Wells Fargo & Co (NYSE:WFC, XETRA:NWT) reported second-quarter profit that topped Wall Street expectations on Tuesday, as strong fee income and improved credit performance offset pressure on the bank's net interest margin.
The bank posted earnings of $2 per share, well above analysts' estimate of $1.72, on revenue of $22.62 billion, compared with expectations of $21.87 billion. Net income rose to $6.41 billion from $5.49 billion a year earlier.
Net interest income came in at $12.32 billion, in line with estimates, while net loan charge-offs of $876 million came in better than the $1.1 billion analysts had forecast, marking a 10 basis point improvement from a year ago.
Average loans grew 12% year-over-year to $1.03 trillion, while average deposits rose 10% to $1.47 trillion.
"The biggest positive from the quarter was the combination of strong fee income and better credit performance, which drove core PPNR above our estimate and helped offset NIM pressure," analysts at Jefferies noted.
Corporate and investment banking revenue climbed 16% year-over-year to $5.43 billion, while wealth and investment management revenue rose 13% to $3.89 billion. Consumer banking and lending revenue increased 6% to $10.29 billion, and commercial banking revenue also grew 6% to $3.12 billion.
Wells Fargo repurchased 37.4 million shares for $3 billion during the quarter and said it expects to raise its third-quarter common dividend by 11% to $0.50 per share.
The bank reiterated its full-year guidance, projecting net interest income of roughly $50 billion and noninterest expense of about $55.7 billion.
"We view the quarter as positive and expect investors to focus primarily on whether WFC can sustain strong NII growth despite NIM pressure, particularly now that management has reaffirmed its 2026 NII outlook," Jefferies said.