JPMORGAN CHASE & CO (JPM) FY 2022 MD&A

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.

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.

(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.

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.

(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:

(a)Includes states, municipalities, hospitals and universities.

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.

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.

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.

(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.

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.

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.

Management’s discussion and analysis

(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.

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.

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.

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

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.

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.

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.

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.

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.

(a)Predominantly recognized in CIB, CB and Corporate.

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.

(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.

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.

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.

(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.

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.

(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.

Management’s discussion and analysis

Foreign exchange risk

Foreign exchange risk is transferred from the LOBs and Other Corporate to Treasury and CIO for certain revenues and expenses. Treasury and CIO manages these risks centrally and reports the impact of foreign exchange rate movements related to the transferred risk in its results. Refer to Market Risk Management on page 137 for additional information.

Debt expense and preferred stock dividend allocation

As part of the funds transfer pricing process, almost all of the cost of the credit spread component of outstanding unsecured long-term debt and preferred stock dividends is allocated to the reportable business segments, while the balance of the cost is retained in Corporate. The methodology to allocate the cost of unsecured long-term debt and preferred stock dividends to the business segments is aligned with the relevant regulatory capital requirements and funding needs of the LOBs, as applicable. The allocated cost of unsecured long-term debt is included in a business segment’s net interest income, and net income is reduced by preferred stock dividends to arrive at a

business segment’s net income applicable to common equity.

Refer to Capital Risk Management on pages 86-96 for additional information.

Capital allocation

The amount of capital assigned to each business segment is referred to as equity. The Firm’s allocation methodology incorporates Basel III Standardized Risk-weighted assets (“RWA”), Basel III Advanced RWA, the global systemically important banks (“GSIB”) surcharge, and a simulation of capital in a severe stress environment. At least annually, the assumptions, judgments and methodologies used to allocate capital are reassessed and, as a result, the capital allocated to the LOBs may change. As of January 1, 2023, the Firm has changed its line of business capital allocations primarily as a result of updates to the Firm’s capital requirements and changes in RWA for each LOB.

Refer to Line of business equity on page 93 for additional information on capital allocation.

Segment Results – Managed Basis

The following tables summarize the Firm’s results by segment for the periods indicated.

Selected Firmwide Metrics

The following tables present key metrics for Wealth Management, which consists of the Global Private Bank in AWM and J.P. Morgan Wealth Management in CCB; and total revenue and key metrics for J.P. Morgan Payments, which consists of payments activities in CIB and CB. This presentation is intended to provide investors with additional information concerning Wealth Management and J.P. Morgan Payments, each of which consists of similar business activities conducted across LOBs to serve different types of clients and customers.

Selected metrics - Wealth Management

(a) Consists of Global Private Bank in AWM and client investment assets in J.P. Morgan Wealth Management in CCB.

Selected metrics - J.P. Morgan Payments

The following sections provide a comparative discussion of the Firm’s results by segment as of or for the years ended December 31, 2022 and 2021.

CONSUMER & COMMUNITY BANKING

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

(a)Included operating lease income of $3.6 billion, $4.8 billion and $5.4 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

(b)Included depreciation expense on leased assets of $2.4 billion, $3.3 billion and $4.2 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

(c)In the fourth quarter of 2022, Consumer & Business Banking was renamed Banking & Wealth Management.

(d)In the fourth quarter of 2022, Card & Auto was renamed Card Services & Auto.

(e)Included MSR risk management results of $93 million, $(525) million and $(18) million for the years ended December 31, 2022, 2021 and 2020, respectively.

Management’s discussion and analysis

2022 compared with 2021

Net income was $14.9 billion, down 29%, reflecting a net increase in the provision for credit losses compared with a net benefit in the prior year.

Net revenue was $55.0 billion, an increase of 10%.

