Bank Earnings Q3 2026: Deal Lull Offset by Equities and Lending

A strong first half runs into a quieter third quarter

The six biggest US banks finished the third quarter of 2026 with plenty of profit. Even so, the week of results showed how quickly Wall Street's momentum can fade once deal activity slows. JPMorgan Chase posted its first profit miss since the fourth quarter of 2023, and Bank of America also came in below expectations. The other four large lenders beat forecasts, but their shares fell or barely moved because investors saw the beats as smaller than in recent quarters.24

The main problem was dealmaking. Executives had expected a strong year for mergers and listings, but momentum faded over the summer. Market volatility, geopolitical tension, rising Treasury yields and doubts about the durability of the AI trade all kept corporate clients waiting.24 Dealogic figures put global investment banking revenue for the quarter at $27.2 billion, down 6.6% from a year earlier, as completed mergers and debt issuance both fell.21

The overall picture is more mixed than the word "lull" suggests. Together the six banks earned about $43.5 billion on revenue of roughly $165 billion. Equities trading grew by double digits at every one of them, while fixed income was flat or lower almost across the board.4 In plain terms, the stock market carried the quarter and the bond desks and deal teams did not.

The rate hike that changed the backdrop

These were the first bank results since the Federal Reserve raised the federal funds target range by a quarter point to 3.75%–4% on September 16.12 That was the Fed's first increase since 2023, and the 10-year Treasury yield was above 5% heading into earnings week.13 Bank of America CEO Brian Moynihan summed up the swing on his call. He said rates had come down from 4.5% to around 3.5% and were now moving back up, and that he expected deposit pricing to follow the same path on the way up as it had on the way down.16

The market reaction before the reports showed that investors were worried about higher rates, not cheering them. The S&P 500 Banks Index fell 5.4% during the third quarter while the broader S&P 500 gained about 2.3%.1 In the weeks after the hike, the financials ETF had dropped about 4% while the S&P 500 rose more than 3%. Investors were weighing higher deposit costs and slower lending against the benefit of higher loan yields.13 In its results statement, JPMorgan pointed to large fiscal deficits, sticky inflation, high asset prices, rising rates and geopolitics as forces that keep moving "under the surface."23

Lending profits rise, but not evenly

On the lending side, higher rates have so far helped the biggest balance sheets. JPMorgan's net interest income rose 13% to $27.1 billion. Higher loan balances are still growing faster than deposit costs.4 The bank raised its full-year net interest income guidance to $106.2 billion from $105.5 billion, and it also raised its expense guidance to $108.6 billion.11 Bank of America's net interest income rose 8% to $16.4 billion, and its net interest yield improved 15 basis points to 2.16%.12 Bank of America estimates that a further instant 100-basis-point rise in rates would add $1.4 billion to net interest income over 12 months. A matching decline would cost it $1.9 billion.14 It now expects net interest income to grow 8% or more in 2027.17 Citi raised its full-year net interest income guidance, excluding markets, to growth in the mid-to-high 6% range.11

Wells Fargo shows the other side of higher rates. Its net interest income rose 5% to $12.52 billion but missed estimates. The bank blamed lower returns on floating-rate assets, higher deposit costs and fewer non-interest-bearing deposits. Its net interest margin fell from 2.61% to 2.43% even as its loan book grew, which means it is paying more for the deposits that fund those loans.18 Since its asset cap was lifted, Wells Fargo has grown average loans and deposits by 11% each, yet its revenue still missed consensus.425 My reading is that a rate hike is not good news for every bank. It helps lenders with strong deposit franchises and fixed-rate assets that are repricing upward, and it squeezes banks that rely on more expensive funding.

