JP Morgan Chase 2015 Annual Report Download - page 132

Management’s discussion and analysis
122 JPMorgan Chase & Co./2015 Annual Report
WHOLESALE CREDIT PORTFOLIO
The Firm’s wholesale businesses are exposed to credit risk
through underwriting, lending, market-making, and hedging
activities with and for clients and counterparties, as well as
through various operating services such as cash
management and clearing activities. A portion of the loans
originated or acquired by the Firm’s wholesale businesses is
generally retained on the balance sheet. The Firm
distributes a significant percentage of the loans it originates
into the market as part of its syndicated loan business and
to manage portfolio concentrations and credit risk.
The wholesale credit portfolio, excluding Oil & Gas,
continued to be generally stable throughout 2015,
characterized by low levels of criticized exposure,
nonaccrual loans and charge-offs. Growth in loans retained
was driven by increased client activity, notably in
commercial real estate. Discipline in underwriting across all
areas of lending continues to remain a key point of focus.
The wholesale portfolio is actively managed, in part by
conducting ongoing, in-depth reviews of client credit quality
and transaction structure, inclusive of collateral where
applicable; and of industry, product and client
concentrations.
Wholesale credit portfolio
December 31, Credit exposure Nonperforming(c)
(in millions) 2015 2014 2015 2014
Loans retained $357,050 $324,502 $ 988 $ 599
Loans held-for-sale 1,104 3,801 34
Loans at fair value 2,861 2,611 25 21
Loans – reported 361,015 330,914 1,016 624
Derivative receivables 59,677 78,975 204 275
Receivables from
customers and other(a) 13,372 28,972 ——
Total wholesale credit-
related assets 434,064 438,861 1,220 899
Lending-related
commitments 366,399 366,881 193 103
Total wholesale credit
exposure $800,463 $805,742 $ 1,413 $ 1,002
Credit derivatives used
in credit portfolio
management activities(b) $ (20,681) $ (26,703) $(9)$—
Liquid securities and
other cash collateral
held against derivatives (16,580) (19,604) NA NA
(a) Receivables from customers and other include $13.3 billion and $28.8
billion of margin loans at December 31, 2015 and 2014, respectively,
to prime and retail brokerage customers; these are classified in
accrued interest and accounts receivable on the Consolidated balance
sheets.
(b) Represents the net notional amount of protection purchased and sold
through credit derivatives used to manage both performing and
nonperforming wholesale credit exposures; these derivatives do not
qualify for hedge accounting under U.S. GAAP. For additional
information, see Credit derivatives on page 129, and Note 6.
(c) Excludes assets acquired in loan satisfactions.