Off–balance sheet lending-related

financial instruments, guarantees, and other

commitments

JPMorgan Chase provides lending-related financial instruments (e.g., commitments and guarantees) to address the financing needs of its customers and clients. The contractual amount of these financial instruments represents the maximum possible credit risk to the Firm should the customer or client draw upon the commitment or the Firm be required to fulfill its obligation under the guarantee, and should the customer or client subsequently fail to perform according to the terms of the contract. Most of these commitments and guarantees are refinanced, extended, cancelled, or expire without being drawn or a default occurring. As a result, the total contractual amount of these instruments is not, in the Firm’s view, representative of its expected future credit exposure or funding requirements. For a further discussion of lending-related commitments and guarantees, and the Firm’s related accounting policies, refer to Note 27 of JPMorgan Chase’s 2017 Annual Report.

To provide for probable credit losses inherent in wholesale and certain consumer lending-related commitments, an allowance for credit losses on lending-related commitments is maintained. Refer to Note 12 for further information regarding the allowance for credit losses on lending-related commitments. The following table summarizes the contractual amounts and carrying values of off-balance sheet lending-related financial instruments, guarantees and other commitments at June 30, 2018, and December 31, 2017. The amounts in the table below for credit card and home equity lending-related commitments represent the total available credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit for these products will be utilized at the same time. The Firm can reduce or cancel credit card lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. In addition, the Firm typically closes credit card lines when the borrower is 60 days or more past due. The Firm may reduce or close HELOCs when there are significant decreases in the value of the underlying property, or when there has been a demonstrable decline in the creditworthiness of the borrower.



Off–balance sheet lending-related financial instruments, guarantees and other commitments
	Contractual amount												Carrying value^(g)
	June 30, 2018										Dec 31, 2017		Jun 30, 2018			Dec 31, 2017
By remaining maturity (in millions)	Expires in 1 year or less		Expires after 1 year through 3 years		Expires after 3 years through 5 years		Expires after 5 years		Total		Total
Lending-related
Consumer, excluding credit card:
Home equity	$	1,202	$	1,163	$	1,559	$	16,606	$	20,530	$	20,360	$	12		$	12
Residential mortgage^(a)	8,342		—		—		12		8,354		5,736		—			—
Auto	7,770		949		187		153		9,059		9,255		2			2
Consumer & Business Banking	12,410		796		110		525		13,841		13,202		19			19
Total consumer, excluding credit card	29,724		2,908		1,856		17,296		51,784		48,553		33			33
Credit card	592,452		—		—		—		592,452		572,831		—			—
Total consumer^(b)	622,176		2,908		1,856		17,296		644,236		621,384		33			33
Wholesale:
Other unfunded commitments to extend credit^(c)	86,217		130,739		140,327		9,395		366,678		331,160		942			840
Standby letters of credit and other financial guarantees^(c)	14,469		8,744		7,042		1,708		31,963		35,226		593			636
Other letters of credit^(c)	2,914		54		148				3,116		3,712		4			3
Total wholesale^(d)	103,600		139,537		147,517		11,103		401,757		370,098		1,539			1,479
Total lending-related	$	725,776	$	142,445	$	149,373	$	28,399	$	1,045,993	$	991,482	$	1,572		$	1,512
Other guarantees and commitments
Securities lending indemnification agreements and guarantees^(e)	$	202,797	$	—	$	—	$	—	$	202,797	$	179,490	$	—		$	—
Derivatives qualifying as guarantees	4,737		334		12,415		40,235		57,721		57,174		457			304
Unsettled reverse repurchase and securities borrowing agreements	102,480		—		—		—		102,480		76,859		—			—
Unsettled repurchase and securities lending agreements	92,150		—		—		—		92,150		44,205		—			—
Loan sale and securitization-related indemnifications:
Mortgage repurchase liability	NA		NA		NA		NA		NA		NA		123			111
Loans sold with recourse	NA		NA		NA		NA		1,084		1,169		33			38
Other guarantees and commitments^(f)	11,754		1,458		209		2,664		16,085		11,867		(225		)	(76		)


(a)	Includes certain commitments to purchase loans from correspondents.


(b)	Predominantly all consumer lending-related commitments are in the U.S.

(c)

At June 30, 2018, and December 31, 2017, reflected the contractual amount net of risk participations totaling $287 million and $334 million respectively, for other unfunded commitments to extend credit; $9.8 billion and $10.4 billion, respectively, for standby letters of credit and other financial guarantees; and $407 million and $405 million, respectively, for other letters of credit. In regulatory filings with the Federal Reserve these commitments are shown gross of risk participations.


(d)	At June 30, 2018, and December 31, 2017, the U.S. portion of the contractual amount of total wholesale lending-related commitments was 78% and 77%, respectively.


(e)	At June 30, 2018, and December 31, 2017, collateral held by the Firm in support of securities lending indemnification agreements was $213.7 billion and $188.7 billion, respectively. Securities lending collateral primarily consists of cash and securities issued by governments that are members of G7 and U.S. government agencies.


