Key Highlights

  • The five largest US banks are forecast to collectively post over $40 billion in trading revenue for Q1 2025.
  • Geopolitical conflict in the Middle East and military action in Venezuela reignited market volatility, boosting trading desks.
  • Equities trading growth is projected to outpace fixed income, currencies, and commodities this quarter.
  • Investment banking fees are expected to rise more than 10 percent across all five major institutions.
  • Profit growth is forecast at approximately 7 percent overall, led by Goldman Sachs and Morgan Stanley.

When Chaos Becomes Capital

For trading desks on Wall Street, disorder is not a disruption. It is a revenue model.

The first quarter of 2026 delivered precisely the kind of turbulence that large bank trading operations are engineered to monetise. Conflict in the Middle East triggered a record-breaking oil price rally, sharp equity market corrections, and renewed anxiety over global inflation trajectories. A US military operation in Venezuela added another layer of geopolitical uncertainty. Financial markets repriced rapidly across asset classes, and the five largest American banks were positioned to collect on every move.

JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup, and Bank of America are expected to report a combined quarterly trading haul exceeding $40 billion when earnings season opens this week. According to forecasts compiled from Bloomberg and Visible Alpha, that figure would represent the highest combined quarterly trading revenue from these institutions in at least twelve years, a 13 percent increase over the same period in 2025.

Goldman Sachs reports Monday. JPMorgan Chase and Citigroup follow Tuesday. Morgan Stanley and Bank of America close the week Wednesday.

The Architecture of Volatility Profits

Understanding why geopolitical shocks translate into bank profits requires a look at how trading operations were fundamentally restructured following the 2008 financial crisis. Regulatory overhauls pushed large institutions away from proprietary directional bets on markets. What replaced that model was a client-facilitation and financing framework. Banks earn revenue by intermediating trades, providing liquidity, and financing positions for institutional clients who are themselves responding to market movements.

When volatility rises sharply, the volume and complexity of those client transactions increase. Bid-ask spreads widen. Hedging demand surges. The operational leverage in a well-run trading desk works in the bank's favour during these periods. Analysts have drawn direct parallels to early 2022, when Russia's invasion of Ukraine produced a similarly outsized volatility-driven trading windfall for the industry. The underlying mechanism is consistent: geopolitical disruption forces institutional repositioning at scale, and the banks collecting fees on that repositioning benefit regardless of which direction markets move.

Equities Lead, FICC Follows

Not all trading desks are expected to benefit equally. Analyst forecasts point to equities trading growth of 13 to 15 percent for the quarter, outpacing fixed income, currencies, and commodities, which is projected at 8 to 13 percent growth. This divergence reflects where volatility was most acute and most tradeable.

Equity markets saw sharp swings in response to geopolitical developments, with institutional investors repositioning across sectors and geographies. That rotation generated substantial commission and financing income for the equities desks of all five banks.

Within FICC, JPMorgan and Citigroup are expected to post the strongest gains, supported by their larger and more diversified fixed income platforms. Energy market volatility also provided tailwinds for commodity trading operations, though oil price movements were not uniformly positive for all trading strategies.

Investment Banking Fees: Structural Recovery, Near-Term Risk

Beyond trading, investment banking fees are forecast to rise more than 10 percent across all five institutions. That recovery reflects a broader structural rebound in dealmaking activity that accelerated through late 2024 and into the current year.

Two forces have driven this resurgence. First, demand for debt and equity financing related to artificial intelligence infrastructure has created a new and substantial deal pipeline. Technology companies and infrastructure investors have required capital markets access at scale, and the largest banks have been well-positioned to provide it. Second, a more permissive regulatory environment under the current US administration has reduced friction in the approval process for large mergers and acquisitions.

A technical feature of investment banking revenue also supports the Q1 numbers. Many transactions that were announced in prior quarters but required time for due diligence, regulatory review, and closing generated fees upon completion in the first three months of 2025. The pipeline built during 2024 is now being monetised.

However, analysts have introduced a note of caution on the forward outlook. Sustained geopolitical instability and choppy equity markets could suppress demand for initial public offerings and other equity capital market transactions. Companies considering listings will weigh investor appetite carefully, and a prolonged period of market uncertainty typically delays issuance calendars. As Cassidy noted, the equity capital markets business may represent the soft spot in the quarter if volatility persists.

Private Credit Exposure: A Watch Item

Investors examining earnings results this week will look beyond trading and banking revenue lines. Banks have significantly expanded their lending to private capital firms and hedge funds in recent years, drawn by higher return potential at relatively contained capital cost. That exposure has grown into a meaningful balance sheet item.

A wave of redemptions across private credit funds, driven by investor concerns about credit quality in a higher-rate environment, has renewed scrutiny of this exposure. Whether any of the five major institutions has material risk concentration in affected private credit vehicles will be a focal point during earnings calls. Management commentary on provisioning, credit quality trends, and leverage facility terms will be closely watched.

Earnings Season as a Macro Signal

The Q1 2025 bank earnings cycle carries significance beyond the individual institutions reporting this week. Trading revenues of this magnitude reflect a market structure in which geopolitical instability is now a recurring input into capital market dynamics, not an occasional disruption.

Overall profit growth for the group is projected at approximately 7 percent, with Goldman Sachs and Morgan Stanley expected to lead on percentage gains, consistent with their higher operational exposure to trading and investment banking relative to consumer lending.

For institutional investors analysing the broader macro environment, these results will serve as a real-time calibration of how financial system intermediaries are absorbing and profiting from a structurally more volatile world. The numbers tell that story clearly.