Major U.S. banks reported strong profits in the fourth quarter of 2025, fueled by robust loan growth and steady demand from borrowers. The trend suggests that the U.S. economy remains resilient, providing a positive outlook for lenders’ earnings in 2026.
Loan Growth Drives Record Earnings
Bank of America (BAC.N) reported an 8% increase in average loans year-on-year, with net interest income—the difference between earnings on loans and the cost of deposits—rising to a record $15.9 billion.
At JPMorgan Chase (JPM.N), average loans grew 9%, while Citigroup (C.N) saw a 7% increase in loan balances across its markets and U.S. personal banking units.
Alastair Borthwick, CFO of Bank of America, explained:
“We’ve seen growth in all of the consumer borrowing categories. That helped us in Q4, but generally, the story in 2025 was more of a commercial borrowing story… our clients in a growing economy have continued to invest to support their businesses.”
Loan growth is widely regarded by investors as a key indicator of bank health and broader economic strength. S&P Global Market Intelligence estimated that overall U.S. bank loans grew 5.3% year-on-year by the end of 2025.
Wells Fargo, Citigroup Announce Job Reductions
Despite strong earnings, banks are streamlining operations through job cuts.
- Wells Fargo (WFC.N) signaled additional layoffs after setting aside $612 million for severance costs in Q4, with commercial loans up 12%.
- Citigroup plans to cut about 1,000 jobs, citing automation and artificial intelligence tools as factors reducing overall headcount.
These moves aim to improve efficiency while sustaining profitability in a competitive lending environment.
Potential Headwinds: Credit Card Interest Cap
Banks face policy challenges, including proposals to cap credit card interest rates at 10%, which executives warn could curb lending and slow economic activity.
- Jane Fraser, CEO of Citigroup, stated:
“A rate cap is not something that we can support. The impact to us and other banks would be dwarfed by the severe effect on credit access and consumer spending.”
- Mark Mason, Citigroup CFO, added that a cap could restrict credit availability for those who need it most and negatively affect the U.S. economy.
The S&P 500 bank index fell roughly 2% amid concerns over the proposed cap, despite surging 30% in 2025.
U.S. Economy Showing Resilience
Despite geopolitical tensions and import tariffs, the U.S. consumer and economy remained strong, supported by:
- Artificial intelligence–driven growth
- Federal Reserve interest rate cuts
- Robust demand for commercial and consumer loans
Bank of America expects mid-single-digit loan growth in 2026, reflecting confidence in ongoing economic stability.
Bank Executives Defend Fed Independence
Amid the Trump administration’s investigation into Fed Chair Jerome Powell, executives emphasized the importance of central bank independence.
- Brian Moynihan, CEO of Bank of America, stated that an independent Fed is crucial for economic stability and effective interest rate policy.
- Jamie Dimon, JPMorgan CEO, warned that political interference could raise inflation expectations.
- Citigroup’s Mason echoed support for maintaining the Fed chair’s autonomy.
Key Takeaways
- Strong loan growth across U.S. banks boosted Q4 profits and reflects ongoing economic resilience.
- Job reductions at Wells Fargo and Citigroup reflect efficiency initiatives despite strong earnings.
- Credit card interest cap proposals pose a potential risk to lending activity and consumer access to credit.
- Bank executives unanimously support Fed independence, seeing it as critical to economic stability.
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