Newsletter · · Ashutosh Agarwal

Bank CEOs Raise Profit Targets as a September Hike Comes Into View - Banks & the Rate-Cut Cycle - Week of September 11, 2026

Banks & the Rate-Cut Cycle for the week of September 11, 2026: after a week with no bank executives on the tape, two CEOs and a team of JPMorgan dealmakers showed up, with Wells Fargo lifting its return target to 17 to 18 percent, Citizens calling the economy remarkably resilient, global equity issuance running near $800 billion, and futures pricing better than a 60% chance of a September 16 rate hike.

Banks & the Rate-Cut Cycle

Week of September 11, 2026: Bank CEOs Raise Profit Targets as a September Hike Comes Into View

"We set a target of 15. We achieved that. We said now 17 to 18. And then we're going to raise it from there." Wells Fargo CEO Charlie Scharf, on Squawk on the Street

For a month this newsletter has been living inside the heads of strategists and economists guessing what the banks were feeling. Last week there was not a single bank executive on any podcast we could find, just pundits reacting to the Fed. This week the actual operators showed up, and the change in who is talking is the story.

Two bank CEOs sat for interviews, and a team of JPMorgan's own dealmakers walked through their order book. None of them sounded worried. The Wells Fargo boss is raising his profitability target. The Citizens Financial boss called the economy "remarkably resilient" and waved off the idea that a rate hike would do much damage. And JPMorgan's bankers described a fee year that has already broken records set in the frenzy of 2021.

One quick translation before we start, because two terms recur. Net interest income (NII) is what a bank earns on its loans and bonds minus what it pays savers on deposits; net interest margin (NIM) is that same gap as a percentage. The big U.S. banks are asset-sensitive, higher rates generally help that spread, and cuts hurt it. So a Fed that will not cut, and might even hike on September 16, is the friendly outcome for this group, not the threat the newsletter's name once implied. Return on tangible common equity (ROTCE), which comes up below, is simply how much profit a bank squeezes from the shareholder money actually at work in the business, the single cleanest scorecard of how well a bank is run.

TL;DR

  • The tape flipped from pundits to operators, and the operators are constructive. Wells Fargo's Charlie Scharf is lifting his ROTCE target to 17-18% and says consumer delinquencies are still improving. Citizens' Bruce Van Saun says "the capital markets are wide open" and doubts a hike would bite. Real executives, real confidence.
  • JPMorgan's own bankers put hard numbers on the fee boom. Global equity issuance is running near $800 billion year-to-date, up 75%, and U.S. equity issuance has already passed the entire 2021 record. That is the cleanest, best-sourced read yet on the capital-markets tailwind for JPM and Citi.
  • September 16 is a genuine coin-flip, tilted toward a hike. Futures price "more than a 60% chance of a rate hike," and everything hinges on today's inflation report. Nobody serious is arguing for a cut.

What's new

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

1. Wells Fargo's CEO is raising the bar on profitability, and says the consumer is still getting healthier. On Squawk on the Street (2026-09-09), speaking from the bank's own healthcare conference, Wells Fargo CEO Charlie Scharf laid out the profit path: "Our return on tangible common equity when we started our journey was high single digits. We set a target of 15. We achieved that. We said now 17 to 18... And then we're going to raise it from there because the natural mix of our business supports a higher number." On credit, the thing that would break the story, he was emphatic: "delinquencies are actually improving from very, very healthy levels already." Why it matters: this is the first hard company guidance in weeks, and it is bullish. A bank hitting a 15% return target, moving the goalposts to 17-18%, and telling you loan losses are still falling is a bank that thinks the higher-for-longer world is working in its favor.

2. JPMorgan's bankers quantified the fee boom, and it is enormous. On JPMorgan's own Making Sense podcast (2026-09-04), Jack Atherton and Eddie Bayoun of JPMorgan's equity-capital-markets team ran the numbers. Atherton: "global ECM volumes year to date are currently running at nearly $800 billion. That's up 75% year over year with just over half of that coming from the US, which is up over 100%." (ECM, equity capital markets, is the business of helping companies sell stock, IPOs and follow-on share sales, for a fee.) Bayoun added that U.S. equity issuance alone is "$430 billion" year-to-date, more than double the "$200 billion" at this point last year, and already on track to beat 2021's "$458 billion" record. JPM advised on "the biggest IPO ever in SpaceX," SK Hynix, Intel and Alphabet's "$90 billion" raise, one of only two banks working all four. Why it matters: fee income is the offset to any margin softness, and this is the most credible read on it, the bankers doing the deals, not a strategist guessing. It is a direct tailwind for JPMorgan and reads straight across to Citigroup's markets and underwriting desks.

3. A second bank CEO says the economy is strong enough to shrug off a hike. On Bloomberg Surveillance (2026-09-09), Citizens Financial Group CEO Bruce Van Saun, not one of our seven names, but a useful read across the group, called the economy "remarkably resilient," pegged growth at "closer to two and a half" for the next year, unemployment "very steady in the low fours," and inflation on a "gradual declining trajectory." On the Fed: "I'm not sure that there will be rate hikes... There's really no new evidence yet that inflation is accelerating." His line of the week: "If 25 basis point kills it, it's not a good economy." Why it matters: when two bank CEOs in one week tell you the borrower is healthy and a hike would barely register, the bear case that rising rates crack the loan book gets harder to hold.

4. The September 16 meeting is now a live hike, and it all comes down to today's inflation print. JPMorgan economist Mike Feroli, same Bloomberg program, said the decision "boils down to Friday's CPI report," that is today, and that his forecast of "core CPI of 0.21% month over month... leaves the Fed on hold." His threshold is razor-thin: "if it's 0.20, I think we're in good shape... if it's 0.29, we'll probably change our call and look for a hike." He framed the risk both ways: "there's a case we could see no hikes for the foreseeable future... a case we could see four hikes." Why it matters: the single biggest swing factor for every name below lands in one number, and the market, per Truist's strategist, is already leaning toward a hike.

The debate

Bull NII case, the operators just co-signed it. For a year the bull rested on one idea: the Fed will not cut, so the asset-sensitive spread holds. This week the people running the banks added the second and third legs. Scharf is raising his profitability target and says credit is still improving. Van Saun says loan and funding demand is "starting to broaden out" beyond AI and data centers. And the fee engine, the part that does not care about NIM at all, is having its best year since 2021, per JPMorgan's own bankers. High rates on the spread, healthy borrowers, and a record deal calendar is about as clean a setup as this group gets.

Bear NIM case, the danger has moved to the rate the Fed does not set. The bear no longer argues margins collapse. It argues the risk sits in the long end of the bond market, where the banks' securities holdings are valued and where mortgage rates live. The debate on September 16 is now about a hike, and Truist Advisory's Keith Lerner warned on Bloomberg Surveillance (2026-09-03) that "I don't think a quarter point matters that much," but "a series of rate hikes... is much more destructive." One nip-and-tuck hike is fine; a cycle of them would pressure the long-dated bonds banks have spent two years nursing back to health, and squeeze the very borrowers the CEOs are so upbeat about.

The people who run the banks sound confident. The one thing that could still trip them isn't a single hike, it's a string of them.

Stocks in play

JPMorgan (JPM). Bull: the best-sourced read this week, straight from its own dealmakers, a record capital-markets year (equity issuance up over 100% in the U.S.), and a lead role on every mega-IPO. Fee income like that cushions any margin softness and plays to JPM's scale. Bear: its own economist, Mike Feroli, put the odds of "four hikes" on the table alongside "no hikes," a genuine two-sided rate risk into a business whose bond book hates a disorderly long end. Next catalyst: today's CPI, then the September 16 FOMC, then Q3 results confirming the fee boom reaches the bottom line.

Bank of America (BAC). Bull: as the most rate-sensitive of the giants, BofA is the purest winner from a Fed that holds or hikes, every basis point flows across its vast, low-cost deposit base, and the "hike is live" backdrop tilts its way. Bear: it also carries one of the largest low-yield bond portfolios in the group, so a series of hikes that pushes the long end higher is precisely what pressures the value of those holdings. No company-specific podcast this week, so the read is pure macro. Next catalyst: the September FOMC, the cleanest single swing factor for its margin.

