| Basis of Presentation (Policies) | 9 Months Ended |
| Sep. 30, 2022 |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | Basis of Presentation |
| Consolidation | Consolidation The firm consolidates entities in which the firm has a controlling financial interest. The firm determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (VIE). Voting Interest Entities. Voting interest entities are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the firm has a controlling majority voting interest in a voting interest entity, the entity is consolidated. Variable Interest Entities. A VIE is an entity that lacks one or more of the characteristics of a voting interest entity. The firm has a controlling financial interest in a VIE when the firm has a variable interest or interests that provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. See Note 17 for further information about VIEs. Equity-Method Investments. When the firm does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is generally accounted for at fair value by electing the fair value option available under U.S. GAAP. Significant influence generally exists when the firm owns 20% to 50% of the entity’s common stock or in-substance common stock. In certain cases, the firm applies the equity method of accounting to new investments that are strategic in nature or closely related to the firm’s principal business activities, when the firm has a significant degree of involvement in the cash flows or operations of the investee or when cost-benefit considerations are less significant. See Note 8 for further information about equity-method investments. |
| Use of Estimates | Use of Estimates Preparation of these consolidated financial statements requires management to make certain estimates and assumptions, the most important of which relate to fair value measurements, the allowance for credit losses on loans and lending commitments accounted for at amortized cost, discretionary compensation accruals, accounting for goodwill and identifiable intangible assets, provisions for losses that may arise from litigation and regulatory proceedings (including governmental investigations), and accounting for income taxes. These estimates and assumptions are based on the best available information, but actual results could be materially different. |
| Revenue Recognition | Revenue Recognition Financial Assets and Liabilities at Fair Value. Trading assets and liabilities and certain investments are carried at fair value either under the fair value option or in accordance with other U.S. GAAP. In addition, the firm has elected to account for certain of its loans and other financial assets and liabilities at fair value by electing the fair value option. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. Fair value gains or losses are generally included in market making or other principal transactions. See Note 4 for further information about fair value measurements. Revenue from Contracts with Clients. The firm recognizes revenue earned from contracts with clients for services, such as investment banking, investment management, and execution and clearing (contracts with clients), when the performance obligations related to the underlying transaction are completed. Revenues from contracts with clients represent approximately 45% of total non-interest revenues for the three months ended September 2022 (including approximately 90% of investment banking revenues, approximately 95% of investment management revenues and all commissions and fees) and approximately 45% of total non-interest revenues for the nine months ended September 2022 (including approximately 85% of investment banking revenues, approximately 95% of investment management revenues and all commissions and fees), and approximately 50% of total non-interest revenues for the three months ended September 2021 and approximately 40% for the nine months ended September 2021 (in each case, reflecting approximately 90% of investment banking revenues, approximately 95% of investment management revenues and all commissions and fees). See Note 25 for information about net revenues by business segment. Investment Banking Advisory. Fees from financial advisory assignments are recognized in revenues when the services related to the underlying transaction are completed under the terms of the assignment. Non-refundable deposits and milestone payments in connection with financial advisory assignments are recognized in revenues upon completion of the underlying transaction or when the assignment is otherwise concluded. Expenses associated with financial advisory assignments are recognized when incurred and are included in transaction based expenses. Client reimbursements for such expenses are included in investment banking revenues. Underwriting. Fees from underwriting assignments are recognized in revenues upon completion of the underlying transaction based on the terms of the assignment. Expenses associated with underwriting assignments are generally deferred until the related revenue is recognized or the assignment is otherwise concluded. Such expenses are included in transaction based expenses for completed assignments. Investment Management The firm earns management fees and incentive fees for investment management services, which are included in investment management revenues. The firm makes payments to brokers and advisors related to the placement of the firm’s investment funds (distribution fees), which are included in transaction based expenses. Management Fees. Management fees for mutual funds are calculated as a percentage of daily net asset value and are received monthly. Management fees for hedge funds and separately managed accounts are calculated as a percentage of month-end net asset value and are generally received quarterly. Management fees for private equity funds are calculated as a percentage of monthly invested capital or committed capital and are received quarterly, semi-annually or annually, depending on the fund. Management fees are recognized over time in the period the services are provided. Distribution fees paid by the firm are calculated based on either a percentage of the management fee, the investment fund’s net asset value or the committed capital. Such fees are included in transaction based expenses. Incentive Fees. Incentive fees are calculated as a percentage of a fund’s or separately managed account’s return, or excess return above a specified benchmark or other performance target. Incentive fees are generally based on investment performance over a twelve-month period or over the life of a fund. Fees that are based on performance over a twelve-month period are subject to adjustment prior to the end of the measurement period. For fees that are based on investment performance over the life of the fund, future investment underperformance may require fees previously distributed to the firm to be returned to the fund. Incentive fees earned from a fund or separately managed account are recognized when it is probable that a significant reversal of such fees will not occur, which is generally when such fees are no longer subject to fluctuations in the market value of investments held by the fund or separately managed account. Therefore, incentive fees recognized during the period may relate to performance obligations satisfied in previous periods. Commissions and Fees The firm earns commissions and fees from executing and clearing client transactions on stock, options and futures markets, as well as over-the-counter (OTC) transactions. Commissions and fees are recognized on the day the trade is executed. The firm also provides third-party research services to clients in connection with certain soft-dollar arrangements. Third-party research costs incurred by the firm in connection with such arrangements are presented net within commissions and fees. Remaining Performance Obligations Remaining performance obligations are services that the firm has committed to perform in the future in connection with its contracts with clients. The firm’s remaining performance obligations are generally related to its financial advisory assignments and certain investment management activities. Revenues associated with remaining performance obligations relating to financial advisory assignments cannot be determined until the outcome of the transaction. For the firm’s investment management activities, where fees are calculated based on the net asset value of the fund or separately managed account, future revenues associated with such remaining performance obligations cannot be determined as such fees are subject to fluctuations in the market value of investments held by the fund or separately managed account. |
| Transfers of Financial Assets | Transfers of Financial Assets Transfers of financial assets are accounted for as sales when the firm has relinquished control over the assets transferred. For transfers of financial assets accounted for as sales, any gains or losses are recognized in net revenues. Assets or liabilities that arise from the firm’s continuing involvement with transferred financial assets are initially recognized at fair value. For transfers of financial assets that are not accounted for as sales, the assets are generally included in trading assets and the transfer is accounted for as a collateralized financing, with the related interest expense recognized over the life of the transaction. See Note 11 for further information about transfers of financial assets accounted for as collateralized financings and Note 16 for further information about transfers of financial assets accounted for as sales. |
| Cash and Cash Equivalents | Cash and Cash Equivalents The firm defines cash equivalents as highly liquid overnight deposits held in the ordinary course of business. Cash and cash equivalents included cash and due from banks of $9.15 billion as of September 2022 and $10.14 billion as of December 2021. Cash and cash equivalents also included interest-bearing deposits with banks of $275.10 billion as of September 2022 and $250.90 billion as of December 2021. |
| Customer and Other Receivables | Customer and Other Receivables Customer and other receivables included receivables from customers and counterparties of $87.72 billion as of September 2022 and $103.82 billion as of December 2021, and receivables from brokers, dealers and clearing organizations of $77.70 billion as of September 2022 and $56.85 billion as of December 2021. Such receivables primarily consist of customer margin loans, receivables resulting from unsettled transactions and collateral posted in connection with certain derivative transactions. Substantially all of these receivables are accounted for at amortized cost net of any allowance for credit losses, which generally approximates fair value. As these receivables are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 through 10. Had these receivables been included in the firm’s fair value hierarchy, substantially all would have been classified in level 2 as of both September 2022 and December 2021. See Note 10 for further information about customer and other receivables accounted for at fair value under the fair value option. Interest on customer and other receivables is recognized over the life of the transaction and included in interest income. |
| Customer and Other Payables | Customer and Other Payables |
| Offsetting Assets and Liabilities | Offsetting Assets and Liabilities To reduce credit exposures on derivatives and securities financing transactions, the firm may enter into master netting agreements or similar arrangements (collectively, netting agreements) with counterparties that permit it to offset receivables and payables with such counterparties. A netting agreement is a contract with a counterparty that permits net settlement of multiple transactions with that counterparty, including upon the exercise of termination rights by a non-defaulting party. Upon exercise of such termination rights, all transactions governed by the netting agreement are terminated and a net settlement amount is calculated. In addition, the firm receives and posts cash and securities collateral with respect to its derivatives and securities financing transactions, subject to the terms of the related credit support agreements or similar arrangements (collectively, credit support agreements). An enforceable credit support agreement grants the non-defaulting party exercising termination rights the right to liquidate the collateral and apply the proceeds to any amounts owed. In order to assess enforceability of the firm’s right of setoff under netting and credit support agreements, the firm evaluates various factors, including applicable bankruptcy laws, local statutes and regulatory provisions in the jurisdiction of the parties to the agreement. Derivatives are reported on a net-by-counterparty basis (i.e., the net payable or receivable for derivative assets and liabilities for a given counterparty) in the consolidated balance sheets when a legal right of setoff exists under an enforceable netting agreement. Resale agreements and securities sold under agreements to repurchase (repurchase agreements) and securities borrowed and loaned transactions with the same term and currency are presented on a net-by-counterparty basis in the consolidated balance sheets when such transactions meet certain settlement criteria and are subject to netting agreements. |
