v3.21.2
Business Segments
 9 Months Ended
Sep. 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 September
          
Nine Months
Ended September
  
           
$ in millions
  
 
2021
 
     2020    
 
 
 
  
 
2021
 
     2020  
Investment Banking
                                        
Non-interest
revenues
  
 
$  3,599
 
     $  1,904               
 
$10,755
 
     $  6,614  
Net interest income
  
 
101
 
     65    
 
 
 
  
 
325
 
     196  
Total net revenues
  
 
3,700
 
     1,969            
 
11,080
 
     6,810  
Provision for credit losses
  
 
41
 
     171            
 
(229
) 
     1,612  
Operating expenses
  
 
1,343
 
     1,067    
 
 
 
  
 
5,161
 
     4,940  
Pre-tax
earnings
  
 
$  2,316
 
     $     731            
 
$  6,148
 
     $     258  
Net earnings
  
 
$  1,831
 
     $     469            
 
$  4,942
 
     $     184  
Net earnings to common
  
 
$  1,818
 
     $     452            
 
$  4,890
 
     $     133  
Average common equity
  
 
$10,346
 
     $11,271            
 
$10,201
 
     $11,251  
Return on average common equity
  
 
70.3%
 
     16.0%    
 
 
 
  
 
63.9%
 
     1.6%  
 
Global Markets
                                        
Non-interest
revenues
  
 
$  4,943
 
     $  4,093            
 
$16,121
 
     $15,292  
Net interest income
  
 
668
 
     460    
 
 
 
  
 
1,971
 
     1,600  
Total net revenues
  
 
5,611
 
     4,553            
 
18,092
 
     16,892  
Provision for credit losses
  
 
(24
) 
     (15 )           
 
(30
) 
     236  
Operating expenses
  
 
2,794
 
     2,542    
 
 
 
  
 
10,352
 
     10,568  
Pre-tax
earnings
  
 
$  2,841
 
     $  2,026            
 
$  7,770
 
     $  6,088  
Net earnings
  
 
$  2,244
 
     $  1,904            
 
$  6,246
 
     $  4,346  
Net earnings to common
  
 
$  2,190
 
     $  1,816            
 
$  6,041
 
     $  4,085  
Average common equity
  
 
$46,959
 
     $39,960            
 
$44,067
 
     $40,542  
Return on average common equity
  
 
18.7%
 
     18.2%    
 
 
 
  
 
18.3%
 
     13.4%  
 
Asset Management
                                        
Non-interest
revenues
  
 
$  2,174
 
     $  2,717            
 
$11,619
 
     $  4,626  
Net interest income
  
 
105
 
     51    
 
 
 
  
 
406
 
     147  
Total net revenues
  
 
2,279
 
     2,768            
 
12,025
 
     4,773  
Provision for credit losses
  
 
10
 
     70            
 
(2
) 
     420  
Operating expenses
  
 
823
 
     1,358    
 
 
 
  
 
4,656
 
     3,888  
Pre-tax
earnings
  
 
$  1,446
 
     $  1,340            
 
$  7,371
 
     $     465  
Net earnings
  
 
$  1,115
 
     $     858            
 
$  5,925
 
     $     332  
Net earnings to common
  
 
$  1,096
 
     $     839            
 
$  5,853
 
     $     273  
Average common equity
  
 
$25,788
 
     $19,989            
 
$25,294
 
     $20,332  
Return on average common equity
  
 
17.0%
 
     16.8%    
 
 
 
  
 
30.9%
 
     1.8%  
 
Consumer & Wealth Management
 
 
                                
Non-interest
revenues
  
 
$  1,328
 
     $     983            
 
$  3,530
 
     $  2,946  
Net interest income
  
 
690
 
     508    
 
 
 
  
 
1,973
 
     1,398  
Total net revenues
  
 
2,018
 
     1,491            
 
5,503
 
     4,344  
Provision for credit losses
  
 
148
 
     52            
 
274
 
     537  
Operating expenses
  
 
1,631
 
     1,237    
 
 
 
  
 
4,499
 
     3,680  
Pre-tax
earnings
  
 
$    
 
239
 
     $     202            
 
$    
 
730
 
     $     127  
Net earnings
  
 
$    
 
188
 
     $     136            
 
$    
 
587
 
     $       91  
Net earnings to common
  
 
$    
 
180
 
     $     126            
 
$    
 
558
 
     $       62  
Average common equity
  
 
$10,740
 
     $  8,519            
 
$10,475
 
     $  7,715  
Return on average common equity
  
 
6.7%
 
     5.9%    
 
 
 
  
 
7.1%
 
     1.1%  
 
Total
                                        
Non-interest
revenues
  
 
$12,044
 
     $  9,697            
 
$42,025
 
     $29,478  
Net interest income
  
 
1,564
 
     1,084    
 
 
 
  
 
4,675
 
     3,341  
Total net revenues
  
 
13,608
 
     10,781            
 
46,700
 
     32,819  
Provision for credit losses
  
 
175
 
     278            
 
13
 
     2,805  
Operating expenses
  
 
6,591
 
     6,204    
 
 
 
  
 
