U.S. Banks Expected to Report Q3 Earnings Growth Despite Slowdown in Capital Markets

U.S. banks will begin releasing their Q3 earnings reports on Tuesday, with Goldman Sachs, JPMorgan Chase, Citigroup, and Wells Fargo among the first to report. Analysts anticipate that most large U.S. banks will show year-over-year earnings growth for Q3 2026, even as capital markets activity has cooled from the heightened levels seen in Q2. Huntington Bancorp is the only bank among the 18 analyzed expected to report a decline in year-over-year earnings.

JPMorgan Chase is projected to show a significant increase of 17%, while State Street and Citizens Financial Group are both expected to rise by 32%. Analysts have noted upward revisions in consensus estimates across all three time frames for JPMorgan, Wells Fargo, trust banks, U.S. Bancorp, Truist Financial, and KeyCorp.

Capital market revenues are expected to decline compared to Q2, which Bank of America Co-President Jim DeMare described as a "lights-out quarter." BMO Capital Markets analyst Gerard Cassidy remains optimistic, suggesting that selected banks will see commentary reflecting positive outcomes in their Markets & Investment Banking sectors during this typically slow quarter. In contrast, Oppenheimer analyst Chris Kotowski has expressed caution regarding the sustainability of capital markets activity, noting that recent surges were unexpected and could diminish quickly. He has shifted to a more cautious stance on firms like Goldman Sachs and Morgan Stanley, which are trading at relatively high P/E ratios.

Analysts have revised their earnings estimates downward for Goldman Sachs and Bank of America over the past month and quarter. Similarly, Morgan Stanley's consensus outlook has also seen downward revisions.

Kotowski recommends focusing on more stable commercial banks, particularly U.S. Bancorp and PNC Financial Services. Citigroup analyst Benjamin Gerlinger also favors banks with a strong commercial focus and healthy capital bases. Last month, Citigroup upgraded Fifth Third Bank and highlighted U.S. Bancorp for its positive earnings revisions, while also taking a favorable stance on KeyCorp due to expectations of recovering pressure points.

Jefferies analyst David Chiaverini expects guidance for net interest income to remain largely consistent, with growth driven by increased volume rather than margin improvements. However, he warns of potential pressures from higher deposit costs due to recent Federal Reserve hikes and increased competition for deposits.

Jefferies has a favorable outlook on Bank of America, Citigroup, U.S. Bancorp, Fifth Third, and Citizens Financial Group as they approach the Q3 earnings season.