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  • Aug 23, 2014
  • Updated: 3:13am

JPMorgan Chase

JPMorgan Chase is the largest bank in the United States, and one of the world’s largest public companies. 

BusinessBanking & Finance
BANKING

JPMorgan to cut 5,000 more jobs

PUBLISHED : Wednesday, 26 February, 2014, 3:38pm
UPDATED : Thursday, 27 February, 2014, 1:09am

JP Morgan Chase, the largest bank in the United States, announced thousands of job cuts as its mortgage lending business slows.

The company said it expected total headcount to fall by 5,000 to 260,000 this year. The bank is also lowering its profitability target.

About 6,000 full-time and contractor jobs in JP Morgan's home loans unit and 2,000 jobs in its branch and credit card network will be cut. At the same time, the bank expects to add 3,000 new jobs in its control function, including areas like compliance.

Chief financial officer Marianne Lake said the bank could post a higher profit, possibly up to US$27 billion a year, once short-term interest rates rise.

The bank reported US$18 billion net income for last year, but Lake said that excluding significant and one-time items, its core income was US$23 billion.

Obviously headcount is coming down in some of the businesses
JAMIE DIMON, CHIEF EXECUTIVE

However, because the bank cannot fund as many of its assets with debt, a measure of the profit it generates from equity will likely be lower. In particular, return on tangible common equity was likely to be somewhere between 15 per cent and 16 per cent, down from the bank's prior estimate of 16 per cent, Lake said.

She said the company believed it would generate enough excess capital to operate without buffer capital beyond regulatory requirements.

Chief executive Jamie Dimon told reporters the job cuts were part of the adjustments the company had to make continually as its business changed.

"You're always trimming the sails. That's business," Dimon said. "Obviously headcount is coming down in some of the businesses. That is life."

The newly announced job cuts in mortgage banking raise the total number of mortgage cuts the company originally called for by the end of this year to 17,000.

Many big banks, including Wells Fargo and Bank of America, have been laying off mortgage workers as higher interest rates in the second half of last year made refinancing less attractive to homeowners.

Mortgage lending at JP Morgan fell 8 per cent last year to US$166 billion, but refinancing fell three times as much. Weakness in that business would persist into this year.

Mortgage banking chief executive Kevin Watters said the pre-tax income of JP Morgan's mortgage production business would be negative this year.

Sales and trading was another business where JP Morgan executives expected weakness in the near term.

Daniel Pinto, a co-chief executive of JP Morgan's corporate and investment bank, said market revenues since the start of the year were down 15 per cent compared with the same period last year.

Gordon Smith, the head of JP Morgan's consumer bank, said he expected the number of employees in its branches would have declined 20 per cent from 2011 to next year.

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