Earnings Call Insights: Wells Fargo & Company (WFC) Q4 2025
Management View
- CEO Charles Scharf reported that “net income increased to $21.3 billion and our diluted earnings per share grew 17% from a year ago,” attributing this growth to “broad-based increases in both our consumer and commercial businesses” and continued investment funded by disciplined expense management. Scharf emphasized, “Since the lifting of the asset cap, we’ve been growing our balance sheet, and our assets grew 11% from a year ago including broad-based loan growth and higher trading assets to help support our markets businesses.”
- Scharf highlighted strategic milestones, including the removal of the asset cap by the Federal Reserve and the closure of 13 regulatory orders since 2019, describing this as “a pivotal moment for the company.” He noted, “We are incredibly proud of our success and understand the importance of continuing to build on that work and sustain the culture that supports it.”
- Product and segment highlights included a 21% increase in new credit card accounts, 19% growth in auto loan balances, and 14% growth in Premier deposit and investment balances. Scharf stated, “We opened nearly 3 million new credit card accounts in 2025, up 21% from a year ago. Credit card balances were up 6% from a year ago.”
- In commercial banking, Scharf referenced the hiring of 185 coverage bankers over two years with “over 60% of the bankers hired in 2025” and reported higher new client acquisition and loan growth. He stated, “We advised on two of the largest M&A deals of 2025 increasing our announced U.S. M&A ranking to 8th in 2025, up from 12 in 2024.”
- On capital return, Scharf noted, “During 2025, we increased our common stock dividend per share by 13% and repurchased $18 billion of common stock.”
- CFO Michael Santomassimo reported, “We earned $5.4 billion in the fourth quarter, up from 6% from a year ago. Diluted earnings per common share was $1.62, up 13% year-over-year, and excluding the severance expense, our diluted earnings per share was $1.76.”
Outlook
- The company expects “total net interest income to be $50 billion, plus or minus, in 2026.” Santomassimo added, “We currently expect markets NII to grow to approximately $2 billion in 2026 driven by lower short-term funding costs and balance sheet growth.”
- Net interest income, excluding markets, was $46.7 billion in 2025, and is expected “to be approximately $48 billion in 2026.”
- Key assumptions for the outlook include “2 to 3 rate cuts by the Federal Reserve in 2026 with 10-year treasury rates remaining relatively stable throughout the year.”
- Average loans and deposits are expected to “grow mid-single digits from fourth quarter 2025 to fourth quarter 2026.”
- Noninterest expense is expected to be “approximately $55.7 billion in 2026.”
Financial Results
- Net interest income increased $381 million or 3% from the third quarter, driven by higher market NII. Excluding markets, net interest income increased $167 million from higher loan and deposit balances.
- Strong loan growth was reported, with period-end loans growing 5% in the third quarter. Average loans increased $49.4 billion or 5% from a year ago.
- Average deposits increased $23.9 billion from a year ago, with growth in both consumer and commercial deposits and a reduction in average deposit costs by 29 basis points from a year ago.
- Noninterest income increased $419 million or 5% from a year ago, with 8% growth in investment advisory fees and brokerage commissions.
- Noninterest expense declined $174 million from a year ago, driven by lower FDIC assessment expense, lower operating losses, and efficiency initiatives, partially offset by higher compensation, advertising, and technology expense.
- Credit performance remained strong, with net loan charge-offs declining 10 basis points from a year ago. The commercial net loan charge-offs increased 4 basis points from the third quarter, mainly due to office portfolio losses.
- CET1 ratio was 10.6% at the end of the quarter.
Q&A
- Robert Siefers, Piper Sandler: Asked about net interest income outlook ex-markets. Santomassimo responded that “rates coming down … will be a headwind for NII ex-markets,” but deposit and loan growth should improve results as the year progresses. Siefers also inquired about credit card rate caps, to which Scharf replied, “It’s too early to know because we’re not quite sure what the ultimate actions, whether it’s the administration or Congress, choose to go down.”
- Kenneth Usdin, Bernstein Autonomous LLP: Asked about balance sheet growth and capital allocation. Santomassimo explained that growth in markets business repo trades “doesn’t attract a lot of capital or RWA,” and Scharf added, “We have significant opportunities to be able to extend loans and use our balance sheet for customers and to continue to buy stock back.”
- Ebrahim Poonawala, BofA Securities: Questioned efficiency initiatives and ROTCE improvement. Scharf stated, “We’ve cut $15 billion of expenses out of the company.” Santomassimo provided examples, including “credit card business new accounts up 20% year-on-year. Auto lending balances up 19%. Loans in the commercial side up 12%.”
- Betsy Graseck, Morgan Stanley: Asked about the impact of markets growth on ROTCE. Santomassimo responded, “I don’t anticipate it’s going to have any kind of negative impact on where we think returns go.”
- Steven Chubak, Wolfe Research: Asked about loan and deposit growth assumptions for 2026. Santomassimo cited seasonality and said, “There are some elements that sort of — that offset it.”
Sentiment Analysis
- Analysts expressed cautious optimism, focusing on NII guidance, capital allocation, efficiency, and ROTCE improvements. Several questions pressed management for more specificity on timing and drivers of return targets.
- Management’s tone was confident in prepared remarks, repeatedly citing progress and growth, but more guarded during Q&A when addressing timing for ROTCE goals and macroeconomic uncertainties. Scharf stated, “We don’t know what the credit environment will be over the next 1, 2, 3, 4, 5 years.”
- Compared to the previous quarter, management’s confidence remained steady, but analysts continued to seek more explicit guidance, especially regarding loan growth, capital return, and efficiency trajectories.
Quarter-over-Quarter Comparison
- The company introduced a $50 billion net interest income target for 2026, compared to the previous quarter’s guidance of roughly flat net interest income for 2025.
- Strategic focus shifted to more detailed disclosure of markets business NII and a clear expectation for both loan and deposit growth in the mid-single digits.
- Analysts’ questions were consistent with prior quarter, centering on efficiency, capital targets, and risk management, but there was heightened focus on the sustainability of growth and expense management.
- Management’s tone continued to stress discipline in cost controls and capital allocation, maintaining its medium-term ROTCE target of 17% to 18%.
Risks and Concerns
- Management noted macroeconomic uncertainty, including the path of interest rates and potential impacts of regulatory changes.
- Exposure to commercial real estate losses, particularly in the office portfolio, remains an area of concern, with Santomassimo indicating, “Office valuations continue to stabilize and although we expect additional losses which can be lumpy, they should be well within our expectations.”
- Questions on credit card rate caps and capital deployment reflected ongoing regulatory and competitive risks.
Final Takeaway
Wells Fargo’s latest earnings call showcased strong momentum in both consumer and commercial businesses, underpinned by disciplined expense management, loan and deposit growth, and robust capital return. Management emphasized confidence in delivering approximately $50 billion in net interest income for 2026, with continued investment in growth and efficiency. While macro and regulatory uncertainty persist, Wells Fargo maintains a medium-term ROTCE target of 17% to 18% and signals ongoing opportunities to optimize its balance sheet and capital deployment as it enters the new year with renewed strategic focus.