Investment banking revenues at the biggest U.S. banks are set to top $9 billion in Q3 — up 13% year over year — marking the strongest quarter since 2021 as dealmaking thaws under the Trump administration.

New York — After a start-and-stop recovery that stretched across two years, Wall Street’s investment banking machine is finally humming. Aggregate investment banking fees at the five largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley — are projected to surpass $9 billion in the third quarter, according to bank guidance and market data providers, the first time the tally has crossed that threshold since 2021. That represents an increase of roughly 13% from a year ago and caps a steady climb from the post‑pandemic trough in 2023.

The rebound is being powered by a broader resurgence in dealmaking: a busier mergers-and-acquisitions calendar, a livelier pipeline of initial public offerings, and a revival of leveraged buyouts as financing markets reopen. While megadeals have grabbed headlines, bankers say the most notable shift is the breadth of activity — from industrial carve‑outs and energy consolidation to software roll‑ups and AI infrastructure plays — that has fed both advisory and underwriting desks.

Signals from bank executives ahead of earnings underscore the turn. Bank of America has telegraphed a double‑digit percentage rise in third‑quarter investment banking fees compared with a year earlier, and JPMorgan has pointed to low‑double‑digit growth after surprising to the upside in the second quarter. Citigroup expects mid‑single‑digit gains. Market‑sensitive trading units remain solid, but the story investors are watching this week is whether high‑margin advisory and equity issuance are truly back.

Policy and macro tailwinds have helped. Markets have responded to the Trump administration’s more business‑friendly posture on regulation and a recalibration of antitrust enforcement priorities, with boards perceiving a clearer path to deal approvals in strategic sectors. At the same time, steadier interest‑rate expectations and buoyant equity valuations have given corporate finance chiefs the confidence to dust off expansion plans deferred during 2022–2023 volatility.

On the financing side, the reopening of the high‑yield bond market and a string of well‑received IPOs have provided crucial exit routes and funding capacity for sponsors. That, in turn, has restarted the private‑equity flywheel: asset sales beget distributions to limited partners, which beget fresh fund commitments — and more deal firepower. Syndicated loan desks that were clogged with hung bridges a year ago report that risk budgets are loosening and that investors are again willing to underwrite new money deals at workable terms.

Crucially, the mix of activity has shifted toward sectors aligned with secular U.S. priorities — energy security, advanced manufacturing, and digital infrastructure — where policy signals and corporate urgency are strongest. Defense supply‑chain consolidation, grid modernization and nuclear‑adjacent projects have moved from whiteboard concepts to mandate‑ready transactions. Technology remains the single biggest fee pool, but bankers report that the buyer universe has widened beyond the largest platforms to include traditional industrial and utility acquirers pursuing vertical integration.

Equity capital markets have also thawed. After two years of sporadic issuance windows, the 2025 calendar has seen a steadier cadence of IPOs and follow‑ons, with pricing power shifting back — cautiously — toward issuers. Bookrunners say that investor conversations now focus less on whether deals can clear and more on the long‑term earnings paths and lock‑up dynamics that will support aftermarket performance. The past quarter’s deals have, on average, traded better in the secondary market, a prerequisite for broadening the pipeline into year‑end.

The rebound remains uneven across firms and products. Goldman Sachs, long a bellwether for M&A, has contended with senior banker turnover amid leadership reshuffles even as it maintains a strong share of megadeals. Morgan Stanley’s equity franchise is regaining altitude as wealth‑linked flows stabilize. Universal banks with deep balance sheets have leveraged those strengths in financing-led transactions, while elite boutiques continue to capture complex, board‑level mandates where independence is the selling point.

Investors will parse compensation lines closely. A busier fee environment typically brings higher payout ratios as banks compete for rainmakers and lift junior‑to‑midlevel hiring freezes. Several firms have already added headcount in coverage and activism defense, particularly in technology, energy and industrials. The industry’s fixed‑cost base is leaner than pre‑2022 after successive rounds of expense cuts, suggesting operating leverage should be meaningful if the revenue trend holds.

Risks still loom. A renewed bout of market volatility, an extended government funding impasse, or a sharper‑than‑expected deterioration in consumer credit could cool animal spirits. On the regulatory front, any high‑profile merger challenge could reset boardroom expectations. And while financing costs have eased from their peaks, they remain structurally higher than during the zero‑rate years, demanding more disciplined underwriting and tighter synergy math to make deals pencil.

For now, though, the tone on the Street is the most constructive it has been in years. Trading divisions are on track for another solid quarter, but — for the first time since the frenzy of 2021 — bankers say their advisory calendars, not their volatility desks, are dictating the week. If earnings over the next few days confirm the early reads, 2025 could yet be the year that dealmaking shifts from tentative to durable — and investment banking resumes its role as the profit engine at the core of Wall Street’s biggest banks.

What to watch next

• Earnings calls: Guidance on fourth‑quarter pipelines, particularly in ECM and sponsor‑backed M&A.

• Regulatory signaling: Any clarity from antitrust authorities on remedies frameworks for large, cross‑market combinations.

• Financing conditions: Depth of leveraged loan demand and high‑yield new‑issue concessions as supply builds.

• Compensation and hiring: Whether banks lift promotion freezes and expand sector coverage teams into 2026.

Editor’s note: Figures refer to aggregate investment‑banking fees at JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley.