Wells Fargo Seeks Greater Fee-Based Traction While Economic Ambiguity Reigns

Economic uncertainty is casting a long shadow over the year ahead. Bank leaders are framing 2025 as a year of “wait and see” marked by resilience, optionality and gradual acceleration. 

That was the story for Wells Fargo’s Q1 earnings call Friday (April 11), where CEO Charlie Scharf and CFO Mike Santomassimo struck a cautiously optimistic tone, outlining progress on fee diversification, credit quality and operational efficiency while acknowledging the volatile macroeconomic environment that continues to test both forecasting and investor patience.

“We support the administration’s willingness to look at barriers to fair trade for the United States, though there are certainly risks associated with such significant actions. Timely resolution which benefits the U.S. would be good for businesses, consumers and the markets. We expect continued volatility and uncertainty and are prepared for a slower economic environment in 2025,” Scharf told investors.

Wells Fargo notched $4.9 billion in net income, or $1.39 per diluted share — a 16% jump year-over-year. The financial institution (FI) also managed to deliver solid bottom-line growth despite headwinds including declining net interest income and modest loan contraction, showcasing progress in cost control, strategic divestitures and regulatory cleanup.

Among the major themes underscored in Wells Fargo’s recent performance was the strategic reduction in dependence on net interest income. While revenue declined year-over-year due to expected drops in interest income, the bank successfully grew fee-based revenue across many business segments.

This shift reflects a broader trend in the industry — financial institutions (FIs) are increasingly focusing on non-interest income streams such as investment advisory, treasury management and merchant services to buffer against market volatility and interest rate uncertainty.

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Perhaps the most consequential milestone for Wells Fargo in Q1 wasn’t financial but regulatory. The bank succeeded in terminating five consent orders during the quarter, bringing the total to 11 closures since 2019.

Scharf highlighted this as a pivotal signal that Wells Fargo is now a materially different institution from the one that had previously drawn sustained scrutiny from regulators.

“These recent closures reflect that we have completed much of the common risk and control infrastructure work,” he said.

He credited the firm’s revamped management structure and investments in internal controls for the progress and reaffirmed the closure of remaining orders as the top priority.

This evolution is also supported by improved efficiency measures. Wells Fargo reported headcount reductions for 19 consecutive quarters, driven by a disciplined approach to cost-cutting and process optimization. The reinvestment of these savings into technology and talent further strengthens their digital and commercial capabilities.

Importantly, the commercial loan book at Wells Fargo showed modest growth for the first time since early 2023, indicating renewed demand despite economic uncertainty. Treasury management and tax credit investments also contributed positively, reflecting innovation in corporate financial solutions.

The bank’s consumer segment also showed signs of progress. Mobile banking users grew 4% year-over-year, and digital account openings continued to climb. The credit card business benefited from ongoing investment and saw loan growth in line with expectations, although card charge-offs were seasonally higher. 

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Net charge-offs for Wells Fargo declined to 45 basis points of average loans, down from 53 basis points last quarter, signaling strong credit quality — especially in commercial lending. Consumer delinquencies appear to have stabilized at historical norms and management reiterated that payment rates on unsecured portfolios remain strong.

Importantly, the bank did modestly adjust its allowance for credit losses to reflect potential economic softness. However, CFO Santomassimo stressed that overall coverage remains conservative, with downside scenarios — such as 5.8% unemployment — already baked into their modeling.

“Our approach continues to be disciplined and proactive,” he said. “We’re well-positioned to absorb macroeconomic shocks should they materialize.” 

Scharf also stepped in and hinted at the future potential once the Federal Reserve lifts Wells Fargo’s long-standing asset cap. While he avoided specifics, he suggested that growth in areas like advisory, underwriting, payments and digital banking could accelerate meaningfully.

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