Analysis of the Annual Report on Form 10-K | Fiscal year ended December 31, 2025
What does JPMorganChase sell, to whom, and how does the money reach the shareholder?
JPMorganChase is a bank holding company with US$4.42 trillion of assets at year-end. It earns money in two ways. The first is the spread between what it earns on loans and securities and what it pays on deposits and debt: net interest income of US$95.4 billion in FY2025. The second is fees and trading revenue, US$87.0 billion. The company reports three segments plus Corporate on a "managed" basis, which grosses up tax-advantaged income by US$3.1 billion without changing net income.
| Segment (managed basis, US$ mn) | FY2025 | Share | FY2024 | FY2023 | Change FY25 |
|---|---|---|---|---|---|
| Consumer & Community Banking | 76,029 | 40.97% | 71,507 | 70,148 | +6.32% |
| Commercial & Investment Bank | 78,454 | 42.27% | 70,114 | 64,353 | +11.89% |
| Asset & Wealth Management | 24,073 | 12.97% | 21,578 | 19,827 | +11.56% |
| Corporate | 7,025 | 3.79% | 17,394 | 8,038 | −59.61% |
| Total | 185,581 | 100.00% | 180,593 | 162,366 | +2.76% |
Consumer & Community Banking serves 86.6 million consumers and 7.4 million small businesses through 5,083 branches, with deposits, cards, mortgages and auto loans. The Commercial & Investment Bank advises, underwrites, lends, moves payments and makes markets, and holds US$41.2 trillion of client assets in custody. Asset & Wealth Management manages US$4.8 trillion. Corporate holds the Treasury and Chief Investment Office, which invests surplus deposits and manages rate risk. In FY2024 Corporate also booked the US$7.9 billion Visa gain, which is why its line collapses this year.
| Revenue by region (reported, US$ mn) | FY2025 | Share | FY2024 | Change |
|---|---|---|---|---|
| North America | 139,689 | 76.56% | 139,323 | +0.26% |
| Europe/Middle East/Africa | 24,478 | 13.42% | 22,353 | +9.51% |
| Asia-Pacific | 14,065 | 7.71% | 11,995 | +17.26% |
| Latin America/Caribbean | 4,215 | 2.31% | 3,885 | +8.49% |
| Total | 182,447 | 100.00% | 177,556 | +2.75% |
North American revenue was flat because the prior year held the Visa gain. Of the US$4.9 billion of reported growth, US$4.5 billion came from outside North America. The Firm had 318,512 employees at year-end. The 10-K is signed by James Dimon, Chairman and CEO, and Jeremy Barnum, CFO. Todd Combs left the Board in December 2025 to join the Firm as head of a Strategic Investment Group. The proxy lists Daniel Pinto as Vice Chair and former President and COO.
A credit card purchase shows how the money moves. A Chase cardholder buys something, and the merchant's side of the transaction pays an interchange fee that reaches Chase. In FY2025 that interchange and processing income was US$36.2 billion. Chase paid 82.05% of it back as rewards and partner payments, up from 79.13% a year earlier. After origination costs, card income was US$4.7 billion. The profit is in the balance the customer carries. Average card loans of US$231.7 billion earned a net yield of 10.26%, before a 3.31% charge-off rate. To hold that loan the Firm must fund it, mostly with deposits that cost 1.80% on average, and set capital aside against it.
The evidence of an advantage sits on the funding side. Average deposits were US$2.51 trillion, of which US$604.2 billion paid no interest. All deposits cost 1.80% on average, against 5.10% on long-term debt. The noninterest-bearing share, however, fell from 28.00% in FY2023 to 24.10%, so the cheapest part of the funding is shrinking in proportion even as deposits grow. The Firm says it ranked first in global investment banking fees, citing Dealogic, but its wallet share fell to 8.4% from 9.1%. Asset & Wealth Management took in US$553 billion of net client assets. The technology, communications and equipment line rose 12.19% to US$11.0 billion, in a year when pre-provision profit grew 1.22%; it also contains auto lease depreciation, so it overstates technology alone. Whether the advantage is widening or narrowing cannot be established from the document.
A newcomer would misread two lines. "Total net revenue" of US$182.4 billion is already net of US$97.9 billion of interest expense, and card income is net of US$29.7 billion of rewards. The operating cash outflow of US$147.8 billion is the trading book growing, not money lost.
What type of company is this, and where is this case decided?
JPMorganChase is a solid company in the sense used here. Revenue excluding the three one-off gains the document names grew 7.19% in FY2025 and 9.22% in FY2024. Return on common equity was 17%, 18% and 17% across the three years. It is not a slow-growth company, because the dividend is not the main use of cash: buybacks of US$31.6 billion were about twice the US$16.1 billion of common dividends. It is not classified as cyclical either. Provisions and net interest income do move with the credit cycle and with rates, as the document itself declares, but ROE moved by one point in three years, so that exposure is carried as a decisive question rather than as the label.
Three questions decide the case.
The first is how much of the US$57.0 billion of net income comes from the spread franchise and how much from a larger balance sheet. Net interest income excluding Markets was flat at US$92.6 billion, while average earning assets outside Markets rose by US$61.8 billion. Markets revenue grew 19.25% on 20.83% more assets. This question goes to section 3.
