One negative force at work was clients moving cash into higher-yielding deposits, denting net interest income.

Wells Fargo late last week reported net income of $4.619 billion for the first three months of 2024, falling 7 per cent year-on-year. Noninterest income fell by 8 per cent to $12.2 billion, while noninterest income rose by 17 per cent to $8.64 billion.

Noninterest costs rose by 5 per cent to $14.34 billion; provision for credit losses narrowed to $938 million in the three months to March 31, down 22 per cent. At the end of March, the San Francisco-headquartered lender said it had an efficiency ratio of 69 per cent, up from 66 per cent a year before. Its return on equity dipped to 10.5 per cent from 11.7 per cent.

At the end of March, the bank had a Common Equity Tier 1 ratio – a standard international measure of a bank’s “shock absorber” – of 11.2 per cent, up from 10.8 per cent a year before.

Wealth management
Within Wells Fargo’s wealth management results, which include its private banking arm and advisors to ultra-high net worth individuals, it reported a 17 per cent year-on-year drop in net income, coming in at $381 million; total revenue rose 2 per cent; noninterest costs rose 6 per cent. Provision for credit losses fell. Total client assets rose 13 per cent from a year earlier to $2.186 trillion, the bank said. 

Noninterest income rose 9 per cent, benefiting from higher asset-based fees. Wells Fargo said its fall in net interest income was caused by lower deposit balances because clients moved cash into higher-yielding alternatives.