Three of the largest U.S. banks reported first-quarter earnings on Tuesday, with JPMorgan Chase and Citigroup exceeding analyst expectations thanks to robust trading and investment banking activity. Wells Fargo also posted a profit beat but fell short on a key measure of lending profitability, sending its shares lower.
The results come amid heightened geopolitical tensions, including the conflict in the Middle East that began in late February, which have roiled global markets and boosted volatility. That environment has proven lucrative for Wall Street trading desks, even as it clouds the economic outlook.
JPMorgan Posts Record Trading Revenue, Warns of Risks
JPMorgan reported first-quarter net income of $16.49 billion, or $5.94 per share, a 13% increase from the same period last year and well above the $5.45 consensus estimate. Revenue climbed 10% to $50.54 billion, also beating forecasts. The firm's markets division generated a record $11.6 billion in quarterly revenue, with fixed income trading rising 21% to $7.08 billion, driven by commodities, credit, currencies, and emerging markets. Investment banking fees jumped 28% to $2.88 billion, as mergers advisory revenue surged 82% to $1.27 billion.
Despite the strong numbers, CEO Jamie Dimon urged caution. "There is an increasingly complex set of risks – such as geopolitical tensions and wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices," Dimon said. "While we cannot predict how these risks and uncertainties will ultimately play out, they are significant and they reinforce why we prepare the firm for a wide range of environments." That sentiment echoed his recent annual letter, which warned of threats from geopolitics, AI, and private credit strains.
On the consumer side, card services and auto lending revenue grew 13%, and credit card spending volume was up 9% year over year. Delinquency rates on consumer loans fell below year-ago levels, and the firm's provision for credit losses dropped to $2.5 billion, down from $3.3 billion a year ago. CFO Jeremy Barnum said consumers and small businesses remain resilient, though the bank lowered its full-year 2026 net interest income guidance to roughly $103 billion from a prior estimate of $104.5 billion.
Wells Fargo Crosses $1 Trillion in Loans, Shares Slip
Wells Fargo reported net profit of $5.25 billion, or $1.60 per share, up from $4.89 billion a year ago and above the $1.58 consensus estimate. However, net interest income came in at $12.1 billion, missing the $12.3 billion analysts had anticipated, and shares fell 2.8% in premarket trading, extending a year-to-date decline of about 7%. The bank's loan book surpassed $1 trillion for the first time, an 11% increase, after the Federal Reserve lifted a $1.95 trillion asset cap last year that had constrained growth for roughly seven years. The expansion has been driven primarily by credit cards and auto loans.
CFO Mike Santomassimo noted that consumers are likely spending between 25% and 30% more on gas than before the conflict, though overall spending remains resilient. Headcount continued to shrink, falling to 200,999 employees at the end of March from 205,198 at year-end, a decline that has continued every quarter since late 2020.
Citigroup Notches Best Revenue Quarter in a Decade
Citigroup posted earnings of $3.06 per share, topping the $2.65 estimate, on revenue of $24.63 billion – the highest quarterly figure in at least 10 years and a beat versus the $23.55 billion forecast. Total markets revenue rose 19% to $7.2 billion, with equities trading jumping 39% and fixed income growing 13%, led by strong commodity performance. Banking division revenue climbed 15%, with equity underwriting fees up 64% and mergers advisory fees up 19%.
Return on tangible common equity hit 13.1%, above the bank's stated target of 10% to 11% and the highest level since 2021. CEO Jane Fraser said the bank remains on track to hit that target for the full year, adding that it has "entered into the final phase of our divestitures and 90% of our transformation programs are now at or near our target state." CFO Gonzalo Lucchetti said the mergers pipeline remains strong, though a prolonged Middle East conflict could weigh on dealmaking activity in the second half of the year.
In related moves, JPMorgan Workplace Solutions CEO Vince La Padula departed for Treasury, and LPL-affiliated Genesis Wealth hired a JPMorgan veteran with $725M, highlighting ongoing talent shifts across the wealth management industry.
