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How JPMorgan Makes Money

JPMorgan generates most of its revenue from Consumer & Community Banking

JPMorgan Chase & Co. (JPM) is a global financial services holding company and the largest U.S. bank by assets. The company provides services including consumer banking, investment banking, commercial banking, and asset management for individuals, corporations, institutions, and governments globally.

New York City-based JPMorgan competes internationally with a broad range of banks, brokerage firms, investment banking companies, hedge funds, commodity trading companies, private equity firms, insurance companies, and investment managers, including Bank of America Corp. (BAC), Citigroup Inc. (C), Morgan Stanley (MS), Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. (GS).

Key Takeaways

  • JPMorgan provides financial services to consumers, small businesses, large corporations, governments, and other clients.
  • Its Consumer & Community Banking segment is the largest source of revenue.
  • The Corporate & Investment Bank segment is the largest source of net income.
  • JPMorgan has agreed to acquire a stake in European cloud-based payments fintech company Viva Wallet.

JPMorgan’s Financials

JPMorgan announced in mid-January financial results for Q4 of its 2021 fiscal year (FY), the three-month period ended Dec. 31, 2021. Net income for the quarter was $10.4 billion, down 14.3% compared to the year-ago quarter. Revenue fell 0.3% year over year (YOY) to $29.3 billion. The slight drop in revenue was driven by a 2.6% decline in non-interest revenue, which was slightly offset by a 2.6% increase in net interest income.

The bank noted in its earnings press release for the fourth quarter that the economy continued to perform well despite a number of headwinds, including the spread of the Omicron variant of the coronavirus, inflation, and supply chain bottlenecks. JPMorgan said that lending activity was picking up with firmwide average loans up 6%. The bank's earnings benefitted from a $1.8 billion net reserve release. The company had built up its loan loss reserves during the pandemic to protect against possible loan defaults amid the health crisis and related adverse shock to the economy.

JPMorgan’s Business Segments

JPMorgan breaks down its revenue and net income into the following business segments: Consumer & Community Banking; Corporate & Investment Bank; Commercial Banking; Asset & Wealth Management; and Corporate. Unlike JPMorgan's companywide financial numbers, the segment breakdown is done on a non-GAAP basis. Total non-GAAP revenue in Q4 FY 2021 was $30.3 billion, approximately $1.1 billion more than GAAP revenue. Total non-GAAP net income for the quarter was $10.4 billion, the same as GAAP net income.

Consumer & Community Banking

JPMorgan's Consumer & Community Banking segment provides a variety of services to consumers and businesses including deposit and investment products, cash management, payment solutions, mortgage origination and servicing, credit-card issuance, and auto loans. The segment reported net income of $4.2 billion in Q4 FY 2021, down 2.3% compared to the year-ago quarter. Revenue for the segment was $12.3 billion, down 3.6% YOY. The segment accounts for about 37% of total net income and about 40% of total non-GAAP revenue.

Corporate & Investment Bank

JPMorgan's Corporate & Investment Bank segment provides investment banking, market-making, prime brokerage, and treasury and securities products and services to corporations, investors, financial institutions, and governments. Net income for the segment fell 9.4% YOY in Q4 FY 2021. At $4.8 billion, the segment accounts for about 42% of JPMorgan's total net income. Revenue for the segment grew 1.6% YOY to $11.5 billion for the quarter, comprising about 37% of total non-GAAP revenue.

Commercial Banking

JPMorgan's Commercial Banking segment offers comprehensive financial solutions, including lending, payments, investment banking, and asset management products to clients including small businesses, midsized and large corporations, and local governments. The segment posted net income of $1.3 billion in Q4 FY 2021, down 38.5% from the year-ago quarter and comprising about 11% of the total. Revenue for the segment grew 6.0% to $2.6 billion, comprising more than 8% of total non-GAAP revenue.

Asset & Wealth Management

JPMorgan's Asset & Wealth Management segment provides services across all asset classes and has $4.3 trillion in client assets. The segment also provides retirement products and services, as well as brokerage and banking. Net income rose 45.8% YOY in Q4 FY 2021 to $1.1 billion, comprising 10% of JPMorgan's total net income. Revenue grew 15.7% compared to Q4 FY 2020. At $4.5 billion, revenue for the segment accounts for more than 14% of total non-GAAP revenue.

Corporate

JPMorgan's Corporate segment measures, monitors, reports, and manages the bank's liquidity, funding, capital, and foreign exchange risks, among other functions. The segment reported a net loss of $1.1 billion in Q4 FY 2021 compared to a net loss of $358 million in the year-ago quarter. Revenue for the segment was also negative at -$545 million compared to -$249 million in Q4 FY 2020.

(Note: segments with negative revenue and/or net income are excluded from the respective revenue and net income percentage share calculations and pie charts above.)

JPMorgan’s Recent Developments

On Jan. 25, 2022, JPMorgan announced that it has agreed to acquire an approximately 49%-ownership stake in Viva Wallet Holdings Software Development S.A. The European fintech company provides a cloud-based payments platform for small- and medium-sized businesses, offering a variety of value-added services. Financial terms of the transaction were not disclosed.

How JPMorgan Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of JPMorgan and its commitment to diversity, inclusiveness, and social responsibility. We examined the data JPMorgan releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether JPMorgan discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether JPMorgan breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

JPMorgan Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors ✔ (U.S. Only)      
C-Suite
✔ (U.S. Only)
     
General Management ✔ (U.S. Only) ✔ (U.S. Only) ✔ (U.S. Only) ✔ (U.S. Only)
Employees ✔ (U.S. Only) ✔  ✔ (U.S. Only) ✔ (U.S. Only) ✔ (U.S. Only)

Article Sources

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  1. Business Insider. "Top 10 Biggest US Banks by Assets in 2022."

  2. JPMorgan Chase & Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 1.

  3. JPMorgan Chase & Co. "Earnings Release Financial Supplement Fourth Quarter 2021," Page 2.

  4. JPMorgan Chase & Co. "Earnings Release Financial Supplement Fourth Quarter 2021," Page 4.

  5. JPMorgan Chase & Co. "4Q21 Earnings Press Release," Page 1.

  6. JPMorgan Chase & Co. "Form 10-K for the fiscal year ended December 31, 2021," Pages 58 & 61.

  7. JPMorgan Chase & Co. "Earnings Release Financial Supplement Fourth Quarter 2021," Pages 2 & 3.

  8. JPMorgan Chase & Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 63.

  9. JPMorgan Chase & Co. "Earnings Release Financial Supplement Fourth Quarter 2021," Page 3.

  10. JPMorgan Chase & Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 67.

  11. JPMorgan Chase & Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 73.

  12. JPMorgan Chase & Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 76.

  13. JPMorgan Chase & Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 79.

  14. JPMorgan Chase & Co. "J.P. Morgan to acquire a stake in Viva Wallet."

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