;
•Heightened regulatory and governmental oversight and scrutiny of JPMorgan Chase’s business practices, including dealings with retail customers;
•Changes in trade, monetary and fiscal policies and laws;
•Changes in the level of inflation;
•Changes in income tax laws, rules and regulations;
•Changes in FDIC assessments;
•Securities and capital markets behavior, including changes in market liquidity and volatility;
•Changes in investor sentiment or consumer spending or savings behavior;
•Ability of the Firm to manage effectively its capital and liquidity;
•Changes in credit ratings assigned to the Firm or its subsidiaries;
•Damage to the Firm’s reputation;
•Ability of the Firm to appropriately address social, environmental and sustainability concerns that may arise, including from its business activities;
•Ability of the Firm to deal effectively with an economic slowdown or other economic or market disruption, including, but not limited to, in the interest rate environment;
•Technology changes instituted by the Firm, its counterparties or competitors;
•The effectiveness of the Firm’s control agenda;
•Ability of the Firm to develop or discontinue products and services, and the extent to which products or services previously sold by the Firm require the Firm to incur liabilities or absorb losses not contemplated at their initiation or origination;
•Acceptance of the Firm’s new and existing products and services by the marketplace and the ability of the Firm to innovate and to increase market share;
•Ability of the Firm to attract and retain qualified and diverse employees;
•Ability of the Firm to control expenses;
•Competitive pressures;
•Changes in the credit quality of the Firm’s clients, customers and counterparties;
•Adequacy of the Firm’s risk management framework, disclosure controls and procedures and internal control over financial reporting;
•Adverse judicial or regulatory proceedings;
•Ability of the Firm to determine accurate values of certain assets and liabilities;
•Occurrence of natural or man-made disasters or calamities, including health emergencies, the spread of infectious diseases, epidemics or pandemics, an outbreak or escalation of hostilities or other geopolitical instabilities, the effects of climate change or extraordinary events beyond the Firm's control, and the Firm’s ability to deal effectively with disruptions caused by the foregoing;
•Ability of the Firm to maintain the security of its financial, accounting, technology, data processing and other operational systems and facilities;
•Ability of the Firm to withstand disruptions that may be caused by any failure of its operational systems or those of third parties;
•Ability of the Firm to effectively defend itself against cyber attacks and other attempts by unauthorized parties to access information of the Firm or its customers or to disrupt the Firm’s systems; and
•The other risks and uncertainties detailed in Part I, Item 1A: Risk Factors in JPMorgan Chase’s 2023 Form 10-K.
Any forward-looking statements made by or on behalf of the Firm speak only as of the date they are made, and JPMorgan Chase does not undertake to update any forward-looking statements. The reader should, however, consult any further disclosures of a forward-looking nature the Firm may make in any subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
90
JPMorgan Chase & Co.
Consolidated statements of income (unaudited)
Three months ended June 30,
Six months ended June 30,
(in millions, except per share data)
2024
2023
2024
2023
Revenue
Investment banking fees
$
2,304
$
1,513
$
4,258
$
3,162
Principal transactions
6,814
6,910
13,604
14,525
Lending- and deposit-related fees
1,828
1,828
3,730
3,448
Asset management fees
4,302
3,774
8,448
7,239
Commissions and other fees
1,924
1,739
3,729
3,434
Investment securities losses
(547)
(900)
(913)
(1,768)
Mortgage fees and related income
348
278
623
499
Card income
1,332
1,094
2,550
2,328
Other income
9,149
3,292
10,277
4,299
Noninterest revenue
27,454
19,528
46,306
37,166
Interest income
48,513
41,644
95,951
78,648
Interest expense
25,767
19,865
50,123
36,158
Net interest income
22,746
21,779
45,828
42,490
Total net revenue
50,200
41,307
92,134
79,656
Provision for credit losses
3,052
2,899
4,936
5,174
Noninterest expense
Compensation expense
12,953
11,216
26,071
22,892
Occupancy expense
1,248
1,070
2,459
2,185
Technology, communications and equipment expense
2,447
2,267
4,868
4,451
Professional and outside services
2,722
2,561
5,270
5,009
Marketing
1,221
1,122
2,381
2,167
Other expense
3,122
2,586
5,421
4,225
Total noninterest expense
23,713
20,822
46,470
40,929
Income before income tax expense
23,435
17,586
40,728
33,553
Income tax expense
5,286
3,114
9,160
6,459
Net income
$
18,149
$
14,472
$
31,568
$
27,094
Net income applicable to common stockholders
$
17,718
$
14,011
$
30,661
$
26,204
Net income per common share data
Basic earnings per share
$
6.13
$
4.76
$
10.58
$
8.86
Diluted earnings per share
6.12
4.75
10.56
8.85
Weighted-average basic shares
2,889.8
2,943.8
2,899.1
2,956.1
Weighted-average diluted shares
2,894.9
2,948.3
2,903.9
2,960.5
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
91
JPMorgan Chase & Co.
Consolidated statements of comprehensive income (unaudited)
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Net income
$
18,149
$
14,472
$
31,568
$
27,094
Other comprehensive income/(loss), after–tax
Unrealized gains/(losses) on investment securities
108
757
249
2,969
Translation adjustments, net of hedges
(156)
70
(360)
267
Fair value hedges
8
11
(13)
(10)
Cash flow hedges
(22)
(497)
(911)
301
Defined benefit pension and OPEB plans
(3)
(6)
23
(61)
DVA on fair value option elected liabilities
366
(207)
117
(415)
Total other comprehensive income/(loss), after–tax
301
128
(895)
3,051
Comprehensive income
$
18,450
$
14,600
$
30,673
$
30,145
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
92
JPMorgan Chase & Co.
Consolidated balance sheets (unaudited)
(in millions, except share data)
June 30, 2024
December 31, 2023
Assets
Cash and due from banks
$
27,265
$
29,066
Deposits with banks
503,554
595,085
Federal funds sold and securities purchased under resale agreements (included $379,930 and $259,813 at fair value)
392,763
276,152
Securities borrowed (included $87,652and $70,086 at fair value)
199,062
200,436
Trading assets (included assets pledged of $176,536and $128,994)
733,882
540,607
Available-for-sale securities (amortized cost of $269,899 and $205,456; included assets pledged of $9,146and $9,219)
266,252
201,704
Held-to-maturity securities
323,746
369,848
Investment securities, net of allowance for credit losses
589,998
571,552
Loans (included $38,250and $38,851 at fair value)
1,320,700
1,323,706
Allowance for loan losses
(22,991)
(22,420)
Loans, net of allowance for loan losses
1,297,709
1,301,286
Accrued interest and accounts receivable
135,692
107,363
Premises and equipment
30,582
30,157
Goodwill, MSRs and other intangible assets
64,525
64,381
Other assets (included $17,233and $12,306 at fair value and assets pledged of $6,702and $6,764)
167,971
159,308
Total assets(a)
$
4,143,003
$
3,875,393
Liabilities
Deposits (included $69,387and $78,384 at fair value)
$
2,396,530
$
2,400,688
Federal funds purchased and securities loaned or sold under repurchase agreements (included $336,315 and $169,003 at fair value)
400,832
216,535
Short-term borrowings (included $26,117 and $20,042 at fair value)
47,308
44,712
Trading liabilities
240,836
180,428
Accounts payable and other liabilities (included $5,925and $5,637 at fair value)
295,813
290,307
Beneficial interests issued by consolidated VIEs (included $1 and $1 at fair value)
27,104
23,020
Long-term debt (included $93,448 and $87,924 at fair value)
394,028
391,825
Total liabilities(a)
3,802,451
3,547,515
Commitments and contingencies (refer to Notes 22, 23 and 24)
Stockholders’ equity
Preferred stock ($1 par value; authorized 200,000,000 shares; issued 2,390,375 and 2,740,375 shares)
23,900
27,404
Common stock ($1 par value; authorized 9,000,000,000 shares; issued 4,104,933,895shares)
4,105
4,105
Additional paid-in capital
90,328
90,128
Retained earnings
356,924
332,901
Accumulated other comprehensive losses
(11,338)
(10,443)
Treasury stock, at cost (1,259,769,168and 1,228,275,301 shares)
(123,367)
(116,217)
Total stockholders’ equity
340,552
327,878
Total liabilities and stockholders’ equity
$
4,143,003
$
3,875,393
(a)The following table presents information on assets and liabilities related to VIEs that are consolidated by the Firm at June 30, 2024 and December 31, 2023. The assets of the consolidated VIEs are used to settle the liabilities of those entities. The holders of the beneficial interests generally do not have recourse to the general credit of JPMorgan Chase. The assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation. Refer to Note 13 for a further discussion.
(in millions)
June 30, 2024
December 31, 2023
Assets
Trading assets
$
2,366
$
2,170
Loans
37,367
37,611
All other assets
641
591
Total assets
$
40,374
$
40,372
Liabilities
Beneficial interests issued by consolidated VIEs
$
27,104
$
23,020
All other liabilities
335
263
Total liabilities
$
27,439
$
23,283
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
93
JPMorgan Chase & Co.
Consolidated statements of changes in stockholders’ equity (unaudited)
Three months ended June 30,
Six months ended June 30,
(in millions, except per share data)
2024
2023
2024
2023
Preferred stock
Balance at the beginning of the period
$
29,900
$
27,404
$
27,404
$
27,404
Issuance
—
—
2,496
—
Redemption
(6,000)
—
(6,000)
—
Balance at June 30
23,900
27,404
23,900
27,404
Common stock
Balance at the beginning and end of the period
4,105
4,105
4,105
4,105
Additional paid-in capital
Balance at the beginning of the period
89,903
89,155
90,128
89,044
Shares issued and commitments to issue common stock for employee share-based compensation awards, and related tax effects
414
423
189
534
Other
11
—
11
—
Balance at June 30
90,328
89,578
90,328
89,578
Retained earnings
Balance at the beginning of the period
342,414
306,208
332,901
296,456
Cumulative effect of change in accounting principles
—
—
(161)
449
Net income
18,149
14,472
31,568
27,094
Preferred stock dividends
(317)
(373)
(714)
(729)
Common stock dividends ($1.15and $1.00 per share and $2.30 and $2.00 per share, respectively)
(3,322)
(2,948)
(6,670)
(5,911)
Balance at June 30
356,924
317,359
356,924
317,359
Accumulated other comprehensive income/(loss)
Balance at the beginning of the period
(11,639)
(14,418)
(10,443)
(17,341)
Other comprehensive income/(loss), after-tax
301
128
(895)
3,051
Balance at June 30
(11,338)
(14,290)
(11,338)
(14,290)
Treasury stock, at cost
Balance at the beginning of the period
(118,046)
(109,372)
(116,217)
(107,336)
Repurchase
(5,371)
(2,316)
(8,229)
(5,271)
Reissuance
50
48
1,079
967
Balance at June 30
(123,367)
(111,640)
(123,367)
(111,640)
Total stockholders’ equity
$
340,552
$
312,516
$
340,552
$
312,516
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
94
JPMorgan Chase & Co.
Consolidated statements of cash flows (unaudited)
Six months ended June 30,
(in millions)
2024
2023
Operating activities
Net income
$
31,568
$
27,094
Adjustments to reconcile net income to net cash used in operating activities:
Provision for credit losses
4,936
5,174
Depreciation and amortization
4,006
2,156
Deferred tax benefit
(1,609)
(2,238)
Bargain purchase gain associated with the First Republic acquisition
(103)
(2,712)
Initial gain on the Visa share exchange
(7,990)
—
Other
1,460
3,008
Originations and purchases of loans held-for-sale
(105,772)
(48,270)
Proceeds from sales, securitizations and paydowns of loans held-for-sale
99,909
47,746
Net change in:
Trading assets
(191,119)
(178,766)
Securities borrowed
1,589
21,835
Accrued interest and accounts receivable
(28,551)
16,107
Other assets
5,463
44,599
Trading liabilities
53,225
(4,846)
Accounts payable and other liabilities
13,163
(24,563)
Other operating adjustments
4,136
1,300
Net cash (used in) operating activities
(115,689)
(92,376)
Investing activities
Net change in:
Federal funds sold and securities purchased under resale agreements
(116,562)
(9,816)
Held-to-maturity securities:
Proceeds from paydowns and maturities
46,800
13,762
Purchases
(1,034)
(4,141)
Available-for-sale securities:
Proceeds from paydowns and maturities
16,742
23,470
Proceeds from sales
61,211
69,875
Purchases
(146,232)
(52,433)
Proceeds from sales and securitizations of loans held-for-investment
29,074
19,526
Other changes in loans, net
(24,568)
(33,353)
Net cash used in the First Republic acquisition
(2,362)
(9,920)
All other investing activities, net
(687)
(11,419)
Net cash (used in)/provided by investing activities
(137,618)
5,551
Financing activities
Net change in:
Deposits
(7,212)
(27,782)
Federal funds purchased and securities loaned or sold under repurchase agreements
184,307
63,590
Short-term borrowings
2,304
(3,135)
Beneficial interests issued by consolidated VIEs
1,628
7,708
Proceeds from long-term borrowings
54,103
19,357
Payments of long-term borrowings
(46,710)
(32,003)
Proceeds from issuance of preferred stock
2,500
—
Redemption of preferred stock
(6,000)
—
Treasury stock repurchased
(8,168)
(5,167)
Dividends paid
(7,270)
(6,651)
All other financing activities, net
(1,076)
(1,275)
Net cash provided by financing activities
168,406
14,642
Effect of exchange rate changes on cash and due from banks and deposits with banks
(8,431)
72
Net decrease in cash and due from banks and deposits with banks
(93,332)
(72,111)
Cash and due from banks and deposits with banks at the beginning of the period
624,151
567,234
Cash and due from banks and deposits with banks at the end of the period
$
530,819
$
495,123
Cash interest paid
$
48,526
$
35,250
Cash income taxes paid, net
7,610
5,466
The Notes to Consolidated Financial Statements (unaudited) are an integral part of these statements.
95
Refer to the Glossary of Terms and Acronyms on pages 194-199 for definitions of terms and acronyms used throughout the Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Note 1 – Basis of presentation
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding company incorporated under Delaware law in 1968, is a leading financial services firm based in the U.S., with operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Refer to Note 25 for further discussion of the Firm's business segments.
On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank (the “First Republic acquisition”) from the FDIC. The Firm continues to convert certain operations, and to integrate clients, products and services associated with the First Republic acquisition, to align with the Firm’s businesses and operations. Accordingly, reporting classification and internal risk rating profiles in the wholesale portfolio may change in future periods. Refer to Note 26 for additional information on the First Republic acquisition.
The accounting and financial reporting policies of JPMorgan Chase and its subsidiaries conform to U.S. GAAP. Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by regulatory authorities.
The unaudited Consolidated Financial Statements prepared in conformity with U.S. GAAP require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expense, and the disclosures of contingent assets and liabilities. Actual results could be different from these estimates. In the opinion of management, all normal, recurring adjustments have been included such that this interim financial information is fairly stated.
These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, and related notes thereto, included in JPMorgan Chase’s 2023 Form 10-K.
Consolidation
The Consolidated Financial Statements include the accounts of JPMorgan Chase and other entities in which the Firm has a controlling financial interest. All material intercompany balances and transactions have been eliminated.
Assets held for clients in an agency or fiduciary capacity by the Firm are not assets of JPMorgan Chase and are not included on the Consolidated balance sheets.
The Firm determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity.
Refer to Notes 1 and 14 of JPMorgan Chase’s 2023 Form 10-K for a further description of JPMorgan Chase’s accounting policies regarding consolidation.
Offsetting assets and liabilities
U.S. GAAP permits entities to present derivative receivables and derivative payables with the same counterparty and the related cash collateral receivables and payables on a net basis on the Consolidated balance sheets when a legally enforceable master netting agreement exists. U.S. GAAP also permits securities financing balances to be presented on a net basis when specified conditions are met, including the existence of a legally enforceable master netting agreement. The Firm has elected to net such balances where it has determined that the specified conditions are met. Refer to Note 1 of JPMorgan Chase’s 2023 Form 10-K for further information on offsetting assets and liabilities.
Accounting standard adopted January 1, 2024
Equity Method and Joint Ventures: Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
The guidance expanded the types of tax-oriented investments, beyond affordable housing tax credit investments, that the Firm can elect on a program by program basis, to be accounted for using the proportional amortization method. This method requires the cost of eligible investments, within an elected program, to be amortized in proportion to the tax benefits received with the resulting amortization reported directly in income tax expense, which aligns with the associated tax credits and other tax benefits. Eligible investments must meet certain criteria, including that substantially all of the return is from income tax credits and other income tax benefits.
This guidance was adopted on January 1, 2024 under the modified retrospective method. The adoption of this guidance resulted in a change to the classification and timing of the amortization associated with certain of the Firm's alternative energy tax-oriented investments. As a result of the adoption, the amortization of these investments that was previously recognized in other income is now being recognized in income tax expense. The change in accounting resulted in a decrease to retained earnings of $161 million and increased the Firm’s income tax expense and the effective tax rate by approximately $450 million and two percentage points, respectively, in the first quarter of 2024, with no material impact to net income.
96
The guidance requires additional disclosure for all investments that generate income tax credits and other income tax benefits from a tax-oriented investment program for which the Firm has elected to apply the proportional amortization method. The guidance also requires a reevaluation of eligible investments when significant modifications or events occur that result in a change in the nature of the investment or a change in the Firm's relationship with the underlying project.
Refer to Notes 5 and 13 for additional information.
97
Note 2 – Fair value measurement
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s valuation methodologies for assets, liabilities and lending-related commitments measured at fair value and the fair value hierarchy.
98
The following table presents the assets and liabilities reported at fair value as of June 30, 2024 and December 31, 2023, by major product category and fair value hierarchy.
Assets and liabilities measured at fair value on a recurring basis
Fair value hierarchy
Derivative netting adjustments(g)
June 30, 2024 (in millions)
Level 1
Level 2
Level 3
Total fair value
Federal funds sold and securities purchased under resale agreements
$
—
$
379,930
$
—
$
—
$
379,930
Securities borrowed
—
87,652
—
—
87,652
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
—
115,604
708
—
116,312
Residential – nonagency
—
2,439
5
—
2,444
Commercial – nonagency
—
1,125
11
—
1,136
Total mortgage-backed securities
—
119,168
724
—
119,892
U.S. Treasury, GSEs and government agencies(a)
168,920
10,929
—
—
179,849
Obligations of U.S. states and municipalities
—
6,357
7
—
6,364
Certificates of deposit, bankers’ acceptances and commercial paper
—
2,050
—
—
2,050
Non-U.S. government debt securities
36,575
70,501
193
—
107,269
Corporate debt securities
—
40,334
408
—
40,742
Loans
—
9,278
691
—
9,969
Asset-backed securities
—
3,178
2
—
3,180
Total debt instruments
205,495
261,795
2,025
—
469,315
Equity securities
189,321
517
122
—
189,960
Physical commodities(b)
2,418
1,090
10
—
3,518
Other
—
16,227
144
—
16,371
Total debt and equity instruments(c)
397,234
279,629
2,301
—
679,164
Derivative receivables:
Interest rate
1,706
228,084
5,197
(209,402)
25,585
Credit
—
9,212
1,172
(9,719)
665
Foreign exchange
132
189,541
1,023
(172,907)
17,789
Equity
—
82,257
2,603
(79,030)
5,830
Commodity
—
18,264
251
(13,711)
4,804
Total derivative receivables
1,838
527,358
10,246
(484,769)
54,673
Total trading assets(d)
399,072
806,987
12,547
(484,769)
733,837
Available-for-sale securities:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
—
75,052
—
—
75,052
Residential – nonagency
—
3,024
—
—
3,024
Commercial – nonagency
—
2,821
—
—
2,821
Total mortgage-backed securities
—
80,897
—
—
80,897
U.S. Treasury and government agencies
127,229
299
—
—
127,528
Obligations of U.S. states and municipalities
—
17,188
—
—
17,188
Non-U.S. government debt securities
23,702
7,397
—
—
31,099
Corporate debt securities
—
90
—
—
90
Asset-backed securities:
Collateralized loan obligations
—
6,808
—
—
6,808
Other(a)
—
2,642
—
—
2,642
Total available-for-sale securities
150,931
115,321
—
—
266,252
Loans(e)
—
35,257
2,993
—
38,250
Mortgage servicing rights
—
—
8,847
—
8,847
Other assets(d)
10,686
(f)
4,381
1,202
—
16,269
Total assets measured at fair value on a recurring basis
$
560,689
$
1,429,528
$
25,589
$
(484,769)
$
1,531,037
Deposits
$
—
$
67,464
$
1,923
$
—
$
69,387
Federal funds purchased and securities loaned or sold under repurchase agreements
—
336,315
—
—
336,315
Short-term borrowings
—
23,391
2,726
—
26,117
Trading liabilities:
Debt and equity instruments(c)
169,338
36,612
68
—
206,018
Derivative payables:
Interest rate
2,319
215,812
3,896
(210,993)
11,034
Credit
—
11,495
992
(11,324)
1,163
Foreign exchange
133
188,768
855
(179,050)
10,706
Equity
—
87,409
5,594
(85,992)
7,011
Commodity
—
17,357
723
(13,176)
4,904
Total derivative payables
2,452
520,841
12,060
(500,535)
34,818
Total trading liabilities
171,790
557,453
12,128
(500,535)
240,836
Accounts payable and other liabilities
3,845
2,010
70
—
5,925
Beneficial interests issued by consolidated VIEs
—
1
—
—
1
Long-term debt
—
62,162
31,286
—
93,448
Total liabilities measured at fair value on a recurring basis
$
175,635
$
1,048,796
$
48,133
$
(500,535)
$
772,029
99
Fair value hierarchy
Derivative netting adjustments(g)
December 31, 2023 (in millions)
Level 1
Level 2
Level 3
Total fair value
Federal funds sold and securities purchased under resale agreements
$
—
$
259,813
$
—
$
—
$
259,813
Securities borrowed
—
70,086
—
—
70,086
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
—
73,840
758
—
74,598
Residential – nonagency
—
1,921
5
—
1,926
Commercial – nonagency
—
1,362
12
—
1,374
Total mortgage-backed securities
—
77,123
775
—
77,898
U.S. Treasury, GSEs and government agencies(a)
133,997
9,998
—
—
143,995
Obligations of U.S. states and municipalities
—
5,858
10
—
5,868
Certificates of deposit, bankers’ acceptances and commercial paper
—
756
—
—
756
Non-U.S. government debt securities
24,846
55,557
179
—
80,582
Corporate debt securities
—
32,854
484
—
33,338
Loans
—
7,872
684
—
8,556
Asset-backed securities
—
2,199
6
—
2,205
Total debt instruments
158,843
192,217
2,138
—
353,198
Equity securities
107,926
679
127
—
108,732
Physical commodities(b)
2,479
3,305
7
—
5,791
Other
—
17,879
101
—
17,980
Total debt and equity instruments(c)
269,248
214,080
2,373
—
485,701
Derivative receivables:
Interest rate
2,815
243,578
4,298
(224,367)
26,324
Credit
—
8,644
1,010
(9,103)
551
Foreign exchange
149
204,737
889
(187,756)
18,019
Equity
—
55,167
2,522
(52,761)
4,928
Commodity
—
15,234
205
(10,397)
5,042
Total derivative receivables
2,964
527,360
8,924
(484,384)
54,864
Total trading assets(d)
272,212
741,440
11,297
(484,384)
540,565
Available-for-sale securities:
Mortgage-backed securities:
U.S. GSEs and government agencies(a)
—
85,170
—
—
85,170
Residential – nonagency
—
3,639
—
—
3,639
Commercial – nonagency
—
2,803
—
—
2,803
Total mortgage-backed securities
—
91,612
—
—
91,612
U.S. Treasury and government agencies
57,683
122
—
—
57,805
Obligations of U.S. states and municipalities
—
21,367
—
—
21,367
Non-U.S. government debt securities
13,095
8,187
—
—
21,282
Corporate debt securities
—
100
—
—
100
Asset-backed securities:
Collateralized loan obligations
—
6,752
—
—
6,752
Other(a)
—
2,786
—
—
2,786
Total available-for-sale securities
70,778
130,926
—
—
201,704
Loans(e)
—
35,772
3,079
—
38,851
Mortgage servicing rights
—
—
8,522
—
8,522
Other assets(d)
6,635
3,929
758
—
11,322
Total assets measured at fair value on a recurring basis
$
349,625
$
1,241,966
$
23,656
$
(484,384)
$
1,130,863
Deposits
$
—
$
76,551
$
1,833
$
—
$
78,384
Federal funds purchased and securities loaned or sold under repurchase agreements
—
169,003
—
—
169,003
Short-term borrowings
—
18,284
1,758
—
20,042
Trading liabilities:
Debt and equity instruments(c)
107,292
32,252
37
—
139,581
Derivative payables:
Interest rate
4,409
232,277
3,796
(228,586)
11,896
Credit
—
11,293
745
(10,949)
1,089
Foreign exchange
147
211,289
827
(199,643)
12,620
Equity
—
60,887
4,924
(56,443)
9,368
Commodity
—
15,894
484
(10,504)
5,874
Total derivative payables
4,556
531,640
10,776
(506,125)
40,847
Total trading liabilities
111,848
563,892
10,813
(506,125)
180,428
Accounts payable and other liabilities
3,968
1,617
52
—
5,637
Beneficial interests issued by consolidated VIEs
—
1
—
—
1
Long-term debt
—
60,198
27,726
—
87,924
Total liabilities measured at fair value on a recurring basis
$
115,816
$
889,546
$
42,182
$
(506,125)
$
541,419
(a)At June 30, 2024 and December 31, 2023, included total U.S. GSE obligations of $131.3 billion and $78.5 billion, respectively, which were mortgage-related.
(b)Physical commodities inventories are generally accounted for at the lower of cost or net realizable value. “Net realizable value” is a term defined in U.S. GAAP as not exceeding fair value less costs to sell (“transaction costs”). Transaction costs for the Firm’s physical commodities inventories are either not applicable or immaterial to the value of the inventory. Therefore, net realizable value approximates fair value for the Firm’s physical commodities inventories. When fair value hedging has been applied (or when net realizable value is below cost), the carrying value of physical commodities approximates fair value, because under fair value hedge accounting, the cost basis is adjusted for changes in fair value. Refer to Note 4 for a further discussion of the Firm’s hedge accounting relationships. To provide consistent fair value disclosure information, all physical commodities inventories have been included in each period presented.
100
(c)Balances reflect the reduction of securities owned (long positions) by the amount of identical securities sold but not yet purchased (short positions).
(d)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not required to be classified in the fair value hierarchy. At both June 30, 2024 and December 31, 2023, the fair values of these investments, which include certain hedge funds, private equity funds, real estate and other funds, were $1.0 billion. Included in these balances at June 30, 2024 and December 31, 2023, were trading assets of $45 million and $42 million, respectively, and other assets of $964 million and $984 million, respectively.
(e)At June 30, 2024 and December 31, 2023, included $10.5 billion and $10.2 billion, respectively, of residential first-lien mortgages, and $5.4 billion and $6.0 billion, respectively, of commercial first-lien mortgages. Residential mortgage loans include conforming mortgage loans originated with the intent to sell to U.S. GSEs and government agencies of $4.5 billion and $2.9 billion, respectively.
(f)At June 30, 2024, includes the Firm’s Visa C shares that are held at fair value. Refer to page 111 for additional information.
(g)As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral received and paid when a legally enforceable master netting agreement exists. The level 3 balances would be reduced if netting were applied, including the netting benefit associated with cash collateral.
Level 3 valuations
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for further information on the Firm’s valuation process and a detailed discussion of the determination of fair value for individual financial instruments.
The following table presents the Firm’s primary level 3 financial instruments, the valuation techniques used to measure the fair value of those financial instruments, the significant unobservable inputs, the range of values for those inputs and the weighted or arithmetic averages of such inputs. While the determination to classify an instrument within level 3 is based on the significance of the unobservable inputs to the overall fair value measurement, level 3 financial instruments typically include observable components (that is, components that are actively quoted and can be validated to external sources) in addition to the unobservable components. The level 1 and/or level 2 inputs are not included in the table. In addition, the Firm manages the risk of the observable components of level 3 financial instruments using securities and derivative positions that are classified within levels 1 or 2 of the fair value hierarchy.
The range of values presented in the table is representative of the highest and lowest level input used to value the significant groups of instruments within a product/instrument classification. Where provided, the weighted averages of the input values presented in the table are calculated based on the fair value of the instruments that the input is being used to value.
In the Firm’s view, the input range, weighted and arithmetic average values do not reflect the degree of input uncertainty or an assessment of the reasonableness of the Firm’s estimates and assumptions. Rather, they reflect the characteristics of the various instruments held by the Firm and the relative distribution of instruments within the range
of characteristics. For example, two option contracts may have similar levels of market risk exposure and valuation uncertainty, but may have significantly different implied volatility levels because the option contracts have different underlyings, tenors, or strike prices. The input range and weighted and arithmetic average values will therefore vary from period-to-period and parameter-to-parameter based on the characteristics of the instruments held by the Firm at each balance sheet date.
101
Level 3 inputs(a)
June 30, 2024
Product/Instrument
Fair value
(in millions)
Principal valuation technique
Unobservable inputs(g)
Range of input values
Average(i)
Residential mortgage-backed securities and loans(b)
$
1,523
Discounted cash flows
Yield
0%
88%
8%
Prepayment speed
3%
12%
9%
Conditional default rate
0%
7%
0%
Loss severity
0%
110%
2%
Commercial mortgage-backed securities and loans(c)
1,539
Market comparables
Price
$0
$90
$82
Corporate debt securities
408
Market comparables
Price
$0
$175
$93
Loans(d)
1,346
Market comparables
Price
$0
$107
$78
Non-U.S. government debt securities
193
Market comparables
Price
$0
$100
$93
Net interest rate derivatives
1,302
Option pricing
Interest rate volatility
7bps
490bps
115bps
Interest rate spread volatility
37bps
77bps
64bps
Bermudan switch value
0%
50%
18%
Interest rate correlation
(82)%
97%
64%
IR-FX correlation
(35)%
60%
6%
(1)
Discounted cash flows
Prepayment speed
0%
20%
5%
Net credit derivatives
149
Discounted cash flows
Credit correlation
26%
68%
47%
Credit spread
0bps
2,999bps
352 bps
Recovery rate
10%
90%
58%
31
Market comparables
Price
$0
$115
$72
Net foreign exchange derivatives
223
Option pricing
IR-FX correlation
(40)%
60%
24%
(55)
Discounted cash flows
Prepayment speed
11%
11%
Interest rate curve
2%
14%
6%
Net equity derivatives
(2,991)
Option pricing
Forward equity price(h)
78%
153%
102%
Equity volatility
5%
147%
31%
Equity correlation
(10)%
100%
56%
Equity-FX correlation
(88)%
65%
(32)%
Equity-IR correlation
(15)%
15%
5%
Net commodity derivatives
(472)
Option pricing
Oil commodity forward
$89 / BBL
$270 / BBL
$179 / BBL
Natural gas commodity forward
$1 / MMBTU
$6 / MMBTU
$4 / MMBTU
Commodity volatility
2%
24%
5%
Commodity correlation
(35)%
98%
32%
MSRs
8,847
Discounted cash flows
Refer to Note 14
Long-term debt, short-term borrowings, and deposits(e)
34,684
Option pricing
Interest rate volatility
7bps
490bps
115bps
Bermudan switch value
0%
50%
18%
Interest rate correlation
(82)%
97%
64%
IR-FX correlation
(35)%
60%
6%
Equity volatility
1%
134%
26%
Equity correlation
(10)%
100%
56%
Equity-FX correlation
(88)%
65%
(32)%
Equity-IR correlation
(15)%
15%
5%
1,251
Discounted cash flows
Credit correlation
26%
68%
47%
Credit spread
1bps
2,500bps
68 bps
Recovery rate
20%
75%
35%
Yield
5%
20%
11%
Loss severity
0%
100%
50%
Other level 3 assets and liabilities, net(f)
1,349
(a)The categories presented in the table have been aggregated based upon the product type, which may differ from their classification on the Consolidated balance sheets. Furthermore, the inputs presented for each valuation technique in the table are, in some cases, not applicable to every instrument valued using the technique as the characteristics of the instruments can differ.
(b)Comprises U.S. GSE and government agency securities of $708 million, nonagency securities of $5 million and non-trading loans of $810 million.
(c)Comprises nonagency securities of $11 million, trading loans of $65 million and non-trading loans of $1.5 billion.
(d)Comprises trading loans of $626 million and non-trading loans of $720 million.
(e)Long-term debt, short-term borrowings and deposits include structured notes issued by the Firm that are financial instruments that typically contain embedded derivatives. The estimation of the fair value of structured notes includes the derivative features embedded within the instrument. The significant unobservable inputs are broadly consistent with those presented for derivative receivables.
(f)Includes equity securities of $776 million including $654 million in Other assets, for which quoted prices are not readily available and the fair value is generally based on internal valuation techniques such as EBITDA multiples and comparable analysis. All other level 3 assets and liabilities are insignificant both individually and in aggregate.
(g)Price is a significant unobservable input for certain instruments. When quoted market prices are not readily available, reliance is generally placed on price-based internal valuation techniques. The price input is expressed assuming a par value of $100.
(h)Forward equity price is expressed as a percentage of the current equity price.
(i)Amounts represent weighted averages except for derivative related inputs where arithmetic averages are used.
102
Changes in and ranges of unobservable inputs
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the impact on fair value of changes in unobservable inputs and the relationships between unobservable inputs as well as a description of attributes of the underlying instruments and external market factors that affect the range of inputs used in the valuation of the Firm’s positions.
Changes in level 3 recurring fair value measurements
The following tables include a rollforward of the Consolidated balance sheets amounts (including changes in fair value) for financial instruments classified by the Firm within level 3 of the fair value hierarchy for the three and six months ended June 30, 2024 and 2023. When a determination is made to classify a financial instrument within level 3, the determination is based on the significance of the unobservable inputs to the overall fair value measurement. However, level 3 financial instruments typically include, in addition to the unobservable or level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources); accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology. The Firm risk-manages the observable components of level 3 financial instruments using securities and derivative positions that are classified within level 1 or 2 of the fair value hierarchy; as these level 1 and level 2 risk management instruments are not included below, the gains or losses in the following tables do not reflect the effect of the Firm’s risk management activities related to such level 3 instruments.
