New York, September 29, 2022 -- Moody's Investors Service ("Moody's") has upgraded to A1 from A2 the issuer and senior debt ratings of JPMorgan Chase & Co. (JPM) and the senior debt ratings of JPM's guaranteed subsidiary. All other ratings of JPM were affirmed, and the ratings outlook for JPM is stable. Moody's also affirmed the a2 Baseline Credit Assessment (BCA) and ratings of JPMorgan Chase Bank, N.A., JPM's lead bank subsidiary, with a stable outlook.
RATINGS RATIONALE
The upgrade of JPM's senior debt to A1 reflects Moody's assessment that the recently increased levels of holding company debt outstanding relative to JPM's total assets will be sustained. The increased debt levels would reduce the likely severity of loss given failure for JPM's senior unsecured creditors, improving the creditworthiness of this debt class. Although long-term debt is the most expensive of JPM's liabilities, the firm has a regulatory requirement to maintain a minimum level of long-term unsecured debt outstanding at the holding company level. Specifically, the Federal Reserve's Total Loss-absorbing Capacity (TLAC) rules, designed to facilitate the orderly resolution of systemically important banks, require that JPM maintain a minimum level of senior unsecured holding company long-term debt outstanding relative to its risk-weighted assets and its supplementary leverage exposure. On June 30, 2022, the most binding of these constraints for JPM was the requirement to maintain at least 4.5% of supplementary leverage exposure outstanding as senior unsecured long-term debt. Moody's expects that this ongoing requirement, together with other regulatory capital requirements for subordinated debt and preferred stock, will incentivize JPM to maintain a sufficient volume of long-term holding company debt to warrant a one-notch uplift from the a2 BCA for JPM's senior unsecured holding company debt rating under the application of Moody's advanced Loss Given Failure framework.
The affirmation of JPMorgan Chase Bank N.A.'s, a2 BCA reflects JPM's steadfast strategic direction and consistent execution across cycles. This consistent strategic direction and execution has allowed the firm to steadily build its four complete and scaled franchises, even while contending with intense competition from banks and fintech firms as well as heightened economic, geopolitical and market risks. For JPM's bondholders, this diversification has led to stable results, despite the large size and complexity of its capital markets franchises. Execution of this strategy has also allowed JPM to build a resilient liquidity profile, underpinned by a diverse deposit franchise, whilst more comprehensive regulation has bolstered the bank's capital requirements. Accordingly, the a2 BCA is amongst the highest assessments that Moody's assigns to banks with global capital market operations.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The large size and complexity of JPM's capital markets businesses can pose substantial creditor risks. Therefore, a BCA upgrade would depend on sustaining strong and stable performance and capital levels above peer averages while maintaining a superior track record of risk controls and consistency of management stewardship. An upgrade of the BCA would likely lead to an upgrade of JPM's ratings assuming no significant change in the firm's liability structure.
The BCA could be downgraded if JPM experiences a significant deterioration in capital or liquidity, demonstrates a marked increase in risk appetite, or experiences a major litigation or other sizeable operational risk charge or control failure. Further, erosion of competitive standing of any of the four franchises that reduces the benefits of diversification could lead to downward rating pressure.
Downward rating pressure could develop for specific debt classes if there were changes in regulatory requirements or other developments that were expected to lead to a sustained decrease in either the amount of that debt class outstanding or in the amount of more junior obligations outstanding relative to tangible banking assets and estimated losses in Moody's advanced LGF framework.
The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://ratings.moodys.com/api/rmc-documents/71997. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Upgrades:
..Issuer: JPMorgan Chase & Co.
.... LT Issuer Rating, Upgraded to A1 from A2, Stable from Positive
....Senior Unsecured Regular Bond/Debenture (Local Currency), Upgraded to A1 from A2, Stable from Positive
....Senior Unsecured Regular Bond/Debenture (Foreign Currency), Upgraded to A1 from A2, Stable from Positive
....Senior Unsecured Shelf (Local Currency), Upgraded to (P)A1 from (P)A2
....Senior Unsecured Medium-Term Note Program (Local Currency), Upgraded to (P)A1 from (P)A2
....Senior Unsecured Medium-Term Note Program (Foreign Currency), Upgraded to (P)A1 from (P)A2
..Issuer: Bear Stearns Companies LLC. (The)
....Senior Unsecured Regular Bond/Debenture (Local Currency), Upgraded to A1 from A2, Stable from Positive
..Issuer: J.P. Morgan & Co. Incorporated
....Senior Unsecured Regular Bond/Debenture (Local Currency), Upgraded to A1 from A2, Stable from Positive
....Senior Unsecured Regular Bond/Debenture (Foreign Currency), Upgraded to A1 from A2, Stable from Positive
..Issuer: JPMorgan Chase Financial Company LLC
....Backed Senior Unsecured Medium-Term Note Program (Local Currency), Upgraded to (P)A1 from (P)A2
....Backed Senior Unsecured Shelf (Local Currency), Upgraded to (P)A1 from (P)A2
....Backed Senior Unsecured Regular Bond/Debenture (Local Currency), Upgraded to A1 from A2, Stable from Positive
....Backed Senior Unsecured Regular Bond/Debenture (Foreign Currency), Upgraded to A1 from A2, Stable from Positive
Affirmations:
..Issuer: JPMorgan Chase & Co.
....Subordinate Medium-Term Note Program (Local Currency), Affirmed (P)A3
....Subordinate Medium-Term Note Program (Foreign Currency), Affirmed (P)A3
....Subordinate Shelf (Local Currency), Affirmed (P)A3
....Preferred Shelf Non-Cumulative (Local Currency), Affirmed (P)Baa2
....Other Short Term (Local Currency), Affirmed (P)P-1
.... Commercial Paper (Local Currency), Affirmed P-1
....Junior Subordinated Regular Bond/Debenture (Local Currency), Affirmed Baa1(hyb)
....Pref. Stock Non-cumulative (Local Currency), Affirmed Baa2(hyb)
....Subordinate Regular Bond/Debenture (Local Currency), Affirmed A3
..Issuer: JPMorgan Chase Bank, N.A.
.... Adjusted Baseline Credit Assessment, Affirmed a2
.... Baseline Credit Assessment, Affirmed a2
.... LT Counterparty Risk Assessment, Affirmed Aa1(cr)
.... ST Counterparty Risk Assessment, Affirmed P-1(cr)
.... ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
.... LT Counterparty Risk Rating (Foreign Currency), Affirmed Aa1
.... ST Counterparty Risk Rating (Local Currency), Affirmed P-1
.... LT Counterparty Risk Rating (Local Currency), Affirmed Aa1
.... LT Issuer Rating, Affirmed Aa2, Stable
.... LT Bank Deposit (Local Currency), Affirmed Aa1, Stable
.... ST Bank Deposit (Local Currency), Affirmed P-1
....Subordinate Bank Note Program (Local Currency), Affirmed (P)Aa3
....Senior Unsecured Bank Note Program (Local Currency), Affirmed (P)Aa2
....Subordinate Medium-Term Note Program (Foreign Currency), Affirmed (P)Aa3
....Subordinate Medium-Term Note Program (Local Currency), Affirmed (P)Aa3
....Senior Unsecured Medium-Term Note Program (Foreign Currency), Affirmed (P)Aa2
....Senior Unsecured Medium-Term Note Program (Local Currency), Affirmed (P)Aa2
....Other Short Term (Local Currency), Affirmed (P)P-1
....ST Bank Note Program (Local Currency), Affirmed P-1
....LT Deposit Note Program (Local Currency), Affirmed (P)Aa1
....LT Deposit Note/Takedown (Local Currency), Affirmed Aa1, Stable
....Senior Unsecured Regular Bond/Debenture (Local Currency), Affirmed Aa2, Stable
....Senior Unsecured Regular Bond/Debenture (Foreign Currency), Affirmed Aa2, Stable
..Issuer: JPMorgan Chase Bank, N.A., London Branch
.... LT Counterparty Risk Assessment, Affirmed Aa1(cr)
.... ST Counterparty Risk Assessment, Affirmed P-1(cr)
.... LT Counterparty Risk Rating (Local Currency), Affirmed Aa1