(f)	At June 30, 2018, and December 31, 2017, primarily includes letters of credit hedged by derivative transactions and managed on a market risk basis, unfunded commitments related to institutional lending and commitments associated with the Firm’s membership in certain clearing houses. Additionally, includes unfunded commitments predominantly related to certain tax-oriented equity investments.


(g)	For lending-related products, the carrying value represents the allowance for lending-related commitments and the guarantee liability; for derivative-related products, the carrying value represents the fair value.

Other unfunded commitments to extend credit

Other unfunded commitments to extend credit generally consist of commitments for working capital and general corporate purposes, extensions of credit to support commercial paper facilities and bond financings in the event that those obligations cannot be remarketed to new investors, as well as committed liquidity facilities to clearing organizations. The Firm also issues commitments under multipurpose facilities which could be drawn upon in several forms, including the issuance of a standby letter of credit.

The Firm acts as a settlement and custody bank in the U.S. tri-party repurchase transaction market. In its role as settlement and custody bank, the Firm in part is exposed to the intra-day credit risk of its cash borrower clients, usually broker-dealers. This exposure arises under secured clearance advance facilities that the Firm extended to its clients (i.e., cash borrowers); these facilities contractually limit the Firm’s intra-day credit risk to the facility amount

and must be repaid by the end of the day. As of December 31, 2017 the secured clearance advance facility maximum outstanding commitment amount was $1.5 billion. As of June 30, 2018 the Firm no longer offers such arrangements to its clients.

Standby letters of credit and other financial guarantees

Standby letters of credit and other financial guarantees are conditional lending commitments issued by the Firm to guarantee the performance of a client or customer to a third party under certain arrangements, such as commercial paper facilities, bond financings, acquisition financings, trade and similar transactions.

The following table summarizes the standby letters of credit and other letters of credit arrangements as of June 30, 2018, and December 31, 2017.

Standby letters of credit, other financial guarantees and other letters of credit



	June 30, 2018				December 31, 2017
(in millions)	Standby letters of credit and other financial guarantees		Other letters of credit		Standby letters of credit and other financial guarantees		Other letters of credit
Investment-grade^(a)	$	25,512	$	2,267	$	28,492	$	2,646
Noninvestment-grade^(a)	6,451		849		6,734		1,066
Total contractual amount	$	31,963	$	3,116	$	35,226	$	3,712

Allowance for lending-related commitments	$	139	$	4	$	192	$	3
Guarantee liability	454		—		444		—
Total carrying value	$	593	$	4	$	636	$	3

Commitments with collateral	$	16,326	$	597	$	17,421	$	878


(a)	The ratings scale is based on the Firm’s internal ratings which generally correspond to ratings as defined by S&P and Moody’s.

Derivatives qualifying as guarantees

The Firm transacts certain derivative contracts that have the characteristics of a guarantee under U.S. GAAP. For further information on these derivatives, refer to Note 27 of JPMorgan Chase’s 2017 Annual Report.

The following table summarizes the derivatives qualifying as guarantees as of June 30, 2018, and December 31, 2017.



(in millions)	June 30, 2018		December 31, 2017
Notional amounts
Derivative guarantees	$	57,721	$	57,174
Stable value contracts with contractually limited exposure	28,487		29,104
Maximum exposure of stable value contracts with contractually limited exposure	2,946		3,053

Fair value
Derivative payables	457		304
Derivative receivables	—		—

In addition to derivative contracts that meet the characteristics of a guarantee, the Firm is both a purchaser and seller of credit protection in the credit derivatives market. For a further discussion of credit derivatives, refer to Note 4.

Loan sales- and securitization-related indemnifications

In connection with the Firm’s mortgage loan sale and securitization activities with GSEs and in certain private label transactions, the Firm has made representations and warranties that the loans sold meet certain requirements, and that may require the Firm to repurchase mortgage loans and/or indemnify the loan purchaser if such representations and warranties are breached by the Firm. Further, although the Firm’s securitizations are predominantly nonrecourse, the Firm does provide recourse servicing in certain limited cases where it agrees to share credit risk with the owner of the mortgage loans. For additional information, refer to Note 27 of JPMorgan Chase’s 2017 Annual Report.

The liability related to repurchase demands associated with private label securitizations is separately evaluated by the Firm in establishing its litigation reserves. For additional information regarding litigation, refer to Note 22 of this Form 10-Q and Note 29 of JPMorgan Chase’s 2017 Annual Report.

Guarantees of subsidiary

The Parent Company has guaranteed certain long-term debt and structured notes of its subsidiaries, including JPMorgan Chase Financial Company LLC (“JPMFC”), a 100%-owned finance subsidiary. All securities issued by JPMFC are fully and unconditionally guaranteed by the Parent Company, and these guarantees rank on a parity with the Firm’s unsecured and unsubordinated indebtedness.