Wells Fargo(US:WFC)2024-06-11 14:31Company and Industry Overview * Company: Wells Fargo & Company (NYSE:WFC) * Industry: US Financials, Payments & CRE * Date: June 11, 2024 * Participants: * Michael Santomassimo - CFO, Wells Fargo * Unidentified Analyst Key Themes and Discussion Points 1. EPS Growth Drivers * Higher for Longer: * Analysts highlighted the potential for EPS growth due to higher interest rates and longer duration. * CFO Michael Santomassimo acknowledged the positive impact of higher rates but emphasized the importance of considering other factors like deposits and loan growth. * Expense Ratio Improvement: * Analysts mentioned the potential for expense ratio improvement as a driver of EPS growth. * CFO Santomassimo discussed ongoing efforts to improve efficiency and reduce costs across the organization. * Capital Deployment Opportunities: * Analysts inquired about capital deployment opportunities, including buybacks and investments. * CFO Santomassimo emphasized the importance of serving clients and maintaining capital levels while considering buyback opportunities. 2. Net Interest Income (NII) Outlook * Down 7% to 9% Year-on-Year: * Analysts questioned the NII outlook given the expectation of only one rate cut in 2024. * CFO Santomassimo confirmed the NII outlook and highlighted the importance of considering factors like deposits and loan growth in addition to interest rates. * Deposit Pricing and Mix Shift: * CFO Santomassimo discussed the stability of deposit pricing and the shift in deposit mix, noting the migration of funds from checking accounts to CDs and savings. * He expressed confidence in the stability of consumer deposits and the potential for further migration in the future. 3. Loan Growth * Muted Loan Demand: * CFO Santomassimo acknowledged the muted loan demand, attributing it to cautiousness around inventory builds and capital investments. * He emphasized the importance of maintaining consistent credit underwriting practices and focusing on the long-term credit risk profile of the commercial book. * Consumer Lending: * CFO Santomassimo discussed the lack of refinance volume in the mortgage market and the impact of credit tightening in the auto lending space. * He highlighted the strong performance of the card business, driven by the efforts to rebuild the business over the past few years. 4. Wealth and Investment Management * Growth Strategies: * CFO Santomassimo outlined three key growth strategies within the wealth management business: * Growing the core advisor business * Providing more investment advice to bank customers * Expanding the independent advisor channel * He emphasized the early stages of these initiatives and the potential for growth in the future. 5. Expenses and Capital * Efficiency Initiatives: * CFO Santomassimo discussed ongoing efforts to improve efficiency and reduce costs across the organization, noting the completion of $8 billion to $10 billion in gross savings over the past few years. * He highlighted the potential for further efficiency improvements and the reinvestment of savings into the business. * Capital Deployment: * CFO Santomassimo discussed the company's capital deployment strategy, emphasizing the importance of serving clients and maintaining capital levels while considering buyback opportunities. * He highlighted the company's commitment to returning capital to shareholders and the significant amount of stock repurchased since 2020. 6. Outlook and Goals * ROTCE Goal: * CFO Santomassimo expressed confidence in achieving the company's medium-term ROTCE goal of 15%. * He highlighted the importance of executing on the card and home lending initiatives, optimizing capital levels, and improving efficiency to achieve this goal.