Wells Fargo shares jump after Q2 results exceed estimates
Wells Fargo & Co. earned more net interest income than analysts expected in the second quarter and lifted its guidance for the full year as big U.S. banks continue to benefit from the Federal Reserve’s rate hikes.
The San Francisco-based firm reported $13.2 billion in net interest income — revenue collected from loan payments minus what depositors are paid — for the three months through June, up 29% from a year ago, according to a statement Friday. Executives now see Wells Fargo’s NII haul rising roughly 14% for the full year, more than the 10% jump they had earlier projected.
“Our strong net interest income continued to benefit from higher interest rates, and we remained focused on controlling expenses,” Chief Executive Charlie Scharf said in the statement. “The US economy continues to perform better than many had expected.”
Wells Fargo, JPMorgan Chase & Co. and Citigroup Inc. are kicking off second-quarter earnings Friday, offering the first look at a period that included tumult among regional lenders capped by the failure of First Republic Bank. Investors are eager for details on how consumers and businesses are faring amid the Federal Reserve’s efforts to cool inflation through interest-rate hikes.
Shares of Wells Fargo climbed 2.5% to $44.79 at 9:36 a.m. in New York, and are up 8.7% this year.
Investors have been increasingly worried about banks’ ability to hang onto customer deposits as the Fed’s moves give consumers higher-yielding options for storing their cash. Wells Fargo was no exception: non-interest-bearing deposits slumped 22% to $402 billion in the quarter while average deposit costs soared.
The firm plugged that hole in part with $25 billion in borrowings from the Federal Home Loan Bank system.
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