- Wells Fargo 1Q revenue surpassed estimates with $20.86 billion against an estimate of $20.21 billion.
- Commercial banking revenue stood at $3.15 billion, slightly below the $3.35 billion estimate.
- Corporate and investment banking revenue came in at $4.98 billion, beating the estimate of $4.85 billion.
- Wells Fargo’s Wealth & Investment Management total revenue was $3.74 billion, slightly above the $3.73 billion estimate.
- The company reported net interest income of $12.23 billion, falling short of the $12.32 billion estimated.
- Earnings per share for the quarter were $1.20.
- They reported total average loans of $928.1 billion, less than the anticipated $933.49 billion.
- An efficiency ratio of 69% was recorded, higher than the estimated 68%.
- Mortgage banking non-interest income stood at $230 million, significantly higher than the expected $185.8 million.
- Net interest margin was 2.81%, slightly below the estimated 2.84%.
- Total average deposits were reported at $1.34 trillion, marginally below the estimated $1.35 trillion.
- Wells Fargo’s return on assets was 0.97%, with return on equity standing at 10.5%, above the estimate of 9.1%.
- Common equity Tier 1 ratio was 11.2%, slightly above the estimated 11.1%.
- Non-interest expenses were $14.34 billion, higher than the $13.91 billion estimate.
- The bank had a return on tangible common equity of 12.3%, a positive surprise against the 10.9% estimate.
- Consumer banking and lending total revenue were $9.09 billion, below the $9.41 billion estimate.
- Provision for credit losses was reported at $938 million, lower than the estimated $1.27 billion.
- Personnel expenses amounted to $9.49 billion, above the $9.19 billion estimate.
- Companies’ analysts suggested 13 buys, 17 holds, and 0 sells for the company’s stock.
Wells Fargo & Co on Smartkarma
Analyst coverage of Wells Fargo & Co on Smartkarma reveals concerning trends according to Daniel Tabbush. Tabbush’s research highlights a bearish sentiment, emphasizing the significant challenges facing Wells Fargo. The report titled “WFC – Net Interest Income +8% YoY Vs +29% | CRE Non-Accruals +54% QoQ, +4.5x YoY | NIM -17bps in 6M” points out that Wells Fargo’s net interest income growth is slowing rapidly, with a potential risk of turning negative in Q4 2023. The pressure on net interest margin (NIM) is intensifying, while commercial real estate (CRE) non-accrual loans are surging, indicating a difficult road ahead for the company.
Tabbush’s analysis further suggests that Wells Fargo’s recent profit performance is largely driven by reduced credit costs, as various loan segments such as mortgage, auto, and CRE exhibit declines both quarterly and annually. Additionally, the data indicates a noticeable drop in total gross loans, reflecting a challenging lending environment for Wells Fargo. With deposit costs on the rise and concerning trends in non-accrual loans, investors may need to closely monitor Wells Fargo’s financial health and strategic decisions moving forward.
A look at Wells Fargo & Co Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 4 | |
| Dividend | 3 | |
| Growth | 5 | |
| Resilience | 3 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 4.0 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Wells Fargo & Company, a diversified financial services giant, is positioned for a promising long-term outlook based on its Smartkarma Smart Scores. With a strong score in Growth and Momentum, the company is set to expand and capture market opportunities efficiently. This indicates a positive trajectory for Wells Fargo’s future performance and strategic positioning in the industry.
Furthermore, Wells Fargo’s high Value score underscores its solid fundamentals and potential for long-term value creation. Combined with respectable scores in Dividend and Resilience, the company exhibits stability and a commitment to rewarding its investors. Overall, Wells Fargo & Company’s Smart Scores profile paints a favorable picture for investors eyeing a reliable and growth-oriented player in the financial services sector.
Summary: Wells Fargo & Company, a diverse financial services entity, demonstrates a strong outlook with notable Smart Scores across various key factors such as Growth, Momentum, and Value. With a broad array of services and a solid market presence, Wells Fargo is poised to capitalize on emerging opportunities both domestically and internationally.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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