Wells Fargo (WFC) Q3 2026 Earnings Call: Q&A Summary

Q: John McDonald of Truist Securities asked for clarification on the drivers of net interest income growth expected in the fourth quarter and the split between markets and non-markets NII.

A: Mike Santomassimo explained that Q4 NII will benefit from loan growth, deposit growth, and asset repricing. He noted that while markets NII is liability-sensitive and will be slightly below $2 billion, non-markets NII will offset this to reach the $50 billion full-year target.

Q: Steven Chubak asked for early thoughts on the drivers of 2027 net interest income relative to the fourth quarter exit rate.

A: Santomassimo noted that entering the year with a strong Q4 exit rate and higher-for-longer rates are net positives, though specific guidance will be provided in January.

Q: Erika Penala of UBS asked if the 4% to 5% growth rate implied by the Q4 exit rate is the right ballpark for 2027 NII.

A: Santomassimo stated that the company will provide more specific guidance in January, but noted that a strong fourth quarter sets the company up well for the coming year.

Q: David Chiaverini of Jefferies asked about the outlook for loan growth and the bank's appetite for financing AI infrastructure.

A: Santomassimo confirmed that loan growth will exceed initial guidance. Regarding AI infrastructure, he stated the bank is cautious and has hard limits on financing data center and chip-related risks.

Q: Scott Siefers of TD Cowen asked how a period of sustained higher rates changes the bank's view on customer health and resilience.

A: Santomassimo stated that employment and wages remain strong, which supports consumer activity despite higher rates. He added that commercial clients are prudent with leverage, so credit profiles remain stable.

Q: John Pancari of Evercore ISI asked if the bank is observing incremental stress in commercial real estate valuations due to higher rates.

A: Santomassimo said that while higher rates pressure valuations, they are not seeing acute stress in commercial real estate at this time, though it will take time for the impact to play out.

Q: Ken Usdin of Autonomous Research asked about capital and balance sheet utility, specifically regarding RWA growth and capital return.

A: Santomassimo said the strategy for growth and capital deployment remains unchanged, focusing on optimizing the balance sheet. Charlie Scharf added that the company has flexibility to manage capital and return it to shareholders.

Q: Ken Usdin asked for the bank's view on deposit betas in this rising rate cycle compared to the prior cycle.

A: Santomassimo stated that betas in this cycle are tracking similarly to the last cycle, with corporate banking having the highest betas and consumer banking being more stable.

Q: Manan Gosalia of Morgan Stanley asked when the deposit mix might start to improve consistently.

A: Santomassimo advised focusing on total dollar growth rather than mix, noting that interest-bearing deposits are valuable and noninterest-bearing balances will grow as consumer and treasury management businesses expand.

Q: Manan Gosalia asked if the fourth quarter expense guidance is a good jumping-off point for next year.

A: Santomassimo noted that the Q4 expense step-up is seasonal and not a jumping-off point for next year, as the company remains committed to efficiency.

Q: Erika Najarian of UBS asked how investors should think about buybacks given Moody's recent comments on CET1 ratios.

A: Santomassimo dismissed the Moody's comment as over-interpreted, stating the company will manage capital within its 10% to 10.5% target range. Scharf added that they have significant flexibility to deploy capital.

Q: David Chiaverini asked if the stable NIM guide for the fourth quarter assumes a reduction in markets business balances.

A: Santomassimo clarified that they are not reducing the markets business to hit NIM targets and expect continued activity growth.

Q: Ebrahim Poonawala of Bank of America asked how the bank's investments in business banking, wealth, and payments are monetizing.

A: Scharf highlighted that investments in wealth, commercial banking, and credit cards are already driving revenue growth, and he expects continued acceleration in these areas.

Q: Ebrahim Poonawala asked about the adoption and opportunity of tokenized deposits.

A: Santomassimo explained that tokenized deposits improve cross-border payment speed and efficiency, expanding the addressable market without needing a global branch network.

Q: Chris McGratty of KBW asked if markets and investment banking are intended to be larger drivers of ROTCE over time.

A: Scharf clarified that while markets and investment banking are important for returns, they represent a smaller portion of total revenue, so they are not expected to drive outsized results in any single quarter.

Q: Matt O'Connor of Deutsche Bank asked about the seasoning of credit card promos and their impact on profitability.

A: Santomassimo explained that recent vintages are maturing, and profitability will increase as these accounts season over the next few years.

Q: Matt O'Connor asked how the bank maintains returns in the auto business while others pull back.

A: Santomassimo noted that the auto business is growing through OEM relationships and a shift toward near-prime lending, maintaining acceptable returns.

Q: John Pancari asked for color on underlying trends in trading and investment banking revenue.

A: Santomassimo stated that IB fees are growing, particularly in M&A, and markets revenue remains stable despite September volatility.

Q: An unnamed analyst asked if AI agents might reduce deposit inertia and lead to mass movement of deposits to higher-yielding alternatives.

A: Scharf argued that AI agents will not cause mass movement of deposits because customers value the primary banking relationship and payment services, and the idea is overdone.