Hearty mega-bank returns blunt capital complaints

Wells Fargo & Co

15/04/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Refiles to fix hyperlink in fifth paragraph.

By Stephen Gandel

NEW YORK, April 14 (Reuters Breakingviews) - It's a bad time for big U.S. banks to be arguing for capital relief. JPMorgan JPM.N, Wells Fargo WFC.N and others grew first-quarter profit at healthy clips despite shaky geopolitics and ample balance‑sheet cushions. The results suggest things are working reasonably well for borrowers, shareholders and regulators alike. Rather than cut lenders more slack, it makes sense to err on the side of systemic financial safety.

Since the implementation of new rules following the 2008 global financial crisis, bank bosses led by JPMorgan's Jamie Dimon have griped that constraints are too tight and overly protective. The core of the argument is straightforward: strong returns attract investors, bolster capital and expand lending. Without that virtuous cycle, the economy will suffer.

The latest quarterly snapshots offer evidence that conditions are solid all-around. JPMorgan generated nearly $17 billion of earnings, lifting its return on tangible common equity, a closely watched measure of industry profitability, to 23%, higher than it reported in the heady days of 2006. Some rivals, like Bank of America BAC.N and Goldman Sachs GS.N, exceeded 30% two decades ago, but largely on the back of proprietary trading and other riskier activities that have been justifiably curbed.

Citigroup C.N and Wells Fargo are doing well, too. Although their profitability trails pre‑crisis highs, the returns improved: 15% for Wells Fargo and 13% at Citi. As a rule of thumb, anything above 10% is generally a good sign. The KBW Nasdaq Bank Index .BKX also has gained 50% over the past year.

What's more, the robust performances to start 2026 coincide with a 10% rise in lending, on average, from the trio that reported on Tuesday and precede proposed regulatory changes from the Trump administration. The revisions would shave large sums from the capital big banks are required to hold. If JPMorgan had returned that excess to shareholders, its tangible return would have neared 27%, according to Breakingviews calculations. Even so, Dimon again railed at what he perceives as double counting in rules that punish his bank.

There are nevertheless good reasons to keep capital levels higher. Wild market swings, caused in large part by mercurial U.S. policy, and the conflict in Iran have boosted trading revenue, but also risk. Potential loan losses, including from private credit and buy-now-pay-later loans, are hard to gauge when the economy eventually slows. For now, there's little evidence the existing guardrails are overly restraining bank stakeholders. The balance is well worth preserving.

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CONTEXT NEWS

JPMorgan on April 14 reported a 23% return on tangible common equity, a closely watched measure of profitability in the banking industry, for the first quarter, as net income grew 13%, to $16.5 billion, from the same time a year earlier on the back of strong trading revenue.

On the same day, Citigroup said its ROTCE in the three months ending March 31 was about 13%, with a 42% increase in net income, to $5.8 billion.

Wells Fargo's return on the same metric was 14.5%, following a 7% rise in net income, to $5.3 billion for the quarter.

Big US banks are generating robust returns https://www.reuters.com/graphics/BRV-BRV/jnpwrbexyvw/chart.png

(Editing by Jeffrey Goldfarb; Production by Pranav Kiran)

((For previous columns by the author, Reuters customers can click on GANDEL/ stephen.gandel@thomsonreuters.com))