Economic Takeaways from Big Bank Earnings

The economy still looked resilient in the third quarter of 2026, but the backdrop shifted. A September Fed hike, higher long-end rates, and higher energy prices slowed deal activity and FICC (fixed-income, currencies, and commodities) trading volume. Meanwhile, consumer spending, loan demand, and credit quality held up.

Key Takeaways

Consumer spend is still growing, 8%–13% year over year, helped by fuel. Bank of America BAC says gas spend is up “20-odd percent” and crowds out some in-store spend.

• JPMorgan JPM debit and credit: +10%
• Wells Fargo WFC debit +8% and credit: +12%
• Citigroup C general-purpose cards: +13%
• Bank of America consumer card and debit: +8%

Credit quality continues to look strong, improving year over year at all four major banks, with no broad-based deterioration.

• Card net charge-off (NCO) rates fell at every bank from year-ago levels and improved sequentially at all except Wells Fargo, which had a 4-basis-point increase to 0.38%.
• 2025 exhibited lower charge-offs than what we would consider average over a full cycle, implying improvements this year are due to strengthening consumer and commercial balance sheets, not merely soft comparables.
• Average card loans grew 5% at Bank of America, 7% at JPMorgan, 9% for Citi’s general-purpose portfolio, and 5% at Wells Fargo against 8%–13% spend growth, so spend looks income-funded rather than credit-funded.

Loan growth remains robust, led by corporate/commercial lending. Average loans rose 6%–12% year-over-year (6% at Bank of America, 10% at JPMorgan, 11% at Wells Fargo, 12% at Citi), with our estimates showing 77%-89% of the loan growth over the trailing year has come from commercial/corporate, explaining 88.5% at JPMorgan, 82.5% at Bank of America, 79.7% at Wells Fargo, and 76.9% at Citi.

Deposit growth slowed sequentially, and deposit costs rose. Average deposits grew 2% quarter over quarter at JPMorgan (from 3% in the second quarter), 2% at Citi (from 4%), and 1% at Wells Fargo (from 4%), while Bank of America was effectively flat. Total yields paid on deposits increased across all four banks, which was anticipated after a rate hike. JPMorgan and Bank of America slightly increased their mix of non-interest-bearing deposits, bucking recent industry trends, particularly during a quarter when rates rose.

The risk of a longer rate-hiking cycle was commonly mentioned. JPMorgan noted an aggressive, extended cycle means higher unemployment and weaker consumer credit. Citi said the marginal borrower, particularly sub-660 FICO borrowers, would feel the pressure after several quarters of hikes, in addition to highlighting a three-year corporate maturity wall.

Consumer Spending

Card spend grew 8%–13% year over year at all four banks, essentially unchanged from the second quarter, and every management team called the consumer healthy on the strength of jobs and wages.

• The labor market is the stated support. JPMorgan described the consumer as “very healthy, primarily because of a healthy labor market,” while Wells Fargo added that wages and employment are strong, with wages keeping up with inflation across cohorts.
• Fuel is a swing factor in nominal spend. Bank of America says gas spend is up “20-odd percent.” Its year-to-date card and debit dollars (+7%) are outpacing transactions (+4%). JPMorgan cites gas and travel as contributors. Wells Fargo sizes energy at 3%–6% of spend, depending on income, and says consumers are offsetting it elsewhere.
• Cohorts are diverging at the edges, but not breaking. Wells Fargo noted that high-income households benefit from asset prices and home equity, while lower-income households are more sensitive to financing and fuel costs but “appear to be stable.” After noting that 86% of its card portfolio is currently prime-plus (FICO 660+), Citi said marginal borrowers, particularly below prime-plus, would likely feel pressure from several quarters of hikes, but not one.
• Spend is outrunning borrowing. Average card loans grew 5% at Bank of America, 7% at JPMorgan, 9% for Citi’s general-purpose portfolio and 5% at Wells Fargo against 8%–13% spend growth, so spend looks income-funded rather than credit-funded.
• Sentiment continues to diverge from behavior. WFC noted that higher prices continue to weigh on consumer sentiment, even as spending and credit hold. There seems to be a stark contrast between sentiment and measured consumer health.

