JPMorgan's 2022 bonuses may actually be ok
It's on. JPMorgan has just become the first bank to report its third quarter results for 2022 and despite some evidence of excruciating occurrences in the investment banking division, it looks like bonuses at JPMorgan's corporate and investment bank (CIB) this year might be ok.
As the chart below shows, the third quarter has made very little difference to the business-by-business narrative for 2022 as a whole: equity capital markets bankers are still having a terrible time. Fixed income sales and traders are doing ok.
However, and despite a 30% reduction in net income across the corporate and investment bank in the first nine months, JPMorgan said today that it's "revenue-related expenses" are up this year. Revenue related expenses can be synonymous with bonuses, and in the third quarter the bank allocated 17% more to compensation in the CIB than Q3 in 2021. Part of this will have been consumed by increased headcount (up 8% year-on-year), but it looks distinctly as if the bonus pool is being topped-up. JPMorgan's fixed income sales people and traders are the likely beneficiaries.
Business-by-business performance JPMorgan 2022
Despite the dire performance in the investment banking division, JPMorgan also adding headcount to its CIB (which includes corporate banking and securities services) in the third quarter. 2,350 people joined between the end of June and the end of September, an increase of 3%.
When JPMorgan announced its second quarter results in July, CFO Jeremy Barnum said there had been no slowdown in the bank's strategic hiring plans. If anything, Barnum said headcount might increase "at a faster pace as we kind of have ramped up our hiring capacity."
JPMorgan is increasing its technology spending across the bank as a whole to $14bn and recently announced plans to hire 2,000 new technologists. However, spending on technology equipment and communications was down 5% in the first nine months, to $7.1bn. This doesn't include spending on technology pay.
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