Wall Street’s largest financial institutions reported record profits, driven by a stock market surge following Donald Trump’s election win. The rally, which began after the November election, fueled significant gains in the stock market, propelling the profits of major banks to historic levels.
JP Morgan Posts Historic Annual Profit
JP Morgan announced a $58.5 billion profit for the year, setting a new record for US banking. This surpassed its previous record of $49.6 billion in 2023. The bank’s earnings were bolstered by robust trading activity in the final quarter of 2024, when market uncertainty surrounding the US presidential election, and Trump’s subsequent victory, led to volatile market conditions. The company’s profit for the three months ending in December reached $14 billion, a 50% increase compared to the same period the previous year.
Goldman Sachs Sees Profit Boost
Goldman Sachs also saw a substantial rise in profits, with a 68% year-over-year increase to $14.3 billion. The bank benefited from a surge in clients investing in the stock market following Trump’s election victory. Goldman’s profits for the quarter covering the election period more than doubled to $4.1 billion.
Wall Street Optimism Fueled by Trump’s Policies
The significant profits were driven by growing optimism surrounding Trump’s economic policies. The president-elect’s plans to deregulate the financial markets and lower corporate taxes have contributed to a surge in confidence among investors. Wall Street expects major banking regulations, such as Basel III, to be relaxed under Trump’s administration.
Goldman Sachs CEO David Solomon highlighted the excitement surrounding the new administration’s approach to the economy. He noted a significant shift in CEO confidence, particularly after the election results, and emphasized an increased appetite for deal-making driven by an improving regulatory environment.
Investment Banking Surge
Both JP Morgan and Goldman Sachs also experienced a boom in investment banking activities. JP Morgan’s investment banking quarterly revenue grew by 46% year-over-year to $2.6 billion, while Goldman Sachs saw a 24% increase in its investment banking revenue, reaching $2 billion.
Both banks played pivotal roles in major deals, including advising on UK transactions such as Aviva’s acquisition of Direct Line and BHP’s failed £34 billion merger attempt with Anglo American.
Anticipation of Record Bonuses
These record profits are expected to lead to substantial bonuses for employees at both banks. As is customary, both JP Morgan and Goldman Sachs are anticipated to announce their banker compensation details next week, which are likely to reflect the strong performance throughout the year.
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