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JPMORGAN CHASE & CO - Annual Report: 2022 (Form 10-K)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year endedCommission file
December 31, 2022number 1-5805
JPMorgan Chase & Co.
(Exact name of registrant as specified in its charter)
Delaware13-2624428
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer
identification no.)
383 Madison Avenue,
New York,New York10179
(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (212) 270-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockJPMThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 5.75% Non-Cumulative Preferred Stock, Series DD
JPM PR DThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 6.00% Non-Cumulative Preferred Stock, Series EE
JPM PR CThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.75% Non-Cumulative Preferred Stock, Series GGJPM PR JThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.55% Non-Cumulative Preferred Stock, Series JJJPM PR KThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.625% Non-Cumulative Preferred Stock, Series LLJPM PR LThe New York Stock Exchange
Depositary Shares, each representing a one-four hundredth interest in a share of 4.20% Non-Cumulative Preferred Stock, Series MMJPM PR MThe New York Stock Exchange
Alerian MLP Index ETNs due May 24, 2024AMJNYSE Arca, Inc.
Guarantee of Callable Fixed Rate Notes due June 10, 2032 of JPMorgan Chase Financial Company LLCJPM/32The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer

Non-accelerated filerSmaller reporting companyEmerging 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of JPMorgan Chase & Co. common stock held by non-affiliates as of June 30, 2022: $327,588,442,114
Number of shares of common stock outstanding as of January 31, 2023: 2,943,355,459
Documents incorporated by reference: Portions of the registrant’s Proxy Statement for the annual meeting of stockholders to be held on May 16, 2023, are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.



Form 10-K Index
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Part I

Item 1. Business.
Overview
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”, 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 $3.7 trillion in assets and $292.3 billion in stockholders’ equity as of December 31, 2022. 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.
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 is not incorporated by reference into this Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K” or “Form 10-K”) or the Firm’s other filings with the SEC. The Firm has adopted, and posted on its website, a Code of Conduct for all employees of the Firm and a Code of Ethics for its Chairman and Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and all other professionals of the Firm worldwide serving in a finance, accounting, treasury, tax or investor relations role. The Code of Ethics is also available in print upon request to the Firm’s Investor Relations team. Within the time period required by the SEC, JPMorgan Chase will post on its website any amendment to the Code of Ethics and any waiver applicable to a director or executive officer.

Business segments
For management reporting purposes, JPMorgan Chase’s activities are organized into four major 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 business segments are the Corporate & Investment Bank (“CIB”), Commercial Banking (“CB”), and Asset & Wealth Management (“AWM”).
A description of the Firm’s business segments and the products and services they provide to their respective client bases is provided in the “Business segment results” section of Management’s discussion and analysis of financial condition and results of operations (“Management’s discussion and analysis” or “MD&A”), beginning on page 46 and in Note 32.
Competition
JPMorgan Chase and its subsidiaries and affiliates operate in highly competitive environments. Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, commodity trading companies, private equity firms, insurance companies, mutual fund companies, investment managers, credit card companies, mortgage banking companies, trust companies, securities processing companies, automobile financing companies, leasing companies, e-commerce and other internet-based companies, financial technology companies, and other companies engaged in providing similar as well as new products and services. The Firm’s businesses generally compete on the basis of the quality and variety of the Firm’s products and services, transaction execution, innovation, reputation and price. Competition also varies based on the types of clients, customers, industries and geographies served. With respect to some of its geographies and products, JPMorgan Chase competes globally; with respect to others, the Firm competes on a national or regional basis. New competitors in the financial services industry continue to emerge, including firms that offer products and services solely through the internet and non-financial companies that offer products and services that disintermediate traditional banking products and services offered by financial services firms such as JPMorgan Chase.







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Part I
Human capital
JPMorgan Chase believes that its long-term growth and success depend on its ability to attract, develop and retain a high-performing and diverse workforce, with inclusion and accessibility as key components of the way the Firm does business. The information provided below relates to JPMorgan Chase’s full-time and part-time employees and does not include the Firm’s contractors.
Global workforce
As of December 31, 2022, JPMorgan Chase had 293,723 employees globally, an increase of 22,698 employees from the prior year. The increase was primarily attributable to additional employees in technology and operations, as well as front office. The Firm’s employees are located in 63 countries, with over 60% of the Firm’s employees located in the U.S. The following table presents the distribution of the Firm’s global workforce by region and by line of business (“LOB”) and Corporate as of December 31, 2022:
Employee Breakdown by RegionEmployee Breakdown by LOB and Corporate
RegionEmployeesLOBEmployees
North America178,599CCB135,347
Asia-Pacific82,696CIB73,452
Europe/Middle East/Africa27,514CB14,687
Latin America/Caribbean4,914AWM26,041
Total Firm293,723Corporate44,196
Total Firm293,723
Diversity, equity and inclusion
In connection with its diversity initiatives, the Firm periodically requests that its employees and Board members self-identify based on specified diversity categories. The following table presents information on self-identifications as of December 31, 2022. Information on race/ethnicity of employees is categorized based on Equal Employment Opportunity (“EEO”) classifications and is presented for U.S. employees who self-identified, and information on gender is presented for global employees who self-identified. Information on race/ethnicity and gender for members of the Operating Committee and the Board of Directors reflects all such members. Information on LGBTQ+ and veteran statuses is based on U.S. employees, and all members of the Operating Committee and the Board of Directors. Information on disability status is based on all U.S. employees and all members of the Operating Committee.
December 31, 2022Total
employees
Senior level employees(e)
Operating Committee
Board of Directors(f)
Race/Ethnicity(a):
White44 %75 %83 %91 %
Hispanic21 %%11 %— 
Asian18 %12 %%— 
Black14 %%— %
Other(b)
%%— — 
Gender(c):
Men51 %73 %61 %64 %
Women49 %27 %39 %36 %
LGBTQ+(d)
%%%— 
Military veterans(d)
%%— %
People with disabilities(d)
%%— — (g)
(a)Based on EEO metrics. Presented as a percentage of the respective populations who self-identified race/ethnicity, which was 96% and 95% of the Firm’s total U.S.-based employees and U.S.-based senior level employees, respectively, and all members of the Operating Committee and the Board of Directors. Information for the Operating Committee include one member who is based outside of the U.S.
(b)Other includes American Indian or Alaskan Native, Native Hawaiian or Other Pacific Islander, and two or more races/ethnicities.
(c)Presented as a percentage of the respective populations who self-identified gender, which was 98% of the Firm’s total global employees and 99% of the Firm’s global senior level employees, and all members of the Operating Committee and the Board of Directors.
(d)Presented as a percentage of total U.S.-based employees, total U.S.-based senior level employees, all members of the Operating Committee, and all members of the Board of Directors, respectively.
(e)Senior level employees represents employees with the titles of Managing Director and above.
(f)Excludes Alicia Boler Davis, who was elected to the Firm’s Board of Directors, effective March 20, 2023.
(g)The Firm did not request members of the Board of Directors to self-identify disability status.
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Firm culture
The foundations of JPMorgan Chase’s culture are its core values and How We Do Business Principles, which are fundamental to the Firm’s success and are represented by four central corporate tenets: exceptional client service; operational excellence; a commitment to integrity, fairness and responsibility; and cultivation of a great team and winning culture. The Firm maintains its focus on its culture of inclusion and respect, which is reinforced by its Code of Conduct and by increasing employee awareness, education, communication and training. An important part of these efforts includes the Firm’s Business Resource Groups, which are groups of employees who support JPMorgan Chase’s diversity, equity and inclusion strategies by leveraging the unique perspectives of their members. The Firm has global Diversity, Equity & Inclusion centers of excellence that lead the Firm’s strategy in supporting its commitments to create more equity and lasting impact in communities, and strengthen its inclusive culture.
Attracting and retaining employees
The goal of JPMorgan Chase’s recruitment efforts is to attract and hire talented individuals in all roles and at all career levels. The Firm strives to provide both external candidates and internal employees who are seeking a different role with challenging and stimulating career opportunities. These opportunities range from internship training programs for students to entry-level, management and executive careers. During 2022, approximately two-thirds of the Firm’s employment opportunities were filled by external candidates, with the remainder filled by existing employees. In addition, depending on business needs, and where appropriate, the Firm has implemented hybrid work models which include a mix of on-site and remote work for certain roles.
Diversity is an important area of focus throughout the Firm’s hiring process. JPMorgan Chase engages in efforts aimed at hiring diverse talent, including initiatives focused on gender, underrepresented ethnic groups, LGBTQ+ individuals, people with disabilities, veterans and others. The Firm’s global Diversity, Equity & Inclusion centers of excellence seek to increase representation of and advance career opportunities for talented diverse individuals across the Firm through initiatives such as career coaching and mentorship.
JPMorgan Chase offers a competitive fellowship program that seeks to attract accomplished individuals who have taken a career break and wish to return to the workforce. In addition, and where appropriate, the Firm’s hiring practices focus on the skills of a job candidate rather than degrees held.
Developing employees
JPMorgan Chase supports the professional development and career growth of its employees. An onboarding training curriculum is required for new hires, which covers, among other topics, compliance with the Firm’s Code of Conduct and information concerning Firm policies and standards,
including those relating to cybersecurity. In addition, the Firm offers extensive training programs and educational resources to all employees, covering a broad variety of topics such as leadership, change management, analytical thinking, culture and conduct, diversity, equity and inclusion, and risk and controls. Leadership Edge, the Firm’s global leadership and management development center of excellence, is focused on creating one Firmwide leadership culture.
Compensation and benefits
The Firm provides market-competitive compensation and benefits programs. JPMorgan Chase’s compensation philosophy includes guiding principles that drive compensation-related decisions across the Firm, and includes: pay-for-performance practices designed to attract and retain top talent; responsiveness and alignment with shareholder interests; and reinforcement of the Firm’s culture and How We Do Business Principles, including the integration of risk, controls and conduct considerations. The Firm’s commitment to diversity, equity and inclusion for all employees includes compensation review processes that seek to ensure that the Firm’s employees are paid equitably and competitively for the work they do.
The Firm also supports employees’ well-being. JPMorgan Chase offers an extensive benefits and wellness package to employees and their families, including healthcare coverage, retirement benefits, life and disability insurance, on-site health and wellness centers, counseling and resources related to mental health, employee assistance programs, competitive vacation and leave policies, backup child care arrangements, tuition reimbursement programs, and financial coaching. In 2022, the Firm implemented or announced enhancements to certain health and wellness benefits for U.S. employees, including expanded medical plan coverage and paid time off policies related to parental, critical caregiving and bereavement leaves.
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Part I
Supervision and regulation
The Firm is subject to extensive and comprehensive regulation under U.S. federal and state laws, as well as the applicable laws of the jurisdictions outside the U.S. in which the Firm does business.
Financial holding company:
Consolidated supervision. JPMorgan Chase & Co. is a bank holding company (“BHC”) and a financial holding company (“FHC”) under U.S. federal law, and is subject to comprehensive consolidated supervision, regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Federal Reserve acts as the supervisor of the consolidated operations of BHCs. Certain of JPMorgan Chase’s subsidiaries are also regulated directly by additional authorities based on the activities or licenses of those subsidiaries.
JPMorgan Chase’s national bank subsidiary, JPMorgan Chase Bank, N.A., is supervised and regulated by the Office of the Comptroller of the Currency (“OCC”) and, with respect to certain matters, by the Federal Deposit Insurance Corporation (the “FDIC”).
JPMorgan Chase’s U.S. broker-dealers are supervised and regulated by the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”). Subsidiaries of the Firm that engage in certain futures-related and swaps-related activities are supervised and regulated by the Commodity Futures Trading Commission (“CFTC”). J.P. Morgan Securities plc is a U.K.-based bank regulated by the U.K. Prudential Regulation Authority (the “PRA”) and the U.K. Financial Conduct Authority (“FCA”).
JPMSE is a Germany-based credit institution regulated by the European Central Bank (“ECB”) as well as the local regulators in each of the countries in which it operates. The Firm’s other non-U.S. subsidiaries are regulated by the banking, securities, prudential and conduct regulatory authorities, as applicable, in the countries in which they operate.
Permissible business activities. The Bank Holding Company Act restricts BHCs from engaging in business activities other than the business of banking and certain closely-related activities. FHCs are permitted to engage in a broader range of financial activities. The Federal Reserve has the authority to limit an FHC’s ability to conduct otherwise permissible activities if the FHC or any of its depository institution subsidiaries ceases to meet applicable eligibility requirements. The Federal Reserve may also impose corrective capital and/or managerial requirements on the FHC, and if deficiencies are persistent, may require divestiture of the FHC’s depository institutions. If any depository institution controlled by an FHC fails to maintain a satisfactory rating under the Community Reinvestment Act, the Federal Reserve must prohibit the FHC and its subsidiaries from engaging in any new activities other than
those permissible for BHCs, or acquiring a company engaged in such activities.
Capital and liquidity requirements. The Federal Reserve establishes capital, liquidity and leverage requirements for JPMorgan Chase that are generally consistent with the international Basel III capital and liquidity framework and evaluates the Firm’s compliance with those requirements. The OCC establishes similar requirements for JPMorgan Chase Bank, N.A. Certain of the Firm’s non-U.S. subsidiaries and branches are also subject to local capital and liquidity requirements.
Banking supervisors globally continue to refine and enhance the Basel III capital framework for financial institutions. U.S. banking regulators have announced their support for the issuance of the Basel III reforms and are considering how to appropriately apply such reforms in the U.S.
Refer to Capital Risk Management on pages 86-96 and Liquidity Risk Management on pages 97-104.
Stress tests. As a large BHC, JPMorgan Chase is subject to supervisory stress testing administered by the Federal Reserve as part of the Federal Reserve’s annual Comprehensive Capital Analysis and Review (“CCAR”) framework. The Firm must conduct annual company-run stress tests and must also submit an annual capital plan to the Federal Reserve, taking into account the results of separate stress tests designed by the Firm and the Federal Reserve. The Federal Reserve uses the results under the severely adverse scenario from its supervisory stress test to determine the Firm’s Stress Capital Buffer (“SCB”) requirement for the coming year, which forms part of the Firm’s applicable capital buffers. The Firm is required to file its annual CCAR submission on April 5, 2023. The Federal Reserve will notify the Firm of its indicative SCB requirement by June 30, 2023 and final SCB requirement by August 31, 2023. The Firm’s final SCB requirement will become effective on October 1, 2023. The OCC requires JPMorgan Chase Bank, N.A. to perform separate, similar stress tests annually. The Firm publishes each year the results of the annual stress tests for the Firm and JPMorgan Chase Bank, N.A. under the supervisory “severely adverse” scenarios provided by the Federal Reserve and the OCC.
Refer to Capital Risk Management on pages 86-96 for more information concerning the Firm’s CCAR.
Enhanced prudential standards. As part of its mandate to identify and monitor risks to the financial stability of the U.S. posed by large banking organizations, the Financial Stability Oversight Council (“FSOC”) recommends prudential standards and reporting requirements to the Federal Reserve for systemically important financial institutions (“SIFIs”), such as JPMorgan Chase. The Federal Reserve has adopted several rules to implement those heightened prudential standards, including rules relating to risk management and corporate governance of subject BHCs. JPMorgan Chase is required under these rules to comply with enhanced liquidity and overall risk
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management standards, including oversight by the board of directors of risk management activities.
Resolution and recovery. The Firm is required to maintain a comprehensive recovery plan, updated annually, summarizing the actions it would take to remain well-capitalized and well-funded in order to avoid failure in the case of an adverse event. In addition, JPMorgan Chase Bank, N.A. is required to prepare and submit a recovery plan as directed by the OCC. The Firm is required to submit periodically to the Federal Reserve and the FDIC a plan for resolution in the event of material distress or failure (a “resolution plan”). In 2019, the FDIC and Federal Reserve revised the regulations governing resolution plan requirements, and on the basis of those revisions, the Firm’s resolution plan submissions will alternate between “targeted” and “full” plans. The Firm’s “targeted” resolution plan was filed on June 28, 2021, and the Firm's next "full" resolution plan is due to be filed on or before July 1, 2023. JPMorgan Chase Bank, N.A. is also required to prepare and submit a separate resolution plan as directed by the FDIC on or before December 1, 2023.
Certain of the Firm’s non-U.S. subsidiaries and branches are also subject to local resolution and recovery planning requirements.
Orderly liquidation authority. Certain financial companies, including JPMorgan Chase and certain of its subsidiaries, can also be subjected to resolution under an “orderly liquidation authority.” The U.S. Treasury Secretary, in consultation with the President of the United States, must first make certain determinations concerning extraordinary financial distress and systemic risk, and action must be recommended by the FDIC and the Federal Reserve. Absent such actions, the Firm, as a BHC, would remain subject to resolution under the Bankruptcy Code. The FDIC has issued a draft policy statement describing its “single point of entry” strategy for resolution of SIFIs under the orderly liquidation authority, which seeks to keep operating subsidiaries of a BHC open and impose losses on shareholders and creditors of the BHC in receivership according to their statutory order of priority.
Holding company as a source of strength. JPMorgan Chase & Co. is required to serve as a source of financial strength for its depository institution subsidiaries and to commit resources to support those subsidiaries, including when directed to do so by the Federal Reserve.
Regulation of acquisitions. Acquisitions by BHCs and their banks are subject to requirements, limitations and prohibitions established by law and by the Federal Reserve and the OCC. For example, FHCs and BHCs are required to obtain the approval of the Federal Reserve before they acquire more than 5% of the voting shares of an unaffiliated bank. In addition, acquisitions by financial companies are prohibited if, as a result of the acquisition, the total liabilities of the financial company would exceed 10% of the total liabilities of all financial companies. Furthermore, for certain acquisitions, the Firm must
provide written notice to the Federal Reserve prior to acquiring direct or indirect ownership or control of any voting shares of any company with over $10 billion in assets that is engaged in activities that are “financial in nature.” Moreover, while FHCs may engage in a broader range of activities (including acquisitions) than BHCs, the Federal Reserve has the authority to limit an FHC’s ability to conduct otherwise permissible acquisitions if the FHC or any of its depository institution subsidiaries ceases to meet applicable eligibility requirements.

Ongoing obligations. The Firm is subject to obligations under the terms of a Deferred Prosecution Agreement entered into with the Department of Justice on September 29, 2020 relating to precious metals and U.S. Treasuries markets investigations as well as under a related order issued by the CFTC.
Subsidiary banks:
The activities of JPMorgan Chase Bank, N.A., the Firm’s principal subsidiary bank, are limited to those specifically authorized under the National Bank Act and related interpretations of the OCC. The OCC has authority to bring an enforcement action against JPMorgan Chase Bank, N.A. for unsafe or unsound banking practices, which could include limiting JPMorgan Chase Bank, N.A.’s ability to conduct otherwise permissible activities, or imposing corrective capital or managerial requirements on the bank.
FDIC deposit insurance. The FDIC deposit insurance fund provides insurance coverage for certain deposits and is funded through assessments on banks, including JPMorgan Chase Bank, N.A.
FDIC powers upon a bank insolvency. Upon any insolvency of JPMorgan Chase Bank, N.A., the FDIC could be appointed as conservator or receiver under the Federal Deposit Insurance Act. The FDIC has broad powers to transfer assets and liabilities without the approval of the institution’s creditors.
Prompt corrective action. The Federal Deposit Insurance Corporation Improvement Act of 1991 requires the relevant federal banking regulator to take “prompt corrective action” with respect to a depository institution if that institution does not meet certain capital adequacy standards. The Federal Reserve is also authorized to take appropriate action against the parent BHC, such as JPMorgan Chase & Co., based on the undercapitalized status of any bank subsidiary. In certain instances, the BHC would be required to guarantee the performance of the capital restoration plan for its undercapitalized subsidiary.
OCC Heightened Standards. The OCC has established guidelines setting forth heightened standards for large banks, including minimum standards for the design and implementation of a risk governance framework for banks. Under these standards, a bank’s risk governance framework must ensure that the bank’s risk profile is easily distinguished and separate from that of its parent BHC for risk management purposes. The bank’s board or risk
5

