NII, Fee Income Growth to Support Wells Fargo's Q3 Earnings

Wells Fargo & Company WFC is slated to report third-quarter 2025 results on Oct. 14, 2025, before market open.WFC’s first-half performance benefited from an improvement in non-interest income and lower provisions, along with a decline in expenses. However, a decline in net interest income (NII) was the undermining factor. This time, the company’s performance is likely to have been decent. The Zacks Consensus Estimate for third-quarter revenues of $21.19 billion suggests 4% year-over-year growth.In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has remained unchanged at $1.54. The figure indicates a 1.3% improvement from the prior-year quarter’s actual.Estimate Revision TrendImage Source: Zacks Investment ResearchWFC has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, the average beat being 9.53%.Earnings Surprise HistoryImage Source: Zacks Investment Research Factors to Impact WFC’s Q3 EarningsLoans & NII: The Federal Reserve reduced interest rates by 25 basis points to 4.00-4.25% in September. With rates remaining largely stable throughout most of the quarter, funding and deposit costs likely stabilized, supporting modest growth in Wells Fargo’s NII in the third quarter.Also, the overall lending scenario was impressive. Per the Fed’s latest data, the demand for commercial and industrial, real estate, and consumer loans remained solid in the first two months of the quarter. Thus, the company’s lending activity is likely to have witnessed an improvement in the quarter to be reported.The Zacks Consensus Estimate for NII is pegged at $12.03 billion, which indicates a 2.9% rise from the previous year quarter's reported number.Non-Interest Revenues: Mortgage rates declined notably during the third quarter compared with levels seen at the start of the year. Although rates fluctuated throughout the quarter, they remained within a range-bound, limiting any significant improvement in refinancing activity and origination volumes. As a result, Wells Fargo’s mortgage banking fees are expected to have been negatively affected. The Zacks Consensus Estimate for mortgage banking revenues for the third quarter of 2025 is pegged at $242.5 million, suggesting a 13.4% decline from the year-ago reported level.Meanwhile, investment advisory and other asset-based fee revenues are likely to have benefited from increased transactional activity. The consensus mark for investment advisory and other asset-based fee revenues is pegged at $2.6 billion, indicating a year-over-year rise of 7.3%.Global mergers and acquisitions (M&As) in the third quarter of 2025 rebounded impressively after reaching lows in April and May following President Trump’s announcement of “Liberation Day” tariff plans. As corporates adapted to the rapidly evolving geopolitical and macroeconomic scenarios, deal-making activity picked up. This is likely to have supported WFC’s investment banking (IB) revenues in the quarter to be reported.The Zacks Consensus Estimate for IB income is pegged at $745.8 million, which indicates a rise of 12.3% on a year-over-year basis.The Zacks Consensus Estimate for Card fees is pegged at $1.16 billion, suggesting a 5.5% rise from the year-ago quarter’s reported level.The Zacks Consensus Estimate for Wells Fargo’s total non-interest income is pegged at $9.07 billion, indicating a 4.5% increase from the year-ago quarter's reported figure.Expenses: WFC’s expenses are expected to have witnessed a modest decline in the third quarter of 2025, given its prudent expense management initiatives, including the streamlining of its organizational structure, closure of branches, and reduction in headcount.Asset Quality: As Wells Fargo had kept a substantial amount of money for potential delinquent loans (mainly commercial loan defaults) in the prior quarters, we expect the company to keep a modest reserve this time, given the expectations of two more interest rate cuts amid the impact of Trump’s tariffs on inflation.The consensus mark for total non-accrual loans is pegged at $8 billion, suggesting a year-over-year decline of 2%. The Zacks Consensus Estimate for non-performing assets of $8.2 billion indicates a 2.6% fall from the year-ago quarter.What Our Quantitative Model Unveils for WFCPer our proven model, we conclusively predict an earnings beat for Wells Fargo this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That is the case here, as you can see below.The Earnings ESP for WFC is +1.02%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Wells Fargo currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Wells Fargo’s Price PerformanceIn the third quarter, shares of WFC delivered a subdued performance, lagging the industry, the S&P 500 index, and its close peers, Bank of America BAC and Citigroup C. Price PerformanceImage Source: Zacks Investment ResearchBank of America is slated to announce quarterly numbers on Oct. 15, whereas Citigroup will release results on Oct. 14. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Over the past week, the Zacks Consensus Estimate for Citigroup’s third-quarter 2025 earnings has been revised upward to $1.91. The consensus estimate for Bank of America has been unchanged at 93 cents.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks