The following is management's discussion and analysis ("MD&A") of the financial condition and results of operations of JPMorgan Chase & Co. ("JPMorgan Chase" or the "Firm") for the first quarter of 2017.

This Form 10-Q should be read in conjunction with JPMorgan Chase's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the U.S. Securities and Exchange Commission (" 2016 Annual Report" or 2016 "Form 10-K"), to which reference is hereby made. See the Glossary of terms and acronyms on pages 151–159 for definitions of terms and acronyms used throughout this Form 10-Q.

The MD&A included in this Form 10-Q contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. For a discussion of certain of those risks and uncertainties and the factors that could cause JPMorgan Chase's actual results to differ materially because of those risks and uncertainties, see Forward-looking Statements on page 72 of this Form 10-Q and Part I, Item 1A, Risk Factors, on pages 8–21 of JPMorgan Chase's 2016 Annual Report.

JPMorgan Chase & Co., a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America ( " U.S. " ), with operations worldwide; the Firm had $2.5 trillion in assets and $255.9 billion in stockholders' equity as of March 31, 2017 . The Firm is a leader in investment banking, financial

services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world's most prominent corporate, institutional and government clients.

JPMorgan Chase's principal bank subsidiaries are JPMorgan Chase Bank, National Association ( " JPMorgan Chase Bank, N.A. " ), a national banking association with U.S. branches in 23 states, and Chase Bank USA, National Association ( " Chase Bank USA, N.A. " ), a national banking association that is the Firm's credit card-issuing bank. JPMorgan Chase's principal nonbank subsidiary is J.P. Morgan Securities LLC ( " JPMorgan Securities " ), the Firm's U.S. investment banking firm. The bank and nonbank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. One of the Firm's principal operating subsidiaries in the United Kingdom ( " U.K. " ) is J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase Bank, N.A.

For management reporting purposes, the Firm's activities are organized into four major reportable business segments, as well as a Corporate segment. The Firm's consumer business is the Consumer & Community Banking ( " CCB " ) segment. The Firm's wholesale business segments are Corporate & Investment Bank ( " CIB " ), Commercial Banking ( " CB " ), and Asset & Wealth Management ( " AWM " ). For a description of the Firm's business segments, and the products and services they provide to their respective client bases, refer to Note 33 of JPMorgan Chase's 2016 Annual Report.

This executive overview of the MD&A highlights selected information and may not contain all of the information that is important to readers of this Form 10-Q. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates affecting the Firm and its various lines of business, this Form 10-Q should be read in its entirety.

Firmwide overview

ROTCE, TBVPS and core loans are considered key financial performance measures. Each of the Fully Phased-In capital and leverage measures is considered a key regulatory capital measure. For a further discussion of each of these measures, see Explanation and Reconciliation of the Firm's Use of Non-GAAP Financial Measures and Key Performance Measures on pages 13–15 , and Capital Risk Management on pages 32–39 .

Business highlights

For a detailed discussion of results by line of business, refer to the Business Segment Results on pages 16–30 .

JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided credit and raised capital of $561 billion for wholesale and consumer clients during the first three months of 2017:

2017 outlook

These current expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase's management and are subject to significant risks and uncertainties. These risks and uncertainties could cause the Firm's actual results to differ materially from those set forth in such forward-looking statements. See Forward-Looking Statements on page 72 of this Form 10-Q and Risk Factors on pages 8–21 of JPMorgan Chase's 2016 Annual Report. There is no assurance that actual results for the full year of 2017 will be in line with the outlook set forth below, and the Firm does not undertake to update any of these forward-looking statements to reflect the impact of circumstances or events that arise after the date hereof.

JPMorgan Chase's outlook for the remainder of 2017 should be viewed against the backdrop of the global and U.S. economies, financial markets activity, the geopolitical environment, the competitive environment, client activity levels, and regulatory and legislative developments in the U.S. and other countries where the Firm does business. Each of these interrelated factors will affect the performance of the Firm and its lines of business. The Firm expects it will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the legal and regulatory, as well as business and economic, environment in which it operates.

Management's current expectations:

Total net revenue increased by 6% on higher net interest income and noninterest revenue. Growth in noninterest revenue was driven by CIB Markets and Banking activities, partially offset by higher Card new account origination costs and lower Mortgage Banking MSR risk management results and servicing revenue.

Investment banking fees increased due to higher debt and equity underwriting fees reflecting strong underlying issuance activity and market share gains, partially offset by lower advisory fees. For additional information, see CIB segment results on pages 21–25 and Note 5 .

Principal transactions revenue increased reflecting broad-based strength across products in CIB's Fixed Income Markets business, including:

For additional information, see CIB and Corporate segment results on pages 21–25 and page 30 , respectively, and

Note 5 .

