US Bank Profits Surge on Q4 Investment Banking Dealmaking
By Reuters | 07 Jan, 2026

A 42% jump in Q4 M&A activity on year drives strong profits growth for US banks.

The largest U.S. banks are expected to report bigger fourth quarter profits next week, fueled by a surge in investment banking revenue as dealmaking accelerates.

The largest U.S. lender, JPMorgan Chase, will kick off earnings season for banks on Jan. 13. Citigroup, Bank of America and Wells Fargo will report on Jan. 14, and Goldman Sachs and Morgan Stanley on Jan. 15. Their results are likely to be bolstered by a revival in mergers and acquisitions.

"The fourth quarter shaped up to be a perfect recipe in the consecutive buildup for investment banking revenues," said Stephen Biggar, a banking analyst at Argus Research. He cited "an improving IPO calendar, to a surge in M&A activity, to continued elevated trading activity across commodities, fixed income and equities," as factors that lifted earnings.

Global investment banking revenue rose 15% from a year earlier to almost $103 billion, the second-highest since 2021, with JPMorgan leading the league table, Dealogic data showed.

Mergers and acquisitions volume surged to $5.1 trillion in 2025 up 42% from 2024, driven by global megadeals, the data showed. Goldman Sachs topped the M&A rankings.

PRO-GROWTH AGENDA

Analysts expect results to benefit from broad loan growth and expansion in net interest margin, a measure of how much a bank earns from interest and pays out on deposits. Both those factors are expected to support earnings this year, the analysts said.

Banks will generate more business from loans next year because of President Donald Trump's pro-growth policies, lighter regulations, lower interest rates, and changes to capital rules, Jason Goldberg, Barclays banking analyst wrote in a note.

Meanwhile, a healthy economy will also support bank earnings this year, said Morningstar analyst Sean Dunlop.

"We still expect solid U.S. GDP growth in nominal terms and do not pencil in a recession," he said. While a slowdown in job growth could dent consumer demand and increase late payments from borrowers, those delinquencies will have little impact on banks' results, he added.

"The biggest variable we're monitoring heading into earnings and the new year is what happens with inflation," Dunlop said.

 A combination of tariffs, fiscal stimulus and tax cuts could reduce rate cut expectations, even when the central bank appoints a new chair, Dunlop said. If rates remain elevated, asset prices could stay high while deal flow subsides, he said.

Here is what analysts expect from the six biggest U.S. lenders in the fourth quarter:

JPMORGAN CHASE

The lender is expected to show its earnings per share rose more than 3% in the fourth quarter from a year earlier, driven by strong investment banking fees and markets revenue, according to LSEG estimates.

JPMorgan's investment banking revenue is expected to rise by low-single digit percentages in the fourth quarter, while it expects markets revenue to be up in the low-teens percentages, an executive told investors at a conference last month.

Investors are likely to focus on its spending plans for 2026. Its shares sank last month after the executive said expenses will climb.

BANK OF AMERICA 

EPS is likely to jump nearly 17%, LSEG estimates, helped by higher net interest income -- the amount the bank makes on loans and pays out on deposits -- and increased trading revenue. 

Bank of America CEO Brian Moynihan expects markets revenue to rise between a high single-digit percentage and 10% in the fourth quarter, while investment banking fees will be broadly flat, he told investors last month.

CITIGROUP 

Analysts see Citigroup's EPS surging 32%, fueled by gains in capital markets. 

Citigroup Chief Financial Officer Mark Mason said last month that investment banking fees are expected to jump in the fourth quarter, buoyed by dealmaking.

WELLS FARGO

 Wells Fargo is expected to post an 17.5% rise in EPS in the fourth quarter, fueled by higher NII and strong investment banking, where the lender is hiring and setting more ambitious targets. 

 Investors are focused on the bank's growth plans after its $1.95 trillion asset cap was lifted by regulators in 2025.  

GOLDMAN SACHS 

 The Wall Street investment banking giant is likely to see a nearly 4.9% decline in EPS, after profit surged to a three-year high in the fourth quarter of 2024.

The bank will benefit from strong M&A advisory fees, but is unlikely to sustain more volatile gains from equity investments in its asset management unit in 2024, analysts said.

Analysts at Well Fargo said they expect Goldman's revenue from private banking to slide due to lower NII, while compensation costs will be higher for the group.

MORGAN STANLEY

Morgan Stanley's EPS is estimated to rise by more than 8%, helped by investment banking revenue.

Citigroup analysts said for wealth management - a core business for Morgan Stanley - it expects another quarter of low-double digit growth, benefiting from the strong equities market. 

Morgan Stanley's profit beat estimates in the third quarter as a surge in dealmaking drove revenue to records, and the company's finance chief said its investment banking pipeline is at "all-time highs."

Bank  Q4 2025 EPS Q4 2024 EPS 

estimate   

JPMorgan        $4.96       $4.81       

Bank of $0.96       $0.82 

America           

Citigroup $1.77       $1.34 

Wells Fargo $1.68       $1.43 

Goldman Sachs $11.37      $11.95 

Morgan Stanley $2.40       $2.22 

Source: LSEG estimates on Jan. 5

(Reporting by Saeed Azhar; additional reporting by Arasu Kannagi Basil in Bengaluru, editing by Lananh Nguyen and Nick Zieminski)