BofA traders' bonuses may disappoint, despite a great quarter
Last year was special. This year may not be so much. After compensating its traders handsomely in the last bonus round to make amends for their comparatively paltry bonuses in the bonus round before that, Bank of America may well take a less generous approach for 2022.
BofA's third quarter results, released today, reveal that some people in its trading business had an exceptional third quarter. Revenues in its macro trading business were up 67% year-on-year, and there were no loss making trading days. The bank made trading profits of over $25m on 94% of days in the three months to the end of September.
BofA said macro traders' out-performance offset a more shaky quarter for its credit and securitization business. The strong macro performance meant that BofA's fixed income sales and trading revenues rose 27% year-on-year, versus a 1% increase at Citi, a 22% increase at JPMorgan and a 33% increase at Morgan Stanley.
Despite BofA's late great performance in macro trading, however, its fixed income traders are still lagging rivals for 2022 as a whole. Only Citi's traders have performed worse year to date.
With fees earned in Bank of America's investment banking business down 37% year-on-year in the first nine months, the comparative weakness in the fixed income trading business will leave the bank with less room to maneuver when it comes to bonuses. BofA needs to hope its traders have short memories and that last year's generosity looms larger than the stinginess that preceded it.
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