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Bloomberg
Wells Fargo & Co said it expects a key measure of lending to pick up this year, a sign that clients are starting to take on debt again as government stimulus wanes.
The bank said net interest income may rise about 8% this year. The firm also reported net income of $5.8 billion, beating analysts’ expectations and the latest indication that Chief Executive Officer Charlie Scharf’s turnaround is taking hold.
“As the economy continued to recover we saw increased consumer spending, higher investment banking fees, higher asset-based fees in our wealth and investment management business, and strong equity gains in our affiliated venture capital and private equity
businesses,†Scharf said.
Wells Fargo’s period-end loans rise 1% in fourth quarter from a year earlier, driven by a jump in borrowing in the corporate and investment bank. Still, consumer loans fall 10% from a year ago and total commercial borrowing ticked up.
The results provide a look at how the US economy fared during the last three months of the year, including as Omicron took hold in December. JPMorgan Chase also reported results, posting a decline in trading revenue that was steeper than analysts expected and said both commercial and consumer loans fell from a year earlier.
Expenses declined to $13.2 billion, a drop that was less than what analysts expected. Reducing costs has been a key part of Scharf’s turnaround plans since he took the helm more than two years ago. Wells Fargo also provided guidance for 2022 and expects non-interest expenses to decrease by 4.3%.
Lending has been a key focus for investors after appetite lagged for much of 2021. That’s normally a bad sign for banks, but executives blamed consumers and businesses being flush with stimulus cash.