Wells Fargo posts higher profits after Fed scraps asset cap

Core Viewpoint - Wells Fargo reported stronger profits for Q4 2025, driven by increased revenue from loans and fees, as the US economy remained stable and the bank moved past a Fed-imposed asset cap following a scandal involving fake accounts [1][10]. Financial Performance - The bank's net income for Q4 2025 was $5.4 billion, an increase from $5.1 billion in the same quarter of 2024 [1]. - Earnings per share (EPS) reached $1.62, surpassing Wall Street expectations and up from $1.43 in Q4 2024 [2]. Growth Drivers - CEO Charlie Scharf highlighted significant investments in infrastructure and business growth, with a 20% increase in new credit card accounts, a 19% rise in auto lending balances, 12% loan growth in commercial banking, and a 14% increase in investment banking fees as key contributors to profit growth [3]. Regulatory Changes - The Federal Reserve lifted a $1.95 trillion asset cap in June 2025, which had been imposed in 2018 due to the fake accounts scandal, allowing the bank to enhance its growth potential [7][10]. - Following the removal of the asset cap, Wells Fargo raised its medium-term profitability goal to a 17% to 18% return on tangible common equity, up from 15% [10]. Market Reaction - The bank's share price experienced a jump in early trading, indicating investor optimism regarding its recovery and future performance [11].