Q2 Results Beat Forecasts Amid Dealmaking Comeback
Major U.S. banks posted stronger-than-expected earnings in the second quarter, fueled by a resurgence in investment banking activity and increased market volatility from tariff announcements. JPMorgan Chase, Citigroup, and Wells Fargo all exceeded analyst expectations, pointing to renewed momentum in capital markets and fee income after a sluggish start to the year.
JPMorgan saw investment banking fees rise 7% to $2.5 billion, outperforming its previous guidance. Higher debt underwriting and advisory fees drove the gains, despite a dip in equity underwriting. Citigroup reported a 15% surge in investment banking revenues to $981 million, led by activity in healthcare, technology, and strong convertible and IPO markets. Wells Fargo’s revenue from investment banking increased 8% to $463 million, with executives noting a noticeable uptick in deal volumes.
Tariff Volatility Lifts Trading Desks
Uncertainty surrounding President Trump’s new round of global tariffs sparked volatility in financial markets — and banks capitalized. Citigroup’s markets revenue jumped 16% to $5.9 billion, the strongest result since mid-2020. Executives said that even with lingering uncertainty, familiarity with navigating tariffs is improving.
“The capital markets are finally exhaling,” said Laurent Birade of Moody’s, noting the return of double-digit fee growth for large financial institutions. Citigroup CFO Mark Mason added that while risks remain, sentiment has generally improved.
Economic Outlook Remains Mixed
Despite the upbeat earnings, bank leaders remain cautious. JPMorgan CEO Jamie Dimon flagged “significant risks” stemming from trade uncertainty, elevated fiscal deficits, and geopolitical instability. Wells Fargo shares fell 6.3% after the bank cut its net interest income outlook, while JPMorgan slipped 0.7%. In contrast, Citigroup shares surged 5% after announcing a $4 billion share buyback, reaching their highest level since 2008.
Robin Vince, CEO of BNY Mellon, noted that investors are increasingly confident in the strength of the U.S. economy, though deal flow is still rebounding from the April pause triggered by tariff threats.
Regulatory Outlook and Industry Optimism
Looking ahead, banking executives are optimistic about continued recovery in deal activity, supported by a robust M&A pipeline and easing regulatory conditions under the Trump administration. Recent stress test results from the Federal Reserve also confirmed that major banks have ample capital to weather future economic shocks.
Matt Stucky of Northwestern Mutual highlighted that current market conditions — a favorable trading environment and strengthening investment banking pipelines — could lead to higher bank earnings in the coming quarters.
