Wells Fargo Q3 2026 Earnings: NII Growth and Cost Discipline Offset Weaker Markets Revenue

Wells Fargo reported third-quarter net income of $6.0B, or $1.87 per diluted share, up 6% and 13%, respectively, from a year earlier. Revenue increased 2% to $21.9B as broad-based growth in the core banking and wealth businesses offset lower venture-capital investment gains, weaker lease income after the rail-car leasing sale, and softer markets activity.

The quarter reinforced Wells Fargo’s improving return profile: ROTCE reached 16.3%, versus 15.2% a year ago. But the quality of the earnings growth was mixed. Lower expenses and a $170M discrete tax benefit supported net income, while credit provisions rose sharply and capital-markets revenue slowed late in the quarter.

Earnings Snapshot

The Bigger Story

Wells Fargo’s investment case is increasingly centered on whether it can sustain revenue growth and improve returns without relying disproportionately on the interest-rate environment, capital-markets conditions, or cost cuts.

Third-quarter results offered evidence of progress. All four operating segments increased revenue year over year, average loans and deposits both rose 11%, and ROTCE reached 16.3%, moving closer to management’s 17% to 18% target range. Commercial Banking, Wealth and Investment Management, consumer deposits, cards, auto lending, investment banking, and treasury-management services all contributed.

Still, revenue growth at the consolidated level remained modest at 2%. The gap between broad business-line growth and company-wide growth reflects headwinds in Corporate, including lower venture-capital investment results and the loss of lease income after the first-quarter sale of the rail-car leasing business. Markets revenue also missed management’s earlier expectations after a weaker September for fixed-income activity.

The central question is whether the higher-returning growth businesses can become large enough to lift company-wide revenue and returns consistently, even when venture gains and market-sensitive businesses are less favorable.

Revenue and Operating Performance

Net interest income increased 5% to $12.5B, driven by higher loan and investment-securities balances, fixed-rate asset repricing, and balance-sheet growth in Markets. Average loans increased $104.7B from a year earlier to $1.03T, while average deposits increased $143.0B to $1.48T.

Management said commercial and industrial demand remained healthy, with growth across Commercial Banking and Corporate and Investment Banking. Consumer lending growth was concentrated in auto loans, credit cards, and securities-based lending. Average auto balances increased 31% year over year, while average credit-card balances also rose.

The Consumer Banking and Lending segment generated $10.7B in revenue, up 5%. Consumer, Small and Business Banking revenue increased 7%, supported by higher deposit balances, wider deposit spreads, and higher debit-card, advisory, and deposit-related fees. Credit-card revenue rose 3% on higher balances and fees, while auto revenue increased 33%.

Home Lending remained the notable weak point in consumer banking. Revenue fell 15% year over year, reflecting lower mortgage servicing income and lower net interest income on lower loan balances.

Commercial Banking revenue increased 6% to $3.2B, with net interest income up 9% on higher loan and deposit balances. Average loans increased 10% and deposits rose 16%. Management also highlighted a 25% increase in investment-banking and markets fees from Commercial Banking clients, suggesting that its effort to deepen relationships beyond lending is contributing to fee growth.

Corporate and Investment Banking revenue rose 3% to $5.0B. Banking revenue increased 8%, including a 10% increase in investment-banking revenue. M&A revenue rose 30%, while equity capital markets and investment-grade underwriting fees each increased 33%.

Markets was less favorable. Total Markets revenue fell 1% year over year, as a 21% increase in equities revenue was more than offset by a 7% decline in fixed income, currencies, and commodities revenue. Management said sharp interest-rate moves in late September reduced client activity in strategic transactions, hedging, and primary issuance, while low equity-market volatility constrained the equities-derivatives business.

Wealth and Investment Management was the strongest major revenue contributor, with revenue rising 12% to $4.1B. Higher loan and deposit balances lifted net interest income 12%, while higher market valuations drove a 12% increase in advisory fees. Company-wide client assets reached $2.74T, up 11% from a year earlier.

Profitability and Margins

Wells Fargo’s earnings growth outpaced revenue growth, helped by expense control and tax benefits. Noninterest expense declined 1% to $13.7B, despite a 15% increase in revenue-related compensation expense. The efficiency ratio improved to 63% from 65% a year earlier.

The expense comparison also benefited from lower severance costs. Third-quarter 2025 included $296M of severance expense. Management said headcount was down 8% year over year, while technology and equipment spending increased as the company continued to invest in its platforms and operating capabilities.

Net income increased 6% to $6.0B, while diluted EPS rose 13% to $1.87. The larger percentage increase in EPS reflects share repurchases as well as higher earnings. Income tax expense fell 11% year over year and included $170M of discrete tax benefits related to the resolution of prior-period matters.

Credit costs moved higher. The provision for credit losses rose 51% to $1.0B, including a $46M increase in the allowance. The reserve build reflected higher commercial and industrial and auto loan balances, partly offset by a lower allowance for commercial real estate loans.

Credit metrics nevertheless remained sound. Net charge-offs were 0.38% of average loans, down from 0.40% a year earlier, while nonperforming assets declined to 0.70% of total loans from 0.83%. Commercial charge-offs increased sequentially, particularly in commercial real estate and commercial and industrial lending, but management said losses remained borrower-specific rather than broad-based.

Demand, Customers and Pricing

Management described consumer and commercial activity as resilient despite mixed consumer sentiment and higher interest rates.

