Good morning, everyone. I'm Gerard Cassidy, president of the Banc Analysts Association of Boston. And on behalf of the Board of Directors, I want to welcome everybody to our 43rd annual conference here. And for some of the folks that h ave been around for a little while.
We used to hold the conference here when it was the Le Méridien and they went through a reconstruction and we moved over to the Four Seasons, and now we've come back to this illustrious building. Some of you might recall this was the old Federal Reserve Bank Building. And there's some kind of interesting paintings throughout the hotel that you could take a look at. That, to our group, we'd find interesting. Just a heads up if you could wear your name tags. We did hire some security just to make sure that there's no protesters or anything, and the security guys will stop you if you don't have your name tag on. So please wear the name tag. The Wi-Fi is Langham, so many of you probably have already figured that out, and so you could obviously go in on the Wi-Fi.
But once again, I want to thank everybody for coming. We have a full two days and just a reminder, tomorrow we have Rodgin Cohen, who's a preeminent M&A lawyer for Sullivan & Cromwell. And in view of the election, we think that's going to be a real timely conversation tomorrow morning. As I mentioned, this is the 43rd year and I'm very pleased that we have such a good turnout of not just the buy side, but the sell side and also the companies themselves. And to kick off this morning really doesn't need any introduction, but Mike Santomassimo is the CFO of Wells Fargo. Many of you have already met him in the past. He's a 25-year veteran of the banking business. And prior to this, you might recall, he was the CFO at Bank of New York.
And before joining Bank of New York, Mike was the CFO for banking at JP Morgan. So I'm going to join him over here in the dais. We've got some questions that we'd like to ask and then also we'll ask for audience participation with some questions as well. So with that, here I go, Mike.
Great.
Thank you again, Mike, for coming. The timing of the conference couldn't be better with the election, of course. And maybe to start off, can you give us your macro view and obviously i n view of what we saw with t he election, but also can you talk about the health of the consumer and b usiness sentiment once we get beyond the election stuff?
Yeah, sure. And again, thanks for having us. We appreciate it. I'm not sure I have words to explain yesterday, so I'm hoping that you all will explain it to me later. But when you look through what you saw yesterday, the environment's still been quite consistent now for a while and it's actually quite good. You look at the activity levels across the consumer side, very good. The growth rates in space are down a little bit relative to earlier in the year, but still quite healthy. And so I think that's going well. When you look at across the rest of our client base, people are in pretty good shape and are continuing to see very consistent performance. When you then look at how they're performing from a credit perspective, most consumers are doing well.
What we see across our portfolio is definitely some stress on the lower end consumer. So folks that are on the lower wealth or income levels, they're going to feel that stress. That's been consistent now for a while too. You see the cumulative impact of inflation impacting people there. It's not a big part of our portfolio, but you can see that clearly coming through. But it really hasn't gone up. It really spread to other cohorts at this point in any significant way. And then on the commercial side, same thing. Credit's been quite good overall, you know, the office real estate side, you know, aside, you know, we're not seeing really any big systematic issues across the portfolio that are starting to come through. And so I think overall the, you know, it still feels quite good.
I think as people get more confidence that, you know, this soft landing scenario is what's going to play out, then I think that'll encourage more and more activity.
Do you find, Mike, that geographically because you've got an incredible franchise o f course. But have you guys noticed any areas of the country that seem to be healthier than others or is it pretty evenly spread across?
Not really. I think it's pretty consistent across the country. I mean certain markets you may see housing prices sort of move in a little bit of a different pattern. Least in the short run, you know, if you saw big run ups in certain places, that might have an impact. But I'd say generally speaking, it's been pretty consistent across the country.
Yep. Maybe moving on to the CSBB Group at Wells Fargo. After many years of no growth, it's now grown. You know, you've grown checking accounts for three consecutive quarters. The debit card market share is starting to increase as well. Can you talk about the consumer banking strategy and what are some of the changes you've made more recently? To drive this growth.
