Banks are set to kick off their second-quarter earnings season on Tuesday, with solid economic data expected to offset ongoing geopolitical uncertainty.

The dynamic should allow banks to continue their run of solid earnings, analysts said. The industry continues to benefit from strong investment-banking and trading revenues, as well as loan growth momentum. And a more favorable regulatory environment has eased fees and streamlined examinations.

Investors, however, are starting to wonder how long the bull run can last.

"The debate is: Is this as good as it's gonna get?" Raymond James analyst Michael Rose said.

SHIFTING NARRATIVES

Investment narratives are currently shifting toward long-term earnings durability and the sustainability of net interest income growth, away from quarterly concerns around credit quality and liquidity, Rose said.

Credit trends are holding up well, and capital levels are robust across much of the industry, analysts said. While the Iran war and inflation are worrying to investors, growing gross domestic product, improving manufacturing and relatively low unemployment are mitigating fears.

Rather, the shift has emerged as banks face waning tailwinds from fixed-asset repricing and growing competition for deposits, according to Rose. It doesn't help that expectations for additional interest rate cuts have been pushed further into the future, and that there is increasing likelihood of a near-term rate hike.

Investors are now taking a longer-term approach, placing more emphasis on metrics such as core deposit franchise strength, revenue diversification, capital flexibility and the ability to consistently generate positive operating leverage.

Investors aren't worried that profit and net interest margins will fall off a cliff this quarter, but they are looking for signs of trouble down the road, Rose said. That is because any sustained pressure on margins could force banks to lower outlooks, potentially creating a negative revision loop.

BIG BANKS ARE BETTER POSITIONED

Big banks are slightly more insulated, analysts said. They tend to have lower loan-to-deposit ratios than smaller regional banks, resulting in more secure lending strategies. And big banks also benefit from greater revenue diversification, making them less vulnerable to immediate margin compression when chasing deposits to fund new loans.

The benefit can be seen in the recent quarter, during which big banks' stocks outperformed. The rally was driven at first by better-than-expected first-quarter results, and then by ebbing concerns over the Iran war and strong spending growth throughout the period, JPMorgan analysts said.

JPMorgan Chase is set to be among the first wave of banks to report earnings, scheduled for before Tuesday's opening bell, alongside Bank of America, Citigroup, Goldman Sachs and Wells Fargo.

Morgan Stanley and PNC Financial Services Group are scheduled to follow on Wednesday, with Citizens Financial Group and Fifth Third closing out the week on Thursday and Friday, respectively.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

July 13, 2026 10:52 ET (14:52 GMT)

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