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Wells Fargo Stock Gains as Q4 Earnings Beat on Higher Fee Income
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Shares of Wells Fargo & Company (WFC - Free Report) jumped 4.6% in the pre-market trading session today as the company reported its fourth-quarter 2024 adjusted earnings per share of $1.42, which surpassed the Zacks Consensus Estimate of $1.34. In the prior-year quarter, the company reported earnings per share of $1.29.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Results have 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) was the undermining factor.
Results exclude net losses of 25 cents per share on debt securities related to a repositioning of the investment securities portfolio and severance expenses, and net earnings of 26 cents per share of discrete tax benefits related to the resolution of prior period matters. After considering it, net income (GAAP basis) was $5.08 billion, which increased 47% from the prior-year quarter.
In 2024, earnings of $5.37 per share surpassed the consensus estimate of $5.29 and rose from $4.83 in 2023. Net income was $19.72 billion, up 3% from the prior-year quarter.
Wells Fargo’s Revenues & Expenses Decline
Quarterly total revenues were $20.38 billion, missing the Zacks Consensus Estimate of $20.55 billion. Also, the top line decreased 0.5% from the year-ago quarter.
For 2024, total revenues were $82.29 billion, which missed the Zacks Consensus Estimate of $82.62 billion. Also, the top line declined 0.4% year over year.
Wells Fargo’s NII was $11.83 billion, down 7% year over year. The metric was affected by deposit mix and pricing changes, the impacts of lower rates on floating rate assets, and lower loan balances, partially offset by lower market funding.
The net interest margin (on a taxable-equivalent basis) declined year over year to 2.70% from 2.92%.
Non-interest income grew 11% year over year to $8.54 billion. The uptick was driven by improved results from the company’s venture capital investments, an increase in asset-based fees in Wealth and Investment Management on higher market valuations, and higher investment banking fees, as well as increases in most other fee categories, partially offset by net losses on debt securities related to a repositioning of the investment portfolio and lower net gains from trading in the Markets business.
Non-interest expenses of $13.9 billion declined 12% year over year. This was mainly due to lower Federal Deposit Insurance Corporation assessments and severance expenses, and the impacts of efficiency initiatives. These decreases were partially offset by higher revenue-related compensation expenses, predominantly in Wealth and Investment Management, an increase in benefits expenses, and higher technology and equipment expenses.
Wells Fargo's efficiency ratio of 68% was lower than 77% in the year-ago quarter. A decrease in the efficiency ratio indicates an improvement in profitability.
As of Dec. 31, 2024, total loans of $912.7 billion increased 0.3% on a sequential basis. Total deposits were $1.37 trillion, which increased 1.6% on a sequential basis.
Wells Fargo’s Credit Quality Improves
The provision for credit losses was $1.09 billion, down 15% from the prior-year quarter.
Net loan charge-offs were $1.21 billion or 0.53% of average loans in the reported quarter, down 3.3% year over year. Further, non-performing assets fell 6% year over year to $7.94 billion.
Wells Fargo’s Capital Ratio Declines
As of Dec. 31, 2024, the Tier 1 common equity ratio was 11.1% under the Standardized Approach, down from 11.4% in the fourth quarter of 2023.
Wells Fargo’s Profitability Ratio Improves
Return on assets was 1.05%, up from the prior-year quarter’s 0.72%. Return on equity of 11.7% increased from 7.6% a year ago.
Wells Fargo’s Share Repurchase Update
In the reported quarter, WFC repurchased 57.8 million shares, or $4 billion, of common stock.
Our View on WFC
The company’s strong fee income growth is likely to support its top line in the upcoming period. Lower provisions and strong capital ratios are other positives. Improving loan balances look encouraging. However, a decline in NII is concerning.
Wells Fargo & Company Price, Consensus and EPS Surprise
M&T Bank Corporation (MTB - Free Report) is slated to report fourth-quarter 2024 results on Jan. 16. It has a Zacks Rank #3 (Hold) at present.
Over the seven days, the Zacks Consensus Estimate for MTB’s quarterly earnings per share has been unchanged at $3.70.
Fifth Third Bancorp (FITB - Free Report) is scheduled to release fourth-quarter 2024 earnings on Jan.21. The company carries a Zacks Rank #3 at present.
The consensus estimate for FITB’s quarterly earnings has been unchanged at 87 cents per share over the past seven days.
