S&P Upgrades Wells Fargo Credit Rating to 'A-' on Risk Management Overhaul

S&P Global Ratings has upgraded Wells Fargo & Co.'s (NYSE: WFC) long-term issuer credit rating to 'A-' from 'BBB+', a move that recognizes the bank's significant strides in overhauling its corporate governance, risk culture, and operational oversight.

Rationale for the Upgrade

The upgrade reflects S&P's confidence in the bank's recovery, particularly after the U.S. Federal Reserve lifted a seven-year asset cap in June 2025. That regulatory milestone removed a major obstacle, allowing Wells Fargo to expand its balance sheet and deepen customer relationships after a prolonged period of remediation.

According to S&P, the bank has made demonstrable progress in strengthening its internal controls and risk management framework, addressing the legacy issues that had previously constrained its rating.

Business Performance and Growth

Since the restriction was removed, Wells Fargo has actively expanded its business lines, including commercial lending, credit cards, auto finance, and capital markets operations. This strategic growth helped drive the bank's return on tangible common equity to 16.1% by mid-2026, according to the S&P report. In response, management has raised its medium-term profitability target to a range of 17% to 18%.

While the bank's total assets grew 15% year-over-year—outpacing the broader banking sector—S&P anticipates this growth rate will moderate and align with the industry average by 2027.

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Capital Strength and Outlook

S&P noted that Wells Fargo's credit performance remains robust, with credit loss metrics continuing to outperform major peers due to prudent underwriting standards. The bank maintains a strong capital and liquidity profile, providing a solid foundation for its operations.

Key financial strength indicators include:

• Common Equity Tier 1 (CET1) Ratio: 10.3%, comfortably above the regulatory minimum and within its internal target range.
• Deposit Funding: A stable base comprising 72% of total liabilities.
• Liquidity Coverage Ratio: A high of 119%.

S&P assigned a stable outlook to all Wells Fargo entities, reflecting expectations that the bank will continue to improve returns to peer levels while managing risk. The rating agency stated that a further upgrade is unlikely within the next two years but cautioned that a negative rating action could occur if the bank pursues overly aggressive expansion or experiences a material erosion of its capital buffers.