103
Fair value measurements using significant unobservable inputs
Three months ended June 30, 2024 (in millions)
Fair value at April 1, 2024
Total realized/unrealized gains/(losses)
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2024
Change in unrealized gains/(losses) related to financial instruments held at June 30, 2024
Purchases(g)
Sales
Settlements(h)
Assets:(a)
Federal funds sold and securities purchased under resale agreements
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies
729
(1)
44
(44)
(20)
—
—
708
(1)
Residential – nonagency
8
1
—
—
—
—
(4)
5
1
Commercial – nonagency
12
(1)
—
—
—
—
—
11
(1)
Total mortgage-backed securities
749
(1)
44
(44)
(20)
—
(4)
724
(1)
Obligations of U.S. states and municipalities
7
—
—
—
—
—
—
7
—
Non-U.S. government debt securities
173
(3)
41
(5)
—
—
(13)
193
(4)
Corporate debt securities
570
(4)
86
(72)
(151)
4
(25)
408
(5)
Loans
531
3
178
(131)
(14)
262
(138)
691
2
Asset-backed securities
14
—
—
(5)
(7)
—
—
2
—
Total debt instruments
2,044
(5)
349
(257)
(192)
266
(180)
2,025
(8)
Equity securities
203
(25)
33
(51)
—
19
(57)
122
3
Physical commodities
2
4
4
—
—
—
—
10
4
Other
107
33
15
—
(11)
1
(1)
144
34
Total trading assets – debt and equity instruments
2,356
7
(c)
401
(308)
(203)
286
(238)
2,301
33
(c)
Net derivative receivables:(b)
Interest rate
800
46
139
(41)
399
58
(100)
1,301
24
Credit
260
91
—
(1)
(153)
(32)
15
180
89
Foreign exchange
24
128
43
(87)
35
24
1
168
140
Equity
(2,781)
128
247
(591)
(109)
38
77
(2,991)
216
Commodity
(503)
54
8
(52)
20
(3)
4
(472)
60
Total net derivative receivables
(2,200)
447
(c)
437
(772)
192
85
(3)
(1,814)
529
(c)
Available-for-sale securities:
Corporate debt securities
—
—
—
—
—
—
—
—
—
Total available-for-sale securities
—
—
(d)
—
—
—
—
—
—
—
(d)
Loans
2,901
72
(c)
149
(183)
(253)
366
(59)
2,993
58
(c)
Mortgage servicing rights
8,605
119
(e)
418
(32)
(263)
—
—
8,847
119
(e)
Other assets
811
37
(c)
373
(13)
(11)
5
—
1,202
37
(c)
Fair value measurements using significant unobservable inputs
Three months ended June 30, 2024 (in millions)
Fair value at April 1, 2024
Total realized/unrealized (gains)/losses
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2024
Change in unrealized (gains)/losses related to financial instruments held at June 30, 2024
Purchases
Sales
Issuances
Settlements(h)
Liabilities:(a)
Deposits
$
2,055
$
14
(c)(f)
$
—
$
—
$
265
$
(407)
$
34
$
(38)
$
1,923
$
12
(c)(f)
Short-term borrowings
2,206
68
(c)(f)
—
—
1,814
(1,360)
1
(3)
2,726
45
(c)(f)
Trading liabilities – debt and equity instruments
37
(37)
(c)
(5)
55
—
—
18
—
68
(37)
(c)
Accounts payable and other liabilities
48
(8)
(c)
(3)
28
—
—
5
—
70
(8)
(c)
Long-term debt
28,678
(36)
(c)(f)
—
—
6,473
(4,121)
426
(134)
31,286
(31)
(c)(f)
104
Fair value measurements using significant unobservable inputs
Three months ended June 30, 2023 (in millions)
Fair value at April 1, 2023
Total realized/unrealized gains/(losses)
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2023
Change in unrealized gains/(losses) related to financial instruments held at June 30, 2023
Purchases(g)
Sales
Settlements(h)
Assets:(a)
Federal funds sold and securities purchased under resale agreements
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies
757
—
106
(106)
(40)
—
(11)
706
(6)
Residential – nonagency
5
6
—
(6)
—
—
—
5
—
Commercial – nonagency
10
(1)
—
—
—
5
(8)
6
(1)
Total mortgage-backed securities
772
5
106
(112)
(40)
5
(19)
717
(7)
Obligations of U.S. states and municipalities
6
—
—
—
—
—
—
6
—
Non-U.S. government debt securities
169
29
50
(49)
—
—
—
199
31
Corporate debt securities
538
—
61
(43)
(2)
7
(39)
522
(2)
Loans
926
(6)
246
(65)
(18)
102
(80)
1,105
(6)
Asset-backed securities
7
—
4
(1)
—
4
—
14
—
Total debt instruments
2,418
28
467
(270)
(60)
118
(138)
2,563
16
Equity securities
581
(16)
50
(36)
—
104
(52)
631
(16)
Physical commodities
—
—
6
—
—
—
—
6
—
Other
140
(19)
2
—
(6)
—
(4)
113
(18)
Total trading assets – debt and equity instruments
3,139
(7)
(c)
525
(306)
(66)
222
(194)
3,313
(18)
(c)
Net derivative receivables:(b)
Interest rate
754
(1,043)
60
(42)
49
(914)
14
(1,122)
(960)
Credit
452
228
—
(1)
31
2
(23)
689
240
Foreign exchange
545
(37)
51
(67)
(126)
55
(32)
389
(29)
Equity
(885)
(148)
295
(675)
(726)
349
(91)
(1,881)
9
Commodity
(287)
(50)
35
(51)
16
(12)
(4)
(353)
(71)
Total net derivative receivables
579
(1,050)
(c)
441
(836)
(756)
(520)
(136)
(2,278)
(811)
(c)
Available-for-sale securities:
Corporate debt securities
250
17
—
—
—
—
—
267
17
Total available-for-sale securities
250
17
(d)
—
—
—
—
—
267
17
(d)
Loans
1,479
(3)
(c)
2,137
(7)
(490)
760
(68)
3,808
(52)
(c)
Mortgage servicing rights
7,755
275
(e)
546
(92)
(255)
—
—
8,229
275
(e)
Other assets
406
16
(c)
5
(2)
(14)
8
(2)
417
16
(c)
Fair value measurements using significant unobservable inputs
Three months ended June 30, 2023 (in millions)
Fair value at April 1, 2023
Total realized/unrealized (gains)/losses
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2023
Change in unrealized (gains)/losses related to financial instruments held at June 30, 2023
Purchases
Sales
Issuances
Settlements(h)
Liabilities:(a)
Deposits
$
2,208
$
(51)
(c)(f)
$
—
$
—
$
139
$
(181)
$
—
$
(62)
$
2,053
$
(51)
(c)(f)
Short-term borrowings
1,410
50
(c)(f)
—
—
1,191
(927)
2
(22)
1,704
29
(c)(f)
Trading liabilities – debt and equity instruments
63
(1)
(c)
—
(2)
—
(2)
6
(1)
63
(1)
(c)
Accounts payable and other liabilities
56
5
(c)
(2)
3
—
—
8
(2)
68
5
(c)
Long-term debt
25,227
325
(c)(f)
—
—
2,667
(2,550)
113
(357)
25,425
354
(c)(f)
105
Fair value measurements using significant unobservable inputs
Six months ended June 30, 2024 (in millions)
Fair value at Jan 1, 2024
Total realized/unrealized gains/(losses)
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2024
Change in unrealized gains/(losses) related to financial instruments held at June 30, 2024
Purchases(g)
Sales
Settlements(h)
Assets:(a)
Federal funds sold and securities purchased under resale agreements
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies
758
—
45
(61)
(41)
7
—
708
—
Residential – nonagency
5
—
—
—
—
4
(4)
5
—
Commercial – nonagency
12
(2)
1
—
—
—
—
11
(1)
Total mortgage-backed securities
775
(2)
46
(61)
(41)
11
(4)
724
(1)
Obligations of U.S. states and municipalities
10
—
—
—
(2)
—
(1)
7
—
Non-U.S. government debt securities
179
2
92
(72)
—
7
(15)
193
(6)
Corporate debt securities
484
7
300
(167)
(181)
8
(43)
408
7
Loans
684
8
321
(330)
(45)
324
(271)
691
5
Asset-backed securities
6
—
1
(5)
(7)
7
—
2
—
Total debt instruments
2,138
15
760
(635)
(276)
357
(334)
2,025
5
Equity securities
127
(19)
114
(81)
—
43
(62)
122
5
Physical Commodities
7
2
4
—
(3)
—
—
10
2
Other
101
44
42
—
(43)
1
(1)
144
42
Total trading assets – debt and equity instruments
2,373
42
(c)
920
(716)
(322)
401
(397)
2,301
54
(c)
Net derivative receivables:(b)
Interest rate
502
(282)
192
(84)
883
187
(97)
1,301
(374)
Credit
265
66
—
(16)
(139)
(38)
42
180
208
Foreign exchange
62
131
77
(125)
(87)
(29)
139
168
139
Equity
(2,402)
(524)
568
(1,199)
222
(11)
355
(2,991)
(6)
Commodity
(279)
(122)
18
(120)
27
(1)
5
(472)
(123)
Total net derivative receivables
(1,852)
(731)
(c)
855
(1,544)
906
108
444
(1,814)
(156)
(c)
Available-for-sale securities:
Corporate debt securities
—
—
—
—
—
—
—
—
—
Total available-for-sale securities
—
—
(d)
—
—
—
—
—
—
—
(d)
Loans
3,079
109
(c)
209
(205)
(645)
669
(223)
2,993
(3)
(c)
Mortgage servicing rights
8,522
397
(e)
478
(27)
(523)
—
—
8,847
397
(e)
Other assets
758
66
(c)
420
(22)
(25)
5
—
1,202
66
(c)
Fair value measurements using significant unobservable inputs
Six months ended June 30, 2024 (in millions)
Fair value at Jan 1, 2024
Total realized/unrealized (gains)/losses
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2024
Change in unrealized (gains)/losses related to financial instruments held at June 30, 2024
Purchases
Sales
Issuances
Settlements(h)
Liabilities:(a)
Deposits
$
1,833
$
(15)
(c)(f)
$
—
$
—
$
792
$
(610)
$
34
$
(111)
$
1,923
$
(21)
(c)(f)
Short-term borrowings
1,758
69
(c)(f)
—
—
3,459
(2,557)
1
(4)
2,726
30
(c)(f)
Trading liabilities – debt and equity instruments
37
(40)
(c)
(6)
57
—
—
21
(1)
68
(67)
(c)
Accounts payable and other liabilities
52
(12)
(c)
(6)
31
—
—
5
—
70
(12)
(c)
Long-term debt
27,726
515
(c)(f)
—
—
10,976
(7,972)
443
(402)
31,286
424
(c)(f)
106
Fair value measurements using significant unobservable inputs
Six months ended June 30, 2023 (in millions)
Fair value at Jan 1, 2023
Total realized/unrealized gains/(losses)
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2023
Change in unrealized gains/(losses) related to financial instruments held at June 30, 2023
Purchases(g)
Sales
Settlements(h)
Assets:(a)
Federal funds sold and securities purchased under resale agreements
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Trading assets:
Debt instruments:
Mortgage-backed securities:
U.S. GSEs and government agencies
759
7
131
(113)
(64)
—
(14)
706
2
Residential – nonagency
5
7
—
(6)
(2)
1
—
5
1
Commercial – nonagency
7
—
—
—
(1)
8
(8)
6
(1)
Total mortgage-backed securities
771
14
131
(119)
(67)
9
(22)
717
2
Obligations of U.S. states and municipalities
7
—
—
(1)
—
—
—
6
—
Non-U.S. government debt securities
155
40
100
(96)
—
—
—
199
43
Corporate debt securities
463
24
110
(60)
(2)
30
(43)
522
18
Loans
759
2
682
(127)
(113)
125
(223)
1,105
1
Asset-backed securities
23
—
5
(3)
(1)
5
(15)
14
(1)
Total debt instruments
2,178
80
1,028
(406)
(183)
169
(303)
2,563
63
Equity securities
665
(47)
108
(107)
—
140
(128)
631
(27)
Physical commodities
2
—
6
—
(2)
—
—
6
—
Other
64
(40)
96
—
(4)
1
(4)
113
(19)
Total trading assets – debt and equity instruments
2,909
(7)
(c)
1,238
(513)
(189)
310
(435)
3,313
17
(c)
Net derivative receivables:(b)
Interest rate
701
(697)
95
(92)
27
(1,079)
(77)
(1,122)
(582)
Credit
13
474
3
(4)
202
26
(25)
689
497
Foreign exchange
489
52
79
(108)
(201)
119
(41)
389
29
Equity
(384)
23
613
(1,362)
(726)
460
(505)
(1,881)
95
Commodity
(146)
(42)
39
(118)
(111)
(11)
36
(353)
(206)
Total net derivative receivables
673
(190)
(c)
829
(1,684)
(809)
(485)
(612)
(2,278)
(167)
(c)
Available-for-sale securities:
Corporate debt securities
239
28
—
—
—
—
—
267
28
Total available-for-sale securities
239
28
(d)
—
—
—
—
—
267
28
(d)
Loans
1,418
23
(c)
2,285
(73)
(585)
917
(177)
3,808
24
(c)
Mortgage servicing rights
7,973
264
(e)
577
(90)
(495)
—
—
8,229
264
(e)
Other assets
405
21
(c)
17
(2)
(30)
8
(2)
417
21
(c)
Fair value measurements using significant unobservable inputs
Six months ended June 30, 2023 (in millions)
Fair value at Jan 1, 2023
Total realized/unrealized (gains)/losses
Transfers into level 3
Transfers (out of) level 3
Fair value at June 30, 2023
Change in unrealized (gains)/losses related to financial instruments held at June 30, 2023
Purchases
Sales
Issuances
Settlements(h)
Liabilities:(a)
Deposits
$
2,162
$
(3)
(c)(f)
$
—
$
—
$
267
$
(248)
$
—
$
(125)
$
2,053
$
(31)
(c)(f)
Short-term borrowings
1,401
140
(c)(f)
—
—
2,242
(2,059)
2
(22)
1,704
34
(c)(f)
Trading liabilities – debt and equity instruments
84
(13)
(c)
(27)
6
—
(2)
18
(3)
63
—
Accounts payable and other liabilities
53
4
(c)
(2)
7
—
—
8
(2)
68
4
(c)
Long-term debt
24,092
1,681
(c)(f)
—
—
5,400
(5,525)
204
(427)
25,425
1,674
(c)(f)
(a)Level 3 assets at fair value as a percentage of total Firm assets at fair value (including assets measured at fair value on a nonrecurring basis) were 2% at both June 30, 2024 and December 31, 2023. Level 3 liabilities at fair value as a percentage of total Firm liabilities at fair value (including liabilities measured at fair value on a nonrecurring basis) were 6% and 8% at June 30, 2024 and December 31, 2023, respectively.
107
(b)All level 3 derivatives are presented on a net basis, irrespective of the underlying counterparty.
(c)Predominantly reported in principal transactions revenue, except for changes in fair value for CCB mortgage loans and lending-related commitments originated with the intent to sell, and mortgage loan purchase commitments, which are reported in mortgage fees and related income.
(d)Realized gains/(losses) on AFS securities are reported in investment securities gains/(losses). Unrealized gains/(losses) are reported in OCI. Realized and unrealized gains/(losses) recorded on level 3 AFS securities were not material both for the three and six months ended June 30, 2024 and 2023.
(e)Changes in fair value for MSRs are reported in mortgage fees and related income.
(f)Realized (gains)/losses due to DVA for fair value option elected liabilities are reported in principal transactions revenue, and were not material for the three and six months ended June 30, 2024 and 2023. Unrealized (gains)/losses are reported in OCI, and were $(137) million and $23 million for the three months ended June 30, 2024 and 2023, respectively, and $(97) million and $(277) million for the six months ended June 30, 2024 and 2023, respectively.
(g)Loan originations are included in purchases.
(h)Includes financial assets and liabilities that have matured, been partially or fully repaid, impacts of modifications, deconsolidations associated with beneficial interests in VIEs and other items.
Level 3 analysis
Consolidated balance sheets changes
The following describes significant changes to level 3 assets since December 31, 2023, for those items measured at fair value on a recurring basis. Refer to Assets and liabilities measured at fair value on a nonrecurring basis on page 110 for further information on changes impacting items measured at fair value on a nonrecurring basis.
Three and six months ended June 30, 2024
Level 3 assets were $25.6 billion at June 30, 2024, reflecting an increase of $860 million from March 31, 2024, and an increase of $1.9 billion from December 31, 2023.
The increase for the three months ended June 30, 2024 was largely driven by higher:
•MSRs of $242 million, and
•Other Assets of $391 million predominantly due to purchases.
The increase for the six months ended June 30, 2024 was predominantly driven by higher:
•Gross derivative receivables of $1.3 billion due to gains, purchases and net transfers largely offset by settlements,
•MSRs of $325 million, and
•Other Assets of $444 million predominantly due to purchases.
Refer to Note 14 for information on MSRs.
Refer to the sections below for additional information.
Transfers between levels for instruments carried at fair value on a recurring basis
For the three months ended June 30, 2024, there were no significant transfers from level 2 into level 3 or from level 3 into level 2.
For the six months ended June 30, 2024, significant transfers from level 2 into level 3 included the following:
•$759 million and $798 million of gross equity derivative receivables and gross equity derivative payables, respectively, as a result of a decrease in observability and an increase in the significance of unobservable inputs.
For the six months ended June 30, 2024, significant transfers from level 3 into level 2 included the following:
•$987 million of gross equity derivative payables as a result of an increase in observability and a decrease in the significance of unobservable inputs.
For the three months ended June 30, 2023, significant transfers from level 2 into level 3 included the following:
•$1.2 billion of gross interest rate derivative payables as a result of transition to term SOFR for certain interest rate options.
•$760 million of non-trading loans driven by a decrease in observability.
For the three months ended June 30, 2023, there were no significant transfers from level 3 into level 2.
For the six months ended June 30, 2023, significant transfers from level 2 into level 3 included the following:
•$1.6 billion of gross interest rate derivative payables as a result of transition to term SOFR for certain interest rate options.
•$901 million of gross equity derivative receivables as a result of a decrease in observability and an increase in the significance of unobservable inputs.
•$917 million of non-trading loans driven by a decrease in observability.
For the six months ended June 30, 2023, significant transfers from level 3 into level 2 included the following:
•$1.3 billion and $827 million of gross equity derivative receivables and gross equity derivative payables, respectively, as a result of an increase in observability and a decrease in the significance of unobservable inputs.
All transfers are based on changes in the observability and/or significance of the valuation inputs and are assumed to occur at the beginning of the quarterly reporting period in which they occur.
108
Gains and losses
The following describes significant components of total realized/unrealized gains/(losses) for instruments measured at fair value on a recurring basis for the periods indicated. These amounts exclude any effects of the Firm’s risk management activities where the financial instruments are classified as level 1 and 2 of the fair value hierarchy. Refer to Changes in level 3 recurring fair value measurements rollforward tables on pages 103-108 for further information on these instruments.
Three months ended June 30, 2024
•$682 million of net gains on assets, predominantly driven by gains in net derivative receivables due to market movements and gains in MSR reflecting lower prepayment speeds on higher rates.
•$1 million of net losses on liabilities, driven by losses in deposits and short-term borrowings predominantly offset by gains in trading liabilities - debt and equity instruments and long-term debt due to market movements.
Three months ended June 30, 2023
•$752 million of net losses on assets, driven by losses in net derivative receivables due to market movements.
•$328 million of net losses on liabilities, driven by losses in long-term debt due to market movements.
Six months ended June 30, 2024
•$117 million of net losses on assets, driven by losses in net derivative receivables due to market movements largely offset by gains in loans due to market movements and gains in MSR reflecting lower prepayment speeds on higher rates.
•$517 million of net losses on liabilities, driven by losses in long-term debt due to market movements.
Six months ended June 30, 2023
•$139 million of net gains on assets, driven by gains in MSR reflecting lower prepayment speeds on higher rates.
•$1.8 billion of net losses on liabilities, predominantly driven by losses in long-term debt due to market movements.
Refer to Note 14 for information on MSRs.
Credit and funding adjustments — derivatives
The following table provides the impact of credit and funding adjustments on principal transactions revenue in the respective periods, excluding the effect of any associated hedging activities. The FVA presented below includes the impact of the Firm’s own credit quality on the inception value of liabilities as well as the impact of changes in the Firm’s own credit quality over time.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Credit and funding adjustments:
Derivatives CVA
$
(56)
$
66
$
20
$
121
Derivatives FVA
(20)
63
37
55
Refer to Note 2 of JPMorgan Chase’s 2023 Form 10-K for further information about both credit and funding adjustments, as well as information about valuation adjustments on fair value option elected liabilities.
109
Assets and liabilities measured at fair value on a nonrecurring basis
The following tables present the assets and liabilities held as of June 30, 2024 and 2023, for which nonrecurring fair value adjustments were recorded during the six months ended June 30, 2024 and 2023, by major product category and fair value hierarchy.
Fair value hierarchy
Total fair value
June 30, 2024 (in millions)
Level 1
Level 2
Level 3
Loans
$
—
$
860
$
778
$
1,638
Other assets(a)
—
6
501
507
Total assets measured at fair value on a nonrecurring basis
$
—
$
866
$
1,279
$
2,145
Accounts payable and other liabilities
—
—
—
—
Total liabilities measured at fair value on a nonrecurring basis
$
—
$
—
$
—
$
—
Fair value hierarchy
Total fair value
June 30, 2023 (in millions)
Level 1
Level 2
Level 3
Loans
$
—
$
803
$
840
$
1,643
Other assets
—
7
286
293
Total assets measured at fair value on a nonrecurring basis
$
—
$
810
$
1,126
$
1,936
Accounts payable and other liabilities
—
—
—
—
Total liabilities measured at fair value on a nonrecurring basis
$
—
$
—
$
—
$
—
(a)Included equity securities without readily determinable fair values that were adjusted based on observable price changes in orderly transactions from an identical or similar investment of the same issuer (measurement alternative). Of the $501 million in level 3 assets measured at fair value on a nonrecurring basis as of June 30, 2024, $336 million related to equity securities adjusted based on the measurement alternative. These equity securities are classified as level 3 due to the infrequency of the observable prices and/or the restrictions on the shares. Also, included impairments on certain equity method investments.
Nonrecurring fair value changes
The following table presents the total change in value of assets and liabilities for which fair value adjustments have been recognized for the three and six months ended June 30, 2024 and 2023, related to assets and liabilities held at those dates.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Loans
$
(105)
$
(96)
$
(149)
$
(128)
Other assets(a)
(178)
(36)
(215)
(99)
Accounts payable and other liabilities
—
—
—
—
Total nonrecurring fair value gains/(losses)
$
(283)
$
(132)
$
(364)
$
(227)
(a)Included $(109) million and $(32) million for the three months ended June 30, 2024 and 2023, respectively, and $(147) million and $(93) million for the six months ended June 30, 2024 and 2023, respectively, of net gains/(losses) as a result of the measurement alternative. The current period also included impairments on certain equity method investments.
110
Equity securities without readily determinable fair values
The Firm measures certain equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer (i.e., measurement alternative), with such changes recognized in other income.
In its determination of the new carrying values upon observable price changes, the Firm may adjust the prices if deemed necessary to arrive at the Firm’s estimated fair values. Such adjustments may include adjustments to reflect the different rights and obligations of similar securities, and other adjustments that are consistent with the Firm’s valuation techniques for private equity direct investments.
The following table presents the carrying value of equity securities without readily determinable fair values held as of June 30, 2024 and 2023, that are measured under the measurement alternative and the related adjustments recorded during the periods presented for those securities with observable price changes. These securities are included in the nonrecurring fair value tables when applicable price changes are observable.
Three months ended June 30,
Six months ended June 30,
As of or for the period ended, (in millions)
2024
2023
2024
2023
Other assets
Carrying value(a)
$
3,564
$
4,673
$
3,564
$
4,673
Upward carrying value changes(b)
10
5
30
40
Downward carrying value changes/impairment(c)
(119)
(37)
(177)
(133)
(a)The carrying value as of December 31, 2023 was $4.5 billion. The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes.
(b)The cumulative upward carrying value changes between January 1, 2018 and June 30, 2024 were $1.1 billion.
(c)The cumulative downward carrying value changes/impairment between January 1, 2018 and June 30, 2024 were $(1.4) billion.
Included in other assets above is the Firm’s interest in approximately 18.6 million Visa Class B-2 common shares ("Visa B-2 shares") and 37.2 million Visa Class B common shares reflected in the Firm's principal investment portfolio as of June 30, 2024 and June 30, 2023, respectively.
The Visa Class B common shares were redenominated to Visa Class B-1 common shares (“Visa B-1 shares”) on January 24, 2024. On April 8, 2024, Visa commenced an initial exchange offer for any and all outstanding Visa B-1 shares. On May 6, 2024, the Firm announced that Visa had accepted the Firm’s tender of its 37.2 million Visa B-1 shares in exchange for a combination of Visa B-2 shares and Visa Class C common shares (“Visa C shares”). The Visa C shares are included in Assets and liabilities measured at fair value on a recurring basis on page 99. Visa's acceptance resulted in an initial gain of $8.0 billion based on the fair value of the Visa C shares. In addition, the current quarter also reflected other Visa-related activity, including the fair value changes of the Visa C shares and derivative instruments, as well as dividends, resulting in the $7.9 billion net gain on Visa shares. As of June 30, 2024, approximately $2 billion of Visa C shares are subject to a lock-up restriction that expires on August 4, 2024.
The Visa B-2 shares are subject to certain transfer restrictions and are convertible into Visa Class A common shares (“Visa A shares”) at a specified conversion rate upon final resolution of certain litigation matters involving Visa. The conversion rate of Visa B-2 shares to Visa A shares was 1.5875 at June 30, 2024 and may be adjusted by Visa depending on developments related to the litigation matters. The outcome of those litigation matters, and the effect that the resolution of those matters may have on the conversion rate, is unknown. Accordingly, as of June 30, 2024, there is significant uncertainty regarding when the transfer restrictions on Visa B-2 shares may be terminated and what the final conversion rate for the Visa B-2 shares will be. As a result of these considerations, as well as differences in voting rights, Visa B-2 shares are not considered to be similar to Visa A shares, and are held at their nominal carryover basis.
In connection with prior sales of Visa Class B common shares prior to the redenomination to Visa B-1 shares, the Firm has entered into derivative instruments with the purchasers of the shares under which the Firm retains the risk associated with changes in the conversion rate. The notional amount of shares associated with those derivative instruments has been adjusted as a result of the Visa exchange offer. Refer to page 194 of JPMorgan Chase’s 2023 Form 10-K for further information.
111
Additional disclosures about the fair value of financial instruments that are not carried on the Consolidated balance sheets at fair value
The following table presents, by fair value hierarchy classification, the carrying values and estimated fair values at June 30, 2024 and December 31, 2023, of financial assets and liabilities, excluding financial instruments that are carried at fair value on a recurring basis, and their classification within the fair value hierarchy.
June 30, 2024
December 31, 2023
Estimated fair value hierarchy
Estimated fair value hierarchy
(in billions)
Carrying value
Level 1
Level 2
Level 3
Total estimated fair value
Carrying value
Level 1
Level 2
Level 3
Total estimated fair value
Financial assets
Cash and due from banks
$
27.3
$
27.3
$
—
$
—
$
27.3
$
29.1
$
29.1
$
—
$
—
$
29.1
Deposits with banks
503.6
503.4
0.2
—
503.6
595.1
594.6
0.5
—
595.1
Accrued interest and accounts receivable
135.3
—
135.2
0.1
135.3
107.1
—
107.0
0.1
107.1
Federal funds sold and securities purchased under resale agreements
12.8
—
12.8
—
12.8
16.3
—
16.3
—
16.3
Securities borrowed
111.4
—
111.4
—
111.4
130.3
—
130.3
—
130.3
Investment securities, held-to-maturity
323.7
127.2
167.6
—
294.8
369.8
160.6
182.2
—
342.8
Loans, net of allowance for loan losses(a)
1,259.5
—
276.1
969.0
1,245.1
1,262.5
—
285.6
964.6
1,250.2
Other
74.5
—
73.1
1.7
74.8
76.1
—
74.9
1.4
76.3
Financial liabilities
Deposits
$
2,327.1
$
—
$
2,327.7
$
—
$
2,327.7
$
2,322.3
$
—
$
2,322.6
$
—
$
2,322.6
Federal funds purchased and securities loaned or sold under repurchase agreements
64.5
—
64.5
—
64.5
47.5
—
47.5
—
47.5
Short-term borrowings
21.2
—
21.2
—
21.2
24.7
—
24.7
—
24.7
Accounts payable and other liabilities(b)
253.5
—
241.1
11.2
252.3
241.8
—
233.3
8.1
241.4
Beneficial interests issued by consolidated VIEs
27.1
—
27.1
—
27.1
23.0
—
23.0
—
23.0
Long-term debt
300.5
—
249.5
50.7
300.2
303.9
—
252.2
51.3
303.5
(a)Fair value is typically estimated using a discounted cash flow model that incorporates the characteristics of the underlying loans (including principal, contractual interest rate and contractual fees) and other key inputs, including expected lifetime credit losses, interest rates, prepayment rates, and primary origination or secondary market spreads. For certain loans, the fair value is measured based on the value of the underlying collateral. Carrying value of the loan takes into account the loan’s allowance for loan losses, which represents the loan’s expected credit losses over its remaining expected life. The difference between the estimated fair value and carrying value of a loan is generally attributable to changes in market interest rates, including credit spreads, market liquidity premiums and other factors that affect the fair value of a loan but do not affect its carrying value.
(b)Excludes lending-related commitments disclosed in the table below.
The majority of the Firm’s lending-related commitments are not carried at fair value on a recurring basis on the Consolidated balance sheets. The carrying value and the estimated fair value of these wholesale lending-related commitments were as follows for the periods indicated.
June 30, 2024
December 31, 2023
Estimated fair value hierarchy
Estimated fair value hierarchy
(in billions)
Carrying value(a)(b)(c)
Level 1
Level 2
Level 3
Total estimated fair value
Carrying value(a)(b)(c)
Level 1
Level 2
Level 3
Total estimated fair value
Wholesale lending-related commitments
$
2.8
$
—
$
—
$
4.7
$
4.7
$
3.0
$
—
$
—
$
4.8
$
4.8
(a)Excludes the current carrying values of the guarantee liability and the offsetting asset, each of which is recognized at fair value at the inception of the guarantees.
(b)Includes the wholesale allowance for lending-related commitments.
(c)As of June 30, 2024 and December 31, 2023, includes fair value adjustments associated with First Republic for other unfunded commitments to extend credit totaling $854 million and $1.1 billion, respectively, recorded in accounts payable and other liabilities on the Consolidated balance sheets. Refer to Notes 22 and 26 for additional information.
The Firm does not estimate the fair value of consumer off-balance sheet lending-related commitments. In many cases, the Firm can reduce or cancel these commitments by providing the borrower notice or, in some cases as permitted by law, without notice. Refer to page 177 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the valuation of lending-related commitments.
112
Note 3 – Fair value option
The fair value option provides an option to elect fair value for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments.
The Firm has elected to measure certain instruments at fair value for several reasons including to mitigate income statement volatility caused by the differences between the measurement basis of elected instruments (e.g., certain instruments that otherwise would be accounted for on an accrual basis) and the associated risk management arrangements that are accounted for on a fair value basis, as well as to better reflect those instruments that are managed on a fair value basis.
The Firm’s election of fair value includes the following instruments:
•Loans purchased or originated as part of securitization warehousing activity, subject to bifurcation accounting, or managed on a fair value basis, including lending-related commitments
•Certain securities financing agreements
•Owned beneficial interests in securitized financial assets that contain embedded credit derivatives, which would otherwise be required to be separately accounted for as a derivative instrument
•Structured notes and other hybrid instruments, which are predominantly financial instruments that contain embedded derivatives, that are issued or transacted as part of client-driven activities
•Certain long-term beneficial interests issued by CIB’s consolidated securitization trusts where the underlying assets are carried at fair value
Changes in fair value under the fair value option election
The following table presents the changes in fair value included in the Consolidated statements of income for the three and six months ended June 30, 2024 and 2023, for items for which the fair value option was elected. The profit and loss information presented below only includes the financial instruments that were elected to be measured at fair value; related risk management instruments, which are required to be measured at fair value, are not included in the table.
Three months ended June 30,
2024
2023
(in millions)
Principal transactions
All other income
Total changes in fair value recorded (e)
Principal transactions
All other income
Total changes in fair value recorded (e)
Federal funds sold and securities purchased under resale agreements
$
13
$
—
$
13
$
18
$
—
$
18
Securities borrowed
215
—
215
(60)
—
(60)
Trading assets:
Debt and equity instruments, excluding loans
1,561
—
1,561
1,160
—
1,160
Loans reported as trading assets:
Changes in instrument-specific credit risk
30
—
30
100
—
100
Other changes in fair value
6
1
(c)
7
2
2
(c)
4
Loans:
Changes in instrument-specific credit risk
145
(7)
(c)
138
6
(5)
(c)
1
Other changes in fair value
39
110
(c)
149
(76)
(6)
(c)
(82)
Other assets
5
—
5
(16)
(1)
(d)
(17)
Deposits(a)
(984)
—
(984)
(395)
—
(395)
Federal funds purchased and securities loaned or sold under repurchase agreements
5
—
5
(8)
—
(8)
Short-term borrowings(a)
(229)
—
(229)
(110)
—
(110)
Trading liabilities
10
—
10
(15)
—
(15)
Beneficial interests issued by consolidated VIEs
—
—
—
—
—
—
Other liabilities
(3)
—
(3)
(1)
—
(1)
Long-term debt(a)(b)
(2)
(2)
(c)(d)
(4)
(663)
(2)
(c)(d)
(665)
113
Six months ended June 30,
2024
2023
(in millions)
Principal transactions
All other income
Total changes in fair value recorded (e)
Principal transactions
All other income
Total changes in fair value recorded (e)
Federal funds sold and securities purchased under resale agreements
$
49
$
—
$
49
$
220
$
—
$
220
Securities borrowed
214
—
214
28
—
28
Trading assets:
Debt and equity instruments, excluding loans
2,809
—
2,809
2,755
—
2,755
Loans reported as trading assets:
Changes in instrument-specific credit risk
198
—
198
231
—
231
Other changes in fair value
19
1
(c)
20
5
2
(c)
7
Loans:
Changes in instrument-specific credit risk
270
(5)
(c)
265
71
(4)
(c)
67
Other changes in fair value
(18)
155
(c)
137
119
104
(c)
223
Other assets
18
—
18
14
(1)
(d)
13
Deposits(a)
(1,958)
—
(1,958)
(868)
—
(868)
Federal funds purchased and securities loaned or sold under repurchase agreements
10
—
10
(69)
—
(69)
Short-term borrowings(a)
(450)
—
(450)
(269)
—
(269)
Trading liabilities
(2)
—
(2)
(30)
—
(30)
Beneficial interests issued by consolidated VIEs
—
—
—
—
—
—
Other liabilities
(2)
—
(2)
(1)
—
(1)
Long-term debt(a)(b)
(936)
(10)
(c)(d)
(946)
(3,461)
(28)
(c)(d)
(3,489)
(a)Unrealized gains/(losses) due to instrument-specific credit risk (DVA) for liabilities for which the fair value option has been elected are recorded in OCI, while realized gains/(losses) are recorded in principal transactions revenue. Realized gains/(losses) due to instrument-specific credit risk recorded in principal transactions revenue were not material both for the three and six months ended June 30, 2024 and 2023.
(b)Long-term debt measured at fair value predominantly relates to structured notes. Although the risk associated with the structured notes is actively managed, the gains/(losses) reported in this table do not include the income statement impact of the risk management instruments used to manage such risk.
(c)Reported in mortgage fees and related income.
(d)Reported in other income.
(e)Changes in fair value exclude contractual interest, which is included in interest income and interest expense for all instruments other than certain hybrid financial instruments in CIB. Refer to Note 6 for further information regarding interest income and interest expense.
114
Difference between aggregate fair value and aggregate remaining contractual principal balance outstanding
The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding as of June 30, 2024 and December 31, 2023, for loans, long-term debt and long-term beneficial interests for which the fair value option has been elected.
June 30, 2024
December 31, 2023
(in millions)
Contractual principal outstanding
Fair value
Fair value over/(under) contractual principal outstanding
Contractual principal outstanding
Fair value
Fair value over/(under) contractual principal outstanding
Loans
Nonaccrual loans
Loans reported as trading assets
$
2,527
$
470
$
(2,057)
$
2,987
$
588
$
(2,399)
Loans
1,086
909
(177)
838
732
(106)
Subtotal
3,613
1,379
(2,234)
3,825
1,320
(2,505)
90 or more days past due and government guaranteed
Loans(a)
47
42
(5)
65
59
(6)
All other performing loans(b)
Loans reported as trading assets
11,224
9,499
(1,725)
9,547
7,968
(1,579)
Loans
38,586
37,299
(1,287)
38,948
38,060
(888)
Subtotal
49,810
46,798
(3,012)
48,495
46,028
(2,467)
Total loans
$
53,470
$
48,219
$
(5,251)
$
52,385
$
47,407
$
(4,978)
Long-term debt
Principal-protected debt
$
53,425
(d)
$
43,796
$
(9,629)
$
47,768
(d)
$
38,882
$
(8,886)
Nonprincipal-protected debt(c)
NA
49,652
NA
NA
49,042
NA
Total long-term debt
NA
$
93,448
NA
NA
$
87,924
NA
Long-term beneficial interests
Nonprincipal-protected debt(c)
NA
$
1
NA
NA
$
1
NA
Total long-term beneficial interests
NA
$
1
NA
NA
$
1
NA
(a)These balances are excluded from nonaccrual loans as the loans are insured and/or guaranteed by U.S. government agencies.
(b)There were no performing loans that were ninety days or more past due as of June 30, 2024 and December 31, 2023.
(c)Remaining contractual principal is not applicable to nonprincipal-protected structured notes and long-term beneficial interests. Unlike principal-protected structured notes and long-term beneficial interests, for which the Firm is obligated to return a stated amount of principal at maturity, nonprincipal-protected structured notes and long-term beneficial interests do not obligate the Firm to return a stated amount of principal at maturity, but for structured notes to return an amount based on the performance of an underlying variable or derivative feature embedded in the note. However, investors are exposed to the credit risk of the Firm as issuer for both nonprincipal-protected and principal-protected notes.
(d)Where the Firm issues principal-protected zero-coupon or discount notes, the balance reflects the contractual principal payment at maturity or, if applicable, the contractual principal payment at the Firm’s next call date.
At June 30, 2024 and December 31, 2023, the contractual amount of lending-related commitments for which the fair value option was elected was $11.5 billion and $9.7 billion, respectively, with a corresponding fair value of $55 million and $97 million, respectively. Refer to Note 28 of JPMorgan Chase’s 2023 Form 10-K, and Note 22 of this Form 10-Q for further information regarding off-balance sheet lending-related financial instruments.
115
Structured note products by balance sheet classification and risk component
The following table presents the fair value of structured notes, by balance sheet classification and the primary risk type.
June 30, 2024
December 31, 2023
(in millions)
Long-term debt
Short-term borrowings
Deposits
Total
Long-term debt
Short-term borrowings
Deposits
Total
Risk exposure
Interest rate
$
42,945
$
635
$
65,413
$
108,993
$
38,604
$
654
$
74,526
$
113,784
Credit
5,212
1,115
—
6,327
5,444
350
—
5,794
Foreign exchange
2,348
1,529
464
4,341
2,605
941
187
3,733
Equity
40,619
6,486
2,965
50,070
38,685
5,483
2,905
47,073
Commodity
1,697
17
1
(a)
1,715
1,862
11
1
(a)
1,874
Total structured notes
$
92,821
$
9,782
$
68,843
$
171,446
$
87,200
$
7,439
$
77,619
$
172,258
(a)Excludes deposits linked to precious metals for which the fair value option has not been elected of $716 million and $627 million for the periods ended June 30, 2024 and December 31, 2023, respectively.
116
Note 4 – Derivative instruments
JPMorgan Chase makes markets in derivatives for clients and also uses derivatives to hedge or manage its own risk exposures. Refer to Note 5 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s use of and accounting policies regarding derivative instruments.
The Firm’s disclosures are based on the accounting treatment and purpose of these derivatives. A limited number of the Firm’s derivatives are designated in hedge
accounting relationships and are disclosed according to the type of hedge (fair value hedge, cash flow hedge, or net investment hedge). Derivatives not designated in hedge accounting relationships include certain derivatives that are used to manage risks associated with specified assets and liabilities (“specified risk management” positions) as well as derivatives used in the Firm’s market-making businesses or for other purposes.
The following table outlines the Firm’s primary uses of derivatives and the related hedge accounting designation or disclosure category.
Type of Derivative
Use of Derivative
Designation and disclosure
Affected segment or unit
10-Q page reference
Manage specifically identified risk exposures in qualifying hedge accounting relationships:
•Interest rate
Hedge fixed rate assets and liabilities
Fair value hedge
Corporate
123-124
•Interest rate
Hedge floating-rate assets and liabilities
Cash flow hedge
Corporate
125
•Foreign exchange
Hedge foreign currency-denominated assets and liabilities
Fair value hedge
Corporate
123-124
•Foreign exchange
Hedge foreign currency-denominated forecasted revenue and expense
Cash flow hedge
Corporate
125
•Foreign exchange
Hedge the value of the Firm’s investments in non-U.S. dollar functional currency entities
Net investment hedge
Corporate
126
•Commodity
Hedge commodity inventory
Fair value hedge
CIB, AWM
123-124
Manage specifically identified risk exposures not designated in qualifying hedge accounting relationships:
•Interest rate
Manage the risk associated with mortgage commitments, warehouse loans and MSRs
Specified risk management
CCB
127
•Credit
Manage the credit risk associated with wholesale lending exposures
Specified risk management
CIB, AWM
127
•Interest rate and foreign exchange
Manage the risk associated with certain other specified assets and liabilities
Specified risk management
Corporate, CIB
127
Market-making derivatives and other activities:
•Various
Market-making and related risk management
Market-making and other
CIB
127
•Various
Other derivatives
Market-making and other
CIB, AWM, Corporate
127
117
Notional amount of derivative contracts
The following table summarizes the notional amount of free-standing derivative contracts outstanding as of June 30, 2024 and December 31, 2023.
Notional amounts(b)
(in billions)
June 30, 2024
December 31, 2023
Interest rate contracts
Swaps
$
25,819
$
23,251
Futures and forwards
4,476
2,690
Written options
3,243
3,370
Purchased options
3,188
3,362
Total interest rate contracts
36,726
32,673
Credit derivatives(a)
1,188
1,045
Foreign exchange contracts
Cross-currency swaps
4,616
4,721
Spot, futures and forwards
8,811
6,957
Written options
968
830
Purchased options
952
798
Total foreign exchange contracts
15,347
13,306
Equity contracts
Swaps
760
639
Futures and forwards
189
157
Written options
970
778
Purchased options
877
698
Total equity contracts
2,796
2,272
Commodity contracts
Swaps
129
115
Spot, futures and forwards
191
157
Written options
152
130
Purchased options
131
115
Total commodity contracts
603
517
Total derivative notional amounts
$
56,660
$
49,813
(a)Refer to the Credit derivatives discussion on page 128 for more information on volumes and types of credit derivative contracts.
(b)Represents the sum of gross long and gross short third-party notional derivative contracts.
While the notional amounts disclosed above give an indication of the volume of the Firm’s derivatives activity, the notional amounts significantly exceed, in the Firm’s view, the possible losses that could arise from such transactions. For most derivative contracts, the notional amount is not exchanged; it is simply a reference amount used to calculate payments.
118
Impact of derivatives on the Consolidated balance sheets
The following table summarizes information on derivative receivables and payables (before and after netting adjustments) that are reflected on the Firm’s Consolidated balance sheets as of June 30, 2024 and December 31, 2023, by accounting designation (e.g., whether the derivatives were designated in qualifying hedge accounting relationships or not) and contract type.
Free-standing derivative receivables and payables(a)
Gross derivative receivables
Gross derivative payables
June 30, 2024 (in millions)
Not designated as hedges
Designated as hedges
Total derivative receivables
Net derivative receivables(b)
Not designated as hedges
Designated as hedges
Total derivative payables
Net derivative payables(b)
Trading assets and liabilities
Interest rate
$
234,987
$
—
$
234,987
$
25,585
$
222,021
$
6
$
222,027
$
11,034
Credit
10,384
—
10,384
665
12,487
—
12,487
1,163
Foreign exchange
189,889
807
190,696
17,789
189,130
626
189,756
10,706
Equity
84,860
—
84,860
5,830
93,003
—
93,003
7,011
Commodity
18,420
95
18,515
4,804
18,054
26
18,080
4,904
Total fair value of trading assets and liabilities
$
538,540
$
902
$
539,442
$
54,673
$
534,695
$
658
$
535,353
$
34,818
Gross derivative receivables
Gross derivative payables
December 31, 2023 (in millions)
Not designated as hedges
Designated as hedges
Total derivative receivables
Net derivative receivables(b)
Not designated as hedges
Designated as hedges
Total derivative payables
Net derivative payables(b)
Trading assets and liabilities
Interest rate
$
250,689
$
2
$
250,691
$
26,324
$
240,482
$
—
$
240,482
$
11,896
Credit
9,654
—
9,654
551
12,038
—
12,038
1,089
Foreign exchange
205,010
765
205,775
18,019
210,623
1,640
212,263
12,620
Equity
57,689
—
57,689
4,928
65,811
—
65,811
9,368
Commodity
15,228
211
15,439
5,042
16,286
92
16,378
5,874
Total fair value of trading assets and liabilities
$
538,270
$
978
$
539,248
$
54,864
$
545,240
$
1,732
$
546,972
$
40,847
(a)Balances exclude structured notes for which the fair value option has been elected. Refer to Note 3 for further information.
