Wells Fargo & Company · NYSE:WFC
Wells Fargo & — Q4 2022 Earnings Presentation
26 slides from Wells Fargo &'s earnings presentation, Jan 13, 2023
Slide 1: 4Q22 Financial Results
4Q22 Financial Results January 13, 2023 © 2023 Wells Fargo Bank, N.A. All rights reserved.
Slide 2: Actively helped our customers in 2022
Actively helped our customers in 2022 Supporting our Customers New Digital and Product Offerings ® • Helped customers avoid overdraft fees and meet short-term cash needs: • Reimagined Wells Fargo Mobile app for consumer and small business customers 1 – Eliminated non-sufficient fund (NSF) fees – 28.
Slide 3: Actively helped our customers, communities and employees in 2022
Actively helped our customers, communities and employees in 2022 Supporting Sustainability Additional Actions to Support Our Communities SM • Published the Wells Fargo CO2eMission , a climate alignment and target- • Donated approximately $300 million to over 3,400 nonprofits in support of setting me
Slide 4: 4Q22 results
4Q22 results • Net income of $2.9 billion, or $0.67 per diluted common share. Results included: ($ in millions, except EPS) Pre-tax Income EPS Litigation, regulatory, and customer remediation matters, primarily related to a variety of previously ($3,287) ($0.70) disclosed historical matters 6 Impair
Slide 5: Capital
Capital 1 Common Equity Tier 1 Ratio under the Standardized Approach Capital Position 1 • Common Equity Tier 1 (CET1) ratio of 10.6% at December 31, 2022 2 remained above our regulatory minimum and buffers of 9.2% 11.4% • CET1 ratio down ~80 bps from 4Q21 and reflected: 10.5% 10.4% 10.3% 10.6% – Dec
Slide 6: 4Q22 earnings
4Q22 earnings Quarter ended $ Change from Year ended $ Change from $ in millions (mm), except per share data 4Q22 3Q22 4Q21 3Q22 4Q21 2022 2021 2021 Net interest income $13,433 12,098 9,262 $1,335 4,171 $44,950 35,779 $9,171 Noninterest income 6,227 7,407 11,594 (1,180) (5,367) 28,835 42,713 (13,878
Slide 7: Credit quality
Credit quality Provision for Credit Losses and Net Charge-offs ($ in millions) Allowance for Credit Losses for Loans ($ in millions) 560 423 399 305 345 784 957 580 13,788 13,609 12,681 12,884 13,225 0.19% 0.17% 0.23% 0.14% 0.15% 5,997 6,653 5,533 5,802 6,234 (452) (787) 1.54% 1.39% 1.37% 1.40% 1.42
Slide 8: Loans and deposits
Loans and deposits Average Loans Outstanding ($ in billions) Average Deposits and Rates ($ in billions) 945.5 948.5 1,470.0 1,464.1 1,445.8 926.6 1,407.9 1,380.5 875.0 898.0 34.9 27.1 20.3 24.4 42.1 Corporate 180.9 185.8 173.7 158.4 142.2 389.1 394.3 396.3 Wealth and 381.9 182.1 169.2 164.9 156.8 In
Slide 9: Net interest income
Net interest income Net Interest Income ($ in millions) • Net interest income up $4.2 billion, or 45%, from 4Q21 primarily due to the impact of higher interest rates, higher loan balances, and lower mortgage- 13,433 backed securities (MBS) premium amortization 12,098 – 4Q22 MBS premium amortization
Slide 10: Noninterest expense
Noninterest expense Noninterest Expense ($ in millions) • Noninterest expense up $3.0 billion, or 23%, from 4Q21 16,202 – Operating losses up $3.0 billion reflecting $3.3 billion primarily related to a 13,870 14,327 variety of previously disclosed historical matters, including litigation, 13,198 3,5
Slide 11: Consumer Banking and Lending
Consumer Banking and Lending Summary Financials • Total revenue up 8% YoY and up 2% from 3Q22 $ in millions (mm) 4Q22 vs. 3Q22 vs. 4Q21 – CSBB up 36% YoY driven by the impact of higher interest rates; up 6% from 3Q22 as higher net interest income was partially offset by lower deposit- Revenue by lin
Slide 12: Consumer Banking and Lending
Consumer Banking and Lending 1 Mortgage Loan Originations ($ in billions) Debit Card Point of Sale (POS) Volume and Transactions 48.1 15.3 122.4 125.2 122.4 124.0 37.9 115.0 34.1 13.8 14.5 2.5 2.5 2.5 2.5 59% 21.5 56% 28% 2.3 32.8 9.1 14.6 24.1 16% 6.4 19.6 13% 12.4 8.2 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21