| Share-based Compensation | Share-Based Compensation The cost of employee services received in exchange for a share-based award is generally measured based on the grant-date fair value of the award. Share-based awards that do not require future service (i.e., vested awards, including awards granted to retirement-eligible employees) are expensed immediately. Share-based awards that require future service are amortized over the relevant service period. Forfeitures are recorded when they occur. Cash dividend equivalents paid on restricted stock units (RSUs) are generally charged to retained earnings. If RSUs that require future service are forfeited, the related dividend equivalents originally charged to retained earnings are reclassified to compensation expense in the period in which forfeiture occurs. The firm generally issues new shares of common stock upon delivery of share-based awards. In certain cases, primarily related to conflicted employment (as outlined in the applicable award agreements), the firm may cash settle share-based compensation awards accounted for as equity instruments. For these awards, whose terms allow for cash settlement, additional paid-in capital is adjusted to the extent of the difference between the value of the award at the time of cash settlement and the grant-date value of the award. The tax effect related to the settlement of share-based awards is recorded in income tax benefit or expense. |
| Foreign Currency Translation | Foreign Currency Translation Assets and liabilities denominated in non-U.S. currencies are translated at rates of exchange prevailing on the date of the consolidated balance sheets and revenues and expenses are translated at average rates of exchange for the period. Foreign currency remeasurement gains or losses on transactions in nonfunctional currencies are recognized in earnings. Gains or losses on translation of the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included, net of hedges and taxes, in the consolidated statements of comprehensive income. |
| Recent Accounting Developments | Recent Accounting Developments Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 848). In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform — Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional relief from applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. In addition, in January 2021 the FASB issued ASU No. 2021-01, “Reference Rate Reform — Scope,” which clarified the scope of ASC 848 relating to contract modifications. The firm adopted these ASUs upon issuance and elected to apply the relief available to certain modified derivatives. The adoption of these ASUs did not have a material impact on the firm’s consolidated financial statements. Troubled Debt Restructurings and Vintage Disclosures (ASC 326) . In March 2022, the FASB issued ASU No. 2022-02, “Financial Instruments — Credit Losses (Topic 326) — Troubled Debt Restructurings and Vintage Disclosures.” This ASU eliminates the recognition and measurement guidance for troubled debt restructurings (TDRs) and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. This ASU also requires enhanced disclosure for loans that have been charged off. The ASU is effective in January 2023 under a prospective approach. Adoption of this ASU is not expected to have a material impact on the firm’s consolidated financial statements. Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for Platform Users (SAB 121) . In March 2022, the SEC staff issued SAB 121 (SAB 121) — “Accounting for obligations to safeguard crypto-assets an entity holds for platform users.” SAB 121 adds interpretive guidance requiring an entity to recognize a liability on its balance sheet to reflect the obligation to safeguard the crypto-assets held for its platform users, along with a corresponding asset. The firm adopted this guidance in June 2022 under a modified retrospective approach and adoption did not have a material impact on the firm’s consolidated financial statements. Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (ASC 820). |
| Fair Value Measurements | Fair Value Measurements The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The firm measures certain financial assets and liabilities as a portfolio (i.e., based on its net exposure to market and/or credit risks). The best evidence of fair value is a quoted price in an active market. If quoted prices in active markets are not available, fair value is determined by reference to prices for similar instruments, quoted prices or recent transactions in less active markets, or internally developed models that primarily use market-based or independently sourced inputs, including, but not limited to, interest rates, volatilities, equity or debt prices, foreign exchange rates, commodity prices, credit spreads and funding spreads (i.e., the spread or difference between the interest rate at which a borrower could finance a given financial instrument relative to a benchmark interest rate). U.S. GAAP has a three-level hierarchy for disclosure of fair value measurements. This hierarchy prioritizes inputs to the valuation techniques used to measure fair value, giving the highest priority to level 1 inputs and the lowest priority to level 3 inputs. A financial instrument’s level in this hierarchy is based on the lowest level of input that is significant to its fair value measurement. In evaluating the significance of a valuation input, the firm considers, among other factors, a portfolio’s net risk exposure to that input. The fair value hierarchy is as follows: Level 1. Inputs are unadjusted quoted prices in active markets to which the firm had access at the measurement date for identical, unrestricted assets or liabilities. Level 2. Inputs to valuation techniques are observable, either directly or indirectly. Level 3. One or more inputs to valuation techniques are significant and unobservable. The fair values for substantially all of the firm’s financial assets and liabilities are based on observable prices and inputs and are classified in levels 1 and 2 of the fair value hierarchy. Certain level 2 and level 3 financial assets and liabilities may require valuation adjustments that a market participant would require to arrive at fair value for factors, such as counterparty and the firm’s credit quality, funding risk, transfer restrictions, liquidity and bid/offer spreads. Valuation adjustments are generally based on market evidence. The valuation techniques and nature of significant inputs used to determine the fair value of the firm’s financial instruments are described below. See Notes 5 through 10 for further information about significant unobservable inputs used to value level 3 financial instruments. Valuation Techniques and Significant Inputs for Trading Cash Instruments, Investments and Loans Level 1. Level 1 instruments include U.S. government obligations, most non-U.S. government obligations, certain agency obligations, certain corporate debt instruments, certain money market instruments, certain other debt obligations and actively traded listed equities. These instruments are valued using quoted prices for identical unrestricted instruments in active markets. The firm defines active markets for equity instruments based on the average daily trading volume both in absolute terms and relative to the market capitalization for the instrument. The firm defines active markets for debt instruments based on both the average daily trading volume and the number of days with trading activity. Level 2. Level 2 instruments include certain non-U.S. government obligations, most agency obligations, most mortgage-backed loans and securities, most corporate debt instruments, most state and municipal obligations, most money market instruments, most other debt obligations, restricted or less liquid listed equities, certain private equities, commodities and certain lending commitments. Valuations of level 2 instruments can be verified to quoted prices, recent trading activity for identical or similar instruments, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g., indicative or executable) and the relationship of recent market activity to the prices provided from alternative pricing sources. Valuation adjustments are typically made to level 2 instruments (i) if the instrument is subject to transfer restrictions and/or (ii) for other premiums and liquidity discounts that a market participant would require to arrive at fair value. Valuation adjustments are generally based on market evidence. Level 3. Level 3 instruments have one or more significant valuation inputs that are not observable. Absent evidence to the contrary, level 3 instruments are initially valued at transaction price, which is considered to be the best initial estimate of fair value. Subsequently, the firm uses other methodologies to determine fair value, which vary based on the type of instrument. Valuation inputs and assumptions are changed when corroborated by substantive observable evidence, including values realized on sales. Valuation techniques of level 3 instruments vary by instrument, but are generally based on discounted cash flow techniques. The valuation techniques and the nature of significant inputs used to determine the fair values of each type of level 3 instrument are described below: Loans and Securities Backed by Commercial Real Estate Loans and securities backed by commercial real estate are directly or indirectly collateralized by a single property or a portfolio of properties, and may include tranches of varying levels of subordination. Significant inputs are generally determined based on relative value analyses and include: • Market yields implied by transactions of similar or related assets and/or current levels and changes in market indices, such as the CMBX (an index that tracks the performance of commercial mortgage bonds); • Transaction prices in both the underlying collateral and instruments with the same or similar underlying collateral; • A measure of expected future cash flows in a default scenario (recovery rates) implied by the value of the underlying collateral, which is mainly driven by current performance of the underlying collateral and capitalization rates. Recovery rates are expressed as a percentage of notional or face value of the instrument and reflect the benefit of credit enhancements on certain instruments; and • Timing of expected future cash flows (duration) which, in certain cases, may incorporate the impact of any loan forbearances and other unobservable inputs (e.g., prepayment speeds). Loans and Securities Backed by Residential Real Estate Loans and securities backed by residential real estate are directly or indirectly collateralized by portfolios of residential real estate and may include tranches of varying levels of subordination. Significant inputs are generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral and risk profiles. Significant inputs include: • Market yields implied by transactions of similar or related assets; • Transaction prices in both the underlying collateral and instruments with the same or similar underlying collateral; • Cumulative loss expectations, driven by default rates, home price projections, residential property liquidation timelines, related costs and subsequent recoveries; and • Duration, driven by underlying loan prepayment speeds and residential property liquidation timelines. Corporate Debt Instruments Corporate debt instruments includes corporate loans, debt securities and convertible debentures. Significant inputs for corporate debt instruments are generally determined based on relative value analyses, which incorporate comparisons both to prices of credit default swaps that reference the same or similar underlying instrument or entity and to other debt instruments for the same or similar issuer for which observable prices or broker quotations are available. Significant inputs include: • Market yields implied by transactions of similar or related assets and/or current levels and trends of market indices, such as the CDX (an index that tracks the performance of corporate credit); • Current performance and recovery assumptions and, where the firm uses credit default swaps to value the related instrument, the cost of borrowing the underlying reference obligation; • Duration; and • Market and transaction multiples for corporate debt instruments with convertibility or participation options. Equity Securities Equity securities consists of private equities. Recent third-party completed or pending transactions (e.g., merger proposals, debt restructurings, tender offers) are considered the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate: • Industry multiples (primarily EBITDA and revenue multiples) and public comparables; • Transactions in similar instruments; • Discounted cash flow techniques; and • Third-party appraisals. The firm also considers changes in the outlook for the relevant industry and financial performance of the issuer as compared to projected performance. Significant inputs include: • Market and transaction multiples; • Discount rates and capitalization rates; and • For equity securities with debt-like features, market yields implied by transactions of similar or related assets, current performance and recovery assumptions, and duration. Other Trading Cash Instruments, Investments and Loans The significant inputs to the valuation of other instruments, such as non-U.S. government and agency obligations, state and municipal obligations, and other loans and debt obligations are generally determined based on relative value analyses, which incorporate comparisons both to prices of credit default swaps that reference the same or similar underlying instrument or entity and to other debt instruments for the same issuer for which observable prices or broker quotations are available. Significant inputs include: • Market yields implied by transactions of similar or related assets and/or current levels and trends of market indices; • Current performance and recovery assumptions and, where the firm uses credit default swaps to value the related instrument, the cost of borrowing the underlying reference obligation; and • Duration. Valuation Techniques and Significant Inputs for Derivatives