Investing.com – Wells Fargo (NYSE:) posted third-quarter earnings that fell short of expectations, but sentiment on the bank received a boost after management in a post-earnings call delivered a more somber outlook on net interest income.
In its post-earnings call, Wells Fargo guided net interest income growth to mid-to-single digits in 2020, compared with a 6% drop this year. That offset some of the gloom that had followed the bank’s mixed results. Wells Fargo (NYSE:) rose nearly 4% early in the day and was up 2.8% at 2:08 p.m. ET (18:08 GMT).
The bank reported earnings of 92 cents a share on revenue of $22.01 billion, with lower-than-expected net interest income, a key driver of the bank’s profits, coming under pressure as the banking company’s net interest margin dropped to 2.66% from 2.94% in the quarter from a year earlier. In the 2018 third quarter, Wells Fargo (NYSE:) earned $1.13 a share on revenue of $21.84 billion.
The mixed earnings comes as the bank continued to fork out legal payments after it let employees create millions of fake bank accounts to meet sales quotas.
The company booked a $1.6 billion charge for legal costs related to its long-running sales-practices problems. It also had a $1.1 billion gain related to the sale of a business.
Wells Fargo (NYSE:WFC) has an average price target of $49.31, a bit lower than the current price, according to consensus estimates from Investing.com. The shares are up about 10% this year.
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