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 all outstanding consent orders. The company demonstrated momentum across consumer and commercial businesses while maintaining disciplined capital management and providing guidance toward its medium-term return targets.
Key Financial Results
Diluted earnings per share increased 15% year-over-year, driven by improved operational performance.
Revenue increased 6% year-over-year, with net interest income up 5% and non-interest income up 8%.
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, with average deposits growing $75.7 billion or 6% from a year ago.
Pre-tax, pre-provision profit grew 14% year-over-year, reflecting revenue growth outpacing expense increases.
Net charge-off ratio remained stable at 45 basis points compared to a year ago.
Net interest income increased $601 million or 5% from a year ago, though it decreased $235 million or 2% from the fourth quarter.
Non-interest income increased $696 million or 8% from a year ago, with growth across most business-related categories.
Non-interest expense increased $439 million or 3% year-over-year, primarily driven by higher revenue-related compensation expense in Wealth & Investment Management.
Business Segment Results
Consumer Banking and Lending revenue grew 7% year-over-year, driven by lower deposit pricing, higher deposit and loan balances, and growth in non-interest income.
Credit card revenue grew 5% year-over-year due to higher loan balances driven by higher purchase volume and new account growth.
Auto revenue increased 24% year-over-year due to higher loan balances, with auto originations more than doubling from a year ago.
Home Lending revenue declined 9% year-over-year as the company continues to reduce the size of its servicing business.
Commercial Banking revenue increased 7% year-over-year, driven by higher revenue from tax credit investments and equity investments.
Commercial Banking loans grew 4% year-over-year with broad-based growth from new and existing customers.
Corporate and Investment Banking revenue increased 11% year-over-year, driven by higher loan and deposit balances and growth in investment banking revenue.
Markets revenue grew 19% year-over-year, driven by higher revenue across most asset classes reflecting disciplined balance sheet usage and higher customer activity.
Average loans in Corporate and Investment Banking grew 23% year-over-year with strong growth in Markets and Banking.
Wealth & Investment Management revenue increased 14% year-over-year driven by growth in asset-based fees from increased market valuations and higher net interest income.
Client assets in Wealth & Investment Management grew 11% year-over-year to $2.2 trillion.
Company-wide net asset flows accelerated in the quarter, reaching their highest level in over 10 years.
Capital Allocation
$5.4 billion returned to shareholders in Q1, including $4 billion in common stock repurchases.
Common shares outstanding were down 6% from a year ago.
CET1 ratio of 10.3%, within the stated 10% to 10.5% target range and well above the CET1 regulatory minimum plus buffers of 8.5%.
The company continues to operate with significant excess capital to support clients and repurchase shares.
Regulatory and Strategic Developments
Final outstanding consent order was closed, bringing the total to 14 terminated since 2019.
Sale of rail car leasing business completed at the beginning of the quarter.
The company has substantially completed efforts to refocus and simplify by exiting or selling 12 businesses since 2019.
Under the proposed Basel III Endgame capital rules, Wells Fargo estimates risk-weighted assets could decrease by approximately 7% if proposals do not change.
The company expects to remain around 1.5% for the G-SIB surcharge under the current proposal, even as it continues to grow.
Macroeconomic Environment
US labor market continues to cool in an orderly but uneven fashion with few signs of systemic stress.
Unemployment rate dipped to 4.3% in March, reflecting slower rehiring and longer job searches rather than renewed labor market strain.
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.
Financial markets have absorbed cross currents with resilience, but continued volatility is expected driven by geopolitical headlines and the unfolding impact of higher commodity prices.
Consumers are spending more than a year ago, including more on gas, but have not slowed spending on everything else.
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.
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
Two new travel-focused reward credit cards launched in Q1, available exclusively to new and existing 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.
Fargo, the AI-powered virtual assistant, reached over 1 billion customer interactions less than three years since its launch.
Approximately 2,500 advisors across the branch system are offering Wells Fargo Premier wealth management services.
Commercial Banking is hiring coverage bankers to drive growth, 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 Q1, demonstrating accelerating momentum.
Investment Banking revenue grew 13% year-over-year, with continued investment in senior talent to improve client coverage and broaden product capabilities.
Strong pipeline for Investment Banking driven by M&A and equity capital markets as the company entered Q2.
The company is increasing investments in technology, including AI, as well as in advertising while continuing to execute on efficiency initiatives.
23 consecutive quarters of head count reductions have been achieved while increasing investments in key areas.
Financial Guidance and Outlook
Net interest income guidance of $50 billion, plus or minus, for 2026 is being retained.
Net interest income is expected to grow over the course of the year, similar to last year.
Average loan growth outlook was based on mid-single digits from Q4 2025 to Q4 2026, though average loans grew 4% in Q1 and could be higher if demand remains strong.
Interest-bearing deposits are expected to continue growing throughout the year, particularly in commercial businesses, as the asset cap has been lifted.
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.
Markets net interest income expectation of approximately $2 billion in 2026 remains appropriate despite the dynamic macroeconomic environment.
2026 non-interest expense guidance of approximately $55.7 billion remains unchanged.
First quarter expenses were in line with expectations, with no changes to full-year guidance.
The company expects to see loan growth each quarter, with mortgages stopping their decline and continued growth in card and auto portfolios.
Potential for net interest income to exceed $50 billion if all factors work out favorably throughout the rest of the year.
Credit Quality and Risk Management
Commercial credit continues to perform well with no signs of systemic weakness.
Commercial net loan charges increased modestly to 24 basis points of average loans from Q4.
Consumer net loan charge-offs increased modestly to 78 basis points of average loans, reflecting seasonally higher credit card losses.
Consumer net loan charge-offs declined 8 basis points compared to a year ago with improvements across consumer portfolios.
Non-performing assets as a percentage of total loans were stable with Q4 and declined modestly from a year ago.
Allowance for credit losses for loans increased modestly, driven by higher commercial and industrial and auto loan balances.
Significant weighting on downside scenarios in loan loss reserve calculations, with peak unemployment rate in scenarios increasing to 6.1%.
Fraud-related loss in the Real Estate Finance category of the financials except banks portfolio was reviewed and believed to be an isolated incident.
Non-Bank Financial Lending Portfolio
Financials except banks loans totaled approximately $210 billion, or 21% of total loan portfolio at the end of Q1.
$237 million of non-accrual loans in the financials except banks portfolio, representing 11 basis points of total loans.
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, with over $36.2 billion in exposure.
Over 98% of corporate debt finance loans are secured by first-lien loans across diverse industries.
Over 3,100 unique obligors in the corporate debt finance portfolio with average obligor concentration in an individual facility of less than 2%.
Weighted average effective advance rates are less than 60%, meaning the portfolio would absorb approximately 40% loss before the company would recognize a loss.
Loans are structured to an A/AA equivalent credit rating with nearly all structures including the ability to approve which assets are included and revalue assets to drive de-leveraging.
