Source: https://www.zacks.com/stock/news/326606/jpmorgan-to-trim-mortgage-banking-division-slash-400-jobs
Similar Layoffs by Other Banks
JPMorgan is not the only one facing the problem. Earlier in August, Wells Fargo (WFC - Free Report) announced its plan to cut more than 600 jobs in mortgage banking business.
Further, U.S. Bancorp’s (USB - Free Report) banking subsidiary — U.S. Bank — announced that it will cut 260 jobs, as it plans to close its Bedford mortgage and consumer banking office.In addition, MB Financial (MBFI - Free Report) announced its plans this April to shut down its national mortgage origination business, which resulted in the layoff of nearly 600 employees at locations across Southeast Michigan.
Conclusion
Since the interest rates have started rising, JPMorgan’s mortgage banking business have started facing problems. Over the last three years (2015-2017), mortgage fees and related income have declined at a CAGR of 19.8%. The slowdown in origination is likely to continue in the quarters ahead, thereby hampering growth of mortgage banking business.
Nonetheless, with rise in demand for loans and improving economy, the bank is witnessing an increase in net interest income as rates rise. This along with JPMorgan’s plan to expand into 15-20 newer markets will further support revenue growth.
Shares of JPMorgan have rallied 21.6% over the past year, outperforming the industry’s rise of 8.5%.