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Wells Fargo (NYSE:WFC) stock dipped 2.1% in Tuesday premarket trading after the bank trimmed its 2025 net interest income guidance. Q2 earnings beat, while revenue met the consensus estimate.
The bank expects 2025 net interest income to be roughly in line with 2024’s $47.7B (vs. Visible Alpha consensus of $47.9B), compared with its prior guidance expecting a ~1%-3% increase. The lower guidance was driven by lower NII in its markets business.
Noninterest expense is expected to be ~$54.2B, unchanged from its previous guidance.
Q1 EPS of $1.60 vs. $1.43 in Q4 and $1.33 in last year’s Q1. The current quarter’s bottom line included a $0.06 per share gain associated with the acquisition of the remaining interest in its merchant services joint venture. Excluding the item, Q2 2025 EPS came to $1.54, vs. the average analyst estimate of $1.40.
Total revenue of $20.8B, in line with the consensus estimate, compared with $20.1B in the prior quarter and $20.7B a year ago.
“Our efforts to increase fee-based income drove revenue growth and both net interest income and noninterest income grew from the first quarter,” said CEO Charlie Scharf. “We are investing in our businesses but remain focused on expense management. While there continue to be risks as we look forward, activity levels have remained consistent and our strong credit performance continues to point to the strength of our commercial and consumer customers’ financial position.”
Provision for credit losses of $1.01B vs. $932M in Q4 and $1.24B in Q1 2024.
Net interest income of $11.7B, just missing the Visible Alpha consensus of $11.8B, increased from $11.5B in the previous quarter and slipped from $11.9B in last year’s Q1.
Noninterest income of $9.11B vs. $8.65B in Q1 and $8.77B in Q1 2024.
Wells Fargo’s (NYSE:WFC) noninterest expense of $13.4B dipped from $13.9B in the prior quarter and edged up from $13.3B a year ago.
Average loans were $916.7B in Q1 vs. $908.2B in Q1. Average deposits slipped to $1.33T from $1.34T in the previous quarter.
Wells Fargo’s (NYSE:WFC) earnings beat “illustrates the bank’s robust market position,” said Seeking Alpha analyst Steve Booyens of Pearl Gray Equity and Research. “That said, lower NII coupled with slightly higher provisions might be a sign of what’s to come. The credit cycle looks set to deteriorate, impacting loan pricing and potential defaults, concurrently short-term funding rates aren’t providing much to cheer about. WFC’s strong capital adequacy protects against cyclical downturns, but it doesn’t deflect compressed earnings outlooks. Noninterest activities could push back, but WFC’s valuation and NII outlook don’t seem particularly encouraging at this stage.”
Q2 revenue performance by segment:
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Consumer Banking and Lending revenue of $9.23B rose 4% Q/Q and 2% Y/Y.
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Commercial Banking revenue of $2.93B was flat Q/Q and fell 6% Y/Y.
- Corporate and Investment Banking revenue of $4.67B dropped 8% Q/Q and 3% Y/Y.
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Wealth and Investment Management revenue of $3.90B increased 1% Q/Q and 1% Y/Y. Total client assets of $2.35T grew 5% Q/Q and 7% Y/Y.
Conference call at 10:00 AM ET.
Earlier, Wells Fargo Non-GAAP EPS of $1.54 beats by $0.14, revenue of $20.82B in-line