Three of the biggest banks already out with their earnings, Wills Fargo among them. Those shares down about six percent. Some concerns here about higher than expected costs, some concerns right now here about a slowdown in cost cutting efforts. Mike Sanamssimo joining us right now, the CFO over at Wells Fargo, and Mike, let's start off with the cost
cutting here. Some commentary and the press release, some commentary on that conference call about a slowdown in some of those efforts characterize us as to what exactly that means.
Well, thanks, thanks again for having me Marina and Alex.
I appreciate it.
You know, look, I think you got to look through into the quarter and you know, there was it was actually quite a solid quarter. You know, we saw really good momentum in our fees revenue generating businesses that more than offset sort of what we saw as the expected decline and an interest income. We saw, you know, headcount continue to come down in the core efficiency agenda stole
in place. We saw good capital return to shareholders. We saw our investments really start to pay off, you know, in terms of that fee income I mentioned, And so there's a lot and there's a lot of opportunity there on the expense side. It was really three things that sort of drove the increase in the full year guidance.
You know, first is revenue related expenses in our wealth management business, which is a good thing because there's revenue that more than offsets all of that and so as the equity markets stay higher than what we predicted earlier in the year, you know that that is a positive
contribution to earnings, but it increases the expense line. Second is related to some remediation costs that we have to put some of these client remediations that are related to some historical matters behind us, and that was in the first half of the year. And the third is the special assessment for the FDIC related to the events of
last year. So when you look beyond those three things, the core efficiency agenda is still very much the same as it was last quarter last year, and we continued excon and feel really good about the opportunity we have there.
With regards to the FDIC costs and the other customer remediation costs in theory costs that should be temporary. Are we sort of the end of this path? Is there a light at the end of the tunnel when it comes to those issues.
Yeah, well, I think the remediation stuff was related to a couple of matters. You know, they're historical, and so we're nearing, you know, the we're nearing. We're closer to the end on those than we are otherwise. And then the fd I see, you know, we get that'll be driven by the losses that we see ultimately through the
FDIC fund there. But we've accrued for you know, everything we know about there, and we'll see how that progresses, and so it shouldn't you know, we don't know that it'll be any higher than it's been, and so we'll get more information each quarter from the FDICE.
Hey, Mike. The other part of the quarter that disappointed the street though was net interest margin, net interest income, and a big part of that is going to be that loan demand. Why do you guys still see that loan demand as tepid when a lot of your peers don't see that. What is it specific to Wells Fargo?
Well, I think, you know, keep in mind that the guidance we put out there for the years, the same guidance we put out in January down seven to nine percent we just set at this point in the year, we think we'll be around eight to nine percent versus you know, anywhere else in the range, and so the guidance is still about the same. So most of what was in there actually, you know, was very similar to
what we expected to happen. You know, Loan growth has definitely been a little bit weaker than we thought as we looked, you know, at the beginning of the year, and I think that's generally the case in a lot of other places as well. And I think we've been very very consistent about our underwriting standards and the way we're approaching it. So we're not out there chasing growth by taking more risk. We're actually very much just being very consistent over a long period of time. But underneath
the ni trends, you're actually seeing some positive trends. You know, Deposits are up, you know, in all of our lines of business versus the first quarter. That's the first time in a couple of years that that's happened. And so there's actually some positive trends that are happening underneath there as well.
I mean, I hear you, but the stock is still down six percent and it's even off its lows versus your peers, Like, there's clearly something that is worrying investors in those costasures as well as net interest income. Were those two worries. What do you think happens to loan growth and net interest income as the FED make cut rates?
Yeah, well, you know, as the Fed starts to cut rates, our deposits will begin to reprice downward as well, particularly on the wholesale side. So that'll be a positive as you start to see you know that that happen. And I think rates are one part of the equation for what we hear from our clients.
Right.
So there's you have the election coming up, you have rates still being high, you have some uncertainty still out there in the economy to make sure this soft landing is really going to materialize in the way people think. And so I think as we get through the year, you'll start to see, you know, clients do more from a lending perspective as well as you know consumers. You know, well, if you know, the stronger the consumer stays, I think you'll start to see some more growth there as well.
Mike, I have to ask you about some of the efforts that Charlie Sharf has made to kind of broaden out this business obviously well as much more known for the consumer side of that business, the mortgage side of that business. But you've made some decent strides so far in the trading space and of course another some of the more traditional all Wall Street types of businesses here. How do you accelerate that though in a way that is going to satisfy investors.
Well, I think it's not about acceleration, it's about being very consistent in our execution there. And I think you know, we've been talking now for a number of years about a few areas of investment versus the credit card business, and I think you see that come through, you know, the new accounts and the growth and balances there. Second is the wealth business, where we've again seen growth in
the advisory fees. We've seen you know, our attrition and advisors slow, and I think that, you know, we think there's opportunity to continue.
To grow there.
And then it's then it's in the corporate investment bank and the commercial bank, and I think you know we've been we've been hiring and investing in people and capabilities there for the last few years and I think you're starting to see that really come through, both in the trading line and the investment banking fee line, and I think that'll that's something that will kind of build, uh, you know, methodically over time. There is no this, you know,
trying to accelerate by taking risks. We have to be very consistent about how we go about it, and I think we're starting to see the benefits of that come through.
Mike, we really appreciate it. You know, it's a busy day. Thank you for taking the time while Spargo CFO Mike Senta me Asimo