• US banks reported stunning Q1 earnings, with banks beating analysts’ estimates to signal momentum in banking and trading.
  • Goldman Sachs fell short in fixed income, while JP Morgan reported strong performance in the division.
  • Citigroup recorded its strongest revenue in a decade under CEO Jane Fraser, driven by equities trading and underwriting. Bank of America also saw growth from healthy depositors and trading revenues.
  • Despite solid numbers across the board, bank CEOs mostly reported cautious outlooks as Middle East volatility threatens economic conditions.

As Q1 earnings season gets underway, US investment banks are off to a strong start, surpassing analysts’ expectations with impressive results across the board.

Geopolitical tensions and AI-driven market shifts created a perfect storm for trading desks, while investment banking activity held steady, proving resilient even in an uncertain environment.

Goldman Sachs Tops Estimates on Record Equities Trading

First in the lineup was Goldman Sachs, reporting Q1 earnings of $17.55 per share, surpassing its estimate of $16.49, while revenues are up 14% YoY to $17.23 billion.

Goldman reached a milestone and recorded its biggest quarterly performance in equities trading. Revenues showed an increase of 27% to $5.33 billion, while investment banking fees rose 48%, driven by M&A transactions.

But there was one disappointing sector, fixed income. This segment saw a 10% drop following weak demand for its interest rate products. ⁽¹⁾

Goldman CEO David Solomon warned that if the conflict in the Middle East continues, it could create headaches for M&A through inflationary pressures. The bank’s provision for credit losses rose nearly 10% to $315 million, its largest increase since 2020. Goldman shares fell almost 2% following the results. ⁽²⁾

JP Morgan Beats on Fixed Income Strength

Next, JP Morgan also showed strong results, with earnings coming in at $5.94 per share, above its estimate of $5.45 while revenue increased 10% to $50.54 billion, as net income rose 13% to $16.49 billion.

Fixed income trading revenue surged 21% to $7 billion. These gains were driven by strong performance in commodities, credit, currencies and emerging markets. Investing banking fees also climbed 28% on higher merger advisory and stock underwriting activity. ⁽³⁾

The bank set aside $2.5 billion for credit losses, around half a billion less than expected, signaling healthy borrower conditions. ⁽⁴⁾

CEO Jamie Dimon struck a cautious note despite the strong results. “There is an increasingly complex set of risks, such as geopolitical tensions and wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices,” he said. ⁽⁵⁾

Citigroup Posts Highest Revenue in a Decade

Another stunning performance was Citigroup, beating estimates with earnings of $3.06 per share versus expectations of $2.65. The bank also delivered its highest revenue in a decade as geopolitical tensions fueled trading activity.

Equities trading revenue soared 30% to $2.83 billion, helping drive Citi’s trading operations to their best quarter in 15 years. Investment banking fees rose 21% to $1.8 billion, with equity underwriting up 64%. Net interest income increased 9% to $15.9 billion. ⁽⁶⁾

CEO Jane Fraser ruled out acquisitions, emphasizing organic growth. The bank repurchased $6.3 billion in shares during the quarter. Citi shares rose 2.9% and hit their highest level since November 2008, with the company’s stock gaining 104.9% over the past 12 months. ⁽⁷⁾

Bank of America Delivers Broad-Based Growth

Finally, Bank of America reported earnings of $1.11 per share, beating the $1.01 estimate. Revenue reached $30.3 billion, up 7% year-over-year, as net income rose 17% to $8.6 billion.

The bank saw strength across all major business lines. Net interest income increased 9% to $15.7 billion, while sales and trading revenue, investment banking fees and asset management fees all posted double-digit gains. ⁽⁸⁾

Average deposits grew 3% to $2.02 trillion, marking the 11th straight quarter of sequential growth. Average loans and leases jumped 9% to $1.19 trillion, with gains in every business segment. ⁽⁹⁾

The provision for credit losses fell to $1.3 billion from $1.5 billion. The bank returned $9.3 billion to shareholders through dividends and share buybacks. ⁽¹⁰⁾

Sources: ⁽¹⁾ ⁽²⁾ ⁽³⁾ ⁽⁴⁾ ⁽⁵⁾ CNBC, ⁽⁶⁾ ⁽⁷⁾ Reuters,⁽⁸⁾ ⁽⁹⁾ ⁽¹⁰⁾ MarketWatch