U.S. Banks Q3 Earnings Preview: Big 5 Banks See Double-Digit EPS Growth, Investment Banking Hits 4-Year High

TradingKey - The 2025 U.S. earnings season kicks off this week with results from major banks. Amid elevated investor sentiment and the Trump administration pushing for deregulation, analysts expect another strong quarter for the banking sector — driven by booming trading activity and a resurgence in investment banking, fueling double-digit percentage growth in earnings per share (EPS) for five of the six largest banks.

Why Bank Earnings Matter

As usual, large financial institutions lead off each earnings season, serving as key barometers of economic health. The performance of the Big Six banks — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Morgan Stanley, and Goldman Sachs — offers critical insights into:

• Loan quality
• Consumer and commercial lending trends
• Credit conditions

BCA Research noted that banks are a window into the U.S. economy. If we see consumers still spending and loan demand improving, it signals the economy isn’t truly edging towards contraction.

Despite Q2 GDP growing at 3.8% — the strongest in two years — and the S&P 500 hitting repeated highs, markets remain cautious about the economic impact of Trump’s global tariff war. Positive earnings momentum remains a key driver behind equity gains.

Horizon Investment Services warned that much of the market’s optimism is built on expected profit growth. If cracks begin to show now, it could spell trouble for the broader market.

Overall Outlook: Solid Growth Ahead

Starting Tuesday, October 14, major banks will report their Q3 results:

• Tuesday: JPMorgan, Goldman Sachs, Citi, BlackRock, Wells Fargo
• Wednesday: Morgan Stanley, Bank of America
• Thursday: U.S. Bancorp, Charles Schwab, BNY Mellon
• Friday: State Street, Truist Financial

Analysts forecast revenue and profit growth across the board, with five of the six banks expected to post double-digit EPS growth year-over-year — Wells Fargo narrowly missing at +9%.

Q3 2025 U.S. Big Bank Earnings Forecasts

Trading Revenues Defy A Seasonally Slow Period

In Q2, major banks reported strong trading gains — proving that in a highly financialized world, uncertainty often creates opportunity. That trend has carried into Q3, typically a seasonally slow period.

Jefferies analysts said that the third quarter tends to be a seasonally slow period for trading, but this quarter may buck the usual trend — equities trading was strong, and activity in fixed income, currencies, and commodities also increased.

Analysts project that equity and FICC trading revenues at the five largest trading banks (excluding Wells Fargo) will rise 8% YoY to $31 billion.

Investment Banking Rebounds to 4-Year High

Boosted by regulatory easing and expectations of further rate cuts, investment banking activity is rebounding. 

According to Bloomberg, the combined quarterly revenue from advisory, equity underwriting, and bond issuance at the Big Five banks (excluding Wells Fargo) is expected to reach $9.1 billion — the highest since Q4 2021.

This marks:

• +13% YoY growth
• +50% vs. 2023 lows
• Still below the $13.4 billion peak in Q4 2021

The rate-hiking cycle starting in 2022 crushed dealmaking, while Biden-era antitrust enforcement further dampened M&A. Wall Street had pinned hopes on Trump’s return to revive the sector — though early 2025 trade risks and government spending cuts slowed recovery.

Now, with those fears receding, the rebound is clear.

Barclays noted that pro-growth environment and lighter regulatory touch were boosting sentiment. What’s going on with AI, whether it’s a need to invest or adapt, is certainly contributing as well.

According to Piper Sandler, there were 49 M&A deals completed in Q3 through mid-September — up from 39 in Q2 and 32 in Q3 2024.

Consumer Health: The Lingering Concern

Despite strong capital markets performance, investors remain wary of consumer credit quality.

Brian Mulberry of Zacks Investment Management said:

“While there are no major concerns on the investment banking and the commercial side of the business, on the consumer side we have seen deposit levels and loan growth have remained statict.”

He added that he is watching for any warning signs in consumer businesses, and there are also some growing concerns around potential defaults in some smaller firms.

Gerard Cassidy of RBC Capital Markets said that consumers will certainly be an area of focus. There’s been a lot of mixed trends in the consumer numbers.

David George of Baird agreed, noting recent bankruptcies at subprime auto lender Tricolor and auto parts firm First Brands could trigger greater scrutiny on credit quality.

Gabelli Funds emphasized that changes in the credit environment, labor data, and overall economic outlook will be closely watched.

“Consumer confidence has been lower, the business confidence is still evolving, and we will watch out to see if there are any lingering concerns from the volatility seen earlier this year.”