The firm’s level 2 and level 3 derivatives are valued using derivative pricing models (e.g., discounted cash flow models, correlation models and models that incorporate option pricing methodologies, such as Monte Carlo simulations). Price transparency of derivatives can generally be characterized by product type, as described below. • Interest Rate. In general, the key inputs used to value interest rate derivatives are transparent, even for most long-dated contracts. Interest rate swaps and options denominated in the currencies of leading industrialized nations are characterized by high trading volumes and tight bid/offer spreads. Interest rate derivatives that reference indices, such as an inflation index, or the shape of the yield curve (e.g., 10-year swap rate vs. 2-year swap rate) are more complex, but the key inputs are generally observable. • Credit. Price transparency for credit default swaps, including both single names and baskets of credits, varies by market and underlying reference entity or obligation. Credit default swaps that reference indices, large corporates and major sovereigns generally exhibit the most price transparency. For credit default swaps with other underliers, price transparency varies based on credit rating, the cost of borrowing the underlying reference obligations, and the availability of the underlying reference obligations for delivery upon the default of the issuer. Credit default swaps that reference loans, asset-backed securities and emerging market debt instruments tend to have less price transparency than those that reference corporate bonds. In addition, more complex credit derivatives, such as those sensitive to the correlation between two or more underlying reference obligations, generally have less price transparency. • Currency. Prices for currency derivatives based on the exchange rates of leading industrialized nations, including those with longer tenors, are generally transparent. The primary difference between the price transparency of developed and emerging market currency derivatives is that emerging markets tend to be only observable for contracts with shorter tenors. • Commodity. Commodity derivatives include transactions referenced to energy (e.g., oil, natural gas and electricity), metals (e.g., precious and base) and soft commodities (e.g., agricultural). Price transparency varies based on the underlying commodity, delivery location, tenor and product quality (e.g., diesel fuel compared to unleaded gasoline). In general, price transparency for commodity derivatives is greater for contracts with shorter tenors and contracts that are more closely aligned with major and/or benchmark commodity indices. • Equity. Price transparency for equity derivatives varies by market and underlier. Options on indices and the common stock of corporates included in major equity indices exhibit the most price transparency. Equity derivatives generally have observable market prices, except for contracts with long tenors or reference prices that differ significantly from current market prices. More complex equity derivatives, such as those sensitive to the correlation between two or more individual stocks, generally have less price transparency. Liquidity is essential to the observability of all product types. If transaction volumes decline, previously transparent prices and other inputs may become unobservable. Conversely, even highly structured products may at times have trading volumes large enough to provide observability of prices and other inputs. Level 1. Level 1 derivatives include short-term contracts for future delivery of securities when the underlying security is a level 1 instrument, and exchange-traded derivatives if they are actively traded and are valued at their quoted market price. Level 2. Level 2 derivatives include OTC derivatives for which all significant valuation inputs are corroborated by market evidence and exchange-traded derivatives that are not actively traded and/or that are valued using models that calibrate to market-clearing levels of OTC derivatives. The selection of a particular model to value a derivative depends on the contractual terms of and specific risks inherent in the instrument, as well as the availability of pricing information in the market. For derivatives that trade in liquid markets, model selection does not involve significant management judgment because outputs of models can be calibrated to market-clearing levels. Valuation models require a variety of inputs, such as contractual terms, market prices, yield curves, discount rates (including those derived from interest rates on collateral received and posted as specified in credit support agreements for collateralized derivatives), credit curves, measures of volatility, prepayment rates, loss severity rates and correlations of such inputs. Significant inputs to the valuations of level 2 derivatives can be verified to market transactions, broker or dealer quotations or other alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g., indicative or executable) and the relationship of recent market activity to the prices provided from alternative pricing sources. Level 3 . Level 3 derivatives are valued using models which utilize observable level 1 and/or level 2 inputs, as well as unobservable level 3 inputs. The significant unobservable inputs used to value the firm’s level 3 derivatives are described below. • For level 3 interest rate and currency derivatives, significant unobservable inputs include correlations of certain currencies and interest rates (e.g., the correlation between Euro inflation and Euro interest rates) and specific interest rate and currency volatilities. • For level 3 credit derivatives, significant unobservable inputs include illiquid credit spreads and upfront credit points, which are unique to specific reference obligations and reference entities, and recovery rates. • For level 3 commodity derivatives, significant unobservable inputs include volatilities for options with strike prices that differ significantly from current market prices and prices or spreads for certain products for which the product quality or physical location of the commodity is not aligned with benchmark indices. • For level 3 equity derivatives, significant unobservable inputs generally include equity volatility inputs for options that are long-dated and/or have strike prices that differ significantly from current market prices. In addition, the valuation of certain structured trades requires the use of level 3 correlation inputs, such as the correlation of the price performance of two or more individual stocks or the correlation of the price performance for a basket of stocks to another asset class, such as commodities. Subsequent to the initial valuation of a level 3 derivative, the firm updates the level 1 and level 2 inputs to reflect observable market changes and any resulting gains and losses are classified in level 3. Level 3 inputs are changed when corroborated by evidence, such as similar market transactions, third-party pricing services and/or broker or dealer quotations or other empirical market data. In circumstances where the firm cannot verify the model value by reference to market transactions, it is possible that a different valuation model could produce a materially different estimate of fair value. See Note 7 for further information about significant unobservable inputs used in the valuation of level 3 derivatives. Valuation Adjustments. Valuation adjustments are integral to determining the fair value of derivative portfolios and are used to adjust the mid-market valuations produced by derivative pricing models to the exit price valuation. These adjustments incorporate bid/offer spreads, the cost of liquidity, and credit and funding valuation adjustments, which account for the credit and funding risk inherent in the uncollateralized portion of derivative portfolios. The firm also makes funding valuation adjustments to collateralized derivatives where the terms of the agreement do not permit the firm to deliver or repledge collateral received. Market-based inputs are generally used when calibrating valuation adjustments to market-clearing levels. In addition, for derivatives that include significant unobservable inputs, the firm makes model or exit price adjustments to account for the valuation uncertainty present in the transaction. Valuation Techniques and Significant Inputs for Other Financial Instruments at Fair Value In addition to trading cash instruments, derivatives, and certain investments and loans, the firm accounts for certain of its other financial assets and liabilities at fair value under the fair value option. Such instruments include resale and repurchase agreements; certain securities borrowed and loaned transactions; certain customer and other receivables, including certain margin loans; certain time deposits, including structured certificates of deposit, which are hybrid financial instruments; substantially all other secured financings, including transfers of assets accounted for as financings; certain unsecured short- and long-term borrowings, substantially all of which are hybrid financial instruments; and certain other liabilities. These instruments are generally valued based on discounted cash flow techniques, which incorporate inputs with reasonable levels of price transparency, and are generally classified in level 2 because the inputs are observable. Valuation adjustments may be made for liquidity and for counterparty and the firm’s credit quality. The significant inputs used to value the firm’s other financial instruments are described below. Resale and Repurchase Agreements and Securities Borrowed and Loaned. The significant inputs to the valuation of resale and repurchase agreements and securities borrowed and loaned are funding spreads, the amount and timing of expected future cash flows and interest rates. Customer and Other Receivables. The significant inputs to the valuation of receivables are interest rates, the amount and timing of expected future cash flows and funding spreads. Deposits. The significant inputs to the valuation of time deposits are interest rates and the amount and timing of future cash flows. The inputs used to value the embedded derivative component of hybrid financial instruments are consistent with the inputs used to value the firm’s other derivative instruments described above. See Note 7 for further information about derivatives and Note 13 for further information about deposits. Other Secured Financings. The significant inputs to the valuation of other secured financings are the amount and timing of expected future cash flows, interest rates, funding spreads and the fair value of the collateral delivered by the firm (determined using the amount and timing of expected future cash flows, market prices, market yields and recovery assumptions). See Note 11 for further information about other secured financings. Unsecured Short- and Long-Term Borrowings. The significant inputs to the valuation of unsecured short- and long-term borrowings are the amount and timing of expected future cash flows, interest rates, the credit spreads of the firm and commodity prices for prepaid commodity transactions. The inputs used to value the embedded derivative component of hybrid financial instruments are consistent with the inputs used to value the firm’s other derivative instruments described above. See Note 7 for further information about derivatives and Note 14 for further information about borrowings. Other Liabilities. |
| Trading Assets and Liabilities | Trading Assets and Liabilities Trading assets and liabilities include trading cash instruments and derivatives held in connection with the firm’s market-making or risk management activities. These assets and liabilities are carried at fair value either under the fair value option or in accordance with other U.S. GAAP, and the related fair value gains and losses are generally recognized in the consolidated statements of earnings. |
| Trading Cash Instruments | Trading Cash Instruments Trading cash instruments consists of instruments held in connection with the firm’s market-making or risk management activities. These instruments are carried at fair value and the related fair value gains and losses are recognized in the consolidated statements of earnings. |
