Bank Profits Rise Amid Credit Card Uncertainty
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What are the recent earnings results from major U.S. banks?
It's 2026 and banking is booming. This is Motley Fool Money.
Tyler Crowe Welcome to Motley Fool Money. I'm Tyler Crowe. Today, I'm joined by longtime Fool contributors Matt Frankel and John Quast. It's that time again, folks, earnings season. We'll discuss earnings today, this proposal from the Trump administration to cap credit card rates because we are talking about banks, and of course, what Thursday show would be complete without talking about stocks on our radar. But first, when I opened up Bloomberg this morning, and not my terminal, I'm not that fancy or have that kind of setup, Two related items caught my eye. Two investment banks, Goldman Sachs and Morgan Stanley, reported earlier today, and they had stellar results in certain sections. Goldman mentioned its trading unit, and Morgan Stanley for its investment banking fees, mostly related to helping companies issue debt.
One of the ones they mentioned was Meta Platforms for its massive AI data infrastructure build-out. As we are talking right now, Goldman and Morgan Stanley are up 4%, 5% respectively. Look, this isn't the most detailed analysis of banks, but I think it's fair to say that within investment banking, they love volatility and vibes. Volatility for their trading operations, like we saw with Goldman, and vibes to get companies to do things like issue debt, do mergers and acquisitions, IPOs, all the cool corporate activity that banks love to do.
How do investment banks respond to market volatility?
Clearly, investment banks are liking what happened last quarter. Now, Matt, you are, of the three of us, probably the most extensive bank coverer or observer of banks we have. What were some of the other themes you saw from banking earnings this past quarter?
Well, I'm definitely going to steal the volatility and vibes thing for an article. That's pretty awesome. But generally speaking, the bank earnings have been really solid so far. All of the big four, that's JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America, all of them beat expectations, both on the top and bottom lines. Interest income has been a very strong point, which is to be expected as Fed rate cuts generally result in lower deposit costs for banks. For example, Bank of America's net interest margin grew by 11 basis points year over year. The bank expects 5% to 7% additional net interest income growth this year. Very strong. Equities trading was another strong point. Like you mentioned, investment banking loves volatility.
It's common in times of market turbulence. Bank of America and JPMorgan Chase, just to name another two examples, in addition to Goldman and Morgan, they saw equities trading revenue rise by 23% and 40%, respectively.
What trends are emerging from the latest bank earnings reports?
Another interesting trend that I saw is, consumers appear to be stronger than many experts thought, or at least more confident, maybe not stronger. Deposit growth has been stronger than I thought. Loan growth has really been stronger than I thought. Bank of America's loan portfolio grew 8% year over year. And most banks have reported lower than expected loan loss provisions, indicating that their loans are performing well. The big question, in my mind anyway, is, why did the big four bank stocks drop after earnings yesterday? As you said, Goldman and Morgan are lifting the sector today, but the initial reaction to all the big bank earnings was negative. There wasn't much to dislike in their earnings reports, although some banks missed estimates on investment banking fees, some missed estimates on fixed income trading.
But these stocks have been excellent performers over the past year. Just to name a couple, Wells Fargo is up 65% in 2025 alone. Goldman Sachs gained 50% last year. So, a pullback on what I would call strong but not stellar earnings isn't that big of a surprise.
I want to broaden the lens a little bit here, because I think bank earnings is like holding up a mirror to Wall Street and the market writ large. I think it's a good way to focus on the vibes a little bit. John, I'll send this to you.
What is the proposed cap on credit card interest rates?
Things like large debt issuance, M&A activity, IPOs, things don't happen as much when everyone on Wall Street is miserable.
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Chapters
8 chapters
1
What are the recent earnings results from major U.S. banks?
0:05–1:40
2
How do investment banks respond to market volatility?
1:40–2:53
3
What trends are emerging from the latest bank earnings reports?
2:53–4:11
4
What is the proposed cap on credit card interest rates?
4:11–5:26
5
What are the potential consequences of capping credit card rates?
5:26–6:13
6
How might the credit card industry react to regulatory changes?
6:13–7:39
7
Which companies could benefit from changes in the credit market?
7:39–10:32
8
What stocks are on the radar for future investment?
10:32–21:15