- Wall Street banks expect stronger dealmaking in 2026, citing active M&A/IPO pipelines and improving sentiment.
- 2025 global investment-banking fees rose about 15% to roughly $103B, the second-best year on record, boosted by U.S. megadeals.
- Results were mixed in late 2025, with JPMorgan’s Q4 IB fees down ~5% on weak underwriting and delayed deals while Citigroup’s advisory fees jumped 84% on restructuring and senior hires.
- Banks are leaning into growth via hiring and higher investment spending, even as cost pressure and rate/regulatory uncertainty remain key risks.
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The recent earnings season has reinforced that investment banking (IB) is entering a new phase of recovery and momentum, especially in advisory and M&A. Citigroup has emerged as a standout, capitalizing on internal restructuring and a strong senior banker roster to achieve an 84% YoY gain in advisory fees in Q4 2025 and a 35% rise in total IB fees for the same period. Leaner management under CEO Jane Fraser, the recruitment of top talent, and execution of large mandates are key levers driving its ascent.
Conversely, JPMorgan’s IB performance in Q4 2025 was disappointing relative to expectations: IB fees dropped 5% YoY to ~$2.35 billion, missing guidance for low-single-digit growth. Weakness in underwriting, especially debt issuance, and the deferral of deals into 2026 contributed to the miss. Nonetheless, JPMorgan remains the top IB fee leader globally for 2025, reflecting strong full-year results.
Across the industry, dealmaking revenue reached approximately $102.9–$103 billion in 2025—a ~15% gain over 2024—marking the second-highest total ever, trailing only 2021. M&A advisory fees climbed ~19% globally, with U.S. fees jumping even more, buoyed by late year megadeals and reviving capital markets activity.
Looking ahead to 2026, banks broadly expect pipelines to stay active. Executives at Goldman Sachs, Morgan Stanley, Citigroup, and others pointed to accelerating M&A, IPOs, and mega-transaction interest, especially in healthcare and industrials, supported by lower rates and looser regulatory tailwinds. However, risks remain: regulatory uncertainty, interest rate volatility, underperformance in some underwriting areas, and pressure on margins from rising costs.
Strategically, banks must balance investing in deal-execution capacity—particularly in advisory talent—with managing elevated expense bases. Those like Citigroup, with positive operating leverage and successful transform programs, are positioned to gain share; firms heavily dependent on underwriting may face headwinds if rate cuts are delayed. Furthermore, the strength of megadeals could skew client and sector exposure, concentrating risk.
Supporting Notes
- Citigroup’s advisory (M&A) fees jumped 84% YoY in Q4 2025, with total IB fees rising 35% to $1.29 billion.
- JPMorgan’s Q4 2025 IB fees dropped ≈5% YoY to ~$2.35 billion, failing to meet its own guidance for low-single-digit growth.
- 2025 global investment banking (dealmaking) fees reached $102.9–$103 billion, up ~15% from 2024; M&A fees amounted to ~$41.4 billion, up ~19%, led by U.S. deals.
- Morgan Stanley reported a 47% YoY surge in its investment banking revenue in Q4 2025; Goldman Sachs saw a 25% increase over the same period.
- JPMorgan forecasts expenses of ~$105 billion for 2026, significantly higher than analyst estimates and prior periods, driven by investments in AI, recruiting, marketing, and branches.
- JPMorgan’s debt-underwriting revenues were weak, falling ~2% YoY instead of growing, highlighting softness in corporate financing demand.