Wells Fargo & Co (NYSE:WFC) stock fell 7.01% (As on July 12, 11:21:26 AM UTC-4, Source: Google Finance) after the company’s second-quarter profit declined and the lender missed analysts’ estimates for interest income on higher deposit costs amid intense competition for customers’ money. Net interest income (NII) slid 9% to $11.92 billion. Analysts on average had expected $12.12 billion, according to LSEG data. Net income fell to $4.91 billion for the three months ended June 30 versus $4.94 billion, a year earlier. The commercial banking segment reported revenue of $3.12 billion, just shy of the $3.15 billion forecast.

WFC in the second quarter of FY 24 has reported the adjusted earnings per share of $1.33, beating the analysts’ estimates for the adjusted earnings per share of $1.29, according to LSEG estimates. The company had reported the adjusted revenue growth of 1 percent to $20.7 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $20.3 billion. Consumer Banking and Lending Revenue decreased 5%. Consumer, Small and Business Banking was down 5% driven by lower deposit balances and the impact of customer migration to higher yielding deposit products including promotional savings and time deposit accounts. Commercial Banking Revenue decreased 7%. Middle Market Banking was down 2% driven by lower net interest income. Banking was up 3% driven by higher investment banking revenue on increased activity across all products, partially offset by lower treasury management results driven by the impact of higher interest rates on deposit costs

NII could fall 7% to 9% this year. NII could hit a trough by the end of the year. Higher net interest income was part of the investor “bull thesis” coming into the quarter, so the management’s new guidance of NII is likely to pressure the stock, said Citigroup analyst Keith Horowitz in a note. The lender also said it expects 2024 noninterest expense to be about $54 billion, up from its prior forecast of about $52.6 billion.

The Company’s stress capital buffer (SCB) for October 1, 2024, through September 30, 2025, is expected to be 3.8%; the Federal Reserve Board has indicated that it will publish the final SCB by August 31, 2024.  Third quarter 2024 common stock dividend is expected to be $0.40 per share, up from $0.35 per share, subject to approval by the Company’s Board of Directors at its regularly scheduled meeting in July.