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Derivatives and Hedging Activities | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | Derivatives and Hedging Activities Derivative Activities Derivatives are instruments that derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors. Derivatives may be traded on an exchange (exchange-traded) or they may be privately negotiated contracts, which are usually referred to as OTC derivatives. Certain of the firm’s OTC derivatives are cleared and settled through central clearing counterparties (OTC-cleared), while others are bilateral contracts between two counterparties (bilateral OTC). Market Making. As a market maker, the firm enters into derivative transactions to provide liquidity to clients and to facilitate the transfer and hedging of their risks. In this role, the firm typically acts as principal and is required to commit capital to provide execution, and maintains market-making positions in response to, or in anticipation of, client demand. Risk Management. The firm also enters into derivatives to actively manage risk exposures that arise from its market-making and investing and financing activities. The firm’s holdings and exposures are hedged, in many cases, on either a portfolio or risk-specific basis, as opposed to an instrument-by-instrument basis. The offsetting impact of this economic hedging is reflected in the same business segment as the related revenues. In addition, the firm may enter into derivatives designated as hedges under U.S. GAAP. These derivatives are used to manage interest rate exposure of certain fixed-rate unsecured borrowings and deposits and certain U.S. and non-U.S. government securities classified as available-for-sale, foreign exchange risk of certain available-for-sale securities, the net investment in certain non-U.S. operations and the exposure to the variability of the forecasted cash flows associated with certain floating-rate assets. The firm enters into various types of derivatives, including: •Futures and Forwards. Contracts that commit counterparties to purchase or sell financial instruments, commodities or currencies in the future. •Swaps. Contracts that require counterparties to exchange cash flows, such as currency or interest payment streams. The amounts exchanged are based on the specific terms of the contract with reference to specified rates, financial instruments, commodities, currencies or indices. •Options. Contracts in which the option purchaser has the right, but not the obligation, to purchase from or sell to the option writer financial instruments, commodities or currencies within a defined time period for a specified price. Derivatives are reported on a net-by-counterparty basis (i.e., the net payable or receivable for derivative assets and liabilities for a given counterparty) when a legal right of setoff exists under an enforceable netting agreement (counterparty netting). Derivatives are accounted for at fair value, net of cash collateral received or posted under enforceable credit support agreements (cash collateral netting). Derivative assets are included in trading assets and derivative liabilities are included in trading liabilities. Realized and unrealized gains and losses on derivatives not designated as hedges are included in market making (for derivatives included in Fixed Income, Currency and Commodities (FICC) and Equities within Global Banking & Markets), and other principal transactions (for derivatives included in Investment banking fees and Other within Global Banking & Markets, as well as derivatives in Asset & Wealth Management) in the consolidated statements of earnings. For each of the three and nine months ended September 2025 and September 2024, substantially all of the firm’s derivatives were included in Global Banking & Markets. The tables below present the gross fair value and the notional amounts of derivative contracts by major product type, the amounts of counterparty and cash collateral netting in the consolidated balance sheets, as well as cash and securities collateral posted and received under enforceable credit support agreements that do not meet the criteria for netting under U.S. GAAP.
