What Big Bank Earnings Just Revealed About the Health of the U.S. Consumer
Key Points
Oil prices are high, inflation is running hot, and Wall Street is tentatively watching consumers.
Bank earnings from the industry giants are in, and the results are very clear.
U.S. consumers appear to be handling the economic headwinds in relative stride.
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There's a saying that Wall Street climbs a wall of worry. One of the big worries right now is around inflation, which is running hotter than the Federal Reserve would like, at least partly thanks to high oil prices (driven by a worrying geopolitical conflict in the Middle East). The fear is that the U.S. economy could be tipped into a recession, as strained consumers are forced to pull back.
You can get a look at how well consumers are doing by examining the second quarter results of big banks. If Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), and JPMorgan Chase (NYSE: JPM) are any indication, Wall Street's economic worries may be misplaced.
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The big-bank numbers you need to watch
Two of the key metrics used to identify financial strain among a bank's customers are the charge-off ratio and the non-performing loan ratio. The charge-off ratio is simply the percentage of a bank's loans that it believes are uncollectible. That's basically the worst-case scenario view of the credit situation. The non-performing loan ratio is the percentage of a bank's loans that aren't currently being paid, which could lead to a default. That's basically one step ahead of the charge-off ratio.
Bank of America's customers are fine
Starting with Bank of America, one of the world's largest financial institutions, the story looks pretty good. The bank's charge-off ratio was 0.47% in the second quarter of 2026. That's not a bad number, but it doesn't give you the full picture. The first quarter figure was 0.48%, and the charge-off ratio a year earlier was 0.55%. In other words, it looks like the bank's customers are in better shape today than they were a year ago.
The same trend holds with the non-performing loan ratio. It was 0.47% in the second quarter. That was down slightly from 0.49% in the first quarter and 0.52% a year earlier. So this leading indicator of increasing strain is also moving in a positive direction.
Wells Fargo and JPMorgan Chase customers are fine, too
Wells Fargo's credit metrics showed the same trends as Bank of America. Its net charge-off ratio in the second quarter was 0.34%. That was down from 0.45% in the first quarter and 0.44% a year earlier. The bank's non-performing loan ratio was 0.77%, down from 0.86% in the first quarter and year earlier periods.
JPMorgan Chase's numbers weren't quite as good, but they weren't worrying, either. Its net charge-off ratio was 1.51% in the second quarter of 2026, down from 1.56% in the first quarter and up slightly from 1.48% a year ago. No big moves are taking shape there. Its non-performing loan ratio was more sanguine, with the second quarter figure for its credit card business at 1%, down from 1.15% in the first quarter and 1.07% a year earlier. Credit cards are often where financial strain first shows up.
Citigroup card customers highlight the need to keep watching
That said, Citibank is seeing a slightly weaker trend in its credit card business. The company's general-purpose cards had a non-performing loan rate of 1.3% in the second quarter, up slightly from 1.27% in the first quarter and 1.21% in the year-ago period. The cards the company issues for retailers (private-label cards), which tend to carry more credit risk, had a non-performing loan rate of 2%, down from 2.08% in the first quarter but up from 1.92% in the second quarter of 2025. Citibank's card business is an indication that investors can't ignore the health of the consumer. And yet, the numbers still aren't at worrying levels.
Every bank is different, so these credit metrics are similar but not identical. You really have to take a big-picture view to get a sense of how well consumers are doing right now. When you do that, the answer is that the health of the U.S. consumer is still strong. But, at the same time, the big picture shows that you shouldn't stop monitoring the trends given the geopolitical and economic backdrop.
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Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
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