AlphaThe Close: Bank earnings show growth, with credit and compliance bills attached
Citigroup, Wells Fargo, Bank of America, State Street and BlackRock all grew revenue in the third quarter, while the Fed's H.15 shows long Treasury yields easing off last week's levels.
- Citigroup earned $2.85 a diluted share on $23.8 billion of revenue, with net interest income up 14% and a $2.6 billion provision for credit losses.
- Bank of America's revenue rose to $29.96 billion from $29.04 billion, but net income fell to $6.93 billion after a $1.2 billion Bank Secrecy Act-related charge.
- Wells Fargo's diluted EPS rose to $1.87 from $1.66 on revenue of $21.87 billion.
- State Street revenue rose about 13% to $4.0 billion and BlackRock revenue rose about 19% to $7.75 billion.
- Per the Fed's H.15, the 10-year Treasury yield was 5.21% on October 13, down from 5.28% on October 7; the 2-year was 4.79%.
The heart of the third-quarter bank reporting season has now arrived, and the message from the official filings is consistent: revenue is growing almost everywhere, but the path from revenue to earnings runs through credit costs, regulatory bills and capital return decisions that differ sharply by firm.
Citi's operating leverage, with a card-loss price tag
Citigroup reported net income of $5.2 billion, or $2.85 per diluted share, versus $3.8 billion, or $1.86, a year earlier. Revenues rose to $23.8 billion from $22.1 billion, net interest income rose 14% and reported operating expenses fell 2% to $14.0 billion. The year-ago quarter carried a Banamex-related goodwill impairment, so the EPS jump overstates the underlying change, but revenue growing faster than expenses is real. The cost is in credit: the provision was $2.6 billion, including $2.2 billion of net credit losses and a $369 million net reserve build. Citi still returned $4.1 billion to shareholders with its CET1 ratio at 12.8%.
Wells Fargo and Bank of America
Wells Fargo earned $5.95 billion, or $1.87 per diluted share, up from $1.66, on total revenue of $21.87 billion against $21.44 billion. EPS grew far faster than revenue, a reminder that share count and cost discipline are doing much of the work. Bank of America went the other way on the bottom line: revenue rose to $29.96 billion from $29.04 billion, but net income fell to $6.93 billion from $8.33 billion, and diluted EPS to $0.91 from $1.04, after a $1.2 billion charge for Bank Secrecy Act-related civil money penalties.
Fee businesses and the industrial read
State Street's revenue rose to $4.00 billion from $3.55 billion and diluted EPS to $3.69 from $2.78. BlackRock's revenue rose to $7.75 billion from $6.51 billion, with GAAP diluted EPS of $10.57 versus $8.43. Outside finance, Fastenal's net sales rose to $2.46 billion from $2.13 billion, a constructive signal for U.S. industrial demand.
Rates backdrop
The Fed's H.15 release shows the 10-year Treasury yield at 5.21% on October 13, down from 5.28% on October 7, and the 30-year at 5.56% from 5.67%. The 2-year held at 4.79% and the 3-month constant-maturity yield edged up to 4.26%, well above the 3.88% effective federal funds rate. The long end has eased while the front end has not, which keeps pressure on bank funding costs even as longer-dated borrowing rates get some relief.
AlphaGen's read: the large banks are entering the final quarter of 2026 with growing revenue and solid capital, so the swing factors for earnings are now credit losses and one-off charges, not demand for financial services. The FOMC meets October 27–28.
For informational purposes only. Not investment advice. See disclosures.