Wells Fargo (WFC) Q1 2026 Earnings: EPS Beat but Revenue Miss

■ Three-Point Assessment

1. EPS

EPS was $1.60 against the expected $1.58.
The same period last year was $1.39 (+15% YoY).

2. Revenue

Revenue was $21.45 billion against the expected $21.76 billion.
The same period last year was $20.23 billion (+6% YoY).

3. Guidance

Full-year 2026 NII (Net Interest Income) guidance is approximately $50 billion (±$2 billion), which is generally in line with the analyst consensus of $50.28 billion.
The previous year's result was $47.5 billion (projecting 5% growth YoY).
Assumes 2-3 Fed rate cuts and a flat 10-year Treasury yield.

■ Verdict: Mixed

EPS beat, but revenue missed by $310 million. NII was weak at $12.1 billion against the expected $12.27 billion. The efficiency ratio also worsened to 67% (expected 65.3%). Challenges remain in cost management.

■ By Segment

- Corporate & Investment Banking (CIB): Revenue $5.28 billion
- Commercial Banking: Revenue $3.12 billion
- Consumer Banking: Details under review
- Wealth & Investment Management: Details under review

■ Guidance Details

- Full-year NII: Approx. $50 billion (ex-Markets $48 billion)
- Assumptions: 2-3 Fed rate cuts, flat 10-year Treasury yield
- Loan/Deposit Growth: Mid-single digits (Q4 2025 to Q4 2026)
- Average Loan Balance: $996 billion (exceeding the expected $980.1 billion)

■ Provisions

- Provision for Credit Losses: $1.14 billion (previous year's same period $932 million, +22% YoY)
- Commercial NCO Ratio: 0.24% (up from 0.22% in the previous quarter)
- Consumer NCO Ratio: 0.78% (up from 0.75% in the previous quarter; seasonal increase in card delinquencies)

■ CEO Comments

CEO Scharf: "We have built a strong foundation and made significant progress in improving growth and returns. With the asset cap restriction lifted, we are now able to deploy more resources into balance sheet growth."

■ Key points for investors to watch

- NII of $12.1 billion missed expectations. While the interest rate environment is a tailwind, it is not benefiting as much as JPM.

- Provisions +22% (YoY). The consumer NCO rate of 0.78% is trending upward. The ripple effects of high oil prices are beginning to show in the numbers.

- The efficiency ratio of 67% indicates weak cost management. It pales in comparison to JPM's ROE (CIB 21%, CCB 32%).

■ Checking the bank earnings checklist

Progress report on the 5-item checklist from the preview article:

□ GS FICC revenue up more than 20% YoY
→ Missed. FICC was $4.01 billion, a $850 million miss against expectations. There was a war-related demand boost, but it was not as high as expected.

□ GS Equities revenue negative YoY
→ Not applicable (a reassuring sign). Equities were $5.33 billion, a record high, +27%. Institutional investors are still able to take risks.

□ WFC loan loss provisions up more than 20% QoQ
→ It is +22% YoY ($932 million to $1.14 billion). The consumer NCO rate rose from 0.75% to 0.78%. It is not a sharp increase, but the direction is deteriorating.

□ GS/MS management states that the "pipeline is healthy"
→ GS: IB fees +28%, showing strong performance. MS reports tomorrow.

□ Comments made that "clients are in wait-and-see mode"
→ Unconfirmed. Final judgment after MS/BAC announcements.

───

I am also posting breaking news on X →
https://x.com/masayuki_konno

For more details on Hirose AI, click here →

* This article is an analysis by AI and does not represent the views of Takao Hirose himself.