US Banks’ Q3 Earnings Boosted by Investment Banking Revenues

While technology stocks have dominated headlines in 2025, bank stocks have been quietly posting impressive gains. Year to date, many large-cap US bank stocks have risen 20% or more, boosted by an increase in deal-making activity, strong equity and fixed income trading volumes, and the prospects of deregulation under the Trump administration.

Recently, we got a glimpse of the underlying performance of the large US banks when these institutions released their earnings for the third quarter of 2025. Here’s a look at how they fared in Q3 amid evolving economic conditions and uncertain trade policies.

JP Morgan

The largest US bank, JP Morgan, had a good third quarter¹, beating expectations² comfortably. For the period, revenue came in at $47.1 billion versus the estimate of $45.4 billion while earnings per share amounted to $5.07 versus $4.84 expected. These revenue and earnings figures were up 9% and 16% year on year respectively. Net interest income (NII) was $24.1 billion, 2% higher year on year, while return on tangible common equity (ROTCE) - a key measure of profitability - was 20%.

During Q3, all of JP Morgan’s major divisions performed well. In its trading division, fixed income trading fees increased 21% to $5.6 billion while equity trading fees jumped 33% to $3.3 billion. Investment banking fees climbed 16% to $2.6 billion.

It’s worth noting that JP Morgan’s provision for credit losses was a weak spot in the earnings report. This rose 9% to $3.4 billion, exceeding the $3.1 billion estimate. This figure was the most the firm has set aside for credit losses since the height of the pandemic, and it indicates that the bank is preparing for higher loan defaults down the road.

Wells Fargo

With regulators removing an asset cap on Wells Fargo in June, investors had high expectations of the bank going into Q3 earnings. And it didn't disappoint. For the quarter³, it generated earnings of $1.66 per share, up 17% year on year and above the estimate⁴ of $1.55 per share. And looking ahead, it raised its ROTCE target to 17% to 18% in the medium term, versus 15.2% for Q3.

Diving deeper into Wells Fargo’s Q3 earnings, NII was $11,950 million, up 2% year on year. Provision for credit losses came in at $681 million versus $1.07 billion a year earlier, suggesting that the financial health of its customers remains robust. In investment banking - an area that the bank has been building out in recent years - fees jumped 25% to a quarterly record of $840 million. Here, CEO Charlie Scharf noted that the bank has been increasingly winning bigger and more complex M&A deals such as Union Pacific’s $85 billion acquisition of Norfolk Southern - the largest deal announced globally this year.

On the earnings call, Scharf said that Wells Fargo is aiming to become the top US consumer and small business bank and wealth manager in the future. It also has plans to be a top five US investment bank.

Bank of America

Bank of America, the second-largest US bank, posted a solid set of third-quarter⁵ results that were better than expected. For the quarter, revenue was $28.2 billion versus the estimate⁶ of $27.5 billion while earnings per share was $1.06 versus 95 cents expected. These figures were up 11% and 31% year on year respectively. NII rose 9% to $15.4 billion while ROTCE for the period was 15.4%.

The highlight of Bank of America’s earnings report was investment banking. Here, fees surged 43% from a year earlier to $2.0 billion - about $380 million above the consensus estimate for this division. However, other areas of the business also performed well. Fees from equities trading jumped 14% to $2.3 billion while fees from fixed income trading rose 5% to $3.1 billion. In consumer banking, revenue was $11.2 billion, up 7%.

Like Wells Fargo, Bank of America lowered its provision for credit losses. This came in at $1.3 billion, down 13% year on year and below analysts’ estimates.

Morgan Stanley

Morgan Stanley’s Q3⁷ earnings were excellent, beating estimates⁸ by the largest margin in nearly five years. For the period, revenue amounted to $18.2 billion versus $16.7 billion expected while earnings per share was $2.80 versus an estimate of $2.10. These figures were up 18% and 49% year on year respectively. ROTCE was 23.5% - the highest among the five US biggest banks.

Investment banking and trading were the two standout segments for Morgan Stanley in Q3. In its investment banking division, revenue surged 44% to $2.1 billion thanks to increases in merger, IPO, and fixed income fundraising activity. Meanwhile, in trading, equities trading revenue jumped 35% to $4.1 billion, helped by record results in its prime brokerage business, which caters to hedge funds. Fixed income trading was up 8% to $2.2 billion.

