v3.21.2
Business Segments
 6 Months Ended
Jun. 30, 2021
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.
 
   
Three Months
Ended June
           
Six Months
Ended June
  
           
$ in millions
  
 
2021
 
     2020    
 
  
 
2021
 
     2020  
Investment Banking
                                    
Non-interest
revenues
  
 
$  3,485
 
     $  2,664        
 
$  7,156
 
     $  4,710  
Net interest income
  
 
124
 
     (7 )   
 
  
 
224
 
     131  
Total net revenues
  
 
3,609
 
     2,657        
 
7,380
 
     4,841  
Provision for credit losses
  
 
(107
) 
     819        
 
(270
) 
     1,441  
Operating expenses
  
 
1,955
 
     2,704    
 
  
 
3,818
 
     3,873  
Pre-tax
earnings/(loss)
  
 
$  1,761
 
     $   
  
(866		 )       
 
$  3,832
 
     $   
  
(473		 ) 
Net earnings/(loss)
  
 
$  1,413
 
     $   
  
(639		 )       
 
$  3,111
 
     $   
  
(285		 ) 
Net earnings/(loss) to common
  
 
$  1,393
 
     $   
  
(662		 )       
 
$  3,072
 
     $   
  
(319		 ) 
Average common equity
  
 
$  9,792
 
     $11,070        
 
$10,078
 
     $11,141  
Return on average common equity
  
 
56.9%
 
     (23.9)%    
 
  
 
61.0%
 
     (5.7)%  
 
Global Markets
                                    
Non-interest
revenues
  
 
$  4,158
 
     $  6,547        
 
$11,178
 
     $11,199  
Net interest income
  
 
742
 
     629    
 
  
 
1,303
 
     1,140  
Total net revenues
  
 
4,900
 
     7,176        
 
12,481
 
     12,339  
Provision for credit losses
  
 
14
 
     183        
 
(6
) 
     251  
Operating expenses
  
 
3,373
 
     5,179    
 
  
 
7,558
 
     8,026  
Pre-tax
earnings
  
 
$  1,513
 
     $  1,814        
 
$  4,929
 
     $  4,062  
Net earnings
  
 
$  1,201
 
     $     419        
 
$  4,002
 
     $  2,442  
Net earnings to common
  
 
$  1,121
 
     $     305        
 
$  3,851
 
     $  2,269  
Average common equity
  
 
$44,430
 
     $42,702        
 
$42,741
 
     $40,970  
Return on average common equity
  
 
10.1%
 
     2.9%    
 
  
 
18.0%
 
     11.1%  
 
Asset Management
                                    
Non-interest
revenues
  
 
$  5,014
 
     $  2,176        
 
$  9,445
 
     $  1,909  
Net interest income
  
 
118
 
     (75 )   
 
  
 
301
 
     96  
Total net revenues
  
 
5,132
 
     2,101        
 
9,746
 
     2,005  
Provision for credit losses
  
 
(65
) 
     271        
 
(12
) 
     350  
Operating expenses
  
 
1,943
 
     1,332    
 
  
 
3,833
 
     2,530  
Pre-tax
earnings/(loss)
  
 
$  3,254
 
     $     498        
 
$  5,925
 
     $   
  
(875		 ) 
Net earnings/(loss)
  
 
$  2,620
 
     $     710        
 
$  4,810
 
     $   
  
(526		 ) 
Net earnings/(loss) to common
  
 
$  2,592
 
     $     684        
 
$  4,757
 
     $   
  
(566		 ) 
Average common equity
  
 
$25,410
 
     $19,322        
 
$25,092
 
     $20,371  
Return on average common equity
  
 
40.8%
 
     14.2%    
 
  
 
37.9%
 
     (5.6)%  
 
Consumer & Wealth Management
 
                            
Non-interest
revenues
  
 
$  1,102
 
     $     964        
 
$  2,202
 
     $  1,963  
Net interest income
  
 
645
 
     397    
 
  
 
1,283
 
     890  
Total net revenues
  
 
1,747
 
     1,361        
 
3,485
 
     2,853  
Provision for credit losses
  
 
66
 
     317        
 
126
 
     485  
Operating expenses
  
 
1,369
 
     1,199    
 
  
 
2,868
 
     2,443  
Pre-tax
earnings/(loss)
  
 
$    
    
312
 
     $   
  
(155		 )       
 
$    
    
491
 
     $     
  
(75		 ) 
Net earnings/(loss)
  
 
$    
    
252
 
     $   
  
(117		 )       
 
$    
    
399
 
     $     
  
(45		 ) 
Net earnings/(loss) to common
  
 
$    
    
241
 
     $   
  
(130		 )       
 
$    
    
378
 
     $     
  
(64		 ) 
Average common equity
  
 
$10,459
 
     $  7,505        
 
$10,335
 
     $  7,271  
Return on average common equity
  
 
9.2%
 
     (6.9)%    
 
  
 
7.3%
 
     (1.8)%  
 
Total
                                    
Non-interest
revenues
  
 
$13,759
 
     $12,351        
 
$29,981
 
     $19,781  
Net interest income
  
 
1,629
 
     944    
 
  
 
3,111
 
     2,257  
Total net revenues
  
 
15,388
 
     13,295        
 
33,092
 
     22,038  
Provision for credit losses
  
 
(92
) 
     1,590        
 
(162
) 
     2,527  
Operating expenses
  
 
8,640
 
     10,414    
 
  
 
18,077
 
     16,872  
Pre-tax
earnings
  
 
$  6,840
 
     $  1,291        
 
$15,177
 
     $  2,639  
Net earnings
  
 
$  5,486
 
     $     373        
 
$12,322
 
     $  1,586  
Net earnings to common
  
 
$  5,347
 
     $     197        
 
$12,058
 
     $  1,320  
Average common equity
  
 
$90,091
 
     $80,599        
 
$88,246
 
     $79,753  
Return on average common equity
  
 
23.7%
 
     1.0%    
 
  
 
27.3%
 
     3.3%  
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 $2.96 billion for the second quarter of 2020 and $3.14 billion for the first half of 2020, primarily reflected in Investment Banking and Global Markets.
 
