This Week in Earnings – Q3'25

Big banks kicked off Q3’25 earnings season on a strong note, soundly beating Street estimates on both the top- and bottom-line with results powered by robust investment banking and capital markets activity, building on the momentum seen coming out of last quarter. This also comes amid a growing consensus around expectations for the Fed to cut rates by an additional 50 bps by year end (25 bps at both the October and December meetings).

Consistent with findings from our recently published Q3’25 Inside The Buy-Side® Earnings Primer®, executives struck a largely upbeat tone, describing a solid U.S. economy and improving confidence amid easing policy uncertainty and a more supportive regulatory backdrop, yet remaining guarded given ongoing macro and geopolitical risks, and potential softening in the labor market. At the same time, many flagged signs of exuberance and “frothiness” across equity markets and risk assets, underscoring the need for continued discipline.

Regarding the business climate, bank leaders highlighted corporate clients leaning back into strategic activity, with dealmaking described as the busiest in years as CEOs gain confidence in the economic backdrop and their ability to navigate the trade and regulatory environments. Across banks, execs touted strengthening pipelines, a rebound in M&A, and constructive financing conditions.

As for the health of the consumer, big banks continue to bang the drum on “resilience,” pointing to strong spending and credit quality, with delinquency trends holding better than expected. Commentary from regional banks is largely aligned, though this group notes continued stress at the lower-income levels.

Meanwhile, recent headlines around troubled auto loans (Tricolor and First Brands) reignited discussion about credit risk, prompting vigilance even as executives framed the events as isolated. JPMorgan’s Jamie Dimon cautioned that “when you see one cockroach, there are probably more.” Heightened investor scrutiny sent regional bank stocks sharply lower on Thursday, though they have stabilized on Friday following some well received earnings.

Finally, technology and AI remained front and center, with banks highlighting tangible progress from prior investments. AI is now being positioned as both a productivity and revenue growth enabler, helping firms “constrain” headcount growth while scaling operations and client engagement.

Key Themes

• Macroeconomic Outlook – Executives See Solid Economy and Improved Confidence, yet Flag Market Exuberance, Policy Uncertainty, and Labor Soft Spots
• Business Climate & Deal Activity – Strategic Dealmaking Builds Momentum as CEO Confidence and a More Supportive Regulatory Backdrop Drive a Broader Recovery
• Consumer Health – Still Beating the Drum on the “Resilient” Consumer, Bank Leaders Note Strong but Discerning Spending and Emphasize Limited Low-income Exposure
• Credit Quality – Tricolor and FirstBrands Stir Scrutiny; Executives Note Reason for Caution but Emphasize Contained Exposure and Disciplined Risk Management 
• AI & Technology – Banks Accelerate AI Investment to Drive Efficiency and Revenue Growth While “Constraining” Headcount Expansion