| Fair Value as of
| September |  | December
| 2025 |  | 2024
$ in millions | Derivative Assets | Derivative Liabilities |  | Derivative Assets | Derivative Liabilities
Not accounted for as hedges
Exchange-traded | $ | 3,755 |  | $ | 1,923 |  |  | $ | 2,706 |  | $ | 1,068 |
OTC-cleared | 1,171 |  | 1,369 |  |  | 1,746 |  | 2,428 |
Bilateral OTC | 153,081 |  | 116,605 |  |  | 152,083 |  | 121,515 |
Total interest rates | 158,007 |  | 119,897 |  |  | 156,535 |  | 125,011 |
OTC-cleared | 3,367 |  | 3,411 |  |  | 1,787 |  | 1,893 |
Bilateral OTC | 10,670 |  | 10,989 |  |  | 9,650 |  | 8,137 |
Total credit | 14,037 |  | 14,400 |  |  | 11,437 |  | 10,030 |
Exchange-traded | 114 |  | 28 |  |  | 142 |  | 6 |
OTC-cleared | 534 |  | 592 |  |  | 1,325 |  | 993 |
Bilateral OTC | 76,073 |  | 76,021 |  |  | 112,838 |  | 113,608 |
Total currencies | 76,721 |  | 76,641 |  |  | 114,305 |  | 114,607 |
Exchange-traded | 6,127 |  | 6,253 |  |  | 5,563 |  | 5,917 |
OTC-cleared | 504 |  | 693 |  |  | 558 |  | 650 |
Bilateral OTC | 6,553 |  | 8,455 |  |  | 7,205 |  | 7,958 |
Total commodities | 13,184 |  | 15,401 |  |  | 13,326 |  | 14,525 |
Exchange-traded | 71,634 |  | 104,939 |  |  | 55,049 |  | 83,475 |
OTC-cleared | 32 |  | 50 |  |  | 189 |  | 131 |
Bilateral OTC | 39,059 |  | 64,163 |  |  | 24,941 |  | 44,900 |
Total equities | 110,725 |  | 169,152 |  |  | 80,179 |  | 128,506 |
Subtotal | 372,674 |  | 395,491 |  |  | 375,782 |  | 392,679 |
Accounted for as hedges |  |  |  |
OTC-cleared | – |  | 1 |  |  | – |  | – |
Bilateral OTC | 180 |  | 7 |  |  | 201 |  | 8 |
Total interest rates | 180 |  | 8 |  |  | 201 |  | 8 |
OTC-cleared | 3 |  | 73 |  |  | 114 |  | 3 |
Bilateral OTC | 3 |  | 216 |  |  | 255 |  | 5 |
Total currencies | 6 |  | 289 |  |  | 369 |  | 8 |
Subtotal | 186 |  | 297 |  |  | 570 |  | 16 |
Total gross fair value | $ | 372,860 |  | $ | 395,788 |  |  | $ | 376,352 |  | $ | 392,695 |
Offset in the consolidated balance sheets
Exchange-traded | $ | (73,913) |  | $ | (73,913) |  |  | $ | (57,776) |  | $ | (57,776) |
OTC-cleared | (5,492) |  | (5,492) |  |  | (4,867) |  | (4,867) |
Bilateral OTC | (194,023) |  | (194,023) |  |  | (218,269) |  | (218,269) |
Counterparty netting | (273,428) |  | (273,428) |  |  | (280,912) |  | (280,912) |
OTC-cleared | (56) |  | (495) |  |  | (412) |  | (105) |
Bilateral OTC | (47,111) |  | (42,320) |  |  | (47,689) |  | (36,698) |
Cash collateral netting | (47,167) |  | (42,815) |  |  | (48,101) |  | (36,803) |
Total amounts offset | $ | (320,595) |  | $ | (316,243) |  |  | $ | (329,013) |  | $ | (317,715) |
Included in the consolidated balance sheets |
Exchange-traded | $ | 7,717 |  | $ | 39,230 |  |  | $ | 5,684 |  | $ | 32,690 |
OTC-cleared | 63 |  | 202 |  |  | 440 |  | 1,126 |
Bilateral OTC | 44,485 |  | 40,113 |  |  | 41,215 |  | 41,164 |
Total | $ | 52,265 |  | $ | 79,545 |  |  | $ | 47,339 |  | $ | 74,980 |
Not offset in the consolidated balance sheets |
Cash collateral | $ | (714) |  | $ | (1,442) |  |  | $ | (600) |  | $ | (1,271) |
Securities collateral | (19,363) |  | (10,321) |  |  | (14,938) |  | (8,731) |
Total | $ | 32,188 |  | $ | 67,782 |  |  | $ | 31,801 |  | $ | 64,978 |
| Notional Amounts as of
| September | December
$ in millions | 2025 | 2024
Not accounted for as hedges |  |
Exchange-traded | $ | 2,102,243 |  | $ | 2,332,117 |
OTC-cleared | 18,934,073 |  | 12,571,690 |
Bilateral OTC | 10,714,678 |  | 10,569,501 |
Total interest rates | 31,750,994 |  | 25,473,308 |
Exchange-traded | 108 |  | 322 |
OTC-cleared | 1,137,889 |  | 660,181 |
Bilateral OTC | 818,187 |  | 619,068 |
Total credit | 1,956,184 |  | 1,279,571 |
Exchange-traded | 10,968 |  | 9,264 |
OTC-cleared | 567,994 |  | 429,858 |
Bilateral OTC | 7,767,359 |  | 6,031,944 |
Total currencies | 8,346,321 |  | 6,471,066 |
Exchange-traded | 373,175 |  | 324,159 |
