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00:00Charlie Scharf, of course, the fourth largest U.S. bank out there, a bank that is now actually
00:06growing after roughly, what, six years or so of regulatory constraints. You've been there for more
00:11than six years navigating through those constraints. I think a lot of people have seen the fix that
00:17you've done over that time. And now the big question is, what are the next six years look
00:21like? Is that a growth story? It certainly is for us. I mean, we're incredibly proud of the progress
00:25that we've made. We're a very different company than we were when I got to the company. I guess
00:30it'll be seven years in November. And what you've seen since the asset cap has come off is that we're
00:36able to compete on a level playing field with everyone. And we're growing our consumer bank,
00:40we're growing our commercial bank, we're going the wealth business, we're growing our court
00:43investment bank. And we're doing it in a way which very, very highly focused on sustainable growth
00:51and higher returns. And we think we've got huge opportunity in front of us.
00:55When you say sustainable growth, some investors want to see aggressive growth.
01:00Yeah. Can you be aggressive and be disciplined and sustainable?
01:02I think, listen, in this business, you've got to be very, very careful about what aggressive means.
01:06And we also have to be very, very careful about distinguishing between what the markets are adding
01:10to our performance or any other financial services providers' performance and what we're doing.
01:16We're not looking for quick wins. We're not looking to take outsized risks in the short term to drive stronger
01:23results. We're looking at building the underlying franchise, building customer relationships,
01:28building flow of things that will go up and down based upon how the markets are doing.
01:34But that's what I mean when I say sustainable over a period of time.
01:37Well, talk about this transition then. Because over the past few years, I mean, people will look at what you've
01:43done
01:43over the last few years and call that a turnaround story. Although we should point out, Wells was in relatively
01:47good shape
01:48even when that asset cap was placed back in 2018. Was that a turnaround story or was that just kind
01:54of regulatory rehab?
01:56Well, I think I wouldn't call it. I think you're right. It's not a turnaround story. The company was always
02:01very strong.
02:01We always had a great franchise. But we had to fix things that needed to get fixed inside the company.
02:08But from our customer standpoint, we were serving them every day. We were making loans. We were taking deposits.
02:13We were constrained on growth. But we were there providing what we did day in and day out. And financially,
02:19we were still doing okay.
02:21And when we looked at what we were able to deliver, we were not able to grow our balance sheet.
02:26We've been focused a lot on efficiency inside the company. We've been focused a lot on growing our fees inside
02:31the business.
02:32So our corporate investment bank has grown very nicely. Our credit card business and credit card spend is growing very,
02:38very nicely.
02:39Focused on building treasury services. And now we can grow the balance sheet so we can more holistically serve customers.
02:45And that's what you see when you look at the results of this past quarter with earnings per share up
02:4825 percent, revenue growth double digits,
02:52growth across every one of our businesses in terms of revenue. We're certainly in a different place.
02:57And our goal is to be viewed as the best financial services provider in these businesses in the country.
03:03How much of that is because of Charlie Scharf and the executive team? And how much of that is because
03:08of market conditions and economic conditions?
03:10Well, I think it's predominantly because of the quality of the franchise and the broad group of people that work
03:16at the company.
03:17Listen, what I and the new management team have been able to do is get people focused, create a different
03:21set of priorities.
03:22But a lot of people execute day in and day out. And the fact is, the markets do help.
03:28So there's no question that I mean, these times are really good for banks.
03:32And so if you're not doing really well as a bank today, there's something not quite right with either how
03:36you're executing what your strategy is.
03:38And that's not lost on us. But again, we look at the underlying metrics of each business.
03:43Are we growing? We're growing our consumer checking accounts. We're growing commercial banking customers.
03:47We're growing the kinds of loans that we want to grow. We're taking the risks that we want to take
03:52that we think will provide strong returns over cycles
03:56and not get over our skis and not pretend that it's all us. Some of it is the markets for
04:01sure.
04:01You just reported earnings and the number that I think jumped out for a lot of folks was the growth
04:06in the investment banking business.
04:08You've been on a hiring spree there. Does that continue that build out?
04:11Yeah. So we've been on a quality disciplined path to growth in our corporate investment bank.
04:17We're a huge lender to corporates of all sizes in this country, large corporates down to middle market companies.
04:23We provide treasury services. And what we're doing is building on those relationships with a stronger set of products and
04:30services,
04:30coverage groups, M&A, underwriting capabilities.
04:33And so we've been very disciplined about adding resources in a sequential way, seeing that they're paying off, and we're
04:39seeing the results.
04:40And so, yeah, we can expect that to continue as we move towards our ambition of being top five.
04:46Well, the ambition of being top five, I am curious. You and your executive team are based here in New
04:51York,
04:52obviously the bank headquartered in San Francisco, your largest employee base down in North Carolina, in Charlotte, I believe.
