US Banks Set for Strong Q4 Earnings Boosted by Investment Banking Rebound

Major United States banks are heading into the fourth-quarter earnings season with optimism, driven by a notable rebound in investment banking. According to a Reuters report, rising deal-making activity and robust trading across equities, commodities, and fixed income are expected to push profits higher for top lenders. Analysts highlight that mergers and acquisitions (M&A) and initial public offerings (IPOs) have played a pivotal role in fueling growth.

JPMorgan Chase will open the earnings season on 13 January, followed by Citigroup, Bank of America, and Wells Fargo on 14 January. Goldman Sachs and Morgan Stanley are scheduled to release results on 15 January. Market watchers are keenly observing these reports as indicators of the broader health of the US banking sector and the investment banking landscape.

Stephen Biggar, a banking analyst at Argus Research, told Reuters that Q4 “shaped up to be a perfect recipe for a consecutive build-up in investment banking revenues.” Analysts point to an improving IPO calendar, a surge in M&A deals, and elevated trading volumes as the main drivers of the anticipated earnings growth. Dealogic data shows that global investment banking revenue climbed 15% year-on-year to nearly $103 billion in 2025, with JPMorgan leading the global rankings. Global M&A volume reached $5.1 trillion, marking a 42% jump from 2024, fueled by a wave of megadeals, where Goldman Sachs emerged at the top.

Beyond investment banking, broad loan growth and expanding net interest margins are expected to further bolster bank earnings. Analysts say expectations of pro-growth policies, lighter regulation, and changes to capital rules could encourage more lending in 2026. While a generally healthy US economy supports bank performance, inflation remains a key variable to watch, as rising prices could keep interest rates elevated and potentially slow deal-making activity.

Investor optimism is already visible in the markets. The S&P index tracking US bank stocks has gained about 3% so far this year, following a 30% rally in 2025. This trend reflects confidence in stronger earnings and improved profitability in the banking sector as investment banking revenues and overall lending activity continue to show momentum.

source: punch