OTC-cleared | 2,765 |  | 3,087 |
Bilateral OTC | 194,150 |  | 183,174 |
Total commodities | 570,090 |  | 510,420 |
Exchange-traded | 2,408,560 |  | 1,868,855 |
OTC-cleared | 1,223 |  | 1,475 |
Bilateral OTC | 1,609,890 |  | 1,256,905 |
Total equities | 4,019,673 |  | 3,127,235 |
Subtotal | 46,643,262 |  | 36,861,600 |
Accounted for as hedges |  |
OTC-cleared | 287,753 |  | 246,765 |
Bilateral OTC | 2,594 |  | 3,588 |
Total interest rates | 290,347 |  | 250,353 |
OTC-cleared | 5,627 |  | 5,041 |
Bilateral OTC | 16,974 |  | 10,328 |
Total currencies | 22,601 |  | 15,369 |
Subtotal | 312,948 |  | 265,722 |
Total notional amounts | $ | 46,956,210 |  | $ | 37,127,322 |
In the tables above: •Gross fair values exclude the effects of both counterparty netting and collateral, and therefore are not representative of the firm’s exposure. •Amounts presented for collateral not offset in the consolidated balance sheets consists of collateral received or posted in connection with OTC-cleared and bilateral OTC derivatives under enforceable credit support agreements that do not meet the criteria for netting under U.S. GAAP. In addition to collateral presented in the table above, the firm also posts or receives collateral in connection with its transactions with certain exchanges in accordance with the exchanges’ margin requirements. Such collateral may be calculated based on the firm’s total exposure to the respective exchange across all product types, including both derivative and non-derivative instruments. See Note 11 for further information. •Total gross fair value of derivatives included derivative assets of $8.55 billion as of both September 2025 and December 2024, a nd derivative liabilities of $11.91 billion as of September 2025 and $10.84 billion as of December 2024, which are not subject to an enforceable netting agreement or are subject to a netting agreement that the firm has not yet determined to be enforceable. Collateral in connection with such derivatives has not been netted. •Notional amounts, which represent the sum of gross long and short derivative contracts, provide an indication of the volume of the firm’s derivative activity and do not represent anticipated losses. OTC Derivatives The table below presents OTC derivative assets and liabilities by tenor and major product type.
$ in millions | Less than 1 Year | 1 - 5 Years | Greater than 5 Years | Total
As of September 2025 |  |  |  |
Assets |  |  |  |
Interest rates | $ | 3,119 |  | $ | 9,751 |  | $ | 52,354 |  | $ | 65,224 |
Credit | 730 |  | 2,972 |  | 2,501 |  | 6,203 |
Currencies | 8,959 |  | 9,397 |  | 5,143 |  | 23,499 |
Commodities | 1,743 |  | 1,619 |  | 458 |  | 3,820 |
Equities | 8,271 |  | 3,766 |  | 1,884 |  | 13,921 |
Counterparty netting in tenors | (2,410) |  | (2,574) |  | (3,238) |  | (8,222) |
Subtotal | $ | 20,412 |  | $ | 24,931 |  | $ | 59,102 |  | $ | 104,445 |
Cross-tenor counterparty netting |  |  |  | (12,730) |
Cash collateral netting |  |  |  | (47,167) |
Total OTC derivative assets |  |  |  | $ | 44,548 |
Liabilities |  |  |  |
Interest rates | $ | 3,789 |  | $ | 8,784 |  | $ | 16,193 |  | $ | 28,766 |
Credit | 2,052 |  | 2,666 |  | 1,847 |  | 6,565 |
Currencies | 10,527 |  | 6,096 |  | 7,170 |  | 23,793 |
Commodities | 3,180 |  | 1,981 |  | 751 |  | 5,912 |
Equities | 16,314 |  | 18,745 |  | 3,987 |  | 39,046 |
Counterparty netting in tenors | (2,410) |  | (2,574) |  | (3,238) |  | (8,222) |
Subtotal | $ | 33,452 |  | $ | 35,698 |  | $ | 26,710 |  | $ | 95,860 |
Cross-tenor counterparty netting |  |  |  | (12,730) |
Cash collateral netting |  |  |  | (42,815) |
Total OTC derivative liabilities |  |  | $ | 40,315 |
As of December 2024 |  |  |
Assets |  |  |  |
Interest rates | $ | 5,880 |  | $ | 9,552 |  | $ | 46,625 |  | $ | 62,057 |
