The U.S. Securities Industry Association says that it expects more modest growth in 2004, after industry profits doubled in 2003.

The SIA reports that securities industry profits came in at US$6.7 billion in the fourth quarter of 2004, beating expectations. This pushed full year results above US$24 billion; almost double the US$12.1 billion earned in 2002.

“After a three-year downturn, industry revenue growth resumed in 2003 and by year-end had become more robust and broad-based, spreading to virtually every product and service line,” the report says.

The SIA says that first quarter results should show that this momentum has been sustained, and it’s expected to continue throughout the year. It projects that first quarter profits will reach US$8 billion; growing to US$28.4 billion for the full year 2004. Industry employment is expected to grow 3% this year.

The report admits that this first quarter data is very preliminary, but it says that the direction for 2004 is nonetheless clear. “Revenue growth is robust and although a significant decline in highly volatile sources of income, such as trading gains, is conservatively anticipated, earnings from other core activities is expected to be more sustainable.”

In 2003, the main source of profit growth was expense control. While revenues slipped 1.4% year over year, expenses dropped 7.3%. The biggest drop in expenses has come from interest expenses, which are down 66% over the past three years. SIA reports that total compensation expense reached $76.7 billion in 2003, up 3.5% from the previous year.