Wells Fargo Earnings: Undervalued Wells Keeps Funding Intact, Outlook Unchanged

Wide-moat-rated Wells Fargo kept a steady outlook across the board, including a steady expense outlook, and most importantly a steady net interest income, or NII, outlook. The deposit base declined by 2% sequentially, which is well within our previous expectation for a 4% decline for all of 2023. Funding costs were also generally developing as expected. We felt going into the quarter that the largest banks and their deposit bases would be fine, and while profitability could face some pressure in the short term, in the longer term it would not be destroyed. We believe current results support our contention that the largest banks in particular will be fine.