Bank Earnings Season: The Winners, Losers

😎 Market Vibes

Bank Earnings Season: The Winners, Losers & What Wall Street Just Told Us About 2026

Well, that was quite a week for America's financial giants. After months of hype about 2025 being a banner year for banking, the actual earnings dropped and Wall Street got... nervous. JPMorgan fell ~3%, Bank of America shed nearly ~4%, Wells Fargo crumbled ~5%, and Citigroup dropped over ~3% despite most beating expectations. Why? Because in today’s market, beating earnings is table stakes. The real question: what's coming next?

🤷‍♂️ JPMorgan - When "Great" Isn't Great Enough

JPMorgan's Q4 looked solid on paper. Adjusted earnings of $5.23 per share beat the $5.00 consensus, revenue climbed 7% to $47 billion, and equities, fixed income, currency, and commodity trading crushed it - up 15% year-over-year. The bank generated $13 billion in profit despite taking a $2.2 billion hit from the Apple Card takeover.

So why did shares tank? Investment banking revenue came in light, and Jamie Dimon warned about geopolitics and national debt. Plus there's the tiny matter of Trump's proposed 10% cap on credit card rates. JPMorgan's CFO warned people would "lose access to credit on a very extensive basis." More on that bomb in a minute.

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‼️ Bank of America & Wells Fargo - The "Solid Quarter" Problem

Wednesday brought mixed results. BofA beat estimates with $0.98 EPS and a 9.7% jump in net interest income. CEO Brian Moynihan declared them "bullish on the U.S. economy in 2026."

Wells Fargo missed with $1.62 EPS versus $1.67 expected, dragged down by severance costs. But here's the twist: after years under a Fed asset cap for their fake account scandal, regulators finally unleashed them. CEO Charles Scharf said they're "excited to now compete on a level playing field." Wells Fargo has been a caged animal for nearly a decade - the cage just opened.

Both stocks still got hammered. Investors wanted blowout numbers to overcome Trump's credit card chaos, not cautious optimism about "monitoring the regulatory environment."

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📖 Citigroup - The Perpetual Turnaround Story

Citigroup beat estimates with $1.81 EPS and revenue up 8% to $21 billion. Net interest income jumped 14% - best among the big banks. CEO Jane Fraser committed to hitting at least a 10% return target for 2026.

The problem? Citi's been in "turnaround mode" for literally decades. This week they announced another 1,000 job cuts, part of tens of thousands being eliminated by end of 2026. Meanwhile, they returned $17 billion to shareholders last year. Shrinking workforce, buying back stock - sustainable or financial engineering?

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🧹 Goldman Sachs & Morgan Stanley - The Deal-Makers Clean Up

Goldman Sachs crushed it with Q4 earnings of $14.01 per share. CEO David Solomon bragged revenues grew 60% since their strategic pivot with shareholder returns exceeding 340%.

Morgan Stanley reported an 18% jump in Q4 profits with client assets hitting $9.3 trillion.

What drove these monsters? Deal-making. M&A accelerated throughout 2025 as companies anticipated friendlier Trump regulation. Warner Bros. Discovery bids, Union Pacific buying Norfolk Southern, Capital One merging with Discover - the advisory fees added up fast.

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💳 The Trump Credit Card Bomb

Last Friday, Trump posted calling for a "one year cap on Credit Card Interest Rates of 10%," claiming rates of 20-30% mean Americans are being "ripped off."

Average card rates hover around 24%. A 10% cap would save Americans roughly $100 billion annually. Great for consumers, right?

Every bank CEO this week said it would be catastrophic for credit access. BofA's Moynihan: "You're going to get restricted credit, meaning less people will get credit cards." JPMorgan's Barnum: people would "lose access to credit on a very extensive basis." Citi's Mason: "significant economic slowdown."

Analysts estimate a 10% cap would hit large bank earnings by 5-18% and wipe out earnings for credit-focused lenders like Capital One. Banks rallied 40% in 2025. If card income gets torched, those gains could evaporate fast.

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👀 What 2026 Actually Looks Like

Strip away the card drama and CEOs are cautiously bullish. The yield curve steepened - wider spreads mean fatter margins. M&A momentum continues with BofA's M&A chief saying "big deals signal CEO confidence." Trump promises lighter regulation and faster merger approvals.

But risks loom. 2025 saw worst job growth outside recession since 2003 - only 584,000 jobs versus 2 million in 2024. If consumers lose jobs, card defaults rise and mortgage apps fall. Dimon warned about "serious geopolitical risk" and the budget deficit.

Wolfe Research downgraded JPMorgan and BofA saying "it's all just a little too perfect in Bank-land." When stocks price in excellence, good news isn't enough.

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📌 Bottom Line

Bank earnings 2026: great numbers, nervous CEOs, policy wildcards everywhere. JPMorgan, Goldman, Morgan Stanley proved scale matters. Wells Fargo's finally unleashed. Citi's still "turning around."

Trump's credit card cap looms largest. If it happens, it fundamentally alters bank economics and credit access. CEOs are unified in opposition. Even progressive Democrats are concerned.

2025's rally was built on deregulation optimism, M&A momentum, and improving margins. If those hold and the card cap fizzles, banks could run. If uncertainty intensifies or the economy stumbles, valuations crash fast.

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