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Wells Fargo & Company (WFC - Free Report) reported its third-quarter 2024 adjusted earnings per share of $1.52, which surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.39.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Results benefited from higher non-interest income. An improvement in capital ratios, a decline in provisions and non-interest expenses were other positives. However, the decrease in net interest income (NII), as well as loans balances were the undermining factors.
Results exclude net losses of 10 cents per share on debt securities related to a repositioning of the investment securities portfolio. After considering it, net income (GAAP basis) was $5.11 billion, which decreased 11.3% from the prior-year quarter figure.
Wells Fargo’s Revenues and Expenses Decline
Quarterly total revenues were $20.37 billion, missing the Zacks Consensus Estimate of $20.38 billion. Also, the top line decreased 2.4% from the year-ago quarter.
Wells Fargo’s NII was $11.7 billion, down 11% year over year. The metric was affected by higher funding costs reflecting customer migration to higher-yielding deposit products, and deposit mix and pricing changes, including increased pricing on sweep deposits in advisory brokerage accounts, as well as lower loan balances, partially offset by higher yields on earning assets.
The net interest margin (on a taxable-equivalent basis) declined year over year to 2.67% from 3.03%.
Non-interest income grew 12% year over year to $8.68 billion. The uptick was driven by an improvement in venture capital investments, an increase in asset-based fees in Wealth and Investment Management on higher market valuations, higher investment banking fees, higher net gains from trading in Markets business, and higher deposit-related fees. This was offset by net losses on debt securities related to the repositioning of the investment securities portfolio.
Non-interest expenses of $13.1 billion declined marginally year over year. This was mainly due to the company’s efficiency initiatives, partially offset by the higher revenue-related compensation and investment in technology and equipment.
Wells Fargo's efficiency ratio of 64% was higher than 63% in the year-ago quarter. An increase in the efficiency ratio indicates a deterioration in profitability.
As of June 30, 2024, total loans of $910.3 billion declined 1% on a sequential basis. Total deposits were $1.34 trillion, which increased marginally on a sequential basis.
Wells Fargo’s Credit Quality: Mixed Bag
The provision for credit losses was $1.07 billion, down 11% from the prior-year quarter.
However, net loan charge-offs were $1.1 billion or 0.49% of average loans in the reported quarter, up 30.7% year over year. Further, non-performing assets rose 2.5% year over year to $8.38 billion.
Wells Fargo’s Capital Ratio Improves
As of June 30, 2024, the Tier 1 common equity ratio was 11.3% under the Standardized Approach, up from 11% reported in the third quarter of 2023.
Wells Fargo’s Profitability Ratio Declines
Return on assets was 1.06%, down from the prior-year quarter’s 1.21%. Return on equity of 11.7% decreased from 13.3% year over year.
Wells Fargo’s Share Repurchase Update
In the reported quarter, Wells Fargo repurchased 62 million shares, or $3.5 billion, of common stock.
Our View on Wells Fargo
The company’s strong fee income growth is likely to support its top line in the upcoming period. Also, lower provisions and strong capital ratios are other positives. However, lower loan balances due to asset cap is a major near-term concern.
Wells Fargo & Company Price, Consensus and EPS Surprise
M&T Bank Corporation (MTB - Free Report) is slated to report third-quarter 2024 results on Oct. 17. It has a Zacks Rank #3 at present.
Over the past month, the Zacks Consensus Estimate for MTB’s quarterly earnings per share has moved marginally downward to $3.60.
Fifth Third Bancorp (FITB - Free Report) is scheduled to release third-quarter 2024 earnings on Oct. 18. The company carries a Zacks Rank #3 at present.
The consensus estimate for FITB’s quarterly earnings has remained unchanged at 82 cents per share over the past month.
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Wells Fargo Q3 Earnings Beat on Higher Fee Income, Lower Expenses
Wells Fargo & Company (WFC - Free Report) reported its third-quarter 2024 adjusted earnings per share of $1.52, which surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.39.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Results benefited from higher non-interest income. An improvement in capital ratios, a decline in provisions and non-interest expenses were other positives. However, the decrease in net interest income (NII), as well as loans balances were the undermining factors.
Results exclude net losses of 10 cents per share on debt securities related to a repositioning of the investment securities portfolio. After considering it, net income (GAAP basis) was $5.11 billion, which decreased 11.3% from the prior-year quarter figure.
Wells Fargo’s Revenues and Expenses Decline
Quarterly total revenues were $20.37 billion, missing the Zacks Consensus Estimate of $20.38 billion. Also, the top line decreased 2.4% from the year-ago quarter.
Wells Fargo’s NII was $11.7 billion, down 11% year over year. The metric was affected by higher funding costs reflecting customer migration to higher-yielding deposit products, and deposit mix and pricing changes, including increased pricing on sweep deposits in advisory brokerage accounts, as well as lower loan balances, partially offset by higher yields on earning assets.
The net interest margin (on a taxable-equivalent basis) declined year over year to 2.67% from 3.03%.
Non-interest income grew 12% year over year to $8.68 billion. The uptick was driven by an improvement in venture capital investments, an increase in asset-based fees in Wealth and Investment Management on higher market valuations, higher investment banking fees, higher net gains from trading in Markets business, and higher deposit-related fees. This was offset by net losses on debt securities related to the repositioning of the investment securities portfolio.
Non-interest expenses of $13.1 billion declined marginally year over year. This was mainly due to the company’s efficiency initiatives, partially offset by the higher revenue-related compensation and investment in technology and equipment.
Wells Fargo's efficiency ratio of 64% was higher than 63% in the year-ago quarter. An increase in the efficiency ratio indicates a deterioration in profitability.
Wells Fargo’s Loans Balance Decline, Deposits Rise
As of June 30, 2024, total loans of $910.3 billion declined 1% on a sequential basis. Total deposits were $1.34 trillion, which increased marginally on a sequential basis.
Wells Fargo’s Credit Quality: Mixed Bag
The provision for credit losses was $1.07 billion, down 11% from the prior-year quarter.
However, net loan charge-offs were $1.1 billion or 0.49% of average loans in the reported quarter, up 30.7% year over year. Further, non-performing assets rose 2.5% year over year to $8.38 billion.
Wells Fargo’s Capital Ratio Improves
As of June 30, 2024, the Tier 1 common equity ratio was 11.3% under the Standardized Approach, up from 11% reported in the third quarter of 2023.
Wells Fargo’s Profitability Ratio Declines
Return on assets was 1.06%, down from the prior-year quarter’s 1.21%. Return on equity of 11.7% decreased from 13.3% year over year.
Wells Fargo’s Share Repurchase Update
In the reported quarter, Wells Fargo repurchased 62 million shares, or $3.5 billion, of common stock.
Our View on Wells Fargo
The company’s strong fee income growth is likely to support its top line in the upcoming period. Also, lower provisions and strong capital ratios are other positives. However, lower loan balances due to asset cap is a major near-term concern.
Wells Fargo & Company Price, Consensus and EPS Surprise
Wells Fargo & Company price-consensus-eps-surprise-chart | Wells Fargo & Company Quote
Currently, Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Banks
M&T Bank Corporation (MTB - Free Report) is slated to report third-quarter 2024 results on Oct. 17. It has a Zacks Rank #3 at present.
Over the past month, the Zacks Consensus Estimate for MTB’s quarterly earnings per share has moved marginally downward to $3.60.
Fifth Third Bancorp (FITB - Free Report) is scheduled to release third-quarter 2024 earnings on Oct. 18. The company carries a Zacks Rank #3 at present.
The consensus estimate for FITB’s quarterly earnings has remained unchanged at 82 cents per share over the past month.