The second is how much of the profit depends on credit losses staying where they are. The allowance is US$31.2 billion, and the company's own adverse scenario adds about US$10.7 billion to modeled losses. The auditor names the allowance a Critical Audit Matter. The document answers this question only in part: it gives one sensitivity, not the position of the credit cycle. This goes to section 5, with the note itself read in section 7.
The third is what is done with capital, and at what price. The Firm distributed 83.35% of earnings to common holders in FY2025 and bought back stock at 2.57 times tangible book value. Its CET1 ratio fell from 15.7% to 14.6% while risk-weighted assets grew 12.76%. The document allows the prices paid to be measured, not compared with any value of the business, which it does not give. This goes to section 8.
Three pairs govern the model, ordered by their contribution to the year's change. Markets publishes no physical units, no trades and no client count, so its pair uses the balance-sheet volume the company reports instead; the card and asset management pairs use the company's own published volumes and rates. In Markets, average Markets earning assets and revenue per dollar of those assets, with revenue up US$5.8 billion. In Card Services, average card loans and net yield, read against the charge-off rate, with Card Services & Auto up US$2.7 billion. In asset management, assets under management and the fee rate on them, with Asset & Wealth Management up US$2.5 billion. Corporate moved most, down US$10.4 billion, but that is the absent Visa gain and an internal transfer-pricing change, with no volume to pair. Banking & Wealth Management revenue rose US$1.9 billion on a higher deposit margin that the company attributes to changes in transfer pricing, offset in Corporate, so it is read at firm level in section 3 instead of as a pair.
Mute for this company: gross margin, inventory and working-capital days; capital expenditure, free cash flow and owner earnings, because capex is not disclosed and "working capital" is trading inventory; EBITDA and net-debt multiples; interest coverage, since interest is the raw material; enterprise-value multiples.
The sections that go deep are 3, 5 and 8.
Which lines moved the result, and what moved them?
Management gives four explanations. (1) Net interest income rose 3% on "higher Markets net interest income, higher revolving balances in Card Services, higher wholesale deposit balances, and the impact of investment securities activity". These were "largely offset by deposit margin compression and the impact of lower rates". (2) Noninterest revenue rose 2%: Markets, asset management fees, auto leases, smaller securities losses, payments and investment banking fees, and a US$588 million First Republic gain were "predominantly offset" by the absent Visa gain and lower card income. (3) Expense rose 4% on compensation, headcount, brokerage, auto lease depreciation, technology, marketing and occupancy. A US$763 million FDIC accrual release and the absent US$1.0 billion Visa donation offset part of it. (4) Provisions rose to US$14.2 billion, made of US$9.8 billion of net charge-offs and a US$4.4 billion reserve build. Of the build, US$2.2 billion is for the Apple Card portfolio, which the Firm does not yet own.
The statements confirm the explanation, with one shift of emphasis. Reported net income fell 2.43% and pre-provision profit rose 1.22%. Removing the one-offs the document names, revenue grew 7.19% and expense 7.03%. On that basis pre-provision profit grew 7.38%. The year's decline came from the provision, which rose US$3.5 billion, and from comparison with the Visa gain.
| US$ mn | FY2025 | FY2024 | FY2023 | Change FY25 |
|---|---|---|---|---|
| Net interest income | 95,443 | 92,583 | 89,267 | +3.09% |
| Principal transactions | 27,212 | 24,787 | 24,460 | +9.78% |
| Asset management fees | 20,327 | 17,801 | 15,220 | +14.19% |
| Card income | 4,720 | 5,497 | 4,784 | −14.13% |
| Other income | 6,174 | 12,462 | 5,609 | −50.46% |
| Total net revenue | 182,447 | 177,556 | 158,104 | +2.75% |
| Compensation expense | 54,487 | 51,357 | 46,465 | +6.09% |
| Total noninterest expense | 95,640 | 91,797 | 87,172 | +4.19% |
| Provision for credit losses | 14,212 | 10,678 | 9,320 | +33.10% |
| Net income | 57,048 | 58,471 | 49,552 | −2.43% |
The complete statement, every line and every year with its source, is in Financials → Income statement on this company's page.
Net interest income is the frame for everything else. Average interest-earning assets grew 8.39% to US$3.83 trillion. The net yield on them fell from 2.63% to 2.50%. Outside Markets, earning assets grew 2.56% and the net yield fell 9 basis points to 3.75%. Net interest income excluding Markets therefore rose by only US$172 million, to US$92.6 billion. The cost of interest-bearing deposits fell 47 basis points to 2.37%. The loan yield fell less, 28 basis points to 6.72%. The compression came from elsewhere: average noninterest-bearing deposits fell by US$34.4 billion. In addition, the transfer-pricing credit for deposits fell faster than the rates paid to depositors, as the document states. The US$2.9 billion of reported NII growth is almost entirely Markets, whose NII rose from US$641 million to US$3,277 million.
The same transfer-pricing mechanism redistributes income between segments. Since the fourth quarter of 2024 the Firm credits consumer deposits with a larger funding benefit, "fully offset in Corporate". Consumer & Community Banking NII rose US$3.4 billion and Corporate NII fell US$3.7 billion. Part of the consumer bank's NII growth is therefore an internal reallocation from Corporate, which also lost income to lower rates; the document does not say how much of each, and the consolidated figure is unaffected.
