WFCBy Calypso Research8 min read

Wells Fargo & Company (WFC) Q1 2026 Earnings Analysis

Wells Fargo & Beat Expectations. Wall Street Wanted More.

Key Takeaways

Wells Fargo & Company (WFC) reported Q1 2026 earnings with revenue of $31.8B, representing a +7.3% year-over-year change. The stock moved -5.7% on earnings day.

The bull case: Improving capital rules, broad-based organic growth in cards, wealth, commercial and Markets, and a clear path to higher NII and ROTCE support a re-rating as Wells Fargo transitions from remediation to growth and accelerates capital return.

The bear case: Persistent NIM pressure from deposit mix and low-ROA Markets growth, questions around the achievability and timing of the 17–18% ROTCE target, and latent risks in nonbank financial and macro credit exposures could cap earnings growth and keep the stock range-bound.

Financial Highlights

  • Revenue: $31.8B (+7.3% YoY)
  • Gross Profit: $20.3B (63.9% margin, -1.0% YoY)
  • Operating Income: $5.9B (18.4% margin, +0.4% YoY)
  • Net Income: $5.3B
  • TTM Revenue: $125.7B

Stock Performance

  • Earnings Day Move: -5.7%
  • Year-to-Date: -14.7%
  • 1-Year Return: +27.0%
  • vs. S&P 500 (since earnings): -9.1%
  • vs. Nasdaq (since earnings): -9.9%

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What Management Said

Here are the key debates and direct quotes from Wells Fargo & Company's Q1 2026 earnings call:

Net Interest Income (NII), NIM Compression, and Path to 2026 NII Guidance

Sentiment: Positive

"You will see a little bit more compression from the first two drivers, but it will be less as we go into the second quarter... Ultimately, we have a really achievable path to 50 billion dollars, and if all works out, it could be better than that depending on how it all plays out through the rest of the year." — Michael Santomassimo
"Rates are driving it, number one... We are not out there competing on price to try to grow the balance sheet... If we do a good job... we should be growing the noninterest-bearing further down the line as we bring on more of these relationships." — Michael Santomassimo

ROTCE Target of 17%–18% vs. Margin Pressure and Business Mix

Sentiment: Positive

"We are actually really confident in the path to get from where we are, roughly 15%, to 17% to 18%... we are not overly reliant on any one thing to get us there... there are a bunch of different paths to get us to that 17% to 18%, which should give you a lot of confidence it is achievable in a reasonable amount of time." — Michael Santomassimo
"We feel as confident as ever in that target. There is absolutely nothing that has changed... We are building the underlying organic growth business by business... We are very confident the things we are doing will ultimately lead to increased profit, faster growth, and higher returns." — Charles Scharf

Basel III Endgame, RWA Decline, and CET1 Target / Capital Return Capacity

Sentiment: Positive

"If you just take the big broad categories... The big decline is on credit risk... That is how you get to about a 7% decline overall... So net-net overall, very constructive for us, and it seems like it is heading in the right direction and allows us to continue to do really smart things to support clients." — Michael Santomassimo
"There is no magic to 10% to 10.5%... When these rules are finalized, we will look at what our requirements are... The trajectory is very favorable for us. We just do not want to get ahead of ourselves and say we are going to change where we are running at this point before things are finalized." — Charles Scharf

Nonbank Financial / NDFI and Private Credit Exposure, Including Fraud Event

Sentiment: Mixed

"We took all of the lessons we saw coming off the back of that individual circumstance and sent teams in to all the clients, particularly in the European portfolio... We brought in independent people and teams... At this point, we feel confident that was an isolated event." — Michael Santomassimo
"I think it is totally different than CRE exposure... really bad things need to happen for us to lose money in most of these portfolios... We feel really good about the way these things are structured and the client selection we have." — Charles Scharf

Markets / Repo Balance Sheet Growth, NIM Dilution, and Return Trade‑off

Sentiment: Mixed

"As we came out of the period when the asset cap was in place, we knew that the place we were going to see the growth first is in repo... It is low ROA, low risk, good returns... I think as we go through this period, you are going to see ROA come down... and then... you will start to see it either stabilize or start to grow as we start to add in the other business activity that we expect to see." — Michael Santomassimo
"On the NIM, what you really saw are three things in the quarter. First is the impact of the growth in the Markets balance sheet impacting the NIM... that is not going to grow at the same pace forever... Second, you see interest-bearing deposits grow... Third, you got a little impact from rates coming off the back of the fourth quarter." — Michael Santomassimo

Bull Case

Improving capital rules, broad-based organic growth in cards, wealth, commercial and Markets, and a clear path to higher NII and ROTCE support a re-rating as Wells Fargo transitions from remediation to growth and accelerates capital return.

Bear Case

Persistent NIM pressure from deposit mix and low-ROA Markets growth, questions around the achievability and timing of the 17–18% ROTCE target, and latent risks in nonbank financial and macro credit exposures could cap earnings growth and keep the stock range-bound.

Looking Ahead

Investors will be closely watching Wells Fargo & Company's next quarterly report for continued execution, particularly around net Interest Income (NII), NIM Compression, and Path to 2026 NII Guidance. With operating margins at 18.4%, margin trends will remain a focal point. The market's negative earnings-day reaction signals that investors need to see stronger execution, and the next earnings report will be a key catalyst for the stock.

Frequently Asked Questions

What was Wells Fargo & Company's revenue in Q1 2026?

Wells Fargo & Company reported Q1 2026 revenue of $31.8B, representing a +7.3% year-over-year change.

Did Wells Fargo & Company beat earnings expectations in Q1 2026?

The stock declined -5.7% on earnings day, suggesting the results fell short of market expectations. The current bull case centers on: Improving capital rules, broad-based organic growth in cards, wealth, commercial and Markets, and a clear path to higher NII and ROTCE support a re-rating as Wells Fargo transitions from remediation to growth and accelerates capital return.

What is the bull case for WFC stock?

The bull case for WFC centers on: Improving capital rules, broad-based organic growth in cards, wealth, commercial and Markets, and a clear path to higher NII and ROTCE support a re-rating as Wells Fargo transitions from remediation to growth and accelerates capital return.

What is the bear case for WFC stock?

The bear case for WFC centers on: Persistent NIM pressure from deposit mix and low-ROA Markets growth, questions around the achievability and timing of the 17–18% ROTCE target, and latent risks in nonbank financial and macro credit exposures could cap earnings growth and keep the stock range-bound.

How has WFC stock performed since its Q1 2026 earnings?

WFC moved -5.7% on the day of its Q1 2026 earnings report, underperforming the S&P 500 by +9.1% since earnings. Year-to-date, the stock has returned -14.7%.

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