Wall Street profits climbed to an eight-year high in 2018 as the industry continued its recovery from the financial meltdown of 2008.
The securities industry hauled in $27.3 billion in pretax profits last year, up 11% from 2017, according to the office of New York State Comptroller Thomas DiNapoli.
Profits at Wall Street firms have nearly doubled since 2015 – despite complaints of excess red tape from regulators seeking to avoid a repeat of the last crisis. The industry lost $42.6 billion in 2008, a year marked by the fire sale of Bear Stearns to JPMorgan Chase (JPM) and the implosion of Lehman Brothers.
The bottom-line growth at big banks last year came in the face of severe turbulence in the stock market. The S&P 500 suffered its worst December since the Great Depression as investors feared an imminent recession.
“Despite a sharp decline in the financial markets in the fourth quarter of 2018, the securities industry still had a good year,” DiNapoli said in a statement.
The report only examined the broker/dealer operations of New York Stock Exchange member firms. The parent companies of those securities divisions made even more money last year.
Average bonus totaled $153,700
Wall Street paid out $27.5 billion in bonuses in 2018, according to DiNapoli’s office. The average Wall Street employee in New York City was rewarded with a bonus of $153,700 last year, the report said.
However, bonuses were down by 17% from 2017’s average of $184,400. That marks the steepest decline since 2011, when the average Wall Street bonus fell by 20% to $111,400.
But don’t feel too badly for Wall Street. The industry’s average bonus (emphasis on average) was still double the average salary of the rest of New York City’s workforce, DiNapoli said.
The New York State Comptroller’s annual estimate of bonuses only includes payouts to employees who work in New York City. Bonuses paid to employees located elsewhere are not included.
Wall Street continues to increase its payroll after sharp job cuts following the crisis. The industry’s headcount rose by 4,700 last year to 181,300, the highest level since 2008.
Despite the decline in bonus payments, the Institute for Policy Studies, a progressive think tank, criticized Wall Street’s post-crisis pay practices.
“If you look at the overall trend, it’s clear that Wall Street is still maintaining their reckless bonus culture,” Sarah Anderson, the group’s director, said in a statement. “Meanwhile, the hardest hit by that crisis, the low-wage workers who are disproportionately women and people of color, have waited a decade for a raise in the minimum wage.”
Biggest banks made $120 billion
Wall Street plays an outsized role in contributing to state and local taxes, which fund everything from schools and police departments to transportation systems. The securities industry accounted for 18% of New York State’s tax collections in the most recent fiscal year and 7% of New York City’s.
The financial success on Wall Street follows blowout earnings reported by big banks last year thanks to the strong economy and corporate tax cuts.
JPMorgan Chase, Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) brought in more than $120 billion in combined profit last year.
The banking industry at large earned $237 billion in 2018, according to the FDIC. Not only was that 44% above 2017 but it was an all-time high.
CNN Business’ Julia Horowitz contributed to this report