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

Core Insights - Wells Fargo & Company's (WFC) second-quarter 2025 adjusted earnings per share (EPS) of $1.54 exceeded the Zacks Consensus Estimate of $1.41, up from $1.33 in the prior-year quarter, driven by improved non-interest income and lower provisions, despite a decline in net interest income (NII) and higher expenses [1][9] Financial Performance - Total revenues reached $20.82 billion, surpassing the Zacks Consensus Estimate of $20.70 billion, and increased by 1% year over year [3] - NII was reported at $11.71 billion, a decrease of 2% year over year, influenced by lower interest rates on floating rate assets and changes in deposit mix [3] - The net interest margin contracted by 7 basis points year over year to 2.68% [4] - Non-interest income grew by 4% year over year to $9.11 billion, benefiting from the merchant services joint venture acquisition and higher asset-based fees [4] Expense Management - Non-interest expenses totaled $13.38 billion, up 1% year over year, primarily due to increased revenue-related compensation and technology expenses [5] - The efficiency ratio remained unchanged at 64% compared to the prior-year quarter [5] Loan and Deposit Trends - As of June 30, 2025, total average loans were $916.7 billion, showing a slight sequential increase, while total average deposits were $1.33 trillion, down marginally [6] Credit Quality - The provision for credit losses was $1 billion, down 19% from the prior-year quarter, with net loan charge-offs at 0.44% of average loans, a decrease from 0.57% [7][9] - Non-performing assets fell by 7.9% year over year to $7.96 billion [7] Capital Ratios - The Tier 1 common equity ratio improved to 11.1% under the Standardized Approach, up from 11% in the second quarter of 2024 [8] Profitability Metrics - Return on assets increased to 1.14%, up from 1.03% in the prior-year quarter, while return on equity rose to 12.8% from 11.5% [10] Shareholder Actions - In the reported quarter, Wells Fargo repurchased 43.9 million shares, amounting to $3 billion of common stock [11]