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Wells Fargo Stock Gains as Q4 Earnings Beat on Higher Fee Income
Shares of Wells Fargo & Company (WFC - Free Report) jumped 4.6% in the pre-market trading session today as the company reported its fourth-quarter 2024 adjusted earnings per share of $1.42, which surpassed the Zacks Consensus Estimate of $1.34. In the prior-year quarter, the company reported earnings per share of $1.29.
Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.
Results have 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) was the undermining factor.
Results exclude net losses of 25 cents per share on debt securities related to a repositioning of the investment securities portfolio and severance expenses, and net earnings of 26 cents per share of discrete tax benefits related to the resolution of prior period matters. After considering it, net income (GAAP basis) was $5.08 billion, which increased 47% from the prior-year quarter.
In 2024, earnings of $5.37 per share surpassed the consensus estimate of $5.29 and rose from $4.83 in 2023. Net income was $19.72 billion, up 3% from the prior-year quarter.
Wells Fargo’s Revenues & Expenses Decline
Quarterly total revenues were $20.38 billion, missing the Zacks Consensus Estimate of $20.55 billion. Also, the top line decreased 0.5% from the year-ago quarter.
For 2024, total revenues were $82.29 billion, which missed the Zacks Consensus Estimate of $82.62 billion. Also, the top line declined 0.4% year over year.
Wells Fargo’s NII was $11.83 billion, down 7% year over year. The metric was affected by deposit mix and pricing changes, the impacts of lower rates on floating rate assets, and lower loan balances, partially offset by lower market funding.
The net interest margin (on a taxable-equivalent basis) declined year over year to 2.70% from 2.92%.
Non-interest income grew 11% year over year to $8.54 billion. The uptick was driven by improved results from the company’s venture capital investments, an increase in asset-based fees in Wealth and Investment Management on higher market valuations, and higher investment banking fees, as well as increases in most other fee categories, partially offset by net losses on debt securities related to a repositioning of the investment portfolio and lower net gains from trading in the Markets business.
Non-interest expenses of $13.9 billion declined 12% year over year. This was mainly due to lower Federal Deposit Insurance Corporation assessments and severance expenses, and the impacts of efficiency initiatives. These decreases were partially offset by higher revenue-related compensation expenses, predominantly in Wealth and Investment Management, an increase in benefits expenses, and higher technology and equipment expenses.
Wells Fargo's efficiency ratio of 68% was lower than 77% in the year-ago quarter. A decrease in the efficiency ratio indicates an improvement in profitability.
WFC’s Loans & Deposit Balances Improve Sequentially
As of Dec. 31, 2024, total loans of $912.7 billion increased 0.3% on a sequential basis. Total deposits were $1.37 trillion, which increased 1.6% on a sequential basis.
Wells Fargo’s Credit Quality Improves
The provision for credit losses was $1.09 billion, down 15% from the prior-year quarter.
Net loan charge-offs were $1.21 billion or 0.53% of average loans in the reported quarter, down 3.3% year over year. Further, non-performing assets fell 6% year over year to $7.94 billion.
Wells Fargo’s Capital Ratio Declines
As of Dec. 31, 2024, the Tier 1 common equity ratio was 11.1% under the Standardized Approach, down from 11.4% in the fourth quarter of 2023.
Wells Fargo’s Profitability Ratio Improves
Return on assets was 1.05%, up from the prior-year quarter’s 0.72%. Return on equity of 11.7% increased from 7.6% a year ago.
Wells Fargo’s Share Repurchase Update
In the reported quarter, WFC repurchased 57.8 million shares, or $4 billion, of common stock.
Our View on WFC
The company’s strong fee income growth is likely to support its top line in the upcoming period. Lower provisions and strong capital ratios are other positives. Improving loan balances look encouraging. However, a decline in NII is concerning.
Wells Fargo & Company Price, Consensus and EPS Surprise
Wells Fargo & Company price-consensus-eps-surprise-chart | Wells Fargo & Company Quote
Currently, Wells Fargo flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings Dates & Expectations of Banks
M&T Bank Corporation (MTB - Free Report) is slated to report fourth-quarter 2024 results on Jan. 16. It has a Zacks Rank #3 (Hold) at present.
Over the seven days, the Zacks Consensus Estimate for MTB’s quarterly earnings per share has been unchanged at $3.70.
Fifth Third Bancorp (FITB - Free Report) is scheduled to release fourth-quarter 2024 earnings on Jan.21. The company carries a Zacks Rank #3 at present.
The consensus estimate for FITB’s quarterly earnings has been unchanged at 87 cents per share over the past seven days.