Why Is Wells Fargo (WFC) Down 0.2% Since Last Earnings Report?

Core Viewpoint - Wells Fargo reported strong Q3 2025 earnings, beating estimates primarily due to growth in fee income and improved net interest income, despite rising expenses [2][4][6]. Financial Performance - Adjusted earnings per share for Q3 2025 were $1.73, exceeding the Zacks Consensus Estimate of $1.55, and up from $1.54 in the prior-year quarter [2]. - Total revenues reached $21.44 billion, surpassing the Zacks Consensus Estimate of $21.19 billion, and increased by 5.2% year over year [4]. - Net interest income (NII) was $11.95 billion, a 2.2% increase year over year, driven by fixed-rate asset repricing and higher loan balances [4][5]. - Non-interest income grew by 9.3% year over year to $9.49 billion, benefiting from the absence of prior-year losses and higher asset-based fees [5]. Expense Management - Non-interest expenses rose to $13.85 billion, a 5.9% increase year over year, primarily due to higher severance costs and increased technology expenses [6]. - The efficiency ratio was 65%, slightly higher than 64% in the previous year, indicating a need for improved cost management [6]. Loan and Deposit Trends - Total average loans were $928.7 billion, up 1.3% sequentially, while total average deposits were $1.34 trillion, showing marginal sequential growth [7]. Credit Quality - The provision for credit losses decreased by 36% year over year to $681 million, with net loan charge-offs at 0.40% of average loans, down from 0.49% [8]. - Non-performing assets fell by 6.6% year over year to $7.83 billion, indicating improved credit quality [8]. Capital and Profitability Ratios - The Tier 1 common equity ratio was 11%, down from 11.3% in the previous year [9]. - Return on assets improved to 1.10%, up from 1.06% a year ago, and return on equity increased to 12.8% from 11.7% [10]. Future Outlook - For Q4 2025, net interest income is expected to be between $12.4 billion and $12.5 billion, with non-interest expenses projected at approximately $13.5 billion [11]. - For the full year 2025, NII is expected to align with 2024's $47.7 billion, while non-interest expenses are now anticipated to be around $54.6 billion, reflecting higher severance costs [12]. - The company aims for a return on tangible common equity of 15% in 2025, up from 13.4% in 2024, through efficiency initiatives and revenue growth [13]. Market Sentiment - Since the earnings release, there has been an upward trend in estimates revision, with a consensus estimate shift of 6.17% [14]. - Wells Fargo currently holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [16].