This past quarter, big banks quietly posted some of the best results in their history.
The four largest banks in America generated $113 billion in revenue and $31 billion in profit. Again, that’s for three months of operations.
And thanks to a rare mix of economic, political, and market conditions, the momentum is poised to continue.
Let’s break down the tailwinds propelling banks higher… and how investors can profit.
1. Rates are staying higher for longer
A year ago, analysts predicted that the Federal Reserve would have slashed rates by now. Instead, rates have stayed elevated… and that’s been a windfall for banks.
Banks make money on the spread between what they pay depositors and what they earn on loans. The higher rates stay, the fatter the spread becomes.
The big four banks—JPMorgan Chase, Bank of America, Wells Fargo, and Citibank—earned $64 billion in net interest income in just one quarter, on pace for $260 billion annually. To put that in perspective, that’s more than Meta’s entire annual revenue… and more than double AT&T’s yearly sales.
And there’s no immediate sign of this slowing. While Fed Chair Jerome Powell’s term ends in May 2026—and his successor is likely to lower rates much faster—there’s still 3/4 of a year before that happens.
It’s also worth noting that when rates do go lower, it will likely reignite the housing market, which will also be a boon for banks.
2. Consumers aren’t cracking
Despite rising costs, U.S. consumers continue to spend on travel, entertainment, and retail. Airports are packed, hotels are sold out, and restaurants remain busy.
As JPMorgan’s CFO put it on their earnings call, “We continue to struggle to see signs of weakness [in consumer spending].”
That means credit card balances remain strong, personal loan demand is healthy, and defaults aren’t spiking.
3. Investment banking is back
With the stock market at all-time highs, mergers and acquisitions are once again booming. Companies that held off making deals under the last administration are now rushing to close them.
That’s because the Trump Administration favors deal-making. Unlike the previous administration that blocked big deals left and right, this one is rolling out the red carpet for M&A.
Goldman Sachs reported a 24% jump in investment banking revenue last quarter, thanks to a “robust backlog of transactions.”
4. Deregulation is coming
Banks were forced to hold massive reserves after the 2008 crisis—capital that sat idle just in case of another similar banking catastrophe.
But under Trump, supplemental leverage ratios and capital buffers are likely to be relaxed, freeing up billions in trapped capital. That’s money banks can redeploy into more lending, share buybacks, and dividend hikes.
5. Global operations are outperforming
The largest U.S. banks have huge international businesses, and global markets are outperforming the S&P 500. Emerging markets are up over 15% year to date vs. 7% for the S&P 500. That’s more revenue streams for banks like JPMorgan and Citigroup.
Why the threats are overblown
Let’s tackle the fearmongering head-on.
- “Banks are going to fail!” – No—they’re making record profits. If one ever did get in trouble, the government would step in, just like it always has.
- “Commercial real estate will destroy regionals!” – Regional banks like Home BancShares Inc. (HOMB) are still reporting record revenue and earnings. The sky isn’t falling.
- “Consumers can’t keep spending!” – History says don’t bet against the U.S. consumer. They always find a way to spend—and banks profit from it.
Meanwhile, these banks are using AI-driven risk management to stay ahead of any trouble long before it becomes systemic.
How to profit
You can approach the banking boom in a couple of different ways: Own the best-of-breed big bank for stability and long-term compounding… and/or add a smart regional bank for growth potential and possible M&A upside.
JPMorgan (JPM) is the king of banking.
- It controls $6.4 trillion in client assets—bigger than the GDP of most countries.
- It dominates in consumer banking, wealth management, trading, and investment banking.
- It’s the top beneficiary of deregulation and a booming M&A market.
JPM is already up 22% this year, but it’s still a core holding for anyone who wants blue-chip exposure to the banking boom. Expect dividend hikes and buybacks as new rules free up capital.
If you want regional bank exposure, skip the weak players and go with a proven winner.
Home BancShares (HOMB) just posted another quarter of record revenue, net income, and earnings per share.
Here’s why HOMB stands out:
- It will benefit when rates eventually come down, reigniting housing and commercial lending.
- It pays a solid ~2.5% dividend.
- It’s a potential takeover target as mid-sized banks consolidate.
- Management is disciplined, with a strong balance sheet and smart capital allocation.
HOMB has underperformed the big banks this year, which means it still has room to run, especially if mortgage and real estate activity picks back up.
The bottom line
We’re in arguably the best banking environment in 30 years.
Rates are still fattening margins, deregulation is coming, consumers aren’t cracking, and deal-making is roaring back.
If you want safety and scale, JPM is the obvious winner. If you want growth potential and a regional play with takeover upside, HOMB is a smart bet.
Either way, banks are no longer the “boring” corner of the market. They’re quietly minting money—and this may be your best chance in years to ride the wave.
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