As consumer preferences shift and interest rates remain low.
Times are still tough for the Masters of the Universe.
J.P. Morgan Chase says the ax swinging isn’t likely to end soon in its consumer and community banking division.
Gordon Smith, CEO of J.P. Morgan Chase’s Consumer and Community Banking, told CNBC in an interview Wednesday the bank put in place a plan to shrink its banking division a few years ago, and it has yet to complete all of those job cuts. In late 2014, J.P. Morgan had revealed plans to cut $2 billion of expenses from its consumer bank by 2016, Reuters reported.
Those cuts came in the form of fewer bank branches and layoffs.
The bank had 5,602 branches at the end of 2014. By June, the number of Chase bank locations had dropped to 5,366. Back in 2014, J.P. Morgan said it would cut 4,000 jobs from its cards, merchant banking, and auto lending units. Smith said much of the funds saved from previous cuts have been used to hire in other area showing more potential for growth.
“We’ve taken a significant amount of what we’ve saved and we’ve put that back into investments in mobile, in digital and into marketing,” Gordon said.
Smith’s comments come as big banks and lenders struggle to lift their revenues amid low interest rates, volatile markets, and higher capital requirements.
Many Wall Street heavyweights have turned to cost cutting to offset their slumping revenue figures. Goldman Sachs is said to be cutting about $1 billion worth in costs through a combination of layoffs and other smaller reductions. Using similar tactics, Morgan Stanley has said it will also cut $1 billion in annual expenses by cracking down on non-client related travel, and moving some 1,250 support staff to lower-cost locations including Bangalore and Glasgow.
Granted, J.P. Morgan did hold up a beacon of hope during its second quarter earnings report mid-July. The bank beat analyst expectations not only in earnings—but also in revenue. To some investors, that suggested that J.P. Morgan may still be able to grow given this new environment for banks.