Wells Fargo reported rising earnings on Friday as the bank benefited from higher interest rates despite building loan loss provisions.
Here’s how Wells Fargo performed in the first quarter versus Refinitiv estimates:
- Earnings per share: $1.23 per GAAP share versus 90 cents a year ago and $1.13 expected.
- Revenue: $20.73 billion versus $20.08 billion expected.
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Shares of the bank rose 1% initially but ended Friday’s session down 0.1%.
Wells Fargo grew its first-quarter net income by more than 30% year over year to nearly $5 billion. The bank said its net interest income, which is what it earns on lending minus payments to customers, rose 45% due to rising interest rates. Sales increased by 17%.
“We had strong first-quarter results, including revenue growth both in the fourth quarter and a year ago, and we continued to make progress on our efficiency initiatives,” CEO Charlie Scharf said in a statement.
More recently, however, the bank has set aside $1.2 billion for loan losses after reducing its provisions by $787 million a year ago. The provision included a $643 million increase for potential losses related to commercial real estate, credit card and auto loans.
While interest income rose, Wells Fargo said noninterest income declined 13% for the quarter due to lower results in its associated venture capital and private equity businesses and a decline in mortgage bank income.
Wells Fargo, once the No. 1 mortgage company, has pulled out of the housing market. It recently fired hundreds of mortgage bankers as part of a sweeping round of cuts sparked by the bank’s recent strategic realignment.
“Looking ahead, we continue to drive our risk and control agenda, which is our top priority,” said Scharf. “While we have made progress, our work is not done and we remain focused on completing the work on time.”
Wells Fargo resumed its stock repurchase program during the quarter, repurchasing 86.4 million shares, or $4.0 billion of common stock.
The stock is up 6% in April and has pared its losses to about 4% in 2023.