Donald Trump's return to the White House could propel Wall Street to a roaring 2025, but worries about inflationary policy and global conflict remain, major U.S. banks said as they reported bumper quarterly earnings.
Executives at several of Wall Street's biggest banks expressed optimism on Wednesday about the outlook for the year, particularly in investment banking, which has seen revenue surge in recent months.
The cautious optimism underscores how many U.S. executives hope the president-elect's promises to boost growth and cut regulations will benefit their businesses, even as they worry about his sometimes erratic policymaking.
Goldman Sachs CEO David Solomon said on Wednesday: "There has been a meaningful shift in CEO confidence, particularly following the U.S. election results. Additionally, there has been... trading interest, supported by an improving regulatory environment." overall increase.”
"These conditions combined should spur further activity in 2025," he added.
Bank of New York CEO Robin Vince added: "The incoming Trump administration has made it clear that they support economic growth... If this pro-growth translates into economic activity, which we obviously hope it will, we think that Would be a great final backdrop.”
Bankers say the enthusiasm spans everything from mergers and acquisitions to debt issuance, with plans to bring more companies to public markets.
JPMorgan Chase Chief Financial Officer Jeremy Barnum said the United States is in an "animal spirit moment." . . We're pleased to see more optimism among executives in the country and in some parts of the world. "
The banks' strong forecasts for 2025 come after reporting big gains in earnings in the final quarter of last year: JPMorgan's net profit rose 50% to $14 billion, while Goldman Sachs' net profit doubled to $14 billion. $4.1 billion. In the last quarter of 2023, Citigroup swung from a loss of $1.8 billion to a profit of $2.9 billion.
After the financial report was released, Citigroup's stock price rose 7%, Goldman Sachs' stock price rose 5%, and JP Morgan Chase's stock price rose more than 1%.
Banks benefited from sharp gains in stock trading around Trump's victory in the November election. His victory sent stocks soaring, although the market has given up much of its gains.
Investment banking also performed well, with companies taking advantage of upbeat market conditions to raise capital through the sale of stocks and bonds. A rebound in M&A activity also helped.
Even Wells Fargo, which generates the vast majority of its revenue from its consumer and corporate businesses, reported significant growth in its investment banking business.
Huge expenses to replenish the Federal Deposit Insurance Fund weighed on profits in the final quarter of 2023 and also made overall net income an even better year-over-year performance.
Despite the strong performance, top financiers also warned that the enthusiasm could be dampened by economic shocks from geopolitical crises or rapid shifts in government policy under Trump, who ran his first term from 2017 to 2021. Inside often takes unexpected paths.
"Geopolitical conditions remain the most dangerous and complex since World War II," JPMorgan CEO Jamie Dimon warned.
Trump not only promised to mass deport illegal immigrants and impose high tariffs, but also considered taking over Greenland and the Panama Canal.
"It's a complex world and I think we should all be vigilant and prepared for the unexpected," Solomon said. "When you look broadly at immigration policy, trade policy, tax policy, energy policy, there's uncertainty. . . . There are different outcomes."
They warned that a return to high inflation could also disrupt markets, put pressure on corporate earnings and cause trading to dry up.
BlackRock CEO Larry Fink told CNBC: "I think the economy is in very good shape. Is it too good to be true? Are we going to start to see inflationary pressures pick up? We'll see Arrived.”
The world's largest fund manager reported it attracted a record amount of new money in the second half of 2024.
Additional reporting by Zehra Munir in New York and Harriet Agnew in London