Wall Street Bonuses to Rise Most at Big Banks

What happened

Johnson Associates raised its 2026 bonus projections by an average of 3 percentage points from its first-quarter forecast, calling this the Year of the Bank. Four out of five Wall Street jobs are now expected to see bonus increases over last year. Stock traders and IPO bankers lead with projected gains of up to 30%, followed by M&A bankers and senior bank executives at 17.5%. Bond underwriters and fixed-income traders are on track for 7.5% growth, while commercial and retail bankers are expected to receive 5% increases. Corporate staff in operations, IT, finance, and human resources are also projected to see double-digit gains. The forecast reflects record first-half earnings at major banks, driven by active markets and strong customer spending and borrowing.

Why it matters

The bonus surge at big banks signals a reversal of the past decade's trend, when private equity, hedge funds, and alternative asset managers dominated Wall Street compensation. Major banks like Goldman Sachs are now outperforming these once-favored firms, benefiting from unusually active IPO and M&A markets, a surging stock market, and ongoing AI-related deal flow. For investors, this shift reflects where revenue and profit growth are concentrated: traditional investment banking and trading are thriving, while private markets face headwinds. The bonus data suggests big banks are capturing a larger share of Wall Street's profits and are positioned to retain top talent.

Bigger picture

The compensation trends reveal a broader shift in the finance industry's power centers. Private credit firms are expected to see bonuses drop as much as 10% due to mounting investor redemptions, fundraising pressure, and credit concerns. Real estate asset management, venture capital, and smaller private equity shops are not projected to receive any aggregate pay increase. Even large private equity firms and infrastructure investors, excluding carried interest, are only trending up 7.5% and 5% respectively. This marks a sharp unwinding of the advantage alternative asset managers held over traditional banks. The finance industry overall continues to perform well, with positive momentum expected to continue through the second half of the year as backlogs and the economy remain strong.

What to watch

Key signals to monitor include second-half earnings reports from major banks, which will confirm whether active markets and strong customer activity persist. Watch for continued IPO and M&A deal flow, as well as stock market performance, which directly drive trading and banking revenues. On the private markets side, track fundraising trends, investor redemption rates, and credit market conditions, as these will determine whether the compensation gap between banks and alternatives widens further or stabilizes.