Major U.S. banks including JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup (C) kick off fourth-quarter earnings season this week amid investor focus on return on tangible common equity targets and credit quality metrics.
Investors will scrutinize whether banks can meet their profitability goals while managing potential credit deterioration in a slowing economic environment.
Key Takeaways
- JPMorgan targets 17% ROTCE versus current 20.48% performance
- Bank of America shows largest improvement gap at 13.84% ROTCE
- Trading income expected to drive quarterly growth across sector
Market Context and Performance Gaps
Bank stocks have reached record highs heading into earnings season, creating elevated expectations for fourth-quarter results. JPMorgan Chase trades near all-time peaks despite targeting a 17% return on tangible common equity (ROTCE), well below its current 20.48% performance 1.
Bank of America faces the widest performance gap, with its ROTCE of 13.84% trailing its 16-18% target range. Citigroup shows similar challenges with current metrics below management guidance 2.
Critical Metrics to Watch
Credit quality emerges as a primary concern for investors as banks navigate a potentially softening economic backdrop. Analysts expect focus on charge-off rates, provision expenses, and loan loss reserves across consumer and commercial portfolios 3.
Trading revenue is anticipated to provide a bright spot, with investment banking fees and market-making activities likely supporting quarterly performance. Wall Street operations could offset weakness in traditional lending margins 4.
AI Strategy and Future Outlook
Beyond traditional banking metrics, investors will monitor management commentary on artificial intelligence investments and their impact on operational efficiency. Banks have committed billions to technology upgrades while seeking to reduce headcount and improve productivity 5.
Management guidance for 2025 will prove crucial given elevated stock valuations and investor expectations for continued profit growth.
Week Ahead Schedule
JPMorgan Chase reports Tuesday, followed by Bank of America, Citigroup, and Wells Fargo later in the week. Goldman Sachs and Morgan Stanley will also provide insights into investment banking trends 6.
The earnings reports coincide with key inflation data releases that could influence Federal Reserve policy decisions and banking sector outlook.
Not investment advice. For informational purposes only.
References
1(2026). “As big banks kick off earnings season, these are the critical numbers to watch”. Morningstar/MarketWatch. Retrieved January 12, 2026.
2(2026). “As big banks kick off earnings season, these are the critical numbers to watch”. MarketWatch. Retrieved January 12, 2026.
3(2026). “Big banks kick off fourth quarter earnings season, inflation data on deck”. Yahoo Finance. Retrieved January 12, 2026.
4(2026). “4 Signals to Watch As Wall Street Banks Report 2025 Earnings”. Business Insider. Retrieved January 12, 2026.
5(2026). “JPMorgan And Wall Street Banks Face High Stakes Earnings”. Retrieved January 12, 2026.
6(2026). “US bank earnings preview: JPMorgan, Citi and BofA report”. IG. Retrieved January 12, 2026.
7(2026). “What to Expect in Markets This Week: Big Bank Earnings, December”. Investopedia. Retrieved January 12, 2026.
8(2026). “Key Bank Earnings, Inflation Data Take Center Stage”. Investing.com. Retrieved January 12, 2026.