Markets is the Firm's trading business. It buys and sells bonds, currencies, commodities, equities and derivatives for clients, and finances clients' positions. Its revenue is the bid-offer spread, the financing spread and the gains on inventory held for clients. That revenue is reported across principal transactions and net interest income, which is why the company judges Markets on total revenue. The volume half of the pair is average Markets interest-earning assets, taken from the non-GAAP reconciliation; the price half is total Markets revenue from the CIB section. Revenue per dollar of those assets, our construction, was 2.84% in FY2023 and 2.66% in FY2024. It was 2.62% in FY2025. In FY2025 assets grew 20.83% and revenue 19.25%. In FY2024 assets grew 14.44% and revenue 7.31%.
Within Markets, Fixed Income produced US$22.5 billion, up 12.29%. Equities produced US$13.3 billion, up 33.29%, "particularly in Equity Derivatives". The mechanism shows on the balance sheet. Trading assets rose 25.88% and securities borrowed 30.36%. Repurchase financing rose 49.04%, which the company attributes to "higher secured financing of trading assets". Resale agreements on the asset side rose with "lower levels of netting, higher collateral requirements" and demand to cover short positions. Markets is growing by committing more balance sheet at a slightly lower return per dollar, so its revenue increasingly depends on how much capital and funding the Firm is willing to put behind it. The company does not publish trading volumes, client counts, or the split between financing and intermediation revenue.
In Card Services the volume is a loan: the balance a customer does not repay at month-end and on which interest is charged. Average card loans come from the CCB metrics; the "net yield on average loans" is published by the company. Average loans of US$231.7 billion at 10.26% give about US$23.8 billion of net interest. The same product was US$20.8 billion in FY2024 and US$18.4 billion in FY2023. Deducting the charge-off rate, the risk-adjusted yield was 7.16% in FY2023 and 6.39% in FY2024. It recovered to 6.95% in FY2025, after charge-offs had risen from 2.45% to 3.34% the year before. The engine is account growth, with 10.4 million new accounts opened and 116.5 million cards in force, plus higher revolving balances. Rewards cost grew 10.96% against interchange at 7.02%. The swipe economics paid for the balance growth: card income fell 14.13% while card interest rose. The company does not publish the revolving share of balances, promotional-rate balances or rewards cost by product.
In asset management, assets under management ended at US$4.79 trillion, up 18.44%. Net inflows added US$392 billion and markets US$354 billion. Asset management fees in the segment were US$15.5 billion, up 13.15%. On the average of opening and closing assets, our construction, the fee rate was 0.382% in FY2023, 0.367% in FY2024 and 0.351% in FY2025. Liquidity funds stayed at about 26.7% of assets in both years, so mix toward money funds does not explain the decline, and the document gives no other explanation. Fee rates by asset class are not published.
The rest of the Commercial & Investment Bank grew more slowly. Payments revenue rose 6.89% to US$19.3 billion. Excluding equity investments the company puts the increase at 5%, from deposits and fees "largely offset by deposit margin compression". Investment banking fees rose 6.79% to US$9.7 billion. Debt underwriting led with a 9.00% increase, and advisory rose 6.29%. Client deposits in Payments and Securities Services averaged US$1.10 trillion, up 14.14%.
There were no acquisitions in FY2025, and First Republic has been in the base since May 2023, so reported growth is organic. The Apple Card portfolio has not closed. On scalability, compensation grew 6.09%, below underlying revenue. Technology, communications and equipment (12.19%, including auto lease depreciation), professional services (11.75%) and marketing (11.20%) grew faster than revenue. The overhead ratio was 52% in both years.
The year's result was produced by a larger balance sheet at thinner margins, a growing card book whose yield rose, and asset fees carried by markets. The spread on the core deposit franchise did not grow.
Is the profit cash, and does it belong to the company?
For a bank the cash flow statement does not answer this question. Operating cash flow was −US$147.8 billion because trading assets absorbed US$156.5 billion and securities borrowed US$66.6 billion. These are inventory and financing positions, funded by repos and deposits that appear in the financing section. Three tests are useful instead.
The first is whether earnings are counted before or after the credit losses actually incurred. The provision of US$14.2 billion exceeded net charge-offs of US$9.8 billion. The difference, US$4.4 billion, is reserve built ahead of losses, including US$2.2 billion for a portfolio the Firm does not yet own. Reported profit is lower than realized losses alone would justify.
The second is third-party money. For this company deposits are the business: they rose US$153.2 billion and fund the growth in loans and securities. Inside "accounts payable and other liabilities", brokerage payables rose to US$186.7 billion. The card rewards liability, points owed to customers, rose 11.11% to US$16.0 billion. None of this is described by the company as free cash flow, and none should be read as such.
The third is taxes. Income tax expense was US$15.5 billion, while cash taxes paid were US$5.3 billion, 7.31% of pretax income. Deferred tax of US$5.6 billion explains part of the gap. The deferred liability on leasing transactions rose by US$2.0 billion, and a new US$2.3 billion liability on depreciation appeared; the note does not say what produced them. The rest of the gap, US$4.6 billion between current tax and cash paid, is not explained. It includes a net U.S. federal refund of US$1.1 billion. Over three years cash taxes were 60.91% of tax expense.
The effective rate was 21.4%. State taxes added 3.7 points to the 21.0% statutory rate. Tax credits subtracted 3.0 points, about half from alternative-energy investments. A US$774 million benefit, from resolving tax audits and from foreign-currency tax regulations, lowered the rate further.