(b)As permitted under U.S. GAAP, the Firm has elected to net derivative receivables and derivative payables and the related cash collateral receivables and payables when a legally enforceable master netting agreement exists.
119
Derivatives netting
The following tables present, as of June 30, 2024 and December 31, 2023, gross and net derivative receivables and payables by contract and settlement type. Derivative receivables and payables, as well as the related cash collateral from the same counterparty, have been netted on the Consolidated balance sheets where the Firm has obtained an appropriate legal opinion with respect to the master netting agreement. Where such a legal opinion has not been either sought or obtained, amounts are not eligible for netting on the Consolidated balance sheets, and those derivative receivables and payables are shown separately in the tables below.
In addition to the cash collateral received and transferred that is presented on a net basis with derivative receivables and payables, the Firm receives and transfers additional collateral (financial instruments and cash). These amounts mitigate counterparty credit risk associated with the Firm’s derivative instruments, but are not eligible for net presentation:
•collateral that consists of liquid securities and other cash collateral held at third-party custodians, which are shown separately as “Collateral not nettable on the Consolidated balance sheets” in the tables below, up to the fair value exposure amount. For the purpose of this disclosure, the definition of liquid securities is consistent with the definition of high quality liquid assets as defined in the LCR rule;
•the amount of collateral held or transferred that exceeds the fair value exposure at the individual counterparty level, as of the date presented, which is excluded from the tables below; and
•collateral held or transferred that relates to derivative receivables or payables where an appropriate legal opinion has not been either sought or obtained with respect to the master netting agreement, which is excluded from the tables below.
June 30, 2024
December 31, 2023
(in millions)
Gross derivative receivables
Amounts netted on the Consolidated balance sheets
Net derivative receivables
Gross derivative receivables
Amounts netted on the Consolidated balance sheets
Net derivative receivables
U.S. GAAP nettable derivative receivables
Interest rate contracts:
Over-the-counter (“OTC”)
$
168,141
$
(144,008)
$
24,133
$
176,901
$
(152,703)
$
24,198
OTC–cleared
65,370
(65,108)
262
71,419
(71,275)
144
Exchange-traded(a)
290
(286)
4
402
(389)
13
Total interest rate contracts
233,801
(209,402)
24,399
248,722
(224,367)
24,355
Credit contracts:
OTC
8,097
(7,622)
475
7,637
(7,226)
411
OTC–cleared
2,165
(2,097)
68
1,904
(1,877)
27
Total credit contracts
10,262
(9,719)
543
9,541
(9,103)
438
Foreign exchange contracts:
OTC
188,341
(172,404)
15,937
203,624
(187,295)
16,329
OTC–cleared
563
(503)
60
469
(459)
10
Exchange-traded(a)
22
—
22
6
(2)
4
Total foreign exchange contracts
188,926
(172,907)
16,019
204,099
(187,756)
16,343
Equity contracts:
OTC
32,589
(30,408)
2,181
25,001
(23,677)
1,324
Exchange-traded(a)
51,181
(48,622)
2,559
30,462
(29,084)
1,378
Total equity contracts
83,770
(79,030)
4,740
55,463
(52,761)
2,702
Commodity contracts:
OTC
9,836
(7,171)
2,665
8,049
(5,084)
2,965
OTC–cleared
168
(124)
44
133
(123)
10
Exchange-traded(a)
6,567
(6,416)
151
5,214
(5,190)
24
Total commodity contracts
16,571
(13,711)
2,860
13,396
(10,397)
2,999
Derivative receivables with appropriate legal opinion
533,330
(484,769)
48,561
(d)
531,221
(484,384)
46,837
(d)
Derivative receivables where an appropriate legal opinion has not been either sought or obtained
6,112
6,112
8,027
8,027
Total derivative receivables recognized on the Consolidated balance sheets
$
539,442
$
54,673
$
539,248
$
54,864
Collateral not nettable on the Consolidated balance sheets(b)(c)
(24,211)
(22,461)
Net amounts
$
30,462
$
32,403
120
June 30, 2024
December 31, 2023
(in millions)
Gross derivative payables
Amounts netted on the Consolidated balance sheets
Net derivative payables
Gross derivative payables
Amounts netted on the Consolidated balance sheets
Net derivative payables
U.S. GAAP nettable derivative payables
Interest rate contracts:
OTC
$
150,477
$
(141,055)
$
9,422
$
161,901
$
(152,467)
$
9,434
OTC–cleared
69,892
(69,606)
286
76,007
(75,729)
278
Exchange-traded(a)
367
(332)
35
436
(390)
46
Total interest rate contracts
220,736
(210,993)
9,743
238,344
(228,586)
9,758
Credit contracts:
OTC
10,497
(9,491)
1,006
10,332
(9,313)
1,019
OTC–cleared
1,850
(1,833)
17
1,639
(1,636)
3
Total credit contracts
12,347
(11,324)
1,023
11,971
(10,949)
1,022
Foreign exchange contracts:
OTC
187,718
(178,544)
9,174
209,386
(199,173)
10,213
OTC–cleared
556
(505)
51
552
(470)
82
Exchange-traded(a)
33
(1)
32
6
—
6
Total foreign exchange contracts
188,307
(179,050)
9,257
209,944
(199,643)
10,301
Equity contracts:
OTC
41,659
(37,372)
4,287
29,999
(27,360)
2,639
Exchange-traded(a)
49,600
(48,620)
980
33,137
(29,083)
4,054
Total equity contracts
91,259
(85,992)
5,267
63,136
(56,443)
6,693
Commodity contracts:
OTC
9,077
(6,682)
2,395
8,788
(5,192)
3,596
OTC–cleared
124
(124)
—
120
(120)
—
Exchange-traded(a)
6,437
(6,370)
67
5,376
(5,192)
184
Total commodity contracts
15,638
(13,176)
2,462
14,284
(10,504)
3,780
Derivative payables with appropriate legal opinion
528,287
(500,535)
27,752
(d)
537,679
(506,125)
31,554
(d)
Derivative payables where an appropriate legal opinion has not been either sought or obtained
7,066
7,066
9,293
9,293
Total derivative payables recognized on the Consolidated balance sheets
$
535,353
$
34,818
$
546,972
$
40,847
Collateral not nettable on the Consolidated balance sheets(b)(c)
(5,924)
(4,547)
Net amounts
$
28,894
$
36,300
(a)Exchange-traded derivative balances that relate to futures contracts are settled daily.
(b)Includes liquid securities and other cash collateral held at third-party custodians related to derivative instruments where an appropriate legal opinion has been obtained. For some counterparties, the collateral amounts of financial instruments may exceed the derivative receivables and derivative payables balances. Where this is the case, the total amount reported is limited to the net derivative receivables and net derivative payables balances with that counterparty.
(c)Derivative collateral relates only to OTC and OTC-cleared derivative instruments.
(d)Net derivatives receivable included cash collateral netted of $48.3 billion at both June 30, 2024 and December 31, 2023. Net derivatives payable included cash collateral netted of $64.1 billion and $70.0 billion at June 30, 2024 and December 31, 2023, respectively. Derivative cash collateral relates to OTC and OTC-cleared derivative instruments.
121
Liquidity risk and credit-related contingent features
Refer to Note 5 of JPMorgan Chase’s 2023 Form 10-K for a more detailed discussion of liquidity risk and credit-related contingent features related to the Firm’s derivative contracts.
The following table shows the aggregate fair value of net derivative payables related to OTC and OTC-cleared derivatives that contain contingent collateral or termination features that may be triggered upon a ratings downgrade, and the associated collateral the Firm has posted in the normal course of business, at June 30, 2024 and December 31, 2023.
OTC and OTC-cleared derivative payables containing downgrade triggers
(in millions)
June 30, 2024
December 31, 2023
Aggregate fair value of net derivative payables
$
14,051
$
14,655
Collateral posted
14,245
14,673
The following table shows the impact of a single-notch and two-notch downgrade of the long-term issuer ratings of JPMorgan Chase & Co. and its subsidiaries, predominantly JPMorgan Chase Bank, N.A., at June 30, 2024 and December 31, 2023, related to OTC and OTC-cleared derivative contracts with contingent collateral or termination features that may be triggered upon a ratings downgrade. Derivatives contracts generally require additional collateral to be posted or terminations to be triggered when the predefined rating threshold is breached. A downgrade by a single rating agency that does not result in a rating lower than a preexisting corresponding rating provided by another major rating agency will generally not result in additional collateral (except in certain instances in which additional initial margin may be required upon a ratings downgrade), nor in termination payment requirements. The liquidity impact in the table is calculated based upon a downgrade below the lowest current rating of the rating agencies referred to in the derivative contract.
Liquidity impact of downgrade triggers on OTC and OTC-cleared derivatives
June 30, 2024
December 31, 2023
(in millions)
Single-notch downgrade
Two-notch downgrade
Single-notch downgrade
Two-notch downgrade
Amount of additional collateral to be posted upon downgrade(a)
$
104
$
1,148
$
75
$
1,153
Amount required to settle contracts with termination triggers upon downgrade(b)
77
403
93
592
(a)Includes the additional collateral to be posted for initial margin.
(b)Amounts represent fair values of derivative payables, and do not reflect collateral posted.
Derivatives executed in contemplation of a sale of the underlying financial asset
In certain instances the Firm enters into transactions in which it transfers financial assets but maintains the economic exposure to the transferred assets by entering into a derivative with the same counterparty in contemplation of the initial transfer. The Firm generally accounts for such transfers as collateralized financing transactions as described in Note 10, but in limited circumstances they may qualify to be accounted for as a sale and a derivative under U.S. GAAP. The amount of such transfers accounted for as a sale where the associated derivative was outstanding was not material at June 30, 2024 and December 31, 2023.
122
Impact of derivatives on the Consolidated statements of income
The following tables provide information related to gains and losses recorded on derivatives based on their hedge accounting designation or purpose.
Fair value hedge gains and losses
The following tables present derivative instruments, by contract type, used in fair value hedge accounting relationships, as well as pre-tax gains/(losses) recorded on such derivatives and the related hedged items for the three and six months ended June 30, 2024 and 2023, respectively. The Firm includes gains/(losses) on the hedging derivative in the same line item in the Consolidated statements of income as the related hedged item.
Gains/(losses) recorded in income
Income statement impact of excluded components(e)
OCI impact
Three months ended June 30, 2024 (in millions)
Derivatives
Hedged items
Income statement impact
Amortization approach
Changes in fair value
Derivatives - Gains/(losses) recorded in OCI(f)
Contract type
Interest rate(a)(b)
$
160
$
(42)
$
118
$
122
$
—
Foreign exchange(c)
(54)
110
56
(132)
56
11
Commodity(d)
(60)
89
29
27
—
Total
$
46
$
157
$
203
$
(132)
$
205
$
11
Gains/(losses) recorded in income
Income statement impact of
excluded components(e)
OCI impact
Three months ended June 30, 2023 (in millions)
Derivatives
Hedged items
Income statement impact
Amortization approach
Changes in fair value
Derivatives - Gains/(losses) recorded in OCI(f)
Contract type
Interest rate(a)(b)
$
(151)
$
164
$
13
$
—
$
5
$
—
Foreign exchange(c)
254
(188)
66
(156)
66
15
Commodity(d)
422
(290)
132
—
133
—
Total
$
525
$
(314)
$
211
$
(156)
$
204
$
15
Gains/(losses) recorded in income
Income statement impact of excluded components(e)
OCI impact
Six months ended June 30, 2024 (in millions)
Derivatives
Hedged items
Income statement impact
Amortization approach
Changes in fair value
Derivatives - Gains/(losses) recorded in OCI(f)
Contract type
Interest rate(a)(b)
$
478
$
(262)
$
216
$
—
$
233
$
—
Foreign exchange(c)
(194)
299
105
(248)
105
(16)
Commodity(d)
202
(147)
55
—
51
—
Total
$
486
$
(110)
$
376
$
(248)
$
389
$
(16)
Gains/(losses) recorded in income
Income statement impact of
excluded components(e)
OCI impact
Six months ended June 30, 2023 (in millions)
Derivatives
Hedged items
Income statement impact
Amortization approach
Changes in fair value
Derivatives - Gains/(losses) recorded in OCI(f)
Contract type
Interest rate(a)(b)
$
1,021
$
(940)
$
81
$
—
$
15
$
—
Foreign exchange(c)
412
(282)
130
(329)
130
(13)
Commodity(d)
(1,118)
1,335
217
—
217
—
Total
$
315
$
113
$
428
$
(329)
$
362
$
(13)
(a)Primarily consists of hedges of the benchmark (e.g., Secured Overnight Financing Rate (“SOFR”)) interest rate risk of fixed-rate long-term debt and AFS securities. Gains and losses were recorded in net interest income.
(b)Includes the amortization of income/expense associated with the inception hedge accounting adjustment applied to the hedged item. Excludes the accrual of interest on interest rate swaps and the related hedged items.
(c)Primarily consists of hedges of the foreign currency risk of long-term debt and AFS securities for changes in spot foreign currency rates. Gains and losses related to the derivatives and the hedged items due to changes in foreign currency rates and the income statement impact of excluded components were recorded primarily in principal transactions revenue and net interest income.
(d)Consists of overall fair value hedges of physical commodities inventories that are generally carried at the lower of cost or net realizable value (net realizable value approximates fair value). Gains and losses were recorded in principal transactions revenue.
(e)The assessment of hedge effectiveness excludes certain components of the changes in fair values of the derivatives and hedged items such as forward points on foreign exchange forward contracts, time values and cross-currency basis spreads. Excluded components may impact earnings either through amortization of the initial amount over the life of the derivative, or through fair value changes recognized in the current period.
(f)Represents the change in value of amounts excluded from the assessment of effectiveness under the amortization approach, predominantly cross-currency basis spreads. The amount excluded at inception of the hedge is recognized in earnings over the life of the derivative.
123
As of June 30, 2024 and December 31, 2023, the following amounts were recorded on the Consolidated balance sheets related to certain cumulative fair value hedge basis adjustments that are expected to reverse through the income statement in future periods as an adjustment to yield.
Carrying amount of the hedged items(a)(b)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items:
June 30, 2024 (in millions)
Active hedging relationships(d)
Discontinued hedging relationships(d)(e)
Total
Assets
Investment securities - AFS
$
143,925
(c)
$
(1,779)
$
(2,013)
$
(3,792)
Liabilities
Long-term debt
201,959
(4,048)
(9,464)
(13,512)
Beneficial interests issued by consolidated VIEs
2,317
(31)
—
(31)
Carrying amount of the hedged items(a)(b)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items:
December 31, 2023 (in millions)
Active hedging relationships(d)
Discontinued hedging relationships(d)(e)
Total
Assets
Investment securities - AFS
$
151,752
(c)
$
549
$
(2,010)
$
(1,461)
Liabilities
Long-term debt
195,455
(2,042)
(9,727)
(11,769)
Beneficial interests issued by consolidated VIEs
—
—
—
—
(a)Excludes physical commodities with a carrying value of $3.2 billion and $5.6 billion at June 30, 2024 and December 31, 2023, respectively, to which the Firm applies fair value hedge accounting. As a result of the application of hedge accounting, these inventories are carried at fair value, thus recognizing unrealized gains and losses in current periods. Since the Firm exits these positions at fair value, there is no incremental impact to net income in future periods.
(b)Excludes hedged items where only foreign currency risk is the designated hedged risk, as basis adjustments related to foreign currency hedges will not reverse through the income statement in future periods. At June 30, 2024 and December 31, 2023, the carrying amount excluded for AFS securities was $25.8 billion and $19.3 billion, respectively. At June 30, 2024 and December 31, 2023, the carrying amount excluded for long-term debt was $535 million and zero, respectively.
(c)Carrying amount represents the amortized cost, net of allowance if applicable. At June 30, 2024 and December 31, 2023, the amortized cost of the portfolio layer method closed portfolios was $67.6 billion and $83.9 billion, of which $63.1 billion and $68.0 billion was designated as hedged, respectively. The amount designated as hedged is the sum of the notional amounts of all outstanding layers in each portfolio, which includes both spot starting and forward starting layers. At June 30, 2024 and December 31, 2023, the cumulative amount of basis adjustments was $(1.8) billion and $(165) million, which is comprised of $(1.3) billion and $73 million for active hedging relationships, and $(485) million and $(238) million for discontinued hedging relationships, respectively. Refer to Note 9 for additional information.
(d)Positive (negative) amounts related to assets represent cumulative fair value hedge basis adjustments that will reduce (increase) net interest income in future periods. Positive (negative) amounts related to liabilities represent cumulative fair value hedge basis adjustments that will increase (reduce) net interest income in future periods.
(e)Represents basis adjustments existing on the balance sheet date associated with hedged items that have been de-designated from qualifying fair value hedging relationships.
124
Cash flow hedge gains and losses
The following tables present derivative instruments, by contract type, used in cash flow hedge accounting relationships, and the pre-tax gains/(losses) recorded on such derivatives, for the three and six months ended June 30, 2024 and 2023, respectively. The Firm includes the gains/(losses) on the hedging derivative in the same line item in the Consolidated statements of income as the change in cash flows on the related hedged item.
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Three months ended June 30, 2024 (in millions)
Amounts reclassified from AOCI to income
Amounts recorded in OCI
Total change in OCI for period
Contract type
Interest rate(a)
$
(662)
$
(677)
$
(15)
Foreign exchange(b)
7
(6)
(13)
Total
$
(655)
$
(683)
$
(28)
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Three months ended June 30, 2023 (in millions)
Amounts reclassified from AOCI to income
Amounts recorded in OCI
Total change
in OCI for period
Contract type
Interest rate(a)
$
(474)
$
(1,199)
$
(725)
Foreign exchange(b)
9
80
71
Total
$
(465)
$
(1,119)
$
(654)
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Six months ended June 30, 2024 (in millions)
Amounts reclassified from AOCI to income
Amounts recorded in OCI
Total change in OCI for period
Contract type
Interest rate(a)
$
(1,283)
$
(2,401)
$
(1,118)
Foreign exchange(b)
39
(44)
(83)
Total
$
(1,244)
$
(2,445)
$
(1,201)
Derivatives gains/(losses) recorded in income and other comprehensive income/(loss)
Six months ended June 30, 2023 (in millions)
Amounts reclassified from AOCI to income
Amounts recorded in OCI
Total change in OCI for period
Contract type
Interest rate(a)
$
(902)
$
(738)
$
164
Foreign exchange(b)
(46)
186
232
Total
$
(948)
$
(552)
$
396
(a)Primarily consists of hedges of SOFR-indexed floating-rate assets. Gains and losses were recorded in net interest income.
(b)Primarily consists of hedges of the foreign currency risk of non-U.S. dollar-denominated revenue and expense. The income statement classification of gains and losses follows the hedged item – primarily noninterest revenue and compensation expense.
The Firm did not experience any forecasted transactions that failed to occur for the three months ended June 30, 2024 and 2023.
Over the next 12 months, the Firm expects that approximately $(2.0) billion (after-tax) of net losses recorded in AOCI at June 30, 2024, related to cash flow hedges will be recognized in income. For cash flow hedges that have been terminated, the maximum length of time over which the derivative results recorded in AOCI will be recognized in earnings is approximately seven years, corresponding to the timing of the originally hedged forecasted cash flows. For open cash flow hedges, the maximum length of time over which forecasted transactions are hedged is approximately seven years. The Firm’s longer-dated forecasted transactions relate to core lending and borrowing activities.
125
Net investment hedge gains and losses
The following table presents hedging instruments, by contract type, that were used in net investment hedge accounting relationships, and the pre-tax gains/(losses) recorded on such instruments for the three and six months ended June 30, 2024 and 2023.
Gains/(losses) recorded in income and other comprehensive income/(loss)
2024
2023
Three months ended June 30, (in millions)
Amounts recorded in
income(a)(b)
Amounts recorded in OCI
Amounts recorded in
income(a)(b)
Amounts recorded in OCI
Foreign exchange derivatives
$
104
$
962
$
121
$
(88)
Gains/(losses) recorded in income and other comprehensive income/(loss)
2024
2023
Six months ended June 30, (in millions)
Amounts recorded in
income(a)(b)
Amounts recorded in OCI
Amounts recorded in
income(a)(b)
Amounts recorded in OCI
Foreign exchange derivatives
$
193
$
2,404
$
205
$
(1,092)
(a)Certain components of hedging derivatives are permitted to be excluded from the assessment of hedge effectiveness, such as forward points on foreign exchange forward contracts. The Firm elects to record changes in fair value of these amounts directly in other income.
(b)Excludes amounts reclassified from AOCI to income associated with net investment hedges. During the three and six months ended June 30, 2024, the Firm reclassified a net pre-tax gain of $10 million to other revenue. During the six months ended June 30, 2023, the Firm reclassified a pre-tax loss of $(41) million to other revenue related to the acquisition of CIFM. The amounts reclassified for the three months ended June 30, 2023 were not material. Refer to Note 19 for further information.
126
Gains and losses on derivatives used for specified risk management purposes
The following table presents pre-tax gains/(losses) recorded on a limited number of derivatives, not designated in hedge accounting relationships, that are used to manage risks associated with certain specified assets and liabilities, including certain risks arising from mortgage commitments, warehouse loans, MSRs, wholesale lending exposures, and foreign currency-denominated assets and liabilities.
Derivatives gains/(losses) recorded in income
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Contract type
Interest rate(a)
$
(21)
$
(112)
$
(244)
$
(126)
Credit(b)
(22)
(67)
(280)
(163)
Foreign exchange(c)
19
41
26
43
Total
$
(24)
$
(138)
$
(498)
$
(246)
(a)Primarily represents interest rate derivatives used to hedge the interest rate risk inherent in mortgage commitments, warehouse loans and MSRs, as well as written commitments to originate warehouse loans. Gains and losses were recorded predominantly in mortgage fees and related income.
(b)Relates to credit derivatives used to mitigate credit risk associated with lending exposures in the Firm’s wholesale businesses. These derivatives do not include credit derivatives used to mitigate counterparty credit risk arising from derivative receivables, which is included in gains and losses on derivatives related to market-making activities and other derivatives. Gains and losses were recorded in principal transactions revenue.
(c)Primarily relates to derivatives used to mitigate foreign exchange risk of specified foreign currency-denominated assets and liabilities. Gains and losses were recorded in principal transactions revenue.
Gains and losses on derivatives related to market-making activities and other derivatives
The Firm makes markets in derivatives in order to meet the needs of customers and uses derivatives to manage certain risks associated with net open risk positions from its market-making activities, including the counterparty credit risk arising from derivative receivables. All derivatives not included in the hedge accounting or specified risk management categories above are included in this category. Gains and losses on these derivatives are primarily recorded in principal transactions revenue. Refer to Note 5 for information on principal transactions revenue.
127
Credit derivatives
Refer to Note 5 of JPMorgan Chase’s 2023 Form 10-K for a more detailed discussion of credit derivatives. The following tables present a summary of the notional amounts of credit derivatives and credit-related notes the Firm sold and purchased as of June 30, 2024 and December 31, 2023. The Firm does not use notional amounts of credit derivatives as the primary measure of risk management for such derivatives, because the notional amount does not take into account the probability of the occurrence of a credit event, the recovery value of the reference obligation, or related cash instruments and economic hedges, each of which reduces, in the Firm’s view, the risks associated with such derivatives.
Total credit derivatives and credit-related notes
Maximum payout/Notional amount
June 30, 2024 (in millions)
Protection sold
Protection purchased with identical underlyings(c)
Net protection (sold)/purchased(d)
Other protection purchased(e)
Credit derivatives
Credit default swaps
$
(466,668)
$
484,309
$
17,641
$
6,235
Other credit derivatives(a)
(95,908)
121,361
25,453
13,207
Total credit derivatives
(562,576)
605,670
43,094
19,442
Credit-related notes(b)
—
—
—
11,072
Total
$
(562,576)
$
605,670
$
43,094
$
30,514
Maximum payout/Notional amount
December 31, 2023 (in millions)
Protection sold
Protection purchased with identical underlyings(c)
Net protection (sold)/purchased(d)
Other protection purchased(e)
Credit derivatives
Credit default swaps
$
(450,172)
$
473,823
$
23,651
$
7,517
Other credit derivatives(a)
(38,846)
45,416
6,570
29,206
Total credit derivatives
(489,018)
519,239
30,221
36,723
Credit-related notes(b)
—
—
—
9,788
Total
$
(489,018)
$
519,239
$
30,221
$
46,511
(a)Other credit derivatives predominantly consist of credit swap options and total return swaps.
(b)Predominantly represents Other protection purchased by CIB.
(c)Represents the total notional amount of protection purchased where the underlying reference instrument is identical to the reference instrument on protection sold; the notional amount of protection purchased for each individual identical underlying reference instrument may be greater or lower than the notional amount of protection sold.
(d)Does not take into account the fair value of the reference obligation at the time of settlement, which would generally reduce the amount the seller of protection pays to the buyer of protection in determining settlement value.
(e)Represents protection purchased by the Firm on referenced instruments (single-name, portfolio or index) where the Firm has not sold any protection on the identical reference instrument. Also includes credit protection against certain loans and lending-related commitments in the retained lending portfolio through the issuance of credit derivatives and credit-related notes.
The following tables summarize the notional amounts by the ratings, maturity profile, and total fair value, of credit derivatives as of June 30, 2024 and December 31, 2023, where JPMorgan Chase is the seller of protection. The maturity profile is based on the remaining contractual maturity of the credit derivative contracts. The ratings profile is based on the rating of the reference entity on which the credit derivative contract is based. The ratings and maturity profile of credit derivatives where JPMorgan Chase is the purchaser of protection are comparable to the profile reflected below.
Protection sold — credit derivatives ratings(a)/maturity profile
June 30, 2024 (in millions)
<1 year
1–5 years
>5 years
Total notional amount
Fair value of receivables(b)
Fair value of payables(b)
Net fair value
Risk rating of reference entity
Investment-grade
$
(145,536)
$
(277,523)
$
(33,751)
$
(456,810)
$
4,072
$
(1,602)
$
2,470
Noninvestment-grade
(33,590)
(68,742)
(3,434)
(105,766)
2,137
(1,564)
573
Total
$
(179,126)
$
(346,265)
$
(37,185)
$
(562,576)
$
6,209
$
(3,166)
$
3,043
December 31, 2023 (in millions)
<1 year
1–5 years
>5 years
Total notional amount
Fair value of receivables(b)
Fair value of payables(b)
Net fair value
Risk rating of reference entity
Investment-grade
$
(89,981)
$
(263,834)
$
(29,470)
$
(383,285)
$
3,659
$
(1,144)
$
2,515
Noninvestment-grade
(31,419)
(69,515)
(4,799)
(105,733)
2,466
(1,583)
883
Total
$
(121,400)
$
(333,349)
$
(34,269)
$
(489,018)
$
6,125
$
(2,727)
$
3,398
(a)The ratings scale is primarily based on external credit ratings defined by S&P and Moody’s.
(b)Amounts are shown on a gross basis, before the benefit of legally enforceable master netting agreements including cash collateral netting.
128
Note 5 – Noninterest revenue and noninterest expense
Noninterest revenue
Refer to Note 6 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the components of and accounting policies for the Firm’s noninterest revenue.
Investment banking fees
The following table presents the components of investment banking fees.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Underwriting
Equity
$
494
$
317
$
848
$
550
Debt
1,030
704
2,033
1,376
Total underwriting
1,524
1,021
2,881
1,926
Advisory
780
492
1,377
1,236
Total investment banking fees
$
2,304
$
1,513
$
4,258
$
3,162
Principal transactions
The following table presents all realized and unrealized gains and losses recorded in principal transactions revenue. This table excludes interest income and interest expense on trading assets and liabilities, which are an integral part of the overall performance of the Firm’s client-driven market-making activities in CIB and fund deployment activities in Treasury and CIO. Refer to Note 6 for further information on interest income and interest expense.
Trading revenue is presented primarily by instrument type. The Firm’s client-driven market-making businesses generally utilize a variety of instrument types in connection with their market-making and related risk-management activities; accordingly, the trading revenue presented in the table below is not representative of the total revenue of any individual LOB.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Trading revenue by instrument type
Interest rate(a)
$
935
$
1,781
$
2,006
$
3,567
Credit(b)
447
419
1,138
1,053
Foreign exchange
1,077
1,435
2,613
2,986
Equity
4,101
2,941
7,378
5,634
Commodity
246
368
446
1,294
Total trading revenue
6,806
6,944
13,581
14,534
Private equity gains/(losses)
8
(34)
23
(9)
Principal transactions
$
6,814
$
6,910
$
13,604
$
14,525
(a)Includes the impact of changes in funding valuation adjustments on derivatives.
(b)Includes the impact of changes in credit valuation adjustments on derivatives, net of the associated hedging activities.
Lending- and deposit-related fees
The following table presents the components of lending- and deposit-related fees.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Lending-related fees(a)
$
518
$
590
$
1,121
$
959
Deposit-related fees
1,310
1,238
2,609
2,489
Total lending- and deposit-related fees
$
1,828
$
1,828
$
3,730
$
3,448
(a)Includes the amortization of the fair value discount on certain acquired lending-related commitments associated with First Republic, predominantly in AWM and CIB. The discount is deferred in other liabilities and recognized on a straight-line basis over the commitment period and was largely recognized in the prior year as the commitments are generally short term. Refer to Note 26 for additional information.
Deposit-related fees include the impact of credits earned by clients that reduce such fees.
Asset management fees
The following table presents the components of asset management fees.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Asset management fees
Investment management fees
$
4,210
$
3,695
$
8,269
$
7,085
All other asset management fees
92
79
179
154
Total asset management fees
$
4,302
$
3,774
$
8,448
$
7,239
Commissions and other fees
The following table presents the components of commissions and other fees.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Commissions and other fees
Brokerage commissions and fees
$
788
$
722
$
1,551
$
1,469
Administration fees
608
575
1,214
1,132
All other commissions and fees (a)
528
442
964
833
Total commissions and other fees
$
1,924
$
1,739
$
3,729
$
3,434
(a)Includes travel-related and annuity sales commissions, depositary receipt-related service fees, as well as other service fees, which are recognized as revenue when the services are rendered.
129
Card income
The following table presents the components of card income.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Interchange and merchant processing income
$
8,520
$
7,885
$
16,351
$
15,024
Rewards costs and partner payments
(6,789)
(6,392)
(12,960)
(11,901)
Other card income(a)
(399)
(399)
(841)
(795)
Total card income
$
1,332
$
1,094
$
2,550
$
2,328
(a)Predominantly represents the amortization of account origination costs and annual fees, which are deferred and recognized on a straight-line basis over a 12-month period.
Refer to Note 14 for further information onmortgage fees and related income.
Other income
The following table presents certain components of other income.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Operating lease income
$
689
$
716
$
1,361
$
1,471
Losses on tax-oriented investments
(23)
(462)
(37)
(874)
Estimated bargain purchase gain associated with the First Republic acquisition
119
2,712
103
2,712
Gain related to the acquisition of CIFM(a)
—
—
—
339
Initial gain on the Visa share exchange(b)
7,990
—
7,990
—
(a)Gain on the original minority interest in CIFM upon the Firm's acquisition of the remaining 51% of the entity.
(b)Relates to the initial gain recognized on May 6, 2024. Refer to Note 2 for additional information.
Refer to Note 16 for information on operating lease income included within other income.
Proportional Amortization Method: Effective January 1, 2024, as a result of adopting updates to the Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method guidance, the amortization of certain of the Firm's alternative energy tax-oriented investments that was previously recognized in other income is now being recognized in income tax expense, which aligns with the associated tax credits and other tax benefits. Refer to Notes 1 and 13 for additional information.
Noninterest expense
Other expense
Other expense on the Firm’s Consolidated statements of income includes the following:
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Legal expense
$
317
$
420
$
245
$
596
FDIC-related expense
291
338
1,264
(d)
655
Operating losses(a)
323
304
622
603
Contribution of Visa shares(b)
1,000
—
1,000
—
First Republic-related expense(c)
237
599
473
599
(a)Predominantly fraud losses in CCB associated with customer deposit accounts, credit and debit cards.
(b)Represents the contribution of a portion of Visa C shares to the JPMorgan Chase Foundation. Refer to Note 2 for additional information.
(c)Reflects the expenses classified within other expense, including $161 million and $316 million of restructuring and integration costs associated with First Republic in the three and six months ended June 30, 2024, respectively. Additionally, the second quarter of 2023 Included payments to the FDIC for the First Republic individuals who were not employees of the Firm until July 2, 2023. Refer to Note 26 for additional information on the First Republic acquisition.
(d)The first quarter of 2024 included an increase of $725 million to the FDIC special assessment reflecting the FDIC's revised estimate of Deposit Insurance Fund losses.
130
Note 6 – Interest income and Interest expense
Refer to Note 7 of JPMorgan Chase’s 2023 Form 10-K for a description of JPMorgan Chase’s accounting policies regarding interest income and interest expense.
The following table presents the components of interest income and interest expense.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Interest income
Loans(a)
$
22,898
$
20,306
$
45,772
$
38,014
Taxable securities
5,124
4,194
9,995
8,161
Non-taxable securities(b)
302
343
625
591
Total investment securities(a)
5,426
4,537
10,620
8,752
Trading assets - debt instruments
4,993
4,013
9,585
7,659
Federal funds sold and securities purchased under resale agreements
4,821
3,767
9,036
6,898
Securities borrowed
2,177
1,866
4,343
3,582
Deposits with banks
6,059
5,189
12,445
10,008
All other interest-earning assets(c)
2,139
1,966
4,150
3,735
Total interest income
$
48,513
$
41,644
$
95,951
$
78,648
Interest expense
Interest-bearing deposits
$
12,421
$
9,591
$
24,655
$
17,228
Federal funds purchased and securities loaned or sold under repurchase agreements
5,108
3,400
9,077
6,204
Short-term borrowings
502
428
1,037
849
Trading liabilities – debt and all other interest-bearing liabilities(d)
2,604
2,373
5,240
4,344
Long-term debt
4,780
3,876
9,398
7,189
Beneficial interest issued by consolidated VIEs
352
197
716
344
Total interest expense
$
25,767
$
19,865
$
50,123
$
36,158
Net interest income
$
22,746
$
21,779
$
45,828
$
42,490
Provision for credit losses
3,052
2,899
4,936
5,174
Net interest income after provision for credit losses
$
19,694
$
18,880
$
40,892
$
37,316
(a)Includes the amortization and accretion of purchase premiums and discounts, as well as net deferred fees and costs on loans.
(b)Represents securities which are tax-exempt for U.S. federal income tax purposes.
(c)Includes interest earned on brokerage-related held-for-investment customer receivables, which are classified in accrued interest and accounts receivable, and all other interest-earning assets which are classified in other assets on the Consolidated balance sheets.
(d)All other interest-bearing liabilities includes interest expense on brokerage-related customer payables.
131
Note 7 – Pension and other postretirement employee benefit plans
Refer to Note 8 of JPMorgan Chase’s 2023 Form 10-K for a discussion of JPMorgan Chase’s pension and OPEB plans.
The following table presents the net periodic benefit costs reported in the Consolidated statements of income for the Firm’s defined benefit pension, defined contribution and OPEB plans.
(in millions)
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Pension and OPEB plans
Pension and OPEB plans
Total net periodic defined benefit plan cost/(credit)
$
(115)
$
(94)
$
(228)
$
(188)
Total defined contribution plans
443
397
831
762
Total pension and OPEB cost included in noninterest expense
$
328
$
303
$
603
$
574
As of June 30, 2024 and December 31, 2023, the fair values of plan assets for the Firm’s significant defined benefit pension and OPEB plans were $21.9 billion and $22.0 billion, respectively.
132
Note 8 – Employee share-based incentives
Refer to Note 9 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the accounting policies and other information relating to employee share-based incentives.
The Firm recognized the following noncash compensation expense related to its various employee share-based incentive plans in its Consolidated statements of income.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Cost of prior grants of restricted stock units (“RSUs”), performance share units (“PSUs”) and stock appreciation rights (“SARs”) that are amortized over their applicable vesting periods
$
430
$
449
$
865
$
806
Accrual of estimated costs of share-based awards to be granted in future periods, predominantly those to full-career eligible employees
514
385
1,017
898
Total noncash compensation expense related to employee share-based incentive plans
$
944
$
834
$
1,882
$
1,704
In the first quarter of 2024, in connection with its annual incentive grant for the 2023 performance year, the Firm granted 17 million RSUs and 726 thousand PSUs with weighted-average grant date fair values of $164.42 per RSU and $165.62 per PSU.
133
Note 9 – Investment securities
Investment securities consist of debt securities that are classified as AFS or HTM. Debt securities classified as trading assets are discussed in Note 2. Predominantly all of the Firm’s AFS and HTM securities are held by Treasury and CIO in connection with its asset-liability management activities. At June 30, 2024, the investment securities portfolio consisted of debt securities with an average credit
rating of AA+ (based upon external ratings where available, and where not available, based primarily upon internal risk ratings).
Refer to Note 10 of JPMorgan Chase’s 2023 Form 10-K for additional information regarding the investment securities portfolio.
The amortized costs and estimated fair values of the investment securities portfolio were as follows for the dates indicated.
June 30, 2024
December 31, 2023
(in millions)
Amortized cost(d)(e)
Gross unrealized gains
Gross unrealized losses
Fair value
Amortized cost(d)(e)
Gross unrealized gains
Gross unrealized losses
Fair value
Available-for-sale securities
Mortgage-backed securities:
U.S. GSEs and government agencies
$
78,806
$
428
$
4,182
$
75,052
$
88,377
$
870
$
4,077
$
85,170
Residential:
U.S.
2,326
8
62
2,272
2,086
10
68
2,028
Non-U.S.
749
3
—
752
1,608
4
1
1,611
Commercial
2,898
9
86
2,821
2,930
12
139
2,803
Total mortgage-backed securities
84,779
448
4,330
80,897
95,001
896
4,285
91,612
U.S. Treasury and government agencies
127,890
392
754
127,528
58,051
276
522
57,805
Obligations of U.S. states and municipalities
17,546
132
490
17,188
21,243
390
266
21,367
Non-U.S. government debt securities
31,442
76
419
31,099
21,387
254
359
21,282
Corporate debt securities
102
—
12
90
128
—
28
100
Asset-backed securities:
Collateralized loan obligations
6,784
31
7
6,808
6,769
11
28
6,752
Other
2,641
12
11
2,642
2,804
8
26
2,786
Unallocated portfolio layer fair value
basis adjustments(a)
(1,285)
—
(1,285)
NA
73
(73)
—
NA
Total available-for-sale securities
269,899
1,091
4,738
266,252
205,456
1,762
5,514
201,704
Held-to-maturity securities(b)
Mortgage-backed securities:
U.S. GSEs and government agencies
101,515
15
13,729
87,801
105,614
39
11,643
94,010
U.S. Residential
9,162
2
1,050
8,114
9,709
4
970
8,743
Commercial
9,879
12
491
9,400
10,534
13
581
9,966
Total mortgage-backed securities
120,556
29
15,270
105,315
125,857
56
13,194
112,719
U.S. Treasury and government agencies
140,281
—
13,104
127,177
173,666
—
13,074
160,592
Obligations of U.S. states and municipalities
9,490
38
673
8,855
9,945
74
591
9,428
Asset-backed securities:
Collateralized loan obligations
51,822
113
30
51,905
58,565
47
352
58,260
Other
1,597
3
49
1,551
1,815
1
61
1,755
Total held-to-maturity securities(c)
323,746
183
29,126
294,803
369,848
178
27,272
342,754
Total investment securities, net of allowance for credit losses
$
593,645
$
1,274
$
33,864
$
561,055
$
575,304
$
1,940
$
32,786
$
544,458
(a)Represents the amount of portfolio layer method basis adjustments related to AFS securities hedged in a closed portfolio. Under U.S. GAAP portfolio layer method basis adjustments are not allocated to individual securities, however the amounts impact the unrealized gains or losses in the table for the types of securities being hedged. Refer to Note 4 for additional information.
