Every quarter, the largest U.S. banks kick off earnings season with JPMorgan Chase reporting on the first day, typically along with one or two others. On Tuesday we’re in for something unusual.
Five of the “Big Six” banks will announce results on “Super Tuesday” before the market open. In recent years, four banks has been the most that have kicked off earnings.
The five largest U.S. banks by total assets are JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldmans Sachs. They will all report second-quarter results Tuesday morning, followed by Morgan Stanley — the sixth largest — on Wednesday.
Before looking at second-quarter estimates for the largest U.S. banks, let’s consider their relative valuation as a group.
How cheap are stocks of big U.S. banks?
The KBW Nasdaq Bank Index BKX of 24 large U.S. banks has returned 14.7% so far in 2026, surging lately to outperform the S&P 500, which has returned 10.8% so far this year. All returns in this article include reinvested dividends.
The banks as a group typically trade at a significant discount to the broad U.S. stock market on a forward price-to-earnings basis. A stock’s forward P/E ratio is its price divided by the consensus 12-month earnings-per-share estimate among analysts working for brokerage or research firms.
The forward P/E ratio for the Invesco KBW Bank exchange-traded fund, which tracks the KBW Bank Index by holding all of its stocks, is a weighted 12.4. That is 61% of the forward P/E valuation of the State Street SPDR S&P 500 ETF Trust, which tracks the S&P 500 and has a forward P/E of 20.4, according FactSet. Here is how KBWB’s valuation relative to SPY has moved since the end of 2011:
The KBW Bank ETF typically trades at a discount to the State Street SPDR S&P 500 ETF Trust’s forward P/E valuation. FactSet
KBWB has traded at an average of 67% of SPY’s valuation since the end of 2011. The relative valuations have ranged as high as 91% in April 2012 and as low as 39% in May 2023. So the banks have come up quite a bit over the past three years, but their collective valuation may still be considered to be a bit low.
Second-quarter expectations
“The banks are saying loan growth is pretty strong,” according to Ebrahim Poonawala, the head of research for North American banks at BofA Securities. He told MarketWatch that good loan-growth numbers and the “higher-for-longer” interest-rate environment would bode well for banks’ net interest margins — the spreads between average interest rates earned on loans and investments and the average cost for deposits and borrowings.
“On the other side, a headwind is that deposit pricing competition is intense,” Poonawala added. He believes the most important themes during this earnings season will be how margins expand or contract with so much competition, along with balance-sheet growth.
He also expects “another quarter of strong trading revenue, on the back of five strong years,” along with “a range of 10% to 20%” for increases in investment-banking revenue for the largest players, based on their guidance.
Investors might see impressive investment-banking revenue numbers this earnings season with such high levels of merger and acquisition activity, as well as initial public offerings. That raises the question of whether or not the investment banks will reach cyclical revenue peaks this year. On June 30, Oppenheimer analyst Chris Kotowski lowered his ratings for Goldman Sachs and Morgan Stanley to “underperform” from “perform,” and dropped Bank of America and Citigroup to “perform” from “outperform.”
The downgrades, especially to the equivalent of sell ratings on Goldman and Morgan Stanley, reflect the investment-banking industry’s move to “the later part of the cycle,” Kotowski wrote in a note to clients.
Kotowski recommended investors move toward “the most boring and stable commercial banks one can find, which are [U.S. Bancorp] and PNC” within the large-cap banking group covered by Oppenheimer, because the “commercial banking expansionary cycle is still in its relatively early phases.”
Kotowski also suggested investors “redeploy the funds raised by selling” the investment banks “into the Alternative Asset managers,” by which he meant, in particular, Ares Management, Blackstone and KKR.
EPS and margin estimates
Here are consensus second-quarter earnings-per-share estimates for the largest 20 U.S. banks, sorted by total assets. This table incudes EPS estimates for the second quarter, as well as actual EPS for the first quarter of 2026 and for the second quarter of 2025, along with estimates of net interest income to average earning assets for the second quarter with comparisons to actual results for the first quarter of 2026 and the second quarter of 2025, as calculated by FactSet. These numbers are labeled NIM on the table. Since banks don’t calculate their reported net interest margins in a consistent manner, the FactSet calculations allow for a uniform set of estimates of how each bank’s margin picture is expected to change.
