Wall Street Scored Record Bonuses Just in Time for a Slump

The good times, they don’t last. But on Wednesday, we at least found out just how good the good times were. 

According to data released from the New York comptroller, Wall Street bonuses surged over 31% in 2024 to an average payout of $244,700 — the highest-ever level going back to 1990. But as economic uncertainty sinks in, bankers are looking at a starkly different reality this year.

Bonus Points

In sum, Wall Street bankers earned an estimated $47.5 billion in bonuses last year, a record going back to at least 1987. It’s thanks largely to a rebound in dealmaking after an epic two-year hibernation, and widespread optimism for the future that fueled the white-hot equities market. That optimism only increased in the final months of the year, on hopes that the next administration would usher in a new dealmaking-friendly era. Each major bank saw a profit explosion in the fourth quarter, and hopes were so high that the KBW Banking index, which tracks leading banks and financial institutions, rose nearly 12% from the November election through Inauguration Day in the US.

“There are good times to be over-exposed to capital markets revenues, and this is one of them,” Stephen Biggar, banking analyst at Argus Research, told Reuters a few days ahead of the presidential swearing-in ceremony.

Today, however, may not be one of them. The S&P 500 has stumbled. This year has ushered in the slowest January and February for dealmaking since the financial crisis. The KBW Banking index has fallen over 8% since Inauguration Day. Goldman Sachs analysts recently lowered their growth target for completed deals this year from 25% to 7%. JPMorgan analysts have pegged the chances of a recession at 40%. All of which is why, three months after handing out hefty bonuses, Wall Street banks are printing out pink slips:

• While this time of year typically sees headcount reductions at major banks, analysts told Reuters on Wednesday that they fear banks could accelerate layoffs beyond normal levels if market conditions don’t rebound. 
• According to Dealogic data seen by Reuters, global investment banking fees reached just $16.8 billion from January 1 to March 13, down from nearly $18 billion a year ago and way down from the nearly $20 billion mark reached in the fourth quarter of 2024.

Summer Daze: So when will Wall Street know if there’s a turnaround? “There’s an expectation that investment banking pickup is delayed, not dead,” Wells Fargo banking analyst Mike Mayo told Reuters. “But if we’re having this discussion in the middle of the summer, that could be a different story. If the revenues aren’t coming in, then employees bear the brunt.”