(b)The Firm purchased $555 million and $1.0 billion of HTM securities for the three and six months ended June 30, 2024, respectively, and $520 million and $4.1 billion for the three and six months ended June 30, 2023, respectively.
(c)Effective January 1, 2023, the Firm adopted the portfolio layer method hedge accounting guidance which permitted a transfer of HTM securities to AFS upon adoption. The Firm transferred obligations of U.S. states and municipalities with a carrying value of $7.1 billion resulting in the recognition of $38 million net pre-tax unrealized losses in AOCI. This transfer was a non-cash transaction. Refer to Note 19 of this Form 10-Q and Note 1 of JPMorgan Chase’s 2023 Form 10-K for additional information.
(d)The amortized cost of investment securities is reported net of allowance for credit losses of $177 million and $128 million at June 30, 2024 and December 31, 2023, respectively.
(e)Excludes $3.4 billion and $2.8 billion of accrued interest receivable at June 30, 2024 and December 31, 2023, respectively. The Firm did not reverse through interest income any accrued interest receivable for the three and six months ended June 30, 2024 and 2023. Refer to Note 10 of JPMorgan Chase’s 2023 Form 10-K for further discussion of accounting policies for accrued interest receivable on investment securities.
134
AFS securities impairment
The following tables present the fair value and gross unrealized losses by aging category for AFS securities at June 30, 2024 and December 31, 2023. The tables exclude U.S. Treasury and government agency securities and U.S. GSE and government agency MBS with unrealized losses of $4.9 billion and $4.6 billion, at June 30, 2024 and December 31, 2023, respectively; changes in the value of these securities are generally driven by changes in interest rates rather than changes in their credit profile given the explicit or implicit guarantees provided by the U.S. government.
Available-for-sale securities with gross unrealized losses
Less than 12 months
12 months or more
June 30, 2024 (in millions)
Fair value
Gross unrealized losses
Fair value
Gross unrealized losses
Total fair value
Total gross unrealized losses
Available-for-sale securities
Mortgage-backed securities:
Residential:
U.S.
$
114
$
1
$
1,026
$
61
$
1,140
$
62
Non-U.S.
—
—
110
—
110
—
Commercial
398
4
1,383
82
1,781
86
Total mortgage-backed securities
512
5
2,519
143
3,031
148
Obligations of U.S. states and municipalities
8,602
184
3,003
306
11,605
490
Non-U.S. government debt securities
13,262
80
4,762
339
18,024
419
Corporate debt securities
4
—
52
12
56
12
Asset-backed securities:
Collateralized loan obligations
—
—
615
7
615
7
Other
335
—
622
11
957
11
Total available-for-sale securities with gross unrealized losses
$
22,715
$
269
$
11,573
$
818
$
34,288
$
1,087
Available-for-sale securities with gross unrealized losses
Less than 12 months
12 months or more
December 31, 2023 (in millions)
Fair value
Gross unrealized losses
Fair value
Gross unrealized losses
Total fair value
Total gross unrealized losses
Available-for-sale securities
Mortgage-backed securities:
Residential:
U.S.
$
81
$
—
$
1,160
$
68
$
1,241
$
68
Non-U.S.
—
—
722
1
722
1
Commercial
228
3
1,775
136
2,003
139
Total mortgage-backed securities
309
3
3,657
205
3,966
208
Obligations of U.S. states and municipalities
2,134
20
2,278
246
4,412
266
Non-U.S. government debt securities
7,145
23
4,987
336
12,132
359
Corporate debt securities
9
—
79
28
88
28
Asset-backed securities:
Collateralized loan obligations
932
2
3,744
26
4,676
28
Other
208
1
1,288
25
1,496
26
Total available-for-sale securities with gross unrealized losses
$
10,737
$
49
$
16,033
$
866
$
26,770
$
915
135
HTM securities – credit risk
Credit quality indicator
The primary credit quality indicator for HTM securities is the risk rating assigned to each security. At both June 30, 2024 and December 31, 2023, all HTM securities were rated investment grade and were current and accruing, with approximately 99% rated at least AA+.
Allowance for credit losses on investment securities
The allowance for credit losses on investment securities was $177 million and $104 million as of June 30, 2024 and 2023, respectively, which included a cumulative-effect adjustment to retained earnings related to the transfer of HTM securities to AFS for the six months ended June 30, 2023.
Refer to Note 10 of JPMorgan Chase’s 2023 Form 10-K for further discussion of accounting policies for AFS and HTM securities.
Selected impacts of investment securities on the Consolidated statements of income
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Realized gains
$
64
$
198
$
237
$
329
Realized losses
(611)
(1,098)
(1,150)
(2,097)
Investment securities losses
$
(547)
$
(900)
$
(913)
$
(1,768)
Provision for credit losses
$
23
$
13
$
49
$
14
136
Contractual maturities and yields
The following table presents the amortized cost and estimated fair value at June 30, 2024, of JPMorgan Chase’s investment securities portfolio by contractual maturity.
By remaining maturity June 30, 2024 (in millions)
Due in one year or less
Due after one year through five years
Due after five years through 10 years
Due after
10 years(c)
Total
Available-for-sale securities
Mortgage-backed securities
Amortized cost
$
3
$
5,214
$
4,659
$
74,903
$
84,779
Fair value
3
5,142
4,654
71,098
80,897
Average yield(a)
4.67
%
5.21
%
6.01
%
4.82
%
4.91
%
U.S. Treasury and government agencies
Amortized cost
$
—
$
91,511
$
29,421
$
6,958
$
127,890
Fair value
—
91,529
29,504
6,495
127,528
Average yield(a)
—
%
5.03
%
6.01
%
6.54
%
5.33
%
Obligations of U.S. states and municipalities
Amortized cost
$
15
$
17
$
80
$
17,434
$
17,546
Fair value
15
17
78
17,078
17,188
Average yield(a)
2.25
%
3.48
%
4.26
%
5.93
%
5.91
%
Non-U.S. government debt securities
Amortized cost
$
12,698
$
7,643
$
3,231
$
7,870
$
31,442
Fair value
12,688
7,595
2,968
7,848
31,099
Average yield(a)
4.50
%
4.66
%
1.78
%
4.05
%
4.15
%
Corporate debt securities
Amortized cost
$
140
$
—
$
14
$
—
$
154
Fair value
77
—
13
—
90
Average yield(a)
11.11
%
—
%
4.10
%
—
%
10.48
%
Asset-backed securities
Amortized cost
$
24
$
559
$
2,519
$
6,323
$
9,425
Fair value
24
558
2,527
6,341
9,450
Average yield(a)
4.68
%
5.09
%
6.39
%
6.87
%
6.63
%
Total available-for-sale securities
Amortized cost(b)
$
12,880
$
104,944
$
39,924
$
113,488
$
271,236
Fair value
12,807
104,841
39,744
108,860
266,252
Average yield(a)
4.57
%
5.01
%
5.69
%
5.15
%
5.15
%
Held-to-maturity securities
Mortgage-backed securities
Amortized cost
$
—
$
7,374
$
7,073
$
106,197
$
120,644
Fair value
—
6,803
6,203
92,309
105,315
Average yield(a)
—
%
2.64
%
2.61
%
3.00
%
2.96
%
U.S. Treasury and government agencies
Amortized cost
$
32,167
$
60,115
$
47,999
$
—
$
140,281
Fair value
31,852
55,456
39,869
—
127,177
Average yield(a)
0.85
%
0.96
%
1.25
%
—
%
1.03
%
Obligations of U.S. states and municipalities
Amortized cost
$
—
$
—
$
271
$
9,256
$
9,527
Fair value
—
—
239
8,616
8,855
Average yield(a)
—
%
—
%
3.19
%
3.92
%
3.90
%
Asset-backed securities
Amortized cost
$
—
$
304
$
19,032
$
34,083
$
53,419
Fair value
—
305
19,055
34,096
53,456
Average yield(a)
—
%
6.76
%
6.19
%
6.52
%
6.40
%
Total held-to-maturity securities
Amortized cost(b)
$
32,167
$
67,793
$
74,375
$
149,536
$
323,871
Fair value
31,852
62,564
65,366
135,021
294,803
Average yield(a)
0.85
%
1.16
%
2.65
%
3.86
%
2.72
%
(a)Average yield is computed using the effective yield of each security owned at the end of the period, weighted based on the amortized cost of each security. The effective yield considers the contractual coupon, amortization of premiums and accretion of discounts, and the effect of related hedging derivatives, including closed portfolio hedges. Taxable-equivalent amounts are used where applicable. The effective yield excludes unscheduled principal prepayments; and accordingly, actual maturities of securities may differ from their contractual or expected maturities as certain securities may be prepaid. However, for certain callable debt securities, the average yield is calculated to the earliest call date.
(b)For purposes of this table, the amortized cost of available-for-sale securities excludes the allowance for credit losses of $52 million and the portfolio layer fair value hedge basis adjustments of $(1.3) billion at June 30, 2024. The amortized cost of held-to-maturity securities also excludes the allowance for credit losses of $125 million at June 30, 2024.
(c)Substantially all of the Firm’s U.S. residential MBS and collateralized mortgage obligations are due in 10 years or more, based on contractual maturity. The estimated weighted-average life, which reflects anticipated future prepayments, is approximately eight years for agency residential MBS and six years for both agency residential collateralized mortgage obligations and nonagency residential collateralized mortgage obligations.
137
Note 10 – Securities financing activities
Refer to Note 11 of JPMorgan Chase’s 2023 Form 10-K for a discussion of accounting policies relating to securities financing activities. Refer to Note 3 for further information regarding securities financing agreements for which the fair value option has been elected. Refer to Note 23 for further information regarding assets pledged and collateral received in securities financing agreements.
The table below summarizes the gross and net amounts of the Firm’s securities financing agreements as of June 30, 2024 and December 31, 2023. When the Firm has obtained an appropriate legal opinion with respect to a master netting agreement with a counterparty and where other relevant netting criteria under U.S. GAAP are met, the Firm nets, on the Consolidated balance sheets, the balances outstanding under its securities financing agreements with the same counterparty. In addition, the Firm exchanges securities and/or cash collateral with its counterparty to reduce the economic exposure with the counterparty, but such collateral is not eligible for net Consolidated balance
sheet presentation. Where the Firm has obtained an appropriate legal opinion with respect to the counterparty master netting agreement, such collateral, along with securities financing balances that do not meet all these relevant netting criteria under U.S. GAAP, is presented in the table below as “Amounts not nettable on the Consolidated balance sheets,” and reduces the “Net amounts” presented. Where a legal opinion has not been either sought or obtained, the securities financing balances are presented gross in the “Net amounts” below. In transactions where the Firm is acting as the lender in a securities-for-securities lending agreement and receives securities that can be pledged or sold as collateral, the Firm recognizes the securities received at fair value within other assets and the obligation to return those securities within accounts payable and other liabilities on the Consolidated balance sheets.
June 30, 2024
(in millions)
Gross amounts
Amounts netted on the Consolidated balance sheets
Amounts presented on the Consolidated balance sheets
Amounts not nettable on the Consolidated balance sheets(b)
Net
amounts(c)
Assets
Securities purchased under resale agreements
$
640,309
$
(248,036)
$
392,273
$
(380,530)
$
11,743
Securities borrowed
246,052
(46,990)
199,062
(145,011)
54,051
Liabilities
Securities sold under repurchase agreements
$
643,995
$
(248,036)
$
395,959
$
(348,145)
$
47,814
Securities loaned and other(a)
56,390
(46,990)
9,400
(9,359)
41
December 31, 2023
(in millions)
Gross amounts
Amounts netted on the Consolidated balance sheets
Amounts presented on the Consolidated balance sheets
Amounts not nettable on the Consolidated balance sheets(b)
Net
amounts(c)
Assets
Securities purchased under resale agreements
$
523,308
$
(247,181)
$
276,127
$
(267,582)
$
8,545
Securities borrowed
244,046
(43,610)
200,436
(144,543)
55,893
Liabilities
Securities sold under repurchase agreements
$
459,985
$
(247,181)
$
212,804
$
(182,011)
$
30,793
Securities loaned and other(a)
52,142
(43,610)
8,532
(8,501)
31
(a)Includes securities-for-securities lending agreements of $5.9 billion and $5.6 billion at June 30, 2024 and December 31, 2023, respectively, accounted for at fair value, where the Firm is acting as lender.
(b)In some cases, collateral exchanged with a counterparty exceeds the net asset or liability balance with that counterparty. In such cases, the amounts reported in this column are limited to the related net asset or liability with that counterparty.
(c)Includes securities financing agreements that provide collateral rights, but where an appropriate legal opinion with respect to the master netting agreement has not been either sought or obtained. At June 30, 2024 and December 31, 2023, included $7.2 billion and $7.1 billion, respectively, of securities purchased under resale agreements; $48.5 billion and $50.7 billion, respectively, of securities borrowed; $46.2 billion and $30.0 billion, respectively, of securities sold under repurchase agreements; and securities loaned and other which were not material at both June 30, 2024 and December 31, 2023.
138
The tables below present as of June 30, 2024 and December 31, 2023 the types of financial assets pledged in securities financing agreements and the remaining contractual maturity of the securities financing agreements.
Gross liability balance
June 30, 2024
December 31, 2023
(in millions)
Securities sold under repurchase agreements
Securities loaned and other
Securities sold under repurchase agreements
Securities loaned and other
Mortgage-backed securities
U.S. GSEs and government agencies
$
74,419
$
—
$
71,064
$
—
Residential - nonagency
2,378
—
2,292
—
Commercial - nonagency
2,526
—
2,669
—
U.S. Treasury, GSEs and government agencies
326,550
625
216,467
1,034
Obligations of U.S. states and municipalities
2,642
—
2,323
—
Non-U.S. government debt
147,698
1,579
97,400
1,455
Corporate debt securities
44,145
2,072
39,247
2,025
Asset-backed securities
3,590
—
2,703
—
Equity securities
40,047
52,114
25,820
47,628
Total
$
643,995
$
56,390
$
459,985
$
52,142
Remaining contractual maturity of the agreements
Overnight and continuous
Greater than 90 days
June 30, 2024 (in millions)
Up to 30 days
30 – 90 days
Total
Total securities sold under repurchase agreements
$
312,993
$
178,700
$
49,573
$
102,729
$
643,995
Total securities loaned and other
54,240
—
152
1,998
56,390
Remaining contractual maturity of the agreements
Overnight and continuous
Greater than 90 days
December 31, 2023 (in millions)
Up to 30 days
30 – 90 days
Total
Total securities sold under repurchase agreements
$
259,048
$
102,941
$
20,960
$
77,036
$
459,985
Total securities loaned and other
49,610
1,544
—
988
52,142
Transfers not qualifying for sale accounting
At June 30, 2024 and December 31, 2023, the Firm held $417 million and $505 million, respectively, of financial assets for which the rights have been transferred to third parties; however, the transfers did not qualify as a sale in accordance with U.S. GAAP. These transfers have been recognized as collateralized financing transactions. The transferred assets are recorded in trading assets and loans, and the corresponding liabilities are recorded primarily in short-term borrowings and long-term debt on the Consolidated balance sheets.
139
Note 11 – Loans
Loan accounting framework
The accounting for a loan depends on management’s strategy for the loan. The Firm accounts for loans based on the following categories:
•Originated or purchased loans held-for-investment (i.e., “retained”)
•Loans held-for-sale
•Loans at fair value
Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for a detailed discussion of loans, including accounting policies. Refer to Note 3 of this Form 10-Q for further information on the Firm's elections of fair value accounting under the fair value option. Refer to Note 2 of this Form 10-Q for information on loans carried at fair value and classified as trading assets.
Loan portfolio
The Firm’s loan portfolio is divided into three portfolio segments, which are the same segments used by the Firm to determine the allowance for loan losses: Consumer, excluding credit card; Credit card; and Wholesale. Within each portfolio segment the Firm monitors and assesses the credit risk in the following classes of loans, based on the risk characteristics of each loan class.
Consumer, excluding credit card
Credit card
Wholesale(c)(d)
• Residential real estate(a)
• Auto and other(b)
• Credit card loans
• Secured by real estate
• Commercial and industrial
• Other(e)
(a)Includes scored mortgage and home equity loans held in CCB and AWM, and scored mortgage loans held in CIB.
(b)Includes scored auto, business banking and consumer unsecured loans as well as overdrafts, primarily in CCB.
(c)Includes loans held in CIB, AWM, Corporate, and risk-rated exposure held in CCB, for which the wholesale methodology is applied when determining the allowance for loan losses.
(d)The wholesale portfolio segment's classes align with loan classifications as defined by the bank regulatory agencies, based on the loan's collateral, purpose, and type of borrower.
(e)Includes loans to SPEs, financial institutions, personal investment companies and trusts, individuals and individual entities (predominantly Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB), states and political subdivisions, as well as loans to nonprofits. Refer to Note 14 of JPMorgan Chase’s 2023 Form 10-K for more information on SPEs.
The following tables summarize the Firm’s loan balances by portfolio segment.
June 30, 2024
Consumer, excluding credit card
Credit card
Wholesale
Total(a)(b)
(in millions)
Retained
$
382,795
$
216,100
$
674,152
$
1,273,047
Held-for-sale
1,366
—
8,037
9,403
At fair value
12,794
—
25,456
38,250
Total
$
396,955
$
216,100
$
707,645
$
1,320,700
December 31, 2023
Consumer, excluding credit card
Credit card
Wholesale
Total(a)(b)
(in millions)
Retained
$
397,275
$
211,123
$
672,472
$
1,280,870
Held-for-sale
487
—
3,498
3,985
At fair value
12,331
—
26,520
38,851
Total
$
410,093
$
211,123
$
702,490
$
1,323,706
(a)Excludes $6.7 billion and $6.8 billion of accrued interest receivables as of June 30, 2024 and December 31, 2023, respectively. Accrued interest receivables written off were not material for the three and six months ended June 30, 2024 and 2023.
(b)Loans (other than those for which the fair value option has been elected) are presented net of unamortized discounts and premiums and net deferred loan fees or costs. These amounts were not material as of June 30, 2024 and December 31, 2023. For the discount associated with First Republic loans, refer to Note 26 on pages 188–190.
140
The following tables provide information about the carrying value of retained loans purchased, sold and reclassified to held-for-sale during the periods indicated. Loans that were reclassified to held-for-sale and sold in a subsequent period are excluded from the sales line of this table.
2024
2023
Three months ended June 30, (in millions)
Consumer, excluding credit card
Credit card
Wholesale
Total
Consumer, excluding credit card
Credit card
Wholesale
Total
Purchases
$
232
(b)(c)
$
—
$
193
$
425
$
92,002
(b)(c)(d)
$
—
$
58,398
(d)
$
150,400
Sales
4,602
—
10,954
15,556
438
—
9,709
10,147
Retained loans reclassified to held-for-sale(a)
182
—
363
545
81
—
771
852
2024
2023
Six months ended June 30, (in millions)
Consumer, excluding credit card
Credit card
Wholesale
Total
Consumer, excluding credit card
Credit card
Wholesale
Total
Purchases
$
356
(b)(c)
$
—
$
354
$
710
$
92,081
(b)(c)(d)
$
—
$
58,561
(d)
$
150,642
Sales
7,966
—
20,536
28,502
438
—
18,880
19,318
Retained loans reclassified to held-for-sale(a)
1,169
—
548
1,717
124
—
1,085
1,209
(a)Reclassifications of loans to held-for-sale are non-cash transactions.
(b)Includes purchases of residential real estate loans, including the Firm’s voluntary repurchases of certain delinquent loans from loan pools as permitted by Government National Mortgage Association (“Ginnie Mae”) guidelines for the three and six months ended June 30, 2024 and 2023. The Firm typically elects to repurchase these delinquent loans as it continues to service them and/or manage the foreclosure process in accordance with applicable requirements of Ginnie Mae, FHA, RHS, and/or VA.
(c)Excludes purchases of retained loans of $80 million and $1.6 billion for the three months ended June 30, 2024 and 2023, respectively, and $284 million and $2.3 billion for the six months ended June 30, 2024 and 2023, respectively, which are predominantly sourced through the correspondent origination channel and underwritten in accordance with the Firm’s standards.
(d)Includes loans acquired in the First Republic acquisition consisting of $91.9 billion in Consumer, excluding credit card and $58.4 billion in Wholesale.
Gains and losses on sales of loans
Net gains/(losses) on sales of loans and lending-related commitments (including adjustments to record loans and lending-related commitments held-for-sale at the lower of cost or fair value) recognized in noninterest revenue for the three and six months ended June 30, 2024 were $(36) million and $60 million, respectively, of which $(33) million and $33 million, respectively, were related to loans. Net gains/(losses) on sales of loans and lending-related commitments for the three and six months ended June 30, 2023 were $14 million and $37 million, respectively, of which $16 million and $43 million, respectively, were related to loans. In addition, the sale of loans may also result in write downs, recoveries or changes in the allowance recognized in the provision for credit losses.
141
Consumer, excluding credit card loan portfolio
Consumer loans, excluding credit card loans, consist primarily of scored residential mortgages, home equity loans and lines of credit, auto and business banking loans, with a focus on serving the prime consumer credit market. These loans include home equity loans secured by junior liens, prime mortgage loans with an interest-only payment period, and certain payment-option loans that may result in negative amortization.
The following table provides information about retained consumer loans, excluding credit card, by class.
(in millions)
June 30, 2024
December 31, 2023
Residential real estate
$
314,843
$
326,409
Auto and other
67,952
70,866
Total retained loans
$
382,795
$
397,275
Delinquency rates are the primary credit quality indicator for consumer loans. Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for further information on consumer credit quality indicators.
142
Residential real estate
Delinquency is the primary credit quality indicator for retained residential real estate loans. The following tables provide information on delinquency and gross charge-offs.
(in millions, except ratios)
June 30, 2024
Term loans by origination year(c)
Revolving loans
Total
2024
2023
2022
2021
2020
Prior to 2020
Within the revolving period
Converted to term loans
Loan delinquency(a)
Current
$
5,203
$
18,586
$
62,746
$
82,170
$
53,916
$
75,532
$
7,001
$
7,591
$
312,745
30–149 days past due
18
24
141
95
43
745
18
218
1,302
150 or more days past due
13
2
40
36
38
503
27
137
796
Total retained loans
$
5,234
$
18,612
$
62,927
$
82,301
$
53,997
$
76,780
$
7,046
$
7,946
$
314,843
% of 30+ days past due to total retained loans(b)
0.59
%
0.14
%
0.29
%
0.16
%
0.15
%
1.61
%
0.64
%
4.47
%
0.66
%
Gross charge-offs
$
—
$
—
$
1
$
1
$
—
$
123
$
10
$
4
$
139
(in millions, except ratios)
December 31, 2023
Term loans by origination year(c)
Revolving loans
Total
2023
2022
2021
2020
2019
Prior to 2019
Within the revolving period
Converted to term loans
Loan delinquency(a)
Current
$
23,216
$
64,366
$
84,496
$
55,546
$
21,530
$
59,563
$
7,479
$
8,151
$
324,347
30–149 days past due
33
74
89
70
41
801
49
223
1,380
150 or more days past due
1
10
17
8
21
456
5
164
682
Total retained loans
$
23,250
$
64,450
$
84,602
$
55,624
$
21,592
$
60,820
$
7,533
$
8,538
$
326,409
% of 30+ days past due to
total retained loans(b)
0.15
%
0.13
%
0.13
%
0.14
%
0.29
%
2.04
%
0.72
%
4.53
%
0.63
%
Gross charge-offs
$
—
$
—
$
—
$
—
$
4
$
167
$
26
$
7
$
204
(a)Individual delinquency classifications include mortgage loans insured by U.S. government agencies which were not material at June 30, 2024 and December 31, 2023.
(b)Excludes mortgage loans that are 30 or more days past due insured by U.S. government agencies which were not material at June 30, 2024 and December 31, 2023. These amounts have been excluded based upon the government guarantee.
(c)Purchased loans are included in the year in which they were originated.
Approximately 37% of the total revolving loans are senior lien loans; the remaining balance are junior lien loans. The lien position the Firm holds is considered in the Firm’s allowance for credit losses. Revolving loans that have been converted to term loans have higher delinquency rates than those that are still within the revolving period. That is primarily because the fully-amortizing payment that is generally required for those products is higher than the minimum payment options available for revolving loans within the revolving period.
143
Nonaccrual loans and other credit quality indicators
The following table provides information on nonaccrual and other credit quality indicators for retained residential real estate loans.
(in millions, except weighted-average data)
June 30, 2024
December 31, 2023
Nonaccrual loans(a)(b)(c)(d)
$
3,231
$
3,466
Current estimated LTV ratios(e)(f)(g)
Greater than 125% and refreshed FICO scores:
Equal to or greater than 660
$
76
$
72
Less than 660
—
—
101% to 125% and refreshed FICO scores:
Equal to or greater than 660
172
223
Less than 660
4
4
80% to 100% and refreshed FICO scores:
Equal to or greater than 660
5,169
6,491
Less than 660
66
102
Less than 80% and refreshed FICO scores:
Equal to or greater than 660
299,687
309,251
Less than 660
8,878
9,277
No FICO/LTV available(h)
791
989
Total retained loans
$
314,843
$
326,409
Weighted-average LTV ratio(e)(i)
47
%
49
%
Weighted-average FICO(f)(i)
775
770
Geographic region(h)(j)
California
$
123,206
$
127,072
New York
47,572
48,815
Florida
21,989
22,778
Texas
14,846
15,506
Massachusetts
13,780
14,213
Colorado
10,458
10,800
Illinois
10,235
10,856
Washington
9,453
9,923
New Jersey
7,707
8,050
Connecticut
6,952
7,163
All other
48,645
51,233
Total retained loans
$
314,843
$
326,409
(a)Includes collateral-dependent residential real estate loans that are charged down to the fair value of the underlying collateral less costs to sell. The Firm reports, in accordance with regulatory guidance, residential real estate loans that have been discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower (“Chapter 7 loans”) as collateral-dependent nonaccrual loans, regardless of their delinquency status. At June 30, 2024, approximately 9% of Chapter 7 residential real estate loans were 30 days or more past due.
(b)Mortgage loans insured by U.S. government agencies excluded from nonaccrual loans were not material at June 30, 2024 and December 31, 2023.
(c)Generally, all consumer nonaccrual loans have an allowance. In accordance with regulatory guidance, certain nonaccrual loans that are considered collateral-dependent have been charged down to the lower of amortized cost or the fair value of their underlying collateral less costs to sell. If the value of the underlying collateral improves subsequent to charge down, the related allowance may be negative.
(d)Interest income on nonaccrual loans recognized on a cash basis was $42 million and $44 million and $85 million and $89 million for the three and six months ended June 30, 2024 and 2023, respectively.
(e)Represents the aggregate unpaid principal balance of loans divided by the estimated current property value. Current property values are estimated, at a minimum, quarterly, based on home valuation models using nationally recognized home price index valuation estimates incorporating actual data to the extent available and forecasted data where actual data is not available. Current estimated combined LTV for junior lien home equity loans considers all available lien positions, as well as unused lines, related to the property.
(f)Refreshed FICO scores represent each borrower’s most recent credit score, which is obtained by the Firm on at least a quarterly basis.
(g)Includes residential real estate loans, primarily held in LLCs in AWM that did not have a refreshed FICO score. These loans have been included in a FICO band based on management’s estimation of the borrower’s credit quality.
(h)Included U.S. government-guaranteed loans as of June 30, 2024 and December 31, 2023.
(i)Excludes loans with no FICO and/or LTV data available.
(j)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at June 30, 2024.
144
Loan modifications
The Firm grants certain modifications of residential real estate loans to borrowers experiencing financial difficulty. The Firm's proprietary modification programs as well as government programs, including U.S. GSE programs, that generally provide various modifications to borrowers experiencing financial difficulty including, but not limited to, interest rate reductions, term extensions, other-than-insignificant payment deferral and principal forgiveness that would otherwise have been required under the terms of the original agreement, are considered FDMs. Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for further information.
Financial effects of FDMs
For the three and six months ended June 30, 2024, residential real estate FDMs were $68 million and $98 million, respectively. The financial effects of the FDMs, which were predominantly in the form of term extensions and interest rate reductions, included extending the weighted-average life of the loans by 7 years and 10 years, and reducing the weighted-average contractual interest rate from 7.59% to 6.04% and 7.58% to 5.50% for the three and six months ended June 30, 2024, respectively.
For the three and six months ended June 30, 2023, residential real estate FDMs were $35 million and $75 million, respectively. The financial effects of the FDMs, which were largely in the form of term extensions and interest rate reductions, included extending the weighted-average life of the loans by 15 years and 18 years, and reducing the weighted-average contractual interest rate from 6.90% to 4.21% and 6.75% to 4.01% for the three and six months ended June 30, 2023, respectively.
As of June 30, 2024 and December 31, 2023, there were no additional commitments to lend to borrowers experiencing financial difficulty whose loans have been modified as FDMs.
For the three and six months ended June 30, 2024 and 2023, loans subject to a trial modification, where the terms of the loans have not been permanently modified, and Chapter 7 loans were not material.
Payment status of FDMs
The following table provides information on the payment status of FDMs during the twelve months ended June 30, 2024 and the six months ended June 30, 2023.
(in millions)
Amortized cost basis
Twelve months ended June 30,
Six months ended June 30,
2024
2023
Current
$
125
$
64
30-149 days past due
19
5
150 or more days past due
14
6
Total
$
158
$
75
Defaults of FDMs
FDMs that defaulted in the three and six months ended June 30, 2024 and were reported as FDMs in the twelve months prior to the default were not material. FDMs that defaulted in the three and six months ended June 30, 2023 and were reported as FDMs on or after January 1, 2023, the date that the Firm adopted the changes to the TDR accounting guidance were not material. Refer to Note 1 of JPMorgan Chase's 2023 Form 10-K for further information.
Active and suspended foreclosure
At June 30, 2024 and December 31, 2023, the Firm had residential real estate loans, excluding those insured by U.S. government agencies, with a carrying value of $619 million and $566 million, respectively, that were not included in REO, but were in the process of active or suspended foreclosure.
145
Auto and other
Delinquency is the primary credit quality indicator for retained auto and other loans. The following tables provide information on delinquency and gross charge-offs.
June 30, 2024
(in millions, except ratios)
Term loans by origination year
Revolving loans
2024
2023
2022
2021
2020
Prior to 2020
Within the revolving period
Converted to term loans
Total
Loan delinquency
Current
$
14,694
$
21,269
$
11,903
$
9,777
$
4,583
$
1,259
$
3,369
$
122
$
66,976
30–119 days past due
90
258
250
185
58
36
34
27
938
120 or more days past due
—
1
—
4
8
1
2
22
38
Total retained loans
$
14,784
$
21,528
$
12,153
$
9,966
$
4,649
$
1,296
$
3,405
$
171
$
67,952
% of 30+ days past due to total retained loans
0.61
%
1.20
%
2.06
%
1.90
%
1.42
%
2.85
%
1.06
%
28.65
%
1.44
%
Gross charge-offs
$
80
$
189
$
118
$
67
$
21
$
45
$
—
$
2
$
522
December 31, 2023
(in millions, except ratios)
Term loans by origination year
Revolving loans
2023
2022
2021
2020
2019
Prior to 2019
Within the revolving period
Converted to term loans
Total
Loan delinquency
Current
$
30,328
$
14,797
$
12,825
$
6,538
$
1,777
$
511
$
2,984
$
102
$
69,862
30–119 days past due
276
279
231
78
43
17
19
24
967
120 or more days past due
1
1
7
8
—
—
3
17
37
Total retained loans
$
30,605
$
15,077
$
13,063
$
6,624
$
1,820
$
528
$
3,006
$
143
$
70,866
% of 30+ days past due to total retained loans
0.91
%
1.86
%
1.75
%
1.15
%
2.36
%
3.22
%
0.73
%
28.67
%
1.39
%
Gross charge-offs
$
333
$
297
$
161
$
53
$
35
$
64
$
—
$
4
$
947
146
Nonaccrual and other credit quality indicators
The following table provides information on nonaccrual and other credit quality indicators for retained auto and other consumer loans.
(in millions)
Total Auto and other
June 30, 2024
December 31, 2023
Nonaccrual loans(a)(b)
$
192
$
177
Geographic region(c)
California
$
10,433
$
10,959
Texas
8,025
8,502
Florida
5,507
5,684
New York
4,910
4,938
Illinois
2,977
3,147
New Jersey
2,505
2,609
Pennsylvania
1,962
1,900
Georgia
1,789
1,912
Arizona
1,673
1,779
North Carolina
1,630
1,714
All other
26,541
27,722
Total retained loans
$
67,952
$
70,866
(a)Generally, all consumer nonaccrual loans have an allowance. In accordance with regulatory guidance, certain nonaccrual loans that are considered collateral-dependent have been charged down to the lower of amortized cost or the fair value of their underlying collateral less costs to sell. If the value of the underlying collateral improves subsequent to charge down, the related allowance may be negative.
(b)Interest income on nonaccrual loans recognized on a cash basis was not material for the three and six months ended June 30, 2024 and 2023.
(c)The geographic regions presented in this table are ordered based on the magnitude of the corresponding loan balances at June 30, 2024.
Loan modifications
The Firm grants certain modifications of auto and other loans to borrowers experiencing financial difficulty.
For the three and six months ended June 30, 2024 and 2023, auto and other FDMs were not material.
As of June 30, 2024 and December 31, 2023, there were no additional commitments to lend to borrowers modified as FDMs.
147
Credit card loan portfolio
The credit card portfolio segment includes credit card loans originated and purchased by the Firm. Delinquency rates are the primary credit quality indicator for credit card loans.
Refer to Note 12 of JPMorgan Chase's 2023 Form 10-K for further information on the credit card loan portfolio, including credit quality indicators.
The following tables provide information on delinquency and gross charge-offs.
(in millions, except ratios)
June 30, 2024
Within the revolving period
Converted to term loans
Total
Loan delinquency
Current and less than 30 days past due and still accruing
$
210,533
$
1,082
$
211,615
30–89 days past due and still accruing
2,083
92
2,175
90 or more days past due and still accruing
2,257
53
2,310
Total retained loans
$
214,873
$
1,227
$
216,100
Loan delinquency ratios
% of 30+ days past due to total retained loans
2.02
%
11.82
%
2.08
%
% of 90+ days past due to total retained loans
1.05
4.32
1.07
Gross charge-offs
$
3,885
$
113
$
3,998
(in millions, except ratios)
December 31, 2023
Within the revolving period
Converted to term loans
Total
Loan delinquency
Current and less than 30 days past due and still accruing
$
205,731
$
882
$
206,613
30–89 days past due and still accruing
2,217
84
2,301
90 or more days past due and still accruing
2,169
40
2,209
Total retained loans
$
210,117
$
1,006
$
211,123
Loan delinquency ratios
% of 30+ days past due to total retained loans
2.09
%
12.33
%
2.14
%
% of 90+ days past due to total retained loans
1.03
3.98
1.05
Gross charge-offs
$
5,325
$
166
$
5,491
Other credit quality indicators
The following table provides information on other credit quality indicators for retained credit card loans.
(in millions, except ratios)
June 30, 2024
December 31, 2023
Geographic region(a)
California
$
33,609
$
32,652
Texas
22,679
22,086
New York
17,389
16,915
Florida
15,652
15,103
Illinois
11,661
11,364
New Jersey
8,959
8,688
Colorado
6,587
6,307
Ohio
6,505
6,424
Pennsylvania
6,101
6,088
Arizona
5,357
5,209
All other
81,601
80,287
Total retained loans
$
216,100
$
211,123
Percentage of portfolio based on carrying value with estimated refreshed FICO scores
Equal to or greater than 660
85.8
%
85.8
%
Less than 660
14.0
14.0
No FICO available
0.2
0.2
(a)The geographic regions presented in the table are ordered based on the magnitude of the corresponding loan balances at June 30, 2024.
148
Loan modifications
The Firm grants certain modifications of credit card loans to borrowers experiencing financial difficulty. These modifications may involve placing the customer’s credit card account on a fixed payment plan, generally for 60 months, which typically includes reducing the interest rate on the credit card account. If the borrower does not make the contractual payments when due under the modified payment terms, the credit card loan continues to age and will be charged-off in accordance with the Firm's standard charge-off policy. In most cases, the Firm does not reinstate the borrower's line of credit.
Financial effects of FDMs
The following tables provide information on credit card loan modifications considered FDMs.
Loan modifications
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Term extension and interest rate reduction(a)(b)
Amortized cost basis
$
259
$
181
$
491
$
326
% of total modifications to total retained credit card loans
0.12
%
0.09
%
0.23
%
0.17
%
Financial effect of loan modifications
Term extension with a reduction in the weighted average contractual interest rate from 23.89% to 3.04%
Term extension with a reduction in the weighted average contractual interest rate from 23.27% to 3.57%
Term extension with a reduction in the weighted average contractual interest rate from 23.88% to 3.17%
Term extension with a reduction in the weighted average contractual interest rate from 22.96% to 3.54%
(a) Term extension includes credit card loans whose terms have been modified under long-term programs by placing the customer's credit card account on a fixed payment plan.
(b) Interest rates represents the weighted average at the time of modification.
Payment status of FDMs
The following table provides information on the payment status of FDMs during the twelve months ended June 30, 2024 and the six months ended June 30, 2023.
(in millions)
Amortized cost basis
Twelve months ended June 30,
Six months ended June 30,
2024
2023
Current and less than 30 days past due and still accruing
$
701
$
264
30-89 days past due and still accruing
61
38
90 or more days past due and still accruing
42
24
Total
$
804
$
326
Defaults of FDMs
FDMs that defaulted in the three and six months ended June 30, 2024 and were reported as FDMs in the twelve months prior to the default were not material. FDMs that defaulted in the three and six months ended June 30, 2023 and were reported as FDMs on or after January 1, 2023, the date that the Firm adopted the changes to the TDR accounting guidance were not material. Refer to Note 1 of JPMorgan Chase's 2023 Form 10-K for further information.
For credit card loans modified as FDMs, payment default is deemed to have occurred when the borrower misses two consecutive contractual payments. Defaulted modified credit card loans remain in the modification program and continue to be charged off in accordance with the Firm's standard charge-off policy.
149
Wholesale loan portfolio
Wholesale loans include loans made to a variety of clients, ranging from large corporate and institutional clients, to small businesses and high-net-worth individuals. The primary credit quality indicator for wholesale loans is the internal risk rating assigned to each loan. Refer to Note 12 of JPMorgan Chase’s 2023 Form 10-K for further information on these risk ratings.
Internal risk rating is the primary credit quality indicator for retained wholesale loans. The following tables provide information on internal risk rating and gross charge-offs.