Credit | 1,664 |  | 2,576 |  | 1,605 |  | 5,845 |
Currencies | 17,249 |  | 8,280 |  | 5,387 |  | 30,916 |
Commodities | 1,908 |  | 1,882 |  | 1,026 |  | 4,816 |
Equities | 5,483 |  | 2,395 |  | 1,959 |  | 9,837 |
Counterparty netting in tenors | (2,681) |  | (2,683) |  | (4,271) |  | (9,635) |
Subtotal | $ | 29,503 |  | $ | 22,002 |  | $ | 52,331 |  | $ | 103,836 |
Cross-tenor counterparty netting |  |  |  | (14,080) |
Cash collateral netting |  |  |  | (48,101) |
Total OTC derivative assets |  |  |  | $ | 41,655 |
Liabilities |  |  |  |
Interest rates | $ | 5,074 |  | $ | 10,858 |  | $ | 16,049 |  | $ | 31,981 |
Credit | 999 |  | 2,474 |  | 963 |  | 4,436 |
Currencies | 12,931 |  | 9,645 |  | 8,417 |  | 30,993 |
Commodities | 2,012 |  | 2,448 |  | 1,201 |  | 5,661 |
Equities | 11,435 |  | 15,113 |  | 3,189 |  | 29,737 |
Counterparty netting in tenors | (2,681) |  | (2,683) |  | (4,271) |  | (9,635) |
Subtotal | $ | 29,770 |  | $ | 37,855 |  | $ | 25,548 |  | $ | 93,173 |
Cross-tenor counterparty netting |  |  |  | (14,080) |
Cash collateral netting |  |  |  | (36,803) |
Total OTC derivative liabilities |  |  |  | $ | 42,290 |
In the table above: •Tenor is based on the remaining contractual maturity for substantially all OTC derivative assets and liabilities. •Counterparty netting within the same product type and tenor category is included within such product type and tenor category. •Counterparty netting across product types within the same tenor category is included in counterparty netting in tenors. Where the counterparty netting is across tenor categories, the netting is included in cross-tenor counterparty netting. See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of derivatives, and Note 5 for further information about derivatives within the fair value hierarchy. Credit Derivatives The firm enters into a broad array of credit derivatives to facilitate client transactions and to manage the credit risk associated with market-making and investing and financing activities. Credit derivatives are actively managed based on the firm’s net risk position. Credit derivatives are generally individually negotiated contracts and can have various settlement and payment conventions. Credit events include failure to pay, bankruptcy, acceleration of indebtedness, restructuring, repudiation and dissolution of the reference entity. The firm enters into the following types of credit derivatives: •Credit Default Swaps. Single-name credit default swaps protect the buyer against the loss of principal on one or more bonds, loans or mortgages (reference obligations) in the event the issuer of the reference obligations suffers a credit event. The buyer of protection pays an initial or periodic premium to the seller and receives protection for the period of the contract. If there is no credit event, as defined in the contract, the seller of protection makes no payments to the buyer. If a credit event occurs, the seller of protection is required to make a payment to the buyer, calculated according to the terms of the contract. •Credit Options. In a credit option, the option writer assumes the obligation to purchase or sell a reference obligation at a specified price or credit spread. The option purchaser buys the right, but does not assume the obligation, to sell the reference obligation to, or purchase it from, the option writer. The payments on credit options depend either on a particular credit spread or the price of the reference obligation. •Credit Indices, Baskets and Tranches. Credit derivatives may reference a basket of single-name credit default swaps or a broad-based index. If a credit event occurs in one of the underlying reference obligations, the protection seller pays the protection buyer. The payment is typically a pro-rata portion of the transaction’s