| Hedge Accounting | Hedge Accounting The firm applies hedge accounting for (i) interest rate swaps used to manage the interest rate exposure of certain fixed-rate unsecured long- and short-term borrowings and certain fixed-rate certificates of deposit and certain U.S. government securities classified as available-for-sale, (ii) foreign exchange forward contracts used to manage the foreign exchange risk of certain available-for-sale securities, (iii) foreign currency forward contracts and foreign currency-denominated debt used to manage foreign currency exposures on the firm’s net investment in certain non-U.S. operations and (iv) commodity futures contracts used to manage the price risk of certain commodities. To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged. Additionally, the firm must formally document the hedging relationship at inception and assess the hedging relationship at least on a quarterly basis to ensure the hedging instrument continues to be highly effective over the life of the hedging relationship. Fair Value Hedges The firm designates interest rate swaps as fair value hedges of certain fixed-rate unsecured long- and short-term debt and fixed-rate certificates of deposit, and beginning in the second quarter of 2022, of certain U.S. government securities classified as available-for-sale. These interest rate swaps hedge changes in fair value attributable to the designated benchmark interest rate (e.g., London Interbank Offered Rate (LIBOR), Secured Overnight Financing Rate (SOFR) or Overnight Index Swap Rate), effectively converting a substantial portion of these fixed-rate financial instruments into floating-rate financial instruments. The firm applies a statistical method that utilizes regression analysis when assessing the effectiveness of these hedging relationships in achieving offsetting changes in the fair values of the hedging instrument and the risk being hedged (i.e., interest rate risk). An interest rate swap is considered highly effective in offsetting changes in fair value attributable to changes in the hedged risk when the regression analysis results in a coefficient of determination of 80% or greater and a slope between 80% and 125%. For qualifying interest rate fair value hedges, gains or losses on derivatives are included in interest income/expense. The change in fair value of the hedged items attributable to the risk being hedged is reported as an adjustment to its carrying value (hedging adjustment) and is also included in interest income/expense. When a derivative is no longer designated as a hedge, any remaining difference between the carrying value and par value of the hedged item is amortized in interest income/expense over the remaining life of the hedged item using the effective interest method. See Note 23 for further information about interest income and interest expense. The table below presents the gains/(losses) from interest rate derivatives accounted for as hedges and the related hedged items. Three Months Nine Months $ in millions 2022 2021 2022 2021 Investments Interest rate hedges $ 427 $ — $ 372 $ — Hedged investments (409) — (357) — Gains/(losses) $ 18 $ — $ 15 $ — Borrowings and deposits Interest rate hedges $ (7,820) $ (1,528) $ (22,629) $ (5,459) Hedged borrowings and deposits 7,741 1,365 22,279 4,991 Gains/(losses) $ (79) $ (163) $ (350) $ (468) The table below presents the carrying value of investments, deposits and unsecured borrowings that are designated in an interest rate hedging relationship and the related cumulative hedging adjustment (increase/(decrease)) from current and prior hedging relationships included in such carrying values. $ in millions Carrying Value Cumulative Hedging Adjustment As of September 2022 Assets Investments $ 10,174 $ (358) Liabilities Deposits $ 7,391 $ (297) Unsecured short-term borrowings $ 7,553 $ (59) Unsecured long-term borrowings $ 150,553 $ (15,395) As of December 2021 Liabilities Deposits $ 14,131 $ 246 Unsecured short-term borrowings $ 2,167 $ 5 Unsecured long-term borrowings $ 144,934 $ 6,169 In the table above: • Cumulative hedging adjustment included $5.10 billion as of September 2022 and $5.91 billion as of December 2021 of hedging adjustments from prior hedging relationships that were de-designated and substantially all were related to unsecured long-term borrowings. • The amortized cost of investments was $10.93 billion as of September 2022. In addition, cumulative hedging adjustments for items no longer designated in a hedging relationship were $149 million as of September 2022 and $68 million as of December 2021 and were substantially all related to unsecured long-term borrowings. The firm designates foreign exchange forward contracts as fair value hedges of the foreign exchange risk of non-U.S. government securities classified as available-for-sale. See Note 8 for information about the amortized cost and fair value of such securities. The effectiveness of such hedges is assessed based on changes in spot rates. The gains/(losses) on the hedges (relating to both spot and forward points) and the foreign exchange gains/(losses) on the related available-for-sale securities are included in market making. The net gains/(losses) on hedges and related available-for-sale securities were $3 million (reflecting a gain of $189 million related to hedges and a loss of $186 million on the related hedged available-for-sale securities) for the three months ended September 2022 and were $(25) million (reflecting a gain of $425 million related to hedges and a loss of $450 million on the related hedged available-for-sale securities) for the nine months ended September 2022. The gross and net gains/(losses) were not material for both the three and nine months ended September 2021. The firm designates commodity futures contracts as fair value hedges of the price risk of certain precious metals included in commodities within trading assets. As of September 2022, the carrying value of such commodities was $627 million and the amortized cost was $664 million, and as of December 2021, the carrying value was $1.05 billion and the amortized cost was $1.02 billion. Changes in spot rates of such commodities are reflected as an adjustment to their carrying value, and the related gains/(losses) on both the commodities and the designated futures contracts are included in market making. The contractual forward points on the designated futures contracts are amortized into earnings ratably over the life of the contract and other gains/(losses) as a result of changes in the forward points are included in other comprehensive income/(loss). The cumulative hedging adjustment was not material as of both September 2022 and December 2021, and the related gains/(losses) were not material for each of the three and nine months ended September 2022 and September 2021. Net Investment Hedges The firm seeks to reduce the impact of fluctuations in foreign exchange rates on its net investments in certain non-U.S. operations through the use of foreign currency forward contracts and foreign currency-denominated debt. For foreign currency forward contracts designated as hedges, the effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts (i.e., based on changes in forward rates). For foreign currency-denominated debt designated as a hedge, the effectiveness of the hedge is assessed based on changes in spot rates. For qualifying net investment hedges, all gains or losses on the hedging instruments are included in currency translation. The table below presents the gains/(losses) from net investment hedging. Three Months Nine Months $ in millions 2022 2021 2022 2021 Hedges: Foreign currency forward contract $ 1,097 $ 373 $ 2,310 $ 600 Foreign currency-denominated debt $ 551 $ 31 $ 1,147 $ 290 |
| Investments | Investments includes debt instruments and equity securities that are accounted for at fair value and are generally held by the firm in connection with its long-term investing activities. In addition, investments includes debt securities classified as available-for-sale and held-to-maturity that are generally held in connection with the firm’s asset-liability management activities. Investments also consists of equity securities that are accounted for under the equity method. The table below presents information about investments. As of September December $ in millions 2022 2021 Equity securities, at fair value $ 15,359 $ 18,937 Debt instruments, at fair value 14,096 15,558 Available-for-sale securities, at fair value 48,125 48,932 Investments, at fair value 77,580 83,427 Held-to-maturity securities 48,549 4,699 Equity method investments 834 593 Total investments $ 126,963 $ 88,719 Equity Securities and Debt Instruments, at Fair Value Equity securities and debt instruments, at fair value are accounted for at fair value either under the fair value option or in accordance with other U.S. GAAP, and the related fair value gains and losses are recognized in the consolidated statements of earnings. Equity Securities, at Fair Value. Equity securities, at fair value consists of the firm’s public and private equity investments in corporate and real estate entities. The table below presents information about equity securities, at fair value. As of September December $ in millions 2022 2021 Equity securities, at fair value $ 15,359 $ 18,937 Equity Type Public equity 17 % 24 % Private equity 83 % 76 % Total 100 % 100 % Asset Class Corporate 73 % 78 % Real estate 27 % 22 % Total 100 % 100 % In the table above: • Equity securities, at fair value included investments accounted for at fair value under the fair value option where the firm would otherwise apply the equity method of accounting of $5.07 billion as of September 2022 and $5.81 billion as of December 2021. Gains/(losses) recognized as a result of changes in the fair value of equity securities for which the fair value option was elected were $(118) million for the three months ended September 2022, $177 million for the three months ended September 2021, $(189) million for the nine months ended September 2022 and $1.81 billion for the nine months ended September 2021. These gains/(losses) are included in other principal transactions. • Equity securities, at fair value included $1.33 billion as of September 2022 and $1.80 billion as of December 2021 of investments in funds that are measured at NAV. Debt Instruments, at Fair Value. Debt instruments, at fair value primarily includes mezzanine, senior and distressed debt. The table below presents information about debt instruments, at fair value. As of September December $ in millions 2022 2021 Corporate debt securities $ 9,828 $ 9,793 Securities backed by real estate 1,316 2,280 Money market instruments 1,002 1,396 Other 1,950 2,089 Total $ 14,096 $ 15,558 In the table above: • Money market instruments primarily includes time deposits and investments in money market funds. • Other included $1.64 billion as of September 2022 and $1.67 billion as of December 2021 of investments in credit funds that are measured at NAV. Investments in Funds at Net Asset Value Per Share. Equity securities and debt instruments, at fair value include investments in funds that are measured at NAV of the investment fund. The firm uses NAV to measure the fair value of fund investments when (i) the fund investment does not have a readily determinable fair value and (ii) the NAV of the investment fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the investments at fair value. Substantially all of the firm’s investments in funds at NAV consist of investments in firm-sponsored private equity, credit, real estate and hedge funds where the firm co-invests with third-party investors. Private equity funds primarily invest in a broad range of industries worldwide, including leveraged buyouts, recapitalizations, growth investments and distressed investments. Credit funds generally invest in loans and other fixed income instruments and are focused on providing private high-yield capital for leveraged and management buyout transactions, recapitalizations, financings, refinancings, acquisitions and restructurings for private equity firms, private family companies and corporate issuers. Real estate funds invest globally, primarily in real estate companies, loan portfolios, debt recapitalizations and property. Private equity, credit and real estate funds are closed-end funds in which the firm’s investments are generally not eligible for redemption. Distributions will be received from these funds as the underlying assets are liquidated or distributed, the timing of which is uncertain. The firm also invests in hedge funds, primarily multi-disciplinary hedge funds that employ a fundamental bottom-up investment approach across various asset classes and strategies. The firm’s investments in hedge funds primarily include interests where the underlying assets are illiquid in nature, and proceeds from redemptions will not be received until the underlying assets are liquidated or distributed, the timing of which is uncertain. Private equity and hedge funds, in which the firm is invested, include “covered funds” as defined in the Volcker Rule of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Substantially all of the credit and real estate funds, in which the firm is invested, are not covered funds. As of September 2022, the firm’s total investments in funds at NAV included investments of approximately $400 million (net of the firm’s share of cash in the funds) in certain legacy “illiquid funds” (as defined in the Volcker Rule) for which the firm conformed by restructuring these funds to be non-covered funds as liquidating trusts by July 2022. However, based on recent interpretations of the covered fund provisions of the Volcker Rule, the firm may be required to seek an additional extension from the Board of Governors of the Federal Reserve System (FRB) to bring these funds into conformance. If the firm does not receive any required extensions or conform by the end of any extensions received, the firm may be required to sell such interests. If that occurs, the firm may receive a value for its interests that is less than the then carrying value as there could be a limited secondary market for these investments and the firm may be unable to sell them in orderly transactions. The table below presents the fair value of investments in funds at NAV and the related unfunded commitments. $ in millions Fair Value of Investments Unfunded Commitments As of September 2022 Private equity funds $ 955 $ 589 Credit funds 1,649 417 Hedge funds 70 — Real estate funds 297 129 Total $ 2,971 $ 1,135 As of December 2021 Private equity funds $ 1,411 $ 619 Credit funds 1,686 556 Hedge funds 84 — Real estate funds 288 147 Total $ 3,469 $ 1,322 Available-for-Sale Securities Available-for-sale securities are accounted for at fair value, and the related unrealized fair value gains and losses are included in accumulated other comprehensive income/(loss) unless designated in a fair value hedging relationship. See Note 7 for information about available-for-sale securities that are designated in a hedging relationship. The table below presents information about available-for-sale securities by tenor. $ in millions Amortized Cost Fair Value Weighted Average Yield As of September 2022 Less than 1 year $ 2,353 $ 2,295 0.24 % 1 year to 5 years 46,366 43,125 0.65 % 5 