Wells Fargo sees bigger-than-expected drop in 2019 net interest income
(Reuters) - Wells Fargo forecast a bigger-than-expected drop in 2019 net interest income on Monday, largely due to lower interest rates.
The U.S. lender expects net interest income to fall 6%, compared with its earlier expectations of an about 5% drop, the company said in a presentation at the Barclays Global Financial Services Conference.
Analysts on average were expecting the bank to post a drop of 3.8% in 2019.
The U.S. Federal Reserve cut overnight lending rates to a target range of 2% to 2.25% on July 31 due to concerns about the global economy on the back of the US-China trade war and muted U.S. inflation.
Wells Fargo relies heavily on interest rates to boost its revenue, since it manages rate sensitive deposits and mortgage securities.
The bank said it expects net interest income in the second half to be down by about $1.8 billion from first half. (bit.ly/2k2RwMy)
It has cut its interest income forecast twice to reflect the broader macroeconomic environment.
Shares of Wells Fargo were marginally up at $47.35 before the bell.