Winner of 2024: Investment Bankers

In some ways, being an investment banker is like being a surfer — only the waves are made of things like underwriting and M&A rather than water molecules.

After two years of diminishing returns that felt like trying to hang ten in landlocked Iowa, 2024 marked something of an investment banker return to Oahu (where many Wall Street traders are probably on post-Christmas vacation right now, thanks to those good waves earlier this year).

The next two years might be even better.

From Lucky to Luckier

Prior to 2024, total investment banking revenue at JPMorgan, Goldman Sachs, Bank of America, Citigroup, and Morgan Stanley fell for two years in a row — from a $48.9 billion peak in 2021 down to $22.9 billion last year. That was thanks (or no thanks, the C-suite might say) to the higher interest-rate environment that stunted dealmaking.

As the dealmaking environment improved — a tip of the hat to the usual suspects, the bull market and interest-rate cuts — investment bankers reaped a windfall. Based on data through the third quarter, Wells Fargo analysts forecast investment banking revenues at the five major banks mentioned above to reach $29.4 billion this year and grow to $34 billion in 2026. Overall global investment banking revenue, meanwhile, rose 27% in the first nine months of 2024, according to Dealogic data. The renewed need for their advisory services was pretty straightforward:

• Bain & Company said earlier this month that global M&A will reach $3.5 trillion this year, up 15% year over year and back to mid-2010s levels. Those deals need investment banks — when confectionery giant Mars snapped up every can of Pringles in a $36 billion deal for its snack company parent, Kellanova, Citigroup and JPMorgan Chase provided $29 billion in debt financing. When son-of-a-billionaire David Ellison’s Skydance Media agreed to merge with Paramount, it tapped Bank of America as an advisor.
• Revenue from investment banking fees rose 56% year over year at Morgan Stanley in the third quarter and an average of 30% at Goldman Sachs, JPMorgan, Bank of America, and Citigroup, according to Wells Fargo analysts. S&P Global’s Coalition Greenwich estimates revenue from the sector at the 12 largest global investment banks will rise 30% in full year 2024.

Feeling Good, Feeling Better: The denizens of Wall Street are, unsurprisingly, feeling good, too: A survey of 1,700 financial services professionals by eFinancialCareers found the average respondent expects a 50% increase to their bonus this year (congrats if that’s you reading this). They could soon feel even better: With deregulation-friendly President-elect Donald Trump set to retake office, Coalition Greenwich predicts global investment banking income could rise 5.7% to $316 billion next year — with $27.6 billion in fees for M&A alone.