Loan Growth

Loans grew 6%–12% year over year at all four banks, led by wholesale, financial sector, and wealth lending. Period-end growth outran average growth at Bank of America and Wells Fargo, setting up a firmer fourth quarter.

• Large corporates and financial borrowers are driving the growth. JPMorgan’s Global Corporate and Investment Banking loans are up 27% year over year. Citi’s corporate loans, which include Markets financing, are up 20% year over year and 6% from the last quarter. Wells Fargo’s Corporate and Investment Banking (CIB) average loans are up 19% from year-ago levels but down 2% from the previous quarter. Wells says commitments keep rising, while utilization is “relatively stable.”
• The middle market is where we see some divergence. JPMorgan’s Commercial Banking loans grew just 3% year over year (Commercial and Specialized Industries 6%, CRE Banking 2%), while Business Banking average loans fell 6%. The firm says clients are “worried about other people while doing fine themselves,” and that rates, input costs, and “the diesel narrative” are creating a little bit of caution. Bank of America grew commercial loans in every segment (small business 2%, business banking 9%, global commercial 6%), and Wells’ Commercial Banking average loans are +10%.
• Wealth client lending is growing 13%–22%. JPMorgan’s Asset and Wealth Management (AWM) average loans were +20%, Bank of America Global Wealth and Investment Management (GWIM) average loans were +13% (securities-based +21%, custom lending +22%), and Wells Fargo’s WIM average loans were +16%.
• Consumer borrowing is modest and uneven. Card balances grew 5% at Bank of America and Wells Fargo, 7% at JPMorgan, and 9% at Citi’s general-purpose portfolio (private label was down 6%). Wells’ auto average loans were up 31%, JPMorgan auto was up 7%, and Bank of America’s CFO cited lower auto balances. Mortgage is flat to down.
• AI capex is the concentration watch item. Wells Fargo calls the AI investment cycle “a complicated macroeconomic force,” financed with significant leverage, and says it has hard limits. JPMorgan calls its exposure “quite modest” against wholesale exposure, but says it’s not immune to a sentiment shift and notes the theme now reaches working-capital revolvers. Citi sees no slowdown in AI ecosystem investment. Bank of America’s CEO flagged ripple effects into construction and staffing if AI-driven growth slows.

Deposit Growth

Deposit growth slowed sequentially, and deposit costs rose, with average deposits up 2% from a quarter ago at JPMorgan (from 3% in the second quarter), 2% at Citi (from 4%), and 1% at Wells Fargo (from 4%), while Bank of America was effectively flat. Total yields paid on deposits increased across all four banks, which was anticipated after a rate hike. JPMorgan and Bank of America slightly increased their mix of non-interest-bearing deposits, bucking recent industry trends, particularly during a quarter when rates rose.

• Consumer deposits are growing at roughly nominal GDP. JPMorgan CCB average deposits were up 4% year over year but flat from the last quarter. Bank of America consumer deposits were basically flat year over year (up 0.1%), but mix improved as non-interest-bearing balances increased 4%. Wells Fargo consumer banking deposits increased 2% year over year and contracted slightly on a quarterly basis (down 0.4%), which it attributed to seasonal outflows. Account growth has been positive across the board, as JPMorgan added about 650,000 net new checking accounts, while Bank of America added 200,000. Wells Fargo’s primary checking accounts have grown year over year for 14 straight quarters.
• Yield-seeking flows have faded, but higher rates bring pressure back. JPMorgan sees “a little bit of additional pressure” from migration into CDs and some outflow, while Bank of America said their core transactional balances have kept growing regardless of rates. Citi said Services operating deposits grew faster than total deposits, which should improve its deposit costs, all else equal.
• Costs rose but were fairly disciplined in the third quarter. Bank of America’s total deposit rate sequentially rose 3 bps to 1.49%, while JPMorgan and Wells Fargo’s average deposit costs both increased 5 basis points, to 1.66% and 1.56%, respectively. Citi stood out with an 11-basis-point sequential rise to 2.45%, though Citi exhibits a higher deposit beta, due to a larger mix of corporate deposits and minimal retail. Considering the rate hike happened so late in the quarter, we anticipate costs to rise more in the next couple of quarters.
• Betas are expected to look like the last cycle. JPMorgan describes a barbell, with wholesale, CDs, and premium deposits at high beta and a large low-beta stack, so migration matters more than product pricing. Bank of America expects the path up to mirror the path down. Wells Fargo says component betas will not differ from last cycle, and the September hike produced a slightly lower beta than planned. Citi says betas are performing in line.
• No one sees AI agents as a near-term deposit threat. Wells Fargo called it “completely overdone” for the period, while Bank of America and Citi both mentioned not being worried about AI leading to any deposit flight risk. JPMorgan noted that it blocks credential-sharing agents when it can to improve security.

