Bank of America Corporation’s BAC shares have underperformed the industry over the past few months. Yet, reports suggest that the bank’s bonus pool for investment bankers will probably rise 10% when it is announced in February.
The investment banking business has been showing signs of resurgence despite the challenging macroeconomic environment that is weighing on it. Banks around the world have benefited from an uptick in mergers and acquisitions and a surge of underwriting for bonds and equities. Also, with interest rates having come down, the company’s net interest income will be positively impacted. The company currently plans to open financial centers in new and existing markets and improve digital capabilities.
There have been reports in recent days that payouts to investment bankers in 2025 are about to rise with them having benefited from a recovery in dealmaking, the interest rate cuts and surging equity markets. The average annual bonus in Wall Street hit $240,400 in 2021, more than doubling from 2011. While it is expected that Investment Bankers will walk away with a fat paycheck this year, the numbers are not likely to cross the 2021 levels.
Bank of America is a Zacks Rank #3 (Hold) company and is part of the Zacks Financial – Investment Bank industry. JPMorgan Chase & Co. JPM and Citigroup Inc. C are two of its peers from the same industry. Both JPMorgan and Citigroup carry a #3 currently. Over the past 12 months, Bank of America has gained 10.7%, lagging its Zacks Peer Group, which gained 18% during the same period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BAC has been under regulatory scrutiny, having received a cease and desist order from the Office of the Comptroller of the Currency. Also, the Consumer Financial Protection Bureau has taken action against the bank for alleged failures to protect consumers from fraud on the Zelle payment network and illegal credit card activities. However, these do not seem to have an impact on payouts to Investment Bankers.
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