Text extracted via OCR from the original document. May contain errors from the scanning process.
= WFC continues to make progress on regulatory compliance. As of 3Q, WFC’s
current total loss absorbing capacity (TLAC) shortfall was 2.1% of risk weighted
assets or $29bn ($43bn including its internal buffer), an S8bn QoQ improvement.
That said, Mr Blinde assured investors that WFC will continue to focus on deposit
growth (66% of total funding) even as its long-term debt needs continue. WFC is
compliant with the liquidity coverage ratio (LCR).
= Potential changes to annual stress test process viewed as positive. Mr. Blinde
noted that potential changes to the annual stress test process, as proposed by Gov.
Tarullo in Sept., is a “real” positive, specifically as it reduces any variance between
how the stressed risk weighted asset balance is calculated. This is likely positive for
the majority of investors polled (31%) who think capital return is the biggest
catalyst for the stock and the (70%) who see the dividend payout growing towards
the 40-50% range long-term (currently 37%).
Chart 49: What do you think is the biggest catalyst for WFC shares over the next 12-24 months?
35% 31%
30%
25%
20%
15%
10%
5%
0%
Better clarity Delivering clean Achieving solid Renewed focus on Accelerating
around the full © andconsistent revenue growth expense capital return, with
impact of the sales earnings results regardless of the managementto — focus on the
practices issue close to or better rate environment drive the efficiency dividend
than current ratio lower
consensus
Source: BofA Merrill Lynch Global Research
Chart 50: As a result, what do you think WFC's long-term dividend payout ratio will be?
40%
35%
30%
29%
20%
15%
10%
5%
0%
Near the current level 40-45% 45-50% >50%
of 37%
Source: BofA Merrill Lynch Global Research
= Note: WFC is scheduled to report October customer activity in Retail Banking on
Thur, Nov. 17th at 9am ET.
Zions Bancorporation (ZION), C-3-7, Underperform
= Sentiment post-election appears constructive on growth prospects. Consistent
with other bank management teams speaking at this year’s conference, CFO Paul
Burdiss noted that small businesses have been reluctant to invest given the
Bankof America a 2016 Future of Financials Conference | 17 November 2016 33
Merrill Lynch
HOUSE_OVERSIGHT_014347