Big Bank Earnings Looked Strong — But Wall Street Still Hit “Sell”: Even Citi Couldn’t Escape the Trap

The first wave of earnings from the four major U.S. money-center banks delivered a clear message: fundamentals are still solid, but the stocks are trading like investors already cashed the check. JPMorgan, Bank of America, Wells Fargo, and Citigroup all reported results that broadly supported the narrative of resilient consumers, steady balance sheets, and a healthier capital markets backdrop. Yet the market reaction has skewed sharply toward “sell the news,” reflecting just how high expectations were after the sector’s strong 2025 run. Across the group, revenue and net interest income held up better than feared, loan growth trends stayed constructive, and credit remained manageable — but that wasn’t enough to generate sustained upside follow-through.

Citigroup initially looked like the outlier that might escape the “sell-the-news” trade hitting big banks this earnings season, with the stock ticking higher in the premarket after a cleaner-than-expected beat and upbeat 2026 outlook. But that optimism didn’t hold once U.S. trading got underway. Citi ultimately rolled over and joined the rest of the money-center group, with shares sliding nearly 4% as investors shifted back into profit-taking mode after the sector’s strong 2025 run. The reversal suggests the market’s bar isn’t just about beating estimates — it’s about delivering results that are strong enough to justify the rally already priced into bank valuations, and so far even the “better” reports are struggling to clear that hurdle.

On top-line performance, the group produced a relatively tight range of outcomes, but the beats and misses mattered more than the absolute numbers. JPMorgan once again posted the biggest revenue base, with Q4 revenue of $45.8B beating expectations near $44.7B and reinforcing its position as the sector’s most diversified earnings engine. Bank of America delivered one of the cleaner “core banking” beats, with revenue up 7% year-over-year to roughly $28.4B ($28.5B FTE), clearing consensus and showing broad-based momentum across the franchise. Wells Fargo was the main disappointment on headline revenue, posting $21.29B versus $21.65B expected, which became the market’s easiest excuse to fade the stock even though underlying profitability was better than the headline suggested. Citigroup’s adjusted revenue of $21.0B edged out expectations, but the more important signal was that revenue was up 8% year-over-year excluding the Russia-related loss, highlighting that momentum is improving in multiple business lines rather than being concentrated in one segment.

Net interest income trends were constructive overall and showed that the “higher for longer hangover” hasn’t crushed earnings power. Bank of America stood out with NII up 10% YoY to $15.8B ($15.9B FTE), supported by fixed-rate asset repricing, higher deposit and loan balances, and stronger Global Markets activity. JPMorgan also posted strong NII, up 7% YoY to $25.1B, while NII excluding Markets rose 4% to $23.9B, reflecting steady balance growth offsetting lower rates and margin compression. Wells Fargo’s NII of $12.33B came in modestly below estimates, a small miss that carried outsized weight given how heavily the market is rewarding “clean prints” this season. Citi’s NII outlook is where investors focused more than the quarter itself, with guidance calling for NII ex-Markets up 5–6% in 2026 — a stabilizing signal as management pushes toward a higher-return model.

Loan growth was one of the most important broad themes across the group, and it reinforces that demand remains intact despite a still-choppy rate environment. JPMorgan’s firmwide average loans rose 9% year-over-year and 3% sequentially, a strong indicator of ongoing balance sheet momentum. Bank of America’s average loans and leases increased 8% with growth across every segment, supporting the thesis that both consumer and commercial credit demand is holding up. Wells Fargo posted average loan growth of 5% year-over-year, led by commercial and industrial, auto, and credit cards, while commercial real estate and residential mortgage balances continued to run off. Citi’s loan growth was one of the more notable positives, with end-of-period loans up 8% and average loans up 7%, driven by Markets, US Personal Banking, and Services — important because it suggests Citi’s restructuring is not coming at the expense of growth where it matters.

