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The average profit per EY partner has been slashed from a record £803,000 in 2022 to £761,000, as reported in the Big Four firm’s recent annual financial report.
Citing rising costs and the increased number of partnerships as key drivers behind the drop, UK chair Hywel Ball said the fall in average profit per partner was thanks to the extra 10% of equity partners gaining access to the bonus pool.
EY’s UK revenues increased by a total of 16% to £3.76bn in the 12 months leading up to June 2023, while the company’s profits rose at a slower pace, increasing by 3.9% to £659m.
EY’s tax and legal division also reported a 20% increase in revenues, while revenues in the consulting division increased by 18%. Audit and assurance also saw increases of 17%, and the strategy and transactions department grew by 8%.
Commenting on the report, Ball said: “These impressive results mark a third year of market-leading growth in the UK. We’ve achieved record UK revenues while also continuing to invest for the future.”
A peak too high?
The positive figures have been revealed in the wake of a tumultuous year for the Big Four firm, after its much-touted “Project Everest” came tumbling down thanks to a veto from its US partners, stopping the firm’s break-up plans.
After Project Everest was deemed unassailable back in April, partners were told to prepare for cost-cutting measures. The project’s cancellation resulted in UK-specific costs of £10m in addition to bills of $600m globally, including $300m of internal costs for work done by EY’s own staff.
Since then, EY’s rank-and-file employees have shared a bonus pool of £83m, down from £110m a year earlier, as the firm continues to battle with an ongoing slump in sales and sluggish macro-economic conditions. The firm had also invested in £72m worth of salary increases in 2023, a significant drop from its £106m increase last year.
A competitive market
EY is the third member of the Big Four to release their figures for the financial year and is currently sitting in third place in terms of partner payouts.
Last month, Deloitte’s annual report revealed that the average profit per partner had reached £1.06m, whereas partners at fellow Big Four member PwC received £902,000, a decrease of £18,000 on the year prior.
While KPMG has not yet released its financial figures for the year, its partners received an average of £717,000 in the year ending in September 2022.
EY’s Ball remained optimistic about his firm’s figures when compared to competitors, arguing that its focus on recruiting nearly a fifth more partners since 2021 contrasts with other firms whose hiring has remained “broadly flat”.