Wells Fargo & Co (NYSE:WFC) will report its second quarter earnings result tomorrow before opening bell, and analysts are reportedly looking for the bank’s earnings to increase year over year. If Wells Fargo posts another strong quarter, it will be a strong following on the previous quarter, in which the bank posted its highest first quarter profits in its history.
Consensus Estimates For Wells Fargo
Consensus indicates that analysts are looking for earnings of 92 cents per share, compared to the 82 cents per share the bank earned in the same quarter a year ago. Revenue is expected to be $21.2 billion, which is just slightly lower than last year’s second-quarter revenue of $21.3 billion
Wells Fargo May Outperform Expectations
Many analysts believe Wells Fargo & Co (NYSE:WFC) may even surprise to the positive tomorrow morning when it reports. The bank posted a positive surprise in the first quarter of the year, coming in at 92 cents per share, compared to consensus of 89 cents per share for that quarter.
Analysts at Zacks see some possible drivers that could push the bank’s earnings higher than expected. They note that capital market activity continued to be strong between April and June. The Federal Reserve continued to support the markets through its bond buying program, and interest rates remained low.
The low rates caused a rise in demand for financial instruments which provider higher returns because their returns don’t depend on the interest rates. Zacks analysts say non-interest revenue sources, particularly trading revenue, should have given Wells Fargo & Co (NYSE:WFC)’s earnings a boost in the second quarter of the year.
They said loan growth likely remained slow, keeping income from interest pressured. Also Wells Fargo & Co (NYSE:WFC) faced more expenses due to litigation during the quarter. However, mortgages were on the rise during the quarter, and credit losses were down as fewer homeowners defaulted on their mortgages.
Other key factors Zacks analysts say should have a positive effect on Wells Fargo’s earnings in the second quarter include rising home prices and declining unemployment. Lending through credit cards also increased during the quarter, so the bank may report higher results in this part of its business.
Barclays’ View Of Wells Fargo
Barclays analysts released a preview report on Wells Fargo & Co (NYSE:WFC)’s earnings earlier this week, and they also believe the bank will do well. They’re looking for earnings of 93 cents—a penny higher than consensus.
Last month however, Sterne Agee downgraded Wells Fargo from buy to neutral, saying that they believed the momentum in the bank’s earnings growth was slowing.