Strong Earnings Driven by Trading and Interest Income
American banks reported a record-breaking quarter, driven by surging trading activity around the U.S. election and a rebound in investment banking deal flow. Earnings reports from major U.S. banks highlight robust profits and broad revenue growth. Key themes include soaring trading and investment banking revenues, higher net interest income (NII), and effective cost management, despite ongoing macroeconomic challenges.
Investment Banking and Trading Outperformance
Investment banking and trading were bright spots for all five banks. Fixed income and equities trading revenues exceeded expectations at JPMorgan, Goldman Sachs, and Citigroup, benefiting from improved market activity. Investment banking fees surged across the sector with the banks signaling a rebound in deal-making and capital markets activity.
Elevated Net Interest Income
Net interest income continued to bolster results, fueled by elevated rates and robust loan books. JPMorgan, Bank of America, and Wells Fargo reported meaningful year-over-year NII growth, though banks acknowledged that upcoming rate cuts could moderate this trend in 2025.
Preparing for Risks Ahead
Despite the strong quarter, CEOs cautioned against potential headwinds, including inflation, geopolitical risks, and regulatory pressures. Leaders like Jamie Dimon and Jane Fraser emphasized the need for strategic capital deployment and cost discipline to navigate these uncertainties.
Top Portfolio Holdings in the Evolve US Banks Enhanced Yield Fund*
JPMorgan Chase & Co (JPM)
Portfolio weight: 6.48%
- EPS: $4.810 reported vs Bloomberg estimate of $4.100
- Revenue: $43.738B reported vs Bloomberg estimate of $42.010B
“The Firm concluded the year with a strong fourth quarter, generating net income of $14.0 billion. Each line of business posted solid results. In the CIB, clients were active, with IB fees up 49%, and Markets revenue rose 21%. Additionally, Payments fees grew by double digits for the fourth consecutive quarter, helping drive Payments revenue to a record $18.1 billion for the year. In CCB, we continued to acquire new customers across Consumer Banking, Business Banking, Card and wealth management. For example, nearly 2 million net new checking accounts were opened during 2024. Finally, in AWM, management fees rose 21%, and revenue hit a record $5.8 billion. More impressively, client asset net inflows totaled $486 billion in 2024, bringing cumulative net inflows over the past two years to $976 billion.” – Jamie Dimon, Chairman and CEO.
JPMorgan Chase reported record quarterly and annual earnings, cementing its status as the largest and most profitable U.S. bank. The bank posted earnings of $4.81 per share, beating the $4.11 estimate, and revenue of $43.74 billion, exceeding projections. Fourth-quarter profit jumped 50% to $14 billion, driven by a 7% decline in noninterest expenses and strong net interest income of $23.47 billion. Fixed income trading revenue rose 20% to $5 billion, while investment banking fees increased 49% to $2.48 billion, both outperforming expectations, though equities revenue fell short despite a 22% gain. CEO Jamie Dimon noted the economy’s resilience, fueled by low unemployment and consumer spending, but warned of inflationary pressures and geopolitical risks. Analysts are focused on the bank’s plans for deploying capital amid potential regulatory shifts, as well as leadership changes, with Dimon signaling a possible exit within five years.
Bank of America Corp (BAC)
Portfolio weight: 6.28%
- EPS: $0.820 reported vs Bloomberg estimate of $0.769
- Revenue: $25.501B reported vs Bloomberg estimate of $25.204B
“We finished 2024 with a strong fourth quarter. Every source of revenue increased, and we saw better than industry growth in deposits and loans. We also ended with strong capital and liquidity, enabling us to return $21 billion of capital to shareholders in 2024. We believe this broad momentum sets up 2025 very well for Bank of America. I thank all my teammates for another great year, and together we look forward to driving the company forward in 2025 against the backdrop of a solid economic environment.” – Brian Moynihan, CEO.
Bank of America delivered strong fourth-quarter results, exceeding expectations for profit and revenue. The bank reported earnings of 82 cents per share, above the 77-cent estimate, and revenue of $25.5 billion, surpassing forecasts. Quarterly profit more than doubled to $6.67 billion, aided by the absence of last year’s $2.1 billion FDIC assessment and a $1.6 billion charge tied to interest rate swaps. Revenue rose 15%, driven by a 44% surge in investment banking fees to $1.65 billion and solid performance in asset management and trading. Fixed income revenue climbed 13% to $2.48 billion, and equities rose 6% to $1.64 billion, both aligning with estimates. Net interest income, a key metric, increased 3% to $14.5 billion, beating projections by $170 million. CEO Brian Moynihan had earlier signaled strong investment banking momentum, and analysts remain focused on how rate cut expectations could impact the bank’s net interest income target for 2025.
