Wells Fargo Profit Squeeze: Interest Income Declines Amidst Economic Shifts

Wells Fargo's profit decreased in the third quarter due to reduced loan demand and increased payments to depositors. The net income was $5.11 billion compared to $5.78 billion the previous year. Factors such as interest rate cuts and an asset cap also impacted the bank's financial performance.

In a challenging third quarter, Wells Fargo, the fourth-largest U.S. bank, reported a decline in profits, as sluggish loan demand and heightened depositor payments squeezed its interest income.

For the quarter ending September 30, Wells Fargo announced a net income of $5.11 billion, down from $5.78 billion for the same period last year. Net interest income fell by 11% to $11.69 billion, falling short of analysts' expectations of $11.87 billion, as compiled by LSEG.

The Federal Reserve's recent interest rate cut and subsequent lowering of prime rates by top banks have further exerted pressure on interest income. Additional challenges include subdued loan demand, competition for deposits, and the ongoing regulatory asset cap linked to past compliance issues.

(With inputs from agencies.)