Wells Fargo beats Wall Street expectations—But will WFC stock recover from its 12% YTD slide?

How did Wells Fargo perform in Q1 2025?

Wells Fargo & Company reported a net income of $4.9 billion for the first quarter of 2025, or $1.39 per diluted share, marking a 6% increase year-over-year and a 16% rise in earnings per share. The growth was attributed to improved cost control, a decline in noninterest expense, and share buybacks, which reduced the diluted share count by 8%. These gains came despite a 6% year-over-year drop in net interest income, primarily caused by lower floating-rate yields, declining loan balances, and customer preference for higher-yield deposit products.

CEO Charlie Scharf underscored the company’s progress in resolving longstanding regulatory issues, highlighting the closure of five consent orders during the quarter. He added that the company remains focused on building operational discipline, returning capital to shareholders, and navigating anticipated economic volatility in 2025.

What were the major financial trends shaping Q1 2025?

Wells Fargo’s total revenue for Q1 stood at $20.15 billion, down 3% from a year earlier. This decline was largely due to a 6% drop in net interest income, which fell to $11.5 billion. In contrast, noninterest income remained flat at $8.65 billion, supported by a $263 million gain from the sale of the commercial mortgage servicing unit and higher asset-based fees in wealth management.

Operating expenses declined 3% to $13.89 billion, aided by lower FDIC assessments and reduced operating losses. Provision for credit losses was $932 million, consistent with the year-ago period, while net loan charge-offs fell to $1.01 billion. The bank’s return on equity (ROE) improved to 11.5%, and return on tangible common equity (ROTCE) rose to 13.6%.

The quarter also included $313 million in discrete tax benefits and $149 million in repositioning losses from the investment portfolio.

How did each business segment contribute to earnings?

Consumer Banking and Lending generated $1.69 billion in net income, relatively flat year-on-year, with a 2% decline in revenue attributed to lower loan balances in the auto and personal lending segments. Credit card income rose 2%, supported by higher loan volumes.

Commercial Banking saw net income decline by 19% to $794 million, as a 13% drop in net interest income and modest provision increases offset gains in treasury and investment banking fees.

Corporate and Investment Banking reported a 2% increase in revenue to $5.06 billion and net income of $1.94 billion. Commercial real estate revenues rose 18%, while fixed income and commodities trading helped stabilise markets revenue. However, losses in structured products and increased operating costs weighed on the segment.

Wealth and Investment Management achieved 4% revenue growth and a 3% increase in net income to $392 million, driven by higher asset-based fees and increased client assets. Expenses rose 4%, mainly due to revenue-linked compensation.

How did Wells Fargo stock react to Q1 2025 earnings?

Despite the earnings beat, Wells Fargo’s stock (NYSE: WFC) fell approximately 2% in early trading on April 11, 2025, and has declined roughly 12% year-to-date. On April 16, WFC closed at $63.98, marking a 0.87% drop from the previous day.

The subdued investor reaction is tied to ongoing concerns around declining net interest income and broader macroeconomic headwinds, including potential fallout from U.S. tariff policy adjustments and consumer credit tightening.

However, sentiment among institutional investors and analysts remains cautiously optimistic. Analysts at Piper Sandler upgraded the stock to “Overweight,” citing the recent pullback as a potential entry point. Others maintain “Buy” ratings with long-term targets in the $80–$84 range, contingent on regulatory relief and sustained earnings performance.

What does sentiment analysis indicate for Wells Fargo?

Current investor sentiment around Wells Fargo is neutral to slightly bullish. Technical indicators are mixed, with short-term momentum weighed down by macro uncertainties, yet longer-term signals suggest upside potential. Forecast models project the stock could rise to approximately $69.83 by mid-May 2025—implying a near 8% gain from current levels.

One of the key catalysts for a re-rating is the potential lifting of the Federal Reserve’s asset cap imposed on Wells Fargo since 2018, following its fake accounts scandal. With five more consent orders closed this quarter and 11 total since 2019, analysts suggest that regulatory normalization could significantly improve the bank’s earnings trajectory and investor confidence.

Additionally, the $3.5 billion in share repurchases during Q1 and strong capital metrics—including an 11.1% Common Equity Tier 1 (CET1) ratio—support the bank’s capital return story.

How does Wells Fargo compare to peer institutions?

Wells Fargo’s 16% year-over-year EPS growth outpaced JPMorgan Chase, which reported a 9% net income increase during the same quarter. However, JPMorgan was more conservative in provisioning, raising its reserves by 75% amid caution about future loan defaults. In contrast, Wells Fargo’s credit provisioning remained stable, suggesting a more upbeat view of borrower performance and economic resilience.

Both banks have acknowledged the potential for turbulence in 2025, particularly if inflationary pressures and geopolitical tensions persist. Yet Wells Fargo appears to be entering this phase with a leaner cost base and a renewed focus on core banking performance.

Is Wells Fargo stock a buy, sell, or hold?

The case for buying WFC stock is supported by ongoing regulatory progress, improved cost discipline, and significant capital return via share repurchases. The current trading price, which is below the 52-week high of $81.50, offers a potential value opportunity for long-term investors.

Hold recommendations are grounded in the view that while structural improvements are evident, macroeconomic risks—especially interest rate volatility and trade policy shifts—could limit near-term upside.

A sell rating would be based on the assumption that declining net interest income and slower loan growth may persist longer than expected, especially in a tightening credit environment.

At present, the consensus among analysts leans toward a moderate Buy, with the expectation that Wells Fargo will benefit from easing regulatory pressure and further efficiency gains in the coming quarters.

What lies ahead for Wells Fargo in 2025?

Looking ahead, Wells Fargo plans to maintain a disciplined focus on expense reduction and customer-centric growth. Scharf noted that the bank is well-positioned to weather a slower economy and continues to invest in digital transformation and operational resilience.

While interest rate pressures are expected to persist, noninterest income streams—particularly from investment banking, wealth management, and transaction services—could help offset some of the drag on net interest income.

As Wells Fargo works to transform into a faster-growing, higher-returning, and well-controlled institution, the key to unlocking further shareholder value may lie in full regulatory clearance, strategic capital deployment, and a gradual recovery in consumer and commercial lending activity.