Yeah. So look, our Consumer and Small Business Banking segment. It's a great business, but it was impacted by some of the issues that we had a number of years ago, particularly around sales practices. So a lot of the work that the team put in over years was to really make sure that we deal with all of those issues, and those are now behind us. You know, that Consent Order got terminated earlier this year. Over the last few years, we've been consistently sort of increasing the investment in the people, the branches, the technology that sort of surrounds it all. We're starting to really see in marketing, and we're starting to see the benefits of all that. We launched a new consumer app a couple years ago that gets better and better every quarter.
We've changed the way we do new account openings for our bankers and clients, that make it much easier to do that. We reintroduced incentive systems across the branch system. We've been investing in all of the branches to bring them up in terms of the quality of the experience customers get there, and we're starting to see the benefits of that. It's very early days. I think we're happy that we're seeing growth in the core checking accounts over the last few quarters, and we should be able to build on that as we go, but I think Saul Van Beurden and the team have done a lot of great work to keep going there, but I think we have more to do.
And I'd say the piece that's probably even a little earlier in its maturation is the work we've been doing to service our affluent clients in that branch system. So these are folks generally that have $250,000 and above in assets. We did a good job managing the banking side of it. We hadn't focused as much on the investment side of it. And I think, you know, that's been. We started launching new products two summers ago called Wells Fargo Premier. That's an experience that we're continuing to build out. We've got a couple thousand investment advisors sitting in the branches already. And I think, you know, as we. And we're starting to see that get a little bit of traction over the last few quarters as people bring more investment assets with us as well.
And the good news is when you can do a good job on the investment side, they'll bring more banking, too. You'll see more deposits, more lending, and you'll see a much fuller relationship build off of that work. And so, again, that's something that I think you'll see more and more come through the numbers over the coming quarters.
We hear a lot about the access to consumers through the digital channel. Obviously you guys are doing that as well. But it sounds like the branch channel is still very important to the process. And so do you think you have the optimal mix now between digital and branches or is there still some refining that you might have to do?
Yeah, no, branches are still an important piece of the mix. I think we have continued to kind of right size the number of branches that we've had. It's down a bit in line with what others have done over a longer period of time over the last three, four, five years. But I think branches still are important and it's not just about that lower end consumer going into branches. It's actually a pretty wide spectrum of people want to use the branches, want to have people there. And as we do more with clients, what they do in the branches changes. So it'll be spent. More time will be spent on advisory or investment oriented stuff, more kind of more sophisticated financial planning work that'll happen there. And so you'll see the nature of what happens there change over time.
But it is an important piece of the puzzle still in one of the.
Lending, obviously on the consumer lending side, you've built up the credit card business and you've kind of deemphasized the mortgage business maybe to start off with credit cards. Can you explain to us how that journey has gone and what should we think about in terms of profitability of the business as the portfolio matures?
Yeah, the credit card business is a really important business to be relevant with your clients every day. Right. So it's not just good enough to have a checking account for clients. You want to be part of that payment ecosystem as well. And credit card is still. Credit cards are still a very big part of that ecosystem that's there. And so we. Back in 2019, when Charlie first got here, I think he looked at it and said our products weren't very competitive. They were branded another credit card company's product and we needed to do a lot to kind of fix the quality of what we did. And so we hired a new team. They started in the fourth quarter of 2019. They've worked on servicing new account opening line assignment. We've completely refreshed all of our products. We've launched nine new products since then. Starting with.
That's a shame.
Walter, if you could go. We'll check.
Oh, there we go.
Oh, it's fading away.
Yeah, that was.
They're ironing out the kinks of the new hotel. I apologize.
That's okay. All right, we'll see.
Uh.
Oh.
Apologize, everybody. I think Terry went to check on it.
There we go.
All right. We're seeing like a deluge.
We're going to see like a deluge of water or something come behind us next. I think somebody hit a pipe.
John's going out to check as well.
So, if it doesn't get too loud, I guess we.
Yeah, we could talk over it. Yeah, we're on the credit card.
Yeah. So I was saying, you know, we launched our first of the. Can people hear over it? Yeah. Is it good enough? All right. We launched the first of the nine products back in, you know, a little over 3.5 , about 3.5 years ago. Our Active Cash product, the cash back product, tends to be one of the larger products across the spectrum there. And we're seeing really good traction across all of it. You can see that through the new accounts origination data come through it. We've seen great spend increases, point of sale, volume increases, quarter on quarter. We've been outpacing the industry as we've seen that come through. And so we're quite pleased with the traction we're getting across the client base. And it's still. The majority of the new accounts are existing clients.