Turning to wealth management, which is responsible for a large proportion of Morgan Stanley’s revenues, revenue here rose 13% to $8.2 billion, helped by rising equity markets. This was about $500 million more than analysts had been expecting. For the quarter, net new assets in wealth management came in at $81 billion. At the end of the period, total fee-based assets amounted to $2,653 billion, up from $2,302 billion a year earlier.

Citigroup

Citigroup saw record revenue in every segment in Q3 and this led to a solid beat. For the quarter⁹, total revenue was $22.1 billion versus $21.1 billion expected¹⁰ while earnings per share was $1.86 (adjusted earnings per share was $2.24) versus the forecast of $1.90. These figures were up 9% and 48% year on year respectively. NII was up 12% while ROTCE for the period was 9.7%.

Zooming in on Citi’s five core business areas, US Personal Banking (USPB) revenue was $5.3 billion, up 7%, driven by growth in branded cards and retail banking. Markets revenue was $5.6 billion, an increase of 15%, fueled by growth in both fixed income markets and equity markets revenues. Services revenues was $5.4 billion, up 7%, helped by growth in Treasury and Trade Solutions (TTS) and Securities Services. Wealth revenue was $2.2 billion, up 8%, driven by growth in Citigold and the Private Bank. And Banking revenue was $2.1 billion, up 34%, boosted by growth in Corporate Lending and Investment Banking.

It’s worth pointing out that Citi’s third-quarter results included a goodwill impairment of $726 million. This was in relation to an agreement to sell a 25% equity stake in its Mexico business, Banamex, ahead of a public stock offer.

Goldman Sachs

Finally, turning to Goldman Sachs, it also surpassed expectations¹¹. For the quarter¹², revenue came in at $15.18 billion versus $14.1 billion expected while earnings per share amounted to $12.25 versus a forecast of $11.00. These figures were up 20% and 46% year on year respectively.

Goldman Sachs generates the majority of its revenue from trading and investment banking. And these divisions delivered in Q3. Investment banking fees jumped 42% to $2.7 billion, fueled by a significant increase in completed M&A volumes as well as an increase in leveraged finance activity. Meanwhile, Fixed Income, Currency, and Commodities (FICC) revenue climbed 17% to $3.5 billion thanks to significantly higher net revenues in interest rate products and higher net revenues in mortgages and commodities. Equities trading revenue was $3.7 billion, 7% higher than in the third quarter of 2024.

The Evolving Landscape for US Banks

In summary, US banks’ Q3 earnings were generally very good. Thanks to their diversified business models, and strength in areas such as investment banking and trading, all six of the largest US banks beat analysts’ estimates. Looking ahead, performance could be more bifurcated due to the fact that some areas of banking are showing more strength than others. Therefore, it could make sense to take a diversified investment approach to the sector to minimize stock-specific risks.

Footnotes:

¹JP Morgan Chase & Co Third-Quarter 2025 Results, as of October 14, 2025

²CNBC, JPMorgan Chase tops estimates as trading revenue hits a record of nearly $9 billion, as of October 14, 2025

³Wells Fargo Reports Third Quarter 2025 Net Income of $5.6 billion, or $1.66 per Diluted Share, as of October 14, 2025

⁴CNBC, Wells Fargo tops profit estimates, raises return target after asset cap lifted, as of October 14, 2025

⁵Bank of America Third-Quarter 2025 Earnings Report, as of October 15, 2025

⁶CNBC, Bank of America tops expectations on 43% surge in investment banking revenue, as of October 15, 2025

⁷Morgan Stanley Third Quarter 2025 Earnings Results, as of October 15, 2025

⁸CNBC, Morgan Stanley posts massive third-quarter earnings beat, as of October 15, 2025

⁹Citigroup, THIRD QUARTER 2025 RESULTS AND KEY METRICS, as of October 14, 2025

¹⁰CNBC, Citi reports a rise in earnings with every business posting record third-quarter revenue, as of October 14, 2025

¹¹CNBC, Goldman Sachs beats estimates on better-than-expected investment banking, bond trading, as of October 14, 2025

¹²Goldman Sachs Third Quarter 2025 Earnings Results, as of October 14, 2025