Wall Street is spending its big windfall on Wall Street

Subscribe to enjoy similar stories.Washington has been trying to free up more of the resources of big banks. Banks have wasted no time putting them to work, but on Wall Street rather than Main Street.Big banks’ lending to consumers and midsize companies is moving modestly ahead.

But demand for financing has boomed in their Wall Street trading businesses, which serve such clients as private-credit funds, hedge funds and institutional investors.This kind of lending can drive big profits, in part thanks to advantageous regulatory treatment and because it brings in lots of fees for arranging trades, doing deals and other services.But investors are starting to ask how much further banks can increase their Wall Street revenue—especially with growing risks in the current market, ranging from war to artificial-intelligence disruption.For the first quarter, the six biggest U.S. banks reported another surge in trading revenue, collectively up 17% from a year earlier.

Those banks are Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.They also added more of the kind of assets that fuel those units. The total of average trading-related assets in the first quarter—which include such things as securities held in trading books, as well as repurchase agreements to swap cash for clients’ securities—grew by about 20% from a year earlier across the largest banks that report those figures.Those banks are also seeing fast growth in lending through their trading desks.

That can include loans to nonbank lenders, such as private-credit funds, which have been a big growth area in recent years. The banks that report loans specifically for their markets units increased them by around a quarter or more from