'It’s hard for me to imagine a job expansion in finance'.
Bloomberg News reports that bank stocks are on a tear after Donald Trump’s victory drove up expectations for the industry’s profits. Here’s the catch for many people working there: Holding onto their jobs won’t be any easier.
While lower taxes, higher interest rates and lighter regulation under Trump could help boost U.S. banks’ earnings by a median 22% in 2018, firms will keep chipping away at costs by using technology to replace traders and branches, analysts at Morgan Stanley said this month. And though rising rates may fatten lenders’ profit margins, they can slow demand for new mortgages and corporate debt issuance. Again, that means fewer staff needed.
'It’s hard for me to imagine a job expansion in finance', said Fred Cannon, head of research at Keefe, Bruyette & Woods. Profits from 'higher interest rates will flow to the bottom line without an increase in expenses'.
Employment at big U.S. lenders has been falling since the financial crisis, first because of consolidation, and then as legal bills piled up and revenue stagnated. While the pace of firings has been slowing across the industry, falling below 19,400 in this year’s first 10 months, analysts say there’s still no rebound in sight as automation continues. Firms including Bank of America Corp. and Morgan Stanley are in the midst of cost-cutting plans they aren’t likely to drop, even as the Trump rally signals higher revenue.
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