Wells Fargo & Co Earnings - Q1 2026 Analysis & Highlights
Wells Fargo reported strong Q1 2026 results with broad-based revenue growth, improved credit performance, and significant progress on strategic priorities including the closure of its final consent order. The company demonstrated momentum across consumer and commercial businesses while maintaining disciplined capital management and expressing confidence in achieving its medium-term return targets despite near-term net interest margin compression.
Key Financial Results
Diluted earnings per share increased 15% year-over-year.
Revenue increased 6% year-over-year, driven by a 5% increase in net interest income and an 8% increase in non-interest income.
Loans grew 11% year-over-year, with period-end loan balances exceeding $1 trillion for the first time since Q1 2020.
Deposits increased 7% year-over-year.
Pre-tax, pre-provision profit grew 14% year-over-year.
Net charge-off ratio remained stable at 45 basis points year-over-year.
Net interest margin declined 13 basis points from the fourth quarter, primarily driven by growth in the Markets business balance sheet and increased interest-bearing deposits.
Non-interest expense increased 3% year-over-year, driven by higher revenue-related compensation expenses and increased advertising and technology investments.
Business Segment Results
Consumer Banking and Lending revenue grew 7% year-over-year.
Commercial Banking revenue grew 7% year-over-year.
Corporate and Investment Banking revenue grew 11%, with Markets revenue increasing 19%.
Wealth & Investment Management revenue grew 14% year-over-year, with client assets growing 11% to $2.2 trillion.
Credit card revenue grew 5% year-over-year due to higher loan balances driven by increased purchase volume and new account growth.
Auto revenue increased 24% year-over-year, with auto originations more than doubling from a year ago.
Home Lending revenue declined 9% year-over-year as the company continues to reduce its mortgage servicing business.
Commercial Banking loans grew 4% year-over-year, or 7% absent the impact of business customers transferred to Consumer Banking.
Corporate and Investment Banking average loans grew 23% year-over-year with strong growth in Markets and Banking.
Capital Allocation
$5.4 billion returned to shareholders in Q1, including $4 billion in common stock repurchases.
Common shares outstanding declined 6% year-over-year.
CET1 ratio of 10.3%, within the stated 10% to 10.5% target range and well above the regulatory minimum plus buffers of 8.5%.
The company continues to operate with significant excess capital to support clients and repurchase shares.
Macroeconomic Environment
US labor market continues to cool in an orderly but uneven fashion with few signs of systemic stress, with the unemployment rate dipping to 4.3% in March.
Layoff activity remains contained and weekly jobless claims are not signaling labor stress.
US economic growth has held up despite slowing employment momentum.
US consumer remains resilient in the aggregate but increasingly bifurcated, with higher income households benefiting from elevated equity prices and home equity while lower income households are more exposed to higher interest rates and energy prices.
Spending has held up into early 2026 despite slower job growth, supported by higher income households, steady wage growth for incumbent workers, and continued access to credit.
Financial markets have absorbed cross currents with resilience, but continued volatility is expected driven by geopolitical headlines and higher commodity prices.
Gas represented 6% of total debit card spend and 4% of total credit card spend before the rise in oil prices, now representing 7% and 5% respectively, with higher percentages for low-income households.
Middle market and large corporate clients remain resilient with strong balance sheets but are approaching the remainder of the year cautiously.
Growth Opportunities and Strategies
Launched two new travel-focused reward credit cards available exclusively to Premier and private wealth clients.
New account growth increased nearly 60% year-over-year driven by higher digital and branch-based openings.
Consumer checking account openings increased over 15% year-over-year.
Mobile active users surpassed 33 million, with Zelle transactions increasing 14% year-over-year and Fargo AI-powered virtual assistant reaching over 1 billion customer interactions less than three years since launch.
Company-wide net asset flows accelerated in the quarter, reaching their highest level in over 10 years.
Continued hiring of coverage bankers in Commercial Banking with early signs of success including higher new client acquisition and loan and deposit growth.
Average loans and deposits in Commercial Banking both grew by approximately $5 billion in the first quarter.
Continued investment in senior talent to improve client coverage and broaden product capabilities in Investment Banking, driving 13% revenue growth year-over-year.
Strong pipeline for Investment Banking driven by M&A and equity capital markets activity entering the second quarter.
Completed the sale of rail car leasing business at the beginning of the quarter, having substantially completed efforts to refocus and simplify the company by exiting or selling 12 businesses since 2019.
