A month has gone by since the last earnings report for Wells Fargo (WFC). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Wells Fargo due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Wells Fargo & Company before we dive into how investors and analysts have reacted as of late.
Wells Fargo Q2 Earnings Beat on Fee Income Growth, Lower Provisions
Wells Fargo has reported its second-quarter 2025 adjusted earnings per share of $1.54 surpassing the Zacks Consensus Estimate of $1.41. In the prior-year quarter, the company reported earnings per share of $1.33.
Results have benefited from an improvement in non-interest income and lower provisions. However, a decline in net interest income and higher expenses were the undermining factors.
Results excluded 6 cents per share of gain associated with the company’s acquisition of the remaining interest in its merchant services joint venture. After including this, net income (GAAP basis) was $5.49 billion, which increased 11.9% from the prior-year quarter.
Revenues Improve, Expenses Rise
Total revenues were $20.82 billion, surpassing the Zacks Consensus Estimate of $20.70 billion. Also, the top line increased 1% from the year-ago quarter.
NII was $11.71 billion, down 2% year over year. The fall was driven by the impact of lower interest rates on floating rate assets and deposit mix changes, partially offset by lower market funding and deposit pricing.
The net interest margin (on a taxable-equivalent basis) contracted 7 basis points year over year to 2.68%.
Non-interest income grew 4% year over year to $9.11 billion. The increase included the gain associated with the merchant services joint venture acquisition, an increase in asset-based fees in Wealth and Investment Management on higher market valuations, and higher investment banking fees, partially offset by lower net gains from trading in the company’s Markets business.
Non-interest expenses of $13.38 billion increased 1% year over year. This was led by higher revenue-related compensation expenses predominantly in Wealth and Investment Management, and higher technology and equipment expenses, partially offset by lower operating losses, reduced salaries expenses reflecting the impacts of efficiency initiatives, and a decrease in Federal Deposit Insurance Corporation assessment expenses.
Wells Fargo's efficiency ratio of 64% was unchanged compared with the year-ago quarter.
Loans Balance Improves, Deposits Decline
As of June 30, 2025, total average loans were $916.7 billion, which increased marginally on a sequential basis. Total average deposits were $1.33 trillion, down marginally on a sequential basis.
Credit Quality Improves
The provision for credit losses was $1 billion, down 19% from the prior-year quarter.
Net loan charge-offs were 0.44% of average loans in the reported quarter, down from 0.57% in the year-ago quarter. Non-performing assets fell 7.9% year over year to $7.96 billion.
Capital Ratio Improve
As of June 30, 2025, the Tier 1 common equity ratio was 11.1% under the Standardized Approach, up from 11% in the second quarter of 2024.
Profitability Ratio Improves
Return on assets was 1.14%, up from the prior-year quarter’s 1.03%. Return on equity of 12.8% increased from 11.5% a year ago.
2025 Outlook
Wells Fargo expects 2025 NII to be in line with 2024 NII of $47.7 billion.
Non-interest expenses for 2025 are expected to be $54.2 billion, with significant investments in technology, risk-control infrastructure and other strategic areas.
The company aims to achieve a return on tangible common equity of 15% in 2025, suggesting a rise from the 13.4% recorded in 2024 through efficiency initiatives, revenue growth and disciplined expense management.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Wells Fargo has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Wells Fargo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Wells Fargo & Company (WFC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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