‘Everything is moving up at the same time’

Last year was a great year to be a Wall Street bank. The coming week will tell us how great 2025 was.

America’s biggest banks will report fourth quarter and annual results in the coming days, with the country’s largest bank JPMorgan Chase (JPM) set to kick off proceedings with its results on Tuesday morning.

The company is expected to deliver another year of record revenues and profits.

Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC) are expected to report earnings Wednesday morning. Investment banking powerhouses Goldman Sachs (GS) and Morgan Stanley (MS) will report Thursday morning. Each firm is expected to show that annual profits have increased over the previous year. Shares of all six major banks outperformed the S&P 500 (^GSPC) in 2025.

Analysts also expect every bank except Wells Fargo to report record annual increases in trading fees. Its small but growing team of investment bankers is set to set its own records in dealmaking fees.

“Right now everything is moving at the same time,” said Saul Martinez, an analyst who covers big U.S. banks for HSBC.

From greater volatility to a surging stock market and a boom in lending, “you’ve seen a material increase in the earnings and profitability power of these companies,” Martinez said.

Many equity analysts, including Bank of America’s Ibrahim Poonawalla, already have enough bullishness to call 2026 the third consecutive year that the KBW Nasdaq Bank Index (^BKX), which includes many of the nation’s largest banking stocks, outperforms the S&P 500. BKX is up 29% in 2025, while the S&P 500 is up 17%.

“Banks outperformed the S&P 500 for three consecutive years in the late 1990s and again in the early 2000s. We see similarities between the two,” Poonawalla wrote in a recent note to clients.

“The industry’s earnings outlook today is the best since the great financial crisis,” Poonawalla said.

Read more: Banking predictions for 2026: 5 ways the industry will evolve over the next year

The US economy is expected to boom again in 2026, with bankers also considering the most regulatory easing since post-financial crisis reforms were passed in 2010. Lending growth is expected to pick up, while low rates should act as another tailwind for the industry. Meanwhile, the pace of M&A is not expected to slow down.

“The way 2025 unfolded, it was a story of increasing momentum throughout the year after the market halt in April and March,” said Jay Hoffman, head of M&A for North America at JPMorgan. “At the moment, there is no reason to believe that the economic factors underpinning this are going to reverse.”

There is also growing debate that investors are beginning to value technology companies like banking giants because of the potential productivity and efficiency gains from incorporating more technology like AI and next-generation assets like crypto on their digital platforms.

“I think the larger, tech-forward banks will start to see margin expansion and trade like tech stocks in the future,” Tom Lee, head of Fundstrat Global Advisors, said on CNBC in late December.

BofA’s Poonawalla said that while it is “too early” to know in any case how these initiatives will impact bank profits this year, investors “may start pricing in the potential before the earnings benefit is realized”.

This rally has pushed up valuations and raised some questions about whether these companies’ shares can continue to rise even with a number of fundamental factors working in their favor.

“Big banks aren’t cheap, but we still like them,” said Chris McGroarty, head of research at KBW. In the absence of any market shocks, McGratty thinks the earnings momentum of these companies remains stable.

But others on the street are not so convinced.

JPMorgan, Bank of America, Citigroup and Wells Fargo see average stock gains of 40% in 2025. According to Wolfe Research analyst Steven Chubbuck’s calculations, only a third of that performance came from higher earnings growth, meaning the rest of the performance was the result of multiple expansion, or how much investors are paying for each dollar of earnings from these firms.

Chubbuck downgraded shares of both JPMorgan and Bank of America on expectations that their 2026 earnings will be average.

As Chubbuck wrote in a note to clients on January 7, “It’s all a little too perfect in bank-land.”

David Hollerith covers the financial sector, From the country’s largest banks to regional lenders, private equity firms and the cryptocurrency sector.

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