Capacity spending can be read only in part. Capital expenditure is not disclosed. Two lines show investment that does not pass through a capex line. Average auto operating lease assets grew from US$11.1 billion to US$16.2 billion, with US$2.4 billion of their depreciation inside expense. Premises and equipment rose US$4.0 billion, including a new headquarters. Internal-use software is capitalized, but the amount is not given.
Accounting choices shape the presentation, not net income. The managed basis adds US$3.1 billion of tax-equivalent revenue. "Adjusted expense" removes legal expense, which totaled US$2.5 billion over three years, 4.45% of FY2025 net income. Two items released or recognized in FY2025, the FDIC accrual release and the First Republic gain, raised pretax income by US$1.35 billion, 1.86% of the total. The tax line added the US$774 million benefit. These are arithmetic, not a claim of error. The year's only accounting change was a disclosure standard that expanded the tax note.
The reserve lines deserve the same reading in both directions. The consumer reserve build of US$3.3 billion was, in the company's words, "partially offset by reduced borrower uncertainty", a qualitative release whose amount is not given. The wholesale build of US$1.1 billion was partly offset by "changes in the Firm's weighted-average macroeconomic outlook". The FDIC accrual of US$2.9 billion booked in FY2023 has now moved in both directions: up US$725 million in FY2024 and down US$763 million in FY2025. Each of these movements changes profit without changing cash, and the document quantifies only the last.
Of the deterioration comparisons, inventory, payables against cost of sales, and capitalized against expensed costs are not applicable or not disclosed. Accrued interest and receivables grew 10.25% against revenue at 2.75%, a gap of 7.5 points. The company attributes it to "higher client-driven activities in Markets", which matches the growth in brokerage payables on the other side. The allowance for loan losses grew 5.83% against loans not carried at fair value at 8.89%, a gap of 3.1 points the other way. Rewards cost grew 3.9 points faster than interchange. Revenue against operating cash flow, the last comparison, is not meaningful for this balance sheet. Free cash flow cannot be computed, so the test on its growth cannot be applied.
The profit is accrual-based but conservative in its credit reserves. The open point is the tax timing that the note does not explain.
What stands in front of the shareholder, and what is it worth?
Of US$4.42 trillion of assets, seven lines exceed 5%. Loans are 33.75%, or US$1.49 trillion, of which US$70.7 billion is carried at fair value. They rose 10.79% on wholesale lending in Markets, securities-based lending in wealth management and card balances, while home lending shrank. Trading assets are 18.14%, or US$802.9 billion, the inventory described in section 3.
Investment securities are the second-largest use of funds. Available-for-sale securities are 11.46% of assets and held-to-maturity 6.10%. During the year the Firm bought US$308.8 billion of AFS securities; the net purchases were "predominantly U.S. Treasuries and non-U.S. government debt securities". In the third quarter it moved US$44.1 billion from AFS to HTM, which takes their price movements out of equity. Resale agreements (7.60%) and securities borrowed (6.47%) are Markets financing. Deposits with banks fell US$124.3 billion to 7.27% of assets: the year converted cash at central banks into securities and loans.
On the liability side deposits are 57.84% of the total. Repurchase agreements are 10.00%, long-term debt 9.84% and accounts payable and other 7.16%. Deposits rose 6.37%, with increases in CIB from Payments and Securities Services clients, in CCB from new accounts and in AWM. Repurchase agreements rose 49.04% to finance trading assets. Accounts payable grew on brokerage payables to US$186.7 billion. The remaining US$130.1 billion includes the US$16.0 billion rewards liability and US$9.3 billion of lease liabilities, and is not broken down further.
Long-term debt totals US$435.2 billion. Parent senior debt is US$234.5 billion and subordinated debt US$18.5 billion. Subsidiaries owe US$113.0 billion of senior debt and US$18.2 billion of Federal Home Loan Bank advances, down from US$29.3 billion. A separate line is the US$49.4 billion Purchase Money Note owed to the FDIC from the First Republic acquisition, at a fixed 3.40%. Maturities are US$42.6 billion in 2026 and US$55.8 billion in 2027. In 2028 they rise to US$105.4 billion, the year the Purchase Money Note falls due, although that note is prepayable. Leases are outside the debt figure. No financial covenants are disclosed. Long-term debt carried at fair value, which the company says "predominantly relates to structured notes", rose to US$134.6 billion; the company attributes the increase to client demand, so it is a client product rather than a funding need.
Goodwill is US$52.7 billion, of which US$32.1 billion sits in Consumer & Community Banking. CIB carries US$11.3 billion and AWM US$8.6 billion. At the annual test every reporting unit's fair value exceeded its carrying value by at least 20%, and an "immaterial" amount was written off in the third quarter. Other intangibles are US$2.6 billion. Mortgage servicing rights are US$9.2 billion, at fair value. On capitalization, card account origination costs are deferred and amortized over twelve months, and internal-use software is capitalized in amounts not disclosed.
Net deferred tax assets fell from US$12.2 billion to US$6.9 billion as deferred liabilities grew. Of the assets, US$2.3 billion are carryforwards that depend on future taxable income, mostly general business credits expiring in 2045. A valuation allowance of US$476 million sits against them.
Liquidity is ample by the company's measures. Cash and deposits with banks were US$343.3 billion. The Firm reports about US$915 billion of high-quality liquid assets at year-end and a fourth-quarter liquidity coverage ratio of 111%. The debt figures above are not netted against cash, because for a bank the cash is matched by deposits.
