Newsletter · · Ashutosh Agarwal

Big Banks Print Record Profits as NII Outlooks Rise Not Fall - Banks & the Rate-Cut Cycle - Week of July 17, 2026

Banks & the Rate-Cut Cycle for the week of July 17, 2026. Five of the six biggest U.S. banks reported, and instead of guiding lending profits down into falling rates, JPMorgan and Bank of America raised their full-year NII outlooks as management began planning around a September hike rather than a cut.

Banks & the Rate-Cut Cycle

Week of July 17, 2026: Big Banks Print Record Profits as NII Outlooks Rise Not Fall

For a newsletter named after a rate-cut cycle, this was the week the banks quietly told us there isn't one. Not yet. Earnings season arrived, five of the six biggest U.S. banks reported, and instead of guiding their lending profits down into falling rates, JPMorgan and Bank of America raised them. Jamie Dimon summed up the mood in seven words: "it's getting close to as good as it gets."

A note on this week's material: last week we were reading tea leaves, because no bank executive had spoken. This week we finally got the real thing. Wells Fargo's chief financial officer sat down for an on-the-record interview, and the podcasts spent the week dissecting the actual numbers from JPMorgan, Bank of America, Citigroup and Wells Fargo (plus Goldman Sachs and Morgan Stanley for context). So most of what follows is grounded in what management actually said and what they actually reported, not guesswork. A quick vocabulary note used throughout: net interest income (NII) is the money a bank earns on its loans and bonds minus what it pays out on deposits; net interest margin (NIM) is that same spread expressed as a percentage. When rates fall, the worry is that loan income drops faster than deposit costs, squeezing both. This week the podcasts argued the squeeze is being pushed further out.

TL;DR

  • The premise flipped again, this time toward the banks. The higher-for-longer world that last week's podcasts feared is turning out to be good for bank margins. JPMorgan raised its full-year NII outlook to $105 billion and Bank of America lifted its NII guidance too, both citing higher rates and stronger deposits. On the calls, the big banks are now openly planning around a single 25-basis-point rate hike in September and "not expecting a cut anytime soon."

  • The quarter was a blowout, but it was a Wall Street quarter, not a Main Street one. Trading and investment banking did the heavy lifting: JPMorgan's equities trading jumped 86%, Goldman posted its best quarter ever, and Citigroup's investment bank had its best showing in five years. The lending engine (NII, loan growth) was solid but boring by comparison, and Wells Fargo's stock got punished precisely because its margin, not its fees, stole the headline.

  • The scariest story from last week partly reversed. The commercial real estate reserve-build fear softened: Bank of America and Wells Fargo are actually releasing reserves on office loans, and analysts now say office is "finding a bottom, for real this time." The new worry moved next door, to data centers and to loose lending happening outside the banks.

What's new

Ranked by how much it should move a bank book, not by when it aired.

1. The banks raised their lending-income outlooks, the single most important tell for the whole "rate-cut" thesis. On the CRE Exchange podcast, real-estate finance analysts Cole and Omar walked through all four big-bank calls and flagged the number that matters: NII was "a broad tailwind," and "B of A raised its full year NII... JP Morgan also raised its NII outlook on stronger deposit balances and higher rates" (CRE Exchange). On Brew Markets, the hosts put JPMorgan's figure in plain terms: the bank "once again raised my full-year net interest income... outlook to $105 billion. That's the spread between what I earn on loans versus what I pay on deposits" (Brew Markets). Why it matters: this newsletter exists to track a feared margin squeeze on the way down. Management is telling you the squeeze isn't happening on schedule, because rates aren't coming down on schedule. The CRE Exchange analysts were blunt about the new base case: "the large banks are now underwriting guidance around a single 25 basis point hike in September... They're not expecting a cut anytime soon" (CRE Exchange).

2. We finally heard from an operator, and the NIM story is real but manageable. In an on-the-record interview, Wells Fargo CFO Mike Santomassimo (OPERATOR/INSIDER) explained the odd gap between fast loan growth and slower income growth. Loans grew about 12% year over year, but NII only rose 5%. His answer: "our full year net interest income guidance is still $50 billion. That's where we said at the beginning of the year," and, crucially, the margin dip is deliberate and small, "You did see net interest margin decline as expected, three or four basis points this quarter. We expect that to happen just a little bit more in the third quarter than stabilize from there" (Bloomberg Talks). He also gave the deposit picture that this newsletter watches most closely, and it was reassuring: Wells is seeing "higher interest-bearing deposit growth, which is actually a good thing for the long run," while expecting its cheapest money, non-interest-bearing checking deposits, "to be more stable... And part of that's the rate environment as rates stay a little bit higher for longer" (Bloomberg Talks). In plain English: higher-for-longer keeps customers parking money in cheap checking accounts a bit longer, which protects the margin.

3. This was a Wall Street quarter, and the trading numbers were almost silly. Across the podcasts, the fee-and-trading lines were the story. On the Schwab Network, senior contributor Alex Coffey (PUNDIT) marveled at JPMorgan's "record trading and sales and trading revenue for equities, they were up 86 percent year over year at $6.03 billion. Adjusted revenue just over $58 billion. Really was a home run compared to around $51.4 billion, which was expected," and noted Goldman's stock-trading revenue of "$7.42 billion" against a Street expectation of "about $5 billion... basically was almost a 50% beat" (Schwab Network). On CNBC's Squawk on the Street, Jim Cramer (PUNDIT) reeled off Goldman's "Fastest EPS growth I've ever seen, 92%. Fastest revenue growth, 39%," and pointed out investment-banking fees rose "50 at B of A, 30 at JPM" (Squawk on the Street). The driver, as the WSJ's Take On the Week previewed days earlier, is the deal machine: "big IPOs happening, the SpaceX IPO. Margin lending is at an all-time high... All that stuff accrues to the Wall Street business at banks" (WSJ's Take On the Week). Why it matters: trading and deal fees are wonderful but lumpy, they come and go with market volatility and the IPO window. The market knows this, which is why it rewarded almost none of these stocks on the day.

4. Credit stayed clean, and last week's CRE fear partly reversed. The reserve-build worry that dominated last week's issue got a real-world rebuttal. On CRE Exchange, Omar (INSIDER) reported that "office [is] finding a bottom, and I would say for real this time": Bank of America's pool of troubled commercial loans "dropped $5.8 billion year over year," with CEO Brian Moynihan pointing to commercial real estate as the main driver, and Wells Fargo's loan-loss cushion "stayed flat this quarter, even though card and auto growth... should have pushed it up higher", because improving office loans offset the consumer softness (CRE Exchange). That is banks taking money out of the rainy-day jar for office, the opposite of last week's storyline. The new caution is next door: JPMorgan "passed on... many data center deals over power supply and tenant risk," and Wells flagged "more risk assets being created on the wholesale side", i.e., aggressive lending migrating to private credit and non-bank lenders, a point both Moynihan and Wells's Charlie Scharf raised independently (CRE Exchange).

5. A friendlier inflation print greased the whole story. On the CRE Weekly Digest by LightBox, the hosts (INSIDER, real-estate finance) walked through Tuesday's inflation report, which came in cooler than feared: "analysts were expecting 3.9% CPI. They got 3.6. And on the core... they were expecting 2.9 and got 2.6," which pulled the 10-year Treasury yield down "about five or six basis points" (The CRE Weekly Digest by LightBox). They also gave the cleanest one-line explanation of why banks are minting money right now: "They're not making 3% loans anymore. They're making 6% and 7% loans," a world away from "three or four years ago when they were having negative arbitrage on a lot of their loans... and watched deposit costs go up to almost 5% at one point" (The CRE Weekly Digest by LightBox).

