Wall Street’s Prime Brokerage Units Enjoy Banner Quarter Amid Volatility
Wall Street’s prime brokerage services are proving more lucrative than ever as major U.S. banks report strong profits, riding a wave of increased trading activity and growing hedge fund demand.
JPMorgan Chase, Goldman Sachs, and Bank of America, three of the largest players in the U.S. banking sector, posted substantial gains in their prime brokerage units during the third quarter. This division, which involves lending cash and securities to hedge funds, has thrived alongside a buoyant market, as valuations of stocks and other assets have surged across industries. While some banks have cautioned that asset prices might be reaching unsustainable levels, the current business boom continues to fuel competition among U.S. lenders, especially as they vie for market share against European rivals.
The demand for , driven by heightened market volatility, particularly linked to the Trump administration’s trade policies. A recent uptick in hedge fund activity and the overall size of funds has contributed to an increase in the leverage ratios of these entities, which hit a five-year high earlier in 2025, according to Reuters.
As race to capture a largeger slice of the pie, the industry’s recovery is in stark contrast to a few years ago when Credit Suisse was forced to shut down its brokerage lending operations later than the Archegos Capital scandal resulted in billions in losses. The current boom is further propelled by a surge in hedge fund activity, with some investors viewing large trading volumes as a direct result of global financial turbulence.
Strong Results From Leading Banks
JPMorgan’s equity markets division reported a remarkable 33% rise in revenue, totaling $3.3 billion for the quarter ending September 30. The surge was driven by strong performance in prime lending, which has become a key contributor to the bank’s success in the current market environment.
Morgan Stanley, too, saw impressive results, with equities revenue climbing 35% to $4.12 billion. The rise was fueled primarily by record-breaking figures in prime brokerage, while fixed-income revenue also grew by 8%. Morgan Stanley’s Chief Financial Officer, Sharon Yeshaya, highlighted the pivotal role prime brokerage played in driving the firm’s performance, as both client balances and financing revenues reached historic highs.
At , revenue from prime brokerage services also saw a significant boost, according to CFO Alastair Borthwick. The bank noted that strong results in this segment assisted fuel its broader equity markets business, as the company continued to capitalize on the growing demand for prime lending.
Citigroup, looking to expand further in this lucrative space, reported that its prime brokerage balances surged 44% in the latest quarter. This contributed to a 24% rise in overall revenue from its equity markets unit, which reached $1.5 billion. CEO Jane Fraser emphasized Citi’s commitment to growing its prime lending services, reflecting a clear recognition of the segment’s revenue potential.
Goldman Sachs, meanwhile, posted a 7% increase in its equities revenue to $3.74 billion. The growth was largely attributed to higher net fees from equities financing, with prime lending remaining a core strength of the bank’s portfolio. CFO Denis Coleman noted that the prime brokerage business, alongside other areas of financing, had become a “stable source of revenue” for Goldman, driven by robust demand from hedge funds.
“Balances are very correlated with overall levels in the markets, which is an attractive feature of the business,” Coleman said.
The prime brokerage boom comes amid a period of uncertainty, with some analysts warning that the market’s rapid expansion may be unsustainable in the long term. Still, for now, banks are cashing in on the surge in trading activity, which shows no sign of sluggishing down in the short term.
