JPMORGAN CHASE & CO

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, 2023, unless otherwise specified. Refer to Consolidated Results of Operations on pages 51-54 of the Firm’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) for a discussion of the 2022 versus 2021 results. Factors that relate primarily to a single business segment are discussed in more detail within that business segment’s results. Refer to pages 155–158 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 $2.8 billion, $3.7 billion and $4.9 billion for the years ended December 31, 2023, 2022 and 2021, respectively. Also includes losses on tax-oriented investments. Refer to Note 6 for additional information.

(b)Included the estimated bargain purchase gain of $2.8 billion for the year ended December 31, 2023, in Corporate associated with the First Republic acquisition. Refer to Business Segment Results on page 67, and Notes 6 and 34 for additional information.

Investment banking fees decreased, reflecting in CIB:

•lower advisory fees due to a lower number of completed transactions, reflecting the lower level of announced deals in the current and the prior year amid a challenging environment, and

•lower debt underwriting fees as challenging market conditions, primarily in the first half of the year, resulted in lower issuance activity across leveraged loans, investment-grade loans and high-grade bonds. This was largely offset by higher issuance activity in high-yield bonds driven by higher industry-wide issuance,

•higher equity underwriting fees driven by a higher level of follow-on offerings due to lower equity market volatility and a higher level of convertible securities offerings, which benefited from higher rates, partially offset by lower activity in private placements amid a challenging environment.

Refer to CIB segment results on pages 72–77 and Note 6 for additional information.

Principal transactions revenue increased, reflecting in CIB:

•higher Equity Markets principal transactions revenue in Prime Finance and Equity Derivatives,

•higher Fixed Income Markets principal transactions revenue in Securitized Products and Fixed Income

Financing, largely offset by lower revenue in Rates and Currencies & Emerging Markets;

–the net increase in Markets principal transactions revenue was more than offset by a decline in Markets net interest income, primarily due to higher funding costs; and

•losses of $280 million in Credit Adjustments & Other compared with $836 million in the prior year.

The prior year included net markdowns on held-for-sale positions, primarily unfunded commitments, in the bridge financing portfolio in CIB and CB.

The increase in principal transactions revenue also included the impact of higher short-term cash deployment activities in Treasury and CIO, reflective of the current interest rate environment.

Principal transactions revenue in CIB generally has offsets across other revenue lines, including net interest income. The Firm assesses the performance of its Markets business on a total net revenue basis.

Refer to CIB and Corporate segment results on pages 72–77 and pages 84–85, respectively, and Note 6 for additional information.

Lending- and deposit-related fees increased, reflecting:

•higher lending-related revenue driven by the amortization of the purchase discount on certain acquired lending-related commitments associated with First Republic, primarily in AWM and CB,

•lower deposit-related fees in CB and CIB driven by the higher level of client credits that reduce such fees.

Refer to CIB, CB and AWM segment results on pages 72–77, pages 78–80 and pages 81–83, respectively, and Note 6 for additional information.

Asset management fees increased driven by strong net inflows and the removal of most money market fund fee waivers in the prior year in AWM, and in CCB the impact of First Republic, as well as higher average market levels and strong net inflows. Refer to CCB and AWM segment results on pages 68–71 and pages 81–83, respectively, and Note 6 for additional information.

Commissions and other fees increased due to higher commissions on annuity sales and travel-related services in CCB. Refer to CCB segment results on pages 68–71 and Note 6 for additional information.

Investment securities losses reflected higher net losses on higher sales of U.S. Treasuries and U.S. GSE and government agency MBS, associated with repositioning the investment securities portfolio in both periods in Treasury and CIO. Refer to Corporate segment results on pages 84–85 and Note 10 for additional information.

Mortgage fees and related income: refer to CCB segment results on pages 68–71, Note 6 and 15 for further information.

Card income increased in CIB and CB, reflecting growth in merchant processing volume and Commercial Card transactions in J.P. Morgan Payments; and in CCB, driven by higher net interchange income on increased debit and credit card sales volume. Refer to Business Segment Results, CCB, CIB and CB segment results on pages 65–85, pages 68–71, pages 72–77 and pages 78–80, respectively, and Note 6 for further information.

