What is the outlook for headcount and broader efficiency improvements, specifically if headcount will remain flat to down?

Management states they still have significant room for efficiency improvements, which will continue to drive headcount down. Technology and AI are expected to accelerate this process, with ongoing efforts to automate and improve client experience. “we expect that we should be able to run this company with less head count that we've got today. Certainly, technology and AI helps us get out aspect of that in a different way or faster than maybe in the past”

What are the expectations for deposit costs and rate assumptions for H2, and how do structural vs. cyclical factors, including market business growth and card maturity, impact NIM?

Management expects deposit costs to 'inch up a little bit' due to faster growth in interest-bearing deposits, which is seen as positive for profitable relationships. They reiterate modest NIM compression in Q3 before stabilization, emphasizing that NIM volatility is expected due to strategic growth in lower-margin but profitable businesses like markets. “what we're seeing in NIM is not happening to us. What we're seeing in NIM is because things that we're doing. And those are things that we don't have to continue to do or we can unwind at some point as well.”

Will NIM stabilize long-term beyond Q3, how does market's balance sheet deployment translate into fee growth, and what is the timing for achieving the 17-18% ROTCE target?

Management expects NIM to stabilize after Q3 and potentially expand longer-term. They explain that market's revenue growth includes NII from certain trading activities and that financing balances are driving significant increases in trading-related revenue and client business. On ROTCE timing, Charlie Scharf reiterates confidence in achieving the target in a 'reasonable time frame' assuming favorable market conditions, noting their confidence is increasing quarterly. “when it comes to the financing as an example, we look client by client, and we're providing more financing. We're getting more share, higher trading revenues.”

WFC

Wells Fargo (WFC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 14, 2026

Source: earnings call transcript

Executive summary

Wells Fargo Q2 FY26 — Broad-Based Growth and Improved Returns

Wells Fargo delivered strong Q2 FY26 results, driven by broad-based revenue growth and disciplined expense management, leading to improved returns. The company is benefiting from economic strength and strategic investments, with a focus on growing fee-based revenues and optimizing its balance sheet. Management remains confident in achieving its 17-18% ROTCE target, despite near-term NIM compression from strategic growth initiatives.

Highlights

Diluted EPS grew 25% to $2.00 in Q2 FY26.
Revenue grew 9% from a year ago, with Net Interest Income up 5% and noninterest income up 13%.
Return on Tangible Common Equity (ROTCE) increased from 15.2% a year ago to 17.7% in Q2 FY26.
Returned over $9.8 billion of capital to shareholders in H1 FY26, including $7 billion in common stock repurchases.
Headcount declined for 24 consecutive quarters, down 3,500 QoQ and 15,000 YoY to 197,000.

Concerns

Net interest margin (NIM) declined 4 basis points from Q1 FY26, with modest compression expected in Q3 FY26.
Growth in new credit card accounts puts pressure on short-term profitability due to significant upfront costs, taking 2-3 years to season.
Noninterest-bearing deposits are now expected to be relatively stable for the full year, a negative shift from original expectations.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Net Interest Income	$50 billion, plus or minus high materiality	FY26	High
Full-year 2026 Net Interest Income (excluding markets)	approximately $48 billion medium materiality	FY26	High
Full-year 2026 Average Loan Growth	higher in the mid-single-digit increase medium materiality	FY26	High
Full-year 2026 Noninterest Expense	approximately $55.7 billion high materiality	FY26	High
Third Quarter Common Stock Dividend	increase by 11% to $0.50 per share high materiality	Q3 · FY26	High
Medium-term ROTCE	17% to 18% high materiality	Medium-term	High
Net Interest Margin trajectory	modest net interest margin compression in the third quarter broadly in line with the second quarter's decline from the first quarter before stabilizing in the fourth quarter high materiality	Q3 FY26, Q4 FY26	Medium
Full-year 2026 Noninterest-bearing deposits	relatively stable medium materiality	FY26	Medium
Full-year 2026 Markets NII	approximately $2 billion medium materiality	FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Consumer Banking and Lending Revenue growth driven by investments in marketing and digital account openings. Auto business benefiting from becoming preferred financing provider for Volkswagen and Audi. Consumer primary checking accounts: 13 consecutive quarters of YoY growthNew credit card accounts: 46% increase YoYMobile active users: $33.7 millionMobile active users increase: $1.6 million YoYPremier client assets: 13% increase YoYAuto originations: 41% increase YoYAuto average balances: 31% increase YoY	6% growth	6%	—	—
Wealth and Investment Management Growth driven by increased market valuations and positive net flows. Investments in technology platform and Advisor Gateway are improving productivity and client experience. Client assets: $2.4 trillionClient assets growth: 15% YoYNet flows: 4 consecutive quarters of positive net flowsAverage deposits: 10% increase YoYAverage loans: 12% increase YoYSecurities-based lending average balances: 31% increase YoY	13% growth	13%	—	—
Corporate Investment Bank Record quarter for investment banking fees across the firm. Growth driven by balance sheet deployment, senior talent, technology investments, and favorable market environment. Markets revenue growth: 24% YoYBanking revenue growth: 20% YoYLeveraged finance market share: 7.2%Leveraged finance rank: #3Equity capital markets share: 3.8%Equity capital markets share increase: 74 basis points YoYM&A rank: #4 among U.S. advisers by announced deal volume (climbed from #9)Non-agency CMBS book runner: #1Real estate loan syndications: #1CRE CLOs: #1Average trading-related assets: 41% increase YoYAverage loans: 26% increase YoY	16% growth	16%	—	—
Commercial Banking Investments in 20 high-density markets and focus on delivering investment banking and market products are driving strong results. Average loans (absent transfers): 9% growth YoYAverage deposits (absent transfers): 10% growth YoY	6% growth	6%	—	—
Treasury Management and Payments (across Commercial Bank and CIB) Revenue growth driven by investments in coverage teams and payment platforms, including innovation using blockchain technology.	5% growth	5%	—	—
Consumer Small and Business Banking Driven by higher deposit and loan balances, wider deposit spreads, and growth in noninterest income.	8% growth	8%	—	—
Credit Card Due to higher loan balances.	2% growth	2%	—	—
Home Lending Reflecting lower loan balances and continued reduction in servicing business, though rate of reduction has slowed. Third-party mortgage loans serviced for others: 21% reduction YoY	7% decline	-7%	—	—
Auto Due to higher loan balances, with strong credit performance. Auto originations: 41% increase YoYAuto originations: stable from Q1 FY26	33% increase	33%	—	—
Commercial Real Estate (CIB) Higher capital markets activity and loan balances offset by lower interest rates.	1% decline	-1%	—	—