total notional amount based on the underlying defaulted reference obligation. In certain transactions, the credit risk of a basket or index is separated into various portions (tranches), each having different levels of subordination. The most junior tranches cover initial defaults and once losses exceed the notional amount of these junior tranches, any excess loss is covered by the next most senior tranche. •Total Return Swaps. A total return swap transfers the risks relating to economic performance of a reference obligation from the protection buyer to the protection seller. Typically, the protection buyer receives a floating rate of interest and protection against any reduction in fair value of the reference obligation, and the protection seller receives the cash flows associated with the reference obligation, plus any increase in the fair value of the reference obligation. The firm economically hedges its exposure to written credit derivatives primarily by entering into offsetting purchased credit derivatives with identical underliers. Substantially all of the firm’s purchased credit derivative transactions are with financial institutions and are subject to stringent collateral thresholds. In addition, upon the occurrence of a specified trigger event, the firm may take possession of the reference obligations underlying a particular written credit derivative, and consequently may, upon liquidation of the reference obligations, recover amounts on the underlying reference obligations in the event of default. The table below presents information about credit derivatives.
| Credit Spread on Underlier (basis points)
$ in millions | 0 - 250 | 251 - 500 | 501 - 1,000 | Greater than 1,000 | Total
As of September 2025 |  |  |  |
Maximum Payout/Notional Amount of Written Credit Derivatives by Tenor
Less than 1 year | $ | 208,030 |  | $ | 13,672 |  | $ | 527 |  | $ | 2,734 |  | $ | 224,963 |
1 - 5 years | 539,744 |  | 22,374 |  | 7,174 |  | 6,185 |  | 575,477 |
Greater than 5 years | 127,298 |  | 7,122 |  | 1,971 |  | 833 |  | 137,224 |
Total | $ | 875,072 |  | $ | 43,168 |  | $ | 9,672 |  | $ | 9,752 |  | $ | 937,664 |
Maximum Payout/Notional Amount of Purchased Credit Derivatives
Offsetting | $ | 725,891 |  | $ | 23,493 |  | $ | 9,046 |  | $ | 9,004 |  | $ | 767,434 |
Other | 227,590 |  | 20,310 |  | 1,882 |  | 1,304 |  | 251,086 |
Total | $ | 953,481 |  | $ | 43,803 |  | $ | 10,928 |  | $ | 10,308 |  | $ | 1,018,520 |
Fair Value of Written Credit Derivatives
Asset | $ | 8,694 |  | $ | 1,291 |  | $ | 276 |  | $ | 56 |  | $ | 10,317 |
Liability | 893 |  | 601 |  | 359 |  | 948 |  | 2,801 |
Net asset/(liability) | $ | 7,801 |  | $ | 690 |  | $ | (83) |  | $ | (892) |  | $ | 7,516 |
As of December 2024 |  |  |  |  |
Maximum Payout/Notional Amount of Written Credit Derivatives by Tenor
Less than 1 year | $ | 137,145 |  | $ | 23,875 |  | $ | 717 |  | $ | 3,041 |  | $ | 164,778 |
1 - 5 years | 378,743 |  | 15,349 |  | 4,242 |  | 6,194 |  | 404,528 |
Greater than 5 years | 29,196 |  | 2,457 |  | 471 |  | 64 |  | 32,188 |
Total | $ | 545,084 |  | $ | 41,681 |  | $ | 5,430 |  | $ | 9,299 |  | $ | 601,494 |
Maximum Payout/Notional Amount of Purchased Credit Derivatives
Offsetting | $ | 463,919 |  | $ | 20,691 |  | $ | 4,781 |  | $ | 8,264 |  | $ | 497,655 |
Other | 165,662 |  | 11,721 |  | 1,879 |  | 1,160 |  | 180,422 |
Total | $ | 629,581 |  | $ | 32,412 |  | $ | 6,660 |  | $ | 9,424 |  | $ | 678,077 |
Fair Value of Written Credit Derivatives
Asset | $ | 6,429 |  | $ | 664 |  | $ | 31 |  | $ | 59 |  | $ | 7,183 |
Liability | 985 |  | 314 |  | 307 |  | 1,138 |  | 2,744 |
Net asset/(liability) | $ | 5,444 |  | $ | 350 |  | $ | (276) |  | $ | (1,079) |  | $ | 4,439 |
