Wells Fargo reported better-than-expected earnings for the first quarter, with adjusted earnings per share coming in at $1.26, surpassing the expected $1.11. The company also exceeded revenue expectations, with $20.86 billion compared to the anticipated $20.20 billion. Despite an initial selloff, Wells Fargo’s stock rebounded, trading up about 1% in premarket trading on Friday morning.
The bank attributed the 8% decrease in net interest income to higher interest rates impacting funding costs and customers shifting to higher-yielding deposit products. Even with a decline in net income to $4.62 billion from $4.99 billion the previous year, excluding certain charges, Wells Fargo managed to beat analyst estimates for earnings per share. CEO Charlie Scharf highlighted the progress the company is making to improve financial performance and diversify revenue sources, noting higher revenue and successful investments made across the franchise.
In response to credit risks, Wells Fargo set aside $938 million for credit losses, with a focus on commercial real estate and auto loans. The bank also repurchased a significant number of shares in the first quarter, contributing to its stock performance, which has outperformed the S&P 500 with a year-to-date increase of more than 15%. Overall, Wells Fargo’s solid first-quarter results demonstrate the positive direction the company is moving in to enhance its financial standing.