JPMorgan Bet on Small Business Boom, Cleans Up Mortgage Sector

According to its fourth-quarter earnings report, JPMorgan pulled out of home loans after reporting a 46% year-over-year decline in mortgage income. According to Bloomberg, the bank saw its mortgage lending drop by 60% in 2022 as a series of rate hikes drained consumer demand for home loans.

This isn't the first exact amount JP Morgan has ever undertaken on a home loan. In June, the bank laid off hundreds of department employees and redeployed hundreds more.

Other banks did the same.

Wells Fargo's home loans have declined several times since April. The bank last month announced plans to streamline its mortgage business to focus on existing customers and the non-white community.

Citi pushed for "few staff reductions" from its Mortgage team "due to optimizing internal functions" in September.

USAA cut 130 jobs in its mortgage department last week. And New York Community Bank announced last week that it is closing 69% of Flagstar Bank's retail home loan offices and moving to a branch-only model for the sector.

NYCB acquired Flagstar in December.

Small Business Development

Jamie Dimon, CEO of JP Morgan, gave a business tone to the possibility of hiring some sectors and laying off others. "We're still opening branches and we continue to hire bankers, consumer bankers, small business bankers, midsize bankers and overseas employees globally," he told Reuters. "We have more customers to reach."

Hiring 500 people will expand JPMorgan's list of banking services by 20%, the bank said.

The effort comes as the Small Business Administration saw a record number of applications over the past two years.

“Since the start of [the Biden-Harris administration], small business applications reached a high of 10.5 million, the most in any two years in our nation’s history,” SBA Director Isabella Casillas Guzman said in a statement last month.

JPMorgan is counting on small firms needing financial advice as well as deposit, credit and cash management products to help them weather upcoming economic hurdles.

“Small business owners are facing difficult challenges with persistent inflation, supply chain disruptions, and expense pressure,” Ben Walter, CEO of business banking at Chase, said in a statement.

“We know that banks play a vital role in the long-term success of small businesses and communities. This investment in people is a testament to our commitment to our customers and our commitment to supporting them throughout their business cycle.”