Part I
committee is responsible for approving the bank’s risk governance framework, providing active oversight of the bank’s risk-taking activities, and holding management accountable for adhering to the risk governance framework.
Restrictions on transactions with affiliates. JPMorgan Chase Bank, N.A. and its subsidiaries are subject to restrictions imposed by federal law on extensions of credit to, investments in stock or securities of, and derivatives, securities lending and certain other transactions with, JPMorgan Chase & Co. and certain other affiliates. These restrictions prevent JPMorgan Chase & Co. and other affiliates from borrowing from such subsidiaries unless the loans are secured in specified amounts and comply with certain other requirements.
Dividend restrictions. Federal law imposes limitations on the payment of dividends by national banks, such as JPMorgan Chase Bank, N.A. Refer to Note 26 for the amount of dividends that JPMorgan Chase Bank, N.A. could pay, at January 1, 2023, to JPMorgan Chase without the approval of the banking regulators. The OCC and the Federal Reserve also have authority to prohibit or limit the payment of dividends of a bank subsidiary that they supervise if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the bank.
Depositor preference. Under federal law, the claims of a receiver of an insured depositary institution (“IDI”) for administrative expense and the claims of holders of U.S. deposit liabilities (including the FDIC and deposits in non-U.S. branches that are dually payable in the U.S. and in a non-U.S. branch) have priority over the claims of other unsecured creditors of the institution, including depositors in non-U.S. branches and public noteholders.
Consumer supervision and regulation. JPMorgan Chase and JPMorgan Chase Bank, N.A. are subject to supervision and regulation by the Consumer Financial Protection Bureau (“CFPB”) with respect to federal consumer protection laws, including laws relating to fair lending and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. The CFPB also has jurisdiction over small business lending activities with respect to fair lending and the Equal Credit Opportunity Act. As part of its regulatory oversight, the CFPB has authority to take enforcement actions against firms that offer certain products and services to consumers using practices that are deemed to be unfair, deceptive or abusive. In February 2023, the CFPB proposed a rule that would significantly reduce and limit the late payment fees that credit card issuers, including the Firm, would be permitted to charge to customers. The Firm’s consumer activities are also subject to regulation under state statutes which are enforced by the Attorney General or empowered agency of each state.
In the U.K., the Firm operates a retail bank through J.P. Morgan Europe Limited (“JPMEL”) and provides retail investment management services through Nutmeg Saving
and Investment Limited (“Nutmeg”). JPMEL is regulated by the PRA, and both JPMEL and Nutmeg are regulated by the FCA with respect to their conduct of financial services in the U.K., including obligations relating to the fair treatment of customers. JPMEL is also regulated by the U.K. Payment Systems Regulator with respect to its operation and use of payment systems. In addition, the retail businesses of JPMEL and Nutmeg are subject to U.K. consumer-protection legislation.
Securities and broker-dealer regulation:
The Firm conducts securities underwriting, dealing and brokerage activities in the U.S. through J.P. Morgan Securities LLC and other non-bank broker-dealer subsidiaries, all of which are subject to regulations of the SEC, FINRA and the New York Stock Exchange, among others. The Firm conducts similar securities activities outside the U.S. subject to local regulatory requirements. In the U.K., those activities are conducted by J.P. Morgan Securities plc. Broker-dealers are subject to laws and regulations covering all aspects of the securities business, including sales and trading practices, securities offerings, publication of research reports, use of customer funds, the financing of client purchases, capital structure, record-keeping and retention, and the conduct of their directors, officers and employees. Refer to Broker-dealer regulatory capital on page 96 for information concerning the capital of J.P. Morgan Securities LLC and J.P. Morgan Securities plc.
Investment management regulation:
The Firm’s asset and wealth management businesses are subject to significant regulation in jurisdictions around the world relating to, among other things, the safeguarding and management of client assets, offerings of funds and marketing activities. Certain of the Firm’s subsidiaries are registered with, and subject to oversight by, the SEC as investment advisers and broker-dealers. The Firm’s registered investment advisers in the United States are subject to the fiduciary and other obligations imposed under the Investment Advisers Act of 1940 and applicable state and federal law. The Firm’s bank fiduciary activities are subject to supervision by the OCC.
Derivatives regulation:
The Firm is subject to comprehensive regulation of its derivatives businesses, including regulations that impose capital and margin requirements, require central clearing of standardized over-the-counter (“OTC”) derivatives, mandate that certain standardized OTC swaps be traded on regulated trading venues, and provide for reporting of certain mandated information. JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC and J.P. Morgan Securities plc are registered with the CFTC as “swap dealers”. In addition, JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC are registered with the SEC as “security-based swap dealers”. As a result, these entities are subject to a comprehensive regulatory framework applicable to their swap or security-based swap activities, including capital requirements, rules requiring the collateralization of uncleared swaps and security-based swaps, rules regarding
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segregation of counterparty collateral, business conduct and documentation standards, record-keeping and reporting obligations, and anti-fraud and anti-manipulation requirements. Similar requirements have also been established under the European Market Infrastructure Regulation (“EMIR”) and the Markets in Financial Instruments Directive (“MiFID II”), as implemented in the EU and as adopted in the U.K.
J.P. Morgan Securities LLC is also registered with the CFTC as a futures commission merchant and is a member of the National Futures Association.
Data, privacy and cybersecurity regulation:
The Firm and its subsidiaries are subject to laws, rules and regulations globally concerning data, including data protection, consumer protection, privacy, cybersecurity and related matters. These laws, rules and regulations are constantly evolving, subject to interpretation, remain a focus of regulators globally, may be enforced by private parties or government bodies, and will continue to have a significant impact on all of the Firm’s businesses and operations.
The Bank Secrecy Act and Economic Sanctions:
The Bank Secrecy Act (“BSA”) requires all financial institutions, including banks and securities broker-dealers, to establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism. The BSA includes a variety of record-keeping and reporting requirements, as well as due diligence/know-your-customer documentation requirements. The Firm is also subject to the regulations and economic sanctions programs administered and enforced by the U.S. Treasury’s Office of Foreign Assets Control (“OFAC”) and EU and U.K. authorities which target entities or individuals that are, or are located in countries that are, involved in activities including terrorism, hostilities, embezzlement or human rights violations. The Firm is also subject to economic sanctions laws, rules and regulations in other jurisdictions in which it operates, including those that conflict with or prohibit a firm such as JPMorgan Chase from complying with certain laws, rules and regulations to which it is otherwise subject.
Anti-Corruption:
The Firm is subject to laws and regulations relating to corrupt and illegal payments to government officials and others in the jurisdictions in which it operates, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.
Compensation practices:
The Firm’s compensation practices are subject to oversight by the Federal Reserve, as well as other agencies. The Federal Reserve has jointly issued guidance with the FDIC and the OCC that is designed to ensure that incentive compensation paid by banking organizations does not encourage imprudent risk-taking that threatens the organizations’ safety and soundness. The Financial Stability Board (“FSB”) has also established standards covering compensation principles for banks. The Firm’s compensation practices are also subject to regulation and oversight by regulators in other jurisdictions, notably the Fifth Capital Requirements Directive (“CRD V”), as implemented in the EU and as adopted in the U.K, which includes compensation-related provisions. The European Banking Authority has instituted guidelines on compensation policies including under CRD V which in certain countries, such as Germany, are implemented or supplemented by local regulations or guidelines. The U.K. regulators have also instituted guidelines on CRD V compensation policies. The Firm expects that the implementation of regulatory guidelines regarding compensation in the U.S. and other countries will continue to evolve, and may affect the manner in which the Firm structures its compensation programs and practices.
Other significant international regulatory initiatives:
Policymakers in the U.K. and EU continue to implement a program of regulatory enhancements relating to financial services, several key elements of which are discussed below.
MiFID II requires the trading of shares and certain standardized OTC derivatives to take place on specified trading venues. MiFID II also significantly enhanced requirements for pre- and post-trade transparency, transaction reporting and investor protection, and introduced a position limits and reporting regime for commodities. In November 2021, the European Commission (“EC”) published a draft legislative proposal for amendments to MiFID II focused on changes to rules related to transparency and market structure, including the proposed creation of a consolidated tape intended to increase transparency into trading across the EU by providing a centralized source of market data. This legislation remains subject to review by the European Parliament and European Council.
In the U.K., MiFID II is being amended through the “Wholesale Markets Review”, a set of proposals designed to streamline and improve regulation of the U.K. secondary markets following the U.K.’s departure from the EU. Some of the changes, such as the removal of the requirement to execute trades in shares on certain trading venues, have been introduced through the Financial Services and Markets Bill (“FSMB”), which is expected to be passed by the U.K. Parliament in the first half of 2023. Other changes, such as amendments to MiFID II rules related to transparency, will be subject to further consultation, which is expected during 2023.
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In December 2022, the EC published a legislative proposal to amend EMIR to increase the competitiveness of the EU central clearing framework and to enhance supervision of EU central counterparties (“CCPs”). These proposals are subject to further review by the European Parliament and European Council.
The EU has adopted mandatory buy-in rules under the Central Securities Depositories Regulation (“CSDR”) which will impose requirements relating to sourcing of securities in the event of a settlement fail. In June 2022, EU regulators proposed an amendment to postpone the application of these rules until November 2025. The amendment remains subject to review by the European Parliament and European Council.
In December 2022, the Chancellor of the Exchequer announced an extensive package of reforms to U.K. financial services regulation known as the “Edinburgh Reforms”. These reforms aim to drive growth and competitiveness in the U.K. financial services sector following the U.K.’s departure from the EU. The reform package includes initiatives relating to a number of areas of financial services policy, including retail banks, payments, markets, digital assets and sustainable finance. The U.K. Government and regulators are expected to release further consultations and announcements related to these reforms in 2023.
EU and U.K. regulators are expected to finalize the rules implementing the Basel III framework during 2023. The Firm’s banking entities in the EU and the U.K. will be required to comply with the Basel III final rules by January 2025, allowing for certain transitional arrangements until 2030 and 2032, respectively. The main changes implemented by the Basel III final rules will be revisions to the credit risk and operational risk calculation methods to reduce the use of and reliance on internal modelling approaches and introduce internationally-agreed changes to the market risk framework. The EU Basel III final rules also strengthen enforcement tools for supervisors overseeing EU banks and require EU banking entities to systematically identify, disclose and manage environmental, social and governance (“ESG”) risks as part of their risk management practices. In addition, in December 2022, the European Banking Authority (“EBA”) announced that it will publish rules and technical standards between 2023 and 2025 related to sustainable finance, which will be applicable to EU banks. The Firm’s banking entities in the U.K. will be required to comply with regulatory policies and standards related to climate risk being developed by the PRA. In addition, EU legislation requires that certain non-EU banks operating in the EU establish an intermediate parent undertaking (“IPU”) located in the EU. The IPU legislation allows a second IPU to be established if a single IPU would conflict with “home country” bank separation rules or impede resolvability. The Firm will be required to comply with the EU’s IPU requirements by December 30, 2023.
The Firm’s banking entities in the EU and U.K. are also subject to supervisory expectations published by the ECB
and the PRA, respectively, for management of financial risks arising from climate change and the increasing operational reliance on IT systems, third-party services and innovative technologies, as well as supervisory expectations for operational resilience and resilience from macro-financial and geopolitical shocks. These expectations address bank strategy, governance, risk management, scenario analysis, risk reporting and disclosure.
Policymakers in the EU have continued to implement sustainability-related initiatives. In December 2022, the Corporate Sustainability Reporting Directive (“CSRD”) was published in the Official Journal of the EU. The CSRD will replace and significantly expand the scope and content of ESG reporting requirements under the EU’s existing ESG reporting rules. CSRD reporting requirements will be phased in beginning in 2024. In addition, the EC published its legislative proposal on the Corporate Sustainability Due Diligence Directive (“CSDDD”) in February 2022. The draft directive sets mandatory due diligence obligations for companies to address actual and potential human rights violations and environmental adverse impacts stemming from their own operations and business relationships, including the activities of companies with which they have established business relationships. The proposed legislation may also require the adoption of company-specific climate-related transition plans. The CSDDD is currently subject to review by the European Parliament and European Council. Both the CSRD and CSDDD will apply to certain of the Firm’s EU entities as well as to certain non-EU entities.
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Item 1A. Risk Factors.
The following discussion sets forth the material risk factors that could affect JPMorgan Chase’s financial condition and operations. Readers should not consider any descriptions of these factors to be a complete set of all potential risks that could affect the Firm. Any of the risk factors discussed below could by itself, or combined with other factors, materially and adversely affect JPMorgan Chase’s business, results of operations, financial condition, capital position, liquidity, competitive position or reputation, including by materially increasing expenses or decreasing revenues, which could result in material losses or a decrease in earnings.
Summary
The principal risk factors that could adversely affect JPMorgan Chase’s business, results of operations, financial condition, capital position, liquidity, competitive position or reputation include:
Regulatory risks, including the impact that applicable laws, rules and regulations in the highly-regulated and supervised financial services industry, as well as changes to or in the application, interpretation or enforcement of those laws, rules and regulations, can have on JPMorgan Chase’s business and operations; the ways in which differences in financial services regulation in different jurisdictions or with respect to certain competitors can negatively impact JPMorgan Chase’s business; the penalties and collateral consequences, and higher compliance and operational costs, that JPMorgan Chase may incur when resolving a regulatory investigation; the ways in which less predictable legal and regulatory frameworks in certain countries can negatively impact JPMorgan Chase’s operations and financial results; and the losses that security holders will absorb if JPMorgan Chase were to enter into a resolution.
Political risks, including the potential negative effects on JPMorgan Chase’s businesses due to economic uncertainty or instability caused by political developments.
Market risks, including the effects that economic and market events and conditions, governmental policies, changes in interest rates and credit spreads, and market fluctuations can have on JPMorgan Chase’s consumer and wholesale businesses and its investment and market-making positions and on JPMorgan Chase’s earnings and its liquidity and capital levels.
Credit risks, including potential negative effects from adverse changes in the financial condition of clients, customers, counterparties, custodians and central counterparties; and the potential for losses due to declines in the value of collateral in stressed market conditions or from concentrations of credit and market risk.
Liquidity risks, including the risk that JPMorgan Chase’s liquidity could be impaired by market-wide
illiquidity or disruption, unforeseen liquidity or capital requirements, the inability to sell assets, default by a significant market participant, unanticipated outflows of cash or collateral, or lack of market or customer confidence in JPMorgan Chase; the dependence of JPMorgan Chase & Co. on the cash flows of its subsidiaries; the adverse effects that any downgrade in any of JPMorgan Chase’s credit ratings may have on its liquidity and cost of funding; and potential negative impacts, including litigation risks, associated with the transition to alternative reference rates.
Capital risks, including the risk that any failure by or inability of JPMorgan Chase to maintain the required level and composition of capital, or unfavorable changes in applicable capital requirements, could limit JPMorgan Chase’s ability to distribute capital to shareholders or to support its business activities.
Operational risks, including risks associated with JPMorgan Chase’s dependence on its operational systems, its ability to maintain appropriately-staffed workforces and the competence, integrity, health and safety of its employees, as well as the systems and employees of third parties, market participants and service providers; the potential negative effects of failing to identify and address operational risks related to the introduction of or changes to products, services and delivery platforms; legal and regulatory risks related to safeguarding personal information; the harm that could be caused by a successful cyber attack affecting JPMorgan Chase or by other extraordinary events; risks associated with JPMorgan Chase’s risk management framework, its models and estimations and associated judgments used in its stress testing and financial statements, and controls over disclosure and financial reporting; and potential adverse effects of failing to comply with heightened regulatory and other standards for the oversight of vendors and other service providers.
Strategic risks, including the damage to JPMorgan Chase’s competitive standing and results that could occur if management fails to develop and execute effective business strategies; risks associated with the significant and increasing competition that JPMorgan Chase faces; and the potential adverse impacts of climate change on JPMorgan Chase’s business operations, clients and customers.
Conduct risks, including the negative impact that can result from the actions or misconduct of employees, including any failure of employees to conduct themselves in accordance with JPMorgan Chase’s expectations, policies and practices.
Reputation risks, including the potential adverse effects on JPMorgan Chase’s relationships with its clients, customers, shareholders, regulators and other stakeholders that could arise from employee misconduct, security breaches, inadequate risk
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Part I
management, compliance or operational failures, litigation and regulatory investigations, failure to satisfy expectations concerning environmental, social and governance concerns, failure to effectively manage conflicts of interest or to satisfy fiduciary obligations, or other factors that could damage JPMorgan Chase’s reputation.
Country risks, including potential impacts on JPMorgan Chase’s businesses from an outbreak or escalation of hostilities between countries or within a country or region; and the potential adverse effects of local economic, political, regulatory and social factors on JPMorgan Chase’s business and revenues in certain countries.
People risks, including the criticality of attracting and retaining qualified and diverse employees; and the potential adverse effects of unfavorable changes in immigration or travel policies on JPMorgan Chase’s workforce.
Legal risks, including those relating to litigation and regulatory and government investigations.
The above summary is subject in its entirety to the discussion of the risk factors set forth below.

