Profits at Wall Street banks jump with trading strength, dealmaking rebound
NEW YORK (Reuters) – Profits at some of the largest U.S. lenders rose in the fourth quarter as dealmaking picked up and trading was boosted by strong equity markets, sending bank stocks higher on Wednesday.
The market environment has been favorable for banks. Stock markets rallied, with the S&P 500 up 23.3% in 2024, while trading volumes rose and strong demand for bond underwriting boosted investment-banking fees.
Shares of banks that reported earnings on Wednesday were up 5.9% for Goldman Sachs and 0.9% for JPMorgan Chase.Bank of America and Morgan Stanley will report results on Thursday.
“The animal spirits are back,” said Stephen Biggar, banking analyst at Argus Research, referring to the tendency for investor sentiment to drive stock prices. “There are good times to be overexposed to equity market returns, and this is one of them.”
Goldman Sachs posted its biggest quarterly profit since the third quarter of 2021, boosted by transaction fees, debt sales and trading. Its global banking and markets revenues rose 33.4% year over year in the fourth quarter. who, and the bank posted record net annual returns in the stock.
The bank said in a statement that its outlook for investment-banking fees was stronger in December than in September, suggesting an optimistic outlook for the coming months.
JPMorgan Chase posted a roughly 50% rise in net income as both investment banking fees and trading income rose in the latest quarter, and CEO Jamie Dimon is hopeful that more favorable conditions are ahead.
The earnings reports come days before the inauguration on Monday of President-elect Donald Trump, who has pushed an agenda of deregulation and lower taxes.Lighter regulation could spur a surge in deals, boosting bank fee income.
“Businesses are more optimistic about the economy and are encouraged by the prospect of a greater growth agenda and improved cooperation between government and business,” Dimon said in a statement.
A rebound in deals sent Wells Fargo’s profit up 47.3% to $5.1 billion as its investment-banking fees rose 59% to $725 million in the quarter from a year earlier.
Citigroup’s quarterly profit beat estimates, helped by more trading and deals, and its investment-banking income rose 35% to $925 million.
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