04:59As you build out an investment banking business, can you do that in Charlotte, San Francisco, or is that a
05:07New York story?
05:08It's a combination of all of the above. I mean, so we do have more resources in New York than
05:13we used to have, for sure.
05:14But as you point out, we have more people in North Carolina and in Charlotte than any other specific location.
05:20And that goes back to the merger of Wachovia and Wells Fargo. Half of our corporate investment bank is down
05:26in Charlotte.
05:27The other half is here. We also, I mean, I should say we do have offices around the country and
05:31other parts of the world.
05:33And so, you know, we would expect to see growth in both locations and closer to serving customers across the
05:40country.
05:41How committed is Wells Fargo to its footprint here in New York City?
05:47We're, listen, we have, I think we have about between 4,000 and 5,000 in New York.
05:52That number at this point will probably, in total state, roughly what it is.
05:58And, you know, the question for us is going to be, you know, where's the best talent?
06:01Where do they want to live?
06:02Where do they find the most attractive place for them to want to live and do business?
06:06You know, it's very hard for us to get people to move from North Carolina to New York, even when
06:10we try.
06:11Sometimes it's hard to get people to move people from New York down there.
06:15There are people that self-select.
06:17And, you know, over a period of time, you know, how New York does and how North Carolina does and
06:21how California does,
06:22does matter to where people want to live.
06:24And that will be an important driver.
06:25I am curious about that, though.
06:27I mean, at your bank and basically with all the different business lines,
06:31you have a very keen insight into the economy across all the geographies here.
06:36When you look at sort of the rebound that we've seen post-pandemic, whether it's in New York or even
06:40some of the down south
06:41and some of those markets here, I mean, what are you actually hearing from your clients,
06:46the people that you're talking to, about where they're doing business?
06:49And more importantly, are they comfortable right now being able to do business?
06:53So I would say what you hear from them and what they're doing aren't the same things.
06:58People are nervous.
07:00They read the newspapers.
07:01They watch TV.
07:03They see what's going on in other parts of the world.
07:06They're concerned about AI.
07:08And so those are things that are very much on their mind.
07:11But when you look at what they're doing, when you look at consumers, they're spending more year over year.
07:16Their delinquencies are down.
07:18They're saving more.
07:20They're doing really, really well.
07:23When you talk to smaller companies across the country, again, they're nervous.
07:26They're concerned about how they should be planning for the future.
07:29But they're in really great financial condition.
07:31Are you surprised by that?
07:32I mean, given how persistent inflation has been and just over the last three weeks,
07:36you've seen oil prices spike back up 30 percent, gasoline prices for $4 a gallon, mortgage rates 6.5 percent.
07:43So does it surprise you to see that economic resiliency?
07:46Yes and no.
07:47I think, I mean, if you would have laid those things out, you would have said, well, would you have
07:51a strong an environment today?
07:53You'd say probably not.
07:54But the fact is employment is still strong.
07:58Wages, at least for our clients, are growing faster than inflation.
08:02And that's going to be the most important driver of how the consumer performs.
08:06Now, that's not to say that that's going to last forever, but we do continue to see that.
08:11And so that's what's going to drive the results.
08:13Well, as you sort of continue this growth story for Wells Fargo, do you feel like the economic conditions will
08:19be supportive,
08:20as supportive as they have been over the last couple of years?
08:23So I'd separate into what I know versus, you know, what we would guess.
08:27What we know is that the strength continues.
08:30When we look at the stats day in and day out, the strength of the consumer, the strength of businesses,
08:35hasn't changed from what we reported just a couple of weeks ago.
08:38Are we nervous about what the future holds?
08:40Sure.
08:40The fact is things are really, really good.
08:43Markets are really strong.
08:44Things are, you know, there's certainly volatility, but things are priced quite well in the credit markets and in the
08:49equity markets.
08:50There's a huge amount of liquidity out there.
08:52There's a huge amount of financing take place, and at some point, then that doesn't go on forever.
08:57So we're trying to be very thoughtful about recognizing that good times don't last forever, but things don't look like
09:06they're breaking quite yet.
09:07Is your expansion or the growth in this business going to be primarily in the U.S.?
09:12There's been talk that you may be looking to expand some of your investment banking business over in Europe.
09:16So, but predominant, so we're 95% of our revenues come from the U.S.
09:22We're thrilled about that.
09:24So goes the U.S., so goes us, and we're big-time bullish on the U.S.
09:28And so we're going to continue to invest in all of our business here in the U.S.
09:31And believe that there's significant opportunities for us to grow with the economy and to take share.
09:36The business that you mentioned, the investment bank, does have to grow outside the U.S.
