JP Morgan Chase 2014 Annual Report Download - page 289

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JPMorgan Chase & Co./2014 Annual Report 287
Note 29 – Off–balance sheet lending-related
financial instruments, guarantees, and other
commitments
JPMorgan Chase provides lending-related financial
instruments (e.g., commitments and guarantees) to meet
the financing needs of its customers. The contractual
amount of these financial instruments represents the
maximum possible credit risk to the Firm should the
counterparty draw upon the commitment or the Firm be
required to fulfill its obligation under the guarantee, and
should the counterparty subsequently fail to perform
according to the terms of the contract. Most of these
commitments and guarantees expire without being drawn
or a default occurring. As a result, the total contractual
amount of these instruments is not, in the Firm’s view,
representative of its actual future credit exposure or
funding requirements.
To provide for probable credit losses inherent in consumer
(excluding credit card) and wholesale lending commitments,
an allowance for credit losses on lending-related
commitments is maintained. See Note 15 for further
discussion regarding the allowance for credit losses on
lending-related commitments. The following table
summarizes the contractual amounts and carrying values of
off-balance sheet lending-related financial instruments,
guarantees and other commitments at December 31, 2014
and 2013. The amounts in the table below for credit card
and home equity lending-related commitments represent
the total available credit for these products. The Firm has
not experienced, and does not anticipate, that all available
lines of credit for these products will be utilized at the same
time. The Firm can reduce or cancel credit card lines of
credit by providing the borrower notice or, in some cases as
permitted by law, without notice. The Firm may reduce or
close home equity lines of credit when there are significant
decreases in the value of the underlying property, or when
there has been a demonstrable decline in the
creditworthiness of the borrower. Also, the Firm typically
closes credit card lines when the borrower is 60 days or
more past due.