War Is Good for Trading Desks: How the Iran Conflict Just Handed Wall Street Its Biggest Revenue Haul in Over a Decade

Apr 12, 2026 - 19:01

Quick Answer

As of 11 April 2026, Goldman Sachs, JPMorgan, Citigroup, Bank of America and Morgan Stanley are set to report a combined $40bn trading haul for Q1 2026 — the highest since at least 2014 — built entirely on the volatility generated by the Iran war, Hormuz closure and ceasefire chaos. The figure dwarfs anything the same quarter produced in previous years, including the 2022 Ukraine invasion shock and the 2025 tariff turbulence. The forward guidance on these earnings calls matters far more than the headline number — because a ceasefire that holds kills the volatility engine that generated every dollar of it.

EBM Exclusive Take

The $40bn trading haul is not simply a story about banks performing well in volatile markets. It is a structural indictment of who wins and who loses from geopolitical catastrophe. Wall Street’s trading desks are explicitly designed to profit from uncertainty — every oil price swing, every equity selloff, every yield curve repricing that destroys value for pension funds and corporate balance sheets generates transaction flow, spread income and volatility premium for the banks routing those trades. The Iran conflict’s reshaping of European energy costs and monetary policy has created precisely the multi-asset volatility environment that trading floors are built to harvest. The scandal is not that banks made money. The scandal is the scale — and the fact that this is, by design, exactly how the system works.

There is a specific kind of dissonance at the heart of this earnings season. In the same weeks that oil refineries across Germany were imposing 30% surcharges, that European airlines were grounding thousands of flights, and that the IEA was calling for the largest emergency oil reserve release in its history, the trading desks of JPMorgan, Goldman Sachs, Citigroup, Bank of America and Morgan Stanley were booking the most lucrative quarter they have collectively seen in at least a decade.

The five largest US lenders are on course to report combined trading revenues of $40 billion for the first quarter of 2026, according to analyst estimates — a figure that would be the highest on record going back to at least 2014. Goldman Sachs kicks off the reporting season today, with JPMorgan, Wells Fargo and Citigroup following tomorrow, and Bank of America and Morgan Stanley completing the picture on Wednesday.

The Mechanics of a Crisis Windfall

Trading desks make money from volatility, not direction. It does not matter whether oil goes up or equities go down — what matters is that markets move sharply, frequently and with genuine uncertainty about the next move. The Iran war delivered all three in abundance. From February 28, when US and Israeli forces launched strikes, through March and into early April, global markets experienced the most sustained multi-asset volatility event since the 2020 pandemic shock. Oil swung by double digits in single sessions. Bond yields lurched as investors repriced the inflation outlook. Equities fell sharply, bounced on ceasefire hopes, and fell again. Currency desks, fixed income traders, commodity desks and equity flow businesses all benefited simultaneously — a rare alignment that does not happen in normal conditions.

The pattern is not new, and it is not coincidental. A near-identical dynamic played out in Q1 2025, when Wall Street’s largest lenders smashed profit expectations by reaping the rewards of a trading boom triggered by President Trump’s erratic tariff agenda. JPMorgan alone booked $46 billion in revenue against a consensus estimate of $44.1 billion. The Iran war has now delivered an even larger volatility event — one with more sustained duration, more genuine macroeconomic uncertainty, and more cross-asset contagion than anything the tariff era produced.

Bank by Bank

Goldman Sachs chief executive David Solomon signalled the direction of travel in his annual shareholder letter, noting that despite the difficulty of predicting the broader economic effects of the US-Israeli military action, the bank still saw “the potential for a more constructive operating environment” — pointing to a changed regulatory landscape creating greater likelihood of boards executing strategic transactions. The M&A pipeline, in other words, has not collapsed. It has accelerated.

JPMorgan is tipped to notch 8.5% growth in interest income according to LSEG analyst estimates, with overall profit growth expected at just over seven percent. Bank of America has guided for interest income growth of at least 7% and investment banking fees up 10% in the quarter. Citigroup — which analysts expect to post the biggest proportional boom — saw chief executive Jane Fraser declare in March that large-cap M&A was “not missing a beat right now” despite everything. The dealmaking data supports her: the first quarter saw nearly two dozen mega-deals worth over $10 billion reached globally, alongside 40 transactions valued at over $5 billion, according to LSEG. Jefferies calculated global M&A advisory fees of $11.3 billion for Q1, led by Goldman.

The Rate Dimension

The Iran war has done something to monetary policy that almost no one predicted at the start of the year: it has made rate cuts less likely and held net interest income at elevated levels for longer. Higher oil prices feed directly into headline inflation, giving central banks — the Fed, the ECB, the Bank of England — less room to cut even as the real economy deteriorates. For bank lending books, that is a double-edged sword. Higher rates support margins in the short term. But if stagflation takes hold across Europe and the US, the corporate loan books carrying exposure to energy-intensive manufacturers and logistics businesses become the next crisis.

Jamie Dimon put it plainly in his shareholder letter. The war in Iran, he wrote, creates “the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect.” Higher rates benefit banks’ income today. But Dimon was signalling precisely where the risk accumulates next — in loan quality, in corporate distress, in a stagflationary environment that erodes the borrower base underpinning the stable income streams that Wall Street spent the post-2008 era rebuilding.

The European Contrast

The trading bonanza is almost entirely a Wall Street story. European banks — with deeper corporate lending exposure to energy-intensive industries, more direct proximity to the conflict’s economic fallout, and less developed trading operations — are navigating a far more complex picture. As EBM reported in its analysis of European bank exposure to the Iran war, the most durable damage is accumulating not on trading desks but in corporate loan books, where chemical producers, steel manufacturers and transport businesses are beginning to show stress under sustained energy cost pressure.

HSBC, the European bank with the deepest Gulf exposure, faces a particular tension: its economists have been among the most explicit in flagging the ECB rate-hike risk from the oil shock, while its own revenue base is structurally tied to a region now at the centre of an active war. Deutsche Bank’s record 2025 turnaround faces exactly the same macro headwinds — a reminder that the story of this earnings season differs fundamentally on each side of the Atlantic.

What Investors Are Watching

RBC Capital Markets analyst Gerard Cassidy has flagged that a key focus of earnings calls will be the outlook for 2026 loan growth — particularly commercial and industrial lending and commercial real estate. Federal Reserve data suggests growth in those categories accelerated in Q1, but sustained oil price pressure and Iran conflict uncertainty could weigh heavily on the forward outlook if the war proves protracted.

That forward guidance matters more than the Q1 numbers themselves. Trading revenues in a crisis quarter are essentially a backward-looking story — impressive, but not repeatable at the same scale once volatility normalises. What investors are trying to assess is whether the structural damage to the real economy has now progressed far enough to generate loan book deterioration in Q2 and beyond, undermining the stable income streams the banks spent the post-2008 era so carefully rebuilding.

The $40 billion haul is real. The question being asked in every earnings call this week is whether it is the peak of the cycle — or merely its first chapter.

Related Analysis

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