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.

Squeeze the global economy in one spot, and it just bulges out somewhere else.

On Wednesday, the Chinese government announced that its trade surplus rose 20% to an all-time high of $1.2 trillion in 2025, even as the trade war led to a marked drop in exports to the US.

With Or Without You

Shipments to the US, China’s longtime largest trading partner (excluding blocs such as the European Union or the Association of Southeast Asian Nations), fell 22% last year because of new trade barriers. Chinese imports from the US, meanwhile, slumped more than 14%. In a press conference, Wang Jun, the deputy director of China’s General Administration of Customs, was also quick to note that its trade surplus would not have been so large if “some countries” had not “politicized economic and trade issues and restricted exports of high-tech products to China for various reasons.” While Wang wasn’t specific, it sure sounds like he was referring to us.

Without the US, China found plenty of customers elsewhere. Exports to Africa rose 26%, to ASEAN countries 13%, to the EU 8%, and to Latin America 7%. Crucially, the surplus came as exports of higher-end goods, such as cars and semiconductors, jumped 20%, while exports of lower-end goods, such as sneakers and toys, decreased. Exports of rare-earth minerals, which became a trade war trump card, surged to their highest levels in over a decade.

Of course, the trade gap has nearly as much to do with what’s happening inside of China as it does outside of China:

• Imports remained essentially flat year-over-year, reflecting both continued weaker consumer demand and a renewed focus on economic self-reliance, as outlined in Beijing’s recent five-year economic plan.
• The bulging trade imbalance doesn’t appear sustainable: “As the second-largest economy in the world, China is simply too big to generate much growth from exports, and continuing to depend on export-led growth risks furthering global trade tensions,” International Monetary Fund managing director Kristalina Georgieva said in a recent news conference.

Port Court: Whether the new trade world order continues may come down to the US Supreme Court, which is set to rule on the legality of the White House’s tariff-via-emergency-order regime … at some point. The court could have, but did not, issue a ruling in the case on Wednesday, and has yet to say when it will announce its next batch of decisions. How’s that for a cliff-hanger?

A 100-year-old retailer is headed to the bargain bin. Saks Global — the parent company behind Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman — has become the latest department store owner to file for Chapter 11 bankruptcy protection. The company said Wednesday that it secured $1.75 billion in financing to keep its store doors open and named a new CEO.

But whether some fast cash will lead to a long-term recovery for Saks is still being sorted and folded.

Trouble on Fifth Avenue

The writing for Saks was on the dressing room wall. In December, Saks missed an interest payment as part of its debt-fueled merger with Neiman Marcus. Since taking on billions in debt in 2024 to buy Neiman Marcus, Saks piled up past-due bills from vendors and brands, The Wall Street Journal reported. Vendors then withheld their stock, leaving shelves sparse for any shoppers looking for the latest trends. As the department store brand’s stock dwindled, so did its sales.

Saks follows in the footsteps of one-time rivals such as Barneys New York and Lord & Taylor with the bankruptcy filing, but that doesn’t mean the whole luxury sector is unravelling:

• Luxury sellers like Saks face increased competition from online outlets, including brands’ own direct-to-consumer sites. Prada sales rose for 19 straight quarters as of this fall, driven by Gen Z-fave Miu Miu. Most of its sales come from its own stores and website. (Not to mention, AI was a top topic of discussion at the National Retail Federation’s conference this week in New York, as retailers like Target start letting shoppers check out in ChatGPT.)
• Bloomingdale’s, meanwhile, has bucked the bankruptcy trend for department stores and staved off online competition. Bloomingdale’s and makeup seller Bluemercury boosted sales in the fall quarter for parent company Macy’s, which has opened new stores for both brands and expanded Bloomingdale’s stock of luxury goods.

Further Off Fifth: Last year, more than 8,000 retail stores shuttered their doors, a 12% jump from 2024, Coresight Research found. If Saks can survive its slump, it will probably slim down its store count. Saks said it is “evaluating its operational footprint,” which includes 33 Saks stores, 70 Saks Off 5th stores and two Bergdorf Goodman locations — plus 36 Neiman Marcus locations. The merger between Neiman Marcus and Saks was meant to create a shopping superpower, but instead may have saddled Saks with extra baggage.