Russ Cohen

Wells Fargo Sees 9% Rise in 2023 Profit Despite Lower Net Interest Income Forecast for 2024 Wells Fargo Sees 9% Rise in 2023 Profit Despite Lower Net Interest Income Forecast for 2024

Wells Fargo & Company WFC earned a net income of $3.45 billion, up 9% YY in the fourth quarter of 2023. The company reported a GAAP EPS of $0.86, beating the consensus of $0.71. Revenue rose 2% to $20.48 billion. Analysts expected $20.28 billion.

Positive Outlook Amid Uncertainty

“We are closely monitoring credit, and while we see modest deterioration, it remains consistent with our expectations,” CEO Charlie Scharf said in a statement. “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 added.

Wells Fargo took a $1.9 billion charge, or ($0.40) per share, related to the expense from a Federal Deposit Insurance Corporation (FDIC) special assessment.

Challenges in Net Interest Income

Wells Fargo’s fourth-quarter 2023 net interest income slid 5% to $12.8 billion, in line with the company guidance of ~$12.7 billion, due to lower deposit and loan balances, partially offset by higher interest rates.

Noninterest income rose 17%, and the bank stated that noninterest expenses were down 2%.

For fiscal 2023, net interest income increased 16.5% Y/Y to $52.4 billion, compared to the company guidance of ~16% higher than the FY22 level of $45.0 billion.

Cautious Forecast for 2024

Guidance: For fiscal year 2024, Wells Fargo expects net interest income to potentially be ~7-9% lower than the full year 2023 level of $52.4 billion. The company expects average loans to decline slightly and anticipates modest growth in commercial and credit card loans in the second half of 2024. Wells Fargo also expects further attrition in Consumer Banking and Lending deposits, resulting in a continued shift to a higher percentage of interest-bearing deposits.

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Despite the positive performance, WFC shares are down 2.20% at $47.96 during the premarket session on the last check Friday.

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