Wells Fargo&Co.

Our stable outlook reflects our expectations that, over the next two years, Wells 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 any potential asset quality deterioration will not be outsize or 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&PGR proprietary capital ratio) at or above 8.0%-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

...Wells' core preprovision revenue should improve in 2022. Excluding one-time items, such as gain on sale of securities or sizeable mark-ups of its private equity portfolio, we expect Wells Fargo & Co. to deliver higher core pre- provision revenue in 2022, largely driven by an increase in net interest income and lower expenses. There is still no clarity as to when Wells will be released from the asset cap imposed by regulators. On the company's fourth-quarter earnings call, management stated there is still "a substantial amount to do" to remove the asset cap. Still, despite the asset cap, we think Wells will be able to grow loans in 2022. The Fed's tapering of its balance sheet should also ease pressure on Wells bumping up against its asset cap. In our opinion, new management has been making progress in changing the culture at Wells and improving profitability. Notably, 11 of 18 members are new to the operating committee and well over half of the most senior...

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