Wells Fargo Q2 Preview: Post-Cap Breakout or Just Hype?

Wells Fargo (WFC) is set to report second-quarter results on Tuesday before the market opens, with investors focused on whether the bank is ready to fully re-engage its growth engine following the removal of its long-standing asset cap. The $1.95 trillion ceiling, imposed in 2018, was finally lifted by the Federal Reserve in late May, and the bank has responded with a series of aggressive moves: a 12.5% dividend hike, a $40 billion share repurchase authorization, and a strong showing in the Fed's June stress tests. These developments, alongside broader sector strength, have powered WFC shares to new 52-week highs, though the stock still trades below JPMorgan on a forward P/E basis.

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Wall Street expects Q2 EPS of $1.41 on revenue of $20.76 billion, according to FactSet. That would mark a 5.3% EPS increase on essentially flat revenue. But most analysts agree that this quarter will not yet reflect the bank’s full potential post-cap. As Alexander Yokum, Senior Vice President of Equity Research at CFRA, noted: "Actual growth in the second quarter will probably be quite weak... So loan growth will probably be pretty anemic and honestly, probably for the second half of 2025 might pick up a bit, but that's probably giving me more of a 2026 story".

With the cap lifted, attention is shifting to the bank's ability to grow market share in previously constrained areas. Investment banking and credit cards are top of mind. "We want to see success in those new areas," said Yokum. "In credit cards, they’re about half the rate of the typical bank their size... We want growth in credit card, but we don't want that to come at the price of credit quality".

Investment banking represents another significant runway. Wells currently ranks near the bottom of the top-tier banks in deal volume despite its overall size. "Last time I looked, they were about 3% market share, but they were only about 2% in 2021", said Yokum. Analysts including Barclays and Morgan Stanley expect market share gains in this area to support revenue diversification and longer-term margin expansion.

The recent Fed stress test results have also been a game changer. Wells saw its Stress Capital Buffer (SCB) drop to the 2.5% minimum, giving it far more flexibility in how it deploys capital. ."So the minimum amount of capital that they could be required to hold, they hold now. What does that do? That means now they have a lot of excess capital, so they can lean into loan growth if that actually materializes, which we're a little bit skeptical on, but hopefully that will materialize," said Yokum.

Valuation has become a growing focus. Wells Fargo now trades at 12.4x 2026 EPS estimates—above the peer group median but still a discount to JPMorgan’s 14.9x multiple. Raymond James recently downgraded the stock to Market Perform from Strong Buy after a 15% run-up, citing limited near-term upside. Yet Morgan Stanley and others argue that the bank is finally getting credit for its improved capital return potential and leaner operating model.

Strategically, CEO Charlie Scharf has emphasized a shift from defense to offense. Under his tenure, Wells has resolved or exited 13 of 14 consent orders and streamlined its business lines. "He has really changed the culture at the bank", said Yokum. "I think they've gotten rid of about 13 or 14 consent orders during his time. So really transformed from a bank that consistently had issues to today, pretty much gone from all of those consent orders. Just that one left".

Yokum added: "This management team is not afraid to say when they make a mistake... I think it is a story of improved credibility given this new management team".

Still, investors want to see execution. As Yokum summed it up: "They've done a good job of playing defense, getting rid of those consent orders, improving their compliance, but now it be, can they play offense?"

Tuesday’s results are unlikely to provide a full answer—but they mark the starting line for Wells Fargo’s post-cap era. If the bank can sustain operational discipline while growing in targeted areas like investment banking and consumer lending, it could finally close the gap with peers and regain long-lost market leadership. What happens beyond this quarter will be even more important than what shows up in the immediate numbers.