Off-balance Sheet Lending-related Financial Instruments, Guarantees, and Other Commitments

6 Months Ended

Jun. 30, 2019

Off-Balance Sheet Lending-Related Financial Instruments, Guarantees and Other Commitments [Abstract]

Off-balance Sheet Lending-related Financial Instruments, Guarantees, and Other Commitments

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 2018 Form 10-K.

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, 2019, and December 31, 2018. 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, 2019										Dec 31, 2018		Jun 30, 2019			Dec 31, 2018
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	$	549	$	1,202	$	2,185	$	17,263	$	21,199	$	20,901	$	12		$	12
Residential mortgage^(a)	9,477		—		—		12		9,489		5,481		—			—
Auto	7,694		962		95		45		8,796		8,011		2			2
Consumer & Business Banking	10,503		679		104		721		12,007		11,673		19			19
Total consumer, excluding credit card	28,223		2,843		2,384		18,041		51,491		46,066		33			33
Credit card	633,970		—		—		—		633,970		605,379		—			—
Total consumer^(b)	662,193		2,843		2,384		18,041		685,461		651,445		33			33
Wholesale:
Other unfunded commitments to extend credit^(c)	61,732		129,593		159,234		8,223		358,782		351,490		883			852
Standby letters of credit and other financial guarantees^(c)	14,658		10,552		4,776		2,210		32,196		33,498		554			521
Other letters of credit^(c)	3,066		220		37		—		3,323		2,825		3			3
Total wholesale^(b)	79,456		140,365		164,047		10,433		394,301		387,813		1,440			1,376
Total lending-related	$	741,649	$	143,208	$	166,431	$	28,474	$	1,079,762	$	1,039,258	$	1,473		$	1,409
Other guarantees and commitments
Securities lending indemnification agreements and guarantees^(d)	$	203,868	$	—	$	—	$	—	$	203,868	$	186,077	$	—		$	—
Derivatives qualifying as guarantees	1,594		135		12,394		40,509		54,632		55,271		228			367
Unsettled resale and securities borrowed agreements	113,218		875		71		—		114,164		102,008		—			—
Unsettled repurchase and securities loaned agreements	122,806		—		—		—		122,806		57,732		—			—
Loan sale and securitization-related indemnifications:
Mortgage repurchase liability	NA		NA		NA		NA		NA		NA		89			89
Loans sold with recourse	NA		NA		NA		NA		1,031		1,019		27			30
Exchange & clearing house guarantees and commitments^(e)	164,784		—		—		—		164,784		58,960		—			—
Other guarantees and commitments^(f)	4,505		2,931		1,537		2,749		11,722		8,183		(79		)	(73		)


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


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

(c)

At June 30, 2019, and December 31, 2018, reflected the contractual amount net of risk participations totaling $193 million and $282 million respectively, for other unfunded commitments to extend credit; $9.5 billion and $10.4 billion, respectively, for standby letters of credit and other financial guarantees; and $682 million and $385 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, 2019, and December 31, 2018, collateral held by the Firm in support of securities lending indemnification agreements was $214.6 billion and $195.6 billion, respectively. Securities lending collateral primarily consists of cash and securities issued by governments that are members of the G7 and U.S. government agencies.


(e)	At June 30, 2019, and December 31, 2018, includes guarantees to the Fixed Income Clearing Corporation under the sponsored member repo program and commitments and guarantees associated with the Firm’s membership in certain clearing houses.


(f)	At June 30, 2019, and December 31, 2018, primarily includes letters of credit hedged by derivative transactions and managed on a market risk basis, and unfunded commitments related to institutional lending. 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.

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 contractual amount and carrying value of standby letters of credit and other financial guarantees and other letters of credit arrangements as of June 30, 2019, and December 31, 2018.

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



	June 30, 2019				December 31, 2018
(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)	$	25,041	$	2,181	$	26,420	$	2,079
Noninvestment-grade^(a)	7,155		1,142		7,078		746
Total contractual amount	$	32,196	$	3,323	$	33,498	$	2,825

Allowance for lending-related commitments	$	210	$	3	$	167	$	3
Guarantee liability	344		—		354		—
Total carrying value	$	554	$	3	$	521	$	3

Commitments with collateral	$	17,373	$	768	$	17,400	$	583


(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 2018 Form 10-K.

The following table summarizes the derivatives qualifying as guarantees as of June 30, 2019, and December 31, 2018.



(in millions)	June 30, 2019		December 31, 2018
Notional amounts
Derivative guarantees	$	54,632	$	55,271
Stable value contracts with contractually limited exposure	28,843		28,637
Maximum exposure of stable value contracts with contractually limited exposure	2,958		2,963

Fair value
Derivative payables	228		367
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 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 2018 Form 10-K.

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 24 of this Form 10-Q and Note 29 of JPMorgan Chase’s 2018 Form 10-K.