JPMorgan's Results Confirm Banks Can't Reduce Compensation Substantially Even if They Want To

JPMorgan would probably have liked to reduce compensation quite considerably at its investment bank last year.

Although the bank's results show profits across the organisation were

up 47% in the fourth quarter (thanks to a $2 billion release of loan loss reserves), profits at the investment bank were down more than 20% year on year.

Margins at JPMorgan's investment bank are being squeezed. As a proportion of revenues, full year costs in the division rose from 55% in 2009 to 66% in 2010. Much of this was driven by an increase in non-compensation expenses, which were up 24% over the year.

In the circumstances, surely pay could have been cut to compensate? Apparently not.

Despite the margin squeeze, full year compensation expenditure at the investment bank also rose - by 4%, to 35% of the revenues.

All of this means that JPMorgan investment bankers, on average, will be paid fairly well for their efforts over the past 12 months.

Mean compensation per head for 2010 stands at $369,000 Following the addition of 1,660 people last year, this is DOWN on a per head basis - but only by 3%, which is nothing compared predictions of double digit cuts.

Moreover, $355,000 compares very favorably to compensation per head at the investment bank in the recent past. In 2007 JPM paid $311,000; in 2008, it paid $275,000; last year it paid $379,000.