Wells Fargo (WFC) announced an 11% increase in its earnings per share for the fourth quarter compared to the same period last year. While net interest income experienced a 7% decline due to factors such as changes in deposit mix and pricing, the effect of reduced rates on floating rate assets, and lower loan balances, this was partly balanced by a reduction in market funding costs. The company indicated that a robust 15% growth in fee-based revenue largely counteracted the decline in net interest income. Additionally, noninterest income rose by 11% over the previous year.
The net income for the fourth quarter rose to $5.08 billion, up from $3.45 billion the previous year. Earnings per share reached $1.43, surpassing the $0.86 of last year, and exceeding analysts' average forecast of $1.35 per share, which typically excludes special items. The company pointed out that its fourth quarter results included: $863 million, or $0.26 per share, in discrete tax benefits due to the resolution of prior period matters; $647 million, or $0.15 per share, in severance expenses; and $448 million, or $0.10 per share, in net losses on debt securities as part of an investment portfolio repositioning.
Total revenue for the fourth quarter amounted to $20.38 billion, slightly down from $20.48 billion the previous year. This figure fell short of analysts' average estimate of $20.58 billion.
Looking ahead to 2025, Wells Fargo projects a 1% to 3% increase in net interest income compared to 2024. The company highlighted significant progress in enhancing returns and remains confident in its achievable target of a sustainable Return on Tangible Common Equity (ROTCE) of 15%.
As of Wednesday's pre-market trading, Wells Fargo shares have risen by 3%.
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