This year's biggest bonus increases in financial services were not in banking
If you worked in banking for at least the last year, you might be feeling smug about your latest bonus. While the rest of the industry was talking about the average bonus going up by only 5 to 10%, you’ve likely pocketed a 20% increase. Unfortunately (or fortunately), you’re not alone.
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We received over 2,500 worldwide responses to our '24-'25 salary and bonus report, across every major jurisdiction and every seniority in the financial services sector. Our data showed that the average bonus paid for last year across the entirety of financial services went up by 22%.
In the front office, people working in investment banking divisions (M&A, equity capital markets - ECM, debt capital markets - DCM) said their bonuses rose by an average of 28%. People in sales & trading in banks told us their bonuses rose by an average of 33%.
There were, however, large variations in bonus increases by sector. For example, within sales & trading, commodities, macro, and equities enjoyed the biggest bonus uplifts (of around 38% each) while credit traders saw bonuses rise by just 20%.
Rising equities bonuses were expected, but commodities and macro bonus increases were not. Market analysis firm BCG Expand estimates that both commodities-related and macro revenues fell by 15% last year. However, bonuses can be as much about looking forward as looking back, and towards the end of 2024 there was heavy macro hiring in expectation of diverging rates and currencies in 2025. This may explain the increase in macro bonuses.
Within investment banking, bonus changes seemed similarly perplexing when compared to revenue changes. M&A bonuses rose by 42%, while DCM and ECM bonuses rose by 18% and fell by 9% respectively. However, BCG Expand calculates that M&A revenues grew by only 9% last year, while ECM and DCM revenues rose by 54% and 39% respectively.
Rising M&A bonuses therefore seem inexplicable, until you consider that the 42% increase was off a very low base in 2023 and reflected optimism that deals would return in 2025. Declining ECM bonuses likely reflected the poor performance of the UK market, where many of our respondents are based.
As we noted above, people on the buy-side, and especially those in private equity or a hedge fund, had the highest bonus increases of all - up 46% and 48% respectively. Traditional asset management bonuses were up just 7.5% but were comparatively high at $140k.
Private equity and private credit professionals have another compensation component that is not represented in our survey: carried interest. This is a small, allocated fraction of a deal’s equity that is distributed as a reward to the team that worked on it. Carried interest can range from zero (for juniors) to 100’s of millions of dollars/euros/pounds.
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