Mike Santomassimo, Wells Fargo's Chief Financial Officer, discusses the company's cost reductions and performance. He points out that despite an expected slowdown in net interest income, the company has seen solid momentum in its fee-based businesses, offsetting the declines. Wells Fargo continues to reduce its workforce while maintaining the return of capital to shareholders.

Santomassimo points to three main factors that have led to an increase in annual cost forecasts: expenses associated with revenues generated by the wealth management sector, costs incurred in resolving old disputes, and an exceptional charge imposed by the FDIC following events that occurred the previous year. He assures us that these costs are temporary and that the company is close to resolving these issues.

With regard to the net interest margin and net interest income, which disappointed expectations, Santomassimo explains that demand for loans remains subdued, attributing this to a prudent and consistent approach to underwriting standards without taking excessive risks to stimulate growth. He also notes some positive developments, such as the increase in deposits in all the company's divisions, the first in several years.

The outlook if the Fed were to cut interest rates suggests that this could lead to lower deposit costs, which would be positive for the business.

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