Freed from Asset Cap, Wells Fargo Ramps up Lending

Severance costs deprived Wells Fargo of a full-fledged victory lap to close out 2025, but the underlying numbers tell a different story: Freed from its Fed-imposed seven-year asset cap, the bank is finally growing again.

“We have built a strong foundation and have made great progress in improving growth and returns, though we have operated with significant constraints,” CEO Charlie Scharf said in a news release, referring to a $1.95 trillion cap on assets imposed by the Federal Reserve in 2018 after a series of scandals. “We are excited to now compete on a level playing field and are able to dedicate even more resources to growth with the ability to grow our balance sheet.”

Net income climbed 5.5% to $5.4 billion, or $1.62 a share, trailing estimates of $1.67 a share, in part because of its $612 million in severance costs. Net interest ‌income rose 4% from the previous year to $12.3 billion, also below analysts’ expectations. 

Leaning on Lending 

Loans in the corporate and investment banking business climbed 14% in the three months through December, reflecting the bank’s newfound maneuvering room to compete with US behemoths including JPMorgan Chase, Bank of America and Citigroup. Wells Fargo has been somewhat of a loser in investment banking compared with its peers in recent years. It’s got a smaller trading desk and a US-focused reach, and the aforementioned asset cap limited its ability to deploy capital toward that part of the business. 

“It’s interesting to see them prioritize that business now; after an aggressive hiring spree, they jumped up to eighth position in the investment banking league table, from 14th a year ago,” Sean Dunlop, Morningstar director of equity research, told The Daily Upside. “There’s no doubt that the firm is more aggressively going after markets like investment banking that it views as attractive now that it isn’t so severely capital-constrained.” 

Wells Fargo is also looking to ramp up efforts in full-spectrum lending: 

• On the earnings call, executives indicated Wells is increasingly willing to compete in lending markets beyond the higher FICO credit-score customers that it prioritized during the asset-cap period. “They were deliberate about highlighting that they would do so only judiciously, without creating a tail risk in their lending book,” Dunlop says. 
• Average loans in the consumer banking and lending arm of the business rose just 2% from a year ago, but will be a key area to watch as the bank continues to grow its business sans asset cap. 

Cap Concerns: Like many of its peers, Wells Fargo weighed in on President Trump’s proposed 10% cap on credit card interest rates for one year. “It would have a significant negative impact on credit availability for a wide spectrum of people, and it would have a negative impact on economic growth if this type of cap was mandated,” Chief Financial Officer Michael Santomassimo said on a call with reporters Wednesday.