Mortgage fees and related income decreased driven by lower MSR risk management results and lower servicing revenue due to lower average third-party loans serviced. For further information on mortgage fees and related income, see CCB segment results on pages 17–20 and

Note 15 .

Card income decreased predominantly driven by higher new account origination costs, partially offset by higher other card-related fees, largely annual fees. For further information, see CCB segment results on pages 17–20 .

Other income decreased primarily reflecting the absence of a gain in the prior year on the disposal of an asset in AWM and due to lower other income in CIB, partially offset by higher operating lease income reflecting growth in auto operating lease volume in CCB. For further information on other income, see Note 5 .

Net interest income increased primarily driven by loan growth across the businesses and the net impact of higher rates. The Firm's average interest-earning assets were $2.2 trillion, and the net interest yield on these assets, on a fully taxable equivalent ("FTE " ) basis, was 2.33%, an increase of 3 basis points from the prior year.

For additional information on asset management, administration and commissions income, see the segment discussions of CIB and AWM on pages 21–25 and pages 28–29 , respectively, and Note 5 ; on lending- and deposit-related fees, see the segment results for CCB on pages 17–20 , CIB on pages 21–25 , and CB on pages 26–27 and Note 5 ; and on securities gains, see the Corporate segment discussion on page 30 .

The provision for credit losses decreased as a result of:

For a more detailed discussion of the student loan transfer, see CCB segment results on pages 17–20 ; the credit portfolio and the allowance for credit losses, see the segment discussions of CCB on pages 17–20 , CIB on pages 21–25 , CB on pages 26–27 , the Allowance for Credit Losses on pages 53–55 and Note 13 .

Compensation expense increased predominantly driven by:

Noncompensation expense increased as a result of:

For a further discussion of legal expense, see Note 22 .

The effective tax rate decreased predominantly due to a higher tax benefit related to the appreciation of the Firm's stock price upon vesting of employee stock-based awards above their original grant price, and the continued utilization of certain deferred tax assets.

Cash and due from banks and deposits with banks increased primarily driven by deposit growth and a shift in the deployment of excess cash from securities purchased under resale agreements. The Firm's excess cash is placed with various central banks, predominantly Federal Reserve Banks.

Federal funds sold and securities purchased under resale agreements decreased due to the shift in the deployment of excess cash to deposits with banks.

For additional information on the Firm's Liquidity Risk Management, see pages 57–61 .

Trading assets and liabilities–debt and equity instruments increased predominantly related to client-driven market-making activities in CIB, reflecting :

For additional information, refer to Note 2 .

Trading assets and liabilities–derivative receivables and payables decreased predominantly related to client-driven market-making activities in CIB Markets, reflecting a decrease in derivative receivables and payables driven by maturities and market movements, which reduced foreign exchange and interest rate receivables, as well as foreign exchange payables.

For additional information, refer to Derivative contracts on pages 51–52 , and Notes 2 and 4 .

Loans were flat and reflected the following:

The allowance for loan losses decreased reflecting the utilization of the allowance for loan losses in connection with the transfer of the student loan portfolio to held-for-sale, and the net reduction in the wholesale allowance primarily driven by Oil & Gas.

For detailed discussion of loans and the allowance for loan losses, refer to Credit Risk Management on pages 40–55 , and Notes 2 , 3 , 12 and 13 .

Accrued interest and accounts receivable increased reflecting higher client receivables related to client-driven market-making activities in CIB.

For information on Securities, see Notes 2 and 10 ; and MSRs, see Note 15 .

Deposits increased due to the following:

For more information on deposits, refer to the Liquidity Risk Management discussion on pages 57–61 ; and Notes 2

and 16 .

Federal funds purchased and securities loaned or sold under repurchase agreements increased predominantly due to higher financing of client-driven market-making activities in CIB. For additional information on the Firm's Liquidity Risk Management, see pages 57–61 .

Commercial paper increased reflecting higher issuance in the wholesale markets consistent with Treasury and Chief Investment Office's ("CIO") short-term funding plans. For additional information, see Liquidity Risk Management on pages 57–61 .

Accounts payable and other liabilitie s decreased due to lower payables to merchants in CCB.

For information on the Firm's long-term debt activities, see Liquidity Risk Management on pages 57–61 ; on changes in stockholders' equity, see page 76 , and on the Firm's capital actions, see Capital actions on page 38 .

Consolidated cash flows overvie w

The following is a discussion of cash flow activities during

the three months ended March 31, 2017 and 2016.

