Wells Fargo reported a 7% decrease in profit in the first quarter due to increased costs of holding customer deposits and decreased demand from borrowers. Despite this, the bank’s adjusted profit of $1.26 per share surpassed analysts’ expectations of $1.11 per share. The bank’s revenue in corporate and investment banking increased by almost 5%, helping to offset some of the losses.
The bank’s net interest income fell by 8% to $12.23 billion, and it reiterated that NII could drop by 7% to 9% this year. As U.S. interest rates continue to fluctuate, the bank faces challenges in forecasting NII due to market volatility and uncertainties in client behavior. The shifting interest rate outlook has also affected lenders’ earnings and made it more costly for banks to maintain deposits from customers seeking higher yields.
Despite challenges in the banking sector, Wells Fargo remains focused on managing its credit portfolio and controlling expenses. The bank’s CEO, Charlie Scharf, expressed satisfaction with the progress made in addressing past misconduct issues and emphasized the ongoing commitment to risk management and compliance. While the bank continues to face regulatory scrutiny, Scharf’s leadership since 2019 has been instrumental in implementing cost-cutting measures and streamlining the business to improve overall performance.