Shares of Wells Fargo & Co. (WFC) surged 3.3% in premarket trading Friday, reaching a four-month high. The San Francisco-based bank reported better-than-expected second-quarter profits and revenues, attributing the positive results to higher interest rates and loan balances.
Impressive Financial Performance
Net income soared to $4.94 billion, or $1.25 per share, surpassing the FactSet consensus of $1.16 per share. This marked a significant increase from $3.14 billion, or 75 cents per share, in the same period last year. The impressive growth in total revenue also exceeded expectations, climbing 20.5% to $20.53 billion, surpassing the FactSet consensus of $20.11 billion.
Boosted by Net Interest Income
Wells Fargo’s net interest income increased by 29.1% to $13.16 billion, beating expectations of $12.82 billion. The bank credited higher interest rates and loan balances for this substantial improvement. However, the provision for credit losses nearly tripled to $1.71 billion from $580 million.
Sustainable Growth Indicators
Although average deposits experienced a slight decline of 6.8% to $1.35 billion, average loans showed a healthy increase of 2.1% to reach $945.9 million.
Market Performance
Over the past three months leading up to Thursday, Wells Fargo’s stock has demonstrated a commendable rally of 10.3%. In comparison, the S&P 500 index (SPX) has gained 9.0%.
