Big US banks kicked off second-quarter earnings on a high note Tuesday, signalling a rebound in investment banking activity after months of subdued dealmaking.
JPMorgan Chase, Citigroup, and Wells Fargo all surpassed profit expectations, buoyed by a pickup in mergers, debt issuance, and IPO momentum.
However, executives remained wary of ongoing economic uncertainty and the potential fallout from evolving US trade policy.
The encouraging results came after a rocky start to the quarter, which saw mergers and acquisitions grind to a halt following President Donald Trump’s announcement of new tariffs on several countries.
But as the quarter progressed, sentiment improved, and deal activity began to recover—particularly in the healthcare and technology sectors.
JPMorgan outperforms on debt underwriting and advisory
JPMorgan Chase, the country’s largest bank, reported a 7% rise in investment banking fees to $2.5 billion, exceeding earlier guidance.
In May, the bank had warned that fees could drop by a mid-teens percentage.
The gains were driven by stronger debt underwriting and advisory revenues, even as equity underwriting activity declined.
Troy Rohrbaugh, co-CEO of JPMorgan’s commercial and investment bank, had flagged weakening momentum earlier in the quarter, but the turnaround was evident by June.
CFO Jeremy Barnum noted that the investment banking landscape had grown “a little more upbeat,” though he cautioned that challenges remain.
Citigroup benefits from momentum in M&A and IPOs
Citigroup also posted a solid performance, with investment banking revenues rising 15% year-over-year to $981 million.
The bank cited stronger momentum in M&A, convertibles, and initial public offerings.
“There is, in general, more growing familiarity with how to deal with uncertainty and volatility,” Citigroup CFO Mark Mason said.
He added that the bank is seeing a healthy pipeline of deals in North America, particularly with financial sponsors and in fast-growing sectors like tech and healthcare.
Wells Fargo sees late-quarter improvement in deal flow
Wells Fargo reported an 8% increase in investment banking revenue, reaching $463 million.
CFO Mike Santomassimo highlighted stronger advisory and capital markets activity, indicating that deal flow picked up notably in the latter part of the quarter.
Still, executives across the board struck a cautious tone.
While they expect delayed deals to come back online in the second half of the year, the broader environment remains fragile.
Tariff uncertainty, geopolitical tensions, and concerns over the economic outlook continue to temper optimism.
More earnings ahead as banks watch policy shifts
Bank of America, Goldman Sachs, and Morgan Stanley are due to report results on Wednesday, which will offer a fuller picture of how Wall Street is responding to the shifting economic and political landscape.
Bank leaders also expressed hope that a more relaxed regulatory stance under the Trump administration will continue to support business growth.
US lenders recently passed the Federal Reserve’s annual stress tests, reaffirming their capital strength and ability to weather adverse scenarios.
“Investors have come back to the reality that the US economy is strong… the stock market’s reflecting that,” said BNY Mellon CEO Robin Vince, adding to the prevailing sentiment that the tide could be turning for investment banking in 2025.
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