The financial deregulation efforts under the Trump administration and the recovery in investment banking have driven the combined market value of the six largest U.S. banks to surge by $600 billion this year.
As of Wednesday's close, the total market capitalization of JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley exceeded $2.38 trillion, a significant increase from $1.77 trillion at the end of last year. The sector is poised to outperform the S&P 500 for the second consecutive year.
In contrast, the combined market value of Europe's top six banks stands at just $1 trillion, highlighting the widening gap between U.S. and European banking sectors since the 2008 financial crisis.
Regulatory shifts have been a key driver of the stock rally. This year, U.S. regulators proposed allowing major banks to increase leverage ratios, overhauled annual stress tests used to determine capital requirements, and rolled back lending guidelines for high-risk loans.
A strong rebound in investment banking has further boosted market confidence. Citigroup's shares have surged over 70% this year, leading gains among the six banks. Goldman Sachs' stock has climbed nearly 60%, reaching a record high. Industry forecasts suggest that banks' equities and fixed-income trading revenues will surpass previous peaks this year.
**Deregulation Unlocks Capital Flexibility** A series of deregulatory measures introduced by the Trump administration this year have directly lifted bank stocks.
Gerard Cassidy, RBC banking analyst, noted: "The impact of regulatory changes on stock prices cannot be underestimated. Post-crisis, banks' profitability was severely constrained as they had to hold more capital—which was necessary."
Additionally, the industry expects the final implementation of Basel III global capital rules to be far less stringent than the Biden administration's initial 2023 proposal. Cassidy added: "Banks are sitting on excess capital, having already reserved under prior proposals."
This capital can be deployed not only to absorb potential losses but also for business expansion, share buybacks, and dividends. Saul Martinez, HSBC's head of U.S. financials research, said: "With bank balance sheets growing so slowly, markets see room for taking on more risk."
Despite concerns from critics like Democratic Senator Elizabeth Warren about large-scale deregulation, investors have shown little worry over banks' increased risk-taking so far.
**U.S. vs. European Banking Gap Widens** Citigroup emerged as the top performer among the six U.S. banks in 2025, with shares up roughly 70%.
The bank's years-long efforts to streamline operations and cut costs have paid off. This month, Citigroup's stock traded above the sum of its divisional valuations for the first time since 2018.
Goldman Sachs' shares also rose nearly 60% this year, hitting an all-time high, fueled by a rebound in core investment banking and sustained trading strength. Bankers expect the recovery in investment banking to accelerate further in 2026.
Industry tracker Crisil Coalition Greenwich projects equities trading revenue to reach $92 billion and fixed-income trading revenue to hit $163 billion this year—both surpassing prior peaks.
The U.S. banking sector's market value growth has further widened its lead over European peers. Martinez remarked: "The current environment feels almost too good to be true. Fundamentals are strong, but the question is how much is already priced in."
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