Net interest income falls short of estimates, causing Wells Fargo's shares to tumble.

• In the second quarter, Wells Fargo's net interest income decreased by 9% year-over-year to $11.92 billion, which is a crucial indicator of a bank's earnings from lending activities.
• According to FactSet, the bank reported lower-than-expected earnings of $12.12 billion, which was attributed to the impact of higher interest rates on funding costs.
• The bank's second-quarter earnings and revenue exceeded Wall Street expectations.

Despite exceeding Wall Street expectations in second-quarter earnings and revenue, on Friday reported a 9% decline in net interest income on Friday.

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

• Earnings per share: $1.33 versus $1.29 cents expected
• Revenue: $20.69 billion versus $20.29 billion expected

The San Francisco-based bank's net interest income decreased by 9% year-over-year to $11.92 billion, below the expected $12.12 billion, due to the impact of higher interest rates on funding costs.

Shares of Wells Fargo dropped more than 5% in premarket trading.

""Our fee-based revenue continued to grow, offsetting an anticipated decline in net interest income, as a result of the investments we have been making, which allowed us to capitalize on market activity in the quarter with exceptional performance in investment advisory, trading, and investment banking fees," CEO Charlie Scharf stated."

In the second quarter, Wells Fargo's net income decreased to $4.91 billion from $4.94 billion in the same quarter the previous year. The bank also set aside $1.24 billion as provision for credit losses, which included a slight reduction in the allowance for credit losses.

During the first half of 2024, the bank repurchased over $12 billion of common stock and anticipates increasing its third-quarter dividend by 14%.

Despite the S&P 500's performance, the stock has surpassed its 22% increase this year.