Three Wells Fargo ATMs on 14th Street in New York City.
Lindsay Nicholson | Universal Pictures Group | Good pictures
Wells Fargo beat Wall Street estimates on top and bottom lines in the second quarter, sending its shares higher in premarket trading on Friday.
Here’s how the bank’s results compared to Wall Street analysts’ expectations, according to Refinitiv.
- Earnings per share were $1.25 versus expectations of $1.16
- Revenue of $20.53 billion vs. $20.12 billion expected
Shares of Wells Fargo rose more than 3% before the hour.
The bank’s total net income was $4.9 billion, compared to $3.1 billion in the same quarter last year.
Higher interest rates helped the increase. Net interest income increased 29% year over year to $13.2 billion. Consumer and small business banking saw revenue grow 19% to nearly $6.6 billion from $5.5 billion last year.
Wells Fargo raised its full-year guidance for net interest income, expecting the metric to rise 14% in 2023 instead of 10%.
However, net interest income declined slightly from the first quarter of this year. The bank reported a quarter-over-quarter decline of 2% for both commercial and consumer deposits.
“Our company remains strong and there are significant opportunities to improve how we serve our customers. The U.S. economy continues to perform better than many expected, and while there will be continued economic slowdown and uncertainty, it is very possible that the range of scenarios will decrease over the next few quarters,” the chief said. CEO Charlie Scharf said in a press release.
The increased revenue came despite Wells Fargo booking a $1.7 billion provision for loan losses. That’s up from $580 million a year ago and $1.2 billion in the first quarter.
“As expected, net loan charges increased from the first quarter. Consumer charge-offs continued to deteriorate. Commercial charges increased due to fewer borrowers in the commercial bank, with little sign of structural weakness across the portfolio, and higher losses in commercial real estate, primarily in the office portfolio,” it said. Scharf said in a press release.
The bank’s non-interest expense increased by 1% year-on-year, compared to a roughly 20% increase in total revenue. Wells Fargo said it spent $4 billion to buy back 100.2 million shares in the quarter.
Entering the earnings report, shares are up about 5.9% year to date, lagging the S&P 500 but outperforming the KBW Bank index.