24,668
 
     23,076  
Pre-tax
earnings
  
 
$  6,842
 
     $  4,299            
 
$22,019
 
     $  6,938  
Net earnings
  
 
$  5,378
 
     $  3,367            
 
$17,700
 
     $  4,953  
Net earnings to common
  
 
$  5,284
 
     $  3,233            
 
$17,342
 
     $  4,553  
Average common equity
  
 
$93,833
 
     $79,739            
 
$90,037
 
     $79,840  
Return on average common equity
  
 
22.5%
 
     16.2%    
 
 
 
  
 
25.7%
 
     7.6%  
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 $3.40 billion for the nine months ended September 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 both the three and nine months ended September 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 both the three and nine months ended September 2021. See Note 20 for information about the firm’s updated SCB, which became effective on October 1, 2021.
The table below presents depreciation and amortization expense by segment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       
   
Three Months
Ended September
          
Nine Months
Ended September
  
           
$ in millions
  
 
2021
 
      2020    
 
 
 
  
 
2021
 
      2020  
Investment Banking
  
 
$  50
 
      $  46               
 
$  
 
144
 
      $   128  
Global Markets
  
 
209
 
      160            
 
571
 
      440  
Asset Management
  
 
153
 
      170            
 
539
 
      553  
Consumer & Wealth Management
  
 
97
 
      92    
 
 
 
  
 
273
 
      283  
Total
  
 
$509
 
      $468    
 
 
 
  
 
$1,527
 
      $1,404  
Segment Assets
The table below presents assets by segment.
 
 
 
 
 
 
 
 
 
 
   
    As of  
     
$ in millions
  
 
September
2021
 
 
      December
2020		  
 
Investment Banking
  
 
$  
 
141,580
 
      $   116,242  
Global Markets
  
 
1,077,437
 
      844,606  
Asset Management
  
 
94,063
 
      95,751  
Consumer & Wealth Management
  
 
130,150
 
      106,429  
Total
  
 
$1,443,230
 
      $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
  
 
September
2021
 
 
      December
2020		  
 
Investment Banking
                 
Corporate
  
 
$  
 
  27,346
 
      $     27,866  
Loans, gross
  
 
27,346
 
      27,866  
Allowance for loan losses
  
 
(918
) 
      (1,322 ) 
Loans
  
 
26,428
 
      26,544  
 
Global Markets
                 
Corporate
  
 
19,349
 
      13,248  
Real estate
  
 
26,641
 
      16,915  
Other
  
 
5,601
 
      3,499  
Loans, gross
  
 
51,591
 
      33,662  
Allowance for loan losses
  
 
(424
) 
      (448 ) 
Loans
  
 
51,167
 
      33,214  
 
Asset Management
                 
Corporate
  
 
7,412
 
      7,545  
Real estate
  
 
8,425
 
      9,125  
Other
  
 
707
 
      675  
Loans, gross
  
 
16,544
 
      17,345  
Allowance for loan losses
  
 
(752
) 
      (787 ) 
Loans
  
 
15,792
 
      16,558  
 
Consumer & Wealth Management
                 
Wealth management
  
 
41,775
 
      33,023  
Installment
  
 
3,449
 
      3,823  
Credit cards
  
 
6,251
 
      4,270  
Loans, gross
  
 
51,475
 
      41,116  
Allowance for loan losses
  
 
(1,238
) 
      (1,317 ) 
Loans
  
 
50,237
 
      39,799  
 
Total
                 
Loans, gross
  
 
146,956
 
      119,989  
Allowance for loan losses
  
 
(3,332
) 
      (3,874 ) 
Loans
  
 
$  
 
143,624
 
      $   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 September
                                
Americas
  
 
$  8,169
 
  
 
60%
 
     $  6,873       64%  
EMEA
  
 
3,394
 
  
 
25%
 
     2,470       23%  
Asia
  
 
2,045
 
  
 
15%
 
     1,438       13%  
Total net revenues
  
 
$13,608
 
  
 
100%
 
     $10,781       100%  
Americas
  
 
$  4,004
 
  
 
59%
 
     $  2,926       68%  
EMEA
  
 
1,922
 
  
 
28%
 
     935       22%  
Asia
  
 
916
 
  
 
13%
 
     438       10%  
Total
pre-tax
earnings
  
 
$  6,842
 
  
 
100%
 
     $  4,299       100%  
 
Nine Months Ended September
                                
Americas
  
 
$28,951
 
  
 
62%
 
     $20,333       62%  
EMEA
  
 
11,585
 
  
 
25%
 
     8,031       24%  
Asia
  
 
6,164
 
  
 
13%
 
     4,455       14%  
Total net revenues
  
 
$46,700
 
  
 
100%
 
     $32,819       100%  
Americas
  
 
$13,484
 
  
 
61%
 
     $  5,330       77%  
EMEA
  
 
6,012
 
  
 
27%
 
     1,937       28%  
Asia
  
 
2,523
 
  
 
12%
 
     (329 )      (5)%  
Total
pre-tax
earnings
  
 
$22,019
 
  
 
100%
 
     $  6,938       100%  
In the table above:
 
•  
Asia
pre-tax
earnings for the nine months ended September 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.