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(Bloomberg) -- Wells Fargo & Co.’s expenses dropped 12% in the fourth quarter as Chief Executive Officer Charlie Scharf continues to whittle headcount as part of broader efforts to slash costs and remake the bank. The company’s shares rose.
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Non-interest expenses came in at $13.9 billion for the last three months of 2024 even as the bank took a $647 million severance charge. Net interest income, which beat estimates in the quarter, are expected by the San Francisco-based company to rise 1% to 3% this year, a bigger increase than analysts are forecasting.
“We are still in the early stages of seeing the benefits of the momentum we are building, and our financial performance should continue to benefit from the work we are doing to transform the company,” Scharf said in a statement Wednesday.
Shares of Wells Fargo climbed 5.2% at 9:49 a.m. in New York, and are up 58% in the past 12 months. The shares have largely retained the gains boosted by the election result in November, as investors expect President-elect Donald Trump to relax regulations and juice the economy.
Wells Fargo kicked off fourth-quarter big-bank earnings Wednesday alongside rivals JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. Investors are eager for details on how the Federal Reserve’s rate cuts impacted bank results, as well as executives’ outlook for the economy and the incoming Trump administration.
Bank investors are hopeful that rate cuts will help ease the pressure of high funding costs, and that the firms are able to lure back borrowers who’ve been deterred by expensive loans.
The fourth-largest US bank is still under a Fed-imposed asset cap, limiting it to its size at the end of 2017. The firm entered a new phase of its effort to escape the limit last year when it submitted a third-party review of its overhauls to the central bank, Bloomberg News reported in September. At year-end, Wells Fargo’s total assets were $$1.93 trillion.
The firm said it expects 2025 non-interest expenses to be about $54.2 billion, slightly lower than last year’s total.
Scharf said in December that Wells Fargo is still “extremely inefficient,” and cutting costs is like “peeling an onion back.” Headcount, which was at nearly 272,000 at the end of 2019, was 217,502 at year-end.
Efficiency will continue to be an area of focus in 2025, and Wells Fargo has baked about $2.4 billion of gross savings into its 2025 guidance, Chief Financial Officer Mike Santomassimo said on a conference call with reporters Wednesday. The company has been on the journey to improve efficiency since Scharf took the helm as the CEO in late 2019. The initiatives have generated around $12 billion of gross savings since then, Santomassimo said.