- Big U.S. banks’ 2025 results were powered by Wall Street businesses—investment banking, trading, and wealth management—while consumer banking stayed steady but unexciting.
- Dealmaking and underwriting fees jumped sharply at major firms, helping push industry investment-banking revenue above $100B.
- Credit conditions remain mostly stable, but commercial real estate (especially office) and resuming student-loan reporting are key delinquency hot spots.
- Banks are leaning into market momentum while keeping buffers for potential consumer and regulatory risks, raising the question of whether gains spread beyond affluent and corporate clients.
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The recent financial reports from major U.S. banks show a bifurcated pattern: Wall Street-facing businesses (investment banking, trading, wealth management) thrived in 2025, benefiting from stronger markets, rising corporate deal activity, and favorable policy shifts. Meanwhile, consumer banking showed resilience in credit but limited growth in revenue and profit, reflecting both a lag in broader economic strength and higher sensitivity to interest rates and wage pressures.
1. Investment banking and trading strength
Full-year investment banking fees surged across top banks: Morgan Stanley reported a 47% year-over-year increase in Q4 fees, Goldman Sachs ~25%, Citi ~35% in its strongest M&A quarter ever, while Bank of America saw moderate gains (~7% over the year; 1% in Q4) in its fees. Total investment banking revenues in the U.S. are estimated to have surpassed $100 billion in 2025, with North America responsible for the bulk of that.
Trading revenue similarly saw meaningful growth due to elevated market volatility: equities trading revenue rose sharply (for instance, Goldman reported record Q4 equities revenue; overall equities trading up ~24% year-over-year), and fixed income, currencies, commodities (FICC) also contributed substantial gains.
2. Wealth management gains
Banks leaned on wealth management for durable income: Morgan Stanley ended 2025 with record revenue from its wealth business and asset under management approaching $9–10 trillion goals. Citi also saw strong growth in its wealth segment. This segment was less volatile than dealing, underwriting, or underwriting-driven income.
3. Consumer banking and credit quality
Credit conditions for consumers held up reasonably well. Overall loan delinquency rates dropped or held steady, credit card and auto-loan delinquencies were above their decade averages but stable or declining. Total household debt rose modestly; mortgage balances increased significantly. However, student loan delinquency spiked sharply as reporting resumed after pandemic forbearance.
4. CRE & sectoral risks
Commercial real estate loan delinquency rates are elevated: income-producing CRE, especially office property loans, remain high (≈10% for large banks) though showing some recent improvement. Consumer loan delinquency while trending down is still above long-term averages.
5. Strategic implications
For banks: there’s opportunity to continue gorging on deal pipelines, expanding wealth businesses, and managing non-interest income. But they must avoid complacency: consumer segments may deteriorate if unemployment climbs or rates remain high; regulatory shifts (credit card rate caps, market oversight) and macro uncertainty could reverse gains. For investors: bank stocks may continue benefitting if trading and fees stay strong, but valuations are sensitive to projections for rate cuts, credit provisioning, and consumer squeeze.
Open questions
– Can the momentum in investment banking and trading broaden into consistent growth in consumer banking and lower-income segments?
– Will CRE and student loan delinquencies be a tail-risk for bank balance sheets in 2026?
– How will regulatory or fiscal policy changes (e.g. interest cap proposals, tax changes, regulation) shift bank profitability?
– If volatility subsides, can banks maintain elevated trading revenues or will they revert toward the norm?
Supporting Notes
- Goldman Sachs posted net income of ≈$4.62 billion in Q4 2025, up ~12% YoY; Morgan Stanley ~$4.4 billion, up ~18%, both boosted by deal-making and equities trading.
- Citi’s dealmaking fees surged ~35% in Q4 2025 to ~$1.29 billion; full-year fees for Citi also rose ~20%.
- Morgan Stanley’s Q4 investment banking revenue rose ~47% YoY to ~$2.41 billion; Goldman’s rose ~25% to ~$2.58 billion.
- Overall loan delinquency rates (30+ days past due or nonaccrual) for consumer loans are declining or stabilizing, but remain above 10-year averages; CRE (notably office property loans) delinquency remains elevated near ~10% at large banks.
- Student loan delinquencies jumped sharply after resumption of reporting; in Q1 2025, ~8.04% of student debt was 90+ days delinquent vs <1% previously.
- Equifax credit data through mid-2025 shows bankcard delinquency fallen year over year to ~2.79% (from ~3.22% peak in Nov 2024); write-offs also down.