Profit growth and a detailed look at the largest US banks after 2025 reports

Big banks just reported their strongest quarter in years, helped by rising trading revenue, a resumption of deals and a return to corporate confidence.

Let's look at the results.

A quick overview of today:

• The big picture

• JPMorganChase:  Record Year

• BofA:  The Rise of Investment Banking

• Wells Fargo:  Efficiency in Focus

• Morgan Stanley:  Trading Dominance

• Goldman Sachs:  Doubling Down

• Citigroup:  Momentum Gains

The big picture

Below is an updated overview of the largest US banks by market capitalization.

Let us remember that banks make money from two main sources of income:

1. Net Interest Income (NII):  The difference between the interest earned on loans (such as mortgages) and the interest paid to depositors (such as savings accounts). This is the main source of income for many banks and is dependent on interest rates.

2. Non-interest income:  Income from services not related to interest. This includes fees (such as ATM fees), consulting fees, and trading income. Banks that rely more on non-interest income are less exposed to changes in interest rates.

Here are the significant events in the fourth quarter of fiscal 2024:

•  Wall Street is recovering:  Investment banking and trading delivered stunning results at big banks. Investment banking revenues soared 24% at Goldman Sachs and 44% at BofA, reaching their highest levels in three years.

•  Trading boom continues:  Market volatility linked to the US election and changing rate expectations contributed to record trading revenues. Morgan Stanley's equities unit hit an all-time high, while JPMorgan and Goldman Sachs saw strong gains in bonds.

•  Corporate optimism fuels deal-making:  CEO confidence has led to a resurgence in M&A, IPOs and private credit demand. Morgan Stanley’s M&A pipeline is the highest in seven years, signaling a multi-year comeback.

•  Net interest income stabilises:  While net interest income remains mixed, banks' forecasts suggest modest but steady growth in 2025, supported by demand for loans and a revaluation of higher-yielding assets.

•  Credit risks on the rise:  Consumer credit stress persists, JPMorgan write-offs up 9%. Banks brace for rising credit card delinquencies.

•  Commercial real estate continues to develop slowly:  tensions in the office sector remain, but banks are managing risks carefully, as no significant shocks have occurred yet.

•  Regulatory and restructuring efforts continue:  Citigroup has cut its 2026 profitability target as part of its financial turnaround, while Bank of America has been scrutinized for anti-money laundering compliance.

•  Robust U.S. economy:  Banks are seeing solid growth in spending, lending and corporate profitability, supporting optimistic forecasts for earnings growth in 2025.

Below is a summary of the fourth quarter fiscal 2024 year-over-year performance.

JPMorganChase: Record Year

• Net revenue increased 11% year over year to $42.8 billion (up $2.1 billion):

  • Net interest income (NII): $23.5 billion (-3% y/y).

  • Non-interest income: $20.3 billion (+15% y/y).

• Net profit: USD 14.0 billion (+50% y/y).

• EPS: $4.81 (down $0.71).

• Key events  :

  •  Record Profitability:  JPMorgan achieved $58.5 billion in annual net profit (+18% year-on-year), doubling its profit from 2020 and setting a new benchmark for the U.S. banking sector.

  •  Investment banking is recovering,  with fees up 46% year-over-year to $2.6 billion, and advisory services and equity underwriting beating expectations. Market revenue rose 21% to $7.0 billion, driven by a 20% jump in fixed income revenue.

  •  Resilient economy:  CEO Jamie Dimon highlighted strong consumer spending and business optimism but warned of lingering inflation pressures and heightened geopolitical risks.

  •  Lending problems:  Consumer banking profit fell 6% year over year as net charge-offs rose 9% to $2.4 billion, largely due to credit card losses.

  •  Return to the office:  JPMorgan announced a full return to office work by March 2025, sparking a backlash from employees and talk of unionization among workers.

  •  Looking Ahead:  The bank provided 2025 net interest income guidance of ~$94 billion (beaten by $2.7 billion). Adjusted expenses are forecast at ~$95 billion, driven by growth initiatives and higher marketing and technology expenses.

  •  Bottom Line:  JPMorgan's record performance underscores its industry dominance. However, issues such as tighter lending margins, inflation and labor discontent could weigh on future performance.

• Key Quote:  CEO Jamie Dimon:

  • “The U.S. economy is resilient. […] However, current and future spending needs are likely to be inflationary […] In addition, geopolitical conditions remain the most dangerous and challenging since World War II.”

