Large-Cap Bank Research at Wells Fargo Securities, said in a note to clients on April 8 that the year-to-date underperformance should reverse. He pointed to strong Q1 earnings, what he called "once-in-a-generation deregulation," and a favorable capital markets backdrop. The KBW Nasdaq Bank Index climbed 3.6% on April 9.
Citigroup shares rose 5.1%, as GuruFocus reported. The KBW Bank Index sank 6% in the first quarter of 2026, its worst quarterly performance since the regional banking crisis of 2023, Bloomberg reported. That followed a strong 2025 in which the same index soared 29%, outpacing both the S&P 500 and the Nasdaq 100.
The pullback was driven by a combination of factors. The U.S.-Iran war and its impact on oil prices and inflation raised concerns about the economic outlook. Private credit fears also rattled sentiment.
Together, they pushed investors away from a sector that had been trading near record highs entering the year. Mayo's argument is that the selloff created an opportunity rather than a warning sign. At current levels, valuations have reset to a point where earnings can do the heavy lifting.
Q1 earnings are the immediate catalyst. Goldman Sachs reports on April 13, followed by JPMorgan, Citigroup, and Wells Fargo on April 14, with Bank of America and Morgan Stanley closing out the week on April 15, according to TipRanks. The numbers are expected to be strong.
Citigroup's Q1 earnings per share are projected to rise 34.2% year-over-year. Wells Fargo's are expected up 23.6%. JPMorgan is forecast to earn $5.41 per share, up 6.7% from a year ago, according to Zacks.
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