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Donald Trump’s return to the White House could fuel a blockbuster 2025 on Wall Street, but concerns linger over inflationary policies and global strife, big US banks said as they unveiled bumper quarterly earnings.
Top executives from several of Wall Street’s biggest banks on Wednesday offered upbeat outlooks for this year, particularly for their investment banking businesses, which have surged in revenues in recent months.
The cautiously optimistic sentiment highlights how many US executives are hoping the president-elect’s pledges to boost growth and slash regulations will be a boon to their businesses even as they worry about his sometimes erratic policymaking.
Goldman Sachs chief executive David Solomon on Wednesday said: “There has been a meaningful shift in CEO confidence, particularly following the results of the US election. Additionally, there is . . . an overall increased appetite for dealmaking supported by an improving regulatory backdrop.”
“The combination of these conditions should spur further activity in 2025,” he added.
BNY chief executive Robin Vince added: “The incoming Trump administration has made clear that they are pro-growth . . . if that pro-growth translates into activity, which obviously we hope it will, we think that will be a good ultimate backdrop.”
The enthusiasm runs the gamut from mergers and acquisitions to debt issuance and plans to float more companies on public markets, the bankers said.
JPMorgan chief financial officer Jeremy Barnum said the US was in an “animal spirits moment . . . We are happy to see more optimism in the c-suites of the country and globally in some pockets.”
Banks’ expectations for a strong 2025 came after they reported significant increases in earnings for the final quarter of last year: JPMorgan’s net earnings rose 50 per cent to $14bn, while Goldman’s doubled to $4.1bn. Citi swung to a profit of $2.9bn from a loss of $1.8bn in the final quarter of 2023.
Citi shares jumped 7 per cent after the release of its results, with Goldman up 5 per cent and JPMorgan gaining more than 1 per cent.
The banks benefited from a sharp rise in trading in equities before and after Trump’s victory in the November elections. His win sent stocks soaring, although markets have given up a significant share of those gains.
Investment banking also excelled with companies tapping sanguine market conditions to raise funds through sales of stocks and bonds. A rebound in M&A activity provided a boost as well.
Even Wells Fargo, which makes the vast majority of its revenue from consumer and corporate businesses, reported a substantial boost from investment banking.
Significant payouts to replenish the federal deposit insurance fund that dragged down profits in the final quarter of 2023 also flattered the year-on-year comparison in overall net profits.
Despite the strong showing, top financiers also cautioned the enthusiasm could be punctured by a geopolitical crisis or an economic shock caused by rapid government policy shifts under Trump, who frequently took unexpected paths during his first term in office from 2017 to 2021.
“Geopolitical conditions remain the most dangerous and complicated since World War II,” JPMorgan CEO Jamie Dimon warned.
Trump has not only promised mass deportations of illegal immigrants and large tariffs, but also mused about taking over Greenland and the Panama Canal, among other things.
“It’s a complicated world and I think we all should be on our toes and be prepared for the unexpected,” Solomon said. “There’s uncertainty when you look broadly across immigration policy, trade policy, tax policy, energy policy . . . there are different outcomes.”
A return to high inflation could also roil markets, put pressure on corporate earnings and dry up dealmaking, they cautioned.
BlackRock CEO Larry Fink told CNBC: “I think the economy is in very good shape. That being said, is it in too good a shape? Are we going to start seeing elevated inflationary pressures? We’ll see.”
The world’s largest money manager reported it had attracted record new money for the second half of 2024.
Additional reporting by Zehra Munir in New York and Harriet Agnew in London
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