US banking giants reap bigger profits as borrowers seek more loans

By Saeed Azhar, Arasu Kannagi Basil and Nivedita Balu

NEW YORK, Jan 14 (Reuters) – U.S. banking giants boosted their profits in the fourth quarter, buoyed by increasing demand from borrowers that signals the economy is holding up, boding well for lenders’ future earnings.

Bank of America’s average loans grew 8% from a year earlier, and its net interest income, the difference between what it earns from loans and pays in deposits, surged to a record $15.9 billion, the bank reported on Wednesday. 

At rival JPMorgan Chase, average loans climbed 9%. Loan growth is closely viewed by investors as a positive indicator for banks’ businesses and a broader sign of economic strength. 

“We’ve seen growth in all of the consumer borrowing categories,” Bank of America Chief Financial Officer Alastair Borthwick told reporters on a conference call. “That’s helped us in Q4, but generally, the story in 2025 was more of a commercial borrowing story … our clients in a growing economy have continued to invest to support their businesses.”

U.S. ECONOMY SHOWING RESILIENCE

Bank of America expects mid-single-digit percentage loan growth in 2026, Borthwick said.

The U.S. economy and American consumer have remained resilient despite President Donald Trump’s sweeping import tariffs, thanks in part to the artificial intelligence boom and Federal Reserve interest-rate cuts. The market expects two more cuts this year.

Analysts at S&P Global Market Intelligence “are optimistic about continued momentum into 2026, driven by macroeconomic stability and favorable lending conditions,” they wrote in a report on Tuesday. They estimated loan growth across U.S. banks “accelerated significantly” by the end of 2025, growing 5.3% year-on-year. 

Citigroup’s average loans climbed 7% in the fourth quarter, driven by its markets, U.S. personal banking and services businesses, it reported on Wednesday.

“We saw the pace of loan growth pick up for the first time in a while,” Wells Fargo Chief Financial Officer Mike Santomassimo told reporters on a conference call. Loans grew 12% for its commercial businesses in the fourth quarter, while revenue also increased due to auto and card lending.

JOB CUTS

Santomassimo also signaled more job cuts were coming after Wells Fargo set aside $612 million for severance costs in the fourth quarter for actions that will take place this year.

“We continue to have opportunities to further streamline the company and become more efficient,” he added.

Elsewhere, Citigroup is set to cut about 1,000 jobs this week, according to a source with knowledge of the plan. In a message ‌to employees on Wednesday, CEO Jane Fraser said artificial intelligence tools and automation are expected to change roles at the bank and will “result in some overall role reductions as our headcount continues to come down.”

CREDIT CARD CAP

Still, lenders face potential headwinds amid heightened geopolitical tensions and policy uncertainty. While big banks expect capital relief from Trump’s bank regulators, they stand to lose out from other policy proposals, including the president’s surprise call last week to cap credit card interest rates at 10%.

“As banks pursue growth in 2026, they’ll remain laser-focused on managing a complex risk landscape including geopolitical tensions, economic volatility … and competition from non-banks,” said Peter Torrente, KPMG U.S. banking sector leader, in an email.

Executives expressed concerns a credit card cap would prompt banks to pull back on lending, curbing economic growth, echoing comments on Tuesday from top JPMorgan executives.

“A rate cap is not something that we can support,” Fraser said. “The impact to us and other banks would just be dwarfed by the severe impact on access to credit and on consumer spending across the country. These things just don’t work out as intended and think back when the Carter administration put credit controls in place to reduce costs. The impact was so severe, they were very swiftly rescinded within two months.”

Citi’s Chief Financial Officer Mark Mason said it was too soon to assess the potential impact, given the administration has provided no details on how a cap would be implemented.

“An interest rate cap would restrict access to credit to those who need it the most, and frankly, would have a deleterious impact on the economy,” Mason said, adding that the bank was nevertheless ready to collaborate on addressing cost-of-living issues.

Santomassimo likewise told reporters there were no details, but a cap would negatively affect credit availability.

Some academics and analysts have argued banks could absorb lower interest rates since credit cards are a highly profitable business.

The S&P 500 bank index slid about 2% in Wednesday afternoon trading on credit card cap fears and after other areas of the banks’ businesses underperformed. The index surged 30% in 2025.

BANKERS DEFEND FED INDEPENDENCE

Separately, more bankers expressed their support for the Fed’s independence after the Trump administration opened an investigation into Chair Jerome Powell. Trump has repeatedly called for the central bank to lower rates further. 

Bank of America CEO Brian Moynihan told CNBC that an independent Fed provides an anchor for U.S. economic success.

“If you think about the U.S. economy, you think about the strength of this country, you think about us leading the world across all dimensions. One of the important parts (of) that is to have an independent Fed who will then set interest rate policies based on what they see,” he said.

On Tuesday, JPMorgan CEO Jamie Dimon warned political interference in the world’s most important central bank would raise inflation expectations and probably increase rates over time.

“What is really important is the independence of the Fed and the Fed chair,” Citi’s Mason said on Wednesday. “We’d expect that the next Fed chair operate with the same level of independence and focus on ensuring that the Fed has that independence.”

(Reporting by Saeed Azhar in New York, Arasu Kannagi Basil in Bengaluru and Nivedita Balu in Toronto, additional reporting by Prakhar Srivastava and Tatiana Bautzer, editing by Lananh Nguyen, Michelle Price, Nick Zieminski, Rod Nickel)