JPMorgan Chase, the biggest bank in the U.S., plans to eliminate a total of 8,000 jobs this year in its mortgage and retail banking divisions, on top of 16,500 job cuts last year.
JPMorgan says its mortgage business is shrinking as interest rates rise. Although greater strength is returning to the U.S. housing market, refinancing is down as the era of low rates appears set to end.
It also wants to control costs at its retail branches and reduce the cost of consumer banking expenses by $2 billion US by the end of 2016. The bank says its Consumer & Community Banking unit will reduce its headcount by about 8,000 workers to 149,000 people this year.
After having his pay cut in 2012 when the bank was embroiled in the “London Whale” trading scandal, JPMorgan CEO Jamie Dimon got a 74 per cent raise for 2014 to $20 million.
The bank also plans to reduce the size of its branches as customers increasingly bank online or use ATMs.
The shift toward ATMs has been under way for decades, but the past year has seen the rise of more mobile banking — including the ability to make deposits by snapping photos of checks.
Almost 10 per cent of deposits are now made through mobile phones, said Barry Sommers, head of Chase's consumer banks.
Cheaper electronic transactions
"As transactions move to mobile devices and Chase.com ... you will see a reduction" in tellers and other service staff, Sommers said.
Electronic transactions are cheaper for the banks to process than retail transactions with a teller.
JPMorgan Chase & Co. increased its target for annual net income to $27 billion US for 2014, with most of the increase coming from its asset-management business.
After two years in which it was hit hard by fines related to the financial crisis and trading irregularities, it expects to face fewer legal bills and settlements. The bank also expects more income from loans and investments as interest rates rise.
Higher capital levels
The profit target was higher than the $24 billion goal it set a year earlier, but its forecast for return on equity was little changed as it holds higher levels of capital in all of its divisions in line with new rules for U.S. banks.
JPMorgan said it expects to expand its middle-market lending and private banking, but the consumer banking segment will shrink.
Competitors including Wells Fargo & Co. and Bank of America Corp. have been dismissing people as higher interest rates discourage the refinancings that banks relied on to fuel profits. JPMorgan employed 251,196 at the end of 2013.