Three major US banks delivered strong quarterly financial results, demonstrating robust performance across consumer banking and investment services despite emerging policy tensions with the current administration. Bank of America Corp, Citigroup, and Wells Fargo each reported increased profits and healthy consumer activity metrics.

Strong Financial Performance Across Major Banks

The quarterly results showed consistent profit growth across the banking sector:

Bank of America Corp generated revenue of $28.40 billion for the quarter, while Wells Fargo reported revenues of $21.30 billion. The results reflect what executives described as a resilient economic environment with continued consumer and business activity.

Consumer Banking Metrics Show Stability

Consumer banking segments demonstrated healthy growth patterns across the reporting banks. Bank of America Corp experienced a 6% increase in credit and debit card spending, with credit card balances rising 3% year-over-year to $103.00 billion. The bank's retail deposits grew to $945.40 billion, indicating continued customer confidence.

Wells Fargo reported similar trends with consumer loan growth and increased credit card activity. Importantly, both banks noted that delinquencies and charge-offs remained relatively stable, suggesting maintained credit quality despite economic uncertainties.

Executive Outlook on Economic Conditions

Bank leadership expressed optimism about economic prospects, with Bank of America Corp CEO and Chairman Brian Moynihan stating the company remains "bullish on the U.S. economy in 2026." Moynihan emphasized that businesses and consumers are "proving resilient" in the current environment.

Citigroup Chief Financial Officer Mark Mason echoed this sentiment, describing consumers and businesses as resilient. Mason noted that "the U.S. economy is doing just fine" while acknowledging potential downside risks, particularly geopolitical uncertainties. Bank executives indicated they were not observing significant evidence of a "K-Shaped" economy where economic benefits are unevenly distributed.

Policy Tensions Over Credit Card Interest Rates

Despite strong financial performance, banks face potential regulatory challenges regarding credit card operations. The administration has proposed capping credit card interest rates at 10%, creating tension with financial institutions that operate large and profitable credit card businesses.

Citigroup's Mason acknowledged affordability concerns while opposing interest rate caps: "Affordability is a big issue and we look forward to collaborating with the administration on ways we can address this. But an interest rate cap is not something we could or would support. It would restrict credit to those who need it the most and have a delirious impact on the economy."

Investment Banking and Dealmaking Activity

The banks benefited from increased corporate activity and dealmaking throughout the reporting period. Companies embraced merger and acquisition opportunities, generating steady investment banking revenues and fees for the major financial institutions. This activity contributed to the overall strong performance across the banking sector's investment services divisions.

India's Securities and Exchange Board has issued a show-cause notice to Bank of America Corp., alleging that the bank's employees improperly shared non-public information about a significant block trade in 2024. The regulatory action centers on accusations of information sharing between employees who were not directly involved in the transaction.

Regulatory Allegations and Response

The show-cause notice outlines SEBI's accusations and requests Bank of America's formal response to the allegations. According to sources familiar with the matter, the bank is currently preparing its response to the regulator's claims. Bank of America representatives declined to comment on the ongoing matter, while SEBI representatives did not immediately respond to requests for comment.

SEBI's allegations extend beyond the initial information sharing claims. The regulator also alleges that Bank of America provided incomplete information during the original investigation when SEBI first inquired about the matter. The notice was reportedly sent to the bank several months ago.

Block Trade Details

The allegations relate to a substantial block trade involving Aditya Birla Sun Life Asset Management Co., where Bank of America served as the broker. The transaction details are outlined below:

Block trades represent large, privately negotiated securities deals executed off public exchanges, typically between major investment firms. Brokers facilitate these transactions to prevent significant price movements in public markets that could result from high-volume orders. These trades are subsequently reported for transparency purposes.

Legal and Regulatory Context

Sharing non-public information ahead of public announcements enables some investors to profit from expected price movements, a practice that is illegal in India, the United States, and other major markets. The regulatory framework is designed to maintain market integrity and ensure fair trading practices for all participants.

Impact on Bank Operations

The allegations have had tangible effects on Bank of America's operations in India. Three dealmakers departed the company in 2024 amid internal investigations related to allegations of wrongdoing involving stock offerings. Following these departures, the bank has been actively working to rebuild its investment-banking team in the country.

As part of its restructuring efforts, Bank of America received approval to appoint Vikram Sahu as its chief executive officer for India, signaling the bank's commitment to maintaining its presence in the Indian market despite the ongoing regulatory challenges.