Wells Fargo & Co. missed estimates for net interest income in the first quarter, a sign that muted loan growth and increased pressure to pay out more for deposits are eating into the benefit of higher rates.
The firm earned $12.2 billion in NII in the first three months of the year, according to a statement Friday, down 8.3% from a year earlier and slightly less than the $12.3 billion analysts expected.
Still, overall revenue topped estimates, aided by an increase in investment advisory fees and brokerage commissions.
"The investments we are making across the franchise contributed to higher revenue versus the fourth quarter as an increase in noninterest income more than offset an expected decline in net interest income," Chief Executive Officer Charlie Scharf said in the statement.
Big banks' first-quarter results offer the latest window into how the U.S. economy is faring amid an interest-rate trajectory muddied by persistent inflation.
Rivals JPMorgan Chase & Co. and Citigroup Inc. also reported quarterly results Friday, with Goldman Sachs Group Inc., Bank of America Corp. and Morgan Stanley set to follow next week. Like Wells Fargo, JPMorgan reported NII that slightly missed estimates.
Shares of Wells Fargo, up 15% this year through Thursday, were down 1.3% at 9:38 a.m. in New York trading.
Wells Fargo attributed the decline in first-quarter NII to the impact of higher interest rates on funding costs, including customers moving their money to higher-yielding accounts, as well as lower loan balances.
