Goldman Sachs

The largest North American and European banks posted double-digit gains as higher-for-longer inflation looms.

All the biggest North American and European banks expect full-year 2026 profits to meet or exceed projections, as AI spending and a surge in market and investment banking activity fueled second-quarter profits.

With drama surrounding AI disruption in the tech sector and gyrations in the commodities markets tied to the war in the Middle East, trading volumes have been robust all year, including the first month of the third quarter.

Christopher Marinac, a banking analyst at Brean Capital, said a steepening Treasury yield curve is allowing banks to improve spreads on loans and securities.

“The way banks are pricing loans is just stable to slightly better, and that is bullish for net [income],” Marinac told Global Finance. “That is the sort of positive undertone.”

The earnings underscored that optimism. Industry leader JPMorgan Chase reported a 41% increase in second-quarter net income, while investment banking giants Goldman Sachs and Morgan Stanley posted gains of 84% and 57.7%, respectively. Bank of America’s profit rose 27%, Citigroup’s 45%, and Wells Fargo’s 16.6%. Canadian giant Royal Bank of Canada rose 25%. European banks also delivered strong results, led by UBS with a huge 134% increase; Santander jumped 17%; Barclays added 15.3%; and Deutsche Bank gained 10%.

Inflation remains a threat to growth, and investor jitters about shifts in tech spending away from more traditional software names have fed stock market volatility, along with the latest Fed moves.

But for now, banks are doing extremely well, with mega IPOs such as Anthropic and OpenAI potentially on deck, following the record $75 billion SpaceX IPO and an $85 billion capital raise for Alphabet, which boosted investment-banking fees in the second quarter.

The regulatory environment remains relatively friendly, and larger M&A deals continue to occur, including the $10 billion acquisition of Crinetics Pharmaceuticals by Vertex Pharmaceuticals, announced on July 10.

The performance so far bodes well for 2026 bonuses, given a strong first half of the year.

JPMorgan, BofA, Santander All Looking Up

During second-quarter calls with Wall Street analysts, JPMorgan Chase raised its net interest income outlook for the year, while Deutsche Bank said it will meet or exceed its net interest income outlook, and Bank of America projected 2026 net income growth at the upper end of its 6% to 8% range.

Barclays raised its 2026 profit forecast to £31.5 billion ($42 billion) from £31 billion and said it still expects to meet its full-year performance goals.

UBS Group CFO Todd Tuckner said he’s “confident” the bank will exceed its 2026 targets, with a formal update expected later this year. He added that the bank is “well-positioned” to outperform its exit-rate return target despite market uncertainty around inflation and interest rates. 

Santander, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, and Royal Bank of Canada kept their guidance unchanged but signaled stronger earnings ahead.

“Not everybody is giving the increase of guidance, but I think there’s higher conviction in the existing guidance for those who did comment,” Brean Capital’s Marinac said.

Looking ahead, the big banks are still optimistic about AI, both to improve internal efficiency and deal-making.

Goldman Sachs CEO David Solomon said AI investments are feeding capital needs for infrastructure, energy and data centers — not just core technology.

“This is creating significant opportunities for Goldman Sachs to provide structuring, financing, risk management, and capital markets execution across both public and private markets,” Solomon said.

Deutsche Bank Group Treasurer Richard Stewart said private pension reforms are creating a positive opportunity for Germany’s largest bank, alongside AI, “which is evolving even faster than we expected.”

Banking analyst Marinac said he expects European banks to benefit from the need to increase military and domestic spending.

“As everybody looks a little bit more inward, that’s probably good for business from a bank’s standpoint,” he said.

Some Big Banks Slash Jobs

Along with favorable conditions in the bond market, another earnings tailwind for banks has come from headcount reductions and productivity gains.

Citigroup cut 5,000 jobs in the second quarter, bringing its total headcount down to 219,000. Wells Fargo reduced its headcount by 3,500 to 197,000, and UBS eliminated 2,500 positions, bringing its total headcount to under 100,000. 

