Wells Fargo & Co Q4 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: John McDonald - Truist Financial Corporation - Analyst : Mike, I was hoping you could unpack the deposit expectations embedded in slide 18 and the NII outlook. You talked about stabilization of retail volumes and mix. Just kind of wanted to get a little more detail about what you're assuming for retail deposit growth mix and how that plays into the paydown of higher cost borrowings throughout the year in your plan?

Question: John McDonald - Truist Financial Corporation - Analyst : Okay. Got it. And then just wanted to shift gears and ask about credit card profitability. When you're in growth mode, credit card experience is a drag from accounting on the upfront acquisition costs and provision. Where are you on card profitability now? Is that an upside driver to ROE as more of the balances, roll off teasers, and some of that upfront expense wanes?

Question: Ebrahim Poonawala - BofA Global Research (US) - Analyst : I guess I just wanted to go back, maybe, Charlie, to something you talked about back in December on the back of the lifting of the OCC consent order. As we think about just the ROE trajectory for the bank, it will be useful if you can maybe give some tangible examples of things that you've been able to do post the lifting of the consent order in terms of incenting branch employees and where in the balance sheet or in the P&L, we should expect that to show up maybe as early as 2025.

Question: Ebrahim Poonawala - BofA Global Research (US) - Analyst : That's helpful color. And I guess, just maybe following up -- so thanks Mike for running through the expense investment priorities. As we think about the severance charge in the fourth quarter, and run way to extract additional efficiencies relative to $54 billion expense guide. How should we think about like are we getting to a point where some of the low-hanging fruit is done and expenses generally move higher given the investments and we should at least anticipate positive operating leverage on the way forward? Or do you still see opportunities to meaningfully cut costs, make things more efficient, especially in the consumer bank?

Question: John Pancari - Evercore ISI Institutional Equities - Analyst : Good morning. On the NII outlook, I know you said it includes modest loan growth expectation for 2025. I just want to see if you can elaborate a little bit on how we could think about that in terms of level and trajectory? Should it be near GDP? Or how should we think about that? And then can you -- in addition to the sizing of the most likely drivers, maybe can you also give us a little bit of color on the pace of expected incremental runoff of balances as you look at the growth outlook?

Question: John Pancari - Evercore ISI Institutional Equities - Analyst : Great. And then separately on capital, 11.1% CET1 pretty solid and you still bought back about $4 billion this quarter. How should we think about the buyback appetite as you look at 2025, assuming that you do see some improvement in organic growth opportunities, how could that influence your pace of buyback.

Question: Erika Najarian - UBS Securities LLC - Analyst : Clearly, the way the stock has reacted the message from your shareholders has been an embrace of Wells Fargo was more than a remediation story. And thinking about the return improvement even beyond the asset cap resolution and the consent order. And I guess to that end, Charlie and Mike, you have a medium-term ROE target of 15%. In 2024, you generated almost 13.5%. And by your own commentary, you still have places like Card and Home Lending where your profitability should improve from here. You're carrying excess capital, you're under the asset cap. Obviously, you're making great efforts in CIB in terms of really using your balance sheet to generate even more fees and off of your relationships. And as we think about that 15%, especially in the context of you have one money center that has to hold more capital than you that has a 17% target and another money center that has to hold more capital to go than that 15% target. I guess, I'm wondering if your shareholders are thinking about fully realized wells beyond the remediation story, what is the true natural return of this business?

Question: Betsy Graseck - Morgan Stanley - Analyst : So two questions. One, just to follow up on the last question that Eric asked on the drivers. We're in the last mile. So congratulations we're in the last mile to the 15%. And are you thinking about that last mile as being driven by revenue growth happening faster in the businesses that have the higher returns? Or are there still expenses to be cut out such that the expense ratio and the expense focus is what's going to drive that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 15, 2025 / 3:00PM, WFC.N - Q4 2024 Wells Fargo & Co Earnings Call

Question: Betsy Graseck - Morgan Stanley - Analyst : Totally get it, and it does feel like there's a bit of a shift at the margin to Rev led profitability growth, in my opinion, which is great, a lot of low-hanging fruits already out on the expense side. And then just lastly, on credit card. I understand get it more mature. There was the announcement during the quarter, I believe, that Ray Fisher is stepping down. Could you help us understand what drove that decisioning. And new yes, and new management and what I assume it's going to be the same goals and everything, but if we could just have a few thoughts on that whole situation. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 15, 2025 / 3:00PM, WFC.N - Q4 2024 Wells Fargo & Co Earnings Call

Question: Betsy Graseck - Morgan Stanley - Analyst : Okay. And you'll announce the new head when the time is appropriate, right?

