Investment banker bonuses set to soar in 2024
After two lackluster years, Wall Street bonuses are poised to jump in virtually every sector of the industry, with debt underwriting likely to be the biggest winner.
Bankers who help companies sell debt may see payouts swell as much as 35%, as deals pick up and capital markets rebound from multiyear lows, according to a report Thursday from compensation consultant Johnson Associates Inc. Equity underwriters are close behind, with gains of as much as 30% predicted.
The forecast follows strong second-quarter performances from US and European banks, after rising stock prices around the world fueled demand on trading desks. For equity traders, incentives may rise 15% while their fixed-income counterparts could see a more modest 5% to 10% rise, according to the report.
Corporate clients that tapped the brakes on stock and bond sales as the Federal Reserve boosted interest rates are returning to the market. And strong demand for wealth management may help drive up bonuses in that business as much as 10%, Johnson Associates estimated.
For those working in asset management, the bump could be about 10% on the back of market appreciation and stabilizing inflows. At hedge funds, incentive compensation is likely to be up as much as 15%, helped by stronger performance across most strategies.
Predictions halfway through the year can change, especially with uncertainty around the US economy, the upcoming US election and the Fed’s path toward lower interest rates. Some businesses will be affected by market volatility and uncertainty more than others, including retail and commercial banking. Johnson Associates said bankers in those fields could see their bonuses down 5% to flat, as real estate remains a concern and commercial lending stays lower.
Financial industry bonuses last swelled when the pandemic set off a wave of trading and dealmaking. But that proved temporary, leading to a pullback in compensation. Traditional merger-and-acquisition activity has started to come back from recent lows, but not in full force. Incentives there are predicted to be flat to up 5%, as the slump in deals continues but the pipeline remains “optimistic,” according to the report.
