Loan growth lifts profits at major lenders
Major U.S. banks reported stronger profits in the fourth quarter, supported by rising loan demand that signals continued resilience in the American economy. Investors closely watched lending activity, which is widely viewed as a key indicator of both banking health and broader economic momentum.
Bank of America reported that its average loans grew 8% year over year, while net interest income reached a record $15.9 billion. At JPMorgan Chase, average loans increased 9%, reinforcing confidence that households and businesses remain willing to borrow despite elevated uncertainty.
Executives pointed to broad-based strength across consumer and commercial lending. Bank of America said growth was visible across all major consumer borrowing categories, while commercial clients continued to invest in their operations throughout 2025.
Economic resilience supports outlook for 2026
Bank of America expects mid single digit loan growth in 2026, reflecting confidence that the U.S. economy will continue to absorb higher borrowing levels. Analysts also see favorable conditions ahead, supported by macroeconomic stability, easing monetary policy and sustained investment linked to artificial intelligence.
S&P Global Market Intelligence estimates that loan growth across U.S. banks accelerated to 5.3% year on year by the end of 2025. Citigroup posted a 7% increase in average loans during the quarter, driven by its markets, services and U.S. personal banking divisions.
Wells Fargo reported particularly strong momentum in commercial lending, where loans rose 12% in the fourth quarter. Revenue also benefited from higher activity in auto and credit card lending, underscoring the ongoing strength of consumer spending.
Cost cuts and job reductions continue
Alongside stronger revenues, some banks are continuing to streamline operations. Wells Fargo set aside $612 million in the fourth quarter for severance costs, signaling further job reductions during 2026 as part of broader efficiency efforts.
Citigroup is also moving ahead with workforce reductions, with about 1,000 jobs expected to be cut. Management said automation and artificial intelligence tools are reshaping roles across the organization, leading to a gradual reduction in overall headcount.
Policy risks weigh on bank shares
Despite the upbeat earnings picture, banks face potential headwinds from policy uncertainty and geopolitical risks. A proposal to cap credit card interest rates at 10% has raised concerns across the sector, with executives warning that such a move could restrict access to credit and slow economic growth.
Bank leaders argued that interest rate caps would have unintended consequences for consumers and lenders alike. Shares of major banks declined following renewed debate over the proposal, although the sector had surged roughly 30% during 2025.
Executives back Federal Reserve independence
Bank executives also voiced strong support for the independence of the Federal Reserve amid political pressure on monetary policy. Industry leaders emphasized that an independent central bank is critical for economic stability, predictable inflation expectations and long term growth.
Concerns remain that political interference could push inflation expectations higher and ultimately lead to higher interest rates, a scenario banks view as damaging for both consumers and financial markets.
