Wells Fargo & Co (NYSE:WFC) stock fell 4.37% (As on April 11, 11:21:33 AM UTC-4, Source: Google Finance) after the company’s profit beat expectations in the first quarter as the bank cut costs and set aside less money to cover potential loan losses, but its CEO warned on Friday that U.S. tariffs risk slowing economic growth. The U.S. bank’s shares extended losses, after it reduced expectations for its net interest income, the difference between what it earns and pays in interest. Net interest income, a key metric for banks, totaled $11.50 billion for the quarter, missing analyst expectations of $11.81 billion. The shortfall in net interest income likely contributed to the overall revenue miss. The 6% decrease in NII is driven by the impact of lower interest rates on floating rate assets, deposit mix and
pricing changes, lower loan balances, and one fewer day in the quarter, partially offset by lower market funding.
Moreover, Consumer Banking and Lending revenue decreased 2%. Consumer, Small and Business Banking was down 2% driven by higher deposit costs, reflecting the impact of customer migration to higher yielding deposit products, partially offset by higher deposit balances. Commercial Banking Revenue decreased 7%, Corporate and Investment Banking revenue increased 2% and Wealth and Investment Management Revenue increased 4%. Investment banking fees jumped 24% to $775 million from a year earlier, driven by increased activity in debt capital markets. Wells Fargo’s investment advisory fees and brokerage commissions rose 7% to $3.17 billion in the quarter, driven by higher asset-based fees.
WFC in the first quarter of FY25 has reported the adjusted earnings per share of $1.39, beating the analysts’ estimates for the adjusted earnings per share of $1.23. The company had reported the adjusted revenue of $20.15 billion in the first quarter of FY25, missing the analysts’ estimates for revenue of $20.75 billion.
Additionally, the company repurchased 44.5 million shares, or $3.5 billion, of common stock in first quarter 2025.
Wells Fargo reiterated its prior forecast that annual interest income would rise between 1% and 3%. U.S. banks entered 2025 with a bullish outlook, backed by a resilient economy, resurgent dealmaking and business-friendly pronouncements from the Trump administration. The optimism has unraveled as President Donald Trump’s fluctuating tariff announcements stoked concerns about inflation that could tip the U.S. economy into recession.