Finance professionals in Hong Kong can expect a lower salary increase and bonus payment due to slower market conditions, according to research by management consulting firm, Pretium Partners Asia.

The Pretium Year-end Rewards and Human Resource Trends Survey - 2016, shows the financial services industry is planning to increase pay by 4.3% in Hong Kong in 2017, compared to 5% a year ago.  Bonus will be at 5.5 months of salary, down from 7 months last year.

Singapore is set to increase pay by 3.5% but its deflation will mean higher growth in real wage when compared to Hong Kong.

The conservatism in pay and bonus review is the result of a slow first half and a more uncertain second half of 2016.

The survey covers 76 international, regional and local investment banks, corporate banks, asset management and private equities firms and insurance companies with multiple offices in Asia.

It asked finance professionals their thoughts on changes in business performance and human resources priorities, bonus payout ratios and levels, salary increase budget, headcount changes and staff mix ratios as well as big data implications for HR among financial institutions.

About one-third of the surveyed firms indicated 2016 performance will be significantly worse than last year due to a sluggish stock market and low interest rates which in turn drive bonus down.  Equities will see the biggest drop due to a high baseline last year and sharp decline in trading volume.

"Chinese firms will fare better than international ones as they are still hiring rather than firing. However, the slowdown of the Chinese economy and the uncertainties surrounding Brexit and the US economy post-election will trend down both pay increase and bonus payment," said May Poon , managing partner at Pretium.

"Insurance and wealth management firms can expect to get more bonuses due to surge in business from Mainland China but rising costs for talent and policy risks will affect momentum."

Half of the surveyed firms intend to expand headcount in 2017 mainly for asset management, wealth management and compliance.

Recruitment is primarily driven by Chinese firms, focusing at analysts to vice president levels. The median staff turnover rate in 2016 is 12% with higher turnover at the back office (15%).

"Financial service industry is facing talent competition from both Chinese corporations and internet companies. The more innovative financial institutions are exploring new ways to recruit, engage and retain employees to cater to the needs and preference of a multi-generational workforce to fend off competition," Poon added.

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