Wells Fargo Roars Ahead: 16% EPS Growth, Fee-Based Revenue Gains, and a Strong Commitment to Risk Management
Wells Fargo, one of the largest banks in the US, has reported solid first quarter results, with diluted earnings per share (EPS) up 16% from a year ago. Despite revenue decline driven by lower net interest income, the company grew its fee-based revenue across various businesses, reflecting the benefits of investments made to diversify revenues and reduce reliance on net interest income.
The bank's commitment to expense discipline has paid off, with expenses declining from a year ago as it executed on efficiency initiatives. This has helped drive head count reductions for 19 consecutive quarters. Credit performance improved during the quarter, with lower net charge-offs from both a year ago and the fourth quarter, driven by improved performance in commercial portfolios while consumer losses remained relatively stable.
"We've maintained our strong credit discipline and are very pleased with the results," said Charlie Scharf, CEO of Wells Fargo. "Our team has done an excellent job of executing on our risk and control work, which remains our top priority."
Wells Fargo returned $4.8 billion of capital to shareholders through dividends and share repurchases in the first quarter, a testament to its commitment to returning excess capital to investors. Diluted average common shares outstanding were down 8% from a year ago.
In a significant development, five consent orders were terminated in the first quarter, marking significant progress on risk management. These closures reflect the company's completion of common risk and control infrastructure work across the organization, required by other orders. Since 2019, 11 orders have been terminated, demonstrating the bank's commitment to improving its regulatory posture.
Ed Olive has joined Wells Fargo as Head of Cards and Merchant Services, bringing over 25 years of financial services and credit card experience to the role. This appointment follows the departure of Ray Fischer, who led the company's card business for five years and was instrumental in transforming it into a key strategic part of Wells Fargo.
Wells Fargo has also started to launch its partnership with Volkswagen and AbbVie brands as their preferred purchase financing provider in the US, marking an exciting development in the auto financing space. These partnerships demonstrate the company's commitment to expanding its payment capabilities across merchant services.
The bank's investments in its card business have continued to drive higher balances and spend from a year ago, while credit results remain within expectations. As Charlie Scharf said, "We're proud of the progress we've made on our strategic priorities, including risk management, which is critical to improving Wells Fargo's returns."