And so we've got a lot more to do to better penetrate the consumer banking client base. And then, you know, I think. But from a profitability perspective, as many of you know, you know, the upfront cost of building out a credit card business, you know, from a GAAP P&L perspective is tough. You got CECL, you got the accounting around the allowance, you got upfront acquisition and origination costs. And so it's not actually contributing a ton to the profitability. And so that should just be. That should just start to happen over the next couple years as we work through sort of those upfront periods for the new originations. And so. And we feel really good about the credit. You know, the credit box that we've had has been pretty tight as we've looked at those originations. And the quality of it is.
It's better than the back book. So as long as the credit continues to perform as we expect, then it just starts to contribute to the bottom line in a much more significant way over time as you start to burn off those intro periods. And we're, like I said, a couple years into that process and it generally takes for any new account a few years to start to see that profitability come through. We're getting closer and closer for that to be a much more meaningful contributor to it. And there'll be some new products, you know, additional products that we put in place over, you know, over time. But so far so good in terms of the execution there.
Very good. When you look at your other consumer business, the home lending business, obviously headcount's down quite a bit, about 50%. You've reduced the size of the servicing portfolio. Are we near an end state of the size? You got it to a level where you're comfortable with?
Yeah. So let me start with what we started on a couple years ago now. First we stopped originating correspondent mortgages and really that's because we really needed to focus our efforts to do a really good job for our consumer banking and wealth management clients. And I think the cross sell across correspondent mortgages for most people is sort of a. It's sort of like this never ending quest that never actually quite happens in the way I think you think. And we wanted to simplify sort of the business overall. So that was step one and that's been done now for the better part of a year, year plus. The other piece was our servicing business. You know, over time we had this goal as a company to be big in mortgages. And what that created was a lot of complexity in our mortgage business.
A lot of cost, a lot of issues that, you know, resulted in some of the regulatory issues that we've had over time, and so what we tried, the goal there is to really reduce the complexity that's there and reduce the size of that third party servicing business, and it's down maybe 20%+ since we started the effort. We still have more to do there, quite a bit more. It'll be smaller over time but it takes some time to sort of really do that, and I think when it's all done, the business will, it will be smaller but it will be more profitable, more better returning and really focused on doing a great job for clients.
We still think mortgage is an important product but we want to make sure that the effort's really focused on sort of our core client segments across each of the businesses.
If we shift over to the CIB area, one of the areas that you've seen real good growth in trading and investment banking for the past seven quarters. What's driving the strong results and what are your goals for this business as you look out over the next couple of years?
Yeah, well I would say in the Corporate Investment Bank we've been really clear now for probably the last four years that one, it's an important business to us. We've changed our external reporting to give you all some more information on it. We've changed the focus on it internally. And I'd say we're still in the very early days of seeing that payoff if you take it piece by piece. On the investment banking side, we already provide a lot of credit to large corporates and commercial banking clients. What wasn't happening is us helping those clients do other things and get paid for that exposure that we have out there, whether it's through advisory work like M & A or equity and debt capital markets, or even some of the markets products around interest rates or FX and those types of things.
So we brought in a new leader in the investment bank two and a half, three years ago, Tim O'Hara, who's been driving sort of the investment across each of the products and coverage sectors. It's very simple, like go through product sector by sector, product by product. Where do we need either to upgrade or add people to make sure that we're covering the opportunity that's there. And we've hired dozens of investment bankers over the last few years and we're starting to see some of that come through the investment banking fee line. But I'd say it's very early days in terms of really seeing that the market's got to cooperate, clients have to do deals. Some of that's been picking up, some of that. Hopefully we'll see more of that as we go over the next couple years.
But I think we're happy with what we're seeing in terms of those people come in. But it's still very early. The markets business, that's a business that was impacted by our asset cap. We had to bring down during COVID the capital markets balance sheet by a lot to make sure that we managed through that time. And what we've been doing now again sounds pretty similar to what I've seen in the other businesses over the last few years. We've been systematically investing in technology people. We haven't added a ton of people in the markets business, but we've upgraded risk takers asset class by asset class. We've added better e-trading and technology across it. Our FX business is a great example. I've talked about that a lot.