Net interest income was $39.9 billion, up 22%, predominantly driven by:

•margin expansion on higher rates as well as growth in deposits in Banking & Wealth Management (“BWM”), and higher revolving loans in Card Services,

partially offset by

•lower NII associated with PPP loan forgiveness in BWM, and tighter loan spreads in Home Lending.

Noninterest revenue was $15.1 billion, down 13%, reflecting:

•lower production revenue from lower margins and volume in Home Lending,

•lower auto operating lease income as a result of a decline in volume, and

•lower card income reflecting higher amortization related to new account origination costs partially offset by higher annual fees in Card Services, while net interchange income was relatively flat,

partially 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, as well as higher operating revenue on a higher level of third-party loans serviced,

•higher commissions reflecting travel-related services in Card Services and increased annuity sales in BWM, and

•higher deposit-related fees due to higher service fee volume in BWM.

Refer to Note 6 for additional information on card income and asset management, administration and commissions.

Refer to Note 15 for further information regarding changes in the value of the MSR asset and related hedges, and mortgage fees and related income.

Noninterest expense was $31.5 billion, up 8%, reflecting:

•investments in the business and higher structural expenses, predominantly driven by compensation, technology and marketing,

partially offset by

•lower volume- and revenue-related expenses, predominantly driven by lower depreciation expense on lower auto lease assets, partially offset by higher operating losses.

The provision for credit losses was $3.8 billion, driven by:

•net charge-offs of $2.7 billion, down from $2.8 billion in the prior year 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,

largely offset by

–a $190 million increase in net charge-offs in Auto and BWM as net charge-offs in the prior year benefited from government stimulus and payment assistance programs, and

•a $1.1 billion net addition to the allowance for credit losses driven by

–$950 million in 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, and

–$175 million in Home Lending.

The prior year included a $9.8 billion reduction in the

allowance for credit losses across CCB.

Refer to Credit and Investment Risk Management on pages 106-130 and Allowance for Credit Losses on pages 127-129 for a further discussion of the credit portfolios and the allowance for credit losses.

(a)At December 31, 2022, 2021 and 2020, included $350 million, $5.4 billion and $19.2 billion of loans, respectively, in Business Banking under the PPP. Refer to Credit Portfolio on pages 108-109 for a further discussion of the PPP.

(b)At December 31, 2022, 2021 and 2020, Home Lending loans held-for-sale and loans at fair value were $3.0 billion, $14.9 billion and $9.7 billion, respectively.

(c)Average Home Lending loans held-for sale and loans at fair value were $7.3 billion, $15.4 billion and $11.1 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

(a)At December 31, 2022, 2021 and 2020, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $187 million, $342 million and $558 million, respectively. These amounts have been excluded based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance.

(b)At December 31, 2022, 2021 and 2020, generally excludes loans that were under payment deferral programs offered in response to the COVID-19 pandemic. Refer to Credit Portfolio on pages 108-109 for further information on consumer assistance. Includes loans to customers that have exited COVID-19 related payment deferral programs and are 90 or more days past due, predominantly all of which were considered collateral-dependent at time of exit.

(c)At December 31, 2022, 2021 and 2020, included $350 million, $5.4 billion and $19.2 billion of loans, respectively, in Business Banking under the PPP. The Firm does not expect to realize material credit losses on PPP loans because the loans are guaranteed by the SBA. Refer to Credit Portfolio on pages 108-109 for a further discussion of the PPP.

(d)At December 31, 2022, 2021 and 2020, the principal balance of loans under payment deferral programs offered in response to the COVID-19 pandemic was $449 million, $1.1 billion and $9.1 billion in Home Lending, respectively. Loans that are performing according to their modified terms are generally not considered delinquent. Refer to Credit Portfolio on pages 108-109 for further information on consumer assistance.

(e)At December 31, 2022, 2021 and 2020, excluded mortgage loans insured by U.S. government agencies of $258 million, $405 million and $744 million, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.

(f)At December 31, 2022 and 2021, nonaccrual loans excluded $101 million and $506 million of PPP loans 90 or more days past due and guaranteed by the SBA, respectively.