WFC operating KPIs by quarter

WFC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Sep 2026 Q3 FY26	Change vs prior quarter
Common equity tier 1 ratio (CET1)	11.1% Our capital position remains strong, and our CET1 ratio of 11.1% continued to be well above our CET1 regulatory minimum plus buffers of 9.8%. Source: earnings call transcript	11.1% Our capital position remains strong, with our CET1 ratio stable at 11.1%, well above our CET1 regulatory minimum plus buffers of 9.8%. Source: earnings call transcript	11.1% We maintained our strong capital position with our CET1 ratio at 11.1%, well above our current CET1 regulatory minimum plus buffers of 9.7%. Source: earnings call transcript	11% We maintained our strong capital position with our CET1 ratio at 11%, well above our new CET1 regulatory minimum plus buffers of 8.5%, which became effective in the fourth quarter. Source: earnings call transcript	10.6% Our capital levels remained strong with our CET1 ratio at 10.6%, down from the third quarter but well above our CET1 regulatory minimum plus buffers of 8.5%. Source: earnings call transcript	10.3% Our capital levels remained strong with our CET1 ratio of 10.3%, within our stated 10% to 10.5% target range and well above our CET1 regulatory minimum plus buffers of 8.5%. Source: earnings call transcript	10.3% Our capital levels remained strong with our CET1 ratio at 10.3% within our stated 10% to 10.5% target range and well above our CET1 regulatory minimum plus buffers at 8.5%. Source: earnings call transcript	10% Our capital levels remained strong with our CET1 ratio at 10%, well above our CET1 regulatory minimum plus buffers of 8.5%. Source: earnings call transcript	-0.3 pt
Employees	—	—	212K+ I know this call is for investors, but I want to once again thank the over 212,000 employees at Wells Fargo who all contributed in one way or another to this milestone. Source: earnings call transcript	~211K Our head count has declined from a peak of approximately 276,000 in second quarter 2020 to approximately 211,000 in the third quarter 2025, down 24%, with head count reductions every quarter for 5 years. Source: earnings call transcript	—	—	197K And in the second quarter, our headcount was 197,000, down 79,000 from 6 years ago, 15,000 from last year and 3,500 from last quarter. Source: earnings call transcript	—	—
Return on tangible common equity (ROTCE)	—	—	15% And the only thing I'll just make sure we're clear on is, yes, we had 15% ROTCE in the quarter, but we also recognize that we had the gain in our Merchant Services business. Source: earnings call transcript	15.2% These efforts helped improve our return on tangible common equity to 15.2% in the third quarter. Source: earnings call transcript	—	—	17.7% Our continued focus on improving returns was evident with ROTCE increasing from 15.2% a year ago to 17.7% in the second quarter and 16.1% in the first half of 2026. Source: earnings call transcript	16.3% Our ROTCE increased from 14.7% during the first 9 months of 2025 to 16.2% during the same period this year and 16.3% this quarter. Source: earnings call transcript	-1.4 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
Advisor Gateway	launch	Q2 FY26

Risks & headwinds

Credit card growth profitability pressure Short-term (initial 2-3 years of new vintages)

New products have significant upfront costs related to marketing, promotional rates, onboarding, and allowance. Takes approximately 2 to 3 years for vintages to season and earn through these upfront costs.

