Wells Fargo (WFC.N) announced better-than-expected profits in its third-quarter results, entering a new period of growth after regulators lifted a seven-year asset cap.
The Federal Reserve (Fed) lifted the bank’s $1.95 trillion asset cap in June, paving the way for CEO Charlie Scharf’s growth plans. Following this development, the bank raised its return on equity (ROTCE) target from 15% to 17-18%. The San Francisco-based bank reported that its net interest income increased by 2% year-on-year to $11.95 billion. This income difference represents the difference between the bank’s earnings from loans and deposit interest. Scharf stated, “While some economic uncertainties remain, the U.S. economy is resilient and our clients’ financial health is strong.” Wells Fargo’s net income was $5.59 billion ($1.66 per share) for the quarter ending September 30. This compares to $5.11 billion for the same period last year. Analysts were expecting earnings of $1.55 per share. The Fed’s interest rate cut in September is expected to boost banks’ interest income starting in the fourth quarter. US banks are supporting their profitability by lowering their deposit costs thanks to these cuts.
