Regulatory Capital

12 Months Ended

Dec. 31, 2020

Regulatory capital

The Federal Reserve establishes capital requirements, including well-capitalized standards, for the consolidated financial holding company. The OCC establishes similar minimum capital requirements and standards for the Firm’s principal IDI subsidiary, JPMorgan Chase Bank, N.A.

The capital rules under Basel III establish minimum capital ratios and overall capital adequacy standards for large and internationally active U.S. bank holding companies and banks, including the Firm and its IDI subsidiaries, including JPMorgan Chase Bank, N.A. Two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III Standardized”), and an advanced approach (“Basel III Advanced”). For each of the risk-based capital ratios, the capital adequacy of the Firm and JPMorgan Chase Bank, N.A. is evaluated against the lower of the Standardized or Advanced approaches compared to their respective minimum capital ratios.

The three components of regulatory capital under the Basel III rules are as illustrated below:

Under the risk-based capital and leverage-based guidelines of the Federal Reserve, JPMorgan Chase is required to maintain minimum ratios for CET1 capital, Tier 1 capital, Total capital, Tier 1 leverage and the SLR. Failure to meet these minimum requirements could cause the Federal Reserve to take action. IDI subsidiaries are also subject to these capital requirements established by their respective primary regulators.

The following table presents the minimum and well-capitalized ratios to which the Firm and its IDI subsidiaries were subject as of December 31, 2020 and 2019.


	Standardized Minimum capital ratios				Advanced Minimum capital ratios				Well-capitalized ratios
	BHC(a)(b)(c)		IDI(c)(d)		BHC(a)(c)		IDI(c)(d)		BHC(e)	IDI(f)
Capital ratios
CET1 capital	11.3	%	7.0	%	10.5	%	7.0	%	NA	6.5	%
Tier 1 capital	12.8		8.5		12.0		8.5		6.0	8.0
Total capital	14.8		10.5		14.0		10.5		10.0	10.0
Tier 1 leverage	4.0		4.0		4.0		4.0		NA	5.0
SLR	NA		NA		5.0		6.0		NA	6.0

Note: The table above is as defined by the regulations issued by the Federal Reserve, OCC and FDIC and to which the Firm and its IDI subsidiaries are subject.

(a)Represents the minimum capital ratios applicable to the Firm. The CET1, Tier 1 and Total capital minimum capital ratios each include a respective minimum requirement plus a GSIB surcharge of 3.5% as calculated under Method 2; plus a 3.3% SCB for Basel III Standardized ratios and a fixed 2.5% capital conservation buffer for Basel III Advanced ratios. The countercyclical buffer is currently set to 0% by the federal banking agencies.

(b)For the period ended December 31, 2019, the CET1, Tier 1, Total, Tier 1 leverage and SLR minimum capital ratios under Basel III Standardized applicable to the Firm were 10.5%, 12.0%, 14.0%, 4.0%, and 5.0%, respectively.

(c)Represents minimum SLR requirement of 3.0%, as well as supplementary leverage buffer requirements of 2.0% and 3.0% for BHC and IDI, respectively.

(d)Represents requirements for JPMorgan Chase’s IDI subsidiaries. The CET1, Tier 1 and Total capital minimum capital ratios include a fixed capital conservation buffer requirement of 2.5% that is applicable to the IDI subsidiaries. The IDI subsidiaries are not subject to the GSIB surcharge.

(e)Represents requirements for bank holding companies pursuant to regulations issued by the Federal Reserve.

(f)Represents requirements for IDI subsidiaries pursuant to regulations issued under the FDIC Improvement Act.

Current Expected Credit Losses

Effective January 1, 2020, the Firm adopted the Financial Instruments – Credit Losses guidance under U.S. GAAP. As permitted under the U.S. capital rules issued by the federal banking agencies in 2019, the Firm initially elected to phase-in the January 1, 2020 (“day 1”) CECL adoption impact to retained earnings of $2.7 billion to CET1 capital, at 25% per year in each of 2020 to 2023. As part of their response to the impact of the COVID-19 pandemic, on March 31, 2020, the federal banking agencies issued an interim final rule (issued as final on August 26, 2020) that provided the option to delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period.

