US banking giants expect dealmaking spree to continue as profits climb

By Tatiana Bautzer NEW YORK (Reuters) -Wall Street executives predicted that windfall earnings from investment banking in the third quarter would continue for the rest of the year, buoying profits at U.S. banking giants. At Goldman Sachs, investment banking revenue jumped 42% in the third quarter, while rival JPMorgan Chase's investment banking fees climbed 16%, the banks reported on Tuesday. Wells Fargo and Citigroup also had solid performances in investment banking. "Pipelines look good, the activity levels are good, and the conversations are constructive" with clients, Wells Fargo Chief Financial Officer Mike Santomassimo told journalists on a conference call. His counterpart at JPMorgan, Jeremy Barnum, said the investment banking environment is quite good after the bank saw its busiest summer in M&A for a long time. Conditions for equity capital markets and IPOs are also strong heading into the fourth quarter, Barnum added. HIGHER INVESTMENT BANKING FEES Global investment banking fees reached a four-year high in the first nine months of the year, underpinning earnings.    "What we've learned so far is that momentum continues across the majority of business lines with Wall Street remaining strong and the demand for consumer loans is very resilient," said Macrae Sykes, a portfolio manager at Gabelli Funds. Worldwide investment banking fees rose 9% to $99.4 billion so far this year, the highest since records were set in 2021, according to LSEG data. Dealmakers in mergers and acquisitions were standout performers in the third quarter, particularly in technology and financial M&A, where fees increased 55% and 34%, respectively, the data showed.   Multibillion-dollar deals have also resumed as tariff uncertainty subsided and the Trump administration sought to ease regulations. Megadeals in the third quarter tallied up to a stunning $1.26 trillion. The $55 billion acquisition last month of video game developer Electronic Arts by buyout group Silver Lake, Saudi Arabia's Public Investment Fund (PIF) and Affinity Partners was the largest leveraged buyout in history. The rebound in dealmaking has been spurred by stocks at historical highs, lower interest rates and lighter regulations under Trump, which offset the uncertainty from trade tensions that stalled activity earlier this year. Global mergers and acquisitions surged 40% in the third quarter versus the previous year, according to Dealogic data. While megadeals rebounded, a paltry 8,912 deals were signed, down 16% from last year, the worst third-quarter for deal volume in 20 years, the data showed.  The rebound in activity also led to a flurry of job-hopping by senior executives. Even the U.S. government is contributing to dealmaking, pursuing deals across up to 30 industries, involving dozens of companies deemed critical to national or economic security, Reuters reported this month.  Global investment banking fees: Bank 2025 YTD 2024 YTD 2024 Wallet Rank share (%) JPMorgan 7.7 1 7.8 Goldman Sachs 6.3 2 6.1 Morgan Stanley 5.2 4 4.8 BofA 5 3 5.5 Citi 4.2 5 3.9 Barclays 2.7 6 2.9 Wells Fargo 2.5 7 2.3 Source: LSEG ​ (Reporting by Tatiana Bautzer, additional reporting by Pritam Biswas, Nupur Anand, Saeed Azhar, Arasu Kannagi Basil, Editing by Lananh Nguyen and Nick Zieminski)

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