Wells Fargo Q2 Earnings Beat on Fee Income Growth, Lower Provisions

Wells Fargo & Company’s WFC second-quarter 2025 adjusted earnings per share of $1.54 surpassed the Zacks Consensus Estimate of $1.41. In the prior-year quarter, the company reported earnings per share of $1.33.

Results have benefited from an improvement in non-interest income and lower provisions. However, a decline in net interest income (NII) and higher expenses were the undermining factors.

Results excluded 6 cents per share of gain associated with the company’s acquisition of the remaining interest in its merchant services joint venture. After including this, net income (GAAP basis) was $5.49 billion, which increased 11.9% from the prior-year quarter.

Wells Fargo’s Revenues Improve, Expenses Rise

Total revenues were $20.82 billion, surpassing the Zacks Consensus Estimate of $20.70 billion. Also, the top line increased 1% from the year-ago quarter.

NII was $11.71 billion, down 2% year over year. The fall was driven by the impact of lower interest rates on floating rate assets and deposit mix changes, partially offset by lower market funding and deposit pricing.

The net interest margin (on a taxable-equivalent basis) contracted 7 basis points year over year to 2.68%.

Non-interest income grew 4% year over year to $9.11 billion. The increase included the gain associated with the merchant services joint venture acquisition, an increase in asset-based fees in Wealth and Investment Management on higher market valuations, and higher investment banking fees, partially offset by lower net gains from trading in the company’s Markets business.

Non-interest expenses of $13.38 billion increased 1% year over year. This was led by higher revenue-related compensation expenses predominantly in Wealth and Investment Management, and higher technology and equipment expenses, partially offset by lower operating losses, reduced salaries expenses reflecting the impacts of efficiency initiatives, and a decrease in Federal Deposit Insurance Corporation assessment expenses.

Wells Fargo's efficiency ratio of 64% was unchanged compared with the year-ago quarter.

WFC’s Loan Balance Improves, Deposits Decline

As of June 30, 2025, total average loans were $916.7 billion, which increased marginally on a sequential basis. Total average deposits were $1.33 trillion, down marginally on a sequential basis.

Wells Fargo’s Credit Quality Improves

The provision for credit losses was $1 billion, down 19% from the prior-year quarter.

Net loan charge-offs were 0.44% of average loans in the reported quarter, down from 0.57% in the year-ago quarter. Non-performing assets fell 7.9% year over year to $7.96 billion.

WFC’s Capital Ratios Improve

As of June 30, 2025, the Tier 1 common equity ratio was 11.1% under the Standardized Approach, up from 11% in the second quarter of 2024.

Wells Fargo’s Profitability Ratios Improve

Return on assets was 1.14%, up from the prior-year quarter’s 1.03%. Return on equity of 12.8% increased from 11.5% a year ago.

WFC’s Share Repurchase Update

In the reported quarter, Wells Fargo repurchased 43.9 million shares, or $3 billion of common stock.

Our View on Wells Fargo

WFC’s fee income growth is likely to support its top line in the upcoming period. Lower provisions and improving loan balances are other positives. However, a dip in NII is concerning.

Wells Fargo & Company Price, Consensus and EPS Surprise

 

Wells Fargo & Company price-consensus-eps-surprise-chart | Wells Fargo & Company Quote

Currently, Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Dates of Other Major Banks

Truist Financial Corporation TFC is slated to report quarterly results on July 18. The Zacks Consensus Estimate for Truist’s second-quarter earnings has been revised downward over the past seven days. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

BankUnited, Inc. BKU is scheduled to report quarterly results on July 23. The Zacks Consensus Estimate for BankUnited’s second-quarter earnings has been unchanged over the past seven days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research