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Forget the trading slump, Wall Street bonuses are set to rise this year

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While most large investment banks are battling weaker fixed income revenues and continued pressure to cut costs, Wall Street as a whole has something to celebrate – barring any sudden downturn in the final quarter, there will be more jobs in securities industry in New York than at any point since before the financial crisis, and bonuses are on the up.

In the annual Wall Street report from New York State Comptroller Thomas DiNapoli’s, he suggested that bonuses across the securities industry will rise by at least 4% in 2017. The report found that New York-based securities industry employees’ salary ticked down year-over-year, but the average bonus was $138,210 in 2016, 1% higher than in the prior year. The average compensation – base salary plus bonus – fell by 3% to $375,300.

But it said that “the industry is off to a very strong start in 2017,” with profits of $12.3bn in the first half, 33% higher than one year earlier. Last year, profits were driven by banks’ cost-cutting efforts and lower settlement costs stemming from the financial crisis. However, this year, profits are being driven by higher revenues. Revenue from trading and underwriting rose 29% year-to-date. Wall Street is on track for the second straight year of higher profits.

What is more, banks and other financial services firms set aside 3.8% more for compensation in the first half of this year compared to one year earlier, suggesting that bonuses could – should, given the profitability figures cited above – be higher than last year. Bonuses account for about one-third of the average salary of industry employees working in New York City.

Comptroller figure 1 Oct 2017

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Over the next three years, the industry added 11,100 jobs, bringing employment to 177,000 in 2016, the highest level since the financial crisis. Despite the growth, there were still (11,900 – 6% fewer industry jobs in New York City than before the financial crisis.

Preliminary employment data show that the industry lost jobs through the first five months of the year, but those losses were more than offset in the following four months, for a net gain of more than 300 jobs so far this year. As of September 2017, there were 178,000 jobs in the securities industry in New York City.

Wall Street’s share of the nation’s financial services industry has shrunk over the past three decades, from one-third of the nation’s securities industry jobs in 1990 to 19% as of last year, per the report.

Comptroller figure 2 Oct 2017

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