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Wells Fargo (WFC) Q4 2025 Earnings — Core Brief Edition

Core-Brief

Core-Brief

— 3 min read
Wells Fargo (WFC) Q4 2025 Earnings — Core Brief Edition

Headline: Wells closed 2025 with stronger growth momentum post–asset-cap removal—EPS +17% YoY, expanding fee revenues, disciplined costs, solid credit, and new 2026 targets (NII ~$50B; ROTCE 17–18% medium-term).

Key Metrics

  • Net income (FY2025): $21.3B; diluted EPS: +17% YoY.
  • Q4 net income: $5.4B (+6% YoY); Q4 diluted EPS: $1.62 (+13% YoY); ex-severance EPS: $1.76.
  • Fee-based revenue (FY2025): +5% YoY (broad-based; consumer + commercial).
  • Loans: Period-end loans +5% QoQ (strongest linked-quarter growth since Q1 2020); average loans +5% YoY (commercial & industrial, CIB, commercial bank).
  • Deposits: Average deposits +$23.9B YoY; average deposit costs -29 bps YoY.
  • Credit: Net charge-offs -16% YoY (FY); Q4 consumer NCO ratio 75 bps; office CRE losses still expected but “lumpy” and within expectations.
  • Capital return (FY2025): $23B (dividend +13%; buybacks $18B). Buybacks expected lower in 2026 given organic growth opportunities.
  • CET1: 10.6% (targeting ~10.0–10.5%).
  • ROTCE: 15% (FY2025) (up from 8% in Q4 2020); new medium-term target 17–18%.

Segment & Strategy Highlights

  • Consumer (cards/auto/home lending/branches & digital):
    • Opened ~3M new credit card accounts in 2025 (+21% YoY); card balances +6% YoY; ~50% of card balances now from post-2021 product launches.
    • Auto: origination volumes stronger; loan balances +19% YoY; became preferred financing provider for Volkswagen/Audi in the U.S. (spring 2025).
    • Home lending simplification: headcount -50%+ over 3 years; third-party servicing -40%+; servicing portfolio -$90B in 2025.
    • Branch refurbishments: ~700 completed in 2025; >50% of network refurbished; 50% of consumer checking accounts opened digitally; mobile active customers +1.4M (+4% YoY).
    • “Wells Premier” (affluent): licensed bankers/branch advisors +12% YoY; Premier deposit & investment balances +14% in 2025.
  • Commercial Bank / CIB / Markets:
    • Hired 185 coverage bankers over last 2 years ( >60% in 2025); early signs: better new-client acquisition + loan/deposit growth.
    • Investment banking & markets fees to commercial bank clients +25% in 2025.
    • “Overland Advantage” (Centerbridge partnership): helped clients raise ~$7B since inception.
    • M&A: advised on 2 of the largest U.S. deals of 2025; U.S. announced M&A ranking #8 in 2025 (from #12 in 2024); 2026 pipeline “meaningfully greater” than any point in last 5 years.
    • Markets balance sheet expansion: trading-related assets +50% in 2025 to support client flows/financing; management emphasized these are lower-margin, lower-risk, less capital-intensive and should deepen client engagement.

Product, Tech, AI

  • Management explicitly flagged AI as an enabler of further efficiency and process automation, alongside continued simplification (real estate footprint, third-party spend, automation).

Credit & Risk

  • Credit tone: resilient consumer (monitoring checking/unemployment flows, direct deposits, overdrafts, payment outflows—no “meaningful shifts”).
  • CRE: office still a watch item; valuations stabilizing, bifurcation (newer Class A in strong cities vs. older stock); additional losses possible but expected to be manageable.
  • Non-performers: quarterly moves driven by idiosyncratic names; management cautioned NPAs aren’t a strong predictor of losses.

Balance Sheet & Capital

  • Asset cap removal described as pivotal; 13 regulatory orders closed since 2019.
  • Capital strategy: manage to CET1 ~10.0–10.5% with “significant buffers” above regulatory minimums; repurchase pace may be lower in 2026 due to growth opportunities.

Guidance / Outlook

  • 2026 net interest income (NII): $50B ± (vs. $47.5B in 2025).
  • Markets NII disclosure added: markets NII ~ $2B expected in 2026, driven by lower short-term funding costs + balance sheet growth (client financing).
  • NII ex-markets: ~$48B in 2026 (vs. $46.7B in 2025). Assumptions include 2–3 Fed rate cuts in 2026; 10Y Treasury stable; loan/deposit growth + fixed-asset repricing offset rate headwinds.
  • Loans: average loans expected mid-single-digit (Q4’25→Q4’26), led by commercial, auto, and credit cards.
  • Deposits: average deposits expected mid-single-digit (more growth in interest-bearing than non-interest-bearing).
  • Provision/ACL: provision expected to rise in 2026 to support expected loan growth.
  • Expenses: 2026 non-interest expense expected ~$55.7B (vs. $54.8B in 2025). Key moving pieces:
    • Severance expected ~$700M lower (no “significant additional severance” assumed).
    • Wealth revenue-related expenses ~+$800M (market-dependent; assumes S&P 500 modestly higher).
    • FDIC assessment ~+$400M (deposit growth + no special assessment credit).
    • “Other” expenses ~+$300M (efficiency saves offset by investments).
    • Efficiency initiatives expected to drive ~$2.4B gross expense reductions in 2026; offset by ~$1.1B incremental tech spend, ~$800M other investments, ~$800M merit/benefits + performance comp.
    • Seasonal note: Q1 personnel expense typically ~$700M higher.

Bottom Line

Wells is leaning into post–asset-cap flexibility: accelerating loan/deposit growth, scaling markets financing to deepen client relationships, and keeping a tight grip on costs. The 2026 setup centers on NII lift to ~$50B, continued efficiency-funded reinvestment (with AI explicitly cited), and a new medium-term 17–18% ROTCE goal—without changing core risk appetite.

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