Here's Wall Street's open secret: banks make more money during crises than during calm markets. JPM, GS, and BAC are posting record trading revenues while the world worries about Iran. Here's why.
Why Banks Win During War
Trading revenue explodes: Volatility = trading volume = commissions and spreads. Goldman Sachs (GS) reported trading revenue up 35% during Q1 2026 versus the prior year. Their fixed income, commodities, and currencies (FICC) desk is printing money from oil volatility alone.
M&A activity increases: Defense companies acquire tech startups. Energy companies consolidate. Banks earn advisory fees on every deal. JPMorgan (JPM) and GS dominate M&A advisory.
Interest rate environment: Geopolitical uncertainty keeps rates elevated. Banks earn more on their loan portfolios when rates are higher. BAC's net interest income benefits from every Fed decision to hold rates steady.
Capital markets activity: Companies raise capital (debt and equity) during uncertainty to build war chests. Banks underwrite these offerings for 2-7% fees.
The Three Bank Stocks to Own
JPMorgan Chase (JPM): The fortress bank. Jamie Dimon has positioned JPM as the safest large bank with best-in-class risk management. Trading, consumer banking, asset management — every segment benefits from the current environment. Dividend yield: 2.4%.
Goldman Sachs (GS): The pure-play Wall Street bank. Highest leverage to trading revenue and M&A advisory. When markets are volatile and deals are flowing, nobody outearns Goldman. Their AI-powered trading algorithms are capturing spread in energy markets 24/7.
Bank of America (BAC): The consumer giant. Benefits most from sustained higher interest rates. $2T+ in deposits earning spread. The most sensitive to rate environment — if rates stay elevated (likely during geopolitical tension), BAC outperforms.
Risks to Watch
Credit losses: If conflict triggers recession, loan defaults increase. But major banks have built massive credit reserves post-2008 — they're prepared.
Cyber risk: Banks are prime targets for state-sponsored hackers. A successful attack on a major bank's systems could crater the stock temporarily.
Regulation: Post-crisis regulatory crackdowns historically squeeze bank profitability.
How to Play It
Direct: Equal-weight JPM + GS + BAC for diversified bank exposure.
ETF: XLF (Financial Select SPDR) for broad financial sector exposure including banks, insurance, and capital markets.
Remember: banks have survived every war, every crisis, and every recession in American history. They don't just survive — they profit. That's not going to change with Iran.