years to 10 years 830 776 2.14 % Total U.S. government obligations 49,549 46,196 0.65 % 1 year to 5 years 9 9 0.28 % 5 years to 10 years 2,461 1,920 0.40 % Total non-U.S. government obligations 2,470 1,929 0.40 % Total available-for-sale securities $ 52,019 $ 48,125 0.64 % As of December 2021 Less than 1 year $ 25 $ 25 0.12 % 1 year to 5 years 41,536 41,066 0.47 % 5 years to 10 years 5,337 5,229 0.92 % Greater than 10 years 2 2 2.00 % Total U.S. government obligations 46,900 46,322 0.53 % 5 years to 10 years 2,693 2,610 0.33 % Total non-U.S. government obligations 2,693 2,610 0.33 % Total available-for-sale securities $ 49,593 $ 48,932 0.52 % In the table above: • Available-for-sale securities were classified in level 1 of the fair value hierarchy as of both September 2022 and December 2021. • The weighted average yield for available-for-sale securities is presented on a pre-tax basis and computed using the effective interest rate of each security at the end of the period, weighted based on the fair value of each security. • The gross unrealized gains included in accumulated other comprehensive income/(loss) were not material and the gross unrealized losses included in accumulated other comprehensive income/(loss) were $3.89 billion as of September 2022 and primarily related to U.S. government obligations in a continuous unrealized loss position for more than a year. The gross unrealized gains included in accumulated other comprehensive income/(loss) were $118 million and the gross unrealized losses included in accumulated other comprehensive income/(loss) were $779 million as of December 2021 and primarily related to U.S. government obligations in a continuous unrealized loss position for less than a year. Net unrealized losses included in other comprehensive income/(loss) were $836 million ($615 million, net of tax) for the three months ended September 2022, $152 million ($114 million, net of tax) for the three months ended September 2021, $3.23 billion ($2.41 billion, net of tax) for the nine months ended September 2022 and $880 million ($658 million, net of tax) for the nine months ended September 2021. • If the fair value of available-for-sale securities is less than amortized cost, such securities are considered impaired. If the firm has the intent to sell the debt security, or if it is more likely than not that the firm will be required to sell the debt security before recovery of its amortized cost, the difference between the amortized cost (net of allowance, if any) and the fair value of the securities is recognized as an impairment loss in earnings. The firm did not record any such impairment losses during either the three or nine months ended September 2022 or September 2021. Impaired available-for-sale debt securities that the firm has the intent and ability to hold are reviewed to determine if an allowance for credit losses should be recorded. The firm considers various factors in such determination, including market conditions, changes in issuer credit ratings and severity of the unrealized losses. The firm did not record any provision for credit losses on such securities during either the three or nine months ended September 2022 or September 2021. The table below presents gross realized gains and the proceeds from the sales of available-for-sale securities. Three Months Nine Months $ in millions 2022 2021 2022 2021 Gross realized gains $ — $ 54 $ — $ 187 Proceeds from sales $ — $ 11,467 $ 2 $ 24,882 In the table above, the realized gains were reclassified from accumulated other comprehensive income/(loss) to other principal transactions in the consolidated statements of earnings. Fair Value of Investments by Level The table below presents investments accounted for at fair value by level within the fair value hierarchy. $ in millions Level 1 Level 2 Level 3 Total As of September 2022 Government and agency obligations: U.S. $ 46,196 $ — $ — $ 46,196 Non-U.S. 1,921 20 — 1,941 Corporate debt securities 160 2,930 6,738 9,828 Securities backed by real estate — 404 912 1,316 Money market instruments 24 978 — 1,002 Other debt obligations — 8 284 292 Equity securities 1,974 3,040 9,020 14,034 Subtotal $ 50,275 $ 7,380 $ 16,954 $ 74,609 Investments in funds at NAV 2,971 Total investments $ 77,580 As of December 2021 Government and agency obligations: U.S. $ 46,322 $ — $ — $ 46,322 Non-U.S. 2,612 — — 2,612 Corporate debt securities 65 5,201 4,527 9,793 Securities backed by real estate — 1,202 1,078 2,280 Money market instruments 41 1,355 — 1,396 Other debt obligations — 35 382 417 Equity securities 2,135 7,088 7,915 17,138 Subtotal $ 51,175 $ 14,881 $ 13,902 $ 79,958 Investments in funds at NAV 3,469 Total investments $ 83,427 See Note 4 for an overview of the firm’s fair value measurement policies and the valuation techniques and significant inputs used to determine the fair value of investments. Significant Unobservable Inputs The table below presents the amount of level 3 investments, and ranges and weighted averages of significant unobservable inputs used to value such investments. As of September 2022 As of December 2021 $ in millions Amount or Range Weighted Amount or Range Weighted Corporate debt securities Level 3 assets $ 6,738 $ 4,527 Yield 2.0% to 21.8% 11.8 % 2.0% to 29.0% 10.8 % Recovery rate 9.1% to 78.5% 51.7 % 9.1% to 76.0% 59.1 % Duration (years) 1.2 to 5.5 3.9 1.4 to 6.4 3.8 Multiples 1.9x to 66.5x 7.8x 0.5x to 28.2x 6.9x Securities backed by real estate Level 3 assets $ 912 $ 1,078 Yield 8.3% to 23.3% 15.4 % 8.3% to 20.3% 13.1 % Recovery rate N/A N/A 55.1% to 61.0% 56.4 % Duration (years) 1.0 to 4.2 4.1 0.1 to 2.6 1.2 Other debt obligations Level 3 assets $ 284 $ 382 Yield 5.0% to 20.0% 7.1 % 2.3% to 10.6% 3.2 % Duration (years) 0.4 to 1.5 1.3 0.9 to 9.3 4.8 Equity securities Level 3 assets $ 9,020 $ 7,915 Multiples 0.4x to 34.4x 9.0x 0.4x to 30.5x 10.1x Discount rate/yield 6.0% to 38.5% 14.7 % 2.0% to 35.0% 14.1 % Capitalization rate 4.0% to 10.8% 5.4 % 3.5% to 14.0% 5.7 % In the table above: • Ranges represent the significant unobservable inputs that were used in the valuation of each type of investment. • Weighted averages are calculated by weighting each input by the relative fair value of the investment. • The ranges and weighted averages of these inputs are not representative of the appropriate inputs to use when calculating the fair value of any one investment. For example, the highest multiple for private equity securities is appropriate for valuing a specific private equity security but may not be appropriate for valuing any other private equity security. Accordingly, the ranges of inputs do not represent uncertainty in, or possible ranges of, fair value measurements of level 3 investments. • Increases in yield, discount rate, capitalization rate or duration used in the valuation of level 3 investments would have resulted in a lower fair value measurement, while increases in recovery rate or multiples would have resulted in a higher fair value measurement as of both September 2022 and December 2021. Due to the distinctive nature of each level 3 investment, the interrelationship of inputs is not necessarily uniform within each product type. • Corporate debt securities, securities backed by real estate and other debt obligations are valued using discounted cash flows, and equity securities are valued using market comparables and discounted cash flows. • The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparables and discounted cash flows may be used together to determine fair value. Therefore, the level 3 balance encompasses both of these techniques. • The significant unobservable inputs for recovery rate related to securities backed by real estate as of September 2022 did not have a range (and there was no weighted average) as they pertained to a single position. Therefore, such unobservable inputs are not included in the table above. Level 3 Rollforward The table below presents a summary of the changes in fair value for level 3 investments. Three Months Nine Months $ in millions 2022 2021 2022 2021 Beginning balance $ 16,109 $ 16,332 $ 13,902 $ 16,423 Net realized gains/(losses) 103 78 428 184 Net unrealized gains/(losses) (407) 155 (1,828) 1,244 Purchases 445 496 1,385 1,467 Sales (236) (478) (741) (1,070) Settlements (272) (831) (1,461) (2,421) Transfers into level 3 1,687 806 6,425 1,843 Transfers out of level 3 (475) (2,879) (1,156) (3,991) Ending balance $ 16,954 $ 13,679 $ 16,954 $ 13,679 In the table above: • Changes in fair value are presented for all investments that are classified in level 3 as of the end of the period. • Net unrealized gains/(losses) relates to investments that were still held at period-end. • Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. If an investment was transferred to level 3 during a reporting period, its entire gain or loss for the period is classified in level 3. • For level 3 investments, increases are shown as positive amounts, while decreases are shown as negative amounts. The table below presents information, by product type, for investments included in the summary table above. Three Months Nine Months $ in millions 2022 2021 2022 2021 Corporate debt securities Beginning balance $ 6,576 $ 4,958 $ 4,527 $ 5,286 Net realized gains/(losses) 69 33 224 150 Net unrealized gains/(losses) (111) 47 (297) 302 Purchases 137 101 624 374 Sales (78) (204) (151) (383) Settlements (143) (601) (810) (1,254) Transfers into level 3 659 529 2,944 1,120 Transfers out of level 3 (371) (586) (323) (1,318) Ending balance $ 6,738 $ 4,277 $ 6,738 $ 4,277 Securities backed by real estate Beginning balance $ 1,067 $ 1,117 $ 1,078 $ 998 Net realized gains/(losses) 7 12 21 29 Net unrealized gains/(losses) (88) (11) (287) 25 Purchases 17 14 76 212 Sales (47) (19) (96) (43) Settlements (23) (51) (140) (247) Transfers into level 3 1 26 269 114 Transfers out of level 3 (22) — (9) — Ending balance $ 912 $ 1,088 $ 912 $ 1,088 Other debt obligations Beginning balance $ 303 $ 502 $ 382 $ 497 Net realized gains/(losses) 3 4 9 9 Net unrealized gains/(losses) (3) 1 (8) 1 Purchases 4 10 28 32 Sales — (1) — (3) Settlements (23) (33) (127) (54) Transfers out of level 3 — (96) — (95) Ending balance $ 284 $ 387 $ 284 $ 387 Equity securities Beginning balance $ 8,163 $ 9,755 $ 7,915 $ 9,642 Net realized gains/(losses) 24 29 174 (4) Net unrealized gains/(losses) (205) 118 (1,236) 916 Purchases 287 371 657 849 Sales (111) (254) (494) (641) Settlements (83) (146) (384) (866) Transfers into level 3 1,027 251 3,212 609 Transfers out of level 3 (82) (2,197) (824) (2,578) Ending balance $ 9,020 $ 7,927 $ 9,020 $ 7,927 Level 3 Rollforward Commentary Three Months Ended September 2022 . The net realized and unrealized losses on level 3 investments of $304 million (reflecting $103 million of net realized gains and $407 million of net unrealized losses) for the three months ended September 2022 included gains/(losses) of $(427) million reported in other principal transactions and $123 million reported in interest income. The net unrealized losses on level 3 investments for the three months ended September 2022 primarily reflected losses on certain equity securities and corporate debt securities (in each case, principally driven by broad macroeconomic concerns). Transfers into level 3 investments during the three months ended September 2022 primarily reflected transfers of certain equity securities from level 2 (principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments) and transfers of certain corporate debt securities from level 2 (principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments, and certain unobservable yield and duration inputs becoming significant to the valuation of these instruments). Transfers out of level 3 investments during the three months ended September 2022 primarily reflected transfers of certain corporate debt securities to level 2 (principally due to certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments). Nine Months Ended September 2022 . The net realized and unrealized losses on level 3 investments of $1.40 billion (reflecting $428 million of net realized gains and $1.83 billion of net unrealized losses) for the nine months ended September 2022 included gains/(losses) of $(1.71) billion reported in other principal transactions and $314 million reported in interest income. The net unrealized losses on level 3 investments for the nine months ended September 2022 primarily reflected losses on certain equity securities and corporate debt securities (in each case, principally driven by broad macroeconomic and geopolitical concerns) and securities backed by real estate (principally driven by an increase in interest rates). Transfers into level 3 investments during the nine months ended September 2022 primarily reflected transfers of certain equity securities from level 2 (principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments), and transfers of certain corporate debt securities from level 2 (principally due to certain unobservable yield and duration inputs becoming significant to the valuation of these instruments, and reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments). Transfers out of level 3 investments during the nine months ended September 2022 primarily reflected transfers of certain equity securities to level 2 (principally due to increased price transparency as a result of market evidence, including market transactions in these instruments) and transfers of certain corporate debt securities to level 2 (principally due to increased price transparency as a result of market evidence, including market transactions in these instruments, and certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments). Three Months Ended September 2021. The net realized and unrealized gains on level 3 investments of $233 million (reflecting $78 million of net realized gains and $155 