Wells Fargo Reports Strong 2025 Results

• Wells Fargo has announced impressive results for 2025, boasting a net income of $21.3 billion. This translates to a 17% increase in earnings per share. The company returned $23 billion to shareholders, including a 13% dividend increase and $18 billion in stock buybacks. However, a decrease in share buybacks is anticipated for 2026 as the company focuses on organic growth. Management described the Federal Reserve’s policy shift regarding asset limits as a “pivotal moment,” reiterating their CET1 target at approximately 10-10.5% (it stood at 10.6% in Q4).

• Fourth-quarter results highlighted a revenue of $5.4 billion, with earnings per share at $1.62, mainly due to substantial loan growth (up 5% in end-of-period loans) and deposit growth, the best since Q1 2020. Management aims to raise net interest income to around $5 billion in 2026, expecting market NII to be about $2 billion, contingent upon two to three Fed rate cuts.

• Expense management remains crucial. With headcount reduced by over 25% since mid-2020, non-interest expenses are projected to reach about $55.7 billion in 2026. Expectations indicate total efficiency savings of around $2.4 billion, alongside a $700 million decrease in severance benefits. Credit trends appear “solid,” though there is noticeable asset pressure in commercial real estate.

During the bank’s fourth-quarter earnings call, executives emphasized revenue and balance sheet growth alongside strict expense management, while outlining their outlook for net interest income and expenses in 2026, particularly as that year marks the end of the Federal Reserve’s asset cap.

CEO Charlie Scharf highlighted what he termed “significant momentum” in 2025’s results. The bank reported a net income of $21.3 billion, reflecting a 17% year-over-year increase in diluted earnings per share. Scharf noted a 5% rise in fee-based revenue across both consumer and commercial sectors.

Expense oversight remains a primary concern. Scharf stated that Wells Fargo has achieved positive operational leverage with 22 consecutive quarters of workforce reductions, resulting in over a 25% headcount decrease since Q2 2020. The company is set to return $23 billion to shareholders, which includes a 13% dividend hike and substantial stock buybacks. Still, Scharf cautioned that share buybacks may be low in 2026 due to organic growth strategies, maintaining a CET1 target of around 10% to 10.5%.

Scharf reiterated the significance of the Fed lifting the asset cap, labeling it a “pivotal moment.” He also pointed out that Wells Fargo has successfully concluded 13 regulatory orders since 2019.

In consumer banking, Scharf discussed investments in credit cards, revealing a 21% year-over-year increase in new accounts, totaling nearly 3 million. The company has also seen a 6% rise in credit card balances. He indicated that, after initial costs over two to three years, newer product vintages are starting to contribute positively to revenue. The auto finance sector is also recovering, with loan balances increasing by 19% year-over-year, aided by Wells Fargo’s role as the preferred lender for Volkswagen and Audi in the U.S.

On the home lending front, Scharf mentioned simplifications over the last three years, including a workforce reduction of more than 50% as the bank prioritizes banking and wealth management clients.

Turning to commercial banking, Scharf noted that the hiring of 185 coverage bankers over the past two years, with about 60% starting in 2025, has brought early indications of new customer acquisition along with growth in loans and deposits. Investment banking fees for commercial customers have increased by over 25% in 2025. Additionally, Scharf highlighted a strategic partnership with Centerbridge Partners that has supported clients in raising around $7 billion.

In terms of investment banking, Wells Fargo’s U.S. M&A ranking improved from 12th in 2024 to 8th in 2025, with ambitions to become a top-five U.S. investment bank. The deal pipeline for 2026 looks “significantly larger” compared to recent years, though he warned of potential changes in market conditions.

As the asset cap was lifted, Wells Fargo increased its trading-related assets by 50% in 2025 to bolster client activities and financing, although many additions were lower margin and less capital-intensive.

CFO Mike Santomassimo stated that the fourth-quarter profit was $5.4 billion, a 6% annual increase. The diluted earnings per share were noted at $1.62, up 13% from the previous year, whereas they would be $1.76 without severance payments. The quarter also accounted for $612 million in severance payments expected for the upcoming year.

Net interest income rose by $381 million, or 3%, over the third quarter, primarily due to increased market NII. Loan growth was notable, seeing a 5% increase from the third quarter, reflecting the strongest quarterly growth since early 2020. Average deposits rose by $23.9 billion year-over-year, with a decrease in high-cost corporate vault deposits offset by gains in consumer and commercial deposits.

Non-interest income grew by $419 million, or 5%, largely from higher fee-based earnings across categories, including an 8% uptick in investment advisory and brokerage fees due to improved market conditions. Non-interest expense dropped by $174 million year-over-year due to various efficiency measures.

Management noted that credit performance is still “strong.” The net loan charge-off rate slightly dipped but exhibited an uptick from the previous quarter. Commercial losses related to real estate increased, and consumer charge-offs also rose modestly. Notably, both categories were lower than the previous year, likely influenced by seasonal factors.

Nonperforming assets saw a slight increase, particularly in commercial real estate and loans, but it’s attributed to specific borrowers rather than systemic issues.

Wells Fargo’s CET1 ratio closed the quarter at 10.6%, slightly down but still above the minimum required level. The bank repurchased $5 billion in common stock in Q4.

Looking ahead, Wells Fargo anticipates net interest income—positive or negative—around $50 billion for 2026, an uptick from $47.5 billion in 2025. The firm has also projected a growth in Markets NII to roughly $2 billion in 2026, driven by reductions in short-term funding costs and increased customer financing activity. Management was careful to note potential offsets from decreasing non-interest income.

Excluding market impacts, projections indicate about $48 billion in NII for 2026, up from $46.7 billion in 2025. This guidance is considering anticipated Fed rate cuts and stable Treasury rates, which may pose mild challenges, although offset by steady growth in loans and deposits. Average loans and deposits are expected to rise by mid-single digits year-over-year.

On expenses, the bank anticipates non-interest expenses to be around $55.7 billion in 2026, an increase from $54.8 billion in 2025, factoring in no significant severance costs. While further expenses for revenue-related activities will rise, the bank has achieved significant savings throughout the past five years.

During a Q&A, executives addressed various investor concerns, including balance sheet expansion, stock buyback discussions, potential credit card interest rate caps, and the commercial real estate landscape. Santomassimo acknowledged strong demand across subsectors of commercial real estate but highlighted stability in office evaluations.

Wells Fargo & Company operates as a diversified financial services corporation, established in 1852 with headquarters in San Francisco, California. It has grown from its origins in express delivery and frontier banking to become one of the largest full-service banks in the U.S., offering a diverse range of financial services to individuals, businesses, and institutional clients.

The company operates multiple business segments, including consumer banking and lending, commercial banking, corporate and investment banking, as well as wealth management services.