A man walks past a Wells Fargo Bank branch on a rainy morning in Washington.
Gary Cameron | Reuters
Wells Fargo announced mixed results for the fourth quarter on Friday, sending the bank’s shares lower.
Here’s how the numbers compare to Wall Street expectations:
- Earnings: 64 cents per share versus Refinitiv estimate of 60 cents per share
- Revenue: $ 17.93 billion versus $ 18.127 billion forecast
- Net interest income: $ 9.275 billion versus $ 9.34 billion FactSet estimate
Shares of Wells Fargo fell 4.7% ahead of the opening bell.
The bank’s earnings include a $ 781 million restructuring expense, a $ 757 million reserve release due to the sale of its student loan portfolio and a hit of $ 321 million due to the ‘impact of the recovery’ of customers.
“Although our financial performance improved and we earned $ 3.0 billion in the fourth quarter, our results continued to be affected by the unprecedented operating environment and the work required to address our significant heritage issues,” said Charlie Scharf, CEO chief, said in a statement. “With a more consistent recovery on a broad basis, and as we continue to move forward with our agenda, we expect you to see that this franchise is much more capable.”
The bank’s consumer banking and lending division declined 5% year-on-year to $ 8.61 billion from $ 9.08 billion. Revenue from its commercial banking business was $ 2.388 billion, a decrease of 18% from $ 2.9 billion in the previous year.
Revenue from corporate and investment banking services fell 7% year-on-year to $ 3.11 billion from $ 3.329 billion. This includes a 25% drop in the stock’s trading income. The fixed income trading income was approximately equal to a year earlier.
“We have put forward and continue to expand our risk and control,” Scharf said. “We have clarified our strategic priorities and are leaving certain non-strategic businesses; and we have identified and implemented a series of actions to improve our financial performance.”
Shares of Wells Fargo rose more than 28% in the fourth quarter as the launch of Covid vaccines and the prospect of more fiscal stimulus raised hopes of a strong economic recovery.
Despite the sharp gain, Wells shares still lagged behind JPMorgan Chase, which rose nearly 32% in the same period. JPMorgan’s quarterly figures, released earlier on Friday, beat the estimates on the top and bottom line. Citigroup’s earnings were mixed.
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