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
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.