Wells Fargo just dropped its latest numbers, and honestly, the vibe is a bit of a mixed bag. On one hand, CEO Charlie Scharf is finally taking a victory lap because that pesky Federal Reserve asset cap is a thing of the past. On the other hand, the market isn't exactly doing backflips. Why? It basically comes down to one acronym that dictates the lifeblood of any bank: NII.
The wells fargo earnings nii outlook for 2026 is officially pegged at "approximately $50 billion, plus or minus." If you're just glancing at the headlines, that sounds like a solid step up from the $47.5 billion they churned out in 2025. But when you start peeling back the layers, you realize this isn't just a simple story of a bank making more money because it’s finally allowed to grow again.
The Reality Behind the $50 Billion Target
Wall Street is a fickle place. Analysts were actually hoping for a tiny bit more—around $50.3 billion—so the $50 billion guide felt a little like a letdown. But the real story is in the "ex-markets" number. CFO Mike Santomassimo pointed out that if you strip away the volatile markets business, NII is expected to be about $48 billion.
That’s only a 3% bump from the $46.7 billion they did last year.
When you consider that the bank is planning to grow its total assets by mid-single digits, a 3% growth in interest income feels... well, a bit flat. It's like running a marathon but only moving forward an inch with every stride. The bank is essentially telling us that while they are finally free to lend more, the profit they make on those loans is getting squeezed by the shifting interest rate environment.
Rate Cuts and the 2026 Math
Wells Fargo isn't guessing in a vacuum. Their outlook assumes the Fed will pull the trigger on two to three rate cuts over the course of 2026. Usually, when rates fall, banks' profit margins on loans tighten up faster than they can lower the interest they pay you on your savings account.
It's a classic squeeze.
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They’re also betting on the 10-year Treasury yield staying relatively stable. If the "long end" of the curve stays put while "short rates" drop, the bank can actually breathe a bit easier. This is because they can keep charging decent rates on long-term loans while their own funding costs (what they pay for deposits) start to slide.
- Average Loans: Expected to grow mid-single digits.
- Average Deposits: Also looking at mid-single-digit growth.
- The "Markets" Wildcard: Expected to contribute about $2 billion to the NII total.
Is the Efficiency Story Actually Working?
We have to talk about the costs. You can't look at the wells fargo earnings nii outlook without looking at what it costs to keep the lights on. Wells is projecting noninterest expenses to hit roughly $55.7 billion in 2026. That’s up from $54.8 billion in 2025.
Wait, isn't Charlie Scharf the "efficiency king"?
The bank took a massive $908 million severance hit in the second half of 2025 just to set up headcount reductions for this year. They’ve cut staff for 22 consecutive quarters. But even with all that cutting, they’re still spending more. Why? Because being a modern bank is expensive. They are dumping $1.1 billion into technology and another $800 million into "merit and performance-based compensation."
Basically, they are firing people in back-office roles to hire 185 new commercial bankers and software engineers. It's a pivot, not just a cut.
The Share Buyback Slowdown
For years, Wells Fargo has been a share-buying machine. They bought back $18 billion worth of stock in 2025 alone. If you've been holding the stock, you've loved this because it makes your slice of the pie bigger.
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But there’s a catch for 2026.
Scharf was pretty blunt: share repurchases will likely be lower this year. Since the asset cap is gone, the bank wants to use its capital to actually be a bank—lending that money out to grow the balance sheet rather than just handing it back to investors. It's the right move for the long term, but it removes a massive safety net that has propped up the stock price for a while.
Why Investors are Skeptical
There’s a specific concern about "NII ex-markets." In the fourth quarter of 2025, the run rate for NII was actually quite strong, but the 2026 guidance implies that things might stall out.
If you annualize the Q4 numbers and adjust for the number of days in the year, the $48 billion target for regular banking NII suggests that they aren't expecting much momentum as the year progresses. They’re basically saying, "We’ve reached a plateau, and we’re just going to hang out here for a bit."
Then there's the credit quality. Commercial real estate—specifically office space—is still the elephant in the room. Santomassimo mentioned that office losses will be "lumpy." That’s a polite way of saying they might see some ugly quarters if a few big buildings go bust at the same time.
Actionable Insights for the 2026 Horizon
If you're watching Wells Fargo right now, the wells fargo earnings nii outlook tells you that the "easy" part of the turnaround is over. The regulatory hurdles are mostly cleared. Now comes the hard part: competing in a world where everyone else is also fighting for high-quality loans.
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1. Watch the Deposit Beta: Keep a close eye on how quickly Wells lowers its deposit rates as the Fed cuts. If they can drop what they pay you faster than the yield on their loans falls, they might beat that $50 billion target.
2. The 10-Year Treasury is Key: If long-term rates spike while the Fed cuts short-term rates, Wells Fargo wins big. This "steepening" of the yield curve is exactly what their balance sheet is built for.
3. Loan Growth vs. Margin: If the bank hits its mid-single-digit loan growth target but NII stays flat, it means their margins are getting crushed. You want to see NII growing at least as fast as the loan book.
4. Commercial Real Estate (CRE) Watch: Don't ignore those "lumpy" office losses. A sudden spike in charge-offs could easily wipe out any gains they make from higher lending volumes.
The bank is targeting a Return on Tangible Common Equity (ROTCE) of 17% to 18% in the medium term. They hit 15% in 2025. Moving that needle the last two or three percentage points is going to require more than just cutting staff; it’s going to require the $50 billion NII target to be a floor, not a ceiling.
The era of remediation is over. The era of "prove it" has begun.