Wells Fargo & Co (WFC, Financial) released its third-quarter earnings report on October 13, 2023, revealing a solid performance despite economic challenges. The company reported a net income of $5.8 billion, or $1.48 per diluted share, a significant increase from $3.6 billion, or $0.86 per diluted share, in the same period last year.
Financial Performance Highlights
Wells Fargo's total revenue for the quarter was $20.9 billion, up from $19.6 billion in Q3 2022. This growth was driven by higher net interest income and noninterest income, benefiting from higher rates and investments in the company's businesses. Noninterest expense decreased to $13.1 billion from $14.3 billion in the same period last year, primarily due to lower operating losses.
The company's balance sheet data showed average loans of $943.2 billion and average deposits of $1,340.3 billion. The Common Equity Tier 1 (CET1) ratio, a key measure of financial strength, was 11.0%, up from 10.3% in Q3 2022.
Operating Segments and Other Highlights
Wells Fargo's operating segments showed mixed performance. The Consumer Banking and Lending segment saw average loans of $335.5 billion, while the Commercial Banking segment reported average loans of $224.4 billion. The Corporate and Investment Banking segment had average loans of $291.7 billion, and the Wealth and Investment Management segment reported average loans of $82.2 billion.
During the quarter, Wells Fargo repurchased 33.8 million shares, or $1.5 billion, of common stock. The company also reported $349 million, or $0.09 per share, of discrete tax benefits related to the resolution of prior period tax matters.
CEO's Commentary
Chief Executive Officer Charlie Scharf commented, "Our third quarter results were solid with net income of $5.8 billion and revenue of $20.9 billion. Our revenue growth from a year ago included both higher net interest income and noninterest income as we benefited from higher rates and the investments we are making in our businesses. Expenses declined from a year ago due to lower operating losses. While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly."
Outlook
Despite the economic headwinds, Wells Fargo remains committed to its business strategy and continues to make progress on its risk and control work. The company's strong capital position allows it to return excess capital to shareholders, with a 17% increase in its common stock dividend in the third quarter and a CET1 ratio of 11.0%, 210 basis points above its new regulatory minimum plus buffers starting in the fourth quarter.
