Big Banks Soar on IPO Boom & Trading Profits in Q3 2025

The third-quarter earnings season kicked off with exceptional results from Wall Street’s largest financial institutions, with JPMorgan Chase leading the charge by posting earnings per share of $5.07 versus expected $4.84 and revenue of $47.12 billion compared to expectations of $45.4 billion. The banking giant’s performance was driven by stronger-than-anticipated trading and investment banking revenue, coming in roughly $700 million above forecasts. This pattern of exceeding expectations was consistent across the sector, with Wells Fargo & Company topping Q3 2025 earnings estimates with earnings per share of $1.73 and revenue of $21.44 billion, while simultaneously raising profitability targets following relief from asset cap restrictions.

Citigroup Inc. reported substantial improvement with net income of $3.8 billion, or $1.86 per diluted share, on revenue of $22.1 billion for the quarter, compared to $3.2 billion, or $1.51 per diluted share, on revenue of $20.2 billion a year earlier. The Goldman Sachs Group Inc. delivered particularly impressive results with net revenues of $15.18 billion and net earnings of $4.10 billion, representing a 37% profit surge from a year earlier and 20% revenue growth. Goldman’s diluted earnings per common share of $12.25 significantly exceeded the expected $11, while revenue of $15.18 billion surpassed the expected $14.1 billion.

BlackRock Inc. complemented the banking sector’s strong showing with one of its strongest quarterly flow results, recording net inflows of $205 billion that powered 10% organic base fee growth in the third quarter and 8% over the last twelve months. The asset management giant reported third quarter diluted earnings per share of $8.43, or $11.55 as adjusted, with revenue of $6.51 billion surpassing estimates and representing a 25% revenue increase year-over-year despite lower GAAP income.

The resurgence of initial public offerings after years of virtually no activity has been a primary driver of the banking sector’s outstanding performance. The 2025 IPO boom included multiple high-profile deals that have soared to new heights, featuring companies like Figma, CoreWeave Inc., and Circle Internet Group, all of which have delivered tremendous gains for investors. This revival in public market activity has created substantial revenue opportunities for investment banking divisions across Wall Street, with a bursting pipeline of deals in the queue suggesting the trend will continue through the remainder of 2025 and into next year.

Trading profits emerged as another critical component of the banks’ success, with JPMorgan Chase specifically highlighting this segment as a key contributor to their earnings beat. The combination of renewed IPO activity and substantial trading revenue created a powerful earnings engine for the financial sector, demonstrating the banks’ ability to capitalize on favorable market conditions. The timing proved particularly advantageous as the stock market rally, highlighted by the massive run by the Magnificent 7 tech stocks alongside Gold Mining stocks and Utilities, drove all major indices to new all-time highs.

Despite the finance sector’s strong performance in 2025, the major Wall Street banks remain significantly cheaper than the overall S&P 500, which trades at 30 times earnings. This valuation gap presents an attractive opportunity for investors seeking exposure to the financial sector’s resurgence. All the major banks pay reliable and rising dividends, offering income-seeking investors dependable yield in an otherwise overbought and nervous stock market environment.

Aggressive stock buyback programs further enhance the value proposition, with almost all major banks significantly increasing their repurchase activity earlier this year. Some institutions reported their biggest repurchase levels in years, reaching as high as $40 to $50 billion, signaling strong management confidence despite ongoing economic uncertainty. These capital return programs, combined with much lower price-to-earnings metrics and a long history of success, make the large-cap banks particularly appealing in the current market context.

With Bank of America set to report tomorrow, the strong start to quarterly earnings results from Wall Street appears poised to continue. The combination of renewed IPO market vitality, robust trading performance, attractive valuations, and shareholder-friendly capital return policies positions the banking sector as a compelling investment opportunity as markets navigate the remainder of 2025.