Bank of America

The largest North American and European banks posted double-digit gains as higher-for-longer inflation looms.

All the biggest North American and European banks expect full-year 2026 profits to meet or exceed projections, as AI spending and a surge in market and investment banking activity fueled second-quarter profits.

With drama surrounding AI disruption in the tech sector and gyrations in the commodities markets tied to the war in the Middle East, trading volumes have been robust all year, including the first month of the third quarter.

Christopher Marinac, a banking analyst at Brean Capital, said a steepening Treasury yield curve is allowing banks to improve spreads on loans and securities.

“The way banks are pricing loans is just stable to slightly better, and that is bullish for net [income],” Marinac told Global Finance. “That is the sort of positive undertone.”

The earnings underscored that optimism. Industry leader JPMorgan Chase reported a 41% increase in second-quarter net income, while investment banking giants Goldman Sachs and Morgan Stanley posted gains of 84% and 57.7%, respectively. Bank of America’s profit rose 27%, Citigroup’s 45%, and Wells Fargo’s 16.6%. Canadian giant Royal Bank of Canada rose 25%. European banks also delivered strong results, led by UBS with a huge 134% increase; Santander jumped 17%; Barclays added 15.3%; and Deutsche Bank gained 10%.

Inflation remains a threat to growth, and investor jitters about shifts in tech spending away from more traditional software names have fed stock market volatility, along with the latest Fed moves.

But for now, banks are doing extremely well, with mega IPOs such as Anthropic and OpenAI potentially on deck, following the record $75 billion SpaceX IPO and an $85 billion capital raise for Alphabet, which boosted investment-banking fees in the second quarter.

The regulatory environment remains relatively friendly, and larger M&A deals continue to occur, including the $10 billion acquisition of Crinetics Pharmaceuticals by Vertex Pharmaceuticals, announced on July 10.

The performance so far bodes well for 2026 bonuses, given a strong first half of the year.

JPMorgan, BofA, Santander All Looking Up

During second-quarter calls with Wall Street analysts, JPMorgan Chase raised its net interest income outlook for the year, while Deutsche Bank said it will meet or exceed its net interest income outlook, and Bank of America projected 2026 net income growth at the upper end of its 6% to 8% range.

Barclays raised its 2026 profit forecast to £31.5 billion ($42 billion) from £31 billion and said it still expects to meet its full-year performance goals.

UBS Group CFO Todd Tuckner said he’s “confident” the bank will exceed its 2026 targets, with a formal update expected later this year. He added that the bank is “well-positioned” to outperform its exit-rate return target despite market uncertainty around inflation and interest rates. 

Santander, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, and Royal Bank of Canada kept their guidance unchanged but signaled stronger earnings ahead.

“Not everybody is giving the increase of guidance, but I think there’s higher conviction in the existing guidance for those who did comment,” Brean Capital’s Marinac said.

Looking ahead, the big banks are still optimistic about AI, both to improve internal efficiency and deal-making.

Goldman Sachs CEO David Solomon said AI investments are feeding capital needs for infrastructure, energy and data centers — not just core technology.

“This is creating significant opportunities for Goldman Sachs to provide structuring, financing, risk management, and capital markets execution across both public and private markets,” Solomon said.

Deutsche Bank Group Treasurer Richard Stewart said private pension reforms are creating a positive opportunity for Germany’s largest bank, alongside AI, “which is evolving even faster than we expected.”

Banking analyst Marinac said he expects European banks to benefit from the need to increase military and domestic spending.

“As everybody looks a little bit more inward, that’s probably good for business from a bank’s standpoint,” he said.

Some Big Banks Slash Jobs

Along with favorable conditions in the bond market, another earnings tailwind for banks has come from headcount reductions and productivity gains.

Citigroup cut 5,000 jobs in the second quarter, bringing its total headcount down to 219,000. Wells Fargo reduced its headcount by 3,500 to 197,000, and UBS eliminated 2,500 positions, bringing its total headcount to under 100,000. 

Analysts asked banks such as Wells Fargo how AI is shaping the job picture as technology advances.

Wells Fargo CFO Mike Santomassimo said the bank has “a lot of room to grow” to improve efficiency. But it also continues to hire branch bankers, investment advisors, commercial banking relationship managers, investment bankers, and traders.

“Certainly, technology and AI help us get at aspects of that in a different way or faster than maybe in the past,” Santomassimo said. “We expect that we’ll continue to see more efficiency from here.”

One key metric for banks’ future performance is employment levels, which have been robust in the U.S. As long as people keep working and paying their bills and business activity keeps up, credit quality will remain healthy, and the big banks will prosper as the year plays out, market observers said.

Steve Gelsi is a contributing writer based in the U.S.

As World Cup spending surges, BofA’s year-long merchant preparation is paying off.

