By Arasu Kannagi Basil and Nivedita Balu
July 14 (Reuters) – Wells Fargo beat Wall Street estimates for second-quarter profit as volatile markets kept its trading desks busy, while strong loan growth boosted interest income.
The fourth-largest U.S. lender’s net income jumped 17% to $6.41 billion, or $2.00 per share, in the three months ended June 30, it said on Tuesday. Analysts had expected a profit of $1.72 per share, according to estimates compiled by LSEG.
“Consumer spending is higher, charge-offs and delinquencies are lower, and savings and investments are growing across consumer segments. Businesses are cautious but balance sheets and cash flows remain strong resulting in strong credit performance,” CEO Charlie Scharf said in a statement.
The bank’s shares, which have underperformed peers this year with a 6% drop, dropped 1.9% in premarket trading. The broader sector was under pressure after JPMorgan fell 2.6% following its results.
The lifting of the $1.95 trillion asset cap last year drew a line under Wells Fargo’s regulatory constraints and freed it to accelerate Scharf’s growth plans.
The bank is growing its loan book by focusing on expanding its credit card and auto businesses, while also hiring bankers from rivals in its commercial business to drive growth.
Wells Fargo’s net interest income (NII), the difference between what a bank earns on loans and pays out on deposits, rose 5% to $12.32 billion in the quarter from a year earlier. Average loans jumped 12% from a year earlier.
The San Francisco, California-based bank retained its annual forecast for interest income at roughly $50 billion.
NII has been a key focus as investors watch the pace and sustainability of earnings growth after the asset cap removal. The metric has fallen short of expectations in recent quarters as the bank’s deposit mix normalizes.
The U.S. economy has stayed resilient as higher tax refunds cushioned the impact of elevated energy prices following the conflict in the Middle East. But worries remain around the impact on inflation.
“Concerns around affordability and inflation exist, but the labor market and wage growth remain strong. We know that such favorable conditions do not go on forever so we are being selective about how much and where to grow,” Scharf said.
BUMPER TRADING QUARTER
The trading business also gained momentum as Wells Fargo deployed more balance sheet to the markets business, which was constrained during the asset-cap era.
The bank’s markets revenue, which includes its trading business, jumped 24% to $2.21 billion in the second quarter.
Equities trading revenue surged 64%, while fixed income, currencies, and commodities rose 10%.
Rivals JPMorgan Chase and Bank of America on Tuesday also reported a jump in second-quarter profit, driven by dealmaking and strong trading.
INVESTMENT BANKING SHINES
Wells Fargo’s investment banking fees jumped 35% to $939 million in the quarter from a year earlier, driven by higher debt and equity underwriting fees.
Dealmaking has accelerated in 2026 as companies take advantage of a more relaxed regulatory environment under President Donald Trump and strike mega deals to build scale.
Equity capital markets also had a blowout quarter, underpinned by a wave of large initial public offerings and AI-linked follow-on share sales.
The bank won mandates on several landmark transactions during the quarter, including advising U.S. utility NextEra Energy on its $67 billion deal for rival Dominion Energy.
Wells Fargo served as a joint bookrunner on SpaceX’s blockbuster $86 billion IPO, the largest on record. It also advised Apollo on a $35 billion financing package supporting AI lab Anthropic’s compute expansion.
The bank has steadily expanded its investment banking business and is increasingly winning bigger and more complex M&A deals.
Wells Fargo climbed to fourth place in U.S. M&A rankings by volume in the first half of 2026 from eighth a year earlier, according to Dealogic data.
HEADCOUNT BREAKS BELOW 200K MARK
Wells Fargo ended June with 197,466 employees, compared with 200,999 as of March 31. The bank’s headcount has fallen every quarter since late 2020.
Under Scharf, the bank has streamlined its workforce, leaning on cost cuts to fund long-term growth initiatives.
Wells Fargo executives have said the bank has room to further cut headcount even before accounting for potential productivity gains from AI.
(Reporting by Arasu Kannagi Basil in Bengaluru and Nivedita Balu in Toronto; Editing by Sriraj Kalluvila)
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