Wells Fargo & Company · NYSE:WFC
Wells Fargo & — Q4 2023 Earnings Presentation
26 slides from Wells Fargo &'s earnings presentation, Jan 12, 2024
Slide 1: 4Q23 Financial Results
4Q23 Financial Results January 12, 2024 © 2024 Wells Fargo Bank, N.A. All rights reserved.
Slide 2: Actively helped our customers and communities in 2023
Actively helped our customers and communities in 2023 Supporting our Customers New Digital and Product Offerings ® • Provided products to help customers avoid overdraft fees and meet short-term • Continued enhancing the Wells Fargo Mobile app for consumer and small cash needs: business customers SM
Slide 3: Actively helped our customers and communities in 2023
Actively helped our customers and communities in 2023 Supporting Sustainability Additional Actions to Support Our Communities • Renewable Energy & Environmental Finance Group provided nearly $2.4 billion in • Donated approximately $300 million to over 3,000 nonprofits in support of financing for win
Slide 4: 4Q23 results
4Q23 results • Net income of $3.4 billion, or $0.86 per diluted common share, included: ($ in millions, except EPS) Pre-tax Income EPS Federal Deposit Insurance Corporation (FDIC) special assessment ($1,931) ($0.40) Severance expense for planned actions (969) (0.20) Financial Results Discrete tax be
Slide 5: Capital and liquidity
Capital and liquidity 1 Common Equity Tier 1 Ratio under the Standardized Approach 11.4% Capital Position 1 10.8% 11.0% • Common Equity Tier 1 (CET1) ratio of 11.4% at December 31, 2023 remained 10.6% 10.7% 2 above our regulatory minimum and buffers of 8.9% 8.9% • CET1 ratio up ~80 bps from 4Q22 and
Slide 6: 4Q23 earnings
4Q23 earnings Quarter ended $ Change from Year ended $ Change from $ in millions, except per share data 4Q23 3Q23 4Q22 3Q23 4Q22 2023 2022 2022 Net interest income $12,771 13,105 13,433 ($334) (662) $52,375 44,950 $7,425 Noninterest income 7,707 7,752 6,601 (45) 1,106 30,222 29,418 804 Total revenue
Slide 7: Credit quality: net loan charge-offs
Credit quality: net loan charge-offs 1 Provision for Credit Losses and Net Loan Charge-offs ($ in millions) • Commercial net loan charge-offs up $284 million from 3Q23 to 34 bps of average loans (annualized) reflecting a $284 million increase in commercial real estate (CRE) net loan charge-offs – CR
Slide 8: Credit quality: allowance for credit losses for loans
Credit quality: allowance for credit losses for loans Allowance for Credit Losses for Loans ($ in millions) • Allowance for credit losses for loans (ACL) up, driven by credit card and commercial real estate loans, partially offset by a lower allowance for auto loans. The change in ACL also included
Slide 9: Loans and deposits
Loans and deposits Average Loans Outstanding ($ in billions) Average Deposits ($ in billions) 948.5 948.7 945.9 1,380.5 1,356.7 1,347.4 943.2 938.0 1,340.3 1,340.9 42.1 60.7 84.7 113.9 122.9 142.2 126.6 Corporate 112.4 107.5 102.1 396.3 395.5 392.9 391.7 389.7 156.2 157.6 Wealth and 160.3 157.2 173.
