A drop in U.S. banks' trading and corporate finance revenue has put a dent in employees’ compensation. A poorly timed hiring spree is exacerbating the pain, writes AntonyMCurrie.
The largest U.S. banks and investment banks reported second-quarter and first-half earnings in the week beginning July 15.
For the first six months of the year Bank of America posted a 1% overall increase in revenue, compared with a year earlier, with JPMorgan adding 4%, compared to the same period in 2018. The top line in their investment-banking units – broadly including trading, advising on deals and underwriting debt and equity – fell by 3.2% and 4.5%, respectively.
Overall revenue fell by less than 1% over the same time frame at Citigroup, and by mid-single digits at both Goldman Sachs and Morgan Stanley. The top line at Morgan Stanley’s investment bank dropped almost 13%. Goldman and Morgan Stanley had almost 3% more employees than at the end of June last year. JPMorgan had added almost 7% to the ranks of its investment bank. Jefferies Group, which reported earnings a year earlier had just over 6% more staff at the end of May, when its second quarter closed, than a year earlier.
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