In the table above: •Fair values exclude the effects of both netting of receivable balances with payable balances under enforceable netting agreements, and netting of cash received or posted under enforceable credit support agreements, and therefore are not representative of the firm’s credit exposure. •Tenor is based on the remaining contractual maturity for substantially all written credit derivatives. •The credit spread on the underlier, together with the tenor of the contract, are indicators of payment/performance risk. The firm is less likely to pay or otherwise be required to perform where the credit spread and the tenor are lower. •Offsetting purchased credit derivatives represent the notional amount of purchased credit derivatives that economically hedge written credit derivatives with identical underliers. •Other purchased credit derivatives represent the notional amount of all other purchased credit derivatives not included in offsetting. •Written and purchased credit derivatives primarily consist of credit default swaps. Impact of Credit and Funding Spreads on Derivatives The firm realizes gains or losses on its derivative contracts. These gains or losses include credit valuation adjustments (CVAs) relating to uncollateralized derivative assets and liabilities, which represent the gains or losses (including hedges) attributable to the impact of changes in credit exposure, counterparty credit spreads, liability funding spreads (which include the firm’s own credit), probability of default and assumed recovery. These gains or losses also include funding valuation adjustments (FVA) relating to uncollateralized derivative assets, which represent the gains or losses (including hedges) attributable to the impact of changes in expected funding exposures and funding spreads. The table below presents information about CVA and FVA.
| Three Months Ended September |  | Nine Months Ended September
$ in millions | 2025 | 2024 |  | 2025 | 2024
CVA, net of hedges | $ | (49) |  | $ | 40 |  |  | $ | 121 |  | $ | 67 |
FVA, net of hedges | 80 |  | 5 |  |  | 109 |  | 124 |
Total | $ | 31 |  | $ | 45 |  |  | $ | 230 |  | $ | 191 |
Bifurcated Embedded Derivatives The table below presents the fair value and the notional amount of derivatives that have been bifurcated from their related borrowings.
| As of
| September | December
$ in millions | 2025 | 2024
Fair value of assets | $ | 423 |  | $ | 467 |
Fair value of liabilities | (280) |  | (175) |
Net asset/(liability) | $ | 143 |  | $ | 292 |
Notional amount | $ | 8,261 |  | $ | 8,106 |
In the table above, derivatives that have been bifurcated from their related borrowings are recorded at fair value and primarily consist of interest rate, equity and commodity products. These derivatives are included in unsecured short- and long-term borrowings, as well as other secured financings, with the related borrowings. Derivatives with Credit-Related Contingent Features Certain of the firm’s derivatives have been transacted under bilateral agreements with counterparties who may require the firm to post collateral or terminate the transactions based on changes in the firm’s credit ratings. The firm assesses the impact of these bilateral agreements by determining the collateral or termination payments that would occur assuming a downgrade by all rating agencies. A downgrade by any one rating agency, depending on the agency’s relative ratings of the firm at the time of the downgrade, may have an impact which is comparable to the impact of a downgrade by all rating agencies. The table below presents information about net derivative liabilities under bilateral agreements (excluding collateral posted), the fair value of collateral posted and additional collateral or termination payments that could have been called by counterparties in the event of a one- or two-notch downgrade in the firm’s credit ratings.
