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Wells Fargo reported another slide in its wealth earnings Friday, with higher costs and lower net interest income from the wealth unit weighing on its balance sheet.
The megabank’s Wealth and Investment Management division saw profits fall 17% over the past year. However, total client assets were still up over the past year in that unit, and so was fee-based and other noninterest income.
Profits firmwide of $5.8 billion were up over that same time. The company beat Wall Street expectations with diluted earnings per share of $1.48, which was 19% more than the analyst consensus of $1.24.
“Our results reflected the progress we’re making to improve our financial performance,” CEO Charlie Scharf said in a call with analysts Friday. “Our revenue reflected strong net interest income growth, as well as higher non-interest income as we benefited from higher rates and the investments we’re making in our businesses.”
At the same time, CFO Mike Santomassimo said on the call, the firm had been aggressive in cutting costs over the past year, through adding automation and layoffs. “We set out a program almost three years ago now to cut roughly $10 billion. And I think that’s all still on track. We’ve brought headcount down 40,000 or closer to 50,000,” Santomassimo said, adding that he expected more layoffs in 2024.
While the firm has cut jobs in areas like home lending, it’s been hiring aggressively and generously for financial advisors and sounded a cautious note of optimism on that front.
“Our wealth business, as you pointed out, no question, also treaded water for a long period of time,” Scharf said on the call, in response to an analyst query about whether that unit and certain others had potential to outperform expectations. “We’re attracting people and teams. We’re rolling out new products, so we feel really good about the opportunities that are there.”
The firm announced yesterday that LifeSync, a financial planning and goal-tracking tool in the bank’s mobile app it rolled out initially to wealth management clients earlier this year, had been expanded to be available for all customers of the bank. The tool is expected to help advisors peek more into their clients’ financial lives and gather new assets.
READ MORE: Wells Fargo preps for wealth battle after $1 billion turnaround
To see the main takeaways from Wells Fargo’s third-quarter earnings, scroll down the slideshow. For a look at the results from the second quarter, click here. For coverage of the firm’s first-quarter earnings, click here.
Note: Unless otherwise noted, all metrics below refer to Wells Fargo’s Wealth and Investment Management segment, which is the home of Wells Fargo Advisors, Wells Fargo Advisors Financial Network, Wells Fargo’s private bank and its custodian. The company doesn’t break out metrics specific to those parts of its business. In a change since the first quarter of 2023, Wells no longer discloses advisor headcount.
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