New York City’s securities industry is on pace for a second straight year of profits, state comptroller Thomas DiNapoli said Monday in his annual Wall Street report on employment and earnings.
Wall Street profits totaled $12.3 billion in the first half of 2017, up 33% from the year-earlier period, according to DiNapoli. The report said that the financial services industry accounted for 18% of state tax collections for the 2017 fiscal year and 6% of city tax collections.
“Wall Street is a very important part of the city and state economy,” said DiNapoli in a conference call about the report’s findings Monday morning. “This is good news for city and state tax collections.”
A 21% increase in securities industry for 2016 to $17.3 billion marked Wall Street’s first increase after three straight years of declines. DiNapoli has attributed the 2017 gains to a 29% revenue jump from trading and underwriting along with a 20% increase in wealth management. Last year’s profit gains were due largely to cost cutting efforts and lower settlement costs stemming from the 2008 financial crisis, according to DiNapoli.
“The securities industry is a major source of tax revenue for both the State and the City,” DiNapoli’s report says. “New York State depends on Wall Street tax revenues even more than New York City because the State relies more heavily on personal and business taxes, and does not levy a property tax as the City does.”
The securities industry has added 11,100 jobs in New York City during the past three years, but DiNapoli cautioned that at the close of 2016 there were still 6% fewer jobs than in 2007. There are around 130 securities industries firms, down from the roughly 200 located in New York City prior to the financial crisis. He also expressed concerns about federal efforts to scale back Wall Street regulations potentially negatively impacting the industry in the future.
“Attempts to boost profits by rolling back financial regulations and consumer protections could promote excessive risk-taking and volatility and put everyday Americans and the broader economy in harm's way,” said DiNapoli in a statement.
Wall Street firms set aside nearly 4% more for compensation in the first half compared to a year earlier suggesting that bonuses could rise, according to DiNapoli. Nearly a quarter of New York City securities industry employees earned more than $250,000 in 2016, the report said.
New York City debt is rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings. The Empire State has general obligation bond ratings of Aa1 by Moody’s and AA-plus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.