JPMorgan Chase & Co. 2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual Form 10-K, not a standalone fourth-quarter filing; quarterly income statement results are not clearly provided in the supplied text. JPMorgan Chase is a global financial holding company operating through Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, Asset & Wealth Management, and Corporate.
Business Context and Financial Position
- December 31, 2022 assets were $3.666 trillion and total stockholders’ equity was $292.3 billion.
- The Firm had 293,723 employees, up 22,698 from 2021, and operated 4,787 U.S. retail branches.
- Core activities include consumer and small-business banking, investment banking, markets, payments, commercial lending, custody, asset management and wealth management.
Key Financial Metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Total net revenue | $128.7 billion | $121.6 billion | Up 6% |
| Net interest income | $66.7 billion | $52.3 billion | Up 28% |
| Noninterest revenue | $62.0 billion | $69.3 billion | Down 11% |
| Noninterest expense | $76.1 billion | $71.3 billion | Up 7% |
| Provision for credit losses | $6.4 billion | $(9.3) billion benefit | Unfavorable swing |
| Net income | $37.7 billion | $48.3 billion | Down 22% |
| Diluted EPS | $12.09 | $15.36 | Down 21% |
| Return on common equity | 14% | 19% | Down 5 percentage points |
| Return on tangible common equity | 18% | 23% | Down 5 percentage points |
Balance Sheet, Funding and Liquidity
- Period-end loans were $1.136 trillion, up 5%; deposits were $2.340 trillion, down 5%.
- Long-term debt was $295.9 billion, down 2%. The loans-to-deposits ratio increased to 49% from 44%.
- Average deposits increased 5% to approximately $2.468 trillion, despite second-half attrition in certain wholesale businesses and migration into investments.
- Average firmwide liquidity coverage ratio was 112%; JPMorgan Chase Bank, N.A.’s average LCR was 151%.
- Average eligible HQLA were approximately $733 billion, and unencumbered marketable securities were approximately $694 billion, producing approximately $1.4 trillion of stated liquidity sources.
- Operating activities generated $107.1 billion of cash; investing activities used $137.8 billion and financing activities used $126.3 billion. Cash and deposits with banks decreased by $173.6 billion.
Capital and Credit Quality
- Standardized CET1 capital was $218.9 billion, with a CET1 ratio of 13.2%; the Advanced CET1 ratio was 13.6%.
- The Tier 1 capital ratio was 14.9%, the total capital ratio was 16.8%, and the supplementary leverage ratio was 5.6%.
- The allowance for credit losses was $22.2 billion, up from $18.7 billion, reflecting a $3.5 billion net addition driven by loan growth and a weaker macroeconomic outlook.
- Net charge-offs were $2.9 billion, broadly flat year over year, and the net charge-off rate declined to 0.27% from 0.30%.
- Nonperforming assets were $7.2 billion, down from $8.3 billion; nonaccrual loans as a percentage of total loans declined to 0.59% from 0.72%.
Material Changes Versus 2021
- Higher interest rates and loan growth increased net interest income, while lower investment banking activity, investment securities losses, weaker mortgage production and lower auto lease income reduced noninterest revenue.
- CIB investment banking revenue declined 48% to $6.5 billion as equity and debt issuance and advisory activity weakened. CIB Markets revenue increased 6% to $29.0 billion, led by Fixed Income Markets.
- Consumer & Community Banking revenue increased 10%, but net income fell 29% as the prior year included a substantial credit-loss benefit. Card loans and spending increased, while mortgage origination volume declined materially.
- Commercial Banking revenue increased 15%, but net income declined 20% due to higher credit provisions and expenses.
- Asset & Wealth Management revenue increased 5%, while net income declined 8%. Assets under management fell 11% to $2.8 trillion and total client assets fell 6% to $4.0 trillion.
- Investment securities recorded $2.4 billion of net losses, primarily from portfolio repositioning. The Firm transferred $78.3 billion of securities from available-for-sale to held-to-maturity.
- Accumulated other comprehensive loss increased substantially, primarily because of unrealized losses on investment securities and cash-flow hedges.
- Common share repurchases totaled $3.1 billion in 2022. Repurchases were suspended in the second half of 2022 because of expected capital requirement increases and resumed in the first quarter of 2023 after the Firm exceeded its 13.0% CET1 target.
Guidance, Outlook, Risks and Unusual Items
- For full-year 2023, management expected net interest income of approximately $73 billion, net interest income excluding Markets of approximately $74 billion, adjusted expense of approximately $81 billion, and a Card Services net charge-off rate of approximately 2.6%. These expectations were described as market dependent.
- The Firm’s credit-loss outlook incorporated a central scenario reflecting a mild recession and increased weighting to adverse scenarios. Management identified inflation, monetary policy changes and geopolitical risks as important drivers.
- The Firm stated that exposure to Russia and Russia-associated clients and counterparties was not material to its financial condition or results, but continued to monitor sanctions, market volatility, inflation and cyber risks related to the war in Ukraine.
- U.S. dollar LIBOR cessation was scheduled for June 30, 2023. The Firm had substantially reduced its LIBOR exposure and expected most remaining exposure to be in derivatives, but identified operational, valuation, litigation and client-transition risks.
- The Firm remained subject to a 2020 Department of Justice Deferred Prosecution Agreement and related CFTC order involving precious metals and U.S. Treasuries markets investigations.
- Aggregate reasonably possible legal losses in excess of established reserves were estimated at up to approximately $1.2 billion, although the filing states that certain matters could not be reasonably estimated and actual outcomes may differ materially.
- Major ongoing risk categories include credit, liquidity, capital, market, operational, cybersecurity, regulatory, legal, conduct, reputation, geopolitical, climate and competition risks.
- Management concluded that internal control over financial reporting was effective as of December 31, 2022, with no material weaknesses identified. PricewaterhouseCoopers LLP issued an unqualified audit opinion.
Most Important Facts for Investors to Verify
- Whether net interest income growth and 2023 guidance remain sustainable as deposit costs rise, deposit balances shift and rates change.
- Credit card delinquencies, charge-offs and the projected increase in Card Services’ 2023 net charge-off rate.
- The adequacy of the $22.2 billion credit-loss allowance under recessionary, commercial real estate and broader wholesale-credit scenarios.
- The effect of higher regulatory capital requirements, including the expected 2024 GSIB surcharge increase, on dividends and share repurchases.
- The fair value, duration, unrealized losses and liquidity implications of the investment securities portfolio, including transferred AFS securities.
- Progress and remaining exposure related to LIBOR transition, sanctions compliance, cybersecurity and the Deferred Prosecution Agreement.
- Developments in pending litigation and whether losses could exceed existing reserves or the disclosed estimated range.
- The supplied filing text provides annual results and outlook, but does not provide a clear standalone fourth-quarter 2022 income statement; investors should verify Q4-specific revenue, earnings, margins and capital data against the related earnings release or Form 8-K.