Wells Fargo & Company WFC has managed to close five regulatory actions so far in 2025. This demonstrates that strengthening its risk management and compliance infrastructure continues to be the mainstay of WFC’s operational strategy.
Since January 2025, WFC has closed two consent orders by the Federal Reserve, two by the Office of the Comptroller of Currency, and one by the Consumer Finance Protection Bureau.
Given the recent developments, WFC shares have gained 6.2% year to date, outperforming the industry’s rise of 3.6% and the S&P 500 index decline of 1.8%. It has fared better than its peers, JPMorgan JPM and Bank of America BAC, over the same time frame.
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Under the leadership of CEO Charlie Scharf, Wells Fargo is strengthening its compliance framework. The bank’s improved risk management techniques have received regulatory approval, with progress closely monitored by their operating committee.
Wells Fargo is operating under an asset cap of $1.95 trillion imposed in 2018 following the revelation of its fake account scandal. Last week, Reuters reported that investors and analysts are more hopeful that the asset cap on Wells Fargo will be lifted this year, with some suggesting it could be in the first half of this year, following the bank’s closure of five regulatory actions in 2025 and 11 since 2019.
Because of the asset cap, the company is unable to grow to its potential. This is affecting its loan growth. Given that loans are among the largest assets a bank can hold, lifting the asset cap will mark a turning point for Wells Fargo.
Given WFC’s impressive share price gain and recent progress, many investors might be tempted to buy the stock. But is it the right time to buy the WFC stock or wait for a better entry point? Let us delve deeper and analyze other factors at play.
Wells Fargo’s net interest income (NII) and net interest margin (NIM) have been subdued by increased funding costs as the high-interest rate environment weighed on it. In 2024, NII declined 8% year over year to $47.7 billion. NIM slipped to 2.73% in 2024 from 3.06% in 2023.
Last year, the Federal Reserve lowered the interest rates by 100 basis points but has kept those steady since then, given sticky inflation and uncertainty regarding the Trump policies. Though the central bank has signaled two rate cuts this year, this is likely to happen in the latter part of the year.
Nonetheless, as the interest rates come down, WFC will likely benefit from the stabilization of deposit costs and a gradual improvement in the lending scenario. With this, WFC will witness a slight improvement in NII and NIM in the upcoming period.
