Wells Fargo Expects 2026 NII to Reach $50B: What's Fueling Growth?

Core Outlook - Wells Fargo & Company (WFC) projects total net interest income (NII) of $50 billion for 2026, indicating a strong growth momentum following the lifting of its $1.95 trillion asset cap in June 2025 [1][7] - The expected rise in markets-related NII is anticipated to reach $2 billion by 2026, reflecting management's ability to leverage a favorable operating environment [1][7] NII Growth Drivers - The bank has achieved a four-year compound annual growth rate (CAGR) of 7.5% in net interest income through 2025, driven by consistent loan expansion, disciplined deposit pricing, and active balance sheet management [5] - The removal of the asset cap allows Wells Fargo to compete more aggressively for loan and deposit growth, with expected mid-single-digit growth in average loans and deposits by Q4 2026 [6][9] - Stabilized funding costs due to Federal Reserve rate cuts are expected to support NII growth [6] Operational Efficiency - Wells Fargo is streamlining operations, investing in technology, and eliminating inefficiencies from past regulatory issues, which is expected to keep operating expenses well-controlled [8] - Lower operational costs will enhance the profitability of balance sheet growth, ensuring that rising NII translates into higher earnings and returns for shareholders [8][9] Peer Comparison - Bank of America (BAC) anticipates a 5-7% year-over-year increase in NII for 2026, following a 7.2% growth in 2025, supported by a favorable rate environment and technological efficiency [11] - Citigroup projects a 5-6% increase in NII for 2026, building on an 11% rise in 2025, with a stable interest rate environment aiding its outlook [12] Price Performance and Valuation - Wells Fargo shares have increased by 17.1% over the past year, compared to the industry's growth of 30.3% [13] - The company trades at a forward price-to-earnings (P/E) ratio of 12.46X, below the industry average of 14.83X [16] - The Zacks Consensus Estimate for WFC's earnings implies year-over-year increases of 12.3% for 2026 and 11.9% for 2027, with upward revisions in estimates over the past week [18]