Wall Street Resurgence: Bank of America and Morgan Stanley Lead the Way

The fourth quarter of 2024 marked a pivotal moment for Wall Street as major banks reported stellar profits, signaling a significant revival in the financial sector. Bank of America (BAC) and Morgan Stanley (MS) emerged as the torchbearers of this resurgence, with their profits more than doubling compared to the previous year. This robust performance has dealmakers optimistic about the economic landscape in 2025, especially under the anticipated Trump administration.

A Record-Breaking Quarter for Big Banks

The combined profits of six major U.S. banks, including JPMorgan Chase (JPM), Goldman Sachs (GS), Citigroup (C), and Wells Fargo (WFC), exceeded $36 billion in the fourth quarter of 2024. For the entire year, these banks collectively earned a staggering $145.7 billion, representing a 19% increase from 2023.

• Key Highlights:
  • Bank of America: $6.7 billion Q4 profit, a 111% jump year-over-year.
  • Morgan Stanley: $3.7 billion Q4 profit, a 145% surge compared to 2023.
  • JPMorgan: $14 billion Q4 profit, with a record-breaking $58 billion annual profit.

Bank of America CEO Brian Moynihan attributed this success to broad momentum, which he believes will set a strong foundation for 2025. Morgan Stanley’s CEO Ted Pick echoed similar sentiments, celebrating one of the firm’s strongest years in history.

Investment Banking and Trading Propel Profits

The end of a two-year dealmaking drought was a major factor behind the profit surge. Both Bank of America and Morgan Stanley reported significant growth in investment banking and trading revenues.

Bank	Investment Banking Growth	Trading Revenue Growth
Bank of America	44%	13%
Morgan Stanley	25%	N/A
Goldman Sachs	24%	N/A

Bank of America achieved a record $4.1 billion in trading revenue for the full year, while Morgan Stanley’s investment banking revenue climbed to $1.64 billion in the fourth quarter alone. The increased market volatility surrounding the U.S. presidential election played a key role in boosting trading activity.

JPMorgan Stands Tall Among Peers

JPMorgan Chase reaffirmed its dominance in the financial sector with unparalleled results. Its $14 billion Q4 profit and $58 billion full-year profit set new records for the bank and the industry. This accomplishment was more than double that of Bank of America, its closest competitor.

Goldman Sachs also delivered impressive results, with its Q4 earnings jumping 105% to $4.1 billion and full-year profits climbing 68% to $14.2 billion. CEO David Solomon expressed optimism about the current environment, which he believes is conducive to sustained growth.

Consumer-Centric Banks Shine Too

Even consumer-focused banks like Wells Fargo performed well. Its investment banking fees increased by 59% in Q4, while its profits rose to $5.08 billion, compared to $3.45 billion in the same period a year earlier. These numbers highlight the broad-based nature of the financial sector’s recovery.

Optimism for 2025 and the Trump Era

With the GOP poised to take control of Washington, many bankers are hopeful for a continued dealmaking revival in 2025. Morgan Stanley’s CEO Ted Pick likened the anticipated activity to the mid-90s corporate finance boom.

• Key Factors Driving Optimism:
  • Favorable market and economic conditions.
  • Expectations of regulatory easing under the Trump administration.
  • Increased corporate merger approvals.

The Trump administration is likely to revise proposed capital rules that could have constrained future industry profits. This anticipated policy shift has already fueled investor confidence, as evidenced by the rally in big bank stocks following Trump’s election.

Stock Market Performance

The stock performance of major banks reflects their strong financial results and the broader optimism in the sector:

Bank	1-Year Stock Performance
Morgan Stanley	+50%
Bank of America	+42%

Morgan Stanley shares rose 4% on the day of its earnings announcement, further cementing its position as a standout performer.

The Road Ahead for Wall Street

The financial sector’s impressive performance in 2024 has set the stage for a promising 2025. With robust earnings, revived dealmaking, and favorable regulatory expectations, Wall Street is poised for sustained growth. As Brian Moynihan aptly put it, the broad momentum from 2024 has laid a strong foundation for the coming year. If the current trajectory holds, the revival of Wall Street could herald a new era of prosperity for the U.S. financial industry.