Wells Fargo (WFC) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

NII and interest rate outlook

• NII guidance remains unchanged at down 7-9% year-on-year, despite rate volatility and only one expected Fed rate cut in 2024.

• Deposit pricing and mix are the biggest near-term drivers for NII, with commercial deposits stable to slightly growing and consumer deposits showing consistent activity.

• Migration from checking to CDs and savings continues but at a slower pace than previous periods.

Loan growth and credit strategy

• Loan demand remains muted, especially on the commercial side, with clients cautious on inventory and capital investments.

• No significant tightening or loosening of credit standards; focus remains on consistent underwriting.

• Auto loans have declined due to tightened credit and lower returns, but used car prices and credit performance are strong.

• Card business is growing, with most new cardholders being existing customers; two more card products are in the pipeline.

Commercial real estate and asset quality

• Multifamily is the largest CRE exposure, performing well with low delinquencies; capital markets remain open for this segment.

• Institutional office space faces the most stress, with an 11% coverage ratio; smaller office loans are performing well.

• Criticized and classified loans have increased slightly but do not indicate imminent losses.

• Residential mortgage portfolio is stable, with net recoveries and limited risk of stress.