Based on first-quarter revenue and cost trends, incentive funding at major investment and commercial banks is expected to fall by 5% to 10% in 2022, with investment bank underwriting desks seeing declines of up to 40%, Johnson Associates has estimated. Lower revenues will be the main driver of direct decreases in incentive pay, but inflation will make the situation worse, the financial services compensation consulting firm said in its latest sector report.

Following “an unbelievably good year,” underwriting revenues “dropped off a cliff” amid a slowdown in advisory in the first few months of 2022, Alan M. Johnson, managing director of Johnson Associates, said in an interview…

Trading revenues have held up well in the early part of 2022 thanks to greater market volatility, which will be reflected in the changes of incentive pay, Johnson said. While the general trend in 2022 is downward, there will be divergences between banks based on business mix, Johnson said.

S&P Global Market Intelligence / May 26, 2022