Wall Street Investment Banking Revenue Expected to Surpass $13 Trillion in Q3 for First Time Since 2021

Impact of Trump’s Return to the White House
Third-Quarter Net Profit of the Six Largest Banks Projected to Rise 8%

On October 12 (local time), the Financial Times (FT) reported that third-quarter investment banking revenues at major Wall Street banks are expected to surpass $9 billion (approximately 12.86 trillion won) for the first time since 2021.

According to estimates compiled by Bloomberg, quarterly revenues from advisory work, equity, and bond underwriting at JPMorgan Chase, Bank of America (BoA), Citigroup, Goldman Sachs, and Morgan Stanley are projected to reach $9.1 billion.

Reuters Yonhap News

This figure represents a 13% increase compared to the same period last year and a 50% improvement from the 2023 low. However, it still falls significantly short of the $13.4 billion recorded during the boom at the end of 2021.

FT explained that this third-quarter outlook reflects Wall Street’s optimism that a surge in new mergers and acquisitions (M&A), leveraged buyouts (LBOs-acquisitions financed by borrowing against the assets of the acquired company), and initial public offerings (IPOs), which had been anticipated after President Donald Trump returned to the White House, will materialize.

Investment banking fees declined after the U.S. Federal Reserve began raising interest rates in early 2022, and the previous Joe Biden administration’s aggressive antitrust policies dampened the M&A market. Wall Street had expected that the investment banking sector would enter a boom phase following President Trump’s return to the White House in January of this year. However, uncertainty over trade policy due to tariffs and large-scale government budget cuts led to a slowdown in deals earlier this year. Recently, however, these headwinds have eased, and expectations for a recovery in investment banking are gaining momentum.

Jason Goldberg, a Barclays bank analyst, stated, “A pro-growth environment and a trend toward regulatory easing are boosting investor sentiment,” adding, “The need for investment related to artificial intelligence (AI) is also clearly having an impact on performance.”

Analysts expect that third-quarter equity and bond trading revenues at these five banks will reach $31 billion, up about 8% from the previous year.

The third-quarter net profit of the six largest U.S. banks by assets (the five investment banks plus Wells Fargo) is projected to have increased by about 8% compared to the previous year. JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo are scheduled to announce their earnings on the 15th, while Morgan Stanley and Bank of America will release theirs on the 16th.

Scott Siefers, senior analyst at Piper Sandler, said, “Banks serve as a vehicle for investors to express their views on macroeconomic health or interest rates,” adding, “Both factors appear to be in good shape, which is drawing investors to banks.”

This content was produced with the assistance of AI translation services.