⚠ A Bank Is a Levered Bet on Being Right About CreditHigh threat

JPMorgan Chase (JPM) — threat to the moat

1.49 trillion dollars of loans against 290 billion of tangible equity -- a five percent loss across the book would take a quarter of the capital.

Everything else on these pages is commentary on one number: JPMorgan holds $1,493.4 billion of loans against $290.0 billion of tangible common equity1.

The leverage, and the cover, $bn$1,493.4bnLoans$290.0bnTangible common equity$86.8bnPre-provision profit$14.2bnProvision 2025A 5% loss across the loan book would consume a quarter of the tangible equity.
Six times covered in a benign year. Losses do not arrive proportionally.

That is roughly five times leverage on the loan book alone, and considerably more against total assets of $4.42 trillion2. It is not imprudent — it is what a bank is, and the capital rules exist precisely to bound it — but it means the margin for error on credit judgement is thin in a way no unlevered business experiences. A 5% loss across the loan book would consume a quarter of the tangible equity.

The current cycle is benign and the numbers say so: a 2025 provision for credit losses of $14.2 billion against pre-provision profit of $86.8 billion3, and a Card Services net charge-off rate guided near 3.4% for 20264. Six times coverage is comfortable.

The reason it is a root threat anyway is that credit losses do not arrive proportionally. They arrive in a cluster, in a recession, across the consumer book and the wholesale book at once, and the reserves built against them are estimates made when things looked fine.

What genuinely mitigates it is capital: three points of CET1 above requirement5, and a firm that stayed profitable through 2020 while building enormous reserves against a pandemic, earning $29.1 billion6.

The number to watch is pre-provision profit against the provision. As long as the first comfortably covers the second, the leverage is doing its job. The year it does not is the only year that matters.

The number that tests this threat
Reported
Loans against tangible common equity
$1,493.4bn against $290.0bn

Roughly five times leverage on the loan book alone, against total assets of $4.42 trillion — a 5% loss across the book would consume a quarter of the tangible equity. The 2025 provision was $14.2bn against $86.8bn of pre-provision profit, six times covered in a benign year. Watch that coverage ratio; the year it fails is the only year that matters.

