JPMorgan says mortgage, community units may lose 19,000 jobs
JPMorgan Chase & Co., the biggest U.S. bank, plans to reduce headcount by as many as 19,000 people in its mortgage and community banking businesses through 2014 as chief executive officer Jamie Dimon cuts expenses.
The lender, which employed about 259,000 people at the end of December, will cut 13,000 to 15,000 jobs in its mortgage unit and 3,000 to 4,000 in community banking excluding home lending through 2014, the New York-based company said Tuesday in presentations on its website. Firmwide headcount will shrink by about 4,000 people this year, mainly through attrition, said Kristin Lemkau, a company spokeswoman.
Dimon, 56, is focusing on expense reductions after boosting net income to records for three straight years. Mortgage profits that have driven banks' earnings may fade this year as increased competition keeps the rates on new loans near all-time lows. Some firms also are cutting jobs after reaching a settlement with U.S. regulators that resolves obligations to review foreclosure documents.
With credit quality stabilizing "banks can focus on operational efficiency," said Chris Kotowski, a New York-based bank analyst with Oppenheimer & Co. "When credit problems are mounting banks have to throw money at their problems. When the environment stabilizes they can worry about operating efficiency."
JPMorgan gave the forecasts as top executives began their annual Investor Day conference in New York. Potential job cuts for mortgage and community banking amount to about 7.3 percent of the firm's total headcount as of Dec. 31. Investment-banking compensation is "expected to remain relatively consistent," the company said.
The stock climbed Tuesday and the company rallied 8.5 percent this year through Monday.
Chief financial officer Marianne Lake said Tuesday that the bank is trying to cut costs and expects to reduce adjusted expenses by about $1 billion in 2013. Net interest income will remain "flat," and the bank will release about $1 billion in credit-card reserves back into earnings this year, she said.
"We know the work we have to do, and we're comfortable doing it," Lake said.
Costs in mortgage banking will fall by about $3 billion through 2014, the company said. It expects a 20 percent reduction in same-store staffing by 2015 via attrition, while expanding the business.
JPMorgan is seeking to cut expenses tied to mortgage servicing as the bank resolves regulatory probes and provides borrower relief including modification of home loans. The company has a long-term plan of as little as $300 million in quarterly servicing expenses, less than half the adjusted total in the fourth quarter, JPMorgan said last month.