JPMORGAN CHASE & CO

This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of the Firm’s 2023 Form 10-K. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates affecting the Firm, the 2023 Form 10-K should be read in its entirety.

As of and for the year ended December 31, 2023, the results of the Firm include the impact of First Republic. Refer to page 67 and Note 34 for additional information.

(a) The ratios reflect the CECL capital transition provisions. Refer to Note 27 for additional information.

(b) Reflects the Firm’s ratios under the Basel III Standardized approach. Refer to Capital Risk Management on pages 91-101 for additional information.

(c) NII and NIR refer to net interest income and noninterest revenue, respectively. Markets consists of CIB's Fixed Income Markets and Equity Markets businesses.

Comparisons noted in the sections below are for the full year of 2023 versus the full year of 2022, unless otherwise specified.

Firmwide overview

JPMorgan Chase reported net income of $49.6 billion for 2023, up 32%, earnings per share of $16.23, ROE of 17% and ROTCE of 21%.

•Total net revenue was $158.1 billion, up 23%, reflecting:

–Net interest income (“NII”) of $89.3 billion, up 34%, 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. NII excluding Markets was $90.0 billion, up 44%.

–Noninterest revenue (“NIR”) was $68.8 billion, up 11%, driven by the impact of First Republic, including the $2.8 billion estimated bargain purchase gain, higher Markets noninterest revenue, and higher asset management fees, partially offset by the absence of the gain on the sale of Visa B shares in the prior year, higher net securities losses in Treasury and CIO, and lower auto operating lease income.

•Noninterest expense was $87.2 billion, up 14%, predominantly driven by higher compensation expense, reflecting an increase in employees, primarily in technology and front office, as well as wage inflation. The increase in expense also includes the $2.9 billion FDIC special assessment and costs associated with the First Republic acquisition.

•Theprovision for credit losses was $9.3 billion, reflecting $6.2 billion of net charge-offs and a net addition to the allowance for credit losses of $3.1 billion. Net charge-offs increased $3.3 billion, predominantly driven by Card Services, and to a lesser extent single name exposures in wholesale. The net addition to the allowance for credit losses included:

–a net addition of $1.3 billion inconsumer, predominantly driven by CCB, reflecting $1.4 billion in Card Services driven by loan growth, including an increase in revolving balances, partially offset by a net reduction of $200 million in Home Lending, and

–a net addition of $657 million inwholesale, driven by net downgrade activity and a deterioration in the outlook for commercial real estate in CB.

The net addition also included $1.2 billion to establish the allowance for First Republic loans and lending-related commitments in the second quarter of 2023.

The provision in the prior year included a $3.5 billion net addition to the allowance for credit losses and net charge-offs of $2.9 billion.

•The total allowance for credit losses was $24.8 billion at December 31, 2023. The Firm had an allowance for loan losses to retained loans coverage ratio of 1.75%, compared with 1.81% in the prior year.

•The Firm’snonperforming assets totaled $7.6 billion at December 31, 2023, up 5%, predominantly driven by wholesale nonaccrual loans, which reflected the impact of downgrades. Refer to Wholesale Credit Portfolio and Consumer Credit Portfolio on pages 120–130 and pages 114–119, respectively, for additional information.

•Firmwide average loansof $1.2 trillion were up 13%, predominantly driven by higher loans in CCB and CB, primarily as a result of First Republic.

•Firmwide average deposits of $2.4 trillion were down 4%, driven by

–continued migration into higher-yielding investments in AWM, the impact of higher customer spending in CCB, continued deposit attrition in CB, and a net decline in CIB, which included actions taken to reduce certain deposits,

–the increase in deposits associated with First Republic, and growth related to the Firm’s international consumer initiatives in Corporate.

Refer to Liquidity Risk Management on pages 102–109 for additional information.

Selected capital and other metrics

•CET1 capitalwas $251 billion, and the Standardized and Advanced CET1 ratios were both 15.0%.

•SLR was 6.1%.

•TBVPS grew 18%, ending 2023 at $86.08.

•As of December 31, 2023, the Firm had eligible end-of-period High Quality Liquid Assets (“HQLA”) of approximately $798 billion and unencumbered marketable securities with a fair value of approximately $649 billion, resulting in approximately $1.4 trillion of liquidity sources. Refer to Liquidity Risk Management on pages 102–109 for additional information.

Refer to Consolidated Results of Operations and Consolidated Balance Sheets Analysis on pages 54–57 and pages 58–60, respectively, for a further discussion of the Firm's results, including the provision for credit losses; and Business Segment Results on page 67 and Note 34 for additional information on the First Republic acquisition.