Analysts asked banks such as Wells Fargo how AI is shaping the job picture as technology advances.

Wells Fargo CFO Mike Santomassimo said the bank has “a lot of room to grow” to improve efficiency. But it also continues to hire branch bankers, investment advisors, commercial banking relationship managers, investment bankers, and traders.

“Certainly, technology and AI help us get at aspects of that in a different way or faster than maybe in the past,” Santomassimo said. “We expect that we’ll continue to see more efficiency from here.”

One key metric for banks’ future performance is employment levels, which have been robust in the U.S. As long as people keep working and paying their bills and business activity keeps up, credit quality will remain healthy, and the big banks will prosper as the year plays out, market observers said.

Steve Gelsi is a contributing writer based in the U.S.

Breaking a six-month record, the investment banking giant capitalizes on a surging wave of global megadeals.

Goldman Sachs said it had advised on more than $1 trillion of announced global mergers and acquisitions so far this year, the fastest any investment bank has reached that milestone in a six-month period, citing data from capital markets data provider Dealogic.

The bank attributed the milestone to a string of marquee mandates, including serving as co-financial adviser to Dominion Energy on its roughly $67 billion sale to rival utility NextEra Energy, announced last month, along with other major transactions.

Rise of the Megadeal

Goldman reported that its investment banking fees rose 48%, to $2.8 billion in the first quarter. It’s a reflection of the “K-shaped” M&A market, where megadeals are the dominant force, but deal volumes are declining, and mid-market activity is subdued. 

Data compiled by PwC revealed that the global M&A market is on track to reach $4 trillion in 2026, a 13% annual increase, with major sales estimated to account for 48% of deal value worldwide, a significant expansion from two years ago. 

“Goldman has been the global leader in M&A advisory fees for more than 90 consecutive quarters. The fact that it’s reaping benefits from a moment of megadeal activity simply proves the strength of its franchise,” said Mark Narron, senior director at Fitch Ratings. “However, advisory revenues are generally a small share of total revenues. In 2021, which was Goldman’s record year for advisory, advisory revenues contributed only 10% of total revenues.” 

Fitch says it’s difficult to forecast whether Goldman’s advisory revenues will continue to climb, given the cyclical nature of advisory fees and uneven regional M&A trends — with most deal activity still concentrated in the U.S.

Fitch expects M&A activity to be sensitive to market conditions, economic growth, geopolitical events, and interest rates. Global growth is estimated to decelerate to 2.8% this year, according to the latest OECD economic outlook report. Inflationary pressures are rising in advanced and emerging economies due to energy shocks from the Iran conflict. Prices in the G20 economies are expected to climb to 4% in 2026. In a “prolonged disruption” scenario, inflation could rise further, which may prompt hawkish interest rate responses from central banks.

Peter Taberner is a contributing writer based in the U.K.

A steep NAV drop and a federal probe trigger a high-level departure at BlackRock.

The private credit market’s roughest stretch in years has claimed its first senior leader at a major asset manager.

BlackRock’s Phil Tseng is in the process of leaving his post as CEO of the firm’s publicly traded business development company, according to Bloomberg News.

The move comes amid a brutal year for BlackRock TCP Capital Corp. The firm marked down its net asset value twice in 2026 — by 19% in January and another 5% in May. Meanwhile, federal prosecutors in Manhattan have been reportedly probing the fund and questioning executives as part of the inquiry.

Tseng, an acqui-hire from BlackRock’s 2018 acquisition of Tennenbaum Capital Partners, remains employed for now with no set departure timeline.

Tseng’s exit echoes a pattern that emerged last fall when two auto-related borrowers collapsed and rattled private lenders. Cleveland-based First Brands filed for Chapter 11 in September after off-balance-sheet financing obscured leverage levels beyond what lenders had underwritten. Founder and CEO Patrick James resigned as the bankruptcy unfolded.