| As of
| September | December
$ in millions | 2025 | 2024
Net derivative liabilities under bilateral agreements | $ | 30,999 |  | $ | 31,575 |
Collateral posted | $ | 22,521 |  | $ | 20,262 |
Additional collateral or termination payments: |  |
One-notch downgrade | $ | 186 |  | $ | 315 |
Two-notch downgrade | $ | 1,427 |  | $ | 1,200 |
Hedge Accounting The firm applies hedge accounting for (i) interest rate swaps used to manage the interest rate exposure of certain fixed-rate unsecured long- and short-term borrowings, certain fixed-rate certificates of deposit and certain U.S. and non-U.S. government securities classified as available-for-sale, (ii) foreign currency forward contracts used to manage the foreign exchange risk of certain securities classified as available-for-sale, (iii) foreign currency forward contracts and foreign currency-denominated debt used to manage foreign exchange risk on the firm’s net investment in certain non-U.S. operations and (iv) interest rate swaps used to manage the variability of the forecasted cash flows associated with certain floating-rate assets. To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged. Additionally, the firm must formally document the hedging relationship at inception and assess the hedging relationship at least on a quarterly basis to ensure the hedging instrument continues to be highly effective over the life of the hedging relationship. Fair Value Hedges The firm designates interest rate swaps as fair value hedges of certain fixed-rate unsecured long- and short-term debt and fixed-rate certificates of deposit and of certain U.S. and non-U.S. government securities classified as available-for-sale. These interest rate swaps hedge changes in fair value attributable to the designated benchmark interest rate (e.g., Secured Overnight Financing Rate (SOFR), Overnight Index Swap Rate or Sterling Overnight Index Average), effectively converting a substantial portion of these fixed-rate financial instruments into floating-rate financial instruments. The firm applies a statistical method that utilizes regression analysis when assessing the effectiveness of these hedging relationships in achieving offsetting changes in the fair values of the hedging instrument and the risk being hedged (i.e., interest rate risk). An interest rate swap is considered highly effective in offsetting changes in fair value attributable to changes in the hedged risk when the regression analysis results in a coefficient of determination of 80% or greater and a slope between 80% and 125%. For qualifying interest rate fair value hedges, gains or losses on derivatives are included in interest income/expense. The change in fair value of the hedged items attributable to the risk being hedged is reported as an adjustment to its carrying value (hedging adjustment) and is also included in interest income/expense. When a derivative is no longer designated as a hedge, any remaining difference between the carrying value and par value of the hedged item is amortized in interest income/expense over the remaining life of the hedged item using the effective interest method. See Note 23 for further information about interest income and interest expense. The table below presents the gains/(losses) from interest rate derivatives accounted for as hedges and the related hedged items.
| Three Months Ended September |  | Nine Months Ended September
$ in millions | 2025 | 2024 |  | 2025 | 2024
Investments |  |  |  |  |
Interest rate hedges | $ | 1 |  | $ | (744) |  |  | $ | (605) |  | $ | (540) |
Hedged investments | 7 |  | 744 |  |  | 638 |  | 542 |
Gains/(losses) | $ | 8 |  | $ | – |  |  | $ | 33 |  | $ | 2 |
Borrowings and deposits |  |  |  |  |
Interest rate hedges | $ | 390 |  | $ | 4,867 |  |  | $ | 3,488 |  | $ | 2,941 |
Hedged borrowings and deposits | (480) |  | (4,948) |  |  | (3,725) |  | (3,208) |
Gains/(losses) | $ | (90) |  | $ | (81) |  |  | $ | (237) |  | $ | (267) |
The table below presents the carrying value of investments, deposits and unsecured borrowings that are designated in an interest rate hedging relationship and the related cumulative hedging adjustment (increase/(decrease)) from current and prior hedging relationships included in such carrying values.
