One of the most prestigious professions in the finance industry is investment banking. We have all heard of the heavy workloads and the lucrative pay this profession offers.
Investment banking is a popular term among those aspiring to a Wall Street career. It is indicative of the high-profile nature of the profession and the lucrative compensation packages that come with it.
Despite the pandemic and the growing uncertainty around deal activity, equity and debt issuance, investment banking has retained its status as one of the fastest-growing sectors in India with increasing demand. As per the Bureau of Labor Statistics, the demand for financial services sales agents is expected to grow by 4% by 2029. A worldwide employment change of 17,400 is projected during this period.
Also, professionals in this field are amongst the highest-paid in the world. New hires can even expect to earn six-figure salaries straight out of school, something that’s unheard of in other professions.
Investment bankers are experts who help companies in gaining capital through various means. They handle large financial transactions and are among the most in-demand professionals in the industry.
However, all the buzz about this profession raises the question, “How much exactly does an investment banker earn in India?”
If you’re wondering the same thing, you have come to the right place as we’ll discuss the average investment banker salary in India and explore what factors affect the same.
Why is Investment Banker salary in India high?
Investment bankers earn a huge income as they facilitate company takeovers and mergers, the resultant of which is high-end compensations in the form of commissions. These takeovers and mergers require a lot of time and hard work and thus, justify the huge benefits they get in return.
In short, investment banking is one of the few handful careers that can reward a straight-out-of-college candidate a six-digit figure annual payout.
Banks actively seek out skilled investment bankers to increase their growth. The scope of investment banking has also increased significantly because of globalisation resulting in new job opportunities.
Other important aspects to consider are — the stressful nature of the job, the unrelenting work hours, and the strict hierarchical standards investment bankers must follow to succeed in their undertakings.
All these factors make India a conducive hub for investment bankers with attractive pay packages.
What is the Average Investment Banker Salary in India?
The average investment banker salary in India is INR 9.61 lakh per year. It ranges from INR 2.46 lakh per annum to INR 70 lakh per annum, including shared profits and bonuses.
The demand for investment bankers has risen substantially in the last few years as companies need their help to raise funds and capital for their projects. With a growing number of investors in the country, investment bankers have become a sought-after experience in the Indian financial industry.
In H1CY19 (calendar year), Indian investment banking activities had generated $523 million in fees, which was 10.8% higher than last year’s performance.
As the pandemic is slowing down, the demand for investment bankers will increase significantly more. Many people with disposable income are interested in homegrown companies, and this has spiked the need for investment bankers in India substantially.
What Does an Investment Banker Do?
Investment bankers help companies, organisations, and government agencies raise capital. Investment banking is among the most prestigious professions in the financial industry as it opens the doors to some of the financially rewarding and coveted positions.
Investment bankers are responsible for examining an organisation’s financial status and capital requirements to recommend a suitable strategy for achieving their financial goals.
They act as a medium between investors looking for investment opportunities and organisations that want to raise funds. We can say that an investment banker’s responsibilities are divided into two parts: examining an organisation’s financial status and helping it reach its financial goals.
For the first part of their responsibilities, investment bankers go through the organisation’s goals and requirements through a retainer. Usually, an organisation would provide the investment banker with all the necessary financial information. The investment banker uses this information to create a strategy that might include issuing and selling stocks, selling bonds, taking a debt, or combining these, depending on the organisation’s financial health and goals.
After the organisation has decided on a strategy, the investment banker will have to find and work with investors who match the organisation’s profile. While finding and working with a prospective investor, the investment banker works like a salesperson on behalf of the organisation that wants to raise capital.
Apart from helping raise capital, investment bankers also construct detailed financial models for Financial Planning & Analysis (FP&A) and Merger and Acquisitions (M&A). They have to perform valuation analyses through different methodologies such as discounted cash flow, transaction comparisons and leveraged buyouts.
Investment bankers conduct industry and company research to develop new business and engage clients. Due to the various duties of this role, investment bankers must possess strong analytical and problem-solving abilities. They must also have excellent interpersonal skills as they interact with multiple clients, investors, and organisations regularly.
Investment bankers typically work 50 hours a week in a traditional office environment. However, their work hours might increase up to 80 hours a week depending on their tasks and responsibilities.
List of Job Roles
The role of an investment banker varies depending on the organisation. In some firms, an investment banker is expected to multi-task, while in others, they are given a specific role.
Let’s understand what their job role entails:
- Investment bankers broadly carry out three main tasks that include investigation, research and analysis, and underwriting.
