• Net Income: $5.1 billion for the fourth quarter.
• Earnings Per Share (EPS): $1.43 per diluted common share.
• Revenue: Fee-based revenue growth up 15% from a year ago.
• Net Interest Income: Increased $146 million or 1% from the third quarter.
• Noninterest Income: Up 11% from a year ago.
• Noninterest Expense: Declined 12% from a year ago.
• Common Stock Dividend: Increased by 15% in 2024.
• Stock Repurchase: Approximately $20 billion of common stock repurchased, up 64% from a year ago.
• Average Loans: Declined throughout the year.
• Average Deposits: Increased from fourth quarter 2023.
• Credit Card Spend: Up over $17 billion from a year ago.
• Allowance for Credit Losses: Down $103 million from the third quarter.
• ROTCE: Improved to 13.4% in 2024.
• 2025 Net Interest Income Expectation: Approximately 1% to 3% higher than full year 2024.
• 2025 Noninterest Expense Expectation: Approximately $54.2 billion.

• Warning! GuruFocus has detected 8 Warning Signs with GS.

Release Date: January 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wells Fargo & Co (NYSE:WFC) reported a solid performance in the fourth quarter, with net income of $5.1 billion and a 1% increase in net interest income from the previous quarter.
• The company returned $25 billion of capital to shareholders in 2024, including a 15% increase in common stock dividends and $20 billion in stock repurchases.
• Wells Fargo & Co (NYSE:WFC) achieved strong fee-based revenue growth, up 15% from the previous year, which helped offset a decline in net interest income.
• The company made significant progress in its risk and control work, with six consent orders terminated since 2019, including the OCC's sales practices consent order.
• Wells Fargo & Co (NYSE:WFC) saw growth in its credit card business, with over 2.4 million new accounts opened in 2024 and a $17 billion increase in credit card spend from the previous year.

Negative Points

• Average loans declined throughout the year, with growth in credit card balances offset by declines in other asset classes due to weak loan demand and credit tightening actions.
• Commercial real estate office fundamentals remain weak, with increased net loan charge-offs in this portfolio.
• The auto business experienced a 21% decrease in revenue from the previous year due to lower loan balances and loan spread compression.
• Noninterest expense declined 12% from a year ago, but this was primarily driven by a lower FDIC special assessment, indicating potential challenges in achieving further cost reductions.
• The company remains under an asset cap, which limits its ability to grow its balance sheet and fully capitalize on growth opportunities.

Q & A Highlights

Q: Mike, could you unpack the deposit expectations embedded in slide 18 and the NII outlook? How does this play into the paydown of higher-cost borrowings throughout the year? A: Michael Santomassimo, CFO: We've seen stabilization in the mix between noninterest-bearing and interest-bearing deposits. We expect this to continue, with some absolute growth across the consumer franchise. Pricing hasn't moved much, but promotional savings and CD rates have come down. We don't expect pricing pressure on the consumer side.

Q: Can you discuss the profitability of the credit card business and its impact on ROE? A: Michael Santomassimo, CFO: We're starting to see the earliest vintages of new products mature and become more profitable. Credit performance is on track with our models, and new account growth continues. Profitability will start to come through more meaningfully over the next year or two.

Q: Charlie, can you give examples of changes post-lifting of the OCC consent order and their impact on ROE? A: Charles Scharf, CEO: We've rolled out a standard incentive framework across branches, which was piloted earlier. This has led to better performance in pilot branches, and we expect results to improve more meaningfully over the near to medium term.

Q: How should we think about the buyback appetite in 2025, given potential organic growth opportunities? A: Michael Santomassimo, CFO: We'll prioritize serving customers and organic growth opportunities. Given the asset cap, we'll continue returning capital to shareholders. We don't believe we need to increase our CET1 percentage, so buybacks will be managed based on opportunities and risks.

Q: What are the risks outside of geopolitical concerns that could impact Wells Fargo? A: Charles Scharf, CEO: Cyber risk is the biggest concern, which is why we invest heavily in this area. The strength of the US economy is crucial for our success, as it drives customer success and, consequently, ours. Anything that risks the US economy is a risk for us.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.