SKN | Wells Fargo Shares Fall 14% in 2026 as Earnings Hold Up and Rate Sensitivity Shifts

Key Takeaways:

• Wells Fargo shares closed at $80.50 on September 29, 2026, down 13.6% from the $93.20 year-end 2025 close, while forward earnings expectations have increased.
• Chief Financial Officer Mike Santomassimo said third-quarter net interest margin was tracking ahead of the bank’s expectations, with the banking book remaining modestly asset sensitive.
• The bank’s valuation multiple has contracted as earnings expectations improved, with NTM P/E falling from roughly 14x to about 11x, while the next major investor test is scheduled for October 13.

Share Price Declines as Forward Earnings Expectations Improve

Wells Fargo’s 2026 share-price decline has occurred alongside an improvement in forward earnings expectations. The stock closed at $80.50 on September 29, representing a 13.6% decline from its $93.20 finish at the end of 2025.

According to the supplied TIKR data, normalized next-twelve-month EPS has increased approximately 8% since the end of 2025, while the forward P/E multiple has contracted from around 14x to approximately 11x. This indicates that the decline in the share price has been driven more by multiple compression than by deterioration in forward earnings expectations.

For investors evaluating Wells Fargo, that distinction is relevant. The market is assigning a lower valuation multiple even as the earnings base has moved higher, leaving the relationship between profitability, interest rates and valuation as an important consideration heading into the bank’s next reporting milestone.

Net Interest Margin Has Been More Resilient Than Expected

At the Barclays Global Financial Services Conference on September 15, CFO Mike Santomassimo said third-quarter net interest margin was running ahead of the bank’s earlier expectations.

Management had entered the quarter expecting NIM to decline by roughly 3 to 4 basis points. Santomassimo indicated that the outcome was more likely to be approximately flat or down only 1 basis point.

He also described Wells Fargo’s banking book as still modestly asset sensitive. That positioning means changes in interest rates can influence the bank’s interest income, although the effect differs across business lines. The markets business, for example, generates less net interest income and more fee revenue as rates increase.

Santomassimo also said that some steepness in the yield curve would be helpful, while characterizing a quarter-point rate move as unlikely to be a major driver of activity by itself.

Rate Hike Changes the Near-Term Earnings Mix

The Federal Reserve’s September 16 rate increase marked its first hike since 2023. Wells Fargo shares declined more sharply than the broader Financial Select Sector SPDR Fund in the period following the decision, according to the supplied data.

Management’s comments suggest that the impact of higher rates should not be viewed exclusively through net interest income. Investment banking and markets revenue also remain relevant to the bank’s earnings mix.

Second-quarter diluted EPS was $2.00, supported in part by strong venture capital results and a $0.04 discrete tax benefit. Santomassimo expects venture results, which contributed approximately $850 million during the first half, to be closer to flat in the third quarter.

At the same time, management expects investment banking fees and markets revenue to increase by approximately mid-single digits year over year. Markets revenue had increased 24% in the second quarter.

Credit Quality Remains a Key Monitoring Point

The rate environment is only one part of the investment picture. Santomassimo said Wells Fargo continues to look for signs of deterioration in its credit portfolio but had not identified meaningful cracks as of the September conference.

Loan growth also remains above the bank’s original expectations, although management anticipates a moderation from the pace recorded during the first half of the year. Average loans increased 12% year over year in the second quarter.

The bank’s reported credit standing also improved during the period covered by the source material. As of September 30, Wells Fargo lists S&P Global Ratings at A- with a stable outlook for the holding company, compared with BBB+ at June 30.

Valuation and the October Earnings Test

Consensus expectations put third-quarter GAAP EPS at approximately $1.85, below the $2.00 reported in the second quarter but about 11% above the $1.66 recorded a year earlier.

The supplied TIKR model’s mid-case scenario points to approximately 9.5% annual returns through 2030. That figure represents a model scenario rather than a guaranteed outcome and should be considered alongside changes in earnings, valuation multiples, credit performance and interest-rate expectations.

The next significant test for Wells Fargo’s operating performance is October 13, when the bank’s investor-relations calendar points to its next earnings-related event.

Closing Insights

Wells Fargo enters its next reporting period with a lower share price but higher forward EPS expectations, while net interest margin appears to be holding up better than management initially anticipated. The central question for investors is therefore not simply whether earnings are growing, but how sustainable that earnings base is as the rate environment changes.

For global wealth holders and institutional investors, the distinction between earnings growth and valuation compression remains important. Wells Fargo’s lower forward multiple, evolving rate sensitivity, credit performance and capital position provide separate variables to monitor rather than a single directional signal.

For a confidential discussion regarding retail banking strategy, insurance distribution models, customer loyalty ecosystems, digital financial services, or cross-border financial innovation opportunities, contact our senior advisory team.