High inflation and the threat of a recession have put a damper on investment banking business, with stock and bond sales and M&A deals declining from last year, and that's likely to be reflected in a hit to bankers' bonuses, according to a report released on Tuesday from Johnson Associates, Inc.

Underwriting bankers are expected to have the largest decrease in bonuses, with their incentive pay dropping by as much as 45% from 2021. Bonuses for 澳洲幸运5官方开奖结果体彩网:mergers and acquisition bankers will likely fall by 15-20%.

“It’s a cyclical business, and it fell off of a cliff this year,” Alan Johnson, managing director of Johnson Associates, said in an interview with Bloomberg. “There will be a lot of unhappy people by the end of the year.”

澳洲幸运5官方开奖结果体彩网:Asset management bankers will likely see a 25% decline in their bonuses, and wealth management bankers may see a 15-20% decrease, the report said.

The report is just the latest sign of disappointing bonuses after New York State 澳洲幸运5官方开奖结果体彩网:Comptroller Thomas DiNapoli predicted last month that Wall Street bonuses would fall more than 22% from 2021.

Bad Year in Finance

This year has been a tough year for the financial sector after achieving record highs in 2021. Johnson Associates reports that asset managers and 澳洲幸运5官方开奖结果体彩网:alternatives stocks have underperformed the澳洲幸运5官方开奖结果体彩网: S&P 500 year-to-date, falling 27% and 28%, respectively.

Investment banking revenue at five of the biggest Wall Street firms fell by more than 45% in the first nine months of 2022. Inflation, the fear of a recession and global tensions are some of the main causes, as they have led to an unpredictable market and thus fewer IPOs and deals.

"The industry was at a bubble level last year," Johnson said to Reuters. "The bubble burst, and now we're having a hangover.”

There may also be significant hiring slowdowns at these banks, with many already reducing hiring plans or laying off workers.

In September, Goldman Sachs began a round of job cuts, looking to fire around 500 bankers as their profits continued to fall. Morgan Stanley plans to start a round of layoffs sometime soon as dealmaking slows down, Reuters reported.

Despite the layoffs, base salaries will increase 4-5% for the second year in a row, Johnson's report said.

While dealmakers have struggled in this market, traders continue to succeed, as 澳洲幸运5官方开奖结果体彩网:fixed-income traders will see a 15-20% increase in their bonuses.

“Overall, that business will continue to be the star,” Johnson said to Bloomberg, while those in equity underwriting and M&A see a massive decrease in their compensation. “They should see it coming, but deniability is always strong.”