JPMorgan to cut 17000 jobs over 2 years to cut 17000 jobs over 2 years

J.P. Morgan Chase stepped up the pace of bank cost cutting, setting plans to eliminate 17,000 jobs by the end of next year and reduce expenses by at least $1 billion annually.

The move announced Tuesday by the New York company, the nation's most profitable bank in 2012 and the biggest U.S. lender by assets, will reduce its staff by 6.5% in one of the most aggressive reductions to date amid widespread financial-industry cutbacks.

J.P. Morgan is considered among the healthiest of the big U.S. banks, but the cuts show that even it isn't immune to the struggle that is dragging down results at financial companies of all stripes—particularly the effect of low interest rates on profits from lending and investing.

The cuts figure to make J.P. Morgan by staffing the smallest among its peers, a group that also includes Bank of America Corp., BAC +0.91%Citigroup Inc. C +0.34%and Wells Fargo WFC -0.11%& Co. The largest, Bank of America, employed 267,190 people at year-end, while J.P. Morgan employed 258,965.

For 2012, J.P. Morgan reported net income of $21.3 billion, up 12% from a year ago and a company record. But revenue was flat at $99.9 billion, amid a slow U.S. economy that has crimped loan growth and a mixed market environment that has squeezed banking and trading profits. Meanwhile, costs inched up 3%. The results were announced Tuesday by Chief Executive James Dimon and other executives during an investor day presentation at the bank's Manhattan headquarters.

Chief Financial Officer Marianne Lake said a key measure of lending profitability, net interest income, is expected to remain flat this year, although she expects strong loan demand from businesses.

The staff reductions come as the biggest financial firms, many of which grew during the financial crisis by acquiring faltering rivals, accelerate a crackdown on costs. The four largest U.S. banks cut 29,793 jobs last year, according to company filings.

"The industry has elevated costs because of the recession and the financial crisis," said RBC Capital Markets banking analyst Gerard Cassidy. With the crisis mostly past, the big banks "don't need those people anymore."

J.P. Morgan said it would reduce its global staff by a net 4,000 jobs this year and 13,000 next, primarily in the consumer bank and the unit that handles home loans. The majority of J.P. Morgan's cuts in 2013 and 2014 will come from its 45,000-person mortgage group. Kevin Watters, the head of the bank's mortgage operations, said reductions are planned mostly among employees dealing with defaults, which have come down, and among employees related to home lending as volume declines. Mortgages remain "a core product" for J.P. Morgan, Mr. Watters said, and the bank is planning to increase its market share.