- ORIGINAL NEWS
Wells Fargo earnings top estimates even as lower interest income cuts into profits
- SUMMARY
Despite a decline in its net interest income, Wells Fargo outperformed market expectations in the first quarter of 2023, reporting both higher earnings and revenue than analysts anticipated.
Net interest income, which reflects the bank’s revenue from lending, saw an 8% decrease due to higher interest rates and customers shifting to higher-yielding deposit products.
However, Wells Fargo’s revenue was boosted by an increase in noninterest income, surpassing the expected decline in net interest income.
CEO Charlie Scharf highlighted the progress the bank has made in diversifying its financial performance and attributed the strong results to investments across the franchise.
The bank also set aside $938 million for credit losses, including a reduction in the allowance for credit losses driven by improved conditions in commercial real estate and auto loans.
Wells Fargo’s earnings per share, excluding a charge related to bank failures, surpassed analyst estimates.
The bank repurchased a significant number of common shares in the quarter, demonstrating confidence in its future prospects.
Despite facing challenges in its net interest income, Wells Fargo’s ability to generate higher noninterest income and its focus on diversifying its financial performance resulted in a positive first quarter, exceeding market expectations.
This performance is reflected in Wells Fargo’s stock price, which has outperformed the broader market year-to-date.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“”Our solid first quarter results demonstrate the progress we continue to make to improve and diversify our financial performance,” Wells CEO Charlie Scharf said in a statement.”
“Wells’ stock is up more than 15% year to date, beating the S&P 500’s 9% return.”
Negative
“Net interest income decreased 8% in the quarter, due to the impact of higher interest rates on funding costs and a shift by customers to higher yielding deposit products.”
“Shares of Wells dipped after the earnings report in premarket trading Friday morning.”