Investment Banking Resurgence Drives Record Results
After nearly three years of pandemic-era uncertainty and false starts, Wall Street’s dealmaking engine is roaring back to life. Goldman Sachs, JPMorgan, and Citigroup all reported stronger-than-expected third-quarter results as corporate executives revived merger and financing plans that had been shelved during market uncertainty. The banking giants logged double-digit gains in investment banking fees, signaling what appears to be a sustainable recovery in capital markets activity after years of drought that had depressed banker compensation and morale.
The resurgence comes amid what industry leaders describe as a more supportive regulatory environment and improved market conditions. For the second consecutive quarter, evidence is mounting that the prolonged dealmaking slowdown has genuinely reversed course. The timing coincides with broader technological shifts, including critical security considerations for enterprise systems as organizations navigate evolving digital infrastructure requirements.
Goldman Sachs Leads the Charge with Historic Performance
Goldman Sachs emerged as the standout performer, reporting its third-highest quarterly net revenues ever at over $15 billion. CEO David Solomon told investors during Tuesday’s shareholder call that mergers have returned with force, driving the firm’s advisory revenues 60% higher than the same period last year to reach $1.4 billion quarterly.
The bank’s overall investment banking fees totaled nearly $2.7 billion, representing a 42% increase from the third quarter of 2024. Equity underwriting revenues climbed 21% to $465 million, while debt underwriting jumped 30% to $788 million. This performance reflects the same technological advancement seen in enhanced hardware monitoring systems that enable more sophisticated financial operations.
Goldman advised on several high-profile transactions this year, including the public offerings of Klarna and Figma last month. The bank also worked on the proposed $50 billion Anglo American and Teck Resources merger and Electronic Arts’ $55 billion take-private deal. These blockbuster transactions, announced this quarter, will contribute to future results as their fees haven’t yet been recorded.
“The setup remains constructive,” Solomon stated, praising the regulatory environment for spurring renewed activity. He predicted “a very constructive M&A environment through the end of the year into 2026.” Goldman’s CFO Denis Coleman noted the firm’s dealmaking backlog reached its highest level in three years across equity, debt, and advisory services.
JPMorgan Shows Strength Through Diversified Model
JPMorgan demonstrated the power of its diversified business approach with investment banking fees rising 16% and commercial and investment banking net revenues approaching $20 billion for the quarter. CEO Jamie Dimon noted that “ECM and M&A activity picked up against a supportive backdrop,” echoing the broader industry recovery.
Kenneth Leon, CFRA Research’s director of equity research, commented that “the quarter showcased the strength of JPMorgan’s diversified business model, with all major segments contributing to growth. We think this will lead the momentum for the rest of 2025 and into 2026.” This strategic positioning mirrors how organizations must address emerging security vulnerabilities through comprehensive protection strategies.
JPMorgan CFO Jeremy Barnum told shareholders that the lending rebound is “mirroring the pickup in deal activity across our investment-banking businesses,” highlighting how client borrowing and transaction volumes are moving in tandem again. “We’re starting to see more M&A activity,” he added, citing “the busiest summer we’ve had in a long time” and a rate environment conducive to dealmaking.
However, Barnum struck a cautious note, warning that market prospects “could change overnight.” He specifically noted that a continued government shutdown could stall capital markets and public issuance activity, potentially impacting ECM bankers who guide companies through public offerings.
Citigroup’s Banking Unit Gains Momentum Under New Leadership
Citigroup’s investment bank generated more than $1.1 billion in fees, representing a solid 17% increase from the previous year. The unit has experienced renewed ambition under its new investment banking chief, Viswas Raghavan, a former JPMorgan dealmaker who joined Citi last year as executive vice chair and head of banking under CEO Jane Fraser.
Corporate lending revenue surged nearly 40% as clients returned to tap Citi’s balance sheet, reflecting the broader industry trend. The bank’s performance improvement comes amid regulatory developments similar to recent online safety enforcement actions that are shaping the operating environment for financial institutions.
Industry-Wide Deal Volume Surges
Data from LSEG reveals the scale of the recovery: deals worth $5 billion or more have surged 64% from last year, with 100 such transactions recorded so far in 2025 compared to 61 by the same point in 2024. This substantial increase has created benefits across the banking sector, with the momentum spreading beyond the largest players.
The improved dealmaking landscape has prompted banks to reverse earlier conservative staffing approaches. JPMorgan executives cited higher compensation and “growth in front office employees,” marking a significant shift from earlier this year when leadership had instructed managers to “resist hiring” and maximize efficiency with existing resources.
This renewed hiring confidence reflects the same forward-looking approach seen in cloud infrastructure innovation that enables scalable business growth. As banks position themselves for sustained activity through 2026, the staffing and technological investments suggest industry leaders anticipate the current momentum will continue.
Market Reaction and Future Outlook
Despite the strong results, Goldman and JPMorgan shares slid more than 2% on Tuesday morning amid a broader market sell-off, while Citigroup rallied approximately 2%. This mixed market response highlights the complex factors influencing bank valuations beyond quarterly earnings.
Industry executives remain cautiously optimistic about the sustainability of the recovery. While the current environment appears favorable for continued dealmaking activity, banks are maintaining vigilance around potential market disruptions. The convergence of supportive regulatory conditions, pent-up corporate demand for strategic transactions, and improved financing availability has created what many hope will be a prolonged period of banking activity growth.
As Wall Street adapts to this new phase of activity, the focus remains on balancing aggressive pursuit of opportunities with prudent risk management—a challenge that will define the banking industry’s trajectory through the remainder of 2025 and into 2026.
