Wells Fargo Profit Hit by Severance as Staff Cut by 5,600

Link copied

Wells Fargo Profit Hit by Severance as Staff Cut by 5,600.

companies :: 2026-01-14 :: source - bloomberg

By Yizhu Wang

Image source: Bloomberg

(Bloomberg) -- Wells Fargo & Co. missed analysts’ profit estimates as severance costs drove up expenses.

The bank spent $612 million on severance as part of a plan designed to cut costs. Expenses were $13.7 billion, compared with the $13.6 billion predicted by analysts in a Bloomberg survey, according to a statement Wednesday.

Most Read from Bloomberg

“We have built a strong foundation and have made great progress in improving growth and returns, though we have operated with significant constraints,” Chief Executive Officer Charlie Scharf said in the statement, referring to an asset cap imposed by the Federal Reserve that was lifted in June. “We are excited to now compete on a level playing field.”

Scharf said last month that he expected higher severance expenses in the fourth quarter as the bank continues to lower its cost base, and that more job cuts are likely to come this year. The company has been shrinking headcount for years in a bid to increase efficiency, and had almost 211,000 employees at the end of September. That figure was just above 205,000 at year-end.

NII, a key source of profit from lending, was $12.3 billion in the fourth quarter, lower than the $12.4 billion analysts had projected. That brought full-year NII to $47.5 billion, coming close to its guidance that 2025 NII would be about the same as in 2024.

The fourth-largest US bank generated $21.3 billion in net income for 2025, compared with analysts’ estimates of $21.6 billion.

Shares of the company, which were up 31% in the past 12 months, fell 1.2% at 7:17 a.m. in early New York trading.

Wells Fargo projected roughly $50 billion of net interest income for this year. That compares with estimates for $50.2 billion. Analysts have been predicting the lending business would rebound, as borrowers have learned to better manage policy uncertainties under the Trump administration.

This year’s expenses are likely to be about $55.7 billion, according to the bank, compared with analysts’ estimates for $55.9 billion.

Wells Fargo will now be able to dedicate more resources to growth with the ability to expand the balance sheet, Scharf said in the statement. As the firm rethinks its earnings profile, it aims for trading to be a larger driver, and broke down NII from trading activities for the first time in its quarterly reporting under Scharf. It made $358 million in markets NII for the last three months of 2025, up $178 million from a year earlier.

Banks earn trading NII by holding assets, such as bonds or derivatives, that generate interest in excess of their funding costs, often through repurchase agreements, or repo markets.

While investors are watching for any early signs of credit stress, the banking sector has largely remained strong. In 2025, Wells Fargo’s net charge-offs, or bad loans written off of its balance sheet, fell more than 16% to $3.99 billion compared to the year before, after it reported stable consumer spending and credit quality throughout the year.

The bank set new profit target in October, lifting the medium-term target for return on tangible common equity to 17% to 18%. ROTCE measures how efficiently a bank can generate earnings available to shareholders, showing the pace of growth and at what cost.

(Adds additional results starting in the 10th paragraph.)