BofA: The Rise of Investment Banking

• Revenue grew 11% year-over-year to $25.3 billion (surpassing $170 million):

  • Net interest income (NII): $14.4 billion (+3% y/y).

  • Non-interest income: USD 11.0 billion (+37% y/y).

• Net profit $6.7 billion (+112% y/y).

• EPS $0.82 (beaten by $0.05).

• Key events  :

  •  Strong Profits:  BofA posted its best quarterly profit in a year, with all revenue sources growing.

  •  Investment banking growth:  Investment banking fees rose 44% to $1.7 billion, the highest in three years, driven by strong debt and equity underwriting.

  •  Trading remains robust,  with sales and trading revenue up 10%, driven by a 13% rise in fixed income and 6% in equities as market volatility spurred client activity.

  •  Consumer and Wealth Strengths:  Higher credit card fees and asset management supported growth in BofA’s retail and wealth divisions. Customer balances reached $4.3 trillion, up 12% y/y.

  •  Net interest income recovers:  After four quarters of decline, net interest income rose 3%, beating expectations, driven by lending growth and stable deposits.

  •  Positive outlook for 2025:  The bank expects net interest income to continue to grow through 2025, with net interest income forecast to reach $15.7 billion per quarter by year-end.

  •  Bottom Line:  BofA enters 2025 with strong momentum, benefiting from renewed dealmaking, trading tailwinds and stabilizing interest income.

• Key quote:

  • Chief Financial Officer Alastair Borthwick:  "Consumers continue to spend and our business customers are profitable and increasingly optimistic. We are heading into 2025 with good momentum."

Wells Fargo: Efficiency in Focus

• Revenue remained flat year-on-year at $20.4 billion (a difference of $0.2 billion):

  • Net interest income (NII): $11.8 billion (-8% y/y).

  • Non-interest income: $8.5 billion (+10% y/y).

• Net profit: $5.3 billion (+50% y/y).

• EPS: $1.43 (up $0.07).

• Key events  :

  •  Net interest income concerns:  While net interest income declined year-over-year, it was up slightly from the previous quarter and is expected to grow by 1% to 3% in 2025, reflecting higher reinvestment rates in maturing assets.

  •  Progress in cost reduction:  Non-interest expenses fell 12% year-on-year to $13.9 billion, driven by headcount reductions and efficiency initiatives, despite a $647 million severance payment.

  •  Investment banking rebounds:  Fees rose 59% year over year to $0.73 billion as Wells Fargo took advantage of a resurgent dealmaking environment and efforts to strengthen its presence on Wall Street.

  •  Capital Return:  The bank returned $25 billion to shareholders in 2024, including a 15% dividend increase and $20 billion in share repurchases, resulting in a 21% reduction in shares outstanding since 2019.

  •  Regulatory hurdles remain:  The Fed's asset cap remains a constraint, while recent fines against former executives have exposed past misdeeds. CEO Charlie Scharf reiterated ongoing efforts to improve compliance and risk controls.

  •  Future Outlook:  The 2025 outlook includes $54.2 billion in noninterest expenses (down slightly from last year) and higher fee income. Efficiency gains and expense discipline should continue to drive improvements.

  •  Bottom Line:  Wells Fargo's disciplined approach to cutting costs and diversifying revenues has helped offset credit demand and net interest income challenges. However, regulatory constraints remain a constraint.

• Key quotes:

  • CEO Charlie Scharf:  “We are still in the early stages of realizing the benefits of the momentum we have built [...] Efficiency will remain an important area of ​​focus in 2025.”

Morgan Stanley: Trading Dominance

• Revenue rose 26% to $16.2 billion (beating expectations by $1.2 billion).

• Net profit: $3.7 billion (+142% y/y).

• EPS: $2.22 (down $0.53).

• Key events  :

  •  Strong quarter:  Morgan Stanley posted impressive revenue and profit results, with profit more than doubling from last year.

  •  Trading Dominance:  Equity trading revenue jumped 51% to $3.3 billion, hitting a full-year high. Increased volatility after the election prompted a surge in client activity, particularly in prime brokerage and re-risking.

  •  Investment Banking Recovers:  Investment banking revenue rose 25% to $1.6 billion, driven by a rebound in equity sales, debt underwriting and M&A activity. CEO Ted Peake noted that M&A deal flow is the strongest in seven years.

