Wells Fargo Q3 2026 EPS Rises as Net Interest Income Grows

Wells Fargo & Company (NYSE: WFC) reported higher third-quarter 2026 earnings as net interest income growth, expanding loan and deposit balances, and lower expenses offset weaker noninterest income and a larger provision for credit losses. The bank maintained its full-year outlook for net interest income and noninterest expense, while forecasting about $13 billion of net interest income for the fourth quarter.

Net income rose to $6.0 billion, or $1.87 per diluted share, from $5.6 billion, or $1.66 per share, a year earlier. Revenue increased 2% to $21.9 billion, while pre-tax pre-provision profit advanced 7% to $8.1 billion. Return on equity was 13.8%, and non-GAAP return on average tangible common equity increased to 16.3% from 15.2%.

Compared with the second quarter, however, net income declined from $6.4 billion and diluted earnings per share fell from $2.00. Revenue decreased by $752 million sequentially, mainly reflecting lower noninterest income.

Balance-sheet growth supports net interest income

Net interest income rose 5% year over year to $12.5 billion and increased 2% from the second quarter. The year-over-year gain reflected higher loan and investment securities balances, fixed-rate asset repricing and growth in Markets net interest income. Those benefits were partly offset by lower rates on floating-rate assets and higher deposit costs.

Net interest income excluding Markets, a non-GAAP measure, increased 2% from both the prior-year period and the second quarter to $12.1 billion. The taxable-equivalent net interest margin was 2.43%, unchanged sequentially and below 2.61% a year earlier.

Average loans increased 11% year over year to $1.03 trillion. Growth in commercial and industrial, auto, securities-based and credit card lending more than offset a decline in residential mortgages. Average deposits also rose 11% to $1.48 trillion, with growth across all operating segments and in Corporate deposits. Average deposit cost was 1.56%, up from 1.54% a year earlier and 1.51% in the second quarter.

Noninterest income declined 1% to $9.4 billion. Investment advisory fees and brokerage commissions rose 12% on higher asset-based fees, while deposit and lending-related fees increased 10%. Those gains were outweighed by a 21% decline in trading gains and lower income from equity securities, mortgage banking and the rail-car leasing business sold in the first quarter.

Business growth was broad, but segment trends diverged

Consumer Banking and Lending revenue increased 5% to $10.7 billion. Consumer, Small and Business Banking revenue rose 7%, supported by deposit balances, deposit spreads and fee growth, while Auto revenue climbed 33% on higher balances and wider loan spreads. Credit Card revenue increased 3%. Home Lending revenue fell 15% because of lower mortgage servicing income and lower net interest income on reduced loan balances.

The consumer segment added about 661,000 credit card accounts during the quarter. Average auto loans increased to $58.8 billion from $44.8 billion a year earlier, and auto originations rose 15% to $10.1 billion. Mobile active customers reached 34 million.

Commercial Banking revenue grew 6% to $3.2 billion as higher loan and deposit balances lifted net interest income. Average loans rose 10% to $240.5 billion, and average deposits increased 16% to $198.9 billion. Its provision for credit losses increased by $201 million year over year, reflecting additional allowance associated with loan growth.

Corporate and Investment Banking revenue increased 3% to $5.0 billion from a year earlier but fell 8% sequentially. Banking revenue rose 8% year over year, helped by investment-grade debt capital markets, equity capital markets, M&A advisory, treasury management and lending. Markets revenue declined 1% year over year and 17% from a strong second quarter, with weaker results across most asset classes. The segment’s net income fell to $1.92 billion from $1.97 billion a year earlier.

Wealth and Investment Management posted the strongest segment revenue growth, rising 12% to $4.1 billion. Higher loan and deposit balances supported net interest income, while increased market valuations lifted investment advisory fees. Client assets rose 11% to $2.45 trillion, and average loans increased 16% to $95.4 billion, largely because of securities-based lending.

Expenses decline as headcount falls

Noninterest expense decreased 1% to $13.7 billion. Personnel costs fell as lower severance and efficiency initiatives, including an 8% year-over-year reduction in headcount, more than offset higher revenue-related compensation. Period-end headcount declined to 194,000 from 211,000. Non-personnel expense rose 4%, predominantly because of higher technology and equipment costs.

The efficiency ratio improved to 63% from 65% a year earlier, though it increased from 60% in the second quarter. Wells Fargo’s effective tax rate was 16.4% and included $170 million of discrete benefits related to the resolution of prior-period tax matters.

Credit provision rises; capital ratio declines

The provision for credit losses increased to $1.03 billion from $681 million a year earlier. Net loan charge-offs were $983 million, equivalent to 0.38% of average loans on an annualized basis, compared with $954 million and 0.40% a year earlier.

Commercial net charge-offs increased sequentially, reflecting higher losses in commercial real estate and commercial and industrial lending. Consumer charge-offs declined as lower credit card losses more than offset higher auto losses. Nonperforming assets rose slightly from the second quarter to $7.4 billion but remained below the year-earlier level, primarily because of lower commercial real estate nonaccrual loans.

The allowance for credit losses on loans was $14.5 billion, up 1% year over year. Allowance coverage declined to 1.38% of loans from 1.52%, reflecting lower coverage for credit card and commercial real estate office loans.

Wells Fargo’s preliminary Common Equity Tier 1 ratio under the Standardized Approach was 10.0%, down from 10.3% in the second quarter and 11.0% a year earlier. The sequential decline included a 38-basis-point impact from lower accumulated other comprehensive income caused by higher interest rates. The ratio remained above the bank’s stated 8.5% regulatory minimum and buffers.

The bank repurchased $2.5 billion of common stock during the quarter and paid $1.5 billion in common dividends. Its quarterly common dividend increased to $0.50 per share from $0.45. The preliminary liquidity coverage ratio was 122%, above the 100% regulatory minimum, while the preliminary total loss-absorbing capacity ratio was 23.0%, compared with a required minimum of 21.5%.

Full-year outlook remains unchanged

Management continues to expect 2026 net interest income of approximately $50 billion, plus or minus, and noninterest expense of about $55.7 billion. Both forecasts were unchanged from prior guidance. Wells Fargo expects fourth-quarter net interest income of approximately $13 billion.

The bank cautioned that net interest income will depend on uncertain factors including the level of interest rates, the shape of the yield curve, deposit balances, deposit mix and pricing, and loan demand. The third-quarter results are preliminary and may change following final review procedures, subsequent events or the discovery of additional information.