Credit Quality

Credit appears better than a year ago in the aggregate, while the quarterly picture is slightly more mixed, with Wells Fargo’s NCO rate sequentially rising 4 basis points to 0.38%. Citi added $208 million to its card allowances, due to changes in its macroeconomic outlook. All said, credit quality still looks quite strong/stable.

• Wells Fargo is the one bank with a worse sequential NCO ratio. The 0.04% increase came from commercial: Commercial Real Estate (CRE) net charge-offs were $107 million (0.32%) against $16 million in the second quarter, and CIB net charge-offs were $73 million against a $15 million recovery. Year over year, CRE charge-offs are the same at $107 million. Wells Fargo’s auto NCO rate is 0.57%, against 0.45% a year ago. Its CFO calls commercial losses “idiosyncratic” and sees no broad-based deterioration.
• Card 30+ delinquencies rose sequentially. JPMorgan finished at 1.97% (up from 1.91%), Wells Fargo at 2.69% (from 2.58%), and Bank of America at 2.32% (from 2.23%). That is consistent with normal third-quarter seasonality, so the year-ago comparison is the cleaner read, and it is flat to better everywhere.
• Card NCO guidance was maintained or improved. JPMorgan holds its full-year 2026 card NCO rate at about 3.2% (it cut from 3.4% in the second quarter). Citi now expects about 4% for US Cards, the low end of its prior 4.0%–4.5% range.
• Reserve builds seem to be volume-driven, except at Citi. JPMorgan says the wholesale build is “just from new activity,” not downgrades, while Citi’s $208 million cards build is “primarily driven by changes in the macroeconomic outlook.” Citi’s reserves assume an eight-quarter average unemployment rate of 5.3%, with a downside near 7.0%.
• JPMorgan’s allowance comparison is distorted. Total Allowance for Credit Losses (ACL) is $31.9 billion, up 11% from year-ago levels. That said, $2.4 billion of Countercyclical Capital Buffer (CCB) lending-related commitments allowance (versus $90 million a year ago) was added with the Apple Card transaction in the fourth quarter of 2025. The allowance for loan losses is up 2%.

What Changed Since Q2, and What to Watch

Consumer spending, credit, and loan demand held steady from the second quarter. Capital markets growth and sequential deposit growth cooled as rates rose.

• The hiking path is the swing factor. Bank of America assumes hikes in December, March, and June, while JPMorgan’s curve has one in December and two in the first half of 2027. We’re going to be watching deposit migration into CDs, CRE valuations, sub-660 FICO borrowers, and the corporate maturity wall.
• Keep an eye on fourth-quarter capital markets. JPMorgan saw activity slow in the second half of September and assumes a normal seasonal decline in markets, though it expects less seasonality than usual. Bank of America also anticipates less seasonality than usual after a soft third quarter. Citi guides Markets revenue down about 20% on a quarterly basis, “or possibly a bit more.”
• Rate hikes hitting capital through Accumulated Other Comprehensive Income (AOCI). Standardized Common Equity Tier 1 (CET1) capital ratios fell 30 basis points at JPMorgan (13.9%), about 35 points at Bank of America (10.9%), and to 10.0% at Wells Fargo (AOCI cost 38 bps). Citi stayed flat at 12.8%.
• Final capital rules (Basel III endgame, G-SIB) are expected in the fourth quarter. Wells Fargo estimates Risk-Weighted Assets (RWA) could fall about 7% under the proposal, and we believe confirmation of the proposal would serve as a tailwind for effectively the entire banking industry. The intriguing question will be the deployment of the freed-up capital, since banks are already running with lower loan/deposit ratios than average.