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DiNapoli: New York City to see $15 billion-plus in securities industry profits

Thomas DiNapoli
Thomas DiNapoli

Securities industry profits in New York City are projected to reach $15 billion this year barring “adverse developments,” even as employment in the industry declines, according to a report issued Tuesday by New York State Comptroller Thomas DiNapoli, the sole trustee of the $146.5 billion New York State Common Retirement Fund, Albany.

Mr. DiNapoli said securities industry profits for the first half of 2012 were $10.5 billion as measured by broker-dealer profits of the member firms of the New York Stock Exchange.

“The securities industry remains in transition and volatility in profits and employment show that we have not yet reached the new normal,” Mr. DiNapoli said in a news release accompanying his annual report on New York City's financial sector.

“The securities industry is still grappling with the fallout from the financial crisis, new regulations and slow economic recovery,” Mr. DiNapoli added. “How the industry negotiates this continued uncertainty could impact profitability and the finances of New York City and New York State.”

However, Mr. DiNapoli pointed out that “further deterioration in domestic and global economic conditions” could thwart the full-year profit prediction.

Mr. DiNapoli noted that the industry charged to a first-half profit of $12.6 billion in 2011, then experienced a sharp slump, primarily because of economic weakness in Europe, and lost $4.9 billion in the second half of the year. The aggregate industry profit of $7.7 billion in 2011 was “disappointing,” he said.

Mr. DiNapoli's report also said securities industry employment in New York City “has fluctuated during 2012, but there has been a sharp decline in recent months.” There were 168,700 jobs in the securities industry in August 2012 (seasonally adjusted), down by 4,800 from May 2012.

This year, the industry has lost a net of 1,200 jobs, the report said. Mr. DiNapoli predicted employment will continue to decline for the rest of the year. He estimated that the industry has experienced a net loss of 20,200 jobs since November 2007.

The average salary for securities industry employees in New York City, including bonuses, rose by 0.5% in 2011 to $362,950, according to the latest available data. “This was a higher average than before the financial crisis and was the highest average among New York City's major industries,” Mr. DiNapoli said.

In 2011, the securities industry accounted for 23.2% of all private-sector wages paid in New York City, even though it accounted for only 5.3% of the private-sector jobs.