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2Q26 earnings rose 17% YoY to US$6.4bn, slightly above our estimates with 1H26 earnings at 52% of our FY26e forecast. Earnings rose from a) balance sheet growth lifting NII despite NIM compression, b) fee income growing across every segment, and c) expenses rising just 2% as headcount fell 7%, lifting ROTCE to 17.7% (2Q25: 15.2%). A 6% smaller share count amplified EPS growth. WFC plans to raise its 3Q26 dividend by 11% to US$0.50.
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NII rose 5% YoY to US$12.3bn as loans grew 12% and deposits 10%, the first full year of expansion since the asset cap removal. Volume growth more than offset NIM compression. Higher market valuations lifted investment advisory fees 13%. Corporates returned to issuance, driving IB fees up 35%. Venture capital gains added further support. FY26e NII guidance of ~US$50bn and expense guidance of ~US$55.7bn were maintained, with NII guided to strengthen in 2H26.
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Maintain BUY with higher target price of US$115 (prev. US$98) as we raise FY26e earnings by 15% from higher NII, investment advisory, brokerage and investment banking estimates, and lower provisions estimates. Our GGM valuation assumes 2.04x FY26e P/BV and an ROE estimate of 18.1%. WFC remains our top pick among the three banks. Its post-asset cap balance sheet expansion offers a growth runway that JPM and BAC lack. Valuations are cheaper at 10.3x FY26e P/E vs 12x to 14x for peers. NII is guided to strengthen in 2H26, with a planned 11% dividend increase adding support.
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