This week belongs to the bankers. From Tuesday through Thursday, America's six largest financial institutions will report fourth-quarter results, capping a remarkable 2025 that saw their shares surge an average of 40% and setting the stage for what could be an even stronger 2026.

The Earnings Calendar

The parade begins Tuesday when JPMorgan Chase reports before the market opens, followed by Goldman Sachs and Wells Fargo. Wednesday brings Bank of America, Citigroup, and Morgan Stanley. Together, these reports will provide the most comprehensive look at the health of the U.S. financial system.

Expectations are high. Consensus estimates project mid-single-digit earnings growth for most banks, supported by a resurgent investment banking business and stable credit quality. Net interest income, the bread-and-butter of traditional banking, faces headwinds from lower rates but should remain healthy.

"Everything is moving up at the same time. Investment banking is recovering, trading volumes are strong, and credit quality remains manageable. This is as good an environment as banks have seen in years."

— Bank sector analyst

The 2025 Scorecard

To appreciate what's at stake this week, consider where banks have come from. JPMorgan, Bank of America, Citigroup, and Wells Fargo saw an average stock gain of 40% in 2025. According to Wolfe Research analyst Steven Chubak, only about a third of that performance came from higher earnings—the rest reflected multiple expansion as investors repriced the sector.

This distinction matters. If bank earnings disappoint, the multiple expansion that drove 2025 returns could reverse quickly. But if earnings validate the optimism, further gains are possible from current levels.

Investment Banking's Comeback

The primary driver of bank enthusiasm is the resurrection of Wall Street's dealmaking machine. After a multi-year drought, global M&A volume surged 42% year-over-year to $5.1 trillion in 2025. IPO activity, while still below historical norms, showed meaningful improvement.

For the investment banking-heavy players—Goldman Sachs and Morgan Stanley—this rebound is transformational. Both firms endured difficult years when corporate activity froze, and the return of dealmaking has lifted their most profitable business lines.

JPMorgan's investment bank has also participated in the recovery, though the firm's diversified model means it matters less to overall results. Citigroup, undergoing a multi-year restructuring, is viewed as a potential winner if it can capture market share in trading and advisory to offset its higher consumer credit exposure.

The Consumer Credit Question

While investment banking thrives, consumer credit presents a more complicated picture. Credit card delinquencies have stabilized near decade highs, and auto loan defaults reached 15-year peaks. Consumer finances are stretched by elevated inflation and a cooling labor market.

Banks with heavy consumer exposure—Bank of America and Wells Fargo, in particular—face more challenging dynamics than their Wall Street-focused peers. Their earnings calls will provide crucial insight into whether credit deterioration is stabilizing or worsening.

JPMorgan's $2.2 billion provision for the Apple Card acquisition highlights how consumer credit risk remains a live concern even for the industry's strongest player.

The Rate Environment

The Federal Reserve's three rate cuts in 2025 created a mixed picture for banks. Lower rates compress net interest margins, reducing the spread banks earn between what they pay depositors and what they charge borrowers. But lower rates also support loan demand and reduce credit losses.

With the Fed now on pause and markets pricing only modest additional cuts in 2026, banks face a stable but challenging rate environment. The consensus view is that net interest income has troughed and should gradually improve as loan growth resumes and deposit costs stabilize.

Regulatory Tailwinds

Perhaps the most underappreciated factor supporting bank stocks is the regulatory environment. The Trump administration's approach to financial regulation has been notably more permissive than its predecessors, and banks are positioned to benefit from relaxed capital requirements and reduced compliance costs.

Wells Fargo, in particular, has reason to celebrate: 2026 marks its first full year without the asset cap imposed following its fake accounts scandal. The removal of this constraint allows the bank to grow its balance sheet and pursue opportunities that were previously off-limits.

The Investment Case

For investors weighing bank stocks, this week's earnings will be crucial. The sector trades at roughly 13 times forward earnings—a discount to the broader market but near the upper end of its historical range.

Bulls argue that banks are positioned for continued earnings growth as investment banking normalizes, credit quality stabilizes, and regulatory headwinds abate. The potential for increased M&A activity and capital markets issuance in 2026 provides further upside.

Bears counter that consumer credit deterioration could accelerate, rate compression will pressure margins, and the multiple expansion of 2025 leaves little room for disappointment. With stocks up 40%, the good news may already be priced in.

What to Watch

As earnings roll out this week, focus on these key indicators:

  • Net interest income guidance: Forward-looking comments on margin trajectory
  • Loan loss provisions: Are banks setting aside more or less for potential defaults?
  • Investment banking pipeline: Commentary on M&A and IPO activity ahead
  • Capital return plans: Buyback authorizations signal management confidence
  • Expense guidance: Can banks maintain cost discipline as revenues grow?

The banks that report this week collectively hold trillions in assets and employ hundreds of thousands of workers. Their results will tell us more about the American economy than any government statistic—and set the tone for what promises to be an eventful 2026.