- They are financial advisors to corporations and governments (in some cases).
- The primary role of an investment banker is to raise money for the firm or client. This can be done in two ways.
- Issuing debt by selling bonds to investors.
- Selling equity shares to raise capital.
- Companies often rely on investment bankers when they hold an Initial Public Offering (IPO) for trading stocks to the public. They help the company by lining up potential investors and place the IPOs in the best saleable spot.
Investment bankers can also transition into other lucrative fields such as research and portfolio management, financial planning and analysis (FP&A), corporate development, and so on.
A portfolio manager works alongside research analysts in helping firms decide which assets should be bought or sold. They have the final say in investment decisions and are responsible for directing funds towards securities based on insights they receive from analysts and researchers. A portfolio manager in India can earn an average basic pay of INR 10,56,450 annually.
Financial Planning & Analysis Manager
They oversee business forecasting. An FP&A’s primary job role is to analyse company finances critically to detect anomalies, if any, and suggest strategies for improvement. They are usually hired by large-scale organizations where business forecasting is not handled by business owners and managers. It’s also their responsibility to analyse cash flow and provide short-term and long-term financial projections. A financial planning & analysis manager is paid an average of INR 8,07,521 per year.
Corporate development experts or corp devs oversee Mergers & Acquisitions (M&As) and help companies carry out divestitures and capital-raising operations in a hassle-free manner. They work closely with investment bankers in devising strategic initiatives along the lines of a company’s vision and mission to achieve organisational objectives. In India, corp devs can earn an average base salary of INR 22,00,000 per year.
Factors Affecting the Average Investment Banker Salary in India
The average investment banker salary in India is substantially high. However, to determine how much you can expect to earn in this industry, you must know what factors affect your pay in this sector. Primarily, four factors determine your salary as an investment banker in India:
Knowing how these factors affect your pay, you can figure out how much you can expect to earn as an investment banker. Now, let’s discuss each one of these factors in detail:
How skilled you are as an investment banker directly impacts how much you make in this sector. Having specific skills will not only help you get a high-paying job but will also provide you with job security as you’d be way ahead of your competition.
The most popular skills among India’s investment bankers are Mergers and Acquisitions, Financial Analysis, and Financial Modeling. Having these skills will ensure that you stay relevant in the market.
However, specific skills tend to offer above-average pay to investment bankers. The most lucrative skill for these professionals is Microsoft Excel as investment bankers with this skill report to earn 82% more than the average.
Another prominent skill that offers lucrative pay in this industry is Mergers and Acquisitions, which offers 77% higher than average income. Following are some additional skills you can develop to ensure you get higher salaries in this industry:
- Financial Modeling (35% higher than average pay)
- Investment Management (5% higher than average pay)
- Financial Analysis (33% higher than average pay)
This is a crucial factor as you have the most control over this one. All the other factors that affect your pay are relatively difficult to control, such as your location and employer.
The amount of experience you have as an investment banker is directly proportional to your income in this industry. The more experience you gain, the more you will earn. On top of that, your pay can increase exponentially in this industry with just a few years of experience.
Beginners in this industry earn significantly less than the highly experienced ones. Entry-level and early-career investment bankers earn 29% and 6% less than the average pay, respectively.
On the other hand, mid-career investment bankers earn 84% more than the average, while late-career ones earn 212% more than the average.
An investment banker’s with less than a year’s experience in India earns around INR 6.8 lakh per year. Similarly, professionals with one to four years of experience in this field earn INR 9 lakh per year on average. Those with five to nine years of experience make around INR 20 lakh per annum in this field, while those with more than ten years of experience earn INR 30 lakh per annum on average. This industry values professional experience a lot.
The city you work in plays a huge role in determining how much you earn in this industry. This is mainly because the cost of living is different for every city. Some cities are more expensive to live in than others. On the other hand, some cities have a higher demand for investment bankers, which also causes the average pay to vary significantly.
The most beneficial city for India’s investment bankers is Mumbai, as it offers an average of 84% more than the national average pay. Other cities that offer above-average income to investment bankers are Pune (4% higher than the average) and New Delhi (4% higher than the average).
Similarly, the average pay of some cities is lower than the national average. The lowest salaries for investment bankers are in Chennai (63.6% lower than the average), Bangalore (29.8% lower than the average) and Hyderabad (48% lower than the average).
