Wells Fargo faces significant financial risks stemming from ongoing regulatory actions (consent orders) requiring changes to business practices, operations, and risk management. These actions may lead to substantial fines, penalties, business restrictions, increased capital requirements, and other adverse consequences. Potential losses from legal proceedings, including litigation related to various business areas, are also a concern. Economic downturns, market volatility, and changes in interest rates pose risks to loan portfolios, asset values, and net interest income.
Financial Upside
Wells Fargo's noninterest income has increased, partially offsetting declines in net interest income. Higher investment advisory and asset-based fees, and increased brokerage activity contribute to this. The company also benefits from higher interest rates on interest-earning assets, though this is partially offset by higher interest-bearing liabilities. The company expects to benefit from potential reductions in overdraft and debit card interchange fees if proposed rules are adopted.
