By Tatiana Bautzer, Nupur Anand and Manya Saini NEW YORK (Reuters) -Top U.S. bankers predicted business would continue to boom as equity markets surged over the last quarter and the economy and consumer spending held up despite sweeping tariffs, but some warned asset prices may be unsustainably high. Goldman Sachs’, investment banking revenue jumped 42% in […]
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US banking giants buoyed by dealmaking, but warn of asset price bubbles
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By Tatiana Bautzer, Nupur Anand and Manya Saini
NEW YORK (Reuters) -Top U.S. bankers predicted business would continue to boom as equity markets surged over the last quarter and the economy and consumer spending held up despite sweeping tariffs, but some warned asset prices may be unsustainably high.
Goldman Sachs’, investment banking revenue jumped 42% in the third quarter, while rival JPMorgan Chase’s investment banking fees climbed 16%, the banks reported on Tuesday. Wells Fargo and Citigroup also put in solid IB performances.
Consumer finances remain healthy, with JPMorgan noting consumer delinquencies were trending below expectations, although executives said they were monitoring for any deterioration as labor market data weaken.
“The macro environment reflects the global economy that’s proved more resilient than many anticipated. The U.S. continues to be a pacesetter, driven by consistent consumer spending, as well as tech investments,” Citigroup CEO Jane Fraser said during a conference call.
“That said, there are pockets of valuation frothiness in the market.”
RECORD-HIGH MARKETS STIMULATE DEALS
Wells Fargo Chief Financial Officer Mike Santomassimo told journalists the deals pipeline looked good. His counterpart at JPMorgan, Jeremy Barnum, said the bank enjoyed its busiest summer in M&A for a long time and that equity capital markets and initial public offering conditions were also strong heading into the fourth quarter.
Deals have been buoyed by higher asset prices, with U.S. equity markets repeatedly hitting records this year, driven by excitement over U.S. Federal Reserve interest rate cuts.
However, that exuberance is causing concern that a major asset price correction is on the horizon. The International Monetary Fund on Tuesday also warned that markets were too complacent about trade and geopolitical risks.
“A lot of assets (are) looking like they are entering bubble territory. But those prices fuel IB, equities, asset management,” said JPMorgan JPM.N CEO Jamie Dimon. He said in credit markets, there were “early signs of some excess.”
Wells Fargo surged 8% in afternoon trading, while Citigroup climbed 5%. Goldman Sachs and JPMorgan fell slightly.
“Momentum continues across the majority of business lines with Wall Street remaining strong and the demand for consumer loans is very resilient,” said Mac Sykes, a portfolio manager at Gabelli Funds.
HIGHER INVESTMENT BANKING FEES
Global investment banking fees reached a four-year high in the first nine months of the year, underpinning earnings.
“The thing about choppy waters is that they create opportunities, and the market volatility experienced over the past few months has created the perfect environment for U.S. investment banks to thrive,” said Danni Hewson, head of financial analysis at investment platform AJ Bell.
Worldwide investment banking fees rose 9% to $99.4 billion so far this year, the highest since records were set in 2021, according to LSEG data.
M&A dealmakers were standout performers in the third quarter, particularly in technology and financial M&A, where fees increased 55% and 34%, respectively, the data showed.
In addition to buoyant equity markets and interest cuts, dealmaking has been spurred by lighter regulations under U.S. President Donald Trump, which offset the uncertainty from trade tensions that stalled activity earlier this year.
Executives said they expected more regulatory wins, as Trump’s bank regulators overhaul capital rules.
Global mergers and acquisitions surged 40% in the third quarter versus the previous year, according to Dealogic data. Megadeals also resumed, hitting a stunning $1.26 trillion.
The $55 billion acquisition last month of video game developer Electronic Arts by buyout group Silver Lake, Saudi Arabia’s Public Investment Fund and Affinity Partners was the largest leveraged buyout in history.
The rebound in activity also led to a flurry of job-hopping by senior executives.
Even the U.S. government is contributing to the boom, with the Trump administration pursuing deals across up to 30 industries, involving dozens of companies deemed critical to national or economic security, Reuters reported this month.
“There is no question that there’s a fair amount of investor exuberance,” Goldman Sachs CEO David Solomon told analysts.
“While I feel good about the forward outlook on balance, the market operates in cycles. Disciplined risk management is imperative.”
Global investment banking fees:
Bank 2025 YTD 2024 YTD 2024
Wallet Rank
share (%)
JPMorgan 7.7 1 7.8
Goldman Sachs 6.3 2 6.1
Morgan Stanley 5.2 4 4.8
BofA 5 3 5.5
Citi 4.2 5 3.9
Barclays 2.7 6 2.9
Wells Fargo 2.5 7 2.3
Source: LSEG
(Reporting by Tatiana Bautzer, Nupur Anand, Manya Saini, Tatiana Bautzer, additional reporting by Pritam Biswas, Saeed Azhar, Arasu Kannagi Basil, Laura Matthews; Editing by Lananh Nguyen, Megan Davies, Michelle Price, Nick Zieminski, Rod Nickel)