2020 is finally in the books, and Wells Fargo (WFC -0.02%) will be happy to leave it behind.

The bank had already been struggling prior to the coronavirus pandemic due to all the punishments it had been working through after its phony-accounts scandal. Then, amid a recession and a worldwide health crisis, Wells Fargo struggled to generate any meaningful profits and ended up trimming its dividend by 80%.

With 2020 now complete, let's take a look at five things to expect from Wells Fargo in 2021.

1. Selling off more business units

In Wells Fargo's third-quarter earnings call, CEO Charlie Scharf said that "we're going to continue to exit some things which aren't core to the U.S." So far, Scharf has stuck by that promise. Recently, the bank announced the sale of its $10 billion student loan portfolio to a group of private equity investors, and there should be more sales in 2021. The company is supposedly deep in the process of selling its asset management arm, which has $607 billion in assets under management and could fetch a price tag around $3 billion. Other reports suggest Wells Fargo could also be interested in shopping its private-label card business and corporate trust unit.

Wells Fargo building

Image source: Wells Fargo.

2. More details around expense cuts

Earlier this year, Scharf suggested that the bank plans to cut $10 billion in annual expenses in order to get its expense structure more in line with peers. While the bank has restarted layoffs and been consolidating lots of branches, investors and analysts have been anxious around more details regarding these cuts and a timeline for them. Scharf should provide some key details during the company's fourth-quarter earnings call in January. Scharf has also said the bank could restructure its business segments as well. It will be interesting to see where Wells Fargo expects to gain further efficiency, as the company has been investing in its regulatory infrastructure in order to correct its regulatory problems, and also acknowledged in the past the need to further invest in technology. 

3. Lower revenue, but better profitability

As things currently stand, you will likely see Wells Fargo generate lower revenue in 2021 than in 2020. The average estimate by analysts for revenue at the bank in 2021 is $71.07 billion, compared to an average estimate of $72.4 billion this year. The estimate makes sense. Former CFO John Shrewsberry said on the bank's third-quarter earnings call that its net interest margin could be flat or down single-digit percentages next year. In 2018, after the phony-accounts scandal, the Federal Reserve placed Wells Fargo under an asset cap that prevents the bank from exceeding $1.95 trillion in assets.

The asset cap prevents the bank from expanding the balance sheet with lots of loan volume to make up for the margin compression resulting from the ultra-low-rate environment. This means it could also be tough for the bank to grow net interest income, which is a significant piece of its total revenue. However, the bank should still see much better profitability in 2021 than 2020, because it should be done reserving significant money for potential future loan losses. In fact, if the economy is able to recover quickly, the bank may be able to release some of its current reserves back into its earnings, which will help earnings in 2021. 

4. More normal capital distributions 

Like most large banks, Wells Fargo suspended its stock buyback plans this year due to the pandemic. Because of the Fed's restrictions, the bank also had to cut its quarterly common dividend from $0.51 per share to $0.10, representing an 80% reduction. The Fed has lifted its ban on share repurchases for the first quarter of 2021, but is still limiting total capital distributions in the quarter to no more than average net income for the previous four calendar quarters. I wouldn't expect Wells Fargo to raise its common dividend in the first quarter or conduct significant stock buybacks.

However, later on in the year, that could change. For one, if the coronavirus vaccines prove to be effective and the economy bounces back quickly, the Fed may lift all restrictions on capital distributions later in 2021. That would likely allow Wells Fargo to increase its dividend and begin conducting more significant stock buybacks, because the bank has more than $25 billion in excess capital. But even if the Fed doesn't remove the restrictions, Wells Fargo still should be able to get back to more normal capital distributions later in 2021, because its average net income number will improve once the bank's dismal first- and second-quarter results of this year are no longer factored into the equation.

5. News on the asset cap

Wells Fargo's asset cap is arguably one of the most costly punishments ever placed on a bank, and by far the biggest hurdle facing the bank's stock price. Nobody really knows when this asset cap will be removed, but February will mark its three-year anniversary. With almost an entirely new management team and board of directors, in addition to a new regulatory infrastructure, Wells Fargo could be closer to exiting the asset cap than people realize. Many speculate that there could still be a ways to go -- but keep an eye out. We could at the very least -- likely through news reports -- learn that Wells Fargo is pushing for removal of the asset cap some time later on in 2021. Once the asset cap is removed, that should be a huge benefit to the bank's stock price.