Regulatory
JPMorgan Chase’s businesses are highly regulated, and the laws, rules and regulations that apply to JPMorgan Chase have a significant impact on its business and operations.
JPMorgan Chase is a financial services firm with operations worldwide. JPMorgan Chase must comply with the laws, rules and regulations that apply to its operations in all of the jurisdictions around the world in which it does business, and financial services firms such as JPMorgan Chase are subject to extensive regulation and supervision.
The regulation and supervision of JPMorgan Chase significantly affects the way that it conducts its business and structures its operations, and JPMorgan Chase could be required to make changes to its business and operations in response to supervisory expectations or decisions or to new or changed laws, rules and regulations. These types of developments could result in JPMorgan Chase incurring additional costs in connection with complying with applicable laws, rules and regulations, which could reduce its profitability. Furthermore, JPMorgan Chase’s entry into or acquisition of a new business or an increase in its principal investments may require JPMorgan Chase to comply with additional laws, rules, and regulations.
In response to new and existing laws, rules and regulations and expanded supervision, JPMorgan Chase has in the past been and could in the future be, required to:
limit the products and services that it offers
reduce the liquidity that it can provide through its market-making activities
refrain from engaging in business opportunities that it might otherwise pursue
pay higher taxes (including as part of any minimum global tax regime), assessments, levies or other governmental charges, including in connection with the resolution of tax examinations
incur losses, including with respect to fraudulent transactions perpetrated against its customers
dispose of certain assets, and do so at times or prices that are disadvantageous
impose restrictions on certain business activities, or
increase the prices that it charges for products and services, which could reduce the demand for them.
Any failure by JPMorgan Chase to comply with the laws, rules and regulations to which it is subject could result in:
increased regulatory and supervisory scrutiny
regulatory and governmental enforcement actions
the imposition of fines, penalties or other sanctions
increased exposure to litigation, or
harm to its reputation.
Differences and inconsistencies in financial services regulation can negatively impact JPMorgan Chase’s businesses, operations and financial results.
The content and application of laws, rules and regulations affecting financial services firms sometimes vary according to factors such as the size of the firm, the jurisdiction in which it is organized or operates, and other criteria. For example:
larger firms such as JPMorgan Chase are often subject to more stringent supervision, regulation and regulatory scrutiny
financial technology companies and other non-traditional competitors may not be subject to banking regulation, or may be supervised by a national or state regulatory agency that does not have the same resources or regulatory priorities as the regulatory agencies which supervise more diversified financial services firms, or
the financial services regulatory framework in a particular jurisdiction may favor financial institutions that are based in that jurisdiction.
These types of differences in the regulatory framework can result in JPMorgan Chase losing market share to competitors that are less regulated or not subject to regulation, especially with respect to unregulated financial products.
There can also be significant differences in the ways that similar regulatory initiatives affecting the financial services industry are implemented in the U.S. and in other countries and regions in which JPMorgan Chase does business. For
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example, when adopting rules that are intended to implement a global regulatory standard, a national regulator may introduce additional or more restrictive requirements, which can create competitive disadvantages for financial services firms, such as JPMorgan Chase, that may be subject to those enhanced regulations.
In addition, certain national and multi-national bodies and governmental agencies outside the U.S. have adopted laws, rules or regulations that may conflict with or prohibit JPMorgan Chase from complying with laws, rules and regulations to which it is otherwise subject, creating conflict of law issues that also increase its risks of non-compliance in those jurisdictions.
Legislative and regulatory initiatives outside the U.S. could require JPMorgan Chase to make significant modifications to its operations and legal entity structure in the relevant countries or regions in order to comply with those requirements. These include laws, rules and regulations that have been adopted or proposed relating to:
the establishment of locally-based intermediate holding companies or operating subsidiaries
requirements to maintain minimum amounts of capital or liquidity in locally-based subsidiaries
to implement processes within locally-based subsidiaries to comply with local regulatory requirements
the separation (or “ring fencing”) of core banking products and services from markets activities
the resolution of financial institutions
requirements for executing or settling transactions on exchanges or through central counterparties (“CCPs”)
position limits and reporting rules for derivatives
governance and accountability regimes
conduct of business and control requirements, and
restrictions on compensation.
These types of differences, inconsistencies and conflicts in financial services regulation have required and could in the future require JPMorgan Chase to:
divest assets or restructure its operations
absorb increased capital and liquidity costs
incur higher operational and compliance costs
change the prices that it charges for its products and services
curtail the products and services that it offers to its customers and clients
curtail other business opportunities, including acquisitions or principal investments, that it otherwise would have pursued
become subject to regulatory fines, penalties or other sanctions, or
incur higher costs for complying with different legal and regulatory frameworks.
Any or all of these factors could harm JPMorgan Chase’s ability to compete against other firms that are not subject to the same laws, rules and regulations or supervisory oversight, or harm JPMorgan Chase’s businesses, results of operations and profitability.
Resolving regulatory investigations can subject JPMorgan Chase to significant penalties and collateral consequences, and could result in higher compliance costs or restrictions on its operations.
JPMorgan Chase is subject to heightened oversight and scrutiny from regulatory authorities in many jurisdictions. JPMorgan Chase has paid significant fines, provided other monetary relief, incurred other penalties and experienced other repercussions in connection with resolving investigations and enforcement actions by governmental agencies. JPMorgan Chase could become subject to similar regulatory or governmental resolutions or other actions in the future, and addressing the requirements of any such resolutions or actions could result in JPMorgan Chase incurring higher operational and compliance costs, including devoting substantial resources to the required remediation, or needing to comply with other restrictions.
In connection with resolving specific regulatory investigations or enforcement actions, certain regulators have required JPMorgan Chase and other financial institutions to admit wrongdoing with respect to the activities that gave rise to the resolution. These types of admissions can lead to:
greater exposure in litigation
damage to JPMorgan Chase’s reputation
disqualification from doing business with certain clients or customers, or in specific jurisdictions, or
other direct and indirect adverse effects.
Furthermore, U.S. government officials have demonstrated a willingness to bring criminal actions against financial institutions and have required that institutions plead guilty to criminal offenses or admit other wrongdoing in connection with resolving regulatory investigations or enforcement actions. Resolutions of this type can have significant collateral consequences for the subject financial institution, including:
loss of clients, customers and business
restrictions on offering certain products or services, and
losing permission to operate certain businesses, either temporarily or permanently.
JPMorgan Chase expects that:
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Part I
it and other financial services firms will continue to be subject to heightened regulatory scrutiny and governmental investigations and enforcement actions
governmental authorities will continue to require that financial institutions be penalized for actual or deemed violations of law with formal and punitive enforcement actions, including the imposition of significant monetary and other sanctions, rather than resolving these matters through informal supervisory actions; and
governmental authorities will be more likely to pursue formal enforcement actions and resolutions against JPMorgan Chase to the extent that it has previously been subject to other governmental investigations or enforcement actions.
If JPMorgan Chase fails to meet the requirements of any resolution of a governmental investigation or enforcement action, or to maintain risk and control processes that meet the heightened standards and expectations of its regulators, it could be required to, among other things:
enter into further resolutions of investigations or enforcement actions
pay additional regulatory penalties or enter into judgments, or
accept material regulatory restrictions on, or changes in the management of, its businesses.
In these circumstances, JPMorgan Chase could also become subject to other sanctions, or to prosecution or civil litigation with respect to the conduct that gave rise to an investigation or enforcement action.
JPMorgan Chase’s operations and financial results can be negatively impacted in countries with less predictable legal and regulatory frameworks.
JPMorgan Chase conducts existing and new business in certain countries in which the application of the rule of law is inconsistent or less predictable, including with respect to:
the absence of a statutory or regulatory basis or guidance for engaging in specific types of business or transactions
conflicting or ambiguous laws, rules and regulations, or the inconsistent application or interpretation of existing laws, rules and regulations
uncertainty concerning the enforceability of contractual, intellectual property or other obligations
difficulty in competing in economies in which the government controls or protects all or a portion of the local economy or specific businesses, or where graft or corruption may be pervasive
the threat of regulatory investigations, civil litigations or criminal prosecutions that are arbitrary or otherwise contrary to established legal principles in other parts of the world, and
the termination of licenses required to operate in the local market or the suspension of business relationships with governmental bodies.
If the application of the laws, rules and regulations in any country is susceptible to producing inconsistent or unexpected outcomes, this can create a more difficult environment in which JPMorgan Chase conducts its business and could negatively affect JPMorgan Chase’s operations and reduce its earnings with respect to that country. For example, conducting business could require JPMorgan Chase to devote significant additional resources to understanding, and monitoring changes in, local laws, rules and regulations, as well as structuring its operations to comply with local laws, rules and regulations and implementing and administering related internal policies and procedures.
There can be no assurance that JPMorgan Chase will always be successful in its efforts to fully understand and to conduct its business in compliance with the laws, rules and regulations of all of the jurisdictions in which it operates, and the risk of non-compliance can be greater in countries that have less predictable legal and regulatory frameworks.
Requirements for the orderly resolution of JPMorgan Chase could result in JPMorgan Chase having to restructure or reorganize its businesses and could increase its funding or operational costs or curtail its businesses.
JPMorgan Chase is required under Federal Reserve and FDIC rules to prepare and submit periodically to those agencies a detailed plan for rapid and orderly resolution in bankruptcy, without extraordinary government support, in the event of material financial distress or failure. The agencies’ evaluation of JPMorgan Chase’s resolution plan may change, and the requirements for resolution plans may be modified from time to time. Any such determinations or modifications could result in JPMorgan Chase needing to make changes to its legal entity structure or to certain internal or external activities, which could increase its funding or operational costs, or hamper its ability to serve clients and customers.
If the Federal Reserve and the FDIC were both to determine that a resolution plan submitted by JPMorgan Chase has deficiencies, they could jointly impose more stringent capital, leverage or liquidity requirements or restrictions on JPMorgan Chase’s growth, activities or operations. The agencies could also require that JPMorgan Chase restructure, reorganize or divest assets or businesses in ways that could materially and adversely affect JPMorgan Chase’s operations and strategy.
Holders of JPMorgan Chase & Co.’s debt and equity securities will absorb losses if it were to enter into a resolution.
Federal Reserve rules require that JPMorgan Chase & Co. (the “Parent Company”) maintain minimum levels of unsecured external long-term debt and other loss-
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absorbing capacity with specific terms (“eligible LTD”) for purposes of recapitalizing JPMorgan Chase’s operating subsidiaries if the Parent Company were to enter into a resolution either:
in a bankruptcy proceeding under Chapter 11 of the U.S. Bankruptcy Code, or
in a receivership administered by the FDIC under Title II of the Dodd-Frank Act (“Title II”).
If the Parent Company were to enter into a resolution, holders of eligible LTD and other debt and equity securities of the Parent Company will absorb the losses of the Parent Company and its subsidiaries.
The preferred “single point of entry” strategy under JPMorgan Chase’s resolution plan contemplates that only the Parent Company would enter bankruptcy proceedings. JPMorgan Chase’s subsidiaries would be recapitalized, as needed, so that they could continue normal operations or subsequently be divested or wound down in an orderly manner. As a result, the Parent Company’s losses and any losses incurred by its subsidiaries would be imposed first on holders of the Parent Company’s equity securities and thereafter on its unsecured creditors, including holders of eligible LTD and other debt securities. Claims of holders of those securities would have a junior position to the claims of creditors of JPMorgan Chase’s subsidiaries and to the claims of priority (as determined by statute) and secured creditors of the Parent Company.
Accordingly, in a resolution of the Parent Company in bankruptcy, holders of eligible LTD and other debt securities of the Parent Company would realize value only to the extent available to the Parent Company as a shareholder of JPMorgan Chase Bank, N.A. and its other subsidiaries, and only after any claims of priority and secured creditors of the Parent Company have been fully repaid.
The FDIC has similarly indicated that a single point of entry recapitalization model could be a desirable strategy to resolve a systemically important financial institution, such as the Parent Company, under Title II. However, the FDIC has not formally adopted a single point of entry resolution strategy.
If the Parent Company were to approach, or enter into, a resolution, none of the Parent Company, the Federal Reserve or the FDIC is obligated to follow JPMorgan Chase’s preferred resolution strategy, and losses to holders of eligible LTD and other debt and equity securities of the Parent Company, under whatever strategy is ultimately followed, could be greater than they might have been under JPMorgan Chase’s preferred strategy.
Political
Economic uncertainty or instability caused by political developments can negatively impact JPMorgan Chase’s businesses.
Political developments in the U.S. and other countries can cause uncertainty in the economic environment and market conditions in which JPMorgan Chase operates its businesses. Certain governmental policy initiatives, as well as heightened geopolitical tensions, could significantly affect U.S. and global economic growth and cause higher volatility in the financial markets, including:
monetary policies and actions taken by the Federal Reserve and other central banks or governmental authorities, including any sustained large-scale asset purchases or any suspension or reversal of those actions
fiscal policies, including with respect to taxation and spending
actions that governments take or fail to take in response to the effects of health emergencies, the spread of infectious diseases, epidemics or pandemics, as well as the effectiveness of any actions taken
governmental actions or initiatives relating to climate risk, or more generally, the impact of business activities on environmental, social and governance (“ESG”) matters, and the management of climate and ESG-related risks
isolationist foreign policies
an outbreak or escalation of hostilities, or other geopolitical instabilities
economic or financial sanctions
the implementation of tariffs and other protectionist trade policies, or
other governmental policies or actions adopted or taken in response to political or social pressures.
These types of political developments, and uncertainty about the possible outcomes of these developments, could:
erode investor confidence in the U.S. economy and financial markets, which could potentially undermine the status of the U.S. dollar as a safe haven currency
provoke retaliatory countermeasures by other countries and otherwise heighten tensions in regulatory, enforcement or diplomatic relations
lead to the withdrawal of government support for agencies and enterprises such as the U.S. Federal National Mortgage Association and the U.S. Federal Home Loan Mortgage Corporation (together, the “U.S. GSEs”)
increase concerns about whether the U.S. government will be funded, and its outstanding debt serviced, at any particular time
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Part I
result in periodic shutdowns of the U.S. government or governments in other countries
increase investor reliance on actions by the Federal Reserve or other central banks, or influence investor perceptions concerning government support of sectors of the economy or the economy as a whole
adversely affect the financial condition or credit ratings of clients and counterparties with which JPMorgan Chase does business, or
cause JPMorgan Chase to refrain from engaging in business opportunities that it might otherwise pursue.
These factors could lead to:
slower growth rates, rising inflation or recession
greater market volatility
a contraction of available credit and the widening of credit spreads
erosion of adequate risk premium on certain financial assets
diminished investor and consumer confidence
lower investment growth
large-scale sales of government debt and other debt and equity securities in the U.S. and other countries
reduced commercial activity among trading partners
the potential for a currency redenomination by a particular country
the possible departure of a country from, or the dissolution of, a political or economic alliance or treaty
potential expropriation or nationalization of assets, or
other market dislocations, including the spread of unfavorable economic conditions from a particular country or region to other countries or regions.
Any of these potential outcomes could cause JPMorgan Chase to suffer losses on its market-making positions or in its investment portfolio, reduce its liquidity and capital levels, increase the allowance for credit losses or lead to higher net charge offs, hamper its ability to deliver products and services to its clients and customers, and weaken its results of operations and financial condition.
JPMorgan Chase's business and results of operations may also be adversely affected by actions or initiatives by national, state or local governmental authorities that:
seek to discourage financial institutions from doing business with companies engaged in certain industries, or conversely, to penalize financial institutions that elect not to do business with such companies, or
mandate specific business practices that companies operating in the relevant jurisdiction must adopt.
Because governmental policies in one jurisdiction may differ or conflict with those in other jurisdictions, JPMorgan Chase may face negative consequences regardless of the course of action it takes or elects not to take, including:
restrictions or prohibitions on doing business within a particular jurisdiction, or with governmental entities in a jurisdiction
the threat of enforcement actions, including under antitrust or other anti-competition laws, rules and regulations, and
harm to its reputation arising from public criticism, including from politicians, activists and other stakeholders.
In addition, JPMorgan Chase's relationships or ability to transact with clients and customers, and with governmental or regulatory bodies in jurisdictions in which JPMorgan Chase does business, could be adversely affected if its decisions with respect to doing business with companies in certain sensitive industries are perceived to harm those companies or to align with particular political viewpoints. Furthermore, JPMorgan Chase's participation in or association with certain social and environmental industry groups or initiatives could be viewed by activists or governmental authorities as boycotting or other discriminatory business behavior.
Market
Economic and market events and conditions can materially affect JPMorgan Chase’s businesses and investment and market-making positions.
JPMorgan Chase’s results of operations can be negatively affected by adverse changes in any of the following:
investor, consumer and business sentiment
events that reduce confidence in the financial markets
inflation, deflation or recession
high unemployment or, conversely, a tightening labor market
the availability and cost of capital, liquidity and credit
levels and volatility of interest rates, credit spreads and market prices for currencies, equities and commodities, and the duration of any changes in levels or volatility
the economic effects of an outbreak or escalation of hostilities, terrorism or other geopolitical instabilities, cyber attacks, climate change, natural disasters, severe weather conditions, health emergencies, the spread of infectious diseases, epidemics or pandemics or other extraordinary events beyond JPMorgan Chase’s control, and
the strength of the U.S. and global economies.
All of these are affected by global economic, market and political events and conditions, as well as regulatory restrictions.
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In addition, JPMorgan Chase’s investment portfolio and market-making businesses can suffer losses due to unanticipated market events, including:
severe declines in asset values
unexpected credit events
unforeseen events or conditions that may cause previously uncorrelated factors to become correlated (and vice versa)
the inability to effectively hedge market and other risks related to market-making and investment portfolio positions, or
other market risks that may not have been appropriately taken into account in the development, structuring or pricing of a financial instrument.
If JPMorgan Chase experiences significant losses in its investment portfolio or from market-making activities, this could reduce JPMorgan Chase’s profitability and its liquidity and capital levels, and thereby constrain the growth of its businesses.
JPMorgan Chase’s consumer businesses can be negatively affected by adverse economic conditions and governmental policies.
JPMorgan Chase’s consumer businesses are particularly affected by U.S. and global economic conditions, including:
personal and household income distribution
unemployment or underemployment
prolonged periods of exceptionally low or high interest rates
housing prices
the level of inflation and its effect on prices for goods and services
consumer and small business confidence levels, and
changes in consumer spending or in the level of consumer debt.
Heightened levels of unemployment or underemployment that result in reduced personal and household income could negatively affect consumer credit performance to the extent that consumers are less able to service their debts. In addition, sustained low growth, low or negative interest rates, inflationary pressures or recessionary conditions could diminish customer demand for the products and services offered by JPMorgan Chase’s consumer businesses.
Adverse economic conditions could also lead to an increase in delinquencies, additions to the allowance for credit losses and higher net charge-offs, which can reduce JPMorgan Chase’s earnings. These consequences could be significantly worse in certain geographies and industry segments where declining industrial or manufacturing activity has resulted in or could result in higher levels of unemployment, or where high levels of consumer debt, such as outstanding
student loans, could impair the ability of customers to pay their other consumer loan obligations.
JPMorgan Chase’s earnings from its consumer businesses could also be adversely affected by governmental policies and actions that affect consumers, including:
policies and initiatives relating to medical insurance, education, immigration, employment status and housing, and
policies aimed at the economy more broadly, such as higher taxes and increased regulation which could result in reductions in consumer disposable income.
Unfavorable market and economic conditions can have an adverse effect on JPMorgan Chase’s wholesale businesses.
In JPMorgan Chase’s wholesale businesses, market and economic factors can affect the volume of transactions that JPMorgan Chase executes for its clients or for which it advises clients, and, therefore, the revenue that JPMorgan Chase receives from those transactions. These factors can also influence the willingness of other financial institutions and investors to participate in capital markets transactions that JPMorgan Chase manages, such as loan syndications or securities underwriting. Furthermore, if a significant and sustained deterioration in market conditions were to occur, the profitability of JPMorgan Chase’s capital markets businesses, including its loan syndication, securities underwriting and leveraged lending activities, could be reduced to the extent that those businesses:
earn less fee revenue due to lower transaction volumes, including when clients are unwilling or unable to refinance their outstanding debt obligations in unfavorable market conditions, or
dispose of portions of credit commitments at a loss, or hold larger residual positions in credit commitments that cannot be sold at favorable prices.
An adverse change in market conditions in particular segments of the economy, such as a sudden and severe downturn in oil and gas prices or an increase in commodity prices, or sustained changes in consumer behavior that affect specific economic sectors, could have a material adverse effect on clients of JPMorgan Chase whose operations or financial condition are directly or indirectly dependent on the health or stability of those market segments or economic sectors, as well as clients that are engaged in related businesses. JPMorgan Chase could incur credit losses on its loans and other credit commitments to clients that operate in, or are dependent on, any sector of the economy that is under stress.
The fees that JPMorgan Chase earns from managing client assets or holding assets under custody for clients could be diminished by declining asset values or other adverse macroeconomic conditions. For example, higher interest rates or a downturn in financial markets could affect the valuations of client assets that JPMorgan Chase manages or
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holds under custody, which, in turn, could affect JPMorgan Chase’s revenue from fees that are based on the amount of assets under management or custody. Similarly, adverse macroeconomic or market conditions could prompt outflows from JPMorgan Chase funds or accounts, or cause clients to invest in products that generate lower revenue. Substantial and unexpected withdrawals from a JPMorgan Chase fund can also hamper the investment performance of the fund, particularly if the outflows create the need for the fund to dispose of fund assets at disadvantageous times or prices, and could lead to further withdrawals based on the weaker investment performance.
An economic downturn or sustained changes in consumer behavior that results in shifts in consumer and business spending could also have a negative impact on certain of JPMorgan Chase’s wholesale clients, and thereby diminish JPMorgan Chase’s earnings from its wholesale operations. For example, the businesses of certain of JPMorgan Chase’s wholesale clients are dependent on consistent streams of rental income from commercial real estate properties which are owned or being built by those clients. Sustained adverse economic conditions could result in reductions in the rental cash flows that owners or developers receive from their tenants which, in turn, could depress the values of the properties and impair the ability of borrowers to service or refinance their commercial real estate loans. These consequences could result in JPMorgan Chase experiencing increases in the allowance for credit losses, higher delinquencies, defaults and charge-offs within its commercial real estate loan portfolio and incurring higher costs for servicing a larger volume of delinquent loans in that portfolio, thereby reducing JPMorgan Chase’s earnings from its wholesale businesses.
Changes in interest rates and credit spreads can adversely affect JPMorgan Chase’s earnings, its liquidity or its capital levels.
When interest rates are high or increasing, JPMorgan Chase can generally be expected to earn higher net interest income. However, higher interest rates can also lead to:
fewer originations of commercial and residential real estate loans
losses on underwriting exposures or incremental client-specific downgrades, or increases in the allowance for credit losses and net charge-offs due to higher financing costs for clients
the loss of deposits, particularly if customers withdraw deposits because they believe that interest rates offered by JPMorgan Chase are lower than those of competitors or if JPMorgan Chase makes incorrect assumptions about depositor behavior
losses on available-for-sale (“AFS”) securities held in the investment securities portfolio
lower net interest income if central banks introduce interest rate increases more quickly than anticipated
and this results in a misalignment in the pricing of short-term and long-term borrowings
less liquidity in the financial markets, and
higher funding costs.
All of these outcomes could adversely affect JPMorgan Chase’s earnings or its liquidity and capital levels. Higher interest rates can also negatively affect the payment performance on loans within JPMorgan Chase’s consumer and wholesale loan portfolios that are linked to variable interest rates. If borrowers of variable rate loans are unable to afford higher interest payments, those borrowers may reduce or stop making payments, thereby causing JPMorgan Chase to incur losses and increased operational costs related to servicing a higher volume of delinquent loans.
On the other hand, a low or negative interest rate environment may cause:
net interest margins to be compressed, which could reduce the amounts that JPMorgan Chase earns on its investment securities portfolio to the extent that it is unable to reinvest contemporaneously in higher-yielding instruments
unanticipated or adverse changes in depositor behavior, which could negatively affect JPMorgan Chase’s broader asset and liability management strategy, and
a reduction in the value of JPMorgan Chase’s mortgage servicing rights (“MSRs”) asset, thereby decreasing revenues.
When credit spreads widen, it becomes more expensive for JPMorgan Chase to borrow. JPMorgan Chase’s credit spreads may widen or narrow not only in response to events and circumstances that are specific to JPMorgan Chase but also as a result of general economic and geopolitical events and conditions. Changes in JPMorgan Chase’s credit spreads will affect, positively or negatively, JPMorgan Chase’s earnings on certain liabilities, such as derivatives, that are recorded at fair value.
JPMorgan Chase’s results may be materially affected by market fluctuations and significant changes in the value of financial instruments.
The value of securities, derivatives and other financial instruments which JPMorgan Chase owns or in which it makes markets can be materially affected by market fluctuations. Market volatility, illiquid market conditions and other disruptions in the financial markets may make it extremely difficult to value certain financial instruments. Subsequent valuations of financial instruments in future periods, in light of factors then prevailing, may result in significant changes in the value of these instruments. In addition, at the time of any disposition of these financial instruments, the price that JPMorgan Chase ultimately realizes will depend on the demand and liquidity in the market at that time and may be materially lower than their
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current fair value. Any of these factors could cause a decline in the value of financial instruments that JPMorgan Chase owns or in which it makes markets, which may have an adverse effect on JPMorgan Chase’s results of operations.
JPMorgan Chase’s risk management and monitoring processes, including its stress testing framework, seek to quantify and manage JPMorgan Chase’s exposure to more extreme market moves. However, JPMorgan Chase’s hedging and other risk management strategies may not be effective, and it could incur significant losses, if extreme market events were to occur.
Credit
JPMorgan Chase can be negatively affected by adverse changes in the financial condition of clients, counterparties, custodians and CCPs.
JPMorgan Chase routinely executes transactions with clients and counterparties such as corporations, financial institutions, asset managers, hedge funds, securities exchanges and government entities within and outside the U.S. Many of these transactions expose JPMorgan Chase to the credit risk of its clients and counterparties, and can involve JPMorgan Chase in disputes and litigation if a client or counterparty defaults. JPMorgan Chase can also be subject to losses or liability where a financial institution that it has appointed to provide custodial services for client assets or funds becomes insolvent as a result of fraud or the failure to abide by existing laws and obligations, or where clients are unable to access assets held by JPMorgan Chase as custodian due to governmental actions or other factors.
A default by, or the financial or operational failure of, a CCP through which JPMorgan Chase executes contracts would require JPMorgan Chase to replace those contracts, thereby increasing its operational costs and potentially resulting in losses. In addition, JPMorgan Chase can be exposed to losses if a member of a CCP in which JPMorgan Chase is also a member defaults on its obligations to the CCP because of requirements that each member of the CCP absorb a portion of those losses. Furthermore, JPMorgan Chase can be subject to bearing its share of non-default losses incurred by a CCP, including losses from custodial, settlement or investment activities or due to cyber or other security breaches.
As part of its clearing services activities, JPMorgan Chase is exposed to the risk of nonperformance by its clients, which it seeks to mitigate by requiring clients to provide adequate collateral. JPMorgan Chase is also exposed to intra-day credit risk of its clients in connection with providing cash management, clearing, custodial and other transaction services to those clients. If a client for which JPMorgan Chase provides these services becomes bankrupt or insolvent, JPMorgan Chase may incur losses, become involved in disputes and litigation with one or more CCPs, the client’s bankruptcy estate and other creditors, or be subject to regulatory investigations. All of the foregoing events can increase JPMorgan Chase’s operational and
litigation costs, and JPMorgan Chase may suffer losses to the extent that any collateral that it has received is insufficient to cover those losses.
Transactions with government entities, including national, state, provincial, municipal and local authorities, can expose JPMorgan Chase to enhanced sovereign, credit, operational and reputation risks. Government entities may, among other things, claim that actions taken by government officials were beyond the legal authority of those officials or repudiate transactions authorized by a previous incumbent government. These types of actions have in the past caused, and could in the future cause, JPMorgan Chase to suffer losses or hamper its ability to conduct business in the relevant jurisdiction.
In addition, local laws, rules and regulations could limit JPMorgan Chase’s ability to resolve disputes and litigation in the event of a counterparty default or unwillingness to make previously agreed-upon payments, which could subject JPMorgan Chase to losses.
Disputes may arise with counterparties to derivatives contracts with regard to the terms, the settlement procedures or the value of underlying collateral. The disposition of those disputes could cause JPMorgan Chase to incur unexpected transaction, operational and legal costs, or result in credit losses. These consequences can also impair JPMorgan Chase’s ability to effectively manage its credit risk exposure from its market activities, or cause harm to JPMorgan Chase’s reputation.
The financial or operational failure of a significant market participant, such as a major financial institution or a CCP, or concerns about the creditworthiness of such a market participant or its ability to fulfill its obligations, can cause substantial and cascading disruption within the financial markets, including in circumstances where coordinated action by multiple other market participants is required to address the failure or disruption. JPMorgan Chase’s businesses could be significantly disrupted by such an event, particularly if it leads to other market participants incurring significant losses, experiencing liquidity issues or defaulting, and JPMorgan Chase is likely to have significant interrelationships with, and credit exposure to, such a significant market participant.
JPMorgan Chase may suffer losses if the value of collateral declines in stressed market conditions.
During periods of market stress or illiquidity, JPMorgan Chase’s credit risk may be further increased when:
JPMorgan Chase fails to realize the fair value of the collateral it holds
collateral is liquidated at prices that are not sufficient to recover the full amount owed to it, or
counterparties are unable to post collateral, whether for operational or other reasons.
Furthermore, disputes with counterparties concerning the valuation of collateral may increase in times of significant
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market stress, volatility or illiquidity, and JPMorgan Chase could suffer losses during these periods if it is unable to realize the fair value of collateral or to manage declines in the value of collateral.
JPMorgan Chase could incur significant losses arising from concentrations of credit and market risk.
JPMorgan Chase is exposed to greater credit and market risk to the extent that groupings of its clients or counterparties:
engage in similar or related businesses, or in businesses in related industries
do business in the same geographic region, or
have business profiles, models or strategies that could cause their ability to meet their obligations to be similarly affected by changes in economic conditions.
For example, a significant deterioration in the credit quality of one of JPMorgan Chase’s borrowers or counterparties could lead to concerns about the creditworthiness of other borrowers or counterparties in similar, related or dependent industries. This type of interrelationship could exacerbate JPMorgan Chase’s credit, liquidity and market risk exposure and potentially cause it to incur losses, including fair value losses in its market-making businesses and investment portfolios. In addition, JPMorgan Chase may be required to increase the allowance for credit losses with respect to certain clients or industries in order to align with directives or expectations of its banking regulators.
Similarly, challenging economic conditions that affect a particular industry or geographic area could lead to concerns about the credit quality of JPMorgan Chase’s borrowers or counterparties not only in that particular industry or geography but in related or dependent industries, wherever located. These conditions could also heighten concerns about the ability of customers of JPMorgan Chase’s consumer businesses who live in those areas or work in those affected industries or related or dependent industries to meet their obligations to JPMorgan Chase. JPMorgan Chase regularly monitors various segments of its credit and market risk exposures to assess the potential risks of concentration or contagion, but its ability to diversify or hedge its exposure against those risks may be limited.
JPMorgan Chase’s consumer businesses can also be harmed by an excessive expansion of consumer credit by bank or non-bank competitors. Heightened competition for certain types of consumer loans could prompt industry-wide reactions such as significant reductions in the pricing or margins of those loans or the making of loans to less-creditworthy borrowers. If large numbers of consumers subsequently default on their loans, whether due to weak credit profiles, an economic downturn or other factors, this could impair their ability to repay obligations owed to JPMorgan Chase and result in higher charge-offs and other credit-related losses. More broadly, widespread defaults on consumer debt could lead to recessionary conditions in the
U.S. economy, and JPMorgan Chase’s consumer businesses may earn lower revenues in such an environment.
If JPMorgan Chase is unable to reduce positions effectively during a market dislocation, this can increase both the market and credit risks associated with those positions and the level of risk-weighted-assets (“RWA”) that JPMorgan Chase holds on its balance sheet. These factors could adversely affect JPMorgan Chase’s capital position, funding costs and the profitability of its businesses.
Liquidity
JPMorgan Chase’s ability to operate its businesses could be impaired if its liquidity is constrained.
JPMorgan Chase’s liquidity could be impaired at any given time by factors such as:
market-wide illiquidity or disruption
unforeseen liquidity or capital requirements, including as a result of changes in laws, rules and regulations
inability to sell assets, or to sell assets at favorable times or prices
default by a CCP or other significant market participant
unanticipated outflows of cash or collateral
unexpected loss of consumer deposits or higher than anticipated draws on lending-related commitments, and
lack of market or customer confidence in JPMorgan Chase or financial institutions in general.
A reduction in JPMorgan Chase’s liquidity may be caused by events over which it has little or no control. For example, periods of market stress, low investor confidence and significant market illiquidity could result in higher funding costs for JPMorgan Chase and could limit its access to some of its traditional sources of liquidity.
JPMorgan Chase may need to raise funding from alternative sources if its access to stable and lower-cost sources of funding, such as deposits and borrowings from Federal Home Loan Banks, is reduced. Alternative sources of funding could be more expensive or limited in availability. JPMorgan Chase’s funding costs could also be negatively affected by actions that JPMorgan Chase may take in order to:
satisfy applicable liquidity coverage ratio and net stable funding ratio requirements
address obligations under its resolution plan, or
satisfy regulatory requirements in jurisdictions outside the U.S. relating to the pre-positioning of liquidity in subsidiaries that are material legal entities.
More generally, if JPMorgan Chase fails to effectively manage its liquidity, this could constrain its ability to fund or invest in its businesses and subsidiaries, and thereby adversely affect its results of operations.
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JPMorgan Chase & Co. is a holding company and depends on the cash flows of its subsidiaries to make payments on its outstanding securities.
JPMorgan Chase & Co. is a holding company that holds the stock of JPMorgan Chase Bank, N.A. and an intermediate holding company, JPMorgan Chase Holdings LLC (the “IHC”). The IHC in turn generally holds the stock of JPMorgan Chase’s subsidiaries other than JPMorgan Chase Bank, N.A. and its subsidiaries. The IHC also owns other assets and provides intercompany lending to the holding company.
The holding company is obligated to contribute to the IHC substantially all the net proceeds received from securities issuances (including issuances of senior and subordinated debt securities and of preferred and common stock).
The ability of JPMorgan Chase Bank, N.A. and the IHC to make payments to the holding company is also limited. JPMorgan Chase Bank, N.A. is subject to regulatory restrictions on its dividend distributions, as well as capital adequacy requirements, such as the Supplementary Leverage Ratio (“SLR”), and liquidity requirements and other regulatory restrictions on its ability to make payments to the holding company. The IHC is prohibited from paying dividends or extending credit to the holding company if certain capital or liquidity thresholds are breached or if limits are otherwise imposed by JPMorgan Chase’s management or Board of Directors.
As a result of these arrangements, the ability of the holding company to make various payments is dependent on its receiving dividends from JPMorgan Chase Bank, N.A. and dividends and borrowings from the IHC. These limitations could affect the holding company’s ability to:
pay interest on its debt securities
pay dividends on its equity securities
redeem or repurchase outstanding securities, and
fulfill its other payment obligations.
These arrangements could also result in the holding company seeking protection under bankruptcy laws or otherwise entering into resolution proceedings at a time earlier than would have been the case absent the existence of the capital and liquidity thresholds to which the IHC is subject.
Reductions in JPMorgan Chase’s credit ratings may adversely affect its liquidity and cost of funding.
JPMorgan Chase & Co. and certain of its principal subsidiaries are rated by credit rating agencies. Rating agencies evaluate general, firm-specific and industry-specific factors when determining credit ratings for a particular financial institution, including:
expected future profitability
risk management practices
legal expenses
ratings differentials between bank holding companies and their bank and non-bank subsidiaries
regulatory developments
assumptions about government support, and
economic and geopolitical developments.
JPMorgan Chase closely monitors and manages, to the extent that it is able, factors that could influence its credit ratings. However, there is no assurance that JPMorgan Chase’s credit ratings will not be lowered in the future. Furthermore, any such downgrade could occur at times of broader market instability when JPMorgan Chase’s options for responding to events may be more limited and general investor confidence is low.
A reduction in JPMorgan Chase’s credit ratings could curtail JPMorgan Chase’s business activities and reduce its profitability in a number of ways, including:
reducing its access to capital markets
materially increasing its cost of issuing and servicing securities
triggering additional collateral or funding requirements, and
decreasing the number of investors and counterparties that are willing or permitted to do business with or lend to JPMorgan Chase.
Any rating reduction could also increase the credit spreads charged by the market for taking credit risk on JPMorgan Chase & Co. and its subsidiaries. This could, in turn, adversely affect the value of debt and other obligations of JPMorgan Chase & Co. and its subsidiaries.
The transition to alternative reference rates could expose JPMorgan Chase to operational risks or litigation and other disputes.
Regulators, industry bodies and other market participants in the U.S. and other countries continue to engage in initiatives to introduce and encourage the use of alternative reference rates to replace certain interest rate indices that are deemed to be “benchmarks”, and certain of these alternative rates have gained or are gaining acceptance among market participants. However, there is no assurance that:
any of these new rates will be similar to, or produce the economic equivalent of, the benchmarks that they seek to replace
arrangements by market participants to prepare for the discontinuation of certain benchmarks and the transition to alternative reference rates will be fully effective, or
a particular alternative reference rate will be widely accepted by market participants, or that market acceptance of that rate will not be hindered by the introduction of other reference rates.
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For example, vast amounts of loans, mortgages, securities, derivatives and other financial instruments are still linked to the London Interbank Offered Rate (“LIBOR”) benchmark, and significant progress has been made by regulators, industry bodies and market participants to introduce and implement the Secured Overnight Financing Rate (“SOFR”) as a replacement rate for U.S. dollar LIBOR. However, if market participants have not implemented effective operational and other arrangements to address the transition from U.S. dollar LIBOR to SOFR, this could result in dislocation in the financial markets, volatility in the pricing of securities, derivatives and other instruments, and the suppression of capital markets activities, all of which could have a negative impact on JPMorgan Chase’s results of operations and on U.S. dollar LIBOR-linked securities, credit or other instruments which are issued, funded, serviced or held by JPMorgan Chase.
JPMorgan Chase could also become involved in litigation and other types of disputes with clients, customers, counterparties and investors as a consequence of the transition from U.S. dollar LIBOR and other benchmark rates to replacement rates, including claims that JPMorgan Chase has:
treated clients, customers, counterparties or investors unfairly, or caused them to experience losses, higher financing costs or lower returns on investments
failed to appropriately communicate the effects of the transition from benchmark rates on the products that JPMorgan Chase has sold to its clients and customers, or failed to disclose purported conflicts of interest
made inappropriate product recommendations to or investments on behalf of its clients, or sold products that did not serve their intended purpose, in connection with the transition from benchmark rates
engaged in anti-competitive behavior, or in the manipulation of markets or specific benchmarks, in connection with the discontinuation of or transition from benchmark rates, or
disadvantaged clients, customers, counterparties or investors when interpreting or making determinations under the terms of agreements or financial instruments.
These types of claims could subject JPMorgan Chase to higher legal expenses and operational costs, require it to pay significant amounts in connection with resolving litigation and other disputes, and harm its reputation.
Capital
Maintaining the required level and composition of capital may impact JPMorgan Chase’s ability to support business activities, meet evolving regulatory requirements and distribute capital to shareholders.
JPMorgan Chase is subject to various regulatory capital requirements, including leverage- and risk-based capital requirements. In addition, as a Globally Systemically
Important Bank (“GSIB”), JPMorgan Chase is required to hold additional capital buffers, including a GSIB surcharge, a Stress Capital Buffer (“SCB”), and a countercyclical buffer, each of which is reassessed at least annually. The amount of capital that JPMorgan Chase is required to hold in order to satisfy these leverage-and risk-based requirements could increase at any given time due to factors such as:
actions by banking regulators, including changes in laws, rules, and regulations
actions taken by the Federal Reserve or the U.S. government in response to the economic effects of systemic events, such as the actions taken in response to the COVID-19 pandemic which led to an expansion of the Federal Reserve balance sheet, growth in deposits held by JPMorgan Chase and other U.S. financial institutions and, consequently, an increase in leverage exposure and the GSIB surcharge
changes in the composition of JPMorgan Chase’s balance sheet or developments that could increase RWA, such as increased market risk, customer delinquencies, client credit rating downgrades or other factors, and
increases in estimated stress losses as determined by the Federal Reserve under the Comprehensive Capital Analysis and Review, which could increase JPMorgan Chase’s SCB.
Any failure by or inability of JPMorgan Chase to maintain the required level and composition of capital, or unfavorable changes in applicable capital requirements, could have an adverse impact on JPMorgan Chase’s shareholders, such as:
reducing the amount of common stock that JPMorgan Chase is permitted to repurchase
requiring the issuance of, or prohibiting the redemption of, capital instruments in a manner inconsistent with JPMorgan Chase’s capital management strategy
constraining the amount of dividends that may be paid on common stock, or
curtailing JPMorgan Chase’s business activities or operations.
Operational
JPMorgan Chase’s businesses are dependent on the effectiveness of its operational systems and those of other market participants.
JPMorgan Chase’s businesses rely on the ability of JPMorgan Chase’s financial, accounting, transaction execution, data processing and other operational systems to process, record, monitor and report a large number of transactions on a continuous basis, and to do so accurately, quickly and securely. In addition to proper design, installation, maintenance and training, the effective
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functioning of JPMorgan Chase’s operational systems depends on:
the quality of the information contained in those systems, as inaccurate, outdated or corrupted data can significantly compromise the functionality or reliability of a particular system and other systems to which it transmits or from which it receives information, and
the ability of JPMorgan Chase to appropriately maintain and upgrade its systems on a regular basis, and to ensure that any changes introduced to its systems are managed carefully to ensure security and operational continuity and adherence to all applicable legal and regulatory requirements.
JPMorgan Chase also depends on its ability to access and use the operational systems of third parties, including its custodians, vendors (such as those that provide data and cloud computing services, and security and technology services) and other market participants (such as clearing and payment systems, CCPs and securities exchanges).
The ineffectiveness, failure or other disruption of operational systems upon which JPMorgan Chase depends, including due to a systems malfunction, cyberbreach or other systems failure, could result in unfavorable ripple effects in the financial markets and for JPMorgan Chase and its clients and customers, including:
delays or other disruptions in providing services, liquidity or information to clients and customers
the inability to settle transactions or obtain access to funds and other assets, including those for which physical settlement and delivery is required
failure to timely settle or confirm transactions
the possibility that funds transfers, capital markets trades or other transactions are executed erroneously, as a result of illegal conduct or with unintended consequences
financial losses, including due to loss-sharing requirements of CCPs, payment systems or other market infrastructures, or as possible restitution to clients and customers
higher operational costs associated with replacing services provided by a system that is unavailable
client or customer dissatisfaction with JPMorgan Chase’s products and services
limitations on JPMorgan Chase's ability to collect data as required in connection with regulatory or other investigations
regulatory fines, penalties, or other sanctions against JPMorgan Chase
loss of confidence in the ability of JPMorgan Chase, or financial institutions generally, to protect against and withstand operational disruptions, or
harm to JPMorgan Chase’s reputation.
As the speed, frequency, volume, interconnectivity and complexity of transactions continue to increase, it can become more challenging to effectively maintain and upgrade JPMorgan Chase’s operational systems and infrastructure, especially due to the heightened risks that:
attempts by third parties to defraud JPMorgan Chase or its clients and customers may increase, evolve or become more complex, particularly during periods of market disruption or economic uncertainty
errors made by JPMorgan Chase or another market participant, whether inadvertent or malicious, cause widespread system disruption
isolated or seemingly insignificant errors in operational systems compound, or migrate to other systems over time, to become larger issues
failures in synchronization or encryption software, or degraded performance of microprocessors, could cause disruptions in operational systems, or the inability of systems to communicate with each other, and
third parties may attempt to block the use of key technology solutions by claiming that the use infringes on their intellectual property rights.
If JPMorgan Chase’s operational systems, or those of newly-acquired businesses or of external parties on which JPMorgan Chase’s businesses depend, are unable to meet the requirements of JPMorgan Chase’s businesses and operations or bank regulatory standards, or if they fail or have other significant shortcomings, JPMorgan Chase could be materially and adversely affected.
A successful cyber attack affecting JPMorgan Chase could cause significant harm to JPMorgan Chase and its clients and customers.
JPMorgan Chase experiences numerous cyber attacks on its computer systems, software, networks and other technology assets on a daily basis from various actors, including groups acting on behalf of hostile countries, cyber-criminals, “hacktivists” (i.e., individuals or groups that use technology to promote a political agenda or social change) and others. These cyber attacks can take many forms, including attempts to introduce computer viruses or malicious code, which are commonly referred to as “malware,” into JPMorgan Chase’s systems. These attacks are often designed to:
obtain unauthorized access to confidential information belonging to JPMorgan Chase or its clients, customers, counterparties or employees
manipulate data
destroy data or systems with the aim of rendering services unavailable
disrupt, sabotage or degrade service on JPMorgan Chase’s systems
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steal money, or
extort money through the use of so-called “ransomware.”
JPMorgan Chase has also experienced:
significant distributed denial-of-service attacks intended to disrupt online banking services and other business activities, and
a higher volume and complexity of cyber attacks against the backdrop of heightened geopolitical tensions.
JPMorgan Chase has experienced security breaches due to cyber attacks in the past, and it is inevitable that additional breaches will occur in the future. Any such breach could result in serious and harmful consequences for JPMorgan Chase or its clients and customers.
A principal reason that JPMorgan Chase cannot provide absolute security against cyber attacks is that it may not always be possible to anticipate, detect or recognize threats to JPMorgan Chase’s systems, or to implement effective preventive measures against all breaches because:
the techniques used in cyber attacks evolve frequently and are increasingly sophisticated, and therefore may not be recognized until launched
cyber attacks can originate from a wide variety of sources, including JPMorgan Chase’s own employees, cyber-criminals, hacktivists, groups linked to terrorist organizations or hostile countries, or third parties whose objective is to disrupt the operations of financial institutions more generally
JPMorgan Chase does not have control over the cybersecurity of the systems of the large number of clients, customers, counterparties and third-party service providers with which it does business, and
it is possible that a third party, after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.
The risk of a security breach due to a cyber attack could increase in the future due to factors such as:
JPMorgan Chase’s ongoing expansion of its mobile banking and other internet-based product offerings and its internal use of internet-based products and applications, including those that use cloud computing services
the acquisition and integration of new businesses, and
the increased use of remote access and third party video conferencing solutions to facilitate work-from-home arrangements for employees.
In addition, a third party could misappropriate confidential information obtained by intercepting signals or
communications from mobile devices used by JPMorgan Chase’s employees.
A successful penetration or circumvention of the security of JPMorgan Chase’s systems or the systems of a vendor, governmental body or another market participant could cause serious negative consequences, including:
significant disruption of JPMorgan Chase’s operations and those of its clients, customers and counterparties, including losing access to operational systems
misappropriation of confidential information of JPMorgan Chase or that of its clients, customers, counterparties, employees or regulators
disruption of or damage to JPMorgan Chase’s systems and those of its clients, customers and counterparties
the inability, or extended delays in the ability, to fully recover and restore data that has been stolen, manipulated or destroyed, or the inability to prevent systems from processing fraudulent transactions
violations by JPMorgan Chase of applicable privacy and other laws
financial loss to JPMorgan Chase or to its clients, customers, counterparties or employees
loss of confidence in JPMorgan Chase’s cybersecurity and business resiliency measures
dissatisfaction among JPMorgan Chase’s clients, customers or counterparties
significant exposure to litigation and regulatory fines, penalties or other sanctions, and
harm to JPMorgan Chase’s reputation.
The extent of a particular cyber attack and the steps that JPMorgan Chase may need to take to investigate the attack may not be immediately clear, and it may take a significant amount of time before such an investigation can be completed. While such an investigation is ongoing, JPMorgan Chase may not necessarily know the full extent of the harm caused by the cyber attack, and that damage may continue to spread. These factors may inhibit JPMorgan Chase’s ability to provide rapid, full and reliable information about the cyber attack to its clients, customers, counterparties and regulators, as well as the public. Furthermore, it may not be clear how best to contain and remediate the harm caused by the cyber attack, and certain errors or actions could be repeated or compounded before they are discovered and remediated. Any or all of these factors could further increase the costs and consequences of a cyber attack.

