What’s News in Earnings: Why 2025 Was One of the Best Years Ever for Banks

0:03Hey listeners, it's Wednesday, January 21st. I'm David Uberti for The Wall Street Journal, and this is What's News in Earnings, our look at some of the biggest themes standing out this earnings season. The health of big banks gives us a snapshot of the state of the economy, tracking money flowing in and out of Americans' pockets, as well as the lending and deal-making that makes corporate America run. This earnings season, that snapshot may be particularly important. President Trump's economic agenda is coming into focus, and he's ramped up threats to scramble global trade over his territorial ambitions in Greenland.

0:36The nation's six largest banks collectively bagged$157 billion in profits last year, up 8 % from 2024, and their highest revenue as a group on record. Today, we'll unpack those results with Anna Maria Andriotis, the journal's lead financial reporter in New York, to learn more about that growth, the health of the U.S. consumer, and what Trump's moves into financial markets could mean for Wall Street and Main Street alike.

1:04Anna Maria, you write a lot about how businesses like trading and investment banking are the engines of Wall Street. How are those engines running heading into 2026? Those engines right now are very strong. Goldman Sachs and Morgan Stanley both posted record annual revenues in 2025 in their investment banking and trading divisions. all six major banks, including also JP Morgan, Bank of America, Citigroup, and Wells Fargo, posted increases in investment banking and trading revenue from a year prior. What has contributed to all of this is that, number one, confidence has returned to corporate boardrooms and executive suites to pursue mergers.

1:482025 produced what was the second highest merger volume on record. The pickup in M &A is also fueling a big rise in lending. Loans that are used to make these deals happen all point to company confidence being up. So a huge 2025, and there's some speculation there could be a potential record in new activity this year. Bankers said that they do expect more deal activity. Goldman CEO David Solomon said the bullish view internally at Goldman is that in 2026, there'll be a new record in terms of M &A. In addition, IPOs, bankers said, are expected to pick up in 2026. Some talked about how they're hoping that this year could be the biggest year ever for IPOs, citing things like Anthropic, the AI company, as well as Rocketmaker, SpaceX.

2:44What's triggering that boost is that the The stock market has risen to record highs. We are in a regulatory environment that is viewed by many companies as being much more friendly to dealmaking. And of course, the massive need among a variety of companies to build out their AI capabilities and other infrastructure as well, which in turn results in them borrowing more. All of that is playing out in the core divisions of the big banks, dealmaking and lending. So Wall Street going gangbusters. But investors and economists are always on the lookout for threats on the horizon. Here's JPMorgan Chase CEO Jamie Dimon.

3:23Geopolitical is an enormous amount of risk. I don't have to go through each part of it. It's just a big amount of risk. It may or may not be determined in the state of the economy. Anna Maria, what have other bankers said about this topic? And what are they worried about this year? Well, Goldman Sachs and Morgan Stanley made similar warnings to what Jamie Dimon said, essentially focused on the increasing uncertainty around a number of policy and geopolitical issues. We see what's happening right now with Greenland and actually the impact that it's having on markets. This friction appears to have markets back in trade war zone, essentially where we were springtime last year with tariff policy uncertainty.

4:00And what's been largely playing out over the last six, seven months or so, increasing questions around the independence of the Federal Reserve. So as good as it is right now, there were warnings issued that it's kind of fragile. So all of that uncertainty, be it foreign or domestic, has come as the economic outlook here in the U.S. has seemed pretty benign in terms of growth. So what are the big banks' results telling us about their confidence levels for that sort of growth continuing? Banks said that consumers remained resilient despite economic pressures. They continued to spend and borrow at a healthy clip.

4:35We had J.P. Morgan, Bank of America, Citigroup saying that spending on cards rose in the third quarter while delinquencies on credit cards edged lower. That was pretty similar to what we heard yesterday from regional banks, U.S. Bank and Fifth Third, that also pointed to continued growth in consumer borrowing with delinquencies either being unchanged or down. And even as that outlook has continued to either stay stable or even improve, President Trump has dialed up some of his interventions into the U.S. economy. And recently he called for a temporary 10 percent cap on credit card interest rates as part of a broader affordability push.

5:13Here's Bank of America CEO Brian Moynihan on that idea. If you bring the caps down, you're going to constrict credit, meaning less people get credit cards. And the balance available to them on those credit cards will also be restricted. Anna Maria, help me make sense of all of this because it seems a little bit counterintuitive. He's saying that capping what we pay on our credit cards might actually backfire in a macro sense. So credit card lending is unsecured. It's not like auto loans or mortgages where the loans are tied to a car or a home that can be repossessed if the borrower stops paying.

5:49So that's a big reason why credit card interest rates have long been materially higher than other loans. It's banks pricing in risk. Currently, average rates on credit cards are around 23%. So if a cap was to be placed down to 10%, banks argue that consumers who are of lower income or who have blemishes on their credit reports would likely get shut off. And then just sort of what does this mean at a macro level? Well, less access to credit cards is likely to result in less consumer spending. And from there, there's that ripple effect on the economy. Wells Fargo's CFO said on the bank's earnings call that this type of cap would have a negative impact on economic growth.

6:35So across the board, the banks have spoken in unison about this. Those banks in particular that are among the biggest credit card issuers in the country. That was Wall Street Journal lead financial reporter Anna Maria Andriotis. Anna Maria, thanks for joining me on this look into the year ahead. Great to be speaking with you. Thank you. And that was What's News in Earnings. Today's show was produced by Pierre Bien-Aimé with supervising producer Tali Arbel. Additional sound courtesy of S &P Global Market Intelligence. Later today, we'll have the PM edition of What's News out for you as usual. And we'll be back again later this earnings season, diving into another industry.

7:10Until then, I'm David Huberti. Have a great day.

7:24Nach der Krise beginnt nicht die Ruhe, sondern die Veränderung. Es läuft wieder, aber anders als früher. Wer scheitert und wieder aufsteht, führt anders. Das zeigen uns Betroffene, Berater und Experten. In Folge 5 von Endstation Insolvenz geht es darum, wie aus einer beinahe Pleite echte Stärke entstehen kann. Jetzt reinhören. Im Podcast-Kanal Gute Geschäfte von Kreditreform. Überall, wo es Podcasts gibt.