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We want to welcome our TV and radio audience audiences as we continue our market coverage and turn now to the banks. With several reporting before the bell this morning, Wells Fargo shares are up after that bank reported net interest income for the fourth quarter that beat estimates and forecast an increase in twenty twenty five net interest income. Joining us now is Mike Santemassimo, CFO of Wells Fargo, and Mike, I want to ask you about a potential
Trump bump that came through in your numbers. I know this investment banking revenue growth was strong in the fourth quarter. Is that as more people start to count on deals, as more people start to look to work with your advisors.
Well, well, first, thanks thanks for having me. Look, I think you're what you're seeing across you know, our businesses is a continuation of like good performance now that we've seen for a number of quarters. So it's not about you know, a temporary you know bump that's coming. I think it's just continued execution across you know, all of the growth initiatives that we've talked about across investment banking and some of what you're referencing in terms of deal
activity potentially coming. And then I think it's just you know, in addition, good continued strength in the in the US consumer where you're seeing good activity levels, you're seeing that come through in terms of the results and our numbers. You're seeing good credit performance, you're seeing good deposits levels, you're seeing good growth in credit card balances, and so it's a whole number of things I think that are
really really driving it. But it's clear people have a sense of optimism coming into twenty twenty five as they look at the new administration really you know, focused on pro growth, pro business initiatives, and I think that's creating some optimism for the year.
Yeah, even with rates you know, still high, not to day's drop. Stocks really haven't gotten back to the highs that we saw at the end of last year.
And yet we have a lot of confidence.
I knowe the NFIB the small Business Confidence the index they put out was up to the highest level since twenty eighteen.
Is that coming through in loan demand? Not quite yet, you know. I think as we sort of talk to our customers, we're definitely hearing that optimism in the conversations, but it hasn't quite translated yet into demand for creditor or many customers making big investments. We're building inventory because they think demand will be there. I think there's still, you know, being there's still a little bit of a wait and see a little bit more prudence there in
terms of thinking about it. But as the year goes by, if the if the macro picture continues to perform quite well, I think you'll see more demand as we get later in the later in the year.
Mike, efficiency has been a big theme at all the banks, and I'm just curious, where are you in your efficiency push? What will be the highlights in twenty twenty five.
Yeah, well, I think it. You know, it really started, you know four plus years ago where and since then, you know, we've delivered you know, twelve billion dollars of gross saves, you know, across the different businesses and parts of the company, and we've reinvested a lot of that back into people, technology, capabilities, products, you know, across all of our businesses. And I think as we look to twenty twenty five, our thinking is no different than it's
been the last three or four years. Where you know, we still have a significant amount of opportunity and we've sort of highlighted that in our expense guidance for the year, and so you know, we think there's more to come there and we're focused on continuing to deliver that so we can continue to invest across the businesses for growth as well as efficiency.
So if you continue to invest, presumably hiring will be quite important. What will your priorities for hiring be and also other investments.
Yeah, like we you know, we've been hiring you know, across the businesses and areas that we want to grow while we get more efficient. And so generally that's in places, you know, in client facing roles across the commercial bank, the investment bank, or capital markets teams within our markets business, as well as in wealth management. As we've continue to you know, recruit more more advisors, not only you know, to serve kind of the core wealth management channels, but
also in our bank branches as well. We've been hiring advisors and bankers to support to support the effort there, and I think we're going to continue to do that, you know, as we go into twenty twenty five. And we're happy so far with the return we're getting a lot of those investments that we've made.
If we do see the FED able to cut rates here, do you worry about net interest income erosion as you have to sort of bring up what you pay on deposits and the amount you can charge on loans comes down.
Well, I think, you know, what we've been seeing is actually deposit costs come down now that the FED has started to cut rates, and so if we see further cuts, I think the positive costs will continue to come down. You'll also see you know, loan yields come down as well. But I think we've already you know, baked that into our forecast and in our guidance that we gave today. We assume there'll be at least one or two cuts
you know, coming this year. But we'll ultimately see and then there'll be a lot of other factors in terms of the level of deposits, the mix of those deposits, you know, what we're seeing in the security side, as well as other opportunities. So I think there's a number of things that will ultimately drive it. And we're pretty confident in our in the in the guidance we gave at this point.
Is there going to be more opportunity to give money back to shareholders. Mike, A lot of bank investors have been optimistic about that going into Trump two point zero.
Well, I think, you know, we certainly have you know, a lot of excess capital still here at the company, and I think we've we've now given back twenty billion Dot.
We've bought back twenty billion dollars of stock last year, and you know, we'll look at the opportunities to support clients and you know, if we continue to see you know that we have excess capital this year, we'll buy back more stock like we've done, and I would anticipate that we will do some as we go into this year, but ultimately it'll we'll see it in terms of overall quantum as we go through the year.
Mike, you did mention that the US consumer is strong, but your CEO will also said the cards, for example, as an area where Wells needs to get a little bit more profitable.
Also home lending. What do you intend to do about that? Is it a mind problem or a consumer problem?
Well? With credit cards, you know, we've we've refreshed our whole product line in the last three and a half years, and we've been in growth mode there to add new customers and new accounts. And when you do that, in the first few years of that, you've got a number of upfront cost either acquisition costs or accounting related to the allowance that you know, mutes the profitability of those relationships. So it normally takes a few years for those relationships
to become profitable, just in normal course. And we're you know, we're two as I said, we're three years into sort of launching our first products. So it's just a matter of time, you know, to start seeing more of that profitability in the card as the as the new vintages mature in the home lending side. You know, we've we announced a number of things that we were doing, including reducing the size of our servicing portfolio that we have there,
and that just takes some time to execute. We're down twenty percent so far in that servicing book since we started the effort, and we'll continue to do that over the next couple of years to get to the right size we want. But those things were pretty certain and confident that we'll get the benefits that we think there.
Mike, from Monday, we'll have a new administration. I'm curious as to what's your biggest hope for the next four years. Several of the executives on the banking calls today so that it should be better environment for banks.
Well, I think, broadly speaking, I think what's encouraging is this the focus on growth and pro business policy. And I think that's going to benefit everybody because for a bank like ours and most banks in the US, as if the economy in the US is doing well, we're going to do well too, because it means our customers are doing well and there's lots of activity that's there
for us to support them. And so I think, you know, I think people are very encouraged by what they're hearing, what they're seeing as that as relates to the policies are talking about. And so we'll ultimately see over the next few weeks and month coming months in terms of what actually gets implemented. But this focus on growth and pro business I think is what is what's encouraged ending for most people.
All Right, Mike, thank you so much for your time today. Wells Fargo the third best performer now in the KBW Bank Index, up more than seven percent. That's Mike Santomosimo CFO of Wells Fargo,