Call it a stretch to forget. The KBW Nasdaq Bank Index fell 6% in the first quarter for its worst performance since 2023, as the Trump administration’s war on Iran rattled investors.
Still, you wouldn’t know it by looking at rosy expectations for earnings growth.
Quarterly report cards from America’s largest banks, due this week, are expected to show that profits climbed in the first quarter from a year ago, helped by strong investment banking and trading activity.
Goldman Sachs reports Monday, followed by JPMorgan Chase, Citigroup, and Wells Fargo the next day. Morgan Stanley and Bank of America are up Wednesday. If investors are heading into this marathon of filings and conference calls with questions, it is probably the one posed by UBS analyst Erika Najarian in an April 7 note to clients: “Can (solid) results overcome a wall of worry?”
The answer, it seems, is yes. “The market has been dealing with a plethora of largely negative headlines,” Najarian wrote, “but even after reducing our presumed rate cuts from two to one (in September), our estimates for ’26 and ’27 are largely unchanged.”
Investors scour bank results because they serve as windows into the economy. Consumer lenders provide data on individual borrowers’ credit quality and spending, while investment banks’ performance shows corporate clients’ confidence in dealmaking and raising capital.
For several quarters, banks’ results have reflected bumper performance for core Wall Street businesses—and solid, but not as ebullient, showings for everyday consumers. Bank CEOs have recently noted, too, that they are seeing a divergence in financial health between high- and lower-income clients.
What is left unsaid can also reflect banks’ backdrop. Banks may be reluctant to raise expectations for their full-year performance because of macroeconomic uncertainty, BofA Securities analyst Ebrahim Poonawala wrote April 6. Still, a busy quarter for trading desks and bankers, paired with a “decent setup” for net-interest income, should drive solid results, he wrote.
Beyond evaluating big banks on the usual profitability measures, shareholders will look for updates on one of the market’s most pressing concerns: private credit, the banks’ less regulated, less transparent cousin.
Investors worry that banks are overexposed to private credit players that are now coming under stress. Banks have lent billions of dollars to private credit funds. Those funds in turn lent money to, among other sectors, software providers now facing intense competition from artificial intelligence. Fears that those businesses could suffer and default have fueled concerns of risk spreading throughout the financial system.
“Lending to private credit funds has soared, led by money centers as well as superregionals and regionals,” J.P. Morgan Securities analyst Vivek Juneja wrote on April 7.
Banks and private-equity firms have generally disputed the notion that private credit threatens financial stability. But steep selloffs in the software and alternative asset-management sectors have spooked investors. Executives’ remarks on private credit—and credit quality broadly—will come into focus.
“Management commentary at earnings will likely underscore that credit is strong today, but higher-for-longer oil prices would be a risk,” Morgan Stanley analyst Manan Gosalia wrote on March 31. “We view bank lending to private credit as more of a headline risk than a fundamental risk.”
Wall Street is picking its winners. Citi’s stock has become a favorite among sell-side analysts attracted to the bank’s potential for higher returns after years of underperforming its rivals. Citi is the top choice for Wells Fargo banking analyst Mike Mayo and Bank of America’s Poonawala. After quarterly earnings, the New York lender led by CEO Jane Fraser is set to hold an investor presentation on May 7.
“We view Citi favorably given its improving return profile driven by broad-based revenue growth, disciplined expense control, and rising capital returns,” Jefferies analyst David Chiaverini wrote on April 8.
On her bank’s earnings call, Fraser will likely field questions about a late March Bloomberg News report that said senior leaders there recently held early-stage discussions about acquiring a bank or other type of financial firm. Citi told Bloomberg that the suggestion is “baseless speculation,” and that for now it is “solely focused” on organic growth. The bank referred Barron’s to that statement. Investors may question Fraser over acquisition strategy in May.
Earnings at JPMorgan, the largest bank of the bunch, should benefit from strong results in its markets and investment banking businesses, Piper Sandler analyst Scott Siefers wrote March 31. (For bank observers: JPMorgan usually sets the tone for quarterly earnings as the first of the big banks to report. This quarter, though, Goldman is scheduled to go first.)
In his note, Siefers, like UBS’s Najarian, lamented a “wall of worry” that banks face. Quarterly earnings “should be strong,” he wrote, “but investors have plenty of anxiety.”
That could make for an earnings season to remember.
