Business Segments

12 Months Ended

Dec. 31, 2018

Business segments

The Firm is managed on a line of business 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 currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. For a further discussion concerning JPMorgan Chase’s business segments, refer to Segment results of this footnote.

The following is a description of each of the Firm’s business segments, and the products and services they provide to their respective client bases.

Consumer & Community Banking

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

Corporate & Investment Bank

The CIB, which consists of Banking and Markets & Investor Services, offers a broad suite of investment banking, market-making, prime brokerage, and treasury and securities products and services to a global client base of corporations, investors, financial institutions, 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 Treasury Services, which provides transaction services, consisting of cash management and liquidity solutions. Markets & Investor Services is a global market-

maker in cash securities and derivative instruments, and also offers sophisticated risk management solutions, prime brokerage, and research. Markets & Investor 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.

Commercial Banking

CB delivers extensive industry knowledge, local expertise and dedicated service to U.S. and U.S. multinational clients, including corporations, municipalities, financial institutions and nonprofit entities with annual revenue generally ranging from $20 million to $2 billion. In addition, CB provides financing to real estate investors and owners. Partnering with the Firm’s other businesses, CB provides comprehensive financial solutions, including lending, treasury services, investment banking and asset management to meet its clients’ domestic and international financial needs.

Asset & Wealth Management

AWM, with client assets of $2.7 trillion, is a global leader in investment and wealth management. AWM clients include institutions, high-net-worth individuals and retail investors in many major markets throughout the world. AWM offers investment management across most major asset classes including equities, fixed income, alternatives and money market funds. AWM also offers multi-asset investment management, providing solutions for a broad range of clients’ investment needs. For Wealth Management clients, AWM also provides retirement products and services, brokerage and banking services including trusts and estates, loans, mortgages and deposits. The majority of AWM’s client assets are in actively managed portfolios.

Corporate

The Corporate segment consists of Treasury and Chief Investment Office and Other Corporate, which includes corporate staff functions and expense that is centrally managed. Treasury and CIO is predominantly responsible for measuring, monitoring, reporting and managing the Firm’s liquidity, funding, capital, structural interest rate and foreign exchange risks. The major Other Corporate functions include Real Estate, Technology, Legal, Corporate Finance, Human Resources, Internal Audit, Risk Management, Compliance, Control Management, Corporate Responsibility and various Other Corporate groups.

Segment results

The following table provides a summary of the Firm’s segment results as of or for the years ended December 31, 2018, 2017 and 2016, on a managed basis. The Firm’s definition of managed basis starts 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. This allows 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/(benefit). These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.

Each business segment is allocated capital by taking into consideration capital levels of similarly rated peers and applicable regulatory capital requirements. ROE is measured and internal targets for expected returns are established as key measures of a business segment’s performance.

The Firm’s allocation methodology incorporates Basel III Standardized RWA, Basel III Advanced RWA, leverage, the GSIB surcharge, and a simulation of capital in a severe stress environment. On at least an annual basis, the assumptions and methodologies used in capital allocation are assessed and as a result, the capital allocated to lines of business may change.

Effective January 1, 2018, the Firm adopted several new accounting standards. Certain of the new accounting standards were applied retrospectively and, accordingly, prior period amounts were revised. For additional information, refer to Note 1.

Net income in 2018 for each of the business segments reflects the favorable impact of the reduction in the U.S. federal statutory income tax rate as a result of the TCJA.

Segment results and reconciliation



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As of or for the year ended December 31, (in millions, except ratios)	Consumer & Community Banking									Corporate & Investment Bank									Commercial Banking									Asset & Wealth Management
	2018			2017			2016			2018			2017			2016			2018			2017			2016			2018			2017			2016
Noninterest revenue	$	16,260		$	14,710		$	15,255		$	26,968		$	24,539		$	24,449		$	2,343		$	2,522		$	2,320		$	10,539		$	10,456		$	9,789
Net interest income	35,819			31,775			29,660			9,480			10,118			10,891			6,716			6,083			5,133			3,537			3,379			3,033
Total net revenue	52,079			46,485			44,915			36,448			34,657			35,340			9,059			8,605			7,453			14,076			13,835			12,822
Provision for credit losses	4,753			5,572			4,494			(60		)	(45		)	563			129			(276		)	282			53			39			26
Noninterest expense	27,835			26,062			24,905			20,918			19,407			19,116			3,386			3,327			2,934			10,353			10,218			9,255
Income/(loss) before income tax expense/(benefit)	19,491			14,851			15,516			15,590			15,295			15,661			5,544			5,554			4,237			3,670			3,578			3,541
Income tax expense/(benefit)	4,639			5,456			5,802			3,817			4,482			4,846			1,307			2,015			1,580			817			1,241			1,290
Net income/(loss)	$	14,852		$	9,395		$	9,714		$	11,773		$	10,813		$	10,815		$	4,237		$	3,539		$	2,657		$	2,853		$	2,337		$	2,251
Average equity	$	51,000		$	51,000		$	51,000		$	70,000		$	70,000		$	64,000		$	20,000		$	20,000		$	16,000		$	9,000		$	9,000		$	9,000
Total assets	557,441			552,601			535,310			903,051			826,384			803,511			220,229			221,228			214,341			170,024			151,909			138,384
Return on equity	28		%	17		%	18		%	16		%	14		%	16		%	20		%	17		%	16		%	31		%	25		%	24		%
Overhead ratio	53			56			55			57			56			54			37			39			39			74			74			72



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As of or for the year ended December 31, (in millions, except ratios)	Corporate									Reconciling Items^(a)										Total
	2018			2017			2016			2018			2017				2016			2018			2017			2016
Noninterest revenue	$	(263	)	$	1,085		$	938		$	(1,877	)	$	(2,704	)	^(b)	$	(2,265	)	$	53,970		$	50,608		$	50,486
Net interest income	135			55			(1,425		)	(628		)	(1,313		)		(1,209		)	55,059			50,097			46,083
Total net revenue	(128		)	1,140			(487		)	(2,505		)	(4,017		)		(3,474		)	109,029			100,705			96,569
Provision for credit losses	(4		)	—			(4		)	—			—				—			4,871			5,290			5,361
Noninterest expense	902			501			462			—			—				—			63,394			59,515			56,672
Income/(loss) before income tax expense/(benefit)	(1,026		)	639			(945		)	(2,505		)	(4,017		)		(3,474		)	40,764			35,900			34,536
Income tax expense/(benefit)	215			2,282			(241		)	(2,505		)	(4,017		)	^(b)	(3,474		)	8,290			11,459			9,803
Net income/(loss)	$	(1,241	)	$	(1,643	)	$	(704	)	$	—		$	—			$	—		$	32,474		$	24,441		$	24,733
Average equity	$	79,222		$	80,350		$	84,631		$	—		$	—			$	—		$	229,222		$	230,350		$	224,631
Total assets	771,787			781,478			799,426			NA			NA				NA			2,622,532			2,533,600			2,490,972
Return on equity	NM			NM			NM			NM			NM				NM			13		%	10		%	10		%
Overhead ratio	NM			NM			NM			NM			NM				NM			58			59			59


(a)	Segment results on a managed basis reflect revenue on a FTE basis with the corresponding income tax impact recorded within income tax expense/(benefit). These adjustments are eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results.

(b)

Included $375 million related to tax-oriented investments as a result of the enactment of the TCJA.