Wells Fargo's 2023 Profit Rises 9% Buoyed By Higher Interest Rates, But Warns Lower Net Interest Income 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.

“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.

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%. The bank said 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.

Guidance: For fiscal year 2024, Wells Fargo expects net interest income could potentially be ~7-9% lower than the full year 2023 level of $52.4 billion.

The company expects average loans to decline slightly and expects 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. 

Price Action: WFC shares are down 2.20% at $47.96 during the premarket session on the last check Friday.

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