Wells Fargo Exceeds Q3 Earnings and Revenue Expectations

In the third quarter, Wells Fargo surpassed Wall Street’s predictions for both earnings and revenue, primarily due to the positive impact of higher interest rates, offsetting a slowdown in lending activity. This performance resulted in a 3.1% increase in the bank’s shares following the report. For the quarter, Wells Fargo reported earnings per share of $1.48, or $1.39, excluding specific tax benefits. While the exact comparable figure to Wall Street’s expectations was not disclosed, both reported figures exceeded the LSEG consensus EPS of $1.24. Additionally, the earnings marked a significant rise from the 86 cents per share reported in the same quarter the previous year. The bank’s total revenue for the quarter stood at $20.9 billion, surpassing the consensus estimate of $20.1 billion, as per LSEG (formerly known as Refinitiv). This revenue figure reflected a 6.5% increase from the $19.6 billion recorded in the third quarter of 2022.

Wells Fargo CEO Charlie Scharf highlighted that the revenue growth from the previous year was driven by higher net interest income and noninterest income, benefiting from increased rates and strategic investments in their businesses. However, Scharf also acknowledged the impact of the slowing economy, witnessing declining loan balances and a modest deterioration in charge-offs. In terms of net income, Wells Fargo reported a rise to $5.77 billion in the three months ending on Sept. 30, compared to $3.59 billion in the same period the previous year. This increase was propelled by an 8% growth in net interest income. Furthermore, Wells Fargo noted that the provision for credit losses in the quarter encompassed a $333 million increase in the allowance for credit losses for commercial real estate office loans, along with higher credit card loan balances.