Wells Fargo's profits jump 47% amid dealmaking rebound

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Wells Fargo's profits soared 47% in the fourth quarter of last year as dealmaking and wealth management fees helped offset weaker interest income.

Total revenues were roughly flat compared with the fourth quarter of 2023, but more of them came from fees Wells Fargo charges for services rather than its loans, the bank said Wednesday.

CEO Charlie Scharf cited the shift as a sign of ongoing progress at Wells Fargo, which has bulked up its investment banking operation to better compete with big banks.

"Our solid performance this quarter caps a year of significant progress for Wells Fargo," Scharf said in a news release. "Our earnings profile continues to improve."

Net income rose to $5.1 billion from $3.4 billion in the year-ago quarter. Earnings per share climbed to $1.43 from 86 cents per share. Analysts were expecting EPS at $1.35, according to S&P Capital IQ data.

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Net interest income fell to $11.8 billion, down 7% from last year, thanks to higher deposit costs, sluggish loan balances and some loans repricing downward after last year's interest rate cuts. The pressure appears to be easing, as Wells Fargo projected its net interest income should rise 1% to 3% in 2025, compared with its 9% decline in 2024.

Average loans fell to $906.4 billion in the fourth quarter, down 3% from $938 billion last year, though Wells Fargo Chief Financial Officer Michael Santomassimo told reporters Wednesday he expects modest growth this year.

Though fewer loans meant less interest income, the bank raked in some $8.5 billion in noninterest income, up 11% from $7.7 billion in the fourth quarter of last year.

Higher stock prices and investor optimism helped drive some of the increase, as Wells Fargo's venture capital investments saw better results and its wealth management division earned more as clients' assets grew. Investment banking fees also jumped 59% from last year to $725 million, with Wells Fargo helping arrange more equity and debt deals for clients.

Wells Fargo's efforts to cut costs also continued, as noninterest expense fell to $13.9 billion in the fourth quarter, down 12% from last year.

Scharf also highlighted the "clear progress we've made on our risk and control agenda," as the bank continues to work on fixing regulators' expectations after its sales-related scandal a decade ago. In February, the Office of the Comptroller of the Currency lifted the 2016 consent order it placed on the bank, which Scharf said was "an important milestone" in its journey.

Wells Fargo remains under a cap that the Federal Reserve imposed in 2018, which limits the bank's assets at $3.9 trillion.

Investors hope the bank's progress in fixing some of its regulatory issues will prompt the Fed to lift the asset cap and supercharge Wells Fargo's growth. Those expectations have risen after President-elect Donald Trump's victory.

Scharf has long declined to give investors a timeline for when regulators will make that decision, saying all the bank can do is improve its risk management and controls to satisfy regulators' expectations.

"Our operational risk and compliance infrastructure is greatly changed from when I arrived and while we are not done, I'm confident that we will successfully complete the work required in our consent orders and embed an operational risk and compliance mindset into our culture," Scharf said Wednesday.