•  
Overhead expenses not directly allocable to specific segments are allocated ratably based on direct segment expenses.
 
•  
The allocation of common equity among the firm’s segments for the second quarter and first half of 2021 reflected updates to the firm’s attributed equity framework (effective January 1, 2021) to incorporate the impact of the SCB rule and the firm’s SCB of 6.6%, which became effective on October 1, 2020 under the Standardized Approach. The average common equity balances above incorporate such impact, as well as the changes in the size and composition of assets held in each of the firm’s segments that occurred during the second quarter and first half of 2021. See Note 20 for information about the firm’s updated SCB, which will become effective on October 1, 2021.
The table below presents depreciation and amortization expense by segment.
 
    Three Months
Ended June		                Six Months
Ended June		  
           
$ in millions
  
 
2021
 
      2020    
 
  
 
2021
 
      2020  
Investment Banking
  
 
$  46
 
      $  43        
 
$  
    
  94
 
      $  82  
Global Markets
  
 
194
 
      147        
 
362
 
      280  
Asset Management
  
 
196
 
      213        
 
386
 
      383  
Consumer & Wealth Management
  
 
  84
 
      96    
 
  
 
176
 
      191  
Total
  
 
$520
 
      $499    
 
  
 
$1,018
 
      $936  
Segment Assets
The table below presents assets by segment.
 
    As of  
     
$ in millions
  
 
June
2021
 
 
      December
2020		  
 
Investment Banking
  
 
$
   
145,836
 
      $   116,242  
Global Markets
  
 
1,025,631
 
      844,606  
Asset Management
  
 
96,605
 
      95,751  
Consumer & Wealth Management
  
 
119,850
 
      106,429  
Total
  
 
$1,387,922
 
      $1,163,028  
The table below presents gross loans by segment and loan type, and allowance for loan losses by segment.
 
    As of  
     
$ in millions
  
 
June
2021
 
 
      December
2020		  
 
Investment Banking
                 
Corporate
  
 
$    
 
25,087
 
      $     27,866  
Loans, gross
  
 
25,087
 
      27,866  
Allowance for loan losses
  
 
(951
) 
      (1,322 ) 
Loans
  
 
24,136
 
      26,544  
 
Global Markets
                 
Corporate
  
 
15,292
 
      13,248  
Real estate
  
 
23,008
 
      16,915  
Other
  
 
5,182
 
      3,499  
Loans, gross
  
 
43,482
 
      33,662  
Allowance for loan losses
  
 
(442
) 
      (448 ) 
Loans
  
 
43,040
 
      33,214  
 
Asset Management
                 
Corporate
  
 
7,435
 
      7,545  
Real estate
  
 
8,678
 
      9,125  
Other
  
 
704
 
      675  
Loans, gross
  
 
16,817
 
      17,345  
Allowance for loan losses
  
 
(749
) 
      (787 ) 
Loans
  
 
16,068
 
      16,558  
 
Consumer & Wealth Management
                 
Wealth management
  
 
39,955
 
      33,023  
Installment
  
 
3,257
 
      3,823  
Credit cards
  
 
5,210
 
      4,270  
Loans, gross
  
 
48,422
 
      41,116  
Allowance for loan losses
  
 
(1,129
) 
      (1,317 ) 
Loans
  
 
47,293
 
      39,799  
 
Total
                 
Loans, gross
  
 
133,808
 
      119,989  
Allowance for loan losses
  
 
(3,271
) 
      (3,874 ) 
Loans
  
 
$  
 
130,537
 
      $   116,115  
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 and
pre-tax
earnings by geographic region.
 
$ in millions
  
 
2021
 
      2020  
Three Months Ended June
                                   
Americas
  
 
$  9,957
 
   
 
65%
 
      $  8,289        62%  
EMEA
  
 
3,478
 
   
 
22%
 
      3,453        26%  
Asia
  
 
1,953
 
   
 
13%
 
      1,553        12%  
Total net revenues
  
 
$15,388
 
   
 
100%
 
      $13,295        100%  
Americas
  
 
$  4,465
 
   
 
65%
 
      $  1,853        143%  
EMEA
  
 
1,675
 
   
 
25%
 
      566        44%  
Asia
  
 
700
 
   
 
10%
 
      (1,128 )       (87)%  
Total
pre-tax
earnings
  
 
$  6,840
 
   
 
100%
 
      $  1,291        100%  
 
Six Months Ended June
                                   
Americas
  
 
$20,782
 
   
 
63%
 
      $13,460        61%  
EMEA
  
 
8,191
 
   
 
25%
 
      5,561        25%  
Asia
  
 
4,119
 
   
 
12%
 
      3,017        14%  
Total net revenues
  
 
$33,092
 
   
 
100%
 
      $22,038        100%  
Americas
  
 
$  9,480
 
   
 
62%
 
      $  2,404        91%  
EMEA
  
 
4,090
 
   
 
27%
 
      1,002        38%  
Asia
  
 
1,607
 
   
 
11%
 
      (767 )       (29)%  
Total
pre-tax
earnings
  
 
$15,177
 
   
 
100%
 
      $  2,639        100%  
In the table above:
 
•  
Asia pre-tax earnings for the second quarter of 2020 and first half of 2020 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.