Wells Fargo on Tuesday beat Wall Street estimates for third-quarter profit and raised its closely watched profitability target after regulators removed an asset cap imposed on the bank, paving the way for it to pursue growth.
The U.S. Federal Reserve lifted the lender’s seven-year, $1.95 trillion asset cap in June, drawing a line under its fake accounts scandal and freeing it to accelerate CEO Charlie Scharf’s growth plans.
Shares of the San Francisco, California-based bank rose 1.7% in premarket trading.
Strong loan growth
The bank is targeting a 17% to 18% return on tangible common equity (ROTCE) over the medium term, compared with its earlier expectations of 15%.
Wells Fargo registered a ROTCE of 15.2% in both the second and third quarters.
Wall Street had been anticipating the bank to raise the target following the removal of the cap, a punishment that restricted its expansion.
Net income was $5.59 billion, or $1.66 per share, in the three months ended Sept. 30, it said on Tuesday. That compares with $5.11 billion, or $1.42 per share, a year earlier.
Analysts had expected a profit of $1.55 per share, according to estimates compiled by LSEG.
“We grew our balance sheet, including the highest linked-quarter loan growth in over three years. Credit performance was strong and continued to improve,” Scharf said in a statement.
“While some economic uncertainty remains, the U.S. economy has been resilient and the financial health of our clients and customers remains strong.”
The fourth-largest U.S. lender has closed seven regulatory punishments, known as consent orders, this year and 13 since 2019. It still has one remaining consent order from 2018.
Wells Fargo’s shares have gained 12.4% this year as of last close, underperforming rivals JPMorgan Chase and Citigroup.
Investment banking shines
Dealmaking has rebounded as corporate boardrooms shrugged off persistent uncertainty from President Donald Trump’s trade policies and chased big-ticket purchases in their pursuit of scale.
Global dealmaking surged past the $3 trillion mark in the first nine months of 2025, lifted by a 33% jump in U.S. M&A volumes, according to data from Mergermarket.
Wells Fargo’s investment banking fees increased 25% to $840 million in the quarter from a year earlier. Fees are up 19% through the first nine months of 2025, from a year earlier.
JPMorgan Chase Tuesday raised its full-year forecast for net interest income after strong investment banking and trading performance helped it beat profit expectations.
Wells Fargo has been steadily building out its investment banking business, tapping dealmakers from rivals to bolster its ranks.
The bank clinched a major win in the third quarter, advising freight rail giant Union Pacific on its $85 billion acquisition of smaller rival Norfolk Southern — the largest deal announced globally this year.
Wells Fargo also advised buyout firm Sycamore Partners on its $23.7 billion take-private deal for U.S. pharmacy chain operator Walgreens Boots Alliance, which was finalized in August.
