JPM (JPMorgan Chase) Capital Adequacy Tier - Tier 1 Ratio % (2024)

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JPM (JPMorgan Chase) Capital Adequacy Tier - Tier 1 Ratio %? ›

JPMorgan Chase's Capital Adequacy Tier - Tier 1 Ratio % for the annual that ended in Dec. 2023 was 16.60% , which is higher than 14.90% for the pervious year ended in Dec. 2022.

The Tier 1 capital ratio compares a bank's equity capital with its total risk-weighted assets (RWAs). These are a compilation of assets the bank holds that are weighted by credit risk. Under the Basel III accord, the value of a bank's Tier 1 capital must be greater than 6% of its risk-weighted assets.

JPMorgan Chase Bank was the bank with the highest Tier 1 capital in the United States as of June 2023. Tier 1 capital measures the financial strength of a bank; it shows its core capital, including equity capital and disclosed reserves.

Key Takeaways. The tier 1 capital ratio is the ratio of a bank's core tier 1 capital to its total risk-weighted assets. It is a key measure of a bank's financial strength that has been adopted as part of the Basel III Accord on bank regulation.

The tier 1 capital ratio of Citigroup increased to 15.02 percent in 2023. This was the third consecutive increase after continuously decreasing between 2016 and 2020. The tier 1 common capital ratio is a measure of a bank's core equity capital compared with its total risk-weighted assets.

Tier 1 capital is intended to measure a bank's financial health; a bank uses tier 1 capital to absorb losses without ceasing business operations. Tier 2 capital is supplementary capital, i.e., less reliable than tier 1 capital. A bank's total capital is calculated as a sum of its tier 1 and tier 2 capital.

JPMorgan Chase (JPMorgan Chase) Capital Adequacy Tier - Tier 1 Ratio % : 16.40% (As of Mar. 2024)

JPM's common equity Tier 1 ratio increased to 15.0% at YE23, from 13.2% one year ago, mostly due to strong internal capital generation that was partially offset by accumulated other comprehensive income losses.

How do you calculate Tier 1 capital ratio? ›

To calculate a bank's tier 1 capital ratio, divide its tier 1 capital by its total risk-weighted assets.

It is the total of a bank's disclosed retained earnings, or reserves, as well as common stock. In some cases, preferred stock is also included in this figure. Tier 1 capital is meant to be able to absorb any losses or keep unforeseen financial crises from impacting the economy it participates in.

Common Equity Tier 1 capital (CET1) is the highest quality of regulatory capital, as it absorbs losses immediately when they occur. Additional Tier 1 capital (AT1) also provides loss absorption on a going-concern basis, although AT1 instruments do not meet all the criteria for CET1.

Under Basel III, all banks are required to have a Capital Adequacy Ratio of at least 8%. Since Tier 1 Capital is more important, banks are also required to have a minimum amount of this type of capital. Under Basel III, Tier 1 Capital divided by Risk-Weighted Assets needs to be at least 6%.

The Basel III common equity Tier 1 capital ratio was an estimated 9.9% at December 31, 2023 and 9.8% at September 30, 2023. PNC's average LCR for the three months ended December 31, 2023 was 107%, exceeding the regulatory minimum requirement throughout the quarter.

The Tier 1 capital ratio should comprise at least 4.5% of CET1.

To calculate a bank's tier 1 capital ratio, divide its tier 1 capital by its total risk-weighted assets.

Further About Tier 2 Capital. The capital reserve ratio for a bank is prescribed at 8%. It stands at 6% for Tier 1 capital and the balance 2% for Tier 2 capital. Usually, a bank's capital ratio is calculated by dividing its capital by its total risk-based assets.

CAR minimums are 8.0% under Basel II and 10.5% (with an added 2.5% conservation buffer) under Basel III. The higher the CAR, the better able a bank should be to meet its financial obligations when under stress.

A firm characterized as a systemically important financial institution (SIFI) is subject to an additional 3% cushion for its Tier 1 common capital ratio, making its threshold to be considered well-capitalized at 10%.