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Donald Trump’s return to the White House could spark a blockbuster 2025 on Wall Street, but policy concerns about inflation and global strife remain, major U.S. banks said as they posted stellar quarterly earnings.
Top executives from several of Wall Street’s biggest banks on Wednesday offered optimistic prospects for this year, especially for their investment banking businesses, which have grown in revenue in recent months.
The cautiously upbeat mood underscores how many U.S. executives hope the president-elect’s promises to boost growth and cut regulations will be a boon for their businesses, even as they worry about his sometimes erratic policymaking.
CEO of Goldman Sachs David Solomon said on Wednesday: “There has been a significant shift in CEO confidence, particularly following the US election results. Additionally, there is . . . an overall increased appetite for dealmaking supported by an improving regulatory backdrop.”
“The combination of these conditions should spur further activity in 2025,” he added.
BNY CEO Robin Vince added: “The incoming Trump administration has made it clear that they are pro-growth . . . if that pro-growth translates into activity, which we obviously hope it will, we think that will be a good final backdrop.”
The enthusiasm extends from mergers and acquisitions to debt issuance and plans to take more companies to the public markets, bankers said.
JPMorgan Chief Financial Officer Jeremy Barnum said the U.S. is in “an animal spirit moment. . . . We’re happy to see more optimism in heads of state and globally in some pockets.”
The banks’ expectations for a strong 2025 came after they reported a significant increase in earnings in the final quarter of last year: JPMorgan’s net income rose 50 percent to $14 billion, while Goldman’s doubled to $4.1 billion. Citi posted a profit of $2.9 billion from a loss of $1.8 billion in the last quarter of 2023.
Citi shares jumped 7 percent after the results, with Goldman up 5 percent and JPMorgan up more than 1 percent.
Banks benefited from a surge in stock trading before and after Trump’s November election victory. His victory sent stocks soaring, although markets gave up a significant portion of those gains.
Investment banking it also stood out with companies taking advantage of upbeat market conditions to raise funds through the sale of stocks and bonds. A recovery in M&A activity has also provided a boost.
Even Wells Fargo, which derives the vast majority of its revenue from consumer and corporate businesses, reported significant growth from investment banking.
Significant payments to top up the Federal Deposit Insurance Fund that reduced profits in the final quarter of 2023 also flattered the year-over-year comparison of total net income.
Despite the strong performance, top financiers also warned that enthusiasm could be dampened by a geopolitical crisis or an economic shock from rapid changes in government policy under Trump, who has often taken unexpected paths during his first term from 2017 to 2021.
“Geopolitical conditions remain the most dangerous and complicated since World War II,” warned JPMorgan CEO Jamie Dimon.
Trump has not only promised mass deportations of illegal immigrants and high tariffs, but has also considered taking over Greenland and the Panama Canal, among other things.
“The world is complicated and I think we should all be vigilant and prepare for the unexpected,” Solomon said. “There is uncertainty when you look at immigration policy in general, trade policy, tax policy, energy policy. . . there are different outcomes.”
A return to high inflation could also roil markets, pressure corporate earnings and dry up deals, they warned.
BlackRock CEO Larry Fink told CNBC: “I think the economy is in very good shape. Also, is it in too good condition? Will we start to see increased inflationary pressures? We’ll see.”
The world’s largest money manager reported that it attracted record new money for the second half of 2024.
Additional reporting by Zehra Munir in New York and Harriet Agnew in London
