Big US banks rake in near-$50bn profit as Iran war shakes markets | Banking
Major US banks made profits worth around $50bn (£37bn) in the first three months of the year, taking advantage of stock market turmoil triggered by the US-Israeli war against Iran.
Wall Street’s biggest lenders reported a jump in first-quarter earnings; This shows that demand for trading services is increasing as investors abandon risky stocks and bonds and seek safer havens for their cash.
On Wednesday, Bank of America and Morgan Stanley posted a jump in profits, joining Goldman Sachs, JP Morgan, Citi and Wells Fargo in posting strong results this week. The six banks collectively reported profits of $47.4 billion.
Investors are trying to reduce their exposure to companies damaged by economic shocks caused by the conflict in the Middle East. The disruption of tanker traffic in the Strait of Hormuz caused an increase in energy prices, an increase in inflation forecasts, debt rates and the possibility of a global recession.
Market jitters have also amplified existing fears about whether some AI companies are as valuable as some claim and revived concerns about the quality of loans made by the once-booming private lending sector.
But investor panic has been a gift to the trading desks of many US investment banks, helping lenders such as JP Morgan report a 13% increase in profits to $16.5 billion in the first quarter compared with the same period a year earlier.
Goldman Sachs announced that its profits rose 19% to $5.6 billion in the first three months of the year; This figure was praised by David Solomon, CEO of Goldman Sachs, as “a very strong performance even as market conditions become more volatile”.
Solomon told analysts that the environment had changed significantly since the beginning of the new year, before the United States and Israel began attacking Iran in late February. He said 2026 “starts with a degree of optimism.” “Markets reached record highs and confidence continued to rise as most clients focused on growth, strategic activity and capital deployment…things were just plateauing. And as the quarter progressed the macro environment began to weigh on sentiment.”
Bank of America, the second-largest U.S. lender, said on Wednesday that its profit rose 17% in the first quarter to $8.6 billion as volatility increased activity on its trading desk. But the bank’s chief executive, Brian Moynihan, said the bank’s board “remains mindful of evolving risks”, reflecting broader concerns that a protracted conflict in the Middle East could negatively impact household spending, business incomes and ultimately global growth.
A further escalation of the Iran conflict could cause a global recession, with net energy importers and developing countries facing the biggest blow, the International Monetary Fund said on Tuesday. This included the US, where the IMF cut its 2026 growth forecast by 0.1 percentage point to 2.3%.
A crisis could reduce bank earnings, leading to a decline in demand for loans and mortgages, while also preventing business clients from pursuing the kinds of mergers and acquisitions that drive up investment banking fees.
Meanwhile, US banks are cheering on their first-quarter performance; Citi reported a 42% increase in profits to $5.8 billion, and Morgan Stanley reported a 30% increase in profits to $5.6 billion. Wells Fargo announced that its first-quarter profits rose 7% to $5.3 billion.
Banks used some of their profits to buy back shares from investors. JP Morgan spent $8.3 billion, a quarterly record for the bank; Citi spent $6.3 billion, the highest figure in at least 20 years. Goldman spent $5 billion, Wells Fargo spent $4 billion and Morgan Stanley spent $1.8 billion. Bank of America made its highest expenditure in the last four years with $7.2 billion.