Source: JPMorgan Chase Form 10-K, FY2025 ↗
References
  1. ReportedTangible common equity was $290,018M at 31 December 2025.
    JPMorgan Chase & Co., Form 10-K FY2025 — consolidated financial statements and management's discussion (SEC, CIK 19617). Total net revenue $182,447M (2024 $177,556M, 2023 $158,104M); total noninterest expense $95,640M (2023 $87,172M); pre-provision profit $86,807M; provision for credit losses $14,212M; net income $57,048M; diluted EPS $20.02; ROE 17%, ROTCE 20% (2024 22%, 2023 21%); overhead ratio 52% (2024 52%, 2023 55%); loans-to-deposits 58% (56%, 55%); deposits 63% of total liabilities. Total assets $4,424,900M, loans $1,493,429M, deposits $2,559,320M, tangible common equity $290,018M, book value per share $126.99, tangible book value per share $107.56, dividends declared per share $5.80 (2024 $4.80, 2023 $4.10). Segment total net revenue: CCB $76,029M / $71,507M / $70,148M; CIB $78,454M / $70,114M / $64,353M; AWM $24,073M / $21,578M / $19,827M. Banking & Payments by client coverage: Global Corporate Banking and Global Investment Banking $25,285M, Commercial Banking $11,851M. Deposit average balances and rates: US non-interest-bearing $572,014M (2024 $611,734M, 2023 $635,791M); US interest-bearing demand $321,145M at 3.26%; US savings $875,519M at 1.41%; total deposits 1.80% (2024 2.08%, 2023 1.70%). An estimated bargain purchase gain of $2.8bn was recorded for the year ended 31 December 2023 on the First Republic acquisition, with a further $588M First Republic-related gain in the first quarter of 2025; 2024 revenue included a $7.9bn net gain on Visa shares. — FY2025 · publ. 2026-02-13 · source ↗
  2. ReportedTotal assets $4,424,900M, deposits $2,559,320M, loans $1,493,429M and 318,512 employees at 31 December 2025.
    JPMorgan Chase & Co., Form 10-K FY2025 — consolidated financial statements and management's discussion (SEC, CIK 19617). Total net revenue $182,447M (2024 $177,556M, 2023 $158,104M); total noninterest expense $95,640M (2023 $87,172M); pre-provision profit $86,807M; provision for credit losses $14,212M; net income $57,048M; diluted EPS $20.02; ROE 17%, ROTCE 20% (2024 22%, 2023 21%); overhead ratio 52% (2024 52%, 2023 55%); loans-to-deposits 58% (56%, 55%); deposits 63% of total liabilities. Total assets $4,424,900M, loans $1,493,429M, deposits $2,559,320M, tangible common equity $290,018M, book value per share $126.99, tangible book value per share $107.56, dividends declared per share $5.80 (2024 $4.80, 2023 $4.10). Segment total net revenue: CCB $76,029M / $71,507M / $70,148M; CIB $78,454M / $70,114M / $64,353M; AWM $24,073M / $21,578M / $19,827M. Banking & Payments by client coverage: Global Corporate Banking and Global Investment Banking $25,285M, Commercial Banking $11,851M. Deposit average balances and rates: US non-interest-bearing $572,014M (2024 $611,734M, 2023 $635,791M); US interest-bearing demand $321,145M at 3.26%; US savings $875,519M at 1.41%; total deposits 1.80% (2024 2.08%, 2023 1.70%). An estimated bargain purchase gain of $2.8bn was recorded for the year ended 31 December 2023 on the First Republic acquisition, with a further $588M First Republic-related gain in the first quarter of 2025; 2024 revenue included a $7.9bn net gain on Visa shares. — FY2025 · publ. 2026-02-13 · source ↗
  3. ReportedThe 2025 provision for credit losses was $14,212M.
    JPMorgan Chase & Co., Form 10-K FY2025 — consolidated financial statements and management's discussion (SEC, CIK 19617). Total net revenue $182,447M (2024 $177,556M, 2023 $158,104M); total noninterest expense $95,640M (2023 $87,172M); pre-provision profit $86,807M; provision for credit losses $14,212M; net income $57,048M; diluted EPS $20.02; ROE 17%, ROTCE 20% (2024 22%, 2023 21%); overhead ratio 52% (2024 52%, 2023 55%); loans-to-deposits 58% (56%, 55%); deposits 63% of total liabilities. Total assets $4,424,900M, loans $1,493,429M, deposits $2,559,320M, tangible common equity $290,018M, book value per share $126.99, tangible book value per share $107.56, dividends declared per share $5.80 (2024 $4.80, 2023 $4.10). Segment total net revenue: CCB $76,029M / $71,507M / $70,148M; CIB $78,454M / $70,114M / $64,353M; AWM $24,073M / $21,578M / $19,827M. Banking & Payments by client coverage: Global Corporate Banking and Global Investment Banking $25,285M, Commercial Banking $11,851M. Deposit average balances and rates: US non-interest-bearing $572,014M (2024 $611,734M, 2023 $635,791M); US interest-bearing demand $321,145M at 3.26%; US savings $875,519M at 1.41%; total deposits 1.80% (2024 2.08%, 2023 1.70%). An estimated bargain purchase gain of $2.8bn was recorded for the year ended 31 December 2023 on the First Republic acquisition, with a further $588M First Republic-related gain in the first quarter of 2025; 2024 revenue included a $7.9bn net gain on Visa shares. — FY2025 · publ. 2026-02-13 · source ↗
  4. ReportedManagement expects the Card Services net charge-off rate to be approximately 3.4% in 2026.
    JPMorgan Chase & Co., Form 10-K for the fiscal year ended 31 December 2025 (SEC, CIK 19617) — total net revenue $182,447M against $177,556M in 2024 and $158,104M in 2023; total noninterest expense $95,640M; pre-provision profit $86,807M; provision for credit losses $14,212M; net income $57,048M and diluted EPS $20.02; return on equity 17%, return on tangible common equity 20% (22% in 2024, 21% in 2023), return on assets 1.29%, overhead ratio 52% (52% in 2024, 55% in 2023), loans-to-deposits ratio 58% (56%, 55%), liquidity coverage ratio 111%. Total assets $4,424,900M, loans $1,493,429M, deposits $2,559,320M (63% of total liabilities), long-term debt $435,206M, common stockholders' equity $342,393M, tangible common equity $290,018M, book value per share $126.99 and tangible book value per share $107.56; dividends declared per share $5.80 (2024 $4.80, 2023 $4.10). Segment total net revenue: Consumer & Community Banking $76,029M, $71,507M and $70,148M; Commercial & Investment Bank $78,454M, $70,114M and $64,353M; Asset & Wealth Management $24,073M, $21,578M and $19,827M across 2025, 2024 and 2023. Banking & Payments revenue by client coverage: Global Corporate Banking and Global Investment Banking $25,285M and Commercial Banking $11,851M in 2025. Deposit average balances and rates: US non-interest-bearing $572,014M (2024 $611,734M, 2023 $635,791M), US interest-bearing demand $321,145M at 3.26%, US savings $875,519M at 1.41%; total deposits average rate 1.80% (2024 2.08%, 2023 1.70%). Firmwide estimated uninsured deposits $1,558.6bn at 31 December 2025 and $1,414.0bn a year earlier, 'primarily reflecting wholesale operating deposits'. Basel III common equity Tier 1 capital $288bn, Standardized ratio 14.6%; the Standardized CET1 requirement including regulatory buffers was 11.5%, with a stress capital buffer of 2.5% effective through 30 September 2027 and the annual capital plan due 6 April 2026. Capital is allocated to the lines of business using standardized risk-weighted assets and the GSIB surcharge, reassessed at least annually; the enhanced supplementary leverage ratio rules were revised to set the buffer at 50% of the firm's US Method 1 GSIB surcharge. The July 2023 Basel III endgame proposal was never finalised, and in September 2025 the Federal Reserve's Vice Chair for Supervision indicated regulators may issue an updated proposal in early 2026, the timing and content of which remain uncertain. 2025 included a $588M First Republic-related gain and an estimated bargain purchase gain of $2.8bn was recorded for the year ended 31 December 2023; 2024 revenue included a $7.9bn net gain on Visa shares. Apple Card transaction: on 7 January 2026 the firm announced Chase will become the new issuer of Apple Card, having entered a forward purchase commitment on 30 December 2025, with expected closing in approximately 24 months; the 2025 provision includes $2.2bn for lending-related commitments and the Standardized CET1 ratio decreased approximately 25 basis points. 2026 outlook: net interest income excluding Markets of approximately $95bn and adjusted expense of approximately $105bn, with a Card Services net charge-off rate of approximately 3.4%. Global workforce of 318,512 employees; JPMorgan Chase Bank, N.A. operates US branches in 48 states and Washington, D.C. Competition: 'Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, commodity trading companies, private equity firms, insurance companies, mutual fund companies, investment managers, credit card companies, mortgage banking companies, trust companies, securities processing companies, automobile financing companies, leasing companies, e-commerce and other internet-based companies, digital asset and other financial technology companies'; 'New competitors in the financial services industry continue to emerge, including firms that offer products and services solely through the internet and non-financial companies that offer products and services that disintermediate traditional banking products and services'. Risk factors warn that advocacy by non-banking competitors for exemptions from regulatory requirements could significantly disadvantage traditional financial institutions; that failing to keep pace with rapidly changing technological advances including generative AI risks losing clients and market share, with competition intensifying as new technologies become more capable and scalable; that adverse conditions could prompt outflows or cause clients to invest in products that generate lower revenue; and that the interconnectivity across credit markets increases the risk that the significant expansion of private credit could worsen losses among non-bank lenders and their borrowers, particularly if stress or defaults spread to broader funding and credit markets. — FY2025 · publ. 2026-02-13 · source ↗
  5. ReportedBasel III CET1 capital of $288bn, a Standardized ratio of 14.6%, against a requirement including all regulatory buffers of 11.5%.
    JPMorgan Chase & Co., Form 10-K FY2025 — capital risk management (SEC, CIK 19617). Basel III common equity Tier 1 capital of $288 billion and a Standardized CET1 ratio of 14.6%; the Standardized CET1 requirement including all regulatory buffers was 11.5%. The stress capital buffer requirement is 2.5% and remains in effect through 30 September 2027, based on the severely adverse scenario of the Federal Reserve's supervisory stress test; the annual CCAR submission was due 6 April 2026. Capital is allocated to the lines of business using standardized risk-weighted assets and the GSIB surcharge under rules currently in effect, reassessed at least annually. The enhanced supplementary leverage ratio rules revise the static leverage buffers to 50% of the bank holding company's US Method 1 GSIB surcharge, capped at 1% for insured depository institution subsidiaries. The July 2023 proposal to amend the US risk-based capital framework (the Basel III endgame) was never finalised; in September 2025 the Federal Reserve's Vice Chair for Supervision indicated regulators may issue an updated proposal in early 2026 replacing it, the timing and content of which remain uncertain. The Apple Card transaction reduced the Standardized CET1 ratio by approximately 25 basis points. — FY2025 · publ. 2026-02-13 · source ↗
  6. ReportedJPMorgan earned net income of $29,131M in 2020.
    JPMorgan Chase annual results, from SEC EDGAR XBRL company facts (CIK 19617) — total net revenue and net income by year: 2015 $93,543M / $24,442M, 2016 $96,569M / $24,733M, 2017 $100,705M / $24,441M, 2018 $108,783M / $32,474M, 2019 $115,720M / $36,431M, 2020 $119,951M / $29,131M, 2021 $121,649M / $48,334M, 2022 $128,695M / $37,676M, 2023 $158,104M / $49,552M, 2024 $177,556M / $58,471M, 2025 $182,447M / $57,048M. Diluted weighted-average shares fell from 3,774 million in 2015 to 2,782 million in 2025. Trailing twelve months to 30 June 2026: revenue $199,408M and net income $65,067M. — FY2015-FY2025 and TTM · publ. 2026-08 · source ↗
Sources
Generated September 23, 2026