Banks See Boost in Trading Revenue Thanks to Tariff Volatility
Global banks, especially major U.S. lenders, are poised to report a 10% increase in markets revenue, primarily driven by shifting U.S. tariff policies, according to analytics firm Crisil Coalition Greenwich. This follows a 15% jump in trading revenue for 12 global banks in the first quarter.
Executives from Bank of America and Citigroup previously anticipated mid-to-high single-digit percentage growth in markets revenue for the second quarter. However, industry experts and bank executives now suggest that when U.S. banking giants release their second-quarter earnings next week, they could exceed these expectations.
These gains are attributed to the volatility spurred by U.S. President Donald Trump’s tariff announcements in April, which led to fluctuations in stock markets and record trading volumes in U.S. Treasuries, as reported by electronic trading platform Tradeweb Markets. A senior Wall Street executive, who preferred to remain anonymous, noted that businesses providing “instantaneous liquidity” benefited significantly from the increased market risk and subsequent “de-risking” by investors.
Volatility as a “Friend” to Markets Revenue
Coalition’s estimates are based on data from 12 prominent global banks, including JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, Wells Fargo, and their European counterparts. Mollie Devine, head of markets competitor analytics at Coalition, highlighted that “volatility is the friend of markets revenue,” and tariff announcements acted as a “positive catalyst” for trading desks.
Devine specifically noted that equities outperformed fixed income and currencies, even though stock markets are smaller. She estimated an 18% increase in equities revenues for the second quarter and a 5% rise in bond revenues compared to the previous year.
Trading Activity: A Return to Normal
Mike Mayo, an analyst at Wells Fargo, suggests that the sustained higher levels of trading activity, fueled by volatility in tariffs, interest rates, and geopolitics, are not an anomaly. He believes this indicates a “path back to normal” after 15 years of near-zero interest rates.
Tradeweb Markets, an electronic marketplace, reported a significant increase in activity, with an average daily volume of $2.7 trillion in April, up 38.6% year-over-year, following a record $2.71 trillion in March. Trading in U.S. government bonds on Tradeweb’s platform surged to a record in April, including the largest weekly jump since 2001, as yields rose in response to Trump’s initial tariff announcements.
Future Projections
Coalition projects that markets revenue for banks in its index will grow by approximately 7% for 2025, with a stronger 13% gain anticipated for the first half of the year. The projected 2025 revenue of $246.2 billion would be the highest since 2009, the year after the global financial crisis. Separately, Mayo from Wells Fargo anticipates trading revenue to increase by 8% for major U.S. banks in the first half, slowing to 5% in the second half, and remaining in low single digits next year as the immediate impact of tariffs subsides.
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