Wall St profitability to ebb rest of year -N.Y. State Comptroller

Reuters

By Edward Krudy

Oct 22 (Reuters) - After a strong start to the year, WallStreet firms are likely to see their profitability slow in theremainder of 2013, setting the industry up for its worst yearsince 2011, according to a report by the New York StateComptroller's office.

The report forecasts that profits generated thebroker-dealer operations of New York Stock Exchange member firmscould fall to $15 billion in 2013 from $23.9 billion in 2012 ashigher interest rates, litigation costs, and the governmentshutdown weigh on business.

"Profits for the first half of 2013 of $10.1 billion wereclose to the pace of 2012 but appear to be slowing," the reportsaid.

The state Comptroller's office has access to a range offinancial data from companies that do business in the state. Ituses this to monitor trends in the securities industry, which isa major source of income and employment for both state and city.

Following two years of record losses in 2007 and 2008, thesecurities industry had four years of profitability buoyed bylow interest rates, including three years of record profits.

The report shows the securities industry continued tostreamline this year. Industry jobs fell to 163,400 in August2013, a 13.5 percent drop from pre-crisis levels. The reportsuggests the industry will contract further as it adapts tochanging regulatory and economic environments.

Total compensation for the broker-dealer operations ofmember firms of the New York Stock Exchange increased by 5.5percent during the first half of 2013. Although this suggestsbonuses might be higher again this year, recent trends have castdoubt on this, the reports said.

The Comptroller's office uses tax data to estimate bonusesfor the previous year in February. In February 2013, itestimated that the cash bonus pool for securities industryworkers in New York City paid during the bonus season grew by 8percent to $20 billion.

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