Management’s discussion and analysis

(a)Users of all web and/or mobile platforms who have logged in within the past 90 days.

(b)Users of all mobile platforms who have logged in within the past 90 days.

(c)Total payments transaction volume includes debit and credit card sales volume and gross outflows of ACH, ATM, teller, wires, BillPay, PayChase, Zelle, person-to-person and checks.

(d)Includes assets invested in managed accounts and J.P. Morgan mutual funds where AWM is the investment manager. Refer to AWM segment results on pages 76-78 for additional information.

(e)Firmwide mortgage origination volume was $81.8 billion, $182.4 billion and $133.4 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

(f)Included origination volume under the PPP of $10.6 billion and $21.9 billion for the years ended December 31, 2021 and 2020, respectively. The program ended on May 31, 2021 for new applications.

CORPORATE & INVESTMENT BANK

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

(a)Includes card income of $1.0 billion, $910 million and $840 million for the years ended December 31, 2022, 2021 and 2020, respectively.

(b)Includes tax-equivalent adjustments, predominantly due to income tax credits and other tax benefits related to alternative energy investments; income tax credits and amortization of the cost of investments in affordable housing projects; and tax-exempt income from municipal bonds of $3.0 billion, $3.0 billion and $2.4 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

(a)Consists primarily of centrally managed credit valuation adjustments ("CVA"), funding valuation adjustments ("FVA") on derivatives, other valuation adjustments, and certain components of fair value option elected liabilities, which are primarily reported in principal transactions revenue. Results are presented net of associated hedging activities and net of CVA and FVA amounts allocated to Fixed Income Markets and Equity Markets. Refer to Notes 2, 3 and 24 for additional information.

Management’s discussion and analysis

2022 compared with 2021

Net income was $15.0 billion, down 29%.

Net revenue was $47.9 billion, down 7%.

Banking revenue was $15.3 billion, down 23%.

•Investment Banking revenue was $6.5 billion, down 48%, driven by lower Investment Banking fees, which were also down 48%, as volatile market conditions resulted in lower fees across products, and $251 million of markdowns on held-for-sale positions, primarily unfunded commitments, in the bridge financing portfolio in the second quarter of 2022. The Firm ranked #1 for Global Investment Banking fees, according to Dealogic.

–Equity underwriting fees were $1.0 billion, down 74%, and debt underwriting fees were $2.8 billion, down 43%, due to lower issuance activity.

–Advisory fees were $3.1 billion, down 30%, driven by a lower level of announced deals.

•Payments revenue was $7.4 billion, up 18%, and included the net impact of equity investments. Excluding this net impact, revenue was $7.8 billion, up 33%, driven by deposit margin expansion on higher rates and growth in fees on higher volumes.

•Lending revenue was $1.4 billion, up 38%, driven by higher net interest income primarily on higher loans, as well as fair value gains on hedges of retained loans, compared with losses in the prior year.

Markets & Securities Services revenue was $32.6 billion, up 2%. Markets revenue was $29.0 billion, up 6%.

•Fixed Income Markets revenue was $18.6 billion, up 10%, driven by strong performance in the macro businesses amid volatile market conditions, particularly in Currencies & Emerging Markets and Rates, partially offset by lower revenue in Securitized Products.

•Equity Markets revenue was $10.4 billion, down 2%, driven by lower revenue in Cash Equities, largely offset by Equity Derivatives.

•Securities Services revenue was $4.5 billion, up 4%, driven by deposit margin expansion on higher rates and growth in fees, largely offset by lower average market values of assets under custody and lower deposits.

•Credit Adjustments & Other was a loss of $836 million, reflecting funding spread widening, and, to a lesser extent, losses on exposures relating to commodities and Russia and Russia-associated counterparties, compared with a gain of $250 million in the prior year.

