(LR) Brian Moynihan, Chairman and CEO of Bank of America. Jamie Dimon, Chairman and CEO of JPMorgan Chase. Jane Fraser, CEO of Citigroup. I will testify at a Senate Banking Committee hearing on December 6, 2023 at Senator Hart’s office building in Washington, D.C.
Saul Roeve | AFP | Getty Images
Almost everywhere you look at the financial world, things are going surprisingly well – at least for now.
Wall Street is humming thanks to the boom in inventory and bond trading and the pickup of companies that acquire competitors and take away massive loans. At the same time, Main Street is enduring as American consumers continue to spend, borrow and pay off their loans, according to a report this week from America’s biggest bank.
It can be an extraordinarily profitable environment for financial companies. The six largest US banks generated around $39 billion in second-quarter profits, surpassing analyst expectations, increasing more than 20% from their core revenue a year ago.
This is an astonishing result after the turbulent quarter start. The period began on April 2nd with a shocking and a plunge market over President Donald Trump’s drastic “liberation day” tariffs. JPMorgan Chase Economists said at the time that the policy would likely cause a recession this year.
But the market rove after Trump responded to the pain signals coming from US bonds and delayed the most punishing tariffs of most trading partners. Investors are beginning to adjust the barrage of administrative tariff declarations as intense or noise, and corporate leaders are quitting their sidelines to get through billion-dollar deals, bank results show.
“Look at how far the world will reach in three months,” Wells Fargo bank analyst Mike Mayo told CNBC. “Through the quarter, you had a pick of investment banking, loan growth, optimism in economic scenarios. There’s very little talk of the recession here.”
That dynamic was evident at JPMorgan, the largest and most profitable US bank. It generated approximately $15 billion in quarterly profit. This is roughly the same as the combined three biggest banks:
The deal benefited from the turbulent conditions of Part 4 as Trump shook the market with a rapidly evolving policy statement. But the real surprise came from investment banks that included merger advice, IPOs, debt and equity issuance. JPMorgan’s revenues rose 7%, generating $450 million more than analysts had expected, just weeks after managers warned about a decline of about 15%.
“The pickup of investment bank fees reflects those who accept uncertainty and decide to proceed with the transaction,” JPMorgan CFO Jeremy Barnum told reporters Tuesday. “The corporate community is embracing that we need to navigate this.”
“Soft Landing”
However, the good news didn’t end with the confidence of the company. JPMorgan’s US internal barometer has been cooled from the first quarter, Barnum said, as some of the worst-case scenarios were taken from the table.
This means that the recession is unlikely to surge US unemployment this year and hurt consumers’ ability to pay off their debts. This was 14% smaller than the first quarter, with clear provisions for bank credit losses.
The economy is directly present in a “soft landing” scenario, Burnham told reporters.
At the same time, consumers and businesses are borrowing more money from JP Morgan. There, loan growth has increased by 5% compared to a year ago, spurring credit card growth and wholesale loans, the bank said.
These statistics mean that, at least for now, banks are giving the US economy a completely transparent signal in the early months of President No. 2 Trump. Even in an age characterized by turbulence and increased geopolitical risk, the economy has ignored expectations of a recession.
“Banks are economically sensitive businesses, and so economic performance under the administration will be important for results,” said Matt Stucky, Chief Portfolio Manager of Equities at Northwestern Mutual Wealth Management. “So far, the economy continues to move forward.”
“Firing on all cylinders”
This situation made JP Morgan CEO Jamie Dimon sound relatively optimistic about the economy as he frequently warns about the risks he is seeing.
“It’s resilient and hopefully it will continue to happen,” Dimon told reporters this week. “It’s always good to have the best and prepare the best, and one thing we’ll point out is that the world is much bigger, much more diverse, and “a slightly more stable global economy than it was 20 years ago,” he said.
The trader works on the floor of the New York Stock Exchange (NYSE) in New York City, USA on July 17, 2025.
Brendan McDermid | Reuters
Trump’s sweeping spending bill, signed into law this month, will maintain corporate tax rates and expand business deductions. On top of that, industry-wide deregulation efforts will boost the economy, Dimon said.
Last month, the Federal Reserve announced a proposal to modify the capital banks need to hold for low-risk assets.
To sum it up, Burnham said it’s harder to imagine a bank setup than it is now.
“We essentially fire all the cylinders,” Burnham told analysts. “The fees are at a good level for us. The trading activity is high. The capital market is very strong. The consumer credit is excellent. The wholesale credit is excellent.”
Certainly, sentiment could move to a dime, with risks including inflation still being there, the US deficit and geopolitical disruptions.
Good times?
Even the previous laguards in the banking industry have shown signs of a comeback.
Wells Fargo CEO Charlie Scharf finally removed the Federal Reserve punishment yoke that concludes the bank’s balance sheet at the 2017 level, but it sounded Ebulient in this week’s revenue call. His company recently gave all employees a $2,000 bonus to celebrate the milestone.
“It’s a very interesting and fun time,” Schaaf told analysts Tuesday. “We’re starting to see the deposit flow, as we discussed. There’s a growth in new accounts. It’s cost-reduced. The credits are working well… there’s less constraints.”
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Citigroup stocks outperform most financial stocks this year.
Shares of another former laguard, Citigroup, rose nearly 30% this year, this year, as CEO Jane Fraser is confident her turnaround plan is working.
This week Fraser sounds like the CEO of the attack, revealing the bank’s new luxury credit card and issuing City-branded Stablecoin. She also marveled at the resilience of the US economy.
“The strength of the US economy, driven by American entrepreneurs and healthy consumers, certainly exceeds expectations,” Fraser told analysts. “Like I’m talking to the CEO, I’ve once again been impressed with the adaptability of our private sector.”
