Wells Fargo’s wealth management arm is reaping profit from the Fed’s rate hikes

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Despite a slowing economy and interest rate hikes, Wells Fargo is reaping growing profit from its wealth management arm.

The San Francisco-based firm reported $465 million of net income from its Wealth and Investment Management segment, an 11% year-over-year increase in the first quarter, according to Wells Fargo’s April 14 earnings report. Net interest income reached $799 million, a 22% increase from a year ago.

The company said its rising income was driven by the impact of higher interest rates, as well as higher deposit and loan balances.

“While we will likely see an increase in credit losses from historical lows, we should be a net beneficiary as we will benefit from rising rates,” CEO Charlie Scharf said in the company’s April 14 earning call, according to a transcript by the investing website Seeking Alpha. “We have a strong capital position, and our lower expense base creates greater margins from which to invest.

“The rate increase currently included in the forward rate curve would also drive stronger net interest income growth than we anticipated earlier in the year,” he added.

Scroll down to see more takeaways from the company’s earnings report.