Wells Fargo & Company (NYSE: WFC) reported its fourth-quarter 2025 financial results on January 14, 2026, showing higher profits compared to last year but falling short of Wall Street expectations. The earnings miss, driven largely by severance costs and weaker-than-expected interest income, sent the bank’s shares sharply lower in early trading.

The results mark Wells Fargo’s first full year operating without the Federal Reserve’s long-standing asset cap, a major restriction that had limited growth since the bank’s fake-accounts scandal nearly a decade ago. While management highlighted progress and future growth plans, investors focused on near-term pressure on earnings.

Key Highlights from Wells Fargo Q4 2025 Results

• Net income: $5.36 billion
• Earnings per share (EPS): $1.62
• Analyst expectation: $1.67 per share
• Net interest income (NII): $12.33 billion
• NII estimate: $12.46 billion
• Severance costs: $612 million
• Shares reaction: Down as much as 5.1%, the biggest drop in six months

Profit Rises Year Over Year but Misses Expectations

Wells Fargo earned $5.36 billion, or $1.62 per share, in the three months ended December 31, 2025. That compares with $5.08 billion, or $1.43 per share, during the same quarter a year earlier.

Despite the improvement, the bank missed analysts’ earnings estimates, mainly due to higher expenses tied to job cuts and restructuring efforts. Investors reacted negatively, pushing shares down about 2.5% initially, with losses widening later in the session.

Severance Costs Weigh on Quarterly Results

A major factor behind the earnings miss was $612 million in severance expenses, part of CEO Charlie Scharf’s ongoing plan to streamline operations and cut long-term costs.

Total expenses for the quarter reached $13.7 billion, slightly above analyst expectations of $13.6 billion. Wells Fargo has been reducing headcount consistently since late 2020, and further job cuts are expected in 2026.

The bank ended 2025 with 205,198 employees, down from 210,821 at the end of September, continuing a multi-year trend aimed at improving efficiency.

Net Interest Income Misses Estimates

Net interest income, the money banks earn from lending after paying depositors, rose 4% year over year to $12.33 billion. However, that figure fell short of market expectations and disappointed investors who hoped for stronger gains after the asset cap was lifted.

For the full year, Wells Fargo generated $47.5 billion in net interest income, roughly in line with its guidance for 2025 but still behind some peers.

Outlook for 2026: $50 Billion Interest Income Forecast

Looking ahead, Wells Fargo forecast net interest income of about $50 billion for 2026, slightly below analysts’ average estimate of around $50.3 billion.

The bank expects average loan growth in the mid-single digits, driven by:

• Commercial lending
• Auto loans
• Credit card balances

Management said consumer activity remains healthy, with solid spending and stable credit performance entering early 2026.

Credit Cards, AI, and Growth Initiatives

Wells Fargo plans to expand its credit card business and increase investment in artificial intelligence to modernize systems, speed up approvals, and improve customer service.

Chief Financial Officer Mike Santomassimo said consumer behavior remains strong so far, noting that cash flow and spending levels have held up well.

However, he warned that a proposed 10% cap on U.S. credit card interest rates, suggested by President Donald Trump, could significantly reduce lending across the industry. Similar concerns have been raised by other major banks, including JPMorgan Chase.

Asset Cap Removal Marks a Turning Point

One of the most important developments for Wells Fargo in 2025 was the removal of the Federal Reserve’s $1.95 trillion asset cap in June. The restriction had limited balance sheet growth since 2018 and was tied to regulatory penalties from the fake-accounts scandal.

With the cap lifted, Wells Fargo’s total assets surpassed $2 trillion for the first time, allowing the bank to compete more freely with rivals.

CEO Charlie Scharf said the company is now operating on a “level playing field” and can dedicate more resources to growth.

Trading and Markets Income Gains Momentum

Wells Fargo also reported $358 million in net interest income from trading activities during the quarter, nearly double the level from a year earlier. The bank broke out this figure separately for the first time, signaling a greater focus on trading as a future earnings driver.

Market Reaction: Shares Slide Despite Strong Year

Despite the earnings miss, Wells Fargo stock had gained about 26% over the past 12 months before the report. Following the release, shares fell as much as 5.1%, marking the steepest intraday drop since July.

Some analysts remain cautiously optimistic. Brian Mulberry of Zacks Investment Management noted that while the interest income miss was disappointing, cost control and loan quality remain strong, and falling interest rates could boost mortgage demand later in 2026.

Final Takeaway

Wells Fargo’s fourth-quarter results show a bank in transition. While profits improved and regulatory restrictions have eased, higher costs and softer interest income continue to weigh on short-term performance. Investors are now watching closely to see whether growth accelerates in 2026 as lending expands and cost cuts take effect.

Analysis: What This Means for Investors

What went wrong?

• Higher-than-expected severance costs
• Net interest income slightly missed forecasts

What went right?

• Profits rose compared to last year
• Asset cap removal allows future growth
• Credit quality remains strong

Short-term view:
Investors reacted negatively because expectations were high after the asset cap was lifted. Any miss, even a small one, triggered selling.

Long-term view:
Wells Fargo now has more freedom to grow loans, expand credit cards, and invest in technology. If interest rates fall and mortgage activity picks up, earnings could improve in the second half of 2026.

Bottom line:
This was a mixed quarter, not a crisis. The stock’s reaction reflects disappointment, not structural weakness.

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