Wall Street bonuses expected to decrease due to market instability, as indicated by a consulting report
Johnson Associates, a renowned financial research firm, published its quarterly report on Thursday, offering insights into the expected changes in year-end bonuses across various sectors of the banking industry in 2025.
The report predicts a mixed bag of fortunes for bank employees. While some sectors are expected to see significant increases, others may face cuts.
One of the most notable predictions is a surge in trader payouts. The record revenues generated due to recent market volatility are expected to benefit traders, with their bonuses potentially increasing by a substantial margin.
However, the report suggests that investment bankers may face a tougher year. Equity Capital Markets (ECM) bankers might see their payouts decline by 10% to 20%, while mergers and acquisitions (M&A) dealmakers could experience decreases between 5% and 10%.
The report also indicates a 5% to 15% rise in debt underwriting, a sector that saw a strong performance in 2024.
Wealth management and traditional asset management bankers are expected to see a decline in their bonuses, with reductions of between 2.5% to 7.5% and 5% to 10% respectively.
Retail and commercial bankers' incentives are predicted to decrease by 5% to 10%, while year-end payments for bankers in the advisory market are expected to drop 5% to 10%.
Interestingly, the report does not provide new information about equity underwriting or equity sales and trading bankers' bonuses.
The overall uptick in year-end bonuses in the financial services industry marks the first wide-scale increase since 2021. However, increasing uncertainty in the economy amid significant federal policy changes may dampen the outlook for parts of the securities industry in 2025, as noted by Thomas DiNapoli, New York State Comptroller.
JPMorgan Chase CEO Jamie Dimon has expressed concerns about the impact of proposed tariffs on inflation, and the expected surge in mergers and acquisitions under the Trump administration is now in question due to the current lack of predictability. Wall Street giants, including JPMorgan, have been forced to assess the potential impact of Trump's tariff plans on the financial sector.
The average bonus paid to employees in New York City's securities industry for 2024 reached $244,700 - up 31.5% from last year, according to DiNapoli's annual estimate.
These predictions offer a snapshot of the anticipated changes in the banking sector's year-end bonuses for 2025. As always, the actual outcomes may vary based on market conditions and policy decisions.
Personal-finance for bank employees could be impacted in diverse ways next year. Some sectors, such as debt underwriting, might witness a 5% to 15% rise in bonuses, while sectors like investment bankers (ECM and M&A dealmakers) may endure reductions of 10% to 20% and 5% to 10%, respectively. Conversely, wealth management and traditional asset management bankers might experience a decline in their bonuses, with reductions of between 2.5% to 7.5% and 5% to 10%, respectively.
