Wells Fargo announced a reduction of its prime lending rate from 7.00% to 6.75%, with the new rate taking effect on December 11, 2025. The move follows the Federal Reserve’s December 2025 policy shift, which lowered the federal funds target range and prompted a wave of rate adjustments across the banking sector.
The cut is expected to lower borrowing costs for the bank’s commercial and consumer customers, potentially stimulating loan demand. However, the narrower spread between the cost of deposits and the yield on loans will compress Wells Fargo’s net‑interest margin. In the quarter ended September 2025, the bank’s NIM stood at 3.09%; a further decline is anticipated as the prime rate falls, which could pressure profitability unless offset by higher loan volumes or fee‑based income.
Wells Fargo’s Q3 2025 earnings report showed net interest income of $11.95 billion, up 2% year‑over‑year, while the prior quarter (Q4 2024) saw a 7% decline. The bank’s management highlighted that the recent rate cut is part of a broader strategy to accelerate growth now that the Federal Reserve has lifted its seven‑year asset cap, allowing more aggressive lending and fee‑based initiatives.
The rate adjustment aligns with a broader industry trend: BMO and U.S. Bank also lowered their prime rates to 6.75% effective the same day, indicating a coordinated response to the Fed’s policy easing and a competitive push to attract borrowers.
CEO Charlie Scharf emphasized that the rate cut is a tactical tool to support loan growth while maintaining disciplined cost management. He noted that the bank is investing in artificial‑intelligence‑driven underwriting and customer experience platforms to enhance efficiency and capture new revenue streams, signaling confidence in sustaining profitability amid margin pressure.
While the prime‑rate announcement itself did not trigger a notable market reaction, the bank’s Q3 2025 earnings—reported on October 14—were well received, with analysts citing strong loan growth and a resilient balance sheet as key drivers of the positive response.
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