Wells Fargo’s (WFC) first-quarter results topped market estimates even though the lender recorded lower net interest income on an annual basis.
Earnings ticked down to $1.20 a share for the quarter through March 31 from $1.23 a year earlier, but were above the Capital IQ-polled consensus of $1.05. The result included $284 million, or $0.06 per share, of additional expense tied to the Federal Deposit Insurance Corp. special assessment. It reflects an update provided by the FDIC on losses as well as potential recoveries related to bank failures last year.
Revenue edged up 1% to $20.86 billion, ahead of the Street’s $20.15 billion view. Net interest income slid 8% to $12.23 billion due to higher interest rates on funding costs and lower loan balances. Noninterest income jumped 17% to $8.64 billion, led in part by higher trading revenue in the markets business and an increase in investment banking fees.
“Our solid first quarter results demonstrate the progress we continue to make to improve and diversify our financial performance,” Chief Executive Charlie Scharf said in a statement. “The investments we are making across the franchise contributed to higher revenue versus the fourth quarter as an increase in noninterest income more than offset an expected decline in net interest income.”
Corporate and investment banking revenue rose 2% to $4.98 billion, aided by gains in banking and markets. Investment banking revenue surged 69% year over year. Commercial banking sales declined 5% to $3.15 billion. Consumer banking and lending revenue was down 3% to $9.09 billion, while wealth and investment management increased 2% to $3.74 billion.
The company said the provision for credit losses totaled $938 million, compared with $1.21 billion last year. The latest provision figure included a decrease in the allowance for losses driven by commercial real estate and auto loans, partially countered by a higher allowance for credit card loans, Wells Fargo said.
“Net charge-offs were stable from the fourth quarter as credit trends remained consistent with recent performance,” according to Scharf. “We remain committed to improving our efficiency while we also invest in both core infrastructure and new products and services to better serve our customers.”