Slide 10: Net interest income
Net interest income Net Interest Income ($ in millions) 13,433 13,336 • Net interest income down $662 million, or 5%, from 4Q22 due to lower 13,163 13,105 deposit and loan balances, partially offset by the impact of higher interest 12,771 rates – 4Q23 MBS premium amortization was $136 million vs. $1
Slide 11: Noninterest expense
Noninterest expense Noninterest Expense ($ in millions) 16,186 15,786 • Noninterest expense down $400 million, or 2%, from 4Q22 355 – Operating losses down $3.2 billion 3,517 13,676 1,931 – 4Q23 FDIC special assessment of $1.9 billion 12,987 13,113 267 329 1 – Personnel expense up $766 million and i
Slide 12: Consumer Banking and Lending
Consumer Banking and Lending Summary Financials • Total revenue up 1% YoY and down 1% from 3Q23 $ in millions (mm) 4Q23 vs. 3Q23 vs. 4Q22 – CSBB up 1% YoY as the impact of higher interest rates was partially offset by lower deposit balances Revenue by line of business: – Home Lending up 7% YoY on im
Slide 13: Consumer Banking and Lending
Consumer Banking and Lending 1 Mortgage Loan Originations ($ in billions) Debit Card Point of Sale (POS) Volume and Transactions 14.6 124.0 124.9 124.5 126.1 117.3 6.4 2.5 2.6 2.5 7.8 2.5 6.6 6.4 2.4 4.5 16% 17% 16% 13% 24% 8.2 5.6 7.7 6.4 4.5 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 POS Vo
Slide 14: Commercial Banking
Commercial Banking Summary Financials • Total revenue up 7% YoY and down 1% from 3Q23 $ in millions 4Q23 vs. 3Q23 vs. 4Q22 – Middle Market Banking revenue up 6% YoY driven by the impact of higher Revenue by line of business: interest rates and higher deposit-related fees driven by lower earnings cre
Slide 15: Corporate and Investment Banking
Corporate and Investment Banking Summary Financials $ in millions 4Q23 vs. 3Q23 vs. 4Q22 • Total revenue up 14% YoY and down 4% from 3Q23 Revenue by line of business: – Banking revenue up 15% YoY driven by higher lending revenue, higher Banking: investment banking revenue on increased activity acros
Slide 16: Wealth and Investment Management
Wealth and Investment Management Summary Financials • Total revenue down 1% YoY and down 1% from 3Q23 $ in millions 4Q23 vs. 3Q23 vs. 4Q22 – Net interest income down 19% YoY driven by lower deposit balances as Net interest income $906 ($101) (218) customers reallocated cash into higher yielding alte
Slide 17: Corporate
Corporate Summary Financials • Revenue decreased $345 million YoY $ in millions 4Q23 vs. 3Q23 vs. 4Q22 – Net interest income down YoY due to higher deposit crediting rates paid to Net interest income ($544) ($275) (622) the operating segments Noninterest income 284 263 277 – Noninterest income up Yo
Slide 18: 2024 net interest income considerations
2024 net interest income considerations 2024 Net Interest Income Considerations • 2024 net interest income could potentially be ~7-9% lower than the full ($ in billions) year 2023 level of $52.4 billion. Key assumptions include: Potential for ~7-9% decrease – Lower rates in the recent implied rate c
Slide 19: 2024 expense expectations
2024 expense expectations Building the right risk and control infrastructure to strengthen our Company remains our top priority 1 2024 Expense Expectations • Delivered ~$10 billion of gross expense saves in 2021-2023 ($ in billions) • 2024 expense expectations $55.6 – Lower severance expense $53.6 0
Slide 20: Areas of focus for 2024 investments
Areas of focus for 2024 investments Firmwide / Risk & Control Consumer, Small and Business Banking Corporate and Investment Banking • Continue to build our risk and control infrastructure and • Continued investment in product and digital offerings, • Hiring in priority sectors and products within in
Slide 21: 4Q23 Return on tangible common equity (ROTCE)
1 4Q23 Return on tangible common equity (ROTCE) We have made progress since 4Q20 improving our returns 1 • 4Q20 ROE of 6.6% and 4Q20 ROTCE of 8.0% 1 • 4Q23 ROE of 7.6% and 4Q23 ROTCE of 9.0% 9% • We have made progress since 4Q20 improving our returns and still believe we have an achievable path to a
Slide 22: Appendix
Appendix
Slide 23: Tangible Common Equity
Tangible Common Equity Wells Fargo & Company and Subsidiaries TANGIBLE COMMON EQUITY We also evaluate our business based on certain ratios that utilize tangible common equity. Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling int
Slide 24: Tangible Common Equity, continued
Tangible Common Equity, continued Wells Fargo & Company and Subsidiaries TANGIBLE COMMON EQUITY The table below provides a calculation of the impact of fourth quarter 2023 notable items to return on equity (ROE) and return on average tangible common equity (ROTCE). Quarter ended ($ in millions) Dece
Slide 25: Common Equity Tier 1 under Basel III
Common Equity Tier 1 under Basel III Wells Fargo & Company and Subsidiaries 1 RISK-BASED CAPITAL RATIOS UNDER BASEL III Estimated Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, ($ in billions) 2023 2023 2023 2023 2022 2 Total equity $ 187.4 182.4 182.0 183.2 182.2 2 Effect of accounting policy change — — —
Slide 26: Disclaimer and forward-looking statements
Disclaimer and forward-looking statements Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 2023, and may differ materially from the results and disclosures in
Wells Fargo & Company — Q4 2023 Earnings Presentation on 6ix