Solid consumer results at Wells Fargo propel larger profits

• Key insight Wells Fargo said third-quarter nonaccrual consumer loans fell more than 8% year-over-year to $2.9 billion.
• Expert quote:  “So as long as the employment picture stays quite strong, people can continue to operate, despite higher prices and the cumulative impact we’ve seen with inflation.” — Chief Financial Officer Mike Santomassimo
• Forward look: Wells Fargo expects spread income to hit $13 billion in the fourth quarter, signalling an annualized run rate that exceeds some analysts’ projections for 2027.

Consumers are continuing to spend on cars and credit cards, which helped Wells Fargo inch past analysts’ quarterly earnings expectations. And the banking giant’s senior executives don’t see the upward trend changing in the near term.

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Wells Fargo reported net income Tuesday of $5.95 billion, or $1.87 per diluted common share. Analysts had been forecasting $1.85 per share, according to S&P Capital IQ.

The bank reported $10.7 billion of third-quarter consumer revenue, just under half of its company-wide $21.9 billion total and up 5% from the same period in 2025. Driving the increase was strong growth in new credit-card accounts and auto-loan originations.

“While economic uncertainty exists and consumer sentiment remains mixed, our data shows that our consumer and business customers are doing well,” Chairman and CEO Charlie Scharf said in a press release. “We had continued growth in consumer primary checking accounts, opened more than 660,000 new credit card accounts, and auto originations increased 15% from a year ago.”

Despite research pointing to an increase in the number of households grappling with financial vulnerability, along with a souring outlook due to persistent inflation and rising interest rates, bank surveys indicate that consumer spending remains strong across income levels, with momentum picking up entering the holiday season.

At the $2.25-trillion-asset Wells Fargo, Chief Financial Officer Mike Santomassimo told reporters that wage growth is undergirding the bank’s consumer results. He expects the consumer sector to remain stable as long as the job market holds steady.

“When you look at the trends that we’re seeing, really across all wealth and income cohorts, particularly on the lower end of the income scale for the clients that we deal with, wages are largely keeping up with inflation,” Santomassimo said. “So as long as the employment picture stays quite strong, people can continue to operate, despite higher prices and the cumulative impact we’ve seen with inflation.”

Wells Fargo reported double-digit year-over-year increases in debit-card purchase volume and average auto loans, while credit-card loans increased a more modest 5.5%. Meanwhile, continued strong asset quality was reflected by declining levels of nonaccrual consumer loans, which totaled $2.9 billion on Sept. 30, down 8.4% from a year earlier.

In a similar vein, JPMorganChase, which also released its third-quarter results Tuesday, reported net chargeoffs totaling $1.98 billion in its consumer and community banking business segment, essentially level with the same period in 2025.

Commenting on a conference call with analysts, Scharf said he expects consumer credit will weaken “at some point,” but he was quick to add that Wells Fargo does “not see signs of this yet.”

Across the industry, consumer banking has been a strong point, TD Cowen analyst Scott Siefers wrote Thursday in a research note.

“Remarkably resilient customers have kept credit quality notably benign, and the industry has absorbed discrete concerns, [like] commercial real estate and nondepository financial institutions, with little visible damage,” Siefers wrote.

Wells Fargo reported quarterly net interest income of $12.5 billion, up about 5% from the same period in 2025. Spread income should reach $13 billion in the fourth quarter and hit the company’s $50 billion target for all of 2026, according to Santomassimo.

Average loans and average deposits both increased 11% year-over-year, to $1.03 trillion and $1.48 trillion, respectively.

The fee-income picture was more mixed. While Wells Fargo reported increases in wealth and investment-banking revenue, net gains from trading activities experienced a 21% year-over-year falloff. Consolidated noninterest income fell 1.4% from the third quarter of 2025 to $9.35 billion.

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RBC Capital Markets analyst Gerard Cassidy characterized Wells Fargo’s third-quarter results as “solid.” David Chiaverini, a Jefferies analyst, described the report as “mixed.” He pointed to the soft fee-income numbers but also noted the $13 billion fourth-quarter net-interest-income estimate “implies a $52 billion annualized run rate” that exceeds his 2027 estimate.

Investors appear to have locked in on fee income. Wells Fargo shares closed down 3.1% Tuesday afternoon, at $80.74.