Wall Street’s top banks, JPMorgan Chase (JPM), Bank of America (BAC), and Morgan Stanley (MS), are expected to give their employees a significant bonus increase for 2024. This comes after a strong rebound in trading and investment banking, which boosted the financial firms’ profits.
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In particular, Bank of America plans to increase bonuses for stock and fixed-income traders by an average of 10%, with top performers receiving over a 10% boost, while some bankers may see increases in the mid-to-high single digits.
Meanwhile, Morgan Stanley and JPMorgan are expected to offer a 10% increase in bonuses to traders. Moreover, JPM is poised to award investment bankers with bonus increases of about 15%.
Here’s What Supported Banks’ Performance in 2024
Wall Street banks are poised to offer higher compensations this year after a period of subdued bonuses due to weak business activities. The Federal Reserve’s aggressive interest rate hikes in 2022 and 2023 hurt capital markets activity, leading to a slowdown in dealmaking.
However, market conditions stabilized in 2024, and trading volumes picked up pace due to higher market volatility. Also, 2024 was a strong year for investment banking, driven by a surge in mergers and acquisitions activity and a rebound in debt and equity underwriting. This robust performance prompted banks to reward their top performers.
It would be interesting to see how the improvement in capital market activities aided the Q4 results of these banks. JPM is scheduled to release results on January 15, while BAC and MS will report numbers on January 16.
Which Bank Stock Is Best to Buy?
Among the above-mentioned stocks, BAC stock has a Strong Buy consensus rating, while JPM and MS have a Moderate Buy rating. Looking ahead, analysts forecast the highest upside potential of 13.09% for BAC stock.
