Wells Fargo Q4 Earnings Top Estimates on Higher NII, Stock Slips

Wells Fargo & Company WFC has reported fourth-quarter 2025 adjusted earnings per share of $1.76, which surpassed the Zacks Consensus Estimate of $1.66. In the prior-year quarter, the company reported earnings per share of $1.42.

Results have benefited from an improvement in net interest income (NII), higher non-interest income, and lower provisions. Higher loan balances and improved deposits were other positives. However, a rise in non-performing assets acted as a spoilsport. The results were also impacted by $612 million in severance expenses from workforce reductions of nearly 5,600 employees compared to the prior quarter as part of WFC’s ongoing cost-cutting initiatives. WFC shares fell nearly 2.6% in the pre-market trading session.

Results have excluded 14 cents per share of severance expenses. After considering this, the net income (GAAP basis) was $5.36 billion, representing a 6% increase from the prior-year quarter.

In 2025, earnings of $6.26 per share missed the consensus estimate of $6.28 and rose from $5.37 in 2024. Net income was $21.4 billion, up 8% from the prior-year quarter.

Wells Fargo’s Revenues Improve, Expenses Fall

Total revenues were $21.29 billion, missing the Zacks Consensus Estimate of $21.6 billion. Also, the top line increased 4.5% from the year-ago quarter.

For 2025, total revenues were $83.69 billion, which missed the Zacks Consensus Estimate of $84.03 billion. However, the top line rose 2% year over year.

NII was $12.33 billion, up 4% year over year. The increase was driven by higher loan and investment securities balances, improved results in our Markets business, and fixed-rate asset repricing, partially offset by deposit mix changes.

The net interest margin (on a taxable-equivalent basis) contracted 10 basis points year over year to 2.60%.

Non-interest income grew 5% year over year to $8.96 billion. The increase reflected the absence of $448 million of net losses recorded in the prior-year quarter due to the repositioning of the investment securities portfolio. The current quarter also benefited from higher asset-based fees in Wealth and Investment Management on higher market valuations, as well as higher card fees, deposit-related fees and mortgage banking fees.

Non-interest expenses of $13.72 billion declined 1% year over year. The decline was due to lower Federal Deposit Insurance Corporation assessment expenses, lower operating losses and the impacts of efficiency initiatives.

Wells Fargo's efficiency ratio of 64% was lower than 68% in the year-ago quarter. A decline in the efficiency ratio indicates improvement in profitability.

WFC’s Loan Balance & Deposits Improve

As of Dec. 31, 2025, total average loans were $955.8 billion, which increased 3% on a sequential basis. Total average deposits were $1.37 trillion, up 3% on a sequential basis.

Wells Fargo’s Credit Quality: Mixed Bag

The provision for credit losses was $1.04 billion, down 5% from the prior-year quarter.

Net loan charge-offs were 0.43% of average loans in the reported quarter, down from 0.53% in the year-ago quarter. Non-performing assets rose 7.1% year over year to $8.5 billion.

WFC’s Capital Ratios Decline

As of Dec. 31, 2025, the Tier 1 common equity ratio was 10.6% under the Standardized Approach, down from 11.1% in the fourth quarter of 2024.

Wells Fargo’s Profitability Ratios: Mixed Bag

Return on assets was 1.02%, down from the prior-year quarter’s 1.05%. Return on equity of 12.3% increased from 11.7% a year ago.

WFC’s Share Repurchase Update

In the reported quarter, Wells Fargo repurchased 58.2 million shares or $5 billion of common stock.

Our View on Wells Fargo

Strong financial performance, the removal of the Federal Reserve’s asset cap and the termination of multiple consent orders drove Wells Fargo’s results, alongside solid growth in both consumer and commercial businesses.

The company has achieved 15% ROTCE target and has set a new medium-term target of 17-18%. Over the past five years, $15 billion in gross expense reductions funded increased investments in infrastructure and growth while reducing the company’s overall expense base. Looking forward, WFC is well-positioned to continue generating healthy returns.

Wells Fargo & Company Price, Consensus and EPS Surprise

Wells Fargo & Company price-consensus-eps-surprise-chart | Wells Fargo & Company Quote

Currently, Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Dates of Other Banks

Truist Financial Corporation TFC is slated to report quarterly results on Jan. 21. The Zacks Consensus Estimate for Truist’s fourth-quarter earnings has been unchanged at $1.09 per share over the past seven days. 

BankUnited, Inc. BKU is scheduled to report quarterly results on Jan. 21. The Zacks Consensus Estimate for BankUnited’s fourth-quarter earnings has been unchanged at 84 cents over the past seven days.

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This article originally published on Zacks Investment Research (zacks.com).

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