Wells Fargo's net interest income (NII) is set to rise meaningfully in the current quarter, Chief Financial Officer Mike Santomassimo said at a Morgan Stanley investor conference on Tuesday, signaling stronger interest-driven revenue for the lender in the near term.
Speaking to attendees, Santomassimo indicated the bank would record a "step up" in NII this quarter and reiterated confidence in the firm's previously announced full-year NII objective of about $50 billion. The comments come amid investor concern about the durability of interest-income growth as market expectations for U.S. Federal Reserve rate cuts have diminished.
"This quarter, you’re obviously going to see a step up in NII," Santomassimo said. He added the bank remained "very confident" it would deliver on the full-year forecast of about $50 billion in net interest income.
Santomassimo also described loan growth as performing well, saying it appeared likely to come in somewhat stronger than the bank had modeled for later in the year, while noting that management would continue to monitor developments: "Loan growth (is) performing well. That is looking like it’s going to be potentially a little bit better than what we had modeled as we go through the year, but we’ll see." He further emphasized that consumers remain "very resilient and stable."
Analysts polled by LSEG currently expect Wells Fargo's NII to increase roughly 5.6% to $12.36 billion in the second quarter. For context, the bank reported NII of $12.1 billion in the first quarter, a rise of 5% from the comparable prior period.
Wells Fargo's stock was trading higher in morning sessions, last up 1.2% as investors parsed the outlook for interest income and loan demand under a higher-rate environment. Higher policy rates can lift lending margins but may also slow loan growth and broader economic activity if they remain elevated for an extended period - a dynamic that the industry watches closely.
Growth in fee businesses
Beyond core lending revenue, Santomassimo highlighted expansion in fee-generating businesses as another source of progress for the bank. He said a run of strong initial public offerings, improved equity markets and rising corporate confidence were expected to lift fee income for banks this year.
While historically more recognized for its lending and consumer banking operations, Wells Fargo has been enlarging its investment banking capabilities to better compete for large mandates. "We’re continuing to see that market share increase each year, but still more to do there," Santomassimo said. "When you look at it by product, certainly the equity capital markets and advisory side are places that we know we can do better. We have a strong debt capital markets business."
Among recent wins, the bank is part of the underwriting syndicate for the planned SpaceX initial public offering, which is expected to raise a record $75 billion. Santomassimo said that there should be opportunity "across the product set," and that the commercial banking client base in particular is an area of excitement for the firm.
What management emphasized
- Near-term uplift in net interest income - "step up" expected this quarter.
- Ongoing confidence in meeting a roughly $50 billion NII target for the year.
- Loan growth performing well and potentially outpacing prior internal models for the year.
Santomassimo framed the outlook as a combination of resilient consumer demand, continuing loan activity and growing fee opportunities, while stopping short of providing revised numeric guidance beyond the reiterated full-year NII goal.