Wells Fargo's Wealth, Investment Arm Logs Q2 Fall In Net Income

Editorial Staff

17 July 2023

The wealth and investment management arm of Wells Fargo last Friday reported a 19 per cent drop in net income for the three months to end-June, standing at $487 million. It rose 7 per cent from the end of March 2023, however.

The firm said revenue in wealth and investment management dipped 2 per cent year-on-year to $3.648 billion. Non-interest costs rose 2 per cent to $2.974 billion; some $24 million was set aside for credit losses, reversing from a net release of $7 million. Net interest income rose 10 per cent due to the impact of higher interest rates, partially offset by lower deposit balances as customers reallocated cash into higher yielding alternatives.

Total client assets stood at $1.998 trillion at the end of June, a gain of 9 per cent on a year before.

For the entire Wells Fargo group, net income rose to $4.938 billion from $3.142 billion a year earlier, while total total revenue increased to $20.533 billion from $17.04 billion, and provision for credit losses rose to $1.713 billion from $580 million. At end of June, Wells Fargo had a Common Equity Tier 1 ratio of 10.7 per cent, rising from 10.4 per cent.

Chief executive Charlie Scharf said that following the US Federal Reserve's recent stress tests on banks, Wells Fargo was shown to be in a strong capital position. The central bank has scrutinized banks’ sensitivities to markets, particularly with regard to the demise earlier this year of Silicon Valley Bank and First Republic Bank.

“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.