US investment bank JP Morgan Chase has revealed a 28.1 billion US dollar (£17.7 billion) bill for staff pay and bonuses in 2010 after a 48% leap in annual earnings.
The group set aside 6.6 billion dollars (£4.2 billion) for staff compensation in the fourth quarter alone, up 29% on a year earlier.
Pay and bonuses for its investment bankers – including between 7,000 and 8,000 based in London – more than trebled year-on-year in the final three months to 1.8 billion dollars (£1.1 billion) in a move likely to raise concerns over the impending bonus round among British banks.
The bumper pay deal for JP Morgan Chase’s staff comes after it reported full-year net income of 17.4 billion dollars (£11 billion) for 2010.
JP Morgan’s fourth quarter profit rose 47%, beating market expectations, as revenue increased and it set aside less to cover bad debts.
The bank is the first of the American players to report in the annual results season, with the US sector being watched closely on these shores as UK banks prepare to release figures next month. It is feared big US bonuses will prompt UK counterparts to follow suit, with concerns also that Government attempts to rein in British banker handouts are failing.
JP Morgan declined to reveal how much had been set aside specifically for its year-end bonus pool, but said that performance-related pay was higher than in 2009. It plans to reveal handouts to its staff in the next few weeks.
The ratio of compensation to revenues – a key measure of bank pay – rose to 30% in the fourth quarter from 11% a year earlier in its investment banking arm despite a 21% fall in the division’s net income.
The investment bank posted profits of 1.5 billion dollars (£946 million) in the October to December quarter, although this was 17% higher than the previous three months thanks to higher fees related to underwriting debt. Its wider business is also being helped by lower losses on loans turned sour, which had hit earnings during the financial crisis.
JP Morgan said provision for credit losses in the fourth quarter fell to 3 billion US dollars (£1.9 billion) from 7.3 billion (£4.6 billion) a year earlier.