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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: We want to welcome our TV and radio audience audiences

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Speaker 2: as we continue our market coverage and turn now to

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Speaker 2: the banks. With several reporting before the bell this morning,

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Speaker 2: Wells Fargo shares are up after that bank reported net

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Speaker 2: interest income for the fourth quarter that beat estimates and

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Speaker 2: forecast an increase in twenty twenty five net interest income.

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Speaker 2: Joining us now is Mike Santemassimo, CFO of Wells Fargo,

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Speaker 2: and Mike, I want to ask you about a potential

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Speaker 2: Trump bump that came through in your numbers. I know

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Speaker 2: this investment banking revenue growth was strong in the fourth quarter.

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Speaker 2: Is that as more people start to count on deals,

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Speaker 2: as more people start to look to work with your advisors.

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Speaker 3: Well, well, first, thanks thanks for having me. Look, I

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Speaker 3: think you're what you're seeing across you know, our businesses

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Speaker 3: is a continuation of like good performance now that we've

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Speaker 3: seen for a number of quarters. So it's not about

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Speaker 3: you know, a temporary you know bump that's coming. I

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Speaker 3: think it's just continued execution across you know, all of

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Speaker 3: the growth initiatives that we've talked about across investment banking

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Speaker 3: and some of what you're referencing in terms of deal

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Speaker 3: activity potentially coming. And then I think it's just you know,

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Speaker 3: in addition, good continued strength in the in the US

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Speaker 3: consumer where you're seeing good activity levels, you're seeing that

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Speaker 3: come through in terms of the results and our numbers.

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Speaker 3: You're seeing good credit performance, you're seeing good deposits levels,

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Speaker 3: you're seeing good growth in credit card balances, and so

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Speaker 3: it's a whole number of things I think that are

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Speaker 3: really really driving it. But it's clear people have a

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Speaker 3: sense of optimism coming into twenty twenty five as they

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Speaker 3: look at the new administration really you know, focused on

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Speaker 3: pro growth, pro business initiatives, and I think that's creating

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Speaker 3: some optimism for the year.

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Speaker 2: Yeah, even with rates you know, still high, not to

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Speaker 2: day's drop. Stocks really haven't gotten back to the highs

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Speaker 2: that we saw at the end of last year.

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Speaker 3: And yet we have a lot of confidence.

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Speaker 2: I knowe the NFIB the small Business Confidence the index

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Speaker 2: they put out was up to the highest level since

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Speaker 2: twenty eighteen.

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Speaker 3: Is that coming through in loan demand? Not quite yet,

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Speaker 3: you know. I think as we sort of talk to

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Speaker 3: our customers, we're definitely hearing that optimism in the conversations,

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Speaker 3: but it hasn't quite translated yet into demand for creditor

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Speaker 3: or many customers making big investments. We're building inventory because

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Speaker 3: they think demand will be there. I think there's still,

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Speaker 3: you know, being there's still a little bit of a

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Speaker 3: wait and see a little bit more prudence there in

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Speaker 3: terms of thinking about it. But as the year goes by,

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Speaker 3: if the if the macro picture continues to perform quite well,

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Speaker 3: I think you'll see more demand as we get later

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Speaker 3: in the later in the year.

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Speaker 1: Mike, efficiency has been a big theme at all the banks,

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Speaker 1: and I'm just curious, where are you in your efficiency push?

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Speaker 1: What will be the highlights in twenty twenty five.

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Speaker 3: Yeah, well, I think it. You know, it really started,

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Speaker 3: you know four plus years ago where and since then,

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Speaker 3: you know, we've delivered you know, twelve billion dollars of

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Speaker 3: gross saves, you know, across the different businesses and parts

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Speaker 3: of the company, and we've reinvested a lot of that

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Speaker 3: back into people, technology, capabilities, products, you know, across all

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Speaker 3: of our businesses. And I think as we look to

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Speaker 3: twenty twenty five, our thinking is no different than it's

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Speaker 3: been the last three or four years. Where you know,

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Speaker 3: we still have a significant amount of opportunity and we've

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Speaker 3: sort of highlighted that in our expense guidance for the year,

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Speaker 3: and so you know, we think there's more to come

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Speaker 3: there and we're focused on continuing to deliver that so

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Speaker 3: we can continue to invest across the businesses for growth

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Speaker 3: as well as efficiency.

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Speaker 1: So if you continue to invest, presumably hiring will be

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Speaker 1: quite important. What will your priorities for hiring be and

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Speaker 1: also other investments.

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Speaker 3: Yeah, like we you know, we've been hiring you know,

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Speaker 3: across the businesses and areas that we want to grow

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Speaker 3: while we get more efficient. And so generally that's in places,

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Speaker 3: you know, in client facing roles across the commercial bank,

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Speaker 3: the investment bank, or capital markets teams within our markets business,

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Speaker 3: as well as in wealth management. As we've continue to

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Speaker 3: you know, recruit more more advisors, not only you know,

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Speaker 3: to serve kind of the core wealth management channels, but

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Speaker 3: also in our bank branches as well. We've been hiring

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Speaker 3: advisors and bankers to support to support the effort there,

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Speaker 3: and I think we're going to continue to do that,

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Speaker 3: you know, as we go into twenty twenty five. And

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Speaker 3: we're happy so far with the return we're getting a

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Speaker 3: lot of those investments that we've made.

