Finance
Wells Fargo WFC Q3 2024 earnings
Wells Fargo reported lower earnings and revenue for the third quarter than a year ago on Friday amid a sizable decline in net interest income.
Here’s what the bank did compared with Wall Street estimates, based on a survey of analysts by LSEG:
- Earnings per share: $1.42 per share, not comparable to the $1.28 cents estimate
- Revenue: $20.37 billion versus $20.42 billion expected
Shares of the bank rose 3% in premarket trading after the results.
The San Francisco-based lender posted $11.69 billion in net interest income, a key measure of what a bank makes on lending. The number marked an 11% decrease from the same quarter last year that was less than the FactSet estimate of $11.9 billion. Wells said the decline was due to higher funding costs amid customer migration to higher-yielding deposit products.
“Our earnings profile is very different than it was five years ago as we have been making strategic investments in many of our businesses and de-emphasizing or selling others,” CEO Charles Scharf said in a statement. “Our revenue sources are more diverse and fee-based revenue grew 16% during the first nine months of the year, largely offsetting net interest income headwinds.”
Wells saw net income fall to $5.11 billion, or $1.42 per share, in the third quarter, from $5.77 billion, or $1.48 per share, during the same quarter a year ago. Revenue dipped to $20.37 billion from $20.86 a year ago.
The bank set aside $1.07 billion as a provision for credit losses, which included a modest decrease in the allowance for credit losses.
Wells repurchased $3.5 billion of common stock in the third quarter, bringing the nine-month total to more than $15 billion, which marks a 60% increase from a year ago.
The bank’s shares have gained 17% in 2024, lagging the S&P 500.
Money manager John Davi is positioning for challenges tied to President-elect Donald Trump’s tariff agenda.
Davi said he worries the new administration’s policies could be “very inflationary,” so he thinks it is important to choose investments carefully.
“Small-cap industrials make more sense than large-cap industrials,” the Astoria Portfolio Advisors CEO told CNBC’s “ETF Edge” this week.
Davi, who is also the firm’s chief investment officer, expects the red sweep will help push a pro-growth, pro-domestic policy agenda forward that will benefit small caps.
It appears Wall Street agrees so far. Since the presidential election, the Russell 2000 index, which tracks small-cap stocks, is up around 4% as of Friday’s close.
Davi, whose firm has $1.9 billion in assets under management, also likes staying domestic despite the tariff risks.
“We’re overweight the U.S. I think that’s the right playbook in the next few years until the midterms,” added Davi. “We have two years of where he [Trump] can control a lot of the narrative.”
But Davi plans to stay away from fixed income due to challenges tied to the growing budget deficit.
“Be careful if you own bonds for sure,” said Davi.
Since the election, the benchmark 10-year Treasury yield is up 3% as of Friday’s close.
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