Wall Street profits are up 11 percent more than last year, with pre-tax profits totaling $13.7 billion in the first half of 2018, while salaries are up 10 percent over 2017, according to the New York State Comptroller.
Last year was a post-financial crisis record, and this year is shaping up to be even better.
"Wall Street has profited every year since the end of the recession in 2009, and compensation last year reached its highest point since the financial crisis. The momentum from last year's dramatic rise in profits has carried into 2018 and the industry is on track for another good year absent a setback later in the year," Comptroller Thomas P. DiNapoli said in a report.
"The securities industry is a major source of revenue for New York City and New York State, and is an important part of the city's economy. Ten years after Lehman Brothers' collapse it is clear that Wall St. does not need to return to the days of excessive risk-taking to enjoy rising profits," he added.
For last year, we were looking at $24.5 billion in pre-tax profits—up 42 percent from the year before.
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But what’s interesting now is the net revenue growth. In 2017, net revenue grew 4.5 percent. In the first half of 2018, net revenue grew a much more impressive 8.6 percent.
In other words, it’s been a great year so far for Wall Streeters, whose salaries jumped by 17 percent in the first quarter of this year, and overall for the first half were up 11 percent.
That gives the securities industry the highest average salary in New York City, accounting for 21 percent of private sector wages even though it accounts for less than 5 percent of employment—so those are some pretty big margins.
The cream of the crop is on Long Island, where hedge funds helped boost average salaries last year by 10 percent to $389,000. But in Suffolk County, Long Island, the average salary was $599,800. No other U.S. location beats this. Related: Is A Market Meltdown Looming?
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DiNapoli also said that bonuses made up 40 percent of securities industry wages in 2017, “a much larger share than in any other industry”, and they are on course to increase this year, too for the third time in a row. This analysis is based on H2 trends, though the report noted that “it is too early to predict with certainty”.
But he also issued a subtle warning, saying that while the industry is poised for another great year, there could be setbacks, including a slowdown in economic growth prompted by the ongoing trade dispute with China, rising interest rates, growing federal deficit and record global debt.
In the meantime, no one’s ready to think this party could come to an end. The S&P 500’s earnings per share increased by 23 percent in Q1 and 26 percent in Q2, and the value of announced mergers and acquisitions in the U.S. jumped by 79 percent this year, along with a 24-percent increase in IPOs, according to Thomson Reuters.
By Tom Kool for Safehaven.com
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