Citigroup Chief Executive Officer Michael Corbat and Goldman Sachs CEO Lloyd Blankfein have been cutting costs and restructuring management to adjust to stricter capital requirements and a revenue downturn since the financial crisis. Goldman Sachs’s 2016 revenue was the lowest in five years, though investors and analysts are speculating the firm’s trading operations could be one of the biggest beneficiaries of Trump’s policies.

“The benefits from higher interest rates, accelerating capital deployment and historically low credit costs have been evident throughout the large-cap U.S. bank earnings releases,” Marty Mosby, an analyst at Vining-Sparks IBG, said in a note. “The fundamental story remains intact.”

 

Eoin Treacy's view

Bond trading profits are dominating headlines among the major banks but hide the fact that most have seen their businesses contract over the last few years as the high cost of complying with regulation bit into the size and scope of their businesses. 

The first 100 days of the new US administration will be important because the bullish argument is based on the delivery of deregulation, lower taxes and increased fiscal spending. Higher interest rates from the Federal Reserve, in response to potentially stronger growth, would of course also be beneficial to the sector. 

The S&P500 Diversified Financials Index rapidly priced in the potential for a bullish outcome immediately following the election in early November. Without clarity on exactly what the new administration can deliver the Index has paused in what has the appearance of the first consolidation following an impressive breakout. A sustained move below 500 would be required to question medium-term upside potential.