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 62–64 for a further discussion of each of these measures.

Business segment highlights

Selected business metrics for each of the Firm’s four lines of business (“LOB”) are presented below for the full year of 2023, and include the impact of First Republic, unless otherwise specified.

(a) Excludes Commercial Card.

(b) Users of all mobile platforms who have logged in within the past 90 days. As of December 31, 2023, excludes First Republic.

Refer to the Business Segment Results on pages 65–85 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 2023, consisting of:

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

Recent events

•On February 6, 2024, JPMorgan Chase announced that it plans to open more than 500 new branches, renovate approximately 1,700 locations and hire 3,500 employees over the next three years.

•On January 25, 2024, JPMorgan Chase announced new responsibilities for several key executives:

–Jennifer Piepszak, formerly the Co-Chief Executive Officer (“CEO”) of CCB, and Troy Rohrbaugh, formerly the Co-head of Markets and Securities Services, became Co-CEOs of the expanded Commercial & Investment Bank, which brings together the Firm’s major wholesale businesses consisting of Global Investment Banking, Commercial Banking and Corporate Banking, as well as Markets, Securities Services and Global Payments.

–Marianne Lake, the former Co-CEO of CCB, became the sole CEO of that business.

–James Dimon, Chairman and CEO, and Daniel Pinto, President and Chief Operating Officer, will continue to jointly manage the company, with Mr. Pinto focusing on the execution of the Firm’s LOB priorities.

As a result of these organizational changes, the Firm will be reorganizing its business segments to reflect the manner in which the segments will be managed. The reorganization of the business segments is expected to be effective in the second quarter of 2024.

•On January 16, 2024, JPMorgan Chase announced that Mark Weinberger, 62, had been elected to its Board of Directors, effective immediately. He will also serve as a member of the Board’s Audit Committee. Mr. Weinberger served as the Global Chairman and Chief Executive Officer of Ernst & Young from 2013 to 2019.

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 161 and Part I, Item 1A, Risk Factors section on pages 9-33 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 2024 will be in line with the outlook information set forth below, and the Firm does not undertake to update any forward-looking statements.

JPMorgan Chase’s current outlook for full-year 2024 should be viewed against the backdrop of the global and U.S. economies, financial markets activity, the geopolitical environment, the competitive environment, client and customer activity levels, and regulatory and legislative developments in the U.S. and other countries where the Firm does business. Each of these factors will affect the performance of the Firm. The Firm will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the business, economic, regulatory and legal environments in which it operates.

Full-year 2024

•Management expects net interest income to be approximately $90 billion, market dependent.

•Management expects net interest income excluding Markets to be approximately $88 billion, market dependent.

•Management expects adjusted expense to be approximately $90 billion, market dependent.

•Management expects the net charge-off rate in Card Services to be less than 3.50%.

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 62–64.

Business Developments

First Republic acquisition

On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First Republic Bank (the "First Republic acquisition") from the Federal Deposit Insurance Corporation (“FDIC”), as receiver.

JPMorgan Chase’s Consolidated Financial Statements as of and for the period ended December 31, 2023 reflect the impact of First Republic. Where meaningful to the disclosure, the impact of the First Republic acquisition, as well as subsequent related business and activities, are disclosed in various sections of this Form 10-K. The Firm continues to convert certain operations, and to integrate clients, products and services, associated with the First Republic acquisition to align with the Firm’s businesses and operations.

Refer to Note 34 and page 67 for additional information related to First Republic.

Interbank Offered Rate (“IBOR”) transition

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) ceased on June 30, 2023 (“LIBOR Cessation”). The one-month, three-month and six-month tenors of U.S. dollar LIBOR will continue to be published on a "synthetic" basis, which will allow market participants to use such rates for certain legacy LIBOR-linked contracts through September 30, 2024.

As part of the Firm’s overall transition efforts which culminated in the second quarter of 2023, the Firm successfully completed the conversion of predominantly all of its remaining cleared derivatives contracts linked to U.S. dollar LIBOR to the Secured Overnight Financing Rate (“SOFR”) as part of initiatives by the principal central counterparties (“CCPs”) to convert cleared derivatives prior to LIBOR Cessation. Nearly all of the Firm’s other U.S. dollar LIBOR-linked products that remained outstanding at LIBOR Cessation have been remediated through contractual fallback provisions or through the framework provided by the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”). The Firm expects that the limited number of contracts remaining that reference “synthetic” U.S. dollar LIBOR will be remediated by September 30, 2024.