Wells Fargo Shares Slide After Interest Income Miss

WELLS FARGO & CO reported first-quarter interest income that fell short of Wall Street expectations on Tuesday, as a series of interest rate cuts by the Federal Reserve in the United States weighed on loan yields. Net interest income (NII) — the difference between what a bank earns on loans and pays out on deposits — reached $12.1 billion for the quarter, missing the $12.3 billion average analyst estimate compiled by LSEG. While rate reductions can eventually lower deposit costs and stimulate borrowing, they often create near-term pressure on interest margins.

Despite the NII miss, the bank's net profit rose to $5.25 billion, or $1.60 per share, compared with $4.89 billion, or $1.39 per share, in the same period last year. This outperformed analyst expectations of $1.58 per share. Shares of the San Francisco-based company fell 2.2% in premarket trading following the report, adding to a 7% decline in the stock price so far this year.