S&P Upgrades Wells Fargo to 'A-' on Risk Management Progress

S&P Global Ratings has upgraded Wells Fargo & Co.'s (NYSE:WFC) long-term issuer credit rating to 'A-' from 'BBB+', a move reflecting the bank's significant progress in overhauling its governance and risk management frameworks. The upgrade follows the pivotal June 2025 termination of a seven-year asset cap imposed by the Federal Reserve.

Risk Overhaul Drives Upgrade

The rating agency cited the bank's success in refining its governance, risk culture, and operational oversight as the primary driver for the upgrade. According to S&P, the removal of the regulatory constraint has cleared a path for Wells Fargo to pursue balance sheet growth and deepen client relationships after a prolonged period of remediation.

Since the asset cap was lifted, Wells Fargo has expanded its operations in key areas, including commercial lending, credit card, and auto financing, while also strengthening its presence in capital markets. This strategic expansion has directly impacted profitability, a key metric for investors and analysts.

Financial Performance and Growth

The bank's improved performance is reflected in its key financial metrics. According to the S&P report, Wells Fargo's strategic initiatives helped lift its return on tangible common equity to 16.1% through mid-2026. This performance has positioned the bank's management to aim for a revised medium-term profitability target of 17% to 18%.

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While balance sheet growth has been robust, with total assets expanding 15% year-over-year, S&P expects this rate to moderate and align more closely with industry averages by 2027. The agency also noted that the bank's credit performance remains resilient, with credit loss metrics comparing favorably to its major peers.

Capital Strength and Stable Outlook

S&P assigned a stable outlook to its new rating, underpinned by Wells Fargo's strong capital and liquidity position. The bank's key buffers remain solid:

• Common Equity Tier 1 (CET1) ratio: Stood at 10.3%, comfortably above regulatory minimums.
• Funding Base: A robust deposit base constitutes 72% of total liabilities.
• Liquidity: The bank's liquidity coverage ratio was reported at 119%.

The stable outlook reflects S&P's expectation that Wells Fargo will continue to improve returns while maintaining controlled risk growth. The agency indicated that further upgrades are unlikely in the next two years and noted that sustained aggressive expansion or a significant decline in capital buffers could result in negative rating action.