Wells Fargo Navigates Interest Income Dip Amid Fed Rate Cuts

Wells Fargo forecasts a 9% drop in 2024 interest income following larger-than-expected U.S. Federal Reserve rate cuts. Third-quarter net income fell to $5.11 billion. Challenges include lower loan demand, deposit competition, and regulatory constraints from a $1.95 trillion asset cap. Regulatory efforts continue to address past issues.

Wells Fargo announced on Friday that it anticipates a 9% decrease in 2024 interest income following a rate cut from the U.S. Federal Reserve last month that exceeded expectations.

The lender's third-quarter net income fell to $5.11 billion, down from $5.78 billion a year ago, impacted by an 11% fall in net interest income to $11.69 billion, below analysts' predictions.

CEO Charlie Scharf emphasized a focus on risk and control, noting subdued loan demand and increased deposit balances despite tightening credit standards. The bank is working to lift a $1.95 trillion asset cap imposed by the Fed, with several regulatory issues still needing resolution.

(With inputs from agencies.)