(Reuters) – Wells Fargo reported a rise in fourth-quarter net profit on Friday, boosted by cost cuts, but warned of a decline of between 7% and 9% in net interest income in 2024 compared to last year.
The massive increases in interest rates carried out by the American Federal Reserve (Fed) boosted the results of banks, which were able to increase the income from the loans they grant. But rate cuts are now expected this year, which should weigh on their net interest income.
“Our business performance remains sensitive to interest rates and the health of the U.S. economy, but we are confident that the actions we are taking will result in higher returns throughout the cycle,” the chief executive said. of the bank, Charlie Scharf, in a press release.
Interest rate cuts are also likely to encourage consumers to take out more loans, boosting bank revenues.
In the fourth quarter, Wells Fargo’s net banking income increased 2% to $20.5 billion.
Net profit increased to $3.45 billion (€3.15 billion), or $0.86 per share, compared to $3.16 billion ($0.75 per share) recorded a year earlier.
Wells Fargo is still subject to an asset cap that prevents it from growing until authorities determine that the problems linked to the fake accounts scandal are not resolved.
The bank is also part of a group of several banking establishments having to bail out a government insurance fund which suffered from the collapse of three regional banks.
(Reporting by Noor Zainab Hussain and Manya Saini in Bangalore and Carolina Mandl in New York; by Stéphanie Hamel, edited by Blandine Hénault)
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