Wells Fargo sees investment banking, trading revenue rise in second quarter
Wells Fargo is projecting stronger momentum in its capital markets businesses in the second quarter as client activity stays firm. The outlook also points to low double-digit revenue growth in wealth management, extending gains after the bank reported solid first-quarter results.
Highlights
- Wells Fargo expects investment banking and trading revenue to rise by mid-teen percentage points in the second quarter, per Charlie Scharf.
- The recent lifting of Wells Fargo's asset cap enables expansion in deposits and lending, supporting the bank's broader growth plans.
- Wells Fargo projects low double-digit revenue growth in wealth management with little or no expense growth as it pursues further efficiency gains.
Second-quarter revenue outlook strengthens
As reported by Reuters, Chief Executive Charlie Scharf said at the Bernstein Conference on Wednesday that Wells Fargo expects investment banking and trading revenue to increase by mid-teen percentage points in the second quarter.Scharf also said the bank is on track for low double-digit revenue growth in wealth management. In the first quarter, Wells Fargo posted a 12.7% increase in revenue in its investment banking arm and a 19% rise in markets revenue.
He said client activity in investment banking and markets remains strong, while the bank continues to see opportunities to deepen relationships by deploying more balance sheet.
Asset cap relief supports broader expansion
The forecast comes after regulators lifted Wells Fargo's asset cap, giving the lender more room to expand in deposits and lending after years of restrictions.Scharf also said Wells Fargo expects to grow with little or no expense growth as it seeks further efficiency gains across the company.
The bank's comments follow upbeat signals from major rivals. JPMorgan Chase Chief Executive Jamie Dimon said at the same conference that the bank's investment banking fees could rise 10% or more in the second quarter, while Bank of America Chief Executive Brian Moynihan said trading revenue is expected to climb about 15% from a year earlier as volatility is tied to shifting U.S. tariffs.
In our earlier analysis of Wells Fargo (WFC) shares, we highlighted that the stock was under persistent selling pressure, trading below its 20-, 50-, and 200-day moving averages despite renewed interest from dividend-focused investors. Our publication also noted a cautious near-term outlook, with bearish momentum indicators pointing to consolidation risk and key levels to watch for any shift in trend.
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