Wall Street bankers are set to get a big raise after a two-year hiatus, with bonuses set to increase by up to 35%, according to a new report.
If these predictions come true, it would be another boost for downtown Manhattan’s hospitality industry, which is already seeing a booming trade from wealthy New York interns.
Remuneration consultants Johnson Associates said debt underwriters would be the biggest beneficiaries, with their bonuses rising 35 percent amid an expected recovery in trading.
According to the report, bonuses for bankers working in equity underwriting are expected to increase by 20 to 30 percent.
A separate study by the New York State Comptroller found that average bonuses across the industry fell 2 percent last year.
The forecast comes after a string of strong second-quarter results were reported by US and European banks, but the bank warned that its estimates were still subject to change, particularly due to economic turmoil and uncertainty surrounding the upcoming elections.
Johnson’s analysis said the strong increase in bond issuance and initial public offering (IPO) activity as markets continue to recover from the impact of the coronavirus pandemic was the main reason for the bonus increase.
The report added that compensation for equity traders will increase by 15 percent and for bond traders by 10 percent.
Hedge funds could see incentive pay rise by as much as 15%, thanks to strong performance across most strategies, according to Johnson Associates estimates.
Executives at asset management and asset administration firms are expected to receive incentives 5 to 10 percent higher this year.
Alan Johnson, president of Johnson Associates, said the bonuses were not unreasonable as they “reflected” current market conditions.
“I think compensation in most of these sectors has been driven by strong markets,” he told The Post. “Wall Street has had a tough few years, but we’re certainly back to where we are in 2021.”
But the firm warned that its forecasts are subject to revision due to ongoing uncertainty surrounding the upcoming elections and possible Fed interest rate cuts.
Johnson himself played down discussion of the possibility of a recession, or a downturn that could hit bankers’ bonuses.
“I think the rest of the year is going to be a good one,” Johnson said, noting that the U.S. economy has “held up pretty well so far” compared with other major Western economies.
The New York State Comptroller’s Office’s latest annual estimates show total Wall Street profits rising 1.8% to $26.6 billion in 2023, but bonuses still fell slightly.
The average bonus fell 2% to $176,500 from $180,000 the previous year, the source said.
In 2021, as the United States and other Western countries emerged from widespread lockdowns, trade and deals boomed.
The average bonus paid to Wall Street financiers rose to $240,300 that year, according to state comptroller statistics.
The huge bonuses contribute billions of dollars to New York state and city tax revenues, which is why local officials track the figures so closely.
Bonuses are paid at the end of the year and usually make up a large portion of total compensation.
According to state statistics, one in 11 New Yorkers works in the financial services industry.
