Wells Fargo's 2025 financial results showed growth, but severance costs prevented a stronger performance. Net income increased 5.5% to $5.4 billion, or $1.62 per share, falling short of the $1.67 per share estimate. Net interest income rose 4% to $12.3 billion, also below analyst expectations.
CEO Charlie Scharf stated in a news release, "We have built a strong foundation and have made great progress in improving growth and returns, though we have operated with significant constraints." He referred to a $1.95 trillion asset cap imposed by the Federal Reserve in 2018 following scandals. Scharf added, "We are excited to now compete on a level playing field and are able to dedicate even more resources to growth with the ability to grow our balance sheet."
Loans in the corporate and investment banking business climbed 14% in the three months through December. This reflects the bank's new ability to compete with major U.S. banks like JPMorgan Chase, Bank of America, and Citigroup. Wells Fargo has historically lagged in investment banking compared to peers, with a smaller trading desk and U.S.-focused reach. The asset cap previously limited capital deployment in this area.
Sean Dunlop, Morningstar director of equity research, told The Daily Upside, "It's interesting to see them prioritize that business now; after an aggressive hiring spree, they jumped up to eighth position in the investment banking league table, from 14th a year ago." Dunlop continued, "There's no doubt that the firm is more aggressively going after markets like investment banking that it views as attractive now that it isn't so severely capital-constrained."
On an earnings call, executives indicated Wells Fargo is increasingly willing to compete in lending markets beyond higher FICO credit-score customers, which were prioritized during the asset-cap period. Dunlop noted, "They were deliberate about highlighting that they would do so only judiciously, without creating a tail risk in their lending book." Average loans in the consumer banking and lending arm rose 2% from a year ago, an area to watch as the bank expands.
Chief Financial Officer Michael Santomassimo commented on President Trump's proposed 10% cap on credit card interest rates for one year during a call with reporters Wednesday. Santomassimo said, "It would have a significant negative impact on credit availability for a wide spectrum of people, and it would have a negative impact on economic growth if this type of cap was mandated."