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Bank Earnings Paint Diverging Pictures for JPMorgan, Citi, and Wells Fargo

The second-quarter earnings season kicked off with a trio of heavyweight reports from the U.S. banking sector, offering a snapshot of diverging fortunes. 

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While JPMorgan Chase (JPM) continued its string of earnings beats, Citigroup (C) emerged as the quarter’s standout with a strong surge in trading and wealth management. Wells Fargo (WFC), on the other hand, revealed a more cautious tone as interest income guidance fell short of expectations.

JPMorgan: Resilience and Realism in the Face of Tariff Risks
JPMorgan Chase posted earnings of $5.24 per share for the second quarter, surpassing analysts' expectations once again. Revenue came in just shy of $45 billion, a modest year-over-year decline primarily due to a one-time gain in 2024 tied to Visa shares. Excluding that, underlying performance was solid across business lines.

Investment banking revenue was notably strong, jumping to $2.68 billion amid a pick-up in deal activity and IPOs. Markets revenue also advanced to $8.9 billion as clients navigated volatile trading conditions sparked by tariff developments and shifting rate expectations.

The bank raised its full-year net interest income forecast to $95.5 billion, up from $94.5 billion in May, signaling confidence in consumer credit demand and higher revolving balances. Still, CEO Jamie Dimon struck a cautious tone, highlighting risks from tariffs, trade disruptions, and broader geopolitical tensions.

Shares were largely flat following the release, reflecting investors’ high expectations after a 20% year-to-date run. While JPMorgan’s operational strength is clear, markets appear to be looking beyond consistent beats toward macro clarity.
 
Citigroup: A Turnaround That’s Starting to Click
Citigroup delivered the biggest upside surprise of the morning. Earnings rose 29% year-over-year to $1.96 per share, crushing estimates. Revenue hit $21.67 billion, driven by a 12% jump in net interest income and broad-based strength across business segments.

Trading revenue surged 16% to $5.9 billion, the highest since 2020, with fixed income trading jumping 20% and equities hitting a second-quarter record. The banking division also impressed with an 18% revenue increase, fueled by a revival in M&A activity.

Wealth management grew 20%, propelled by rising client investment balances and strong fixed-income inflows. Citigroup nudged its full-year revenue outlook higher to approximately $84 billion.

CEO Jane Fraser emphasized that automation and AI are driving cost efficiencies, and reaffirmed the bank’s 10–11% return-on-tangible-common-equity target for 2026. The bank returned $3 billion to shareholders during the quarter.

Citi shares jumped over 3% to their highest level since the 2008 financial crisis. After years of underperformance, the market may finally be buying into Fraser’s multiyear restructuring strategy.

Wells Fargo: Guidance Miss Tempers Solid Results
Wells Fargo reported a better-than-expected bottom line of $1.60 per share and revenue of $20.82 billion. However, the story turned sour with net interest income (NII) — the bank’s bread and butter — coming in light at $11.7 billion, a 2% decline year-over-year.

Moreover, Wells revised its full-year NII forecast downward to roughly match 2024’s $47.7 billion, missing Wall Street’s hopes for modest growth. CEO Charlie Scharf pointed to pressure from floating-rate loans and deposit mix changes, and reiterated plans to reduce reliance on NII in favor of fee-based revenue streams.

The bank, recently released from regulatory growth caps, is exploring new opportunities in capital markets and non-bank financial lending. But investor reaction was cool, with shares falling more than 1% after the print.

Wells Fargo is still in the midst of a strategic transformation. While the regulatory burden has eased, questions remain about how it plans to grow in a more competitive and tech-driven banking environment.

A Sector in Motion as Tailwinds Meet Trade Headwinds
The second-quarter results from JPMorgan, Citigroup, and Wells Fargo underscore the complex backdrop facing U.S. banks. Trading activity and consumer resilience have supported earnings, but margin pressures and tariff uncertainty are casting longer shadows.

Citigroup stands out for now with clear momentum and investor buy-in. JPMorgan continues to execute reliably, but faces a high bar. Wells Fargo is still finding its post-regulatory footing, and investors want more clarity on the path ahead.

As trade tensions persist and the Federal Reserve weighs its next move, expect more divergence in bank earnings as business models, strategic agility, and exposure to global volatility take center stage.


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