NEW YORK - Profits in the securities industry are projected to grow in 2012, while employment and the cash bonus pool in New York City are expected to decline, according to an analysis released today by New York State Comptroller Thomas DiNapoli.

“The securities industry remains in transition and volatility in profits and employment show that we have not yet reached the new normal,” DiNapoli said. “The securities industry is still grappling with the fallout from the financial crisis, new regulations and slow economic recovery. How the industry negotiates this continued uncertainty could impact profitability and the finances of New York City and New York State.”

Securities industry revenues have been declining in recent years and profits (as measured by broker/dealer profits of the member firms of the New York Stock Exchange) have been volatile. The industry posted record losses in 2007 and 2008, followed by the two most profitable years on record. The first half of 2011 saw very strong profits of $12.6 billion, but the second half resulted in $4.9 billion in losses as the European sovereign debt crisis deepened. By year’s end, profits were a disappointing $7.7 billion.

In the first half of 2012, the industry earned $10.5 billion and is on pace to earn more than $15 billion by year’s end unless adverse developments erode profitability like last year. The impending ‘fiscal cliff’ and further deterioration in domestic and global economic conditions could quickly erode profitability in the securities industry in the second half of this year.