Debit-card spending increased 8% year over year and credit-card spending increased 12%. Wells Fargo opened more than 660,000 credit-card accounts during the quarter, while consumer primary checking accounts grew year over year for the 14th consecutive quarter. Auto originations increased 15%.

The company expects credit-card profitability to improve as recent account vintages mature. Management said originations have reached a more stable run rate of roughly 600,000 to 700,000 new accounts per quarter, which should allow the economics of recent card investments to become more visible over the next several years.

In deposits, growth has been concentrated in commercial interest-bearing accounts. Management characterized those balances as valuable because they generate payment and service fees alongside deposit revenue, even if they carry higher funding costs than noninterest-bearing deposits. Lower-cost consumer and operational commercial deposits should grow as Wells Fargo expands consumer banking and treasury-management relationships, though management indicated that process will take time.

What is Wells Fargo’s guidance for full-year 2026?

Management reaffirmed its expectation for full-year 2026 net interest income of approximately $50B, plus or minus. Fourth-quarter net interest income is expected to be about $13B, with net interest margin stable from the third quarter’s 2.43%.

Management expects fourth-quarter NII growth to benefit from loan and deposit growth, fixed-rate asset repricing, and higher investment-securities balances. The company remains modestly asset-sensitive outside Markets, meaning higher rates support banking-book NII. Markets NII is liability-sensitive and would be pressured by higher rates, although management expects that pressure to be substantially offset by Markets noninterest income.

Wells Fargo also maintained its forecast for approximately $55.7B of full-year 2026 noninterest expense. Revenue-related expenses are now expected to exceed the original forecast by about $400M, largely because of stronger activity in equities and other growth businesses. Management expects additional efficiency savings to offset those costs.

Management did not provide formal 2027 guidance, but said it enters the year from a stronger NII run rate, with continued loan growth, asset repricing, and sustained deposit growth acting as potential tailwinds.

Balance Sheet, Cash Flow and Capital

Wells Fargo ended the quarter with a CET1 ratio of 10.0%, down from 10.3% in the second quarter and 11.0% a year earlier. The decline reflected, in part, accumulated other comprehensive income pressure from higher interest rates.

The ratio remained above the company’s 8.5% regulatory minimum plus buffers. Management reiterated its intention to operate within a 10.0% to 10.5% CET1 range and said share repurchases will remain the principal lever for managing capital after considering loan growth, market conditions, and balance-sheet risks.

The company repurchased $2.5B of common stock, or 28.6 million shares, during the third quarter and raised its common dividend to $0.50 per share. Total common stockholders’ equity was $158.8B, while tangible common equity was $133.4B.

Management expects proposed Basel III capital rules, if finalized broadly as proposed, could reduce risk-weighted assets by about 7%, which would increase the CET1 ratio assuming no other changes. That potential benefit remains subject to the final rule and its implementation.

What Investors Should Watch

1. Fourth-Quarter NII Delivery

Management expects roughly $13B of fourth-quarter NII and stable net interest margin. Meeting that outlook would validate the benefit of loan growth, securities yields, and fixed-rate asset repricing, while a shortfall could signal greater deposit-cost pressure or weaker balance-sheet momentum.

2. Credit Costs in Commercial Lending and Auto

Credit quality remains favorable, but provisions rose 51% year over year and commercial charge-offs increased sequentially. Investors should monitor whether losses remain isolated or begin to broaden across commercial real estate, commercial and industrial lending, or newer consumer lending vintages.

3. Markets Recovery and Investment-Banking Share Gains

Investment-banking results continued to improve, but Markets revenue weakened late in the quarter. The next test is whether Wells Fargo can continue gaining advisory and underwriting share while restoring more consistent fixed-income and equities revenue growth.

4. Consumer Banking and Card Maturation

Checking-account, card-account, and auto-loan growth are improving the consumer franchise’s scale. The key financial question is whether maturing card vintages translate into higher profitability without a corresponding deterioration in credit losses.

5. Expense Discipline During Investment Spending

The company has held expenses broadly flat while increasing technology, AI, marketing, and revenue-related compensation spending. Sustaining that balance will be important if management is to move ROTCE from 16.3% toward its 17% to 18% target.

AlgovestIQ Takeaway

Wells Fargo produced a solid quarter, with broad-based operating growth, rising loans and deposits, lower expenses, and continued improvement in returns. The 16.3% ROTCE result is a meaningful marker of progress, particularly because revenue increased in every operating segment.

However, the headline EPS growth was stronger than the underlying revenue picture. Revenue rose only 2%, noninterest income declined 1%, and the earnings comparison benefited from lower severance expense and a $170M discrete tax benefit. Markets activity also showed that the company’s capital-markets expansion remains exposed to quarter-to-quarter market conditions.

The most encouraging development is the growing contribution from commercial banking, wealth management, cards, auto lending, treasury management, and investment banking. These businesses are generating stronger revenue growth than the consolidated company and could support a more durable improvement in returns if management sustains execution.

The remaining challenge is converting that business momentum into consistently faster company-wide revenue growth while credit costs normalize and capital remains constrained within the targeted CET1 range. Evidence that fourth-quarter NII reaches approximately $13B, credit losses remain contained, and card and commercial-banking investments continue to mature would strengthen the case that Wells Fargo’s return improvement is becoming more structural rather than primarily cyclical.