Last week, big banks like JPMorganJPM

and CitiC

reported mixed earnings — stoking fears that higher interest rates could eat into banks’ profits this year. But there was one bright spot: investment banking. And this week, Goldman SachsGS

and Morgan StanleyMS

comfortably beat expectations, buoyed by their investment banking (IB) revenue.

• Goldman reported over $2B in profits from IB fees, a 33% year-over-year (YoY) increase — and the bulk of the company’s 28% overall profit surge.
• Morgan Stanley also posted strong results, with a 14% profit spike thanks to wealth management revenue, IB fees, and equities trading, all of which beat expectations.

Let the dealmaking begin: With capital markets rebounding after a rocky 2022 and 2023, companies are considering their next moves. While initial public offerings (IPOs) remain the slowest since 2019, mergers and acquisitions (M&As) have doubled this quarter — bolstering investment banks’ performance. Some experts predict an IPO rebound, including Citi’s CEO Jane Fraser, who’s “cautiously optimistic” it’ll pick up in Q2.