Question: Betsy Graseck - Morgan Stanley - Analyst : Thank you. Thank you. Sorry about that.

Question: Betsy Graseck - Morgan Stanley - Analyst : Then picked it up. All right. Thank you.

Question: Matt O'Connor - Deutsche Bank - Analyst : Obviously, rate volatility is quite high here. So how do we think about the rate sensitivity to your net interest income if rates end up being a little bit higher, obviously, it seems like a structurally good, but help frame some of the sensitivity to the guidance that you put out there from changes in rates.

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay. That's helpful. And then just on trading, obviously, you guys have been executing really well for a few years now. And I don't want to make too much of just one quarter. But even if we strip out the fair value adjustment, the trading was still down year-over-year. Obviously, the peers are kind of implying up, I don't know, 15%, 20% plus just maybe talk a bit about was there anything unusual this quarter that [far weak on] trading. And again, I appreciate last year was a strong quarter, but it did jump out.

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay. Actually, just on that last point. Obviously, we know you're more domestic, but your comment that others might take more risk. Like how do you think you're being more conservative in trading?

Question: David Long - Raymond James & Associates, Inc. - Analyst : As it relates to auto, just seems like a bit of a strategic shift after three years of seeing that portfolio decline. What are you seeing in that business that is increasing your appetite to grow it here forward?

Question: David Long - Raymond James & Associates, Inc. - Analyst : Got it. And then the second question I had relates to the investment securities portfolio repositioning. And do you have certain internal payback maximum that you're willing to look at? Or do you need to have a gain elsewhere in the bank before you look to take a loss in making some adjustments. What is the thought process that you go through to get you to the decision to actually act.

Question: Vivek Juneja - J.P. Morgan Securities LLC - Analyst : Mike, a follow-up for you on your guide for NII of plus 1% to plus 3% for 2025 full year. Can you give us the guide for NII ex markets for 2025.

Question: Gerard Cassidy - RBC Capital Markets Wealth Management - Analyst : Charlie. Can you guys share with us, obviously, there's geopolitical risks all around. And I think many investors, obviously, are aware of those. Can you list for us the risks that you guys talk about outside of the geopolitical risk when you're running your business, what are the things -- because the outlook, I think we all share the optimism you and your peers for the upcoming year for banking. And what are the risks, though, that could maybe sort of a curve ball at us?

Question: Gerard Cassidy - RBC Capital Markets Wealth Management - Analyst : Very good. No, very clear. As a follow-up, and I apologize if this is putting the cart before the horse, you guys have obviously made great progress in resolving your regulatory issues. You talked on the call today about the OCC lifting, obviously, the cease-and-desist order earlier last year. And so when we get beyond these issues for you folks, obviously, everybody talks about the asset cap and the Federal Reserve's cease-and-desist order. Can we talk about strategic planning going forward in terms of how you might -- because you have plenty of excess capital, how you might consider acquisitions? And in particular, what I'm interested in is pre-pandemic and pre-year asset cap Wells deposit market share was over 10%, which as we all know, you're not -- no bank is permitted to buy a depository with the market share is over 10%. But now with the growth in the industry's deposits, you guys have been flat, you're below 10%. So would there -- and again, I apologize if this is the cart before the horse, but is there any consideration once this is all behind you, as you guys look to grow through maybe acquisitions, depositories or investment banks? Or how are you guys looking at it from that standpoint?

Question: Saul Martinez - HSBC - Analyst : You addressed -- in response to an earlier question, changes in the incentive framework across the branches. And there is this debate about the extent and how quickly an asset cap removal would kick start and allow for balance sheet growth. But I'm curious to hear if you think there are still operational/cultural constraints that you need to address to really capitalize on the growth opportunities across your businesses in response to the sales scandal, you changed the compensation structure of the branches. As you mentioned, you've built in safeguards to prevent abuses and maybe there is more of a cultural predilection to be more risk averse. But do you feel like these are factors you still need to address to sort of remove the shackles, create incentives that help you grow as you change more to a more of a growth mindset? If you could just maybe elaborate on those questions, please.