Wells Fargo (WFC) Q3 2025 Earnings Call Transcript
News Summary
Wells Fargo reported Q3 2025 net income of $5.6 billion, up 9% year-over-year, with diluted EPS of $1.66. Revenue increased 5% year-over-year, driven by gains in both net interest income and fee-based revenue. Loan growth was the strongest in over three years, and new credit card accounts rose 49% year-over-year. Credit performance continued to improve, with the net loan charge-off ratio declining nine basis points year-over-year. The bank's CET1 ratio stood at 11%, well above the 8.5% regulatory minimum, holding over $30 billion in capital above requirements. Return on tangible common equity (ROTCE) reached 15.2%, with a new medium-term target set at 17%-18%. The lifting of the asset cap allowed total assets to surpass $2 trillion for the first time, enabling a 50% expansion in trading-related assets since 2023. Wells Fargo expects full-year 2025 net interest income to be roughly in line with 2024's $47.7 billion, with Q4 NII projected between $12.4 billion and $12.5 billion. However, full-year non-interest expense guidance was raised to $54.6 billion due to higher-than-anticipated severance and revenue-related compensation. Management emphasized organic growth in U.S.-focused businesses, capital return, and ongoing efficiency initiatives post-asset cap removal.
Background
Following the fake accounts scandal in 2016, Wells Fargo was subjected to an asset cap by the Federal Reserve in 2018, significantly limiting its ability to grow assets and expand its business. This restriction had a prolonged impact on the bank's strategy, profitability, and market share. Under CEO Charlie Scharf's leadership, Wells Fargo underwent years of significant reforms, including addressing 13 regulatory orders, simplifying its business mix, investing in risk and control infrastructure, and driving operational efficiencies. This earnings call, being the first since the asset cap was lifted in 2025, marks a critical milestone in the bank's transformation, allowing it to rebalance and grow its balance sheet-intensive businesses.
In-Depth AI Insights
Does Wells Fargo's aggressive growth and return targets post-asset cap removal signal a potential shift in risk appetite, especially within the current economic climate? - The lifting of the asset cap undoubtedly grants Wells Fargo