Credit risk concentrations

Concentrations of credit risk arise when a number of customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions.

JPMorgan Chase regularly monitors various segments of its credit portfolios to assess potential credit risk concentrations and to obtain collateral when deemed necessary. Senior management is significantly involved in the credit approval and review process, and risk levels are adjusted as needed to reflect the Firm’s risk appetite.

In the Firm’s consumer portfolio, concentrations are evaluated primarily by product and by U.S. geographic region, with a key focus on trends and concentrations at the portfolio level, where potential credit risk concentrations can be remedied through changes in underwriting policies and portfolio guidelines. In the wholesale portfolio, credit risk concentrations are evaluated primarily by industry and monitored regularly on both an aggregate portfolio level and on an individual customer basis. The Firm’s wholesale exposure is managed through loan syndications and participations, loan sales, securitizations, credit derivatives, master netting agreements, and collateral and other risk-reduction techniques. For additional information on loans, see Note 14.

The Firm does not believe that its exposure to any particular loan product (e.g., option adjustable rate mortgages (“ARMs”)), or industry segment (e.g., commercial real estate), or its exposure to residential real estate loans with high loan-to-value ratios, results in a significant concentration of credit risk. Terms of loan products and collateral coverage are included in the Firm’s assessment when extending credit and establishing its allowance for loan losses.

The table below presents both on–balance sheet and off–balance sheet consumer and wholesale-related credit exposure by the Firm’s three credit portfolio segments as of December 31, 2015 and 2014.



	2015								2014
	Credit exposure		On-balance sheet				Off-balance sheet^(f)		Credit exposure		On-balance sheet				Off-balance sheet^(f)(g)
December 31, (in millions)			Loans		Derivatives						Loans		Derivatives
Total consumer, excluding credit card	$	403,424	$	344,821	$	—	$	58,478	$	353,635	$	295,374	$	—	$	58,153
Total credit card	646,981		131,463		—		515,518		657,011		131,048		—		525,963
Total consumer	1,050,405		476,284		—		573,996		1,010,646		426,422		—		584,116
Wholesale-related^(a)
Real Estate	116,857		92,820		312		23,725		105,975		79,113		327		26,535
Consumer & Retail	85,460		27,175		1,573		56,712		83,663		25,094		1,845		56,724
Technology, Media & Telecommunications	57,382		11,079		1,032		45,271		46,655		11,362		2,190		33,103
Industrials	54,386		16,791		1,428		36,167		47,859		16,040		1,303		30,516
Healthcare	46,053		16,965		2,751		26,337		56,516		13,794		4,542		38,180
Banks & Finance Cos	43,398		20,401		10,218		12,779		55,098		23,367		15,706		16,025
Oil & Gas	42,077		13,343		1,902		26,832		43,148		15,616		1,836		25,696
Utilities	30,853		5,294		1,689		23,870		27,441		4,844		2,272		20,325
State & Municipal Govt	29,114		9,626		3,287		16,201		31,068		7,593		4,002		19,473
Asset Managers	23,815		6,703		7,733		9,379		27,488		8,043		9,386		10,059
Transportation	19,227		9,157		1,575		8,495		20,619		10,381		2,247		7,991
Central Govt	17,968		2,000		13,240		2,728		19,881		1,103		15,527		3,251
Chemicals & Plastics	15,232		4,033		369		10,830		12,612		3,087		410		9,115
Metals & Mining	14,049		4,622		607		8,820		14,969		5,628		589		8,752
Automotive	13,864		4,473		1,350		8,041		12,754		3,779		766		8,209
Insurance	11,889		1,094		1,992		8,803		13,350		1,175		3,474		8,701
Financial Markets Infrastructure	7,973		724		2,602		4,647		11,986		928		6,789		4,269
Securities Firms	4,412		861		1,424		2,127		4,801		1,025		1,351		2,425
All other^(b)	149,117		109,889		4,593		34,635		134,475		92,530		4,413		37,532
Subtotal	783,126		357,050		59,677		366,399		770,358		324,502		78,975		366,881
Loans held-for-sale and loans at fair value	3,965		3,965		—		—		6,412		6,412		—		—
Receivables from customers and other^(c)	13,372		—		—		—		28,972		—		—		—
Total wholesale-related	800,463		361,015		59,677		366,399		805,742		330,914		78,975		366,881
Total exposure^(d)(e)	$	1,850,868	$	837,299	$	59,677	$	940,395	$	1,816,388	$	757,336	$	78,975	$	950,997


(a)	Effective in the fourth quarter 2015, the Firm realigned its wholesale industry divisions in order to better monitor and manage industry concentrations. Prior period amounts have been revised to conform with current period presentation. For additional information, see Wholesale credit portfolio on pages 122–129.


(b)	All other includes: individuals; SPEs; holding companies; and private education and civic organizations. For more information on exposures to SPEs, see Note 16.


(c)	Primarily consists of margin loans to prime brokerage customers that are generally over-collateralized through a pledge of assets maintained in clients’ brokerage accounts and are subject to daily minimum collateral requirements. As a result of the Firm’s credit risk mitigation practices, the Firm did not hold any reserves for credit impairment on these receivables.


(d)	For further information regarding on–balance sheet credit concentrations by major product and/or geography, see Note 6 and Note 14. For information regarding concentrations of off–balance sheet lending-related financial instruments by major product, see Note 29.


(e)	Excludes cash placed with banks of $351.0 billion and $501.5 billion, at December 31, 2015 and 2014, respectively, placed with various central banks, predominantly Federal Reserve Banks.


(f)	Represents lending-related financial instruments.

(g)

Effective January 1, 2015, the Firm no longer includes within its disclosure of wholesale lending-related commitments the unused amount of advised uncommitted lines of credit as it is within the Firm’s discretion whether or not to make a loan under these lines, and the Firm’s approval is generally required prior to funding. Prior period amounts have been revised to conform with the current period presentation.