(L-R) Brian Moynihan, Chairman and CEO of Financial institution of America; Jamie Dimon, Chairman and CEO of JPMorgan Chase; and Jane Fraser, CEO of Citigroup; testify throughout a Senate Banking Committee listening to on the Hart Senate Workplace Constructing in Washington, D.C., on Dec. 6, 2023.
Saul Loeb | Afp | Getty Photos
Practically in all places you look on this planet of finance, issues are going surprisingly nicely — at the least for now.
Wall Road is buzzing because of a increase in inventory and bond buying and selling and a pickup in firms buying opponents and taking out large loans. On the identical time, Fundamental Road is holding up because the American shopper continues to spend, borrow and repay loans, in accordance with experiences this week from the biggest U.S. banks.
It makes for an unusually worthwhile atmosphere for monetary companies. The six largest U.S. banks generated about $39 billion in second-quarter revenue, outstripping analysts’ expectations and collectively leaping greater than 20% from core earnings a 12 months in the past.
It is a exceptional outcome after a tumultuous begin to the quarter. The interval started with shock and plunging markets on April 2 over President Donald Trump’s sweeping “Liberation Day” tariffs. JPMorgan Chase economists stated on the time that the insurance policies would most likely trigger a recession this 12 months.
However markets roared again after Trump responded to misery indicators coming from U.S. bonds and delayed probably the most punishing tariffs on most buying and selling companions. Traders have begun to tune out the administration’s barrage of tariff pronouncements as bluster or noise, and company leaders are stepping off the sidelines to drag off multibillion-dollar transactions, financial institution outcomes present.
“Look how far the world’s are available in three months,” Wells Fargo banking analyst Mike Mayo advised CNBC. “All through the quarter, you had a pickup in funding banking, mortgage development and optimism with financial eventualities. Right here we’re, with discuss of a recession just about absent.”
That dynamic was clear at JPMorgan, the biggest and most worthwhile U.S. financial institution. It produced about $15 billion in quarterly revenue, which is almost as a lot as the following three largest banks mixed.
Buying and selling benefited from turbulent situations within the quarter as Trump roiled markets with quickly evolving coverage statements. However the actual shock got here from funding banking, which includes mergers recommendation, IPOs and debt and fairness issuance. Income at JPMorgan jumped 7%, producing $450 million greater than analysts had anticipated, simply weeks after managers had warned of an approximate 15% decline.
“The pickup in funding banking charges, to some extent, displays individuals accepting uncertainty and deciding to maneuver on with transactions,” JPMorgan CFO Jeremy Barnum advised reporters on Tuesday. “The company neighborhood has type of accepted that they only must navigate by means of this.”
‘Gentle touchdown’
However the excellent news did not finish with company confidence. JPMorgan’s inside barometers for U.S. financial dangers cooled down from the primary quarter as among the worst-case eventualities had been taken off the desk, Barnum stated.
Which means it is much less seemingly {that a} recession will trigger a spike in U.S. unemployment this 12 months, hurting customers means to repay their money owed. That was clear within the financial institution’s provision for credit score losses, which was 14% smaller than within the first quarter.
The financial system is squarely within the “gentle touchdown” situation, Barnum advised reporters this week.
On the identical time, customers and firms are borrowing more cash from JPMorgan, the place mortgage development rose 5% in contrast with a 12 months in the past, fueled by rising bank card and wholesale loans, the financial institution stated.
These stats imply that, at the least for now, banks are giving the all-clear sign on the U.S. financial system within the early months of the second Trump presidency. Even in a time marked by turbulence and rising geopolitical dangers, the financial system has defied expectations for a downturn.
“Banks are economically delicate companies, and so how the financial system performs underneath the administration goes to matter to their outcomes,” stated Matt Stucky, chief portfolio supervisor for equities at Northwestern Mutual wealth administration. “To date, the financial system continues to push ahead.”
‘Firing on all cylinders’
The scenario even made JPMorgan CEO Jamie Dimon, who continuously warns about dangers he sees, sound comparatively optimistic in regards to the financial system.
“It has been resilient, and hopefully it’s going to proceed to be,” Dimon advised reporters this week. “It is at all times good to hope for the most effective, put together for not the most effective, and we’ll see… One factor I might level out, the world is far greater and far more diversified” now and that makes for a “barely extra steady world financial system than you had 20 years in the past,” he stated.
Merchants work on the ground on the New York Inventory Trade (NYSE) in New York Metropolis, U.S., July 17, 2025.
Brendan McDermid | Reuters
Trump’s sweeping spending invoice, signed into regulation this month, preserves company tax charges and expands enterprise deductions. On high of that, deregulatory efforts throughout industries will increase the financial system, Dimon stated.
Final month, the Federal Reserve launched a proposal to amend the capital that banks want to carry for lower-risk property, probably liberating up billions of {dollars} for the banks that they may use to spice up share repurchases, purchase opponents or gasoline extra mortgage development, executives stated this week.
Taken collectively, it is laborious to conceive of a greater setup for banks than proper now, Barnum stated.
“We’re primarily firing on all cylinders,” Barnum advised analysts. “Charges are an excellent stage for us. Deal exercise is excessive. Capital markets are very robust. Shopper credit score is superb. Wholesale credit score is superb.”
To make sure, sentiment can shift on a dime, and dangers together with inflation, the mounting U.S. deficit and geopolitical turmoil are nonetheless on the market, Barnum famous.
Good occasions forward?
Even the banking trade’s former laggards are displaying indicators of a resurgence.
Wells Fargo CEO Charlie Scharf, contemporary off lastly eradicating the yoke of a Federal Reserve punishment that capped his financial institution’s stability sheet at 2017 ranges, sounded ebullient throughout an earnings name this week. His firm not too long ago gave all its workers a $2,000 bonus to rejoice the milestone.
“That is an extremely attention-grabbing and enjoyable time,” Scharf advised analysts Tuesday. “We’re beginning to see deposit flows, as we have talked about. We have got new account development. We have got bills in verify. Credit score is performing nicely… Now we have much less constraints.”
Citigroup shares have outpaced most monetary shares this 12 months.
The shares of one other former laggard, Citigroup, have climbed practically 30% this 12 months as CEO Jane Fraser convinces traders her turnaround plan is working.
Fraser this week appeared like a CEO on the assault, disclosing the financial institution’s new luxurious bank card and plans to concern a Citi-branded stablecoin. She additionally marveled on the resiliency of the U.S. financial system.
“The energy of the U.S. financial system, pushed by the American entrepreneur and a wholesome shopper, has definitely been exceeding expectations,” Fraser advised analysts. “As I have been talking to CEOs, I’ve but once more been impressed by the adaptability of our non-public sector.”
