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How Wells Fargo Is Sitting after Its 2Q17 Results

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How Wells Fargo Is Sitting after Its 2Q17 Results PART 1 OF 10

Wells Fargo Beat Estimates on These Wins in 2Q17

WFC beats estimates

Wells Fargo (WFC) posted EPS (earnings per share) of $1.07 in 2Q17—higher than the estimate of $1.01. The bank posted net income of $5.8 billion, which represented a growth of 5% on a YoY (year-over-year) basis, helped by credit expansion and higher net interest margins.

WFC posted net revenues of $22.2 billion, including interest income of $12.5 billion, which was 6% higher YoY. Major banking (XLF) peers JPMorgan Chase (JPM) and Citigroup (C) also beat estimates on higher interest income in 2Q17. Bank of America (BAC) has yet to report its results.

Wells Fargo Beat Estimates on These Wins in 2Q17

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Management comments

In its press release on July 14, 2017, Wells Fargo CEO (chief executive officer) Tim Sloan stated: “Second quarter 2017 results demonstrated the benefit of our diversified business model as we continued to generate strong financial results, invest for the future, and adhere to our prudent risk discipline.”

Sloan added: “We remain committed to reducing expenses and improving the efficiency of our company, and we are very focused on our recently announced goals. As we work to improve our efficiency, we will also continue to innovate for the future.”

Loan expansion subdued, credit improves

In 2Q17, Wells Fargo saw deposits rise 5%, while loans grew 1%, reflecting relatively lower credit expansion compared with other commercial bankers. The banking giant has managed to improve its credit quality substantially with lower reserves, to attract more capital for its long term product offerings in the asset management business, and to garner some penetration for its card business.

In this series, we’ll analyze Wells Fargo’s performance across divisions as well as evaluate its strategic initiatives, margin expansion, spending, performance outlook, shareholder payouts, and valuations.

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