FX168 Financial Press (North America) — Wall Street firms expect to pay higher bonuses this year, the first increase since the 2021 harvest year, according to a report by payroll consulting firm Johnson Associates.

Alan Johnson, founder of the consulting firm, said that after financiers benefit from several factors in recent months, wages are likely to rise: a recovery in trading, the Federal Reserve's interest rate cuts, and the stock market soaring to historic highs.

“This year's performance was unexpectedly good, with the industry quite optimistic about 2025, especially the possibility of announcing moremergers and acquisitions“Deal,” he meant mergers and acquisitions.

Although the bonuses will be more generous, they will still be below 2021's record levels, when earnings and pay were “unusually good,” Alan Johnson said.

By 2024, bonuses for investment bankers in the debt underwriting sector are expected to increase by 25% to 35%, the biggest increase, driven by a recovery in activity. Equity capital market peers are likely to receive 15% to 25% bonus increases.

Meanwhile, a slowing recovery in mergers and acquisitions will result in smaller bonus increases of 5% to 10% for bankers advising on transactions.

The report shows that traders will also reap windfalls from increased volatility and rising stock markets. Bonuses for stock sales and trading professionals are expected to grow by around 15% to 20%, while bonuses in the fixed income sector are likely to increase by 5% to 10%.

However, the consulting firm said that not all bankers will share the dividends of the recovery. Retail and commercial bankers' bonuses are likely to fall or level out over the course of a year.