Where, you know, we used to be, you know, five, six, seven years ago, all we did was do the FX off of corporate payment flows. We built an institutional business over the last few years and we've been onboarding folks now for the better part of a year and a half onto that capability. And we're seeing it just really go. And we're doing record volumes in some of those products like FX now quarter after quarter after quarter. And that will just gradually sort of build on itself. And as we have more flexibility from a balance sheet perspective, we'll continue to give more resources. You've seen trading assets go up now this year a bit year to date, and hopefully we'll continue to allocate more resources there and start to see it come up. We're not going to try to compete everywhere with everybody across that space.
We're going to be very focused on our clients that and what makes sense for Wells Fargo. But we feel really good about that team and they've done a great job. And one of the best parts I think that we've seen over the last couple years is we've been able to grow the trading fees without growing risk a lot. So you're not seeing market risk RWAs grow by a significant amount while we've been increasing. And we've got seven quarters in a row of decent, I've said this now, seven quarters in a row, by the way. We've got seven quarters in a row. We still have to do it over a longer period of time. So it's good progress.
We're seeing consistent performance there, but we got to do it over a much longer period of time, over years, and continue to see it sort of gradually get better and better and they've done a good job.
When we look at, as you said, you've been hiring a bunch of people, is it more competitive today in hiring investment bankers than maybe two years ago when you started to hire more?
Yeah, look, you go in peaks and valleys. It's always like waves or peaks and valleys in terms of competitiveness for sure. But I think we've been really pleased with the quality of the people we've been able to hire. And what's good is they're coming from everywhere. It's not one place. It's not like one type of firm. It's not one location. It's like, you know, people everywhere. And we're, you know, we've been hiring folks to go after our commercial banking clients in the mid cap space in places like Chicago and New York and California. And we've been hiring just groups across people across each of the sectors and so far we've been able to. We've been very pleased with the people and I think they see the story and they see the opportunity and they see the ability to really help build and grow a business.
I think that resonates with a lot of folks.
Yep.
Moving over to the other line of business, your wealth management business, it seems like you've stemmed the advisor attrition, of course, and you're attracting new names into the platform. What changes have you made to drive that improvement, and tell us about the strategy and aspirations you have for that business as we go forward.
Yeah. So we're very pleased with the work that Barry Sommers and team have done to stem the attrition and begin to grow the core advisor market. But when you look a little bit more broadly at that business, it's really four channels and some of them are a bit unique to us given who we compete against. First is that core advisor market. That's where you saw the advisor attrition happen. That's not happening anymore. We get to look at every big team that's moving around the country now and we've been very competitive in recruiting there. And you're seeing that like business grow, you know, begin to grow again. When you look at the second channel, I talked a little bit about it with. Can you guys still hear me okay? Yeah, I talked a little bit about it with CSBB. I might need some Advil later.
But with the consumer banking business, you know, that affluent opportunity is huge and we've barely scratched the surface there. We've got millions of existing customers in the branch banking system that don't do much investments with us or any at all. And so that affluent channel will continue to be a big area of opportunity for us. The third piece, which is a bit unique to us relative to the big competitors, is that we can service independent advisors. So the fastest growing piece of the wealth management business, you know, when you look at the growth in number of advisors, is that independent channel.
So we have the ability to service them leveraging our existing capabilities so we get the scale benefits of the investments we're making across all the channels and it allows us to keep the folks that we're moving out of our different channels. But then also we're starting to recruit people from other places. So whether all of the big peers, we're starting to see folks come into that channel for the first time. And it's an area that we hadn't really focused on recruiting from others in the past. And so that's been a focus that's been building now for a year or two and we're starting to see some folks come onto it. And then the last piece is digital.
When we put these four channels together, it should give us some unique opportunities to grow in some of the faster moving parts of the market.
In view of the conference theme, obviously you've given us good insights to your different lines of businesses, and you know, we're talking, we always hear about scale, you know, the need for scale. Is it fact or fiction? Can you share with us how important is scale in these business lines, and then is there any way investors can measure whether you have sufficient scale?
