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After a year of boasting success, Wall Street is handing out higher salaries, even as uncertainty creeps into the economic outlook.

JPMorgan Chase reported a record win of the year on Friday, and Citigroup’s annual profit more than doubled. But both banks have said the cost of doing business is rising: higher compensation has held back revenue in the last quarter of 2021.

Higher payouts coincide with a labor market where there is high demand for workers who bounce between jobs and gain wage increases.

“We want to be very, very competitive in pay,” Jamie Dimon, CEO of JPMorgan, told analysts at a conference call on Friday. “There’s a lot more compensation for the best bankers, traders and managers, who, by the way, I have to say, has done an extraordinary job in the last few years. ”

JPMorgan, the country’s largest bank in terms of assets, achieved a record profit of $ 48.3 billion in 2021, but its profit for the three months ended December fell 14 percent to $ 10.4 billion from the same quarter in 2020, despite It was a 37 percent jump. fees collected by its investment bankers.

Revenues remained broadly unchanged in the quarter, and much of the decline in profits is due to higher salaries and a surplus on technology, the company said in its income statement.

“There’s a war for talent – it’s real,” and it’s likely to trigger higher damages on Wall Street, ”said David George, chief banking analyst at Robert W. Baird & Company in St. Louis. JPMorgan’s industry leadership position means that “if a lot of money is going to be spent, others will have to follow suit, otherwise they will be vulnerable,” Mr. George said.

Two other bank giants – Citigroup and Wells Fargo – also reported higher annual profits on Friday. Top executives at all three banks were asked about revenue calls for inflation, which is at its highest level in four decades.

While rising prices are making businesses more uncertain about the future of the epidemic-ridden economy and shaking consumer confidence as housing, gas and food become more expensive, U.S. workers have also been helped to earn higher incomes.

Wages are rising across the economy – the average hourly wage in December was 4.7 per cent higher than a year earlier. The issue of pay is particularly serious on Wall Street: banks have raised the starting pay of novice bankers as a reward for long hours of tedious work, but for some, that’s not enough to restore the attractiveness of a financial career.

Mark Mason, the bank’s deputy chief financial officer, told reporters in a conference call that “there is a lot of competitive pressure on wages and salaries”

Jane Fraser, CEO of Citigroup, told analysts that the company plans to change the remuneration structure for executives and business unit managers to receive more shares instead of cash to boost performance.

Like JPMorgan, Citigroup reported lower fourth-quarter profit, up 26 percent to $ 3.2 billion, but still exceeding analysts ’forecasts. Profits nearly doubled during the year to $ 21.9 billion.

Wells Fargo broke the quarterly trend: profits rose 86 percent to $ 5.8 billion. And full-year profits rose to $ 21.5 billion in 2021 – more than six times that of 2020, when the company stockpiled funds on rainy days in the event of a credit crunch and that didn’t materialize.

Although the fourth quarter results of JPMorgan and Citigroup may have shed some light on 2021, it was still a flagship year. Banks ’consumer divisions recovered as Americans recovered from downtime due to the epidemic and spent more on goods, travel and entertainment. Lenders, in turn, provided cash when advising companies on a wave of mergers and acquisitions. Goldman Sachs – which will announce next week along with Bank of America and Morgan Stanley – has already surpassed record total annual profits by the end of September.

Bank executives have been cheerful about the economy in recent months, especially as the epidemic eases. On Friday, leading bankers acknowledged the possibility of rising prices and disruptions due to the Omicron version of the coronavirus, which caused labor shortages in schools and businesses, but maintained their rosy outlook for the direction of the economy.

“Everyone seems to be more and more confident that the recovery will continue,” Michael P. Santomassimo, CFO of Wells Fargo, said in a conference call. Given the consumer spending and the business, we are “optimistic,” he said.

Shares of Wells Fargo rose 3.7 percent on Friday, while JPMorgan fell 6.2 percent and Citigroup fell 1.3 percent. The KBW index of bank stocks rose more than 11 percent this month as investors predict the Federal Reserve will raise interest rates this year to control inflation.

Rising interest rates would pave the way for banks to increase their profits: they could charge customers more interest.

This would remove some of the rising labor costs that Wells Fargo CEO Charles W. Scharf called the “very, very competitive” market for talent, giving many workers the opportunity to move on to higher pay.

But Mr. Scharf wasn’t too worried about the wear.

“We never want to lose good people,” he said. – But it happens.

Stephen Gandel contributed to the report.

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