After regulatory shackles were removed, the stock price of Wells Fargo & Company (WFC.US) soared! Analysts believe that reaching a new all-time high is not the end.

Notice that Wells Fargo & Company (WFC.US) stock price broke through a historical high of $89.39 during yesterday's trading session, eventually closing at $90.21. The market expects its profits to continue to grow in double digits. The rise in Wells Fargo & Company's stock price is in line with the strong performance of the overall banking sector, which is mainly being driven by market expectations of an upcoming rate cut by the Federal Reserve. The management of Wells Fargo & Company expects fourth-quarter net interest income (NII) to be between $12.4 billion and $12.5 billion in 2025, compared to $11.8 billion in the same period last year. Asset cap lifted, growth potential unleashed In June 2025, with the Federal Reserve lifting Wells Fargo & Company's $1.95 trillion asset cap imposed in 2018 due to the fake accounts scandal, Wells Fargo & Company reached a critical moment. The asset cap had restricted the growth of its balance sheet, thus limiting the bank's overall potential. This lifting of growth restrictions reflects significant progress made by Wells Fargo & Company in addressing its own shortcomings, as well as meeting the conditions required for the cap to be lifted. With the removal of the asset cap, Wells Fargo & Company can now increase deposits, expand its loan portfolio, and broaden the range of securities it holds. This will lead to an increase in net interest income (NII), which is an important source of income for banks, as the balance sheet may include more interest-earning assets. Additionally, Wells Fargo & Company will have more opportunities to expand its fee-based business, such as payment services, asset management, and mortgage lending. The bank's trading-related assets grew by approximately 50% since the end of 2023, and the investment banking business saw a faster growth rate, with fee income increasing by 19% in the first nine months of 2025. With the asset cap lifted, Wells Fargo & Company is now focusing on deposit growth, particularly by expanding its checking account base through strengthened marketing and digital customer outreach. Additionally, the bank is strengthening its credit card business, with new account numbers growing by 9% in the first nine months of 2025, reflecting increased customer penetration and diversification of fee income sources. These measures will help improve the company's profitability. Successful progress in cost transformation Wells Fargo & Company has continued to make steady progress in improving overall cost efficiency over the years. The bank has actively implemented cost-cutting strategies such as streamlining organizational structures, optimizing branch layouts, and staff reductions. These measures have resulted in a compound annual growth rate of -1.3% for non-interest expenses in the four years ending 2024. While expenses rose slightly in the first nine months of 2025 due to accelerated operational investments by the bank. Optimizing the branch network remains a key focus area for Wells Fargo & Company. The bank is increasingly strategic in its branch location decisions, with plans to reduce the total number of branches by 2.1% year-on-year to 4,108 by the end of the third quarter of 2025. To achieve efficiency goals, Wells Fargo & Company continues to downsize its workforce, with a 4.3% year-on-year reduction in staff numbers to 211,000 by the same period end. At the same time, Wells Fargo & Company is heavily investing in digital capabilities and process automation to permanently reduce structural costs and increase operational leverage. These efforts are expected to bring significant cost savings, with management expecting to achieve $15 billion in gross expense cuts by the end of the year. These combined efforts will help continuously improve profit margins and enhance overall profitability. Ample liquidity supports capital allocation As of September 30, 2025, Wells Fargo & Company had long-term debt of $177.8 billion and short-term borrowings of $230.6 billion. The company has good liquidity, with a liquidity coverage ratio of 121% as of the third quarter of 2025, exceeding the regulatory minimum requirement of 100%. As of the same date, total current assets were $486.1 billion. Therefore, Wells Fargo & Company has been able to provide shareholders with generous returns. Following the Federal Reserve's 2025 stress test, the company increased its common stock dividend by 12.5% in the third quarter to 45 cents per share. Over the past five years, Wells Fargo & Company has raised its dividend six times, with the current dividend yield at 2%. Wells Fargo & Company has implemented a stock buyback program. Following the announcement of a $30 billion stock buyback plan in July 2023, the board approved an additional $40 billion stock buyback plan in April 2025. As of September 30, 2025, the company still had authorization to repurchase up to $34.7 billion worth of common stock. Upside potential not yet fully realized The average rating for Wells Fargo & Company in the market is 'buy.' The average target price is around $93.71 to $95.54, indicating potential upside from the current stock price. Analysts generally believe that the lifting of regulatory constraints (such as the asset cap) has brought growth opportunities to Wells Fargo & Company, while cost control and rate cut expectations are expected to enhance net interest income and overall profitability.