Big European, US i-banks reap trading benefits of volatility in Q1 2025

Market volatility propelled the largest US and European investment banks towards significant trading gains in the first three months of 2025.

In S&P Global Market Intelligence's sample of 10 banks — five each from Europe and the US — all but one generated higher income from equities trading in the first quarter. The same is true for the banks' income from fixed-income, currencies and commodities (FICC) trading.

The increased volatility in the quarter reflected heightened economic and policy uncertainty, especially in the lead-up to US President Donald Trump's Liberation Day announcement of higher tariffs on imports.

Trump became president for the second time in late January, and the market uncertainty that followed was "a feature, not a bug" of his second presidency, Irene Tunkel, chief US equities strategist at BCA Research, told Market Intelligence via email.

Frankfurt-based Deutsche Bank AG was not included in the equities sample since it exited the business in 2019. UK-based HSBC was excluded from both samples since its ongoing global business realignment made it difficult to make a valid comparison.

Elevated client activity

Higher market volatility boosted trading activity as investors repositioned their portfolios, Tunkel said. This was true of Goldman Sachs Group Inc., whose CEO David Solomon said during the bank's earnings call that ongoing policy uncertainty and market volatility drove many clients to reposition portfolios.

Goldman Sachs' equities income increased 26.6% year over year, the third highest among US banks, behind Morgan Stanley and JPMorgan Chase & Co. Morgan Stanley achieved the highest increase in the sample, at 45.2%.

BNP Paribas SA quarterly equities trading income grew 42.1% year over year, the best among European banks. Fellow French bank Groupe BPCE followed with 39.3% growth, while that of UBS Group AG increased 33.5%.

Several banks set new multi-year records in equities trading, financial markets analysis firm Tricumen said in a quarterly report. Revenue from equity derivatives grew the most, led by banks with strong options and high-margin emerging markets offerings.

The combined equities and FICC trading income of UBS — known together as global markets — increased 32% year over year to $2.47 billion. This marked the best quarter on record for the business, according to CFO Todd Tuckner.

UBS reported the highest year-over-year increase in FICC income among the sample, at 27%. Groupe BPCE, Barclays PLC and Deutsche Bank also reported double-digit growth. Meanwhile, BNP Paribas' increased by 4.4%.

Strong start to Q2

Volatility continued spiking into the start of the second quarter, particularly after President Trump announced the higher tariffs in early April. Banks' trading desks are again poised to benefit since the April volatility was "almost unprecedented," BCA Research's Tunkel said.

"We expect strong [second-quarter] earnings growth from the largest diversified banks," Tunkel said.

UBS CEO Sergio Ermotti said during the bank's earnings call that trading volumes exceeded their pandemic-time peaks by around 30% on some days in early April, and that clients have taken a "wait and see" approach as conditions stabilize.

Troy Rohrbaugh, JPMorgan's co-CEO of the commercial and investment bank, echoed the sentiment at a recent investor day. JPMorgan's FICC income in the first quarter hit $5.85 billion, up 7.8% year over year.

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