NEW YORK — JPMorgan Chase and Wells Fargo, bellwethers for the banking industry, reported record earnings Friday, but those numbers masked troubling declines in revenue.
Revenue fell slightly at both banks, and the earnings gains came largely from slashing expenses and related measures. JPMorgan socked away less to cover potential lawsuits and released some of the money set aside for bad loans. Wells cut back on office space and branches.
The results show that in an era of sluggish loan demand and increased government regulations, banks must stay lean if they want to boost earnings. The industry has come a long way since the panic of the financial crisis, but the pattern it has settled into is one of cutting expenses and maintaining revenue.
For both banks, analysts homed in on a slowdown in the mortgage business. For the past several quarters, the banks have enjoyed a boom in mortgage refinancings as homeowners lined up to take advantage of low interest rates. That pace now appears to be stalling.