Slide 13: Commercial Banking
Commercial Banking Summary Financials • Total revenue up 38% YoY and up 7% from 3Q22 $ in millions 4Q22 vs. 3Q22 vs. 4Q21 – Middle Market Banking revenue up 78% YoY primarily due to the impact of Revenue by line of business: higher interest rates and higher loan balances, partially offset by lower d
Slide 14: Corporate and Investment Banking
Corporate and Investment Banking Summary Financials • Total revenue up 18% YoY and up 2% from 3Q22 $ in millions 4Q22 vs. 3Q22 vs. 4Q21 Revenue by line of business: – Banking revenue up 22% YoY driven by stronger treasury management Banking: results due to the impact of higher interest rates and hig
Slide 15: Wealth and Investment Management
Wealth and Investment Management Summary Financials • Total revenue up 1% YoY and up 1% from 3Q22 $ in millions 4Q22 vs. 3Q22 vs. 4Q21 – Net interest income up 69% YoY and up 3% from 3Q22 driven by the Net interest income $1,124 $36 458 impact of higher interest rates, partially offset by lower depo
Slide 16: Corporate
Corporate Summary Financials • Net interest income up YoY due to the impact of higher interest rates $ in millions 4Q22 vs. 3Q22 vs. 4Q21 – Business divestitures in 2021 accounted for $27 million of net interest Net interest income $78 $326 498 income in 4Q21 Noninterest income (367) (651) (3,907) •
Slide 17: 2023 net interest income considerations
2023 net interest income considerations 2023 Net Interest Income Considerations • 2023 net interest income could potentially be ~ 10% higher than the ($ in billions) full year 2022 level of $45.0 billion – Based on recent implied forward rates Potential for a ~10% increase Forward Rate Curve as of 1
Slide 18: 2023 expense expectations
2023 expense expectations Building the right risk and control infrastructure to strengthen our Company remains our top priority 2023 Expense Expectations (Excluding Operating Losses) • 2023 expense expectations (excluding operating losses) ($ in billions) – Merit increases including inflationary pre
Slide 19: Areas of focus for 2023 investments
Areas of focus for 2023 investments Risk and Controls Digital Payments Products Continuing to build the right risk and control Building experiences for customers that are Improving payments products which are at the infrastructure to strengthen our Company streamlined, intuitive and transparent hear
Slide 20: 4Q22 Return on tangible common equity (ROTCE)
1 4Q22 Return on tangible common equity (ROTCE) 2 4Q22 ROTCE 1 • 4Q22 ROE of 6%; 4Q22 ROTCE of 8% ~16% 4 3 • 4Q22 adjusted ROTCE excluded the following notable items : – $3.3 billion of operating losses related to litigation, regulatory, and Excluded customer remediation matters 4Q22 notable – Eleva
Slide 21: Path to higher returns
Path to higher returns Progress since 4Q20 Path to medium-term ROTCE Longer-term ROTCE • On our 4Q20 earnings ~ call we laid out a • Clear, achievable path to a sustainable ~15% ROTCE in the medium-term; • Continued execution on path to higher returns; ROTCE in 4Q20 requires: running the company in
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 In fourth quarter 2022, we adjusted ROTCE to consider notable items that occurred in the quarter. Management believes that adjusted ROTCE is a useful financial measure because it enables management, inves
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, except ratio) 2022 2022 2022 2022 2021 Total equity $ 181.9 178.4 179.8 181.7 190.1 Adjustments: 2 Preferred stock (
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, 2022, and may differ materially from the results and disclosures in
Wells Fargo & Company — Q4 2022 Earnings Presentation on 6ix