For all of Wall Street’s enthusiasm for Donald Trump’s economic agenda, The largest banks are ending the Biden era on a high note.
The four lenders that reported annual results on Wednesday posted their second-most profitable year ever in 2024, trailing only Joe Biden’s first year as president. The group’s operating and lending income benefited from movements in interest rates, while investment banking fees are up 32% from a sluggish 2023, and executives predict this is just the beginning.
JP Morgan Chase & Co. became the first bank in US history to exceed $50 billion in annual profits. At Citigroup Inc.three of its five core segments (wealth, US personal banking, and services) posted record revenues for the year.
Of course, the fourth quarter saw further earnings growth as Trump’s election victory and his monetary policy hints sent the market swinging. But that wasn’t the only factor, as better-than-expected employment numbers reset expectations for future rate cuts by the Federal Reserve.
Those surges helped equity traders at Goldman Sachs Group Inc generate record income for the year. At JPMorgan, the desks that manage fixed income products had their best fourth quarter in history.
For its part, corporate operations recovered. Even Well’s Fargo, with the smallest presence on Wall Street among the largest banks, it increased its annual income from investment banking by 62%.
Bank of America Corp. and Morgan Stanley released results on Thursday.
Many bankers were “very happy” after Trump’s victory, JPMorgan CEO Jamie Dimon told his peers at a global summit in mid-November. Executives had long lamented the Biden administration’s regulatory agenda, blaming it for making lending less profitable.
With Trump’s imminent return, bank leaders said goodbye to the outgoing administration on Wednesday. “There has been a change of sentiment” among corporate leaders, Goldman’s David Solomon told analysts. “It feels like we have momentum going into 2025.”
Dimon predicted more “constructive” discussions with regulators and criticized the Fed’s stress tests on lenders, saying they produce results “that we cannot understand.” Dimon said authorities must balance economic growth and banking security. It is “about establishing rules that are transparent, fair, holistic in their approach and based on rigorous analysis of data,” he said.
Now, the expectation among banking executives is that Trump’s watchdogs will ease oversight, repeal some rules and scale back or abandon a campaign to require too-big-to-fail lenders to hold more capital to protect against economic shocks.
And that means that, after the 2024 earnings windfall, bank leaders are more confident about increasing payouts to shareholders.
On Wednesday morning, Citigroup shares posted their biggest gain since Trump’s election victory after the firm revealed plans to buy back $20 billion of its shares over the next few years. That was despite the bank’s decision to reduce its profit forecast.
