v3.20.4
Business Segments
 12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Business Segments
Note 25.
Business Segments
The firm reports its activities in four business segments: Investment Banking, Global Markets, Asset Management and Consumer & Wealth Management. See Note 1 for information about the firm’s business segments.
Compensation and benefits expenses in the firm’s segments reflect, among other factors, the overall performance of the firm, as well as the performance of individual businesses. Consequently,
pre-tax
margins in one segment of the firm’s business may be significantly affected by the performance of the firm’s other 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.
Segment Results
The table below presents a summary of the firm’s segment results.
 
    Year Ended December  
       
$ in millions
  
 
2020
 
      2019        2018  
Investment Banking
                          
Non-interest
revenues
  
 
$  9,158
 
      $  7,079        $  7,856  
Net interest income
  
 
265
 
      520        322  
Total net revenues
  
 
9,423
 
      7,599        8,178  
Provision for credit losses
  
 
1,624
 
      333        124  
Operating expenses
  
 
6,134
 
      4,685        4,473  
Pre-tax
earnings
  
 
$  1,665
 
      $  2,581        $  3,581  
Net earnings
  
 
$  1,262
 
      $  2,065        $  3,001  
Net earnings to common
  
 
$  1,193
 
      $  1,996        $  2,924  
Average common equity
  
 
$11,313
 
      $11,167        $  8,737  
Return on average common equity
  
 
10.5%
 
      17.9%        33.5%  
 
Global Markets
                          
Non-interest
revenues
  
 
$18,928
 
      $13,109        $12,831  
Net interest income
  
 
2,229
 
      1,670        1,607  
Total net revenues
  
 
21,157
 
      14,779        14,438  
Provision for credit losses
  
 
274
 
      35        52  
Operating expenses
  
 
12,806
 
      10,851        10,585  
Pre-tax
earnings
  
 
$  8,077
 
      $  3,893        $  3,801  
Net earnings
  
 
$  6,122
 
      $  3,114        $  3,185  
Net earnings to common
  
 
$  5,766
 
      $  2,729        $  2,796  
Average common equity
  
 
$40,760
 
      $40,060        $41,237  
Return on average common equity
  
 
14.1%
 
      6.8%        6.8%  
 
Asset Management
                          
Non-interest
revenues
  
 
$  7,743
 
      $  8,454        $  8,353  
Net interest income
  
 
241
 
      511        482  
Total net revenues
  
 
7,984
 
      8,965        8,835  
Provision for credit losses
  
 
442
 
      274        160  
Operating expenses
  
 
5,142
 
      4,817        4,179  
Pre-tax
earnings
  
 
$  2,400
 
      $  3,874        $  4,496  
Net earnings
  
 
$  1,819
 
      $  3,099        $  3,767  
Net earnings to common
  
 
$  1,740
 
      $  3,013        $  3,668  
Average common equity
  
 
$20,491
 
      $21,575        $19,061  
Return on average common equity
  
 
8.5%
 
      14.0%        19.2%  
 
Consumer & Wealth Management
                          
Non-interest
revenues
  
 
$  3,980
 
      $  3,542        $  3,809  
Net interest income
  
 
2,016
 
      1,661        1,356  
Total net revenues
  
 
5,996
 
      5,203        5,165  
Provision for credit losses
  
 
758
 
      423        338  
Operating expenses
  
 
4,901
 
      4,545        4,224  
Pre-tax
earnings
  
 
$    
 
337
 
      $     235        $     603  
Net earnings
  
 
$    
 
256
 
      $     188        $     506  
Net earnings to common
  
 
$    
 
216
 
      $     159        $     472  
Average common equity
  
 
$  8,012
 
      $  6,292        $  4,950  
Return on average common equity
  
 
2.7%
 
      2.5%        9.5%  
 
Total
                          
Non-interest
revenues
  
 
$39,809
 
      $32,184        $32,849  
Net interest income
  
 
4,751
 
      4,362        3,767  
Total net revenues
  
 
44,560
 
      36,546        36,616  
Provision for credit losses
  
 
3,098
 
      1,065        674  
Operating expenses
  
 
28,983
 
      24,898        23,461  
Pre-tax
earnings
  
 
$12,479
 
      $10,583        $12,481  
Net earnings
  
 
$  9,459
 
      $  8,466        $10,459  
Net earnings to common
  
 
$  8,915
 
      $  7,897        $  9,860  
Average common equity
  
 
$80,576
 
      $79,094        $73,985  
Return on average common equity
  
 
11.1%
 
      10.0%        13.3%  
In the table above:
 
•  
Revenues and expenses directly associated with each segment are included in determining
pre-tax
earnings.
 
•  
Net revenues in the firm’s segments include allocations of interest income and expense to specific positions in relation to the cash generated by, or funding requirements of, such positions. Net interest is included in segment net revenues as it is consistent with how management assesses segment performance.
 
•  
Total operating expenses included net provisions for litigation and regulatory proceedings of $3.42 billion for 2020, $1.24 billion for 2019 and $844 million for 2018, primarily reflected in Investment Banking and Global Markets.
 
•  
Net earnings included an income tax benefit of $487 million in 2018 related to Tax Legislation.
 
•  
Overhead expenses not directly allocable to specific segments are allocated ratably based on direct segment expenses.
The table below presents depreciation and amortization expense by segment.
 