Which company or organisation you work for is also a huge determiner of how much you’ll make as an investment banker in India. However, you shouldn’t choose a company solely based on the pay it offers. It would be best to consider the offered benefits such as insurance, sick leaves, etc., and the work environment before selecting a company.
The prominent employers of investment bankers are investment banks such s Goldman Sachs and Morgan Stanley. At Morgan Stanley, an investment banker’s average pay ranges from INR 14 lakh to INR 15.5 lakh per year. Similarly, the salary of an investment banker at UBS Investment Bank ranges from INR 7 lakh per annum to INR 35.9 lakh per annum.
Investment Banker Salary in Other Countries (UK & USA)
The financial viability and economic activities of a country are two crucial determinants of the earning potential of investment bankers.
In a financially strong country like the US, the initial base salary of investment analysts is estimated to be between $75,000 and $96,000 per year. These figures are not exact as they do not include signing bonuses, which can be anywhere between $5000 – $15,000 based on the firm size. Their compensation packages also include stub bonuses that can range from $20,000 – $30,000 apart from the bonus they earn through high-profit deals.
Experienced investment bankers earn higher packages than freshers. Their earnings per transactions are also significantly high when compared to bankers with fewer years of experience.
London is the second biggest hub for investment bankers next to New York. Entry-level investment bankers are paid 50,000 GBP as base salary, that increases to 55,000 GBP in the first year and 60,000 GBP in the third year.
Investment associates in the UK make 80,000 GBP to 110,000 GBP. Their contemporaries in the US pocket $140,000 to $200,000 annually. The difference is primarily due to Brexit that caps the salary to bonus ratio.
In London, investment bankers are provided increments in their pay from 72,000 GBP to 93,000 GBP (inclusive of salary and bonus) as they climb up the ladder from an analyst to an associate 2. With further growth to Vice President, the pay rises to 380,000 GBP, and it usually happens before the banker turns 30. The next promotion to director earns them 1.1 million GBP before the age of 35.
In short, investment banks take good care of their staff by ensuring they achieve steady growth in their position.
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What does the future hold for investment bankers?
The current trend in the economic activities of India suggests an upward growth in the investment banking sector. Digitalization, coupled with upcoming technologies, has created an excellent path for the future of investment banking in India. In the future, investment banking is expected to become the third-largest sector in the banking industry.
Artificial Intelligence, big data, augmented reality, and virtual reality is likely to revamp and modernise the course of banking linked to every financial sector. Artificial intelligence is expected to make the process of investment a hassle-free affair in the future.
Multi-asset class investment is likely to become the most desirable as investors are keen on making investments less risky but more profitable. In the past few years, investment banking dynamically changed to keep up with customer expectations and widen financial inclusions. The changes have also been made to take on the competition from Fintech, which looks poised to take over a bulk of business and clients from investment banks.
How to Become an Investment Banker?
An investment banker has a lot of responsibilities. Due to this, companies always look for skilled and qualified professionals for this role. To become an investment banker in India, you’ll need an MBA in finance. It will teach you the skills you need to conduct all the industry standards’ duties and solve business problems.
At upGrad, we offer an MBA in Digital finance and banking degree with OP Jindal Global Business School. The course spans 24 months and teaches you multiple skills and concepts you’d need to become an investment banker in India.
The course has an up to date curriculum and teaches you some of the latest technologies such as:
- Artificial Intelligence in Business
- Data Visualization in Finance
- Digital Fraud and Risk Analytics
- Design Thinking and Leadership
- Blockchain and Cryptocurrency
Learning these concepts will help you become a sought-after investment banker and earn the top investment banker salary in India.
As it’s an upGrad course, you will get access to our Student Success Corner, where you get a dedicated success mentor who helps you resolve doubts about all non-academic matters. You will also receive one-on-one feedback on all your assignments and projects, so you learn smoothly.
If you’re interested in pursuing an investment banking career, we recommend checking the course out.
We hope you found this article on the average investment banker salary in India helpful. If you like to work with numbers or if you’re a people’s person, this field is perfect for you!
As you can see, it’s one of the most well-paying and promising careers in the finance sector. Not just in India but all across the globe, the demand for investment bankers is rising. Now is the perfect time to pursue a career in this field.
If you are keen on upgrading your career with an MBA Degree, upGrad is offering an MBA in Digital Finance & Banking in collaboration with the Jindal Global Business School and the Jindal School of Banking & Finance. The program has been designed to Future-oriented content suited for those working in or aspiring to work in finance across domains. Be a JGU alumnus and take advantage of continued engagement and networking with the world of academia, policy, and industry.
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