Exorbitant ticket prices be damned. Die-hard soccer fans are flocking to host cities across the U.S., Canada, and Mexico for the first tri-nation tournament in FIFA history. And they are proving to be exceptionally big spenders.

The Bank of America Institute — the firm’s research arm — mined its credit and debit card data and learned that the 2026 FIFA World Cup is delivering a massive economic win for host cities, driven overwhelmingly by these hefty-spending, out-of-town visitors.

During the tournament’s opening days from June 10–21, overall consumer spending in host markets jumped 6.3% year over year. “Non-local” cardholders — a category tracking both international tourists and U.S. residents traveling out of state for matches — fueled the lift. Their spending, according to data shared with Global Finance, climbed 16.7% year over year.

Bank of America’s data also highlighted a lucrative trend for local merchants: visiting fans are out-purchasing non-fans by a nearly 3-to-1 margin.

Pre-Tournament Warmup

“We’re really only halfway through, as you know, so no surprise that the majority of that spend has been driven from non-local residents coming in,” said Sara Walsh, a Bank of America managing director who oversees the bank’s relationships with vendors and networks in payments and has spent more than a year preparing merchants for the tournament. “Restaurants, bars, hotels, of course, make up the majority of that.”

The data tracks with results from last year’s FIFA Club World Cup, a smaller-scale tournament that Bank of America Institute found drove a 7% year-over-year rise in consumer spending in host zip codes. Walsh told Global Finance in a phone interview that the event effectively served as a dry run for the numbers the bank is now seeing at scale.

“The Club World Cup gave us a nice little pilot into what the stats would look like, and they were very consistent with what we’re seeing here,” Walsh said.

Soccer fans, meanwhile, are proving to be especially heavy spenders. A study Bank of America conducted with Visa found that soccer fans spend on average 2.8 times more than non-fans, according to the Institute. Walsh said the bank analyzed customers making purchases tied to FIFA and MLS tickets to reach that conclusion.

The scale of the opportunity is significant. The tournament’s 16 U.S., Mexican and Canadian host cities together represent:

• $11 trillion in gross domestic product (GDP)
• Roughly 130 million people, and
• An expected draw of 33 million international visitors annually.

Historically, host nations have seen an average 0.4 percentage-point lift in GDP growth in the year following the tournament, the Institute found.

A Year of Preparation

Bank of America began preparing merchants for the World Cup surge more than a year ago. It drew on its position spanning treasury, card-issuing and merchant-services clients. The prep work centered on three areas: building tools for merchants to capture customer data and loyalty even after fans leave the U.S.; speeding up checkout through contactless and pay-at-table technology; and ensuring cards from international networks, such as Japan’s JCB, are accepted without triggering declines.

“Merchants can either survive the World Cup or prosper from the World Cup,” Walsh said, citing a colleague’s framing of the stakes.

Restaurants and bars needed the most hand-holding, Walsh said, particularly around pay-at-table functionality that’s common internationally but was slower to catch on in the U.S. The bank also coached retailers on when to use 3D Secure authentication — the phone-based verification step common in Europe — given the risk of transaction friction in crowded, high-traffic settings with spotty connectivity.

“We did not want to have customers who are standing in line, they’ve come all this way, get ready to purchase, and have their cards decline,” Walsh said. So far, she said, cross-border approval rates have held up as fans travel from city to city.

Spillover Into Other Events

One surprise for the bank has been spending spillover into unrelated events and sectors. Walsh said Bank of America has seen international visitors attending Major League Baseball games and concerts during their trips, alongside a pickup in merchandise sales tied to breakout national teams.

“You’re going to have people who are purchasing things from some of these teams that maybe a month ago no one had ever even heard of these countries, and all of a sudden they’re winning,” Walsh said, adding that merchandise sales represent a “fun kickback” opportunity for merchants tied to Cinderella-story squads.

Cape Verde’s inspiring World Cup run, for example, captivated fans. The team, representing an island nation of just 535,000, reached the knockout stage unbeaten and pushed Argentina, the reigning champs, to a hard-fought 3-2 extra-time loss.

Bank of America worked with Visa and FIFA, along with industry forums including Money20/20, the Electronic Transactions Association, and the Merchant Advisory Group, to prepare merchants of all sizes through its Merchant Engagement Program, Walsh said.

Looking ahead, Walsh said that the bank plans to apply lessons from the World Cup to future events on U.S. soil. That includes the 2028 Summer Olympics in Los Angeles and the 2031 FIFA Women’s World Cup, which the U.S. will jointly host with Mexico, Costa Rica, and Jamaica.

“We will definitely continue to use these events for learning opportunities to improve where we need to and get ready for those events as well,” she added.

Anthony Noto covers corporate finance and private credit. Contact him at anoto@gfmag.com