Principal transactions

Principal transactions revenue is driven by many factors, including:

•the bid-offer spread, which is the difference between the price at which a market participant is willing and able to sell an instrument to the Firm and the price at which another market participant is willing and able to buy it from the Firm, and vice versa; and

•realized and unrealized gains and losses on financial instruments and commodities transactions, including those accounted for under the fair value option, primarily used in client-driven market-making activities, and on private equity investments.

–Realized gains and losses result from the sale of instruments, closing out or termination of transactions, or interim cash payments.

–Unrealized gains and losses result from changes in valuation.

In connection with its client-driven market-making activities, the Firm transacts in debt and equity instruments, derivatives and commodities, including physical commodities inventories and financial instruments that reference commodities.

Principal transactions revenue also includes realized and unrealized gains and losses related to:

•derivatives designated in qualifying hedge accounting relationships, primarily fair value hedges of commodity and foreign exchange risk;

•derivatives used for specific risk management purposes, primarily to mitigate credit, foreign exchange and interest rate risks.

Refer to Note 5 for further information on the income statement classification of gains and losses from derivatives activities.

In the financial commodity markets, the Firm transacts in OTC derivatives (e.g., swaps, forwards, options) and ETD that reference a wide range of underlying commodities. In the physical commodity markets, the Firm primarily purchases and sells precious and base metals and may hold other commodities inventories under financing and other arrangements with clients.

The following table presents all realized and unrealized gains and losses recorded in principal transactions revenue. This table excludes interest income and interest expense on trading assets and liabilities, which are an integral part of the overall performance of the Firm’s client-driven market-making activities in CIB and fund deployment activities in Treasury and CIO. Refer to Note 7 for further information on interest income and interest expense.

Trading revenue is presented primarily by instrument type. The Firm’s client-driven market-making businesses generally utilize a variety of instrument types in connection with their market-making and related risk-management activities; accordingly, the trading revenue presented in the table below is not representative of the total revenue of any individual LOB.


Year ended December 31, (in millions)	2022			2021		2020
Trading revenue by instrument type
Interest rate(a)	$	3,010		$	1,646	$	2,575
Credit(b)	1,412		(c)	2,691		2,753
Foreign exchange	5,119			2,787		4,253
Equity	8,068			7,773		6,171
Commodity	2,348			1,428		2,088
Total trading revenue	19,957			16,325		17,840
Private equity gains/(losses)	(45)			(21)		181
Principal transactions	$	19,912		$	16,304	$	18,021

(a)Includes the impact of changes in funding valuation adjustments on derivatives.

(b)Includes the impact of changes in credit valuation adjustments on derivatives, net of the associated hedging activities.

(c)Includes net markdowns on held-for-sale positions, primarily unfunded commitments, in the bridge financing portfolio.

Principal transactions revenue is earned primarily by CIB. Refer to Note 32 for segment results.

Lending- and deposit-related fees

Lending-related fees include fees earned from loan commitments, standby letters of credit, financial guarantees, and other loan-servicing activities. Deposit-related fees include fees earned from providing overdraft and other deposit account services, and from performing cash management activities. Lending- and deposit-related fees in this revenue category are recognized over the period in which the related service is provided.

The following table presents the components of lending- and deposit-related fees.


Year ended December 31, (in millions)	2022		2021		2020
Lending-related fees	$	1,468	$	1,472	$	1,271
Deposit-related fees	5,630		5,560		5,240
Total lending- and deposit-related fees	$	7,098	$	7,032	$	6,511

Lending- and deposit-related fees are earned by CCB, CIB, CB, and AWM. Refer to Note 32 for segment results.

Asset management, administration and commissions

This revenue category includes fees from investment management and related services, custody, brokerage services and other products. The Firm manages assets on behalf of its clients, including investors in Firm-sponsored funds and owners of separately managed investment accounts. Management fees are typically based on the value of assets under management and are collected and recognized at the end of each period over which the management services are provided and the value of the managed assets is known. The Firm also receives performance-based management fees, which are earned based on exceeding certain benchmarks or other performance targets and are accrued and recognized when the probability of reversal is remote, typically at the end of the related billing period. The Firm has contractual arrangements with third parties to provide distribution and other services in connection with its asset management activities. Amounts paid to these third-party service

providers are generally recorded in professional and outside services expense.

The following table presents the components of Firmwide asset management, administration and commissions.


Year ended December 31, (in millions)	2022		2021		2020
Asset management fees
Investment management fees(a)	$	13,765	$	14,027	$	11,694
All other asset management fees(b)	331		378		338
Total asset management fees	14,096		14,405		12,032

Total administration fees(c)	2,348		2,554		2,249

Commissions and other fees
Brokerage commissions(d)	2,831		3,046		2,959
All other commissions and fees(e)	1,402		1,024		937
Total commissions and fees	4,233		4,070		3,896
Total asset management, administration and commissions	$	20,677	$	21,029	$	18,177

(a)Represents fees earned from managing assets on behalf of the Firm’s clients, including investors in Firm-sponsored funds and owners of separately managed investment accounts.

