Big US Banks Report Earnings This Week as Wall Street Watches 2026 Targets

Source: Coindoo Original Title: Big US Banks Report Earnings This Week as Wall Street Watches 2026 Targets Original Link: U.S. bank earnings season kicks off this week, and investors are watching more than just quarterly profit beats. With regulators taking a noticeably lighter stance toward the financial sector, the country’s largest banks are entering reporting season under conditions that could reshape their performance targets - and potentially their stock valuations - heading into 2026.

The reporting calendar starts with JPMorgan Chase & Co. on Tuesday, followed by Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. on Wednesday. Goldman Sachs Group Inc. and Morgan Stanley close out the week on Thursday.

Key Takeaways

• This earnings season is more about future profitability targets than short-term results.
• JPMorgan and Morgan Stanley are already priced as leaders, while Bank of America, Citi, and Wells Fargo have more upside if execution improves.
• A lighter regulatory backdrop could support higher returns and stronger bank stocks into 2026.

Earnings season is about more than quarterly beats

While most large U.S. companies tend to exceed consensus earnings estimates, bank results carry extra weight. This is when management teams typically reaffirm or revise their longer-term profitability goals, which can have a stronger influence on share prices than the quarterly numbers themselves.

For banks, those discussions often center on return on tangible common equity, or ROTCE. Changes to these targets can reset investor expectations for years, not just quarters.

Why ROTCE is in focus again

ROTCE measures how efficiently a bank generates profits from its core equity base, stripping out preferred shares and intangible assets. In recent years, Federal Reserve stress tests have effectively capped how aggressively banks could use capital.

Now, with capital levels comfortably above required minimums, banks have more flexibility. Higher dividends and continued share buybacks have become central tools for boosting ROTCE, lowering share counts, and supporting earnings per share growth.

Leaders versus catch-up candidates

Some of the largest banks are already operating at, or above, their stated profitability targets. JPMorgan and Morgan Stanley fall squarely into that camp, which helps explain why they trade at premium valuations compared with peers. Goldman Sachs also sits near the middle of its target range, supported by strong capital markets activity.

The more debated opportunity lies with Bank of America, Citigroup, and Wells Fargo. All three are still running below their own ROTCE goals, leaving room for improvement if management can execute. In Wells Fargo’s case, the removal of growth restrictions has raised expectations that profitability can finally accelerate.

Valuations point to uneven expectations

Market pricing reflects this divide. Banks with the strongest recent ROTCE results command the highest price-to-book and forward earnings multiples. Those still working toward their targets trade at lower valuations, despite relatively optimistic analyst sentiment.

Citigroup stands out within this group. After years of restructuring and shrinking lower-return businesses, it trades just above tangible book value and at the lowest forward earnings multiple among the major banks. Investors are increasingly focused on whether upcoming guidance can confirm a sustained turnaround.

A friendlier backdrop for 2026

Beyond individual bank strategies, the broader environment may prove supportive. A lighter regulatory tone under the current U.S. administration could ease long-term capital constraints, while stronger deal-making, trading activity, and wealth management flows would lift fee income across the sector.

As earnings are released this week, markets will be listening closely not only for profit figures, but for how confidently bank executives talk about capital deployment, profitability targets, and growth plans. Those signals may end up shaping bank stock performance well into 2026.