Equity is US$362.4 billion, of which preferred stock is US$20.0 billion. It is shown after US$164.6 billion of treasury stock. The AOCI deficit narrowed from US$12.5 billion to US$4.3 billion as rates fell. Noncontrolling interests are not shown separately. The complete statement, every line and every year with its source, is in Financials → Balance sheet on this company's page.
Off the balance sheet sit US$1.82 trillion of lending commitments, of which US$1.18 trillion are card lines, including commercial card. The Apple Card forward purchase adds about US$104 billion of exposure at closing, of which about US$23 billion are drawn loans. A US$2.2 billion allowance for it is already booked.
Return on equity with treasury stock added back, instead of subtracted, was 11.61% in FY2025. On reported average common equity it was 16.81%. The same pair was 13.08% and 18.32% in FY2024. In FY2023 it was 12.20% and 17.04%. The gap is the capital returned through buybacks. It widened from 4.84 points in FY2023 to 5.24 points in FY2024 and held at 5.20 points in FY2025. Retained earnings rose US$39.9 billion, which is net income less dividends. Buybacks sit in treasury stock rather than here, so retained earnings say nothing about distributions when read alone.
Solidity for a bank is not an interest-coverage question: interest expense was 50.63% of interest income, the cost of the raw material. Long-term debt equals 7.63 years of current net income. The measure the company is held to is capital. CET1 capital of US$288.5 billion is 14.6% of standardized risk-weighted assets. It is 14.1% of advanced risk-weighted assets. The requirement is 11.5% under both. The surplus, our construction, is US$61.4 billion on the standardized measure and US$53.2 billion on the advanced one. The advanced ratio became the binding one at year-end, partly because about US$110 billion of advanced RWA were booked for Apple Card. The company expects that figure to fall to about US$30 billion. The supplementary leverage ratio was 5.8%, against 6.1% a year earlier.
Assets measured at fair value are 41.40% of the total; those valued with significant unobservable inputs, level 3, are 0.60%. Retained loans, 32.15% of assets, are carried at amortized cost less an allowance that is management's forecast. Held-to-maturity securities carry an unrecognized loss of US$16.8 billion, down from US$26.6 billion. That loss equals 5.79% of tangible common equity.
If growth stopped and margins returned to the average of the three years, two items would protect the shareholder. They are tangible book of US$107.56 per share and the capital surplus above requirements. Cash of US$127.34 per share would not, because it is owed to depositors; net of long-term and short-term debt it is −US$58.10 per share.
Does the capital earn, and does the shareholder receive it?
| Per share (US$, diluted average) | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Revenue | 65.59 | 61.67 | 53.72 |
| Net income to common | 20.11 | 19.87 | 16.33 |
| Diluted EPS (reported, two-class method) | 20.02 | 19.75 | 16.23 |
| Book value (year-end) | 126.99 | 116.07 | 104.45 |
| Tangible book value (year-end) | 107.56 | 97.30 | 86.08 |
| Dividends declared | 5.80 | 4.80 | 4.10 |
Per share, the shareholder moved ahead faster than the company. Revenue per share grew 6.36%, against 2.75% in total, because diluted shares fell 3.39%. Tangible book per share grew 10.54% after US$5.80 of dividends. Free cash flow per share is not calculable. The dividend per share rose 20.83% to US$5.80. The common dividend took 29% of earnings, against 24% a year earlier.
The segments earn very different returns on the equity the Firm assigns them. Consumer & Community Banking earned 32% on US$56.0 billion of allocated equity. Asset & Wealth Management earned 40% on US$16.0 billion. The Commercial & Investment Bank earned 18% on US$149.5 billion. For 2026 the Firm raised CIB's allocation to US$166.5 billion, so more capital is going to the segment with the lowest return of the three.
Incremental return is our construction, on the company's ROE definition. From FY2023 to FY2025 net income to common rose US$7.9 billion on US$50.7 billion more average common equity. That is 15.58%, close to the 16.81% average return. On these years it is one point, not a trend, and the FY2023 base includes a bargain-purchase gain. From FY2024 to FY2025 the incremental figure is −6.20%, because the Visa gain sits in the base.
Retention was 16.65% of earnings after dividends and net buybacks. At a 16.81% ROE that implies 2.80% growth in equity-financed earnings. Realized net income to common fell 2.21% and pre-provision profit rose 1.22%, so the year landed close to what retention implies. A company that earns 16.81% on equity and distributes 83.35% of its earnings does not compound that return; it collects it. The growth in per-share figures comes from the shrinking share count.
The Firm financed itself internally. Preferred stock issued and redeemed were both US$3.0 billion. Long-term debt rose a net US$12.7 billion, which for a bank is operating funding rather than a capital source.
Capital intensity cannot be measured on capex. The equivalent for this company is risk-weighted assets, which grew 12.76% against CET1 capital at 4.70%. Growth here consumes regulatory capital rather than plant, and that explains the fall in the CET1 ratio. Growth spending sits in compensation and technology, not in capex.
The CET1 rollforward shows what kept the ratio from falling further. Net income to common added US$55.9 billion; dividends and net buybacks took US$46.6 billion. Unrealized gains on securities, hedges, currency translation and pension plans added US$5.6 billion through other comprehensive income, and CET1 capital rose US$13.0 billion in total. More than two-fifths of the year's capital growth therefore came from market movements that can reverse.
