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How Wells Fargo & Company Makes Most of Its Money

By Matthew Frankel, CFP® – Apr 20, 2017 at 11:48AM

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Wells Fargo doesn't rely on investment banking and trading like many other big banks do.

Wells Fargo (WFC 0.74%) is one of the "big four" financial institutions in the United States, along with Citigroup, JPMorgan Chase, and Bank of America, but it makes its money somewhat differently from the others. Specifically, while the others rely on investment banking and trading activities for large percentages of their revenue, Wells Fargo's revenue mix looks more like what you'd expect from a traditional savings & loan.

Wells Fargo's revenue sources

In 2016, Wells Fargo generated approximately $94.2 billion in revenue, $53.7 billion of which came from interest income and $40.5 billion of which came from other sources, such as fees.

Pile of cash, bundles of 100 dollar bills.

Image source: Getty Images.

Here's a breakdown of the sources of Wells Fargo's interest income:


Amount ($billions)



Investment securities


Trading assets


Other interest income


Mortgages held for sale




Source: Wells Fargo 2016 Income Statement. Numbers may not add up perfectly, due to rounding.

As you might expect, the lion's share of Wells Fargo's interest income comes from its lending activities. The noninterest income, on the other hand, is a bit more complicated:


Amount ($billions)

Trust and investment fees


Mortgage banking


Service charges on deposit accounts


Card fees


Other fees


Lease income




Other income


Net gains on debt securities


Net gains from equity investments


Net gains from trading activities




Source: Wells Fargo 2016 Income Statement. Numbers may not add up perfectly, due to rounding.

The main point to notice in these charts is that most of Wells Fargo's money is made from traditional consumer and business banking activities -- not investment banking and trading, which makes up a much larger portion of most other banks' revenue streams. For example, about $12.1 billion of Bank of America's $42.6 billion in noninterest income in 2016 came from investment banking and trading profits.

Wells Fargo's revenue by business division

Wells Fargo operates its business in three divisions -- community banking, wholesale banking, and wealth and investment management.

The community banking division is the one that provides banking products for consumers and small businesses, such as checking and savings accounts, credit and debit cards, auto loans, mortgages, and other lending products. It also offers investment services and insurance in 39 states and D.C. Community banking is Wells Fargo's largest division, and accounted for about 53% of the bank's revenue in the most recent quarter.

Wholesale banking provides many of the same services as the community banking division, but to businesses, governments, and other institutions. In addition, wholesale banking offers treasury management, corporate trust, and equipment financing services, just to name a few. The wholesale banking division made up about 33% of the bank's total revenue in the latest quarter.

Finally, the wealth and investment management division provides investment and retirement products to individuals and businesses through Wells Fargo Advisors, Wells Fargo Asset Management, and others. This includes Wells Fargo's brokerage services, as well as financial planning services provided to high-net-worth individuals. This is Wells Fargo's smallest division, at about 19% of revenue, but it has grown considerably over the past several years.

The bottom line

The main thing to notice here is that while some of Wells Fargo's revenue comes from trading and investing, most of Wells Fargo's money is made from traditional consumer banking activities such as lending, credit cards, and account fees.

This makes the bank different than the other big U.S. banks, as the business model looks more like a traditional savings and loan than what we've become accustomed to from our massive financial institutions.

From an investing standpoint, Wells Fargo's more narrow focus on its core business has resulted in stronger and more consistent growth than most of its peers. Wells Fargo is a financial institution that does a better job of running an efficient and safe consumer banking operation than most, and the bank sticks with what it's good at.

Matthew Frankel owns shares of Bank of America. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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