Finance

Wells Fargo Soars 10% After Q3 Earnings Beat: Can the Bank Recapture Its Former Glory?

Wells Fargo’s Q3 earnings and revenue exceeded expectations, causing stock to jump 10% after the asset cap lift.

October 18, 2025, 7:34 PM

The Wells Fargo & Co. building, with its illuminated interior and glass facade, in San Francisco's Financial District.

The Wells Fargo & Co. building in San Francisco's Financial District, a prominent financial institution in the city. By TakakoPhillips / Shutterstock.com.

Executive Summary

Wells Fargo exceeded Q3 2025 earnings and revenue expectations, leading to a 10% stock rise, following the Federal Reserve’s lifting of its seven-year asset cap.

The bank demonstrated robust growth, with consumer checking accounts up 8%, credit card accounts up 9%, and a significant 25% year-over-year surge in investment banking.

Following the removal of the asset cap, Wells Fargo increased its profitability target to 17-18% ROTCE and aims to become the leading U.S. consumer and business bank while achieving a “top-five” position in investment banking.

The Story So Far

Wells Fargo’s recent strong performance and ambitious growth plans are primarily a direct consequence of the Federal Reserve lifting a seven-year asset cap in June. This cap had been imposed due to prior scandals involving improper sales practices, restricting the bank’s growth, and its removal has now enabled Wells Fargo to expand operations and set higher profitability targets.

Why This Matters

Wells Fargo’s strong third-quarter performance, driven by the lifting of its federal asset cap, signals a significant turnaround, allowing the bank to aggressively pursue ambitious growth targets and aim for market leadership in both consumer/business and investment banking. This strategic pivot, coupled with improved financial health and renewed investor confidence, positions the institution to intensify competition and expand its market share across key banking segments, marking a pivotal moment in its post-scandal recovery.

Who Thinks What?

Wells Fargo’s leadership, including CEO Charlie Scharf, is focused on aggressive growth and market leadership across key segments, revising profitability targets upwards and aiming to become the leading U.S. consumer and business bank, alongside achieving a “top-five” position in investment banking, following the asset cap removal.

Analysts and the market reacted positively to Wells Fargo exceeding earnings and revenue expectations, evidenced by a 10% stock rise, suggesting confidence in the bank’s robust growth across consumer and investment banking, coupled with improved credit quality.

Wells Fargo exceeded analyst expectations for both earnings and revenue in the third quarter of 2025, with its stock rising 10% following the report. The performance comes after the Federal Reserve lifted a seven-year asset cap in June, allowing the bank to expand its operations and prompting its leadership to increase profitability targets and outline ambitious growth plans.

Third Quarter Performance Highlights

The bank reported robust growth across its consumer and investment banking segments. Consumer checking accounts increased by 8% year-to-date compared to 2024, while credit card accounts grew by 9%, leading to a 12% rise in card fee revenue. Net investment flows into client accounts also saw a significant 47% increase.

Wells Fargo’s loan portfolio and net interest income each grew by 2%. The institution also experienced a 25% year-over-year surge in investment banking, a segment that has historically been less central to its overall business model compared to other major banks.

Further positive indicators included a reduction in the provision for credit losses, which decreased from $1.07 billion a year ago to $681 million, suggesting improved credit quality. The net charge-off rate for its loan portfolio also dropped from 0.49% to 0.40%.

Strategic Direction Post-Asset Cap

Following the lifting of the asset cap, which had been imposed due to prior scandals involving improper sales practices, Wells Fargo’s total assets surpassed $2 trillion for the first time. The bank has since revised its medium-term profitability target, aiming for returns on tangible common equity (ROTCE) of 17% to 18%, an increase from its previous 15% target.

CEO Charlie Scharf articulated an objective for Wells Fargo to become the leading U.S. consumer and business bank, alongside achieving a “top-five” position in investment banking. Currently, Wells Fargo holds the No. 3 market share in consumer and small business banking, No. 4 in wealth management client assets, and No. 6 among U.S. investment banks by market share.

Market Positioning

The bank’s stock currently trades at 1.6 times its book value, a level noted as significantly lower than its valuation prior to the onset of its past scandals.

Outlook

Wells Fargo’s strong third-quarter results and renewed strategic objectives signal a pivotal moment for the institution. With the asset cap removed, the bank’s leadership is now focused on aggressive growth and market leadership across its key segments.