Wall Street Investment Banking Revenues Surge in Q3 2025 Amid M&A, Strong Regulation

The investment banking business at Wall Street’s biggest banks is firmly in recovery. Estimates indicating $9.1 billion in IB fees for Q3 2025 across advisory, equity and debt underwriting at the five major U.S. banks mark both a return to growth and resilience in the face of macro-headwinds. The 13 % year-over-year rise shows dealmaking momentum has picked up after a drawn-out slump linked to interest-rate pressures, regulatory uncertainty, and subdued IPO activity. [1][2]

However, even with the rebound, the IB revenue base remains well below last boom-times: it hasn’t yet returned to the $13.4 billion levels seen in the final quarter of 2021. That gap suggests that while sentiment is improving, some deal types (especially IPOs) and certain underwriting activities have not yet fully recovered. [1]

Individual banks show variation but broadly similar upward trends. Goldman Sachs reported ~$2.7 billion in IB fees (up ~42 % YoY), JPMorgan ~$2.6 billion (up ~17 % YoY), Morgan Stanley ~$2.1 billion (up ~44 % YoY), Bank of America ~$2.0 billion (up ~43 % YoY), and Citi ~$1.2 billion (up ~17 % YoY). This reflects diversified growth drivers: Goldman leading in advisory, Morgan Stanley strong in equity underwriting, and Bank of America, Citi closing gaps in both advisory and underwriting. [4][5]

Strategic tailwinds are aiding this upswing: a more permissive regulatory climate under the current U.S. administration; growing deal pipelines with sponsor-backed transactions; robust corporate and refinancing activity; and substantial stock market sentiment supported by leaked hints of future rate cuts. But risks remain—volatile rates, geopolitical tension, and credit concerns (especially in lower-quality consumer and auto sectors) all pose upside limits. [1][2][3]

For Q4 2025 and into 2026, expectations are cautiously optimistic. Banks like Citigroup forecast mid-20 % YoY fee growth in Q4; others expect modest gains or flat IB revenues depending on underwriting appetite. Whether upward momentum sustains may hinge on how much IPO windows stay open and how fast deal flow ripens in sectors like private equity, energy transition, and industrial M&A. [6][4]

On dimensions like cost control, efficiency, and capital allocation, banks have made strides: compensation ratios are tightening relative to revenue gains, headcount growth remains disciplined, and cross-product integration (advisory + underwriting + financing) is proving differentiating. Those who can maintain or increase market share here stand to benefit. [3][2]