US banking giants ride tariff volatility to beat estimates but risks remain

US banking giants including Citigroup and JP Morgan have topped analysts' earnings estimates but remain wary of tariff-driven uncertainty and geopolitical headwinds.

Though JP Morgan Chase, the biggest US lender by assets, reported a 17 per cent year-on-year drop in its net income for the quarter to the end of June, its earnings per share of $5.24 topped the average analysts' forecast of $4.48, according to estimates compiled by LSEG.

The bank's profits for the three-month period fell to $15 billion, reflecting a one-time accounting gain in the same period last year that skewed comparison.

“The US economy remained resilient in the quarter,” JP Morgan chief executive Jamie Dimon said.

The April-June quarter earnings of large financial institutions in the US reflect a volatile three-month period, which was dominated by President Donald Trump's tariff agenda that spooked global markets initially. However, major indexes on Wall Street recovered quickly and soared to their record-highs in recent weeks.

In the same period came the passage of Mr Trump's landmark “One Big Beautiful Bill”, which non-partisan analysts estimate will add trillions of dollars to the US deficit. Hostilities between Israel and Iran also led to fears of a potential crunch in the energy market.

“The finalisation of tax reform and potential deregulation are positive for the economic outlook, however, significant risks persist – including from tariffs and trade uncertainty, worsening geopolitical conditions, high fiscal deficits and elevated asset prices,” Mr Dimon said.

One of the most outspoken voices in the banking industry, Mr Dimon has previously warned of ballooning US debt and widening fiscal deficit.

Net interest income boost

JP Morgan on Tuesday also boosted its guidance on net interest income (NII) to about $95.5 billion in 2025.

Bank of New York Mellon also raised its outlook for NII this year, expecting to hit “high-single-digit” year-on-year growth compared to its previous outlook of “up mid-single-digits”. The company posted adjusted earnings per share of $1.94, topping analysts' projections of $1.75.

Meanwhile, Wells Fargo cut its 2025 guidance for NII to $47.7 billion, citing lower income in its markets business.

Citigroup also posted a rise in its second quarter net income to $4 billion on Tuesday, up from $3.2 billion in the same period last year. The global lender's earnings of $1.96 per share for the reporting period also beat analyst estimates of $1.60 per share.

“Markets had their best second-quarter performance since 2020 with a record second quarter for equities,” Citigroup chief executive Jane Fraser said.

Citigroup said total market revenue was 16 per cent higher than the same time last year, while equity revenue increased 6 per cent on an annual basis. "With revenue up 8 per cent, services continue to show why this high-return business is our crown jewel,” Ms Fraser said.

Citigroup said it expects $84 billion in revenue for the full year.

BlackRock, among biggest asset managers in the world, also said it has benefited from Wall Street's second-quarter rally, reporting assets under management climbing to $12.53 trillion from April-June, up from $10.65 trillion on the same period last year.

Goldman Sachs, Bank of America and Morgan Stanley are scheduled to report earnings on Wednesday.