Wells Fargo reports higher fourth-quarter profit, helped by higher interest rates and cost cuts

Wells Fargo shares fell on Friday even after fourth-quarter profit rose from last year, as the bank warned that net interest income for 2024 could be significantly lower year-on-year.

Here’s what the bank reported versus what Wall Street expected, based on a survey of analysts at LSEG, formerly known as Refinitiv:

ยท Revenue: $20.48 billion vs. $20.30 billion is expected

Wells Fargo shares fell 1% before the bell.

Total sales for the period reached $20.48 billion. That’s a 2% increase from the fourth quarter of 2022, when Wells Fargo reported $20.3 billion in revenue.

The bank reported net income of $3.45 billion, or 86 cents a share, up slightly from $3.16 billion, or 75 cents a share, a year ago.

Earnings were reduced by $1.9 billion, or 40 percent per share, from the FDIC special assessment and $969 million, or 20 cents, from severance costs. Wells Fargo also saw a tax benefit of $621 million, or 17 cents per share.

CEO Charlie Scharf said: “While our improved 2023 results benefited from a strong economic environment and higher interest rates, our continued focus on efficiency and strong credit discipline were also important contributors.”

Despite the drop in revenue, Wells Fargo said net interest income fell 5% from a year earlier to $12.78 billion, and warned that the figure could be down 7% to 9% for the year from $52.4 billion in 2023.

Loan loss provisions rose 34% to $1.28 billion from $957 million a year ago as loan loss provisions increased on credit cards and commercial real estate loans. Wells Fargo said that was partially offset by lower auto loan allowances.

Wells Fargo shares are virtually flat this year after rising more than 19% in 2023. Interest rates rose sharply during that period, with the 10-year Treasury yield breaking above 5% in October before ending the year below 3.9%.

This story is evolving. Please check for updates.

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