This Week in Earnings – Q1'25

Big Banks kicked off Q1 earnings season with most delivering solid results on the top- and bottom-line, continuing their recent trend. That said, executives struck a notably cautious tone, flagging recent market volatility and warning of slowing deal activity amid ongoing trade and economic “turbulence”. Further, the animal spirits that buoyed outlooks last quarter have largely dissipated, with expected tailwinds from a more pro-growth agenda from the White House (i.e., tax cuts, deregulation) pushed further out, and execs framing that the start of Q2 is a “markedly different operating environment” than at the start of the year.

That said, commentary from bank executives suggests that despite tariff concerns and waning consumer sentiment, the U.S. consumer remains resilient, albeit exhibiting some notable shifts in spending patterns. JPMorgan pointed to signs of front-loading in areas expected to see price increases from tariffs, while Citi highlighted a move toward essentials away from travel and entertainment.

Regarding the deal environment, executives note corporate clients remain engaged, but that tariff turmoil has shifted priorities away from longer-term strategic initiatives toward short-term mitigation efforts and supply chain adjustments. However, most maintain that backlogs and strong pipelines suggest an eventual pickup once clients gain clarity, with deals being “paused” not “deleted”.

Against this backdrop, banks remain focused on disciplined expense management, while still prioritizing investments around automation and AI-driven efficiencies. Taken together, after a mostly solid start to the year, banks exhibit a more cautious stance heading into Q2, noting clarity on the tariff landscape likely won’t be reached for some time.

Key Themes

• Macroeconomic Outlook – Notable Shift to Concern, Owing to Policy Shifts, Global Tensions, and Unclear Growth Trajectory
• Consumer Health – Resilience Holds Up in Q1 with a Certain Amount of Front-Loading Driving Up Spend while Lower-Income Segments Remain Pressured; Consumer Not at Levels of “Distress”
• Business Activity & Deal Environment – Tariff Turmoil Puts Deals on Ice as Clients Prioritize Mitigation Steps; Execs Tout Strong Pipelines and Continued Engagement, Anticipating a Rebound When Clarity Improves
• Loan Growth / Demand – Stable but Not Accelerating; Constrained More by Uncertainty than by Fundamentals, Businesses Remain Healthy but Cautious, and Longer-Term Structural Trends – e.g., Reshoring and Regional Migration – are Tailwinds on the Horizon