Momo Takahashi/BI
After nearly three years of stagnation and false starts since the highs of the pandemic, Wall Street’s deal-making activities are showing signs of a revival.
Major banks including Goldman Sachs, JPMorgan, and Morgan Stanley have released impressive third-quarter earnings this week, indicating a resurgence in mergers and financing initiatives that had previously stalled as investors awaited a market recovery. For the second consecutive quarter, indicators suggest that the persistent drought in deal-making — which has impacted the compensation and morale of bankers — is beginning to lift.
“It’s uncertain whether we are entering a golden era for investment banking, but there’s been a lot of talk about potential recovery, and now it seems the momentum is building,” stated Morgan Stanley CEO Ted Pick during an analysts’ call on Wednesday.
The bank revealed $2.1 billion in investment banking revenue, a 44% increase year-over-year, driven by an 80% rise in equity underwriting, amounting to $652 million, alongside increasing advisory fees of $684 million, which is up 25%.
Goldman Sachs initiated the resurgence on Tuesday, announcing its third-highest quarterly net revenues ever, exceeding $15 billion, according to its earnings release. CEO David Solomon informed investors in a shareholder call that mergers are returning, propelling advisory revenues to rise 60% compared to the same quarter last year, reaching a total of $1.4 billion.
“The environment appears positive,” he remarked on Tuesday, highlighting a “more favorable regulatory climate” that is facilitating renewed activity.
Other financial institutions reporting their earnings this week, including JPMorgan Chase and Bank of America, are also benefiting from the uptick in deal-making, showing double-digit increases in fees.
Are we being too optimistic?
Late Wednesday morning, stocks of large banks saw a rise, with Bank of America gaining over 5%, Morgan Stanley climbing by 6%, and JPMorgan advancing by 2%.
However, Wall Street is well aware of the feeling of optimism that often faces sudden uncertainty which disrupts corporate activities.
“The global situation remains uncertain, and there could be interruptions based on geopolitical factors, but generally, the investment banking sector is expected to see upward trends in the upcoming years,” predicted Morgan Stanley’s Pick.
In a separate earnings call, JPMorgan’s finance chief Jeremy Barnum cautioned that the market should remain vigilant — prospects can shift rapidly.
“As you know well,” Barnum remarked, “conditions could alter overnight.”
For example, if the government shutdown persists, it might delay capital market activities and public offerings, negatively impacting ECM bankers who handle IPOs.
Strong quarters at BofA, JPMorgan, Citi
The number of deals valued at $5 billion or more surged 64% from last year, hitting a total of 100 in 2025, up from 61 at this point in 2024, according to LSEG data as of September.
Recently, banks have facilitated the public offerings of Klarna, Figma, and Coreweave. Furthermore, significant deals like the proposed $50 billion merger between Anglo American and Teck Resources, as well as Electronic Arts’ $55 billion take-private have also been announced, though their fees have yet to impact the banks’ results.
At Bank of America, investment banking fees for the third quarter reached $2 billion, reflecting a 43% increase compared to the previous year. Greater certainty regarding trade policies, tariffs, and taxation have enhanced deal-making, prompting clients to undertake long-term commitments, according to CFO Alastair Borthwick. He noted that the firm’s deal pipeline grew by double digits in Q3.
JPMorgan’s investment banking fees rose by 16%. The net revenue from commercial and investment banking hit nearly $20 billion for the quarter. CEO Jamie Dimon indicated that “ECM and M&A activities are gaining momentum amidst a supportive market environment.”
“This quarter demonstrated the robustness of JPMorgan’s diversified business model, with all major sectors contributing to growth,” said Kenneth Leon, director of equity research at CFRA Research. “We believe this momentum will carry through for the remainder of 2025 and into 2026.”
JPMorgan CFO Barnum disclosed to shareholders on Tuesday that the uptick in lending corresponds with increased deal activity across their investment banking sectors, emphasizing that client borrowing and transaction volumes are once again in sync. “We’re witnessing an increase in M&A activities,” he mentioned, remarking on “the busiest summer we’ve experienced in a long time.”
The bank acknowledged that enhanced trading and client activities have contributed to an optimistic deal-making landscape, and executives noted an increase in compensation and “growth in front office staffing” — a shift from earlier this year where leadership urged managers to “limit hiring” and aim for greater efficiency.
Citi’s investment banking division generated over $1.1 billion in fees, a 17% rise from the previous year. Revenue from corporate lending saw an almost 40% increase as clients began leveraging its financial resources once more.
The investment banking unit has seen a wave of ambition invigorated by its new chief, Viswas Raghavan, a former JPMorgan executive who took over as Citi’s executive vice chair and head of banking under CEO Jane Fraser last year.
