Market brief
Wells Fargo Q3 Revenue Misses as Headcount Cut 8% Trims Costs
The bank beat on earnings per share but fell short on revenue and net interest income, while a smaller workforce pushed quarterly expenses down 1%.
Key points
- Wells Fargo's Q3 revenue of $21.87B missed the $22.31B estimate, though EPS of $1.87 beat expectations.
- Non-interest expenses fell 1% from the prior quarter, helped by an 8% reduction in headcount and lower severance costs.
- The bank guided to Q4 net interest income of about $13B and maintained its full-year target of roughly $50B.
Wells Fargo reported third-quarter revenue of $21.87 billion, below the $22.31 billion analysts expected, even as earnings per share of $1.87 topped estimates, according to the bank's quarterly results. Net interest income of $12.52 billion also came in under the $12.59 billion consensus, while the net interest margin of 2.43% edged past the 2.41% estimate.
The quarter's expense line gave the clearest read on management's cost work: non-interest expenses totaled $13.74 billion, below the $13.87 billion estimate and down 1% from the prior quarter. Wells Fargo said the decline reflects an 8% cut in headcount and lower severance expense. The efficiency ratio, which measures how much it costs to generate each dollar of revenue, came in at 63% against an expected 62.2%.
Credit quality was firmer than analysts modeled. The provision for credit losses was $1.03 billion versus the $1.14 billion estimate, net charge-offs were $983 million against an expected $1.05 billion, and non-performing assets stood at $7.36 billion, below the $8.04 billion consensus. Those figures indicate loan losses ran lighter than expected in the quarter, though the provision is still a charge against earnings set aside for loans the bank expects may not be repaid in full.
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