Wells Fargo & Company closed its fourth quarter of 2025 with earnings that surpassed analyst forecasts, revealing robust gains in both net interest income and fee-based revenue. Despite posting revenues below market consensus, the financial institution’s net income trends and capital returns underscored underlying operational strength and strategic momentum heading into 2026.
For the period ending in the last quarter of the year, Wells Fargo registered a net income of $5.4 billion, translating to $1.62 per diluted share, up from $5.1 billion, or $1.43 per share during the corresponding quarter in 2024. This figure includes $612 million in pre-tax severance charges linked to efficiency restructuring. When excluding these costs, the adjusted net income reached $5.8 billion, or $1.76 per share, comfortably exceeding the analyst consensus estimate of $1.67.
The bank recorded a 4% year-over-year increase in total revenue, amounting to $21.3 billion. This growth was fueled partly by advances in net interest income and enhancements in fee income, although the total fell short of the $21.65 billion anticipated by analysts. Measures of profitability such as return on equity improved, rising from 11.7% to 12.3%, complemented by an increase in return on tangible common equity from 13.9% to 14.5%, highlighting stronger operational leverage.
Analyzing Income Components
Net interest income expanded by 4% year over year, reaching $12.3 billion. This was principally driven by a rise in loan and investment securities balances, enhanced by fixed-rate asset repricing efforts. However, some of these gains were offset by changes in deposit mix impacting overall interest margins. Meanwhile, noninterest income also registered a 5% gain, totaling $9.0 billion, supported by higher asset-based fees within Wealth and Investment Management, increasing card-related fees, and improved revenues tied to deposit services.
Segmented Business Performance
Within Consumer Banking and Lending, revenues advanced by 7%, with the subsegment of Consumer, Small and Business Banking seeing a 9% increase. This was primarily due to reduced deposit pricing and elevated balances in deposits and loans. Credit card and auto lending revenues both rose by 7%, benefiting from increased loan volumes and transaction activity. Conversely, home lending revenue experienced a 6% decline, effects of diminished balances and tightening mortgage banking fees. The segment’s net income surged to $2.1 billion, with a marked improvement in return on allocated capital climbing to 18.0% from 13.4% the previous year.
The Commercial Banking sector encountered some headwinds, with revenue dipping 3% year over year. This was mainly attributed to an 11% contraction in net interest income, reflective of lower interest rates and a business realignment involving the migration of certain clients to Consumer Banking. Nonetheless, this segment benefitted from an 18% uplift in noninterest income driven by increased tax credit and equity investment activities. Efficiencies contributed to a 5% reduction in noninterest expenses; however, net income declined to $1.1 billion.
Corporate and Investment Banking revenues remained largely stable, balancing lower investment banking fees and diminished interest income against a 7% gain in Markets revenue, buoyed by heightened activity in equities, commodities, and structured financial products. Modest decreases in commercial real estate revenue reflected the impact of shrinking loan balances and softer interest rates. The segment recorded a slight uptick in net income to $1.6 billion.
Among all business lines, Wealth and Investment Management posted some of its strongest figures, with total revenues climbing 10% year over year. Net interest income in this segment rose 16%, bolstered by reduced deposit pricing and elevated deposit volumes, while noninterest income grew 9%, supported by increased asset-based fees stemming from enhanced market valuations. Client assets expanded to $2.5 trillion, and segment net income grew to $656 million, reflecting a return on allocated capital improvement to 39.1%.
Cost Management, Credit Quality, and Capital Position
Overall noninterest expenses decreased by 1% year over year, totaling $13.7 billion. This reduction was attributable to efficiency programs and lower Federal Deposit Insurance Corporation (FDIC) assessment fees, partially counterbalanced by increased expenditures in technology and advertising. Credit provisions stood at $1.0 billion, with net charge-offs falling to 0.43% of average loans, despite ongoing stress noted in commercial real estate office property areas.
Wells Fargo maintained a robust capital stance with a Common Equity Tier 1 (CET1) ratio of 10.6%, and preserved liquidity with a coverage ratio of 119%. Capital return efforts continued with $5.0 billion in common stock repurchases and $1.4 billion in dividend payouts during the quarter, reflecting a proactive capital deployment strategy.
Executive Insights and Strategic Positioning
Chairman and CEO Charlie Scharf underscored the year 2025 as a period of notable achievements for Wells Fargo. Key highlights included delivering strong financial results, regulatory progress such as the lifting of the Federal Reserve’s asset cap, closure of various consent orders, and positive growth trends across both consumer-focused and commercial banking operations.
Scharf emphasized the company’s approach combining near-term operational priorities with strategic long-term investments. Expenditures aimed at infrastructure and business development were balanced through efficiency-driven initiatives designed to optimize cost structures.
According to Scharf, outbound from a historically constrained environment due to regulatory limitations, Wells Fargo now possesses a reinforced foundation. With renewed capabilities to expand its balance sheet and allocate additional resources toward organic growth, the bank is poised to contend within a more leveled competitive landscape. The leadership expressed optimism entering 2026, highlighting increasing institutional momentum and a favorable growth outlook.
Forward-Looking Expectations for 2026
Looking ahead, Wells Fargo anticipates a rise in net interest income, excluding Markets operations, spurred by balance sheet growth, improved loan and deposit mixes, and continued fixed-rate asset repricing. These projections assume a scenario with the Federal Reserve implementing two to three rate reductions throughout the year and relatively stable 10-year Treasury yields.
Growth forecasts place average loans and deposits increasing at mid-single-digit percentages, reflecting expansion across consumer banking, commercial lending, and wealth management segments. Markets segment net interest income is also expected to benefit from reduced short-term funding expenses and escalating client financing balances.
Expense dynamics project that lower severance charges will partly offset higher compensation aligned with increasing revenues, additional FDIC assessments, and enhanced technology investments. Wells Fargo management reiterated that efficiency drives and automation adoption, notably through greater incorporation of artificial intelligence technologies, will remain fundamental to productivity advancements and sustained return enhancement beyond the upcoming year.
The company noted achievement of its prior return on tangible common equity target of 15%, subsequently adjusting its medium-term goal upward to 17%–18%, signaling confidence in its strategic trajectory.
Wells Fargo's shares experienced a decline of nearly 2% in premarket trading following the earnings release, reflecting market responses to the revenue miss despite earnings strength.
Summary
- Net income exceeded expectations despite a slight revenue shortfall.
- Consumer Banking and Wealth Management segments exhibited significant growth.
- Efficiency initiatives and regulatory relief facilitated improved profitability and investment capacity.
- Management projects balanced growth supported by anticipated interest rate cuts and stable treasury yields.
Risks and Uncertainties
- Potential variability in Federal Reserve interest rate policy including projected cuts.
- Persisting stress in commercial real estate office loan exposures could impact credit quality.
- Economic or competitive pressures affecting loan and deposit balance growth.
- Execution risks related to efficiency initiatives and integration of artificial intelligence technologies.