Wells Fargo Q3 Y/Y Net Interest Margin Off 33 BPS

Wells Fargo reported net income of $5.7 billion for Q3/14, up from $5.6 billion for Q3/13. For the first nine months of 2014, net income was $17.3 billion up from $16.3 billion for the same period in 2013. Revenue in Q3/14 was $21.2 billion, up from $20.5 billion for the same quarter a year earlier. The net interest margin of 3.06% in Q3/14 is comparable to 3.15% sequentially and 3.39% for the same quarter in 2013.

The bank said average lease financing average balances and yields for Q3/14 were $12.0 billion and 5.39%, respectively compared to $11.7 billion and 5.29% a year earlier. For the nine month period, average lease financing balances were $11.92 billion with a yield of 5.75% compared to $12.15 billion and 6.26% a year earlier. The average yield for all commercial loans of $385.5 billion was 3.41%, down from 3.73% year-to-date through September of 2013.

“Credit quality continued to trend positively in the third quarter as loan losses remained at historic lows, nonperforming assets continued to decrease, delinquency rates were stable, and we continue to originate high quality loans,” said chief risk officer Mike Loughlin. “Credit losses were $668 million in third quarter 2014, compared with $975 million in third quarter 2013, a 31% improvement. The quarterly loss rate (annualized) was 0.32% with commercial recoveries of 0.02% and consumer losses of 0.62%. Nonperforming assets declined by $406 million, or 9% (annualized), from last quarter. We released $300 million from the allowance for credit losses in the third quarter, reflecting further credit quality improvement. We continue to expect future reserve releases absent a significant deterioration in the economic environment, but expect a lower level of future releases as the rate of credit improvement slows and the loan portfolio continues to grow.”

“The company’s third quarter results demonstrated strength in the fundamental drivers of our long-term growth,” said chairman and CEO John Stumpf. “Loan and deposit growth was strong and diversified across both commercial and consumer businesses. Capital levels increased even as we returned more capital to shareholders through higher dividends and share repurchases from a year ago. We continue to see signs of a steadily improving economy, and I remain optimistic about the opportunities ahead for Wells Fargo.”

To view the full Wells Fargo news release, click here.

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