Closed final outstanding consent order, bringing the total to 14 terminated since 2019, allowing the company to focus fully on accelerating growth and improving returns.
Approximately 2,500 advisors across the branch system in the Wells Fargo Premier wealth management offering, with momentum continuing to build.
Roughly a couple hundred commercial bankers added over the last 18 to 24 months with early signs of success in new client acquisition.
Financial Guidance and Outlook
Net interest income guidance of $50 billion, plus or minus, for 2026 remains unchanged.
Expected net interest income to grow over the course of 2026, similar to the prior year.
Outlook based on average loan growth of mid-single digits from Q4 2025 to Q4 2026, though average loans grew 4% in Q1 and could be higher than mid-single digits if demand remains strong.
Expected continued growth in interest-bearing deposits throughout the year, particularly in commercial businesses, as a result of the lifted asset cap.
If interest rates stay higher for longer, deposit mix trends could impact non-interest-bearing deposits, potentially putting pressure on net interest income excluding Markets.
Outlook assumed two to three Federal Reserve rate cuts, though the market currently expects fewer cuts, which would be positive for net interest income excluding Markets but would only have modest impact on 2026 net interest expectations.
Markets net interest income expectation of approximately $2 billion in 2026.
2026 non-interest expense guidance of approximately $55.7 billion remains unchanged.
Confident in path to 17% to 18% return on tangible common equity with multiple drivers across consumer, wealth, and commercial businesses contributing to this target.
Focused on organic growth rather than pursuing significant M&A activity.
Credit Quality and Risk Management
Credit performance remained strong with net charge-off ratio stable at 45 basis points year-over-year.
Commercial net loan charges increased modestly to 24 basis points of average loans from the fourth quarter, with lower commercial real estate losses offset by higher losses in the commercial and industrial portfolio driven by a single fraud-related loss.
Fraud-related loss in the Real Estate Finance category of the financials except banks portfolio was reviewed and believed to be an isolated incident.
Consumer net loan charge-offs increased modestly to 78 basis points of average loans from the fourth quarter, reflecting seasonally higher credit card losses.
Consumer net loan charge-offs declined 8 basis points year-over-year with improvements across consumer portfolios.
Non-performing assets as a percentage of total loans were stable with the fourth quarter and declined modestly year-over-year.
Allowance for credit losses for loans increased driven by higher commercial and industrial and auto loan balances, largely offset by lower allowance for commercial real estate office and credit card loans.
Significant weighting on downside scenarios in reserve calculations, with peak unemployment rate in scenarios increasing to 6.1% from prior assumptions.
Non-Bank Financial Lending Portfolio
Financials except banks loans totaled approximately $210 billion, or 21% of total loan portfolio at the end of Q1.
Portfolio has delivered strong credit performance over time, with $237 million of non-accrual loans or 11 basis points of total loans in Q1.
85% of asset managers and funds loans are subscription facilities provided to large private equity and private credit funds with established track records.
No individual fund makes up more than 1.5% of total commitments in the subscription facilities portfolio.
Corporate debt finance loans comprise the majority of private credit lending at approximately $36.2 billion, with over 98% secured by first-lien loans across diverse industries.
Over 3,100 unique obligors in corporate debt finance with average obligor concentration in an individual facility less than 2%.
Loans structured to an A/AA equivalent credit rating with weighted average effective advance rates less than 60%, meaning the portfolio would absorb approximately 40% loss before recognition of loss.
Nearly all structures include ability to approve which assets are included in the facility and revalue assets to drive de-leveraging if credit performance weakens.
Management is comfortable with the portfolio based on decades of lending experience, deep understanding of collateral, experienced underwriters, diversification across clients and asset types, and protective loan structures.
Regulatory Capital Changes
Estimated 7% decline in risk-weighted assets under the proposed Basel III Endgame rules if proposals do not change and based on current balance sheet composition.
Biggest driver of RWA decline is credit risk, particularly from benefits for investment grade credits in the commercial loan space and significant benefits on the mortgage portfolio.
Market risk is not a big driver of the proposal, while operational risk is expected to increase.
Expected to remain around 1.5% for the G-SIB surcharge for the foreseeable future under the current proposal, even as the company continues to grow.
Proposals viewed as constructive and heading in the right direction, allowing the company to continue supporting clients across all portfolios.
Will not put a new capital target out until the rules are finalized, continuing to stick with the 10% to 10.5% CET1 target range for now.
No magic to 10% to 10.5% target in the future if capital requirements change, with the company to reevaluate when rules are finalized.
