At a time when the banking industry is struggling with slow
top-line growth, banks are attempting to cut expenses in order to
remain profitable. Wall Street biggies including
JPMorgan Chase & Co.
) are among the front runners.
Per a report from Wall Street Journal, JPMorgan is seeking avenues
to slash wasteful expenditure. For the last several months, the
company's chief operating officer (COO), Matt Zames has been
endeavoring to develop effective cost-cutting measures.
JPMorgan is considering a wide range of area for the imminent cost
slash. These include relocation of employees to less expensive
offices, reviewing third-party contracts and external legal
spending. Notably, these savings will not support bottom line.
Such moves are being undertaken by the bank mainly to counter rise
in expenses related to compliance and litigations. Since the
financial crisis, banking sector has been facing a spate of
regulations leading to higher expenses. Hiring employees to take
care of the regulatory compliances has increased compensation
expenses for banks like JPMorgan.
Further, banks such as JPMorgan,
Bank of America Corporation
), among others, are facing litigations and probes for their
business conducts in the pre-crisis period. Despite settlement of
several lawsuits in the past one year, JPMorgan still faces many
other probes and cases.
Besides other measures, JPMorgan has already announced 8,000 job
cuts by the end of 2014. Further, the company would be putting more
emphasis on automated banking services as these are less costly.
Layoff Bells Toll at JPMorgan Again
We believe that JPMorgan's efforts to slash costs and improve
efficiency will help it to overcome sluggish revenue growth. The
company had announced a 20% decline in market revenues in the
second quarter. Hence, with continued pressure on top line, such
initiatives will aid the company in keeping up its profitability.
Currently, JPMorgan carries a Zacks Rank #3 (Hold).
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