Wells Fargo (WFC, Financial) announced that its third-quarter profit exceeded analysts' predictions, driven by a significant rise in investment banking fees, which helped offset a decline in loan income due to lower interest rates. The San Francisco-based bank reported a 37% increase in investment banking fees, reaching $672 million, boosting its non-interest income by 12% to $8.7 billion.
The bank's net profit for the third quarter fell by 11% to $5.1 billion, or $1.42 per share, primarily due to a $447 million loss from bond holdings during its portfolio adjustments. Excluding these losses, the earnings per share would have been $1.52, surpassing the average analyst estimate of $1.28 compiled by Bloomberg.
CEO Charlie Scharf mentioned that the bank's current earnings status is markedly different from five years ago, owing to strategic investments in various businesses while scaling back or divesting others. Under Scharf's leadership, Wells Fargo has been expanding its investment banking operations, seizing emerging opportunities.
Year-to-date, Wells Fargo's stock price has risen by 17%, and it saw a 3.7% increase in pre-market trading as of New York time. However, its net interest income totaled $11.7 billion, down 11% year-over-year, falling short of the Bloomberg-surveyed analysts' average projection of $11.9 billion, indicating the bank's diminishing benefits from prolonged high interest rates.
The company maintains its forecast of an approximate 9% decline in full-year net interest income, aligning with earlier predictions.
