Wells Fargo's (WFC.US) stock price “soared to the sky” after the regulatory shackles were lifted! Analyst: The all-time high is not the end

The Zhitong Finance App noticed that Wells Fargo Bank (WFC.US) stock price broke through a record high of 89.39 US dollars during yesterday's trading session and finally settled at 90.21 US dollars. The market expects its profits to continue to grow in double digits.

The rise in Wells Fargo's stock price is in line with the strong trend in the overall banking sector, while the strengthening of the banking sector is mainly driven by rising market expectations that the Federal Reserve will cut interest rates soon.

Wells Fargo management expects net interest income (NII) of $12.4 billion to $12.5 billion for the fourth quarter of 2025, compared to $11.8 billion for the same period last year.

Unlocking growth potential by lifting asset caps

In June 2025, Wells Fargo ushered in a critical moment as the Federal Reserve lifted the $1.95 trillion asset cap imposed by Wells Fargo in 2018 due to the false account scandal. This asset cap limited the growth of its balance sheet, thereby limiting the bank's full potential. The lifting of growth restrictions reflects the remarkable progress Wells Fargo has made in addressing its own flaws and that the bank has met the conditions needed to lift growth restrictions.

With asset caps lifted, Wells Fargo can now increase deposits, expand loan portfolios, and broaden securities holdings. This will result in an increase in net interest income (NII), which is an important source of income for banks because the balance sheet is likely to include more interest-bearing assets.

Additionally, Wells Fargo will have more opportunities to expand its charging services, such as payment services, asset management, and mortgage issuance. The bank's transaction-related assets increased by about 50% compared to the end of 2023, and the growth rate of investment banking business accelerated. Fee revenue for the first nine months of 2025 increased by 19%.

After getting rid of previous balance sheet restrictions, Wells Fargo is refocusing on deposit growth, focusing on expanding the size of checking accounts through enhanced marketing and digital customer development. In addition, the bank is also strengthening its credit card business. The number of new accounts increased by 9% in the first nine months of 2025, reflecting an increase in customer penetration and diversification of transaction fee revenue sources. These measures will help increase the company's profitability.

The cost transformation is progressing smoothly

Wells Fargo has continued to make steady progress in its efforts to improve the overall cost efficiency of the bank over the years. The bank is actively implementing various cost reduction strategies, such as streamlining the organizational structure, optimizing branch layout, and layoffs. These measures resulted in the company's non-interest expenses growing at a compound annual rate of negative 1.3% over the four years ending 2024. Despite a slight increase in spending in the first nine months of 2025 as the bank accelerated operating investments.

Optimizing the branch office network remains a key area of focus for Wells Fargo. Wells Fargo is increasingly strategic in selecting branch locations, and plans to reduce the total number of branches by 2.1% year-on-year to 4,108 by the end of the third quarter of 2025. Wells Fargo also continued to lay off staff in order to achieve efficiency goals. By the end of the same period, the number of employees had decreased by 4.3% year-on-year to 211,000.

Meanwhile, Wells Fargo is investing heavily in digital capabilities and process automation to permanently reduce structural costs and increase operational leverage. These initiatives are expected to result in significant cost savings, and management expects to cut gross expenses of $15 billion by the end of the year. Together, these efforts will help continue to increase profit margins and enhance overall profitability.

Adequate liquidity helps allocate capital

As of September 30, 2025, Wells Fargo's long-term debt was $177.8 billion, while short-term loans were $23.6 billion. The company's liquidity conditions are good. As of the third quarter of 2025, its liquidity coverage rate reached 121%, exceeding 100% of the regulatory minimum requirements. As of the same date, its total current assets were $486.1 billion.

As a result, Wells Fargo rewards shareholders handsomely. After passing the Federal Reserve's 2025 stress test, the company raised its third-quarter common stock dividend by 12.5% to 45 cents per share. Wells Fargo has raised its dividend six times in the past five years, and the current dividend yield is 2%.

Wells Fargo has implemented a share repurchase program. Following the announcement of a $30 billion share repurchase plan in July 2023, its board of directors approved an additional $40 billion share repurchase plan in April 2025. As of September 30, 2025, the company still has up to $34.7 billion in common share repurchase authorizations.

The potential for growth is not exhausted

The market's average rating for Wells Fargo is “buy.” The average target share price is around $93.71 to $95.54, and there is potential room for growth compared to the current stock price.

Analysts generally believe that the lifting of regulatory restrictions (such as asset caps) has brought growth opportunities to Wells Fargo, while cost control and interest rate cut expectations will help improve net interest income and overall profitability.