JPMorgan says layoffs are on the table in investment banking

JPMorgan Chase could lay off staff in a bid to counter falling investment banking revenue.

America's largest bank by assets expects investment banking fees to fall in the third quarter by between 45% and 50% from a year ago, Chief Operating Officer Daniel Pinto said Tuesday at an investor conference hosted by Barclays. In addition to reducing headcount, the bank could reduce compensation, Pinto said.

"Last year, we had to add a lot of bodies just to execute the huge amount of volume we were executing," Pinto said.  Still, he said it is important to exercise caution when cutting bankers during a downturn "because you will hurt the possibility of growth going forward."

Bloomberg

Banks are reassessing staffing needs in a number of business lines that have come under pressure this year, including investment banking and mortgages.

The comments from JPMorgan come a day after reports of impending layoffs at Goldman Sachs, where analysts expect a double-digit drop in earnings this year. Wells Fargo, one of the largest mortgage lenders in the country, said in July that layoffs were likely to continue alongside plunging home-loan originations. Citigroup last week cut dozens of staffers in its slowing mortgage division.

Citi Chief Financial Office Mark Mason also spoke Tuesday at the industry conference, and while he did not mention impending job cuts in investment banking, he did say that investment banking revenues are under pressure.

"In light of the volatility and uncertainty, wallets are down some 50% plus or so and we're down in tandem with that, and we think we'll end the quarter generally around where the wallet ends," Mason said.

On Monday, Bank of America CEO Brian Moynihan said that the Charlotte, North Carolina, bank is "fine with our headcount." If the bank needs to reduce staffing, it will likely not fill all open positions, he said.

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Across the industry, the robust dealmaking that powered record investment banking revenue earlier in the pandemic has come to a halt in 2022. Turbulent equities markets and growing fears of a recession in the U.S. have business leaders on edge, reluctant to make the deals they would have welcomed a year ago.

At JPMorgan, fees from investment banking fell 54% in the second quarter. 

JPMorgan's consumer customers are faring well, Pinto said. Consumers are being cautious, but the bank still expects revolving balances on credit cards to match 2019 levels at some point next year. Delinquencies have risen slightly, largely among customers with lower incomes and lower credit scores, the bank said.

Allissa Kline contributed to this report.