Many Big Banks Reported Earnings Recently — Is It a Good Time To Buy Their Stocks?
Written by
John Csiszar
Edited by
Jenna Klaverweiden
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America’s big banks are often a telling indicator for the health of the overall economy. As such, when the big banks report earnings, everyone on Wall Street listens, and the results can often move markets.
According to the most recent results from the country’s biggest banks, business is booming. Per The New York Times, big banks like JPMorgan Chase, Wells Fargo and Goldman Sachs had “bumper profits” in their earnings reports.
But do these solid earnings make it a good time to buy big bank stocks, or is the news already factored into their share prices? Read on to learn more.
Also see the five best stocks you could’ve bought in 2015.
Just How Well Did the Banks Do?
Overall, big bank earnings were up significantly in the fourth quarter of 2024, with most of the name-brand banks reporting stellar results. Here are some of the highlights, as cited by CNN:
- JPMorgan Chase (JPM) reported net income of $14 billion in the fourth quarter alone, pushing its full-year annual profit to a staggering $58.5 billion.
- Citigroup (C) flipped a $1.8 billion loss in the fourth quarter of 2023 into a $2.9 billion profit in the same quarter of 2024.
- Wells Fargo (WFC) surprised Wall Street with a 50% jump in profits, from $3.4 billion in the fourth quarter of 2023 to $5.1 billion in the fourth quarter of 2024.
- Goldman Sachs (GS) more than doubled its fourth quarter 2023 profits, with the investment bank reporting $4.11 billion in net earnings in the fourth quarter of 2024
What Drove Big Bank Earnings?
According to the Risk Management Association, a division of ProSight, corporate deal-making was part of what helped propel bank earnings in their most recent quarter. Investment banking grew in the fourth quarter, with corporate bond issuances and general merger and acquisition activity pushing up revenue 25% year over year for all of the major banks.
This jump in investment banking came just at the right time for big banks, as the fuel for their revenue growth the prior two years, interest income, began to slow. On the back of the Federal Reserve jacking up interest rates to their highest level in some 40 years, banks raked it in in terms of interest income in 2023 and 2024. However, with the Fed embarking on its campaign of cutting rates in 2024, that engine started to slow.
What Are the Year-to-Date Returns of the Big Banks?
As of Feb. 5, 2025, all of the major banks have posted solid gains on a year-to-date basis. Here’s a comparison of how they’ve done.
- JPMorgan Chase: 12.82%
- Citigroup: 12.89%
- Wells Fargo: 13.97%
- Goldman Sachs: 12.72%
Over the past full year, these four banks earned returns between 45% and 68%, well above the S&P 500’s 22.63% over the past year.
Is It Too Late To Get In?
Nothing is ever certain in the stock market, and there are solid arguments both for and against buying bank stocks now.
“Our number one stock idea for 2025 is long investment banks due to a likely boom in both M&A and AI-related IPOs,” said Jay Hatfield, CEO of Infrastructure Capital Advisors. As the solid investment banking numbers for the most recent quarter weren’t likely a one-off occurrence, Hatfield suggested staying the course.
However, others aren’t as certain about riding the wave of the banks’ recent momentum. Joe Brusuelas, chief economist at RSM US, said that recent inflation numbers have been poor, and he worries the tailwind of falling rates could shortly reverse. “The bond market is very skittish right now. And they are prone to overreaction,” he said.
Big banks are on fire right now, with their solid 2024 returns rolling right into market-beating performance in the first quarter of 2025. The analysts at Charles Schwab see conflicting factors affecting the banks for the rest of the year, with the strong economy giving them a boost but tough comparisons with great earnings in 2024 limiting the opportunity for growth.
If you’re a long-term investor, however, banks remain fairly cheap on a price-to-earnings basis, and many sport solid dividend yields.
Before you jump into any big bank stocks, be sure they match your investment objectives and risk tolerance, and consider speaking with a financial advisor.
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