JPMorgan Reports Tuesday. Three Numbers Show Whether 5% Yields Help or Hurt Banks.

All six of the largest US banks are expected to earn more than they did a year ago. The main index of bank stocks has still fallen about 13% from its August peak. The headline earnings will not settle that argument. Three lines further down the report will. Here is where to look, and why it matters even if you do not own a single bank.

HeyTheo Research · Sunday, October 11, 2026

Quick Read

• JPMorgan, Wells Fargo, Citigroup and Goldman Sachs report on Tuesday, Oct 13. Bank of America and Morgan Stanley follow on Wednesday, Oct 14.

• Analysts expect earnings per share to rise at all six, from about 2% at Goldman Sachs to 17% at JPMorgan.

• The index of large bank stocks is down about 13% from its August peak anyway. The market is worried about what comes after this quarter.

• Three numbers answer that worry: the outlook for lending income, the money set aside for bad loans, and the paper losses on banks' own bonds.

The setup: good numbers, weak stocks

Source: company investor relations for dates, LSEG analyst consensus as of Oct 7. Percent changes are desk calculations.

On paper this is a strong season. Wall Street firms earned $45.9 billion in the first half of 2026, up 51% from a year earlier. Deal fees and trading have been running hot.

The stocks tell a different story. The main index of large bank shares has fallen about 13% from its August peak and lost about 6% over the third quarter. Over the same three months, Wells Fargo fell about 6% while the S&P 500 rose about 4%.

Notice the shape, too. Growth is expected everywhere, but it is thin outside JPMorgan and Wells Fargo. When profits rise and the stock falls, the market is not arguing with last quarter. It is arguing with the next four. So the place to look is not the earnings-per-share line. It is the three numbers below.

Research cue · try it in HeyTheo

Before Tuesday, ask Theo for the bull case, bear case and what to watch on any bank you hold. Add: "what would have to be true for the stock to fall on a good quarter?" It lays out the worry the price is already carrying. Open HeyTheo

Number one: the outlook for lending income

A bank's core business is simple. It pays you a little for your deposit and charges a borrower more for a loan. The difference is called net interest income.

Higher rates were supposed to be good news for that. Often they are. But what matters is the gap between short-term and long-term rates, because banks tend to borrow short and lend long.

That gap has narrowed this year. The 10-year Treasury yield stood about 0.74 points above the 2-year in February. On Thursday, Oct 8, it was about half a point: 5.24% against 4.75%. Long-term rates are high, but so is what banks must pay to keep deposits.

So ignore the quarter's lending income and read the forecast. All four of the big lenders gave one in July.

Source: company guidance as summarized in analyst previews

A raise says 5% yields are helping. A cut, or a warning about deposit costs, says the squeeze has started.

Number two: money set aside for bad loans

Every quarter a bank puts money aside for loans it expects to go bad. This is called the provision. It is management's own forecast of the economy, in dollars.

The backdrop changed on Oct 2. The US added just 29,000 jobs in September and unemployment rose to 4.2%. So far the banks have described credit as healthy. JPMorgan expects to write off about 3.2% of its credit card loans this year, a figure it lowered in July. Citigroup guides to 4% to 4.5% on its US cards.

Watch three things: whether provisions jump, whether those card forecasts move back up, and any comment on loans to non-bank lenders. Bank lending to that group grew more than 22% in the year to June. It is the fastest-growing and least tested corner of the loan book.

Research cue · try it in HeyTheo

Set a trigger for the bank names you follow: "tell me if this stock moves more than 4% either way on its earnings day." Then use the backtester to see how the same stock traded after its last eight reports. It shows whether a big reaction is normal for that name or unusual. Open HeyTheo

Number three: paper losses on the banks' own bonds

This one gets the least coverage and matters the most in a week like this.

Banks own trillions of dollars of bonds. When interest rates rise, older bonds with lower rates lose value. Banks do not have to book that loss unless they sell. But the loss is real, and it limits how much room a bank has to lend, buy back shares, or absorb a shock.

At the end of June, US banks were sitting on $326.7 billion of these paper losses. That figure had risen for two quarters in a row.

Then rates rose much further. The 10-year Treasury yield went from about 4.6% in late July to 5.29% by the end of September, and it was still about 5.24% on Friday, Oct 9. The third-quarter number will almost certainly be larger.

This is not 2023 again. Most large banks have shortened the life of their bond holdings since then, which limits the damage. But a smaller hit is still a hit, and it lands on the same capital that pays for buybacks.

Look for the line called accumulated other comprehensive income, or simply "unrealized losses," and for any change in buyback plans. A bank that slows buybacks while reporting record profit is telling you something about its balance sheet.

The bonus number: fees

Fees are where the banks will differ most from each other.

JPMorgan said in mid-September that it expects investment banking fees and trading revenue to rise by a mid-to-high teens percentage. Bank of America has said it expects its investment banking fees to fall at least 10%. Same quarter, same deal market, opposite calls.

Worldwide deal volume fell to about $1.23 trillion in the third quarter from $1.8 trillion in the second. We covered what that slowdown looks like from the shareholder's side in our note on Monday's deals. The banks are the other side of that trade.

Why this matters if you own no banks

Bank reports are the first hard data on the economy each quarter. They show whether companies are borrowing, whether households are paying their cards, and whether deals are getting done.

They are also the second of four dates we flagged in our note on jobs, bonds and the Nasdaq. The third lands one day later. September inflation data is due Wednesday, Oct 14, at 8:30 AM ET, the same morning Bank of America and Morgan Stanley report.

Research cue · try it in HeyTheo Open the money-flow view and check whether money moved into or out of financials over the past week. Then build two baskets, the largest banks and the regional banks, and compare them after Tuesday. If the big banks hold up and the regionals do not, the worry is about credit, not rates. Open HeyTheo

Research it yourself: rules HeyTheo tracks

• Bank basket. The six largest banks tracked as a group against regional banks and against the index.

• Guidance trigger. Flags any bank that changes its full-year lending income forecast, up or down, on earnings day.

• Good-news-sold trigger. Flags a holding that beats expectations and still closes lower. In a nervous market, that pattern says more than the beat.

• Ask Theo. Try: "Which of my holdings depend most on consumer credit staying healthy?" or "Give me the bear case for large banks if the 10-year stays above 5.3%."

Check the rule behind any trigger before acting on it. You trade through your own broker; HeyTheo helps you decide.

The Teller Window

The earnings headline on Tuesday morning will almost certainly read as good news. Profits up, estimates beaten.

The market already expects that, and bank shares fell 13% anyway. What it does not know is whether lending income keeps growing, whether loan losses stay low with hiring this weak, and how large the bond losses have become.

Those answers are a few pages into each report. They are worth the extra five minutes.

Start your own first pass this weekend. Download HeyTheo, add the banks you follow, and run the three cues above before Tuesday's open. Get the app

Sources

JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley, Wells Fargo, FDIC, New York State Comptroller, LSEG, Reuters, Zacks, Hudson Labs, 24/7 Wall St., Bureau of Labor Statistics, US Treasury

Disclaimer

Disclaimer: HeyTheo is a research and education platform, not an investment adviser or broker-dealer. Nothing here is advice to buy, sell, or hold any security. You trade through your own broker; HeyTheo helps you decide. Backtested results are hypothetical and do not guarantee future returns. References to governments, officials, or policies are for market context only and are not political endorsements. All investing involves risk, including loss of principal. Data is as of the dates noted.