KBW’s Christopher McGratty Predicts Strong 2026 Bank Earnings Growth, Names Citi Top Performer

This analysis is based on CNBC’s ‘Closing Bell’ interview with KBW’s Christopher McGratty on December 26, 2025, where he forecasted strong earnings growth for the banking sector in 2026 [1]. McGratty, who had earlier identified Citigroup © as the top-performing major bank for 2026 on December 22 [0], reaffirmed the positive sector outlook.

On the day of the interview, the KBW Bank Index (^BKX) closed up 0.71%, while individual major banks—including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Goldman Sachs (GS), and Citigroup ©—experienced slight declines, likely attributed to holiday-thinned trading volumes [0]. The broader financial services sector also dipped 0.33% that day [0].

KBW maintains an Outperform rating on both Citigroup and JPMorgan Chase [0], with analyst consensus assigning Buy ratings to both stocks. Notably, Citigroup has delivered a year-to-date (YTD) return of 72.18% as of the event date, significantly outpacing JPMorgan’s 36.63% YTD return [0].

1. Disconnect Between Outlook and Day Trading Performance
   : The slight decline in individual bank stocks on December 26 appears driven by low holiday trading volumes rather than a market rejection of McGratty’s positive outlook, as evidenced by the KBW Bank Index’s modest gain [0].
2. Citi’s YTD Momentum Aligns with Analyst Projections
   : Citigroup’s strong 72.18% YTD return supports McGratty’s earlier prediction that it will be the top-performing major bank in 2026, signaling potential market confidence in the stock’s future [0].
3. Sustained Earnings Growth Expectations
   : McGratty’s reaffirmation of strong 2026 bank earnings growth, combined with KBW’s Outperform ratings and analyst consensus Buy ratings, highlights broadly positive sentiment toward the sector’s fundamental outlook [0,1].

• Opportunities
  : The positive 2026 earnings growth forecast for banks presents potential opportunities for financial sector-focused investors, particularly with Citigroup identified as a top performer [1]. KBW’s Outperform ratings on JPMorgan and Citigroup further underscore this potential [0].
• Risks
  :
  • Holiday Trading Volatility
    : Thin volumes on December 26 may have distorted the day’s stock performance, making it challenging to gauge immediate market reaction to McGratty’s comments [0].
  • Macroeconomic Uncertainties
    : The outlook does not address potential macroeconomic risks (e.g., interest rate fluctuations, credit quality trends) that could impact bank earnings, which may alter the projected growth trajectory [0].
  • Market Sentiment Shifts
    : Investor sentiment could change based on subsequent economic data or company-specific developments, affecting the sector’s performance [0].

• Event
  : KBW’s Christopher McGratty appeared on CNBC’s “Closing Bell” on December 26, 2025, predicting strong 2026 banking sector earnings growth and reaffirming Citigroup as the top-performing major bank [1].
• Market Performance
  : KBW Bank Index up 0.71% on Dec 26; major banks (JPM, BAC, WFC, GS, C) down slightly; financial sector down 0.33%—likely due to holiday-thinned volumes [0].
• Ratings & Returns
  : KBW rates C and JPM as Outperform; consensus Buy ratings for both. Citi has a 72.18% YTD return (vs JPMorgan’s 36.63%) [0].