As digital banking takes off, which institution will wear the crown?
The much-anticipated Q3 earnings season has officially kicked off, with major banks taking the spotlight this week and setting the tone for what’s to come.
The headline-grabber was the resurgence of trading and investment banking among Wall Street’s banks — a clear bright spot in an otherwise challenging landscape
While the timing of the Fed’s rate cuts didn’t allow them to negatively affect banks’ third-quarter net interest incomes, optimism is also building around their future effects. The rate cuts from the Federal Reserve and other central banks along with expectations of further cuts in the coming months could pave the way for more deals as reduced borrowing costs make capital more accessible.
Snapshot: Q3 investment banking earnings of major banks
A quick overview of investment banking earnings from the six major banks shows growth trends:
- Wells Fargo‘s non-interest income grew by 12%, partially driven by higher investment banking fees and strong trading revenue.
- Bank of America experienced an 18% YoY increase in investment banking fees, totaling $1.4 billion, as renewed client confidence encouraged more debt and equity issuance.
- Goldman Sachs saw the fees of investment banking, its signature business line, rise by 20% YoY, reaching $1.87 billion, thanks to leveraged finance, investment-grade activity, and equity underwriting. The pipeline for investment banking fees also showed improvement compared to the end of the second quarter of 2024.
- J.P. Morgan recorded a 31% increase in investment banking fees.
- Citigroup also shined this quarter, with a 31% rise in investment banking revenue, largely fueled by investment-grade debt issuance.
- Morgan Stanley‘s investment banking revenue surged by 56% compared to the previous year, amounting to $1.46 billion. This reflects the firm’s investment banking balance with its wealth management division, a major contributor to its overall earnings. The firm’s investment management division also reported a 9% revenue increase, reaching $1.46 billion.
The 2 recurring themes: Technology and digital banking
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