Wells Fargo’s rebound faces a key test in Tuesday’s earnings

Wells Fargo heads into Tuesday’s second-quarter report with its stock trying to recover from a rough first half. For retail investors, the setup is straightforward: the bank needs to show that last year’s removal of a Federal Reserve growth restriction is turning into stronger earnings power.

The stock hit a 52-week low near $73 on May 15, according to CNBC’s Investing Club with Jim Cramer. Since then, shares have climbed 19% to more than $86, but they remain down nearly 6% for the year. That trails the S&P 500, up almost 10.5% in 2026, and the financials sector index, up more than 2%.

Wells Fargo has also lagged Goldman Sachs, another Investing Club holding, which is up nearly 20% this year, helped by strength in investment banking. Goldman is also scheduled to report Tuesday morning.

What investors are watching

The central issue is whether Wells Fargo can deliver a cleaner quarter after two mixed reports. CNBC’s Investing Club said the bank needs to beat expectations across revenue, earnings, net interest income and noninterest income to rebuild investor confidence.

In the first quarter, Wells Fargo reported revenue of $21.45 billion, up 6.4% from a year earlier, but below the $21.8 billion consensus estimate compiled by LSEG. The stock fell nearly 6% in one session after that April report, according to CNBC’s Investing Club.

For the second quarter, analysts expect Wells Fargo to report revenue of $21.8 billion, up 1.6% from a year earlier, according to LSEG. Earnings per share, which means profit divided by the number of shares outstanding, are expected to reach $1.72, a 7.5% year-over-year increase, LSEG data shows.

The lending engine is still central

Net interest income will be one of the most closely watched numbers. Net interest income, or NII, is the spread between what a bank earns on loans and securities and what it pays on deposits and other funding.

Wells Fargo’s consumer banking business, which depends heavily on interest income, generated about 46% of total revenue last quarter, according to CNBC’s Investing Club. Wall Street analysts expect second-quarter NII of $12.38 billion, up 5.7%, according to FactSet.

The report will also help investors judge whether Wells Fargo remains on pace for its $50 billion NII goal for 2026. That figure can be affected by Federal Reserve rate decisions. Higher rates can lift income on loans, but they can also raise what banks must pay depositors, so the mix of non-interest-bearing deposits matters.

Minutes from the Fed’s June meeting, the first under Chairman Kevin Warsh, showed policymakers weighing cases for both rate increases and cuts. The Fed held rates steady as inflation pressures rose with oil prices elevated by the Iran War, while President Donald Trump has continued to call for lower rates.

Fee income and efficiency are under the microscope

Investors are also focused on noninterest income, which is money banks earn from fees, commissions and other businesses outside traditional lending. Wells Fargo has been adding senior investment bankers as it tries to grow dealmaking and diversify revenue.

CEO Charlie Scharf said last quarter that the investment banking outlook remained strong and that Wells Fargo entered the second quarter with a solid pipeline driven by mergers and acquisitions and equity capital markets. He also said markets revenue rose 19% from a year earlier, while client sentiment was cautious but engaged.

Bank of America analyst Ebrahim Poonawala said Wells Fargo could beat earnings expectations, citing momentum in capital markets. He also pointed to banker hiring, balance sheet deployment, a resilient economy, stable credit quality and generally strong loan growth tied to a buoyant labor market.

Two profitability metrics will round out the scorecard. FactSet estimates return on tangible common equity, a measure of how efficiently a bank turns shareholder capital into profit, at 15.3%, flat from a year earlier. Analysts also expect an efficiency ratio of 63.3%, according to CNBC’s Investing Club. The efficiency ratio compares operating expenses with net revenue, and lower is better. That would improve from 67% in the first quarter and 64% a year earlier.

Wells Fargo waited seven years for the Fed to remove its $1.95 trillion asset cap, a restriction tied to past misconduct that was lifted in June 2025. Tuesday’s report will show whether investors are starting to see the payoff.

This story draws on original reporting from CNBC.