Wells Fargo profit beats estimates as shares swing on interest outlook
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Wells Fargo profit beats estimates as shares swing on interest outlook
(Reuters) - Wells Fargo's (WFC.N), opens new tab profit fell 7% in the first quarter as it paid more to hold customer deposits while demand from borrowers declined, the bank reported on Friday.
Still, adjusted profit of $1.26 per share came ahead of analysts' estimates of $1.11, according to LSEG data, helped by revenue in corporate and investment banking, which gained almost 5%.
Shares pared early losses, falling 0.1% in afternoon trading.
The bank's net interest income (NII) -- the difference between what it earns on loans and pays out for deposits -- fell 8% to $12.23 billion.
"It's certainly challenging these days to forecast NII, given all of the volatility that we've seen across a lot of the different data points, as well as some of the uncertainty that's out there relative to how our clients are going to behave," finance chief Michael Santomassimo told reporters on a call.
The bank reiterated on Friday that its NII could fall 7% to 9% this year.
"We figured the NII guide might get a boost upward, but not today," Piper Sandler analyst Scott Siefers wrote in a note.
Bank of America analyst Ebrahim Poonawala reiterated his buy rating on the stock, saying the results and outlook supported a "constructive view."
The shifting U.S. interest rate outlook is an important factor that will drive banks' future profits. U.S. consumer prices increased more than expected in March, leading financial markets to anticipate that the Federal Reserve would delay cutting rates until September.
