Big US banks rake in near-$50bn profit as Iran war shakes markets

Big US banks raked in nearly $50bn (£37bn) worth of profits in the first three months of the year, as they benefited from stock market turbulence triggered by the US-Israeli war on Iran.

Wall Street’s largest lenders have reported a jump in first-quarter earnings, reflecting the surge in demand for trading services as investors dumped risky stocks and bonds and sought safer havens for their cash.

On Wednesday, Bank of America and Morgan Stanley posted a leap in profits, joining Goldman Sachs, JP Morgan, Citi and Wells Fargo in announcing strong results this week. Collectively, the six banks reported $47.4bn in profits.

Investors have been trying to cut their exposure to companies due to suffer as a result of economic shocks triggered by the Middle Eastern conflict. Disrupted tanker traffic in the strait of Hormuz has led to a rise in energy prices, raising inflation forecasts, borrowing rates and the likelihood of a global recession.

Market jitters have also amplified existing concerns about whether some AI companies are truly worth as much some have claimed, and triggered renewed concerns over the quality of loans issued by the once-booming private credit sector.

But investor panic has been a gift to trading desks at many US investment banks, helping lenders such as JP Morgan report a 13% jump in profits to $16.5bn in the first quarter, compared with the same period a year earlier.

Goldman Sachs announced its profits had jumped 19% in the first three months of the year to $5.6bn, a figure that its chief executive, David Solomon, hailed as a “very strong performance … even as market conditions became more volatile”.

Solomon told analysts that the environment had changed significantly since the turn of the new year, before the US and Israel began attacking Iran in late February. “2026 began with a degree of optimism,” Solomon said. “Markets hit record highs and confidence continued to build, with most clients focused on growth, strategic activity, and capital deployment … things were only moving a straight line. And as the quarter progressed, the macro environment started to weigh on sentiment.”

Bank of America, the second-largest US lender, said on Wednesday that profits had grown 17% in first quarter to $8.6bn as volatility increased activity on its trading desk. However, its chief executive, Brian Moynihan, said the bank’s board “remain watchful of evolving risks” reflecting wider concerns that an extended conflict in the Middle East could knock household spending, business revenues and ultimately global growth.

The International Monetary Fund said on Tuesday that a further escalation of the Iran conflict could trigger a global recession, adding that net energy importers and developing nations would face the biggest hit. That included the US, with the IMF having lowered its 2026 growth forecast by 0.1 percentage points, to 2.3%.

A downturn could knock bank earnings, resulting in a drop in demand for loans and mortgages, while discouraging business clients from pursuing the kind of mergers and takeovers that increase investment banking fees.

In the meantime, US banks are cheering their first-quarter performance, with Citi having reported a 42% rise in profits to $5.8bn and Morgan Stanley posting a 30% rise in profits to $5.6bn. Wells Fargo announced a 7% increase in first-quarter profits to $5.3bn.

Banks used some of their profits to buy back shares from investors. JP Morgan spent $8.3bn – a quarterly record for the bank – while Citi spent $6.3bn, the highest in at least 20 years. Goldman spent $5bn, Wells Fargo $4bn and Morgan Stanley $1.8bn. Bank of America spent $7.2bn, the highest in four years.