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Wells Fargo beats estimates for second-quarter results, hikes guidance for net interest income

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Three Wells Fargo ATM’s on 14th street, New York City.
Lindsey Nicholson | Universal Images Group | Getty Images

Wells Fargo beat Wall Street estimates on the top and bottom lines for the second quarter, sending its stock higher in premarket trading Friday.

Here is how the bank’s results compared to Wall Street analysts expectations, according to Refinitiv.

  • $1.25 in earnings per share vs $1.16 expected
  • $20.53 billion in revenue vs $20.12 billion expected

Shares of Wells Fargo rose more than 3% before the bell.

The bank’s total net income was $4.9 billion, up from $3.1 billion in the same quarter last year.

Higher interest rates helped fuel the increase. Net interest income rose 29% year over year to $13.2 billion. Consumer and small business banking saw earnings of nearly $6.6 billion, up 19% from $5.5 billion last year.

However, net interest income was down slightly from the first quarter of this year. The bank also reported quarter-over-quarter declines of 2% for commercial and consumer deposits.

“Our company remains strong and we have significant opportunities to continue to improve how we serve our customers. The U.S. economy continues to perform better than many had expected, and although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters,” CEO Charlie Scharf said in a press release.

The increased earnings came despite Wells Fargo booking a $1.7 billion provision for credit losses. That is up from $580 million a year ago, and $1.2 billion in the first quarter.

“As expected, net loan charge-offs increased from the first quarter. Consumer charge-offs continued to deteriorate modestly. Commercial charge-offs increased driven by a small number of borrowers in Commercial Banking, with little signs of systemic weakness across the portfolio, and higher losses in commercial real estate, primarily in the office portfolio,” Scharf said in the press release.

The bank’s noninterest expense rose about 1% year over year, compared to an increase of roughly 20% for total revenue. Wells Fargo also said it spent $4 billion buying back 100.2 million shares during the quarter.

Entering the earnings report, the stock was up about 5.9% year to date, which is lagging the S&P 500 but well above the KBW Bank Index.

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