.... LT Counterparty Risk Rating (Foreign Currency), Affirmed Aa1
.... ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
.... ST Counterparty Risk Rating (Local Currency), Affirmed P-1
....Senior Unsecured Medium-Term Note Program (Foreign Currency), Affirmed (P)Aa2
....Other Short Term (Foreign Currency), Affirmed (P)P-1
..Issuer: JPMorgan Chase Bank, N.A., New York Branch
.... LT Counterparty Risk Assessment, Affirmed Aa1(cr)
.... ST Counterparty Risk Assessment, Affirmed P-1(cr)
.... LT Counterparty Risk Rating (Local Currency), Affirmed Aa1
.... LT Counterparty Risk Rating (Foreign Currency), Affirmed Aa1
.... ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
.... ST Counterparty Risk Rating (Local Currency), Affirmed P-1
....Subordinate Medium-Term Note Program (Foreign Currency), Affirmed (P)Aa3
....Senior Unsecured Medium-Term Note Program (Foreign Currency), Affirmed (P)Aa2
..Issuer: JPMorgan Chase Bank, N.A., Paris Branch
.... LT Counterparty Risk Assessment, Affirmed Aa1(cr)
.... ST Counterparty Risk Assessment, Affirmed P-1(cr)
.... ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
.... LT Counterparty Risk Rating (Foreign Currency), Affirmed Aa1
.... ST Counterparty Risk Rating (Local Currency), Affirmed P-1
.... LT Counterparty Risk Rating (Local Currency), Affirmed Aa1
.... ST Bank Deposit (Foreign Currency), Affirmed P-1
.... LT Bank Deposit (Foreign Currency), Affirmed Aa1, Stable
..Issuer: JPMorgan Chase Bank, N.A., Singapore Br
.... LT Counterparty Risk Assessment, Affirmed Aa1(cr)
.... ST Counterparty Risk Assessment, Affirmed P-1(cr)
.... ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
.... LT Counterparty Risk Rating (Foreign Currency), Affirmed Aa1
.... LT Counterparty Risk Rating (Local Currency), Affirmed Aa1
.... ST Counterparty Risk Rating (Local Currency), Affirmed P-1
.... LT Bank Deposit (Foreign Currency), Affirmed Aa1, Stable
.... ST Bank Deposit (Foreign Currency), Affirmed P-1
....Senior Unsecured Medium-Term Note Program (Foreign Currency), Affirmed (P)Aa2
....Other Short Term (Foreign Currency), Affirmed (P)P-1
..Issuer: JPMorgan Chase Bank, N.A., Toronto
.... Backed Commercial Paper (Foreign Currency), Affirmed P-1
.... LT Counterparty Risk Assessment, Affirmed Aa1(cr)
.... ST Counterparty Risk Assessment, Affirmed P-1(cr)
.... LT Counterparty Risk Rating (Local Currency), Affirmed Aa1
.... LT Counterparty Risk Rating (Foreign Currency), Affirmed Aa1
.... ST Counterparty Risk Rating (Foreign Currency), Affirmed P-1
.... ST Counterparty Risk Rating (Local Currency), Affirmed P-1
.... ST Bank Deposit (Local Currency), Affirmed P-1
.... ST Bank Deposit (Foreign Currency), Affirmed P-1
....LT Bank Deposit (Local Currency), Affirmed Aa1, Stable
....LT Bank Deposit (Foreign Currency), Affirmed Aa1, Stable
Outlook Actions:
..Issuer: JPMorgan Chase & Co.
....Outlook, Changed To Stable From Positive(m)
..Issuer: JPMorgan Chase Bank, N.A.
....Outlook, Remains Stable
..Issuer: JPMorgan Chase Bank, N.A., London Branch
....Outlook, Remains Stable
..Issuer: JPMorgan Chase Bank, N.A., New York Branch
....Outlook, Remains Stable
..Issuer: JPMorgan Chase Bank, N.A., Paris Branch
....Outlook, Remains Stable
..Issuer: JPMorgan Chase Bank, N.A., Singapore Br
....Outlook, Remains Stable
..Issuer: JPMorgan Chase Bank, N.A., Toronto
....Outlook, Remains Stable
..Issuer: JPMorgan Chase Financial Company LLC
....Outlook, Changed To Stable From Positive
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.
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Peter E. Nerby
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
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U.S.A.
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Donald Robertson
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
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