Wells Fargo posts higher fourth-quarter profit, helped by higher interest rates and cost cutting

cnbc.com:

In this article

Wells Fargo shares fell Friday even after fourth-quarter profit rose from a year ago, as the bank warned that net interest income for 2024 could come in significantly lower year over year.

«As we look forward, our business performance remains sensitive to interest rates and the health of the U.S. economy, but we are confident that the actions we are taking will drive stronger returns over the cycle,» said Chief Executive Charlie Scharf in the earnings release. «We are closely monitoring credit and while we see modest deterioration, it remains consistent with our expectations.»

Scharf said earnings in the latest period were helped by a strong economy and higher interest rates as well as cost-cutting efforts put in place by the bank. Still, Wells Fargo's stock fell more than 2%.

Here's what the bank reported versus what Wall Street was expecting based on a survey of analysts by LSEG, formerly known as Refinitiv:

·       Revenue: $20.48 billion vs. $20.30 billion expected

In the quarter ended Dec. 31, 2023, Well Fargo posted net income of $3.45 billion, or 86 cents per share, up slightly from $3.16 billion, or 75 cents a share, a year ago.

Earnings were lowered by a $1.9 billion charge from a FDIC special assessment tied to the failures of Silicon Valley Bank and Signature Bank, and a $969 million charge from severance expenses. Wells Fargo also recorded a $621 million, or 17 cents per share, tax benefit.

Total revenue came in at $20.48 billion for the period. That's a 2% increase from the fourth quarter of 2022 when Wells Fargo posted $20.3 billion in revenue.

Wells Fargo said net interest income fell 5% from a year ago to $12.78 billion, and warned that the figure could come in 7% to 9% lower for the year