I mean, it's clear scale matters. Having not only businesses that have scale in amongst themselves, having good diversity across the businesses matters a lot. You can see that in different quarters, different cycles, different parts of the cycle. It does matter. If you look at all the investment we continue to make, you look at all of the changing the world that's sort of changing around us. I think having the ability to consistently invest across all those different channels over time I think gives us a huge advantage. I think as you go through different parts of the cycle, you're going to see parts of it outperform and parts of it underperform, as you would expect. That's going to give us very consistent returns over time and earnings over time, which I think is a definite plus.
There's no perfect way to measure scale and how that comes through, but I do think it's clear in that the scale does matter in our business and I think that consistent investment over a long period of time is going to really help differentiate us.
Moving more to the income statement now, when you, in your third quarter call, you gave us guidance on fourth quarter net interest income essentially being fairly flat with the third quarter and maybe it's troughing soon and I appreciate you're not in a position to talk about 25 guidance, but could you give us a sense what the NII drivers are that we should be focused on?
Yeah, this is going to sound super simple, but it's all the same stuff, right? It's like what's going to happen with deposits in the short run. Deposits is going to drive outperformance or underperformance relative to what you think the overall level, the mix, the pricing, all of that as we go through this changing environment, I think is going to matter a lot. And in the short run that's going to be the driver. I think when you look at what's happening in deposits and you can kind of see this now over the last number of quarters is, you know, that shift from lower, you know, from non interest bearing to interest bearing or other alternatives has materially slowed and continues to slow. You're seeing as rates start to come back down.
We're seeing exactly what we thought we would see in terms of being able to pass that on to the most interest-rate-sensitive deposits across the commercial side. You know, what you're not seeing yet is loan growth, and I think we'll see how that starts to come back eventually. It will, but that's the part that I think it's not clear what the catalyst is going to be there, but I think as we go through it, it's a bit of a hard environment, as you can imagine. Things change. It feels like every time you think things are starting to settle down, you've got a really clear path of rates and where things are going. Yesterday happened, right? Or, you know, or this week happens, and so it feels like that's, that's kind of the recurring sort of theme over the last two years.
Every time you think it's going to settle down, something else happens. But I think it's, you know, as we said on the call, like we feel like we're near the trough. You know, we'll start to see that come through and I think we'll start to see growth at some point.
One of the large topics that everybody's talking about today is balance sheet sensitivity to interest rates. Obviously the Fed is moving by reducing rates. If the forward curve doesn't materialize and we have fewer cuts than projected, how does that impact NII? I think in your 10-Q, you had disclosures representing the sensitivity of, you know, a 25 basis points decline in rates in one quarter versus 100 basis points decline. Can you share with us?
Yeah, yeah. I mean, as you can see in the, in the interest rate disclosures that we give, the balance sheet's naturally getting less sensitive to rates as we go. And so we still have a little bit of rate sensitivity there, but it's not going to be a key driver necessarily of one way or the other. I think I come back to the thing that's going to drive it most is what's going to happen on the deposit side in the short run. And that's really what's going to matter most. And I think the expectations around rates have been moving around quite a bit even over the last week or so. And so we'll see what ultimately plays out. But I think the overall sensitivity of the balance sheet just naturally gets a little bit less and less as we go.
You touched on deposits just a moment ago. What are you seeing in deposit trends, particularly the behavior of the consumer and commercial depositors as you lower rates, lower the rates on those deposits?
Is this thing on? There we go. You know, look, on the, you know, if you take the commercial side first, you know, where we've got the most interest rate sensitive deposits there, you know, like I said, we're seeing exactly what we thought we'd see, which is for the most interest rate sensitive deposits, the betas are very high. You know, we've been working on this for months and months with our relationship managers. We've been talking to clients. So the expectations were clear and we're not really getting any kind of pushback of any substance there. I think those are playing out, like I said, exactly as we thought. The betas are what we thought. On the consumer side, you're seeing that mix shift slow down materially and continue to slow down. You're not seeing a lot of pricing pressure there at all.
You see lower betas on the consumer side because rates were lower, like they didn't go up as much. And so that's just all pretty natural in terms of what you're seeing. But so far I'd say it's exactly what we modeled and exactly what we planned for. And we expect that to continue moving.
