Wells Fargo Reaches New Milestone: The Asset Cap is Lifted
Wells Fargo has marked a significant milestone in its transformation journey with the removal of the asset cap. This development comes as the company continues to deliver stronger financial results, driven by investments in its businesses and a disciplined approach to expenses.
According to Charlie Scharf, CEO of Wells Fargo, the second quarter results reflect the progress made towards consistently producing better financial outcomes. Net income, diluted earnings per share, and return on tangible common equity have all increased compared to both the first quarter and the same period last year. Fee-based income has also grown, with each business segment increasing during the first half of the year.
The company has taken a strategic approach to managing expenses, resulting in a 23% decline in headcount from five years ago. Additionally, Wells Fargo has maintained its strong credit discipline, with improved loss rates in both consumer and commercial portfolios compared to last year.
In a significant move, the lifting of the asset cap marks a pivotal milestone in Wells Fargo's transformation, along with the termination of 13 regulatory orders since 2019, including seven this year alone. This change allows the company to allocate its time differently and focus more on growth and future development.
Mike Santomassimo, CFO, highlighted that despite generating substantial capital over the years since the asset cap was imposed, Wells Fargo has been limited in how much it could deploy to support customers and communities. However, with the removal of the asset cap, the company can now focus on growing its businesses and balance sheet.
Scharf expressed appreciation for the efforts of employees, recognizing that their contributions have made a significant impact on this milestone. He stated that employees will receive special year-end cash awards for their hard work and dedication. The lifting of the asset cap allows the company to give back to its employees in a meaningful way.
As Wells Fargo moves forward with its risk and control agenda, it aims to embed these disciplines deep into its culture. This change has freed up time and resources, allowing the company to focus on growth opportunities and strategic initiatives that can drive long-term success. The lifting of the asset cap marks an exciting new chapter for Wells Fargo as it continues to evolve and adapt in a rapidly changing business landscape.