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JPMorgan Chase can be negatively affected if it fails to identify and address operational risks associated with the introduction of or changes to products, services and delivery platforms.
When JPMorgan Chase launches a new product or service, introduces a new platform for the delivery or distribution of products or services (including mobile connectivity, electronic trading and cloud computing), acquires or invests in a business or makes changes to an existing product, service or delivery platform, it may not fully appreciate or identify new operational risks that may arise from those changes, or may fail to implement adequate controls to mitigate the risks associated with those changes. Any significant failure in this regard could diminish JPMorgan Chase’s ability to operate one or more of its businesses or result in:
potential liability to clients, counterparties and customers
increased operating expenses
higher litigation costs, including regulatory fines, penalties and other sanctions
damage to JPMorgan Chase’s reputation
impairment of JPMorgan Chase’s liquidity
regulatory intervention, or
weaker competitive standing.
Any of the foregoing consequences could materially and adversely affect JPMorgan Chase’s businesses and results of operations.
JPMorgan Chase’s operational costs and customer satisfaction could be adversely affected by the failure of an external operational system.
External operational systems with which JPMorgan is connected, whether directly or indirectly, can be sources of operational risk to JPMorgan Chase. JPMorgan Chase may be exposed not only to a systems failure or cyber attack that may be experienced by a vendor or market infrastructure with which JPMorgan Chase is directly connected, but also to a systems breakdown or cyber attack involving another party to which such a vendor or infrastructure is connected. Similarly, retailers, payment systems and processors, data aggregators and other external parties with which JPMorgan Chase’s customers do business can increase JPMorgan Chase’s operational risk. This is particularly the case where activities of customers or other parties are beyond JPMorgan Chase’s security and control systems, including through the use of the internet, cloud computing services, and personal smart phones and other mobile devices or services.
If an external party obtains access to customer account data on JPMorgan Chase’s systems, whether authorized or unauthorized, and that party experiences a cyberbreach of its own systems or misappropriates that data, this could
result in a variety of negative outcomes for JPMorgan Chase and its clients and customers, including:
heightened risk that external parties will be able to execute fraudulent transactions using JPMorgan Chase’s systems
losses from fraudulent transactions, as well as potential liability for losses that exceed thresholds established in consumer protection laws, rules and regulations
increased operational costs to remediate the consequences of the external party’s security breach, and
reputational harm arising from the perception that JPMorgan Chase’s systems may not be secure.
As JPMorgan Chase’s interconnectivity with clients, customers and other external parties continues to expand, JPMorgan Chase increasingly faces the risk of operational failure or cyber attacks with respect to the systems of those parties. Security breaches affecting JPMorgan Chase’s clients or customers, or systems breakdowns or failures, security breaches or human error or misconduct affecting other external parties, may require JPMorgan Chase to take steps to protect the integrity of its own operational systems or to safeguard confidential information, including restricting the access of customers to their accounts. These actions can increase JPMorgan Chase’s operational costs and potentially diminish customer satisfaction and confidence in JPMorgan Chase.
Furthermore, the widespread and expanding interconnectivity among financial institutions, clearing banks, CCPs, payments processors, financial technology companies, securities exchanges, clearing houses and other financial market infrastructures increases the risk that the disruption of an operational system involving one institution or entity, including due to a cyber attack, may cause industry-wide operational disruptions that could materially affect JPMorgan Chase’s ability to conduct business.
JPMorgan Chase’s business and operations rely on its ability, and the ability of key external parties, to maintain appropriately-staffed workforces, and on the competence, trustworthiness, health and safety of employees.
JPMorgan Chase’s ability to operate its businesses efficiently and profitably, to offer products and services that meet the expectations of its clients and customers, and to maintain an effective risk management framework is highly dependent on its ability to staff its operations appropriately and on the competence, integrity, health and safety of its employees. JPMorgan Chase's businesses and operations similarly rely on the workforces of third parties, including employees of vendors, custodians and financial markets infrastructures, and of businesses that it may seek to acquire. JPMorgan Chase’s businesses could be materially and adversely affected by:
the ineffective implementation of business decisions
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any failure to institute controls that appropriately address risks associated with business activities, or to appropriately train employees with respect to those risks and controls
staffing shortages, particularly in tight labor markets
the possibility that significant portions of JPMorgan Chase’s workforce are unable to work effectively, including because of illness, quarantines, shelter-in-place arrangements, government actions or other restrictions in connection with health emergencies, the spread of infectious diseases, epidemics or pandemics
a significant operational breakdown or failure, theft, fraud or other unlawful conduct, or
other negative outcomes caused by human error or misconduct by an employee of JPMorgan Chase or of another party on which JPMorgan Chase’s businesses or operations depend.
JPMorgan Chase’s operations could also be impaired if the measures taken by it or by governmental authorities to help ensure the health and safety of its employees are ineffective, or if any external party on which JPMorgan Chase relies fails to take appropriate and effective actions to protect the health and safety of its employees.
JPMorgan Chase faces substantial legal and operational risks in the processing and safeguarding of personal information.
JPMorgan Chase’s businesses and operations are subject to complex and evolving laws, rules and regulations, both within and outside the U.S., governing the privacy and protection of personal information of individuals. Governmental authorities around the world have adopted and are considering the adoption of numerous legislative and regulatory initiatives concerning privacy, data protection and security. Litigation or enforcement actions relating to these laws, rules and regulations could result in
fines or orders requiring that JPMorgan Chase change its data-related practices, which could have an adverse effect on JPMorgan Chase’s ability to provide products and otherwise harm its business operations.
Implementing processes relating to JPMorgan Chase’s collection, use, sharing and storage of personal information to comply with all applicable laws, rules and regulations in all relevant jurisdictions, including where the laws of different jurisdictions are in conflict, can:
increase JPMorgan Chase’s compliance and operating costs
hinder the development of new products or services, curtail the offering of existing products or services, or affect how products and services are offered to clients and customers
demand significant oversight by JPMorgan Chase’s management, and
require JPMorgan Chase to structure its businesses, operations and systems in less efficient ways.
Not all of JPMorgan Chase’s clients, customers, vendors, counterparties and other external parties may have appropriate controls in place to protect the confidentiality, integrity or availability of the information exchanged between them and JPMorgan Chase, particularly where information is transmitted by electronic means. JPMorgan Chase could be exposed to litigation or regulatory fines, penalties or other sanctions if personal information of clients, customers, employees or others were to be mishandled or misused, such as situations where such information is:
erroneously provided to parties who are not permitted to have the information, or
intercepted or otherwise compromised by unauthorized third parties.
Concerns regarding the effectiveness of JPMorgan Chase’s measures to safeguard personal information, or even the perception that those measures are inadequate, could cause JPMorgan Chase to lose existing or potential clients and customers or employees, and thereby reduce JPMorgan Chase’s revenues. Furthermore, any failure or perceived failure by JPMorgan Chase to comply with applicable privacy or data protection laws, rules and regulations may subject it to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices, significant liabilities or regulatory fines, penalties or other sanctions. Any of these could damage JPMorgan Chase’s reputation and otherwise adversely affect its businesses.
In recent years, well-publicized incidents involving the inappropriate collection, use, sharing or storage of personal information have led to expanded governmental scrutiny of practices relating to the processing or safeguarding of personal information by companies in the U.S. and other countries. That scrutiny has in some cases resulted in, and could in the future lead to, the adoption of stricter laws, rules and regulations relating to the collection, use, sharing and storage of personal information. These types of laws, rules and regulations could prohibit or significantly restrict financial services firms such as JPMorgan Chase from transferring information across national borders or sharing information among affiliates or with third parties such as vendors, thereby increase compliance costs, or could restrict JPMorgan Chase’s use of personal information when developing or offering products or services to customers. Some countries are considering or have adopted legislation implementing data protection requirements or requiring local storage and processing of data which could increase the cost and complexity of JPMorgan Chase’s delivery of products and services. These restrictions could also inhibit JPMorgan Chase’s development or marketing of certain products or services, or increase the costs of offering them to customers.
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JPMorgan Chase’s operations, results and reputation could be harmed by occurrences of extraordinary events beyond its control.
JPMorgan Chase’s business and operational systems could be seriously disrupted, and its reputation could be harmed, by events or contributing factors that are wholly or partially beyond its control, including material instances of:
cyber attacks
security breaches of its physical premises, including threats to health and safety
power, telecommunications or internet outages, or shutdowns of mass transit
failure of, or loss of access to, technology or operational systems, including any resulting loss of critical data
damage to or loss of property or assets of JPMorgan Chase or third parties, and any consequent injuries, including in connection with any construction projects undertaken by JPMorgan Chase
effects of climate change
natural disasters or severe weather conditions
accidents such as explosions or structural failures
health emergencies, the spread of infectious diseases, epidemics or pandemics, or
events arising from local or larger-scale civil or political unrest, any outbreak or escalation of hostilities, or terrorist acts.
JPMorgan Chase maintains a Firmwide resiliency program that is intended to enable it to recover critical business functions and supporting assets, including staff, technology and facilities, in the event of a business disruption, including due to the occurrence of an extraordinary event beyond its control. There can be no assurance that JPMorgan Chase’s resiliency plans will fully mitigate all potential business continuity risks to JPMorgan Chase, its clients, and customers and third parties with which it does business, or that its resiliency plans will be adequate to address the effects of simultaneous occurrences of multiple business disruption events. In addition, JPMorgan Chase’s ability to respond effectively to a business disruption event could be hampered to the extent that the members of its workforce, physical assets or systems and other support infrastructure needed to address the event are geographically dispersed, or conversely, if such an event were to occur in an area in which they are concentrated. Further, should extraordinary events or the factors that cause or contribute to those events become more chronic, the disruptive effects of those events on JPMorgan Chase’s business and operations, and on its clients, customers, counterparties and employees, could become more significant and long-lasting.
Any significant failure or disruption of JPMorgan Chase’s operations or operational systems, or the occurrence of one or more extraordinary events that are beyond its control, could:
hinder JPMorgan Chase’s ability to provide services to its clients and customers or to transact with its counterparties
require it to expend significant resources to correct the failure or disruption or to address the event
cause it to incur losses or liabilities, including from loss of revenue, damage to or loss of property, or injuries
disrupt market infrastructure systems on which JPMorgan Chase’s businesses rely
expose it to litigation or regulatory fines, penalties or other sanctions, and
harm its reputation.
Enhanced regulatory and other standards for the oversight of vendors and other service providers can result in higher costs and other potential exposures.
JPMorgan Chase must comply with enhanced regulatory and other standards associated with doing business with vendors and other service providers, including standards relating to the outsourcing of functions as well as the performance of significant banking and other functions by subsidiaries. JPMorgan Chase incurs significant costs and expenses in connection with its initiatives to address the risks associated with oversight of its internal and external service providers. JPMorgan Chase’s failure to appropriately assess and manage these relationships, especially those involving significant banking functions, shared services or other critical activities, could materially adversely affect JPMorgan Chase. Specifically, any such failure could result in:
potential harm to clients and customers, and any liability associated with that harm
regulatory fines, penalties or other sanctions
lower revenues, and the opportunity cost from lost revenues
increased operational costs, or
harm to JPMorgan Chase’s reputation.
JPMorgan Chase’s risk management framework may not be effective in identifying and mitigating every risk to JPMorgan Chase.
Any inadequacy or lapse in JPMorgan Chase’s risk management framework, governance structure, practices, models or reporting systems could expose it to unexpected losses, and its financial condition or results of operations could be materially and adversely affected. Any such inadequacy or lapse could:
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Part I
hinder the timely escalation of material risk issues to JPMorgan Chase’s senior management and Board of Directors
lead to business decisions that have negative outcomes for JPMorgan Chase
require significant resources and time to remediate
lead to non-compliance with laws, rules and regulations
attract heightened regulatory scrutiny
expose JPMorgan Chase to litigation, regulatory investigations or regulatory fines, penalties or other sanctions
lead to potential harm to customers and clients, and any liability associated with that harm
harm its reputation, or
otherwise diminish confidence in JPMorgan Chase.
JPMorgan Chase relies on data to assess its various risk exposures. Any deficiencies in the quality or effectiveness of JPMorgan Chase’s data gathering, analysis and validation processes could result in ineffective risk management practices. These deficiencies could also result in inaccurate or untimely risk reporting.
Many of JPMorgan Chase’s risk management strategies and techniques consider historical market behavior and to some degree are based on management’s subjective judgment or assumptions. For example, many models used by JPMorgan Chase are based on assumptions regarding historical correlations among prices of various asset classes or other market indicators. In times of market stress, including difficult or less liquid market environments, or in the event of other unforeseen circumstances, previously uncorrelated indicators may become correlated. Conversely, previously-correlated indicators may become uncorrelated at those times. Sudden market movements and unanticipated market or economic movements could, in some circumstances, limit the effectiveness of JPMorgan Chase’s risk management strategies, causing it to incur losses.
JPMorgan Chase could recognize unexpected losses, its capital levels could be reduced and it could face greater regulatory scrutiny if its models, estimations or judgments, including those used in its financial statements, prove to be inadequate or incorrect.
JPMorgan Chase has developed and uses a variety of models and other analytical and judgment-based estimations to measure, monitor and implement controls over its market, credit, capital, liquidity, operational and other risks. JPMorgan Chase also uses internal models and estimations as a basis for its stress testing and in connection with the preparation of its financial statements under U.S. generally accepted accounting principles (“U.S. GAAP”).
These models and estimations are based on a variety of assumptions and historical trends, and are periodically
reviewed and modified as necessary. The models and estimations that JPMorgan Chase uses may not be effective in all cases to identify, observe and mitigate risk due to a variety of factors, such as:
reliance on historical trends that may not persist in the future, including assumptions underlying the models and estimations such as correlations among certain market indicators or asset prices
inherent limitations associated with forecasting uncertain economic and financial outcomes
historical trend information may be incomplete, or may not be indicative of severely negative market conditions such as extreme volatility, dislocation or lack of liquidity
sudden illiquidity in markets or declines in prices of certain loans and securities may make it more difficult to value certain financial instruments
technology that is introduced to run models or estimations may not perform as expected, or may not be well understood by the personnel using the technology
models and estimations may contain erroneous data, valuations, formulas or algorithms, and
review processes may fail to detect flaws in models and estimations.
JPMorgan Chase may experience unexpected losses if models, estimates or judgments used or applied in connection with its risk management activities or the preparation of its financial statements prove to have been inadequate or incorrect. For example, where quoted market prices are not available for certain financial instruments that require a determination of their fair value, JPMorgan Chase may make fair value determinations based on internally developed models or other means which ultimately rely to some degree on management estimates and judgment.
Similarly, JPMorgan Chase establishes an allowance for expected credit losses related to its credit exposures which requires significant judgments, including forecasts of how macroeconomic conditions might impair the ability of JPMorgan Chase’s clients and customers to repay their loans or other obligations. These types of estimates and judgments may not prove to be accurate due to a variety of factors, as noted above. This is particularly true when the current and forecasted environments are significantly different from the historical environments upon which the models were developed, as JPMorgan Chase experienced during the early stages of the COVID-19 pandemic. The increased uncertainty may necessitate a greater degree of judgment and analytics to inform any adjustments that JPMorgan Chase may make to model outputs than would otherwise be the case.
Some of the models and other analytical and judgment-based estimations used by JPMorgan Chase in managing
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risks are subject to review by, and require the approval of, JPMorgan Chase’s regulators. These reviews are required before JPMorgan Chase may use those models and estimations for calculating market risk RWA, credit risk RWA and operational risk RWA under Basel III. If JPMorgan Chase’s models or estimations are not approved by its regulators, it may be subject to higher capital charges, which could adversely affect its financial results or limit the ability to expand its businesses.
Lapses in controls over disclosure or financial reporting could materially affect JPMorgan Chase’s profitability or reputation.
There can be no assurance that JPMorgan Chase’s disclosure controls and procedures will be effective in every circumstance, or that a material weakness or significant deficiency in internal control over financial reporting will not occur. Any such lapses or deficiencies could result in inaccurate financial reporting which, in turn, could:
materially and adversely affect JPMorgan Chase’s business and results of operations or financial condition
restrict its ability to access the capital markets
require it to expend significant resources to correct the lapses or deficiencies
expose it to litigation or regulatory fines, penalties or other sanctions
harm its reputation, or
otherwise diminish investor confidence in JPMorgan Chase.
Strategic
If JPMorgan Chase’s management fails to develop and execute effective business strategies, and to anticipate changes affecting those strategies, JPMorgan Chase’s competitive standing and results could suffer.
JPMorgan Chase’s business strategies significantly affect its competitive standing and operations. These strategies relate to:
the products and services that JPMorgan Chase offers
the geographies in which it operates
the types of clients and customers that it serves
the businesses that it acquires or in which it invests
the counterparties with which it does business, and
the methods and distribution channels by which it offers products and services.
If management makes choices about these strategies and goals that prove to be incorrect, are based on incomplete, inaccurate or fraudulent information, do not accurately assess the competitive landscape and industry trends, or fail to address changing regulatory and market environments or the expectations of clients, customers,
investors, employees and other stakeholders, then the franchise values and growth prospects of JPMorgan Chase’s businesses may suffer and its earnings could decline.
JPMorgan Chase’s growth prospects also depend on management’s ability to develop and execute effective business plans to address these strategic priorities, both in the near term and over longer time horizons. Management’s effectiveness in this regard will affect JPMorgan Chase’s ability to develop and enhance its resources, control expenses and return capital to shareholders. Each of these objectives could be adversely affected by any failure on the part of management to:
devise effective business plans and strategies
offer products and services that meet changing expectations of clients and customers
allocate capital in a manner that promotes long-term stability to enable JPMorgan Chase to build and invest in market-leading businesses, even in a highly stressed environment
allocate capital appropriately due to imprecise modeling or subjective judgments made in connection with those allocations
conduct appropriate due diligence on prospective business acquisitions or investments, or effectively integrate newly-acquired businesses
appropriately address concerns of clients, customers, investors, employees and other stakeholders, including with respect to ESG matters
react quickly to changes in market conditions or market structures, or
develop and enhance the operational, technology, risk, financial and managerial resources necessary to grow and manage JPMorgan Chase’s businesses.
Furthermore, JPMorgan Chase may incur costs in connection with disposing of excess properties, premises and facilities, and those costs could be material to its results of operations in a given period.
JPMorgan Chase faces significant and increasing competition in the rapidly evolving financial services industry.
JPMorgan Chase operates in a highly competitive environment in which it must evolve and adapt to the significant changes as a result of changes in financial regulation, technological advances, increased public scrutiny and changes in economic conditions. JPMorgan Chase expects that competition in the U.S. and global financial services industry will continue to be intense. Competitors include:
other banks and financial institutions
trading, advisory and investment management firms
finance companies
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Part I
technology companies, and
other nonbank firms that are engaged in providing similar as well as new products and services.
JPMorgan Chase cannot provide assurance that the significant competition in the financial services industry will not materially and adversely affect its future results of operations. For example, aggressive or less disciplined lending practices by nonbank competitors could lead to a loss of market share for traditional banks, and in an economic downturn could result in instability in the financial services industry and adversely impact other market participants, including JPMorgan Chase.
New competitors in the financial services industry continue to emerge. For example, technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products. These advances have also allowed financial institutions and other companies to provide electronic and internet-based financial solutions, including electronic securities and cryptocurrency trading, lending and other extensions of credit to consumers, payments processing and online automated algorithmic-based investment advice. Furthermore, both financial institutions and their non-banking competitors face the risk that payments processing and other products and services, including deposits and other traditional banking products, could be significantly disrupted by the use of new technologies, such as cryptocurrencies and other applications using secure distributed ledgers, that require no intermediation. New technologies have required and could require JPMorgan Chase to spend more to modify or adapt its products to attract and retain clients and customers or to match products and services offered by its competitors, including technology companies. In addition, new technologies may be used by customers, or breached or infiltrated by third parties, in unexpected ways, which can increase JPMorgan Chase’s costs for complying with laws, rules and regulations that apply to the offering of products and services through those technologies and reduce the income that JPMorgan Chase earns from providing products and services through those technologies.
Ongoing or increased competition may put pressure on the pricing for JPMorgan Chase’s products and services or may cause JPMorgan Chase to lose market share, particularly with respect to traditional banking products. This competition may be on the basis of quality and variety of products and services offered, transaction execution, innovation, reputation and price. The failure of any of JPMorgan Chase’s businesses to meet the expectations of clients and customers, whether due to general market conditions, under-performance, a decision not to offer a particular product or service, changes in client and customer expectations or other factors, could affect JPMorgan Chase’s ability to attract or retain clients and customers. Any such impact could, in turn, reduce JPMorgan Chase’s revenues. Increased competition also
may require JPMorgan Chase to make additional capital investments in its businesses, or to extend more of its capital on behalf of its clients in order to remain competitive.
The effects of climate change could adversely affect JPMorgan Chase’s business and operations, both directly and as a result of impacts on its clients and customers.
JPMorgan Chase operates in many regions, countries and communities around the world where its business, and the activities of its clients and customers, could be adversely affected by climate change. Climate change could manifest as a financial risk to JPMorgan Chase either through changes in the physical climate or from the process of transitioning to a lower-carbon economy. Both physical risks and transition risks associated with climate change could have negative impacts on the financial condition or creditworthiness of JPMorgan’s clients and customers, and on its exposure to those clients and customers.
Climate-related physical risks include the increased frequency or severity of acute weather events, such as floods, wildfires and tropical storms, and chronic shifts in the climate, such as persistent changes in precipitation levels, rising sea levels, or increases in average ambient temperature.Potential adverse impacts of climate-related physical risks include:
declines in asset values, including due to the destruction or degradation of property
reduced availability or increased cost of insurance for clients of JPMorgan Chase
interruptions to business operations, including supply chain disruption, and
population migration or unemployment in affected regions.
Transition risks arise from societal adjustment to a lower-carbon economy, such as changes in public policy, adoption of new technologies or changes in consumer preferences towards low-carbon goods and services. These risks could also be influenced by changes in the physical climate. Potential adverse impacts of transition risks include:
sudden devaluation of assets, including unanticipated write-downs (“stranded assets”)
increased operational and compliance costs driven by changes in climate policy
increased energy costs driven by governmental actions and initiatives such as higher taxation and accelerated decarbonization policies
negative consequences to business models, and the need to make changes in response to those consequences, and
damage to JPMorgan Chase’s reputation, including due to any perception that its business practices are
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contrary to public policy or the preferences of different stakeholders.
Climate risks can also arise from the inconsistencies and conflicts in the manner in which climate policy and financial regulation is implemented in the many regions where JPMorgan Chase operates, including initiatives to apply and enforce policy and regulation with extraterritorial effect.
Conduct
Conduct failure by JPMorgan Chase employees can harm clients and customers, impact market integrity, damage JPMorgan Chase’s reputation and trigger litigation and regulatory action.
JPMorgan Chase’s employees interact with clients, customers and counterparties, and with each other, every day. All employees are expected to demonstrate values and exhibit the behaviors that are an integral part of JPMorgan Chase’s Code of Conduct and How We Do Business Principles, including JPMorgan Chase’s commitment to “do first class business in a first class way.” JPMorgan Chase endeavors to embed conduct risk management throughout an employee’s life cycle, including recruiting, onboarding, training and development, and performance management. Conduct risk management is also an integral component of JPMorgan Chase’s promotion and compensation processes.
Notwithstanding these expectations, policies and practices, certain employees have engaged in improper or illegal conduct in the past. These instances of misconduct have resulted in litigation, and resolutions of governmental investigations or enforcement actions involving consent orders, deferred prosecution agreements, non-prosecution agreements and other civil or criminal sanctions. There is no assurance that further inappropriate or unlawful actions by employees have not occurred or will not occur, lead to a violation of the terms of these resolutions (and associated consequences), or that any such actions will always be detected, deterred or prevented.
JPMorgan Chase’s reputation could be harmed, and collateral consequences could result, from a failure by one or more employees to conduct themselves in accordance with JPMorgan Chase’s expectations, policies and practices, including by acting in ways that harm clients, customers, other market participants, employees or others. Some examples of this include:
improperly selling and marketing JPMorgan Chase’s products or services
engaging in insider trading, market manipulation or unauthorized trading
engaging in improper or fraudulent behavior in connection with government relief programs
facilitating a transaction where a material objective is to achieve a particular tax, accounting or financial disclosure treatment that may be subject to scrutiny by governmental or regulatory authorities, or where the
proposed treatment is unclear or may not reflect the economic substance of the transaction
failing to fulfill fiduciary obligations or other duties owed to clients or customers
violating antitrust or anti-competition laws by colluding with other market participants
using electronic communications channels that have not been approved by JPMorgan Chase
engaging in discriminatory behavior or harassment with respect to clients, customers or employees, or acting contrary to JPMorgan Chase’s goal of fostering a diverse and inclusive workplace
managing or reporting risks in ways that subordinate JPMorgan Chase’s risk appetite to business performance goals or employee compensation objectives, and
misappropriating property, confidential or proprietary information, or technology assets belonging to JPMorgan Chase, its clients and customers or third parties.
The consequences of any failure by one or more employees to conduct themselves in accordance with JPMorgan Chase’s expectations, policies or practices could include litigation, or regulatory or other governmental investigations or enforcement actions. Any of these proceedings or actions could result in judgments, settlements, fines, penalties or other sanctions, or lead to:
financial losses
increased operational and compliance costs
greater scrutiny by regulators and other parties
regulatory actions that require JPMorgan Chase to restructure, curtail or cease certain of its activities
the need for significant oversight by JPMorgan Chase’s management
loss of clients or customers, and
harm to JPMorgan Chase’s reputation.
The foregoing risks could be heightened with respect to newly-acquired businesses if JPMorgan Chase fails to successfully integrate employees of those businesses or any of those employees do not conduct themselves in accordance with JPMorgan Chase's expectations, policies and practices.
Reputation
Damage to JPMorgan Chase’s reputation could harm its businesses.
Maintaining trust in JPMorgan Chase is critical to its ability to attract and retain clients, customers, investors and employees. Damage to JPMorgan Chase’s reputation can therefore cause significant harm to JPMorgan Chase’s
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business and prospects, and can arise from numerous sources, including:
employee misconduct, including discriminatory behavior or harassment with respect to clients, customers or employees, or actions that are contrary to JPMorgan Chase’s goal of fostering a diverse and inclusive workplace
security breaches, including as a result of cyber attacks
failure to safeguard client, customer or employee information
failure to manage risks associated with its business activities or those of its clients, including those that may be unpopular among one or more constituencies
failure to meet publicly-announced commitments to support ESG initiatives
non-compliance with laws, rules, and regulations
operational failures
litigation or regulatory fines, penalties or other sanctions
actions taken in executing regulatory and governmental requirements during a global or regional health emergency, spread of infectious disease, epidemic or pandemic
regulatory investigations or enforcement actions, or resolutions of these matters, and
failure or perceived failure to comply with laws, rules or regulations by JPMorgan Chase or its clients, customers, counterparties or other parties, including newly-acquired businesses, companies in which JPMorgan Chase has made principal investments, parties to joint ventures with JPMorgan Chase, and vendors with which JPMorgan Chase does business.
JPMorgan Chase’s reputation may be significantly damaged by adverse publicity or negative information regarding JPMorgan Chase, whether or not true, that may be published or broadcast by the media or posted on social media, non-mainstream news services or other parts of the internet. This latter risk can be magnified by the speed and pervasiveness with which information is disseminated through those channels.
Social and environmental activists have been increasingly targeting JPMorgan Chase and other financial services firms with public criticism concerning their business practices, including business relationships with clients that are engaged in certain sensitive industries, such as companies :
whose products are or are perceived to be harmful to human health, or
whose activities negatively affect or are perceived to negatively affect the environment, workers’ rights or communities.
Activists have also taken actions intended to change or influence JPMorgan Chase’s business practices with respect to ESG matters, including public protests at JPMorgan Chase’s headquarters and other properties, and submitting specific ESG-related proposals for a vote by JPMorgan Chase’s shareholders.
These and other types of activist criticism and actions directed at JPMorgan Chase could potentially engender dissatisfaction among clients, customers, investors and employees with how JPMorgan Chase addresses ESG concerns in its business activities. In all of these cases, the resulting harm to JPMorgan Chase’s reputation could:
attract scrutiny from governmental or regulatory bodies
cause certain clients and customers to cease doing business with JPMorgan Chase
impair JPMorgan Chase’s ability to attract new clients and customers, or to expand its relationships with existing clients and customers
diminish JPMorgan Chase’s ability to hire or retain employees
prompt JPMorgan Chase to cease doing business with certain clients or customers
cause certain investors to divest from investments in securities of JPMorgan Chase, or
otherwise negatively affect JPMorgan Chase's business and results of operations.
Actions by the financial services industry generally or individuals in the industry can also affect JPMorgan Chase’s reputation. For example, the reputation of the industry as a whole can be damaged by concerns that:
consumers have been treated unfairly by a financial institution, or
a financial institution has acted inappropriately with respect to the methods used to offer products to customers.
If JPMorgan Chase is perceived to have engaged in these types of behaviors, this could weaken its reputation among clients or customers.
Failure to effectively manage potential conflicts of interest or to satisfy fiduciary obligations can result in litigation and enforcement actions, as well as damage JPMorgan Chase’s reputation.
JPMorgan Chase’s ability to manage potential conflicts of interest is highly complex due to the broad range of its business activities which encompass a variety of transactions, obligations and interests with and among JPMorgan Chase’s clients and customers. JPMorgan Chase can become subject to litigation, enforcement actions, and heightened regulatory scrutiny, and its reputation can be damaged, by the failure or perceived failure to:
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adequately address or appropriately disclose conflicts of interest, including potential conflicts of interest that may arise in connection with providing multiple products and services in, or having one or more investments related to, the same transaction
identify and address any conflict of interest that a third party with which it is does business may have with respect to a transaction involving JPMorgan Chase
deliver appropriate standards of service and quality
treat clients and customers fairly and with the appropriate standard of care
use client and customer data responsibly and in a manner that meets legal requirements and regulatory expectations
provide fiduciary products or services in accordance with the applicable legal and regulatory standards, or
handle or use confidential information of customers or clients appropriately and in compliance with applicable data protection and privacy laws, rules and regulations.
A failure or perceived failure to appropriately address conflicts of interest or fiduciary obligations could result in customer dissatisfaction, litigation and regulatory fines, penalties or other sanctions, and heightened regulatory scrutiny and enforcement actions, all of which can lead to lost revenue and higher operating costs and cause serious harm to JPMorgan Chase’s reputation.
Country
An outbreak or escalation of hostilities between countries or within a country or region could have a material adverse effect on the global economy and on JPMorgan Chase’s businesses within the affected region or globally.
Aggressive actions by hostile governments or groups, including armed conflict or intensified cyber attacks, could expand in unpredictable ways by drawing in other countries or escalating into full-scale war with potentially catastrophic consequences, particularly if one or more of the combatants possess nuclear weapons. Depending on the scope of the conflict, the hostilities could result in:
worldwide economic disruption
heightened volatility in financial markets
severe declines in asset values, accompanied by widespread sell-offs of investments
substantial depreciation of local currencies, potentially leading to defaults by borrowers and counterparties in the affected region
disruption of global trade, and
diminished consumer, business and investor confidence.
Any of the above consequences could have significant negative effects on JPMorgan Chase’s operations and
earnings, both in the countries or regions directly affected by the hostilities or globally. Further, if the U.S. were to become directly involved in such a conflict, this could lead to a curtailment of any operations that JPMorgan Chase may have in the affected countries or region, as well as in any nation that is aligned against the U.S. in the hostilities. JPMorgan Chase could also experience more numerous and aggressive cyber attacks launched by or under the sponsorship of one or more of the adversaries in such a conflict.
JPMorgan Chase’s business and operations in certain countries can be adversely affected by local economic, political, regulatory and social factors.
Some of the countries in which JPMorgan Chase conducts business have economies or markets that are less developed and more volatile or may have political, legal and regulatory regimes that are less established or predictable than other countries in which JPMorgan Chase operates. In addition, in some jurisdictions in which JPMorgan Chase conducts business, the local economy and business activities are subject to substantial government influence or control. Some of these countries have in the past experienced economic disruptions, including:
extreme currency fluctuations
high inflation
low or negative growth, and
defaults or reduced ability to service sovereign debt.
The governments in these countries have sometimes reacted to these developments by imposing restrictive policies that adversely affect the local and regional business environment, such as:
price, capital or exchange controls, including imposition of punitive transfer and convertibility restrictions or forced currency exchange
expropriation or nationalization of assets or confiscation of property, including intellectual property, and
changes in laws, rules and regulations.
The impact of these actions could be accentuated in trading markets that are smaller, less liquid and more volatile than more-developed markets. These types of government actions can negatively affect JPMorgan Chase’s operations in the relevant country, either directly or by suppressing the business activities of local clients or multi-national clients that conduct business in the jurisdiction.
In addition, emerging markets countries, as well as more developed countries, have been susceptible to unfavorable social developments arising from poor economic conditions or governmental actions, including:
widespread demonstrations, civil unrest or general strikes
crime and corruption
31