Wells Fargo & Co (WFC)
Portfolio weight: 7.34%
- EPS: $1.420 reported vs Bloomberg estimate of $1.348
- Revenue: $20.378B reported vs Bloomberg estimate of $20.587B
“I believe we are still in the early stages of seeing the benefits of the momentum we are building, and our financial performance should continue to benefit from the work we are doing to transform the company.” Charlie Scharf, CEO.
Wells Fargo reported strong fourth-quarter results, exceeding profit expectations and providing upbeat guidance for 2025 net interest income. Earnings per share reached $1.42, surpassing the $1.35 estimate, while revenue slightly declined to $20.38 billion, just below the $20.59 billion forecast. Net income surged 47% year-over-year to $5.1 billion, supported by lower severance costs. Investment banking fees rose 59% to $725 million, and the bank repurchased $4 billion in common stock during the quarter. CEO Charlie Scharf highlighted Wells Fargo’s improved earnings profile, stronger balance sheet, and progress on growth initiatives and risk management. For 2025, the bank projects net interest income to increase 1% to 3% over 2024’s $47.7 billion.
Goldman Sachs Group Inc (GS)
Portfolio weight: 6.63%
- EPS: $11.950 reported vs Bloomberg estimate of $8.212
- Revenue: $13.869B reported vs Bloomberg estimate of $12.374B
“We are very pleased with our strong results for the quarter and the year. I’m encouraged that we have met or exceeded almost all of the targets we set in our strategy to grow the firm five years ago, and as a result, have both grown our revenues by nearly 50% and enhanced the durability of our franchise. With an improving operating backdrop and growing CEO confidence, we are harnessing the power of One Goldman Sachs to continue to serve our clients with excellence and create further value for our shareholders.” – David Solomon, CEO.
Goldman Sachs reported strong fourth-quarter results, with earnings of $11.95 per share far exceeding the $8.22 estimate, and revenue rising 23% to $13.87 billion, beating forecasts of $12.37 billion. Profit doubled to $4.11 billion as the bank benefited from higher trading revenue and lower expenses. Equities trading generated $3.45 billion, surpassing expectations by $450 million, while fixed income trading brought in $2.74 billion, exceeding estimates by $300 million. The asset and wealth management division also outperformed, with revenue climbing 8% to $4.72 billion, $560 million above forecasts. CEO David Solomon highlighted Goldman’s focus on leveraging its “One Goldman Sachs” strategy amid improving market conditions and renewed Wall Street deal activity. Following a challenging pivot away from consumer finance, the bank has regained momentum, with shares jumping nearly 50% in 2024, bolstered by market optimism around Federal Reserve rate cuts and a rebound in mergers and the IPO market.
Citigroup Inc (C)
Portfolio weight: 6.74%
- EPS: $1.359 reported vs Bloomberg estimate of $1.220
- Revenue: $19.581B reported vs Bloomberg estimate of $19.502B
“2024 was a critical year and our results show our strategy is delivering as intended and driving stronger performance in our businesses. Our net income was up nearly 40% to $12.7 billion and we exceeded our fullyear revenue target, including record years in Services, Wealth and U.S. Personal Banking. We delivered expenses within our guidance and improved our efficiency ratio while concluding a significant reorganization of our firm. We returned nearly $7 billion of capital to common shareholders and our Board of Directors has authorized a program to repurchase $20 billion in common stock.” – Jane Fraser, CEO.
Citigroup reported strong Q4 results, with earnings of $1.36 per share beating the $1.22 estimate and revenue rising 12% year-over-year to $19.58 billion, exceeding forecasts. Net income improved to $2.86 billion from a $1.84 billion loss a year earlier, driven by growth across divisions. Investment banking revenue surged 35% to $925 million, while markets revenue grew 36% to $4.58 billion, led by fixed income outperformance. Wealth and services units posted double-digit growth. CEO Jane Fraser highlighted strategic progress, with full-year net income up nearly 40% to $12.7 billion, though the 2026 return on tangible common equity target was revised to 10%-11%. Citigroup announced a $20 billion stock buyback, with $1.5 billion planned for Q1 2025. Elevated expenses reflect ongoing transformation efforts, but Fraser reaffirmed a focus on long-term shareholder value, with Banamex’s IPO now expected by 2026.
*Portfolio weights as at December 31, 2024. Holdings sorted by Market Cap. Figures in USD.
Source: Getty Images Credit: Javier Ghersi