Operating activities

Cash used in operating activities for the period ending March 31, 2017 resulted from:

Client-driven market-making activities in CIB

Other operating activities

Cash used in operating activities in 2016 from client-driven market-making activities in CIB resulted from:

Investing activities

Cash used in investing activities during 2017 resulted from:

Partially offsetting these cash outflows were net proceeds from paydowns, maturities, sales and purchases of investment securities and a decrease in securities purchased under resale agreements due to the shift in the deployment of excess cash to deposits with banks.

Cash used in investing activities during 2016 resulted from:

Financing activities

Cash provided by financing activities in 2017 resulted from:

Cash provided by financing activities in 2016 resulted from:

For both periods, cash was used for net payments of long-term borrowings, repurchases of common stock and dividends on common and preferred stock.

For a further discussion of the activities affecting the Firm's cash flows, see Consolidated Balance Sheets Analysis on pages 9–10 , Capital Risk Management on pages 32–39 , and Liquidity Risk Management on pages 57–61 of this Form 10-Q, and pages 110–115 of JPMorgan Chase's 2016 Annual Report.

In the normal course of business, the Firm enters into various contractual obligations that may require future cash payments. Certain obligations are recognized on-balance sheet, while others are off-balance sheet under accounting principles generally accepted in the U.S. ("U.S. GAAP"). The Firm is involved with several types of off–balance sheet arrangements, including through nonconsolidated special-purpose entities ("SPEs"), which are a type of VIE, and through lending-related financial instruments (e.g., commitments and guarantees). For further discussion, see Note 20 of this Form 10-Q and Off–Balance Sheet Arrangements and Contractual Cash Obligations on pages 45–46 and Note 29 of JPMorgan Chase's 2016 Annual Report.

Special-purpose entities

The most common type of VIE is an SPE. SPEs are commonly used in securitization transactions in order to isolate certain assets and distribute the cash flows from those assets to investors. SPEs are an important part of the financial markets, including the mortgage- and asset-backed securities and commercial paper markets, as they provide market liquidity by facilitating investors' access to specific portfolios of assets and risks. The Firm holds capital, as deemed appropriate, against all SPE-related transactions and related exposures, such as derivative transactions and lending-related commitments and guarantees. For further information on the types of SPEs, see Note 14 of this Form 10-Q, and Note 1 and Note 16 of JPMorgan Chase's 2016 Annual Report.

Implications of a credit rating downgrade to JPMorgan Chase Bank, N.A.

For certain liquidity commitments to SPEs, JPMorgan Chase Bank, N.A. could be required to provide funding if its short-term credit rating were downgraded below specific levels, primarily "P-1", "A-1" and "F1" for Moody's Investors Service ("Moody's"), Standard & Poor's and Fitch, respectively. These liquidity commitments support the issuance of asset-backed commercial paper by Firm-administered consolidated SPEs. In the event of a short-term credit rating downgrade, JPMorgan Chase Bank, N.A., absent other solutions, would be required to provide funding to the SPE if the commercial paper could not be reissued as it matured. The aggregate amounts of commercial paper outstanding held by third parties as of March 31, 2017 , and December 31, 2016 , was $3.1 billion and $2.7 billion , respectively. The aggregate amounts of commercial paper issued by these SPEs could increase in future periods should clients of the Firm-administered consolidated SPEs draw down on certain unfunded lending-related commitments. These unfunded lending-related commitments were $7.0 billion and $7.4 billion at March 31, 2017 , and December 31, 2016 , respectively. The Firm could facilitate the refinancing of some of the clients' assets in order to reduce the funding obligation. For further

information, see the discussion of Firm-administered multiseller conduits in Note 14 .

The Firm also acts as liquidity provider for certain municipal bond vehicles. The Firm's obligation to perform as liquidity provider is conditional and is limited by certain termination events, which include bankruptcy or failure to pay by the municipal bond issuer and any credit enhancement provider, an event of taxability on the municipal bonds or the immediate downgrade of the municipal bond to below investment grade. See Note 14 for additional information.

Off–balance sheet lending-related financial instruments, guarantees, and other commitments

JPMorgan Chase provides lending-related financial instruments (e.g., commitments and guarantees) to meet the financing needs of its customers. The contractual amount of these financial instruments represents the maximum possible credit risk to the Firm should the counterparty draw upon the commitment or the Firm be required to fulfill its obligation under the guarantee, and should the counterparty subsequently fail to perform according to the terms of the contract. Most of these commitments and guarantees are refinanced, extended, cancelled, or expire without being drawn or a default occurring. As a result, the total contractual amount of these instruments is not, in the Firm's view, representative of its actual future credit exposure or funding requirements. For further discussion of lending-related financial instruments, guarantees and other commitments, and the Firm's accounting for them, see Lending-related commitments on page 51 and Note 20 . For a discussion of liabilities associated with loan sales and securitization-related indemnifications, see Note 20 .

