What’s News in Earnings: Why 2025 Was One of the Best Years Ever for Banks

Ryan Knutson (0:00)

Hey, it's Ryan Knutson, host of The Journal podcast, our show about money, business, and power. If you're looking for more deeply reported stories like we share every day, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com/thejournal, all lowercase, to subscribe now.

David Uberti (0:22)

Hey, listeners, it's Wednesday, January 21st. I'm David Uberti for The Wall Street Journal, and this is What's News in Earnings, our look at some of the biggest themes standing out this earnings season. The health of big banks gives us a snapshot of the state of the economy, tracking money flowing in and out of Americans' pockets, as well as the lending and deal making that makes corporate America run. This earnings season, that snapshot may be particularly important. President Trump's economic agenda is coming into focus, and he's ramped up threats to scramble global trade over his territorial ambitions in Greenland. The nation's six largest banks collectively bagged $157 billion in profits last year, up 8% from 2024, and their highest revenue is a group on record. Today we'll unpack those results with AnnaMaria Andriotis, the journal's lead financial reporter in New York, to learn more about that growth, the health of the US consumer, and what Trump's moves into financial markets could mean for Wall Street and Main Street alike.

AnnaMaria, you write a lot about how businesses like trading and investment banking are the engines of Wall Street. How are those engines running heading into 2026?

AnnaMaria Andriotis (1:32)

Those engines right now are very strong. Goldman Sachs and Morgan Stanley both posted record annual revenues in 2025 in their investment banking and trading divisions, all six major banks, including also JPMorgan, Bank of America, Citigroup, and Wells Fargo posted increases in investment banking and trading revenue from a year prior. What has contributed to all of this is that number one confidence has returned to corporate boardrooms and executive suites to pursue mergers. 2025 produced what was the second highest merger volume on record. The pickup in M&A is also fueling a big rise in lending. Loans that are used to make these deals happen at all points to company confidence being up.

David Uberti (2:25)

So a huge 2025 and there's some speculation there could be a potential record in new activity this year.

AnnaMaria Andriotis (2:31)

Bankers said that they do expect more deal activity. Goldman CEO David Solomon said the bullish view internally at Goldman is that in 2026 there will be a new record in terms of M&A. In addition, IPO's, bankers said, are expected to pick up in 2026 Some talked about how they're hoping that this year could be the biggest year ever for IPO's, citing things like Anthropic, the AI company, as well as Rocket Maker, SpaceX. What's triggering that boost is that the stock market has risen to record highs. We are in a regulatory environment that is viewed by many companies as being much more friendly to deal making, and of course, the massive need among a variety of companies to build out their AI capabilities and other infrastructure as well, which in turn results in them borrowing more. All of that is playing out in the core divisions of the big banks, deal making and lending.

David Uberti (3:32)

So Wall Street going gangbusters, but investors and economists are always on the lookout for threats on the horizon. Here's JPMorgan Chase CEO, Jamie Dimon.

AnnaMaria Andriotis (3:41)

JPMorgan Chase CEO, Jamie Dimon Geopolitical is an enormous amount of risk.

David Uberti (3:44)

I don't have to go through each part of it.

Jamie Dimon (3:45)

It's just a big amount of risk.

AnnaMaria Andriotis (3:46)

It may or may not be determined in the day of the economy.

David Uberti (3:50)

AnnaMaria, what have other bankers said about this topic, and what are they worried about this year?

AnnaMaria Andriotis (3:54)

AnnaMaria Well, Goldman Sachs and Morgan Stanley made similar warnings to what Jamie Dimon said, essentially focused on the increasing uncertainty around a number of policy and geopolitical issues. We see what's happening right now with Greenland, and then actually the impact that it's having on markets. This friction appears to have markets back in trade war zone, essentially where we were springtime last year with tariff policy uncertainty. And what's been largely playing out over the last six, seven months or so, increasing questions around the independence of the Federal Reserve. So as good as it is right now, there were warnings issued that it's kind of fragile.

David Uberti (4:32)

So all of that uncertainty, be it foreign or domestic, has come as the economic outlook here in the US has seemed pretty benign in terms of growth. So what are the big banks' results telling us about their confidence levels for that sort of growth continuing?