Financials

Wells Fargo CFO Said Net Interest Income To Rise 16% In Full Year, Boosting Guidance From 14%.

Wells Fargo & Company (NYSE:WFC) reported Q3 net interest of $13.1 billion, up 8% Y/Y, primarily due to the impact of higher interest rates. Q3 EPS reached $1.48, beating the consensus of $1.24 and $0.86 a year ago. Wells Fargo’s profit rose in the third quarter as the U.S. lender benefited from customers paying higher interest on loans. The bank reported Q3 revenues of $20.86 billion, up 21% Y/Y, above the consensus of $20.11 billion. The bank earned Q3 profits of $5.77 billion, up 61% from $3.59 billion a year earlier. CEO Charlie Scharf commented, “Our third quarter results were solid…Our revenue growth from a year ago included both higher net interest income and noninterest income as we benefited from higher rates and the investments we are making in our businesses. Expenses declined from a year ago due to lower operating losses.” “While the economy has continued to be resilient, we

We decrease our target price by $3 to $42, 8.3x our 2024 EPS estimate, below the three-year historic average of 13.6x given declining credit quality expectations. We increase our 2023 EPS view by $0.34 to $5.24 and raise 2024’s by $0.23 to $5.08. WFC posted Q3 EPS of $1.48 vs. $0.86 a year ago, $0.24 above consensus on resilient net interest income of $13.1 billion, which rose 8% Y/Y. WFC has handled the elevated rate regime in an impressive manner, and we note the bank’s net interest margin of 3.03% (+20 bps Y/Y) remains a full 50 bps above pre-pandemic levels. Additionally, we were encouraged by investment banking fees, which surged 31% higher given increased activity across all products. However, we remain cautious on WFC given clear credit deterioration in both net charge-offs (+19 bps to 0.36%) and nonperforming loans (+27 bps to 0.87%). On the positive side, we view