Wells Fargo beats profit estimates, NII and revenue fall short — SkimNews
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- Wells Fargo reported Q3 profit of $1.87/share, beating the $1.85 analyst estimate (LSEG), while NII of $12.52 billion (+5% YoY) and revenue of $21.87 billion both fell short of consensus ($12.63B and $22.31B respectively).
- Shares slipped about 1.3% on the print after the NII and revenue misses, even as the EPS beat landed.
- Executives attributed the NII shortfall to lower interest rates on floating-rate assets, higher deposit costs, and a decline in non-interest-bearing deposits, with CEO Charlie Scharf calling inflation and higher rates headwinds for both consumers and commercial clients.
- CFO Mike Santomassimo projected Q4 NII growth on stronger loan and deposit trends and higher rates, but warned markets-business gains could be partially offset by funding-cost pressure.
- Markets revenue (fixed income, currencies, commodities) fell 1% YoY and 17% sequentially, while investment banking fees of $611 million rose 10% YoY but slipped 3% quarter-over-quarter, in line with a broader Wall Street pullback.
- Loan growth stayed the bright spot, with average consumer loan balances up 4% to roughly $342 billion and commercial banking loans climbing 10% to $240.5 billion, and Santomassimo said no borrower or depositor behavior shift suggests an underlying trend break.
- Big-bank Q3 kickoff was mixed: JPMorgan Chase missed quarterly profit estimates for the first time in nearly three years, and the broader sector was roiled by the conflict in Iran, higher oil prices, and a global bond-market selloff.
- Cross-coverage note: The only other listed headline (CNBC) leads with AI dominating analyst calls at JPMorgan, Goldman and Wells Fargo — an angle entirely absent from this earnings write-up, which sticks to the rate, deposit, and trading story.
Why it matters: Wells Fargo's beat-on-profit, miss-on-NII split is the cleanest read yet of how a steeper rate curve is squeezing deposit-funded lenders: NII growth slowed to 5% despite a 10% surge in commercial loans, and the markets desk's 17% sequential revenue drop shows the trading tailwind from late 2024 fading, leaving investors to weigh resilient loan demand against a softer top line.
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