Wells Fargo & Co Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John McDonald - Truist Securities - Analyst : Mike, thanks for the explanation on the NII outlook. It's helpful, the markets piece of it. Just on the non-markets NII, could you talk about what loan growth assumptions you built into the NII outlook for the back half of the year and how that connects to what you saw in terms of loan growth in the second quarter?

Question: John McDonald - Truist Securities - Analyst : Okay. And then maybe you could just give us your thoughts in terms of total revenue. I know you don't give total revenue guidance, but just maybe when you look at your own internal projections and budgeting, how is the revenue outlook for this year shaping up? What are the puts and takes relative to your expectations if we think about the year so far?

Question: John McDonald - Truist Securities - Analyst : Okay. And I guess just to clarify, Mike, you mentioned -- you used to previously say that your NII guide assumes the asset cap remains in place. And now we relax that assumption, the outlook is a little worse. Is it just this counterintuitive mix shift that you're going to grow the capital markets balance sheet, but it's going to come in fees?

Question: R. Scott Siefers - Piper Jaffray Inc - Analyst : I was hoping, Mike, maybe we could approach the NII question maybe, I guess, a little differently. Just what are -- if loan growth in the second half will only be modest, what are the other factors that will allow NII to grow? Because I think you'll still need to average a few percent higher in the second half than you just did in the second quarter. So just trying to understand what the major puts and takes are within there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 2:00PM, WFC.N - Q2 2025 Wells Fargo & Co Earnings Call

Question: R. Scott Siefers - Piper Jaffray Inc - Analyst : And then Charlie, maybe just a top level thing. With the asset cap now off, I guess one of the questions that I get pretty frequently is, when or how might be the right time to revisit medium-term return targets? Do you have any broad sense for where you are in thinking about that dynamic?

Question: Ken Usdin - Autonomous Research - Analyst : Just one more question on capital. Given what all you just said, Charlie, and that we still have now really big amount of capital, the buyback in the second quarter was a little smaller than the first quarter. And loan growth, as you said, looks like it's getting better, but not that quickly. So should we -- can we expect that you might do more in terms of the buyback in advance of getting that final zone of where you want to live, given that you just -- it seems like you have enough capacity to do all things you would want to do in terms of growing the balance sheet and also returning more?

Question: Ken Usdin - Autonomous Research - Analyst : And on one -- you've laid out all the organic potentials in the past. But the one I wanted to ask you specific about is on retail deposits, where there is obviously a strong competitive landscape and a lot of thanks to building branches in other territories. You've talked about how that consent order coming off last year has helped you just go to market in a broader sense. But like how will that manifest itself in terms of just retail deposit growth? Can you see -- you expect an acceleration there in either net new checking or just overall deposit growth taking on the retail side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 2:00PM, WFC.N - Q2 2025 Wells Fargo & Co Earnings Call

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : I just wanted to follow up, Charlie, on what you said in terms of -- in one of your responses around nothing is going to change dramatically. 15% (inaudible) was like step number one, which you were at 2Q again, just one quarter. I appreciate that. But I think the (inaudible) way to look at this -- you mentioned the world grow aggressively many, many times on the call. And I think that the concern from an investor standpoint is a lot of this growth may come from -- at the cost of ROTCE. I don't think that's what you're saying. But just give us a sense of the lens with which you're looking at these growth, be it on consumer deposits, commercial deposits. Could it be that we could see a near-term hit in terms of profitability before things pick up and you gain more wallet share? Just how should we think about the impact on the next 6, 12, 18 months of returns? And are there offsetting factors on the expense side or productivity side that could mitigate things that you do to pursue growth?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. And maybe a separate question, Mike, for you in terms of NII. The market's view on what the Fed might do keeps changing. I appreciate that. But remind us in terms of asset sensitivity as we put into context, like the sequential growth in NII in the back half and maybe into next year. But how should we think about what three or four rate cuts would do to the balance sheet and the ability to maybe offset that given the growth outlook that you saw?

Question: Matt O'Connor - Deutsche Bank - Analyst : I was hoping you could just provide some clarity on the net interest income ex markets this quarter. I was having a hard time in finding that. And then maybe just give the guidance or comments on the full-year guide on other markets just to clarify.

Question: Matt O'Connor - Deutsche Bank - Analyst : And I'm sure you guys have heard it before, but just as you're growing the trading business, I think the clarity on the trading that over time would be helpful. And then just separately want to ask about the lower tax rate this quarter and, somewhat related, just the impact of the new legislation reducing clean energy tax credits. I think there are some puts and takes there as you think about some stuff going away and some stuff that you might be able to do that you're not doing now. So just a broader tax this quarter going forward.

Question: Erika Najarian - UBS AG - Analyst : I wanted to ask another question about capital, Charlie. Everyone appreciates that the regulatory reform is in flux. You mentioned earlier an 8.6%

Question: Erika Najarian - UBS AG - Analyst : I agree with that.

Question: Betsy Graseck - Morgan Stanley - Analyst : Charlie, I had a question about how you're thinking about the arc of expenses over the next period of time, call it, a year or two. With the asset cap removal, underlying question is, are there efficiencies that can be generated from investments you had to make that were unique to the asset cap period? And if so, with those efficiencies, is there reinvesting in everything you just mentioned on headcount to drive revenues? Or is there a technology angle to some of this reinvestment that we should be expecting? And how are you positioned for generating efficiencies from AI?

Question: Betsy Graseck - Morgan Stanley - Analyst : Okay. And I know you said that you would address the ROTCE target when you hit the 15%, which you did this quarter. So can you give us a sense of the timing when we should expect that you would be revisiting that target?

Question: Betsy Graseck - Morgan Stanley - Analyst : Super. So maybe the January call post the strategy deck?

Question: John Pancari - Evercore Inc - Analyst : Just want to see if you can give us a little bit more color on the loan yields this quarter. It looks like they were relatively flat. I guess overall, I would have expected an increase given some of the front book, back book dynamics. So can you maybe talk us through some of the puts and takes and your expectation as you look out given the rate environment and the curve outlook as well?

Question: John Pancari - Evercore Inc - Analyst : And did that competition intensify to a greater degree than you may have thought? But it seems like a higher loan yield expectation would have been fair to assume.

Question: John Pancari - Evercore Inc - Analyst : Okay. And then I'll -- my follow-up would be related to that, too. Like where are you seeing that competitive pressure come from? Is it private credit? Is it other types of non-banks? We've heard some setting insurance players stepping up again in certain parts of real estate? Are there areas that you flagged? And then has that impacted anything around loan growth expectations?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Mike, you talked about the growth in the commercial and industrial loans in the quarter. It was predominantly in the Corporate and Investment Bank. Can you give us a little more color and insights into where you saw that in that segment of the commercial and industrial loan portfolio growth?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Very good. And you guys have talked a lot about improving efficiencies and improving profitability of -- with the asset cap being lifted, a pivoting question. You talked about exiting the rail equipment leasing business, and you've exited other businesses over the years. Are there any other businesses left that are not meeting your internal profitability targets possibly that could enhance the longer-term profitability of the company? Or is this essentially for divesting of different segments?

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Just on operating leverage a little bit more broadly. The markets feel better today, the more optimism in markets. But certainly, we know that's fluid. I know you touched briefly on it, but just maybe unpacking the degree of confidence in the operating leverage over the medium term and then, I guess, both sides of the revenue and the expenses.