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Speaker 2: If we do see the FED able to cut rates here,

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Speaker 2: do you worry about net interest income erosion as you

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Speaker 2: have to sort of bring up what you pay on

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Speaker 2: deposits and the amount you can charge on loans comes down.

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Speaker 3: Well, I think, you know, what we've been seeing is

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Speaker 3: actually deposit costs come down now that the FED has

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Speaker 3: started to cut rates, and so if we see further cuts,

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Speaker 3: I think the positive costs will continue to come down.

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Speaker 3: You'll also see you know, loan yields come down as well.

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Speaker 3: But I think we've already you know, baked that into

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Speaker 3: our forecast and in our guidance that we gave today.

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Speaker 3: We assume there'll be at least one or two cuts

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Speaker 3: you know, coming this year. But we'll ultimately see and

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Speaker 3: then there'll be a lot of other factors in terms

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Speaker 3: of the level of deposits, the mix of those deposits,

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Speaker 3: you know, what we're seeing in the security side, as

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Speaker 3: well as other opportunities. So I think there's a number

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Speaker 3: of things that will ultimately drive it. And we're pretty

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Speaker 3: confident in our in the in the guidance we gave

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Speaker 3: at this point.

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Speaker 2: Is there going to be more opportunity to give money

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Speaker 2: back to shareholders. Mike, A lot of bank investors have

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Speaker 2: been optimistic about that going into Trump two point zero.

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Speaker 3: Well, I think, you know, we certainly have you know,

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Speaker 3: a lot of excess capital still here at the company,

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Speaker 3: and I think we've we've now given back twenty billion Dot.

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Speaker 3: We've bought back twenty billion dollars of stock last year,

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Speaker 3: and you know, we'll look at the opportunities to support

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Speaker 3: clients and you know, if we continue to see you

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Speaker 3: know that we have excess capital this year, we'll buy

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Speaker 3: back more stock like we've done, and I would anticipate

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Speaker 3: that we will do some as we go into this year,

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Speaker 3: but ultimately it'll we'll see it in terms of overall

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Speaker 3: quantum as we go through the year.

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Speaker 4: Mike, you did mention that the US consumer is strong,

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Speaker 4: but your CEO will also said the cards, for example,

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Speaker 4: as an area where Wells needs to get a little

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Speaker 4: bit more profitable.

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Speaker 1: Also home lending. What do you intend to do about that?

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Speaker 1: Is it a mind problem or a consumer problem?

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Speaker 3: Well? With credit cards, you know, we've we've refreshed our

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Speaker 3: whole product line in the last three and a half years,

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Speaker 3: and we've been in growth mode there to add new

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Speaker 3: customers and new accounts. And when you do that, in

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Speaker 3: the first few years of that, you've got a number

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Speaker 3: of upfront cost either acquisition costs or accounting related to

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Speaker 3: the allowance that you know, mutes the profitability of those relationships.

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Speaker 3: So it normally takes a few years for those relationships

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Speaker 3: to become profitable, just in normal course. And we're you know,

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Speaker 3: we're two as I said, we're three years into sort

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Speaker 3: of launching our first products. So it's just a matter

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Speaker 3: of time, you know, to start seeing more of that

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Speaker 3: profitability in the card as the as the new vintages

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Speaker 3: mature in the home lending side. You know, we've we

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Speaker 3: announced a number of things that we were doing, including

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Speaker 3: reducing the size of our servicing portfolio that we have there,

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Speaker 3: and that just takes some time to execute. We're down

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Speaker 3: twenty percent so far in that servicing book since we

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Speaker 3: started the effort, and we'll continue to do that over

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Speaker 3: the next couple of years to get to the right

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Speaker 3: size we want. But those things were pretty certain and

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Speaker 3: confident that we'll get the benefits that we think there.

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Speaker 1: Mike, from Monday, we'll have a new administration. I'm curious

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Speaker 1: as to what's your biggest hope for the next four years.

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Speaker 1: Several of the executives on the banking calls today so

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Speaker 1: that it should be better environment for banks.

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Speaker 3: Well, I think, broadly speaking, I think what's encouraging is

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Speaker 3: this the focus on growth and pro business policy. And

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Speaker 3: I think that's going to benefit everybody because for a

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Speaker 3: bank like ours and most banks in the US, as

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Speaker 3: if the economy in the US is doing well, we're

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Speaker 3: going to do well too, because it means our customers

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Speaker 3: are doing well and there's lots of activity that's there

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Speaker 3: for us to support them. And so I think, you know,

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Speaker 3: I think people are very encouraged by what they're hearing,

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Speaker 3: what they're seeing as that as relates to the policies

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Speaker 3: are talking about. And so we'll ultimately see over the

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Speaker 3: next few weeks and month coming months in terms of

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Speaker 3: what actually gets implemented. But this focus on growth and

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Speaker 3: pro business I think is what is what's encouraged ending

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Speaker 3: for most people.

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Speaker 1: All Right, Mike, thank you so much for your time today.

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Speaker 1: Wells Fargo the third best performer now in the KBW

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Speaker 1: Bank Index, up more than seven percent. That's Mike Santomosimo

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Speaker 1: CFO of Wells Fargo,