Wells Fargo & Co. (WFC): 2Q26 EPS: A solid quarterly beat, although focus remains on the NIM and NII outlook

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Wells Fargo & Co. (WFC): 2Q26 EPS: A solid quarterly beat, although focus remains on the NIM and NII outlook

Goldman Sachs Wells Fargo & Co. (WFC)

With NII largely in-line, fee income and efficiency headlined the quarterly beat. WFC

reported core fee income of $9.8bn, which was ~3% above the Street, with strength

across capital markets and deposit/lending related fees. The company continues to

highlight broad-based share gains in capital markets, which we expect to continue from

here. Further, the 2Q26 core efficiency ratio of 61.6% came in ~70bps/130bps better

than GSe/Street, and the company reiterated its $55.7bn expense target (despite higher

revenues), as it continues to see further efficiency benefits from headcount reductions,

as well as tech and AI-driven productivity initiatives. In addition, WFC continues to hold

significant excess capital, with its CET1% unchanged QoQ at 10.3% vs. an 8.5%

regulatory minimum and 10.0%-10.5% management target.

All in, our 2026E/27E EPS rises by 4%/2%, as we forecast a 16.0% ROTCE in 2026,

increasing to 17.1% in 2028. Our 2027E P/E target multiple falls 0.5x to 12.0x, resulting

in our PT decreasing ~2% to $99 (from $101 prev.). Further detail within.

n NII: WFC’s NII came in largely in-line with Street expectations, with ~0.5% stronger

AEA offset by a 1bp NIM miss. Notably, deposit funding costs rose 9bps QoQ, driven

by a continued mixshift into higher yielding corporate deposits, and elevated deposit

competition. Management maintained the 2026 NII target of $50bn, as they expect

stronger balance sheet expansion across loans and trading assets to more than

offset the steeper funding competition. On the back of this, the company expects

NIM to largely stabilize toward the end of 2026E, after another modest decline in

3Q26E.