$ in millions | Carrying Value | Cumulative Hedging Adjustment
As of September 2025 |  |
Assets |  |
Investments | $ | 53,197 |  | $ | 423 |
Liabilities |  |
Deposits | $ | 1,106 |  | $ | (23) |
Unsecured short-term borrowings | $ | 8,889 |  | $ | (59) |
Unsecured long-term borrowings | $ | 138,216 |  | $ | (7,206) |
As of December 2024 |  |
Assets |  |
Investments | $ | 34,755 |  | $ | (279) |
Liabilities |  |
Deposits | $ | 1,840 |  | $ | (52) |
Unsecured short-term borrowings | $ | 14,720 |  | $ | (113) |
Unsecured long-term borrowings | $ | 130,161 |  | $ | (10,757) |
In the table above: •Cumulative hedging adjustment included $(5.24) billion as of September 2025 and $(5.81) billion as of December 2024 of hedging adjustments from prior hedging relationships that were de-designated and substantially all were related to unsecured long-term borrowings. •The amortized cost of investments was $53.45 billion as of September 2025 and $35.29 billion as of December 2024. In addition, cumulative hedging adjustments for items no longer designated in a hedging relationship were not material as of both September 2025 and December 2024. The firm designates certain foreign currency forward contracts as fair value hedges of the foreign exchange risk of non-U.S. government securities classified as available-for-sale. See Note 8 for information about the amortized cost and fair value of such securities. The effectiveness of such hedges is assessed based on changes in spot rates. The gains/(losses) on the hedges (relating to both spot and forward points) and the foreign exchange gains/(losses) on the related available-for-sale securities are included in market making. The net gains/(losses) on hedges and the related hedged available-for-sale securities were $24 million (reflecting a gain of $125 million related to hedges and a loss of $101 million on the related hedged available-for-sale securities) for the three months ended September 2025 and were $19 million (reflecting a loss of $384 million related to hedges and a gain of $403 million on the related hedged available-for-sale securities) for the nine months ended September 2025. The net gains/(losses) on hedges and the related hedged available-for-sale securities were $14 million (reflecting a loss of $193 million related to hedges and a gain of $207 million on the related hedged available-for-sale securities) for the three months ended September 2024 and were $28 million (reflecting a loss of $165 million related to hedges and a gain of $193 million on the related hedged available-for-sale securities) for the nine months ended September 2024. Net Investment Hedges The firm seeks to reduce the impact of fluctuations in foreign exchange rates on its net investments in certain non-U.S. operations through the use of foreign currency forward contracts and foreign currency-denominated debt. For foreign currency forward contracts designated as hedges, the effectiveness of the hedge is assessed based on the overall changes in the fair value of the forward contracts (i.e., based on changes in forward rates). For foreign currency-denominated debt designated as a hedge, the effectiveness of the hedge is assessed based on changes in spot rates. For qualifying net investment hedges, all gains or losses on the hedging instruments are included in currency translation. The table below presents the gains/(losses) from net investment hedging.
| Three Months Ended September |  | Nine Months Ended September
$ in millions | 2025 | 2024 |  | 2025 | 2024
Hedges: |  |  |  |  |
Foreign currency forward contracts | $ | 90 |  | $ | (314) |  |  | $ | (1,112) |  | $ | 193 |
Foreign currency-denominated debt | $ | 133 |  | $ | (1,010) |  |  | $ | (2,630) |  | $ | (41) |
Gains or losses on individual net investments in non-U.S. operations are reclassified from accumulated other comprehensive income/(loss) to earnings when such net investments are sold or substantially liquidated. The gross and net gains/(losses) reclassified to earnings from accumulated other comprehensive income/(loss) were not material for each of the three and nine months ended September 2025 and September 2024. The firm had designated $23.32 billion as of September 2025 and $22.10 billion as of December 2024 of foreign currency-denominated debt, included in unsecured long- and short-term borrowings, as hedges of net investments in non-U.S. subsidiaries. Cash Flow Hedges The firm designates certain interest rate swaps as cash flow hedges. These interest rate swaps hedge the firm’s exposure to the variability of the forecasted cash flows due to changes in the contractually specified interest rates associated with certain floating-rate assets. The firm applies a statistical method that utilizes regression analysis when assessing hedge effectiveness. A cash flow hedge is considered highly effective in offsetting the variability of the forecasted cash flows attributable to the hedged risk when the regression analysis results in a coefficient of determination of 80% or greater and a slope between 80% and 125%. For qualifying cash flow hedges, the gains or losses on derivatives are included in “Cash flow hedges” within the consolidated statements of comprehensive income. Such gains or losses are reclassified to interest income/expense within the consolidated statements of earnings in the same period that the forecasted hedged cash flows impact earnings. The gains/(losses) included within other comprehensive income/(loss) and the gains/(losses) reclassified to earnings from accumulated other comprehensive income/(loss) related to cash flow hedges were not material for both the three and nine months ended September 2025 and are not expected to be material for the next 12 months. The maximum length of time over which the forecasted cash flows are hedged is approximately one year.

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