Secured by real estate
Commercial and industrial
Other(a)
Total retained loans
(in millions, except ratios)
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
Loans by risk ratings
Investment-grade
$
116,812
$
120,405
$
70,806
$
72,624
$
267,340
$
265,809
$
454,958
$
458,838
Noninvestment-grade:
Noncriticized
36,840
34,241
82,888
80,637
74,008
75,178
193,736
190,056
Criticized performing
9,370
7,291
11,384
12,684
1,415
1,257
22,169
21,232
Criticized nonaccrual
864
401
1,620
1,221
805
724
3,289
2,346
Total noninvestment-grade
47,074
41,933
95,892
94,542
76,228
77,159
219,194
213,634
Total retained loans
$
163,886
$
162,338
$
166,698
$
167,166
$
343,568
$
342,968
$
674,152
$
672,472
% of investment-grade to total retained loans
71.28
%
74.17
%
42.48
%
43.44
%
77.81
%
77.50
%
67.49
%
68.23
%
% of total criticized to total retained loans
6.24
4.74
7.80
8.32
0.65
0.58
3.78
3.51
% of criticized nonaccrual to total retained loans
0.53
0.25
0.97
0.73
0.23
0.21
0.49
0.35
(a)Includes loans to SPEs, financial institutions, personal investment companies and trusts, individuals and individual entities (predominantly Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB), states and political subdivisions, as well as loans to nonprofits. As of June 30, 2024 and December 31, 2023, predominantly consisted of $107.2 billion and $106.9 billion, respectively, to individuals and individual entities; $94.3 billion and $87.5 billion, respectively, to financial institutions; and $83.5 billion and $91.2 billion, respectively, to SPEs. Refer to Note 14 of JPMorgan Chase’s 2023 Form 10-K for more information on SPEs.
Secured by real estate
(in millions)
June 30, 2024
Term loans by origination year
Revolving loans
2024
2023
2022
2021
2020
Prior to 2020
Within the revolving period
Converted to term loans
Total
Loans by risk ratings
Investment-grade
$
4,147
$
10,400
$
27,215
$
24,165
$
16,066
$
33,375
$
1,444
$
—
$
116,812
Noninvestment-grade
2,434
5,028
13,865
8,913
3,737
11,629
1,457
11
47,074
Total retained loans
$
6,581
$
15,428
$
41,080
$
33,078
$
19,803
$
45,004
$
2,901
$
11
$
163,886
Gross charge-offs
$
1
$
13
$
27
$
—
$
33
$
38
$
—
$
—
$
112
Secured by real estate
(in millions)
December 31, 2023
Term loans by origination year
Revolving loans
2023
2022
2021
2020
2019
Prior to 2019
Within the revolving period
Converted to term loans
Total
Loans by risk ratings
Investment-grade
$
10,687
$
28,874
$
25,784
$
16,820
$
15,677
$
21,108
$
1,455
$
—
$
120,405
Noninvestment-grade
4,477
12,579
7,839
3,840
3,987
7,918
1,291
2
41,933
Total retained loans
$
15,164
$
41,453
$
33,623
$
20,660
$
19,664
$
29,026
$
2,746
$
2
$
162,338
Gross charge-offs
$
20
$
48
$
22
$
—
$
23
$
78
$
—
$
1
$
192
150
Commercial and industrial
(in millions)
June 30, 2024
Term loans by origination year
Revolving loans
2024
2023
2022
2021
2020
Prior to 2020
Within the revolving period
Converted to term loans
Total
Loans by risk ratings
Investment-grade
$
8,308
$
7,356
$
7,868
$
3,414
$
1,639
$
1,661
$
40,558
$
2
$
70,806
Noninvestment-grade
10,734
14,385
13,359
7,621
1,145
1,443
47,132
73
95,892
Total retained loans
$
19,042
$
21,741
$
21,227
$
11,035
$
2,784
$
3,104
$
87,690
$
75
$
166,698
Gross charge-offs
$
5
$
4
$
67
$
24
$
1
$
3
$
88
$
2
$
194
Commercial and industrial
(in millions)
December 31, 2023
Term loans by origination year
Revolving loans
2023
2022
2021
2020
2019
Prior to 2019
Within the revolving period
Converted to term loans
Total
Loans by risk ratings
Investment-grade
$
14,875
$
10,642
$
4,276
$
2,291
$
1,030
$
1,115
$
38,394
$
1
$
72,624
Noninvestment-grade
18,890
16,444
9,299
1,989
1,144
1,006
45,696
74
94,542
Total retained loans
$
33,765
$
27,086
$
13,575
$
4,280
$
2,174
$
2,121
$
84,090
$
75
$
167,166
Gross charge-offs
$
25
$
8
$
110
$
55
$
2
$
12
$
259
$
8
$
479
Other(a)
(in millions)
June 30, 2024
Term loans by origination year
Revolving loans
2024
2023
2022
2021
2020
Prior to 2020
Within the revolving period
Converted to term loans
Total
Loans by risk ratings
Investment-grade
$
16,122
$
27,693
$
16,067
$
8,229
$
10,129
$
8,656
$
179,160
$
1,284
$
267,340
Noninvestment-grade
7,791
8,122
6,241
4,578
1,819
2,236
45,329
112
76,228
Total retained loans
$
23,913
$
35,815
$
22,308
$
12,807
$
11,948
$
10,892
$
224,489
$
1,396
$
343,568
Gross charge-offs
$
—
$
36
$
2
$
26
$
41
$
36
$
1
$
—
$
142
Other(a)
(in millions)
December 31, 2023
Term loans by origination year
Revolving loans
2023
2022
2021
2020
2019
Prior to 2019
Within the revolving period
Converted to term loans
Total
Loans by risk ratings
Investment-grade
$
38,338
$
18,034
$
10,033
$
10,099
$
3,721
$
6,662
$
176,728
$
2,194
$
265,809
Noninvestment-grade
14,054
8,092
6,169
2,172
811
2,001
43,801
59
77,159
Total retained loans
$
52,392
$
26,126
$
16,202
$
12,271
$
4,532
$
8,663
$
220,529
$
2,253
$
342,968
Gross charge-offs
$
5
$
298
$
8
$
8
$
—
$
8
$
13
$
—
$
340
(a)Includes loans to SPEs, financial institutions, personal investment companies and trusts, individuals and individual entities (predominantly Global Private Bank clients within AWM and J.P. Morgan Wealth Management within CCB), states and political subdivisions, as well as loans to nonprofits. Refer to Note 14 of JPMorgan Chase’s 2023 Form 10-K for more information on SPEs.
151
The following table presents additional information on retained loans secured by real estate, which consists of loans secured wholly or substantially by a lien or liens on real property at origination.
(in millions, except ratios)
Multifamily
Other commercial
Total retained loans secured by real estate
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
Retained loans secured by real estate
$
101,726
$
100,725
$
62,160
$
61,613
$
163,886
$
162,338
Criticized
4,086
3,596
6,148
4,096
10,234
7,692
% of criticized to total retained loans secured by real estate
4.02
%
3.57
%
9.89
%
6.65
%
6.24
%
4.74
%
Criticized nonaccrual
$
90
$
76
$
774
$
325
$
864
$
401
% of criticized nonaccrual loans to total retained loans secured by real estate
0.09
%
0.08
%
1.25
%
0.53
%
0.53
%
0.25
%
Geographic distribution and delinquency
The following table provides information on the geographic distribution and delinquency for retained wholesale loans.
Secured by real estate
Commercial and industrial
Other
Total retained loans
(in millions)
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
Loans by geographic distribution(a)
Total U.S.
$
160,858
$
159,499
$
128,139
$
127,638
$
262,178
$
262,499
$
551,175
$
549,636
Total non-U.S.
3,028
2,839
38,559
39,528
81,390
80,469
122,977
122,836
Total retained loans
$
163,886
$
162,338
$
166,698
$
167,166
$
343,568
$
342,968
$
674,152
$
672,472
Loan delinquency
Current and less than 30 days past due and still accruing
$
162,166
$
161,314
$
164,281
$
164,899
$
341,542
$
341,128
$
667,989
$
667,341
30–89 days past due and still accruing(b)
813
473
734
884
1,202
1,090
2,749
2,447
90 or more days past due and still accruing(c)
43
150
63
162
19
26
125
338
Criticized nonaccrual
864
401
1,620
1,221
805
724
3,289
2,346
Total retained loans
$
163,886
$
162,338
$
166,698
$
167,166
$
343,568
$
342,968
$
674,152
$
672,472
(a)The U.S. and non-U.S. distribution is determined based predominantly on the domicile of the borrower.
(b)As of June 30, 2024, includes delayed payments associated with certain First Republic loans as a result of ongoing integration activities. As of August 2, 2024, these loans were largely current.
(c)Represents loans that are considered well-collateralized and therefore still accruing interest.
Nonaccrual loans
The following table provides information on retained wholesale nonaccrual loans.
(in millions)
Secured by real estate
Commercial and industrial
Other
Total retained loans
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
Nonaccrual loans
With an allowance
$
156
$
129
$
1,284
$
776
$
618
$
492
$
2,058
$
1,397
Without an allowance(a)
708
272
336
445
187
232
1,231
949
Totalnonaccrual loans(b)
$
864
$
401
$
1,620
$
1,221
$
805
$
724
$
3,289
$
2,346
(a)When the discounted cash flows or collateral value equals or exceeds the amortized cost of the loan, the loan does not require an allowance. This typically occurs when the loans have been partially charged off and/or there have been interest payments received and applied to the loan balance.
(b)Interest income on nonaccrual loans recognized on a cash basis was not material for the three and six months ended June 30, 2024 and 2023.
152
Loan modifications
The Firm grants certain modifications of wholesale loans to borrowers experiencing financial difficulty.
Financial effects of FDMs
The following tables provide information by loan class about modifications considered FDMs during the three and six months ended June 30, 2024 and 2023.
Secured by real estate
Three months ended June 30, 2024
Six months ended June 30, 2024
(in million)
Amortized cost basis
% of loan modifications to total retained Secured by real estate loans
Financial effect of loan modifications
Amortized cost basis
% of loan modifications to total retained Secured by real estate loans
Financial effect of loan modifications
Single modifications
Term extension
$
27
0.02
%
Extended loans by a weighted-average of 5 months
$
28
0.02
%
Extended loans by a weighted-average of5 months
Multiple modifications
Other-than-insignificant payment deferral and interest rate reduction
35
0.02
Provided payment deferrals with delayed amounts recaptured at maturity and reduced weighted-average contractual interest by 185 bps
48
0.03
Provided payment deferrals with delayed amounts recaptured at maturity and reduced weighted-average contractual interest by 162 bps
Other(a)
—
—
NM
1
—
NM
Total
$
62
$
77
(a)Includes a loan with a single modification.
Secured by real estate
Three months ended June 30, 2023
Six months ended June 30, 2023
Amortized cost basis
% of loan modifications to total retained Secured by real estate loans
Financial effect of loan modifications
Amortized cost basis
% of loan modifications to total retained Secured by real estate loans
Financial effect of loan modifications
Single modifications
Term extension
$
68
0.04
%
Extended loans by a weighted-average of 9 months
$
71
0.04
%
Extended loans by a weighted-average of 9 months
Other(a)
9
—
NM
14
—
NM
Total
$
77
$
85
(a)Includes loans with both single and multiple modifications.
Commercial and industrial
Three months ended June 30, 2024
Six months ended June 30, 2024
Amortized cost basis
% of loan modifications to total retained Commercial and industrial loans
Financial effect of loan modifications
Amortized cost basis
% of loan modifications to total retained Commercial and industrial loans
Financial effect of loan modifications
Single modifications
Term extension
$
460
0.28
%
Extended loans by a weighted-average of 12 months
$
754
0.45
%
Extended loans by a weighted-average of 13 months
Other-than-insignificant payment deferral
162
0.10
Provided payment deferrals with delayed amounts primarily re-amortized over the remaining tenor
166
0.10
Provided payment deferrals with delayed amounts primarily re-amortized over the remaining tenor
Multiple modifications
Other-than-insignificant payment deferral and term extension
20
0.01
Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 19 months
115
0.07
Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 20 months
Other(a)
2
—
NM
6
—
NM
Total
$
644
$
1,041
(a)Includes loans with both single and multiple modifications.
153
Commercial and industrial
Three months ended June 30, 2023
Six months ended June 30, 2023
Amortized cost basis
% of loan modifications to total retained Commercial and industrial loans
Financial effect of loan modifications
Amortized cost basis
% of loan modifications to total retained Commercial and industrial loans
Financial effect of loan modifications
Single modifications
Term extension
$
306
0.18
%
Extended loans by a weighted-average of 8 months
$
423
0.25
%
Extended loans by a weighted-average of 10 months
Multiple modifications
Term extension and principal forgiveness
—
—
40
0.02
Extended loans by a weighted average of 64 months and reduced amortized cost basis of the loans by $23 million
Other(a)
6
—
NM
6
—
NM
Total
$
312
$
469
(a)Includes loans with both single and multiple modifications.
Other
Three months ended June 30, 2024
Six months ended June 30, 2024
Amortized cost basis
% of loan modifications to total retained Other loans
Financial effect of loan modifications
Amortized cost basis
% of loan modifications to total retained Other loans
Financial effect of loan modifications
Single modifications
Term extension
$
19
0.01
%
Extended loans by a weighted-average of 7 months
$
29
0.01
%
Extended loans by a weighted-average of 11 months
Other-than-insignificant payment deferral
13
—
Provided payment deferrals with delayed amounts recaptured at the end of the deferral period
13
—
Provided payment deferrals with delayed amounts recaptured at the end of the deferral period
Other(a)
2
—
NM
2
—
NM
Total
$
34
$
44
(a)Includes a loan with multiple modifications.
Other
Three months ended June 30, 2023
Six months ended June 30, 2023
Amortized cost basis
% of loan modifications to total retained Other loans
Financial effect of loan modifications
Amortized cost basis
% of loan modifications to total retained Other loans
Financial effect of loan modifications
Single modifications
Term extension
$
38
0.01
%
Extended loans by a weighted average of 3 months
$
54
0.02
%
Extended loans by a weighted average of 6 months
Interest rate reduction
11
—
Reduced weighted-average contractual interest by 654 bps
11
—
Reduced weighted-average contractual interest by 654 bps
Multiple modifications
Other-than-insignificant payment deferral and term extension
235
0.07
Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 144 months
235
0.07
Provided payment deferrals with delayed amounts primarily recaptured at the end of the deferral period and extended loans by a weighted-average of 144 months
Total
$
284
$
300
154
Payment status of FDMs
The following table provides information on the payment status of FDMs during the twelve months ended June 30, 2024 and the six months ended June 30, 2023.
Amortized cost basis
Twelve months ended June 30, 2024
Six months ended June 30, 2023
(in millions)
Secured by real estate
Commercial and industrial
Other
Secured by real estate
Commercial and industrial
Other
Current and less than 30 days past due and still accruing
$
74
$
1,271
$
134
$
77
$
331
$
—
30-89 days past due and still accruing
1
79
—
1
—
—
90 or more days past due and still accruing
—
—
—
—
3
—
Criticized nonaccrual
70
425
208
7
135
300
Total
$
145
$
1,775
$
342
$
85
$
469
$
300
Defaults of FDMs
The following table provides information by loan class about FDMs that defaulted in the three and six months ended June 30, 2024 that were reported as FDMs in the twelve months prior to the default, and FDMs that defaulted in the three and six months ended June 30, 2023 that were reported as FDMs on or after January 1, 2023, the date that the Firm adopted the changes to the TDR accounting guidance.
Amortized cost basis
Three months ended June 30, 2024
Six months ended June 30, 2024
(in millions)
Secured by real estate
Commercial and industrial
Other
Secured by real estate
Commercial and industrial
Other
Term extension
$
1
$
110
$
9
$
6
$
111
$
11
Other-than-insignificant payment deferral
—
23
—
—
23
—
Other than insignificant payment deferral and term extension
—
20
—
—
20
—
Interest rate reduction and term extension
3
1
—
3
2
—
Total
$
4
$
154
$
9
$
9
$
156
$
11
Amortized cost basis
Three months ended June 30, 2023
Six months ended June 30, 2023
(in millions)
Secured by real estate
Commercial and industrial
Other
Secured by real estate
Commercial and industrial
Other
Term extension
$
—
$
3
$
—
$
1
$
7
$
—
Total
$
—
$
3
$
—
$
1
$
7
$
—
As of June 30, 2024 and December 31, 2023, additional unfunded commitments on modified loans to borrowers experiencing financial difficulty were $849 million and $1.8 billion, respectively, in Commercial and industrial, and $73 million and $4 million, respectively, in Other loan class. There were no additional commitments to borrowers experiencing financial difficulty whose loans have been modified as FDMs in Secured by real estate for both periods.
155
Note 12 – Allowance for credit losses
The Firm's allowance for credit losses represents management's estimate of expected credit losses over the remaining expected life of the Firm's financial assets measured at amortized cost and certain off-balance sheet lending-related commitments.
Refer to Note 13 of JPMorgan Chase's 2023 Form 10-K for a detailed discussion of the allowance for credit losses and the related accounting policies.
156
Allowance for credit losses and related information
The table below summarizes information about the allowances for credit losses and includes a breakdown of loans and lending-related commitments by impairment methodology. Refer to Note 10 of JPMorgan Chase’s 2023 Form 10-K and Note 9 of this Form 10-Q for further information on the allowance for credit losses on investment securities.
2024
2023
Six months ended June 30, (in millions)
Consumer, excluding credit card
Credit card
Wholesale
Total
Consumer, excluding credit card
Credit card
Wholesale
Total
Allowance for loan losses
Beginning balance at January 1,
$
1,856
$
12,450
$
8,114
$
22,420
$
2,040
$
11,200
$
6,486
$
19,726
Cumulative effect of a change in accounting principle(a)
NA
NA
NA
NA
(489)
(100)
2
(587)
Gross charge-offs
661
3,998
448
5,107
501
2,432
294
3,227
Gross recoveries collected
(343)
(482)
(95)
(920)
(247)
(386)
(46)
(679)
Net charge-offs/(recoveries)
318
3,516
353
4,187
254
2,046
248
2,548
Provision for loan losses
204
4,266
288
4,758
751
2,546
2,067
5,364
Other
1
—
(1)
—
—
—
25
25
Ending balance at June 30,
$
1,743
$
13,200
$
8,048
$
22,991
$
2,048
$
11,600
$
8,332
$
21,980
Allowance for lending-related commitments
Beginning balance at January 1,
$
75
$
—
$
1,899
$
1,974
$
76
$
—
$
2,306
$
2,382
Provision for lending-related commitments
17
—
77
94
52
—
(253)
(201)
Other
—
—
—
—
1
—
4
5
Ending balance at June 30,
$
92
$
—
$
1,976
$
2,068
$
129
$
—
$
2,057
$
2,186
Total allowance for investment securities
NA
NA
NA
177
NA
NA
NA
104
Total allowance for credit losses(b)
$
1,835
$
13,200
$
10,024
$
25,236
$
2,177
$
11,600
$
10,389
$
24,270
Allowance for loan losses by impairment methodology
Asset-specific(c)
$
(856)
$
—
$
562
$
(294)
$
(971)
$
—
$
478
$
(493)
Portfolio-based
2,599
13,200
7,486
23,285
3,019
11,600
7,854
22,473
Total allowance for loan losses
$
1,743
$
13,200
$
8,048
$
22,991
$
2,048
$
11,600
$
8,332
$
21,980
Loans by impairment methodology
Asset-specific(c)
$
3,034
$
—
$
3,283
$
6,317
$
3,439
$
—
$
2,587
$
6,026
Portfolio-based
379,761
216,100
670,869
1,266,730
392,756
191,348
665,558
1,249,662
Total retained loans
$
382,795
$
216,100
$
674,152
$
1,273,047
$
396,195
$
191,348
$
668,145
$
1,255,688
Collateral-dependent loans
Net charge-offs
$
3
$
—
$
134
$
137
$
5
$
—
$
77
$
82
Loans measured at fair value of collateral less cost to sell
2,978
—
1,341
4,319
3,388
—
762
4,150
Allowance for lending-related commitments by impairment methodology
Asset-specific
$
—
$
—
$
107
$
107
$
—
$
—
$
65
$
65
Portfolio-based
92
—
1,869
1,961
129
—
1,992
2,121
Total allowance for lending-related commitments(d)
$
92
$
—
$
1,976
$
2,068
$
129
$
—
$
2,057
$
2,186
Lending-related commitments by impairment methodology
Asset-specific
$
—
$
—
$
541
$
541
$
—
$
—
$
332
$
332
Portfolio-based(e)
27,375
—
511,857
539,232
32,428
—
521,408
553,836
Total lending-related commitments
$
27,375
$
—
$
512,398
$
539,773
$
32,428
$
—
$
521,740
$
554,168
(a)Represents the impact to the allowance for loan losses upon the adoption of the Financial Instruments - Credit Losses: Troubled Debt Restructurings accounting guidance. Refer to Note 1 of JPMorgan Chase's 2023 Form 10-K for further information.
(b)At June 30, 2024 and 2023, in addition to the allowance for credit losses in the table above, the Firm also had an allowance for credit losses of $278 million and $18 million, respectively, associated with certain accounts receivable in CIB.
(c)Includes collateral-dependent loans, including those for which foreclosure is deemed probable, and nonaccrual risk-rated loans.
(d)The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(e)At June 30, 2024 and 2023, lending-related commitments excluded $19.8 billion and $18.4 billion, respectively, for the consumer, excluding credit card portfolio segment; $964.7 billion and $881.5 billion, respectively, for the credit card portfolio segment; and $32.6 billion and $19.3 billion, respectively, for the wholesale portfolio segment, which were not subject to the allowance for lending-related commitments.
157
Discussion of changes in the allowance
The allowance for credit losses as of June 30, 2024 was $25.5 billion, reflecting a net addition of $749 million from December 31, 2023.
The net addition to the allowance for credit losses included:
•$653 million in consumer, reflecting a $753 millionnet addition in Card Services, predominantly driven by the seasoning of newer vintages, loan growth, and updates to certain macroeconomic variables, and a $125 million net reduction in Home Lending, and
•$47 million in wholesale, driven by
–a net addition of $707 million, reflecting net downgrade activity, primarily in Real Estate, and included approximately $200 million associated with incorporating the First Republic portfolio into the Firm’s modeled credit loss estimates,
predominantly offset by
–a net reduction of $660 million, primarily due to the impact of changes in the loan and lending-related commitment portfolios and updates to certain macroeconomic variables.
The Firm has maintained the additional weight placed on the adverse scenarios in the first quarter of 2023 to reflect ongoing uncertainties and downside risks related to the geopolitical and macroeconomic environment.
The Firm's allowance for credit losses is estimated using a weighted average of five internally developed macroeconomic scenarios. The adverse scenarios incorporate more punitive macroeconomic factors than the central case assumptions provided in the table below, resulting in a weighted average U.S. unemployment rate peaking at 5.3% in the second quarter of 2025, and a weighted average U.S. real GDP level that is 2.1% lower than the central case at the end of the fourth quarter of 2025.
The following table presents the Firm’s central case assumptions for the periods presented:
Central case assumptions at June 30, 2024
4Q24
2Q25
4Q25
U.S. unemployment rate(a)
4.1
%
4.1
%
4.0
%
YoY growth in U.S. real GDP(b)
1.5
%
1.6
%
1.9
%
Central case assumptions at December 31, 2023
2Q24
4Q24
2Q25
U.S. unemployment rate(a)
4.1
%
4.4
%
4.1
%
YoY growth in U.S. real GDP(b)
1.8
%
0.7
%
1.0
%
(a)Reflects quarterly average of forecasted U.S. unemployment rate.
(b)The year over year growth in U.S. real GDP in the forecast horizon of the central scenario is calculated as the percentage change in U.S. real GDP levels from the prior year.
Subsequent changes to this forecast and related estimates will be reflected in the provision for credit losses in future periods.
Refer to Note 13 and Note 10 of JPMorgan Chase’s 2023 Form 10-K for a description of the policies, methodologies and judgments used to determine the Firm’s allowance for credit losses on loans, lending-related commitments, and investment securities.
Refer to Note 11 for additional information on the consumer and wholesale credit portfolios.
Refer to Critical Accounting Estimates Used by the Firm on pages 86-88 for further information on the allowance for credit losses and related management judgments.
158
Note 13 – Variable interest entities
Refer to Note 1 and Note 14 of JPMorgan Chase’s 2023 Form 10-K for a further description of the Firm's accounting policies regarding consolidation of and involvement with VIEs.
The following table summarizes the most significant types of Firm-sponsored VIEs by business segment. The Firm considers a “Firm-sponsored” VIE to include any entity where: (1) JPMorgan Chase is the primary beneficiary of the structure; (2) the VIE is used by JPMorgan Chase to securitize Firm assets; (3) the VIE issues financial instruments with the JPMorgan Chase name; or (4) the entity is a JPMorgan Chase–administered asset-backed commercial paper conduit.
Line of Business
Transaction Type
Activity
Form 10-Q page references
CCB
Credit card securitization trusts
Securitization of originated credit card receivables
159
Mortgage securitization trusts
Servicing and securitization of both originated and purchased residential mortgages
159–161
CIB
Mortgage and other securitization trusts
Securitization of both originated and purchased residential and commercial mortgages, and other consumer loans
159–161
Multi-seller conduits
Assisting clients in accessing the financial markets in a cost-efficient manner and structuring transactions to meet investor needs
161
Municipal bond vehicles
Financing of municipal bond investments
161
In addition, CIB also invests in and provides financing, lending-related services and other services to VIEs sponsored by third parties. Refer to pages 162–163 of this Note for more information on the VIEs sponsored by third parties.
Significant Firm-sponsored VIEs
Credit card securitizations
As a result of the Firm’s continuing involvement, the Firm is considered to be the primary beneficiary of its Firm-sponsored credit card securitization trust, the Chase Issuance Trust.
Firm-sponsored mortgage and other securitization trusts
The Firm securitizes (or has securitized) originated and purchased residential mortgages, commercial mortgages and other consumer loans primarily in its CCB and CIB businesses. Depending on the particular transaction, as well as the respective business involved, the Firm may act as the servicer of the loans and/or retain certain beneficial interests in the securitization trusts.
159
The following tables present the total unpaid principal amount of assets held in Firm-sponsored private-label securitization entities, including those in which the Firm has continuing involvement, and those that are consolidated by the Firm. Continuing involvement includes servicing the loans, holding senior interests or subordinated interests (including amounts required to be held pursuant to credit risk retention rules), recourse or guarantee arrangements,
and derivative contracts. In certain instances, the Firm’s only continuing involvement is servicing the loans. The Firm’s maximum loss exposure from retained and purchased interests is the carrying value of these interests. Refer to page 165 of this Note for information on the securitization-related loan delinquencies and liquidation losses.
Principal amount outstanding
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e)
June 30, 2024 (in millions)
Total assets held by securitization VIEs
Assets held in consolidated securitization VIEs
Assets held in nonconsolidated securitization VIEs with continuing involvement
Trading assets
Investment securities
Other financial assets
Total interests held by JPMorgan Chase
Securitization-related(a)
Residential mortgage:
Prime/Alt-A and option ARMs
$
64,815
$
645
$
45,545
$
568
$
1,811
$
126
$
2,505
Subprime
8,768
—
1,470
26
22
—
48
Commercial and other(b)
174,322
—
120,198
596
5,646
1,485
7,727
Total
$
247,905
$
645
$
167,213
$
1,190
$
7,479
$
1,611
$
10,280
Principal amount outstanding
JPMorgan Chase interest in securitized assets in nonconsolidated VIEs(c)(d)(e)
December 31, 2023 (in millions)
Total assets held by securitization VIEs
Assets held in consolidated securitization VIEs
Assets held in nonconsolidated securitization VIEs with continuing involvement
Trading assets
Investment securities
Other financial assets
Total interests held by JPMorgan Chase
Securitization-related(a)
Residential mortgage:
Prime/Alt-A and option ARMs
$
58,570
$
675
$
39,319
$
595
$
1,981
$
60
$
2,636
Subprime
8,881
—
1,312
3
—
—
3
Commercial and other(b)
168,042
—
120,262
831
5,638
1,354
7,823
Total
$
235,493
$
675
$
160,893
$
1,429
$
7,619
$
1,414
$
10,462
(a)Excludes U.S. GSEs and government agency securitizations and re-securitizations, which are not Firm-sponsored.
(b)Consists of securities backed by commercial real estate loans and non-mortgage-related consumer receivables.
(c)Excludes the following: retained servicing; securities retained from loan sales and securitization activity related to U.S. GSEs and government agencies; interest rate and foreign exchange derivatives primarily used to manage interest rate and foreign exchange risks of securitization entities; senior securities of $129 million and $52 million at June 30, 2024 and December 31, 2023, respectively, and subordinated securities which were not material at June 30, 2024 and December 31, 2023, which the Firm purchased in connection with CIB’s secondary market-making activities.
(d)Includes interests held in re-securitization transactions.
(e)As of June 30, 2024 and December 31, 2023, 76% and 77%, respectively, of the Firm’s retained securitization interests, which are predominantly carried at fair value and include amounts required to be held pursuant to credit risk retention rules, were risk-rated “A” or better, on an S&P-equivalent basis. The retained interests in prime residential mortgages consisted of $2.3 billion and $2.5 billion of investment-grade retained interests at June 30, 2024 and December 31, 2023, respectively, and $158 million and $88 million of noninvestment-grade retained interests at June 30, 2024 and December 31, 2023, respectively. The retained interests in commercial and other securitization trusts consisted of $5.9 billion and $6.1 billion of investment-grade retained interests at June 30, 2024 and December 31, 2023, respectively, and $1.8 billion and $1.7 billion of noninvestment-grade retained interests at June 30, 2024 and December 31, 2023, respectively.
160
Residential mortgage
The Firm securitizes residential mortgage loans originated by CCB, as well as residential mortgage loans purchased from third parties by either CCB or CIB.
Commercial mortgages and other consumer securitizations
CIB originates and securitizes commercial mortgage loans, and engages in underwriting and trading activities involving the securities issued by securitization trusts.
Re-securitizations
The following table presents the principal amount of securities transferred to re-securitization VIEs.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Transfers of securities to VIEs
U.S. GSEs and government agencies
$
12,772
$
6,261
$
21,178
$
9,667
The Firm did not transfer any private label securities to re-securitization VIEs during the three and six months ended June 30, 2024 and 2023, respectively and retained interests in any such Firm-sponsored VIEs as of June 30, 2024 and December 31, 2023 were not material.
The following table presents information on the Firm's interests in nonconsolidated re-securitization VIEs.
Nonconsolidated re-securitization VIEs
(in millions)
June 30, 2024
December 31, 2023
U.S. GSEs and government agencies
Interest in VIEs
$
4,879
$
3,371
As of June 30, 2024 and December 31, 2023, the Firm did not consolidate any U.S. GSE and government agency re-securitization VIEs or any Firm-sponsored private-label re-securitization VIEs.
Multi-seller conduits
In the normal course of business, JPMorgan Chase makes markets in and invests in commercial paper issued by the Firm-administered multi-seller conduits. The Firm held $2.7 billion and $9.8 billion of the commercial paper issued by the Firm-administered multi-seller conduits at June 30, 2024 and December 31, 2023, respectively, which have been eliminated in consolidation. The Firm’s investments reflect the Firm’s funding needs and capacity and were not driven by market illiquidity. Other than the amounts required to be held pursuant to credit risk retention rules, the Firm is not obligated under any agreement to purchase the commercial paper issued by the Firm-administered multi-seller conduits.
Deal-specific liquidity facilities, program-wide liquidity and credit enhancement provided by the Firm have been eliminated in consolidation. The Firm or the Firm-administered multi-seller conduits provide lending-related commitments to certain clients of the Firm-administered multi-seller conduits. The unfunded commitments were $12.1 billion and $10.8 billion at June 30, 2024 and December 31, 2023, respectively, and are reported as off-balance sheet lending-related commitments in other unfunded commitments to extend credit. Refer to Note 22 for more information on off-balance sheet lending-related commitments.
Municipal bond vehicles
Municipal bond vehicles or tender option bond (“TOB”) trusts allow institutions to finance their municipal bond investments at short-term rates. TOB transactions are known as customer TOB trusts and non-customer TOB trusts. Customer TOB trusts are sponsored by a third party.
The Firm serves as sponsor for all non-customer TOB transactions.
161
Consolidated VIE assets and liabilities
The following table presents information on assets and liabilities related to VIEs consolidated by the Firm as of June 30, 2024 and December 31, 2023.
Assets
Liabilities
June 30, 2024 (in millions)
Trading assets
Loans
Other(c)
Total
assets(d)
Beneficial interests in
VIE assets(e)
Other(f)
Total liabilities
VIE program type
Firm-sponsored credit card trusts
$
—
$
13,188
$
167
$
13,355
$
5,315
$
11
$
5,326
Firm-administered multi-seller conduits
1
21,960
159
22,120
19,437
28
19,465
Municipal bond vehicles
2,034
—
21
2,055
2,231
8
2,239
Mortgage securitization entities(a)
—
663
8
671
121
52
173
Other
331
1,556
(b)
286
2,173
—
236
236
Total
$
2,366
$
37,367
$
641
$
40,374
$
27,104
$
335
$
27,439
Assets
Liabilities
December 31, 2023 (in millions)
Trading assets
Loans
Other(c)
Total
assets(d)
Beneficial interests in
VIE assets(e)
Other(f)
Total liabilities
VIE program type
Firm-sponsored credit card trusts
$
—
$
9,460
$
117
$
9,577
$
2,998
$
6
$
3,004
Firm-administered multi-seller conduits
1
27,372
194
27,567
17,781
30
17,811
Municipal bond vehicles
2,056
—
22
2,078
2,116
11
2,127
Mortgage securitization entities(a)
—
693
8
701
125
57
182
Other
113
86
250
449
—
159
159
Total
$
2,170
$
37,611
$
591
$
40,372
$
23,020
$
263
$
23,283
(a)Includes residential mortgage securitizations.
(b)Primarily includes consumer loans in CIB.
(c)Includes assets classified as cash and other assets on the Consolidated balance sheets.
(d)The assets of the consolidated VIEs included in the program types above are used to settle the liabilities of those entities. The assets and liabilities include third-party assets and liabilities of consolidated VIEs and exclude intercompany balances that eliminate in consolidation.
(e)The interest-bearing beneficial interest liabilities issued by consolidated VIEs are classified on the Consolidated balance sheets as “Beneficial interests issued by consolidated VIEs”. The holders of these beneficial interests generally do not have recourse to the general credit of JPMorgan Chase. Included in beneficial interests in VIE assets are long-term beneficial interests of $5.4 billion and $3.1 billion at June 30, 2024 and December 31, 2023, respectively.
(f)Includes liabilities classified as accounts payable and other liabilities on the Consolidated balance sheets.
VIEs sponsored by third parties
The Firm enters into transactions with VIEs structured by other parties. These include, for example, acting as a derivative counterparty, liquidity provider, investor, underwriter, placement agent, remarketing agent, trustee or custodian. These transactions are conducted at arm’s-length, and individual credit decisions are based on the analysis of the specific VIE, taking into consideration the quality of the underlying assets. Where the Firm does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, or a variable interest that could potentially be significant, the Firm generally does not consolidate the VIE, but it records and reports these positions on its Consolidated balance sheets in the same manner it would record and report positions in respect of any other third-party transaction.
Tax credit vehicles
The Firm holds investments in unconsolidated tax credit vehicles, which are limited partnerships and similar entities that own and operate affordable housing, alternative energy, and other projects. These entities are primarily considered VIEs. A third party is typically the general partner or managing member and has control over the
significant activities of the tax credit vehicles, and accordingly the Firm does not consolidate tax credit vehicles. The Firm generally invests in these partnerships as a limited partner and earns a return primarily through the receipt of tax credits allocated to the projects. The maximum loss exposure, represented by equity investments and funding commitments, was $33.6 billion and $35.1 billion at June 30, 2024 and December 31, 2023, of which $14.0 billion and $14.7 billion was unfunded at June 30, 2024 and December 31, 2023, respectively. The Firm assesses each project and to reduce the risk of loss, may withhold varying amounts of its capital investment until the project qualifies for tax credits. Refer to Note 25 of JPMorgan Chase’s 2023 Form 10-K for further information on affordable housing tax credits and Note 22 of this Form 10-Q for more information on off-balance sheet lending-related commitments.
Effective January 1, 2024, the Firm adopted updates to the Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method guidance which expanded the types of tax-oriented investments, beyond affordable housing tax credit investments, that the Firm can elect on a program by program basis, to be accounted for
162
using the proportional amortization method. Refer to Note 1 for further information.
The proportional amortization method requires the cost of eligible investments, within an elected program, be amortized in proportion to the tax benefits received with the resulting amortization reported directly in income tax expense, which aligns with the associated tax credits and other tax benefits. Investments must meet certain criteria to be eligible, including that substantially all of the return is from income tax credits and other income tax benefits.
In addition, under this method deferred taxes are generally not recorded as the investment is now amortized in proportion to the income tax credits and other income tax benefits received. Delayed equity contributions that are unconditional and legally binding or conditional and probable of occurring are recorded in other liabilities with a corresponding increase in the carrying value of the investment. The guidance also requires a reevaluation of eligible investments when significant modifications or events occur that result in a change in the nature of the investment or a change in the Firm's relationship with the underlying project. During the period, there were no significant modifications or events that resulted in a change in the nature of an eligible investment or a change in the Firm's relationship with the underlying project.
The following table provides information on tax-oriented investments for which the Firm elected to apply the proportional amortization method.
As of or for the period ended, (in millions)
Alternative energy and affordable housing programs(d)
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Programs for which the Firm elected proportional amortization:
Carrying value(a)
$
30,498
$
13,419
$
30,498
$
13,419
Tax credits and other tax benefits(b)
1,521
495
2,787
946
Investments that qualify to be accounted for using proportional amortization:
Amortization losses recognized as a component of income tax expense
(1,135)
(389)
(2,151)
(744)
Non-income-tax-related gains and other returns received that are recognized outside of income tax expense(c)
20
—
68
—
(a)Recorded in Other assets on the Consolidated balance sheets. Excludes programs to which the Firm does not apply the proportional amortization method, such as historic tax credit and new market tax credit programs.
(b)Reflected in Income tax expense on the Consolidated statements of income and Investing activities on the Consolidated statements of cash flows.
(c)Recorded in Other income on the Consolidated statements of income and Investing activities on the Consolidated statements of cash flows.
(d)As of December 31, 2023, the carrying value of eligible affordable housing investments was $14.6 billion. Refer to Note 25 of JPMorgan Chase’s 2023 Form 10-K for further information on affordable housing tax credits.
Customer municipal bond vehicles (TOB trusts)
The Firm may provide various services to customer TOB trusts, including remarketing agent, liquidity or tender option provider. In certain customer TOB transactions, the Firm, as liquidity provider, has entered into a reimbursement agreement with the Residual holder.
In those transactions, upon the termination of the vehicle, the Firm has recourse to the third-party Residual holders for any shortfall. The Firm does not have any intent to protect Residual holders from potential losses on any of the underlying municipal bonds. The Firm does not consolidate customer TOB trusts, since the Firm does not have the power to make decisions that significantly impact the economic performance of the municipal bond vehicle.
The Firm’s maximum exposure as a liquidity provider to customer TOB trusts at June 30, 2024 and December 31, 2023 was $5.3 billion and $5.1 billion, respectively. The fair value of assets held by such VIEs at June 30, 2024 and December 31, 2023 was $7.4 billion and $7.3 billion, respectively.
163
Loan securitizations
The Firm has securitized and sold a variety of loans, including residential mortgages, credit card receivables, commercial mortgages and other consumer loans.
Securitization activity
The following table provides information related to the Firm’s securitization activities for the three months ended June 30, 2024 and 2023, related to assets held in Firm-sponsored securitization entities that were not consolidated by the Firm, and where sale accounting was achieved at the time of the securitization.