To the other side of the balance sheet: loans. How are loans trending relative to expectations and what do you think could be the driver for commercial loan growth? Are rate cuts alone enough to get the catalyst, or do we need to see more economic activity or easing of lending standards?
It's not the latter. Right. I think we feel very, very strongly that we've got to be consistent in our underwriting standards over time. And I think if you start materially changing your standards to kind of grow loans, that generally won't result in a good outcome. And so you need to be consistent. Particularly on the commercial side. It's not clear exactly what the catalyst is going to be. I don't think rates alone will do it. I think up until the last couple days, part of what I would have said is we need to get certainty around the election. We have that check. We need also certainty around the economic path and we need lower borrowing costs as you sort of look at it.
So I do think it's going to be a confluence of these things, and people need to have more certainty that the economic baseline case is what's going to play out, and then I think you'll start to see the growth. They're just being, if you put yourself in the shoes of a commercial client, they're just being prudent, saying, okay, I'm not exactly sure what the demand profile is going to look like, so I'm going to be a little bit careful about building inventory back to higher levels. I'm going to be a little careful about CapEx, and so, you know, kind of makes sense that they're being thoughtful and prudent about it all, and we'll see, we'll see. As they get more confidence that the demand will be there, I think you'll see people borrow more.
Moving on to fee revenue growth, Mike, you've had several quarters of year over year growth in fee income. We talked about the investments that obviously you've made and the favorable market conditions that have helped fee income growth. Can you walk us through any of the opportunities ahead and including any seasonal trends that you may want to highlight going into the fourth quarter here?
Yeah, I mean, look, there's always seasonality in a lot of, you know, whether it's investment banking or trading or other lines. And so I would just, you know, most of you know that quite well, but I would sort of account for that. When you start to look at fees though, overall, I think we still feel we've got a big opportunity to continue to see fees go up over time. It goes back to a lot of the investments we talked about earlier, whether it's on the card space, the wealth space, the investment banking markets. Many of those opportunities should help drive higher fees over time, not just lending or other products. And so I think we'll see those come through gradually as we go. And so almost every line item has some opportunity to see growth as we grow the underlying franchise.
Talking about expenses, obviously you guys have done a good job in reducing headcount. I think it's about 17 consecutive quarters that you've reduced it, but it is 17.
There you go.
Thank you. Efficiency looks still high relative to peers, particularly in the consumer business. What else can you guys do to improve the efficiency?
Yeah, look, if you look at when we started this journey back in January of 2021, we laid out some incremental goals over time, but we've generated through the end of this year, we'll have generated $13 billion+ in gross saves across the place. Some of that's headcount related, that's other items as well. Some, a lot of that's gotten reinvested back into the business and some of that's fallen to the bottom line. But where we stand today, we feel no different than we have over the last couple years, a lot of opportunity to continue to get more efficient. That includes things like operations and other sort of processes where we can continue to automate things and need less people to sort of operate the place. We've got real estate, we've got third party spend across every area.
There really isn't any part of the company that I would say is fully optimized. We happened to do a town hall in this room yesterday with a couple hundred people and if you ask that group, which I did, and said how many of you feel like we're fully optimized from an efficiency point of view, nobody raises their hand and we still need so we still feel across really almost every part of the company will continue to find pieces. There are no silver bullets. There's no like one thing that's going to drive it. It's literally hundreds of projects that are going on every day to sort of drive it. And little by little you see sort of the benefits come through. Now will we see headcount reductions every quarter forever? No, of course not.
But we still have more opportunity to see that come down and we have more opportunity to drive it across the other line items as well. And so we're as focused on that today as we have been. And part of it is just, it's making sure that we embed it in the way we operate the place every day. People should come in every day trying to figure out how to make it better, how to make it more efficient and that'll drive cost out over time.
I have to ask Mike, when you were here yesterday, did you have the special sound effects that we heard? That's new today.
That's new today.
OK, I know it's budget process season for you folks. Is there any kind of color you want to share with us or can share with us as you look out into 2025 about expenses?
