Wells Fargo & Co. (NYSE: WFC) reported its financial results for the second quarter on Wednesday that beat Wall Street estimates. The bank valued releases from its loan loss reserves at $1.6 billion in the recent quarter as the U.S. economy continued to claw its way out of the pandemic. Wells Fargo shares were unbothered in premarket trading.
Financial performance
Wells Fargo said its net income in the second quarter printed at $6.04 billion that translates to $1.38 per share. In the comparable quarter of last year, its net income was capped at $3.846 billion or $1.01 per share.
The American multinational generated $20.270 billion of revenue in Q2 versus the year-ago figure of $18.286 billion. According to FactSet, experts had forecast the investment bank to post $17.757 billion of revenue and 98 cents of EPS.
Other prominent figures
Other notable figures in Wells Fargo’s earnings report on Wednesday include an 11% decline in net interest income that misses estimates. Non-interest income jumped 37% in the second quarter to top the FactSet consensus.
The San Francisco-based financial services firm’s consumer banking division was also upbeat in Q2 with a 14% annualised growth in credit card lending and a 40% increase in home lending. Revenue from corporate and investment bank, however, tanked 18% in the recent quarter as lower trading activity resulted in a 45% slide in markets revenue. This was partially offset by a 10% year over year increase in wealth management revenue.
Dividend and share repurchase
Wells Fargo passed the U.S. Federal Reserve’s stress tests last month and is now likely to double its Q3 dividend from 10 cents per share to 20 cents per share upon approval from the board. Through the second quarter of fiscal 2022 (next year), it intends to buy back roughly $18 billion of its own shares.
The earnings report comes a week after Wells Fargo said it was closing all existing personal lines of credit.
CEO Charlie Scharf’s remarks
Commenting on the earnings report, CEO Charlie Scharf said:
“Wells Fargo benefited from the continued economic recovery, strong markets that helped drive gains in our affiliated venture capital businesses, and our progress on improving efficiency, but the headwinds of low-interest rates and tepid loan demand remained.”
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