NII, Fee Income Growth to Support Wells Fargo's Q3 Earnings

Core Insights - Wells Fargo & Company (WFC) is expected to report third-quarter 2025 results on October 14, 2025, before market open [1] - The Zacks Consensus Estimate for third-quarter revenues is $21.19 billion, indicating a 4% year-over-year growth [2] - The earnings estimate for the upcoming quarter remains unchanged at $1.54, reflecting a 1.3% improvement from the prior-year quarter [3] Financial Performance - The first half of 2025 saw improved non-interest income and lower provisions, alongside a decline in expenses, although net interest income (NII) decreased [2] - NII is estimated at $12.03 billion for Q3 2025, representing a 2.9% increase year-over-year, supported by stable funding costs and lending activity [6][8] - Non-interest income is projected to grow by 4.5% year-over-year, driven by higher fees and stronger investment banking gains [8][11] Earnings Surprise History - WFC has a strong earnings surprise history, with an average beat of 9.53% over the last four quarters [4][5] - The company has consistently outperformed the Zacks Consensus Estimate in recent quarters, with reported earnings exceeding estimates by notable margins [5] Loan and Asset Quality - The Federal Reserve's recent interest rate cut is expected to stabilize funding and deposit costs, aiding NII growth [6] - The demand for loans, particularly in commercial and industrial sectors, remains solid, contributing to improved lending activity [6] - Total non-accrual loans are estimated at $8 billion, indicating a 2% year-over-year decline, while non-performing assets are projected at $8.2 billion, down 2.6% from the previous year [14] Investment Banking and Fees - Investment banking income is estimated at $745.8 million, reflecting a 12.3% year-over-year increase, supported by a rebound in global mergers and acquisitions [10][11] - Mortgage banking revenues are expected to decline by 13.4% year-over-year to $242.5 million due to fluctuating mortgage rates [9] Expense Management - WFC's expenses are anticipated to decline modestly in Q3 2025 due to effective expense management strategies, including branch closures and workforce reductions [12]