Wells Fargo’s (WFC) Q1 adjusted earnings per share exceeded expectations mainly due to higher non-interest income and lower loan-loss provisions, HSBC Global Research said in a note Friday.
The firm reiterated its hold rating and $60 target price on Wells Fargo.
Analysts, including Saul Martinez, said that net interest income, which stood at $12.2 billion, came in slightly below HSBC’s estimate, while adjusted expenses were in line.
The analysts added that the company maintained the 2024 guidance for net interest income and adjusted expenses, with the former implying “modest downside risk” to their 2024 projection.
“Our first take is mixed as continued net interest income pressure offsets good expense performance and continued momentum in non-interest income, notably Investment Banking and Markets,” the note said.
Adjusted expenses, which excluded the Federal Deposit Insurance Corp. special assessment and operating losses, were up 5% quarter-over-quarter and fell 2% year-over-year, the analysts said.
“We are optimistic about continued cost optimization efforts and relative capital flexibility; however, we note this is offset by our continued expectation for near-term net interest income pressure and limited line of sight on the removal of the asset cap by the Fed,” the analysts said.