Due to the push of the investment banking business recovery, it is expected that the third-quarter financial reports of the six major banks in the United States to be released next week will be stronger.
Morgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and Wells Fargo are expected to benefit from the revival of trading activities. Meanwhile, the economic resilience has helped borrowers maintain good financial conditions, providing support for the consumer finance and commercial lending sectors.
As these major lending institutions are set to release their financial reports next Tuesday, investors are closely watching for their comments on economic outlook and expectations for investment banking and trading activities.
Mac Sykes, portfolio manager at Gabelli Funds, said, “The market will closely watch for any changes in the credit environment, the impact of employment data, and overall economic outlook. In addition, given the persistently low consumer confidence and evolving corporate confidence, we will closely monitor whether the market volatility earlier this year has left any concerns.”
Despite experiencing a stall earlier in the year due to President Trump’s announcement of tariffs, investment banking activities have rebounded. Deregulation and expectations of rate cuts are also fueling merger and acquisition activities. JPMorgan Chase has stated that this summer was one of the busiest trading seasons for the bank. Recruitment activities are also on the rise.
According to Piper Sandler analysts, as of mid-September, there have been 49 announced transactions in the third quarter, a significant increase from 39 in the second quarter and 32 in the same period last year. Global mergers and acquisitions (M&A) total has reached $2.6 trillion, setting a record high for the first seven months of the year since the peak of the pandemic in 2021.
Merger activities and initial public offerings (IPOs) have driven the surge in trading volume, and the equity capital market also remains robust.
Oppenheimer analyst Chris Kotowski wrote, “Our view on the merger cycle is that while it may have begun flapping its wings, it has yet to truly take off.” This contrasts with expectations earlier in the year of an “epic wave of mergers and acquisitions” that has yet to materialize.
Jefferies analysts noted, “Historically, the third quarter is usually a seasonally slow period for trading activity… but the third quarter of 2025 seems to have broken that pattern,” with strong performance in stock trading, and increased activities in fixed income, foreign exchange, and commodities trading.
Investors will also focus on the forecast for net interest income (the difference between interest income from loans and deposit costs). Baird Equity Research analysts pointed out that with the US economy continuing to show resilience, net interest income is expected to remain robust.
Major lending institutions have indicated that the financial condition of US consumers remains good, with borrowers continuing to meet their repayment obligations. Investors will closely monitor any changes in borrower delinquency or default.
Brian Mulberry, portfolio manager at Zacks Investment Management, said, “While there are no major concerns in investment banking and commercial business areas, we are observing stagnation in deposit size and loan growth on the consumer side.” He is closely monitoring any warnings in consumer finance business, noting that worries about potential defaults among small businesses are growing.
Suryansh Sharma, analyst at Morningstar Research Services, pointed out, “Banks have significant capital and the macroeconomic environment remains stable, therefore, we will wait for management comments to judge whether these factors signal a return of loan growth in the coming quarters.”
Here are the key points expected to be presented in the third-quarter financial reports of the six major banks in the United States:
JPMorgan Chase is set to announce its third-quarter earnings on October 14. According to LSEG estimates, the largest bank in the US is expected to report an earnings per share growth of over 10%, primarily driven by strong investment banking fees and market business income.
In Morgan Chase’s investor conference last month, it was expected that third-quarter investment banking business income would achieve low double-digit percentage growth.
LSEG data shows that the reported earnings per share for the bank could jump by nearly 17%. UBS analysts mentioned that investors are closely watching whether stock buybacks and capital management processes will be clarified, with details possibly revealed during the Bank of America’s Investor Day event in November.
Alastair Borthwick, CFO of Bank of America, told investors at a September meeting that the third-quarter investment banking business fees are expected to grow by 10% to 15%.
Analysts predict that Citigroup’s earnings per share will soar by 26% driven by capital market activities. Citi previously stated that its investment banking fees and market revenues are expected to grow in the mid-single-digit percentage range.
Following the regulators’ lifting of its $1.95 trillion asset cap earlier this year, investors are closely watching the bank’s growth plans and will pay high attention to Wells Fargo’s net interest income guidance, which has remained stable since a downgrade in July.
Analysts pointed out that driven by investment banking business and trading revenue, this Wall Street giant may see an earnings per share growth of nearly 31%, and the market will evaluate whether this growth is sustainable.
Estimates indicate that Morgan Stanley’s earnings per share are expected to grow by over 11%.
Bank of America analyst Ebrahim Poonawala stated, “We believe that Morgan Stanley’s comprehensive business strength in the capital markets and diversified wealth management channels, as well as its global presence and strong profitability, constitute competitive advantages that should allow it to outperform peers in revenue growth in the mid-term.”
(This article was referenced from Reuters)