Bank of America or Wells Fargo: Which Big Bank Offers More Upside?

By Swayta Shah | June 26, 2025, 9:10 AM

Bank of America BAC and Wells Fargo WFC are two of the U.S. Big Four banks and are designated systemically important financial institutions. Both generate substantial net interest income (NII) and have deep exposure to consumer banking, making them sensitive to interest rate trends and broader economic conditions.

While they share similar macroeconomic drivers, WFC has regained strategic flexibility following the lifting of its asset cap, whereas BAC continues to leverage momentum in its investment banking (IB) operations. Let us delve deeper and assess the long-term growth prospects of each bank to determine which currently presents the stronger investment opportunity.

The Case for Bank of America

Bank of America, one of the most rate-sensitive banks in the country, is prioritizing organic, domestic growth through the expansion of its physical and digital presence. This is part of a broader strategy to solidify customer relationships and tap into new markets, driving NII growth over time. By 2027, the company plans to expand its financial center network and open more than 150 centers. It sees an upside to NII in 2025, with the metric expected to rise 6-7%.

Coupled with the growing adoption of digital tools such as the Zelle money transfer system and the AI-powered assistant Erica, these initiatives support BAC's ability to enhance digital engagement and cross-sell a range of products, including mortgages, auto loans and credit cards.

Also, BAC’s IB business is poised to rebound once macroeconomic and geopolitical uncertainties ease. During the first quarter of 2025, the company recorded decent IB performance despite a challenging operating environment. Though its IB business performance is likely to be weak in the near term, a strong IB pipeline positions the bank to benefit from a recovery in global deal-making activity.

However, because of prolonged higher interest rates, BAC’s credit quality has weakened. As it remains vigilant about the effects of continuous high rates, the impact of tariffs on inflation and quantitative tightening on its loan portfolio, its asset quality is expected to remain subdued in the near term.

The Case for Wells Fargo

One of the biggest developments for Wells Fargo in recent days has been the lifting of the asset cap imposed in the 2018 consent order by the Federal Reserve. The removal of the growth restriction indicates the substantial progress the bank has made in addressing its deficiencies. Asset cap removal will likely result in a significant improvement in the company’s financial performance and long-term strategic positioning.

With this, the company can now boost deposits, grow its loan portfolio and broaden its securities holdings. This will lead to an increase in NII going forward. Moreover, WFC intends to expand fee-generating businesses like payment services, asset management and mortgage origination. These fee income-generating opportunities will bolster its top-line mix.

Furthermore, Wells Fargo is adopting a more balanced approach to its operations. While the bank is reducing headcount and streamlining processes, it is investing in its branch network and digital upgrades. This allows the bank to maintain a focus on cost management.

Wells Fargo is taking a strategic approach to its branch network, reducing its total branches by 3% year over year to 4,177 in 2024. At the same time, it is focused on modernization, having upgraded 730 branches last year, with plans to revamp the entire network over the next five years. These efficiency efforts are expected to drive $2.4 billion in gross expense reductions in 2025.

BAC & WFC: Price Performance, Valuation & Other Comparisons

While 2025 started on a positive note, Trump’s tariff plans and geopolitical tension resulted in massive volatility, upending bullish investor sentiments. This year, shares of Bank of America and Wells Fargo gained 6.6% and 12.5%, respectively.