Wall Street banks cut 5 000 jobs even as they notched record profits

The biggest banks on Wall Street didn’t let record earnings stop them from trimming more than 5 000 jobs in the first quarter.

Four of the six largest US banks reduced their headcount during the first three months of the year, with Wells Fargo & Co leading the way with more than 4 000 cuts, while JPMorgan Chase & Co and Morgan Stanley added staff. That came as the six banks racked up $47.3 billion of net income on the back of higher revenue from fixed-income and stock trading as the war in Iran spurred market swings.

The reductions account for a small slice of the more than 1 million people that the banks collectively employ. But the cuts come after the banks shrank headcount last year as well, feeding fears that even companies performing well won’t be looking to add staff as they pour money into artificial intelligence in an effort to become even more efficient.

“We’re increasing our investments in areas like technology, including AI, as well as in advertising, while continuing to execute on our efficiency initiatives, which has resulted in 23 consecutive quarters of headcount reductions,” Wells Fargo chief executive officer Charlie Scharf said on a conference call with analysts.

The job cuts continued a trend from last year, when the biggest banks reduced the number of employees by the most in almost a decade.

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To be sure, banks often make staffing decisions in the first quarter, around the time bonuses are due – and none of the executives this week linked their job reductions to AI. Still, last quarter’s cuts were far greater than a year earlier, when the lenders collectively reduced headcount by 707 employees.

‘Early stages’

“AI gives us places to go,” Bank of America CEO Brian Moynihan said Wednesday on a call with analysts. “We’re still in the early stages of what all this will do. But we’re seeing real benefits out of it today.”

Wall Street has spent years reining in headcount, but the age of AI has set off new jitters among bankers and traders about how the technology will affect their everyday work. Bank bosses faced a flurry of questions from analysts this week about how they’re deploying AI.

At Citigroup, executives said more than 80% of the firm’s 224,000 employees were using the firm’s AI tools, with its trading teams saving some 1 700 hours of work each month. Its 10 000 engineers have used it to remap three decades of coding in just two days, CEO Jane Fraser said.

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“I feel good about the modernisation we’ve done,” Fraser told analysts. “The other area we’re really happy about is the investments we’ve made in our data and architecture.”

This week’s results came on the heels of a meeting convened earlier this month by US officials with the heads of some of the biggest banks, where attendees were briefed on heightened risks of cyberattacks posed by Anthropic’s lastest model. Lenders have spent the intervening days testing out that new model, known as Mythos, to ensure their systems aren’t vulnerable.

One by one, though, the CEOs this week sounded overwhelmingly positive about what AI will mean for their institutions.

“It will not be a straight line – whenever you have acceleration in new technology, there are going to be bumps and there are going to be risk issues and there are going to be recalibrations,” Goldman Sachs CEO David Solomon said on a conference call. “But the power of the technology, the ability to use it in an enterprise to remake processes, to create efficiencies and also create more capacity to invest in growth, I can’t find a CEO that’s not talking about that.”

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