Wells Fargo Stock Sinks as Q2 Net Interest Income Drags

Wells Fargo (WFC) shares sank Friday aft nan lender reported a slump successful second-quarter nett liking income that offset higher-than-forecast results.

Net liking income (NII), a cardinal measurement of lending profitability, fell 9% year-over-year to $11.9 cardinal for nan 3 months ended June 30.

Competition for borrowers arsenic depositors activity higher liking rates has taken a toll connected nan banking sector's NII, which measures loans gross minus what banks salary for deposits and funds. Banks for illustration Wells Fargo, which are much focused connected user banking, person been particularly wounded by declines successful NII.

The slump successful nett liking income overshadowed results that hit Wall Street analysts' estimates. Well Fargo reported earnings per stock (EPS) of $1.33 connected gross of $20.7 billion, beating analysts' estimates compiled by Visible Alpha of $1.28 and $20.3 billion, respectively.

Wells Sees Some Investment Banking Benefits

Wells Fargo Chief Executive Officer (CEO) Charlie Scharf said that nan Main Street-focused bank's description successful finance banking was base fruit. The S&P 500's 4% second-quarter gain, pinch indexes astatine grounds levels, has been a boon for much Wall Street-focused lenders for illustration JPMorgan Chase (JPM), which posted higher-than-forecast results Friday.

"We continued to spot maturation successful our fee-based gross offsetting an expected diminution successful nett liking income," Scharf said. "The investments we person been making allowed america to return advantage of nan marketplace activity successful nan 4th pinch beardown capacity successful finance advisory, trading, and finance banking fees."

Wells Fargo shares sank much than 6% to $56.46 arsenic of 9:45 a.m. ET Friday. The San Francisco-based lender's shares are up 14% this year.