Wells Fargo: Asset Cap Lifted, 2026 Outlook Strong

Wells Fargo's fourth-quarter 2025 performance, while showing mixed results against estimates, signals a positive trajectory following the mid-2025 removal of the Federal Reserve's $1.95 trillion asset cap. This lifting, a result of CEO Charlie Scharf's cleanup efforts since 2019, allows for renewed balance sheet growth and strategic expansion.

The bank reported a 4.5% year-over-year increase in total revenue to $21.29 billion and a 13% rise in earnings per share to $1.62, though both fell short of analyst expectations. Nevertheless, improvements in efficiency ratio and tangible book value per share to $45.02 were noted. Management has increased its medium-term return on tangible common equity target to 17%-18%.

Investment banking saw significant gains, with Wells Fargo ascending to eighth in U.S. M&A rankings for 2025, advising on major deals. The company anticipates 2026 net interest income to reach approximately $50 billion, factoring in expected Federal Reserve rate cuts. Share repurchases are projected to decrease in 2026 as the focus shifts to organic growth opportunities.