09:40For us to serve large companies and middle market companies as they want to expand outside the U.S. properly,
09:46we need to have a presence.
09:48We need to have distribution capabilities.
09:50We need to have advisory capabilities.
09:52But it's there primarily to serve the customers that we do business with here in the U.S.
09:57With regards to the private markets and your role at Wells Fargo, you've obviously been involved in some deals.
10:06I believe you're an advisor on Apollo's deal for that Broadcom AI Center and a couple others here.
10:12You don't see any real credit concerns in terms of credit quality concerns in that space?
10:19Well, in the private markets, you know, where we say this, you know, it's private markets are a very, very
10:24broad group of people.
10:26There are some that do it really, really well, that have the experience, that have been through cycles, that have
10:31the analytics, that have the rigor.
10:33Those are the ones that we try and do business with, and those are the ones that we focus our
10:36attention on.
10:37And we feel really good about the credit support that we're providing for them.
10:42There are others out there that, you know, people potentially should be more concerned about, but we don't have broad
10:47exposure to that.
10:49But when we see certain transactions, there are that are willing to take a lot more risk than others that
10:54do seem to have different levels of discipline and different levels of analytics.
10:58So, you know, if credit does turn down, it's just like in the banking universe.
11:04Some do it really well. Others do it less well. Some will do quite well.
11:08We believe those are the ones that we bank. Others not as well.
11:11And that will be shown up away from us.
11:15With the structure of some of these AI data center financing deals, is Wells Fargo still interested in doing more?
11:21We are. Listen, I mean, the fact is, this is a, it's, you know, it's a necessary bill that needs
11:27to take place to support what AI can do.
11:31But here, too, just like we talked about private credit, not every transaction is the same.
11:35Not every piece of risk is the same.
11:37Who you finance, who the guarantor is, who's got the revenue model to support it really does matter.
11:42And so we very much are an active dialogue, not just with the things that we've done in the past,
11:48but the things that we want to do in the future.
11:50But you've got to be selective about who you're financing, what the structures are.
11:55Your board recently reorganized your compensation to effectively structure it to keep you around for, what, another six years, basically
12:02through 2031.
12:03There's been a lot of talk as to whether you will be there through 2031 or whether you would have
12:08ambitions maybe to take the seat of another CEO job.
12:16I have no ambition to do anything other than stay at Wells Fargo, build Wells Fargo, and retire from Wells
12:22Fargo.
12:22That's what I, that's what I intend to do, and that's what I'm going to do.
12:25By the way, I think it's, I think it's the great seat.
12:28I mean, when you look at, if someone could give you the opportunity to run a company like Wells Fargo,
12:33with the quality of the business that's been so constrained for so long, that's, has picked and chosen the businesses
12:39to be in.
12:40We have amazing opportunities to continue to do a better job for our clients to grow and increase returns.
12:47And I think we can make a difference in this country, and that's incredibly appealing.
12:50Do you ever look at your old employers and get envious, BNY, JP Morgan, the others?
12:56No, I don't get envious.
12:57I look at them and, listen, you can learn a lot from people.
13:00A lot of companies out there do really, really well.
13:02They've done really well.
13:03Yeah.
13:04And hopefully over time, they'll look at us and feel the same way.
13:06Do you ever talk to Jamie Dimon?
13:08I talk to Jamie.
13:09I talk to all the other leaders in the business.
13:11Yeah.
13:12There are things we've got common interests on, and we talk about those things, but we compete hard day in
13:17and day out.
13:18I do have to ask you about the Wall Street Journal story from the other day that allege that the
13:25head of the IRS and the Social Security Administration,
13:27who used to work at JP Morgan, allegedly spied on some of his rivals within the organization, including you, when
13:35you were running the commercial business there at JP Morgan.
13:37Is there any truth to that?
13:38Were you aware of anything potentially going on?
13:41I have no idea.
13:43Frank and I have known each other for, I think it's maybe 30, 35 years, spoke to him the other
13:47night.
13:48He says it's not true.
13:49By the way, I don't know what I would have that anyone would have any interest in, and so I
13:53honestly don't think about it that much.
13:55All right, Charlie, a final question here, and this is really about the next six years.
13:58I mean, when that next six years is wrapped up, whether they're past 20, 31 or beyond, what exactly do
14:04you want to make sure gets done over the next six years?
14:07I think we've got the opportunity not just to have Wells be a better-performing company, but be back to
14:16what we should be,
14:17which is the best-performing financial institution in this country, which means real sustainable growth with the highest returns adjusted
14:24for our business mix.
14:25And ultimately, that should drive us to be the most respected bank in this country.
14:29And we compete with great people out there, so it's not going to be easy to do, but that's our
14:34goal.
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