SIX MAJOR US BANKS

The US’ six major banks had a strong quarter, but the biggest driver was activity in financial markets rather than traditional lending. Equities trading was strong, while bond trading was weaker at most banks. Wealth management also continued to grow.

The combined reported net income was about $43.6bn. JPMorgan, Citi and Bank of America benefitted from higher net interest income, while Goldman Sachs and Morgan Stanley benefitted strongly from equities trading. Wells Fargo reported strong profits, but its revenue and net interest income were below expectations. Bank of America missed profit estimates, and a $1.2bn regulatory settlement charge made the result worse.

The main issue for investors is whether strong trading and deal activity can continue if interest rates stay high and market volatility increases.

Key Results

●     JPMorgan: Net income of about $15.3bn; EPS $5.57; revenue $50.9bn. Equities-markets revenue increased by 49%. Net interest income rose 13% to $27.1bn. The bank reported $658m of securities losses and made $664m of net share repurchases.

●     Bank of America: Net income of about $6.9bn; reported EPS $0.91. Net interest income increased by 8%, but sales and trading revenue fell 5% and investment-banking fees fell 11%.

●     Citigroup: Net income of about $5.2bn; EPS $2.85; revenue $23.8bn. Profit increased about 40% year on year. Equities revenue increased 14% and fixed-income revenue rose 4% year on year. Total Markets revenue fell 13% from Q2.

●     Goldman Sachs: Net revenue of $18.68bn; EPS $17.01. Equities revenue increased by 72%. Equities-financing revenue increased by 96% to a record. The investment-banking backlog fell from Q2, even though the longer-term deal pipeline remained important.

●     Morgan Stanley: Revenue of about $20.34bn; EPS $3.03; net income $4.91bn. Equities revenue rose about 41%. Wealth-management revenue was a record, and return on tangible equity was about 22.6%.

●     Wells Fargo: Net income of about $6bn; EPS $1.87, above the $1.85 estimate. Revenue was $21.87bn versus $22.31bn expected. Net interest income was $12.52bn versus $12.63bn expected. Provisions for credit losses increased to about $1.03bn.

●     Capital return: JPMorgan reported about $30bn of excess capital but made only $664m of net share repurchases. Bank of America repurchased about $6bn of shares, and Wells Fargo repurchased about $2.5bn.

Analysis & Outlook

Share Price Performance:

Looking beyond the immediate earnings reaction gives a clearer picture. The performance shows price return only, excluding dividends. Year-to-date performance is measured from 31 December 2025; the 12-month performance is measured from the 14 October 2025 close.

●     JPMorgan: closed at about $335.28; up 4.1% year-to-date and up 11% over 12 months.

●     Bank of America: closed at about $51.39; down 6.6% year-to-date but up 2.6% over 12 months.

●     Citigroup: closed at about $122.27; up 4.8% year-to-date and up 22.5% over 12 months.

●     Goldman Sachs: closed at about $878.72; roughly flat year-to-date but up 14% over 12 months.

●     Morgan Stanley: closed at about $181.51; up 2.2% year-to-date and up 16.8% over 12 months.

●     Wells Fargo: closed at about $80.90; down 13.2% year-to-date and down 4.3% over 12 months.

The main message is that performance has differed widely across the group. Citi and Morgan Stanley have been the stronger 12-month performers, while Wells Fargo has lagged. Bank of America has fallen this year even though it remains slightly above its level from a year ago. Goldman’s strong earnings momentum has not translated into a year-to-date price gain.

What Could Move the Sector:

Potential upside:

●     A stronger deal market: Management teams described deal pipelines as solid. A more stable bond market and better IPO activity could support investment-banking fees.

●     Continued equities activity: Goldman’s record equities financing and strong results at JPMorgan and Morgan Stanley show how much the banks can earn when clients trade actively.

●     Higher net interest income: JPMorgan’s 2027 central case of about $107bn excluding Markets gives the sector an important earnings support, although it depends on rates, deposits, loans and credit demand.

●     Citi’s turnaround: Citi’s return on tangible equity was 11.5% in Q3. Further progress toward its medium-term 11% - 13% target could improve investor confidence.

●     Wells Fargo’s growth: Loan and deposit growth could help Wells Fargo convert its post-asset-cap expansion into stronger revenue over time.

Potential downside:

●     An equity-market sell-off: Equities trading and financing were major sources of growth. A sharp market decline or a reduction in hedge-fund activity could reverse that benefit.

●     Higher borrowing costs: Further rate increases or persistent inflation could put pressure on households, companies and commercial borrowers.

●     Weak fixed-income trading: Bond, currency, and commodities trading was weaker at several banks. Continued weakness would reduce an important source of market revenue.

●     Rising expenses: JPMorgan’s non-interest expense increased by 12%. Higher compensation, technology, and client-financing costs could reduce the benefit of stronger revenue.

●     Regulatory and legal costs: Bank of America’s $1.2bn settlement charge shows how quickly a regulatory issue can affect earnings and sentiment.

●     AI-financing risk: AI infrastructure is creating new financing demand, but a slowdown in AI spending or overbuilding could reduce future deal and financing activity.

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** This article was prepared by BROKSTOCK analyst Maboko Seabi