Wells Fargo profit surges 57% on higher interest income from customers
Wells Fargo Bank branch is seen in New York City, U.S., March 17, 2020. REUTERS/Jeenah Moon
WFC
+1.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
(Reuters) -Wells Fargo’s profit surged 57% in the second quarter as it earned more in interest payments from customers and raised its forecast for 2023 net interest income, sending its shares up nearly 4% higher in premarket trading.
Its net interest income climbed 29% to $13.16 billion as banks raised their borrowing costs following a series of rate hikes by the Federal Reserve to tame inflation.
The fourth largest U.S. lender said 2023 net interest income (NII) is expected to be about 14% higher than last year’s $45 billion. It had earlier forecast a 10% rise in NII.
Fed Chair Jerome Powell signaled late last month that the central bank will likely resume its rate-hike campaign after leaving the policy rate unchanged in June.
“The U.S. economy continues to perform better than many had expected, and although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters.,” said CEO Charlie Scharf.
Wells Fargo (NYSE:WFC) set aside $1.71 billion in provisions for credit losses in the second quarter, compared with $580 million a year ago.
U.S. lenders have been stockpiling funds to prepare for consumers defaulting on loan payments as an economic slowdown looms.
Worries around the health of the economy accelerated earlier this year, as the collapse of three regional lenders fueled industry turmoil and prompted calls for tougher regulation.
Commercial real estate has also emerged as a big worry for the banking industry. The concerns center around office loans, as financing costs rise for many buildings that have been largely vacated by employees who opt to work remotely.
Net income rose to $4.94 billion, or $1.25 per share, for the three months ended June 30, compared with $3.14 billion, or $0.75 per share, a year earlier, the lender said on Friday.