Other income increased, reflecting:

•the $2.8 billion estimated bargain purchase gain in Corporate associated with the First Republic acquisition,

•the impact of net investment hedges in Treasury and CIO, and

•a gain of $339 million recognized in the first quarter of 2023 in AWM on the original minority interest in China International Fund Management (“CIFM”) upon the Firm's acquisition of the remaining 51% interest in the entity,

•lower auto operating lease income in CCB due to a decline in volume,

•lower net gains related to certain other Corporate investments, and

•the net impact of equity investments in CIB, including impairment losses in the second half of 2023,

The prior year included:

•a gain of $914 million on the sale of Visa B shares and proceeds from an insurance settlement in Corporate, and

•a gain on an equity-method investment received in partial satisfaction of a loan in CB.

Refer to Business Segment Results on page 67 and Note 34 for additional information on the First Republic acquisition; Note 5 for additional information on net investment hedges; and Note 6 for further information.

Net interest income increased driven by higher rates, the impact of First Republic, and higher revolving balances in Card Services, partially offset by lower Markets net interest income and lower average deposit balances.

The Firm’s average interest-earning assets were $3.3 trillion, down $23 billion, and the yield was 5.14%, up 236 basis points (“bps”). The net yield on these assets, on an FTE basis, was 2.70%, an increase of 70 bps. The net yield excluding Markets was 3.85%, up 125 bps.

Refer to the Consolidated average balance sheets, interest and rates schedule on pages 310-314 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 62–64 for a further discussion of Net yield excluding Markets.

Theprovision for credit losses was $9.3 billion, reflecting $6.2 billion of net charge-offs and a net addition of $3.1 billion to the allowance for credit losses.

Net charge-offs increased $3.3 billion, consisting of $2.6 billion in consumer, predominantly driven by Card Services, as the portfolio continued to normalize to pre-pandemic levels, and $698 million in wholesale.

•$1.3 billion inconsumer, predominantly driven by CCB, reflecting a $1.4 billion net addition in Card Services, partially offset by a net reduction of $200 million in Home Lending. The net addition in Card Services was driven by loan growth, including an increase in revolving balances, partially offset by reduced borrower uncertainty. The net reduction in Home Lending was driven by improvements in the outlook for home prices; and

•$657 million in wholesale, driven by net downgrade activity and the net effect of changes in the Firm's weighted average macroeconomic outlook, including a deterioration in the outlook for commercial real estate in CB, partially offset by the impact of changes in the loan and lending-related commitment portfolios.

The provision in the prior year included a $3.5 billion net addition 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 reductionin the allowance related to a decrease in uncertainty associated with borrower behavior as the effects of the pandemic gradually receded, and net charge-offs of $2.9 billion.

Refer to the segment discussions of CCB on pages 68–71, CIB on pages 72–77, CB on pages 78–80, AWM on pages 81–83, the Allowance for Credit Losses on pages 131–133, and Notes 1, 10 and 13 for further discussion of the credit portfolio and the allowance for credit losses.

(a)Includes depreciation expense associated with auto operating lease assets.

(b)Included Firmwide legal expense of $1.4 billion, $266 million and $426 million, as well as FDIC-related expense of $4.2 billion, $860 million and $730 million for the years ended December 31, 2023, 2022 and 2021, respectively. Refer to Note 6 for additional information.

(c)Reflected the impact of First Republic of $1.5 billion, which included expenses recorded in the second quarter of 2023 with respect to individuals associated with First Republic who did not become employees of the Firm until July 2, 2023. Refer to Business Segment Results on page 67 for additional information.

Compensation expense increased driven by:

•an increase in employees, primarily in technology and front office, as well as wage inflation,

•the impact of First Republic in the second half of 2023, predominantly in CCB and Corporate, and

•higher volume- and revenue-related compensation predominantly in AWM and CCB.

Noncompensation expense increased as a result of:

•higher FDIC-related expense, which included the $2.9 billion special assessment recognized in Corporate,

•the impact of First Republic in Corporate and CCB,

•higher legal expense in CIB, Corporate and CCB,

•higher investments in the business, including marketing and technology, and

•higher other expenses, including higher indirect tax expense in CIB, and higher travel and entertainment expense across the segments,

•lower depreciation expense on lower auto lease assets.

Refer to Business Segment Results on page 67 and Note 34 for additional information on the First Republic acquisition; Note 6 for further information;

Theeffective tax rate increased predominantly driven by:

•the higher level of pre-tax income and changes in the mix of income and expenses subject to U.S. federal, state and local taxes,

•lower benefits associated with tax audit settlements, and

• vesting of employee stock based awards,

largely offset by

•the impact of the income tax expense associated with the First Republic acquisition that was reflected in the estimated bargain purchase gain, which resulted in a reduction in the Firm’s effective tax rate, and

•an income tax benefit related to the finalization of certain income tax regulations.

Refer to Note 25 for further information.