Insightful Word
  • Investing
  • Stock
  • Economy
  • Politics
  • Investing
  • Stock
  • Economy
  • Politics
No Result
View All Result
Insightful Word
No Result
View All Result
Home Economy

Wells Fargo profit beats forecasts as provisions shrink, shares rise

admin by admin
October 11, 2024
in Economy
0
Wells Fargo profit beats forecasts as provisions shrink, shares rise
0
SHARES
6
VIEWS
Share on FacebookShare on Twitter

By Noor Zainab Hussain, Manya Saini and Saeed Azhar

(Reuters) – Wells Fargo’s profit beat analysts’ expectations in the third quarter, helped by resilience in wealth management and lower provisions for credit losses, which sent its shares up 3.5% before the bell on Friday.

The bank, however, forecast a bigger-than-expected 9% drop in 2024 interest income on Friday following the U.S. Federal Reserve’s jumbo-sized rate cut in September.

This compares with Wall Street expectations of an 8.4% decline.

The fourth-largest U.S. lender reported third-quarter earnings per share of $1.52, compared with expectations of $1.28, according to data from LSEG.

Wells Fargo’s net interest income — or the difference between what it earns on loans and pays out for deposits — dropped 11% to $11.69 billion in the quarter.

Analysts on average had predicted $11.87 billion, according to estimates compiled by LSEG.

“Our risk and control work remains our top priority,” said Chief Executive Officer Charlie Scharf. “Credit performance was consistent with our expectations, commercial loan demand remained tepid, we saw growth in deposit balances in all of our businesses.”

Banks’ interest income, which had benefited in recent years as the Fed raised interest rates, is expected to keep declining for the rest of 2024.

The U.S. central bank last month lowered its benchmark policy rate for the first time since 2020, cutting it by 50 basis points. Policymakers have projected another half of a percentage point reduction by the end of this year.

The rate cut was followed by top banks lowering prime lending rates, which will likely shrink their interest income. Banks have also tightened lending standards this year.

Wells Fargo’s revenue declined 2% to $20.37 billion in the third quarter.

Average loans came in at $910.3 billion versus $943.2 billion a year earlier.

Loan demand has been subdued as higher interest rates deterred commercial and consumer borrowers. At the same time, banks have had to compete for deposits by paying clients more.

Wells Fargo set aside $1.07 billion in provisions to cover souring loans. That compared with $1.20 billion a year earlier.

JPMorgan Chase (NYSE:JPM)’s profit dropped in the third quarter as a bigger provision for potential loan defaults offset gains from investment banking, the bank said on Friday.

Executives at top lenders have said that U.S. consumers remain resilient despite pockets of stress and higher loan delinquencies among lower-income households.

Wells Fargo is also reportedly doubling down on efforts to lift a $1.95 trillion asset cap imposed by the Federal Reserve that prevents the bank from growing until regulators deem it has fixed problems dating back to the 2016 fake accounts scandal.

In September, a U.S. banking regulator found its safeguards against money laundering and other illegal transactions were too lax and restricted its ability to expand in risky businesses.

The asset cap curtails Wells Fargo’s ability to take in more deposits and expand its trading business, two potential growth areas for the bank, CEO Scharf said earlier this year.

It still has eight regulatory punishments, called consent orders, that it is working to address.

This post appeared first on investing.com

Previous Post

EV firm Polestar expects positive fourth-quarter gross margin despite slow demand

Next Post

Bank of NY Mellon earnings beat by $0.14, revenue topped estimates

admin

admin

Next Post
Bank of NY Mellon earnings beat by $0.14, revenue topped estimates

Bank of NY Mellon earnings beat by $0.14, revenue topped estimates

Trending News

ECB to continue cutting rates in December, Stournaras says

ECB to continue cutting rates in December, Stournaras says

December 2, 2024
Satellogic shares surge on contract expansion and share sale

Satellogic shares surge on contract expansion and share sale

December 9, 2024
Top Canadian banks quit global climate coalition ahead of Trump inauguration

Top Canadian banks quit global climate coalition ahead of Trump inauguration

January 19, 2025
Subscribe to Insightful Word


    Recent News

    S&P 500 nears record high despite headwinds: key drivers behind the surprise rally

    S&P 500 nears record high despite headwinds: key drivers behind the surprise rally

    June 26, 2025
    Top Nasdaq 100 Index stocks of 2025 as it breaks new all-time high

    Top Nasdaq 100 Index stocks of 2025 as it breaks new all-time high

    June 26, 2025
    S&P 500 nears record high as Wall Street opens higher amid tech momentum

    S&P 500 nears record high as Wall Street opens higher amid tech momentum

    June 26, 2025
    Galaxy Digital launches $175 million fund to back DeFi and stablecoin startups

    Galaxy Digital launches $175 million fund to back DeFi and stablecoin startups

    June 26, 2025

    Recent News

    S&P 500 nears record high despite headwinds: key drivers behind the surprise rally

    S&P 500 nears record high despite headwinds: key drivers behind the surprise rally

    June 26, 2025
    Top Nasdaq 100 Index stocks of 2025 as it breaks new all-time high

    Top Nasdaq 100 Index stocks of 2025 as it breaks new all-time high

    June 26, 2025

    Latest News

    • S&P 500 nears record high despite headwinds: key drivers behind the surprise rally
    • Top Nasdaq 100 Index stocks of 2025 as it breaks new all-time high
    • S&P 500 nears record high as Wall Street opens higher amid tech momentum

    About Insightful Word

    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools
    • Contacts
    • Cookie Notice
    • Privacy Policy
    • Terms of Service
    • Trading tools

    Copyright © 2025 Insightfulword.com. All Rights Reserved.

    No Result
    View All Result
    • Investing
    • Stock
    • Economy
    • Politics

    Copyright © 2025 Insightfulword.com. All Rights Reserved.