Big banks post strong Q3 profits, but warn higher rates and inflation
could bite
[October 14, 2026] By
KEN SWEET
NEW YORK (AP) — Wall Street’s biggest banks reported another strong
quarter on Tuesday, as the U.S. consumer continues to pay their bills
and businesses keep investing heavily in AI.
But even as JPMorgan Chase, Citigroup, Wells Fargo and Goldman Sachs
reported higher profits from a year ago, they warned about the long-term
impact of higher interest rates as well as the impact higher prices
could have on the consumer if inflation is not brought under control.
JPMorgan posted a $15.3 billion profit in the third quarter, or $5.57 a
share, up from $14.4 billion or $5.07 a share, in the same period a year
earlier. The results missed analysts’ expectations, with Wall Street
looking for the bank to earn $5.93 a share.
It was a rare earnings miss for JPMorgan and its CEO, Jamie Dimon. The
last time the bank missed analysts’ expectations was nearly three years
ago. The investment banking division of JPMorgan was to blame this
quarter, as its fixed income trading desks saw a slowdown in activity
compared to both earlier this summer as well as last year. Still, shares
rose 0.2% in midday trading.
“The U.S. economy continued to be fueled by strong business investment
and ongoing consumer spending,” Dimon said in a statement. “However,
large fiscal deficits, sticky inflation, elevated asset prices, rising
interest rates and geopolitical conditions continue to shift under the
surface.”
The big banks typically kick off the quarterly earnings season, and this
is a key one for the stock market given that robust corporate profits
have helped propel the S&P 500 to record levels. Analysts expect
companies in the S&P 500 to deliver overall growth of nearly 30% in
earnings per share from a year earlier, according to data provider
FactSet. If they’re correct, it would be the third consecutive quarter
of growth that exceeds 25%.
Goldman Sachs, whose third-quarter profits rose sharply due to a sharp
rise in stock-trading revenue, also reported that its bond trading
activity slowed last quarter. The bank posted a profit of $5.29 billion,
or $17.01 a share, compared to $4.1 billion, or $12.25 a share, a year
earlier. Goldman shares rose 0.6%.
The bond market saw significant levels of volatility and turmoil this
summer, as investors became increasingly worried about government
spending and inflation. The yield on cornerstone financial instruments
like 10-year and 30-year Treasurys rose to levels not seen in years.
Higher diesel, technology and food prices gave the Federal Reserve
reason to raise interest rates last month, despite pressure from the
White House to not do so.
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A sign for Chase bank is seen on an ATM Tuesday, Jan. 6, 2026, in
Portland, Ore. (AP Photo/Jenny Kane, File)
 The higher interest rates and
election-fueled volatility have made some businesses pause any
significant investments until later this year, or early 2027. OpenAI,
the owner of ChatGPT, said it plans to delay its initial public
offering until next year. That IPO is expected to be an investment
banking bonanza for Wall Street, as was the public offering of
SpaceX earlier this summer.
Despite the volatility, bank CEOs said they continue to see growth
in the economy in the short-to-medium term.
David Solomon, Goldman's CEO, told investors during a call that the
rise in bond yields “doesn't scare me.” However, other bank CEOs did
point to a slowdown in the housing market, with new mortgage rates
being well above 7%.
There were similar statements out of Wells Fargo, which has one of
the nation's largest consumer banking franchises, where executives
told investors that they see all parts of the bank's business
growing, with the exception of mortgage originations.
"While higher interest rates, higher oil prices and persistent
inflation create risks to the economy, strong positive forces such
as the investment in AI infrastructure, high employment levels and
consistent wage growth continue to outweigh the risks,” said Charlie
Scharf, Wells' CEO, in a statement.
Citigroup said its third-quarter profits jumped 40% from a year ago,
beating Wall Street expectations. The bank posted higher revenue
from investment banking and wealth management, while the bank's
credit card division profits were flat. Citi shares dipped 3.6%.
Wells Fargo posted a profit of $5.95 billion, or $1.87 a share,
beating Wall Street forecasts. The San Francisco-based bank has seen
its profits climb steadily in recent quarters after federal bank
regulators removed the asset cap that had been imposed for several
years after the bank's sales practices scandal nearly a decade ago.
Wells shares dropped 1.7%.
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