Wells Fargo retains $50B 2026 net interest income outlook as Basel proposal implies ~7% RWA decline
View original at seekingalpha.comWells Fargo retains $50B 2026 net interest income outlook as Basel proposal implies ~7% RWA decline Earnings Call Insights: Wells Fargo & Company (WFC) Q1 2026 MANAGEMENT VIEW * "We saw continued positive impacts from the investments we've been making with diluted earnings per share increasing 15%, revenue increasing 6…
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Wells Fargo's net loan charge-off ratio was stable from a year ago and commercial losses included a single fraud-related loss believed to be an isolated incident
60% confidenceWells Fargo's CET1 ratio of 10.3% is within stated 10% to 10.5% target range
60% confidenceUnder Basel proposal, operational risk will increase but there's a big decline on credit risk with benefits for investment-grade credits and mortgage portfolio, leading to about 7% decline overall in RWA
60% confidenceDebt markets are wide open and IPOs may return if volatility stabilizes
60% confidenceConfidence indicators and underlying balance sheet trends point to rising stress for less-affluent consumers, with potential second-half spending adjustments tied to energy prices
60% confidenceQ1 results included $135 million or $0.04 per share of discrete tax benefits related to resolution of prior period matters
60% confidenceWells Fargo closed its final outstanding consent order last month, bringing total to 14 terminated since 2019 and is now focusing more fully on accelerating growth and improving returns
60% confidencePeak unemployment rate in reserve scenarios went up to a little over 6%, 6.1% to be exact, with significant downside weighting unchanged
60% confidenceWells Fargo's expense guidance is unchanged and pressure would mainly be revenue-related compensation
60% confidenceWells Fargo saw diluted earnings per share increase 15%, revenue increase 6%, loans grow 11% and deposits up 7% compared to a year ago
60% confidenceWells Fargo is still going to stick with the 10%-10.5% CET1 target
60% confidenceAt the end of Q1, financials except bank loans totaled approximately $210 billion, or 21% of total loan portfolio
60% confidencePeriod-end loan balances grew 11% from a year ago and exceeded $1 trillion for the first time since Q1 2020
60% confidenceNet interest income increased $601 million, or 5% from a year ago, and decreased $235 million, or 2% from Q4
60% confidenceThere is absolutely nothing that has changed regarding ROTCE targets
60% confidenceThree things drove NIM compression: markets balance-sheet mix, interest-bearing deposit mix, and rates coming off the back of Q4
60% confidenceRates are driving NII pressure and Wells Fargo is not competing on price to grow the balance sheet
60% confidenceWells Fargo feels confident the fraud-related loss in financials-ex-banks was an isolated event
60% confidenceCard growth is about awareness and advertising
60% confidenceWells Fargo is retaining guidance of $50 billion, plus or minus, of net interest income for 2026
60% confidenceWells Fargo is actually really confident in the path to 17%-18% ROTCE
60% confidenceWells Fargo returned $5.4 billion to shareholders in Q1, including $4 billion in common stock repurchases, while continuing to operate with significant excess capital
60% confidenceMarkets balance-sheet growth shouldn't be dilutive to ROTCE, and Wells Fargo will either get increased flows at strong ROTCE or won't use the balance sheet for it
60% confidenceExpects additional margin compression next quarter
60% confidenceWells Fargo's outlook assumed 2-3 cuts by the Federal Reserve, but the market currently expects fewer cuts
60% confidenceNoninterest expense increased $439 million, or 3% from a year ago and included approximately $700 million of seasonally higher expenses
60% confidenceNoninterest income increased $696 million, or 8% from a year ago
60% confidenceCard account growth is driven by really good, compelling, simple products
60% confidencePrivate credit sizing in corporate debt finance bucket is about $36.2 billion
60% confidenceWells Fargo is not seeing utilization increase in people's revolvers yet despite borrowing demand remaining strong
60% confidence
Data points we hold from this source
| Wells Fargo & Company · tax benefit | 135 USD |
| Wells Fargo & Company · noninterest income yoy growth | 8 percent |
| Wells Fargo & Company · share repurchases | 4 USD |
| Wells Fargo & Company · tax benefit per share | 0.04 USD |
| Wells Fargo & Company · deposit growth | 7 percent |
| Wells Fargo & Company · net interest income qoq growth | -2 percent |
| Wells Fargo & Company · private credit exposure | 36.2 USD |
| Wells Fargo & Company · consent orders terminated since 2019 | 14 count |
| Wells Fargo & Company · shareholder return | 5.4 USD |
| Wells Fargo & Company · net interest income yoy change | 601 USD |
| Wells Fargo & Company · seasonal expense increase | 700 USD |
| Wells Fargo & Company · loan growth | 11 percent |
| Wells Fargo & Company · noninterest income yoy change | 696 USD |
| Wells Fargo & Company · total loans | 1000 USD |
| Wells Fargo & Company · net interest income yoy growth | 5 percent |
| Wells Fargo & Company · noninterest expense yoy change | 439 USD |
| Wells Fargo & Company · financials except bank loans percentage | 21 percent |
| Wells Fargo & Company · cet1 ratio | 10.3 percent |
| Wells Fargo & Company · financials except bank loans | 210 USD |
| Wells Fargo & Company · noninterest expense yoy growth | 3 percent |
| Wells Fargo & Company · net interest income qoq change | -235 USD |