Amid an 11% decline in net interest income, Wells Fargo reports lower earnings and revenue.

On Friday, it was reported that Wells Fargo experienced a decline in net interest income, resulting in lower earnings and revenue in the third quarter compared to the previous year.

Based on a survey of analysts by LSEG, the bank's performance exceeded Wall Street estimates.

• The earnings per share were $1.42, which did not match the estimated $1.28 cents.
• Revenue: $20.37 billion versus $20.42 billion expected

Shares of the bank rose 3% in premarket trading after the results.

The net interest income of the San Francisco-based lender, which is a crucial indicator of a bank's earnings on lending, was $11.69 billion in the latest quarter, marking an 11% decrease from the same period last year. This was lower than the FactSet estimate of $11.9 billion. Wells Fargo attributed the decline to the increase in funding costs and the migration of customers to higher yielding deposit products.

"Our earnings profile has undergone a significant transformation over the past five years, with our strategic investments in various businesses and de-emphasis on others resulting in a more diverse revenue portfolio," CEO Charles Scharf stated. "During the first nine months of the year, fee-based revenue grew by 16%, which helped to mitigate the negative impact of net interest income on our earnings."

In the third quarter, Wells' net income decreased to $5.11 billion, or $1.42 per share, from $5.77 billion, or $1.48 per share, in the same quarter the previous year. Additionally, revenue decreased to $20.37 billion from $20.86 billion in the same quarter a year ago.

The bank allocated $1.07 billion for credit loss provisions, with a slight reduction in the credit loss allowance.

In the third quarter, Wells Fargo bought back $3.5 billion of common stock, increasing its nine-month total to more than $15 billion, representing a 60% increase from the previous year.

In 2024, the S&P 500 outperformed the bank's shares, which gained only 17%.