million of net unrealized gains) for the three months ended September 2021 included gains of $183 million reported in other principal transactions and $50 million reported in interest income. The net unrealized gains on level 3 investments for the three months ended September 2021 primarily reflected gains on certain private equity securities (principally driven by corporate performance and company-specific events). Transfers into level 3 investments during the three months ended September 2021 primarily reflected transfers of certain corporate debt securities and private equity securities from level 2 (in each case, principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments). Transfers out of level 3 investments during the three months ended September 2021 primarily reflected transfers of certain private equity securities to level 2 (principally due to increased price transparency as a result of market evidence, including market transactions in these instruments) and transfers of certain corporate debt securities to level 2 (principally due to certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments, and increased price transparency as a result of market evidence, including market transactions in these instruments). Nine Months Ended September 2021. The net realized and unrealized gains on level 3 investments of $1.43 billion (reflecting $184 million of net realized gains and $1.24 billion of net unrealized gains) for the nine months ended September 2021 included gains of $1.29 billion reported in other principal transactions and $135 million reported in interest income. The net unrealized gains on level 3 investments for the nine months ended September 2021 primarily reflected gains on certain private equity securities and corporate debt securities (in each case, principally driven by corporate performance and company-specific events). Transfers into level 3 investments during the nine months ended September 2021 primarily reflected transfers of certain corporate debt securities from level 2 (principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments, and certain unobservable yield and duration inputs becoming significant to the valuation of these instruments) and transfers of certain private equity securities from level 2 (principally due to reduced price transparency as a result of a lack of market evidence, including fewer market transactions in these instruments). Transfers out of level 3 investments during the nine months ended September 2021 primarily reflected transfers of certain private equity securities to level 2 (principally due to increased price transparency as a result of market evidence, including market transactions in these instruments) and transfers of certain corporate debt securities to level 2 (principally due to certain unobservable yield and duration inputs no longer being significant to the valuation of these instruments, and increased price transparency as a result of market evidence, including market transactions of these instruments). Held-to-Maturity Securities |
| Held to Maturity Securities | Held-to-maturity securities are reviewed to determine if an allowance for credit losses should be recorded in the consolidated statements of earnings. The firm considers various factors in such determination, including market conditions, changes in issuer credit ratings, historical credit losses and sovereign guarantees. Provision for credit losses on such securities was not material during either the three or nine months ended September 2022 or September 2021. |
| Loans | Loans includes (i) loans held for investment that are accounted for at amortized cost net of allowance for loan losses or at fair value under the fair value option and (ii) loans held for sale that are accounted for at the lower of cost or fair value. Interest on loans is recognized over the life of the loan and is recorded on an accrual basis. The table below presents information about loans. $ in millions Amortized Fair Value Held For Sale Total As of September 2022 Loan Type Corporate $ 57,431 $ 1,844 $ 3,906 $ 63,181 Wealth management 45,564 4,537 — 50,101 Commercial real estate 22,214 1,277 2,591 26,082 Residential real estate 14,084 257 1 14,342 Consumer: Installment 5,157 — — 5,157 Credit cards 13,691 — — 13,691 Other 8,324 335 302 8,961 Total loans, gross 166,465 8,250 6,800 181,515 Allowance for loan losses (4,846) — — (4,846) Total loans $ 161,619 $ 8,250 $ 6,800 $ 176,669 As of December 2021 Loan Type Corporate $ 50,960 $ 2,492 $ 2,475 $ 55,927 Wealth management 38,062 5,936 — 43,998 Commercial real estate 21,150 1,588 3,145 25,883 Residential real estate 15,493 320 100 15,913 Consumer: Installment 3,672 — — 3,672 Credit cards 8,212 — — 8,212 Other 5,958 433 2,139 8,530 Total loans, gross 143,507 10,769 7,859 162,135 Allowance for loan losses (3,573) — — (3,573) Total loans $ 139,934 $ 10,769 $ 7,859 $ 158,562 In the table above: • The increase in credit cards from December 2021 to September 2022 reflected approximately $2.0 billion relating to the firm’s acquisition of the General Motors co-branded credit card portfolio. • Loans held for investment that are accounted for at amortized cost include net deferred fees and costs, and unamortized premiums and discounts, which are amortized over the life of the loan. These amounts were less than 1% of loans accounted for at amortized cost as of both September 2022 and December 2021. The following is a description of the loan types in the table above: • Corporate. Corporate loans includes term loans, revolving lines of credit, letter of credit facilities and bridge loans, and are principally used for operating and general corporate purposes, or in connection with acquisitions. Corporate loans may be secured or unsecured, depending on the loan purpose, the risk profile of the borrower and other factors. • Wealth Management. Wealth management loans includes loans extended to private bank clients, including wealth management and other clients. These loans are used to finance investments in both financial and nonfinancial assets, bridge cash flow timing gaps or provide liquidity for other needs. Substantially all of such loans are secured by securities, residential real estate, commercial real estate or other assets. • Commercial Real Estate. Commercial real estate loans includes originated loans (other than those extended to private bank clients) that are directly or indirectly secured by hotels, retail stores, multifamily housing complexes and commercial and industrial properties. Commercial real estate loans also includes loans extended to clients who warehouse assets that are directly or indirectly backed by commercial real estate. In addition, commercial real estate includes loans purchased by the firm. • Residential Real Estate. Residential real estate loans primarily includes loans extended by the firm to clients (other than those extended to private bank clients) who warehouse assets that are directly or indirectly secured by residential real estate and loans purchased by the firm. • Installment. Installment loans are unsecured loans originated by the firm (including point-of-sale loans that the firm began to originate through the GreenSky platform in the third quarter of 2022). • Credit Cards. Credit card loans are loans made pursuant to revolving lines of credit issued to consumers by the firm. • Other. Other loans primarily includes loans extended to clients who warehouse assets that are directly or indirectly secured by consumer loans, including auto loans and private student loans, and other assets. Other loans also includes unsecured consumer and credit card loans purchased by the firm. Credit Quality Risk Assessment. The firm’s risk assessment process includes evaluating the credit quality of its loans by the firm’s independent risk oversight and control function. For corporate loans and a majority of wealth management, real estate and other loans, the firm performs credit analyses which incorporate initial and ongoing evaluations of the capacity and willingness of a borrower to meet its financial obligations. These credit evaluations are performed on an annual basis or more frequently if deemed necessary as a result of events or changes in circumstances. The firm determines an internal credit rating for the borrower by considering the results of the credit evaluations and assumptions with respect to the nature of and outlook for the borrower’s industry and the economic environment. The internal credit rating does not take into consideration collateral received or other credit support arrangements. The table below presents gross loans by an internally determined public rating agency equivalent or other credit metrics and the concentration of secured and unsecured loans. $ in millions Investment-Grade Non-Investment- Grade Other Metrics/Unrated Total As of September 2022 Accounting Method Amortized cost $ 62,336 $ 78,212 $ 25,917 $ 166,465 Fair value 1,784 3,606 2,860 8,250 Held for sale 1,036 5,703 61 6,800 Total $ 65,156 $ 87,521 $ 28,838 $ 181,515 Loan Type Corporate $ 21,072 $ 42,033 $ 76 $ 63,181 Wealth management 36,376 6,090 7,635 50,101 Real estate: Commercial 2,586 23,246 250 26,082 Residential 935 12,406 1,001 14,342 Consumer: Installment — — 5,157 5,157 Credit cards — — 13,691 13,691 Other 4,187 3,746 1,028 8,961 Total $ 65,156 $ 87,521 $ 28,838 $ 181,515 Secured 85 % 93 % 31 % 80 % Unsecured 15 % 7 % 69 % 20 % Total 100 % 100 % 100 % 100 % As of December 2021 Accounting Method Amortized cost $ 50,923 $ 75,179 $ 17,405 $ 143,507 Fair value 2,301 4,634 3,834 10,769 Held for sale 1,650 4,747 1,462 7,859 Total $ 54,874 $ 84,560 $ 22,701 $ 162,135 Loan Type Corporate $ 15,370 $ 40,389 $ 168 $ 55,927 Wealth management 31,476 5,730 6,792 43,998 Real estate: Commercial 3,986 21,523 374 25,883 Residential 1,112 13,779 1,022 15,913 Consumer: Installment — — 3,672 3,672 Credit cards — — 8,212 8,212 Other 2,930 3,139 2,461 8,530 Total $ 54,874 $ 84,560 $ 22,701 $ 162,135 Secured 85 % 92 % 36 % 82 % Unsecured 15 % 8 % 64 % 18 % Total 100 % 100 % 100 % 100 % In the table above: • Wealth management loans included in the other metrics/unrated category primarily consists of loans backed by residential real estate and securities, and real estate loans included in the other metrics/unrated category primarily consists of purchased loans. The firm’s risk assessment process for these loans includes reviewing certain key metrics, such as loan-to-value ratio, delinquency status, collateral values, expected cash flows, the Fair Isaac Corporation (FICO) credit score (which measures a borrower’s creditworthiness by considering factors such as payment and credit history) and other risk factors. • For installment and credit card loans included in the other metrics/unrated category, the evaluation of credit quality incorporates the borrower’s FICO credit score. FICO credit scores are periodically refreshed by the firm to assess the updated creditworthiness of the borrower. See “Vintage” below for information about installment and credit card loans by FICO credit scores. The firm also assigns a regulatory risk rating to its loans based on the definitions provided by the U.S. federal bank regulatory agencies. Total loans included 93% of loans as of September 2022 and 92% of loans as of December 2021 that were rated pass/non-criticized. Vintage. The tables below present gross loans accounted for at amortized cost (excluding installment and credit card loans) by an internally determined public rating agency equivalent or other credit metrics and origination year for term loans. As of September 2022 $ in millions Investment- Non-Investment- Other Metrics/ Total 2022 $ 4,364 $ 3,512 $ — $ 7,876 2021 3,847 7,031 — 10,878 2020 1,246 4,334 — 5,580 2019 325 3,333 — 3,658 2018 1,833 2,064 — 3,897 2017 or earlier 1,063 3,026 — 4,089 Revolving 7,259 14,193 1 21,453 Corporate 19,937 37,493 1 57,431 2022 1,886 766 907 3,559 2021 1,391 1,069 1,175 3,635 2020 522 377 — 899 2019 411 225 — 636 2018 356 36 — 392 2017 or earlier 686 468 — 1,154 Revolving 30,018 2,083 3,188 35,289 Wealth management 35,270 5,024 5,270 45,564 2022 39 3,053 157 3,249 2021 219 3,437 — 3,656 2020 85 1,420 — 1,505 2019 47 1,203 — 1,250 2018 184 488 — 672 2017 or earlier 655 674 6 1,335 Revolving 863 9,684 — 10,547 Commercial real estate 2,092 19,959 163 22,214 2022 97 734 218 1,049 2021 141 1,208 229 1,578 2020 — 11 91 102 2019 — — 101 101 2018 — 103 142 245 2017 or earlier 6 2 144 152 Revolving 669 10,188 — 10,857 Residential real estate 913 12,246 925 14,084 2022 — 84 114 198 2021 — 556 160 716 2020 — 30 320 350 2019 — 11 13 24 2018 — 13 10 23 2017 or earlier — 4 5 9 Revolving 4,124 2,792 88 7,004 Other 4,124 3,490 710 8,324 Total $ 62,336 $ 78,212 $ 7,069 $ 147,617 Percentage of total 42 % 53 % 5 % 100 % As of December 2021 $ in millions Investment- Non-Investment- Other Metrics/ Total 2021 $ 4,687 $ 10,424 $ 52 $ 15,163 2020 1,911 4,561 7 6,479 2019 451 3,949 — 4,400 2018 1,842 2,901 — 4,743 2017 733 1,857 — 2,590 2016 or earlier 274 1,693 — 1,967 Revolving 3,800 11,744 74 15,618 Corporate 13,698 37,129 133 50,960 2021 1,405 1,186 1,265 3,856 2020 558 287 — 845 2019 537 352 — 889 2018 334 38 — 372 2017 380 31 — 411 2016 or earlier 565 243 — 808 Revolving 26,349 2,127 2,405 30,881 Wealth management 30,128 4,264 3,670 38,062 2021 334 4,084 94 4,512 2020 127 1,890 — 2,017 2019 52 1,336 — 1,388 2018 207 829 — 1,036 2017 398 624 — 1,022 2016 or earlier 405 583 7 995 Revolving 1,768 8,412 — 10,180 Commercial real estate 3,291 17,758 101 21,150 2021 113 1,944 253 2,310 2020 260 557 103 920 2019 — — 173 173 2018 — 84 165 249 2017 8 65 119 192 2016 or earlier — 1 56 57 Revolving 673 10,919 — 11,592 Residential real estate 1,054 13,570 869 15,493 2021 — 694 261 955 2020 — 59 378 437 2019 — 25 19 44 2018 — 30 — 30 2017 — 5 8 13 Revolving 2,752 1,645 82 4,479 Other 