Financial services bonus expectations for 2024 - pretty good, actually
How are 2024 bonuses (paid in 2025) in financial services looking after a pretty good year? According to the 1,700 respondents to our bonus expectations survey earlier this year... Simply lovely.
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2024 witnessed one of the most anticipated events in investment banking in years: a turnaround in investment banking revenue.
After a measly few years, things are looking up for the world's bankers. The first nine months of 2024 saw a 27% increase in global investment banking revenue, according to market intelligence firm Dealogic. But while the average respondent to our survey expected their bonus to increase by 50%, who exactly in finance is expecting the biggest bonus increases in 2024?
As the chart below shows, the most optimistic people this year are in private credit funds. Private credit has thrived since the pandemic, growing 400% since 2015, according to the Bank of England. Although 2024 hasn’t been as strong as the recent past as banks’ own syndicated loan desks have made a comeback, there has still been growth, as “numerous leveraged loans and high-yield bonds reach their maturity wall and will need to refinanced,” according to law firm Dechert.
Ranking behind private credit, hedge fund and private equity professionals expected bonus increases of 65 and 68%, respectively. Although some hedge funds have been doing well in 2024, private equity has not, with concerns growing about unrealized losses on past investments – Nathaniel Benjamin, the Bank of England’s executive director for financial stability strategy and risk, told The Times earlier this year that high interest rates – even those that PE firms were seeking to refinance – were leading to “the risk is that the impact of higher rates is simply delayed, and an extension gives false comfort, increasing credit losses in the future”.
Despite this, private equity professionals seem to think their bonuses will defy gravity. One private equity managing director in New York with $1.4m total compensation (including a $400k bonus that he expected to reach $1m) lamented that he would like to have “more control” over his time. He was also looking for a new job, branching into “GP [General Partner] Stakes investing.”
The least optimistic major group of professionals in our survey were those that worked at traditional asset managers, who “only” expected their bonuses to increase by 27%. They were also the most pessimistic in our survey last year, when they expected their bonus pool as a collective to fall by approximately 4%. Maybe asset managers simply have a pessimism problem.
On balance, the most optimistic people this year are on the buy-side, defined as firms that buy and hold securities for investment purposes such as hedge funds, asset management firms, and pension funds. The least optimistic are on the sell-side, defined as the firms that market and sell securities – investment banks.
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