U.S. Banks Eye Strong Q3 Results Amid Market Boom

Analysts project that the combined profits of six major U.S. banks will rise by around 6% year-over-year in the third quarter, according to Bloomberg data, reflecting the continued strength across lending, trading, and dealmaking operations. JPMorgan Chase, Citigroup, Goldman Sachs, and Wells Fargo will begin reporting results on Tuesday, followed by Bank of America and Morgan Stanley on Wednesday.

The performance outlook remains broadly optimistic. With equity markets at record highs, volatile interest rates, and geopolitical shifts, market activity has fueled strong momentum for investment banking and trading. For most major players—excluding Wells Fargo, whose Wall Street arm is smaller—these divisions are expected to post gains for a seventh consecutive quarter, said Barclays analyst Jason Goldberg, who described the environment as “very active.”

Wall Street bank stocks have enjoyed a strong year, benefiting from higher fee income, widening lending margins, and a lighter regulatory stance from Washington. As of October 10, shares of Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley have risen between 23% and 40%, outperforming the S&P 500 by at least nine percentage points, while Wells Fargo and Bank of America have traded roughly in line with the benchmark.

Just a few months ago, the sector was weighed down by uncertainty linked to tariffs that had slowed corporate lending and deal activity. Now, global M&A volumes have exceeded $1 trillion, and markets for IPOs, corporate bonds, and syndicated loans have also rebounded, according to Dealogic.

At a recent Barclays investor conference, top banking executives voiced optimism about dealmaking trends and the durability of the U.S. economy. Even higher third-quarter costs—particularly rising compensation expenses tied to investment banking and trading—were described as positive signs of renewed growth. “We call them good expenses,” said Doug Petno, co-head of JPMorgan’s commercial and investment banking division.

Still, some industry leaders remain cautious. JPMorgan CEO Jamie Dimon and Goldman Sachs CEO David Solomon have both warned of a potential market correction within the next two years. “I’m far more worried than others about a serious market correction,” Dimon told the BBC last week.

Meanwhile, exposure to corporate bankruptcies is drawing attention. Fifth Third Bank and JPMorgan Chase reportedly have credit lines with Tricolor, while Jefferies Financial Group, UBS’s O’Connor hedge fund, and CIT, a First Citizens BancShares unit, are among creditors in the First Brands Group bankruptcy. Jefferies, which holds $715 million in receivables linked to First Brands through its Leucadia Asset Management fund, has seen its shares drop 20% since the exposure was disclosed.

According to Chris Whalen, chairman of Whalen Global Advisors, regulators are increasingly focused on the growth of loans to funds and non-bank financial institutions, which now represent a significant area of concern in Washington’s oversight of financial stability.