Wells Fargo delivers higher earnings despite revenue dip in Q1 2025

Overview

Wells Fargo posted solid results for the first quarter of 2025, supported by disciplined cost management, stable noninterest income, and continued capital returns. Despite a year-over-year decline in revenue, the firm delivered higher earnings and improved profitability ratios, benefitting from lower expenses and discrete tax gains.

CEO Charlie Scharf highlighted the firm’s momentum and progress in addressing regulatory issues, with five consent orders closed during the quarter: “This quarter was an important proof point regarding our prior comments about our confidence in our progress on our risk and control work. We expect continued volatility and uncertainty and are prepared for a slower economic environment in 2025, but the actual outcome will be dependent on the results and timing of the policy changes. We and our customers come into the current environment from a position of strength that should serve us well. We are prepared for a variety of outcomes, our focus is unwavering, and we will continue transforming Wells Fargo by investing to build a well-controlled, faster-growing and a higher-returning company while we work to better serve our customers and become more efficient.”

Q1 2025 vs. Q1 2024:

Net income increased to $4.9bn (+6% YoY), with EPS of $1.39 (compared to $1.20 in Q1 2024).
Total revenue declined slightly to $20.1bn (-3% YoY).
- Consumer Banking and Lending revenue recorded a value of 8.9bn (-2% YoY), pressured by deposit cost increases and declining auto/personal loan balances.
  - Home Lending was stable and included higher mortgage banking fees and lower net interest income on lower loan balances.
  - Credit Card was up +2% driven by higher loan balances, partially offset by lower card fees.
  - Auto was down -21% due to lower loan balances and loan spread compression.
  - Personal Lending was down -10% driven by lower loan balances.
- Commercial Banking revenue declined to $2.9bn (-7% YoY), due to lower net interest income and lease income.
  - Net interest income was down -13% due to the impact of lower interest rates, partially offset by lower deposit pricing and higher deposit balances.
  - Noninterest income was up +8% driven by higher treasury management fees, higher revenue from tax credit investments, and an increase in investment banking fees, partially offset by lower lease income and lower results from equity investments.
- Corporate & Investment Banking revenue grew to $5.1bn (+2% YoY), driven by strength in commercial real estate and debt capital markets.
  - Banking was down -4% driven by the impact of lower interest rates, partially offset by lower deposit pricing and higher investment banking revenue on increased activity in debt capital markets.
  - Commercial Real Estate was up +18% due to a gain on the sale of our commercial non-agency third-party servicing business, as well as increased capital markets activity and higher revenue in our low-income housing business, partially offset by lower loan balances and the impact of lower interest rates.
  - Markets was stable and included higher revenue in commodities and foreign exchange and lower results in structured products and credit trading.
- Wealth & Investment Management revenue increased to $3.9bn (+4% YoY), with growth in asset-based fees offsetting net interest income decline.
  - Net interest income was down -5% driven by higher deposit costs, partially offset by higher deposit and loan balances.
  - Noninterest income was up +6% on higher asset-based fees driven by an increase in market valuations.
Return on Equity (ROE) was 11.5% (vs. 10.5% in Q1 2024), while Return on Tangible Common Equity (ROTCE) recorded a value of 13.6% (compared to 12.3% in Q1 2024).
Wells Fargo returned capital aggressively in Q1 2025, repurchasing $3.5bn in common stock (44.5m shares) and benefiting from an 8% YoY reduction in share count.
The firm also paid a regular quarterly dividend and maintained a CET1 ratio of 11.1% (flat YoY), underscoring its strong capital position.

While management highlighted the strength of the firm’s diversified model, they also acknowledged macroeconomic headwinds, including potential market volatility and the evolving impact of trade policies. Nonetheless, Morgan Stanley remains focused on growth through its integrated platform, resilient business mix, and continued client engagement across segments.

Even though volatility has increased enormously recently on global markets, WFC shares appreciated by approximately +5% in the week of the announcement of the results for the first quarter of 2025, practically following the trend of the major American banks. However, compared to this year, the company’s stock price is trading down by approximately -7.8%, and since the beginning of March, when Donald Trump started the “trade tariff war”, the WFC share price has remained below the 50-day moving average, which, in the medium and long term, does not bring too optimistic feelings among investors on Wall Street.