Shares of Wells Fargo Tumble After Net Interest Income Misses Expectations

On Friday, Wells Fargo reported a 9% drop in net interest income despite exceeding Wall Street expectations for its second-quarter earnings and revenue.

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Here’s how the bank performed compared to Wall Street estimates, based on a survey of analysts by LSEG:

• Earnings per share: $1.33 versus $1.29 expected
• Revenue: $20.69 billion versus $20.29 billion expected

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The San Francisco-based bank posted $11.92 billion in net interest income, which is a critical measure of earnings from lending, marking a 9% decrease from the previous year. This figure was below the $12.12 billion analysts expected, according to FactSet. The bank attributed the decline to the impact of higher interest rates on funding costs.

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Shares of Wells Fargo fell nearly 7% on Friday following the announcement.

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CEO Charlie Scharf said in a statement, “We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income. The investments we have been making allowed us to take advantage of the market activity in the quarter with strong performance in investment advisory, trading, and investment banking fees.”

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Wells Fargo's net income fell slightly to $4.91 billion, or $1.33 per share, in the second quarter, from $4.94 billion, or $1.25 per share, in the same quarter the previous year. The bank allocated $1.24 billion as a provision for credit losses, which included a modest reduction in the allowance for those losses. Revenue for the quarter rose to $20.69 billion.

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Additionally, the bank repurchased over $12 billion of common stock during the first half of 2024 and plans to increase the third-quarter dividend by 14%.

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Despite Friday's drop, Wells Fargo's stock is up more than 22% this year, outperforming the S&P 500.

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