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.
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
Wells Fargo’s stock fell 1% before the bell.
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. The bank also 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 and a $969 million charge from severance expenses. Wells Fargo also recorded a $621 million, or 17 cents per share, tax benefit.
“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 Officer Charlie Scharf in a release. “We are closely monitoring credit and while we see modest deterioration, it remains consistent with our expectations.”
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 from $52.4 billion in 2023. The decline in net interest income was due to lower deposit and loan balances, but offset slightly by higher interest rates, the bank said.
Provisions for credit losses rose 34% to $1.28 billion from $957 million a year ago, as allowances for credit losses rose for credit card and commercial real estate loans. Wells Fargo said that was partially offset by lower allowances for auto loans.
Wells Fargo shares are virtually flat this year after rallying more than 19% in 2023. During the period the 10-year Treasury yield topped the 5% threshold in October, before finishing the year below 3.9%.
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