However, Q2 2023 saw Wells Fargo client assets go from $1,835bn to $1,998bn, a 9% rise.
Net interest income also rose, by 10% year-on-year, thanks to higher interest rates, offset by lower deposit balances as customers moved cash into higher yielding options.
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Noninterest income actually fell 5% on lower asset-based fees driven by a decrease in market valuations. Net income overall plummeted by 19% from $603m to $487m.
In addition, average deposits for wealth and investment management totalled $112.4bn, a 35% slide from this time last year.
Wells Fargo Group in Q2 2023
Compared to Q2 2022, net interest income rose 29%. This was attributed to the impact of higher interest rates and higher loan balances, slightly offset by lower deposit balances.
Furthermore, noninterest income increased by 8%, driven by higher trading revenue in the markets business and lower impairments in the bank’s venture capital and private equity businesses. This was partially offset by less asset-based feed in the wealth and investment management arm.
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By GlobalDataRetial bank branches dropped from 4,660 to 4,455 over the year. However, active digital customers rose from 33.4 million to 34.2 million in the same time, as well as active mobile customers increasing from 28 million to 29.1 million.
Chief executive Charlie Scharf commented: “We reported solid results in the second quarter, with net income of $4.9bn and revenue of $20.5bn. Our strong net interest income continued to benefit from higher interest rates, and we remained focused on controlling expenses. As expected, net loan charge-offs increased from the first quarter. Consumer charge-offs continued to deteriorate modestly. Commercial charge-offs increased driven by a small number of borrowers in Commercial Banking, with little signs of systemic weakness across the portfolio, and higher losses in commercial real estate, primarily in the office portfolio. We had a $949m increase in the allowance for credit losses, primarily for commercial real estate office loans, as well as for higher credit card loan balances. While we haven’t seen significant losses in our office portfolio to-date, we are reserving for the weakness that we expect to play out in that market over time.”
“The recent Federal Reserve stress test affirmed that Wells Fargo remains in a strong capital position, reflecting the value of our franchise and the benefits of our operating model. We repurchased $4bn of common stock in the second quarter while maintaining our strong capital position. Our CET1 ratio was 10.7%, 1.5 percentage points above our current regulatory minimum plus buffers, and 1.8 percentage points above our expected new regulatory minimum plus buffers starting in the fourth quarter of this year. While we expect to repurchase more common stock this year, we believe continuing to maintain significant excess capital is prudent until there is more specificity on the new bank capital requirements,” Scharf added.
“Our company remains strong and we have significant opportunities to continue to improve how we serve our customers. The US economy continues to perform better than many had expected, and although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters. We remain prepared for a variety of scenarios and our steadfast commitment to our risk and control buildout coupled with our continued focus on financial and credit risk management allows us to support our customers throughout economic cycles,” he concluded.
