Big Bank Q4 2025 Earnings Season Analysis: Mixed Results Despite Beats as Investor Concerns Mount

The Q4 2025 bank earnings season presents a textbook case of “good news not being good enough for stocks,” as characterized by CNBC’s Leslie Picker on the January 14, 2026, edition of ‘Money Movers’ [1]. The opening day of earnings season revealed a paradoxical situation where major financial institutions delivered quarterly results that exceeded Wall Street expectations across multiple metrics, yet their stock prices experienced pronounced declines.

led off the earnings season on January 13, reporting adjusted EPS of $5.23 against the $5.00 expected (a 5% beat) and revenue of $46.77B versus $46.20B forecast (1% beat) [3]. The bank’s trading division provided notable strength, with equities revenue surging 40% year-over-year to $2.9B and fixed income rising 7% to $5.4B. However, investment banking fees declined 5% to $2.3B, missing estimates by approximately $210M [3]. CEO Jamie Dimon’s cautionary remarks about markets “underappreciating potential hazards” including geopolitical risks, sticky inflation, and elevated asset prices may have contributed to investor caution [3].

followed on January 14 with robust results, reporting net income of $5.4B ($1.62 per share, or $1.76 excluding a $612M severance charge) and revenue of $21.3B, representing a 4% year-over-year increase [1]. The bank achieved return on equity of 12.3% and executed $5.0B in share repurchases of 58.2M shares. Perhaps most significantly, the Federal Reserve removed the bank’s asset cap and terminated multiple consent orders, signaling meaningful regulatory progress [1]. Despite these positives, the stock declined 5.53%, suggesting investors may have been looking for even stronger performance or better forward guidance.

delivered the strongest relative earnings beat, with profits rising 18% year-over-year to exceed analyst estimates significantly [5]. Revenue of $28.4B was driven by solid performances across consumer banking, global wealth and investment management, and global markets divisions. The bank benefited from improving credit conditions, with provisions of $1.3B compared to $1.5B in the prior year [5]. Yet the stock still declined 4.89%, indicating the bar for positive stock reaction was set extremely high.

rounded out the first day with an adjusted EPS of $1.81 versus $1.65 expected (approximately 10% beat) and adjusted revenue of $21B, up 8% year-over-year excluding a $1B loss from Russian operations [2]. Services revenue increased 15%, and provisions for credit losses declined 14% year-over-year to $2.2B. The bank targets a return on tangible common equity of 10-11% for 2026 [2]. Despite these results, Citigroup shares fell 4.51%.

The sector context reveals important nuances. While the Financial Services sector overall gained +0.21% [0], individual bank performance diverged significantly from this aggregate measure. Major indices retreated across the board—the S&P 500 fell 0.70% to 6,889.19, the NASDAQ declined 0.92% to 23,348.29, and the Dow Jones Industrial Average slipped 0.34% to 48,919.75 [0]. The Russell 2000 of small-cap stocks showed a slight gain of +0.07%, potentially indicating some rotation away from large-cap financials [0].

: The 40% average gain in bank stocks during 2025, with only one-third attributable to earnings growth and the remainder from multiple expansion, has created an environment where positive surprises are increasingly difficult to achieve [4]. Analyst Steven Chubak of Wolfe Research downgraded both JPMorgan and Bank of America on January 7, noting that “It’s all just a little too perfect in Bank-land” [4]. This sentiment appears to have been validated by the market reaction to the earnings reports.

: A clear bifurcation exists within bank revenue streams. Trading operations, particularly equities, demonstrated exceptional strength—JPMorgan’s 40% equities revenue surge being the standout example. However, investment banking and advisory fees remained under pressure, with JPMorgan’s 5% decline in this category raising questions about the 2026 growth trajectory [3]. The upcoming Goldman Sachs and Morgan Stanley results on January 15 will provide additional insight into advisory fee trends and the M&A pipeline.

: Wells Fargo’s removal of the Federal Reserve asset cap and termination of multiple consent orders represents a meaningful milestone for the institution [1]. This regulatory progress, while not directly impacting quarterly earnings, removes a significant overhang on the stock and potentially enables more aggressive capital deployment going forward. Investors may have been disappointed that this positive development did not translate into more robust forward guidance.

