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A surge in Wall Street trading and dealmaking has led to strong third-quarter profits for Bank of America (BAC) and Morgan Stanley (MS). Thanks to a rise in mergers, IPOs, and trading activity, both banks beat analyst expectations and showed growing confidence in the US financial sector.
Bank of America's net profit increased 23% to $8.47 billion, and Morgan Stanley's profit surged 44% to $4.6 billion, both at least $1 billion more than analysts had projected. Both banks reported good results as a busy summer of mergers and initial public offerings fueled investment banking.
Dealmaking fees increased aggressively, 43% at Bank of America and 44% at Morgan Stanley, to approximately $2 billion and $2.1 billion, respectively. Bank of America CEO Brian Moynihan attributed ‘strong fee performance from our market-facing businesses,’ and Morgan Stanley CEO Ted Pick described the quarter as ‘outstanding.’
Rising markets also supported both banks' trading operations. Bank of America's revenue in trading increased 8% to $5.3 billion, while Morgan Stanley's increased 24%, primarily from its equities trading division.
Both banks played central roles in some of the year's largest corporate transactions. Bank of America was a leading participant in Union Pacific's $71 billion purchase of Norfolk Southern, the largest US merger of 2025. Morgan Stanley also advised on that transaction and co-led Keurig Dr Pepper's $18 billion acquisition of JDE Peet's.
The robust results are matched by earlier performances of Goldman Sachs, JPMorgan Chase, Citigroup, and Wells Fargo, which all posted double-digit gains in dealmaking fees. Experts attribute this boom to faster approvals of mergers and relaxed regulatory guidelines by the Trump administration that have eased the passage of large financial deals.
These figures indicate that Wall Street's investment banking market is staging a strong recovery. With eased regulations, massive corporate deals, and fierce trading, US banks are gaining from restored investor confidence. If the trend carries on through 2026, the financial sector might witness its most profitable phase in nearly a decade.
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