Banks’ Q3 Bonanza and Faster Bonuses? Windfalls, Risk-Taking—and a Private‑Credit Reckoning
Wall Street banks just delivered their strongest third quarter in years, powered by a one‑two punch of booming trading and a resurgent deal machine. From JPMorgan’s record trading haul to a five‑year‑best earnings beat at Morgan Stanley, large U.S. banks posted double‑digit profit growth as equity markets near record highs and tariff-driven volatility kept clients active across rates, currencies, commodities, and stocks. Investment banking fees surged as M&A, IPOs and debt issuance found a higher gear. The windfall is already stirring a perennial question with fresh urgency: what happens to bonus pools when the revenue mix swings toward discretionary, performance-sensitive businesses like trading and advisory? Compensation pressures are building—but so are the warning lights. JPMorgan pushed provisions for credit losses higher, even as Bank of America lowered its own. And JPMorgan CEO Jamie Dimon warned that recent auto- and consumer-linked bankruptcies may be early signs of broader excess in private-company financing. As Q4 begins, investors and employees alike are watching three fault lines: the durability of the deal pipeline, the health of credit, and how banks manage compensation optics and timing.