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
(in millions)
Residential mortgage(d)
Commercial and other(e)
Residential mortgage(d)
Commercial and other(e)
Residential mortgage(d)
Commercial and other(e)
Residential mortgage(d)
Commercial and other(e)
Principal securitized
$
4,471
$
4,886
$
2,216
$
376
$
9,393
$
7,244
$
3,289
$
376
All cash flows during the period:(a)
Proceeds received from loan sales as financial instruments(b)(c)
$
4,310
$
4,784
$
2,123
$
380
$
9,141
$
7,108
$
3,153
$
380
Servicing fees collected
6
8
6
1
12
11
12
1
Cash flows received on interests
92
165
86
91
162
295
160
178
(a)Excludes re-securitization transactions.
(b)Primarily includes Level 2 assets.
(c)The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale.
(d)Represents prime mortgages. Excludes loan securitization activity related to U.S. GSEs and government agencies.
(e)Includes commercial mortgage and auto loans.
Loans and excess MSRs sold to U.S. government-sponsored enterprises and loans in securitization transactions pursuant to Ginnie Mae guidelines
In addition to the amounts reported in the securitization activity tables above, the Firm, in the normal course of business, sells originated and purchased mortgage loans and certain originated excess MSRs on a nonrecourse basis, predominantly to U.S. GSEs. These loans and excess MSRs are sold primarily for the purpose of securitization by the U.S. GSEs, who provide certain guarantee provisions (e.g., credit enhancement of the loans). The Firm also sells loans into securitization transactions pursuant to Ginnie Mae guidelines; these loans are typically insured or guaranteed by another U.S. government agency. The Firm does not consolidate the securitization vehicles underlying these transactions as it is not the primary beneficiary. For a limited number of loan sales, the Firm is obligated to share a portion of the credit risk associated with the sold loans with the purchaser. Refer to Note 22 of this Form 10-Q for additional information about the Firm’s loan sales- and securitization-related indemnifications and Note 14 for additional information about the impact of the Firm’s sale of certain excess MSRs.
The following table summarizes the activities related to loans sold to the U.S. GSEs, and loans in securitization transactions pursuant to Ginnie Mae guidelines.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Carrying value of loans sold
$
6,630
$
6,323
$
11,166
$
9,021
Proceeds received from loan sales as cash
60
33
366
40
Proceeds from loan sales as securities(a)(b)
6,499
6,220
10,691
8,882
Total proceeds received from loan sales(c)
$
6,559
$
6,253
$
11,057
$
8,922
Gains/(losses) on loan sales(d)(e)
$
—
$
—
$
—
$
—
(a)Includes securities from U.S. GSEs and Ginnie Mae that are generally sold shortly after receipt or retained as part of the Firm’s investment securities portfolio.
(b)Included in level 2 assets.
(c)Excludes the value of MSRs retained upon the sale of loans.
(d)Gains/(losses) on loan sales include the value of MSRs.
(e)The carrying value of the loans accounted for at fair value approximated the proceeds received upon loan sale.
164
Options to repurchase delinquent loans
In addition to the Firm’s obligation to repurchase certain loans due to material breaches of representations and warranties as discussed in Note 22, the Firm also has the option to repurchase delinquent loans that it services for Ginnie Mae loan pools, as well as for other U.S. government agencies under certain arrangements. The Firm typically elects to repurchase delinquent loans from Ginnie Mae loan pools as it continues to service them and/or manage the foreclosure process in accordance with the applicable requirements, and such loans continue to be insured or guaranteed. When the Firm’s repurchase option becomes exercisable, such loans must be reported on the Consolidated balance sheets as a loan with a corresponding liability. Refer to Note 11 for additional information.
The following table presents loans the Firm repurchased or had an option to repurchase, real estate owned, and foreclosed government-guaranteed residential mortgage loans recognized on the Firm’s Consolidated balance sheets as of June 30, 2024 and December 31, 2023. Substantially all of these loans and real estate are insured or guaranteed by U.S. government agencies.
(a)Primarily all of these amounts relate to loans that have been repurchased from Ginnie Mae loan pools.
(b)Relates to voluntary repurchases of loans, which are included in accrued interest and accounts receivable.
Loan delinquencies and liquidation losses
The table below includes information about components of and delinquencies related to nonconsolidated securitized financial assets held in Firm-sponsored private-label securitization entities, in which the Firm has continuing involvement as of June 30, 2024 and December 31, 2023. For loans sold or securitized where servicing is the Firm’s only form of continuing involvement, the Firm generally experiences a loss only if the Firm was required to repurchase a delinquent loan or foreclosed asset due to a breach in representations and warranties associated with its loan sale or servicing contracts.
Net liquidation losses/(recoveries)
Securitized assets
90 days past due
Three months ended June 30,
Six months ended June 30,
(in millions)
June 30, 2024
December 31, 2023
June 30, 2024
December 31, 2023
2024
2023
2024
2023
Securitized loans
Residential mortgage:
Prime / Alt-A & option ARMs
$
45,545
$
39,319
$
459
$
440
$
5
$
3
$
7
$
10
Subprime
1,470
1,312
109
131
—
2
1
4
Commercial and other
120,198
120,262
1,408
2,874
13
—
19
19
Total loans securitized
$
167,213
$
160,893
$
1,976
$
3,445
$
18
$
5
$
27
$
33
165
Note14 – Goodwill, mortgage servicing rights, and other intangible assets
Refer to Note 15 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the accounting policies related to goodwill, mortgage servicing rights, and other intangible assets.
Goodwill
Goodwill is recorded upon completion of a business combination as the difference between the purchase price and the fair value of the net assets acquired, and can be adjusted up to one year from the acquisition date as additional information pertaining to facts and circumstances that existed as of the acquisition date is obtained about the fair value of assets acquired and liabilities assumed.
The following table presents goodwill attributed to the reportable business segments and Corporate.
(in millions)
June 30, 2024
December 31, 2023
Consumer & Community Banking
$
32,116
$
32,116
Commercial & Investment Bank
11,270
11,251
Asset & Wealth Management
8,555
8,582
Corporate
679
685
Total goodwill
$
52,620
$
52,634
The following table presents changes in the carrying amount of goodwill.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Balance at beginning of period
$
52,636
$
52,144
$
52,634
$
51,662
Changes during the period from:
Business combinations(a)
(5)
236
29
687
Other(b)
(11)
—
(43)
31
Balance at June 30,
$
52,620
$
52,380
$
52,620
$
52,380
(a)For the six months ended June 30, 2024, includes estimated goodwill associated with the acquisition of LayerOne Financial in CIB in the first quarter. For the three and six months ended June 30, 2023, represents estimated goodwill associated with the acquisition of Aumni Inc. in CIB in the second quarter, and the acquisition of the remaining 51% interest in CIFM in AWM in the first quarter.
(b)Primarily foreign currency adjustments.
Goodwill impairment testing
Goodwill is tested for impairment during the fourth quarter of each fiscal year, or more often if events or circumstances, such as adverse changes in the business climate, indicate that there may be an impairment. Refer to Note 15 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of the Firm’s goodwill impairment testing.
Unanticipated declines in business performance, increases in credit losses, increases in capital requirements, as well as deterioration in economic or market conditions, adverse regulatory or legislative changes or increases in the estimated market cost of equity, could cause the estimated fair values of the Firm’s reporting units to decline in the future, which could result in a material impairment charge to earnings in a future period related to some portion of the associated goodwill.
As of June 30, 2024, the Firm reviewed current economic conditions, estimated market cost of equity, as well as actual business results and projections of business performance. In addition, as a result of the business segment reorganization, the Firm assessed goodwill for impairment. Based on such reviews, the Firm has concluded that goodwill was not impaired as of June 30, 2024, or December 31, 2023, nor was goodwill written off due to impairment during the six months ended June 30, 2024 or 2023.
166
Mortgage servicing rights
MSRs represent the fair value of expected future cash flows for performing servicing activities for others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the MSR asset against contractual servicing and ancillary fee income. MSRs are either purchased from third parties or recognized upon sale or securitization of mortgage loans if servicing is retained. Refer to Notes 2 and 15 of JPMorgan Chase’s 2023 Form 10-K for a further description of the MSR asset, interest rate risk management, and the valuation of MSRs.
The following table summarizes MSR activity for the three and six months ended June 30, 2024 and 2023.
As of or for the three months ended June 30,
As of or for the six months ended June 30,
(in millions, except where otherwise noted)
2024
2023
2024
2023
Fair value at beginning of period
$
8,605
$
7,755
$
8,522
$
7,973
MSR activity:
Originations of MSRs
95
78
153
110
Purchase of MSRs(a)
323
468
325
467
Disposition of MSRs(b)
(32)
(92)
(27)
(90)
Net additions/(dispositions)
386
454
451
487
Changes due to collection/realization of expected cash flows
(263)
(255)
(523)
(495)
Changes in valuation due to inputs and assumptions:
Changes due to market interest rates and other(c)
117
283
385
261
Changes in valuation due to other inputs and assumptions:
Projected cash flows (e.g., cost to service)
—
2
7
2
Discount rates
—
—
—
—
Prepayment model changes and other(d)
2
(10)
5
1
Total changes in valuation due to other inputs and assumptions
2
(8)
12
3
Total changes in valuation due to inputs and assumptions
119
275
397
264
Fair value at June 30,
$
8,847
$
8,229
$
8,847
$
8,229
Changes in unrealized gains/(losses) included in income related to MSRs held at June 30,
$
119
$
275
$
397
$
264
Contractual service fees, late fees and other ancillary fees included in income
395
388
794
776
Third-party mortgage loans serviced at June 30, (in billions)
644
605
644
605
Servicer advances, net of an allowance for uncollectible amounts, at June 30(e)
524
595
524
595
(a)Includes purchase price adjustments associated with MSRs purchased in the prior quarter, primarily as a result of loans that prepaid within 90 days of settlement, allowing the Firm to recover the purchase price.
(b)Includes excess MSRs transferred to agency-sponsored trusts in exchange for stripped mortgage-backed securities (“SMBS”). In each transaction, a portion of the SMBS was acquired by third parties at the transaction date; the Firm acquired the remaining balance of those SMBS as trading securities.
(c)Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and expected prepayments.
(d)Represents changes in prepayments other than those attributable to changes in market interest rates.
(e)Represents amounts the Firm pays as the servicer (e.g., scheduled principal and interest, taxes and insurance), which will generally be reimbursed within a short period of time after the advance from future cash flows from the trust or the underlying loans. The Firm’s credit risk associated with these servicer advances is minimal because reimbursement of the advances is typically senior to all cash payments to investors. In addition, the Firm maintains the right to stop payment to investors if the collateral is insufficient to cover the advance. However, certain of these servicer advances may not be recoverable if they were not made in accordance with applicable rules and agreements.
167
The following table presents the components of mortgage fees and related income (including the impact of MSR risk management activities) for the three and six months ended June 30, 2024 and 2023.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
CCB mortgage fees and related income
Production revenue
$
157
$
102
$
287
$
177
Net mortgage servicing revenue:
Operating revenue:
Loan servicing revenue
412
402
817
802
Changes in MSR asset fair value due to collection/realization of expected cash flows
(262)
(255)
(522)
(495)
Total operating revenue
150
147
295
307
Risk management:
Changes in MSR asset fair value due to market interest rates and other(a)
117
283
385
261
Other changes in MSR asset fair value due to other inputs and assumptions in model(b)
2
(8)
12
3
Changes in derivative fair value and other
(80)
(250)
(359)
(251)
Total risk management
39
25
38
13
Total net mortgage servicing revenue
189
172
333
320
Total CCB mortgage fees and related income
346
274
620
497
All other
2
4
3
2
Mortgage fees and related income
$
348
$
278
$
623
$
499
(a)Represents both the impact of changes in estimated future prepayments due to changes in market interest rates, and the difference between actual and expected prepayments.
(b)Represents the aggregate impact of changes in model inputs and assumptions such as projected cash flows (e.g., cost to service), discount rates and changes in prepayments other than those attributable to changes in market interest rates (e.g., changes in prepayments due to changes in home prices).
Changes in fair value based on variations in assumptions generally cannot be easily extrapolated, because the relationship of the change in the assumptions to the change in fair value are often highly interrelated and may not be linear. In the following table, the effect that a change in a particular assumption may have on the fair value is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which would either magnify or counteract the impact of the initial change.
The table below outlines the key economic assumptions used to determine the fair value of the Firm’s MSRs at June 30, 2024 and December 31, 2023, and outlines the sensitivities of those fair values to immediate adverse changes in those assumptions, as defined below.
Impact on fair value of a 100 basis point adverse change
$
(381)
$
(369)
Impact on fair value of a 200 basis point adverse change
(732)
(709)
(a)Includes the impact of operational risk and regulatory capital.
168
Other intangible assets
The Firm’s finite-lived and indefinite-lived other intangible assets are initially recorded at their fair value primarily upon completion of a business combination. Finite-lived intangible assets, including core deposit intangibles, customer relationship intangibles, and certain other intangible assets, are amortized over their useful lives, estimated based on the expected future economic benefits. The Firm’s intangible assets with indefinite lives, such as asset management contracts, are not subject to amortization and are assessed periodically for impairment.
As of June 30, 2024 and December 31, 2023, other intangible assets consisted of finite-lived intangible assets of $1.9 billion and $2.0 billion, respectively, as well as indefinite-lived intangible assets, which are not subject to amortization, of $1.2 billion for both periods.
169
Note 15 – Deposits
Refer to Note 17 of JPMorgan Chase’s 2023 Form 10-K for further information on deposits.
As of June 30, 2024 and December 31, 2023, noninterest-bearing and interest-bearing deposits were as follows:
(in millions)
June 30, 2024
December 31, 2023
U.S. offices
Noninterest-bearing (included $66,178and $75,393 at fair value)(a)
$
632,316
$
643,748
Interest-bearing (included $588and $573 at fair value)(a)
1,291,737
1,303,100
Total deposits in U.S. offices
1,924,053
1,946,848
Non-U.S. offices
Noninterest-bearing (included $2,158and $1,737 at fair value)(a)
26,362
23,097
Interest-bearing (included $463 and $681 at fair value)(a)
446,115
430,743
Total deposits in non-U.S. offices
472,477
453,840
Total deposits
$
2,396,530
$
2,400,688
(a)Includes structured notes classified as deposits for which the fair value option has been elected. Refer to Note 3 for further discussion.
As of June 30, 2024 and December 31, 2023, time deposits in denominations that met or exceeded the insured limit were as follows:
(in millions)
June 30, 2024
December 31, 2023
U.S. offices
$
148,883
$
132,654
Non-U.S. offices(a)
101,488
90,187
Total
$
250,371
$
222,841
(a)Represents all time deposits in non-U.S. offices as these deposits typically exceed the insured limit.
As of June 30, 2024, the remaining maturities of interest-bearing time deposits in each of the 12-month periods ending June 30 were as follows:
June 30, (in millions)
U.S.
Non-U.S.
Total
2025
$
223,458
$
98,431
$
321,889
2026
801
64
865
2027
275
5
280
2028
124
24
148
2029
441
695
1,136
After 5 years
160
111
271
Total
$
225,259
$
99,330
$
324,589
Note 16 – Leases
Refer to Note 18 of JPMorgan Chase’s 2023 Form 10-K for a further discussion on leases.
Firm as lessee
At June 30, 2024, JPMorgan Chase and its subsidiaries were obligated under a number of noncancellable leases, predominantly operating leases for premises and equipment used primarily for business purposes.
Operating lease liabilities and right-of-use (“ROU”) assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.
The carrying values of the Firm’s operating leases were as follows:
(in millions)
June 30, 2024
December 31, 2023
Right-of-use assets
$
8,358
$
8,431
Lease liabilities
8,739
8,833
The Firm’s net rental expense was $556 million and $448 million for the three months ended June 30, 2024 and 2023 and $1.1 billion and $935 million for the six months ended June 30, 2024 and 2023, respectively.
Firm as lessor
The Firm’s lease financings are predominantly auto operating leases, and are included in other assets on the Firm’s Consolidated balance sheets.
The following table presents the Firm’s operating lease income, included within other income, and the related depreciation expense, included within technology, communications and equipment expense, on the Consolidated statements of income.
Three months ended June 30,
Six months ended June 30,
(in millions)
2024
2023
2024
2023
Operating lease income
$
689
$
716
$
1,361
$
1,471
Depreciation expense
438
457
874
876
170
Note 17 – Preferred stock
Refer to Note 21 of JPMorgan Chase’s 2023 Form 10-K for a further discussion on preferred stock.
The following is a summary of JPMorgan Chase’s non-cumulative preferred stock outstanding as of June 30, 2024 and December 31, 2023, and the quarterly dividend declarations for the three and six months ended June 30, 2024 and 2023.
Shares(a)
Carrying value
(in millions)
Contractual rate in effect at June 30, 2024
Earliest redemption date(b)
Floating annualized rate(c)
Dividend declared
per share
June 30, 2024
December 31, 2023
June 30, 2024
December 31, 2023
Issue date
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Fixed-rate:
Series DD
169,625
169,625
$
1,696
$
1,696
9/21/2018
5.750
%
12/1/2023
NA
$
143.75
$
143.75
$287.50
$287.50
Series EE
185,000
185,000
1,850
1,850
1/24/2019
6.000
3/1/2024
NA
150.00
150.00
300.00
300.00
Series GG
90,000
90,000
900
900
11/7/2019
4.750
12/1/2024
NA
118.75
118.75
237.50
237.50
Series JJ
150,000
150,000
1,500
1,500
3/17/2021
4.550
6/1/2026
NA
113.75
113.75
227.50
227.50
Series LL
185,000
185,000
1,850
1,850
5/20/2021
4.625
6/1/2026
NA
115.63
115.63
231.26
231.26
Series MM
200,000
200,000
2,000
2,000
7/29/2021
4.200
9/1/2026
NA
105.00
105.00
210.00
210.00
Fixed-to-floating rate:
Series Q
—
150,000
—
1,500
4/23/2013
—
5/1/2023
SOFR + 3.25
—
218.48
220.45
347.23
(d)
Series R
—
150,000
—
1,500
7/29/2013
—
8/1/2023
SOFR + 3.30
—
150.00
221.70
300.00
(e)
Series S
—
200,000
—
2,000
1/22/2014
—
2/1/2024
SOFR + 3.78
—
168.75
233.70
337.50
(f)
Series U
—
100,000
—
1,000
3/10/2014
—
4/30/2024
SOFR + 3.33
—
153.13
153.13
306.25
Series X
160,000
160,000
1,600
1,600
9/23/2014
6.100
10/1/2024
SOFR + 3.33
152.50
152.50
305.00
305.00
Series CC
125,750
125,750
1,258
1,258
10/20/2017
SOFR + 2.58
11/1/2022
SOFR + 2.58
208.75
201.36
412.45
384.15
Series FF
225,000
225,000
2,250
2,250
7/31/2019
5.000
8/1/2024
SOFR + 3.38
125.00
125.00
250.00
250.00
Series HH
300,000
300,000
3,000
3,000
1/23/2020
4.600
2/1/2025
SOFR + 3.125
115.00
115.00
230.00
230.00
Series II
150,000
150,000
1,500
1,500
2/24/2020
4.000
4/1/2025
SOFR + 2.745
100.00
100.00
200.00
200.00
Series KK
200,000
200,000
2,000
2,000
5/12/2021
3.650
6/1/2026
CMT + 2.85
91.25
91.25
182.50
182.50
Series NN
250,000
NA
2,496
NA
3/12/2024
6.875
6/1/2029
CMT + 2.737
150.87
NA
150.87
NA
(g)
Total preferred stock
2,390,375
2,740,375
$
23,900
$
27,404
(a)Represented by depositary shares.
(b)Each series of fixed-to-floating rate preferred stock converts to a floating rate at the earliest redemption date.
(c)Effective June 30, 2023, CME Term SOFR became the replacement reference rate for fixed-to-floating rate preferred stock issued by the Firm that formerly referenced U.S. dollar LIBOR. References in the table to “SOFR” mean a floating annualized rate equal to three-month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spreads noted. The reference to “CMT” means a floating annualized rate equal to the five-year Constant Maturity Treasury (“CMT”) rate plus the spread noted.
(d)The dividend rate for Series Q preferred stock became floating and payable quarterly starting on May 1, 2023; prior to which the dividend rate was fixed at 5.15% or $257.50 per share payable semiannually. The dividend rate for each quarterly dividend period commencing on August 1, 2023 is three-month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spread of 3.25%.
(e)The dividend rate for Series R preferred stock became floating and payable quarterly starting on August 1, 2023; prior to which the dividend rate was fixed at 6.00% or $300.00 per share payable semiannually. The dividend rate for each quarterly dividend period commencing on August 1, 2023 is three-month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spread of 3.30%.
(f)The dividend rate for Series S preferred stock became floating and payable quarterly starting on February 1, 2024; prior to which the dividend rate was fixed at 6.75% or $337.50 per share payable semiannually. The dividend rate for each quarterly dividend period commencing on February 1, 2024 is three-month term SOFR (plus a spread adjustment of 0.26% per annum) plus the spread of 3.78%.
(g)The initial dividend declared is prorated based on the number of days outstanding for the period. Dividends were declared quarterly thereafter at the contractual rate.
Each series of preferred stock has a liquidation value and redemption price per share of $10,000, plus accrued but unpaid dividends. The aggregate liquidation value was $24.1 billion at June 30, 2024.
On March 12, 2024, the Firm issued $2.5 billion of fixed-rate reset non-cumulative preferred stock, Series NN.
Redemptions
On August 1, 2024, the Firm redeemed all $2.3 billion of its fixed-to-floating rate non-cumulative preferred stock, Series FF.
On May 1, 2024, the Firm redeemed all $5.0 billion of its fixed-to-floating rate non-cumulative preferred stock, Series Q, Series R and Series S.
On April 30, 2024, the Firm redeemed all $1.0 billion of its fixed-to-floating rate non-cumulative preferred stock, Series U.
171
Note 18 – Earnings per share
Refer to Note 23 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the computation of basic and diluted earnings per share (“EPS”). The following table presents the calculation of basic and diluted EPS for the three and six months ended June 30, 2024 and 2023.
(in millions, except per share amounts)
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Basic earnings per share
Net income
$
18,149
$
14,472
$
31,568
$
27,094
Less: Preferred stock dividends
317
373
714
729
Net income applicable to common equity
17,832
14,099
30,854
26,365
Less: Dividends and undistributed earnings allocated to participating securities
114
88
193
161
Net income applicable to common stockholders
$
17,718
$
14,011
$
30,661
$
26,204
Total weighted-average basic shares
outstanding
2,889.8
2,943.8
2,899.1
2,956.1
Net income per share
$
6.13
$
4.76
$
10.58
$
8.86
Diluted earnings per share
Net income applicable to common stockholders
$
17,718
$
14,011
$
30,661
$
26,204
Total weighted-average basic shares
outstanding
2,889.8
2,943.8
2,899.1
2,956.1
Add: Dilutive impact of unvested PSUs, nondividend-earning RSUs and SARs
5.1
4.5
4.8
4.4
Total weighted-average diluted shares outstanding
2,894.9
2,948.3
2,903.9
2,960.5
Net income per share
$
6.12
$
4.75
$
10.56
$
8.85
172
Note 19 – Accumulated other comprehensive income/(loss)
AOCI includes the after-tax change in unrealized gains and losses on investment securities, foreign currency translation adjustments (including the impact of related derivatives), fair value changes of excluded components on fair value hedges, cash flow hedging activities, net gain/(loss) related to the Firm’s defined benefit pension and OPEB plans, and fair value option-elected liabilities arising from changes in the Firm’s own credit risk (DVA).
As of or for the three months ended June 30, 2024 (in millions)
Unrealized gains/(losses) on investment securities
Translation adjustments, net of hedges
Fair value hedges
Cash flow hedges
Defined benefit pension and OPEB plans
DVA on fair value option elected liabilities
Accumulated other comprehensive income/(loss)
Balance at April 1, 2024
$
(3,602)
$
(1,420)
$
(155)
$
(4,821)
$
(1,052)
$
(589)
$
(11,639)
Net change
108
(156)
8
(22)
(3)
366
301
Balance at June 30, 2024
$
(3,494)
(a)
$
(1,576)
$
(147)
$
(4,843)
$
(1,055)
$
(223)
$
(11,338)
As of or for the three months ended June 30, 2023 (in millions)
Unrealized gains/(losses) on investment securities
Translation adjustments, net of hedges
Fair value hedges
Cash flow hedges
Defined benefit pension and OPEB plans
DVA on fair value option elected liabilities
Accumulated other comprehensive income/(loss)
Balance at April 1, 2023
$
(6,912)
$
(1,348)
$
(54)
$
(4,858)
$
(1,506)
$
260
$
(14,418)
Net change
757
70
11
(497)
(6)
(207)
128
Balance at June 30, 2023
$
(6,155)
(a)
$
(1,278)
$
(43)
$
(5,355)
$
(1,512)
$
53
$
(14,290)
As of or for the six months ended June 30, 2024 (in millions)
Unrealized gains/(losses) on investment securities
Translation adjustments, net of hedges
Fair value hedges
Cash flow hedges
Defined benefit pension and OPEB plans
DVA on fair value option elected liabilities
Accumulated other comprehensive income/(loss)
Balance at January 1, 2024
$
(3,743)
$
(1,216)
$
(134)
$
(3,932)
$
(1,078)
$
(340)
$
(10,443)
Net change
249
(360)
(13)
(911)
23
117
(895)
Balance at June 30, 2024
$
(3,494)
(a)
$
(1,576)
$
(147)
$
(4,843)
$
(1,055)
$
(223)
$
(11,338)
As of or for the six months ended June 30, 2023 (in millions)
Unrealized gains/(losses) on investment securities
Translation adjustments, net of hedges
Fair value hedges
Cash flow hedges
Defined benefit pension and OPEB plans
DVA on fair value option elected liabilities
Accumulated other comprehensive income/(loss)
Balance at January 1, 2023
$
(9,124)
$
(1,545)
$
(33)
$
(5,656)
$
(1,451)
$
468
$
(17,341)
Net change
2,969
267
(10)
301
(61)
(415)
3,051
Balance at June 30, 2023
$
(6,155)
(a)
$
(1,278)
$
(43)
$
(5,355)
$
(1,512)
$
53
$
(14,290)
(a)As of June 30, 2024 and 2023 included after-tax net unamortized unrealized gains/(losses) of $(725) million and $(1.1) billion related to AFS securities that have been transferred to HTM, respectively. As of June 30, 2023 included after-tax net unamortized unrealized gains/(losses) of $(29) million related to HTM securities that have been transferred to AFS as permitted by the new hedge accounting guidance adopted on January 1, 2023. Refer to Note 9 for further information.
173
The following table presents the pre-tax and after-tax changes in the components of OCI.
2024
2023
Three months ended June 30, (in millions)
Pre-tax
Tax effect
After-tax
Pre-tax
Tax effect
After-tax
Unrealized gains/(losses) on investment securities:
Net unrealized gains/(losses) arising during the period
$
(405)
$
99
$
(306)
$
95
$
(21)
$
74
Reclassification adjustment for realized (gains)/losses included in net income(a)
547
(133)
414
900
(217)
683
Net change
142
(34)
108
995
(238)
757
Translation adjustments(b):
Translation
(929)
50
(879)
126
10
136
Hedges
952
(229)
723
(88)
22
(66)
Net change
23
(179)
(156)
38
32
70
Fair value hedges, net change(c)
11
(3)
8
15
(4)
11
Cash flow hedges:
Net unrealized gains/(losses) arising during the period
(683)
165
(518)
(1,119)
268
(851)
Reclassification adjustment for realized (gains)/losses included in net income(d)
655
(159)
496
465
(111)
354
Net change
(28)
6
(22)
(654)
157
(497)
Defined benefit pension and OPEB plans, net change
(2)
(1)
(3)
(8)
2
(6)
DVA on fair value option elected liabilities, net change
485
(119)
366
(273)
66
(207)
Total other comprehensive income/(loss)
$
631
$
(330)
$
301
$
113
$
15
$
128
2024
2023
Six months ended June 30, (in millions)
Pre-tax
Tax effect
After-tax
Pre-tax
Tax effect
After-tax
Unrealized gains/(losses) on investment securities:
Net unrealized gains/(losses) arising during the period
$
(586)
$
143
$
(443)
$
2,137
$
(511)
$
1,626
Reclassification adjustment for realized (gains)/losses included in net income(a)
913
(221)
692
1,768
(425)
1,343
Net change
327
(78)
249
3,905
(936)
2,969
Translation adjustments(b):
Translation
(2,294)
118
(2,176)
1,099
(31)
1,068
Hedges
2,394
(578)
1,816
(1,051)
250
(801)
Net change
100
(460)
(360)
48
219
267
Fair value hedges, net change(c)
(16)
3
(13)
(13)
3
(10)
Cash flow hedges:
Net unrealized gains/(losses) arising during the period
(2,445)
591
(1,854)
(552)
132
(420)
Reclassification adjustment for realized (gains)/losses included in net income(d)
1,244
(301)
943
948
(227)
721
Net change
(1,201)
290
(911)
396
(95)
301
Defined benefit pension and OPEB plans, net change
34
(11)
23
(79)
18
(61)
DVA on fair value option elected liabilities, net change
158
(41)
117
(547)
132
(415)
Total other comprehensive income/(loss)
$
(598)
$
(297)
$
(895)
$
3,710
$
(659)
$
3,051
(a)The pre-tax amount is reported in Investment securities gains/(losses) in the Consolidated statements of income.
(b)Reclassifications of pre-tax realized gains/(losses) on translation adjustments and related hedges are reported in other income/expense in the Consolidated statements of income. During the three and six months endedJune 30, 2024, the Firm reclassified a net pre-tax gain of $1 million to other revenue, of which $10 million related to net investment hedges. The amounts were not material for the three months ended June 30, 2023. During the six months ended June 30, 2023, the Firm reclassified a net pre-tax loss of $(5) million to other revenue related to the acquisition of CIFM of which $(41) million related to the net investment hedge loss.
(c)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. The initial cost of cross-currency basis spreads is recognized in earnings as part of the accrual of interest on the cross-currency swaps.
(d)The pre-tax amounts are primarily recorded in noninterest revenue, net interest income and compensation expense in the Consolidated statements of income.
174
Note 20 – Restricted cash and other restricted
assets
Refer to Note 26 of JPMorgan Chase’s 2023 Form 10-K for a detailed discussion of the Firm’s restricted cash and other restricted assets.
Certain of the Firm’s cash and other assets are restricted as to withdrawal or usage. These restrictions are imposed by various regulatory authorities based on the particular activities of the Firm’s subsidiaries.
The Firm is also subject to rules and regulations established by other U.S. and non-U.S. regulators. As part of its compliance with the respective regulatory requirements, the Firm’s broker-dealer activities are subject to certain restrictions on cash and other assets.
The following table presents the components of the Firm’s restricted cash:
(in billions)
June 30, 2024
December 31, 2023
Segregated for the benefit of securities and cleared derivative customers
$
14.0
$
10.3
Cash reserves at non-U.S. central banks and held for other general purposes
9.4
9.3
Total restricted cash(a)
$
23.4
$
19.6
(a)Comprises $21.7 billion and $18.2 billion in deposits with banks, and $1.7 billion and $1.4 billion in cash and due from banks on the Consolidated balance sheets as of June 30, 2024 and December 31, 2023, respectively.
Also, as of June 30, 2024 and December 31, 2023, the Firm had the following other restricted assets:
•Cash and securities pledged with clearing organizations for the benefit of customers of $33.2 billion and $40.5 billion, respectively.
•Securities with a fair value of $22.5 billion and $20.5 billion, respectively, were also restricted in relation to customer activity.
175
Note 21 – Regulatory capital
Refer to Note 27 of JPMorgan Chase’s 2023 Form 10-K for a detailed discussion on regulatory capital.
The Federal Reserve establishes capital requirements, including well-capitalized standards, for the Firm as a consolidated financial holding company. The OCC establishes similar minimum capital requirements and standards for the Firm’s principal insured depository institution ("IDI") subsidiary, JPMorgan Chase Bank, N.A.
Under the risk-based capital and leverage-based guidelines of the Federal Reserve, JPMorgan Chase is required to maintain minimum ratios for CET1 capital, Tier 1 capital, Total capital, Tier 1 leverage and the SLR. Failure to meet these minimum requirements could cause the Federal Reserve to take action. JPMorgan Chase Bank, N.A. is also subject to these capital requirements established by its primary regulators.
The following table presents the risk-based regulatory capital ratio requirements and well-capitalized ratios to which the Firm and JPMorgan Chase Bank, N.A. were subject as of June 30, 2024 and December 31, 2023.
Standardized capital ratio requirements
Advanced capital ratio requirements
Well-capitalized ratios
BHC(a)(b)
IDI(c)
BHC(a)(b)
IDI(c)
BHC(d)
IDI(e)
Risk-based capital ratios
CET1 capital
11.9
%
7.0
%
11.5
%
7.0
%
NA
6.5
%
Tier 1 capital
13.4
8.5
13.0
8.5
6.0
%
8.0
Total capital
15.4
10.5
15.0
10.5
10.0
10.0
Note: The table above is as defined by the regulations issued by the Federal Reserve, OCC and FDIC and to which the Firm and JPMorgan Chase Bank, N.A. are subject.
(a)Represents the regulatory capital ratio requirements applicable to the Firm. The CET1, Tier 1 and Total capital ratio requirements each include a respective minimum requirement plus a GSIB surcharge of 4.5% as calculated under Method 2; plus a 2.9% SCB for Basel III Standardized ratios and a fixed 2.5% capital conservation buffer for Basel III Advanced ratios. The countercyclical buffer is currently set to 0% by the federal banking agencies.
(b)For the period ended December 31, 2023, the CET1, Tier 1, and Total capital ratio requirements under Basel III Standardized applicable to the Firm were 11.4%, 12.9%, and 14.9%, respectively; the Basel III Advanced CET1, Tier 1, and Total capital ratio requirements applicable to the Firm were 11.0%, 12.5%, and 14.5%, respectively.
(c)Represents requirements for JPMorgan Chase Bank, N.A. The CET1, Tier 1 and Total capital ratio requirements include a fixed capital conservation buffer requirement of 2.5% that is applicable to JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, N.A. is not subject to the GSIB surcharge.
(d)Represents requirements for bank holding companies pursuant to regulations issued by the Federal Reserve.
(e)Represents requirements for JPMorgan Chase Bank, N.A. pursuant to regulations issued under the FDIC Improvement Act.
The following table presents the leverage-based regulatory capital ratio requirements and well-capitalized ratios to which the Firm and JPMorgan Chase Bank, N.A. were subject as of June 30, 2024 and December 31, 2023.
Capital ratio requirements(a)
Well-capitalized ratios
BHC
IDI
BHC(b)
IDI
Leverage-based capital ratios
Tier 1 leverage
4.0
%
4.0
%
NA
5.0
%
SLR
5.0
6.0
NA
6.0
Note: The table above is as defined by the regulations issued by the Federal Reserve, OCC and FDIC and to which the Firm and JPMorgan Chase Bank, N.A. are subject.
(a)Represents minimum SLR requirement of 3.0%, as well as supplementary leverage buffer requirements of 2.0% and 3.0% for BHC and JPMorgan Chase Bank, N.A., respectively.
(b)The Federal Reserve's regulations do not establish well-capitalized thresholds for these measures for BHCs.
CECL Regulatory Capital Transition
Beginning January 1, 2022, the $2.9 billion CECL capital benefit, provided by the Federal Reserve in response to the COVID-19 pandemic, is being phased out at 25% per year over a three-year period. As of June 30, 2024 and December 31, 2023, the Firm's CET1 capital reflected the remaining benefit of $720 million and $1.4 billion, respectively, associated with the CECL capital transition provisions.
Similarly, as of January 1, 2024, the Firm has phased out 75% of the other CECL capital transition provisions which impacted Tier 2 capital, adjusted average assets, total leverage exposure and RWA, as applicable.
Refer to Note 27 of JPMorgan Chase’s 2023 Form 10-K for further information on CECL capital transition provisions.
176
The following tables present risk-based capital metrics under both the Basel III Standardized and Basel III Advanced approaches and leverage-based capital metrics for JPMorgan Chase and JPMorgan Chase Bank, N.A. As of June 30, 2024 and December 31, 2023, JPMorgan Chase and JPMorgan Chase Bank, N.A. were well-capitalized and met all capital requirements to which each was subject.
June 30, 2024 (in millions, except ratios)
Basel III Standardized
Basel III Advanced
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
Risk-based capital metrics:(a)
CET1 capital
$
267,196
$
277,096
$
267,196
$
277,096
Tier 1 capital
290,442
277,099
290,442
277,099
Total capital
322,175
297,156
308,639
(b)
283,665
(b)
Risk-weighted assets
1,743,481
1,692,925
1,726,204
(b)
1,568,264
(b)
CET1 capital ratio
15.3
%
16.4
%
15.5
%
17.7
%
Tier 1 capital ratio
16.7
16.4
16.8
17.7
Total capital ratio
18.5
17.6
17.9
18.1
December 31, 2023 (in millions, except ratios)
Basel III Standardized
Basel III Advanced
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
JPMorgan
Chase & Co.
JPMorgan
Chase Bank, N.A.
Risk-based capital metrics:(a)
CET1 capital
$
250,585
$
262,030
$
250,585
$
262,030
Tier 1 capital
277,306
262,032
277,306
262,032
Total capital
308,497
281,308
295,417
(b)
268,392
(b)
Risk-weighted assets
1,671,995
1,621,789
1,669,156
(b)
1,526,952
(b)
CET1 capital ratio
15.0
%
16.2
%
15.0
%
17.2
%
Tier 1 capital ratio
16.6
16.2
16.6
17.2
Total capital ratio
18.5
17.3
17.7
17.6
(a)The capital metrics reflect the CECL capital transition provisions.
(b)Includes the impacts of certain assets associated with First Republic to which the Standardized approach has been applied as permitted by the transition provisions in the U.S. capital rules.
Three months ended (in millions, except ratios)
June 30, 2024
December 31, 2023
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.
Leverage-based capital metrics:(a)
Adjusted average assets(b)
$
4,016,654
$
3,408,684
$
3,831,200
$
3,337,842
Tier 1 leverage ratio
7.2
%
8.1
%
7.2
%
7.9
%
Total leverage exposure
$
4,768,202
$
4,157,231
$
4,540,465
$
4,038,739
SLR
6.1
%
6.7
%
6.1
%
6.5
%
(a)The capital metrics reflect the CECL capital transition provisions.
(b)Adjusted average assets, for purposes of calculating the leverage ratios, includes quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill, inclusive of estimated equity method goodwill, and other intangible assets.
177
Note 22 – Off–balance sheet lending-related
financial instruments, guarantees, and other
commitments
JPMorgan Chase provides lending-related financial instruments (e.g., commitments and guarantees) to address the financing needs of its customers and clients. The contractual amount of these financial instruments represents the maximum possible credit risk to the Firm should the customer or client draw upon the commitment or the Firm be required to fulfill its obligation under the guarantee, and should the customer or client subsequently fail to perform according to the terms of the contract. Most of these commitments and guarantees have historically been refinanced, extended, cancelled, or expired without being drawn or a default occurring. As a result, the total contractual amount of these instruments is not, in the Firm’s view, representative of its expected future credit exposure or funding requirements. Refer to Note 28 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of lending-related commitments and guarantees, and the Firm’s related accounting policies.
To provide for expectedcredit losses in wholesale and certain consumer lending-related commitments, an allowance for credit losses on lending-related commitments is maintained. Refer to Note 12 for further information regarding the allowance for credit losses on lending-related commitments.
