- A potential 10% interest rate cap on credit cards will impact big card issuers with sizeable cards portfolio the most
- US banks are likely to continue to see big shareholder payouts supported by further regulation reduction
- We expect US banks to register resilient high single-digit y/y earnings growth as investment banking fees and trading income continue to boost non-interest income
- We remain highly selective and favour US firms with a compelling restructuring story, riding on revenue growth and share buybacks
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Keeping a close watch on potential 10% interest rate cap on credit cards. President Trump continues to push for a temporary one-year interest rate cap of 10% in early 2026 to relieve high borrowing costs for US consumers. It remains to be seen how the rate cap can be implemented, with no federal law, executive order, or regulatory rule enacted as yet. It is widely believed that an executive order could be met with industry legal action, as some big lenders have criticised the rate cap. There is an ongoing debate about affordability versus ensuring credit access, as well as disruption to pricing of consumer credit risk, as most bank management agree that a cap will constrict credit eventually, potentially causing a slowdown to the economy. Most issuers have left rates unchanged for the time being. Fintech BILT has started to offer new credit cards with 10% interest rate on first year as an introductory offer. The proposed plans on a rate cap may hit big banks with sizable cards portfolios the most, namely JPM and Citi amongst others.
US Banks continue to see big shareholder payout given expected further regulation reduction. US regulators have moved to reduce post GFC rules governing large banks, in view of the current overly complex framework constraining growth. A central change is the narrowing of banking supervision, with Fed cutting supervision and regulation staff by c.30% and refocusing oversight on material risks including capital adequacy and major operational weaknesses, focusing less on compliance and documentation issues. A less stringent, risk-based capital framework, which is potentially capital-neutral, is likely to replace the original Basel III Endgame. The proposed easing of enhanced supplementary leverage ratio would relax capital requirements, particularly for large banks. During 2025, post 2025 stress tests, JPM has announced its largest share repurchase program till date, amounting to USD50bn with an unspecified end date, while BAC, Citi, WFC, GS, MS all raised dividends since 2H25 as ongoing excess capital return via higher dividends and share buyback continues.
A year of resilient earnings growth for US Banks; we remain highly selective. We believe US Banks are poised for high single-digit y/y earnings growth, as investment banking fees and trading income continue to boost non-interest income. Net interest income is likely to continue seeing modest growth on the back of lower funding costs amidst moderate asset growth. We recommend US firms with compelling restructuring story, riding on revenue growth and share buybacks.
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Related Insights
- Research Library13 Feb 2026
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Related Insights
- Research Library13 Feb 2026
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- Take-Two Interactive Software Inc13 Feb 2026