富国银行CFO：净利息收入符合预期，投行业务创纪录

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Let's also talk a little bit about Wells Fargo, one of the big banks reporting today. Taking a look at their shares, actually down slightly today, even though when you take a look at non-interest income, a big recovery there. We've been following that story, that measure hitting 10.3 billion dollars in the most recent quarter reported. That is a four-year high, it's ahead of analyst expectations, but not giving much of a lift to the stock today because the focus really seems to be around margin, that NIM measure, which is coming under some pressure, Romaine.

All right. Well, let's talk about that pressure. Mike Santomassimo joins us right now, the CFO over at Wells Fargo. And obviously on the surface, Mike, obviously a lot of progress in the quarter, a lot of progress over the last couple of years. But when we talk about average loan growth growing in that uh 12% range year-over-year, but net interest income only up 5%. I know you've said in the past that this is temporary, but how long should investors expect that disparity?

Well, thanks uh thanks for having me, Romaine. And and you know, when you look at like the backdrop of the quarter, it was actually a really good quarter and broad-based revenue growth across every single business. And you know, we can sort of dig into aspects of it. Um but but really good performance across every every one of them. And on net interest income, you know, it's progressing exactly as we thought it would, right?

So, our full-year net interest income, you know, guidance is still 50 billion dollars, that's where we set at the beginning of the year. You're seeing, you know, loan growth be a little bit higher than what, you know, we had projected in the year. We're also seeing higher interest-bearing deposit growth, which is actually a good thing for the long run. So, we're deepening, you know, our client relationships in the commercial side of the house uh in particular.

We're expecting, you know, non-interest-bearing deposits to be more stable uh and we were we were thinking they would grow a little bit more earlier in the year. And, you know, part of that's the rate environment as rates stay a little bit higher for longer. And so, we'll see how that progresses. And then, we're seeing really good growth across the markets business where you see, you know, NII contributions coming through a lot of the financing we do there.

So, so overall, actually quite quite good. You did see net interest margin decline as as expected, you know, four basis points this quarter. We expect that to happen just a little bit more in the third quarter then stabilize from there. But, but all of the underlying inputs and trends that we're seeing across the business are actually quite quite good and and really what we expected to see, you know, now that we're about a year off of coming out of the asset cap.

Well, let's talk a little bit about that because that's obviously opened up a lot of growth opportunities for you beyond just the basic loan book here. Let's talk about the wealth management side of this business, the growth there, but also the expenses that come along with it in order to build it out.

Yeah, look, the the wealth business as we've talked about a number of times is actually seeing really good momentum now. You know, if you if you go back a number of years, we were seeing high levels of attrition of advisors. That's completely turned around. We've had, you know, our three best quarters maybe ever in terms of recruiting that we put onto the platform the last three quarters. We are seeing net flows as well the last couple quarters just broadly across that business.

And the markets have really helped in terms of equity values and so, you see, you know, wealth management revenues up in, you know, 13, 14% you know, year-on-year and so, quite quite good there, you know, in terms of the overall, you know, trends underneath that business. Now, that does bring expenses too, right? So, you got commissions you pay advisors and other other volume-based fees that are there, but revenue more than offsets that.

And so, that and that's what you saw in the quarter, which was really good performance. And then, lastly on wealth is you're starting to see really good growth in deposits and lending as well. We've talked about that for a while as as something we want to do to broaden what we do with our clients and you're really starting to see that come through the results. And so a lot of the effort the teams had there the last couple of years is really really coming through.

And Mike, I want to talk a little bit about M&A when it comes to Wells Fargo because you think about that asset cap that has now been removed from the Fed. How big would you say that M&A is for you at this moment?

Yeah, we're mostly focused Katie on on organic growth. I think the opportunity we have across each one of the businesses just, you know, big. You know, to grow organically. And that's what you've seen us really do now the last number of quarters. And I think, you know, when you think about, you know, opportunities for M&A, you know, there could be some, you know, product capabilities or other, you know, payments related stuff that could be interesting.

But but it'll be very, you know, very much just adding capabilities to our what we do. You know, our main focus is really growing sort of organically across each of the businesses.

Understood there with the focus on organic growth. But I do want to talk a little bit about the pipeline because you did say when it comes to the M&A pipeline for Wells Fargo, it looks robust here. And I'd love to dig into that a little bit more. Are there any industries which particularly stand out to Wells Fargo at this moment or that you're, you know, pursuing more aggressively than others?

Well, you know, across the investment banking space, you know, we've been adding, you know, people in equity and debt capital markets, our M&A practice, and all the coverage groups, you know, just sector by sector over the last, you know, few years. And and the pipelines are quite healthy, you know, now. And they've been that way for a while across really all of the products set there including M&A. And you're certainly seeing, you know, across the number of different industries sort of, you know, deals that may not have been, you know, totally possible, you know, a couple years ago.

And so, I think that that idea of of of pursuing those strategic goals across really, you know, in a in a pretty broad way is is is definitely alive. Um and the and the conversations the team's having, it really spans every everything from healthcare to tech to media to, you know, a whole different, you know, all all industrial uh sectors as well. And so, I think you're seeing you're seeing it in a pretty broad-based way.

Now, we'll have to see what actually happens in terms of deals getting announced and done, but but I think the activity level is quite high and I think uh people see this as an opportunity to uh you know, think broadly about their strategic goals and M&A is definitely part of it.

Well, overall, I mean, just looking at this business uh a year of kind of post uh that asset cap being lifted uh with loan growth going well, obviously, the M&A business uh and fees uh there also strong here. Is there a certain part of this business right now uh that you and Charlie Scharf, the CEO, are really looking to where maybe you don't think Wells Fargo, at least right now, uh punches up to the weight of its competitors?

Well, I think there's opportunity to grow and improve the returns in everywhere still. Um that that doesn't take away from the progress we've made cuz we've made a lot of progress. Um you know, in our in our corporate investment bank, you've seen that progress in our investment banking business. We had a record fee quarter for investment banking fees this quarter

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