Wells Fargo’s net income for the first quarter of 2024 demonstrated the negative dynamic of decline.
The mentioned financial institution released data on its earnings for the period from January 1 to March 21 of the current year on Friday, April 12.
Wells Fargo’s net income for the first quarter was fixed at $4.62 billion. This indicator showed a decrease of 7.4% compared to the result for the same period in 2023. It is worth noting that the consensus forecast of analysts provided that the net income of a financial institution for the first quarter would amount to $4.04 billion.
The bank’s revenue for the first three months of 2024 was fixed at $20.86 billion. This indicator increased by 0.1% year-on-year. The consensus forecast of experts provided that the revenue of a financial institution for the first quarter would amount to $20.17 billion.
The bank’s diluted earnings per share for the first quarter amounted to $1.2. This indicator grew by 2.4% year-on-year. As part of their consensus forecast, analysts expected the mentioned figure to be $1.03 for the first quarter.
The net interest income of a financial institution, which is the difference between what a lender earns on loans and pays out for deposits, amounted to $12.23 billion in the first three months of 2024. This indicator fell by 8% year-on-year. The final net interest income does not differ significantly from the preliminary expectations of analysts.
The interest income of the financial institution shrank due to the increase in the amount of payments for holding deposits of customers seeking to higher yields. At the same time, the volume of loans decreased.
Wells Fargo Chief Financial Officer Michael Santomassimo says that in the current conditions, it is difficult to predict net interest income. Also in this context, the issue of uncertainty regarding changes in customer behavior was mentioned.
On Friday, the financial institution once again announced that its net interest income could decline in the range of 7% to 9% in 2024.
Stephen Biggar, banking analyst at Argus Research, says there were expectations for Wells Fargo’s more positive net interest income indicator.
The profits of banks in the United States will likely be affected by the changed forecasts regarding the lowering of borrowing costs by the Federal Reserve. In March, consumer prices in the US showed a stronger increase compared to preliminary expectations. Against this background, forecasts for cutting interest rates have been revised. Currently, financial markets expect the Fed to start lowering borrowing costs in September. The previous version of the forecast provided that the first decision on monetary policy easing would be made in June.
High-interest rates have become a factor in increasing the earnings of financial institutions, as these organizations began to bring in more money from interest payments. However, in 2024, the benefits waned. High-interest rates have led to an increase in the cost of banking services. Against this background, lenders began to pay more to keep customer deposits.
Wells Fargo is one of the oldest banks in the United States. This financial institution was founded in 1852. The bank is inextricably linked with the history of the country’s financial system, which contains many facts about US money. Wells Fargo operates in 35 countries and serves more than 70 million customers worldwide.
