JPMorgan: Shifting Profits, Shifting Salaries

JPMorgan (NYSE:JPM) may have seen some nice expansion of its business in several areas over the past year, but investment banking was not one of them, and salaries in the division reflect the setbacks.

While the world may not have ended, 2012 was far from a good year for JPMorgan’s investment banking unit. Global deals for the unit fell 13 percent to $2.67 trillion last year, and net income dropped 15 percent to $5.2 billion in the first 9 months of 2012. Revenue from fees dropped 17 percent for mergers and acquisitions and 13 percent for equity underwriting.  JPMorgan had then merged the investment bank with the corporate bank and treasury services division.

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Additional losses came from JPMorgan’s corporate division and chief investment office, which lost $2.1 billion and $6.2 billion, respectively. Part of the corporate division had been responsible for the company’s record trading setback last year. Derivatives were the source of the loss in the chief investment office, and most of the traders and managers in the section have been fired or have quit.

Not all other divisions at JPMorgan performed so poorly. Debt deals grew in the company’s favor, swelling 13 percent to $3.3 billion for the year, and fixed-income trading grew 4.3 percent to $15.4 billion. Net income for the asset-management division was also up 7 percent, reaching $1.7 billion…

Profit for the whole of JPMorgan climbed 12 percent to $21.3 billion — a record — for the year.

Employee earnings on average reflected the division in which the employee worked. For example, where the asset-management division’s net income went up 7 percent, the portfolio managers bonuses and wages went up about 6 percent.

However, despite JPMorgan’s profit rising to a record height last year, CEO Jamie Dimon’s pay was halved as a result of the trading losses incurred during the “London Whale” episode, in which one trader led the way on trading and derivatives losses. Dimon’s pay dropped to $11.5 million for the year, as the board of directors essentially thought he was not careful enough.

Compensation for the whole company went up on average, increasing by 5 percent to $7 billion.

Wednesday morning, JPMorgan shares traded slightly below the previous close but above the opening price.

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