Wells Fargo (WFC) – Get Free Report shares slipped lower in pre-market trading heading into the bank’s third quarter earnings report prior to Friday’s opening bell.
Wells Fargo is expected to post a bottom line of $1.24 per share, down 4.6% from the same period last year, on revenues of around $20.1 billion, according to Street forecasts.
The bank’s profits will also be hit by the payment of $1.8 billion to the Federal Deposit Insurance Corporation in August as it helped replenish the government’s deposit insurance fund, which was drained of around $16 billion following the collapse of Silicon Valley Bank and Signature Bank and the sale of First Republic.
Wells Fargo said at the time of the payment in early August that it “expects a significant increase in its risk-weighted assets and a net increase in its capital requirements” following rule changes that require U.S. lenders to set aside larger amounts of cash in order to absorb potential losses in their loan portfolios under the so-called Basel III endgame capital requirements.
The bank’s exposure to the commercial real estate sector will also be in focus, after it set aside $949 million in the second quarter to cover potential losses, even as revenues from its holdings rose to $1.33 billion
Wells Fargo shares were marked 0.6% lower in pre-market trading to indicate an opening bell price of $39.50 each, pegging the stock little-changed over the past six months.
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