Wall Street banks raked in bumper profits, comfortably breezing past analyst expectations in the third quarter, driven by the continued strength of trading desks and a sharp revival in deal making.
JP Morgan, Goldman Sachs and Citigroup brushed past estimates on Tuesday, with Jamie Dimon’s banking juggernaut collecting $14.4bn (£10.8bn) in profit – a 12 per cent annual rise.
The bank’s revenue rose nine per cent to $47.2bn. Meanwhile, Citi’s revenue soared to $22bn, easily surpassing expectations of $21bn. Bank of America, the nation’s second-largest lender, recorded a 10.8 per cent increase to revenue at $28.2bn.
Morgan Stanley and Goldman Sachs followed on Wednesday, each reporting 18 and 20 per cent jumps in revenue.
“The thing about choppy waters is that they create opportunities, and the market volatility experienced over the past few months has created the perfect environment for US investment banks to thrive,” said Danni Hewson, head of financial analysis at AJ Bell.
Banking bosses hail deal making quarter
Trading divisions at the banks maintained the pace from the first half of the year when President Donald Trump’s tariff offensive helped investment bank profits rocket.
Banks also began to enjoy the material impact of the Trump administration’s deregulatory stance, which has opened the floodgates to a boom in deal making.
JPMorgan chief financial officer Jeremy Barnum said the past summer was the “busiest” period in a “long time” for announced M&A activity.
Morgan Stanley took the crown for the biggest haul from equities trading with a 35 per cent increase in revenue to $4.1bn.
Goldman Sach’s investment banking arm helped power the firm’s performance in the quarter, with fees jumping 42 per cent to $2.7bn – near $500m higher than analyst estimates. The lender said its backlog of potential deals for the end of the quarter reached the highest in three years.
David Solomon, the bank’s chief said the “momentum from the first half of the year persisted through the summer and into September”.
It comes amid a tumultuous period for US investors with the government shutdown leading to a delay of crucial jobs data that could be set to impact the Federal Reserve’s rate cuts.
Hewson said: “Investors still expect the US Fed to continue its rate cutting into 2026 and for that to have an impact on the big banks’ net interest income, but mega deals might suffer if the US economy shows further signs of deterioration, with huge concerns about the state of the jobs market which can’t be properly assessed whilst the government shutdown continues.”
Barclays will kick off third quarter reporting season for FTSE 100 banks on 22 October.