NEW YORK (Reuters) – Wall Street chief executives on Wednesday reported a jump in profits as trading and trading recovered, and said the next U.S. administration will be business-friendly and good for banks. He expressed confidence that he was deaf.
Market conditions are already favorable for banks, including a booming stock market and expectations that President-elect Donald Trump will introduce deregulation and tax cuts.
Goldman Sachs CEO David Solomon told analysts at an earnings call that “there has been a significant change in CEO confidence, particularly in response to the results of the U.S. presidential election.'' “Furthermore, there is significant backlog from sponsors, and overall trading appetite is increasing, supported by an improving regulatory environment.”
Stocks of banks reporting earnings on Wednesday rose steadily, with Goldman Sachs up 6.1%, JPMorgan Chase up 2%, Wells Fargo up 7% and Citi up 7.4%. Bank of America and Morgan Stanley will report their results on Thursday.
“The animal spirits are back,” said Stephen Biggar, a banking analyst at Argus Research, referring to the tendency for investor sentiment to drive stock prices. “There are good times to be overexposed to capital market returns, and this is one of them.”
Stock markets have soared over the past year, with the S&P 500 index up 23.3% in 2024, while trading volumes have increased and strong demand for debt underwriting has pushed up investment banking fees. Since the US election in November, the KBW Bank Index is up nearly 10%.
Goldman Sachs posted its biggest quarterly profit since the third quarter of 2021, at $4.11 billion, helped by transaction fees, debt sales and trading. Global banking and markets revenue increased 33.4% year-over-year in the fourth quarter, with the equities sector posting record annual net revenue.
The bank said in a statement that it expects investment banking fees to be higher in December than in September, giving an optimistic outlook for the coming months.
JPMorgan Chase & Co. saw net income rise about 50% last quarter as both investment banking fees and trading revenue soared, and CEO Jamie Dimon said he expects even more favorable business ahead. I look forward to the situation.
The earnings report comes days before Inauguration Day, with President Trump pushing his agenda of deregulation and tax cuts. If regulations are eased, transactions may become more active and banks' fee income may increase.
“Businesses are becoming more optimistic about the economy, driven by expectations for more pro-growth policies and improved collaboration between government and business,” Dimon said in a statement.