    Year Ended December  
       
$ in millions
  
 
2020
 
      2019        2018  
Investment Banking
  
 
$  
 
174
 
      $   139        $   114  
Global Markets
  
 
611
 
      646        563  
Asset Management
  
 
740
 
      618        450  
Consumer & Wealth Management
  
 
377
 
      301        201  
Total
  
 
$1,902
 
      $1,704        $1,328  
Segment Assets
The table below presents assets by segment.
 
    As of December  
     
$ in millions
  
 
2020
 
      2019  
Investment Banking
  
 
$  
 
116,242
 
      $  92,009  
Global Markets
  
 
844,606
 
      725,060  
Asset Management
  
 
95,751
 
      92,102  
Consumer & Wealth Management
  
 
106,429
 
      83,797  
Total
  
 
$1,163,028
 
      $992,968  
The table below presents gross loans by segment and loan type, and allowance for loan losses by segment.
 
    As of December  
$ in millions
  
 
2020
 
      2019  
Investment Banking
                 
Corporate
  
 
$  27,866
 
      $  27,035  
Loans, gross
  
 
27,866
 
      27,035  
Allowance for loan losses
  
 
(1,322
) 
      (470 ) 
Loans
  
 
26,544
 
      26,565  
 
Global Markets
                 
Corporate
  
 
13,248
 
      11,852  
Real estate
  
 
16,915
 
      15,671  
Other
  
 
3,499
 
      3,756  
Loans, gross
  
 
33,662
 
      31,279  
Allowance for loan losses
  
 
(448
) 
      (168 ) 
Loans
  
 
33,214
 
      31,111  
 
Asset Management
                 
Corporate
  
 
7,545
 
      7,420  
Real estate
  
 
9,125
 
      9,030  
Other
  
 
675
 
      1,036  
Loans, gross
  
 
17,345
 
      17,486  
Allowance for loan losses
  
 
(787
) 
      (385 ) 
Loans
  
 
16,558
 
      17,101  
 
Consumer & Wealth Management
                 
Wealth management
  
 
33,023
 
      27,940  
Installment
  
 
3,823
 
      4,747  
Credit cards
  
 
4,270
 
      1,858  
Loans, gross
  
 
41,116
 
      34,545  
Allowance for loan losses
  
 
(1,317
) 
      (418 ) 
Loans
  
 
39,799
 
      34,127  
 
Total
                 
Loans, gross
  
 
119,989
 
      110,345  
Allowance for loan losses
  
 
(3,874
) 
      (1,441 ) 
Loans
  
 
$116,115
 
      $108,904  
See Note 9 for further information about loans.
Geographic Information
Due to the highly integrated nature of international financial markets, the firm manages its businesses based on the profitability of the enterprise as a whole. The methodology for allocating profitability to geographic regions is dependent on estimates and management judgment because a significant portion of the firm’s activities require cross-border coordination in order to facilitate the needs of the firm’s clients. Geographic results are generally allocated as follows:
 
•  
Investment Banking: location of the client and investment banking team.
 
•  
Global Markets: FICC and Equities intermediation: location of the market-making desk; FICC and Equities financing (excluding prime brokerage financing): location of the desk; prime brokerage financing: location of the primary market for the underlying security.
 
•  
Asset Management (excluding Equity investments and Lending and debt investments): location of the sales team; Equity investments: location of the investment; Lending and debt investments: location of the client.
 
•  
Consumer & Wealth Management: Wealth management: location of the sales team; Consumer banking: location of the client.
The table below presents total net revenues,
pre-tax
earnings and net earnings by geographic region.
 
$ in millions
  
 
2020
 
     2019       2018  
Year Ended December
                                                
Americas
  
 
$27,508
 
  
 
62%
 
     $22,148       60%       $22,339       61%  
EMEA
  
 
10,868
 
  
 
24%
 
     9,745       27%       9,244       25%  
Asia
  
 
6,184
 
  
 
14%
 
     4,653       13%       5,033       14%  
Total net revenues
  
 
$44,560
 
  
 
100%
 
     $36,546       100%       $36,616       100%  
 
Americas
  
 
$  9,019
 
  
 
72%
 
     $  6,623       62%       $  8,125       65%  
EMEA
  
 
3,041
 
  
 
25%
 
     3,349       32%       3,244       26%  
Asia
  
 
419
 
  
 
3%
 
     611       6%       1,112       9%  
Total pre-tax earnings
  
 
$12,479
 
  
 
100%
 
     $10,583       100%       $12,481       100%  
 
Americas
  
 
$  7,468
 
  
 
79%
 
     $  5,514       65%       $  7,092       68%  
EMEA
  
 
2,090
 
  
 
22%
 
     2,600       31%       2,522       24%  
Asia
  
 
(99
) 
  
 
(1)%
 
     352       4%       845       8%  
Total net earnings
  
 
$  9,459
 
  
 
100%
 
     $  8,466       100%       $10,459       100%  
In the table above:
 
•  
Americas net earnings included an income tax benefit of $487 million in 2018 related to Tax Legislation.
 
•  
Asia
pre-tax
earnings and net earnings for 2020 and 2019 were impacted by net provisions for litigation and regulatory proceedings.
 
•  
Substantially all of the amounts in Americas were attributable to the U.S.
 
•  
Asia includes Australia and New Zealand.