Jan 12 Reuters Wells Fargo39;s profit beat fourthquarter expectations on cost cuts, but the lender warned that 2024 net interest income could be 7 to 9 lower than a year earlier, sending its shares down 1.9 before the bell.

Rising borrowing costs have benefited banks that charged borrowers more on interest, but with market participants expecting rate cuts by the Federal Reserve this year, their interest income could start to erode.

Our business performance remains sensitive to interest rates and the health of the U.S. economy, but we are confident that the actions we are taking will drive stronger returns over the cycle, CEO Chief Executive Officer Charlie Scharf said in a statement.

The bank has already tightened its belt and expects annual expenses to drop by 3 billion from 2023. In the fourth quarter, Wells Fargo booked 969 million in severance expense.

CEO Scharf had told investors last month that the bank was likely to see higherthananticipated severance expenses between 750 million to a little less than 1 billion in the fourth quarter.

Chief Financial Officer Mike Santomassimo said in a conference call on Friday that there is no specific area that should be more impacted by layoffs, without providing a number.

Revenue in the fourth quarter rose 2 to 20.5 billion.

Excluding items, Wells Fargo earned 1.26 per share, beating analysts39; expectations of 1.17, according to LSEG estimates.

Noninterest expense dropped 2.5 in the quarter.

Wells Fargo is among a…