Profits in BNP Paribas's investment bank were up by 16%. So why are bonuses up 5%?
BNP Paribas’ Q4 results, which were released today, were a mixed bag for its corporate and investment bank (CIB). Although they were the driving force behind the nearly €12bn of profit in 2024, Bloomberg reported last week that the CIB's bonus pool would only increase by 5%.
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That might sting more for some more than others. Within trading, the lion’s share of BNP’s strong performance came from its equities salespeople and traders, who benefited from the political volatility in France earlier in the year.
Equities revenue was up by 28% in 2024 compared to 2023, while fixed income, currencies, and commodities (FICC) revenue was down by around 1.4%. This compares to 23% and (positive) 10% at UBS.
Fortunately, BNP’s people had pretty low expectations to begin with. Our bonus expectations survey a few months ago showed that its people had some of the lowest expectations for their bonuses of anyone in the industry. They expected a 16% rise on average, well below expectations at some rivals such as Barclays (whose people were expecting a 47% increase) or Deutsche Bank (49%).
Compensation consultancy Johnson Associates also noted late last year that sales and traders professionals could expect bonuses to rise between 5 and 20%, depending on what desk they were on.
BNP’s corporate and investment bank material risk takers – a regulatory distinction that includes its most well-paid people – already saw their pay decline as a group between 2022 and 2023, going from an average of $1.3m per head to $1.2m. Over the same period, CIB pre-tax income increased by 6%.
The bank's macro traders also put in a good performance in Q4, despite faltering during the first nine months of 2024. They were commended by the bank for their performance in the last quarter, especially in currencies.
BNP’s investment banking revenues were up by 11%. Although the bank doesn't break out all regions or divisions, it did note that capital markets and M&A revenue up by 16% and 36% respectively in EMEA between Q4 of 2023 and 2024.
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