Wells Fargo missed estimates last quarter as net interest income fell short of expectations, with shares falling by almost 6%.
Earnings per share were US$1.56 per share, rising from $1.39 year-over-year and under Zacks consensus estimates of $1.58. Revenue was $21.45 billion, up from $20.15 billion but below estimates by 1.3%.
“We saw continued positive impacts from the investments we have been making with diluted earnings per share increasing 15%, revenue increasing 6%, loans increasing 11%, and deposits increasing 7% compared to a year ago,” said chair and CEO Charlie Scharf.
“While markets have been volatile, we still see continued resiliency in the underlying economy and the financial health of the consumers and businesses we serve remains strong, though the impact of higher oil prices will likely take some time to materialize. We will continue to monitor trends and respond accordingly, and we are well positioned to support our customers across a range of economic scenarios.”
Net interest income was up 5% to $12.10 billion, below LSEG-compiled estimates of $12.3 billion. Wells Fargo credited the increase to higher deposit balances and lower deposit costs, offset by lower interest rates on floating rate assets.
Noninterest income grew by 8% to $9.35 billion. Its allowance for credit losses was $14.37 billion, down from $14.55 billion.
Average loans during the quarter increased 10% year-over-year to $996 billion, and average deposits climbed 6%. The company’s average assets rose 13% to $2.17 billion.
Wells Fargo’s Common Equity Tier 1 ratio was 10.3%, down from 11.1% one year ago.
Revenue from its Consumer Banking & Lending and Commercial Banking divisions each rose 7%.
Scharf said on an earnings call that customers’ gas purchases now represented 75% of Wells Fargo’s total debit and credit card spend. Gas accounted for 6% of debit card spend and 4% of credit card spend before prices surged due to the Iran war.
Rival Citigroup reported its strongest quarterly revenue performance in a decade today, and Goldman Sachs said profits rose 19% last quarter. Both companies beat earnings per share and revenue estimates.
Wells Fargo (NYSE: WFC) shares closed 5.7% lower at $81.70, and remained largely unchanged after-hours. Its market capitalisation is $251.22 billion.