The multiples use data supplied with this request, not taken from the document. The price is the US$322.22 close on December 31, 2025, the last trading day of the fiscal year, so that price and earnings describe the same date. The share count is 2,697,032,375 on January 31, 2026. On these, market capitalization is US$869.0 billion. The price is 16.09 times diluted EPS and 2.54 times book. It is 3.00 times tangible book. The earnings yield is 6.21% and the dividend yield 1.80%. A buyer paying 3.00 times tangible book for a 19.96% ROTCE earns 6.65% on the price paid, before any change in that return. Operating return on enterprise value is not meaningful for a bank, whose debt is its inventory.
Return on tangible equity, the measure the company and its incentive plan use, was 19.96% against 16.81% on all common equity. The difference comes from US$55.3 billion of goodwill and intangibles; goodwill was already US$51.7 billion at the start of FY2023, so it predates the years covered here. A shareholder buying at the supplied price pays for that goodwill as well, which is why the price-to-tangible-book multiple is the one that matches the return actually earned on the capital at work.
The capital earns a high and stable return, and the shareholder receives most of it in cash and buybacks rather than in reinvested growth.
Which notes change the reading, and by how much?
The first Critical Audit Matter is the allowance for loan losses on the portfolio-based wholesale and credit card books. The wholesale allowance is US$7.6 billion on US$788.0 billion of loans. The card allowance is US$15.6 billion on US$247.8 billion. The whole allowance for credit losses is US$31.2 billion. It rests on five internally developed scenarios weighted over an eight-quarter forecast, with unemployment, GDP and house prices as the main variables. The company gives one sensitivity. Its "relative adverse" scenario assumes unemployment about 2.0 points higher on average than the central one. That scenario raises modeled losses by about US$1.2 billion in residential real estate and US$4.4 billion in cards. It adds US$5.1 billion in wholesale. The total of US$10.7 billion is 34.26% of the allowance and 14.74% of FY2025 pretax income. The Apple Card allowance is excluded from that sensitivity. The numerical scenario weights are not disclosed, but the company says that during 2025 it "further increased the weight placed on the adverse scenarios", a judgment that raised the allowance without a change in observed losses.
The second Critical Audit Matter is level 3 fair value, centered on liabilities. In scope are US$2.4 billion of deposits and US$5.6 billion of short-term borrowings. The largest item is US$46.7 billion of long-term debt; the Firm's structured notes sit in these lines and are valued with option and discounted cash flow models. Their unobservable inputs are volatilities and correlations. Level 3 liabilities in total rose 29.30% to US$67.0 billion, 18.47% of equity. A change in those inputs moves principal transactions revenue, or OCI for the part due to the Firm's own credit. The document gives no aggregate sensitivity, so how much a change in correlation assumptions would move profit cannot be measured.
The card rewards liability is US$16.0 billion, up from US$14.4 billion, because points earned have "outpaced redemptions". It depends on two assumptions: how many points will be redeemed and what each will cost. A 25-basis-point rise in the redemption rate and a 1-basis-point rise in cost per point would add about US$512 million. That charge would fall on card income, already down 14.13%.
Income taxes carry US$5.6 billion of unrecognized tax benefits. Of these, US$4.6 billion would lower the effective rate if recognized. U.S. federal years from 2011 onward are still under examination. In FY2025 the balance fell by US$1.27 billion for prior-period positions; the rate reconciliation shows US$387 million of that as lower tax expense.
Litigation adds a range of reasonably possible losses above reserves from zero to about US$1.2 billion; accruals by matter are not disclosed. The defined benefit plans are in surplus by US$8.9 billion, so they place no claim ahead of creditors.
The Apple Card allowance is a judgment of its own. The US$2.2 billion was booked on a commitment, not a loan, and is held in other liabilities. The company says it was "estimated based on certain forward-looking assumptions of the portfolio's risk characteristics and expected credit losses at the time of closing". Against the roughly US$23 billion of loans expected at closing, it equals about 9.6%, our arithmetic; it also covers the undrawn part of the US$104 billion exposure, so it is not comparable with the allowance on the Firm's own card loans. The company says it is still integrating the portfolio into its allowance model, so the figure will be revised.
One note points the other way. The Firm holds about 18.6 million Visa Class B-2 shares, convertible into Class A shares at a rate of 1.5108, carried at their "nominal carryover basis" because transfer restrictions remain. On February 13, 2026 Visa authorized a further exchange offer, with timing outside the Firm's control. In FY2024 a similar exchange produced the US$7.9 billion gain that now distorts the comparison. The document gives no fair value for these shares, and valuing them would need a market price this report does not use.
The notes shift the reading toward the credit estimate. A third of the allowance's size separates the central and adverse cases, and the year's largest single reserve addition was booked for exposure that is not yet on the balance sheet.
What did they do with the money, and do they say so when it goes badly?
James Dimon is Chairman and CEO, with a Lead Independent Director. PricewaterhouseCoopers has audited the Firm since 1965. Its fees rose 13.45% to US$135.0 million. The proxy, the 2026 statement covering FY2025, says the Board is working toward "an orderly CEO transition to take place in the medium-term". Directors and executive officers as a group own 0.32% of the shares. Mr. Dimon owns 6,266,647 shares, or 0.23%, worth US$2.02 billion at the supplied price. The proxy says he acquired them "through compensation and purchases on the open market", without a split between the two. Vanguard holds 9.86% and BlackRock 7.15%. The Related Persons Policy is described, and no transaction is quantified.
