JPMorgan Chase & Co.’s JPM 2015-end bonus pool for its traders will be kept almost unchanged from 2014, per a Bloomberg report. The move comes even after increased compliance costs and new regulations in the banking sector, which is likely to put strain on the bank’s weakened peers.
Though JPMorgan’s plans may change depending on its trading performance in December, top managers of the bank were informed about its initial decision. The bank’s total compensation costs (including salaries and benefits) were $10.4 billion for 2014, which was 3.6% lower than the prior year. The trading and banking division had 49,384 employees as of Sep 30, around 4% lesser than the previous year.
While UK-based Barclays PLC BCS may not award bonuses this year to some of its bankers, JPMorgan’s European counterparts, including Deutsche Bank AG DB, are also looking to reduce payouts. Also, Switzerland-based Credit Suisse Group AG CS might need to slash management bonuses by 60% as regulatory pressure continues to limit the company’s flexibility.
Amid the declining bonus pool across banks, JPMorgan’s decision to keep the pool unchanged will strengthen its position among peers. However, weak trading activities primarily led to a decline in the overall profit for JPMorgan in its latest earnings results.
Though JPMorgan’s weaker trading revenues continue to strain its top line, which is already facing pressure due to a low rate environment, steady synergies from the company’s business-diversification efforts, improving retail banking performance, cost-containment and streamlining measures and a strong capital position will likely support its financials going forward.
Currently, JPMorgan carries a Zacks Rank #3 (Hold).
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