Wells Fargo's Triumphant Quarter: Profit Surges as Asset Cap Lifted

Wells Fargo surpasses Wall Street's expectations for its third-quarter profit and raises its profitability target after the Federal Reserve lifts a crucial asset cap, enabling growth. The bank now aims for a 17-18% return on tangible common equity, boosting investor confidence and shares by 3% in premarket trading.

In a major boost to its growth strategy, Wells Fargo outperformed Wall Street's profit predictions for the third quarter and upgraded its profitability target after regulators removed an asset cap that had long stymied its expansion.

The Federal Reserve's decision to remove the $1.95 trillion asset cap in June marked a pivotal moment in the bank's post-scandal comeback, allowing CEO Charlie Scharf to spearhead growth initiatives. This development raised investor optimism, causing the bank's shares to jump by 3% in premarket trading.

Wells Fargo now targets a 17% to 18% return on tangible common equity, climbing from a previous 15%, amidst solid financial health indicators and economic resilience. It reported an increase in net interest income to $11.95 billion for the quarter, reflecting a 2% year-over-year rise. With the Federal Reserve's recent rate cuts expected to further improve interest income, the bank's net income reached $5.59 billion, or $1.66 per share, surpassing analysts' predictions.

(With inputs from agencies.)