Part I
security and personal safety issues
an outbreak or escalation of hostilities, or other geopolitical instabilities
overthrow of incumbent governments
terrorist attacks, and
other forms of internal discord.
These economic, political, regulatory and social developments have in the past resulted in, and in the future could lead to, conditions that can adversely affect JPMorgan Chase’s operations in those countries and impair the revenues, growth and profitability of those operations. In addition, any of these events or circumstances in one country can affect JPMorgan Chase’s operations and investments in another country or countries, including in the U.S.
People
JPMorgan Chase’s ability to attract and retain qualified and diverse employees is critical to its success.
JPMorgan Chase’s employees are its most important resource, and in many areas of the financial services industry, competition for qualified personnel is intense. JPMorgan Chase endeavors to attract talented and diverse new employees and retain, develop and motivate its existing employees. JPMorgan Chase's efforts to retain talented and diverse employees can be particularly challenging when members of its workforce are targeted for recruitment by competitors. If JPMorgan Chase were unable to continue to attract or retain qualified and diverse employees, including successors to the Chief Executive Officer, members of the Operating Committee and other senior leaders, JPMorgan Chase’s performance, including its competitive position, could be materially and adversely affected.
JPMorgan Chase’s increased use of hybrid work models could result in deterioration in employee performance or degradation of JPMorgan Chase's control environment which may have a material and adverse effect on its business and operations. Alternatively, discontinuing hybrid work models could harm JPMorgan Chase’s ability to attract and retain employees.
Unfavorable changes in immigration or travel policies could adversely affect JPMorgan Chase’s businesses and operations.
JPMorgan Chase relies on the skills, knowledge and expertise of employees located throughout the world. Changes in immigration or travel policies in the U.S. and other countries that unduly restrict or otherwise make it more difficult for employees or their family members to work in, or travel to or transfer between, jurisdictions in which JPMorgan Chase has operations or conducts its business could inhibit JPMorgan Chase’s ability to attract and retain qualified employees, and thereby dilute the quality of its workforce, or could prompt JPMorgan Chase to
make structural changes to its worldwide or regional operating models that cause its operations to be less efficient or more costly.
Legal
JPMorgan Chase faces significant legal risks from litigation and formal and informal regulatory and government investigations.
JPMorgan Chase is named as a defendant or is otherwise involved in many legal proceedings, including class actions and other litigation or disputes with third parties. Actions currently pending against JPMorgan Chase may result in judgments, settlements, fines, penalties or other sanctions adverse to JPMorgan Chase. Any of these matters could materially and adversely affect JPMorgan Chase’s business, financial condition or results of operations, or cause serious reputational harm. As a participant in the financial services industry, it is likely that JPMorgan Chase will continue to experience a high level of litigation and regulatory and government investigations related to its businesses and operations.
Regulators and other government agencies conduct examinations of JPMorgan Chase and its subsidiaries both on a routine basis and in targeted exams, and JPMorgan Chase’s businesses and operations are subject to heightened regulatory oversight. This heightened regulatory scrutiny, or the results of such an investigation or examination, may lead to additional regulatory investigations or enforcement actions. There is no assurance that those actions will not result in resolutions or other enforcement actions against JPMorgan Chase. Furthermore, a single event involving a potential violation of law or regulation may give rise to numerous and overlapping investigations and proceedings, either by multiple federal, state or local agencies and officials in the U.S. or, in some instances, regulators and other governmental officials in non-U.S. jurisdictions.
If another financial institution violates a law or regulation relating to a particular business activity or practice, this will often give rise to an investigation by regulators and other governmental agencies of the same or similar activity or practice by JPMorgan Chase.
These and other initiatives by U.S. and non-U.S. governmental authorities may subject JPMorgan Chase to judgments, settlements, fines, penalties or other sanctions, and may require JPMorgan Chase to restructure its operations and activities or to cease offering certain products or services. All of these potential outcomes could harm JPMorgan Chase’s reputation or lead to higher operational costs, thereby reducing JPMorgan Chase’s profitability, or result in collateral consequences. In addition, the extent of JPMorgan Chase’s exposure to legal and regulatory matters can be unpredictable and could, in some cases, exceed the amount of reserves that JPMorgan Chase has established for those matters.
32


Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
JPMorgan Chase’s headquarters is located in New York City at 383 Madison Avenue, a 47-story office building that it owns. The demolition of the Firm's former headquarters at 270 Park Avenue in New York City was completed in 2021, and construction of a new headquarters on the same site is underway.
The Firm owned or leased facilities in the following locations at December 31, 2022.
December 31, 2022
(in millions)
Approximate square footage
United States(a)
New York City, New York
383 Madison Avenue, New York, New York
1.1 
All other New York City locations
5.7 
Total New York City, New York
6.8 
Other U.S. locations
Columbus/Westerville, Ohio
3.5 
Chicago, Illinois
2.7 
Dallas/Plano/Fort Worth, Texas
2.5 
Wilmington/Newark, Delaware
2.2 
Houston, Texas
1.6 
Phoenix/Tempe, Arizona
1.5 
Jersey City, New Jersey
1.4 
All other U.S. locations
32.9 
Total United States
55.1 
Europe, the Middle East and Africa (“EMEA”)
25 Bank Street, London, U.K.
1.4 
All other U.K. locations
2.9 
All other EMEA locations
1.5 
Total EMEA
5.8 
Asia-Pacific, Latin America and Canada
India
6.5 
Philippines1.1 
All other locations
2.8 
Total Asia-Pacific, Latin America and Canada
10.4 
Total
71.3 
(a)At December 31, 2022, the Firm owned or leased 4,787 retail branches in 48 states and Washington D.C.
The premises and facilities occupied by JPMorgan Chase are used across all of the Firm’s business segments and for corporate purposes. JPMorgan Chase continues to evaluate its current and projected space requirements and may determine from time to time that certain of its properties (including the premises and facilities noted above) are no longer necessary for its operations. There is no assurance that the Firm will be able to dispose of any such excess properties, premises or facilities, or that it will not incur costs in connection with such dispositions. Such disposition costs may be material to the Firm’s results of operations in
a given period. Refer to the Consolidated Results of Operations on pages 51-54 for information on occupancy expense.
Item 3. Legal Proceedings.
Refer to Note 30 for a description of the Firm’s material legal proceedings.
Item 4. Mine Safety Disclosures.
Not applicable.
33

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market for registrant’s common equity
JPMorgan Chase’s common stock is listed and traded on the New York Stock Exchange. Refer to “Five-year stock performance,” on page 45 for a comparison of the cumulative total return for JPMorgan Chase common stock with the comparable total return of the S&P 500 Index, the KBW Bank Index and the S&P Financials Index over the five-year period ended December 31, 2022.
Refer to Capital actions in the Capital Risk Management section of Management’s discussion and analysis on page 94 for information on the common dividend payout ratio. Refer to Note 21 for a discussion of restrictions on dividend payments. On January 31, 2023, there were 203,141 holders of record of JPMorgan Chase common stock. Refer to Part III, Item 12 on page 37 for information regarding securities authorized for issuance under the Firm’s employee share-based incentive plans.
Repurchases under the common share repurchase program
Refer to Capital actions in the Capital Risk Management section of Management’s discussion and analysis on page 94 for information regarding repurchases under the Firm’s common share repurchase program.
Effective May 1, 2022, the Firm is authorized to purchase up to $30 billion of common shares under its common share repurchase program, which superseded the previously approved repurchase program under which the Firm was authorized to purchase up to $30 billion of common shares.
On July 14, 2022, the Firm announced that it had temporarily suspended share repurchases in anticipation of the increase in the Firm's regulatory capital requirements. The Firm had set a target for achieving CET1 capital of 13.0% by the first quarter of 2023. The Firm met and exceeded that target in the fourth quarter of 2022, and resumed repurchasing shares under its common share repurchase program in the first quarter of 2023.
Shares repurchased pursuant to the common share repurchase program during 2022 were as follows.
Year ended December 31, 2022Total 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)
First quarter18,106,991 $138.04 $2,500 $9,052 
Second quarter4,981,047 124.88 622 29,633 
(b)(c)
Third quarter— — — — 
October— — — — 
November— — — — 
December— — — — 
Fourth quarter— — — — 
Year-to-date23,088,038 $135.20 $3,122 $29,633 
(c)
(a)Excludes commissions cost.
(b)The remaining amount of $8.8 billion under the prior Board authorization was canceled when the $30 billion repurchase program was authorized by the Board of Directors effective May 1, 2022.
(c)Represents the amount remaining under the $30 billion repurchase program.
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s discussion and analysis of financial condition and results of operations, entitled “Management’s discussion and analysis,” appears on pages 46–154. Such information should be read in conjunction with the Consolidated Financial Statements and Notes thereto, which appear on pages 159-291.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Refer to the Market Risk Management section of Management’s discussion and analysis on pages 131-138 for a discussion of quantitative and qualitative disclosures about market risk.
34


Item 8. Financial Statements and Supplementary Data.
The Consolidated Financial Statements, together with the Notes thereto and the report thereon dated February 21, 2023, of PricewaterhouseCoopers LLP, the Firm’s independent registered public accounting firm (PCAOB ID 238), appear on pages 156-291.
The “Glossary of Terms and Acronyms’’ is included on pages 297-303.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.

Item 9A. Controls and Procedures.
The internal control framework promulgated by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), “Internal Control — Integrated Framework” (“COSO 2013”), provides guidance for designing, implementing and conducting internal control and assessing its effectiveness. The Firm used the COSO 2013 framework to assess the effectiveness of the Firm’s internal control over financial reporting as of December 31, 2022. Refer to “Management’s report on internal control over financial reporting” on page 155.
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 155 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 December 31, 2022, that has materially affected, or is reasonably likely to
materially affect, the Firm’s internal control over financial reporting.
Item 9B. Other Information.
None.
Item 9C. Disclosure regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
35

Parts III and IV


Item 10. Directors, Executive Officers and Corporate Governance.
Executive officers of the registrant
Age
Name(at December 31, 2022)Positions and offices
James Dimon66
Chairman of the Board since December 2006 and Chief Executive Officer since December 2005.
Ashley Bacon53Chief Risk Officer since June 2013.
Jeremy Barnum50
Chief Financial Officer since May 2021, prior to which he was Head of Global Research for the Corporate & Investment Bank since February 2021. He previously served as Chief Financial Officer of the Corporate & Investment Bank from July 2013 until February 2021.
Lori A. Beer55
Chief Information Officer since September 2017, prior to which she had been Chief Information Officer of the Corporate & Investment Bank since June 2016.
Mary Callahan Erdoes55Chief Executive Officer of Asset & Wealth Management since September 2009.
Stacey Friedman54
General Counsel since January 2016.
Marianne Lake53
Co-Chief Executive Officer of Consumer & Community Banking since May 2021, prior to which she had been Chief Executive Officer of Consumer Lending since May 2019. She was Chief Financial Officer from January 2013 until May 2019.
Robin Leopold58
Head of Human Resources since January 2018, prior to which she had been Head of Human Resources for the Corporate & Investment Bank since August 2012.
Douglas B. Petno57Chief Executive Officer of Commercial Banking since January 2012.
Jennifer A. Piepszak52
Co-Chief Executive Officer of Consumer & Community Banking since May 2021, prior to which she had been Chief Financial Officer since May 2019. She previously served as Chief Executive Officer for Card Services from February 2017 until May 2019.
Daniel E. Pinto60
President and Chief Operating Officer since January 2022 and Chief Executive Officer of the Corporate & Investment Bank since March 2014, having previously served as Co-President and Co-Chief Operating Officer since January 2018.
Peter L. Scher
  
61
Vice Chairman since March 2021. He previously served as Chairman of the Mid-Atlantic Region from February 2015 until December 2022 and Head of Corporate Responsibility from April 2011 until September 2021.
Unless otherwise noted, during the five fiscal years ended December 31, 2022, all of JPMorgan Chase’s above-named executive officers have continuously held senior-level positions with JPMorgan Chase. There are no family relationships among the foregoing executive officers. Information to be provided in Items 10, 11, 12, 13 and 14 of this 2022 Form 10-K and not otherwise included herein is incorporated by reference to the Firm’s Definitive Proxy Statement for its 2023 Annual Meeting of Stockholders to be held on May 16, 2023, which will be filed with the SEC within 120 days of the end of the Firm’s fiscal year ended December 31, 2022.

36


Item 11. Executive Compensation.
Refer to Item 10.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Refer to Item 10 for security ownership of certain beneficial owners and management.
The following table sets forth the total number of shares available for issuance under JPMorgan Chase’s employee share-based incentive plans (including shares available for issuance to non-employee directors). The Firm is not authorized to grant share-based incentive awards to non-employees, other than to non-employee directors.
December 31, 2022Number of shares to be issued upon exercise of outstanding options/stock appreciation rightsWeighted-average
exercise price of
outstanding
options/stock appreciation rights
Number of shares remaining available for future issuance under stock incentive plans
Plan category
Employee share-based incentive plans approved by shareholders2,511,444 
(a)
$141.19 69,327,901 
(b)
Total2,511,444 $141.19 69,327,901 
(a)Does not include restricted stock units or performance stock units granted under the shareholder-approved Long-Term Incentive Plan (“LTIP”), as amended and restated effective May 18, 2021. Refer to Note 9 for further discussion.
(b)Represents shares available for future issuance under the shareholder-approved LTIP.
All shares available for future issuance will be issued under the shareholder-approved LTIP. Refer to Note 9 for further discussion.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Refer to Item 10.
Item 14. Principal Accounting Fees and Services.
Refer to Item 10.
37

Part IV


Item 15. Exhibits, Financial Statement Schedules.
1Financial statements
The Consolidated Financial Statements, the Notes thereto and the report of the Independent Registered Public Accounting Firm thereon listed in Item 8 are set forth commencing on page 156.
2Financial statement schedules
3Exhibits
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9

3.10

3.11
3.12
3.13
3.14
3.15
3.16
3.17
38


3.18
3.19
4.1(a)
4.1(b)
4.2(a)
4.2(b)
4.3(a)
4.3(b)
4.4
4.5
4.6
Other instruments defining the rights of holders of long-term debt securities of JPMorgan Chase & Co. and its subsidiaries are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. JPMorgan Chase & Co. agrees to furnish copies of these instruments to the SEC upon request.
10.1
10.2
10.3
10.4
10.5
39

Part IV

10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
40


10.20
21
22.1Annual Report on Form 11-K of The JPMorgan Chase 401(k) Savings Plan for the year ended December 31, 2019 (to be filed pursuant to Rule 15d-21 under the Securities Exchange Act of 1934).
22.2
23
31.1
31.2
32
101.INS
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.(d)
101.SCH
XBRL Taxonomy Extension Schema
Document.(b)
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.(b)
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.(b)
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.(b)
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.(b)
104Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
(a)    This exhibit is a management contract or compensatory plan or arrangement.
(b)    Filed herewith.
(c)    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.
(d)    Pursuant to Rule 405 of Regulation S-T, includes the following financial information included in the Firm’s Form 10-K for the year ended December 31, 2022, formatted in XBRL (eXtensible Business Reporting Language) interactive data files: (i) the Consolidated statements of income for the years ended December 31, 2022, 2021 and 2020, (ii) the Consolidated statements of comprehensive income for the years ended December 31, 2022, 2021 and 2020, (iii) the Consolidated balance sheets as of December 31, 2022 and 2021, (iv) the Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2022, 2021 and 2020, (v) the Consolidated statements of cash flows for the years ended December 31, 2022, 2021 and 2020, and (vi) the Notes to Consolidated Financial Statements.
41



























page 42 not used

42

Table of contents


Financial:
44Audited financial statements:
45155
Management’s discussion and analysis:156
46159
47164
51
55
58Supplementary information:
61292
81297
85
86
97
106
131
139
141
142
149
153
154

JPMorgan Chase & Co./2022 Form 10-K
43

Financial
THREE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
As of or for the year ended December 31,
(in millions, except per share, ratio, headcount data and where otherwise noted)
202220212020
Selected income statement data
Total net revenue$128,695 $121,649 $119,951 
Total noninterest expense76,140 71,343 66,656 
Pre-provision profit(a)
52,555 50,306 53,295 
Provision for credit losses6,389 (9,256)17,480 
Income before income tax expense46,166 59,562 35,815 
Income tax expense8,490 11,228 6,684 
Net income$37,676 $48,334 $29,131 
Earnings per share data
Net income: Basic$12.10 $15.39 $8.89 
              Diluted12.09 15.36 8.88 
Average shares: Basic2,965.8 3,021.5 3,082.4 
              Diluted2,970.0 3,026.6 3,087.4 
Market and per common share data
Market capitalization$393,484 $466,206 $387,492 
Common shares at period-end2,934.2 2,944.1 3,049.4 
Book value per share90.29 88.07 81.75 
Tangible book value per share (“TBVPS”)(a)
73.12 71.53 66.11 
Cash dividends declared per share4.00 3.80 3.60 
Selected ratios and metrics
Return on common equity (“ROE”)(b)
14 %19 %12 %
Return on tangible common equity (“ROTCE”)(a)(b)
18 23 14 
Return on assets (“ROA”)(a)
0.98 1.30 0.91 
Overhead ratio59 59 56 
Loans-to-deposits ratio49 44 47 
Firm Liquidity coverage ratio (“LCR”) (average)(c)
112 111 110 
JPMorgan Chase Bank, N.A. LCR (average)(c)
151 178 160 
Common equity Tier 1 (“CET1”) capital ratio(d)
13.2 13.1 13.1 
Tier 1 capital ratio(d)
14.9 15.0 15.0 
Total capital ratio(d)
16.8 16.8 17.3 
Tier 1 leverage ratio(c)(d)
6.6 6.5 7.0 
Supplementary leverage ratio (“SLR”)(c)(d)
5.6 5.4 6.9 
Selected balance sheet data (period-end)
Trading assets$453,799 $433,575 $503,126 
Investment securities, net of allowance for credit losses631,162 672,232 589,999 
Loans1,135,647 1,077,714 1,012,853 
Total assets3,665,743 3,743,567 3,384,757 
Deposits2,340,179 2,462,303 2,144,257 
Long-term debt295,865 301,005 281,685 
Common stockholders’ equity264,928 259,289 249,291 
Total stockholders’ equity292,332 294,127 279,354 
Headcount293,723 271,025 255,351 
Credit quality metrics
Allowances for loan losses and lending-related commitments$22,204 $18,689 $30,815 
Allowance for loan losses to total retained loans1.81 %1.62 %2.95 %
Nonperforming assets$7,247 $8,346 $10,906 
Net charge-offs2,853 2,865 5,259 
Net charge-off rate0.27 %0.30 %0.55 %
(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 58-60 for a discussion of these measures.
(b)Quarterly ratios are based upon annualized amounts.
(c)For the years ended December 31, 2022, 2021 and 2020, the percentage represents average ratios for the three months ended December 31, 2022, 2021 and 2020.
(d)As of December 31, 2022, 2021 and 2020, the capital metrics reflect the relief provided by the Federal Reserve Board in response to the COVID-19 pandemic, including the Current Expected Credit Losses ("CECL") capital transition provisions. As of December 31, 2020, the SLR reflected the temporary exclusions of U.S. Treasury securities and deposits at Federal Reserve Banks, which became effective April 1, 2020 and remained in effect through March 31, 2021. Refer to Capital Risk Management on pages 86-96 for additional information.

