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Wall Street firms are expected to pay out higher bonuses this year in what would be the first increase since 2021, according to a report by compensation consulting firm Johnson Associates.
Bonuses are expected to rise after recent months saw an uptick in deal-making, the Federal Reserve cutting interest rates and the stock market surging to record highs.
"This year has been surprisingly good, and the industry is quite optimistic about 2025, especially with the potential of announcing more M&A deals," the firm's founder, Alan Johnson, told Reuters.
Although bonuses are rising for the first time in three years, they will remain below the record levels they reached in 2021, when, Johnson noted, there was "abnormally good" revenue and compensation.
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The Johnson Associates analysis found that Wall Street firms are expected to increase bonuses at the highest levels since 2021. (Michael M. Santiago/Getty Images / Getty Images)
Investment bankers working in the debt underwriting sector will see the largest increase in bonuses compared to their peers in other fields, increasing by 25% to 35% because of what Johnson Associates noted were revenues booming due to debt issuance growth.
Equity underwriters are expected to see bonuses rise by 15% to 25% compared to last year, with revenues up significantly from 2023 despite a slow IPO market, the firm noted.
Traders are likely to see bonuses increase by 15% to 20% amid increased activity in equity markets and elevated levels of volatility.
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The Federal Reserve's rate cuts have helped spur more activity in the market. (Michael Nagle/Bloomberg via Getty Images / Getty Images)
Bonuses for firm managers are expected to rise by 10% to 15% amid a rise in all business segments and a drop in credit loss provisions.
Asset management and wealth management professionals are expected to see bonuses rise by 7% to 12% from last year due to inflows and market appreciation.
Bankers advising on mergers and acquisitions are projected to see bonuses rise by 5% to 10%, the same for fixed income traders, corporate staff and insurance.
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Wall Street bankers in debt underwriting are expected to get the largest increase in bonuses. (Yuki Iwamura/Bloomberg via Getty Images / Getty Images)
Other areas in the banking sector are expected to see bonuses remain relatively flat or even decline due to sluggish activity in those market segments, the report found.
Real estate bankers' bonuses are expected to remain flat after a multi-year downturn that has seen the market bottom out, Johnson Associates wrote.
Bonuses for retail and commercial bankers are likely to decrease by 5% or remain flat due to lending and credit loss provisions declining.
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Reuters contributed to this report.
