In-Depth Analysis of Mass Layoffs at the Six Major U.S. Banks: Investment Strategy Report for Bank Stocks

I have now collected sufficient data, and I will provide you with a systematic and comprehensive analysis report.

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According to the latest data, the six major U.S. banks (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley) cut a total of

in 2025, hitting a 10-year high. The total number of employees at the end of the year dropped to , the lowest level since 2021 [1][2]. This layoff wave marks that the Wall Street banking industry is undergoing profound structural adjustments.

Bank	Layoff Situation	Year-End Headcount	Strategy Features
Wells Fargo	Cut over 12,000 jobs	Approximately 200,000	Layoffs for 22 consecutive quarters, to continue in the future
Citigroup	Cut approximately 3,000 jobs	Continuing to shrink	Direct layoffs during transformation
JPMorgan Chase	Slight headcount growth, slowest growth rate	Lowest since the pandemic	Expansion paused
Bank of America	Reduction via natural attrition	Planned decline	Halt hiring instead of layoffs
Goldman Sachs	Expanded headcount by 2% against the trend	47,400	Expand investment banking business
Morgan Stanley	Cut jobs first then added 2,500	Increased at year-end	Expand wealth management

The core drivers of the layoff wave come from two major factors:

1. Cyclical business contraction
   : M&A activity on Wall Street has plummeted since 2022, leading to a sharp decline in investment banking revenue
2. Over-hiring during the pandemic
   : Banks hired heavily during the pandemic and now need to “pay the price” [2]

: The chart above shows a comprehensive analysis of the market capitalization comparison, valuation indicators, stock price performance, and profitability of the six major U.S. banks. Data shows that the total market capitalization of the six major banks reaches $2.33 trillion, with an average 1-year increase of 40.35%.

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Bank executives are targeting

, the major expenditure item, with the main strategies including:

• Wells Fargo
  : Continuing to promote corporate restructuring, compressing costs through long-term layoffs, and has cut staff for 22 consecutive quarters [2]
• Citigroup
  : Announced in 2024 that it would cut 20,000 jobs (accounting for approximately 8% of total staff) by the end of 2026; it has cut over 10,000 jobs and is expected to cut approximately 1,000 more positions in January 2026 [2]

• Bank of America
  : Rely on natural attrition to reduce scale, allowing headcount to fall naturally by halting hiring [2]
• JPMorgan Chase
  : Expands headcount but growth rate drops to the lowest since the pandemic

• The industry is discussing replacing some labor with
  artificial intelligence
  to further optimize the cost structure through technological means [2]

Taking Citigroup as an example, its cost-cutting plan is expected to generate

[3]. Wells Fargo’s management has clearly stated that it will continue layoffs, demonstrating its firm determination on cost control.

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The layoff wave boosts bank profitability mainly in the following aspects:

Impact Path	Specific Performance	Expected Outcome
Labor Cost Savings	Annual savings of $2-2.5 billion (taking Citigroup as an example)	Directly increase net profit
Efficiency Improvement	Streamline structure, reduce hierarchical levels	Improve operational efficiency
Capital Release	Saved human capital can be used for investment	Improve return on capital

Based on the latest financial data [0]:

• ROE (Return on Equity):
  15.95%
• Net Profit Margin:
  22.24%
• Operating Profit Margin:
  28.30%
• Free Cash Flow: -$42.1 billion (strategic investment period)

• ROE:
  10.19%
• Net Profit Margin:
  16.23%
• Operating Profit Margin:
  18.48%
• Aggressive financial stance, relatively high debt risk

The Q4 2025 results of the six major banks show that the banking sector is generally performing well:

• Morgan Stanley’s Q4 revenue reached $17.89 billion, YoY +10.3%, EPS of $2.68 [4]
• Goldman Sachs’ Q4 equity trading revenue hit a record $4.31 billion, Non-GAAP EPS of $14.01 [4]
• Bank of America’s Q4 EPS was $0.98, exceeding market expectations [0]

According to the industry research firm Crisil Coalition Greenwich, the banking industry’s

and in 2025, both exceeding previous peaks [1]. Combined with deregulation dividends and the recovery of investment banking business, bank profitability is expected to continue to improve.

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The current valuation levels of the six major banks are as follows [0]:

Bank	P/E	P/B	1-Year Increase	Analyst Target Price
JPMorgan Chase	15.72x	2.43x	+23.72%	$331.00 (+5.2%)
Bank of America	13.94x	1.29x	+13.87%	$60.00 (+13.0%)
Citigroup	16.97x	~1.10x	+77.0%	Best Performer
Wells Fargo	14.22x	1.28x	+20.5%	In Recovery
Goldman Sachs	19.66x	1.85x	+62.0%	All-Time High
Morgan Stanley	19.62x	1.85x	+45.0%	Earnings Beat Expectations

According to S&P Global data, the total market capitalization of the six major U.S. banks increased from

at the end of 2024 to at the end of 2025, surging by in a year [1]. This growth mainly benefits from:

1. Improved regulatory environment
   : The Trump administration promoted the relaxation of financial regulation, and bank capital requirements are expected to be reduced
2. The final version of Basel III has requirements far lower than the initial plan, and banks hold a large amount of idle capital
3. Recovery of investment banking business
   : Global investment banking revenue increased by 15% YoY in 2025, and M&A transaction volume increased by 42% YoY [5]

Gerard Cassidy, a banking analyst at RBC, said: “The importance of changes in the regulatory environment to stock prices cannot be overemphasized. After the financial crisis, the profitability of the entire industry was severely compressed because banks had to significantly increase their capital levels.” [1]

Despite the strong performance of bank stocks, the market has concerns that

:

• Bank stocks are expected to outperform the S&P 500 for the second consecutive year
• The KBW Bank Index rose
  34.17%
  in the past year [5]
• Saul Martinez, head of U.S. financial stock research at HSBC, warned: “The current situation is so good that it almost seems unrealistic. The fundamentals are indeed good, but the question is how much of this has been priced into the market.” [1]

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Based on the latest technical analysis data [0]:

• Current Price:
  $314.59
• Trend Judgment:
  Sideways Consolidation
  (no clear direction)
• Key Technical Levels:
  • Support Level:
    $311.36
  • Resistance Level:
    $322.66
• Technical Indicators: MACD no crossover (bearish bias), KDJ bearish bias, RSI in normal range
• Beta Coefficient:
  1.07
  (basically consistent with market fluctuations)

• Current Price:
  $53.11
• Trend Judgment:
  Sideways Consolidation
• Key Technical Levels:
  • Support Level:
    $52.56
  • Resistance Level:
    $55.25
• Beta Coefficient:
  1.29
  (slightly higher than market fluctuations)

Both banks are currently in the

, and the KDJ indicator shows they are in the oversold zone, with a possible in the short term. However, the medium-term trend needs to be confirmed after breaking through key resistance levels.

: K-line chart of JPMorgan Chase from January 2025 to January 2026, currently within the consolidation range of $311.36-$322.66.

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1. Cost Structure Optimization
   : Layoffs directly reduce operating costs and improve profit margins
2. Capital Efficiency Improvement
   : Saved resources can be redirected to high-return businesses
3. Adapt to Market Cycles
   : Proactive adjustments before the recovery of investment banking business demonstrate management prudence
4. Shareholder Return Potential
   : Saved costs can be returned to shareholders through dividends and share repurchases

1. Negative Effects of Excessive Layoffs
   : May affect service quality and innovation capabilities
2. Economic Downturn Risk
   : If the macroeconomy enters a recession, the risk resistance of banks that have laid off staff may decline
3. Technology Replacement Risk
   : AI-driven layoffs may lead to brain drain and insufficient innovation momentum

Assessment Dimension	Effectiveness Judgment	Basis
Short-Term Profit Increase	★★★★☆	Direct annual labor cost savings of $2-2.5 billion
Valuation Increase	★★★★★	Market capitalization increased by $600 billion in a year, driven by deregulation and business recovery
Long-Term Competitiveness	★★★☆☆	Need to balance cost control and innovation capabilities
Shareholder Returns	★★★★★	Capital release supports dividends and share repurchases

: Cost-cutting strategies , but long-term competitiveness depends on whether banks can maintain innovation and service capabilities while reducing costs.

1. JPMorgan Chase (JPM)
   : Industry leader, financially sound, ROE as high as 15.95%, analyst consensus is “Buy”, target price $331.00 [0]
2. Citigroup ©
   : Remarkable transformation results, 77% increase within the year, cost-cutting expected to generate annual savings of $2-2.5 billion [1][2]
3. Bank of America (BAC)
   : Most attractive valuation (P/E only 13.94x, P/B only 1.29x), analyst target price shows 13% upside potential [0]

1. Valuations have partially reflected optimistic expectations, caution is needed when chasing high prices
2. Need to follow up on subsequent financial reports to verify profitability improvements
3. Macroeconomic uncertainty may affect bank asset quality

: The six major banks are in a sideways consolidation stage, KDJ shows short-term oversold, consider

: The triple positive factors of deregulation dividends, investment banking business recovery, and cost-cutting are combined, and bank stocks are

• Conservative Investors: Wait for a breakout of the consolidation range before entering
• Aggressive Investors: Build positions in batches near support levels
• Risk-Seeking Investors: Focus on banks with smaller increases but attractive valuations (such as Bank of America)

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Risk Type	Specific Risk	Impact Level
Macroeconomic Risk	Economic recession leads to increased credit losses	High
Valuation Risk	Good news has been fully priced in	Medium-High
Regulatory Risk	Deregulation policies fall short of expectations	Medium
Operational Risk	Excessive layoffs affect service quality	Medium
Technological Risk	AI employee replacement progress falls short of expectations	Low

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The large-scale layoff wave at the six major U.S. banks is a proactive measure by the banking industry to respond to market cycle changes and optimize cost structures. In the short term, layoffs directly reduce labor costs and improve profitability; in the long term, the key will be whether banks can maintain innovation and service capabilities while reducing costs and improving efficiency.

From an investment perspective, cost-cutting strategies

, but investors need to note that current valuations have partially reflected optimistic expectations. It is recommended to focus on bank stocks with relatively reasonable valuations and remarkable transformation results (such as Citigroup and Bank of America), while remaining cautious about banks with large increases and relatively high valuations.

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[0] Jinling API Real-Time Data - Real-Time Quotes, Company Profiles, Financial Analysis, Technical Analysis of the Six Major Banks

[1] CLS Network - “Deregulation Dividends Erupt, Total Market Capitalization of Six Major U.S. Banks Surges by $600 Billion in a Year” (https://www.cls.cn/detail/2240431)

[2] Lianhe Zaobao - “Six Major U.S. Banks Cut Over 10,000 Jobs Last Year, Hitting a 10-Year High” (https://www.zaobao.com.sg/realtime/world/story20260116-8109060)

[3] Yahoo Finance - “Bank Stocks Shine in 2025: 3 S&P 500 Plays to Watch for 2026” (https://finance.yahoo.com/news/bank-stocks-shine-2025-3-130800651.html)

[4] Securities Times Network - “Positive Earnings, Bank Stocks Surge!” (https://www.stcn.com/article/detail/3596048.html)

[5] TradingKey - “Bank Stocks Lead US Equities in 2026” (https://www.tradingkey.com/analysis/stocks/us-stocks/261469067-c-wfc-jpm-bac-ms-gs-bank-stock-tradingkey)