The debate

Bull NII case (the money banks earn on loans keeps climbing). This week the bulls got the microphone, and it was management holding it. If the Fed is on hold or even hiking rather than cutting, the feared "asset yields fall while deposit costs stay sticky" squeeze simply doesn't arrive. Instead, banks keep re-pricing maturing low-yield bonds into 6–7% new loans, cheap checking deposits stay put a little longer (Santomassimo's point), and NII drifts up. JPMorgan and Bank of America both raised their NII outlooks; the CRE Exchange analysts noted the whole group now plans around a September hike, not a cut (CRE Exchange). Add benign credit and office reserves being released, and the bull case looks the strongest it has all summer.

Bear NIM case (margins are being propped up by things that don't last). The bears have two arguments. First, the margin is still slipping, Wells openly guided to more NIM decline in the third quarter (Bloomberg Talks), and the deposit fight is coming from software, not just the Fed. As the WSJ's Take On the Week put it, "XXMoney has launched with a 6% APY on its accounts. And banks have to compete with that" (WSJ's Take On the Week). Second, the blowout quarter was built on lumpy Wall Street revenue, trading and IPO fees that vanish when volatility fades, plus one-time items like JPMorgan's ~$4.5 billion Visa gain (Brew Markets). Strip those out and you're left with a solid-but-not-spectacular lending bank at a rich valuation, with a consumer that the same podcasts keep describing as "stressed." Even the bulls are hedging: Dimon's own "as good as it gets" is a warning as much as a boast.

Stocks in play

JPMorgan (JPM). Bull: the most diversified engine in the group and the clearest higher-for-longer winner, record profit ever ($21 billion, or $7.70 a share, beating by $1.85), equities trading up 86%, and a raised NII outlook to $105 billion (Brew Markets). Bear: the stock fell anyway. As Cramer noted, "people always hold JP Morgan to a higher standard," the fixed-income trading line "wasn't perfect," and management nudged full-year expense guidance up to $107.5 billion, "$2.5 billion... higher versus the previous $105 billion that was expected" (Squawk on the Street; Schwab Network). Next catalyst: watching whether the raised NII outlook holds if a September hike doesn't materialize, and Dimon's read on the consumer.

Bank of America (BAC). Bull: Cramer's quiet favorite this week, "the most consistent and never gets mentioned," selling at just "13 times earnings" with "every single one of their lines... terrific" (Squawk on the Street). It beat on both lines (EPS $1.21), grew trading revenue 33% to $7.5 billion with stock trading up 70%, "didn't post a single daily loss all quarter," raised its NII guidance, and saw troubled commercial loans fall $5.8 billion. Moynihan called the economy "more durable than expected," with consumer spending "running at 6% plus" (Brew Markets; CRE Exchange). Bear: its CFO pointedly declined to raise NII further, saying "we're just up against tougher comps," and the shares had already run hard into the print (Brew Markets). Next catalyst: whether the NII line accelerates in the second half or the "tough comps" excuse becomes a plateau.

Wells Fargo (WFC). Bull: this is the first full year of unshackled growth since the Fed's asset cap was lifted in 2025, and it showed, record investment-banking fee quarter, markets balance sheet up "almost $200 billion since the end of 2024," wealth revenue up "13, 14 percent," average deposits up 10%, average loans up 12%, and return on equity of 17.7% that surprised even skeptics (Bloomberg Talks; Squawk on the Street). Cramer, who had been bearish, admitted Scharf "made it very clear how wrong I was." Bear: the stock is the group laggard (up only ~9% over the year) and it's the one name where the margin, that 3-4 bp NIM decline with more to come in Q3, genuinely overshadowed the fees. Scharf himself warned, "We know that such favorable conditions do not go on forever" (Squawk on the Street). Next catalyst: the Q3 NIM stabilization Santomassimo promised, if it slips instead, the laggard tag sticks.

