Because of the slowdown in overall investment banking activity, annual bonus and compensation for the industry might be the lowest in three years, analysts forecast.
Investment bank Morgan Stanley reportedly will cap bonuses at $125,000 for most bankers, the Wall Street Journal reported Tuesday. Banks generally pay bonuses four to six weeks into its first quarter.
Wells Fargo & Co. Tuesday reported a quarterly profit increase of 20 percent, in stark contrast to an 11 percent decline at Citigroup. Wells Fargo's net income rose to $4.11 billion, or 73 cents per share, while revenue decreased 4 percent to $20.6 billion.
"Wells Fargo's great quarter bodes very well for regular banks, particularly if you have less exposure to market-related items or international businesses," Anthony Polini, analyst with Raymond James said, referring to global concerns such as the two-year-old European debt crisis.
Polini said the San Francisco-based bank had strong growth in loans, deposits and credit quality. As the first traditional U.S. bank to report its fourth-quarter earnings, Wells Fargo might be an indicator of other banks without large exposure to investment banking, in contrast to Citigroup.
Citi's quarter was "ugly" and "messy," Polini said.
"More than anything else, Citi missed on market-related items, like trading, or the investment banking side of the business," he added.
Citi had a profit of $1.16 billion, or 38 cents per share, on revenue of $17.2 billion, less than expected. Citigroup had a profit of $1.3 billion and revenue of $18.4 billion for the same quarter last year. The bank's full-year net income for 2011 was $11.3 billion, up 6 percent from $10.6 billion in 2010.
JPMorgan Chase, the largest bank by assets, said Friday that fourth-quarter profit fell 23 percent but was in line with analyst expectations. The bank's profit fell to $3.73 billion, or 90 cents a share, from $4.83 billion, or $1.12, a year earlier. Investment banking revenue declined by 30 percent as trading slowed because of the financial crisis in Europe.