Wells Fargo & Company (NYSE:WFC) posted stronger-than-expected fourth-quarter earnings on Wednesday as net interest income and fees climbed, but the bank’s shares slipped premarket after revenue came in light.
Wells Fargo reported fourth-quarter 2025 net income of $5.4 billion, or $1.62 per diluted share, up from $5.1 billion, or $1.43 per share, a year earlier.
Results included $612 million in pre-tax severance expenses. Excluding those costs, adjusted net income rose to $5.8 billion. The bank reported fourth-quarter adjusted earnings of $1.76, beating the consensus of $1.67.
Revenue increased 4% year over year to $21.3 billion, supported by growth in both net interest and fee income. Analysts expected $21.65 billion.
Return on equity improved to 12.3% from 11.7%, while return on tangible common equity rose to 14.5% from 13.9%, reflecting stronger profitability and operating leverage.
Net Interest And Fee Income Trends
Net interest income increased 4% year over year to $12.3 billion, driven by higher loan and investment securities balances and fixed-rate asset repricing, partially offset by deposit mix changes. Noninterest income rose 5% to $9.0 billion, led by higher asset-based fees in Wealth and Investment Management, stronger card fees, and improved deposit-related revenue.
Segment Performance
Consumer Banking and Lending delivered a strong year-over-year performance, with total revenue rising 7%. Consumer, Small and Business Banking revenue increased 9%, benefiting from lower deposit pricing and higher deposit and loan balances. Credit card and auto lending revenue both rose 7% on higher loan balances and increased transaction activity, while home lending revenue declined 6% due to lower balances and mortgage banking fees. Segment net income increased to $2.1 billion, and return on allocated capital rose to 18.0% from 13.4%.
Commercial Banking revenue declined 3% year over year as net interest income fell 11%, reflecting lower interest rates and the impact of transferring certain business customers to Consumer Banking earlier in the year. This was partially offset by an 18% increase in noninterest income driven by higher tax credit and equity investment revenue. Noninterest expense declined 5% on efficiency initiatives, though net income fell to $1.1 billion.
Corporate and Investment Banking revenue was relatively flat year over year. Banking revenue declined on lower investment banking fees and reduced interest income, while Markets revenue increased 7% on stronger equities, commodities, and structured products activity. Commercial real estate revenue declined modestly, reflecting lower loan balances and interest rates. Segment net income edged higher to $1.6 billion.
Wealth and Investment Management delivered one of the strongest performances, with total revenue rising 10% year over year. Net interest income increased 16% on lower deposit pricing and higher balances, while noninterest income climbed 9% on higher asset-based fees driven by improved market valuations. Client assets grew to $2.5 trillion, and segment net income rose to $656 million, with return on allocated capital improving to 39.1%.
Expenses, Credit, And Capital Position
Noninterest expense declined 1% year over year to $13.7 billion, reflecting efficiency initiatives and lower FDIC assessment costs, partially offset by higher technology and advertising spending. Provision for credit losses totaled $1.0 billion, while net charge-offs declined to 0.43% of average loans despite continued stress in commercial real estate office exposures.
The bank ended the quarter with a Common Equity Tier 1 ratio of 10.6% and a liquidity coverage ratio of 119%. Wells Fargo repurchased $5.0 billion of common stock during the quarter and paid $1.4 billion in dividends, reinforcing its capital return strategy.
Executive Commentary
Chairman and Chief Executive Officer Charlie Scharf said Wells Fargo delivered strong results in 2025, marked by solid financial performance, the removal of the Federal Reserve’s asset cap, the resolution of multiple consent orders, and improved growth across both its consumer and commercial businesses.
Scharf said the company has balanced near-term execution with long-term investment, funding higher spending on infrastructure and business growth through efficiency initiatives.
Scharf said Wells Fargo has built a strong foundation despite operating under significant constraints and is now positioned to compete on a more level playing field. With the ability to grow its balance sheet and allocate more resources toward expansion, the company enters 2026 with increased momentum and a strengthened outlook.
Outlook
Looking ahead to 2026, Wells Fargo expects net interest income excluding Markets to increase from 2025 levels, driven by balance-sheet growth, loan and deposit mix improvements, and continued fixed-rate asset repricing. The outlook assumes two to three Federal Reserve rate cuts during the year, with the 10-year Treasury yield remaining relatively stable.
Average loans and deposits are both expected to grow at mid-single-digit rates, supported by expansion across consumer, commercial, and wealth segments. Markets net interest income is also expected to rise on lower short-term funding costs and growth in client financing balances.
On expenses, Wells Fargo expects lower severance costs to partially offset higher revenue-related compensation, increased FDIC assessment expenses, and incremental technology investments. Management said efficiency initiatives and automation, including expanded use of artificial intelligence, will remain central to improving productivity and supporting returns beyond 2026.
Wells Fargo said it met its prior return on tangible common equity target of 15% and has now raised its medium-term goal to a range of 17%–18%.
WFC Price Action: Wells Fargo shares were down 1.98% at $91.71 during premarket trading on Wednesday, according to Benzinga Pro data.
Photo by Rob Wilson via Shutterstock
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