Bank | City | Est. Q2 EPS | Q1 EPS | Q2 2025 EPS | Est. Q2 NIM | Q1 NIM | Q2 2025 NIM |
JPMorgan Chase | New York | $5.58 | $5.94 | $5.24 | 2.48% | 2.25% | 2.33% |
Bank of America | Charlotte, N.C. | $1.13 | $1.11 | $0.89 | 2.07% | 2.00% | 1.92% |
Citigroup | New York | $2.74 | $3.06 | $1.96 | 2.47% | 2.56% | 2.49% |
Wells Fargo | San Francisco | $1.72 | $1.60 | $1.60 | 2.43% | 2.54% | 2.63% |
Goldman Sachs Group | New York | $14.47 | $17.55 | $10.91 | N/A | 0.85% | 0.73% |
Morgan Stanley | New York | $2.93 | $3.43 | $2.13 | N/A | 0.82% | 0.83% |
U.S. Bancorp | Minneapolis | $1.28 | $1.18 | $1.11 | 2.75% | 2.98% | 2.97% |
Capital One Financial | McLean, Va. | $4.70 | $3.34 | -$8.58 | 8.06% | 9.09% | 6.93% |
PNC Financial Services Group | Pittsburgh | $4.46 | $4.14 | $3.86 | 2.97% | 2.88% | 2.80% |
Bank of New York Mellon | New York | $2.23 | $2.24 | $1.93 | 1.39% | 1.65% | 1.65% |
Truist Financial | Charlotte, N.C. | $1.08 | $1.09 | $0.90 | 3.00% | 3.05% | 3.06% |
Charles Schwab | Westlake, Texas | $1.53 | $1.37 | $1.09 | 2.95% | 4.29% | 3.98% |
State Street | Boston | $3.34 | $2.49 | $2.17 | 1.14% | 0.90% | 0.93% |
American Express | New York | $4.41 | $4.28 | $4.08 | 7.73% | 6.40% | 7.80% |
Fifth Third Bancorp | Cincinnati | $0.84 | $0.15 | $0.88 | 3.34% | 2.88% | 3.06% |
Huntington Bancshares | Columbus, Ohio | $0.36 | $0.25 | $0.34 | 3.23% | 2.87% | 3.04% |
Citizens Financial Group | Providence, R.I. | $1.24 | $1.13 | $0.92 | 3.16% | 3.17% | 3.00% |
M&T Bank | Buffalo | $4.66 | $4.13 | $4.24 | 3.66% | 3.69% | 3.64% |
KeyCorp | Cleveland | $0.42 | $0.44 | $0.35 | 2.93% | 2.79% | 2.52% |
Northern Trust | Chicago | $2.71 | $2.71 | $2.13 | 1.74% | 2.41% | 2.32% |
Source: FactSet | |||||||
All of these banks are expected to show year-over-year increases in EPS except for Fifth Third Bancorp. But seven are expected to show sequential EPS declines, including JPMorgan, Citi, Goldman and Morgan Stanley.
Macrae Sykes, the portfolio manager of the Gabelli Financial Services Opportunities ETF, said executives’ comments at recent industry conferences had hinted at rising expenses for the banks and that investors would be looking for more guidance on expenses in the earnings reports.
He also told MarketWatch: “I don’t see much margin improvement.” Investors had started 2026 anticipating two cuts to the Federal Open Market Committee’s target range for the federal-funds rate. “Now we are neutral” in terms of rate-cut expectations, he said. Banks typically can take quick advantage of Federal Reserve cuts to the federal-funds rate, upon which savings-account and money-market yields are based.
Valuation and returns on equity
Let’s look at forward P/E ratios to see how those compare with five-year average valuations. This table also includes estimated returns on tangible common equity for the second quarter and actual ROTCE figures for the first quarter of 2026 and the second quarter of 2025.
