Banks Earnings Suggest Healthy Backdrop.

Happy Friday!

“Consumer spending week after week is up the same amount… deposits remain strong… we just see a lot of consistency.”

That quote from JPMorgan’s earnings call sums up much of what we’re seeing across the data. Despite cautious headlines, the U.S. consumer remains remarkably stable. Spending is steady, delinquencies are contained, and deposits remain strong. The pattern of resilience that’s defined this cycle continues, and it’s showing up not only in credit data but across the broader economy.

Still, markets grew uneasy this week following the bankruptcies of Tricolor and First Brands, both tied to the auto credit space. We’ll touch on that below along with what bank data actually shows about the health of the system.

Under the surface, there’s also a subtle shift in tone from corporate America. Optimism around AI is giving way to accountability. Companies are being asked to prove what AI can deliver, not just talk about it. Also, I added a very interesting Ai datapoint at the end.

Let’s get into the data!

Here is the summary if you want just that:

• Delinquencies trending lower…

• Consumer spending consistent

• Deposits remain strong

• AI focus shifting to ROI

Let’s start with credit concerns

The market has been on edge this week following the bankruptcies of TriColor and First Brands, both tied to the auto credit sector. That’s sparked fresh concerns about regional bank exposure and the overall health of consumer credit. But when you look at the data, the story is far more stable. Delinquency rates across major institutions are trending lower, not higher. Most medium and large banks continue to show healthy credit performance, consistent payment behavior, and limited subprime exposure.

Next, we’ll turn to management commentary from the major banks to further highlight this underlying strength.

The Consistent Consumer

“We see really strong credit results, strong consumer spend, and stable deposits… a consistently strong consumer.” - Wells Fargo Earnings This Week

Across the major banks, the message was consistent. See quote below. The consumer remains solid. Delinquency rates are low at JPMorgan, Bank of America, and Citi, with no meaningful deterioration in credit quality or spending. While some discretionary categories soften when fuel prices rise, the broader picture continues to show balance and strength.

The AI Reality Check

“The risk is that the AI theme has become so overwhelming that we lose sight of facts and tangible outcomes.” - JP Morgan Earnings This Week

This was one of the more thoughtful moments from bank management commentary. While companies continue to invest heavily in AI, leadership teams are stressing the need for realistic expectations. As one executive put it, “the proof will be in the pudding” on whether AI meaningfully slows expense growth or drives real efficiency gains.

Next are the hard numbers. Banks are doing well. Arguably better then ever.

Revenue growth ranged from +9% to +20%, with net income gains of +9% to +44%. Morgan Stanley and Goldman Sachs led, reflecting stronger deal and market activity. Hard to get too negative here.

Beneath the surface, we’re starting to see signs of underlying strength. Forward EPS revisions are rising alongside ISM improvements, a historically bullish combination for equities, especially those more sensitive to macro conditions.

Next up is business formation. It’s not yet visible in the jobs data, but if you’re worried about employment trends, this is worth watching. After two years of normalization, new business creation is picking up again. Both business applications and domain registrations are trending higher into early 2025.

Why this matters:

Business formation is a leading indicator of entrepreneurial confidence and future labor demand. Even with higher rates, small business activity is turning back up, a constructive signal for the broader economy and local job markets.

I can’t help but throw a AI datapoint here. One that is interesting and concerning for data providers.

ChatGPT citations from external sites fell sharply (-50% to -85%) across GitHub, Reddit, and YouTube, showing users increasingly rely on direct model interaction instead of search engines.

No conclusion here but should be of concern.

That’s all this week!

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