Banks always win: Iran war, market volatility, oil price turbulence help US giants clock $50 billion in profits

In the last few days, major US banks with deep Wall Street trading presence reported strong to record profits for the first quarter of this year. Helped by Iran war-linked market volatility, several of them posted double-digit revenue and earnings growth in January–March. The boost is clearly tied to the war, which caused sharp swings in oil prices, equities, fixed income, commodities, and currencies. Investment banks and those with large trading desks benefited the most. They emerged as the winners through higher client trading volumes, wider spreads, and rebalancing activity. Here is a roundup:

War, what war? Banks showed their strongest profits in a decade

Standout performers who beat or strongly exceeded analyst expectations include JPMorgan Chase, with net income of $16.49 billion, up 13 per cent year on year, on revenue of $50.54 billion, up 10 per cent. Its trading revenue hit a record $11.6 billion, up 20 per cent year on year, with fixed income up 21 per cent and equities up 17 per cent.

Citigroup net income was up 42 per cent year on year at $5.8 billion on revenues of $24.6 billion, the highest in a decade and up 14 per cent. Markets revenue was up 19 per cent at $7.2 billion, with equities-linked earnings up 39 per cent.

Bank of America net income was $8.6 billion, up 17 per cent, on $30.3 billion in revenue, which was up 7 per cent. Equities trading revenues were up 30 per cent, with the desk remarkably avoiding any daily losses in spite of the war-linked turbulence in the markets.

Morgan Stanley net income was up 29 per cent at $5.57 billion, while revenue grew 16 per cent to $20.58 billion. It had record equities trading at $5.15 billion, up 25 per cent.

Goldman Sachs net income for Q1 was $5.63 billion on revenues of $17.23 billion, up 14 per cent. It also recorded equities trading at $5.33 billion, up 27 per cent year on year.

Wells Fargo net income was around $5.3 billion on six per cent revenue growth to $21.45 billion.

$50 billion in Q1 profits: How did US banks benefit from Iran war volatility?

The net profit of banking giants neared $50 billion, with JPMorgan, Citi, and Wells Fargo alone exceeding $25 billion.

The Iran war, which started with joint US-Israel air strikes on the Islamic Republic, its counterstrikes targeting Gulf states, and the disruption of the Strait of Hormuz, definitely contributed to this growth, according to analysts.

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The war led to oil price spikes and broader market volatility, creating exactly the kind of chaos that the trading desks of these banks benefit from.

Combined trading revenues for JPMorgan, Goldman Sachs, Morgan Stanley, Citi, and Bank of America were on track to exceed $40 billion, the highest since at least 2014, with a near 13 per cent annual jump overall.

Record or near-record earnings came from trading desks in equities, fixed income, commodities, and derivatives. The volatility led to more client flows, hedging demand, and wider bid-ask spreads, said analysts and the banks themselves, who explicitly linked the surge to the war.

Without the volatility generated by the conflict, trading revenues would have been meaningfully lower. Note that pure commercial banks like Wells Fargo benefited less from this tailwind, while investment or trading-heavy banks like Goldman Sachs, JPMorgan, Citi, and Bank of America had an exceptional quarter, thanks in large part to the Iran war's market turbulence.