While some banks, notably Wells Fargo & Co (NYSE:WFC) and Bank of America Corp (NYSE:BAC), are fighting back against this trend, JPMorgan Chase & Co. (NYSE:JPM) appears to have made peace with the idea of lower profits for the remainder of 2013. The big bank seems to be exhibiting some malaise in areas other than mortgage banking as well. Here are three reasons I think JPMorgan is in a funk.
1. Huge staff cuts
Although many megabanks are promising to slash employee numbers this year, JPMorgan has the largest number of pink slips at the ready — 17,000, to be exact, constituting nearly 81% of the combined 21,000 that the six biggest banks plan to trim before the end of next year.
Layoffs are to be expected as troubled loan portfolios become more manageable, but these cuts are huge and approximately 14,000 of those layoffs are said to come out of the bank’s mortgage unit. At the same time, Wells and Bank of America Corp (NYSE:BAC) are both adding to their mortgage departments. Perhaps JPMorgan Chase & Co. (NYSE:JPM) is responding to first-quarter numbers that showed an increase in year-over-year mortgage originations of 37%, while delivering a 31% dip in net income due to narrower margins.
2. The bank has dropped out of the Euromoney FX poll
After falling a few notches in the Euromoney foreign exchange listing last year, JPMorgan has decided to no longer participate in the survey, in which investment banks ask for customers’ support in an effort to climb higher in the rankings.
Does this matter? It might, as this yearly ritual apparently has some effect on rankings. Though observers note that Goldman Sachs Group, Inc. (NYSE:GS) also stopped canvassing for votes several years ago, it was also noted that JPMorgan Chase & Co. (NYSE:JPM) could drop another tier in the rankings because of this decision.
3. JPMorgan considers many investment banks a lousy investment
Yes, that’s right. Even though JPMorgan Chase & Co. (NYSE:JPM) ranks first in investment banking fees, it recently released a paper saying that top-tier investment banks are “uninvestable,” suggesting that perhaps entities like Bank of America Corp (NYSE:BAC) and Citigroup Inc. (NYSE:C) would be a better bet for investors.
Why does JPMorgan say that a group of which it is a member is no longer a good deal? The bank’s analysts note that rivals like Goldman Sachs Group, Inc. (NYSE:GS) and Deutsche Bank AG (USA) (NYSE:DB) face a slew of new regulations that may affect earnings, as well as concerns with future capital restrictions. JPMorgan didn’t mention itself in this report, but The New York Times predicts some “uneasy reading” for JPMorgan executives.
Has JPMorgan lost its groove? These three recent signals are worrying, but 2013 is still young. Perhaps the bank will clear the clouds off its horizon and get back its mojo or, just possibly, it has a plan for success that isn’t apparent to the investment community. Time will tell, but JPMorgan Chase & Co. (NYSE:JPM) may be signaling the advent of tough banking times, and very soon.
The article 3 Signs That JPMorgan Chase Is Giving Up originally appeared on Fool.com and is written by Amanda Alix.
Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs and Wells Fargo. It owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.
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