44
JPMorgan Chase & Co./2022 Form 10-K


FIVE-YEAR STOCK PERFORMANCE
The following table and graph compare the five-year cumulative total return for JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) common stock with the cumulative return of the S&P 500 Index, the KBW Bank Index and the S&P Financials Index. The S&P 500 Index is a commonly referenced equity benchmark in the United States of America (“U.S.”), consisting of leading companies from different economic sectors. The KBW Bank Index seeks to reflect the performance of banks and thrifts that are publicly traded in the U.S. and is composed of leading national money center and regional banks and thrifts. The S&P Financials Index is an index of financial companies, all of which are components of the S&P 500. The Firm is a component of all three industry indices.
The following table and graph assume simultaneous investments of $100 on December 31, 2017, in JPMorgan Chase common stock and in each of the above indices. The comparison assumes that all dividends were reinvested.
December 31,
(in dollars)
201720182019202020212022
JPMorgan Chase$100.00 $93.35 $137.48 $129.89 $165.91 $145.01 
KBW Bank Index100.00 82.29 112.01 100.47 138.99 109.25 
S&P Financials Index100.00 86.96 114.87 112.85 152.20 136.17 
S&P 500 Index100.00 95.61 125.70 148.82 191.49 156.81 

December 31,
(in dollars)
jpm-20221231_g1.jpg
JPMorgan Chase & Co./2022 Form 10-K
45

Management’s discussion and analysis
The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan Chase for the year ended December 31, 2022. The MD&A is included in both JPMorgan Chase’s Annual Report for the year ended December 31, 2022 (“Annual Report”) and its Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K” or “Form 10-K”) filed with the Securities and Exchange Commission (“SEC”). Refer to the Glossary of terms and acronyms on pages 297-303 for definitions of terms and acronyms used throughout the Annual Report and the 2022 Form 10-K.

This Form 10-K 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-K and are subject to significant risks and uncertainties. Refer to Forward-looking Statements on page 154 and Part 1, Item 1A: Risk factors in this Form 10-K on pages 9-32 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.

INTRODUCTION
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 $3.7 trillion in assets and $292.3 billion in stockholders’ equity as of December 31, 2022. 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 nonbank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating 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.
For management reporting purposes, the Firm’s activities are organized into four major reportable business segments, as well as a Corporate segment. The Firm’s consumer business is the Consumer & Community Banking (“CCB”) segment. The Firm’s wholesale business segments are the Corporate & Investment Bank (“CIB”), Commercial Banking (“CB”), and Asset & Wealth Management (“AWM”). Refer to Business Segment Results on pages 61-80, and Note 32 for a description of the Firm’s business segments, and the products and services they provide to their respective client bases.
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 is not incorporated by reference into this 2022 Form 10-K or the Firm’s other filings with the SEC.
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JPMorgan Chase & Co./2022 Form 10-K


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 2022 Form 10-K. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates affecting the Firm, this 2022 Form 10-K should be read in its entirety.
Financial performance of JPMorgan Chase
Year ended December 31,
(in millions, except per share data and ratios)
20222021Change
Selected income statement data
Noninterest revenue$61,985 $69,338 (11)%
Net interest income$66,710 $52,311 28 %
Total net revenue$128,695 $121,649 %
Total noninterest expense76,140 71,343 
Pre-provision profit52,555 50,306 
Provision for credit losses6,389 (9,256)NM
Net income37,676 48,334 (22)
Diluted earnings per share12.09 15.36 (21)
Selected ratios and metrics
Return on common equity14 %19 %
Return on tangible common equity
18 23 
Book value per share$90.29 $88.07 
Tangible book value per share73.12 71.53 
Capital ratios(a)
CET1 capital13.2 %13.1 %
Tier 1 capital14.9 15.0 
Total capital 16.8 16.8 
Memo:
NII excluding Markets(b)
$62,355 $44,498 40 
NIR excluding Markets(b)
40,938 53,412 (23)
Markets(b)
28,984 27,394 
Total net revenue - managed basis$132,277 $125,304 
(a)    The ratios reflect the CECL capital transition provisions. Refer to Capital Risk Management on pages 86-96 for additional information.
(b)    NII and NIR refer to net interest income and noninterest revenue, respectively. Markets consists of CIB's Fixed Income Markets and Equity Markets businesses.
Comparisons noted in the sections below are for the full year of 2022 versus the full year of 2021, unless otherwise specified.
Firmwide overview
JPMorgan Chase reported net income of $37.7 billion for 2022, down 22%, earnings per share of $12.09, ROE of 14% and ROTCE of 18%.
Total net revenue was $128.7 billion, up 6%, reflecting:
Net interest income of $66.7 billion, up 28%, driven by higher rates and loan growth, partially offset by lower Markets net interest income. Net interest income excluding Markets was $62.4 billion, up 40%.

Noninterest revenue of $62.0 billion, down 11%, driven by lower Investment Banking fees, $2.4 billion of net investment securities losses in Treasury and CIO, lower net production revenue in Home Lending and lower auto operating lease income, largely offset by higher CIB Markets revenue and a $914 million gain on the sale of Visa Class B common shares (“Visa B shares”) in Corporate.
Noninterest expense was $76.1 billion, up 7%, driven by higher structural expense and continued investments in the business, including compensation, technology and marketing, partially offset by lower volume- and revenue-related expense.
The provision for credit losses was $6.4 billion, reflecting:
a net addition of $3.5 billion to the allowance for credit losses, consisting of $2.3 billion in wholesale and $1.2 billion in consumer, driven by loan growth and deterioration in the Firm’s macroeconomic outlook, partially offset by a reduction in the allowance related to a decrease in uncertainty associated with borrower behavior as the effects of the pandemic gradually recede, and
$2.9 billion of net charge-offs.
The prior year provision was a net benefit of $9.3 billion, reflecting a net reduction to the allowance for credit losses of $12.1 billion.
The total allowance for credit losses was $22.2 billion at December 31, 2022. The Firm had an allowance for loan losses to retained loans coverage ratio of 1.81%, compared with 1.62% in the prior year.
The Firm’s nonperforming assets totaled $7.2 billion at December 31, 2022, a net decrease of $1.1 billion, predominantly driven by lower consumer nonaccrual loans, reflecting improved credit performance and loan sales.
Firmwide average loans of $1.1 trillion were up 6%, driven by higher loans across the LOBs.
Firmwide average deposits of $2.5 trillion were up 5%, reflecting:
growth in CCB from existing and new accounts, and net inflows in AWM resulting from the residual effects of certain government actions, partially offset by the impact of growth in customer spending in CCB and migration into investments in AWM, and
reductions in CIB and CB due to attrition driven by the rising interest rate environment.
Selected capital and other metrics
CET1 capital was $219 billion, and the Standardized and Advanced CET1 ratios were 13.2% and 13.6%, respectively.
SLR was 5.6%.
TBVPS grew by 2%, ending 2022 at $73.12.
JPMorgan Chase & Co./2022 Form 10-K
47

Management’s discussion and analysis
As of December 31, 2022, the Firm had average eligible High Quality Liquid Assets (“HQLA”) of approximately $733 billion and unencumbered marketable securities with a fair value of approximately $694 billion, resulting in approximately $1.4 trillion of liquidity sources. Refer to Liquidity Risk Management on pages 97-104 for additional information.
Refer to Consolidated Result of Operations and Consolidated Balance Sheets Analysis on pages 51-54 and pages 55-56, respectively, for a further discussion of the Firm's results.
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 58-60 for a further discussion of each of these measures.
Business segment highlights
Selected business metrics for each of the Firm’s four LOBs are presented below for the full year of 2022.
CCB
ROE
 29%
Average deposits up 10%; client investment assets down 10%
Average loans up 1%; Card Services net charge-off rate of 1.47%
Debit and credit card sales volume(a) up 14%
Active mobile customers(b) up 9%
CIB
ROE
 14%
#1 ranking for Global Investment Banking fees with 8.0% wallet share for the year
Total Markets revenue of $29.0 billion, up 6%, with Fixed Income Markets up 10% and Equity Markets down 2%
CB
ROE
 16%
Gross Investment Banking revenue of $3.0 billion, down 42%
Average deposits down 2%; average loans up 9%
AWM
ROE
 25%
Assets under management (“AUM”) of $2.8 trillion, down 11%
Average deposits up 14%; average loans up 9%
(a) Excludes Commercial Card.
(b) Users of all mobile platforms who have logged in within the past 90 days.
Refer to the Business Segment Results on pages 61-62 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 2022, consisting of:
$2.4 trillion
Total credit provided and capital raised (including loans and commitments)(a)
$250
billion
Credit for consumers
$33
billion
Credit for U.S. small businesses
$1.1 trillion
Credit for corporations
$1.0 trillion
Capital raised for corporate clients and non-U.S. government entities
$65
 billion
Credit and capital raised for nonprofit and U.S. government entities(a)
(a)Includes states, municipalities, hospitals and universities.
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JPMorgan Chase & Co./2022 Form 10-K


Recent events
On January 20, 2023, JPMorgan Chase announced that J.P. Morgan Asset Management had received regulatory approval from the China Securities Regulatory Commission to complete its acquisition of China International Fund Management Co., Ltd.
On January 17, 2023, JPMorgan Chase announced that Alicia Boler Davis had been elected as a director of the Firm, effective March 20, 2023. Ms. Davis serves as Chief Executive Officer of Alto Pharmacy.
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-K, and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements on page 154, and the Risk Factors section on pages 9-32 of this 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 2023 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 2023 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 2023
Management expects net interest income to be approximately $73 billion, market dependent.
Management expects net interest income excluding Markets to be approximately $74 billion, market dependent.
Management expects adjusted expense to be approximately $81 billion, market dependent.
Management expects the net charge-off rate in Card Services to be approximately 2.6%.
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 58-60.
JPMorgan Chase & Co./2022 Form 10-K
49

Management’s discussion and analysis
Business Developments
War in Ukraine
The duration and potential outcomes of the war in Ukraine remain uncertain. The Firm has taken and continues to take steps to close positions and reduce certain of its business activities and exposures connected with the war, and to assist clients with fulfilling any pre-existing obligations and managing their Russia-related risks.
The Firm’s exposure to Russia and Russia-associated clients and counterparties is not material to its financial condition or results of operations. However, the Firm continues to monitor potential secondary impacts of the war, including increased market volatility, inflationary pressures and the effects of financial and economic sanctions imposed by various governments, that could have adverse effects on the Firm’s businesses.
The Firm also continues to monitor and manage the operational risks associated with the war, including compliance with the financial and economic sanctions and the increased risk of cyber attacks.
Refer to Wholesale Credit Portfolio on pages 116-126, Allowance for Credit Losses on pages 127-129, Market Risk Management on pages 131-138, Country Risk Management on pages 139-140 and Operational Risk Management on pages 142-144 for additional information.
For purposes of this Form 10-K, “Russia” refers to exposure to clients and counterparties of the Firm for which the largest proportion of their assets is located, or the largest proportion of their revenue is derived, in Russia, based on the Firm’s internal country risk management framework; and “Russia-associated” refers to exposure to clients and counterparties of the Firm with respect to which economic or financial sanctions relating to the war in Ukraine have been imposed or which have close association with Russia.
Interbank Offered Rate (“IBOR”) transition
The Firm and other market participants are preparing for the final stages of the transition from the use of the London Interbank Offered Rate (“LIBOR”) and other IBORs in accordance with the International Organization of Securities Commission’s standards for transaction-based benchmark rates. The cessation of the publication of the remaining principal tenors of U.S. dollar LIBOR (i.e., overnight, one-month, three-month, six-month and 12-month LIBOR) (“LIBOR Cessation”) is scheduled for June 30, 2023.
As of December 31, 2022, the Firm had significantly reduced the notional amount of its exposure to contracts that reference U.S. dollar LIBOR, including in derivatives, bilateral and syndicated loans, securities, and debt and preferred stock issuances, and is on-track to meet both its internal milestones for contract remediation as well as the industry milestones and recommendations published by National Working Groups, including the Alternative Reference Rates Committee in the U.S. The Firm also continues to engage with clients to assist them with transitioning their U.S. dollar LIBOR-linked contracts to replacement rates in anticipation of LIBOR Cessation. The majority of the Firm’s remaining LIBOR exposure is to derivative contracts. The Firm will be participating in initiatives by the principal central counterparties (“CCPs”) to convert cleared derivatives contracts linked to U.S. dollar LIBOR in the second quarter of 2023 which will remediate approximately 40% of the Firm’s remaining U.S. dollar LIBOR derivatives exposure. The Firm expects that the majority of the remaining derivatives exposure will be remediated predominantly through contractual fallback provisions.
On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”) was signed into law in the U.S. The LIBOR Act provides a framework for replacing U.S. dollar LIBOR as the reference rate in legacy financial contracts that may not otherwise transition to a replacement rate upon LIBOR Cessation. In addition, the U.K. Financial Conduct Authority is proposing that the administrator of LIBOR be required to continue to publish the one-month, three-month and six-month tenors of U.S. dollar LIBOR on a “synthetic” basis which would allow market participants to use such rates through September 30, 2024. This proposal would apply to contracts that are outside the scope of the LIBOR Act, including U.S. dollar LIBOR-linked contracts that are not governed by U.S. law. Both the LIBOR Act and the proposed publication of “synthetic” LIBOR are intended to facilitate, and reduce the risks associated with, the transition from LIBOR, including the potential for disputes or litigation.
The Firm continues to make necessary changes to its risk management systems in connection with the transition from LIBOR, including modifications to its operational systems and models. In addition, the Firm continues to monitor and evaluate client, industry, market, regulatory and legislative developments relating to the transition from LIBOR. Refer to Part 1, Item 1A: Risk Factors on pages 9-32 of the 2022 Form 10-K and to Accounting and Reporting Developments on page 153 for additional information.
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JPMorgan Chase & Co./2022 Form 10-K



CONSOLIDATED RESULTS OF OPERATIONS
This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the two-year period ended December 31, 2022, unless otherwise specified. Refer to Consolidated Results of Operations on pages 52-54 of the Firm’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) for a discussion of the 2021 versus 2020 results. Factors that relate primarily to a single business segment are discussed in more detail within that business segment’s results. Refer to pages 149-152 for a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations.
Revenue
Year ended December 31,
(in millions)
202220212020
Investment banking fees$6,686 $13,216 $9,486 
Principal transactions19,912 16,304 18,021 
Lending- and deposit-related fees7,098 7,032 6,511 
Asset management, administration and commissions20,677 21,029 18,177 
Investment securities gains/(losses)
(2,380)(345)802 
Mortgage fees and related income
1,250 2,170 3,091 
Card income4,420 5,102 4,435 
Other income(a)
4,322 4,830 4,865 
Noninterest revenue61,985 69,338 65,388 
Net interest income66,710 52,311 54,563 
Total net revenue$128,695 $121,649 $119,951 
(a)Included operating lease income of $3.7 billion, $4.9 billion and $5.5 billion for the years ended December 31, 2022, 2021 and 2020, respectively. Also includes losses on tax-oriented investments. Refer to Note 6 for additional information.
2022 compared with 2021
Investment banking fees decreased in CIB, as volatile market conditions resulted in:
lower equity and debt underwriting fees due to lower issuance activity, and
lower advisory fees driven by a lower level of announced deals.
Refer to CIB segment results on pages 67-72 and Note 6 for additional information.
Principal transactions revenue increased, reflecting:
higher net revenue in Fixed Income Markets, driven by a strong performance in the macro businesses amid volatile market conditions, particularly Currencies & Emerging Markets and Rates, partially offset by lower revenue in Securitized Products and Credit, and
higher revenue associated with Equity Derivatives and Prime Finance in Equity Markets,

largely offset by
a loss of $836 million in Credit Adjustments & Other in CIB, compared with a gain of $250 million in the prior year. The loss in the current year reflected funding spread widening and, to a lesser extent, losses on exposures relating to commodities and Russia and Russia-associated counterparties,
net markdowns recorded in the second quarter of 2022 on held-for-sale positions, primarily unfunded commitments, in the bridge financing portfolio in CIB and CB,
higher net losses on certain legacy private equity investments in Corporate, and
net losses in Treasury and CIO related to cash deployment transactions, which were more than offset by the related net interest income earned on those transactions.
Principal transactions revenue in CIB may in certain cases have offsets across other revenue lines, including net interest income. The Firm assesses the performance of its CIB Markets business on a total revenue basis.
Refer to CIB, CB and Corporate segment results on pages 67-72, pages 73-75 and pages 79-80, respectively, and Note 6 for additional information.
Lending- and deposit-related fees increased due to higher service fee volume in CCB, predominantly offset by lower cash management fees in CB and CIB due to a higher level of credits earned by clients and applied against such fees. Refer to CCB, CIB and CB segment results on pages 63-66, pages 67-72 and pages 73-75, respectively, and Note 6 for additional information.
Asset management, administration and commissions revenue decreased driven by:
lower asset management fees in AWM resulting from lower average market levels, predominantly offset by the removal of most money market fund fee waivers, and net long-term inflows,
lower custody fees in Securities Services, primarily associated with lower average market values of assets under custody, and
lower brokerage commissions, largely in AWM, reflecting reduced volumes,
partially offset by
higher commissions on travel-related services and annuity sales in CCB.
Refer to CCB, CIB and AWM segment results on pages 63-66, pages 67-72 and pages 76-78, respectively, and Note 6 for additional information.

JPMorgan Chase & Co./2022 Form 10-K
51

Management’s discussion and analysis
Investment securities gains/(losses) reflected higher net losses on sales of U.S. GSE and government agency MBS and U.S. Treasuries, associated with repositioning the investment securities portfolio in Treasury and CIO. Refer to Corporate segment results on pages 79-80 and Note 10 for additional information.
Mortgage fees and related income decreased driven by Home Lending, reflecting:
lower production revenue due to lower margins and volume,
largely offset by
higher net mortgage servicing revenue, reflecting
the absence of a net loss in MSR risk management in the prior year primarily driven by updates to model inputs related to prepayment expectations, and
higher operating revenue due to a higher level of third-party loans serviced.
Refer to CCB segment results on pages 63-66, Note 6 and 15 for further information.
Card income decreased driven by higher amortization related to new account origination costs, partially offset by higher annual fees in CCB, and higher payments revenue on volume growth in commercial cards in CIB and CB.
Refer to CCB, CIB and CB segment results on pages 63-66, pages 67-72 and pages 73-75, respectively, and Note 6 for further information.
Other income decreased reflecting:
lower auto operating lease income in CCB as a result of a decline in volume, and
net losses on certain investments in CIB and AWM, compared with net gains in the prior year,
partially offset by
an increase in Other Corporate from:
a gain of $914M on the sale of Visa B shares,
higher net gains related to certain other investments, and
proceeds from an insurance settlement in the first quarter of 2022,
a gain on an equity-method investment received in partial satisfaction of a loan in CB,
the impact of movements in foreign exchange rates related to net investment hedges in Treasury and CIO, primarily as a result of the strengthening of the U.S. dollar, and
the absence of weather-related write-downs recorded in the prior year on certain renewable energy investments in CIB.
Refer to Note 2 for additional information on Visa B shares.
Net interest income increased driven by higher rates and loan growth, partially offset by lower Markets NII.
The Firm’s average interest-earning assets were $3.3 trillion, up $133 billion, and the yield was 2.78%, up 97 basis points (“bps”). The net yield on these assets, on an FTE basis, was 2.00%, an increase of 36 bps. The net yield excluding Markets was 2.60%, up 69 bps.
Refer to the Consolidated average balance sheets, interest and rates schedule on pages 292-296 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 58-60 for a further discussion of Net yield excluding Markets.

