Wells Fargo said it expects a key measure of lending to pick up this year, a sign customers are starting to borrow again as government stimulus eases.
The bank said net interest income could rise about 8% this year. The company also reported net income of $5.8 billion, beating analyst expectations and recent signs that Chief Executive Charlie Scharf's turnaround is taking hold.
"As the economy continued to recover, we saw increased consumer spending, higher investment banking fees, higher asset-based fees in our wealth and investment management businesses, and strong stock gains in our related venture capital and private equity businesses," Scharf said in a statement.
The results provide a glimpse of how the US economy performed over the last three months of the year, even as the Omicron variant of COVID-19 took hold in December. JPMorgan Chase also reported results on Friday, reporting a steeper-than-analysts-expected decline in trading earnings and saying both commercial and consumer credit were down from a year earlier.
Wells Fargo shares are up 2.3% to $57.27 as of 7:22 am in early New York trade. They are up 1.3% in the 12 months to Thursday, less than the 58% rise in the KBW Bank Index.
Spending fell to $13.2 billion, a decrease that was smaller than analysts had expected. Since he took the helm more than two years ago, cutting costs has been a key part of Scharf's turnaround plans. Wells Fargo also provided guidance for 2022 and expects noninterest expenses to fall by 4.3%.
Lending has been a key focus for investors after appetite lagged for much of 2021. That's usually a bad sign for banks, but executives blamed consumers and businesses awash with stimulus cash.
Wells Fargo's loans at the end of the period increased 1% year over year in the fourth quarter, driven by an increase in borrowing at the corporate and investment bank. Still, consumer credit fell 10% year-on-year and total commercial borrowing rose.
The bank expects operating losses to be around $1.3 billion in 2022, up from last year's level, driven by litigation, regulatory issues and related costs.
Wells Fargo's efficiency ratio, a measure of profitability, improved to 63% from 71% at the end of September.