What We Learned About the Economy from Big Bank Earnings

Equities Trading Revenue Is Out of This World

The large trading desks posted absolutely eye-popping trading revenues for the second quarter of 2026, with equities truly stealing the show. Equities trading revenues were up for JPMorgan JPM (86%), Goldman Sachs GS (72%), Bank of America BAC (70%), Morgan Stanley (69%) MS, and Citigroup C (45%) from the year-ago period.

Trading volume in 2025 was historically strong, so these numbers are not due to softer comparisons. Rather, it’s been buoyed by the perfect storm of variables breeding uncertainty: geopolitical conflict in Iran and Ukraine, a rapidly changing technological landscape with buildout and adoption of artificial intelligence, and index levels hovering around all-time highs.

Higher prime balances and leverage ratios have been fairly key contributors to the recent strength. This is unsustainable through the entire cycle, as negative catalysts will eventually result in forced selling/deleveraging. As an example of how hyper-normal equities trading volume is, Bank of America, which has a significant presence and reputation in fixed income, currencies, and commodities (averaging 84% higher revenues there than in equities over the past 12 years), generated more equities revenues in the quarter.

Strong Investment Revenues

Investment banking revenues look poised to finish 2026 as their second-strongest calendar year, trailing only 2021. While not to the degree of trading, investment banking transactional volume has picked up considerably this year. Looking across the money-center banks, consolidated investment banking fees were up considerably from the year-ago period for JPMorgan (30%), Bank of America (50%), Citi (44%), and Wells Fargo WFC (35%). These are four different franchises with differing client mixes and demographics, confirming that the corporate risk appetite has solid breadth.

Looking ahead, potential Anthropic and OpenAI IPOs later this year at valuations exceeding $1 trillion could keep fueling this cycle. Large IPOs and M&A (especially cross-border or involving public companies) are historically the most profitable subcategories of investment banking—notable because those are the transaction types driving the charge this year.

Consumer Spending Metrics Look Robust

Credit and debit card volume results were quite strong relative to the year-ago quarter, with JPMorgan posting combined credit and debit volume up 10%, Bank of America combined up 9%, Wells Fargo debit up 8% and credit up 11%, and Citi general-purpose card up 12%. With consistent growth across four banks with meaningfully different customer bases, this is a fairly clean read that consumer spending strength is broad-based across income cohorts and not concentrated in one segment.

Consumer and Corporate Credit Quality is Improving, Not Deteriorating

All four money-center banks reported improved holistic credit metrics, which is encouraging for household and business balance sheets. JPMorgan’s updated guidance for card portfolio net charge-offs showed a 20-basis-point reduction to 3.2%. Bank of America’s net charge-off ratio ticked down 8 basis points to 0.47% year over year. Wells Fargo’s net charge-off ratio improved 10 basis points to 0.34%. Finally, Citi’s branded-card net credit loss rate improved 24 basis points to 4.19%, with a decline in 90+ day delinquencies, to boot. We also believe the improved credit metrics highlight a rosy picture for the broader economy.

Deposit Growth Remains Healthy

We witnessed healthy, sustainable deposit growth across each of the four money-center banks. Wells Fargo and Citi each posted deposit growth that was up by low double digits from a year ago, while JPMorgan was up 7%. Bank of America was only up 2.5% from a year ago, but we believe its growth has been particularly selective and disciplined, demonstrated in part by 12 consecutive quarters of growth alongside strong deposit costs.

To further drive home the sustainability of deposit growth, Citi emphasized on its earnings call that deposit inflows largely represent operational deposits, not just yield-seeking “hot money.” This is particularly insightful from them, as the relatively higher rates paid and larger mix of commercial deposits predispose Citi to a higher prevalence of yield-sensitive deposits than the other three.

Loan Growth Remains Robust

Loan growth was notably strong this quarter, with JPMorgan reporting firmwide average loans up 10% from a year ago and 2% from a quarter ago. Bank of America’s average loans were up 8% from a year ago, marking its 9th consecutive quarter of growth. Wells Fargo’s average loans were up 12% from a year ago. We were not surprised to see Wells Fargo lead the pack, since the first anniversary of its asset cap lifting just passed.

While there was modest consumer loan growth, commercial and capital markets-linked lending is really driving the show at present. Wells Fargo’s corporate and investment banking segment reported a 26% growth in its loan book, while Bank of America’s commercial book was up 11%, dramatically outpacing consumer categories. Additionally, JPMorgan’s fastest-growing loan category was wealth-client securities-based lending, not traditional consumer credit, implying corporates and wealthy individuals are borrowing against strong balance sheets/portfolios more than a broad-based consumer credit expansion.

Interpreting this with the card volume data and improving credit metrics, we’re witnessing strong consumer spending across the board without a commensurate increase in consumer borrowing. This illustrates an attractive backdrop and partly explains the improving credit metrics.