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

Episode Date: January 21, 2026

Bonus Episode for Jan. 21. The big banks kick off earnings season with gangbuster investment-banking and trading operations. Their results offer a picture of a resilient consumer, but executives warn of a slew of geopolitical risks. Wall Street Journal lead financial reporter AnnaMaria Andriotis discusses what stood out in reports from Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo, as well as regional banks such as U.S. Bancorp. David Uberti hosts this special bonus episode of What's News in Earnings, where we dig into companies’ earnings reports and analyst calls to find out what’s going on under the hood of the American economy. Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey listeners, it's Wednesday, January 21st. I'm David Uberti for the Wall Street Journal. And this is What's News and Earnings, our look at some of the biggest theme 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. The 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. And 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 J.P. Morgan, Bank of America, City Group, 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. 2025 produced what was the second highest merger volume on record. The pickup in MNA is also fueling a big rise in lending. Lones that are used to make these deals happen, but all points 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's CEO, David Solomon, said the bullish view internally at Goldman is that in 26, there will be a new record in terms of M&A. In addition, IPOs, bankers said, are expected to pick up in 20. 26, 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 Rocket Maker, SpaceX. What's triggering that boost is that 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 J.P. Morgan Chase, CEO, Jamie Diamond.

Geopolitical 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 and may not be determined the day 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 Diamond 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, you know, springtime last year with tariff policy uncertainty. and 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 issue 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?

Bank said that consumers remained resilient despite economic pressures. They continued to spend and borrow at a healthy clip. We 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. 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 called for a temporary 10% cap on credit card interest rates as part of a broader affordability push. Here'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 will get credit cards. and the balance available to the money's 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 in 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 possessed if the borrower stops paying. So 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.

So 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 and Earnings. Today's show was produced by Pierre Bienname, with supervising producer Tali Arbell. 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 earning season, diving into another industry. Until then, I'm David Uberti. Have a great day.