Mitigation:Prioritizing longer-term results given the quality of accounts generated; evaluating growth rate each quarter to balance profitability and growth.

Macroeconomic and geopolitical uncertainty

Concerns around affordability and inflation exist, despite strong labor market and wage growth. Strong environments 'don't last forever'.

Mitigation:Watching carefully for signs of outsized risks and stress; deploying resources carefully and deliberately to build sustainable high returns that can endure market shocks and economic cycles.

Outsized risks and leverage development in capital deployment

Large amounts of capital being deployed by both banks and nonbanks across a broad range of risk assets. Leverage and risks can develop that are sometimes hard to see.

Mitigation:Staying true to risk tolerances; underwriting different pieces of financing (e.g., data centers) very differently based on credit profile and repayment; avoiding transactions with credit profiles outside comfort zone.

Net Interest Margin (NIM) compression from strategic growth Short-term (Q3 FY26)

Growth in interest-bearing deposits and markets business financing balances (which have lower spread) leads to NIM compression. NIM declined 4 bps QoQ, with modest compression expected in Q3 FY26.

Mitigation:Strategic decision to grow profitable balances and deepen client relationships; expecting NIM stabilization in Q4 FY26; belief that these activities will lead to stronger NIM and fee revenues over time.

Q&A highlights

What are the assumptions for earning asset growth to achieve the $50 billion NII target, and what drives NIM stabilization in Q4?

Management expects continued earning asset growth, including loans and securities, similar to the previous year's step-up. NIM stabilization in Q4 is anticipated as the market balance sheet growth moderates, combined with ongoing earning asset repricing.

“we don't expect to see the market balance sheet to grow at the same pace. And so the impact that we've seen over the last quarters moderates.”

asked by Kenneth Usdin · answered by Michael Santomassimo

2 min read 6 chapters

Detailed narrative

Strategic Investments Driving Growth

Wells Fargo's investments in marketing, digital account openings, and enhanced credit card products are yielding results, with consumer primary checking accounts growing for 13 consecutive quarters and new credit card accounts up 46% YoY. The company is also expanding its auto business, with originations up 41% YoY, partly due to becoming the preferred financing provider for Volkswagen and Audi vehicles in the U.S.

These initiatives are contributing to strong momentum across consumer portfolios.

Wealth Management Modernization and Client Asset Growth

Over $1 billion has been invested over the past several years to modernize the Wealth and Investment Management technology platform. In Q2 FY26, the company launched Advisor Gateway, a new desktop technology with Gen AI capabilities, designed to enhance advisor tools and client service.

These investments have contributed to a 15% YoY growth in client assets to over $2.4 trillion and 4 consecutive quarters of positive net flows, alongside strong growth in deposits and loans within the segment.

Commercial Business Expansion and Market Share Gains

The Corporate Investment Bank saw revenue growth of 16% YoY, with markets revenue up 24% and banking revenue up 20%. Strategic hiring in 20 high-density markets and increased balance sheet deployment are driving client growth and market share gains. Notably, the firm achieved a 7.2% market share in leveraged finance, ranking #3, and climbed from #9 to #4 among U.S. advisers by announced M&A deal volume, reflecting successful execution of its growth plan.

Efficiency Initiatives and Headcount Reduction

Wells Fargo has achieved 24 consecutive quarters of headcount reductions, with total headcount at 197,000, down 3,500 QoQ and 15,000 YoY. These efficiencies are being reinvested into growth areas such as branch bankers, investment advisers, commercial banking relationship managers, and technology, including AI and cyber defenses. Nonrevenue-related expenses were down from a year ago, demonstrating continued expense discipline.

Strong Credit Quality Across Portfolios

Consumer and commercial credit quality remains strong across all portfolios, with net loan charge-offs declining 10 basis points from a year ago to 34 basis points of average loans. Commercial credit charge-offs declined to 10 basis points, and consumer charge-offs declined 74 basis points, with improvements across the portfolio.

Nonperforming assets as a percentage of total loans also declined QoQ and YoY, supported by a strong employment picture and wage growth.

Strategic Balance Sheet Deployment Post-Asset Cap

Following the removal of the asset cap, Wells Fargo has seen strong balance sheet growth, with average loans up 12% and average deposits up 10% from a year ago. The markets business's trading-related assets increased 41% YoY, driven primarily by financing activities.

While these activities have lower spreads and impact NIM, they generate good returns and profitability, positioning the company to attract more flow business and deepen client relationships.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.