FINANCIALS: Wells Fargo (WFC Aa2/A+/AA-) - Q4 Results
Wells Fargo (WFC Aa2/A+/AA-) - Q4 Results
{WFC US Equity}
Decent quarter for Wells Fargo, managing to increase both NII and commissions and fees
- Net interest income up 1.2% on Q3 to $11,836, but this is still down -7.3% vs Q4 23. 2025 expected to be 1-3% higher than 2024.
- Non-interest expense up 6.4% from Q3 but down -11.9% from Q4 23. Both Q4 23 and Q4 24 contained $1.1bn and $0.65bn of severance expense respectively. Other expenses were marginally lower than Q3.
- CET1 at 11.1% is -0.2% lower than Q3. The whole move is due to higher AOCI (accumulated other comprehensive income due to higher rates and wider MBS spreads)
- Loan loss rate remains very low at 12bps, unchanged from Q3. NPL's also down slightly on Q3.
- OpInc/RWA 1.8% and RoTE 13.9% is decent. WFC has struggled to get RoTE to >15% OpInc/RWA to >2% which would be a numeral score improvement at both S&P, Moody's and Fitch for the former and S&P and Fitch for the latter.
Valuation: WFC trades maybe 5bps back from where you would expect given the rating and the low risk nature of the core business.
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CANADA FINANCE MINISTER FREELAND RESIGNS FROM CABINET
- CANADA FINANCE MINISTER FREELAND RESIGNS FROM CABINET
- FREELAND MAKES ANNOUNCEMENT IN LETTER POSTED ON X
US: Final Text Of Govt Funding CR Expected Today
Congressional leaders are expected to release the final text of a Continuing Resolution to extend appropriations into mid-March, today. House Majority Leader Steve Scalise (R-LA) told Punchbowl News a short time ago that “hopefully” the text will be ready today, with House Speaker Mike Johnson (R-LA) saying it's: “Moving along, almost there.”
- If the package isn’t released today, Johnson may have to ditch a self-imposed 72-hour window for lawmakers to consider legislation before a vote. Although there is little chance of a government shutdown, moving the last major piece of legislation of this Congress without adhering to informal conference rules will irk conservatives who have criticised leadership for jamming bills through the chamber without sufficient scrutiny.
- Politico reported this morning that lawmakers have been eyeing the CR “as a path to clearing several other major policy priorities, including a package to authorize expiring health care programs, a long-sought bipartisan deal to overhaul rules for permitting energy projects and a measure to restrict U.S. investments to China.”
- Senate Majority Leader Chuck Schumer (D-NY) has already filed cloture on a legislative vehicle to serve as a placeholder for CR. When the House finishes work on the bill, the upper chamber is expected to move quickly to vote on final passage of the package on Thursday or Friday.
BONDS: Bunds Outperform Gilts & EGBs
A muted couple of hours for UK & European paper, as the bid in Tsys and the weakness in European equities helps keep the space underpinned.
- A move lower in European natural gas futures also factors into the rally in Bunds.
- German curve bull steepens on the day, with yields 1.5-4.0bp lower.
- Weakness in equities and Moody’s off-schedule one-notch downgrade of France leaves EGB spreads to Bunds wider on the day, with PGBs under the most pressure, widening by ~3.5bp.
- Gilts give up early outperformance against Bunds, now trading 1bp wider at 216bp, spread comfortably within its multi-week range.
- Gilt yields 1.5bp higher to 2bp lower, curve twist flattens.
