US bank Wells Fargo beats analyst consensus on almost all levels with its 3Q 2023 results and has once again raised its outlook for the full fiscal year 2023.

3Q results

Among the segments, consumer banking earned Wells Fargo the most, at USD 9.58 billion. Corporate and investment banking earned $4.92 billion. Commercial banking and wealth management earned USD 3.41bn and USD 3.7bn, respectively.

The Bank of San Francisco recorded 8% year-over-year growth in net interest income to $13.1 billion. This beat the average analyst estimate of USD 12.8 billion compiled by Bloomberg. Net interest margin was 3.03%, 10 basis points above expectations.

The loan portfolio averaged USD 943.2 billion, with average deposits down 5% year-on-year to USD 1.34 billion. USD 1.5 billion as expected.

Evolution of average loans (left) and deposits (right), source: Wells Fargo

The cost of risk (i.e. the cost item associated with loans that are delinquent or expected to be delinquent) was USD 1.2 billion.

Return on equity (ROE) of 13.3% beat analysts' expectations of 10.6%. The capital adequacy ratio (Tier 1) was 11% against expectations of 10.7%.

Non-interest expenses increased by EUR 126 million quarter-on-quarter. Non-interest income increased by USD 126 million to USD 13.11 billion.

Increase in outlook

Wells Fargo expects net interest income to be 16% higher in fiscal 2023 than the 2022 result, equivalent to a level of USD 45 billion. The outlook was thus raised by an additional two percentage points from the last outlook increase released with last quarter's results.

Non-interest expenses are expected to be USD 51.5bn, implying an expected 4Q cost of USD 12.6bn.

Wells Fargo shares

Shares of Wells Fargo & Co (WFC) are up 2.42% to $40.7 in pre-market trading after earnings.

$59.90 $0.46 +0.78%

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