US Banks Secure Nearly $50bn in First-Quarter Profits as Iran Conflict Fuels Market Volatility
Leading US financial institutions have collectively reported profits approaching $50bn (£37bn) for the initial three months of the year, capitalising on stock market upheaval triggered by the ongoing US-Israeli military engagement with Iran. This surge underscores how geopolitical tensions are reshaping global economic landscapes and benefiting Wall Street's trading operations.
Profit Surges Across Major Lenders
On Wednesday, Bank of America and Morgan Stanley announced significant profit increases, joining peers Goldman Sachs, JP Morgan, Citi, and Wells Fargo in revealing robust quarterly results. In total, these six banks amassed $47.4bn in profits, highlighting a period of exceptional financial performance amid uncertain times.
JP Morgan led the charge with a 13% rise in profits to $16.5bn compared to the same quarter last year, while Goldman Sachs saw a 19% jump to $5.6bn. David Solomon, Goldman's chief executive, praised this as a "very strong performance ... even as market conditions became more volatile." Other notable gains included Citi's 42% increase to $5.8bn, Morgan Stanley's 30% rise to $5.6bn, Bank of America's 17% growth to $8.6bn, and Wells Fargo's 7% uptick to $5.3bn.
Market Turbulence Drives Trading Desk Activity
The profits were largely fueled by heightened trading desk activity as investors sought safer havens amidst market jitters. Solomon noted that the environment shifted dramatically after the US and Israel began attacks on Iran in late February, stating that 2026 "began with a degree of optimism" before macroeconomic concerns weighed on sentiment. Disrupted tanker traffic in the Strait of Hormuz has driven up energy prices, raising inflation forecasts and borrowing rates, which in turn spurred demand for bank trading services.
Brian Moynihan, Bank of America's chief executive, acknowledged the bank's board "remain watchful of evolving risks," reflecting broader anxieties that prolonged Middle Eastern conflict could dampen household spending, business revenues, and global growth. The International Monetary Fund warned on Tuesday that further escalation could precipitate a global recession, particularly impacting net energy importers and developing nations, with the US growth forecast for 2026 trimmed by 0.1 percentage points to 2.3%.
Share Buybacks and Future Outlook
Banks utilised portions of their profits for substantial share buybacks. JP Morgan set a quarterly record with $8.3bn in repurchases, followed by Citi at $6.3bn—its highest in at least two decades. Other expenditures included Goldman Sachs at $5bn, Wells Fargo at $4bn, Morgan Stanley at $1.8bn, and Bank of America at $7.2bn, marking a four-year peak.
While current earnings are celebrated, concerns linger about potential downturns. An economic slump could reduce demand for loans and mortgages, while discouraging mergers and takeovers that generate investment banking fees. Additionally, market volatility has amplified existing fears about AI company valuations and loan quality in the private credit sector, posing risks to future bank performance.
In summary, US banks are riding a wave of profitability driven by geopolitical strife, but remain cautious as global uncertainties threaten to reshape the financial landscape in the coming quarters.
