Wells Fargo Q3 EPS Beats at $1.87 but Revenue Misses; Shares Dip Premarket

WFC beat third-quarter profit estimates but missed on revenue. The bank reported diluted EPS of $1.87, up 13% from $1.66 a year earlier, and net income of $5.95 billion, up 6%. Consensus for EPS was $1.85 per Zacks (via AP) and LSEG, with other providers at $1.84 to $1.86, so the beat holds on every provider. Revenue was $21.87 billion, up 2%, but trailed estimates of $22.15 billion from Zacks and roughly $22.3 billion from LSEG per CNBC estimates.

The details were mixed. Net interest income was $12.52 billion, up 5% from a year ago but shy of the $12.6 billion consensus in Bloomberg's report. Provision for credit losses was $1,029 million, up 51% from $681 million, although the provision and net charge-offs of $983 million were both better than the average estimates in a Bloomberg survey. In the corporate and investment bank, investment banking revenue rose 10% to $611 million, with M&A revenue up 30%, while Markets revenue slipped 1% even as equities revenue grew 21%.

Management kept its full-year net interest income forecast of roughly $50 billion, according to Bloomberg, and Tradingpedia reported an expectation of approximately $13 billion in net interest income for the fourth quarter. Return on tangible common equity rose to 16.3%, still below the 17% to 18% medium-term target. The bank repurchased 28.6 million shares, about $2.5 billion, in the quarter. CEO Charlie Scharf said results reflected "broad-based growth, higher earnings, and stronger returns."

Shares fell in early trading, down 1.1% in premarket per Yahoo Finance, 1.5% to $82.05 per Bloomberg, and 1.6% per Tradingpedia, as the revenue shortfall outweighed the EPS beat. Investors may watch whether net interest income reaches the roughly $13 billion fourth-quarter expectation, how credit provisions trend after the 51% yearly increase, and whether investment banking strength continues.