Wells Fargo shares rise as solid third quarter results beat expectations

Investing.com -- Investment banking giant Wells Fargo reported better-than-expected third quarter earnings on Friday, with revenue growth across both consumer and commercial businesses driving shares up more than 3% in pre-market U.S. trading Tuesday.

The banking giant posted earnings per share of $1.66 and revenue of $21.44 billion, exceeding analyst estimates of $21.16 billion.

While net interest income (NII) came in at $11.95 billion, slightly below the $12.01 billion consensus, the bank showed strong growth in fee-based income.

Investment banking fees reached $840 million, significantly above the $742.8 million estimate.

Wells Fargo demonstrated improved credit performance with provision for credit losses of $681 million, well below the $1.17 billion analysts had expected.

The bank also reported the highest linked-quarter loan growth in over three years, with total average loans reaching $928.7 billion.

"The momentum we are building across our businesses drove strong financial results in the third quarter with net income and diluted earnings per share both up from a year ago and the second quarter," said Chairman and CEO Charlie Scharf.

"Revenue grew with higher net interest income and strong, broad-based growth in fee-based income across both our consumer and commercial businesses."

The bank’s efficiency ratio was 65%, higher than the 63.6% estimate, while non-interest expenses came in at $13.85 billion, above the $13.42 billion estimate.

Despite these higher costs, Wells Fargo’s return on equity reached 12.8%, exceeding the 12% consensus.

Wells Fargo also returned significant capital to shareholders during the quarter, increasing its common stock dividend by 12.5% and repurchasing $6.1 billion of its common stock.

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