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## Note 7 – Interest income and Interest expense 

Interest income and interest expense are recorded in the Consolidated statements of income and classified based on the nature of the underlying asset or liability. 

The following table presents the components of interest income and interest expense: 

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(a) Includes the amortization/accretion of unearned income (e.g., purchase premiums/discounts, net deferred fees/costs, and others). (b) In the third quarter of 2020, the Firm reclassified certain fair value option 

elected lending-related positions from trading assets to loans and other assets. Prior-period amounts have been revised to conform with the current presentation. (c) Represents securities that are tax-exempt for U.S. federal income tax purposes. 

(d) Negative interest income is related to the impact of current interest rates 

combined with the fees paid on client-driven securities borrowed balances. The negative interest expense related to prime brokerage customer payables is recognized in interest expense and reported within trading liabilities - debt and all other interest-bearing liabilities. (e) Includes interest earned on brokerage-related held-for-investment customer 

receivables, which are classified in accrued interest and accounts receivable, and all other interest-earning assets, which are classified in other assets on the Consolidated balance sheets. (f) Includes commercial paper. 

(g) 

All other interest-bearing liabilities includes interest expense on brokerage- related customer payables. 

Interest income and interest expense includes the current-period interest accruals for financial instruments measured at fair value, except for derivatives and financial instruments containing embedded derivatives that would be separately accounted for in accordance with U.S. GAAP, absent the fair value option election; for those instruments, all changes in fair value including any interest elements, are reported in principal transactions revenue. For financial instruments that are not measured at fair value, the related interest is included within interest income or interest expense, as applicable. Refer to Notes 12, 10, 11 and 20, for further information on accounting for interest income and interest expense related to loans, investment securities, securities financing activities (i.e., securities purchased or sold under resale or repurchase agreements; securities borrowed; and securities loaned) and long-term debt, respectively. 

