- Q4 2025 bank earnings were mixed, with Bank of America beating estimates, Wells Fargo growing profit but missing revenue, and Citigroup down on a one-time Russia-exit charge.
- Trump’s proposed one-year 10% credit-card APR cap drew sharp pushback from bank leaders who say it would shrink card lending and cut access for riskier borrowers.
- With average card APRs near 21–22%, a 10% cap would force major repricing and likely prompt tighter underwriting, reduced rewards, and a shift toward fee income.
- Key uncertainties include how any cap would be structured, whether Congress would act, and its legal and regulatory survivability.
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The fourth quarter of 2025 brought both opportunities and pressures for major U.S. banks. Bank of America reported a strong beat: revenue of approximately $28.4 billion and EPS of $0.98 both exceeded analyst expectations, driven by record net interest income, trading gains, and operating leverage through disciplined expense controls. Expense growth was modest (~4 %) versus revenue growth (~7%) which yielded improved efficiency and healthy returns on equity.
Wells Fargo also saw earnings increase (~13 %), posting EPS around $1.62. However, its performance was blemished by several downside elements: revenue missed consensus (~$21.3 billion vs. $21.6 billion expected), severance costs of $612 million due to restructuring, and investor concern about future net interest income amid expected Fed rate cuts.
Citigroup faced a tougher Q4. Net income dropped roughly 13 % year-over-year to $2.47 billion ($1.19 per share), largely due to a $1.2 billion after-tax loss tied to the sale of its Russian operations. Adjusted EPS (excluding that loss) was ~$1.81, slightly above forecasts. Revenue rose ~2 % year-over-year, led by dealmaking and corporate banking services. Trading revenue edged down but was up for the full year. RO tangible common equity fell to ~5.1 %, well below the management’s 10-11 % target for 2026.
The proposal by former President Donald Trump to impose a one-year 10 % interest rate cap on credit cards has become a focal point of uncertainty. Bank executives from JPMorgan, Citi, Wells Fargo, and others have strongly opposed it, warning it would “significantly change and cut back” the credit card business, especially for subprime and prime borrowers. JPMorgan CFO Jeremy Barnum expressed concerns about broad loss of access for consumers and systemic negative consequences. Citigroup echoed these warnings, saying the cap could fail to improve outcomes for those the policy is meant to help.
Quantitative context reinforces why banks are alarmed. Average APRs for U.S. credit card accounts accruing interest remain near 22 % in Q4 2025, while average APRs across all credit card accounts are ~21 %. Thus, a 10 % cap would require steep margin compression or disintermediation for many issuers, particularly on high‐risk card balances where default risk is materially higher and underwriting standards already tight.
Strategic implications include: banks may tighten underwriting (raising minimum credit scores, reducing credit limits), reduce rewards and benefits to manage profitability under lower yields, shift focus to fee-based or non-interest income areas, and increase lobbying efforts. Regulatory risk is heightened, as implementation would likely require Congress or face legal challenge. Investors will also be watching guidance and capital allocation plans, especially how banks intend to absorb regulatory headwinds while maintaining returns.
Open questions include: How exactly would a cap be structured—duration, exemptions, grandfathering of existing contracts? What legal pathways could be used to enforce it? Would it apply to all issuers or just federally chartered banks? Would rewards programs and fees offset lost interest income? And might this push more lending into unregulated or shadow credit markets?
Supporting Notes
- Bank of America reported Q4 2025 revenue of $28.4 billion and EPS of $0.98, beating estimates; net interest income rose ~10 % YoY.
- Wells Fargo earned $5.4 billion net income (~$1.62 per share), up ~6 % YoY, but revenue of $21.3 billion fell short of expectations; severance expenses of $612 million weighed on results.
- Citigroup’s net income dropped ~13 % to $2.47 billion ($1.19 per share) due to a $1.2 billion loss tied to the sale of its Russia business; excluding that one-off, EPS was $1.81.
- Bank of America’s operating expenses rose ~4 % YoY while revenue rose ~7 %, creating >300bps of operating leverage. Efficiency ratio ~61-62 %.
- JPMorgan CFO Jeremy Barnum warned that a 10 % credit card rate cap would force banks to change or cut back their card business, with broad loss of access for consumers. Jamie Dimon said it would disproportionately hit subprime borrowers.
- Average APR for U.S. credit card accounts with interest accrual (~accounts carrying balance) was ~22.3 % in Q4 2025; across all credit card accounts ~21.0 %.