  •  Wealth Management Strength:  The unit added $56.5 billion in net new assets, bringing total client assets to $7.9 trillion. The unit remains a solid revenue driver as Morgan Stanley moves toward its $10 trillion asset target.

  • Strategic Reorganization  : Morgan Stanley launched a new unit, Integrated Firm Management, to streamline services in investment banking, trading and asset management.

  •  Bottom Line:  Morgan Stanley demonstrated the strength of its trading and investing engine in Q4, delivering record equity results and strong asset flows. Fiscal 2025 looks promising, given a flurry of M&A activity, a resurgence of IPOs, and continued expansion of asset management.

• Key quotes:

  • CEO Ted Peake:  "M&A deal values ​​are at their highest in seven years [...] the pent-up activity we've seen is starting to be released."

Goldman Sachs:  Doubling Down

• Revenue grew 23% year over year to $13.9 billion (up $1.4 billion):

• Net profit: $4.1 billion (+105% y/y).

• EPS: $11.95 (better by $3.60).

• Key events  :

  •  Record Equity Trading Volume:  Equity trading revenue rose 32% year-on-year to $3.5 billion, setting an all-time high as market volatility drove increased client activity.

  •  Investment banking growth:  Revenues increased 24% year-on-year to $2.1 billion, with strong growth in equity underwriting (+98%) and debt underwriting (+51%) as capital markets recovered.

  •  Asset Management Performance:  Asset and wealth management fees exceeded US$10 billion for the year, driven by growth in assets under management (+8% year-on-year to US$3.1 trillion).

  •  Strategic evolution:  Goldman continued to unwind investments on its balance sheet, but they generated a $472 million gain in the fourth quarter. The newly formed Capital Solutions Group aims to exploit growth opportunities in private lending and alternative finance.

  •  Platform Solutions Growth:  Revenue grew 16% year over year, reflecting improvements in transaction banking and the Apple Card partnership, although Goldman signaled an early exit from its Apple partnership.

  •  Bottom Line:  Goldman's strategic pivot toward fee income and dominance in equities and investment banking showed in the fourth quarter. However, challenges remain in reducing reliance on traditional rates and managing regulatory changes.

• Key quote:

  • CEO David Solomon:  “I am encouraged that we have met or exceeded nearly all of our strategy goals [...] The CEO’s confidence and activity in private equity signal strong momentum moving forward.”

Citigroup: Momentum Gains

• Revenue grew 12% year-over-year to $19.6 billion (surpassing $70 million):

  • Net interest income: USD 13.7 billion (-1% y/y).

  • Non-interest income $5.8 billion (+62% y/y).

• Net income: $2.9 billion (versus loss of $1.8 billion in Q4 FY23).

• EPS: $1.34 (up $0.12).

• Key events  :

  •  Market resurgence:  Fixed income (+37% y/y to $3.5bn) and equity markets (+34% y/y to $1.1bn) posted strong gains, taking advantage of election-related volatility.

  •  Banking sector dynamics:  Investment banking revenues grew 35% year-on-year to US$0.9 billion, supported by robust corporate bond issuance and improved deal activity.

  •  Buyback Announcement:  A $20 billion share repurchase program was announced, with $1.5 billion planned for the first quarter of 2025, reflecting management's confidence in future earnings.

  •  Efficiency gains:  Operating expenses fell to $13.2 billion (-2% q/q), driven by workforce reductions and technology investments. However, the 2026 RoTCE guidance was lowered to 10%-11%, highlighting ongoing transformation costs.

  •  Progress on restructuring:  CEO Jane Fraser emphasized long-term growth, citing momentum across all lines of business and improving credit quality. The planned IPO of Banamex, Citi’s Mexican retail banking unit, has been delayed to 2026 as part of the strategic realignment.

  •  Takeaway:  Citigroup delivered solid growth in key segments, supported by disciplined cost management. However, regulatory and operational challenges remain as the bank continues its transformation.

• Key quotes:

  • CEO Jane Fraser:  "This level is a stopgap, not a destination. We intend to grow returns well beyond this level and unlock the full potential of Citi for our shareholders."

Summary

Major US banks show strong momentum heading into 2025.

 What's next?  With a resurgent IPO market, record stock trading and robust growth in asset management, banks are well-positioned to benefit from renewed corporate optimism.  The big question  : Will the deal frenzy continue or will macroeconomic uncertainty halt the rally?