Bank earnings show a Q4 timing shift, not a confidence problem
JPMorgan’s 5% year-over-year decline in fourth-quarter investment banking fees was the number that caught everyone’s attention. The stock dropped nearly 3% despite an overall earnings beat—$5.23 per share versus $5.00 expected. Wall Street’s largest bank had missed on the one metric that matters most for gauging corporate confidence.
But zoom out across this week’s bank earnings and a different story emerges. The deals didn’t disappear. They slid into 2026.
The culprit was largely mechanical. A federal government shutdown froze SEC operations in late 2025, halting IPO approvals and forcing issuers to delay offerings that were otherwise ready to price. Year-end timing—always lumpy in investment banking—pushed M&A closings past December 31. Regulatory reviews on major transactions stretched beyond the quarter. The result: a miss that reflects a traffic jam, not a loss of appetite.
Bank of America: Steady on Dealmaking, Strong Everywhere Else
Bank of America’s results Wednesday reinforced the picture. Investment banking fees came in at $1.7 billion, up just 1% year-over-year—not the surge some analysts had modeled, but hardly a retreat. The bank retained its #3 global ranking in IB fees for 2025, behind only JPMorgan and Goldman Sachs.
The broader quarter was strong. Net income hit $7.6 billion, with earnings per share of $0.98—up 18% from a year ago and comfortably ahead of estimates. Revenue rose 7% to $28.4 billion. Net interest income, the profit banks earn on loans minus what they pay on deposits, surged 10% to $15.9 billion as fixed-rate assets repriced higher and deposit balances grew.
The trading desks delivered. Sales and trading revenue jumped 10% to $4.5 billion, with equities up 23% on increased client activity and FICC (fixed income, currencies, and commodities) grinding 2% higher. It marked the 15th consecutive quarter of year-over-year growth in trading—a streak that speaks to market share gains as much as market conditions.
The consumer picture looked healthy. Combined credit and debit card spending rose 6% to $255 billion. Average deposits held steady at $945 billion. The bank added roughly 680,000 net new consumer checking accounts in 2025, extending a streak of 28 consecutive quarters of growth. Credit card charge-off rates improved to 3.40% from 3.79% a year earlier.
CEO Brian Moynihan was direct about the outlook: “With consumers and businesses proving resilient, as well as the regulatory environment and tax and trade policies coming into sharper focus, we expect further economic growth in the year ahead. While any number of risks continue, we are bullish on the U.S. economy in 2026.”
CFO Alastair Borthwick added context on positioning: “With strong liquidity and capital, as well as healthy asset quality, we enter 2026 focused on driving core growth, market share gains and improved profitability.” The efficiency ratio—a measure of how much it costs to generate a dollar of revenue—improved nearly 200 basis points to 61%.
Wells Fargo: Finally Unconstrained
Wells Fargo’s results told a story less about the quarter and more about what comes next. Earnings per share of $1.76 beat estimates of $1.65, and net income came in at $5.4 billion. Revenue of $21.3 billion missed slightly, but the miss was overshadowed by a bigger headline: the Fed’s asset cap is finally gone.
The asset cap, imposed in 2018 following the bank’s fake accounts scandal, had limited Wells Fargo’s ability to grow its balance sheet for nearly seven years. Its removal represents a turning point. CEO Charlie Scharf didn’t hide his enthusiasm: “Strong financial performance, removal of the asset cap imposed by the Federal Reserve, termination of multiple consent orders, and stronger growth in both our consumer and commercial businesses make me proud of our 2025 results.”
He added: “We are excited to now compete on a level playing field.”
The underlying metrics supported optimism. Net interest income rose 4% to $12.3 billion. Average loans grew 5%. Credit performance improved, with net charge-offs declining 13% from a year ago. The bank repurchased $5 billion in stock during the quarter alone—a signal of confidence in forward earnings power.
The Pipeline Ahead
If the Q4 investment banking softness reflected weakening demand, we’d expect to see it in forward indicators. Instead, the 2026 pipeline looks packed.
Global M&A volume hit $5.1 trillion in 2025, up 42% year-over-year. The IPO market had its best showing since 2021, with traditional offerings raising $33.6 billion. Goldman Sachs and Morgan Stanley—both more levered to investment banking than the universal banks—report Thursday and are expected to show IB fees up 17% or more for the full year, with another 11% growth projected for 2026.
“Many issuers shifted their plans into 2026, which is expected to meaningfully increase activity—particularly in the first half of the year,” PwC noted in its capital markets outlook. The backlog includes potential blockbuster IPOs from SpaceX, OpenAI, Anthropic, and Kraken—names that would rank among the most consequential offerings in years.
The Read
Investment banking revenue matters because it reflects corporate confidence. Executives don’t pursue acquisitions, take companies public, or raise capital unless they believe conditions will justify the cost and complexity. A decline driven by evaporating demand is a warning sign. A decline driven by timing and logistics is a traffic jam—and traffic jams clear.
The evidence points to the latter. JPMorgan retained its #1 global IB ranking despite the miss. BofA’s Moynihan is explicitly bullish. Wells is finally unconstrained. The SEC is back online. Consumer spending, credit quality, and loan growth all look healthy across the big banks.
The deal backlog has to clear somewhere. That somewhere is Q1.