Citigroup (C). Bull: the turnaround delivered its best quarterly revenue in a decade ($25 billion, up 14%), net income up 45% to $5.8 billion, and an investment bank up 44%, "my best showing in five years", with real traction in energy and power deals "tied to the AI infrastructure build-out" (Brew Markets). Bear: still the "show me" story. Its own CFO conceded Citi is "still playing catch-up in equities relative to the likes of Goldman and Morgan Stanley," and the stock fell about 5% after the print as investors questioned whether the turnaround is durable (Brew Markets). Next catalyst: proof that the returns keep climbing without more one-off help, the market wants to see the next lever Jane Fraser pulls.

Read-throughs

  • Super-regionals (USB, PNC, TFC): no direct podcast coverage this week, and there's a good reason. U.S. Bancorp, PNC and Truist report right at the edge of this window (roughly July 15–17), so the post-earnings podcast commentary simply hasn't aired yet; expect it in next week's sweep. The read-across from the money-center prints is broadly encouraging for them: higher-for-longer supports their loan margins, office-loan stress is easing, and credit stayed benign. The catch is that these three are more deposit-funded and more exposed to the deposit-competition and consumer-credit themes below, so watch their NIM guidance and card/auto commentary closely when they do surface.

  • Deposit competition: the theme that keeps evolving. Santomassimo's read is that higher rates are actually helping keep cheap deposits in place for now (Bloomberg Talks). But the WSJ crew's reminder that a fintech is dangling "6% APY" is the counterpoint, the competition for deposits is structural, not cyclical, and it doesn't need a Fed cut to bite (WSJ's Take On the Week).

  • Capital-markets fee tailwinds: this was the quarter's engine. Investment-banking and trading revenue set records across the board, powered by a record first half for mega-deals, "global deals valued above $10 billion reached a record level during the first half of 2026," with JPMorgan, Bank of America and Goldman all leading (DHUnplugged). Goldman's deal backlog is now "at its highest level in five years," a forward tell that the fee boom has legs into the second half (Brew Markets). The risk is symmetry: these lines fall as fast as they rise if the IPO window closes.

  • CRE and consumer credit: the most improved read-through of the summer. Office loans are healing enough that Bank of America and Wells Fargo are releasing reserves against them (CRE Exchange). The offsetting soft spot is the consumer, card and auto losses are creeping up, which is why Wells's overall reserve stayed flat rather than falling. And the AI build-out is creating a fresh credit question: JPMorgan is already turning down data-center loans over power and tenant risk, and the banks are warning that the loosest underwriting is happening outside their walls, in private credit (CRE Exchange).

What changed vs last week

Last Friday's issue (July 10) was built on fear and read-across: the Fed's minutes read hawkish, oil was surging, the market was pricing an 80% chance of a September hike, no bank executive had spoken, and the two loudest worries were a slow-burn deposit threat and a coming wave of commercial-real-estate reserve builds.

This week the actual numbers landed, and they largely resolved those debates in the banks' favor. The higher-for-longer backdrop that felt threatening a week ago turned out to be a tailwind: JPMorgan and Bank of America raised their NII outlooks, and the banks themselves are now planning around a September hike, so last week's "80% hike odds" went from a scare to management's working assumption (CRE Exchange). The CRE reserve-build fear was partly contradicted: instead of building reserves on office, Bank of America and Wells Fargo released them (CRE Exchange). And the biggest upgrade was simply information quality, last week we had zero operator commentary; this week we had a CFO on the record and four full earnings reports to work from.

Two things carried over rather than changed. The deposit-competition worry is still live (a 6% fintech savings rate keeps the pressure on), and the consumer is still described as stressed even as spending holds up. What genuinely faded: the investment-banking-boom and capital-return stories from two weeks ago came roaring back with hard numbers behind them. Net: last week was the last quiet week before the prints; this week the prints said the rate-cut squeeze is, for now, a problem for another quarter.