Wells Fargo & Company (WFC) reported a net income of $3.45 billion for the fourth quarter of 2023, a 9% increase compared to the previous year. The company’s earnings per share (EPS) of $0.86 also surpassed the consensus estimate of $0.71. This positive performance was accompanied by a 2% rise in revenue to $20.48 billion, slightly exceeding analysts’ expectations of $20.28 billion.
In a statement, CEO Charlie Scharf expressed confidence in the company’s future prospects, stating, “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.” Scharf also acknowledged the modest deterioration in credit but emphasized that it was within their expectations.
However, Wells Fargo faced a $1.9 billion charge, or ($0.40) per share, related to a special assessment from the Federal Deposit Insurance Corporation (FDIC). This expense impacted the company’s fourth-quarter 2023 net interest income, which declined by 5% to $12.8 billion. The decrease was primarily attributed to lower deposit and loan balances, partially offset by higher interest rates.
On the bright side, noninterest income saw a notable increase of 17%, and noninterest expenses decreased by 2%. For the fiscal year 2023, net interest income rose by 16.5% year-on-year to $52.4 billion, surpassing the company’s guidance of approximately 16% higher than the FY22 level of $45.0 billion.
Looking ahead to fiscal year 2024, Wells Fargo anticipates a potential 7-9% decrease in net interest income compared to the full-year 2023 level of $52.4 billion. The company expects average loans to slightly decline but foresees modest growth in commercial and credit card loans in the second half of the year. Additionally, Wells Fargo predicts further attrition in Consumer Banking and Lending deposits, resulting in a shift towards a higher percentage of interest-bearing deposits.
As of the premarket session, Wells Fargo’s stock (WFC) was down 2.20% at $47.96. Investors will closely monitor the company’s performance in the coming months, particularly in relation to interest rates and the state of the U.S. economy.
