What JPMorgan's first quarter results say about pay and hiring

JPMorgan released its first quarter results a few hours ago and they are very pretty: first quarter net income was up 55% across the bank as a whole, and 185% in the investment bank.

In addition to reflecting the benign banking environment, JPMorgan's results - and the accompanying conference call - reveal the following.

1) JPMorgan is hiring again

JPMorgan hired 323 investment bankers in the first three months of this year. Notably, this was the first quarter in which its investment banking headcount rose (rather than fell) since 2Q08.

2) Pay remains constrained by political considerations

Although JPMorgan's investment bankers appear to be doing very well, and the bank is doing its best to pay them, compensation ratios are still below historical norms.

As a proportion of revenues, compensation for the past quarter was 35%, compared to 40% for the same time last year. However, the compensation ratio for the fourth quarter of 2009 was just 11%, so things are improving.

3) The bonus tax won't make itself felt in 1Q results

Apparently it's a 2Q affair, when the effects may be, 'material.'

4) IBD bankers are still second class citizens

Investment banking fees went up 5% year on year. Fixed income sales and trading revenues rose 100%. Fixed income revenues and growth rates are not expected to remain this high. Equally, however there's no sign of when IBD revenues will come back strongly.