Wells Fargo Beats Earnings Estimates in 3Q15



Earnings review

On October 14, 2015, Wells Fargo (WFC), the largest mortgage lender in the United States, reported higher-than-estimated 3Q15 earnings. Higher earnings were driven by increased consumer and business borrowing.

Earnings per share (or EPS) beat consensus estimates of $1.04 and came in at $1.05. Revenues rose to $21.9 billion, up 3% over the same period last year. This was slightly lower than consensus estimates of $22.2 billion.

Third quarter net profit was 1% higher at $5.8 billion. Net interest income increased by $516 million compared to the same period last year, reflecting high loan growth.

Average earnings assets inched up 1% to $19.8 billion. However, net interest margins fell 1 basis point to 2.96% from the 2.97% reported in the previous quarter. Non-interest income was $10.4 billion, 1% higher than 3Q14.

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About Wells Fargo

Wells Fargo is the fourth largest bank in the United States (SPY) by assets and has a market capitalization of $264.7 billion as of October 15. It’s the second largest bank in terms of deposits, home mortgage servicing, and debit cards. It operates under three segments: Community Banking, Wholesale Banking, and Wealth and Investment Management.

Wells Fargo’s main competitors in the United States are J.P. Morgan (JPM), Bank of America (BAC), and Citigroup (C). Investors looking for exposure to these banks could invest in the Financial Select Sector SPDR ETF (XLF). Together, these four banks have a weight of ~23%.


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