US Bank earnings outlook for Q3 2025

​​​The September-quarter reporting season begins on Tuesday, 14 October, when JPMorgan, Wells Fargo and Citigroup unveil their third quarter (Q3) 2025 results. These three banking giants will set the tone for the wider financial sector.

​Their shares have performed strongly in recent months, despite some recent weakness. This resilience reflects continued optimism about sector earnings and the strength of capital markets activity.

​The banking sector has benefited from a robust economy and increased corporate activity throughout 2025. Investment banking fees have recovered as companies return to the M&A market and pursue capital raising opportunities.

​Trading desks have also enjoyed a productive quarter, with elevated volatility in equity and fixed income markets providing opportunities for revenue generation. This combination of factors has positioned banks well heading into results.

​Analyst expectations point to strong results

​BofA Securities has raised its forecasts for several major banks ahead of Q3 results. The firm expects better-than-anticipated investment banking and trading revenues to drive stronger performance across the sector.

​Citigroup's earnings per share (EPS) forecast has been lifted to $1.91, with analysts setting a target price of $115 for the stock. This represents a significant upgrade from previous expectations.

​JPMorgan's forecast now stands at $4.92 per share, reflecting confidence in the bank's diversified business model and strong market position. Morgan Stanley and Goldman Sachs have also seen their price targets increased.

​Other major banks including Wells Fargo and Bank of America have benefited from revised forecasts. The broad-based nature of these upgrades suggests sector-wide strength rather than isolated success stories.

​What's driving the optimism?

​Investment banking has staged a notable recovery in 2025, with M&A activity picking up as companies gain confidence in the economic outlook. This has translated into higher advisory fees and underwriting revenues.

​Trading operations have capitalised on market volatility, particularly in fixed income and currencies. Banks with strong trading franchises have been able to generate substantial revenues from client flows and proprietary positioning.

​Net interest income remains resilient despite expectations of rate cuts. Banks have managed their deposit costs effectively while maintaining lending yields, preserving margins better than many anticipated.

​Capital markets activity has accelerated, with initial public offering (IPO) pipelines building and debt issuance remaining robust. This provides a supportive backdrop for investment banking divisions across the sector.

​Key themes to watch in bank earnings

​Net interest income trends will be crucial, particularly as the market anticipates further rate cuts. Investors want to understand how banks plan to manage margins in a declining rate environment.

​M&A activity and deal pipelines will provide insight into future revenue visibility. Banks with strong backlogs of announced but unclosed deals should benefit in coming quarters.

​Trading performance across asset classes will reveal which banks best capitalised on market opportunities. Strength in equities, fixed income and commodities trading will be scrutinised.

​Capital deployment plans deserve attention as banks accumulate excess capital. Share buyback programmes, dividend increases and potential acquisitions will all be on the agenda as rate cuts approach.

​Market sentiment and investor positioning

​Market strategist Ed Yardeni notes the S&P 500 Diversified Banks index has reached a record high. This performance reflects record forward earnings expectations and investor confidence in the sector's outlook.

​However, this strength raises questions about whether optimism is already fully priced into bank shares. Strong results may be needed simply to justify current valuations rather than drive further gains.

​The recent pullback in some bank shares suggests profit-taking after a strong run. This could create opportunities for investors who believe the earnings strength will continue beyond Q3.

​Sector rotation into financials earlier this year positioned many investors long banks ahead of results. The earnings season will test whether this positioning proves prescient or premature.

​Understanding bank business models

​Banks generate revenue through multiple channels, making them complex businesses to analyse. Net interest income from lending represents the traditional core, but investment banking and trading have become increasingly important.

​Investment banking divisions advise on M&A transactions, help companies raise capital through equity and debt offerings, and provide strategic advisory services. These activities generate fees that are less capital-intensive than lending.

​Trading operations act as market makers and take proprietary positions across asset classes. While potentially volatile, successful trading divisions can generate substantial returns during periods of market activity.

​Asset management and wealth management units provide steady fee income and help diversify revenue streams. These businesses typically carry lower risk profiles than trading or lending operations.