Wells Fargo focused on tech spend in the second quarter as headcount continued to shrink amid a push to reduce expenses.
The $1.9 trillion bank’s tech spend rose 19% year over year to $947 million, and headcount dropped 4% YoY to 233,834, according to the bank’s earnings supplement.
“I think our focus on expenses really hasn’t changed,” Chief Financial Officer Mike Santomassimo said during the bank’s Q2 earnings call Friday. “We’re going to continue to be very disciplined.”
THE BIG PICTURE: Wells Fargo’s revenue increased 20% YoY to $20.5 billion, buoyed by a 29% YoY rise in net interest income to $13.2 billion, according to the earnings supplement.
The bank’s performance tracked with economic conditions, as the Federal Reserve has continued to raise interest rates in a bid to tame inflation.
“The revenue growth reflected strong net interest income growth, as well as higher non–interest income while our efficiency ratio improved, and we continue to make progress on our efficiency initiatives,” Wells Fargo Chief Executive Charles Scharf said.
Meanwhile, the bank’s deposits fell 7% YoY from $1.4 trillion to $1.3 trillion, continuing trends from Q1 as consumer spending remains high, according to the bank’s earnings presentation.
BY THE NUMBERS: Wells Fargo reported:
- Net income increased 57% YoY from $3.1 billion to $4.9 billion;
- Digital usership rose 2% YoY to from 33.4 to 34.2 million; and
- Mobile usership rose 4% YoY from 28 million to 29.1 million.
NOTEWORTHY: Noninterest expenses rose $125 million YoY to $13 billion, according to the earnings presentation. Santomassimo said the increase was driven primarily by the bank’s severance costs due to slower than expected attrition.
These severance expenses accounted for much of Wells Fargo’s $164 million YoY increase in personnel expenses to $8.6 billion, according to the presentation. The bank closed 4% of its branches and reduced branch staffing by 10%, Santomassimo said in the call. The bank’s total number of branches now sits at 4,455, according to the supplement.
FLASHBACK: In Q2, the bank’s AI-driven virtual assistant, Fargo, went live on its mobile app, Scharf said. The feature, powered by Google Cloud, was announced in October.
FUTURE LOOK: The headcount reductions in Q2 are part of a trend expected to continue in the second half of the year, Scharf said.
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