JPMorgan plans 8,000 layoffs
Banks adjust for challenges in mortgage market
JPMorgan Chase (JPM) is expected to reduce employee headcount in mortgages by 6,000 in 2014, in addition to an expense reduction of $2 billion from 2013 to 2014. It's part of a total predicted reduction of 8,000 jobs, the bank announced in its investor day presentation.
But the bank’s cuts run deeper than just mortgages. The bank also announced its plans to layoff 2,000 employees in 2014 and a 1% expense growth in its consumer and business banking division and card, merchant services and auto division.
However, despite the reduction, these cuts are less than the 2013 investor day targets and 2013 performance numbers.
Mortgage banking reported a full year expense down $3 billion in 2014 versus 2012 and a reduced $1.5 billion in expense 2013.
The division also recorded a 13,000 to 15,000 headcount reduction by year end 2014 and a reduced headcount of 11,0000 in 2013.
“We have a strong mortgage franchise; however, profitability headwinds exist given declining origination volumes and continued elevated default servicing costs,” JPMorgan said.
Mortgage banking net income dropped from $3,341 in 2012 to $3,082 in 2013: broken into $1,815 in the first half of 2013 and $1,267 in the second half.
“Despite the challenges and complexities, we are committed to being in the mortgage business and will adjust our business model to be successful over the long-run,” the mega bank said. “We are investing in the future, but the next few years will be challenging.”