S&P Upgrades Wells Fargo to A- as Risk Management Improves
Wells Fargo has received a significant credit-rating upgrade from S&P Global Ratings, marking another milestone in the U.S. bank's long-running effort to strengthen governance, risk management and regulatory controls.
S&P raised Wells Fargo & Company's long-term issuer credit rating to A- from BBB+, citing progress in governance, risk culture and operational oversight. The rating agency also assigned a stable outlook to the bank's rated entities.
The upgrade is important because Wells Fargo spent years operating under heightened regulatory scrutiny following a series of compliance and risk-management problems. The Federal Reserve removed the bank's asset-growth restriction in June 2025 and terminated the remaining 2018 enforcement action in March 2026 after determining that Wells Fargo had met the required conditions.
For investors, the latest rating action provides another indication that the bank's remediation program has moved from a regulatory obligation toward a broader effort to support normal business growth.
Why S&P Upgraded Wells Fargo
According to the rating report summarized by Investing.com, S&P's upgrade reflected Wells Fargo's progress in refining its governance, risk culture and operational oversight.
Credit ratings are different from stock ratings. A credit rating primarily assesses an institution's ability to meet its financial obligations, including debt payments. An upgrade can therefore affect how investors and lenders view the bank's creditworthiness and potentially its funding conditions.
In Wells Fargo's case, the upgrade also reflects progress made after years of regulatory remediation.
The Federal Reserve said in June 2025 that Wells Fargo had met the conditions required to remove the asset-growth restriction imposed under its 2018 enforcement action. The Fed specifically pointed to improvements in governance and risk management and said its own assessment, together with third-party reviews, supported removal of the restriction.
That restriction had limited Wells Fargo's ability to expand its balance sheet since 2018.
The End of the Asset Cap Changed Wells Fargo's Growth Path
The Federal Reserve's decision in June 2025 was a major turning point for Wells Fargo.
The bank's 2025 annual report said the asset cap had constrained growth in deposits, loans and other assets capable of generating income. After the restriction was lifted, Wells Fargo could pursue growth without the same firmwide asset ceiling.
The Federal Reserve subsequently terminated the underlying 2018 enforcement action in March 2026. The regulator said the remediation work had taken nearly a decade and that Wells Fargo had demonstrated effective improvements in governance and risk management.
This history is central to understanding the latest S&P upgrade.
The rating action is not simply about one quarter's financial results. It reflects the cumulative progress of a multiyear restructuring of the bank's control environment.
Financial Strength Gives the Upgrade More Context
Wells Fargo entered 2026 with a substantial capital and liquidity cushion.
Its 2025 annual report showed a 10.61% standardized Common Equity Tier 1 (CET1) ratio and a 119% liquidity coverage ratio (LCR) at year-end. CET1 measures a bank's highest-quality regulatory capital relative to risk-weighted assets, while LCR measures its ability to withstand a defined short-term liquidity stress scenario.
The bank's first-quarter 2026 results showed a CET1 ratio of 10.3% and an LCR of 120% as of March 31. Net loan charge-offs were 0.45% of average loans on an annualized basis during the quarter.
These figures do not eliminate banking risks, but they provide important context for assessing the rating upgrade.
S&P also said Wells Fargo's credit performance remained resilient and that the bank maintained a strong capital position, according to the report on the rating action.
Profitability Is Improving Alongside Risk Controls
Wells Fargo's turnaround has not been limited to regulatory compliance.
The bank reported $21.3 billion of net income in 2025, up 8% from 2024, while revenue increased 2% to $83.7 billion. Its return on tangible common equity, or ROTCE, rose to 14.6% from 13.4%.
ROTCE is a profitability measure commonly used for banks because it compares earnings with tangible common equity, excluding certain intangible assets.
The improvement matters because stronger profitability gives a bank more capacity to absorb losses, invest in its businesses and return capital to shareholders.
According to the latest S&P assessment, Wells Fargo's return on tangible common equity had reached 16.1% through mid-2026, while management was targeting a medium-term ROTCE of 17% to 18%.
The key question for investors is whether Wells Fargo can sustain that improvement while expanding its balance sheet without allowing risk controls to weaken.
Growth Has Returned, but S&P Expects It to Moderate
The removal of the asset cap has allowed Wells Fargo to expand its lending and other businesses.
The rating report said total assets had grown about 15% year over year, faster than the broader banking sector. S&P expects this pace to moderate toward industry averages by 2027.
That expectation is significant.
Rapid balance-sheet growth can increase revenue opportunities, but it can also introduce additional credit and operational risks. A bank needs to ensure that underwriting standards, risk systems and capital remain strong as loans and other assets increase.
The rating upgrade therefore should not be interpreted as a signal that Wells Fargo can expand without constraints. Instead, S&P's stable outlook suggests continued progress is expected while risk management remains an important condition.
Leadership Change Keeps Risk Management in Focus
Wells Fargo is also preparing for a change at the top of its risk-management function.
Chief Risk Officer Derek Flowers is scheduled to retire in January 2027, and current Chief Operating Officer Scott Powell is set to succeed him as chief risk officer. Wells Fargo disclosed the appointment in September, and the company said Flowers had played a key role in strengthening risk and control systems.
The transition comes at an important stage.
Wells Fargo has moved through a long period of regulatory remediation, but maintaining those improvements while the bank grows will remain an ongoing challenge. Continuity in risk governance could therefore be closely watched by regulators, credit-rating agencies and investors.
What the Upgrade Could Mean for Investors
The A- rating does not directly determine Wells Fargo's stock valuation, but it can influence the broader perception of the bank's financial strength.
A stronger credit profile can potentially support funding access and investor confidence. For a large bank, funding costs are particularly important because even small changes in financing costs can affect profitability across a very large balance sheet.
However, investors should not treat the upgrade as a guarantee of stronger stock performance.
Bank shares remain sensitive to interest rates, credit losses, loan growth, deposit costs, investment-banking activity, capital requirements and the wider U.S. economy.
Wells Fargo's upcoming third-quarter 2026 earnings release is scheduled for October 13, according to the company's investor-relations calendar. That report should provide a fresh look at loan growth, credit quality, capital levels, expenses and profitability following the rating upgrade.
Risks Investors Should Continue to Monitor
The most important risk is that faster growth could eventually put pressure on the risk controls that helped Wells Fargo achieve regulatory normalization.
Investors should also monitor:
Credit losses and nonperforming loans
Commercial and consumer loan growth
Deposit trends and funding costs
CET1 and other capital ratios
Net interest income
Operating expenses
Regulatory developments
Progress in maintaining the bank's risk-management framework
The transition to a new chief risk officer
The March 2026 termination of the Federal Reserve's 2018 enforcement action was a major milestone, but banking risk management is an ongoing process rather than a one-time achievement.
Conclusion
S&P Global Ratings has upgraded Wells Fargo's long-term issuer credit rating to A- from BBB+, citing improvements in governance, risk culture and operational oversight. The move follows the removal of the Federal Reserve's asset cap in 2025 and termination of the related 2018 enforcement action in 2026.
For investors, the significance goes beyond the rating itself. Wells Fargo is entering a new phase in which balance-sheet growth and stronger profitability must be matched by continued discipline in risk management. The next major checkpoints will be third-quarter earnings, credit-quality trends, capital ratios and how successfully the bank maintains its controls during expansion.
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This article is for informational and educational purposes only and should not be considered investment advice.