Wells Fargo Navigates Profit Miss Amid Strategic Overhaul

Wells Fargo failed to meet Q4 profit estimates due to $612 million in severance costs linked to CEO Charlie Scharf's operational streamlining. Despite a rise in net interest income, expectations were missed. The bank forecasts increased interest income and growth in loan sectors by 2026.

Wells Fargo fell short of Wall Street's profit expectations for the fourth quarter, largely due to $612 million in severance expenses aimed at streamlining operations under CEO Charlie Scharf. The outcome sent the bank's shares down by 2.5%.

Despite a 4% increase in net interest income to $12.33 billion, the figure did not meet the anticipated $12.46 billion, as reported by LSEG. In response, Wells Fargo has trimmed its workforce to fund future growth, closing multiple regulatory consent orders linked to its previous fake-accounts scandal.

Looking ahead, the bank forecasts $50 billion in interest income for 2026. It plans growth in commercial, auto, and credit card loans, focusing on AI-driven expansion of its credit card offerings. CFO Mike Santomassimo noted the U.S. President's proposal to cap credit card interest could influence lending approaches.

(With inputs from agencies.)