Wells Fargo (WFC). Bull: the standout of the week. Scharf is lifting the ROTCE target to 17-18% "and then... raise it from there," with delinquencies still improving and the balance sheet free of the old regulatory asset cap. A higher-for-longer world with genuine loan demand is exactly the setup for the cheapest big-bank re-rating story. Bear: the target is a promise, not a print, he conceded improving credit "is not going to go on forever," and the stock now has to deliver the 17-18% to earn the re-rating. Next catalyst: Q3 results proving the profitability climb is real, not just guided.

Citigroup (C). Bull: a record issuance calendar and a busy, volatile market keep Citi's trading and underwriting engine humming, the JPMorgan ECM data and Morgan Stanley's Mike Wilson ("the best year since 2021... I don't see any real unwinding of that machinery") read straight across. Add a still-cheap valuation and an improving-returns story. Bear: the fee tailwind is the most cyclical piece of the case; a dovish surprise or a stumble in the mega-IPO pipeline would hit both its lending spread and its markets revenue. No dedicated Citi tape this week. Next catalyst: Q3 proof that return on tangible equity keeps grinding higher.

Read-throughs

  • Super-regionals (USB, PNC, TFC). The clearest read comes from commercial real estate. On Street Talk (2026-09-07), the Mortgage Bankers Association's Michael Fratantoni said bank ("depository") commercial-property lending jumped "69%" in the first half versus a year earlier, as banks met the "$875 billion" wall of 2026 loan maturities, "about half" of it on bank balance sheets, with a "no more kicking the can down the road" resolve. Refinancing the wall rather than defaulting on it is good news for the regional books most exposed to it. Truist gets a second, softer read-through via its own advisory strategist, Keith Lerner, on the Fed path.
  • Deposit competition. No name-specific deposit-beta tape this week, but the through-line from the CEOs is telling: Scharf notes small businesses "don't borrow long at those rates," and Van Saun sees funding demand broadening. A higher-for-longer world keeps cash and short bonds paying savers well, which keeps the fight to hold deposits expensive, a bigger drag for regionals than for the money-center banks with the stickiest, cheapest funding.
  • Capital-markets and lending fees. This is the loudest signal of the week and it is unambiguously positive. JPMorgan's bankers and Morgan Stanley's Mike Wilson both describe a deal machine running at its hottest since 2021, with high-grade bond issuance setting records "in June, July and August." That is a direct earnings tailwind for the trading and underwriting desks at JPMorgan and Citigroup.
  • CRE and consumer credit. Both CEOs and the MBA economist point the same way: consumer delinquencies "improving," CRE originations up sharply, office pain narrowing (D.C. still weak, San Francisco "now booming"). The caveat is data-center lending, "more zeros in those loans," mostly large syndicated construction deals, now drawing "community neighborhood pushback" as the midterms near. Worth watching, but not yet a credit problem.

What changed vs last week

Last Friday's issue (2026-09-04) had a single voice: the Fed. Every podcast was a strategist, economist or policymaker reacting to Kevin Warsh's hawkish Jackson Hole debut and the bond selloff that sent yields to their highest since 2008. We flagged it plainly, no bank CEOs, CFOs or banking analysts anywhere on the tape.

What changed: the operators showed up. Two bank CEOs and a team of JPMorgan bankers replaced the strategist chorus, and they turned the abstract "higher-for-longer is good for banks" thesis into concrete, sourced confidence, a raised profitability target, improving credit, and a record fee book.

What carried over, and hardened: the higher-for-longer, asset-sensitive tailwind is fully intact, and the September FOMC is still the pivot. But the framing sharpened. Last week the question was "will Warsh be hawkish?" This week it is "hike or hold on the 16th?", with futures at "more than a 60% chance of a rate hike" and today's CPI as the trigger.

What softened: last week's dominant fear, a disorderly long-end selloff wrecking bank bond books, cooled a notch. The 10-year drifted back toward 4.8%, and the debate narrowed from "term-premium blowout" to "one hike versus none." The bond-book risk is still the key offset, but this week it took a back seat to a run of genuinely good operator news.