Wells Fargo & Company (NYSE:WFC) Q4 2022 Earnings Call Transcript

Charles Scharf: Can I just ask to start before Mike actually goes to the facts? Again, I think one of the things that you’re hearing from all of us that were all very consistent on, which I know you appreciate, but I just want to say it anyway, is we don’t know what the rate path is going to look like from here over the next 11.5 months, which is exactly what you’re asking and exactly what the competitive environment is going to be month by month versus all of the people we compete with. So, you’re looking at — we don’t know what the alternative is going to be in nonbank deposits, and we don’t know what the alternatives are going to be in bank deposits, but we’re trying to make those predictions. So, I think when we go through all of this, we’re all just trying to, in our own way, make sure that there’s clarity that we’re — and I’ll speak to myself now.

We’re trying to give you what we think is achievable. And in our case, based upon the rate curve that we’ve laid out in the document, and it might or might not turn out that way. We’re also assuming, and I talked about this at a conference in December that we are going to continue to raise rates in which we pay our consumers because we’re thinking about this not in terms of maximizing short-term NII, but thinking about it in terms of the value of the relationship and making sure that we pay properly for that, so that we’re continuing to recognize how expensive it is to get a new relationship and how profitable it can be to keep an existing relationship. And so if your views are different toward the end of the year as to what the rent scenario could be, that’s fine.

Specifically, what we’ve tried to do, as we’ve gotten closer to the periods with which we see is give you some clarity as Mike did on what we’re — the first quarter is a little clearer to us. But beyond that, is pretty difficult, and we’re not going to go through every last beta that we’re assuming in terms of what those forecasts are.

Mike Santomassimo : Yes. The only thing I’d add to it is as you — as the Fed does — when the Fed does ultimately peak in terms of rising rates, you will see a lag on pricing as that will continue — pricing will continue to increase over a quarter or two quarters, three quarters. Really, it all depends on the competitive environment. So, you’re going to have some lag there. But I’m sure all of us have our own points of view and assumptions underneath those models. But what we’re trying to give you, as Charlie said, is a case that we think is achievable through the year. And as I said earlier on the call, I think if we’re — if we’ve — depending on how it plays out over the first and second quarter, we could have some opportunity in the second half. But I think it’s unclear exactly how that will play out. So, we’ll obviously keep you updated as it goes.

Operator: Thank you. The next question is from Betsy Graseck of Morgan Stanley. Your line is open.