U.S. Large-Cap Banks: 2Q26 EPS PREVIEW: Loan and fee growth should outpace expense and provision adds

Research evidence excerpt

U.S. Large-Cap Banks: 2Q26 EPS PREVIEW: Loan and fee growth should outpace expense and provision adds

back) and market-related fee income are both strong. We highlight that elevated

market-related revenues should be accompanied by higher expenses (both comp and BCE) and

strong loan growth requires upfront provisioning. In addition, after lower than expected tax

rates in 1Q26 (every bank but RF), we expect an increase in 2Q26.

The net of these drivers, coupled with active share repurchase, should support results

above consensus. Still, over the past 30 days the median bank's 2Q26 EPS estimate is little

changed. Within our coverage, only market-sensitive names like, GS, C, STT and JPM, along with

ZION, have seen increases of $0.02 or more, though just FITB (-$0.03) and ALLY (-$0.01) have

witnessed reductions. We expect additional upward revisions to consensus EPS heading

into the prints.

While deposits have received outsized investor attention this quarter, we expect near-

term (balance, mix and rate paid) trends to be stable and banks continue to push back on

long-term concerns (‘smart cash’, stablecoins) are overdone. Deposit costs could be higher

than expected at the start of the year, as we discussed last month (Deposit discussions back in

focus, 5/21/26), a ‘higher-for-longer’ interest rate backdrop as well as strong loan growth, active

de novo expansion plans, multiple banks currently involved in merger integrations paying a

little extra to maintain newly acquired customers, and WFC reengaging post asset cap removal

are all playing a role. Nevertheless, NII is still tracking in-line to better than expected. Looking

out, banks should continue to downplay risks from stablecoins (lack of meaningful use cases,