WFC's Credit Rating Upgraded to 'A-' by S&P, Outlook Remains Stable
S&P Global Ratings (S&P) upgraded the issuer credit rating of Wells Fargo & Co. WFC to ‘A-’ from ‘BBB+’, while maintaining a stable outlook. S&P affirmed WFC’s short-term issuer credit rating at ‘A-2’ and the ‘A+/A-1’ issuer credit ratings on several core operating subsidiaries.
The upgrade reflects Wells Fargo’s significant progress in risk management, culture and oversight, along with improving profitability and deepening client relationships. Following an improvement in Wells Fargo’s group stand-alone credit profile to ‘a’ from ‘a-’, S&P now incorporates one notch of uplift for additional loss-absorbing capacity support.
What Led to the Upgrade in WFC’s Ratings?
Improved Risk Management and Governance: A key factor behind the upgrade is Wells Fargo’s continued progress in strengthening its risk management framework, corporate culture and oversight. Since 2019, the bank has terminated 14 consent orders, highlighting the progress made in addressing regulatory concerns. In June 2025, the Federal Reserve removed the asset cap that had restricted WFC’s balance-sheet growth for nearly seven years. Regulators terminated another consent order in March 2026, further advancing the bank’s remediation efforts.
Wells Fargo currently has no outstanding consent orders, although a formal agreement with the Office of the Comptroller of the Currency related to financial crimes risk management and anti-money laundering controls remains in place. S&P believes the bank is on a path toward resolving this remaining matter.
Broader Client Relationships Support Growth: Since the asset cap was removed, WFC has expanded its businesses and deepened client relationships, particularly in credit cards, auto lending, commercial loans and capital markets. The broader customer base is supporting capital markets growth and adding revenue diversification, although WFC’s capital markets revenue remains below that of its global systemically important bank (GSIB) peers.
Improving Profitability Profile: The expansion of earning assets, higher net interest income (NII), increased fee income and disciplined expense management have improved profitability, driving growth in pre-provision net revenue and strengthening the bank’s earnings profile.
Reflecting this improvement, WFC raised its medium-term return on tangible common equity (ROTCE) target to 17%-18% in the third quarter of 2025 from its previous target of 15%. As of June 30, 2026, ROTCE had increased to 16.1% from 14.4% a year earlier, with S&P expecting further improvement as balance-sheet growth remains controlled.
Manageable Balance-Sheet Growth: Wells Fargo’s balance sheet has expanded faster than the banking industry since the asset cap was removed. Through the second quarter of 2026, its assets rose 15% year over year, while loans grew 12%, driven by lending and market-related businesses. S&P continues to view the expansion as manageable.
Nonbank lending was a key contributor, with balances rising 33% year over year to account for 22% of total loans. Auto lending also grew 33%, while trading assets increased 33% to roughly 11% of total assets. Despite the faster growth, credit quality remained solid, with net charge-offs better than those of most peers in recent years. S&P expects balance-sheet growth to moderate starting in 2027 and move broadly in line with industry levels.
Adequate Capital Position: The bank’s capital position continues to support its credit profile. Its Common Equity Tier 1 (CET1) ratio stood at 10.3% as of June 30, 2026, down from 11.1% a year earlier, remaining within its 10.0%-10.5% target range and well above the 8.5% minimum requirement. Its risk-adjusted capital ratio was 8.5%, within S&P’s adequate 7%-10% range. While higher long-term rates could increase unrealized losses, most of its longer-duration securities are held to maturity and do not affect regulatory capital ratios.
Looking ahead, proposed changes to the U.S. risk-based capital framework and GSIB surcharge could influence capital levels across large banks. Management has indicated that, if finalized, the changes could reduce WFC’s risk-weighted assets by 7%, equivalent to an increase of nearly 80 basis points in its CET1 ratio. S&P expects WFC’s capital ratios to remain broadly in line with those of large regional bank peers.
Final Words on WFC
The stable outlook reflects S&P’s expectation that Wells Fargo will maintain controlled balance-sheet growth, prudent risk management, improving profitability and adequate capital. However, downward pressure could arise from weaker capital, aggressive growth, or weaker profitability and credit quality.
Other Financial Firms Receiving S&P Rating Upgrades
In September 2026, S&P upgraded the ratings of several other financial firms, including Rithm Capital Corp. RITM and Capital One Financial Corp. COF, citing stronger diversification, earnings stability and franchise strength.
Rithm Capital’s issuer credit rating was upgraded to ‘B+’ from ‘B’, with a stable outlook, reflecting greater earnings diversification through asset management, residential transitional lending and commercial real estate businesses. Rithm Capital’s stable Newrez earnings also support its mortgage finance operations.
Capital One’s long-term issuer credit rating was upgraded to ‘BBB+’ from ‘BBB’, with a stable outlook, reflecting its stronger franchise and progress integrating Discover. Capital One is expected to benefit from higher card purchase volumes, fee income and revenue stability, while its auto lending and corporate finance businesses provide additional diversification.
WFC’s Zacks Rank & Price Performance
Shares of WFC have lost 2.4% over the past six months against the industry’s growth of 10.3%.
Image Source: Zacks Investment Research
The company carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
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This article originally published on Zacks Investment Research (zacks.com).
