Wells Fargo, the fourth largest US lender, has raised its annual forecast for net interest income (NII) after reporting a surge of 57% in profit for the second quarter.
NII climbed 29% to reach $13.16 billion, benefiting from higher interest rates as Wells Fargo and other banks increased their borrowing costs following a series of rate hikes by the Federal Reserve to combat inflation.
Wells Fargo now expects NII to be approximately 14% higher than last year's $45 billion, up from its previous forecast of a 10% rise. The bank's reported profit for the three months ending June 30 was $1.25 per share, surpassing analysts' average estimate of $1.16 per share. However, provisions for credit losses in the second quarter increased to $1.71 billion, compared to $580 million in the same period last year.
In a statement accompanying the results, CEO Charlie Scharf expressed optimism about the US economy.
"The US economy continues to perform better than many had expected,” Scharf told investors. “Although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters."
Shares of Wells Fargo raced around 3.6% higher in premarket trading Friday, echoing similar gains from JP Morgan and Citigroup, both of whom reported positive results.
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