Top Wall Street banks are tipped to reveal huge profit growth next week amid firm investment banking activity and soaring trading volumes on the back of volatility in the Middle East.
Goldman Sachs will issue the starting gun on US banks earnings season on Monday, where boss David Solomon has already teased a boom in investment banking.
Solomon said in March that momentum in mergers and acquisitions activity was set to continue despite any disruption caused by the US-Israeli war on Iran.
“While it is difficult to predict the broader economic effects of the military action by the US and Israel against Iran, we still see the potential for a more constructive operating environment,” Solomon’s annual shareholder letter said.
He added that a change in the regulatory environment had led to “greater likelihood” for boards to execute strategic transactions and scale.
Jamie Dimon, the boss of JP Morgan, which will release its first quarter update the day after Goldman on Tuesday, also cast a major warning on economic shocks from the Iran war.
“Because of the war in Iran, we additionally face the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect,” Dimon wrote.
Higher interest rates bode well for lenders, with net interest income expected to hold firm for the US lenders in the first-quarter as central banks held off on a hastily approach to chopping rates amid inflation jitters from the Iran war.
JP Morgan and Goldman Sachs to kick off banks earnings boom
JP Morgan is tipped to notch 8.5 per cent growth in interest income, according to analyst estimates from the London Stock Exchange Group (LSEG). Meanwhile, profit growth for the bank is set to come in at just over seven per cent.
Citigroup is forecast for the biggest boom, which is expected to come from a rise in its investment banking fees and market revenue.
The bank’s chief executive Jane Fraser – whose pay rose to a call $42m last year – said in March: “Despite everything, corporate activity – very strong at the moment. Large-cap M&A is not missing a beat right now”.
She also doubled down the banks 10 to 11 per cent target for return on tangible equity – a key metric for profit – target for the year.
A volatility-backed profit boom would mirror a similar outlook than the first three months of 2025.
Top lenders were able to smash profit expectations after reaping the rewards of a trading boom caused by President Donald Trump’s erratic tariff agenda.
JP Morgan comfortably topped first-quarter estimates after booking $46bn (£34.7bn) in revenue. Analysts had pencilled in $44.11bn.
It came as the period narrowly missed Trump’s ‘Liberation Day’ levies on April 2, but ahead of the announcement highly-teased tariffs sent ripples through global markets.
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