Noninterest expense was $27.1 billion, up 7%, driven by higher structural expense and investments in the business, including higher compensation, partially offset by lower revenue-related compensation as well as lower legal expense.

The provision for credit losses was $1.2 billion, predominantly driven by a net addition to the allowance for credit losses, reflecting deterioration in the Firm’s macroeconomic outlook and loan growth.

The provision for credit losses in the prior year was a net benefit of $1.2 billion, driven by a net reduction in the allowance for credit losses.

(a)Loans retained includes credit portfolio loans, loans held by consolidated Firm-administered multi-seller conduits, trade finance loans, other held-for-investment loans and overdrafts.

(b)Loans held-for-sale and loans at fair value primarily reflect lending related positions originated and purchased in CIB Markets, including loans held for securitization.

(a)Allowance for loan losses of $104 million, $58 million and $278 million were held against these nonaccrual loans at December 31, 2022, 2021 and 2020, respectively.

(b)At December 31, 2022, 2021 and 2020, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $115 million, $281 million and $316 million, respectively. These amounts have been excluded based upon the government guarantee.

(c)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.

(d)Management uses allowance for loan losses to period-end loans retained, excluding trade finance and conduits, a non-GAAP financial measure, to provide a more meaningful assessment of CIB’s allowance coverage ratio. Refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 58-60.

Management’s discussion and analysis

(a)Represents long-term debt and loan syndications.

(a)Source: Dealogic as of January 2, 2023. Reflects the ranking of revenue wallet and market share.

(b)Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.

(c)Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.

(d)Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities ("ABS") and mortgage-backed securities ("MBS"); and exclude money market, short-term debt, and U.S. municipal securities.

(e)Global investment banking fees exclude money market, short-term debt and shelf securities.

Markets revenue

The following table summarizes selected income statement data for the Markets businesses. Markets includes both Fixed Income Markets and Equity Markets. Markets revenue consists of principal transactions, fees, commissions and other income, as well as net interest income. The Firm assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate net interest income may be risk-managed by derivatives that are reflected at fair value in principal transactions revenue. Refer to Notes 6 and 7 for a description of the composition of these income statement line items.

Principal transactions reflects revenue on financial instruments and commodities transactions that arise from client-driven market-making activity. Principal transactions revenue includes amounts recognized upon executing new transactions with market participants, as well as “inventory-related revenue”, which is revenue recognized from gains and losses on derivatives and other instruments that the Firm has been holding in anticipation of, or in response to, client demand, and changes in the fair value of instruments used by the Firm to actively manage the risk exposure arising from such inventory. Principal transactions revenue recognized upon executing new transactions with market participants is affected by many factors including the level of client activity, the bid-offer spread (which is the

difference between the price at which a market participant is willing and able to sell an instrument to the Firm and the price at which another market participant is willing and able to buy it from the Firm, and vice versa), market liquidity and volatility. These factors are interrelated and sensitive to the same factors that drive inventory-related revenue, which include general market conditions, such as interest rates, foreign exchange rates, credit spreads, and equity and commodity prices, as well as other macroeconomic conditions.

For the periods presented below, the predominant source of principal transactions revenue was the amount recognized upon executing new transactions.

(a)Loss days represent the number of days for which CIB Markets, which consists of Fixed Income Markets and Equity Markets, posted losses to total net revenue. The loss days determined under this measure differ from the measure used to determine backtesting gains and losses. Daily backtesting gains and losses include positions in the Firm’s Risk Management value-at-risk ("VaR") measure and exclude certain components of total net revenue, which may more than offset backtesting gains or losses on a particular day. For more information on daily backtesting gains and losses, refer to the VaR discussion on pages 133-135.

(a)Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.

(b)Represents total merchant processing volume across CIB, CCB and CB.

(c)Client deposits and other third-party liabilities pertain to the Payments and Securities Services businesses.

Management’s discussion and analysis

(a)Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking location, or domicile of the client, as applicable.

