In a world of uncertainty, Wall Street continues to find a way to make money.
That was underscored on Tuesday when, amid the latest flare up in the war with Iran, the five largest banks in the United States reported a collective $49 billion in profits in the second quarter, smashing records and exceeding analysts’ projections.
The earnings reports reflect the growing dichotomy between geopolitical turmoil in the Middle East and a strengthening American economy. The big banks took advantage of one of the best periods of deal-making booms in recent memory and of a roaring stock market, fueled by the build out of artificial intelligence.
The banks cited little evidence that topsy-turvy energy prices, driven higher by the protracted conflict over the Strait of Hormuz, or even a relatively stagnant environment for wages are weighing heavily on the economy or their core businesses.
“It would be naïve not to be worried,” Jeremy Barnum, JPMorgan Chase’s chief financial officer, told reporters on Tuesday, “but it’s always easy to be worried and then the market keeps going up.”
JPMorgan earned $21 billion in the quarter, up more than 40 percent from the same period a year earlier — a jump that could be partly credited to a $4.6 billion gain on its stake in the credit card company Visa.
The bank, along with rival Goldman Sachs, which logged $6.6 billion in profits during the quarter, was also bolstered by higher fees in investment banking during a boom in mergers and acquisitions and a hot string of financing deals for A.I. companies.
Trading profits, too, are up headily, lifted in no small part by SpaceX’s $85 billion initial public offering last month, the largest ever, which brought so-called retail investors into the market in droves. Banks are looking ahead to more blockbuster A.I. stock offerings planned in the coming months that, if they come to pass, will provide another boost to their trading and advisory revenue.
Bank of America, overall, had one of its best quarters ever, which Brian Moynihan, the bank’s chief executive, attributed to a “healthy economic backdrop” and “resilient” consumer and business clients.
The bank made $9 billion, fueled by trading gains and investment banking fees. and its earnings per share rose more than 30 percent from a year ago.
Wells Fargo turned a profit of more than $6 billion, as consumers and businesses borrowed more. Citigroup earned nearly $6 billion and posted quarterly revenue of nearly $25 billion, its highest in a decade. Fees on services for corporate customers, such as managing clients’ cash, were a strength for the bank.
Even as more households struggled to keep up with rising costs for essentials like gas and groceries, banks profited from fairly low delinquencies on debts and from interest rates that analysts now expect to stay higher for longer. Those rates boosted the fees banks earned from increased credit card spending and rising balances.
Bank of America added a million new credit card accounts during the quarter, as its customers spent $266 billion on their credit and debit cards — up 9 percent compared with a year ago. At Wells Fargo, revenue from auto loans increased 33 percent, thanks to higher balances and sharp growth in the issuance of new loans.
Goldman’s share price rose as high as 8 percent in early trading. Shares of Bank of America and JPMorgan were up about 2 percent.
“There was a lot of optimism about the outlook of the consumer,” said Chris McGratty, the head of U.S. bank research at KBW, an investment bank. “And the trading results were outstanding. The banks have managed risk very well.”
Charlie Scharf, Wells Fargo’s chief executive, noted “concerns” around affordability and inflation, but said those were being offset by strong employment numbers and wage growth. For banks, times are good: “We know that such favorable conditions do not go on forever, so we are being selective about how much and where to grow,” he said.
Jamie Dimon, JPMorgan’s chief executive, told reporters that the global economy “has been more resilient than people have expected, including us.” But he warned in a separate statement of “risks shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits and elevated asset prices.”
The bank results are the unofficial start of quarterly earnings season, in which the largest publicly traded companies offer updates on their finances to the public. That tradition is now under pressure as Trump administration securities regulators have proposed ending the mandate for quarterly reports and instead requiring semiannual reports.
The major banks, whose results are particularly closely watched because they offer hints on consumer and business spending across the economy, have said they will continue reporting quarterly regardless.
Rob Copeland and Stacy Cowley
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