Wells Fargo Says Fed Asset Cap Isn't as Painful as It Thought
Wells Fargo Says Fed Asset Cap Isn't as Painful as It Thought
(Bloomberg) -- Wells Fargo & Co.’s cap on asset growth, a penalty imposed by the Federal Reserve for a pattern of consumer abuses and compliance lapses, won’t hurt earnings as much as the bank originally thought.
The hit to net income after taxes will be less than $100 million, well below the as much as $400 million the bank projected in February, Treasurer Neal Blinde said Thursday at the company’s annual Investor Day.
The more optimistic forecast stems in part from modest deposit and loan growth that’s keeping the bank below the cap, Blinde said at the event in Charlotte, North Carolina. A seasonal increase in activity at the end of the year followed by an outflow in the first quarter is also providing headroom, he said.
“We have a very healthy cushion versus the asset cap and that provides us the ability to provide traditional core lending and deposit-taking to our customers in a very normal way,” Blinde said.
Under the Fed’s consent order, the San Francisco-based lender is banned from increasing assets until it fixes its missteps. Chief Executive Officer Tim Sloan said at the event that, after receiving feedback from the Fed, the bank is “making plans to operate under the asset cap through the first part of 2019.”
To contact the reporter on this story: Hannah Levitt in New York at hlevitt@bloomberg.net.
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson, Steven Crabill
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