Bank profits rise, but so does the cost of risk

In brief

• Wells Fargo's third-quarter net income rose to six billion and diluted earnings per share increased to one point eight seven.
• Revenue rose two percent year on year and average loans and deposits each grew eleven percent, while the provision for credit losses jumped fifty-one percent.
• For Hungarian investors, the important links are bank equities, the , global risk appetite and domestic bank valuations, not one US stock's daily move.

DATA TABLE — Wells Fargo source values; USD million unless marked bps | metric | 2025 | 2026 | |---|---:|---:| | revenue | 21436 | 21870 | | net income | 5589 | 5951 | | credit provision | 681 | 1029 | | average loans | 928700 | 1033400 | | average deposits | 1339900 | 1482900 | | net interest income | 11921 | 12517 | | net interest margin, bps | 261 | 243 | | CET1 ratio, bps | 1100 | 1000 | | NPA ratio, bps | 83 | 70 | | allowance to loans, bps | 152 | 138 | | diluted EPS, cents | 142 | 187 | | repurchases, USD million | 0 | 2500 | | repurchased shares | 0 | 28600000 | | implied average price, cents | 0 | 8741 | | JPMorgan net income | 0 | 15300 | | JPMorgan revenue | 0 | 50200 |

The Wells Fargo release published on thirteen October shows strengthening business activity and a higher cost of risk at the same time. The bank earned five point nine five one billion in net income in the third quarter of two thousand twenty-six, against five point five eight nine billion a year earlier. Revenue was twenty-one point eight seven zero billion, up two percent year on year, while the one point zero two nine billion provision for credit losses was fifty-one percent above the comparable two thousand twenty-five level.

Chief executive Charlie Scharf said the results reflected “broad-based growth, higher earnings, and stronger returns.” The company release is a primary but interested source: final numbers will appear in the subsequent ten-Q, and the bank describes the current figures as preliminary. We therefore also consider JPMorganChase's results released on the same day; the larger bank reported fifteen point three billion in net income and fifty point two billion in revenue.

Growth with a thinner capital buffer

The first chart converts the company's million- figures into billions and compares the third quarters of two thousand twenty-five and two thousand twenty-six. Our calculation shows net income up six point four eight percent: five point nine five one billion divided by five point five eight nine billion, minus one. Revenue growth was two point zero two percent, while the provision rose fifty-one point one zero percent. Rounded rates may differ from the whole-number percentages reported by the bank.

Average loans increased from nine hundred twenty-eight point seven billion to one thousand thirty-three point four billion, and average deposits from one thousand three hundred thirty-nine point nine billion to one thousand four hundred eighty-two point nine billion. Each represents growth of about eleven percent. Net interest income rose five percent to twelve point five one seven billion, while the net interest margin narrowed from two point six one percent to two point four three percent. A larger balance sheet therefore offset the narrower margin.

The second chart places percentage metrics side by side. The CETone capital ratio fell from eleven percent to ten percent, while nonperforming assets as a share of loans improved from zero point eight three percent to zero point seven zero percent. The allowance for loan losses as a share of loans declined from one point five two percent to one point three eight percent. These are different concepts: a lower CETone ratio can indicate a thinner regulatory capital cushion, while the improved nonperformance ratio suggests better current credit quality.

What can a Hungarian investor learn?

The first channel is the global bank risk premium. Investors may see faster loan growth as evidence of a stronger economy and support financial shares. If they focus instead on the higher provision and smaller capital buffer, they may require a higher return. US and European bank balance sheets differ, so Wells Fargo's figures cannot directly predict OTP results. The morning global close review records the market starting point.

The second channel is the and the rate path. Net interest income growth shows that balance-sheet expansion and repricing still supported revenue, but the narrower margin indicates a limit. For a Hungarian investor, the return on a -denominated US share or fund also depends on the exchange rate. Currency movements may amplify or offset the share-price change.

The third channel is portfolio weighting. Many global ETFs and mutual funds hold US bank shares, so the report may affect savers who do not own Wells Fargo directly. The effect depends on the fund's weight, hedging policy, costs and trading time. Our analysis of hedge-fund exposures explains why liquidity matters under stress.

Fact, inference and scenarios

It is a fact that Wells Fargo reported higher revenue, earnings, loans and deposits year on year, alongside a larger provision and a lower CETone ratio. It is an inference that the bank's growth story strengthened while its risk buffer and credit costs require more attention. That does not predetermine the share-price direction.

In a baseline scenario, loan and deposit growth sustain interest income while nonperforming assets remain manageable. In an adverse case, higher rates, oil prices and persistent inflation weaken borrowers and require further provisions. In a favourable case, corporate activity, wealth-management revenue and technology investment offset pressure on margins.

This is not personalised buy or sell advice. The next checkpoints are Wells Fargo's final ten-Q, the management conference call, and other large US bank reports on fourteen October. From a Hungarian perspective, bank equity indices, , the US yield curve and Hungarian bank shares may provide further evidence, though not proof of causation. Beyond one quarter, the credit-quality trend will show whether growth produces durable revenue or later losses for the bank and its shareholders.

Cyclicality also matters when comparing these figures: one quarter cannot separate lasting business improvement from seasonal or one-off effects. Credit quality, margins, fee income and capital should therefore be followed across several reporting periods with a consistent method. Currency movements form a separate layer that changes the result measured in the Hungarian investor’s domestic currency, including the full cost.