The final rule provides a uniform approach for estimating the effects of CECL compared to the legacy incurred loss model during the first two years of the transition period (the “day 2” transition amount), whereby the Firm may exclude from CET1 capital 25% of the change in the

allowance for credit losses (excluding allowances on PCD loans). The cumulative day 2 transition amount as at December 31, 2021 that is not recognized in CET1 capital, as well as the $2.7 billion day 1 impact, will be phased into CET1 capital at 25% per year beginning January 1, 2022. The Firm has elected to apply the CECL capital transition provisions, and accordingly, for the year ended December 31, 2020, the capital metrics of the Firm exclude $5.7 billion, which is the $2.7 billion day 1 impact to

retained earnings and 25% of the $12.2 billion increase in the allowance for credit losses (excluding allowances on PCD loans).

The impacts of the CECL capital transition provisions have also been incorporated into Tier 2 capital, adjusted average assets, and total leverage exposure. Refer to Note 1 for further information on the CECL accounting guidance.

The following tables present the risk-based and leverage-based capital metrics for JPMorgan Chase and JPMorgan Chase Bank, N.A. under both the Basel III Standardized and Basel III Advanced Approaches. As of December 31, 2020, the capital metrics are presented applying the CECL capital transition provisions. As of December 31, 2020 and 2019, JPMorgan Chase and JPMorgan Chase Bank, N.A. were well-capitalized and met all capital requirements to which each was subject.


December 31, 2020 (in millions, except ratios)	Basel III Standardized						Basel III Advanced
	JPMorgan Chase & Co.(c)			JPMorgan Chase Bank, N.A.(c)			JPMorgan Chase & Co.(c)			JPMorgan Chase Bank, N.A.(c)
Risk-based capital metrics:
CET1 capital	$	205,078		$	234,235		$	205,078		$	234,235
Tier 1 capital	234,844			234,237			234,844			234,237
Total capital	269,923			252,045			257,228			239,673
Risk-weighted assets	1,560,609			1,492,138			1,484,431			1,343,185
CET1 capital ratio	13.1		%	15.7		%	13.8		%	17.4		%
Tier 1 capital ratio	15.0			15.7			15.8			17.4
Total capital ratio	17.3			16.9			17.3			17.8
Leverage-based capital metrics:
Adjusted average assets(a)	$	3,353,319		$	2,970,285		$	3,353,319		$	2,970,285
Tier 1 leverage ratio	7.0		%	7.9		%	7.0		%	7.9		%
Total leverage exposure(b)	NA			NA			$	3,401,542		$	3,688,797
SLR(b)	NA			NA			6.9		%	6.3		%


December 31, 2019 (in millions, except ratios)	Basel III Standardized						Basel III Advanced
	JPMorgan Chase & Co.			JPMorgan Chase Bank, N.A.			JPMorgan Chase & Co.			JPMorgan Chase Bank, N.A.
Risk-based capital metrics:
CET1 capital	$	187,753		$	206,848		$	187,753		$	206,848
Tier 1 capital	214,432			206,851			214,432			206,851
Total capital	242,589			224,390			232,112			214,091


Risk-weighted assets	1,515,869			1,457,689			1,397,878			1,269,991
CET1 capital ratio	12.4		%	14.2		%	13.4		%	16.3		%
Tier 1 capital ratio	14.1			14.2			15.3			16.3
Total capital ratio	16.0			15.4			16.6			16.9
Leverage-based capital metrics:
Adjusted average assets(a)	$	2,730,239		$	2,353,432		$	2,730,239		$	2,353,432

Tier 1 leverage ratio	7.9		%	8.8		%	7.9		%	8.8		%
Total leverage exposure	NA			NA			$	3,423,431		$	3,044,509
SLR	NA			NA			6.3		%	6.8		%

(a)Adjusted average assets, for purposes of calculating the leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.

(b)As of December 31, 2020, JPMorgan Chase’s total leverage exposure for purposes of calculating the SLR, excludes on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks, as provided by the interim final rule issued by the Federal Reserve on April 1, 2020. On June 1, 2020, the Federal Reserve, OCC and FDIC issued an interim final rule that provides IDI subsidiaries with an option to apply this temporary exclusion subject to certain restrictions. As of December 31, 2020, JPMorgan Chase Bank, N.A. has not elected to apply this exclusion.

(c)As of December 31, 2020, the capital metrics for the Firm reflect the exclusion of assets purchased from money market mutual fund clients pursuant to nonrecourse advances provided under the MMLF. Additionally, loans originated under the PPP for the Firm and JPMorgan Chase Bank, N.A. receive a zero percent risk weight.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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