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Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2022
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 2021 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 credit losses and includes a breakdown of loans and lending-related commitments by impairment methodology. Refer to Note 10 of JPMorgan Chase’s 2021 Form 10-K and Note 9 of this Form 10-Q for further information on the allowance for credit losses on investment securities.
2022
2021
Six month ended June 30,
(in millions)		Consumer, excluding
credit card		Credit cardWholesaleTotalConsumer, excluding credit cardCredit cardWholesaleTotal
Allowance for loan losses
Beginning balance at January 1,$1,765 $10,250 $4,371 $16,386 $3,636 $17,800 $6,892 $28,328 
Gross charge-offs384 1,505 123 2,012 308 2,213 135 2,656 
Gross recoveries collected(311)(419)(43)(773)(318)(475)(72)(865)
Net charge-offs/(recoveries)73 1,086 80 1,239 (10)1,738 63 1,791 
Provision for loan losses237 1,236 1,125 2,598 (1,746)(3,562)(1,730)(7,038)
Other
— — 5 5 (2)— 3 1 
Ending balance at June 30$1,929 $10,400 $5,421 $17,750 $1,898 $12,500 $5,102 $19,500 
Allowance for lending-related commitments
Beginning balance at January 1,
$113 $— $2,148 $2,261 $187 $— $2,222 $2,409 
Provision for lending-related commitments
(2)— (37)(39)(46)— 634 588 
Other
(1)— 1 — 1 — — 1 
Ending balance at June 30$110 $— $2,112 $2,222 $142 $— $2,856 $2,998 
Total allowance for investment securitiesNANANA47 NANANA87 
Total allowance for credit losses
$2,039 $10,400 $7,533 $20,019 $2,040 $12,500 $7,958 $22,585 
Allowance for loan losses by impairment methodology
Asset-specific(a)
$(676)$227 $332 $(117)$(557)$443 $488 $374 
Portfolio-based2,605 10,173 5,089 17,867 2,455 12,057 4,614 19,126 
Total allowance for loan losses$1,929 $10,400 $5,421 $17,750 $1,898 $12,500 $5,102 $19,500 
Loans by impairment methodology
Asset-specific(a)
$12,683 $827 $2,408 $15,918 $15,187 $1,180 $3,010 $19,377 
Portfolio-based289,948 164,667 581,857 1,036,472 282,544 139,899 521,845 944,288 
Total retained loans$302,631 $165,494 $584,265 $1,052,390 $297,731 $141,079 $524,855 $963,665 
Collateral-dependent loans
Net charge-offs$(15)$— $8 $(7)$23 $— $6 $29 
Loans measured at fair value of collateral less cost to sell
3,935 — 607 4,542 4,689 — 341 5,030 
Allowance for lending-related commitments by impairment methodology
Asset-specific
$— $— $78 $78 $— $— $150 $150 
Portfolio-based
110 — 2,034 2,144 142 — 2,706 2,848 
Total allowance for lending-related commitments(b)
$110 $— $2,112 $2,222 $142 $— $2,856 $2,998 
Lending-related commitments by impairment methodology
Asset-specific
$— $— $397 $397 $— $— $851 $851 
Portfolio-based(c)
26,809 — 448,362 475,171 36,092 — 459,078 495,170 
Total lending-related commitments
$26,809 $— $448,759 $475,568 $36,092 $— $459,929 $496,021 
(a)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 allowance for credit card 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.
(b)The allowance for lending-related commitments is reported in accounts payable and other liabilities on the Consolidated balance sheets.
(c)At June 30, 2022 and 2021, lending-related commitments excluded $13.7 billion and $20.8 billion, respectively, for the consumer, excluding credit card portfolio segment; $774.0 billion and $682.5 billion, respectively, for the credit card portfolio segment; and $38.7 billion and $42.7 billion, respectively, for the wholesale portfolio segment, which were not subject to the allowance for lending-related commitments.
Discussion of changes in the allowance
The allowance for credit losses as of June 30, 2022 was $20.0 billion, an increase of $1.3 billion from December 31, 2021, consisting of: $1.0 billion in wholesale and $311 million in consumer.
The change in allowance reflects the increased weight placed on the adverse scenarios in the current year, due to the ongoing effects associated with higher inflation, changes in monetary policy, and geopolitical risks, including the war in Ukraine, and a modest deterioration in the Firm's macroeconomic forecast. The increase in the allowance was also driven by loan growth in Card and CB in the second quarter of 2022, and client-specific Russia and Russia-associated downgrades in CIB and AWM in the first quarter of 2022.
The Firm's allowance for credit losses is estimated using a weighted average of five internally developed macroeconomic scenarios. The adverse scenarios incorporate more punitive macroeconomic factors than the central case assumptions provided in the table below, resulting in weighted average U.S. unemployment rates above 4% through the fourth quarter of 2023, and a 1.1% lower U.S. real GDP level exiting the fourth quarter of 2023.
The Firm’s central case assumptions reflected U.S. unemployment rates and U.S. real GDP as follows:
Assumptions at June 30, 2022
4Q222Q234Q23
U.S. unemployment rate(a)
3.6 %3.6 %3.7 %
YoY growth in U.S. real GDP(b)
1.3 %1.7 %1.2 %
Assumptions at December 31, 2021
2Q224Q222Q23
U.S. unemployment rate(a)
4.2 %4.0 %3.9 %
YoY growth in U.S. real GDP(b)
3.1 %2.8 %2.1 %
(a)Reflects quarterly average of forecasted U.S. unemployment rate.
(b)As of June 30, 2022, the year over year growth in U.S. real GDP in the forecast horizon of the central scenario is calculated as the percent change in U.S. real GDP levels from the prior year.
Subsequent changes to this forecast and related estimates will be reflected in the provision for credit losses in future periods.
Refer to Note 13 and Note 10 of JPMorgan Chase's 2021 Form 10-K for a description of the policies, methodologies and judgments used to determine the Firm’s allowances for credit losses on loans, lending-related commitments, and investment securities.
Refer to Consumer Credit Portfolio on pages 57-61, Wholesale Credit Portfolio on pages 62-70 and Note 11 for additional information on the consumer and wholesale credit portfolios.
Refer to Critical Accounting Estimates Used by the Firm on pages 83-85 for further information on the allowance for credit losses and related management judgments.