JP Morgan Chase 2015 Annual Report Download - page 140

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Management’s discussion and analysis
130 JPMorgan Chase & Co./2015 Annual Report
ALLOWANCE FOR CREDIT LOSSES
JPMorgan Chase’s allowance for loan losses covers both the
consumer (primarily scored) portfolio and wholesale (risk-
rated) portfolio. The allowance represents management’s
estimate of probable credit losses inherent in the Firm’s
loan portfolio. Management also determines an allowance
for wholesale and certain consumer lending-related
commitments.
For a further discussion of the components of the allowance
for credit losses and related management judgments, see
Critical Accounting Estimates Used by the Firm on pages
165–169 and Note 15.
At least quarterly, the allowance for credit losses is
reviewed by the Chief Risk Officer, the Chief Financial
Officer and the Controller of the Firm, and discussed with
the DRPC and Audit Committee of the Firm’s Board of
Directors. As of December 31, 2015, JPMorgan Chase
deemed the allowance for credit losses to be appropriate
and sufficient to absorb probable credit losses inherent in
the portfolio.
The consumer, excluding credit card, allowance for loan
losses decreased from December 31, 2014, due to a
reduction in the residential real estate portfolio allowance,
reflecting continued improvement in home prices and
delinquencies and increased granularity in the impairment
estimates. For additional information about delinquencies
and nonaccrual loans in the consumer, excluding credit
card, loan portfolio, see Consumer Credit Portfolio on pages
115–121 and Note 14.
The credit card allowance for loan losses was relatively
unchanged from December 31, 2014, reflecting stable
credit quality trends. For additional information about
delinquencies in the credit card loan portfolio, see
Consumer Credit Portfolio on pages 115–121 and Note 14.
The wholesale allowance for credit losses increased from
December 31, 2014, reflecting the impact of downgrades in
the Oil & Gas portfolio. Excluding Oil and Gas, the wholesale
portfolio continued to experience generally stable credit
quality trends and low charge-off rates.