The US economy is borrowing again.
Major US banks reported strong Q4 results today, driven not just by high rates, but by a tangible pickup in loan demand from both businesses and consumers.
📈 THE GROWTH ENGINE: Despite fears of a slowdown, the “Big Four” are seeing credit expansion accelerate:
- Bank of America: Average loans +8% YoY; Net Interest Income hit a record $15.9 billion.
- JPMorgan Chase: Average loans +9%.
- Wells Fargo: Commercial loans +12%, signaling businesses are investing for growth.
- Citigroup: Average loans +7%.
- Industry Wide: S&P Global estimates loan growth accelerated to 5.3% by the end of 2025.
🗣️ THE “REAL” ECONOMY VIEW: Alastair Borthwick (CFO, Bank of America) noted a key shift: “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.”
⚠️ THE 10% RATE CAP THREAT: While the numbers are good, the earnings calls were dominated by questions regarding President-elect Trump’s proposed 10% credit card interest rate cap.
- Citi CFO Mark Mason: Warned a cap would have a “deleterious impact on the economy” and restrict access to credit for lower-income borrowers.
- Wells Fargo CFO Mike Santomassimo: Agreeing that while details are scarce, it would negatively impact credit availability.
🏛️ FED INDEPENDENCE: Amid reports of an administration investigation into Chair Jerome Powell, bank executives closed ranks. Citi’s Mason emphasized that the independence of the Fed is “really important” for market stability.
💡 ANALYST TAKEAWAY: The fundamentals of US Banking are stronger than the stock price reaction (-1% today) suggests. Loan growth of 8-12% is consistent with a booming economy, not a recession. However, the market is currently pricing in Legislative Risk over Fundamental Performance. Until there is clarity on the credit card cap, expect P/E multiples to remain compressed despite the record Net Interest Income.
👇 Commercial Bankers: Are you seeing this 12% loan growth demand in your pipeline for 2026, or is this growth concentrated in large caps?