Wells Fargo Lifts Annual Interest Income Forecast As Q3 Earnings Beat Street View

Wells Fargo & Company 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 are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly," Scharf added.

Consumer, Small and Business Banking was up 7% to $6.67 billion, driven by the impact of higher interest rates.

The bank posted a decline in total deposits to $1.34 trillion from $1.41 trillion a year earlier.

Guidance: For FY23, Wells Fargo expects net interest income to be ~16% higher than the FY22 level of $45.0 billion, up from prior guidance of ~14% higher, with 4Q23 expected to be ~$12.7 billion.

Price Action: WFC shares are up 2.37% at $40.68 during the premarket session on the last check Friday.