Wall Street earns huge commissions from Space X IPO, big M&A deals
Driven by the blockbuster listing of SpaceX and the rebound in giant mergers and acquisitions, major Wall Street investment banks will report their highest investment banking commission income in four and a half years this week. The commission income from investment banking business of the five leading U.S. investment banks, Citigroup and Citigroup, is expected to increase by 27% year-on-year in the second quarter. The total commission scale may reach US$11.1 billion, setting a new high since the industry’s phased peak in 2021. A large part of the commission increase comes from the equity capital markets business. The total revenue of this sector of the above-mentioned five major investment banks is expected to reach US$2.5 billion. The core driver is the US$500 million in underwriting commissions brought by the SpaceX IPO project to 23 partner investment banks. This is also the highest listing underwriting fee in the world's history. Goldman Sachs and Morgan Stanley each received $100 million from the deal. Brian Mulberry, chief market strategist at Zacks Investment Management, said: "The volume of SpaceX's listing is huge, and we expect that all investment banks participating in the underwriting will benefit significantly." Bankers and analysts have pointed out that a number of large technology companies have completed listings or are about to enter the capital market, including SpaceX, OpenAI and Anthropic. However, affected by the high interest rate environment, the listing activities of small and medium-sized enterprises owned by private equity institutions have been relatively deserted. Commission income from the M&A business of the five major investment banks is expected to surge by about 30% year-on-year, with the total exceeding US$4 billion; this is also the first time since 2021 that commissions in this sector have stood at the US$4 billion mark for three consecutive quarters. Wall Street investment banks have benefited greatly from the rebound in large-scale mergers and acquisitions worth more than US$10 billion. Morgan Stanley mentioned in a client research report this week that the scale of global disclosed M&A transactions is expected to hit a record high in 2026. JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citibank and Both are scheduled to release financial reports on Tuesday, with Morgan Stanley delaying its disclosure to Wednesday. The market expects the combined net profit of these six banks to be approximately US$44 billion in the second quarter, a year-on-year increase of 18%. The trading departments of various banks will also benefit from the increasingly volatile financial markets and provide customers with transaction matching and financing services. Among them, the growth of stock trading business is particularly eye-catching. While the investment banking sector achieved growth, losses in the credit business remained at a relatively moderate level, supporting the rise of bank stocks. The banking sector as a whole has outperformed the market in the past two years. This has also led the market to question how much room there is for bank stocks to rise in the future. Saul Martinez, head of U.S. financial industry equity research at HSBC, said: "The threshold for market expectations has been raised. This quarter's performance should be good, but the market has already predicted this, and the stock price trend has already reflected this." Investors will also scrutinize bank balance sheets for signs of stress on U.S. residents. At present, in the face of various shocks such as import tariffs, conflicts between the United States and Iran, and rising oil prices, American consumers are relatively resistant to risks. Martinez said: "The real cause for concern is that the conflict escalates again, oil prices rebound sharply, and inflation returns. Only then will economic growth become worrying."