Surge in financial trading boosts profits at Wall Street banks

Strong volatility in global financial markets in Q1 due to geopolitical conflicts—from the U.S. military campaign in Venezuela to the fighting in Iran—has provided a substantial boost to the largest Wall Street banks. The standout is JPMorgan Chase, whose trading revenue in the quarter reached a record high. The bank's net income was only lower than in 2024, when JPMorgan booked a sizable one-off gain from the sale of its stake in Visa Inc. Citigroup also reported Q1 trading revenue of $7.2 billion, the highest in more than a decade. The bank also achieved an important earnings target, suggesting that a years-long restructuring is approaching its final phase. Collectively, JPMorgan Chase, Citi and Wells Fargo — three of the four largest U.S. banks by assets — reported more than $27 billion in aggregate earnings in Q1. Bank of America, the remaining bank in the Big Four, has not been included in the above figures as results were due to be released on April 14 in U.S. time. The first quarter saw a string of geopolitical shocks, from the U.S. campaign in Venezuela to the Iran conflict. These events increased volatility in the commodities markets and shifted investors' expectations for the path of interest rates. This environment is favorable for investment banks, as higher market volatility typically drives more client trading activity, boosting fee income. Meanwhile, rising oil prices have not yet put material pressure on borrowers in the U.S. In the quarter, JPMorgan's profit rose 13% year over year to $16.5 billion, beating analysts' consensus by about $1 billion. The trading division generated $11.6 billion revenue from fixed-income, currencies and commodities and equity trading — the highest figure on record. As a perennial leader in trading-fee revenue, JPMorgan again outpaced peers in Q1. Its trading-fee revenue exceeded Goldman Sachs by more than $2.3 billion. At Citi, trading revenue reached $7.2 billion, the highest in more than 10 years. The bank also achieved an important profitability target, signaling that the long-running restructuring is nearing completion. Citi's net income in Q1 rose 42% from a year earlier to $5.8 billion, well above the $4.9 billion consensus estimate. Meanwhile, Wells Fargo — more reliant on traditional banking segments such as consumer and commercial banking — said Q1 net income rose 7% to $5.3 billion, also above analysts' expectations. Wells Fargo's loan portfolio surpassed $1 trillion in Q1, a milestone less than a year after the bank was released from asset restrictions that previously constrained its balance sheet. However, Wells Fargo CFO Mike Santomassimo warned that the impact of the Iran conflict on oil prices is starting to affect consumer spending. He noted that Wells Fargo's retail customers are now spending 25–30% more on gasoline than before the conflict. Nevertheless, Wells Fargo has not yet observed meaningful changes in consumer spending. This aligns with JPMorgan CEO Jamie Dimon's assessment of U.S. households' resilience. In a statement on April 14, Dimon said the U.S. economy is “still resilient” despite a range of evolving risks. He also noted that energy costs account for only about 3% of a typical consumer's total spending.