Wells Fargo & Company (NYSE:WFC) has announced adjusted earnings per share of $1.29 for the fourth quarter of 2023, surpassing the Consensus Estimate of $1.18 and marking a 15% improvement compared to the previous year. The adjusted figures exclude expenses related to an FDIC special assessment, severance expenses for planned actions, and discrete tax benefits linked to the resolution of prior period tax matters.
The positive results were driven by higher non-interest income, improvements in capital ratios, and a reduction in expenses. However, challenges such as a decline in net interest income (NII), deteriorating credit quality, and a decrease in loan balances impacted overall performance.
Net income for the quarter rose to $5.77 billion, a significant increase from $3.59 billion in the same quarter of the previous year.
For the full year 2023, earnings amounted to $4.83 per share, missing the consensus estimate of $5.17 but still representing an increase from $3.27 in 2022. Net income for the year reached $19.14 billion, reflecting a 40% growth compared to the prior year.
WFC’s shares experienced a 1% decline in pre-market trading due to an annual performance that fell below expectations.
Strong revenue performance was a highlight, with quarterly total revenues reaching $20.47 billion, surpassing the Consensus Estimate of $20.31 billion and demonstrating a 2% increase from the same period last year. For the full year 2023, total revenues were $82.59 billion, exceeding the Consensus Estimate of $82.47 billion, although showing an 11.1% decline year over year.
Wells Fargo’s NII for the quarter was $12.77 billion, a 4.9% decrease compared to the previous year. This decline was attributed to lower deposit and loan balances, partially offset by higher interest rate benefits. The net interest margin also declined year over year to 2.92% from 3.14% on a taxable-equivalent basis.
Non-interest income experienced a notable 17% growth, reaching $7.70 billion. This increase was primarily driven by higher trading revenues, deposit-related fees, mortgage banking revenues, and improved investment banking fees. However, lower card fees partially offset these gains.
Non-interest expenses for the quarter were $15.78 billion, representing a 2% decrease from the previous year. This decline was attributed to lower operating losses and the impacts of Wells Fargo’s efficiency initiatives. However, higher severance and non-personnel expenses partially offset these savings.
Wells Fargo’s efficiency ratio improved to 77%, compared to 81% in the year-ago quarter, indicating enhanced profitability.
As of December 31, 2023, total loans declined by 1% on a sequential basis, amounting to $943.8 billion. Total deposits increased marginally on a sequential basis, reaching $1.34 trillion.
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