Wells Fargo & Co (NYSE:WFC) stock fell 1.58% (As on January 16, 11:23:12 AM UTC-4, Source: Google Finance) after the company’s profit beat expectations in the fourth quarter, powered by a rebound in dealmaking activity and forecast it would earn more from interest payments this year. The bank said that it has a solid pipeline in its investment banking business while its net interest income, or the difference between what it earns on loans and pays out on deposits, would begin to grow in 2025. Wells Fargo’s investment banking fees jumped 59% to $725 million in the quarter compared with a year earlier. The bank also recorded severance expenses of $647 million in the quarter, lower than the $969 million a year earlier. Its headcount dropped to about 217,500 by the end of 2024, compared with nearly 226,000 at the end of 2023. Net interest margin fell to 2.70% in the fourth quarter from 2.92% a year ago. Net interest income grew 146 million or 1% from the third quarter, the first linked-quarter increase since the fourth quarter of 2022. The increase was driven by higher customer deposit balances, which enabled us to continue to reduce higher cost market funding. Average deposit cost declined 18 basis points from the third quarter as deposit costs stabilized or declined across all of our deposit gathering businesses.

WFC in the fourth quarter of FY 24 has reported the adjusted earnings per share of $1.42, beating the analysts’ estimates for the adjusted earnings per share of $1.34, according to Zacks Investment Research. The company had reported the adjusted revenue of $20.38 billion in the fourth quarter of FY 24, missing the analysts’ estimates for revenue of $20.55 billion.

Severance is expected to be lower by $500 million in 2025, Santomassimo said. Wells Fargo’s net interest income (NII) fell about 7% to $11.84 billion in the quarter compared with a year earlier, hurt by lower rates on floating rate assets and lower loan balances. Despite the slide in NII, the bank projected interest income would begin to grow again in 2025, driven by a drop in deposit costs and a recovery in loan demand. It expects NII to rise about 1% to 3% this year from the 2024 level of $47.68 billion. Analysts expect the bank to report an interest income of $47.13 billion in 2025.