10 Best Diversified Bank Stocks to Buy Now

4. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders In Q2 2024: 83

Wells Fargo & Company (NYSE:WFC) is one of the biggest consumer banks in the US which also operates in investment banking, commercial banking, wealth management, and other markets. The retail exposure is also evident on its income statement, with $11.9 billion of the bank’s $20.6 billion in revenue coming through interest. This means that as interest rates drop, Wells Fargo & Company (NYSE:WFC)’s interest income also faces a threat, but if they don’t drop, then the bank has to contend with higher costs in a classic double whammy. The higher costs also made Wells Fargo & Company (NYSE:WFC) increase the low end of its annual net interest income guidance drop to 8% during Q3 from an earlier 7%. Yet, the bank’s noninterest income depends on trading activities and investment advisory. Cumulatively, these accounted for $3.8 billion of Wells Fargo & Company (NYSE:WFC)’s $8.7 billion in noninterest income allowing it significant room to benefit from tailwinds from lower rates and increased stock market and capital markets activity.

Wells Fargo & Company (NYSE:WFC)’s management commented on its investment arm during the Q2 2024 earnings call:

“We have been methodically growing our corporate investment bank, which has been a priority and continues to be a significant opportunity for us. We are executing on a multi-year investment plan while maintaining our strong risk discipline and our positive momentum continues. We have added significant talent over the past several years and we’ll continue to do so in targeted areas where we see opportunities for growth. Fernando Rivas recently joined Wells Fargo as Co-CEO of Corporate Investment Banking. Fernando has deep knowledge of our industry and his background and skills complement the terrific team Jon Weiss has put together. While we view our work here as a long-term commitment, we expect to see results in the short and medium term and are encouraged by the improved performance we’ve already seen with strong growth in investment banking fees during the first half of the year.

In our Wealth and Investment Management business, we have substantially improved advisor retention and have increased the focus on serving independent advisers and our consumer banking clients, which should ultimately help drive growth. In the commercial Bank, we are focused on growing our treasury management business, adding bankers to cover segments where we are underpenetrated, and delivering our investment banking and markets capabilities to clients and believe we have significant opportunities in the years ahead.”