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Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2021
Credit Loss [Abstract]  
Allowance for Credit Losses Allowance for credit losses
The Firm's allowance for credit losses represents management's estimate of expected credit losses over the remaining expected life of the Firm's financial assets measured at amortized cost and certain off-balance sheet lending-related commitments.
Refer to Note 13 of JPMorgan Chase's 2020 Form 10-K for a detailed discussion of the allowance for credit losses and the related accounting policies.
Allowance for credit losses and related information
The table below summarizes information about the allowances for loan losses and lending-related commitments, and includes a breakdown of loans and lending-related commitments by impairment methodology. Refer to Note 10 of JPMorgan Chase’s 2020 Form 10-K for further information on the allowance for credit losses on investment securities.
2021
2020
Nine months ended September 30,
(in millions)		Consumer, excluding
credit card		Credit cardWholesaleTotalConsumer, excluding credit cardCredit cardWholesaleTotal
Allowance for loan losses
Beginning balance at January 1,$3,636 $17,800 $6,892 $28,328 $2,538 $5,683 $4,902 $13,123 
Cumulative effect of a change in accounting principle
NANANANA297 5,517 (1,642)4,172 
Gross charge-offs452 2,957 187 3,596 620 4,104 641 5,365 
Gross recoveries collected(470)(724)(87)(1,281)(483)(585)(88)(1,156)
Net charge-offs/(recoveries)(18)2,233 100 2,315 137 3,519 553 4,209 
Provision for loan losses(1,778)(3,917)(2,162)(7,857)1,803 10,119 5,802 17,724 
Other
(2)— (4)(6)1 — 3 4 
Ending balance at September 30,$1,874 $11,650 $4,626 $18,150 $4,502 $17,800 $8,512 $30,814 
Allowance for lending-related commitments
Beginning balance at January 1,
$187 $— $2,222 $2,409 $12 $— $1,179 $1,191 
Cumulative effect of a change in accounting principle
NANANANA133 — (35)98 
Provision for lending-related commitments
(45)— (61)(106)71 — 1,464 1,535 
Other
— — 2 2 — — (1)(1)
Ending balance at September 30,$142 $— $2,163 $2,305 $216 $— $2,607 $2,823 
Total allowance for credit losses(a)
$2,016 $11,650 $6,789 $20,455 $4,718 $17,800 $11,119 $33,637 
Allowance for loan losses by impairment methodology
Asset-specific(b)
$(571)$383 $357 $169 $228 $652 $792 $1,672 
Portfolio-based2,445 11,267 4,269 17,981 4,274 17,148 7,720 29,142 
Total allowance for loan losses$1,874 $11,650 $4,626 $18,150 $4,502 $17,800 $8,512 $30,814 
Loans by impairment methodology
Asset-specific(b)
$14,464 $1,083 $2,330 $17,877 $16,888 $1,432 $3,856 $22,176 
Portfolio-based283,844 142,083 530,456 956,383 288,218 138,158 496,985 923,361 
Total retained loans$298,308 $143,166 $532,786 $974,260 $305,106 $139,590 $500,841 $945,537 
Collateral-dependent loans
Net charge-offs$26 $— $9 $35 $109 $— $22 $131 
Loans measured at fair value of collateral less cost to sell
4,460 — 364 4,824 4,517 — 130 4,647 
Allowance for lending-related commitments by impairment methodology
Asset-specific
$— $— $129 $129 $— $— $109 $109 
Portfolio-based
142 — 2,034 2,176 216 — 2,498 2,714 
Total allowance for lending-related commitments(c)
$142 $— $2,163 $2,305 $216 $— $2,607 $2,823 
Lending-related commitments by impairment methodology
Asset-specific
$— $— $641 $641 $— $— $607 $607 
Portfolio-based(d)
36,819 — 457,548 494,367 35,587 — 416,267 
(d)
451,854 
Total lending-related commitments
$36,819 $— $458,189 $495,008 $35,587 $— $416,874 $452,461 
(a)Excludes the allowance for credit losses on investment securities of $73 million and $120 million as of September 30, 2021 and 2020, respectively.
(b)Includes collateral dependent loans, including those considered TDRs and those for which foreclosure is deemed probable, modified PCD loans and non-collateral dependent loans that have been modified or are reasonably expected to be modified in a TDR. Also includes risk-rated loans that have been placed on nonaccrual status for the wholesale portfolio segment. The asset-specific credit card allowance for loans modified, or reasonably expected to be modified, in a TDR is calculated based on the loans’ original contractual interest rates and does not consider any incremental penalty rates.
(c)The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(d)At September 30, 2021 and 2020, lending-related commitments excluded $19.9 billion and $10.8 billion, respectively, for the consumer, excluding credit card portfolio segment; $710.6 billion and $662.9 billion, respectively, for the credit card portfolio segment; and $41.0 billion and $24.4 billion, respectively, for the wholesale portfolio segment, which were not subject to the allowance for lending-related commitments. Prior-period amount for wholesale lending-related commitments, including the amount not subject to allowance, has been revised to conform with the current presentation.
Discussion of changes in the allowance
The allowance for credit losses as of September 30, 2021 was $20.5 billion, a decrease from $30.8 billion at December 31, 2020. The decrease in the allowance for credit losses reflected:
•an $8.0 billion reduction in consumer, predominantly in the credit card portfolio, reflecting improvements in the Firm's macroeconomic outlook; and    
•a $2.3 billion net reduction in wholesale, across the LOBs, reflecting improvements in the Firm's macroeconomic outlook.
The COVID-19 pandemic has stressed many MEVs used in the Firm's allowance estimate which has created challenges in the use of modeled credit loss estimates, increased the reliance on management judgment, and resulted in adjustments to appropriately address the economic circumstances. These adjustments continued through the third quarter of 2021, although to a lesser extent than experienced during 2020.
The U.S. economy has continued to improve despite the ongoing impact of the COVID-19 pandemic, with the benefits of vaccination resulting in improvements in the Firm's macroeconomic outlook, particularly in the adverse scenarios. However, uncertainties remain, including the impact that additional waves and variants of COVID-19 may have on the pace of economic growth, the strength of underlying labor markets with the expiration of government assistance programs, and the potential for changes in consumer behavior that could have longer term impacts on certain sectors. As a result of these uncertainties, the Firm retained meaningful weighting on its adverse scenarios in the third quarter of 2021, in line with the second quarter of 2021, but to a lesser extent than the fourth quarter of 2020. These adverse scenarios incorporate more punitive macroeconomic factors than the central case assumptions outlined below, resulting in a weighted average U.S. unemployment rate near 7% into the first quarter of 2022 and falling below 6% in the third quarter of 2022, and a weighted average cumulative change in U.S. GDP of 3.8% in the fourth quarter of 2022.
The Firm’s central case assumptions reflected U.S. unemployment rates and U.S. real GDP as follows:
Assumptions at September 30, 2021
4Q212Q224Q22
U.S. unemployment rate(a)
5.1 %4.4 %4.1 %
Cumulative change in U.S. real GDP from 12/31/20193.3 %5.0 %6.2 %
Assumptions at December 31, 2020
2Q214Q212Q22
U.S. unemployment rate(a)
6.8 %5.7 %5.1 %
Cumulative change in U.S. real GDP from 12/31/2019(1.9)%0.6 %2.0 %
(a)Reflects quarterly average of forecasted U.S. unemployment rate.
Subsequent changes to this forecast and related estimates will be reflected in the provision for credit losses in future periods.