Yeah, look, we're approaching the budget the same way we've approached it since I got here. We start with really thinking about what else can we do across the company to drive efficiency. We separately look at where we think we need to continue to make investments across people, technology, product capabilities. And then we work through things like inflation around salaries and other things as we go through it. But we're approaching it no different than we have and I think we'll share more as we get to January. But the process is the same, the thought process is the same and we're going to continue to think there's more to do on the efficiency side. And we'll get some more next year.
Charlie mentioned in his letter to shareholders about spending $2.5 billion since above the 2018 per year. Yeah.
On risk and control areas. Can you share with us how much of that is permanent versus being reinvested maybe into other areas?
We'll see. We think there'll be opportunities to optimize that as well, but it's not an area that we're that focused on right now. You know, our main goal is to fix the risk and regulatory work, finish the build out that we've got to do there, move past those items with the regulators, and then we'll come back and look at opportunities to drive efficiency there, and there'll be opportunities there, but it's not an area that we're spending a lot of time on right now.
Got it. Obviously, you're very well capitalized. You purchased $15 billion of your shares year to date in 2024. When you look at your CET1 ratio and looking forward, what should we expect on how you're going to manage that? And second, any thoughts on the changes that Basel III Endgame re- proposals should have come between now and year end?
You know, look, I'll start on the last one. It's unclear, you know, when we're going to get more details on the capital rules. I think this week probably makes it more complicated, not less complicated. And so we really don't know. I think regardless of that, I think when you look at where we are and where our capital levels are, whatever happens, we've got a lot of capital and we're very well capitalized, as you said. And I think in the short run, what we said over the last quarter is that we'll run around 11% or so and we'll see how that progresses as we go. But we feel really good about where we are for anything that may come at us. And, you know, we'll see when we get some clarity on the rules.
Moving over to the regulatory front, obviously Charlie's tone, and you guys seem a little more upbeat of late with your progress you're making. Obviously with the regulators. I know you can't go into details, but are there any updates that you can share with us? And then second, eventually, when the asset cap is lifted, what business lines do you think will have the most impact in being able to grow even better?
Yeah, look, I think our focus continues to be just getting the work done to our satisfaction and the regulator's satisfaction. And I think as you sort of seen our language change over time. You know, we're at the point where we're making, you know, we've seen a substantial amount of progress. We are seeing the benefits of that in terms of how we operate the place. And you kind of see that coming through sort of the operating metrics that we look at every week or every month. And I think we're very confident we will get the remaining part of the work done and then ultimately it'll be up to the regulators to decide the rest. But we're very confident we're going to get all of it done. And then I think when you look at just the overall what was the. Second part of the
what businesses most favorably?
When you think about all the investments that I talked about earlier, all those things, a lot of them drive fees. They don't need necessarily a lot of balance sheet. So I wouldn't expect when the asset cap goes away at some point, I wouldn't expect all of a sudden like the next week to be this big explosion of some growth. It will take time to kind of see that come through. I think the places you'll see, places like markets is where you'll see maybe growth first as we have more flexibility to grow the balance sheet and just think things like financing type trades that help drive other flows across the markets business.
But I think you'll see sort of gradual sort of improvement post that. It's not going to be one day it's on, one day it's off, and all of a sudden I think it'll be a gradual view, and that's why we've been making all these investments for the last number of years across all the businesses.
Got it. We're running out of time, but one last question for you. The 15% return on tangible common equity, that goal, do you consider that to be the end point? And then what are the biggest opportunities and constraints in achieving that 15% on a sustainable basis?
Look, we continue to believe that's definitely attainable and reasonable people can have different views of exactly where we are. But we're not far off, I think in terms of getting there. And I think our belief is that each of the segments should have best in class returns by segment relative to peers. And so that could potentially drive different higher returns over a period of time. But we first want to set achievable goals. We started this again back in 2020 at like 8%. So we got to 10, now we set a goal of 15. We're not far off of that goal of where we sit today, and then as we get there, we'll kind of reevaluate and set other expectations. But our goal is to get to best in class returns by segment, and I think that's still achievable.
There's nothing we've seen that should not make that attainable over time.
Great. Please join me in a round of applause. Thank you, Mike, for being here, and Truist will be up right next, so please stay in your seats.
Thank you.