It is the best of years. It is the worst of years. US banks from Goldman Sachs to JPMorgan, Bank of America and Citi have reported first quarter results this week and they are fine indeed.
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Markets businesses in particular had a blowout quarter. In the words of JPMorgan CFO Jeremy Barnum, recent volatility has not been of the bad variety featuring “extremely gappy discontinuous markets with low liquidity that keeps clients on the sidelines.” In the words of his boss, it’s been of the good variety that encourages “much more volume and the volatility.” Spreads are wider, volumes are up. Equities trading revenues benefitted; prime balances soared as hedge funds engaged.
Even deal-doing bankers basked in a balmy breeze of execution. First quarter M&A revenues rose nearly 90% year-on-year at Goldman Sachs and over 80% at JPMorgan. Barnum said M&A deals benefitted from “accelerated timing” thanks to “faster-than-expected regulatory approval.” Morgan Stanley said today that lighter capital requirements boosted its trading revenues. The US government has been good for something.
Higher revenues mean higher pay. JPMorgan, Citi and Goldman all increased compensation spending in the first quarter. That’s auspicious for bonuses.
However, three months are not a year. Even the most ebullient banking executives acknowledged that war in the Middle East might take its toll. For the moment, Barnum said clients still expect the situation to be quickly resolved. “If things start getting derailed, I would be surprised if you don’t see some impact on sentiment and on deal decision-making,” he observed.
With uncertainty comes caution, and with caution comes care over costs. As we noted earlier this week, Goldman’s blowout quarter was achieved with 400 fewer people than it had at the end of 2025. Citi cut 2,000 people in Q1 and they appeared to have been high earners. More cuts are coming. Goldman reportedly intends to spend 2026 conducting waves of incremental cuts as it pursues a 60% efficiency ratio (it hit 60.5% in the first quarter). Citi CFO Gonzalo Luchetti said yesterday that the bank expects to end 2026 with lower headcount once again. AI will “turbocharge” efficiencies, said Luchetti. The mantra is the same everywhere.
All of which means that while some front office bankers and traders have had a brilliant quarter, new jobs remain hard to come by. It’s brutal if you’re out of the market now, says one London headhunter.
“Banks are making hundreds of millions in profits but they’re also constantly making hundreds of people redundant,” the headhunter tells us. “These aren’t marginal roles being cut; it’s often experienced men and women, capable people, senior individuals who’ve delivered for years, mid-level operators who keep things running. Entire teams are being reduced or reshaped. It’s not about performance.”
Once you’ve been cut, he says the hiring process has become so convoluted that getting back in is almost impossible. “Everything is going through layers and a process that involves robots, ATS filters, screening criteria and internal talent teams.
“Most people are automatically rejected, even when they are very strong.”
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