The following table summarizes the contractual amounts and carrying values of off-balance sheet lending-related financial instruments, guarantees and other commitments at June 30, 2024 and December 31, 2023. The amounts in the table below for credit card, home equity and certain scored business banking lending-related commitments represent the total available credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit for these products will be utilized at the same time. The Firm can reduce or cancel credit card and certain scored business banking lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. In addition, the Firm typically closes credit card lines when the borrower is 60 days or more past due. The Firm may reduce or close HELOCs when there are significant decreases in the value of the underlying property, or when there has been a demonstrable decline in the creditworthiness of the borrower.
178
Off–balance sheet lending-related financial instruments, guarantees and other commitments
Contractual amount
Carrying value(h)(i)
June 30, 2024
Dec 31, 2023
June 30, 2024
Dec 31, 2023
By remaining maturity (in millions)
Expires in 1 year or less
Expires after 1 year through 3 years
Expires after 3 years through 5 years
Expires after 5 years
Total
Total
Lending-related
Consumer, excluding credit card:
Residential Real Estate(a)
$
11,225
$
7,493
$
5,461
$
8,674
$
32,853
$
30,125
$
623
(j)
$
678
(j)
Auto and other
10,896
21
—
3,445
14,362
15,278
69
(j)
148
(j)
Total consumer, excluding credit card
22,121
7,514
5,461
12,119
47,215
45,403
692
826
Credit card(b)
964,727
—
—
—
964,727
915,658
—
—
Total consumer(c)
986,848
7,514
5,461
12,119
1,011,942
961,061
692
826
Wholesale:
Other unfunded commitments to extend credit(d)
124,757
192,737
169,714
24,442
511,650
503,526
2,692
(j)
2,797
(j)
Standby letters of credit and other financial guarantees(d)
16,443
8,919
3,209
553
29,124
28,872
403
479
Other letters of credit(d)
3,854
249
42
101
4,246
4,388
36
37
Total wholesale(c)
145,054
201,905
172,965
25,096
545,020
536,786
3,131
3,313
Total lending-related
$
1,131,902
$
209,419
$
178,426
$
37,215
$
1,556,962
$
1,497,847
$
3,823
$
4,139
Other guarantees and commitments
Securities lending indemnification agreements and guarantees(e)
$
319,353
$
—
$
—
$
—
$
319,353
$
283,664
$
—
$
—
Derivatives qualifying as guarantees
1,435
77
10,479
40,910
52,901
54,562
88
89
Unsettled resale and securities borrowed agreements
154,224
258
—
—
154,482
95,106
1
—
Unsettled repurchase and securities loaned agreements
107,401
537
—
—
107,938
60,724
—
—
Loan sale and securitization-related indemnifications:
Mortgage repurchase liability
NA
NA
NA
NA
NA
NA
60
76
Loans sold with recourse
NA
NA
NA
NA
825
803
23
24
Exchange & clearing house guarantees and commitments(f)
124,661
—
—
—
124,661
265,887
—
—
Other guarantees and commitments(g)
10,939
718
93
741
12,491
15,074
27
38
(a)Includes certain commitments to purchase loans from correspondents.
(b)Also includes commercial card lending-related commitments primarily in CIB.
(c)Predominantly all consumer and wholesale lending-related commitments are in the U.S.
(d)As of June 30, 2024 and December 31, 2023, reflected the contractual amount net of risk participations totaling $90 million and $88 million, respectively, for other unfunded commitments to extend credit; $9.9 billion and $8.2 billion, respectively, for standby letters of credit and other financial guarantees; $372 million and $589 million, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk participations.
(e)As of June 30, 2024 and December 31, 2023, collateral held by the Firm in support of securities lending indemnification agreements was $339.5 billion and $300.3 billion, respectively. Securities lending collateral primarily consists of cash, G7 government securities, and securities issued by U.S. GSEs and government agencies.
(f)As of June 30, 2024 and December 31, 2023, includes guarantees to the Fixed Income Clearing Corporation under the sponsored member repo program and commitments and guarantees associated with the Firm’s membership in certain clearing houses.
(g)As of June 30, 2024 and December 31, 2023, primarily includes unfunded commitments to purchase secondary market loans, other equity investment commitments, and unfunded commitments related to certain tax-oriented equity investments, and reflects the impact of adopting updates to the Accounting for Investments in Tax Credit Structures guidance effective January 1, 2024.
(h)For lending-related products, the carrying value includes the allowance for lending-related commitments and the guarantee liability; for derivative-related products, and lending-related commitments for which the fair value option was elected, the carrying value represents the fair value.
(i)For lending-related commitments, the carrying value also includes fees and any purchase discounts or premiums that are deferred and recognized in accounts payable and other liabilities on the Consolidated balance sheets. Deferred amounts for revolving commitments and commitments not expected to fund, are amortized to lending- and deposit-related fees on a straight line basis over the commitment period. For all other commitments the deferred amounts remain deferred until the commitment funds or is sold.
(j)As of June 30, 2024 and December 31, 2023, includes fair value adjustments associated with First Republic for residential real estate lending-related commitments totaling $550 million and $630 million, respectively, for auto and other lending-related commitments totaling $69 million and $148 million, respectively, and for other unfunded commitments to extend credit totaling $854 million and $1.1 billion, respectively. Refer to Note 26 for additional information.
179
Other unfunded commitments to extend credit
Other unfunded commitments to extend credit generally consist of commitments for working capital and general corporate purposes, extensions of credit to support commercial paper facilities and bond financings in the event that those obligations cannot be remarketed to new investors, as well as committed liquidity facilities to clearing organizations. The Firm also issues commitments under multipurpose facilities which could be drawn upon in several forms, including the issuance of a standby letter of credit.
Standby letters of credit and other financial guarantees
Standby letters of credit and other financial guarantees are conditional lending commitments issued by the Firm to guarantee the performance of a client or customer to a third party under certain arrangements, such as commercial paper facilities, bond financings, acquisition financings, trade financings and similar transactions.
The following table summarizes the contractual amount and carrying value of standby letters of credit and other financial guarantees and other letters of credit arrangements as of June 30, 2024 and December 31, 2023.
Standby letters of credit, other financial guarantees and other letters of credit
June 30, 2024
December 31, 2023
(in millions)
Standby letters of credit and other financial guarantees
Other letters of credit
Standby letters of credit and other financial guarantees
Other letters of credit
Investment-grade(a)
$
20,333
$
3,477
$
19,694
$
3,552
Noninvestment-grade(a)
8,791
769
9,178
836
Total contractual amount
$
29,124
$
4,246
$
28,872
$
4,388
Allowance for lending-related commitments
$
107
$
36
$
110
$
37
Guarantee liability
296
—
369
—
Total carrying value
$
403
$
36
$
479
$
37
Commitments with collateral
$
16,272
$
426
$
16,861
$
539
(a)The ratings scale is based on the Firm’s internal risk ratings. Refer to Note 11 for further information on internal risk ratings.
Derivatives qualifying as guarantees
The Firm transacts in certain derivative contracts that have the characteristics of a guarantee under U.S. GAAP. Refer to Note 28 of JPMorgan Chase’s 2023 Form 10-K for further information on these derivatives.
The following table summarizes the derivatives qualifying as guarantees as of June 30, 2024 and December 31, 2023.
(in millions)
June 30, 2024
December 31, 2023
Notional amounts
Derivative guarantees
$
52,901
$
54,562
Stable value contracts with contractually limited exposure
32,510
32,488
Maximum exposure of stable value contracts with contractually limited exposure
1,653
1,652
Fair value
Derivative payables
88
89
In addition to derivative contracts that meet the characteristics of a guarantee, the Firm is both a purchaser and seller of credit protection in the credit derivatives market. Refer to Note 4 for a further discussion of credit derivatives.
Loan sales- and securitization-related indemnifications
In connection with the Firm’s mortgage loan sale and securitization activities with U.S. GSEs the Firm has made representations and warranties that the loans sold meet certain requirements, and that may require the Firm to repurchase mortgage loans and/or indemnify the loan purchaser if such representations and warranties are breached by the Firm.
The liability related to repurchase demands associated with private label securitizations is separately evaluated by the Firm in establishing its litigation reserves. Refer to Note 24 of this Form 10-Q and Note 30 of JPMorgan Chase’s 2023 Form 10-K for additional information regarding litigation.
180
Merchant charge-backs
Under the rules of payment networks, in its role as a merchant acquirer, the Firm's Merchant Services business in CIB Payments, retains a contingent liability for disputed processed credit and debit card transactions that result in a charge-back to the merchant. If a dispute is resolved in the cardholder’s favor, the Firm will (through the cardholder’s issuing bank) credit or refund the amount to the cardholder and will charge back the transaction to the merchant. If the Firm is unable to collect the amount from the merchant, the Firm will bear the loss for the amount credited or refunded to the cardholder. The Firm mitigates this risk by withholding future settlements, retaining cash reserve accounts or obtaining other collateral. In addition, the Firm recognizes a valuation allowance that covers the payment or performance risk related to charge-backs.
Sponsored member repo program
The Firm acts as a sponsoring member to clear eligible overnight and term resale and repurchase agreements through the Government Securities Division of the Fixed Income Clearing Corporation (“FICC”) on behalf of clients that become sponsored members under the FICC’s rules. The Firm also guarantees to the FICC the prompt and full payment and performance of its sponsored member clients’ respective obligations under the FICC’s rules. The Firm minimizes its liability under these guarantees by obtaining a security interest in the cash or high-quality securities collateral that the clients place with the clearing house; therefore, the Firm expects the risk of loss to be remote. The Firm’s maximum possible exposure, without taking into consideration the associated collateral, is included in the Exchange & clearing house guarantees and commitments line on page 179. Refer to Note 11 of JPMorgan Chase’s 2023 Form 10-K for additional information on credit risk mitigation practices on resale agreements and the types of collateral pledged under repurchase agreements.
Guarantees of subsidiaries
The Parent Company has guaranteed certain long-term debt and structured notes of its subsidiaries, including JPMorgan Chase Financial Company LLC (“JPMFC”), a 100%-owned finance subsidiary. All securities issued by JPMFC are fully and unconditionally guaranteed by the Parent Company and no other subsidiary of the Parent Company guarantees these securities. These guarantees, which rank pari passu with the Firm’s unsecured and unsubordinated indebtedness, are not included in the table on page 179 of this Note. Refer to Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information.
Note 23 – Pledged assets and collateral
Refer to Note 29 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s pledged assets and collateral.
Pledged assets
The Firm pledges financial assets that it owns to maintain potential borrowing capacity at discount windows with Federal Reserve banks, various other central banks and FHLBs. Additionally, the Firm pledges assets for other purposes, including to collateralize repurchase and other securities financing agreements, to cover short sales and to collateralize derivative contracts and deposits. Certain of these pledged assets may be sold or repledged or otherwise used by the secured parties and are parenthetically identified on the Consolidated balance sheets as assets pledged.
The following table presents the Firm’s pledged assets.
(in billions)
June 30, 2024
December 31, 2023
Assets that may be sold or repledged or otherwise used by secured parties
$
192.4
$
145.0
Assets that may not be sold or repledged or otherwise used by secured parties
283.5
244.2
Assets pledged at Federal Reserve banks and FHLBs
689.1
675.6
Total pledged assets
$
1,165.0
$
1,064.8
Total pledged assets do not include assets of consolidated VIEs; these assets are used to settle the liabilities of those entities. Refer to Note 13 for additional information on assets and liabilities of consolidated VIEs. Refer to Note 10 for additional information on the Firm’s securities financing activities. Refer to Note 20 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s long-term debt.
Collateral
The Firm accepts financial assets as collateral that it is permitted to sell or repledge, deliver or otherwise use. This collateral is generally obtained under resale and other securities financing agreements, prime brokerage-related held-for-investment customer receivables and derivative contracts. Collateral is generally used under repurchase and other securities financing agreements, to cover short sales and to collateralize derivative contracts and deposits.
The following table presents the fair value of collateral accepted.
(in billions)
June 30, 2024
December 31, 2023
Collateral permitted to be sold or repledged, delivered, or otherwise used
$
1,493.6
$
1,303.9
Collateral sold, repledged, delivered or otherwise used
1,188.1
982.8
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Note 24 – Litigation
Contingencies
As of June 30, 2024, the Firm and its subsidiaries and affiliates are defendants or respondents in numerous evolving legal proceedings, including private proceedings, public proceedings, government investigations, regulatory enforcement matters, and the matters described below. The litigations range from individual actions involving a single plaintiff to class action lawsuits with potentially millions of class members. Investigations and regulatory enforcement matters involve both formal and informal proceedings, by both governmental agencies and self-regulatory organizations. These legal proceedings are at varying stages of adjudication, arbitration or investigation, and involve each of the Firm’s lines of business and several geographies and a wide variety of claims (including common law tort and contract claims and statutory antitrust, securities and consumer protection claims), some of which present novel legal theories.
The Firm believes the estimate of the aggregate range of reasonably possible losses, in excess of reserves established, for its legal proceedings is from $0 to approximately $1.7 billion at June 30, 2024. This estimated aggregate range of reasonably possible losses was based upon information available as of that date for those proceedings in which the Firm believes that an estimate of reasonably possible loss can be made. For certain matters, the Firm does not believe that such an estimate can be made, as of that date. The Firm’s estimate of the aggregate range of reasonably possible losses involves significant judgment, given:
•the number, variety and varying stages of the proceedings, including the fact that many are in preliminary stages,
•the existence in many such proceedings of multiple defendants, including the Firm, whose share of liability (if any) has yet to be determined,
•the numerous yet-unresolved issues in many of the proceedings, including issues regarding class certification and the scope of many of the claims, and
•the uncertainty of the various potential outcomes of such proceedings, including where the Firm has made assumptions concerning future rulings by the court or other adjudicator, or about the behavior or incentives of adverse parties or regulatory authorities, and those assumptions prove to be incorrect.
In addition, the outcome of a particular proceeding may be a result which the Firm did not take into account in its estimate because the Firm had deemed the likelihood of that outcome to be remote. Accordingly, the Firm’s estimate of the aggregate range of reasonably possible losses will change from time to time, and actual losses may vary significantly.
Set forth below are descriptions of the Firm’s material legal proceedings.
1MDB Litigation. J.P. Morgan (Suisse) SA was named as a defendant in a civil litigation filed in May 2021 in Malaysia by 1Malaysia Development Berhad (“1MDB”), a Malaysian state-owned and controlled investment fund. The claim alleges “dishonest assistance” against J.P. Morgan (Suisse) SA in relation to payments of $300 million and $500 million, from 2009 and 2010, respectively, received from 1MDB and paid into an account at J.P. Morgan (Suisse) SA held by 1MDB PetroSaudi Limited, a joint venture company between 1MDB and PetroSaudi Holdings (Cayman) Limited. In March 2024, the Court upheld the Firm's challenge to the validity of service and the Malaysian Court’s jurisdiction to hear the claim. That decision has been appealed by 1MDB. In August 2023, the Court denied an application by 1MDB to discontinue its claim with permission to re-file a new claim in the future. An appeals court is scheduled in August 2024 to hear separate appeals filed by 1MDB and the Firm against that August 2023 decision. In its appeal, the Firm seeks to prevent any claim from continuing.
In addition, in November 2023, the Federal Office of the Attorney General (OAG) in Switzerland notified J.P. Morgan (Suisse) SA that it is conducting an investigation into possible criminal liability in connection with transactions arising from J.P. Morgan (Suisse) SA’s relationship with the 1MDB PetroSaudi joint venture and its related persons for the period September 2009 through August 2015. The OAG investigation is ongoing.
Amrapali. India’s Enforcement Directorate (“ED”) is investigating J.P. Morgan India Private Limited in connection with investments made in 2010 and 2012 by two offshore funds formerly managed by JPMorgan Chase entities into residential housing projects developed by the Amrapali Group (“Amrapali”) relating to delays in delivering or failure to deliver residential units. In August 2021, the ED issued an order fining J.P. Morgan India Private Limited approximately $31.5 million, and the Firm is appealing that order. Relatedly, in July 2019, the Supreme Court of India issued an order making preliminary findings that Amrapali and other parties, including unspecified JPMorgan Chase entities and the offshore funds that had invested in the projects, violated certain criminal currency control and money laundering provisions, and ordered the ED to conduct a further inquiry. The Firm is responding to and cooperating with the inquiry.
Foreign Exchange Investigations and Litigation. The Firm previously reported settlements with certain government authorities relating to its foreign exchange (“FX”) sales and trading activities and controls related to those activities. Among those resolutions, in May 2015, the Firm pleaded guilty to a single violation of federal antitrust law. The Department of Labor ("DOL") granted the Firm exemptions
182
that permit the Firm and its affiliates to continue to rely on the Qualified Professional Asset Manager exemption under the Employee Retirement Income Security Act (“ERISA”) through the ten-year disqualification period following the antitrust plea. The only remaining FX-related governmental inquiry is a South Africa Competition Commission matter which is currently pending before the South Africa Competition Tribunal.
With respect to civil litigation matters, in a putative class action filed against the Firm and other foreign exchange dealers on behalf of certain parties who purchased foreign currencies at allegedly inflated rates, the United States District Court for the Southern District of New York denied certification of a class and granted summary judgment against the named plaintiffs in March 2023. In May 2024, the United States Court of Appeals for the Second Circuit affirmed the District Court's decision, and in July 2024, plaintiffs’ subsequent petition for en banc review by the full Court of Appeals was denied. In addition, some FX-related individual and putative class actions based on similar alleged underlying conduct have been filed outside the U.S., including in the U.K., Israel, the Netherlands, Brazil and Australia. An agreement to resolve one of the U.K. actions was reached in December 2022. In July 2023, the U.K. Court of Appeal overturned the Competition Appeal Tribunal's earlier denial of a request for class certification on an opt-out basis. In Israel, a settlement in principle has been reached on the putative class action, which remains subject to court approval.
Government Inquiries Related to the Zelle Network. The Firm is responding to inquiries from the Consumer Financial Protection Bureau (CFPB) regarding the transfers of funds through the Zelle Network. In connection with this, the CFPB Staff has informed the Firm that it is authorized to pursue a resolution of the inquiries or file an enforcement action. The Firm is evaluating next steps, including litigation.
Interchange Litigation. Groups of merchants and retail associations filed a series of class action complaints alleging that Visa and Mastercard, as well as certain banks, conspired to set the price of credit and debit card interchange fees and enacted related rules in violation of antitrust laws.
In September 2018, the parties settled the class action seeking monetary relief, with the defendants collectively contributing approximately $6.2 billion. The settlement has been approved by the United States District Court for the Eastern District of New York and affirmed on appeal. Based on the percentage of merchants that opted out of the settlement, $700 million has been returned to the defendants from the settlement escrow. A separate class action seeking injunctive relief continues, and in September 2021, the District Court granted plaintiffs’ motion for class certification in part, and denied the motion in part. In June 2024, the District Court denied preliminary approval of a settlement of the injunctive class action in which Visa and Mastercard agreed to certain changes to their respective network rules and system-wide reductions in interchange
rates for U.S.-based merchants. The parties are considering next steps.
Of the merchants who opted out of the damages class settlement, certain merchants filed individual actions raising similar allegations against Visa and Mastercard, as well as against the Firm and other banks. While some of those actions remain pending, the defendants have reached settlements with the merchants who opted out representing over 70% of the combined Mastercard-branded and Visa-branded payment card sales volume.
LIBOR and Other Benchmark Rate Investigations and Litigation. JPMorgan Chase has responded to inquiries from various governmental agencies and entities around the world relating primarily to the British Bankers Association’s (“BBA”) London Interbank Offered Rate (“LIBOR”) for various currencies and the European Banking Federation’s Euro Interbank Offered Rate (“EURIBOR”). The Swiss Competition Commission’s investigation relating to EURIBOR, to which the Firm and one other bank remain subject, continues. The Firm appealed a December 2016 decision by the European Commission against the Firm and other banks finding an infringement of European antitrust rules relating to EURIBOR. In December 2023, the European General Court annulled the fine imposed by the European Commission, but exercised its discretion to re-impose a fine in an identical amount. In March 2024, the Firm filed an appeal of this decision with the Court of Justice of the European Union.
In addition, the Firm has been named as a defendant along with other banks in various individual and putative class actions related to benchmark rates, including U.S. dollar LIBOR. In actions related to U.S. dollar LIBOR during the period that it was administered by the BBA, the Firm has obtained dismissal of certain actions and resolved certain other actions, and others are in various stages of litigation. The United States District Court for the Southern District of New York has granted class certification of antitrust claims related to bonds and interest rate swaps sold directly by the defendants, including the Firm. In addition, a lawsuit filed by a group of individual plaintiffs asserting antitrust claims, alleging that the Firm and other defendants were engaged in an unlawful agreement to set U.S. dollar LIBOR and conspired to monopolize the market for LIBOR-based consumer loans and credit cards was dismissed in October 2023. Plaintiffs' appeal of the dismissal to the United States Court of Appeals for the Ninth Circuit filed in November 2023 remains pending. The Firm has resolved all non-U.S. dollar LIBOR actions.
Russian Litigation.The Firm is obligated to comply with international sanctions laws, which mandate the blocking of certain assets. These laws apply when assets associated with individuals, companies, products or services are within the scope of the sanctions. The Firm has faced actual and threatened litigation in Russia seeking payments on transactions that the Firm cannot make under, and is contractually excused from paying as a result of, relevant sanctions laws. In claims involving the Firm and claims filed
183
against other financial institutions, Russian courts have disregarded the parties’ contractual agreements concerning forum selection and did not recognize foreign sanctions laws as a basis for not making payment. As to claims against the Firm, a Russian court entered judgment against the Firm in one claim in February 2024, which was executed in July 2024 against assets held onshore by the Firm in Russia. The Firm continues to appeal the Russian court’s decision. In separate claims, in April 2024, Russian courts ordered an interim freeze of assets in Russia (including funds in bank accounts, securities, shares in authorized capital, and certain trademarks, of the named defendants) pending a determination on the underlying claims. Russian courts may rule similarly in other cases, including ordering freezes and seizure of assets. The Firm challenged the April 2024 freeze orders in the Russian courts and in a New York federal court action, and a Russian court has issued an order instructing the Firm to discontinue the New York action. The value of the current claims and the orders to freeze assets against the Firm exceed the total amount of available assets that the Firm holds in Russia. If further claims are enforced despite the actions taken by the Firm to challenge the claims and orders and to seek the proper application of law, the Firm’s assets in Russia could be seized in full or the Firm could be prevented from complying with its obligations.
SEC Inquiries. The Firm is responding to requests from the SEC regarding aspects of certain advisory programs within J.P. Morgan Securities LLC, including aggregation of accounts for billing, discounting advisory fees, and selecting portfolio managers. Separately, the Firm is responding to requests from the SEC in connection with the timing of the Firm’s liquidation of shares distributed in-kind to certain investment vehicles that invest in third-party managed private funds. The Firm continues to cooperate and is currently engaged in resolution discussions with the SEC. There is no assurance that such discussions will result in resolutions
Securities Lending Antitrust Litigation. JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, J.P. Morgan Prime, Inc., and J.P. Morgan Strategic Securities Lending Corp. are named as defendants in a putative class action filed in the United States District Court for the Southern District of New York. The complaint asserts violations of federal antitrust law and New York State common law in connection with an alleged conspiracy to prevent the emergence of anonymous exchange trading for securities lending transactions. The settlement of this action by the parties has been preliminarily approved, and is subject to final court approval.
Shareholder Litigation. Several shareholder putative class actions, as well as shareholder derivative actions purporting to act on behalf of the Firm, have been filed against the Firm, its Board of Directors and certain of its current and former officers.
Certain of these shareholder suits relate to historical trading practices by former employees in the precious
metals and U.S. treasuries markets and related conduct which were the subject of the Firm’s resolutions with the DOJ, CFTC and SEC in September 2020, and fiduciary activities that were separately the subject of a resolution between JPMorgan Chase Bank, N.A. and the OCC in November 2020. One of these shareholder derivative suits was filed in the Supreme Court of the State of New York in May 2022, asserting breach of fiduciary duty and unjust enrichment claims relating to the historical trading practices and related conduct and fiduciary activities which were the subject of the resolutions described above. In December 2022, the court granted defendants’ motion to dismiss this action in full, and in July 2023, the plaintiff filed an appeal, which remains pending.
A separate shareholder derivative suit was filed in March 2022 in the United States District Court for the Eastern District of New York asserting state claims of breaches of fiduciary duty and federal claims of violations of federal securities laws based on the alleged failure of the Board of Directors to exercise adequate oversight over the Firm’s compliance with records preservation requirements which were the subject of resolutions between certain of the Firm’s subsidiaries and the SEC and the CFTC. In March 2024, the Court granted Defendants’ motion to dismiss the federal claims and declined to exercise jurisdiction over the remaining state claims.
Trading Venues Investigations. The Firm has been responding to government inquiries regarding its processes to inventory trading venues and confirm the completeness of certain data fed to trade surveillance platforms. The Firm self-identified that certain trading and order data through the CIB was not feeding into its trade surveillance platforms. The Firm has completed enhancements to the CIB’s venue inventory and data completeness controls, and other remediation is underway. The Firm has also performed a review of the data not originally surveilled and has not identified any employee misconduct, harm to clients or the market. While the identified gaps represent a fraction of the overall activity across the CIB, the data gap on one venue, which largely consisted of sponsored client access activity, was significant. The Firm is dedicated to maintaining rigorous controls and continuously enhancing the reliability of its trade infrastructure. The Firm entered into resolutions with the OCC and the Board of Governors of the FRB in March 2024 and with the Commodity Futures Trading Commission in May 2024. The resolutions required the Firm to, among other things, pay aggregate civil penalties of $450 million, which the Firm has paid, and to complete the Firm’s remediation. The Firm has also engaged an independent compliance consultant as required by the resolutions. The Firm does not expect any disruption of service to clients as a result of these resolutions.
* * *
In addition to the various legal proceedings discussed above, JPMorgan Chase and its subsidiaries are named as defendants or are otherwise involved in a substantial number of other legal proceedings. The Firm believes it has
184
meritorious defenses to the claims asserted against it in its currently outstanding legal proceedings and it intends to defend itself vigorously. Additional legal proceedings may be initiated from time to time in the future.
The Firm has established reserves for several hundred of its currently outstanding legal proceedings. In accordance with the provisions of U.S. GAAP for contingencies, the Firm accrues for a litigation-related liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated. The Firm evaluates its outstanding legal proceedings each quarter to assess its litigation reserves, and makes adjustments in such reserves, upward or downward, as appropriate, based on management’s best judgment after consultation with counsel. The Firm’s legal expense was $317 million and $420 million for the three months ended June 30, 2024 and 2023, respectively. There is no assurance that the Firm’s litigation reserves will not need to be adjusted in the future.
In view of the inherent difficulty of predicting the outcome of legal proceedings, particularly where the claimants seek very large or indeterminate damages, or where the matters present novel legal theories, involve a large number of parties or are in early stages of discovery, the Firm cannot state with confidence what will be the eventual outcomes of the currently pending matters, the timing of their ultimate resolution or the eventual losses, fines, penalties or consequences related to those matters. JPMorgan Chase believes, based upon its current knowledge and after consultation with counsel, consideration of the material legal proceedings described above and after taking into account its current litigation reserves and its estimated aggregate range of possible losses, that the other legal proceedings currently pending against it should not have a material adverse effect on the Firm’s consolidated financial condition. The Firm notes, however, that in light of the uncertainties involved in such proceedings, there is no assurance that the ultimate resolution of these matters will not significantly exceed the reserves it has currently accrued or that a matter will not have material reputational consequences. As a result, the outcome of a particular matter may be material to JPMorgan Chase’s operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of JPMorgan Chase’s income for that period.
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Note 25 – Business segments
The Firm is managed on an LOB basis. Effective in the second quarter of 2024, the Firm reorganized its reportable business segments by combining the former Corporate & Investment Bank and Commercial Banking business segments to form one reportable segment, the Commercial & Investment Bank (“CIB”). As a result of the reorganization, the Firm now has three reportable business segments: Consumer & Community Banking, Commercial & Investment Bank, and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. Refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures on pages 18-19 for a definition of managed basis.
Refer to Note 32 of JPMorgan Chase’s 2023 Form 10-K for a further discussion of JPMorgan Chase’s business segments.
Segment results
The following table provides a summary of the Firm’s segment results as of or for the three and six months ended June 30, 2024 and 2023, on a managed basis. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the reportable business segments) on an FTE basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. Refer to Note 32 of JPMorgan Chase’s 2023 Form 10-K for additional information on the Firm’s managed basis.
Capital allocation
The amount of capital assigned to each business segment is referred to as equity. At least annually, the assumptions, judgments and methodologies used to allocate capital are reassessed and, as a result, the capital allocated to the LOBs may change. Refer to Note 32 of JPMorgan Chase’s 2023 Form 10-K for additional information on capital allocation.
Segment results and reconciliation(a)
As of or for the three months ended June 30, (in millions, except ratios)
Consumer & Community Banking
Commercial & Investment Bank
Asset & Wealth Management
2024
2023
2024
2023
2024
2023
Noninterest revenue
$
3,996
$
3,543
$
12,744
$
11,637
$
3,633
$
3,358
Net interest income
13,705
13,690
5,173
4,870
1,619
1,585
Total net revenue
17,701
17,233
17,917
16,507
5,252
4,943
Provision for credit losses
2,643
1,862
384
1,135
20
145
Noninterest expense
9,425
8,313
9,166
8,194
3,543
3,163
Income/(loss) before income tax expense/(benefit)
5,633
7,058
8,367
7,178
1,689
1,635
Income tax expense/(benefit)
1,423
1,752
2,470
1,878
426
409
Net income/(loss)
$
4,210
$
5,306
$
5,897
$
5,300
$
1,263
$
1,226
Average equity
$
54,500
$
54,346
$
132,000
$
137,505
$
15,500
$
16,670
Total assets
638,493
620,193
1,939,038
1,737,334
247,353
247,118
ROE
30
%
38
%
17
%
15
%
32
%
29
%
Overhead ratio
53
48
51
50
67
64
As of or for the three months ended June 30, (in millions, except ratios)
Corporate
Reconciling Items(a)
Total
2024
2023
2024
2023
2024
2023
Noninterest revenue
$
7,758
(b)
$
1,980
$
(677)
$
(990)
$
27,454
(b)
$
19,528
Net interest income
2,364
1,738
(115)
(104)
22,746
21,779
Total net revenue
10,122
3,718
(792)
(1,094)
50,200
41,307
Provision for credit losses
5
(243)
—
—
3,052
2,899
Noninterest expense
1,579
(c)
1,152
—
—
23,713
(c)
20,822
Income/(loss) before income tax expense/(benefit)
8,538
2,809
(792)
(1,094)
23,435
17,586
Income tax expense/(benefit)
1,759
169
(792)
(1,094)
5,286
3,114
Net income/(loss)
$
6,779
$
2,640
$
—
$
—
$
18,149
$
14,472
Average equity
$
106,763
$
69,364
$
—
$
—
$
308,763
$
277,885
Total assets
1,318,119
1,263,595
NA
NA
4,143,003
3,868,240
ROE
NM
NM
NM
NM
23
%
20
%
Overhead ratio
NM
NM
NM
NM
47
50
(a)Segment managed results reflect revenue on an FTE basis with the corresponding income tax impact recorded within income tax expense/(benefit). These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results.
(b)Included $7.9 billion net gain related to Visa shares. Refer to Note 2 for additional information.
(c)Included $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
186
Segment results and reconciliation(a)
As of or for the six months ended June 30, (in millions, except ratios)
Consumer & Community Banking
Commercial & Investment Bank
Asset & Wealth Management
2024
2023
2024
2023
2024
2023
Noninterest revenue
$
7,941
$
7,166
$
24,905
$
23,941
$
7,147
$
6,691
Net interest income
27,413
26,523
10,596
9,677
3,214
3,036
Total net revenue
35,354
33,689
35,501
33,618
10,361
9,727
Provision for credit losses
4,556
3,264
385
1,610
(37)
173
Noninterest expense
18,722
16,378
17,890
16,985
7,003
6,254
Income/(loss) before income tax expense/(benefit)
12,076
14,047
17,226
15,023
3,395
3,300
Income tax expense/(benefit)
3,035
3,498
4,707
3,955
842
707
Net income/(loss)
$
9,041
$
10,549
$
12,519
$
11,068
$
2,553
$
2,593
Average equity
$
54,500
$
53,180
$
132,000
$
137,005
$
15,500
$
16,337
Total assets
638,493
620,193
1,939,038
1,737,334
247,353
247,118
ROE
33
%
39
%
18
%
16
%
32
%
31
%
Overhead ratio
53
49
50
51
68
64
As of or for the six months ended June 30, (in millions, except ratios)
Corporate
Reconciling Items(a)
Total
2024
2023
2024
2023
2024
2023
Noninterest revenue
$
7,483
(b)
$
1,225
$
(1,170)
$
(1,857)
$
46,306
(b)
$
37,166
Net interest income
4,841
3,478
(236)
(224)
45,828
42,490
Total net revenue
12,324
4,703
(1,406)
(2,081)
92,134
79,656
Provision for credit losses
32
127
—
—
4,936
5,174
Noninterest expense
2,855
(c)
1,312
—
—
46,470
(c)
40,929
Income/(loss) before income tax expense/(benefit)
9,437
3,264
(1,406)
(2,081)
40,728
33,553
Income tax expense/(benefit)
1,982
380
(1,406)
(2,081)
9,160
6,459
Net income/(loss)
$
7,455
$
2,884
$
—
$
—
$
31,568
$
27,094
Average equity
$
102,519
$
68,038
$
—
$
—
$
304,519
$
274,560
Total assets
1,318,119
1,263,595
NA
NA
4,143,003
3,868,240
ROE
NM
NM
NM
NM
20
%
19
%
Overhead ratio
NM
NM
NM
NM
50
51
(a)Segment managed results reflect revenue on an FTE basis with the corresponding income tax impact recorded within income tax expense/(benefit). These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results.
(b)Included $7.9 billion net gain related to Visa shares. Refer to Note 2 for additional information.
(c)Included $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation. Refer to Note 5 for additional information.
187
Note 26 – Business combinations
On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank (the "First Republic acquisition") from the Federal Deposit Insurance Corporation (“FDIC”), as receiver. The acquisition resulted in a bargain purchase gain, which represents the excess of the estimated fair value of the net assets acquired above the purchase price.
The Firm has determined that this acquisition constitutes a business combination under U.S. GAAP. Accordingly, the initial recognition of the assets acquired and liabilities assumed were generally measured at their estimated fair values as of May 1, 2023. The determination of those fair values required management to make certain market-based assumptions about expected future cash flows, discount rates and other valuation inputs at the time of the acquisition. The Firm believes that the fair value estimates of the assets acquired and liabilities assumed provide a reasonable basis for determining the estimated bargain purchase gain.
The First Republic acquisition resulted in a preliminary estimated bargain purchase gain of $2.7 billion. As the one-year measurement period permitted by U.S. GAAP has now concluded, management has finalized its fair value estimates for the assets acquired and liabilities assumed. The final bargain purchase gain of $2.9 billion reflects adjustments made during the measurement period to the fair value of the net assets acquired, including an increase of $119 million and $103 million for the three and six months ended June 30, 2024, respectively. Certain matters related to the final settlement remain outstanding between the Firm and the FDIC. Any subsequent adjustments will not impact the final bargain purchase gain and will be reflected in Other income.
Refer to Note 34 of JPMorgan Chase’s 2023 Form 10-K for further information on the First Republic acquisition.
188
The computation of the purchase price, the fair values of the assets acquired and liabilities assumed as part of the First Republic acquisition and the related bargain purchase gain are presented below, and reflects adjustments made during the measurement period to the acquisition-date fair value of the net assets acquired.
Fair value purchase price allocation as of May 1, 2023
(in millions)
Purchase price consideration
Amounts paid/due to the FDIC, net of cash acquired(a)
$
13,555
Purchase Money Note (at fair value)(b)
48,848
Settlement of First Republic deposit and other related party transactions(c)
5,447
Contingent consideration - Shared-loss agreements
15
Purchase price consideration
$
67,865
Assets
Securities
$
30,285
Loans
153,242
Core deposit and customer relationship intangibles
1,455
Indemnification assets - Shared-loss agreements
675
Accounts receivable and other assets(d)
6,740
Total assets acquired
$
192,397
Liabilities
Deposits
$
87,572
FHLB advances
27,919
Lending-related commitments
2,614
Accounts payable and other liabilities(d)
2,792
Deferred tax liabilities
757
Total liabilities assumed
$
121,654
Fair value of net assets acquired
$
70,743
Gain on acquisition, after income taxes
$
2,878
(a)Net of cash acquired of $680 million, and including disputed amounts.
(b)As part of the consideration paid, JPMorgan Chase issued a five-year, $50 billion secured note to the FDIC (the "Purchase Money Note").
(c)Includes $447 million of securities financing transactions with First Republic Bank that were effectively settled on the acquisition date.
(d)Other assets include $1.2 billion in tax-oriented investments and $683 million of lease right-of-use assets. Other liabilities include the related tax-oriented investment liabilities of $669 million and lease liabilities of $748 million. Refer to Note 14 and Note 18 of JPMorgan Chase's 2023 Form 10-K for additional information.
Refer to JPMorgan Chase’s 2023 Form 10-K for a discussion of the Firm’s accounting policies and valuation methodologies for securities, loans, core deposits and customer relationship intangibles, shared-loss agreements and the related indemnification assets, deposits, Purchase Money Note, FHLB advances and lending-related commitments.
Loans
The following table presents the unpaid principal balance ("UPB") and fair values of the loans acquired as of May 1, 2023, and reflects adjustments made during the measurement period to the acquisition-date fair value of the loans acquired.
May 1, 2023
(in millions)
UPB
Fair value
Residential real estate
$
106,240
$
92,053
Auto and other
3,093
2,030
Total consumer
109,333
94,083
Secured by real estate
37,117
33,602
Commercial & industrial
4,332
3,932
Other
23,499
21,625
Total wholesale
64,948
59,159
Total loans
$
174,281
$
153,242
189
Unaudited pro forma condensed combined financial information
The following table presents certain unaudited pro forma financial information for the three and six months ended June 30, 2023 as if the First Republic acquisition had occurred on January 1, 2022, including recognition of the estimated bargain purchase gain of $2.7 billion and the provision for credit losses of $1.2 billion. Additional adjustments include the interest on the Purchase Money Note and the impact of amortizing and accreting certain estimated fair value adjustments related to intangible assets, loans and lending-related commitments.
The Firm expects to achieve operating cost savings and other business synergies resulting from the acquisition that are not reflected in the pro forma amounts. The pro forma information is not necessarily indicative of the historical results of operations had the acquisition occurred on January 1, 2022, nor is it indicative of the results of operations in future periods.
Three months ended June 30,
Six months ended June 30,
(in millions)
2023
2023
Noninterest revenue
$
16,924
$
34,832
Net interest income
22,184
44,084
Net income
13,565
26,726
190
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of JPMorgan Chase & Co.:
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated balance sheet of JPMorgan Chase & Co. and its subsidiaries (the “Firm”) as of June 30, 2024, and the related consolidated statements of income, comprehensive income and changes in stockholders’ equity for the three-month and six-month periods ended June 30, 2024 and 2023 and the consolidated statements of cash flows for the six-month periods ended June 30, 2024 and 2023, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Firm as of December 31, 2023, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and of cash flows for the year then ended (not presented herein), and in our report dated February 16, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Firm’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Firm in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
August 2, 2024
PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, NY 10017
191
JPMorgan Chase & Co.