(b)Represents fees for services that are ancillary to investment management services, such as commissions earned on the sales or distribution of mutual funds to clients. These fees are recorded as revenue at the time the service is rendered or, in the case of certain distribution fees based on the underlying fund’s asset value and/or investor redemption, recorded over time as the investor remains in the fund or upon investor redemption.

(c)Predominantly includes fees for custody, securities lending, funds services and securities clearance. These fees are recorded as revenue over the period in which the related service is provided.

(d)Represents commissions earned when the Firm acts as a broker, by facilitating its clients’ purchases and sales of securities and other financial instruments. Brokerage commissions are collected and recognized as revenue upon occurrence of the client transaction. The Firm reports certain costs paid to third-party clearing houses and exchanges net against commission revenue.

(e)Includes travel-related and annuity sales commissions, depositary receipt-related service fees, as well as other service fees, which are recognized as revenue when the services are rendered.

Asset management, administration and commissions are earned primarily by AWM, CIB and CCB. Refer to Note 32 for segment results.

Mortgage fees and related income

This revenue category reflects CCB’s Home Lending production and net mortgage servicing revenue.

Production revenue includes fees and income recognized as earned on mortgage loans originated with the intent to sell, and the impact of risk management activities associated with the mortgage pipeline and warehouse loans. Production revenue also includes gains and losses on sales and lower of cost or fair value adjustments on mortgage loans held-for-sale (excluding certain repurchased loans insured by U.S. government agencies), and changes in the fair value of financial instruments measured under the fair value option. Net mortgage servicing revenue includes operating revenue earned from servicing third-party mortgage loans, which is recognized over the period in which the service is provided; changes in the fair value of MSRs; the impact of risk management activities associated

with MSRs; and gains and losses on securitization of excess mortgage servicing. Net mortgage servicing revenue also includes gains and losses on sales and lower of cost or fair value adjustments of certain repurchased loans insured by U.S. government agencies.

Refer to Note 15 for further information on risk management activities and MSRs.

Net interest income from mortgage loans is recorded in interest income.

Card income

This revenue category includes interchange and other income from credit and debit card transactions; and fees earned from processing card transactions for merchants, both of which are recognized when purchases are made by a cardholder and presented net of certain transaction-related costs. Card income also includes account origination costs and annual fees, which are deferred and recognized on a straight-line basis over a 12-month period.

Certain credit card products offer the cardholder the ability to earn points based on account activity, which the cardholder can choose to redeem for cash and non-cash rewards. The cost to the Firm related to these proprietary rewards programs varies based on multiple factors including the terms and conditions of the rewards programs, cardholder activity, cardholder reward redemption rates and cardholder reward selections. The Firm maintains a liability for its obligations under its rewards programs and reports the current-period cost as a reduction of card income.

Credit card revenue sharing agreements

The Firm has contractual agreements with numerous co-brand partners that grant the Firm exclusive rights to issue co-branded credit card products and market them to the customers of such partners. These partners endorse the co-brand credit card programs and provide their customer or member lists to the Firm. The partners may also conduct marketing activities and provide rewards redeemable under their own loyalty programs that the Firm will grant to co-brand credit cardholders based on account activity. The terms of these agreements generally range from five to ten years.

The Firm typically makes payments to the co-brand credit card partners based on the cost of partners’ marketing activities and loyalty program rewards provided to credit cardholders, new account originations and sales volumes. Payments to partners based on marketing efforts undertaken by the partners are expensed by the Firm as incurred and reported as marketing expense. Payments for partner loyalty program rewards are reported as a reduction of card income when incurred. Payments to partners based on new credit card account originations are accounted for as direct loan origination costs and are deferred and recognized as a reduction of card income on a straight-line basis over a 12-month period. Payments to partners based on sales volumes are reported as a reduction of card income when the related interchange

income is earned.

The following table presents the components of card income:


Year ended December 31, (in millions)	2022		2021		2020
Interchange and merchant processing income	$	28,085	$	23,592	$	18,563
Reward costs and partner payments	(22,162)		(17,868)		(13,637)
Other card income(a)	(1,503)		(622)		(491)
Total card income	$	4,420	$	5,102	$	4,435

(a)Predominantly represents the amortization of account origination costs and annual fees, which are deferred and recognized on a straight-line basis over a 12-month period.

Card income is earned primarily by CCB, CIB and CB. Refer to Note 32 for segment results.

Other income

This revenue category includes operating lease income, as well as losses associated with the Firm’s tax-oriented investments, predominantly alternative energy equity-method investments in CIB.

The following table presents certain components of other income:


Year ended December 31, (in millions)	2022		2021		2020
Operating lease income	$	3,654	$	4,914	$	5,539
Losses on tax-oriented investments(a)	(1,491)		(1,570)		(1,280)
Gain on sale of Visa B shares	914		—		—

(a) The losses associated with these tax-oriented investments are more than offset by lower income tax expense from the associated tax credits.

Refer to Note 2 and 18 for additional information on Visa B shares and operating leases, respectively.

Noninterest expense

Other expense

Other expense on the Firm’s Consolidated statements of income included:


Year ended December 31, (in millions)	2022		2021		2020
Legal expense	$	266	$	426	$	1,115