Warren Buffett Money Quote saying the Wells Fargo customer base was growing steadily – however growth was due to fraud – making it much harder for Wells Fargo to make money on new customer growth. Warren Buffett said:
“Wells Fargo … you can’t take away Wells’ customer base. It grows quarter by quarter. And what you make money off of is customers. And you make money on customers by having a helluva spread on assets and not doing anything really dumb. And that’s what they do” — Warren Buffett
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Warren Buffett is praising Wells Fargo’s large and steadily growing customer base. He notes that banks primarily make money from their customers through interest earned on loans and fees. Specifically, Wells Fargo earns money from its “spread” – the difference between the interest it pays depositors and the higher interest it charges for loans.
As long as Wells Fargo lends responsibly and avoids risky or fraudulent behavior (“doing anything really dumb”), its large customer base will continue generating steady profits from this spread on assets like mortgages and credit cards. Overall, Buffett sees Wells Fargo’s expanding customer base as a key strength of the bank’s business model.