⚠ The Margin Fell as the Bank GrewModerate threat

Wells Fargo (WFC) — threat to the moat

Wells Fargo's margin fell a quarter of a point in a year as the new balance sheet went into thinner assets.

Growth in low-margin assets lowers the margin, and Wells Fargo's fell. The net interest margin on a taxable-equivalent basis was 2.73% in 2024 and 2.64% in 20251, and 2.43% in the second quarter of 2026 against 2.68% a year earlier2.

Net interest margin, taxable-equivalent (%)2.73%20242.64%20252.68%Q2 20252.43%Q2 2026Wells Fargo Q4 2025 earnings release; Q2 2026 presentation
Growth came with a thinner margin.

Net interest income still rose, to $12,317 million in the quarter from $11,708 million3, because the balance sheet grew faster than the margin fell. That is the trade the bank is making.

A falling margin is not bad by itself. Trading assets carry thin margins and need little credit reserve.

But it changes what the moat is worth. The cheap deposits earn their keep on high-margin loans; spread across trading assets, they earn less.

Net interest income still grew 4% in the fourth quarter of 2025, which the bank attributed to higher loan and investment securities balances, its Markets business and fixed rate asset repricing, partially offset by deposit mix changes4. Volume, not margin, is doing the work.

The decline shows quarter by quarter. The margin was 2.70% in the fourth quarter of 2024, 2.61% in the third quarter of 2025 and 2.60% in the fourth quarter of 20255.

The bank's own sensitivity table says the margin could fall further. A 100 basis point fall in short-term rates alone would reduce net interest income over the next twelve months by about $1.4 billion6. The new trading assets offer little spread to protect, so a cut would land mostly on the older, richer book. Volume can offset that only while the balance sheet keeps growing.

The sign of trouble would be a margin that kept falling after the balance sheet stopped growing; then the thinner assets would be pure dilution rather than a trade for volume.

References
  1. ReportedThe net interest margin on a taxable-equivalent basis was 2.73% in 2024 and 2.64% in 2025, and 2.43% in the second quarter of 2026 against 2.68% a year earlier.
    Wells Fargo fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1 - full-year 2025 results, net interest margin, severance, the $15 billion of gross expense reductions and the new 17-18% ROTCE target. — Q4 2025 · publ. 14 January 2026 · source ↗
  2. ReportedThe net interest margin on a taxable-equivalent basis was 2.73% in 2024 and 2.64% in 2025, and 2.43% in the second quarter of 2026 against 2.68% a year earlier.
    Wells Fargo second-quarter 2026 earnings presentation, Form 8-K exhibit 99.3 - segment returns, deposit cost, market shares and the 2026 outlook - consolidated results, deposit cost, capital and the 2026 outlook. — Q2 2026 · publ. 14 July 2026 · source ↗
  3. ReportedNet interest income still rose, to $12,317 million in the quarter from $11,708 million, because the balance sheet grew faster than the margin fell.
    Wells Fargo second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - consolidated results, credit quality, capital and the chief executive's comments. — Q2 2026 · publ. 14 July 2026 · source ↗
  4. ReportedNet interest income still grew 4% in the fourth quarter of 2025, which the bank attributed to higher loan and investment securities balances, its Markets business and fixed rate asset repricing, partially offset by deposit mix changes.
    Wells Fargo fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1 - full-year 2025 results, net interest margin, severance, the $15 billion of gross expense reductions and the new 17-18% ROTCE target. — Q4 2025 · publ. 14 January 2026 · source ↗
  5. ReportedThe margin was 2.70% in the fourth quarter of 2024, 2.61% in the third quarter of 2025 and 2.60% in the fourth quarter of 2025.
    Wells Fargo fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1 - full-year 2025 results, net interest margin, severance, the $15 billion of gross expense reductions and the new 17-18% ROTCE target. — Q4 2025 · publ. 14 January 2026 · source ↗
  6. ReportedA 100 basis point fall in short-term rates alone would reduce net interest income over the next twelve months by about $1.4 billion.
    Wells Fargo Form 10-Q for the quarter ended 30 June 2026 - balance sheet, capital requirements, interest rate sensitivity, segment assets, headcount and legal actions. — Q2 2026 · publ. 28 July 2026 · source ↗
Sources
Generated September 28, 2026