Consolidated average balance sheets, interest and rates (unaudited)
(Taxable-equivalent interest and rates; in millions, except rates)
Three months ended June 30, 2024
Three months ended June 30, 2023
Average balance
Interest(f)
Rate (annualized)
Average balance
Interest(f)
Rate (annualized)
Assets
Deposits with banks
$
512,150
$
6,059
4.76
%
$
495,018
$
5,189
4.20
%
Federal funds sold and securities purchased under resale agreements
370,817
4,821
5.23
326,563
3,767
4.63
Securities borrowed
195,877
2,177
4.47
191,393
1,866
3.91
Trading assets – debt instruments
452,933
5,005
4.44
391,945
4,025
4.12
Taxable securities
552,909
5,124
3.73
578,876
4,194
2.91
Nontaxable securities(a)
27,135
349
5.17
32,676
390
4.79
Total investment securities
580,044
5,473
3.80
(g)
611,552
4,584
3.01
(g)
Loans
1,313,085
22,954
7.03
1,238,237
20,351
6.59
All other interest-earning assets(b)(c)
84,819
2,139
10.14
89,072
1,966
8.85
Total interest-earning assets
3,509,725
48,628
5.57
3,343,780
41,748
5.01
Allowance for loan losses
(22,273)
(20,055)
Cash and due from banks
22,136
25,228
Trading assets – equity and other instruments
221,382
169,558
Trading assets – derivative receivables
57,175
63,339
Goodwill, MSRs and other intangible Assets
64,452
62,530
All other noninterest-earning assets
218,846
207,008
Total assets
$
4,071,443
$
3,851,388
Liabilities
Interest-bearing deposits
$
1,722,856
$
12,421
2.90
%
$
1,715,699
$
9,591
2.24
%
Federal funds purchased and securities loaned or sold under repurchase agreements
375,371
5,108
5.47
263,718
3,400
5.17
Short-term borrowings
38,234
502
5.27
35,335
428
4.87
Trading liabilities – debt and all other interest-bearing
liabilities(d)(e)
318,703
2,604
3.29
293,269
2,373
3.25
Beneficial interests issued by consolidated VIEs
26,222
352
5.40
15,947
197
4.95
Long-term debt
342,516
4,780
5.61
294,239
3,876
5.28
Total interest-bearing liabilities
2,823,902
25,767
3.67
2,618,207
19,865
3.04
Noninterest-bearing deposits
648,327
671,715
Trading liabilities – equity and other instruments(e)
30,456
28,513
Trading liabilities – derivative payables
37,538
46,934
All other liabilities, including the allowance for lending-related commitments
196,590
180,730
Total liabilities
3,736,813
3,546,099
Stockholders’ equity
Preferred stock
25,867
27,404
Common stockholders’ equity
308,763
277,885
Total stockholders’ equity
334,630
305,289
Total liabilities and stockholders’ equity
$
4,071,443
$
3,851,388
Interest rate spread
1.90
%
1.97
%
Net interest income and net yield on interest-earning assets
$
22,861
2.62
$
21,883
2.62
(a)Represents securities which are tax-exempt for U.S. federal income tax purposes.
(b)Includes brokerage-related held-for-investment customer receivables, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated Balance Sheets.
(c)The rates reflect the impact of interest earned on cash collateral where the cash collateral has been netted against certain derivative payables.
(d)All other interest-bearing liabilities include brokerage-related customer payables.
(e)The combined balance of trading liabilities – debt and equity instruments was $192.3 billion and $153.7 billion for the three months ended June 30, 2024 and 2023, respectively.
(f)Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(g)The annualized rate for securities based on amortized cost was 3.76% and 2.96% for the three months ended June 30, 2024 and 2023, respectively, and does not give effect to changes in fair value that are reflected in AOCI.
192
JPMorgan Chase & Co.
Consolidated average balance sheets, interest and rates (unaudited)
(Taxable-equivalent interest and rates; in millions, except rates)
Six months ended June 30, 2024
Six months ended June 30, 2023
Average balance
Interest(f)
Rate (annualized)
Average balance
Interest(f)
Rate (annualized)
Assets
Deposits with banks
$
523,929
$
12,445
4.78
%
$
500,311
$
10,008
4.03
%
Federal funds sold and securities purchased under resale agreements
347,402
9,036
5.23
319,911
6,898
4.35
Securities borrowed
194,211
4,343
4.50
192,114
3,582
3.76
Trading assets – debt instruments
437,725
9,608
4.41
374,908
7,685
4.13
Taxable securities
551,486
9,995
3.64
587,750
8,161
2.80
Nontaxable securities(a)
28,559
725
5.11
29,022
698
4.85
Total investment securities
580,045
10,720
3.72
(g)
616,772
8,859
2.90
(g)
Loans
1,312,332
45,885
7.03
1,184,231
38,105
6.49
All other interest-earning assets(b)(c)
81,976
4,150
10.18
92,372
3,735
8.15
Total interest-earning assets
3,477,620
96,187
5.56
3,280,619
78,872
4.85
Allowance for loan losses
(22,320)
(19,593)
Cash and due from banks
22,881
25,640
Trading assets – equity and other instruments
206,082
160,868
Trading assets – derivative receivables
57,405
63,929
Goodwill, MSRs and other intangible Assets
64,427
61,697
All other noninterest-earning assets
213,945
207,913
Total assets
$
4,020,040
$
3,781,073
Liabilities
Interest-bearing deposits
$
1,724,499
$
24,655
2.88
%
$
1,692,993
$
17,228
2.05
%
Federal funds purchased and securities loaned or sold under repurchase agreements
335,177
9,077
5.45
258,045
6,204
4.85
Short-term borrowings
38,381
1,037
5.42
37,039
849
4.63
Trading liabilities – debt and all other interest-bearing
liabilities(d)(e)
310,849
5,240
3.39
285,467
4,344
3.07
Beneficial interests issued by consolidated VIEs
26,815
716
5.37
14,722
344
4.71
Long-term debt
341,464
9,398
5.53
271,912
7,189
5.33
Total interest-bearing liabilities
2,777,185
50,123
3.63
2,560,178
36,158
2.85
Noninterest-bearing deposits
648,486
661,138
Trading liabilities – equity and other instruments(e)
29,539
29,137
Trading liabilities – derivative payables
38,707
48,139
All other liabilities, including the allowance for lending-related commitments
194,694
180,517
Total liabilities
3,688,611
3,479,109
Stockholders’ equity
Preferred stock
26,910
27,404
Common stockholders’ equity
304,519
274,560
Total stockholders’ equity
331,429
301,964
Total liabilities and stockholders’ equity
$
4,020,040
$
3,781,073
Interest rate spread
1.93
%
2.00
%
Net interest income and net yield on interest-earning assets
$
46,064
2.66
$
42,714
2.63
(a)Represents securities which are tax-exempt for U.S. federal income tax purposes.
(b)Includes brokerage-related held-for-investment customer receivables, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated Balance Sheets.
(c)The rates reflect the impact of interest earned on cash collateral where the cash collateral has been netted against certain derivative payables.
(d)All other interest-bearing liabilities include brokerage-related customer payables.
(e)The combined balance of trading liabilities – debt and equity instruments was $183.2 billion and $148.5 billion for the six months ended June 30, 2024 and 2023, respectively.
(f)Interest includes the effect of certain related hedging derivatives. Taxable-equivalent amounts are used where applicable.
(g)The annualized rate for securities based on amortized cost was 3.68% and 2.85% for the six months ended June 30, 2024 and 2023, respectively, and does not give effect to changes in fair value that are reflected in AOCI.
193
GLOSSARY OF TERMS AND ACRONYMS
2023 Form 10-K: Annual report on Form 10-K for year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission.
ABS: Asset-backed securities
Active foreclosures: Loans referred to foreclosure where formal foreclosure proceedings are ongoing. Includes both judicial and non-judicial states.
AFS: Available-for-sale
Allowance for loan losses to total retained loans: represents period-end allowance for loan losses divided by retained loans.
Amortized cost: Amount at which a financing receivable or investment is originated or acquired, adjusted for accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, charge-offs, foreign exchange, and fair value hedge accounting adjustments. For AFS securities, amortized cost is also reduced by any impairment losses recognized in earnings. Amortized cost is not reduced by the allowance for credit losses, except where explicitly presented net.
AOCI: Accumulated other comprehensive income/(loss)
ARM(s): Adjustable rate mortgage(s)
AUC: “Assets under custody”: Represents assets held directly or indirectly on behalf of clients under safekeeping, custody and servicing arrangements.
Auto loan and lease origination volume: Dollar amount of auto loans and leases originated.
AWM: Asset & Wealth Management
Beneficial interests issued by consolidated VIEs:represents the interest of third-party holders of debt, equity securities, or other obligations, issued by VIEs that JPMorgan Chase consolidates.
BHC: Bank holding company
BWM: Banking & Wealth Management
Bridge Financing Portfolio: A portfolio of held-for-sale unfunded loan commitments and funded loans. The unfunded commitments include both short-term bridge loan commitments that will ultimately be replaced by longer term financing as well as term loan commitments. The funded loans include term loans and funded revolver facilities.
CCAR: Comprehensive Capital Analysis and Review
CCB: Consumer & Community Banking
CCP: Central Counterparty
CDS: Credit default swaps
CECL: Current Expected Credit Losses
CEO: Chief Executive Officer
CET1 capital: Common equity Tier 1 capital
CFO: Chief Financial Officer
CFTC: Commodity Futures Trading Commission
CIB: Commercial & Investment Bank
CIO: Chief Investment Office
Client assets: Represent assets under management as well as custody, brokerage, administration and deposit accounts.
Client deposits and other third-party liabilities: Deposits, as well as deposits that are swept to on-balance sheet liabilities (e.g., commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements) as part of client cash management programs.
Client investment assets: Represent assets under management as well as custody, brokerage and annuity accounts, and deposits held in investment accounts.
CLTV: Combined loan-to-value
CMT: Constant Maturity Treasury
Collateral-dependent: A loan is considered to be collateral-dependent when repayment of the loan is expected to be provided substantially through the operation or sale of thecollateral when the borrower is experiencing financial difficulty, including when foreclosure is deemed probable based on borrower delinquency.
Commercial Card: provides a wide range of payment services to corporate and public sector clients worldwide through the commercial card products. Services include procurement, corporate travel and entertainment, expense management services, and business-to-business payment solutions.
Credit derivatives:Financial instruments whose value is derived from the credit risk associated with the debt of a third-party issuer (the reference entity) which allow one party (the protection purchaser) to transfer that risk to another party (the protection seller). Upon the occurrence of a credit event by the reference entity, which may include, among other events, the bankruptcy or failure to pay its obligations, or certain restructurings of the debt of the reference entity, neither party has recourse to the reference entity. The protection purchaser has recourse to the protection seller for the difference between the face value of the CDS contract and the fair value at the time of settling the credit derivative contract. The determination as to whether a credit event has occurred is generally made by the relevant International Swaps and Derivatives Association (“ISDA”) Determinations Committee.
Criticized: Criticized loans, lending-related commitments and derivative receivables that are classified as special mention, substandard and doubtful categories for regulatory purposes and are generally consistent with a rating of CCC+/Caa1 and below, as defined by S&P and Moody’s.
CRR: Capital Requirements Regulation
CVA: Credit valuation adjustment
DVA: Debit valuation adjustment
194
EC: European Commission
Eligible HQLA: Eligible high-quality liquid assets, for purposes of calculating the LCR, is the amount of unencumbered HQLA that satisfy certain operational considerations as defined in the LCR rule.
Eligible LTD: Long-term debt satisfying certain eligibility criteria
Embedded derivatives: are implicit or explicit terms or features of a financial instrument that affect some or all of the cash flows or the value of the instrument in a manner similar to a derivative. An instrument containing such terms or features is referred to as a “hybrid.” The component of the hybrid that is the non-derivative instrument is referred to as the “host.” For example, callable debt is a hybrid instrument that contains a plain vanilla debt instrument (i.e., the host) and an embedded option that allows the issuer to redeem the debt issue at a specified date for a specified amount (i.e., the embedded derivative). However, a floating rate instrument is not a hybrid composed of a fixed-rate instrument and an interest rate swap.
EPS: Earnings per share
ERISA: Employee Retirement Income Security Act of 1974
ESG: Environmental, Social and Governance
ETD: “Exchange-traded derivatives”: Derivative contracts that are executed on an exchange and settled via a central clearing house.
EU: European Union
Expense categories:
•Volume- and/or revenue-related expenses generally correlate with changes in the related business/transaction volume or revenue. Examples of volume- and revenue-related expenses include commissions and incentive compensation, depreciation expense related to operating lease assets, and brokerage expense related to equities trading transaction volume.
•Investments include expenses associated with supporting medium- to longer-term strategic plans of the Firm. Examples of investments include initiatives in technology (including related compensation), marketing, and compensation for new bankers and client advisors.
•Structural expenses are those associated with the day-to-day cost of running the bank and are expenses not covered by the above two categories. Examples of structural expenses include employee salaries and benefits, as well as noncompensation costs such as real estate and all other expenses.
Fannie Mae: Federal National Mortgage Association
FASB: Financial Accounting Standards Board
FCA: Financial Conduct Authority
FDIC: Federal Deposit Insurance Corporation
FDM: "Financial difficulty modification" applies to loan modifications effective January 1, 2023, andis deemed to occur when the Firm modifies specific terms of the original loan agreement. The following types of modifications are
considered FDMs: principal forgiveness, interest rate reduction, other-than-insignificant payment deferral, term extension or a combination of these modifications.
Federal Reserve: The Board of the Governors of the Federal Reserve System
FFIEC: Federal Financial Institutions Examination Council
FHA: Federal Housing Administration
FHLB: Federal Home Loan Bank
FICO score: A measure of consumer credit risk based on information in consumer credit reports produced by Fair Isaac Corporation. Because certain aged data is excluded from credit reports based on rules in the Fair Credit Reporting Act, FICO scores may not reflect all historical information about a consumer.
FICC: Fixed Income Clearing Corporation
FINRA: Financial Industry Regulatory Authority
Firm: JPMorgan Chase & Co.
Forward points: represents the interest rate differential between two currencies, which is either added to or subtracted from the current exchange rate (i.e., “spot rate”) to determine the forward exchange rate.
Freddie Mac: Federal Home Loan Mortgage Corporation
Free-standing derivatives: is a derivative contract entered into either separate and apart from any of the Firm’s other financial instruments or equity transactions. Or, in conjunction with some other transaction and is legally detachable and separately exercisable.
FTE: Fully taxable-equivalent
FVA: Funding valuation adjustment
FX: Foreign exchange
G7: “Group of Seven nations”:Countries in the G7 are Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
G7 government securities:Securities issued by the government of one of the G7 nations.
Ginnie Mae: Government National Mortgage Association
GSIB: Global systemically important banks
HELOC: Home equity line of credit
Home equity – senior lien:represents loans and commitments where JPMorgan Chase holds the first security interest on the property.
Home equity – junior lien:represents loans and commitments where JPMorgan Chase holds a security interest that is subordinate in rank to other liens.
HQLA: High-quality liquid assets
HTM: Held-to-maturity
IBOR: Interbank Offered Rate
IDI: Insured depository institutions
IHC: JPMorgan Chase Holdings LLC, an intermediate holding company
Investment-grade:An indication of credit quality based on
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JPMorgan Chase’s internal risk assessment system. “Investment grade” generally represents a risk profile similar to a rating of a “BBB-”/“Baa3” or better, as defined by independent rating agencies.
IPO: Initial Public Offering
IR: Interest rate
ISDA: International Swaps and Derivatives Association
JPMorgan Chase: JPMorgan Chase & Co.
JPMorgan Chase Bank, N.A.: JPMorgan Chase Bank, National Association
JPMorgan Chase Foundation or Foundation: a not-for-profit organization that makes contributions for charitable and educational purposes.
J.P. Morgan Securities: J.P. Morgan Securities LLC
JPMSE: J.P. Morgan SE
LCR: Liquidity coverage ratio
LIBOR: London Interbank Offered Rate
LLC:Limited Liability Company
LOB: Line of business
LTV: “Loan-to-value ratio”: For residential real estate loans, the relationship, expressed as a percentage, between the principal amount of a loan and the appraised value of the collateral (i.e., residential real estate) securing the loan.
Origination date LTV ratio
The LTV ratio at the origination date of the loan. Origination date LTV ratios are calculated based on the actual appraised values of collateral (i.e., loan-level data) at the origination date.
Current estimated LTV ratio
An estimate of the LTV as of a certain date. The current estimated LTV ratios are calculated using estimated collateral values derived from a nationally recognized home price index measured at the metropolitan statistical area (“MSA”) level. These MSA-level home price indices consist of actual data to the extent available and forecasted data where actual data is not available. As a result, the estimated collateral values used to calculate these ratios do not represent actual appraised loan-level collateral values; as such, the resulting LTV ratios are necessarily imprecise and should therefore be viewed as estimates.
Combined LTV ratio
The LTV ratio considering all available lien positions, as well as unused lines, related to the property. Combined LTV ratios are used for junior lien home equity products.
Macro businesses: the macro businesses include Rates, Currencies and Emerging Markets, Fixed Income Financing and Commodities in CIB's Fixed Income Markets.
Managed basis: A non-GAAP presentation of Firmwide financial results that includes reclassifications to present revenue on a fully taxable-equivalent basis. Management also uses this financial measure at the segment level, because it believes this provides information to enable
investors to understand the underlying operational performance and trends of the particular business segment and facilitates a comparison of the business segment with the performance of competitors.
Markets: consists of CIB's Fixed Income Markets and Equity Markets businesses.
Master netting agreement: A single agreement with a counterparty that permits multiple transactions governed by that agreement to be terminated or accelerated and settled through a single payment in a single currency in the event of a default (e.g., bankruptcy, failure to make a required payment or securities transfer or deliver collateral or margin when due).
MBS: Mortgage-backed securities
MD&A: Management’s discussion and analysis
Measurement alternative: Measures equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from an identical or similar investment of the same issuer.
Merchant Services: offers merchants payment processing capabilities, fraud and risk management, data and analytics, and other payments services. Through Merchant Services, merchants of all sizes can accept payments via credit and debit cards and payments in multiple currencies.
MEV: Macroeconomic variable
Moody’s: Moody’s Investor Services
Mortgage product types:
Alt-A
Alt-A loans are generally higher in credit quality than subprime loans but have characteristics that would disqualify the borrower from a traditional prime loan. Alt-A lending characteristics may include one or more of the following: (i) limited documentation; (ii) a high CLTV ratio; (iii) loans secured by non-owner occupied properties; or (iv) a debt-to-income ratio above normal limits. A substantial proportion of the Firm’s Alt-A loans are those where a borrower does not provide complete documentation of his or her assets or the amount or source of his or her income.
Option ARMs
The option ARM real estate loan product is an adjustable-rate mortgage loan that provides the borrower with the option each month to make a fully amortizing, interest-only or minimum payment. The minimum payment on an option ARM loan is based on the interest rate charged during the introductory period. This introductory rate is usually significantly below the fully indexed rate. The fully indexed rate is calculated using an index rate plus a margin. Once the introductory period ends, the contractual interest rate charged on the loan increases to the fully indexed rate and adjusts monthly to reflect movements in the index. The minimum payment is typically insufficient to cover interest accrued in the prior month, and any unpaid interest is deferred and added to the principal balance of the loan. Option ARM loans are subject to payment recast, which
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converts the loan to a variable-rate fully amortizing loan upon meeting specified loan balance and anniversary date triggers.
Prime
Prime mortgage loans are made to borrowers with good credit records who meet specific underwriting requirements, including prescriptive requirements related to income and overall debt levels. New prime mortgage borrowers provide full documentation and generally have reliable payment histories.
Subprime
Subprime loans are loans that, prior to mid-2008, were offered to certain customers with one or more high risk characteristics, including but not limited to: (i) unreliable or poor payment histories; (ii) a high LTV ratio of greater than 80% (without borrower-paid mortgage insurance); (iii) a high debt-to-income ratio; (iv) an occupancy type for the loan is other than the borrower’s primary residence; or (v) a history of delinquencies or late payments on the loan.
MREL: Minimum requirements for own funds and eligible liabilities
MSR: Mortgage servicing rights
NA:Data is not applicable or available for the period presented.
Net Capital Rule: Rule 15c3-1 under the Securities Exchange Act of 1934.
Net charge-off/(recovery) rate: represents net charge-offs/(recoveries) (annualized) divided by average retained loans for the reporting period.
Net interchange income includes the following components:
•Interchange income: Fees earned by credit and debit card issuers on sales transactions.
•Rewards costs: The cost to the Firm for points earned by cardholders enrolled in credit card rewards programs generally tied to sales transactions.
•Partner payments: Payments to co-brand credit card partners based on the cost of loyalty program rewards earned by cardholders on credit card transactions.
Net yield on interest-earning assets: The average rate for interest-earning assets less the average rate paid for all sources of funds.
NFA: National Futures Association
NM:Not meaningful
Nonaccrual loans: Loans for which interest income is not recognized on an accrual basis. Loans (other than credit card loans and certain consumer loans insured by U.S. government agencies) are placed on nonaccrual status when full payment of principal and interest is not expected, regardless of delinquency status, or when principal and interest has been in default for a period of 90 days or more unless the loan is both well-secured and in the process of collection. Collateral-dependent loans are typically
maintained on nonaccrual status.
Nonperforming assets: Nonperforming assets include nonaccrual loans, nonperforming derivatives and certain assets acquired in loan satisfactions, predominantly real estate owned and other commercial and personal property.
NSFR: Net Stable Funding Ratio
OCC: Office of the Comptroller of the Currency
OCI: Other comprehensive income/(loss)
OPEB: Other postretirement employee benefit
OTC: “Over-the-counter derivatives”:Derivative contracts that are negotiated, executed and settled bilaterally between two derivative counterparties, where one or both counterparties is a derivatives dealer.
OTC cleared: “Over-the-counter cleared derivatives”:Derivative contracts that are negotiated and executed bilaterally, but subsequently settled via a central clearing house, such that each derivative counterparty is only exposed to the default of that clearing house.
Overhead ratio: Noninterest expense as a percentage of total net revenue.
Parent Company: JPMorgan Chase & Co.
Participating securities: represents unvested share-based compensation awards containing nonforfeitable rights to dividends or dividend equivalents (collectively, “dividends”), which are included in the earnings per share calculation using the two-class method. JPMorgan Chase grants restricted stock and RSUs to certain employees under its share-based compensation programs, which entitle the recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities, based on their respective rights to receive dividends.
PCD: “Purchased credit deteriorated” assets represent acquired financial assets that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Firm.
Pillar 1: The Basel framework consists of a three “Pillar” approach. Pillar 1 establishes minimum capital requirements, defines eligible capital instruments, and prescribes rules for calculating RWA.
Pillar 3: The Basel framework consists of a three “Pillar” approach. Pillar 3 encourages market discipline through disclosure requirements which allow market participants to assess the risk and capital profiles of banks.
PPP: Paycheck Protection Program under the Small Business Association (“SBA”)
PRA: Prudential Regulation Authority
Preferred stock dividends: reflects dividends declared and deemed dividends upon redemption of preferred stock
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Pre-provision profit/(loss): represents total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.
Principal transactions revenue:Principal transactions revenue is driven by many factors, including the bid-offer spread, which is the difference between the price at which the Firm is willing to buy a financial or other instrument and the price at which the Firm is willing to sell that instrument. It also consists of realized (as a result of closing out or termination of transactions, or interim cash payments) and unrealized (as a result of changes in valuation) gains and losses on financial and other instruments (including those accounted for under the fair value option) primarily used in client-driven market-making activities and on private equity investments. In connection with its client-driven market-making activities, the Firm transacts in debt and equity instruments, derivatives and commodities (including physical commodities inventories and financial instruments that reference commodities). Principal transactions revenue also includes certain realized and unrealized gains and losses related to hedge accounting and specified risk-management activities, including: (a) certain derivatives designated in qualifying hedge accounting relationships (primarily fair value hedges of commodity and foreign exchange risk), (b) certain derivatives used for specific risk management purposes, primarily to mitigate credit risk and foreign exchange risk, and (c) other derivatives.
PSU(s): Performance share units
Regulatory VaR: Daily aggregated VaR calculated in accordance with regulatory rules.
REO: Real estate owned
Reported basis: Financial statements prepared under U.S. GAAP, which excludes the impact of taxable-equivalent adjustments.
Retained loans:Loans that are held-for-investment (i.e. excludes loans held-for-sale and loans at fair value).
Revenue wallet: Total fee revenue based on estimates of investment banking fees generated across the industry (i.e., the revenue wallet) from investment banking transactions in M&A, equity and debt underwriting, and loan syndications. Source: Dealogic, a third-party provider of investment banking competitive analysis and volume based league tables for the above noted industry products.
RHS: Rural Housing Service of the U.S. Department of Agriculture
ROE: Return on equity
ROTCE: Return on tangible common equity
ROU assets: Right-of-use assets
RSU(s): Restricted stock units
RWA: “Risk-weighted assets”:Basel III establishes two comprehensive approaches for calculating RWA (a Standardized approach and an Advanced approach) which
include capital requirements for credit risk, market risk, and in the case of Basel III Advanced, also operational risk. Key differences in the calculation of credit risk RWA between the Standardized and Advanced approaches are that for Basel III Advanced, credit risk RWA is based on risk-sensitive approaches which largely rely on the use of internal credit models and parameters, whereas for Basel III Standardized, credit risk RWA is generally based on supervisory risk-weightings which vary primarily by counterparty type and asset class. Market risk RWA is calculated on a generally consistent basis between Basel III Standardized and Basel III Advanced.
S&P: Standard and Poors
SA-CCR: Standardized Approach for Counterparty Credit Risk
SAR as it pertains to Hong Kong: Special Administrative Region
SAR(s) as it pertains to employee stock awards: Stock appreciation rights
SCB:Stress capital buffer
Scored portfolios: Consumer loan portfolios that predominantly include residential real estate loans, credit card loans, auto loans to individuals and certain small business loans.
SEC: U.S. Securities and Exchange Commission
Securitized Products Group: Comprised of Securitized Products and tax-oriented investments.
Seed capital: Initial JPMorgan capital invested in products, such as mutual funds, with the intention of ensuring the fund is of sufficient size to represent a viable offering to clients, enabling pricing of its shares, and allowing the manager to develop a track record. After these goals are achieved, the intent is to remove the Firm’s capital from the investment.
Shelf securities: Securities registered with the SEC under a shelf registration statement that have not been issued, offered or sold. These securities are not included in league tables until they have actually been issued.
Single-name: Single reference-entities
SLR: Supplementary leverage ratio
SMBS: Stripped Mortgage-Backed Securities
SOFR: Secured Overnight Financing Rate
SPEs: Special purpose entities
Structural interest rate risk: represents interest rate risk of the non-trading assets and liabilities of the Firm.
Structured notes: Structured notes are financial instruments whose cash flows are linked to the movement in one or more indexes, interest rates, foreign exchange rates, commodities prices, prepayment rates, underlying reference pool of loans or other market variables. The notes typically contain embedded (but not separable or detachable) derivatives. Contractual cash flows for principal, interest, or both can vary in amount and timing
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throughout the life of the note based on non-traditional indexes or non-traditional uses of traditional interest rates or indexes.
Suspended foreclosures: Loans referred to foreclosure where formal foreclosure proceedings have started but are currently on hold, which could be due to bankruptcy or loss mitigation. Includes both judicial and non-judicial states.
Taxable-equivalent basis: In presenting managed results, the total net revenue for each of the business segments and the Firm is presented on a tax-equivalent basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities; the corresponding income tax impact related to tax-exempt items is recorded within income tax expense.
TBVPS: Tangible book value per share
TCE: Tangible common equity
TDR: “Troubled debt restructuring” applies to loan modifications granted prior to January 1, 2023 and is deemed to occur when the Firm modifies the original terms of a loan agreement by granting a concession to a borrower that is experiencing financial difficulty. Loans with short-term and other insignificant modifications that are not considered concessions are not TDRs.
TLAC: Total Loss Absorbing Capacity
U.K.: United Kingdom
U.S.: United States of America
U.S. GAAP:Accounting principles generally accepted in the United States of America.
U.S. government agencies: U.S. government agencies include, but are not limited to, agencies such as Ginnie Mae and FHA, and do not include Fannie Mae and Freddie Mac which are U.S. government-sponsored enterprises (“U.S. GSEs”). In general, obligations of U.S. government agencies are fully and explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government in the event of a default.
U.S. GSE(s): “U.S. government-sponsored enterprises” are quasi-governmental, privately-held entities established or chartered by the U.S. government to serve public purposes as specified by the U.S. Congress to improve the flow of credit to specific sectors of the economy and provide certain essential services to the public. U.S. GSEs include Fannie Mae and Freddie Mac, but do not include Ginnie Mae or FHA. U.S. GSE obligations are not explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government.
U.S. Treasury:U.S. Department of the Treasury
Unaudited: Financial statements and/or information that have not been subject to auditing procedures by an independent registered public accounting firm.
VA: U.S. Department of Veterans Affairs
VaR: “Value-at-risk” is a measure of the dollar amount of potential loss from adverse market moves in an ordinary market environment.
VIEs: Variable interest entities
Warehouse loans:consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as loans.
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LINE OF BUSINESS METRICS
CONSUMER & COMMUNITY BANKING (“CCB”)
Debit and credit card sales volume: Dollar amount of card member purchases, net of returns.
Deposit margin: Represents net interest income expressed as a percentage of average deposits.
Home Lending Production and Home Lending Servicing revenue comprises the following:
Net mortgage servicing revenue: Includes operating revenue earned from servicing third-party mortgage loans, which is recognized over the period in which the service is provided; changes in the fair value of MSRs; the impact of risk management activities associated with MSRs; and gains and losses on securitization of excess mortgage servicing. Net mortgage servicing revenue also includes gains and losses on sales and lower of cost or fair value adjustments of certain repurchased loans insured by U.S. government agencies.
Production revenue: Includes fees and income recognized as earned on mortgage loans originated with the intent to sell, and the impact of risk management activities associated with the mortgage pipeline and warehouse loans. Production revenue also includes gains and losses on sales and lower of cost or fair value adjustments on mortgage loans held-for-sale (excluding certain repurchased loans insured by U.S. government agencies), and changes in the fair value of financial instruments measured under the fair value option.
Mortgage origination channels comprise the following:
Retail: Borrowers who buy or refinance a home through direct contact with a mortgage banker employed by the Firm using a branch office, the Internet or by phone. Borrowers are frequently referred to a mortgage banker by a banker in a Chase branch, real estate brokers, home builders or other third parties.
Correspondent: Banks, thrifts, other mortgage banks and other financial institutions that sell closed loans to the Firm.
Card Services: is a business that primarily issues credit cards to consumers and small businesses.
Net revenue rate: Represents Card Services net revenue (annualized) expressed as a percentage of average loans for the period.
Auto loan and lease origination volume: Dollar amount of auto loans and leases originated.
Commercial & Investment Bank (“CIB”)
Definition of selected CIB revenue:
Investment Banking: Includes investment banking fees as well as other revenues associated with investment banking activities and services including advising on corporate strategy and structure, and capital-raising in equity and debt markets.
Payments: reflects revenue from cash management solutions, including services that enable clients to manage payments globally across liquidity and account solutions, commerce solutions, clearing, trade and working capital.
Lending: includes revenue from a variety of financing alternatives, which includes on a secured basis.
Other: includes tax-equivalent adjustments generated from Community Development Banking and activity derived from principal transactions.
Fixed Income Markets: primarily includes revenue related to market-making and lending across global fixed income markets, including foreign exchange, interest rate, credit and commodities markets.
Equity Markets: primarily includes revenue related to market-making and lending across global equity markets, including cash, derivative and prime brokerage products.
Securities Services: revenues are primarily generated from net interest income, asset based fees, and transaction based fees. Our core product offering is organized into four key areas: custody, fund services, liquidity and trading services, and data solutions. These services are marketed primarily to institutional investors.
Description of certain business metrics:
Assets under custody (“AUC”): represents activities associated with the safekeeping and servicing of assets on which Securities Services earns fees.
Investment banking fees: represents advisory, equity underwriting, bond underwriting and loan syndication fees.
Description of CIB client coverage segment for Banking and Payments revenue:
Global Corporate Banking & Global Investment Banking: provides banking products and services generally to large corporations, financial institutions and merchants.
Commercial Banking: provides banking products and services generally to middle market clients, including start-ups, small and mid-sized companies, local governments, municipalities, and nonprofits, as well as to commercial real estate clients.
Other: includes amounts related to credit protection purchased against certain retained loans and lending-related commitments in Lending, the impact of equity investments in Payments and revenues not aligned with a primary client coverage segment.
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ASSET & WEALTH MANAGEMENT (“AWM”)
Assets under management (“AUM”): represent assets managed by AWM on behalf of its Private Banking, Global Institutional and Global Funds clients. Includes “Committed capital not Called.”
Client assets: represent assets under management, as well as custody, brokerage, administration and deposit accounts.
Multi-asset: Any fund or account that allocates assets under management to more than one asset class.
Alternative assets: The following types of assets constitute alternative investments – hedge funds, currency, real estate, private equity and other investment funds designed to focus on nontraditional strategies.
AWM’s lines of business consist of the following:
Asset Management: offers multi-asset investment management solutions across equities, fixed income, alternatives and money market funds to institutional and retail investors providing for a broad range of clients’ investment needs.
Global Private Bank: provides retirement products and services, brokerage, custody, trusts and estates, loans, mortgages, deposits and investment management to high net worth clients.
AWM’s client segments consist of the following:
Private Banking: clients include high- and ultra-high-net-worth individuals, families, money managers and business owners.
Global Institutional: clients include both corporate and public institutions, endowments, foundations, nonprofit organizations and governments worldwide.
Global Funds: clients include financial intermediaries and individual investors.
Asset Management has two high-level measures of its overall fund performance:
Percentage of active mutual fund and active ETF assets under management in funds rated 4- or 5-star: Mutual fund rating services rank funds based on their risk-adjusted performance over various periods. A 5-star rating is the best rating and represents the top 10% of industry-wide ranked funds. A 4-star rating represents the next 22.5% of industry-wide ranked funds. A 3-star rating represents the next 35% of industry-wide ranked funds. A 2-star rating represents the next 22.5% of industry-wide ranked funds. A 1-star rating is the worst rating and represents the bottom 10% of industry-wide ranked funds. An overall Morningstar rating is derived from a weighted average of the performance associated with a fund’s three-, five- and ten- year (if applicable) Morningstar Rating metrics. For U.S.-domiciled funds, separate star ratings are provided at the individual share class level. The Nomura “star rating” is based on three-year risk-adjusted performance only. Funds with fewer than three years of history are not rated and hence excluded from these rankings. All ratings, the
assigned peer categories and the asset values used to derive these rankings are sourced from the applicable fund rating provider. Where applicable, the fund rating providers redenominate asset values into U.S. dollars. The percentage of AUM is based on star ratings at the share class level for U.S.-domiciled funds, and at a “primary share class” level to represent the star rating of all other funds, except for Japan, for which Nomura provides ratings at the fund level. The performance data may have been different if all share classes had been included. Past performance is not indicative of future results.
Percentage of active mutual fund and active ETF assets under management in funds ranked in the 1st or 2nd quartile (one, three, and five years): All quartile rankings, the assigned peer categories and the asset values used to derive these rankings are sourced from the fund rating providers. Quartile rankings are based on the net-of-fee absolute return of each fund. Where applicable, the fund rating providers redenominate asset values into U.S. dollars. The percentage of AUM is based on fund performance and associated peer rankings at the share class level for U.S.-domiciled funds, at a “primary share class” level to represent the quartile ranking for U.K., Luxembourg and Hong Kong funds and at the fund level for all other funds. The performance data may have been different if all share classes had been included. Past performance is not indicative of future results.
“Primary share class” means the C share class for European funds and Acc share class for Hong Kong and Taiwan funds. If these share classes are not available, the oldest share class is used as the primary share class.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Refer to the Market Risk Management section of Management’s discussion and analysis and pages 135–143 of JPMorgan Chase’s 2023 Form 10-K for a discussion of the quantitative and qualitative disclosures about market risk.
Item 4. Controls and Procedures.
As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of the Firm’s management, including its Chairman and Chief Executive Officer and its Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chairman and Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective. Refer to Exhibits 31.1 and 31.2 for the Certifications furnished by the Chairman and Chief Executive Officer and Chief Financial Officer, respectively.
The Firm is committed to maintaining high standards of internal control over financial reporting. Nevertheless, because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Deficiencies or lapses in internal controls may occur from time to time, and there can be no assurance that any such deficiencies will not result in significant deficiencies or material weaknesses in internal control in the future and collateral consequences therefrom. Refer to “Management’s report on internal control over financial reporting” on page 162 of JPMorgan Chase’s 2023 Form 10-K for further information. There was no change in the Firm’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the three months ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Firm’s internal control over financial reporting.
Part II – Other Information
Item 1. Legal Proceedings.
Refer to the discussion of the Firm’s material legal proceedings in Note 24 of this Form 10-Q for information that updates the disclosures set forth under Part I, Item 3: Legal Proceedings, in JPMorgan Chase’s 2023 Form 10-K.
Item 1A. Risk Factors.
Refer to Part I, Item 1A: Risk Factors on pages 9-33 of JPMorgan Chase’s 2023 Form 10-K and Forward-Looking Statements on page 90of this Form 10-Q for a discussion of certain risk factors affecting the Firm.
Supervision and regulation
Refer to the Supervision and regulation section on pages 4–8 of JPMorgan Chase’s 2023 Form 10-K for information on Supervision and Regulation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Repurchases under the common share repurchase program
Refer to Capital Risk Management on pages 45-50 of this Form 10-Q and pages 91-101 of JPMorgan Chase’s 2023 Form 10-K for information regarding repurchases under the Firm’s common share repurchase program.
On June 28, 2024, the Firm announced that its Board of Directors had authorized a new $30 billion common share repurchase program, effective July 1, 2024. Through June 30, 2024, the Firm was authorized to purchase up to $30 billion of common shares under its previously-approved common share repurchase program that was announced on April 13, 2022.
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Shares repurchased pursuant to the common share repurchase program during the six months ended June 30, 2024 were as follows:
Six months ended June 30, 2024
Total number of shares of common stock repurchased
Average price paid per share of common stock(a)
Aggregate purchase price of common stock repurchases
(in millions)(a)
Dollar value of remaining authorized repurchase
(in millions)(a)(b)
First quarter
15,869,936
$
179.50
$
2,849
$
16,886
April
4,306,651
$
191.55
$
824
$
16,062
May
12,727,717
198.35
2,525
13,537
June
9,985,362
197.17
1,969
11,568
Second quarter
27,019,730
$
196.83
$
5,318
$
11,568
Year-to-date
42,889,666
$
190.42
$
8,167
$
11,568
(a)Excludes excise tax and commissions. As part of the Inflation Reduction Act of 2022, a 1% excise tax was imposed on net share repurchases effective January 1, 2023.
(b)Represents the amount remaining under the $30 billion repurchase program.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Trading arrangements
During the second quarter of 2024, no director or officer who is subject to the filing requirements of Section 16 of the Securities Exchange Act of 1934 ("Section 16 Director or Officer") adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (each, as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934). Certain of the Firm's Section 16 Directors or Officers may participate in employee stock purchase plans, 401(k) plans or dividend reinvestment plans of the Firm that have been designed to comply with Rule 10b5-1(c).
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
(a)Filed herewith.
(b)Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
(c)Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Firm’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated statements of income (unaudited) for the three and six months ended June 30, 2024 and 2023, (ii) the Consolidated statements of comprehensive income (unaudited) for the three and six months ended June 30, 2024 and 2023, (iii) the Consolidated balance sheets (unaudited) as of June 30, 2024 and December 31, 2023, (iv) the Consolidated statements of changes in stockholders’ equity (unaudited) for the three and six months ended June 30, 2024 and 2023, (v) the Consolidated statements of cash flows (unaudited) for the six months ended June 30, 2024 and 2023, and (vi) the Notes to Consolidated Financial Statements (unaudited).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
