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JP Morgan cuts profit target, jobs

Tuesday, February 25 16:14:16

JPMorgan Chase, the largest U.S. bank, is reducing both its target for profitability and its headcount in 2014, according to presentation today.

The bank trimmed its target for a return on tangible common equity to a range of 15 percent to 16 percent, down from 16 percent previously. The bank announced the changes in a presentation tied to its annual investor day conference.

At the conference, Chief Financial Officer Marianne Lake said the bank could potentially post an annual profit of $27 billion once interest rates normalize. The bank reported $18 billion net income in 2013, but Lake said excluding significant and one-time items its core performance was $23 billion.

JPMorgan also said it expected total headcount to fall by 5,000 to 260,000 in 2014. Around 6,000 full-time and contractor jobs in JPMorgan's home loans unit and 2,000 jobs in its branch and credit-card network will be cut. At the same time, the bank expects to add 3,000 new jobs in its control function, including areas like compliance.

Chief executive Jamie Dimon told reporters before the conference that such changes are part of the adjustments the company has to make continually as its business changes.

"You're always trimming the sails. That's business," Dimon said. "Obviously headcount is coming down in some of the businesses. That is life."

The newly announced job cuts in mortgage banking raises the total number of mortgage cuts the company originally called for by year-end 2014 to 17,000. The job cuts in the branches and in credit card were also up from the 4,000 announced in 2013.

Gordon Smith, the head of JPMorgan's consumer bank, said at the conference he expected the number of employees who work in the bank's branches will have declined 20 percent in 2015 from 2011.