Over three years net income to common totaled US$161.2 billion. Of that, US$41.9 billion went to dividends and US$57.3 billion to buybacks net of shares reissued, together 61.51%. In FY2025 the share rose to 83.35%. The only acquisition, First Republic, cost US$9.9 billion of net cash in FY2023 and US$2.4 billion in FY2024. It produced a bargain gain rather than goodwill. Goodwill overall has not been written down beyond an immaterial amount. The remaining retained capital went into risk-weighted assets.
The cash map of FY2025 shows where the balance sheet money went. Deposits brought in US$153.2 billion and repurchase financing US$145.5 billion. Net long-term debt added US$12.7 billion, mostly Markets structured notes and Treasury issuance. On the other side, net other changes in loans held for investment absorbed US$188.5 billion, against US$57.6 billion of loan sales, and trading assets absorbed US$156.5 billion. Securities absorbed a net US$80.7 billion, and cash at banks fell by US$124.3 billion. Shareholders received US$31.6 billion in buybacks and US$16.6 billion in dividends paid. Funding from clients and markets, not retained earnings, paid for the growth; retained earnings paid for distributions.
| Buybacks | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Spend (US$ mn, excl. excise tax) | 31,640 | 18,841 | 9,898 |
| Shares (mn) | 114.4 | 91.7 | 69.5 |
| Average price (US$) | 276.55 | 205.46 | 142.42 |
| Price / year-end tangible book | 2.57x | 2.11x | 1.65x |
| Price / diluted EPS | 13.81x | 10.40x | 8.77x |
The 2025 average price was 14.17% below the year-end close of US$322.22. Quarterly average prices rose from US$252.50 in the first quarter to US$309.81 in the fourth. The more telling reading is across years. Spending more than tripled while the multiple paid rose from 1.65 to 2.57 times tangible book. The earnings yield bought fell from 11.40% to 7.24%. Buybacks rose with the price, not against it. They were financed by retained earnings and by letting the CET1 ratio fall 110 basis points. The US$50 billion authorization approved in July had US$33.4 billion left at year-end.
Dilution was covered. The Firm reissued 13.0 million shares to employees against 114.4 million bought, and period-end shares fell 3.62%. Share-based compensation cost US$3.6 billion, 6.34% of net income.
Adjusted measures exclude one recurring item. The company's "adjusted expense" leaves out legal expense, which appeared in every year: US$1,436 million in FY2023 and US$740 million in FY2024. It was US$361 million in FY2025, US$2.5 billion over the three years. The managed basis adds tax-equivalent revenue without changing net income. Neither adjustment touches the net income on which executive incentives are measured.
The document contains no adverse governance signal. Internal control was found effective, financial statements were not restated (only segment presentations were revised), and the proxy prohibits executives and directors from pledging shares.
The year's decisions read together point one way. The Firm moved cash at banks into securities and loans, as the cash map shows, and transferred securities to held-to-maturity (section 5). It authorized US$50 billion of buybacks. On December 30 it committed to buy a card portfolio with about US$104 billion of exposure, at a price the document does not disclose. Capital allocated to Corporate fell from US$120.9 billion to US$98.4 billion for 2026. CIB rose from US$149.5 billion to US$166.5 billion and CCB to US$61.5 billion. Unallocated capital and cash are being turned into duration, loans and an acquisition at the same time as the largest buybacks of the three years, which is why the CET1 ratio fell. Next year's balance sheet will show this as Apple Card RWA and as buyback pace against the remaining authorization.
The CEO's 2025 performance-year pay was US$43.0 million, of which US$36.5 million in performance share units. Those units pay on three-year average ROTCE, both absolute and relative to ten named banks. The absolute scale reaches maximum payout at 18% or more and pays nothing below 6%. If CET1 falls below 8% at a year-end, up to one-third of unvested units can be cut. ROTCE uses reported net income, so the adjusted measures do not enter it. Its denominator, tangible common equity, shrinks with every buyback. The incentive metric therefore rises mechanically when capital is returned; this is an observation about the formula, not about intentions.
On candor, the document admits wholesale charge-offs from "borrower fraud in certain secured lending facilities". It also records two loss days in Markets. The goodwill write-off appears only in a footnote, with no explanation, which is accounting rather than candor. Fund ratings fell, with 60% of rated assets at four or five stars against 69%, and are reported without comment. No sentence in the document says that a decision was wrong.
What would have to happen for capital to be lost permanently here?
The risks below are ranked by weight for this case, and come from the risk factors, the credit and capital disclosures and the litigation note.
The first three and the tenth are tied to the decisive questions; the others are tail risks the document names without sizing. Risks 2 and 3 are the ones already visible in the FY2025 numbers.
Compared with the FY2024 10-K, legal risk moved from the last category to the first, now headed "Legal and Regulatory". Litigation is now listed ahead of market risk. Two factors are new. One covers operational risk from "interconnectedness with clients, customers and other external parties". The other covers the effect of "advanced technologies such as AI" on competitive standing. The separate factor on immigration and travel policies was folded into a single workforce factor. Credit risk now names "other market participants" alongside central counterparties. The collateral factor no longer limits itself to "stressed market conditions", which widens the circumstances it describes.