The Firm prepares its Consolidated Financial Statements using U.S. GAAP; these financial statements appear on pages 73–77 . That presentation, which is referred to as "reported" basis, provides the reader with an understanding of the Firm's results that can be tracked consistently from year-to-year and enables a comparison of the Firm's performance with other companies' U.S. GAAP financial statements.

In addition to analyzing the Firm's results on a reported basis, management reviews the Firm's results, including the overhead ratio, and the results of the lines of business, on a "managed" basis, which are non-GAAP financial measures. The Firm's definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the reportable business segments) on a FTE basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. These non-GAAP financial measures allow management to assess the comparability of revenue from year-to-year arising from both taxable and tax-exempt sources. The corresponding income tax impact

related to tax-exempt items is recorded within income tax expense/(benefit). These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.

Management also uses certain non-GAAP financial measures at the Firm and business-segment level, because these other non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Firm or of the particular business segment, as the case may be, and, therefore, facilitate a comparison of the Firm or the business segment with the performance of its relevant competitors. For additional information on these non-GAAP measures, see Business Segment Results on pages 16–30 .

Additionally, certain credit metrics and ratios disclosed by the Firm exclude PCI loans, and are therefore non-GAAP measures. For additional information on these non-GAAP measures, see Credit Risk Management on pages 40–55 .

Non-GAAP financial measures used by the Firm may not be comparable to similarly named non-GAAP financial measures used by other companies.

Net interest income excluding CIB's Markets businesses

In addition to reviewing net interest income on a managed basis, management also reviews net interest income excluding net interest income arising from CIB's Markets businesses to assess the performance of the Firm's lending, investing (including asset-liability management) and deposit-raising activities. CIB's Markets businesses represent both Fixed Income Markets and Equity Markets. The data presented below are non-GAAP financial measures due to the exclusion of net interest income from CIB's Markets businesses ("CIB Markets").

Management believes this exclusion provides investors and analysts with another measure by which to analyze the non-markets-related business trends of the Firm and provides a comparable measure to other financial institutions that are primarily focused on lending, investing and deposit-raising activities.

Tangible common equity, ROTCE and TBVPS

Tangible common equity ("TCE"), ROTCE and TBVPS are each non-GAAP financial measures. TCE represents the Firm's common stockholders' equity (i.e., total stockholders' equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm's net income applicable to common equity as a percentage of average TCE. TBVPS represents the Firm's TCE at period-end divided by common shares at period-end. TCE, ROTCE, and TBVPS are utilized by the Firm, as well as investors and analysts, in assessing the Firm's use of equity.

The Firm considers the following to be key regulatory capital measures:

The Firm, as well as banking regulators, investors and analysts use these measures to assess the Firm's regulatory capital position and to compare the Firm's regulatory capital to that of other financial services companies.

For additional information on these measures, see Capital Risk Management on pages 32–39 .

Core loans are also considered a key performance measure. Core loans represent loans considered central to the Firm's ongoing businesses; and exclude loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. Core loans are utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio.

The Firm is managed on a line of business basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.

The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis. For a definition of managed basis, see Explanation and Reconciliation of the Firm's use of Non-GAAP Financial Measures and Key Performance Measures on pages 13–15 .

Description of business segment reporting methodology

Results of the business segments are intended to reflect each segment as if it were a stand-alone business. The management reporting process that derives business segment results allocates income and expense using market-based methodologies. For further information

about line of business capital, see Line of business equity

on page 37 .

The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.

Business segment capital allocation changes

The amount of capital assigned to each business is referred to as equity. On at least an annual basis, the Firm assesses the level of capital required for each line of business as well as the assumptions and methodologies used to allocate capital. Through the end of 2016, capital was allocated to the lines of business based on a single measure, Basel III Advanced Fully Phased-In RWA. Effective January 1, 2017, the Firm's methodology used to allocate capital to the business segments was updated. The new methodology incorporates Basel III Standardized Fully Phased-In RWA (as well as Basel III Advanced Fully Phased-In RWA), leverage, the GSIB surcharge, and a simulation of capital in a severe stress environment. The methodology will continue to be weighted towards Basel III Advanced Fully Phased-In RWA because the Firm believes it to be the best proxy for economic risk. In addition, under the new methodology, capital is no longer allocated to each line of business for goodwill and other intangibles associated with acquisitions effected by the line of business.

For a further discussion of those methodologies, see Business Segment Results – Description of business segment reporting methodology on pages 51–52 of JPMorgan Chase's 2016 Annual Report.

The following discussions of the business segment results are based on a comparison of the three months ended March 31, 2017 versus the corresponding period in the prior year, unless otherwise specified.