US bank stocks fell as much as 4% on Wednesday as investors decoded Bank of America and Citigroup’s December quarter earnings and a proposed 10% cap on credit card interest rates, which is widely seen as affecting financial institutions.

The S&P bank index fell a little over 1%. Wells Fargo dragged down the US stock market after its shares fell 4.6%, as the San Francisco-based lender posted weaker-than-expected quarterly profit and revenue, weighed down by softer trading fees and other non-core items.

Bank of America shares fell 3.5% despite the lender topping quarterly profit estimates, while Wells Fargo fell 4.4% after missing fourth-quarter revenue expectations.

Citigroup fell 0.5% despite reporting higher revenue.

This follows warnings from JPMorgan executives that a proposed cap on credit-card interest rates could squeeze consumers and reduce profitability across the financial sector.

Bank stocks have weakened after a 25% rally in the past 12 months. The sector was down 0.4% on the day.

“Banks have had a very strong start to the year and markets are taking some time to digest the results,” said Jack Johnston, deputy CIO at Advisors Asset Management.

“We’re seeing a slight miss on some estimates, but these stocks had a strong run-up to these reports, and it’s not unusual to see a bit of a pullback.”

US banking giants boosted their profits in the fourth quarter, buoyed by increased demand from borrowers that could bode well for lenders’ future earnings. Bank of America’s average loan was up 8% from a year earlier, and its net interest income — or the difference between what it earns on loans and pays out in deposits — rose to a record $15.9 billion, it reported Wednesday. At rival JPMorgan Chase, average loans rose 9%. Loan growth is closely watched by investors as a positive indicator for banks’ businesses.

“We’ve seen growth across all consumer lending categories,” Bank of America Chief Financial Officer Alastair Borthwick told reporters on a conference call. “That helped us in Q4, but in general, the story in 2025 was a commercial lending story, and we’re pleased with the fact that our customers in a growing economy continue to invest to support their businesses.”

Analysts at S&P Global Market Intelligence are “optimistic about sustained momentum in 2026 driven by macroeconomic stability and favorable credit conditions,” they wrote in a report on Tuesday. They estimated that loan growth across US banks “accelerated significantly” by the end of 2025, rising 5.3% annually.

Citigroup’s average loans rose 7% in the fourth quarter, driven by markets, U.S. personal banking and services businesses, it reported Wednesday. “We’ve seen an increase in the pace of loan growth for the first time in a while,” Wells Fargo Chief Financial Officer Mike Santomassimo told reporters on a conference call. Loans for its commercial businesses rose 12% in the fourth quarter, while auto and card lending also boosted revenue.

Credit card cap

Executives also expressed concern that President Donald Trump’s proposed 10% cap on credit card interest rates would encourage banks to pull back on lending and stifle economic growth. However, they said more details are needed to assess its potential impact.

Mark Mason, Citigroup’s chief financial officer, said it was too early to comment on the policy due to a lack of details. More broadly, “an interest rate cap is not something we support or can do,” he told reporters on a conference call.

“Capping interest rates will restrict access to credit for those who need it most, and frankly, will have a detrimental effect on the economy … (I) don’t want to speculate on the impact, given the lack of information that’s out in the market, but agree that affordability is an important issue and we’re willing to collaborate on how we work to address it,” Masson said.

Wells Fargo Chief Financial Officer Mike Santomassimo told reporters that the bank encourages careful consideration of all proposals.

“It’s too early,” he said. “There’s not enough detail to really comment on individual impacts in Wales or the industry. But as I said, it will have a negative impact on credit availability.” Separately, more bankers expressed their support for Federal Reserve independence after the Trump administration launched an investigation into Chairman Jerome Powell.

“Independence of the Fed and the Fed chair is really important,” Mason said. “We expect the next Fed chair to act with the same level of independence and focus on making sure the Fed has that independence.”