Wall Street’s bonus pool rose 15 percent to $26.7 billion in 2013 even as profits from broker-dealer operations on the New York Stock Exchange fell by 30 percent, according to estimates by New York state Comptroller Thomas DiNapoli.
Employees took home an average bonus of $164,530 last year, the largest since the 2008 financial crisis and the third highest on record, Mr. DiNapoli said in a statement Wednesday. Exchange member firms had profit of $16.7 billion, down from $23.9 billion in 2012.
“Although profits were lower than the prior year, the industry still had a good year in 2013 despite costly legal settlements and higher interest rates,” Mr. DiNapoli said. “Wall Street continues to demonstrate resilience as it evolves in a changing regulatory environment.”
Trading and investment-banking revenue at the nine biggest global firms fell 4 percent to $160 billion in 2013, as a drop in fixed-income revenue outweighed gains in equity trading and fees from advising and underwriting. Profit at JPMorgan Chase & Co., the largest U.S. bank, declined as it announced more than $23 billion in legal and regulatory settlements.
The largest Wall Street investment banks, including The Goldman Sachs Group Inc., JPMorgan and Morgan Stanley, each set aside a smaller portion of revenue for employee pay to cut costs and improve returns. Shares of the three firms each jumped last year as an improving U.S. economy sent the S&P 500 to a record high.
Morgan Stanley reduced the portion of pay that it deferred to later years for top earners. The bank, which set aside 100 percent of 2012 bonuses for employees who had both total pay of at least $350,000 and incentive pay of $50,000, this year deferred between 50 percent and 98 percent of those workers’ bonuses.
In October, Mr. DiNapoli predicted that Wall Street profits would fall by as much as 37 percent as employment fell to near a post-recession low. An impasse overs spending in Washington that month led to the federal government shutdown and legal expenses — including JPMorgan’s $13 billion settlement to end federal probes of its mortgage-bond sales — were expected to drive down earnings, Mr. DiNapoli said at the time.
A blow to Wall Street’s take can also hurt the bottom line for the state and New York City. In fiscal 2013, taxes on the securities industry and its workers delivered $10.3 billion to state coffers, or almost 16 percent of all state revenue, the October report showed. In New York City, the industry accounted for 8.5 percent of all receipts.