Wells Fargo (WFC) Earnings 2Q 2023

Three Wells Fargo ATMs on 14th street, New York City.

Lindsey Nicholson | Universal Images Group | Getty Images

Wells Fargo beat Wall Street estimates on its top and bottom lines for the second quarter, sending its stock higher in premarket trading Friday.

Here’s how the bank’s results compared to Wall Street analysts’ expectations, according to Refinitiv.

  • 1.25 dollars in earnings per share against the expected 1.16 dollars
  • $20.53 billion in revenue versus $20.12 billion expected

Shares of Wells Fargo rose more than 3% before the bell.

The bank’s total net income was $4.9 billion, up from $3.1 billion in the same quarter last year.

Higher interest rates contributed to the increase. Net interest income increased 29% year over year to $13.2 billion. Consumer and small business banking had revenue of nearly $6.6 billion, up 19% from $5.5 billion last year.

Wells Fargo raised its full-year guidance for net interest income, saying it expected the metric to rise 14% in 2023 instead of the previous estimate of 10%.

However, net interest income decreased somewhat from the first quarter of this year. The bank also reported a quarter-on-quarter decline of 2% for commercial and consumer deposits.

“Our company remains strong and we have significant opportunities to continue to improve the way we serve our customers. The U.S. economy continues to perform better than many expected, and while continued economic slowdown and uncertainty are still possible . range of scenarios will decline over the next few quarters,” CEO Charlie Scharf said in a press release.

The increased earnings came despite Wells Fargo ordering a $1.7 billion provision for credit losses. That’s up from $580 million a year ago, and $1.2 billion in the first quarter.

“As expected, net loan charge-offs increased from the first quarter. Consumer charge-offs continued to deteriorate modestly. Commercial charge-offs increased driven by a small number of borrowers in Commercial Banking, with few signs of systemic weakness in the portfolio, and higher losses in commercial property, primarily in the office portfolio, Scharf said in the release.

The bank’s non-interest costs increased by approx. 1% year on year, compared to an increase of approx. 20% for total revenue. Wells Fargo said it spent $4 billion to buy back 100.2 million shares during the quarter.

Going into the earnings report, the stock was up approx. 5.9% so far this year, which is behind the S&P 500, but well above the KBW Bank Index.

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