Wells Fargo reported total revenue of $21.29 billion for the quarter, a 4 % year‑over‑year increase that fell short of the $21.65 billion consensus estimate. The shortfall is largely attributable to a shift in the bank’s deposit mix toward lower‑yielding retail deposits and increased competition for credit card and auto‑loan demand, which limited the ability to raise rates on new lending.
Adjusted earnings per share rose to $1.76, beating the $1.69 consensus by $0.07 (a 4 % beat). The upside was driven by disciplined cost management and a 6 % rise in corporate and investment banking loans, which lifted net interest income and helped offset the impact of the severance charge.
GAAP earnings per share were $1.62, missing the $1.66 consensus by $0.04. The miss reflects a $612 million one‑time severance expense that was included in the quarter’s GAAP results but excluded from the adjusted figure.
Net interest margin contracted to 2.6 % from the 2.7 % forecast, a 0.1 percentage‑point decline. The compression stems from a deposit mix shift toward lower‑yielding retail deposits and a modest decline in net interest income as the bank’s loan portfolio grew in segments with lower spreads.
Segment performance was mixed: corporate and investment banking loans grew 6 %, consumer banking and lending loans increased 1 %, and wealth and investment management loans rose 3 %. Total average loans reached $955.8 billion and average deposits climbed to $1.38 trillion, underscoring continued balance‑sheet expansion.
CEO Charlie Scharf highlighted the removal of the Federal Reserve’s $1.95 trillion asset cap in June 2025 as a key enabler for growth. He noted that the bank has achieved its 2025 return‑on‑tangible‑common‑equity target of 15 % and set a new medium‑term target of 17‑18 %. The comments signal confidence that the bank can leverage its expanded loan and deposit base to drive future profitability.
Investors reacted cautiously, focusing on the revenue miss and margin compression despite the adjusted earnings beat. The market’s attention to these metrics reflects concerns about the bank’s ability to translate its post‑cap‑lift momentum into top‑line growth that meets or exceeds expectations.
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