FuGuo bank Reported profit growth on Friday, despite building up loan loss reserves, as the bank benefited from higher interest rates.
Here’s how Wells Fargo performed in the first quarter compared to Refinitiv estimates:
- Earnings per share: $1.23 per GAAP share, compared with 90 cents a year ago and $1.13 expected.
- Revenue: $20.73 billion, compared with expectations for $20.08 billion.
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Shares in the bank initially rose 1 percent, but closed down 0.1 percent on Friday.
Wells Fargo’s first-quarter net income rose more than 30% from a year earlier to nearly $5 billion. The bank said its net interest income (lending income minus payments to customers) rose 45% as interest rates soared. Revenue rose 17%.
“We delivered strong results in the first quarter, including revenue growth in the fourth quarter and a year ago, and we continue to make progress in improving efficiencies,” Chief Executive Officer Charlie Scharf said in a statement.
However, in the most recent period, the bank set aside $1.2 billion for credit losses after reducing provisions by $787 million a year earlier. The provision includes a $643 million increase in potential losses related to commercial real estate, credit card and auto loans.
While interest income climbed, Wells Fargo said its noninterest income fell 13% in the quarter, driven by lower performance in its affiliated venture capital and private equity businesses and lower mortgage banking revenue.
Wells Fargo, once the No. 1 mortgage lender, has exited the real estate market. It recently laid off hundreds of mortgage bankers as part of sweeping layoffs sparked by the bank’s latest strategic shift.
“Going forward, we will continue to advance our risk and controls agenda, which is our top priority,” Scharf said. “While we have made progress, our work is not done and we remain focused on getting it done in a timely manner.”
Wells Fargo resumed its share repurchase program during the quarter, repurchasing 86.4 million common shares, or $4 billion.
The stock rose 6% in April, paring its 2023 decline to around 4%.