(May 7): It’s a lucrative time to be a banker, for now. Wall Street bonuses are projected to jump for the third year in a row as market volatility fuels trading demand and dealmaking makes its long-awaited comeback.
For investment bankers who advise corporate clients on deals, incentive pay is poised to be up 10% to 20% or more from a year earlier, according to Johnson Associates Inc.
Bankers who help companies raise equity are likely to see a similar bump, of as much as 20% or more, the compensation consultant said in a report on Thursday. That expected increase follows a banner 2025 for Wall Street, reflecting a rebound in mergers and acquisitions helped by relaxed regulations under President Donald Trump — a trend that’s continued into the new year, with the biggest banks reporting their most profitable quarter ever for the first three months of 2026.
“It’s the year of the bank,” Alan Johnson, managing director of Johnson Associates, said in an interview. “It’s a horse race between trading and M&A advisory.”
The new projections come amid market swings sparked by geopolitics — dynamics that have helped Wall Street so far, but could also turn against it — as well as concerns around artificial intelligence and private credit. Trading desks have been on a hot streak since Trump returned to the White House, with his policy moves whipsawing equities, interest rates and commodities.
Volatility has fuelled demand for trading services, which drive incentive pay for equity traders, who are expected to see their year-end bonuses jump 10% to 15%, according to the report. Their fixed-income counterparts could see a more modest increase, of 5% to 10%, Johnson said.
See also: Blackstone agrees to buy stake in Greek online marketplace Skroutz
Given it’s still early in the year, forecasts can change, especially if questions remain unanswered around the war in Iran, the economy, tariff negotiations and the Federal Reserve’s path towards lower interest rates.
Strong demand for wealth-management services could be countered by potential market declines, causing incentive pay in that business to fall. But, for now, wealth-management professionals are expected to see their bonuses increase 5% on the back of healthy inflows and heightened competition for talent, according to Johnson Associates.
See also: GIC, Brookfield complete privatisation of ASX-listed National Storage REIT
“If you look to revenue per head across private equity, private credit, you name it, firms are more productive,” Chris Connors, managing director at Johnson Associates, said in a Bloomberg Television interview on Thursday. “They have less heads, but also top line growth is there. This is why this is the year of the bank.”
Last year, Wall Street bonuses swelled, with the total pool for payouts jumping to a record US$49.2 billion (RM194 billion) as industry profits soared, according to estimates by New York State Comptroller Thomas DiNapoli. The average annual bonus rose 6%, to US$246,900.
Though the good times are projected to continue, tensions remain that could change the outcome.
“We’re in the middle of the war. That’s the big overhang,” Johnson said. “The markets are saying they don’t expect it to get worse, but if it did, that could throw everything up in the air.”
Some businesses will be more affected by that uncertainty than others, including those who work in alternative investing. Employees in private-credit shops could see their bonuses flat to up 5% amid challenging, competitive conditions and lower returns, Johnson Associates said.
“You’ll have a shakeout, with some firms not doing well and fundraising down,” Johnson said in the interview. “The weak will shrivel.”
Still, most of the financial industry should be happy with performance so far, and how that’s reflected in year-end bonuses, as long as the deal pipeline and trading activity remain strong.
“It’s early,” Johnson said, “but things are surprisingly optimistic again, knock on wood — for now.”
Uploaded by Evelyn Chan
