Wells Fargo&Co.

Leading market positions in numerous U.S. banking businesses Long-standing, very strong deposit franchise, with a solid balance sheet Good track record of loan credit risk management Prolonged reputational and regulatory issues, including an asset cap imposed by the Federal Reserve Governance, compliance, and operational risk procedures that still need improvement Profitability pressure from the pandemic, low interest rates, and the regulatory-imposed asset cap Our stable outlook reflects our expectations that over the next two years, Wells Fargo&Co. will progress in resolving the regulatory consent order which imposed the asset cap and that its preprovision profitability will gradually improve, although likely not to its historically strong levels. We also think Wells' asset quality deterioration from the economic downturn will

...Outlook: Stable Our stable outlook reflects our expectations that over the next two years, Wells Fargo & Co. will progress in resolving the regulatory consent order which imposed the asset cap and that its preprovision profitability will gradually improve, although likely not to its historically strong levels. We also think Wells' asset quality deterioration from the economic downturn will not be outsized and will not overly weigh on earnings and capital. We expect Wells will maintain a common equity Tier 1 (CET1) ratio above its target of 10% and a risk-adjusted capital ratio (RAC, an S&P Global Ratings proprietary capital ratio) at or above 8%-8.5%. We also expect that growth restrictions will not significantly hurt its competitive positions in key businesses and that new management will execute on its strategy to improve profitability without hurting company morale. We could lower the ratings if Wells does not show timely progress on improving its governance and operational risk management...

Full Report