That same month, subprime auto lender Tricolor Holdings began liquidating. Federal prosecutors later indicted founder and CEO Daniel Chu and chief operating officer David Goodgame, alleging the pair systematically misled lenders to keep credit lines open. Goodgame pleaded guilty in June to six counts, including bank fraud and conspiracy, and is now cooperating with prosecutors — a deal that could put him on the stand against Chu, who has pleaded not guilty. Chu had also abruptly resigned from Origin Bancorp’s board days before Tricolor’s implosion.

Industry executives have largely characterized the two collapses as isolated fraud cases rather than evidence of systemic rot. Blue Owl co-president Craig Packer told CNBC in October that the failures “weren’t private credit stories” at all.

BlackRock CEO Larry Fink struck a similarly confident tone. On an April earnings call, he told analysts that institutional demand for private credit was “accelerating.” Still, headlines around the sector aren’t reflecting what the firm’s own client and portfolio data showed.

Redemptions from business development companies, key lenders in the private credit market, are surging. Investors requested $20.8 billion in redemptions in the first quarter alone. In some cases, those redemptions exceeded the 5% cap set by BlackRock and its rivals: Apollo Global Management, Ares Management, Blackstone, Blue Owl Capital, and KKR.

Not all private credit funds appear troubled. Goldman Sachs’ private credit fund, for example, honored all redemption requests in Q2 because it reported relatively modest private credit fund redemption requests (3.2%). The same goes for Nuveen Churchill and Oaktree with withdrawals of 3.1% to 4.5%, respectively.

But with so many of the sector’s players posting losses, Tseng’s departure suggests the reckoning is reaching up the org chart.

Value up, volume down — megadeals carry record-chasing M&A market through a year of geopolitical turmoil.

Global mergers and acquisitions are on track to reach roughly $4 trillion in total value in 2026. That’s up 13% from 2025 — only the second-highest spike to the pandemic-era peak of 2021 — that figure obscures a market increasingly defined by a handful of blockbuster transactions.

Deal volume data from PwC and LSEG projects an estimated 42,000 transactions for the full year, down 13% from 2025. Megadeals exceeding $5 billion account for roughly 48% of global deal value — up from 39% in 2025 and just 26% in 2024. Remove them from the equation, and overall deal value falls 4% year over year.

Headwinds likely stymied deal activity in specific sectors. The U.S.-Israeli military campaign against Iran, launched in late February, caused what the International Energy Agency called the largest oil supply disruption in the history of the global oil market, sending energy prices sharply higher.

Despite the recent U.S.-Iran memorandum of understanding to reopen the Strait of Hormuz, the conflict cast a pall over deal activity for much of the first half of the year, particularly for transactions with any exposure to energy, logistics, or the Gulf region.

Geographic Picture Remains Uneven

The U.S. has expanded its dominance, commanding 63% of global deal value in the first half of 2026, up from 54% a year earlier, even as deal volumes fell, according to Dealogic.

Europe’s share of value also increased by 88% ($733.6 billion), buoyed by large individual transactions. The Middle East and Africa, together, saw a 45% increase in deal value ($61.3 billion).

Asia Pacific moved in the opposite direction: its share of global deal value dropped to 29% — reflecting fewer megadeals and smaller average transaction sizes relative to the U.S. and EMEA.

On the advisory side, Goldman Sachs is leading the rankings by a wide margin — $1.161 trillion in deal value across more than 200 transactions so far this year. Among the firm’s marquee assignments: advising Dominion Energy on its $66.8 billion sale to NextEra Energy, counseling Unilever on its planned $65 billion food business merger with McCormick & Company, and serving as lead-left underwriter on the SpaceX IPO.

JPMorgan ranks second with $743 billion, up from $557.1 billion a year earlier — a performance the bank has attributed in part to M&A fees that nearly doubled year over year in the first quarter of 2026. Morgan Stanley rounds out the top three at $622.5 billion.

Anthony Noto covers corporate finance and private credit. Contact him at anoto@gfmag.com