2Q26 Earnings Preview: Strong Results, All Eyes on Issuance Calendar, and Remain Constructive for U.S. GSIBs

Research evidence excerpt

2Q26 Earnings Preview: Strong Results, All Eyes on Issuance Calendar, and Remain Constructive for U.S. GSIBs

and the continuation of hyperscaler capital markets activity.

We are estimating Investment Banking to grow low teens YoY. Investment banking

revenues increased 32% YoY and 5% QoQ. The YoY investment banking growth was

driven by Advisory and Equity Underwriting. Advisory revenues increased 69% YoY

and 1% QoQ, and Equity Underwriting revenues increased 41% YoY and 1% QoQ. The

improved Advisory performance was driven by elevated mergers and acquisitions

volumes, while Equity Underwriting was higher on increased IPOs and convertible

offerings. Investment banking backlogs remain elevated even though there have been

realizations. Turning to Markets, we expect another strong showing, with growth to the

tune of high single digits to low double digits YoY. In 1Q’26, total FICC revenues

increased 11% YoY and 42% QoQ. The improved performance was largely across all

U.S. Money Centers, although MS and C led on a percentage growth basis. FICC

growth was largely driven by elevated client activity, specifically within commodities

and currencies driven by volatility. Total equities revenues increased 26% YoY and 43%

QoQ, which was up significantly across firms. The revenue growth was driven by

increased client activity within derivatives, prime services, and cash equities.

Deposits: We expect modest deposit growth in 2Q’26, in the low- to mid-single-digit

range. Furthermore, we expect NII to continue to grow as balance sheets grow, although

margins should be stable to down QoQ. With that said, the higher for longer

environment will ultimately allow for continued healthy earnings. The U.S. Money

Centers reported margin compression, with an average NIM of 2.38%, down 5bp YoY