Equities up, bonds and deals down

Goldman Sachs had the standout quarter. Net revenue rose 23% to $18.68 billion, net earnings rose 29% to $5.29 billion, and earnings per share of $17.01 were well above the roughly $13 consensus.4 Equities revenue jumped 72% to $6.44 billion, and equities financing, which is lending to hedge funds, nearly doubled to a record $3.37 billion.4 Advisory revenue of $1.65 billion was the highest the firm has ever reported.1 Morgan Stanley's equities business also beat forecasts at $5.8 billion, and its wealth unit brought in a record $232.4 billion of net new assets.84

The quarter-on-quarter numbers are less impressive. Goldman's investment banking fees rose 21% from a year earlier but fell 5% from the second quarter. CEO David Solomon would not say whether capital markets activity has peaked.1 Citi's investment banking revenue rose 9% year over year but fell 13% from the prior quarter.5 Bank of America's investment banking fees fell 11% to $1.8 billion.4 Goldman's equities revenue, strong as it was, also came in below the record $7.42 billion of the second quarter.9

JPMorgan's miss shows this split most clearly. Its fixed-income revenue fell 4% to $5.4 billion while equities rose 49% to $5.0 billion.4 Analysts at Oppenheimer called the gap between the two "odd," since the businesses usually move together.2 Jamie Dimon said trading and investment banking activity "did moderate somewhat" as the quarter went on, which suggests clients were pulling back from risk.1 A $658 million securities loss cut 18 cents from earnings per share. Excluding it, JPMorgan earned $5.75 a share, which was still below expectations.231

Where the reporting diverges

The broad story is consistent across outlets. The size of JPMorgan's miss is less clear because estimates differ. CNBC cited an LSEG consensus of $5.90 a share, Mint cited $5.85 and Newsday cited $5.93.110 Fortune called it the first revenue and earnings miss in nearly three years. Reuters, citing LSEG data, described it as the first profit miss since late 2023.2524 Total profit figures also vary depending on which banks are counted. One analysis put the first four reporters at about $32 billion, while a separate tally of all six came to $43.5 billion.184

Accounts of fixed income also differ. One report said Citigroup benefited from stronger bond trading, unlike JPMorgan.9 Another described fixed income as flat to down almost everywhere.4 Both can be true. Citi's fixed-income desks did not fall the way JPMorgan's and Goldman's did, but no bank had a strong bond-trading quarter.

The outlets also framed the results differently. Some focused on strong profits alongside warnings about rates and inflation.6 Others treated the strong bank earnings as a warning sign for the wider market. One Forbes columnist noted that 54% of Russell 3000 stocks were at least 20% below their June highs, and that JPMorgan had added about $500 million to its corporate lending reserves.18 I find the second view more useful. Higher rates help banks earn more on loans, but they also raise refinancing costs for corporate borrowers, and that pressure eventually shows up in credit.

Capital and credit

The banks also made different choices about returning capital. JPMorgan bought back only $664 million of stock, down from more than $6 billion the quarter before. Dimon said the bank holds about $30 billion of excess capital and would rather put it to work at good returns.2 Bank of America took a $1.2 billion regulatory settlement charge and still bought back $6.0 billion, even though its CET1 ratio of 10.9% was the lowest of the six.4 Higher rates cut $1.8 billion from Bank of America's capital through accumulated other comprehensive income.16 Its stock fell more than 5% on results day.16

Credit quality was mostly sound, though there were early signs of strain. Wells Fargo's provision for credit losses rose to $1.03 billion from $681 million a year earlier.4 Goldman's provisions in its Global Banking & Markets segment rose sharply, and profits in Citi's card business fell 8%, partly because of higher provisions.5 Bank of America's net charge-off ratio improved to 44 basis points.16

The takeaway

The quarter was a slowdown from very high levels, not the start of a downturn. Executives said the delayed IPOs had been postponed, not canceled.24 Fortune reported that bank leaders are betting the IPO lull will not last.25 Even so, the drivers of this quarter's profits were equity-market strength near record highs and lending margins boosted by the Fed's hike, and both are tied to conditions that could reverse. Equity revenue is usually the first to drop when markets fall, and expenses are rising quickly at JPMorgan and Morgan Stanley.4 Bank stocks underperformed the market going into earnings and gained little after them. Investors appear to be pricing a peak in the cycle more than an interruption.