Capital markets and trading revenue were the standout positives across the board and arguably the clearest macro signal from this earnings round. JPMorgan’s Markets revenue climbed 17% YoY to $8.2B, with both FICC and equities trading beating estimates and confirming strong client activity and financing demand. Bank of America extended its own consistency streak with sales and trading revenue up 10% YoY to $4.5B, driven by a 23% jump in equities revenue to $2.0B — a strong showing that aligns with improving market tone and higher investor engagement. Citi’s Markets performance was steady, with FICC trading revenue of $3.46B beating expectations, helping offset tougher comparisons and reinforcing its top-tier institutional positioning. Wells Fargo’s Markets revenue was up 7% within Corporate and Investment Banking, but it remains less central to the overall WFC model than it is for JPM, BAC, or Citi. Still, the takeaway is consistent: capital markets strength is a tailwind heading into 2026 and a meaningful offset to the margin pressures that show up when rates drift lower.

Profitability and bottom-line trends split the group into two tiers: “dominant scale winners” and “improving but still proving it.” JPMorgan delivered EPS of $4.63 with net income of $13.0B, and management noted net income would have been $14.7B excluding a significant item, underscoring how much underlying earnings power remains intact. Bank of America posted EPS of $0.98 versus $0.96 expected, with net income rising to $7.6B, showing strong execution even as the stock faded. Wells Fargo missed headline EPS at $1.62, but the adjusted result of $1.76 beat expectations once severance was excluded, making the selloff feel more like expectation-management than true deterioration. Citi posted adjusted EPS of $1.81 versus $1.67 expected, but reported results were distorted by the Russia-related loss — the market’s focus was less on the accounting charge and more on whether Citi’s core earnings trajectory is becoming durable enough to justify a rerating.

Credit quality was generally stable, with bank-by-bank differences showing up more in mix than in overall stress levels. Bank of America’s provision for credit losses held at $1.3B and fell year-over-year, while net charge-offs declined both YoY and sequentially. Importantly, credit card metrics improved, with the credit card charge-off rate falling to 3.40% versus 3.79% last year, even as delinquencies rose seasonally. Wells Fargo’s credit trends were also steady, with net charge-offs down to $1.0B and an annualized loss rate of 0.43%, although management noted higher charge-offs in card, auto, and some CRE exposures alongside a modest rise in nonperforming assets. Citi’s credit costs remained elevated due to U.S. cards, and investors flagged higher non-accrual loans from idiosyncratic corporate downgrades and some consumer stress tied to wildfire-impacted mortgages. JPMorgan’s provisioning was noisy due to a $2.2B credit reserve tied to the Apple Card forward purchase commitment, which management estimated reduced EPS by roughly $0.60 — a major headline swing factor that muddies clean year-over-year comparisons.

Expenses and operating leverage were another key separator, especially given how aggressively banks are investing in technology, compliance, and talent. Bank of America’s noninterest expense rose 4% YoY to $17.4B, driven by incentive comp, tech spend, and litigation costs, though it still delivered positive operating leverage and improved its efficiency ratio to 61%. Citi’s expenses rose 6% to $13.8B, but management emphasized positive operating leverage across all five businesses and reaffirmed targets for a ~60% efficiency ratio and 10–11% RoTCE in 2026. Wells Fargo’s expenses were down 1% YoY in Q4, yet the 2026 expense guide of roughly $55.7B points to reinvestment in growth and technology rather than pure cost-cutting. JPMorgan’s expenses were up 5% YoY to $24.0B, consistent with its long-running playbook of spending to sustain dominance, while reaffirming 2026 expense expectations near $105B.

So who outperformed peers? Fundamentally, JPMorgan remains the most complete franchise, pairing scale, NII durability, elite markets execution, and deep fee engines like Payments and asset management. Bank of America delivered arguably the cleanest quarter across the “core banking + markets” toolkit, with strong NII growth, steady credit, and robust equities trading — even if the stock action didn’t reward it. Citi’s report looked like the best “change story” in the group, with real top-line traction across Services and Banking and clearer 2026 targets, but the stock’s reversal made it clear investors are not ready to pay up without sustained follow-through. Wells Fargo delivered solid operational execution but got hit for the revenue and NII misses, and in this tape, small misses are treated like big mistakes.

The late-day fade in Citi was the clearest signal that this isn’t a single-bank story — it’s a sector positioning story, where investors are using earnings strength as liquidity to de-risk rather than chasing upside follow-through. The broader takeaway is that money-center fundamentals still look healthy heading into 2026, especially with capital markets stabilizing and loan growth trends remaining positive. But after a massive 2025 run, the market is demanding perfection — and even strong prints are getting sold if they don’t provide a clear reason to rerate higher from already-elevated expectations.