JPMorgan Chase is cutting a 4,000 jobs this year mainly from its mortgage and consumer businesses as the biggest US bank by assets starts to reduce expenses by $1 billion (€766 million).

Despite the cuts, the bank is confident it will enjoy a record-breaking year, beating analysts’ expectations of $21.1 billion in net income and laying to rest the $6 billion in trading losses racked up by a London-based trader nicknamed “the Whale” for his outsized position in credit derivatives.

JPMorgan yesterday said in the next two years it aimed to cut 13,000-15,000 jobs from the mortgage business, as fewer staff are needed to deal with defaults now that the US housing market is showing signs of recovery. About 3,000-4,000 staff will also be cut from the consumer business as automation replaces people. The deep reductions in the mortgage business will be offset by increases in commercial banking, private banking and asset management.

The 4,000 cuts this year represent more than 1 per cent of the bank’s 259,000 workforce.

After a year marred by trading losses and marked by a management shake-up, the bank announced that it was aiming to earn $27.5 billion in net income “over time”.

‘Bull market’

Marianne Lake, the bank’s new chief financial officer, said expense reduction and investment – including the job cuts, interest rates rising 1 percentage point and the end of expensive litigation related to the mortgage crisis – would boost the bank’s net income.

“That gets you to about $27.5 billion over time,” she said. “It doesn’t contemplate fully normalised interest rates or a bull market.”

That compares with net income of $21.9 billion in 2012, adjusted for changes in the value of the bank’s own debt.

After a push for new clients in Europe, JPMorgan said its prime brokerage, which serves hedge fund clients, has seen international balances increase by 80 per cent since 2010.

The US investment bank said global corporate bankers, who focus on multinational clients, had tripled to 300 since 2009 and revenues had increased by $2 billion as a result.

The next phase of the bank’s drive for international growth will mean a bigger proportion of expenses shift from the US to Europe and Asia.

The investment bank is setting its sights on business in Europe, trying to coax more large European firms to raise debt and equity in the capital markets. – The Financial Times Limited 2013