🚀 Bank Earnings

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Market Overview
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Year To Date Performances:

1. Bank of America kicked off 2026 by outstripping Wall Street forecasts, reporting a 12% rise in fourth-quarter profit to $7.6 billion, or 98 cents per share, fueled by a 9.7% surge in net interest income and a 23% jump in equities trading revenue. Despite a 1% dip in premarket shares amid broader sector pressure and concerns over potential regulatory shifts, including proposed caps on credit card interest rates, CEO Brian Moynihan remains bullish on the U.S. economy, projecting 2.4% GDP growth for the year ahead and signaling an easing of trade tensions. The lender’s resilient performance was further bolstered by a smaller-than-expected provision for loan losses and a 10% rise in wealth management revenue, setting a high bar for competitors like Citigroup and Wells Fargo as they prepare to unveil their own year-end results.

2. Citigroup kicked off the new year by exceeding Wall Street expectations for the fourth quarter, reporting adjusted earnings of $1.81 per share on $21.0 billion in revenue as the lender benefited from lighter-than-expected loan loss provisions. While a $1.1 billion after-tax charge related to the divestiture of its Russian operations caused a 13% dip in overall net income, CEO Jane Fraser highlighted record revenues and positive operating leverage across all five of the bank's business segments. This performance, bolstered by growth in banking, wealth, and institutional services, has reinforced Fraser's commitment to reaching a 10% return target for 2026 amid an ongoing corporate restructuring and a favorable U.S. regulatory environment. With shares edging up in premarket trading, Citigroup joins JPMorgan Chase and Bank of America in a strong early showing for the banking sector, setting a positive tone as investors look toward the remaining major bank reports this week.

3. In a striking display of the "Trump effect" on financial markets, mortgage refinance applications skyrocketed 40% last week after a single social media post from the President briefly drove interest rates to nearly three-year lows. By directing Fannie Mae and Freddie Mac to deploy $200 billion in cash reserves to purchase mortgage-backed bonds, the administration triggered a Friday morning plunge that saw 30-year fixed rates dip as low as 5.99%, enticing homeowners to flood the market before rates rebounded to an average of 6.18%. While the Mortgage Bankers Association reported an overall 28.5% jump in total application volume, economists warn that the relief may be fleeting, as Treasury yields have already begun to climb this week in response to steady inflation data and shifting oil prices.

   Headlines

   1. Airbnb has hired Ahmad Al-Dahle, Meta’s former head of GenAI.

   2. Trump publicly stated that anything less than full US control of Greenland would be unacceptable to him.