Wells Fargo & Company (NYSE: WFC) released its first-quarter 2022 earnings results on Thursday before the opening bell. WFC shares fell 3.4% in premarket Thursday after its revenue fell short of Wall Street estimates.
Analysts Estimates
EPS:- $0.88 per share vs. $0.83 per share estimated
Revenue:- $17.59 Billion vs. $17.89 Billion estimated
Financial Highlights – FY22 Q1 vs. FY21 Q1
- Net interest income increased 5%, primarily due to lower mortgage-backed securities premium amortization, a decrease in long-term debt, and higher loan balances, partially offset by lower interest income from loans purchased from securitization pools and Paycheck Protection Program (PPP) loans.
- Noninterest income decreased 14%, driven by lower mortgage banking income primarily due to lower originations and gain on sale margins, divestitures, and lower trading activity and investment banking fees. These decreases were partially offset by improved results in our affiliated venture capital and private equity businesses, higher asset-based fees in Wealth and Investment Management on higher market valuations, and increased deposit-related fees.
- Noninterest expenses decreased by 1%. Personnel expense was down primarily due to efficiency initiatives and divestitures. Non-personnel expenses increased, reflecting higher operating losses primarily driven by customer remediation expenses predominantly for various historical matters, partially offset by divestitures and efficiency initiatives.
- Provision for credit losses in the first quarter of 2022 included a $1.1 billion decrease in the allowance for credit losses predominantly due to reduced uncertainty around the economic impact of the COVID-19 pandemic on our loan portfolios and a decrease in a net charge-off.
“Our results in the first quarter reflected the continued economic recovery and the progress we’ve made on our strategic priorities. We had broad-based loan growth, growing both consumer and commercial loans from the fourth quarter. Credit quality remained strong and our results included a $1.1 billion pre-tax reduction in the allowance for credit losses. We continued to return capital to our shareholders, including repurchasing $6 billion of common stock and increasing our quarterly common stock dividend to 25 cents per share.”
Chief Executive Officer Charlie Scharf
Earnings History
Wells Fargo & Company’s most recent earnings report was on January 14th, 2022. The financial services provider reported $1.38 EPS for the quarter, $0.29 higher than the consensus estimate of $1.09. The company’s revenue for the quarter was $20.86 billion, compared to analysts’ expectations of $18.61 billion. When compared to the same quarter last year, its quarterly revenue increased by 12.8%. Wells Fargo & Company earned $4.98 per share in the previous year ($4.98 diluted earnings per share) and has a price-to-earnings ratio of 9.8.
Annual Forecast
Wells Fargo & Company’s earnings are expected to increase by 22.50% in the coming year, from $4.00 to $4.90 per share.
Recent News
On Tuesday, Wells Fargo and Operation HOPE, Inc. announced plans to open HOPE Inside centers in 20 markets, serving up to 150 Wells Fargo branches and their surrounding communities across the United States by the end of 2023. Through financial education workshops and free one-on-one coaching, the new HOPE Inside centers will feature Operation HOPE financial coaches who will help empower community members to achieve their financial goals.
Company Profile
Wells Fargo & Company, a diversified financial services firm, offers banking, investment, mortgage, and consumer and commercial finance products and services in the United States and worldwide. Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management are its four business segments. Wells Fargo & Company was established in 1852 and is based in San Francisco, California.
