“2021 was a fabulous year and this is a real downer,” Alan Johnson, managing director of Johnson Associates, said in an interview. “We’ve had bonus declines before, but you overlay that with inflation by the end of the year and I think it’s going to be particularly painful.”

Investment-banking revenue fell 43% in the first six months of 2022 from a year earlier at the five biggest Wall Street firms. Persistent inflation, recession fears and global turmoil including Russia’s invasion of Ukraine brought on wild market swings, keeping clients on the sidelines. And the battle for banking talent has cooled, with the biggest companies more mindful of their expenses.

Equity traders, on the other hand, could see their bonuses climb 10%, while their fixed-income colleagues may enjoy a 20% increase, with the same market tumult boosting trading revenue.

“This year the traders will be subsidizing some of their colleagues in investment banking,” Johnson said. “You only like that if it’s coming toward you, not going away from you.”

“Seven-plus months into the end of the year, anything is possible, but it’s very, very unlikely it’s going to make too much of a comeback,” Johnson said. “Wall Street goes up and down — this is a down year.”

Bloomberg / August 4, 2022