2,752 2,458 748 5,958 Total $ 50,923 $ 75,179 $ 5,521 $ 131,623 Percentage of total 39 % 57 % 4 % 100 % In the tables above, revolving loans which converted to term loans were $1.25 billion as of September 2022 and were not material as of December 2021. The table below presents gross installment loans by refreshed FICO credit scores and origination year and gross credit card loans by refreshed FICO credit scores. $ in millions Greater than or Less than 660 Total As of September 2022 2022 $ 2,951 $ 118 $ 3,069 2021 1,271 102 1,373 2020 324 27 351 2019 210 29 239 2018 98 17 115 2017 or earlier 8 2 10 Installment 4,862 295 5,157 Credit cards 9,495 4,196 13,691 Total $ 14,357 $ 4,491 $ 18,848 Percentage of total: Installment 94 % 6 % 100 % Credit cards 69 % 31 % 100 % Total 76 % 24 % 100 % As of December 2021 2021 $ 2,017 $ 42 $ 2,059 2020 665 40 705 2019 508 61 569 2018 257 42 299 2017 32 7 39 2016 1 — 1 Installment 3,480 192 3,672 Credit cards 6,100 2,112 8,212 Total $ 9,580 $ 2,304 $ 11,884 Percentage of total: Installment 95 % 5 % 100 % Credit cards 74 % 26 % 100 % Total 81 % 19 % 100 % In the table above, credit card loans consist of revolving lines of credit. Credit Concentrations. The table below presents the concentration of gross loans by region. $ in millions Carrying Americas EMEA Asia Total As of September 2022 Corporate $ 63,181 64 % 29 % 7 % 100 % Wealth management 50,101 89 % 10 % 1 % 100 % Commercial real estate 26,082 79 % 16 % 5 % 100 % Residential real estate 14,342 95 % 3 % 2 % 100 % Consumer: Installment 5,157 100 % — — 100 % Credit cards 13,691 100 % — — 100 % Other 8,961 89 % 10 % 1 % 100 % Total $ 181,515 80 % 16 % 4 % 100 % As of December 2021 Corporate $ 55,927 54 % 38 % 8 % 100 % Wealth management 43,998 87 % 10 % 3 % 100 % Commercial real estate 25,883 80 % 15 % 5 % 100 % Residential real estate 15,913 95 % 2 % 3 % 100 % Consumer: Installment 3,672 100 % — — 100 % Credit cards 8,212 100 % — — 100 % Other 8,530 84 % 15 % 1 % 100 % Total $ 162,135 76 % 19 % 5 % 100 % In the table above: • EMEA represents Europe, Middle East and Africa. • The top five industry concentrations for corporate loans as of September 2022 were 23% for funds, 17% for technology, media & telecommunications, 12% for diversified industrials, 8% for financial institutions, and 8% for real estate. • The top five industry concentrations for corporate loans as of December 2021 were 21% for funds, 18% for technology, media & telecommunications, 13% for diversified industrials, 9% for natural resources & utilities, and 8% for financial institutions. Nonaccrual and Past Due Loans. Loans accounted for at amortized cost (other than credit card loans) are placed on nonaccrual status when it is probable that the firm will not collect all principal and interest due under the contractual terms, regardless of the delinquency status or if a loan is past due for 90 days or more, unless the loan is both well collateralized and in the process of collection. At that time, all accrued but uncollected interest is reversed against interest income and interest subsequently collected is recognized on a cash basis to the extent the loan balance is deemed collectible. Otherwise, all cash received is used to reduce the outstanding loan balance. A loan is considered past due when a principal or interest payment has not been made according to its contractual terms. Credit card loans are not placed on nonaccrual status and accrue interest until the loan is paid in full or is charged off. In certain circumstances, the firm may modify the original terms of a loan agreement by granting a concession to a borrower experiencing financial difficulty, typically in the form of a modification of loan covenants, but may also include forbearance of interest or principal, payment extensions or interest rate reductions. These modifications, to the extent significant, are considered TDRs. Loan modifications that extend payment terms for a period of less than 90 days are generally considered insignificant and therefore not reported as TDRs. The table below presents information about past due loans. $ in millions 30-89 days 90 days Total As of September 2022 Corporate $ 12 $ 129 $ 141 Wealth management 253 37 290 Commercial real estate 24 316 340 Residential real estate 2 7 9 Consumer: Installment 34 12 46 Credit cards 226 196 422 Other 20 8 28 Total $ 571 $ 705 $ 1,276 Total divided by gross loans at amortized cost 0.8 % As of December 2021 Corporate $ 5 $ 90 $ 95 Wealth management — 20 20 Commercial real estate 7 143 150 Residential real estate 3 4 7 Consumer: Installment 20 7 27 Credit cards 86 71 157 Other 15 3 18 Total $ 136 $ 338 $ 474 Total divided by gross loans at amortized cost 0.3 % The table below presents information about nonaccrual loans. As of September December $ in millions 2022 2021 Corporate $ 1,422 $ 1,559 Wealth management 213 21 Commercial real estate 574 841 Residential real estate 4 5 Installment 38 43 Total $ 2,251 $ 2,469 Total divided by gross loans at amortized cost 1.4 % 1.7 % In the table above: • Nonaccrual loans included $598 million as of September 2022 and $254 million as of December 2021 of loans that were 30 days or more past due. • Loans that were 90 days or more past due and still accruing were not material as of both September 2022 and December 2021. • Nonaccrual loans included $212 million as of September 2022 and $267 million as of December 2021 of corporate and commercial real estate loans that were modified in a TDR. The firm’s lending commitments related to these loans were not material as of both September 2022 and December 2021. Installment loans that were modified in a TDR were not material as of both September 2022 and December 2021. • Allowance for loan losses as a percentage of total nonaccrual loans was 215.3% as of September 2022 and 144.7% as of December 2021. Allowance for Credit Losses The firm’s allowance for credit losses consists of the allowance for losses on loans and lending commitments accounted for at amortized cost. Loans and lending commitments accounted for at fair value or accounted for at the lower of cost or fair value are not subject to an allowance for credit losses. To determine the allowance for credit losses, the firm classifies its loans and lending commitments accounted for at amortized cost into wholesale and consumer portfolios. These portfolios represent the level at which the firm has developed and documented its methodology to determine the allowance for credit losses. The allowance for credit losses is measured on a collective basis for loans that exhibit similar risk characteristics using a modeled approach and on an asset-specific basis for loans that do not share similar risk characteristics. The allowance for credit losses takes into account the weighted average of a range of forecasts of future economic conditions over the expected life of the loan and lending commitments. The expected life of each loan or lending commitment is determined based on the contractual term adjusted for extension options or demand features, or is modeled in the case of revolving credit card loans. The forecasts include baseline, favorable and adverse economic scenarios over a three-year period. For loans with expected lives beyond three years, the model reverts to historical loss information based on a non-linear modeled approach. The forecasted economic scenarios consider a number of risk factors relevant to the wholesale and consumer portfolios described below. The firm applies judgment in weighing individual scenarios each quarter based on a variety of factors, including the firm’s internally derived economic outlook, market consensus, recent macroeconomic conditions and industry trends. The allowance for credit losses also includes qualitative components which allow management to reflect the uncertain nature of economic forecasting, capture uncertainty regarding model inputs, and account for model imprecision and concentration risk. Management’s estimate of credit losses entails judgment about the expected life of the loan and loan collectability at the reporting dates, and there are uncertainties inherent in those judgments. The allowance for credit losses is subject to a governance process that involves review and approval by senior management within the firm’s independent risk oversight and control functions. Personnel within the firm’s independent risk oversight and control functions are responsible for forecasting the economic variables that underlie the economic scenarios that are used in the modeling of expected credit losses. While management uses the best information available to determine this estimate, future adjustments to the allowance may be necessary based on, among other things, changes in the economic environment or variances between actual results and the original assumptions used. The table below presents gross loans and lending commitments accounted for at amortized cost by portfolio. As of September 2022 December 2021 $ in millions Loans Lending Commitments Loans Lending Wholesale Corporate $ 57,431 $139,946 $ 50,960 $143,296 Wealth management 45,564 4,638 38,062 4,091 Commercial real estate 22,214 2,715 21,150 4,306 Residential real estate 14,084 2,793 15,493 3,317 Other 8,324 4,940 5,958 6,169 Consumer Installment 5,157 957 3,672 9 Credit cards 13,691 60,655 8,212 35,932 Total $ 166,465 $216,644 $ 143,507 $197,120 In the table above: • Wholesale loans included $2.21 billion as of September 2022 and $2.43 billion as of December 2021 of nonaccrual loans for which the allowance for credit losses was measured on an asset-specific basis. The allowance for credit losses on these loans was $449 million as of September 2022 and $543 million as of December 2021. These loans included $313 million as of September 2022 and $140 million as of December 2021 of loans which did not require a reserve as the loan was deemed to be recoverable. • Credit card lending commitments included $60.66 billion as of September 2022 and $33.97 billion as of December 2021 related to credit card lines issued by the firm to consumers. These credit card lines are cancellable by the firm. The increase in credit card lending commitments from December 2021 to September 2022 reflected approximately $15.0 billion relating to the firm’s acquisition of the General Motors co-branded credit card portfolio. In addition, credit card lending commitments as of December 2021 included a commitment of approximately $2.0 billion to acquire the outstanding credit card loans related to the General Motors co-branded credit card portfolio. See Note 18 for further information about lending commitments. • The increase in installment lending commitments from December 2021 to September 2022 primarily relates to commitments extended in connection with point-of-sale financing. See Note 18 for further information about lending commitments. The following is a description of the methodology used to calculate the allowance for credit losses: Wholesale. The allowance for credit losses for wholesale loans and lending commitments that exhibit similar risk characteristics is measured using a modeled approach. These models determine the probability of default and loss given default based on various risk factors, including internal credit ratings, industry default and loss data, expected life, macroeconomic indicators, the borrower’s capacity to meet its financial obligations, the borrower’s country of risk and industry, loan seniority and collateral type. For lending commitments, the methodology also considers probability of drawdowns or funding. In addition, for loans backed by real estate, risk factors include the loan-to-value ratio, debt service ratio and home price index. The most significant inputs to the forecast model for wholesale loans and lending commitments include unemployment rates, GDP, credit spreads, commercial and industrial delinquency rates, short- and long-term interest rates, and oil prices. The allowance for loan losses for wholesale loans that do not share similar risk characteristics, such as nonaccrual loans or loans in a TDR, is calculated using the present value of expected future cash flows discounted at the loan’s original effective rate, the observable market price of the loan or the fair value of the collateral. Wholesale loans are charged off against the allowance for loan losses when deemed to be uncollectible. Consumer. The allowance for credit losses for consumer loans that exhibit similar risk characteristics is calculated using a modeled approach which classifies consumer loans into pools based on borrower-related and exposure-related characteristics that differentiate a pool’s risk characteristics from other pools. The factors considered in determining a pool are generally consistent with the risk characteristics used for internal credit risk measurement and management and include key metrics, such as FICO credit scores, delinquency status, loan vintage and macroeconomic indicators. The most significant inputs to the forecast model for consumer loans include unemployment rates and delinquency rates. The expected life of revolving credit card loans is determined by modeling expected future draws and the timing and amount of repayments allocated to the funded balance. The firm also recognizes an allowance for credit losses on commitments to acquire loans. However, no allowance for credit losses is recognized on credit card lending commitments as they are cancellable by the firm. The allowance for credit losses for consumer loans that do not share similar risk characteristics, such as loans in a TDR, is calculated using the present value of expected future cash flows discounted at the loan’s original effective rate. |
