J.P. Morgan Dims Its Light on 2014 --- Bank Pares a Profitability Measure Amid Slump in Trading; More Staff Cuts at Branches, Mortgage Unit
J.P. Morgan Chase & Co. offered a cautious outlook as it lowered its projections of a key profitability measure amid a slump in trading at the start of the year and boosted job-cut targets for its branches and mortgage business.</br></br>The reduced ambitions outlined Tuesday by Chief Executive James Dimon and others at the bank's annual investor day in New York show how J.P. Morgan's size and power across various markets hasn't made it immune to the struggles weighing down results at financial companies of all stripes. Executives across the banking industry, despite some early signs of loan growth, are wrestling with a sluggish U.S. economy and the effect of low interest rates on profits from lending, investing and trading.</br></br>J.P. Morgan executives said trading revenue had fallen 15% this year, due largely to a slump in trading activity in fixed-income markets. The bank lowered projections of a profitability measure known as return on tangible common equity to 15% to 16% for 2014, down from 16% in 2013.</br></br>Pressures on J.P. Morgan are acute in part because the bank has had to increase compliance costs. Tuesday, the bank said it would add 3,000 employees to compliance areas as it works to shore up relationships with the numerous regulators that oversee the bank's global operations. Executives said the 3,000 employees would be on top of the 7,000 additions to compliance in 2013.</br></br>The bank has agreed to more than $20 billion in settlements over the past year to resolve a number of government investigations and lawsuits, but it still faces a number of federal probes.