Santander

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.

Europe’s financial innovators are arriving in the US from more than one direction.

After moving to Spain from Los Angeles in January of last year, I quickly realized that much of the innovation in finance is happening in Europe. Meaning the seismic shifts in how consumers manage and spend money in their day-to-day lives.  

U.K.-based fintech Revolut filed for a U.S. bank charter with the Federal Deposit Insurance Corp. recently and expects to establish a banking presence there next year, complete with high-yield savings and checking accounts; access to stablecoins, multi-currency deposits; trading in stocks and crypto; and access to ATM networks (no physical branches). 

But as much as JPMorgan Chase & Co. CEO Jamie Dimon seems to—all at once—love, respect, and envy Revolut, I’m not so sure the banking and fintech establishments are quite ready for the neobank’s full-scale entry into the U.S.

Enter Santander

As much as I believe Revolut — not to mention bunq — are building the future of finance in the U.S. from Europe, another, less-discussed name could present a significant challenge. Put another way: You can’t talk about neobanks upending personal finance in the U.S. without bringing Banco Santander SA into the conversation. 

Fintechs alone may not be the most meaningful competitive challenge to U.S. banks, in other words. 

Understanding why starts with one of the first questions Revolut skeptics and banking incumbents around the world love to float: Can a company become a primary financial relationship without being a major loan underwriter?

It’s difficult for a fintech to build a lending business, Felipe Peñacoba Martinez, CEO of Getnet Platforms Payments Hub (a Santander company) and former CIO at Revolut Bank (EU), told Global Finance. “Revolut is aware this takes time,” he said, “and they’re going slower than in other areas.” 

Despite serving tens of millions of customers globally and holding roughly $67 billion in customer balances, Revolut’s loan book remains a fraction of that figure. Then again, its consumer lending business is also growing rapidly: up 120% year over year to $2.9 billion, according to the company’s 2025 report. 

By banking standards, Revolut’s loan-to-deposit ratio remains small, but its lending segment is no longer theoretical. What matters is whether fintechs can scale banking capabilities faster than banks can scale digital ecosystems.

Peñacoba Martinez points to his own children, all three of whom use Revolut and don’t have a need the company can’t serve. “Big banks are seeing how neobanks are taking market share, especially among younger generations,” he says, and as these users eventually seek mortgages and more complex investment products, Revolut wants to serve those needs.   

At day’s end, lending conveniently trotted out as a competitive obstacle is the kind of question keepers of the status quo ask when confronted with disruptive business models. Radio people dismissed streaming. Early Amazon.com Inc. skeptics pointed to the online retailer’s lack of profitability. Blockbuster Video scoffed at a $50 million offer to buy Netflix Inc. History is full of established players evaluating the future through the lens of the present.

The lending question becomes more useful as a lens than a verdict. Is it easier for fintechs to build the lending, deposits, and infrastructure traditionally associated with banks? Or is it easier for banks to build the customer experiences, payment capabilities, and digital ecosystems that make fintechs disruptive?

The Openbank Advantage

Santander’s advantage goes beyond its balance sheet. Through Openbank, Getnet, and its broader technology transformation efforts, the bank appears to be assembling many of the same capabilities fintechs spent years developing from scratch and combining them with infrastructure that many challengers still outsource or access through partners. 

Traditional banks realize the threat from fintechs like Revolut and need to act, said Peñacoba Martinez, but the challenge lies in execution.

“We all know we need to build a modern tech stack that’s easy to integrate, but how do you do that?” he added. “Building is easy, but decades of history, legacy systems, and mindsets are the hard part. It’s very complex for incumbents due to time. Every year that passes, the situation is worse. The risk of breaking something is a greater challenge for big banks than for fintechs.”

Inside Santander, the approach has been to prove new systems internally before scaling them more broadly. As Peñacoba Martinez described it, the challenge isn’t simply building something new; it’s continuing to improve it after launch. Payments became the first testing ground at Santander, with roughly 70% of group payments now running through Getnet.

The same logic applies to Openbank. Santander Executive Chair Ana Botín has made clear that she wants the platform to reach tens of millions of accounts in the coming years as “a digital bank with branches,” including in the U.S.

When I asked Peñacoba Martinez if these efforts effectively place Santander in direct competition with Revolut, his answer was straightforward: yes.

For all the attention paid to Revolut’s 2027 full-scale launch in the U.S., one of the more consequential battles may involve two companies moving toward similar destinations from opposite directions.  

Lifestyle Brands vs. Global Banks

One is a fintech building bank capabilities but marketing itself as a lifestyle brand; the other, a global bank adopting the mindset of a fintech while leveraging advantages fintechs have yet to replicate. The lesson for incumbents in the U.S. and around the world: neither of these models exists in isolation. 

Revolut, Santander, bunq, Nubank, and others are part of a broader wave of foreign challengers attempting to capture market share in the world’s most lucrative banking market. 

Having helped build products inside Revolut and now helping modernize a global banking group, Peñacoba Martinez has seen both journeys firsthand. Listening to him describe them, one conclusion becomes difficult to ignore: time tends to help one side and hurt the other. 

Like a young athlete, fintechs have room to grow aggressively from scratch; they don’t think about limits. For older players, every year increases the pressure to keep up without breaking what they have already established.

There’s no question that the competitive threat to U.S. finance from abroad is real. What remains murky is whether U.S. banks truly appreciate how many directions it’s coming from. 

Rocco Pendola is a contributing correspondent based in Spain.