| Fair Value Option | Other Financial Assets and Liabilities at Fair Value In addition to trading assets and liabilities, and certain investments and loans, the firm accounts for certain of its other financial assets and liabilities at fair value, substantially all under the fair value option. The primary reasons for electing the fair value option are to: • Reflect economic events in earnings on a timely basis; • Mitigate volatility in earnings from using different measurement attributes (e.g., transfers of financial assets accounted for as financings are recorded at fair value, whereas the related secured financing would be recorded on an accrual basis absent electing the fair value option); and • Address simplification and cost-benefit considerations (e.g., accounting for hybrid financial instruments at fair value in their entirety versus bifurcation of embedded derivatives and hedge accounting for debt hosts). Hybrid financial instruments are instruments that contain bifurcatable embedded derivatives and do not require settlement by physical delivery of nonfinancial assets (e.g., physical commodities). If the firm elects to bifurcate the embedded derivative from the associated debt, the derivative is accounted for at fair value and the host contract is accounted for at amortized cost, adjusted for the effective portion of any fair value hedges. If the firm does not elect to bifurcate, the entire hybrid financial instrument is accounted for at fair value under the fair value option. Other financial assets and liabilities accounted for at fair value under the fair value option include: • Resale and repurchase agreements; • Certain securities borrowed and loaned transactions; • Certain customer and other receivables and certain other liabilities; • Certain time deposits (deposits with no stated maturity are not eligible for a fair value option election), including structured certificates of deposit, which are hybrid financial instruments; • Substantially all other secured financings, including transfers of assets accounted for as financings; and |
| Collateralized Agreements and Financings | Collateralized agreements and financings are presented on a net-by-counterparty basis when a legal right of setoff exists. Interest on collateralized agreements, which is included in interest income, and collateralized financings, which is included in interest expense, is recognized over the life of the transaction. See Note 23 for further information about interest income and interest expense. Resale and Repurchase Agreements A resale agreement is a transaction in which the firm purchases financial instruments from a seller, typically in exchange for cash, and simultaneously enters into an agreement to resell the same or substantially the same financial instruments to the seller at a stated price plus accrued interest at a future date. A repurchase agreement is a transaction in which the firm sells financial instruments to a buyer, typically in exchange for cash, and simultaneously enters into an agreement to repurchase the same or substantially the same financial instruments from the buyer at a stated price plus accrued interest at a future date. Even though repurchase and resale agreements (including “repos- and reverses-to-maturity”) involve the legal transfer of ownership of financial instruments, they are accounted for as financing arrangements because they require the financial instruments to be repurchased or resold before or at the maturity of the agreement. The financial instruments purchased or sold in resale and repurchase agreements typically include U.S. government and agency, and investment-grade sovereign obligations. The firm receives financial instruments purchased under resale agreements and makes delivery of financial instruments sold under repurchase agreements. To mitigate credit exposure, the firm monitors the market value of these financial instruments on a daily basis, and delivers or obtains additional collateral due to changes in the market value of the financial instruments, as appropriate. For resale agreements, the firm typically requires collateral with a fair value approximately equal to the carrying value of the relevant assets in the consolidated balance sheets. Securities Borrowed and Loaned Transactions In a securities borrowed transaction, the firm borrows securities from a counterparty in exchange for cash or securities. When the firm returns the securities, the counterparty returns the cash or securities. Interest is generally paid periodically over the life of the transaction. In a securities loaned transaction, the firm lends securities to a counterparty in exchange for cash or securities. When the counterparty returns the securities, the firm returns the cash or securities posted as collateral. Interest is generally paid periodically over the life of the transaction. The firm receives securities borrowed and makes delivery of securities loaned. To mitigate credit exposure, the firm monitors the market value of these securities on a daily basis, and delivers or obtains additional collateral due to changes in the market value of the securities, as appropriate. For securities borrowed transactions, the firm typically requires collateral with a fair value approximately equal to the carrying value of the securities borrowed transaction. Securities borrowed and loaned within Fixed Income, Currency and Commodities (FICC) financing are recorded at fair value under the fair value option. See Note 10 for further information about securities borrowed and loaned accounted for at fair value. |
| Property, Leasehold Improvements and Equipment | Substantially all property and equipment is depreciated on a straight-line basis over the useful life of the asset. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the term of the lease. Capitalized costs of software developed or obtained for internal use are amortized on a straight-line basis over three years. |
| Impairments | The firm tests property, leasehold improvements and equipment for impairment when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. To the extent the carrying value of an asset or asset group exceeds the projected undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group, the firm determines the asset or asset group is impaired and records an impairment equal to the difference between the estimated fair value and the carrying value of the asset or asset group. In addition, the firm will recognize an impairment prior to the sale of an asset or asset group if the carrying value of the asset or asset group exceeds its estimated fair value. |
| Goodwill Impairment | Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events occur or circumstances change that indicate an impairment may exist. When assessing goodwill for impairment, first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its estimated carrying value. If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed. Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment. |
| Savings and Demand Deposits | The firm’s savings and demand deposits are recorded based on the amount of cash received plus accrued interest |
| Unsecured Short-Term Borrowings | Unsecured Short-Term Borrowings Unsecured short-term borrowings includes the portion of unsecured long-term borrowings maturing within one year of the financial statement date and unsecured long-term borrowings that are redeemable within one year of the financial statement date at the option of the holder. |
| Securitization Activities | The firm accounts for a securitization as a sale when it has relinquished control over the transferred financial assets. Prior to securitization, the firm generally accounts for assets pending transfer at fair value and therefore does not typically recognize significant gains or losses upon the transfer of assets. Net revenues from underwriting activities are recognized in connection with the sales of the underlying beneficial interests to investors. |
| VIE Consolidation Analysis | VIE Consolidation Analysis The enterprise with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE. The firm determines whether it is the primary beneficiary of a VIE by performing an analysis that principally considers: • Which variable interest holder has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; • Which variable interest holder has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE; • The VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders; • The VIE’s capital structure; • The terms between the VIE and its variable interest holders and other parties involved with the VIE; and • Related-party relationships. |
| Lending Commitments | In the table above: • Held for investment lending commitments are accounted for at amortized cost. The carrying value of lending commitments was a liability of $958 million (including allowance for credit losses of $739 million) as of September 2022 and $1.05 billion (including allowance for credit losses of $776 million) as of December 2021. The estimated fair value of such lending commitments was a liability of $6.70 billion as of September 2022 and $4.17 billion as of December 2021. Had these lending commitments been carried at fair value and included in the fair value hierarchy, $4.00 billion as of September 2022 and $1.91 billion as of December 2021 would have been classified in level 2, and $2.70 billion as of September 2022 and $2.26 billion as of December 2021 would have been classified in level 3. • Held for sale lending commitments are accounted for at the lower of cost or fair value. The carrying value of lending commitments held for sale was a liability of $130 million as of September 2022 and $91 million as of December 2021. The estimated fair value of such lending commitments approximates the carrying value. Had these lending commitments been included in the fair value hierarchy, they would have been primarily classified in level 3 as of both September 2022 and December 2021. |
| Derivative Guarantees | Derivative Guarantees. The firm enters into various derivatives that meet the definition of a guarantee under U.S. GAAP, including written equity and commodity put options, written currency contracts and interest rate caps, floors and swaptions. These derivatives are risk managed together with derivatives that do not meet the definition of a guarantee, and therefore the amounts in the table above do not reflect the firm’s overall risk related to derivative activities. Disclosures about derivatives are not required if they may be cash settled and the firm has no basis to conclude it is probable that the counterparties held the underlying instruments at the inception of the contract. The firm has concluded that these conditions have been met for certain large, internationally active commercial and investment bank counterparties, central clearing counterparties, hedge funds and certain other counterparties. Accordingly, the firm has not included such contracts in the table above. See Note 7 for information about credit derivatives that meet the definition of a guarantee, which are not included in the table above. |
| Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share (EPS) is calculated by dividing net earnings to common by the weighted average number of common shares outstanding and RSUs for which the delivery of the underlying common stock is not subject to satisfaction of future service, performance or market conditions (collectively, basic shares). Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect of the common stock deliverable for RSUs for which the delivery of the underlying common stock is subject to satisfaction of future service, performance or market conditions. |
| Interest Income and Interest Expense | Interest Income and Interest Expense Interest is recorded over the life of the instrument on an accrual basis based on contractual interest rates. |
| Income Taxes | Income Taxes Provision for Income Taxes Income taxes are provided for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities. The firm reports interest expense related to income tax matters in provision for taxes and income tax penalties in other expenses. Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities. These temporary differences result in taxable or deductible amounts in future years and are measured using the tax rates and laws that will be in effect when such differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets to the amount that more likely than not will be realized and primarily relate to the ability to utilize losses in various tax jurisdictions. Tax assets are included in other assets and tax liabilities are included in other liabilities. Unrecognized Tax Benefits The firm recognizes tax positions in the consolidated financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the consolidated financial statements. Regulatory Tax Examinations |
| Business Segments | The firm allocates assets (including allocations of global core liquid assets and cash, secured client financing and other assets), revenues and expenses among the four business segments. Due to the integrated nature of these segments, estimates and judgments are made in allocating certain assets, revenues and expenses. The allocation process is based on the manner in which management currently views the performance of the segments. The allocation of common shareholders’ equity and preferred stock dividends to each segment is based on the estimated amount of equity required to support the activities of the segment under relevant regulatory capital requirements. Net earnings for each segment is calculated by applying the firmwide tax rate to each segment’s pre-tax earnings. Management believes that this allocation provides a reasonable representation of each segment’s contribution to consolidated net earnings to common, return on average common equity and total assets. Transactions between segments are based on specific criteria or approximate third-party rates. |
