Reports: Tuesday, July 14, 2026, before market open | Conference call to follow
Wells Fargo reports second-quarter results tomorrow alongside JPMorgan and Citigroup, kicking off big-bank earnings season. The stock has been a relative laggard in 2026 — down roughly 8% year-to-date versus a mid-teens gain for the KBW Bank ETF (KBE) — but has rallied hard into the print, climbing from the low-$80s at the end of June to roughly $87–88 heading into tomorrow's release. Sentiment has turned more constructive recently, with at least one sell-side strategist flagging WFC as an under-owned name heading into bank earnings season. At current levels, the stock trades around 11x forward earnings, a discount that reflects lingering skepticism about the path to management's medium-term profitability targets.
Consensus for Q2 2026 calls for EPS of $1.71 (up ~6.8% year-over-year), total revenue of $21.8 billion (+4.9%), net interest income (NII) of roughly $12.36 billion (+4.85%), and noninterest income of about $9.38 billion (+3%). Wells Fargo has beaten estimates in all but one quarter since 2022, averaging a beat of more than 9% — a track record that has investors leaning toward another upside surprise, particularly given management's demonstrated ability to lean on cost discipline to protect the bottom line.
The single most important number on the call is net interest income. Wells Fargo has guided to full-year 2026 NII of "$50 billion, plus or minus," which management reiterated on the Q1 call after NII grew 5% year-over-year but fell 2% sequentially, partly on two fewer days and full-quarter effects of Q4 2025 rate cuts. CFO Mike Santomassimo told investors on the Q1 call that net interest margin compression would continue into Q2 before moderating, driven by three forces: rapid growth in the lower-margin, lower-risk Markets balance sheet; a mix shift toward higher-cost interest-bearing deposits as commercial clients return following the removal of the asset cap; and the lagged impact of 2025 rate cuts. The bull case is straightforward: loan growth has been running ahead of the "mid-single-digit" full-year assumption (average loans grew 4% quarter-over-quarter in Q1 alone), deposit growth has been robust, and if the Fed delivers fewer cuts than the 2–3 originally assumed — increasingly likely under new Fed Chair Kevin Warsh, who has held rates steady and faces pressure over "whether to reverse the most recent 50 basis points of rate cuts amid persistent inflation" — that's a modest net positive for NII. Watch for: the Q2 NIM trajectory, updated full-year NII guidance, and commentary on markets-related NII (guided to ~$2 billion for the year).
With the seven-year asset cap removed and the final consent order terminated in March 2026 (14 total resolved since 2019), Wells Fargo has pivoted fully to offense. Management highlighted broad-based momentum entering Q2: credit card accounts up nearly 60% year-over-year, auto originations more than doubling, investment banking revenue up double digits, Markets revenue up 19%, and Wealth & Investment Management client assets reaching $2.2 trillion. Commercial Banking and CIB loan growth has been particularly strong (average CIB loans +23% in Q1), aided by new banker hires and clients returning now that balance-sheet capacity constraints are gone. Investors will want fresh evidence this growth is translating into fee and NII contribution rather than just low-return repo/markets balance sheet growth — a nuance CFO Santomassimo addressed directly on the Q1 call, arguing that new client onboarding "takes a while" but is expected to increasingly convert into higher-return business (prime brokerage, trading flows) without diluting ROTCE.
Wells Fargo has guided to ~$55.7 billion of 2026 noninterest expense, with the efficiency ratio improving to 67% in Q1 from 69% a year earlier as part of a multiyear cost-cutting effort that has produced 23 consecutive quarters of headcount reductions. The tension now is that the bank must simultaneously invest (technology/AI, advertising, banker hiring) to support growth while keeping the expense base contained. Management has been explicit that revenue-related compensation (tied to Wealth Management and trading results) is the main swing factor and is viewed as "good" expense growth since it's more than offset by higher fee income.
Net charge-offs were stable year-over-year at 45 basis points in Q1, with no signs of systemic weakness in commercial or consumer books. Two areas warrant attention on the call:
Wells Fargo cleared the Fed's 2026 stress test on June 24, with its stress capital buffer unchanged at 2.5%, and announced plans to raise its Q3 2026 dividend 11% to $0.50 per share, subject to board approval expected this month. The bank repurchased $4 billion of stock in Q1 (following $17.7 billion in all of 2025) and still has roughly $26 billion remaining on its $40 billion buyback authorization — a meaningful EPS tailwind even in a modest earnings-growth environment. Separately, proposed Basel III endgame changes are seen as constructive: management's initial estimate is a ~7% reduction in risk-weighted assets if the rules are finalized as proposed, driven mainly by relief on investment-grade commercial credit and mortgages, with the GSIB surcharge expected to stay around 1.5%. CFO commentary suggested this could eventually free up capital for either faster buybacks or growth, though management has been careful not to pre-commit to a lower CET1 target (currently 10–10.5%) before the rules are finalized.
ROTCE came in at 14.5% in Q1, versus management's medium-term target of 17–18%. This gap is the central skepticism among bears (Barron's noted analysts see only ~15.3% ROE this year, and one BofA analyst pushed management directly on the call about the credibility of the timeline given ongoing margin pressure). Management's defense rests on multiple, diversified levers rather than one big catalyst: credit card vintages maturing into profitability, growth in the Wells Fargo Premier wealth offering, Commercial Banking payoff from banker hiring, Investment Banking/Markets monetization, expense discipline, and eventual capital optimization from Basel III relief. Listen for whether management reiterates this target with the same conviction or signals any timeline slippage.
Wells Fargo goes into this print with easing regulatory constraints, a growth-mode balance sheet, a clean stress test, a bigger dividend on the way, and a long buyback runway — but also with a consensus that already expects a solid beat-and-cost-discipline quarter, real NIM/NII execution risk tied to deposit mix and rates, and lingering doubt about how quickly returns actually converge toward management's 17–18% ROTCE ambition. With the stock trading at a discount to peers and having lagged the sector badly this year, the bar for a "good enough" reaction may be more about NII guidance and ROTCE-path credibility than about the headline EPS beat itself.