Chief Executive Officer & Chairman, Wells Fargo
FED TRANSITION: Wells Fargo chief welcomes fresh perspective from Kevin Warsh
Wells Fargo Chairman and CEO Charlie Scharf discusses the bank's growth and strategy following the lifting of the $2 trillion asset cap, the state of the consumer, the Federal Reserve under Chairman Kevin Warsh and more on 'Mornings with Maria.'
00:00 Wells Fargo's transformation...
01:17 Returning to deposit and loan growth
02:09 The state of the U.S. consumer...
03:57 Investing in credit cards and auto...
04:43 Expectations for a fresh look...
05:30 Strategy for capital markets and M&A
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About Charles Scharf
Charles Scharf, CEO and Chairman of Wells Fargo, has said the bank is "big time bullish on the US" and that "these times are really good for banks." He stated that the company is focused on sustainable growth following the removal of the Federal Reserve's asset cap, and that the bank is growing its consumer, commercial, wealth, and investment banking businesses. Scharf described the company as "totally different" than when he joined, and said the goal is for Wells Fargo to be "the best performing financial institution in this country" and "the most respected bank." Regarding the economy, Scharf said consumers are "remarkable" and "doing really, really well," citing strong employment, wage growth, and low delinquencies. He noted that while consumers and small businesses express nervousness about news and AI, their actual spending and financial condition remain strong. On the Federal Reserve, Scharf welcomed a "fresh perspective" from incoming Chairman Kevin Warsh, calling him "incredibly bright" with valuable experience. He also discussed the bank's disciplined approach to adding investment banking resources and its involvement in large M&A deals.
Transcript (18 segments)
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Maria0:10
Welcome back. U.S. consumer spending creeping up in April. Last month, PCE price index showing 3.8% year-over-year increase, one of the largest in three years. Consumer spending still up, increased one-tenth of a percent in April. Personal income flat. Iran conflict increasing price of new materials, pushing savings rate to almost four-year low.
Joining me for a Fox Business exclusive, Chairman and CEO of Wells Fargo, Charlie Scharf, with us on stage. Great to have you before your remarks. Thank you so much for being here. You've been running Chairman and CEO of Wells Fargo since late 2019. When you came into the company, you, of course, had to deal with lots of regulatory issues, spend time doing that. The Federal Reserve last year lifted the two trillion-dollar cap on assets that had been in place since 2018. How has that changed things? And tell us where the company is going now you don't have a cap on assets in place.
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Charles Scharf1:10
Remarkable. We are a totally different company in terms of things we focus on today versus when I first got to Wells. We had tens of thousands working incredibly hard to deal with issues we had to deal with. We've done that. And now it's about how we can do more for the consumers, corporate customers we do business with, growing loans, deposits, expanding balance sheet to serve customers and markets with trading flow. And it is exciting the types of things that large banks are able to do to help the economy grow. We weren't able to do that for a long time. To be able to be in business and do that motivates people to come into work and help others.
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Maria1:54
Congratulations on that. Does this mean you're focusing on increasing deposits?
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Charles Scharf2:02
Absolutely, yeah. When we had the asset cap in, I'm not sure people contemplated that was a deposit cap. We had to turn away deposits. As people started to draw during COVID, we had to say, 'Please take deposits elsewhere.' Hard to do. Now to go to customers, we are here for you, we want to do more for you, and they've been wonderful. So when you look at results last quarter, loans up 11% on a year-over-year basis, deposits up 8% year-over-year basis. That is something we weren't able to do for a long time. Hopefully the beginning of a trend will help drive growth in the company.
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Maria2:46
Talk about the company. What are you seeing from business lines, the consumer, housing? How would you assess the consumer right now?
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Charles Scharf2:52
The consumer is remarkable. I mean, when you look at the facts, data continues to say that consumers are willing to spend. We look at all pieces: consumer spend, delinquencies on lending, savings rates. All three continue to remain very strong. Credit card, debit card spend up 8 to 10% year-over-year basis, up even a little bit more than it had been a couple months ago. Some driven by the increased price of fuel, but all other categories also up slightly as well. Delinquencies, extremely, extremely strong. Possibly getting a little bit better. We don't see in savings rates—I heard what you said, four-year low. Look at things, overall the consumer is in great shape. Higher end doing better than those who have less money, but we just don't see a lot of change in terms of anything that would be something in the facts would make you worried.
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Maria3:56
Are you surprised the consumer is holding up as well as he or she is? And this market performance, unstoppable even in the face of war in Iran?
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Charles Scharf4:10
Employment and wages are drivers. Consumers listen to things going on, see what is going on in the war, that drives sentiment. But ultimately what they do is come home, look at bank account, figure out how much they can afford to spend. The reality is employment is extremely strong. The data that we see, we look at based on direct deposit, wage growth. Wage growth is hanging in there overall. As long as those things continue to hold up, the consumer will do fine. If they change, a different story.
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Maria4:40
Enabled you this performance, lifting of the cap enabled you to invest like credit card business. Tell us about that.
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Charles Scharf4:47
Looking at it saying, how can we do more? That is what we are here for. Whether lifting asset cap, changes in capital rules, enable us to do more in communities for the people that we are there to serve. Yes, we've grown credit card balance sheet from 35 billion to 50 to 55 billion dollars. Investing in building out auto lending, lending more towards small businesses, middle market companies. And that is what we are there for. That is why such an incredible, exciting time for us. In the backdrop of an environment as good as it can be, not going on forever for sure. So you have to have that in your mind, but at this point we don't see something economically going to change that.
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Maria5:37
Which is also giving you loans to get rid of non-core and focus on where growth is. Your take on the Fed, because Kevin Warsh now Chairman, got his first meeting next month. What is your expectation for how things change? How does that impact Wells?
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Charles Scharf5:55
One thing I learned in my career, good things. Kevin, incredibly bright, has incredible experience in private sector and at the Fed. Huge plus. So to come in, take a fresh look at policies, whether size of the balance sheet, trajectory of interest rates, different analyses, good. So I actually think it's going to be a huge plus for the conversation within the Fed about how to think about some things a little bit differently.
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Maria6:28
You talked about lending, housing a bit. What about capital markets? Because you said that you want the company to be in the top five capital markets players in investment banking.
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Charles Scharf6:39
Correct. Area by area. So we are huge lenders to companies, we lend as much as any other bank. We have huge treasury services. We want to be in position to provide more strategic advice, having access to public markets, using balance sheet wisely. 19% growth in trading revenues, 15% growth in investment banking. From 14 to 8 in M&A, largest transactions. Not linear. We are not doing it by changing the risk tolerance dramatically. It is figuring out who our consumer base is, to do a better job on them asking for a fair share, showing up in a credible way.
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Maria7:25
Can you get in on big deals, Anthropic?
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Charles Scharf7:28
We have been involved in biggest M&A deals. We were involved in three of five. Involved in big energy deal recently. Be part of it. We don't have long relationships that some other companies have that have been calling on these companies. It takes time, but it is linear. We are not expecting exponential progress. If we do that, it will pay off.
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Maria7:51
Congratulations. We appreciate it.