Bank | Forward P/E | Five-year avg. forward P/E | Forward P/E five years ago | Est. Q2 ROTCE | Q1 ROTCE | Q2 2025 ROTCE |
JPMorgan Chase | 14.1 | 12.3 | 11.3 | 20.1% | 23.0% | 21.0% |
Bank of America | 12.0 | 11.6 | 12.6 | 15.8% | 16.0% | 13.4% |
Citigroup | 11.4 | 9.7 | 7.4 | 11.3% | 13.1% | 8.7% |
Wells Fargo | 11.3 | 11.4 | 10.8 | 15.0% | 14.5% | 15.2% |
Goldman Sachs Group | 15.9 | 12.4 | 7.8 | 13.3% | 16.8% | 13.6% |
Morgan Stanley | 17.1 | 14.7 | 12.6 | 20.5% | 27.1% | 18.2% |
US Bancorp | 11.2 | 10.5 | 11.5 | 17.5% | 17.0% | 17.3% |
Capital One Financial | 8.6 | 9.3 | 7.6 | N/A | 5.6% | N/A |
PNC Financial Services Group | 12.3 | 12.3 | 13.6 | 16.5% | 15.2% | 12.2% |
Bank of New York Mellon | 15.8 | 12.2 | 11.9 | 28.8% | 29.5% | 27.8% |
Truist Financial | 10.3 | 10.5 | 11.3 | 14.1% | 13.8% | 12.3% |
Charles Schwab | 14.6 | 19.6 | 21.3 | 40.7% | 40.0% | 35.6% |
State Street | 12.8 | 10.7 | 11.2 | 23.0% | 20.1% | 19.4% |
American Express | 17.7 | 18.4 | 22.0 | 39.0% | 36.1% | 37.8% |
Fifth Third Bancorp | 12.9 | 11.3 | 10.4 | 17.2% | 16.0% | 17.6% |
Huntington Bancshares | 10.1 | 10.3 | 9.7 | 16.4% | 11.6% | 16.1% |
Citizens Financial Group | 11.5 | 10.4 | 9.1 | 13.5% | 12.2% | 10.7% |
M&T Bank | 11.7 | 11.1 | 11.2 | 16.7% | 14.5% | 15.5% |
KeyCorp | 11.2 | 10.5 | 8.8 | 12.3% | 13.0% | 11.2% |
Northern Trust | 15.3 | 14.3 | 16.6 | 17.5% | 17.8% | 14.1% |
Sources: LSEG, except FactSet for Goldman estimated and Q1 ROTCE and Capital One Q1 ROTCE | ||||||
Analysts are expecting mostly sequential declines in ROTCE for the largest six banks, with Wells Fargo the exception.
“With Wells Fargo, you can see how they are optimizing their balance sheet after the asset cap,” Sykes said, referring to the limit the Federal Reserve placed on the bank’s asset growth in 2018 as part of regulatory actions taken to correct problems with Wells Fargo’s deposit- and loan-account servicing, as well as certain sales practices. The asset cap was lifted in June 2025.
Among stocks of the largest U.S. banks, Poonawala favors Citigroup, whose management team expects to improve its ROTCE to a steady range of 14% to 15% over the next several years. Citi’s second-quarter ROTCE is expected to show the greatest improvement from a year earlier for any of the banks on the list, with the exception of Capital One, which reported a net loss during the second quarter of 2025 when it acquired Discover Financial.
Even with that improvement, Citi “is the one among the Big Six where the room for improvement is the most,” Poonawala said. Citi is roughly tied with Wells Fargo as the cheapest among the six largest U.S. banks by forward P/E valuation.
Sykes continues to favor American Express as a long-term investment. Looking at the second table, you can see that the company has the highest forward P/E on the list. But that P/E valuation of 17.7 compares with a five-year average of 18.4 and is well below the valuation of 22 five years ago. If you had bought the shares at that considerably higher forward P/E, your five-year return would have been 114%, compared with returns of 86% for the S&P 500 and 50% for the KBW Bank Index.
American Express’s second-quarter ROTCE is estimated to be 39% — the second highest on the list after Charles Schwab.
So this may a good entry point for American Express, whose reputation for good customer service remains “a differentiator for them within the industry,” Sykes said.
