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Big Banks Post Big Profits In Anticipation of Better Times Under Trump

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Big Banks Post Big Profits In Anticipation of Better Times Under Trump

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Days before the start of the second Trump presidency, America’s big banks are turning in a banner quarter, and for many, a bumper 2024. Industry major players such as JPMorgan Chase, Wells Fargo, Goldman Sachs, and Citigroup surpassed analyst expectations and posted hefty profits. Combined with a softer-than-expected inflation reading, the big banks’ strong performances are energizing the market and setting the stage for a bright 2025.

Big Banks Go Big Time in the 4th Quarter

JPMorgan led the pack with $14 billion in profits for the fourth quarter and a staggering $59 billion for the year. CEO Jamie Dimon highlighted the strength of traditional lending and investment banking, helping the bank achieve a 22% return on tangible equity, the highest among its peers. Wells Fargo followed with $5.1 billion in quarterly profits, fueled by a surge in deposits from high-net-worth clients.

Goldman Sachs also reported $4 billion in profits for the quarter and achieved significant gains by connecting high-risk borrowers with eager lenders. Meanwhile, Citigroup also posted a robust quarter with $2.9 billion in profits and announced an ambitious $20 billion stock buyback plan.

What Drove the Big Banks’ Bumper Quarter?

Several factors contribute to the optimism surrounding the big banks. Market confidence surged following Donald Trump’s election victory and sparked hope among corporate executives anticipating business-friendly policies and reduced regulatory burdens. Goldman Sachs CEO David Solomon remarked on a “meaningful shift in CEO confidence,” driving deal-making and financial transactions across the board. Additionally, a softer inflation reading created favorable borrowing conditions that encouraged increased corporate and consumer activity.

Cost management has also been a major driver of growth. For instance, Goldman Sachs achieved its lowest compensation-to-revenue ratio in years, which helped to boost investor returns. Wells Fargo’s CFO Michael Santomassimo noted that many of the bank’s clients expect increased merger and acquisition activity in the future, which reflected broader economic optimism under the incoming administration.

Other Market Winners

Similarly, Bank of New York Mellon (BNY Mellon) delivered record 2024 revenue of $18.6 billion, fueled by strong fee income and gains from foreign exchange activities. These performances have lifted major U.S. indexes, with the Nasdaq up 2.1%, the Dow gaining 1.5%, and the S&P 500 climbing 1.6%, reflecting the widespread optimism across financial markets.

The positive momentum isn’t confined to big banks. Other industry movers, including Tesla and BlackRock, are also capitalizing on current favorable market conditions. Tesla’s shares climbed following a positive assessment from Barclays analysts. The firm raised the stock’s price target due to the company’s advancements in artificial intelligence and autonomous vehicle technologies. Meanwhile, BlackRock set a record for assets under management and posted quarterly results that exceeded forecasts, signaling strength in the asset management sector.

Challenges on the Horizon

While the outlook is largely positive, challenges remain for the financial sector. Inflation continues to hover above target levels and can create headwinds for cost management and lending growth. Geopolitical uncertainties and evolving Federal Reserve policies also present potential risks to market stability.

Nonetheless, the anticipated pro-growth policies under the Trump administration are expected to favor deregulation and provide a supportive environment for financial institutions. With strong momentum from recent earnings and a market environment poised for growth, big banks appear well-positioned to navigate these challenges in 2025.

Do you agree that the incoming Trump administration will sustain the positive momentum of big banks and the rest of the market in 2025? Tell us what you think.

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1 Comment

1 Comment

  • Kathy says:

    It would be nice to know how much of this profit is from the soul eating credit card interest they charge. I’ve seen some offers in the high twenty to just over thirty percent.

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