EXECUTIVE OVERVIEW This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of this 2020 Form 10-K. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates, affecting the Firm and its various LOBs, this 2020 Form 10-K should be read in its entirety. Effective January 1, 2020, the Firm adopted the CECL accounting guidance. Refer to Note 1 for further information. Financial performance of JPMorgan Chase Year ended December 31, (in millions, except per share data and ratios) 2020 2019 Change Selected income statement data Total net revenue $ 119,543 $ 115,399  4 % Total noninterest expense 66,656 65,269  2  Pre-provision profit 52,887 50,130  5  Provision for credit losses 17,480 5,585  213  Net income 29,131 36,431  (20) Diluted earnings per share 8.88 10.72  (17) Selected ratios and metrics Return on common equity 12 % 15 % Return on tangible common equity 14 19  Book value per share $ 81.75 $ 75.98  8  Tangible book value per share 66.11 60.98  8  Capital ratios CET1 13.1 % 12.4 % Tier 1 capital 15.0 14.1 Total capital 17.3 16.0 (a) (a) (b) (a) In the second quarter of 2020, the Firm reclassified certain spend-based credit card reward costs from marketing expense to be a reduction of card income, with no effect on net income. Prior-period amounts have been revised to conform with the current presentation. (b) As of December 31, 2020, the capital metrics reflect the relief provided by the Federal Reserve Board in response to the COVID-19 pandemic, including the CECL capital transition provisions that became effective in the first quarter of 2020. Refer to Regulatory Developments relating to the COVID-19 Pandemic on pages 52-53 and Capital Risk Management on pages 91-101 for additional information. Comparisons noted in the sections below are for the full year of 2020 versus the full year of 2019, unless otherwise specified. Firmwide overview JPMorgan Chase reported net income of $29.1 billion for 2020, or $8.88 per share, on net revenue of $119.5 billion. The Firm reported ROE of 12% and ROTCE of 14%. The Firm's results for 2020 included net additions to the allowance for credit losses of $12.2 billion and Firmwide legal expense of $1.1 billion. • The Firm had net income of $29.1 billion, down 20%. • Total net revenue was up 4%. Noninterest revenue was $65.0 billion, up 12%, driven by higher CIB Markets revenue, Investment Banking fees and net production revenue in Home Lending. Net interest income was $54.6 billion, down 5%, driven by the impact of lower rates, predominantly offset by higher net interest income in CIB Markets as well as balance sheet growth. • Noninterest expense was $66.7 billion, up 2%, driven by higher volume- and revenue-related expense, legal expense and continued investments in the businesses, partially offset by lower structural expense. • The provision for credit losses was $17.5 billion, up $11.9 billion from the prior year, driven by net additions to the allowance for credit losses of $12.2 billion due to the deterioration and increased uncertainty in the macroeconomic environment as a result of the impact of the COVID-19 pandemic. • The total allowance for credit losses was $30.8 billion at December 31, 2020. The Firm had an allowance for loan losses to retained loans coverage ratio of 2.95%, compared with 1.39% in the prior year; the increase from the prior year was driven by the additions to the allowance for credit losses and the adoption of CECL. • The Firm’s nonperforming assets totaled $10.9 billion at December 31, 2020, an increase of $5.9 billion from the prior year, primarily reflecting client credit deterioration across multiple industries in the wholesale portfolio; and in the consumer portfolio, loans placed on nonaccrual status related to the impact of the COVID-19 pandemic, as well as the adoption of CECL, as the purchased credit deteriorated loans in the mortgage portfolio became subject to nonaccrual loan treatment. In the fourth quarter of 2020, nonperforming assets decreased $556 million from the prior quarter, reflecting some credit improvement in the wholesale portfolio. The consumer portfolio remained relatively flat, as the increase in loans placed on nonaccrual status in Home Lending related to the impact of the COVID-19 pandemic was predominantly offset by lower loans at fair value in CIB, largely due to sales. • Firmwide average loans of $1.0 trillion were up 1%, driven by higher loan balances in AWM and CIB, as well as loans originated under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), predominantly offset by lower loan balances in Home Lending and Card. • Firmwide average deposits of $1.9 trillion were up 25%, reflecting significant inflows across the Firm, primarily driven by the impact of the COVID-19 pandemic and the related effect of certain government actions. • As of December 31, 2020, the Firm had average eligible High Quality Liquid Assets (“HQLA”) of approximately $697 billion and unencumbered marketable securities with a fair value of approximately $740 billion, resulting in approximately $1.4 trillion of liquidity sources. Refer to Liquidity Risk Management on pages 102– 108 for additional information. JPMorgan Chase & Co./2020 Form 10-K 47