In the second quarter, the US investment banking industry achieved its best performance in two years

In the second quarter, Wall Street investment banking business rebounded strongly, achieving its best quarterly performance in two years.

Recently, the five major U.S. banks including Goldman Sachs, JPMorgan Chase, Morgan Stanley, Bank of America, and Citigroup released their second-quarter reports. The total revenue from investment banking reached $8.2 billion, a year-on-year increase of 40%, reaching the highest level since the beginning of 2022.

It is worth mentioning that except for Goldman Sachs, the investment banking revenues of the other four major banks exceeded market expectations, demonstrating a general recovery trend in the industry.

Over the past three months, the stock performance of the five major banks has outperformed the S&P 500 index. Analysts believe that this outstanding performance not only reflects the recovery of the financial markets but also indicates that investment banks may be entering a new growth cycle.

Significant Recovery in Various Segments, Optimistic Outlook for Investment Banking Business

Specifically, different segments have shown varying degrees of recovery:

• Debt Financing: The most outstanding performance, with debt underwriting revenue of the five major banks growing by over 50% to $3.7 billion. This is mainly due to corporate borrowers actively refinancing or adding debt in the context of stabilizing interest rates. Investors' appetite for higher-risk transactions is increasing, such as Boeing successfully raising $10 billion at the end of April. Citigroup and Morgan Stanley performed best in debt transactions, with revenues growing by approximately 90% and 70% respectively.
• Underwriting Business: Revenue increased by 36% to $1.8 billion. South Korean online comic platform Webtoon Entertainment went public on Nasdaq, raising $315 million, becoming one of the highlights of the quarter. JPMorgan Chase and Goldman Sachs achieved revenues of $495 million and $425 million respectively, leading other competitors.
• Mergers and Acquisitions (M&A) Advisory: Revenue increased by 25% to $2.7 billion. Although the growth rate is relatively small, there are increasing signs of large M&A transactions, such as ExxonMobil's $60 billion acquisition of Pioneer. Goldman Sachs accounted for 28% of the deal value announced in the first half of 2024, a significant increase from 21% in the same period last year; Morgan Stanley followed closely, with its share rising from 15% to 24%.

Regarding the future prospects of the investment banking business, major investment banks have expressed optimism.

Morgan Stanley's Chief Financial Officer Sharon Yeshaya stated on Tuesday:

We believe we are in the early stages of the recovery in the investment banking business, and the differences in asset valuations between buyers and sellers are narrowing.

This is consistent with Goldman Sachs' view. Goldman Sachs CEO Solomon previously stated on the earnings call that the company's investment banking backlog has increased significantly this quarter, with further room for recovery.

Morgan Stanley CEO Ted Pick's optimistic comments on the outlook for the investment banking business helped reverse the impact of the bank's stock price being affected by mixed quarterly performance. He said:

I believe we are in the early stages of growth led by the investment banking business, and we are very confident in this assessment