: Across multiple banks, provisions for credit losses declined—Bank of America ($1.3B vs. $1.5B prior year), Citigroup (down 14% YoY), and Wells Fargo (implied by results) all benefited from improving credit conditions [5][2]. This suggests a benign consumer credit environment and potentially lower future charge-offs, though this positive fundamental factor failed to move stocks in the immediate reaction.

: Jamie Dimon’s warning about underappreciated hazards—geopolitical conditions, sticky inflation, and elevated asset prices—may have weighed on investor sentiment more than the actual earnings numbers [3]. When the CEO of the nation’s largest bank expresses concern about market complacency, investors tend to take notice, even if the current quarter’s results remain strong.

:

1. Investment Banking Revenue Sustainability
   : The continued weakness in M&A and underwriting fees, evidenced by JPMorgan’s 5% decline, poses a risk to 2026 earnings growth projections [3]. If deal-making activity remains subdued as regulatory processes lengthen and economic uncertainty persists, this segment may continue to underperform.

2. Net Interest Income Guidance Uncertainty
   : JPMorgan’s target of approximately $103B in net interest income for 2026 comes with significant “market dependent” qualifiers [3]. As the Federal Reserve’s rate trajectory remains uncertain, banks may face challenges in maintaining NII levels as rate tailwinds diminish.

3. Expense Growth Concerns
   : Higher “volume- and growth-related expenses” noted in JPMorgan’s guidance may compress net interest margins and reduce operational leverage [3]. If revenue growth fails to keep pace with expense increases, profitability could suffer.

4. Valuation Vulnerability
   : The 40% sector appreciation in 2025 leaves bank stocks susceptible to multiple contraction if 2026 growth decelerates [4]. With much of the recent stock performance already priced in, any guidance shortfall could trigger sharper corrections.

5. Geopolitical and Economic Uncertainty
   : Dimon’s explicit warning about underappreciated hazards suggests the potential for macroeconomic headwinds that could impact loan growth, credit quality, and trading revenues [3].

:

1. Regulatory Arbitrage from Reform
   : With Wells Fargo’s consent orders terminated and the broader regulatory environment potentially improving under a new administration, banks may benefit from reduced compliance costs and increased flexibility in capital deployment.

2. Trading Revenue Momentum
   : If market volatility persists or increases, the strong trading performance demonstrated in Q4 could continue into 2026, providing a revenue offset to any weakness in investment banking.

3. Consumer Resilience
   : Despite broader economic concerns, consumer spending remains robust according to Dimon’s assessment, supporting consumer banking revenues across the major institutions [3].

4. Small-Cap Rotation Potential
   : The Russell 2000’s slight outperformance (+0.07% vs. major indices declining) could signal early rotation toward smaller financial institutions that may offer better relative value [0].

The Q4 2025 bank earnings season’s opening day revealed strong fundamental performance undermined by elevated investor expectations. JPMorgan Chase demonstrated trading strength (equities +40% YoY) partially offset by investment banking weakness (fees -5%), while Wells Fargo’s regulatory progress and Bank of America’s 18% earnings growth went unrewarded by investors. Citigroup’s 8% revenue growth and improved credit provisions similarly failed to prevent a 4.51% stock decline.

The disconnect between earnings beats and stock declines reflects a market that had already heavily priced in bank sector strength during 2025’s 40% average appreciation. With trading revenues providing a bright spot while investment banking remains challenged, the key variables to monitor include 2026 net interest income guidance, expense trajectory, and the pending results from Goldman Sachs and Morgan Stanley that will provide additional insight into advisory fee trends.

CEO Dimon’s cautionary commentary about underappreciated market hazards, combined with analyst downgrades preceding the earnings season, suggests a market that is actively seeking reasons to rotate out of financial stocks despite current-quarter strength. The improving credit environment and regulatory progress at Wells Fargo represent fundamental positives that may take time to be fully reflected in stock valuations.