Strong Trading Revenues
Bolster US Banks’ Q2 Earnings

Banking has been one of the best-performing areas of the market in 2025. Year to date, many large-cap bank stocks are up more than 20%, fueled by hopes of lower interest rates, the prospect of deregulation, and the potential for more capital markets activity.

Recently, we got a glimpse of the underlying performance of the US banks when they posted their earnings for the second quarter of 2025. Here’s a look at how these institutions fared amidst evolving economic conditions and volatile financial markets.

JP Morgan

It was a solid quarter for the largest US bank, JP Morgan¹. For the period, revenue came in at $45.7 billion versus $44.1 billion expected. Excluding one-off costs, earnings per share were $4.96, compared to the LSEG consensus estimate of $4.48. Net interest income (NII) was $23.3 billion, up 2% year on year.

A highlight of JP Morgan’s results was its Markets division, which encompasses trade execution for clients. Here, revenue jumped 15% year on year to $8.9 billion as investors seized opportunities and hedged risks in response to tariff-related market volatility. This figure was higher than management’s previous guidance.

Investment banking fees were also higher than previous guidance. These were up 7% year on year to $2.5 billion. Performance here was helped by an increase in initial public offerings (IPOs) and M&A activity.

During the quarter, JP Morgan repurchased $7 billion of common stock. It also announced that it intends to increase its common dividend for the second time this year, resulting in a 20% cumulative increase compared with the fourth quarter of 2024. It ended the period with a 15% CET1 ratio – well above its required capital levels.

Citigroup

Citi’s Q2 report² stood out as one of the strongest among the major US money center banks. This was reflected in its share price, which climbed nearly 4% after the earnings were posted to hit its highest level since 2008.

For the quarter, revenue was $21.7 billion versus $20.0 a year earlier. Meanwhile, earnings per share were $1.96, up 29% year on year and well above the LSEG consensus estimate of $1.60 per share. Net interest income was $3.0 billion, up 12% year on year.

Like JP Morgan, Citigroup saw a good performance from its trading division. For the period, Markets revenue was $5.9 billion – up 16% year on year (the best performance since the second quarter of 2020). It also saw good results in its investment banking division. Here, fees climbed 13% year on year to $981 million, helped by M&A and IPO activity (Citi jointly led the IPO of stablecoin issuer Circle as well as the IPO for trading platform eToro). Zooming in on the company’s wealth unit – a key growth area – revenue was up 20% year on year. Overall, it was a stellar quarter for the bank, with strength across multiple segments.

During the quarter, Citigroup returned $3.1 billion to shareholders via common dividends and share buybacks. It expects to repurchase another $4.0 billion, or more, worth of stock in Q3. It ended Q2 with a CET1 ratio of 13.5%, indicating a strong capital position.

Goldman Sachs

Goldman Sachs’ earnings³ were also impressive. For the quarter, the bank reported net revenues of $14.6 billion, up 15% year on year, and diluted earnings per common share of $10.91, up 22% year on year (well ahead of the consensus forecast of $9.53). Net interest income was $3.1 billion, up 56% year on year.

The strong performance here was driven by better-than-expected performances in the bank’s equities and investment banking divisions. Equities revenue rose 36% to $4.3 billion as investors rebalanced their portfolios to manage tariff-related risks during the quarter. As for investment banking fees, these climbed 26% year on year to $2.2 billion as deal activity increased.

A weak spot in Goldman’s earnings was the bank’s asset and wealth management arm, which caters to institutions and high-net-worth individuals. Here, revenue fell 3% to $3.8 billion. Overall, however, the bank’s Q2 report was robust.

In terms of shareholder returns, the firm returned $4.0 billion of capital to common shareholders in Q2. $3.0 billion of this was share repurchases while the rest was dividends. Looking ahead, the bank said that it would increase the quarterly dividend to $4.00 per common share in the third quarter.

Wells Fargo

Wells Fargo⁴ shares experienced some weakness after the bank posted its Q2 earnings. The main reason for this was that the lender cut its guidance for 2025 net interest income. With Q2 NII only rising 2% to $11.7 billion, management now expects no growth in NII this year.

Overall though, the bank’s results weren’t terrible. Revenue of $20.8 billion was up 1% year on year while earnings per share of $1.60 were up 20% year on year. Note that during the quarter, the bank repurchased $3.0 billion of common stock.

It’s worth pointing out that in June, the US Federal Reserve lifted Wells Fargo's seven-year $2.0 trillion asset cap. This should allow the bank to pursue a more aggressive strategy going forward. This in turn, could lead to a higher level of profitability and more interest from investors.

Morgan Stanley

Morgan Stanley⁵ beat earnings forecasts, reporting earnings per share of $2.13 on revenue of $16.8 billion. This EPS figure was comfortably ahead of the LSEG estimate of $1.96. Net interest income was $2.4 billion, up 14% year on year.

Several Morgan Stanley divisions performed well in Q2. Wealth management revenue increased to $7.8 billion from $6.8 billion a year earlier, helped by rising equity markets. Meanwhile, trading revenues increased to $7.6 billion versus $7.0 billion a year ago. As for equity underwriting, revenues here surged 42% to $500 million, driven by higher follow-on and convertible deals as well as IPOs. Note that Morgan Stanley was the lead underwriter for the IPO of FinTech company Chime in June.

On the downside, investment banking at Morgan Stanley did not recover as quickly as it did for rivals such as Goldman Sachs, Citi, and JP Morgan. Here, revenues came in at $1.54 billion versus $1.62 a year earlier.

In terms of capital returns, Morgan Stanley said that it would increase its quarterly common stock dividend to $1.00 per share. It also said that it would retain flexibility to deploy incremental capital. The bank ended Q2 with a CET1 ratio of 15% – a high figure.

Bank of America

Finally, turning to Bank of America⁶, it reported net income of $7.1 billion, or 89 cents per share, compared with $6.9 billion, or 83 cents per share, a year earlier. This was an earnings miss as analysts had been expecting 86 cents a share. Revenue was up 4% to $26.5 billion while net interest income rose 7% to $14.7 billion.

Unpacking BofA’s results, sales and trading revenue jumped 15% to $5.4 billion, notching a record for the second quarter and marking 13 consecutive quarters of year-over-year revenue growth. Within trading, equities revenue increased 10% while fixed income, currencies, and commodities revenue jumped 19%. Investment banking was a drag, with fees sliding 9% to $1.4 billion.

During the quarter, BoA returned $7.3 billion to shareholders. This was made up of $5.3 billion in share repurchases and $2.0 billion in common stock dividends. Looking ahead, the bank said that it plans to increase its common stock dividend by 8% beginning in the third quarter.

Diversification Can Pay When Investing in Bank Stocks

In summary, US banks’ Q2 earnings were solid overall. Most institutions beat earnings expectations – helped by robust trading revenues and a pick-up in capital markets activity – and many announced increased shareholder returns. There was some variation in performance, however, with several institutions underperforming in certain areas, and seeing share price weakness as a result. This illustrates the importance of a diversified investment approach when investing in the banking industry.

Footnotes:

¹JPMorgan Chase & CO, Second-Quarter 2025 Results, as of July 15, 2025

²Citigroup, Second Quarter 2025 Results and Key Metrics, as of July 15, 2025

³Goldman Sachs, Second Quarter 2025 Earnings Results, as of July 16, 2025

⁴Wells Fargo, 2Q25 Financial Results, as of July 15, 2025

⁵Morgan Stanley, Morgan Stanley Second Quarter 2025 Earnings Results, as of July 16, 2025

⁶Bank of America, 2Q25 Press Release, as of July 16, 2025