Shares of Bank of America fell 3.5% even as the lender beat quarterly profit expectations, while Wells Fargo fell 4.4% after missing fourth-quarter revenue expectations.Citigroup fell 0.5% despite higher revenue.
This follows warnings from JPMorgan executives that a proposed cap on credit card interest rates could put pressure on consumers and hit profitability in the financial sector.
The weakness in banking stocks comes after a 25% jump in the past twelve months. The sector fell 0.4% that day.
“Banks have started the year very strongly and markets need some time to digest the results,” said Jake Johnston, deputy CIO of Advisors Asset Management. “We see some of the estimates missing slightly, but these stocks had a strong run-up to these reports, and it’s not unusual to see a small pullback.”
US banking giants boosted their fourth-quarter profits, buoyed by rising demand from borrowers, which could bode well for lenders’ future earnings. Bank of America’s average loans grew 8% from a year earlier, and its net interest income — or the difference between what it earns on loans and deposit payouts — rose to a record $15.9 billion, Bank of America reported Wednesday. At competitor JPMorgan Chase, average loans increased by 9%. Lending growth is keenly viewed by investors as a positive indicator of banks’ activities.
“We’ve seen growth across all consumer lending categories,” Bank of America Chief Financial Officer Alastair Borthwick told reporters on a conference call. “That helped us in the fourth quarter, but overall the story in 2025 has been more of a commercial lending story, and we’re pleased that our customers have continued to invest in a growing economy to support their businesses.”
Analysts at S&P Global Market Intelligence “are optimistic about continued momentum into 2026, driven by macroeconomic stability and favorable credit conditions,” they wrote in a report on Tuesday. They estimate that credit growth at U.S. banks will “accelerate significantly” by the end of 2025, growing at an annual rate of 5.3%.
Citigroup’s average loans rose 7% in the fourth quarter, driven by the markets, U.S. personal banking and services businesses, it said Wednesday. “We saw the pace of credit growth pick up for the first time in a long time,” Wells Fargo Chief Financial Officer Mike Santomassimo told reporters on a conference call. Loans for the commercial business grew 12% in the fourth quarter, while revenues also rose thanks to auto and card loans.
CREDIT CARD CAP
Executives also expressed concern that President Donald Trump’s proposed 10% cap on credit card interest rates would prompt banks to cut back on lending and curb economic growth. Still, they said more details were needed to assess its potential impact.
Citigroup Chief Financial Officer Mark Mason said it was too early to judge the policy given the lack of details. More broadly, “an interest rate cap is not something we would or could support,” he told reporters on a conference call.
“An interest rate cap would limit access to credit to those who need it most, and would frankly have a damaging impact on the economy… (I) don’t want to speculate on the impact given the lack of information available in the market, but agree that affordability is an important issue and “stand ready to collaborate on how we work to address this,” Mason said.
Wells Fargo Chief Financial Officer Mike Santomassimo told reporters that the bank encourages careful consideration of all proposals.
“It’s just too early,” he said. “There aren’t enough details to really comment on the individual impact on Wells or the industry. But as I said, it would have a negative impact on the availability of credit.” In addition, more bankers expressed support for Federal Reserve independence after the Trump administration opened an investigation into Chairman Jerome Powell.
“What’s really important is the independence of the Fed and the Fed chairman,” Mason said. “We expect the next Fed chairman will operate with the same level of independence and will focus on ensuring the Fed has that independence.”
#bank #stocks #fall #results #credit #card #limit #center #stage