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Wall Street’s biggest banks smashed records with first-quarter earnings that capitalised on market volatility sparked by the outbreak of the Iran war.
JPMorgan Chase reported the highest ever revenues from its trading business and net income for the bank that was second only to 2024, when it received a one-off windfall from the sale of its stake in Visa.
Rival Citi posted its best quarterly revenue in a decade and a 42 per cent jump in net income, lifting its shares to their highest level since the financial crisis.
Combined, JPMorgan, Citi and Wells Fargo reported more than $25bn of profits for the first three months of the year, as the banks’ traders benefited from sharp moves in markets without higher oil prices hurting US borrowers.
The first quarter was marked by geopolitical shocks, including the US military operation in Venezuela and the Iran war, which triggered bouts in volatility in commodities markets and upended expectations around the future path of interest rates.
This type of volatility is good for investment banks, which make money from financing and facilitating client trades.
Profits at JPMorgan rose 13 per cent in the first quarter to $16.5bn, more than $1bn ahead of analysts’ expectations.
Traders at the bank generated $11.6bn in revenues across fixed income and equities, a record. Although JPMorgan consistently delivers the highest trading revenues of any bank, it beat Goldman Sachs by $2.3bn in the first quarter as its rival’s fixed income traders stumbled.
“We haven’t really seen any so-called bad volatility,” JPMorgan chief financial officer Jeremy Barnum told analysts. “What we mean by that is the types of extremely gappy, discontinuous markets with low liquidity that keep clients on the sidelines.”
Citi’s traders reported revenues of $7.2bn, the bank’s highest in more than a decade, and it hit a key profitability target in the final stages of its years-long turnaround effort.
Net income at Citi rose 42 per cent year-on-year to $5.8bn, comfortably above the $4.9bn analysts expected. It also exceeded its target for return on tangible common equity, reporting a figure of 13.1 per cent for the quarter compared with its aim of between 10 and 11 per cent by the end of the year.
Citi chief Jane Fraser said her plan to overhaul the Wall Street bank, which has involved thousands of job cuts and seen the bank exit retail markets outside the US, was nearly complete.
“We’ve entered into the final phase of our divestitures and 90 per cent of our transformation programmes are now at or near our target state,” she said.
Citi is widely expected to update its targets at an investor day next month, where it will lay out its plans for its next phase of growth.
Wells Fargo, which is more reliant on Main Street businesses such as retail and commercial banking for its earnings, said first-quarter profits rose 7 per cent to $5.3bn, slightly better than expected.
Its loan book surpassed $1tn in the first quarter, marking a symbolic milestone less than a year after it was freed from a punitive asset cap.
Wells’ chief financial officer Mike Santomassimo did caution that the Iran conflict’s effect on oil prices was “certainly having an impact on overall spend” and that its retail consumers were spending between 25 and 30 per cent more on petrol than they did before the start of the war.
He added that the bank had not seen a significant change in consumer spending trends, however, echoing comments from JPMorgan chief executive Jamie Dimon about the strength of US households.
Dimon said on Tuesday that the US economy “remained resilient” despite “an increasingly complex set of risks”, with energy costs about 3 per cent of the typical consumer’s expenditure.
“If you look at gas, it’s a rather small component of consumer spend. So obviously, for the lower-income people, it’s more,” he said. “But they have jobs, they have wages.”