52
JPMorgan Chase & Co./2022 Form 10-K


Provision for credit losses
Year ended December 31,
(in millions)202220212020
Consumer, excluding credit card
$506 $(1,933)$1,016 
Credit card3,353 (4,838)10,886 
Total consumer3,859 (6,771)11,902 
Wholesale2,476 (2,449)5,510 
Investment securities54 (36)68 
Total provision for credit losses
$6,389 $(9,256)$17,480 
2022 compared with 2021
The provision for credit losses was $6.4 billion, reflecting a net addition of $3.5 billion to the allowance for credit losses and $2.9 billion of net charge-offs. The net addition to the allowance for credit losses consisted of:
$2.3 billion in wholesale, driven by deterioration in the Firm’s macroeconomic outlook, and loan growth predominantly in CB and CIB, and
$1.2 billion in consumer, predominantly driven by Card Services, reflecting higher outstanding balances and deterioration in the Firm’s macroeconomic outlook, partially offset by a reduction in the allowance related to a decrease in uncertainty associated with borrower behavior as the effects of the pandemic gradually recede.
The prior year included a $12.1 billion net reduction in the allowance for credit losses.
Deterioration in the Firm’s macroeconomic outlook included both updates to the central scenario in the fourth quarter of 2022, which now reflects a mild recession, as well as the impact of the increased weight placed on the adverse scenarios beginning in the first quarter of 2022 due to the effects associated with higher inflation, changes in monetary policy, and geopolitical risks, including the war in Ukraine.

Net charge-offs were $2.9 billion, flat compared with 2021, and included:
a $309 million decrease in Card Services, reflecting the ongoing financial strength of U.S. consumers. However, median deposit balances declined in the second half of 2022, impacted by the growth in consumer spending,
offset by
a $190 million increase in net charge-offs in Auto and Banking & Wealth Management (“BWM”) as net charge-offs in the prior year benefited from government stimulus and payment assistance programs, and an increase of $76 million in CIB.
Refer to the segment discussions of CCB on pages 63-66, CIB on pages 67-72, CB on pages 73-75, AWM on pages 76-78, the Allowance for Credit Losses on pages 127-129, and Notes 1, 10 and 13 for further discussion of the credit portfolio and the allowance for credit losses.
JPMorgan Chase & Co./2022 Form 10-K
53

Management’s discussion and analysis
Noninterest expense
Year ended December 31,
(in millions)202220212020
Compensation expense$41,636 $38,567 $34,988 
Noncompensation expense:
Occupancy4,696 4,516 4,449 
Technology, communications and equipment(a)
9,358 9,941 10,338 
Professional and outside services
10,174 9,814 8,464 
Marketing3,911 3,036 2,476 
Other(b)
6,365 5,469 5,941 
Total noncompensation expense
34,504 32,776 31,668 
Total noninterest expense
$76,140 $71,343 $66,656 
(a)Includes depreciation expense associated with auto operating lease assets.
(b)Included Firmwide legal expense of $266 million, $426 million and $1.1 billion for the years ended December 31, 2022, 2021 and 2020, respectively.
2022 compared with 2021
Compensation expense increased driven by additional headcount, primarily in technology and operations, as well as front office, and the impact of inflation, partially offset by lower revenue-related compensation in CIB.
Noncompensation expense increased as a result of:
higher investments in the business, including marketing and technology, and
higher structural expense, including travel and entertainment; regulatory assessments; occupancy expense associated with higher utilities and exit costs of certain leases; and other employee-related expense,
partially offset by
lower volume-related expense, reflecting lower depreciation expense on lower Auto lease assets; and lower distribution fees in AWM, partially offset by higher operating losses and outside services, both in CCB; and
lower legal expense.
The prior year included a $550 million contribution to the Firm's Foundation.
Income tax expense
Year ended December 31,
(in millions, except rate)
202220212020
Income before income tax expense
$46,166 $59,562 $35,815 
Income tax expense8,490 11,228 6,684 
Effective tax rate18.4 %18.9 %18.7 %
2022 compared with 2021
The effective tax rate decreased driven by income tax benefits compared with income tax expense in the prior year related to tax audit settlements, largely offset by other tax adjustments and a change in the level and mix of income and expenses subject to U.S. federal and state and local taxes. Refer to Note 25 for further information.
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JPMorgan Chase & Co./2022 Form 10-K


CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS
Consolidated balance sheets analysis
The following is a discussion of the significant changes between December 31, 2022 and 2021.
Selected Consolidated balance sheets data
December 31, (in millions)20222021Change
Assets
Cash and due from banks$27,697 $26,438 %
Deposits with banks539,537 714,396 (24)
Federal funds sold and securities purchased under resale agreements
315,592 261,698 21 
Securities borrowed185,369 206,071 (10)
Trading assets453,799 433,575 
Available-for-sale securities205,857 308,525 (33)
Held-to-maturity securities425,305 363,707 17 
Investment securities, net of allowance for credit losses631,162 672,232 (6)
Loans1,135,647 1,077,714 
Allowance for loan losses(19,726)(16,386)20 
Loans, net of allowance for loan losses1,115,921 1,061,328 
Accrued interest and accounts receivable
125,189 102,570 22 
Premises and equipment27,734 27,070 
Goodwill, MSRs and other intangible assets60,859 56,691 
Other assets182,884 181,498 
Total assets$3,665,743 $3,743,567 (2)%
Cash and due from banks and deposits with banks decreased primarily as a result of lower deposits across the LOBs and loan growth. Deposits with banks reflect the Firm’s placement of its excess cash with various central banks, including the Federal Reserve Banks.
Federal funds sold and securities purchased under resale agreements increased, reflecting:
the impact of a lower level of netting on client-driven market-making activities and on collateral requirements in Markets,
higher demand for securities to cover short positions in Fixed Income Markets, and
an increase in the deployment of cash in Treasury and CIO.
Securities borrowed decreased driven by Markets, reflecting lower client-driven activities and lower demand for securities to cover short positions in Equity Markets.
Refer to Note 11 for additional information on securities purchased under resale agreements and securities borrowed.
Trading assets increased due to:
higher derivative receivables, primarily in foreign exchange, as a result of market movements, and
an increase in the deployment of cash in Treasury and CIO.
Refer to Notes 2 and 5 for additional information.
Investment securities decreased, driven by lower available-for-sale (“AFS”) securities, partially offset by higher held-to-maturity (“HTM”) securities, which includes the impact of the transfer of $78.3 billion of securities from AFS to HTM in 2022, for capital management purposes.
The decrease in AFS securities was also due to paydowns, as well as unrealized losses, which are recognized in accumulated other comprehensive income (“AOCI”),
largely offset by net purchases, and
the increase in HTM securities also reflected purchases partially offset by paydowns.
Refer to Corporate segment results on pages 79-80, Investment Portfolio Risk Management on page 130 and Notes 2 and 10 for additional information on investment securities.
Loans increased, reflecting:
higher balances in Card Services driven by higher consumer spending and net new originations,
higher originations and revolver utilization in CB, and
higher wholesale loans in CIB,
partially offset by
lower mortgage warehouse loans in Home Lending as sales outpaced originations due to higher interest rates, and
the impact from PPP loan forgiveness in BWM.
The allowance for loan losses increased, reflecting a net addition of $3.3 billion to the allowance for loan losses, consisting of:
$2.1 billion in wholesale, resulting from deterioration in the Firm’s macroeconomic outlook, and loan growth predominantly in CB and CIB, and
$1.2 billion in consumer, predominantly driven by Card Services, reflecting higher outstanding balances, and deterioration in the Firm’s macroeconomic outlook, partially offset by a reduction in the allowance related to a decrease in uncertainty associated with borrower behavior as the effects of the pandemic gradually recede.
There was also a $121 million addition to the allowance for lending-related commitments recognized in other liabilities
JPMorgan Chase & Co./2022 Form 10-K
55

Management’s discussion and analysis
on the Consolidated balance sheets, and a $54 million addition to the allowance for investment securities.
Refer to Credit and Investment Risk Management on pages 106-130, and Notes 1, 2, 3, 12 and 13 for further discussion of loans and the allowance for loan losses.
Accrued interest and accounts receivable increased due to higher client receivables related to client-driven activities in Markets, as well as higher receivables in Payments related to the timing of payment activities, with December 31, 2022 falling on a weekend.
Premises and equipment, refer to Note 16 and 18 for additional information.
Goodwill, MSRs and other intangibles increased reflecting:
higher MSRs as a result of higher market interest rates and net additions, partially offset by the realization of expected cash flows, and
additions to goodwill associated with the acquisitions of Renovite Technologies, Inc. in the fourth quarter of 2022, Global Shares PLC and Figg, Inc. in the third quarter of 2022, and Frosch Travel Group, LLC and Volkswagen Payments S.A. in the second quarter of 2022.
Refer to Note 15 for additional information.
Other assets increased predominantly due to the impact of securities financing activities in Markets, offset by lower auto operating lease assets in CCB.
Selected Consolidated balance sheets data
December 31, (in millions)20222021Change
Liabilities
Deposits$2,340,179 $2,462,303 (5)
Federal funds purchased and securities loaned or sold under repurchase agreements
202,613 194,340 
Short-term borrowings44,027 53,594 (18)
Trading liabilities177,976 164,693 
Accounts payable and other liabilities300,141 262,755 14 
Beneficial interests issued by consolidated variable interest entities (“VIEs”)
12,610 10,750 17 
Long-term debt295,865 301,005 (2)
Total liabilities3,373,411 3,449,440 (2)
Stockholders’ equity292,332 294,127 (1)
Total liabilities and stockholders’ equity
$3,665,743 $3,743,567 (2)%
Deposits decreased reflecting:
attrition in CB and CIB, particularly non-operating deposits in CB, partially offset by net issuances of structured notes in Markets,
net outflows into investments in AWM amid the rising interest rate environment, and
a decline in balances in existing accounts in CCB due to higher customer spending, predominantly offset by net inflows into new accounts.
Federal funds purchased and securities loaned or sold under repurchase agreements increased due to:
higher secured financing of trading assets in Markets,
partially offset by
lower secured financing of AFS investment securities in Treasury and CIO.
Short-term borrowings decreased predominantly as a result of lower financing requirements in Markets.
Refer to Liquidity Risk Management on pages 97-104 for additional information on deposits, federal funds purchased and securities loaned or sold under repurchase agreements, and short-term borrowings; and also to Notes 2 and 17 for deposits and Note 11 for federal funds purchased and securities loaned or sold under repurchase agreements.
Trading liabilities increased due to client-driven market-making activities, which resulted in higher levels of short positions in Markets. Refer to Notes 2 and 5 for additional information.
Accounts payable and other liabilities increased due to higher client payables related to client-driven activities in Markets, including Prime Finance, as well as higher payables in Payments related to the timing of payment activities, with December 31, 2022 falling on a weekend. Refer to Note 19 for additional information.
Beneficial interests issued by consolidated VIEs increased driven by higher issuance of commercial paper as a result of an increase in loan balances in the Firm-administered multi-seller conduits. Refer to Liquidity Risk Management on pages 97-104; and Notes 14 and 28 for additional information on Firm-sponsored VIEs and loan securitization trusts.
Long-term debt decreased driven by:
fair value hedge accounting adjustments in Treasury and CIO as a result of higher rates, and a decline in the fair value of structured notes in Markets,
largely offset by
net issuances of senior debt in Treasury and CIO and structured notes in Markets. Refer to Liquidity Risk Management on pages 97-104 and Note 20 for additional information.
Stockholders’ equity reflects net unrealized losses in AOCI, predominantly driven by the impact of higher interest rates on the AFS portfolio and cash flow hedges in Treasury and CIO. Refer to Consolidated Statements of Changes in Stockholders’ Equity on page 162, Capital Actions on page 94, and Note 24 for additional information.
56
JPMorgan Chase & Co./2022 Form 10-K


Consolidated cash flows analysis
The following is a discussion of cash flow activities during the years ended December 31, 2022 and 2021. Refer to Consolidated cash flows analysis on page 57 of the Firm’s 2021 Form 10-K for a discussion of the 2020 activities.
(in millions)Year ended December 31,
202220212020
Net cash provided by/(used in)
Operating activities$107,119 $78,084 $(79,910)
Investing activities(137,819)(129,344)(261,912)
Financing activities
(126,257)275,993 596,645 
Effect of exchange rate changes on cash
(16,643)(11,508)9,155 
Net increase/(decrease) in cash and due from banks and deposits with banks
$(173,600)$213,225 $263,978 
Operating activities
JPMorgan Chase’s operating assets and liabilities primarily support the Firm’s lending and capital markets activities. These assets and liabilities can vary significantly in the normal course of business due to the amount and timing of cash flows, which are affected by client-driven and risk management activities and market conditions. The Firm believes that cash flows from operations, available cash and other liquidity sources, and its capacity to generate cash through secured and unsecured sources, are sufficient to meet its operating liquidity needs.
In 2022, cash provided resulted from higher accounts payable and other liabilities, lower securities borrowed, and net proceeds from sales, securitizations, and paydowns of loans held-for-sale, partially offset by higher trading assets.
In 2021, cash provided resulted from lower trading assets and higher accounts payable and other liabilities, partially offset by higher securities borrowed and lower trading liabilities.
Investing activities
The Firm’s investing activities predominantly include originating held-for-investment loans, investing in the investment securities portfolio and other short-term instruments.
In 2022, cash used resulted from net originations of loans and higher securities purchased under resale agreements, partially offset by net proceeds from investment securities.
In 2021, cash used resulted from net purchases of investment securities and higher net originations of loans, partially offset by lower securities purchased under resale agreements.
Financing activities
The Firm’s financing activities include acquiring customer deposits and issuing long-term debt and preferred stock.
In 2022, cash used reflected lower deposits, partially offset by net proceeds from long- and short-term borrowings.
In 2021, cash provided reflected higher deposits and net proceeds from long- and short-term borrowings, partially offset by a decrease in securities loaned or sold under repurchase agreements.
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 55-56, Capital Risk Management on pages 86-96, and Liquidity Risk Management on pages 97-104, and the Consolidated Statements of Cash Flows on page 163 for a further discussion of the activities affecting the Firm’s cash flows.
JPMorgan Chase & Co./2022 Form 10-K
57

Management’s discussion and analysis
EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures
The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP; these financial statements appear on pages 159-163. That presentation, which is referred to as “reported” basis, provides the reader with an understanding of the Firm’s results that can be tracked consistently from year-to-year and enables a comparison of the Firm’s performance with the U.S. GAAP financial statements of other companies.
In addition to analyzing the Firm’s results on a reported basis, management reviews Firmwide results, including the overhead ratio, on a “managed” basis; these Firmwide managed basis results are non-GAAP financial measures. The Firm also reviews the results of the LOBs on a managed basis. The Firm’s definition of managed basis starts, in each case, 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. These financial measures allow
management to assess the comparability of revenue from year-to-year arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the LOBs.
Management also uses certain non-GAAP financial measures at the Firm and business-segment level because these other non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Firm or of the particular business segment, as the case may be, and therefore facilitate a comparison of the Firm or the business segment with the performance of its relevant competitors. Refer to Business Segment Results on pages 61-80 for additional information on these non-GAAP measures. Non-GAAP financial measures used by the Firm may not be comparable to similarly named non-GAAP financial measures used by other companies.


The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
202220212020
Year ended
December 31,
(in millions, except ratios)
Reported
Fully taxable-equivalent adjustments(a)
Managed
basis
Reported
Fully taxable-equivalent adjustments(a)
Managed
basis
Reported
Fully taxable-equivalent adjustments(a)
Managed
basis
Other income$4,322 $3,148 $7,470 $4,830 $3,225 $8,055 $4,865 $2,560 $7,425 
Total noninterest revenue61,985 3,148 65,133 69,338 3,225 72,563 65,388 2,560 67,948 
Net interest income66,710 434 67,144 52,311 430 52,741 54,563 418 54,981 
Total net revenue128,695 3,582 132,277 121,649 3,655 125,304 119,951 2,978 122,929 
Total noninterest expense76,140 NA76,140 71,343 NA71,343 66,656 NA66,656 
Pre-provision profit52,555 3,582 56,137 50,306 3,655 53,961 53,295 2,978 56,273 
Provision for credit losses6,389 NA6,389 (9,256)NA(9,256)17,480 NA17,480 
Income before income tax expense46,166 3,582 49,748 59,562 3,655 63,217 35,815 2,978 38,793 
Income tax expense8,490 3,582 12,072 11,228 3,655 14,883 6,684 2,978 9,662 
Net income$37,676 NA$37,676 $48,334 NA$48,334 $29,131 NA$29,131 
Overhead ratio59 %NM58 %59 %NM57 %56 %NM54 %
(a)Predominantly recognized in CIB, CB and Corporate.

58
JPMorgan Chase & Co./2022 Form 10-K


Net interest income, net yield, and noninterest revenue excluding CIB Markets
In addition to reviewing net interest income, net yield, and noninterest revenue on a managed basis, management also reviews these metrics excluding CIB Markets, as shown below. CIB Markets consists of Fixed Income Markets and Equity Markets. These metrics, which exclude CIB Markets, are non-GAAP financial measures. Management reviews these metrics to assess the performance of the Firm’s lending, investing (including asset-liability management) and deposit-raising activities, apart from any volatility associated with CIB Markets activities. In addition, management also assesses CIB Markets business performance on a total revenue basis as offsets may occur across revenue lines. Management believes that these measures provide investors and analysts with alternative measures to analyze the revenue trends of the Firm.
Year ended December 31,
(in millions, except rates)
202220212020
Net interest income – reported$66,710 $52,311 $54,563 
Fully taxable-equivalent adjustments434 430 418 
Net interest income – managed basis(a)
$67,144 $52,741 $54,981 
Less: Markets net interest income(b)
4,789 8,243 8,374 
Net interest income excluding Markets(a)
$62,355 $44,498 $46,607 
Average interest-earning assets$3,349,079 $3,215,942 $2,779,710 
Less: Average Markets interest-earning assets(b)
953,195 888,238 751,131 
Average interest-earning assets excluding Markets$2,395,884 $2,327,704 $2,028,579 
Net yield on average interest-earning assets – managed basis2.00 %1.64 %1.98 %
Net yield on average Markets interest-earning assets(b)
0.50 0.93 1.11 
Net yield on average interest-earning assets excluding Markets2.60 %1.91 %2.30 %
Noninterest revenue – reported$61,985 $69,338 $65,388 
Fully taxable-equivalent adjustments3,148 3,225 2,560 
Noninterest revenue – managed basis$65,133 $72,563 67,948 
Less: Markets noninterest revenue(b)
24,195 19,151 21,109 
Noninterest revenue excluding Markets$40,938 $53,412 $46,839 
Memo: Total Markets net revenue(b)
$28,984 $27,394 $29,483 
(a)Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.
(b)Refer to pages 70-71 for further information on CIB Markets.

Calculation of certain U.S. GAAP and non-GAAP financial measures
Certain U.S. GAAP and non-GAAP financial measures are calculated as follows:
Book value per share (“BVPS”)
Common stockholders’ equity at period-end /
Common shares at period-end
Overhead ratio
Total noninterest expense / Total net revenue
ROA
Reported net income / Total average assets
ROE
Net income* / Average common stockholders’ equity
ROTCE
Net income* / Average tangible common equity
TBVPS
Tangible common equity at period-end / Common shares at period-end
* Represents net income applicable to common equity
In addition, the Firm reviews other non-GAAP measures such as
Adjusted expense, which represents noninterest expense excluding Firmwide legal expense, and
Pre-provision profit, which represents total net revenue less total noninterest expense.
Management believes that these measures help investors understand the effect of these items on reported results and provide an alternative presentation of the Firm’s performance.
The Firm also reviews the allowance for loan losses to period-end loans retained excluding trade finance and conduits, a non-GAAP financial measure, to provide a more meaningful assessment of CIB’s allowance coverage ratio.

JPMorgan Chase & Co./2022 Form 10-K
59

Management’s discussion and analysis
TCE, ROTCE and TBVPS
TCE, ROTCE and TBVPS are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm’s net income applicable to common equity as a percentage of average TCE. TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. TCE, ROTCE and TBVPS are utilized by the Firm, as well as investors and analysts, in assessing the Firm’s use of equity.
The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.
Period-endAverage
Dec 31,
2022
Dec 31,
2021
Year ended December 31,
(in millions, except per share and ratio data)202220212020
Common stockholders’ equity
$264,928 $259,289 $253,068 $250,968 $236,865 
Less: Goodwill51,662 50,315 50,952 49,584 47,820 
Less: Other intangible assets
1,224 882 1,112 876 781 
Add: Certain deferred tax liabilities(a)
2,510 2,499 2,505 2,474 2,399 
Tangible common equity$214,552 $210,591 $203,509 $202,982 $190,663 
Return on tangible common equityNANA18 %23 %14 %
Tangible book value per share$73.12 $71.53 NANANA
(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.
60
JPMorgan Chase & Co./2022 Form 10-K


BUSINESS SEGMENT RESULTS
The Firm is managed on an LOB basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.
The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is 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 58-60 for a definition of managed basis.
JPMorgan Chase
Consumer BusinessesWholesale Businesses
Consumer & Community BankingCorporate & Investment BankCommercial BankingAsset & Wealth Management
Banking &
Wealth Management(a)
Home Lending
Card Services & Auto(b)
BankingMarkets &
Securities Services
 • Middle Market Banking
 • Asset Management
 • Consumer Banking
 • J.P. Morgan Wealth Management
 • Business Banking
 
 • Home Lending Production
 • Home Lending Servicing
 • Real Estate Portfolios
• Card Services
• Auto


 • Investment Banking
 • Payments
 • Lending
 • Fixed
Income
Markets
 • Corporate Client Banking
 • Global Private Bank

 • Equity Markets
 • Securities Services
 • Credit Adjustments & Other
 • Commercial Real Estate Banking
(a)In the fourth quarter of 2022, Consumer & Business Banking was renamed Banking & Wealth Management (“BWM”).
(b)In the fourth quarter of 2022, Card & Auto was renamed Card Services & Auto.
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 also assesses the level of capital required for each LOB on at least an annual basis. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods. The Firm’s LOBs also provide various business metrics which are utilized by the Firm and its investors and analysts in assessing performance.
Revenue sharing
When business segments join efforts to sell products and services to the Firm’s clients and customers, the participating business segments 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 segment(s) involved in the transaction. The segment results reflect these revenue-sharing agreements.
Expense Allocation
Where business segments use services provided by corporate support units, or another business segment, the costs of those services are allocated to the respective business segments. The expense is generally
allocated based on the actual cost and use of services provided. In contrast, certain costs and investments related to corporate support units, technology and operations that are not currently utilized by any LOB, are not allocated to the business segments and are retained in Corporate. Expense retained in Corporate generally includes costs that would not be incurred if the segments were stand-alone businesses, and other items not aligned with a particular business segment.
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.
As a result of the rising interest rate environment, the cost of funds for assets and the credits earned for liabilities have generally increased, impacting the business segments’ net interest income. During the period ended December 31, 2022, this has resulted in higher cost of funds for loans and contributed to margin expansion on deposits.
JPMorgan Chase & Co./2022 Form 10-K
61

Management’s discussion and analysis