Wells Fargo Boosts Key Profit Metric as Asset Cap Removed

Core Viewpoint - Wells Fargo & Co. has raised its return on tangible common equity (ROTCE) target to 17% to 18% in the medium term, up from a previous target of 15%, following the removal of regulatory constraints that had been in place for over seven years [1][2][4]. Financial Performance - The bank reported net interest income (NII) of $11.95 billion in the third quarter, slightly below analysts' expectations of $12.01 billion, while maintaining its guidance for 2025 NII to remain steady compared to the previous year [3]. - The ROTCE update indicates a new growth phase for Wells Fargo after the Federal Reserve lifted an asset cap in June, with plans to reduce its Common Equity Tier 1 ratio to 10% to 10.5% from over 11% in the past nine quarters [4]. Market Position - The updated ROTCE target reflects Wells Fargo's earnings potential as the fourth-largest lender in the U.S., with comparisons to other major banks: JPMorgan Chase & Co. reported a ROTCE of 21% in the second quarter, Bank of America Corp. at 13.4%, and Citigroup Inc. at 8.7% with a target of 10% to 11% next year [7].