(b)Client deposits and other third-party liabilities pertaining to the Payments and Securities Services businesses, and AUC, are based on the domicile of the client.

COMMERCIAL BANKING

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

(a)Includes card income of $685 million, $624 million and $525 million for the years ended December 31, 2022, 2021 and 2020, respectively.

(b)Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community development entities and in entities established for rehabilitation of historic properties, as well as tax-exempt income related to municipal financing activities of $322 million, $330 million and $350 million for the years ended December 31, 2022, 2021 and 2020, respectively.

2022 compared with 2021

Net income was $4.2 billion, down 20%, reflecting a net increase in the provision for credit losses compared with a net benefit in the prior year.

Net revenue was $11.5 billion, up 15%. Net interest income was $8.2 billion, up 35%, driven by deposit margin expansion on higher rates and growth in loans, predominantly offset by the impact of higher funding costs and lower deposits.

Noninterest revenue was $3.3 billion, down 15%, driven by lower investment banking revenue and net markdowns on held-for-sale positions, primarily unfunded commitments, in the bridge financing portfolio. The decreases were partially offset by a gain on an equity method investment received in partial satisfaction of a loan.

Noninterest expense was $4.7 billion, up 17%, largely driven by higher volume-and revenue-related expense, as well as structural expense, including higher compensation expense, and expense associated with growth in payments.

The provision for credit losses was $1.3 billion, predominantly driven by a net addition to the allowance for credit losses, reflecting deterioration in the Firm’s macroeconomic outlook and loan growth.

The provision for credit losses in the prior year was a net benefit of $947 million, driven by a net reduction in the allowance for credit losses.

Management’s discussion and analysis

CB product revenue consists of the following:Lending includes a variety of financing alternatives, which are primarily provided on a secured basis; collateral includes receivables, inventory, equipment, real estate or other assets. Products include term loans, revolving lines of credit, bridge financing, asset-based structures, leases, and standby letters of credit.Payments includes revenue from a broad range of products and services that CB clients use to manage payments and receipts globally, as well as invest and manage funds.Investment banking includes investment banking fees and markets revenue from a full range of products and services providing CB clients with advisory, loan syndications, capital-raising in equity and debt markets, and risk management solutions.Other revenue primarily includes tax-equivalent adjustments generated from Community Development Banking and activity derived from principal transactions.

(a)In the fourth quarter of 2022, certain revenue from CIB Markets products was reclassified from investment banking to payments. Prior-period amounts have been revised to conform with the current presentation.

(b)Includes CB’s share of revenue from investment banking products sold to CB clients through the CIB.

(c)Includes gross revenues earned by the Firm for investment banking and payments products sold to CB clients that are subject to a revenue sharing arrangement with the CIB. Refer to Business Segment Results on page 61 for a discussion of revenue sharing.

(a)At December 31, 2022, 2021 and 2020, total loans included $132 million, $1.2 billion and $6.6 billion of loans under the PPP, of which $123 million, $1.1 billion and $6.4 billion were in Middle Market Banking, respectively. Refer to Credit Portfolio on pages 108-109 for a further discussion of the PPP.

(a)Allowance for loan losses of $153 million, $124 million and $273 million was held against nonaccrual loans retained at December 31, 2022, 2021 and 2020, respectively.

(b)Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.

(c)At December 31, 2022 and 2021, nonaccrual loans excluded $18 million and $114 million, respectively, of PPP loans 90 or more days past due and guaranteed by the SBA.

Management’s discussion and analysis

ASSET & WEALTH MANAGEMENT

Asset & Wealth Management, with client assets of $4.0 trillion, is a global leader in investment and wealth management. Asset Management Offers multi-asset investment management solutions across equities, fixed income, alternatives and money market funds to institutional and retail investors providing for a broad range of clients’ investment needs. Global Private BankProvides retirement products and services, brokerage, custody, estate planning, lending, deposits and investment management to high net worth clients. The majority of AWM’s client assets are in actively managed portfolios.