The big banks kick off earnings season next week (Jan 13), and the narrative has shifted aggressively from “Rate Defense” to “Fee Offense.”
Driven by a 42% surge in global M&A volume (hitting $5.1 Trillion in 2025) and a rebounding IPO calendar, the largest U.S. lenders are poised to report surging profits.
🏦 THE EPS SCORECARD (Q4 2025 Est vs. Q4 2024): Estimates via LSEG
The Outperformers:
- 🔵 Citigroup: $1.77 vs. $1.34 (+32%) – The biggest projected jumper, fueled by capital markets recovery.
- 🔴 Wells Fargo: $1.68 vs. $1.43 (+17.5%) – Hiring aggressively in IB now that the asset cap is history.
- 🔵 Bank of America: $0.96 vs. $0.82 (+17%) – Driven by NII expansion and trading revenues.
- 🔵 Morgan Stanley: $2.40 vs. $2.22 (+8%) – Wealth Management expected to show double-digit growth.
The Heavyweights:
- 🔷 JPMorgan Chase: $4.96 vs. $4.81 (+3%) – Leading the global league tables, though expenses remain a key focus for investors.
- 🟡 Goldman Sachs: $11.37 vs. $11.95 (-4.9%) – Facing tough YoY comps from 2024 equity investment gains, despite topping the 2025 M&A rankings.
🔎 MACRO DRIVERS:
- The “Pro-Growth” Trade: Analysts cite the new administration’s agenda (lighter regulation, lower taxes) as a tailwind for loan growth in 2026.
- The Risk: Inflation remains the “biggest variable.” If tariffs and stimulus keep rates elevated, the cost of capital could eventually dampen this deal flow.
💡 ANALYST TAKEAWAY: Net Interest Margin (NIM) expansion is back, but the real story this quarter is the return of the Investment Banker. With global IB revenue up 15% to $103B, the banks with the strongest advisory franchises are successfully offsetting the normalization of consumer credit costs. Watch Wells Fargo closely—they are the “new” player in the room with their asset cap lifted and ambitious hiring targets.
👇 Bankers & Traders: Is the M&A surge sustainable through 2026, or was Q4 just a rush to beat potential tariff-induced volatility?