Big banks post prodigious profits as dealmaking makes a Trump-tinged comeback
Because that’s where the money is… JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo brought their quarterly #s out of the vault yesterday, and it was a blowout. Investment-banking biggies JPMorgan and Goldman saw profits soar last quarter as dealmaking optimism boomed ahead of Trump’s inauguration. JPM’s profit popped 50% from last year and Goldman’s more than doubled. Citi unloaded a nearly $3B profit, a U-turn from last year’s loss, and Wells Fargo’s net income surged by $1.5B. Shares of all four banks popped on the lucrative reports.
Deal or yes deal… Banks chalked up the banner quarter to a dealmaking drive among clients as private-equity firms gobbled up financing. That, plus expectations around a lighter regulatory touch under Trump, have banks seeing $$. Still, JPM boss Jamie Dimon called out Trump’s plans for deficit spending, suggesting it could drive inflation. Meantime, banks’ net-interest income surged thanks to high rates on credit cards, mortgages, and other loans.
Speaking of interest: The Consumer Financial Protection Bureau sued Capital One yesterday, alleging the bank “schemed” to deprive customers of $2B in interest payments from accounts like savings.
Banks reflect the economy… but may be a funhouse mirror. Broader economic enthusiasm is trickling up to banks’ top and bottom lines. Traders are betting that the Fed will keep cutting rates this year, which in turn may drive an appetite for even more deals and loans. But experts say Trump’s planned tariffs might lead to a spike in inflation, which could rain on the economy’s — and banks’ — parade.