Suppose that three years from now this investment has produced a permanent loss. The first mechanism is consumer losses outrunning reserves, measured today by the card figures in risk 1. The 30-day card delinquency rate, 2.16%, would move first.
The second mechanism is rates falling while deposits keep migrating to interest-bearing accounts. Today the net yield outside Markets is 3.75% and noninterest-bearing deposits are 24.10% of the total. The deposit margin in Banking & Wealth Management, 2.74%, would signal it first.
The third mechanism is a wholesale credit event concentrated in financial counterparties. Today exposure to asset managers is US$152.8 billion and to banks and finance companies US$75.7 billion. Criticized exposure, reported in risk 2, would rise first.
What did they promise, and what came of it?
The document declares six catalysts. The first is the Apple Card closing in about 24 months. The second is the fall in Apple advanced RWA from about US$110 billion to about US$30 billion, expected "in the near term". The Federal Reserve will notify the indicative stress capital buffer by June 30, 2026. A trial of interchange claims brought by several merchants that opted out of the class settlement is set for April 2026. US$33.4 billion of buyback authorization remains. The FY2026 outlook calls for about US$103 billion of net interest income and about US$105 billion of adjusted expense, with a card charge-off rate of about 3.4%. Two regulatory items also sit in the document. A final rule issued in November 2025 resets the enhanced leverage buffers of global systemically important banks to half of each bank's GSIB surcharge. A separate proposal would average stress test results over two years when setting the stress capital buffer. Both bear on the capital surplus that funds buybacks, and the document does not quantify either for the Firm. A further Visa exchange offer, authorized on February 13, 2026, could produce a gain on the 18.6 million Visa B-2 shares, with timing the Firm says it does not control. None of these controls the credit cycle or the rate path, which decide the second question.
This is the first year of coverage, so the comparison is with the outlook given in the FY2024 10-K.
| FY2025 item | Declared (FY2024 10-K) | Realized | Variance |
|---|---|---|---|
| Net interest income | about US$94.0 bn | US$95.9 bn managed (US$95.4 bn reported) | +US$1.9 bn |
| NII excluding Markets | about US$90.0 bn | US$92.6 bn | +US$2.6 bn |
| Adjusted expense | about US$95.0 bn | US$95.3 bn | +US$0.3 bn |
| Card net charge-off rate | about 3.60% | 3.31% | −0.29 pt |
All four landed on the favorable side or within a third of a billion. The outlook does not say whether net interest income is reported or managed, so both are shown. The FY2026 guidance implies Markets NII of about US$8 billion, against US$3.3 billion in FY2025, so the growth the company expects is again concentrated in Markets. On the same arithmetic, adjusted expense guided at about US$105 billion would be 10.20% above FY2025's US$95.3 billion. Guided net interest income would be 7.44% above the managed FY2025 figure. These are the company's numbers, not ours, and the FY2026 filing will show how each line compares with them.
The case rests on three questions; the document answers the first fully and the second and third only in part.
On the first question, the spread franchise held but did not grow. Net interest income outside Markets was flat at US$92.6 billion on more assets. The year's growth came from Markets using 20.83% more assets, from card balances at a higher yield and from asset fees. The reading holds if the net yield excluding Markets, now 3.75%, stops falling. It weakens if Markets revenue per dollar of assets keeps slipping below 2.62% while the balance sheet expands.
On the second, profit is reported after a conservative reserve build of US$4.4 billion. But the adverse case of US$10.7 billion is a third of the US$31.2 billion allowance, and the Apple Card commitment adds exposure before any revenue. The document gives the size of the sensitivity, not the phase of the cycle. The reading holds while card charge-offs stay near 3.31% and criticized wholesale exposure stops rising. It falls if either line moves the way it did in FY2024.
On the third, the Firm returned 83.35% of earnings and paid 2.57 times tangible book for its own stock, against 1.65 times two years earlier. Its CET1 ratio fell to 14.1% on the binding measure. At the supplied price a shareholder pays 3.00 times tangible book for a 19.96% ROTCE. The reading holds if capital generation keeps pace with RWA; the CET1 ratio and the remaining authorization will show whether it does.
What next year's filing will settle
- Net interest income excluding Markets — US$92.6 billion; net yield excluding Markets 3.75%. Whether the deposit franchise grows again or keeps compressing: the first question.
- Markets revenue per dollar of average Markets earning assets — 2.62% on US$1.36 trillion. Whether balance-sheet growth in Markets still earns its keep: the first question.
- Card net charge-off rate and card allowance — 3.31%; US$15.6 billion. How much of the profit is a credit-cycle position: the second question.
- Criticized wholesale exposure — US$48.5 billion. Whether FY2025's wholesale losses were isolated: the second question.
- CET1 ratio (advanced, binding) and buyback spend — 14.1%; US$31.6 billion at 2.57 times tangible book. Whether capital returns are sustained by capital generation: the third question.
This report is based on JPMorgan Chase & Co.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, signed February 13, 2026, with the FY2024 Form 10-K for comparison and the 2026 Proxy Statement. Multiples use the closing price of US$322.22 on December 31, 2025 and 2,697,032,375 shares outstanding on January 31, 2026, both supplied with the request and not taken from the filings. The report is for analysis only and does not constitute investment advice.
The full data table behind this report — every line item with its source in the filing and the arithmetic checks — is published separately: JPMorgan Chase & Co. FY2025 data table.