By Manya Saini and Nupur Anand
June 9 (Reuters) – U.S. banking giant Wells Fargo’s net interest income will see a “step up” in the current quarter, Chief Financial Officer Mike Santomassimo said at an investor conference on Tuesday.
The forecast is likely to be welcomed by investors worried whether lenders can continue to grow interest income as expectations for rate cuts by the U.S. Federal Reserve have faded. Its stock was last up 1.2% in morning trading.
Although higher rates typically bolster lending margins, a prolonged period of elevated borrowing costs risks slowing loan growth and economic activity, creating fresh challenges for banks.
“This quarter, you’re obviously going to see a step up in NII,” Santomassimo said, adding that the bank remained “very confident” it would achieve its full-year forecast of about $50 billion in net interest income.
“Loan growth (is) performing well,” Santomassimo said at the Morgan Stanley U.S. Financials Conference. “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 added that consumers remain very resilient and stable.
Analysts on average expect the bank’s net interest income to increase about 5.6% to $12.36 billion in the second quarter, according to estimates compiled by LSEG.
The bank’s NII – the difference between what it earns on loans and pays out on deposits – rose 5% to $12.1 billion in the first quarter.
GROWTH OPPORTUNITIES
A string of blockbuster IPOs, buoyant equity markets and improving corporate sentiment are expected to drive a surge in fees for banks this year.
Traditionally more known for its lending and consumer banking operations than investment banking, Wells Fargo has spent the past several years expanding the business to compete with other Wall Street titans on big-ticket deals.
“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 its investment banking wins this quarter is a spot on the underwriting syndicate for SpaceX’s IPO, which is expected to raise a record $75 billion.
“There should be opportunity really across the product set, but we’re really excited about what we can do in the commercial banking client base,” Santomassimo said.
(Reporting by Manya Saini in Bengaluru and and Nupur Anand in New York; Editing by Sriraj Kalluvila)
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