J.P. Morgan Says It Plans to Slash Costs

J.P. Morgan & Co. said it plans to slash as much as $300 million to $500 million in costs annually through next year, possibly including job cuts, as the bank tries to boost its below-average return on equity. The nation’s fourth-largest bank, which reduced expenses by $250 million in the first quarter through job cuts, outlined a broad plan to raise return on equity to 15% from an annualized first-quarter rate of 8.6%, compared with the 18% average return among other U.S. global banks. The plan includes reducing lending and holding down costs in its equities business. Morgan’s competitors are getting bigger, as rival Citicorp agreed to merge with Travelers Group Inc., and NationsBank Corp. agreed to acquire BankAmerica Corp. And on Tuesday, Swiss regulators gave conditional approval to the $33-billion merger of Swiss Bank Corp. and Union Bank of Switzerland, which would create the world’s third-largest bank. Still, J.P. Morgan Chairman Douglas A. “Sandy” Warner III told analysts the bank was “big enough to compete.” In the last five years, J.P. Morgan’s stock rose an average 20% annually, lagging its banking peers, which surged 36% a year during the same period. Morgan stock rose 13 cents to close at $134.56 on the New York Stock Exchange.