Wall Street's banking giants have reported record revenues in the first quarter of 2025, driven by heightened market volatility and a trading boom linked to President Donald Trump's unpredictable tariff policies. Major banks exceeded profit expectations as traders reacted to Trump's tariff agenda, causing sell-offs that ultimately benefited lenders.
JP Morgan Chase led the pack, posting a staggering $46 billion (£34.7 billion) in revenue, surpassing analysts' forecasts of $44.11 billion. This surge was significantly bolstered by a 48% increase in equities trading, which reached $3.8 billion. The bank's first-quarter profit soared to $14.6 billion, showcasing its strong performance amidst turbulent market conditions.
Bank of America also saw impressive results, with equities trading revenue climbing 17% to a record $2.2 billion. The bank's profits rose over 11% to $7.4 billion, while total revenue increased by 6% to $27.5 billion (£20.8 billion). Morgan Stanley's equity trading revenues surged 45% to $4.13 billion, contributing to a record total revenue of $17.7 billion (£13.4 billion) and earnings jumping 26% to $4.32 billion.
Goldman Sachs reported revenues of $15.06 billion (£11.4 billion), a 6% increase from the same period last year. Profits climbed 15% to $4.74 billion, driven by a 27% rise in equity trading revenue, which reached a new high of $4.19 billion. However, the bank struggled in its investment banking sector, with advisory revenues falling 8% to $1.91 billion as mergers and acquisitions activity slowed.
Despite these record earnings, Wall Street executives are sounding alarms about potential challenges ahead. Jamie Dimon, CEO of JP Morgan, cautioned about “considerable turbulence” on the horizon, highlighting the risks associated with tariffs and trade wars. Goldman Sachs' David Solomon echoed these sentiments, suggesting that the second quarter would present a “markedly different operating environment.” Meanwhile, Bank of America's Brian Moynihan warned of a “changing economy” that could impact future performance.
As the first quarter reporting season continues, attention is turning to UK banks, with HSBC set to kick off its earnings report on April 29. Analysts will be keenly observing how the ongoing tariff disputes affect operations and risk appetites among major players like Barclays, Lloyds, Natwest, and Standard Chartered.
In a separate report, Bank of America disclosed that its capital markets teams underperformed compared to peers, with equity capital markets (ECM) revenues plummeting 34% and debt capital markets (DCM) revenues only increasing by 7%. In mergers and acquisitions, the bank recorded the second-worst performance among its rivals, with a modest 7% increase.
Despite these setbacks, Bank of America noted a slight increase in market share, rising by 23 basis points (0.23%). However, the bank has faced challenges, including a net loss of 19 managing directors in the US during 2024, significantly more than the two lost at JP Morgan.
In an effort to address performance issues, Bank of America cut over 100 junior investment bankers globally in the first quarter of 2025. The bank had previously hoped that natural attrition would alleviate the need for cuts, but employee turnover was lower than expected.
On the trading front, Bank of America's equities trading revenue grew by 18%, although it still lagged behind its competitors. In fixed income, currencies, and commodities (FICC), revenue growth of 8% matched that of JP Morgan.
Bank of America's earnings report on April 15 revealed that consumer spending remains robust, with credit and debit spending up 4% and the number of transactions increasing by 2% to $228 billion. Digital sales represented 65% of total sales, amounting to $1.9 billion, a significant increase from 53% and $1.7 billion in the same period of 2022. Zelle payments also saw a substantial rise, reaching $130 billion in volume, up from $106 billion a year earlier.
CEO Brian Moynihan emphasized the strength of organic growth across the bank's businesses, noting the addition of 250,000 new checking accounts in the quarter. The bank's digital assistant, Erica, has surpassed 2.7 billion interactions since its launch in 2018.
Moynihan pointed out that transactions processed through Zelle now exceed both the number of checks written by customers and the total of cash transactions from ATMs. He expressed confidence in consumer spending, stating that growth has continued at a rate of 5% through the early weeks of April 2025.
Commercial loans held steady at $196 billion, with Moynihan suggesting that businesses are cautious about how tariffs will affect their operations and investment decisions. This uncertainty is contributing to a slowdown in decision-making processes as companies reassess their growth strategies.
As the financial landscape evolves, the performance of these banking giants will be closely monitored, particularly in light of the ongoing tariff disputes and their potential impact on both domestic and global markets. Investors and analysts alike are left to ponder what the future holds for these institutions as they navigate a complex and often unpredictable economic environment.
