Wells Fargo’s shares fall as revenue disappoints

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Wells Fargo

shares slipped after the bank in San Francisco was based on earnings that were lower than expected and weaker than in the same quarter a year earlier.

Wells Fargo (ticker: WFC) earned $ 3.0 billion, or 64 cents a share, with revenue of $ 17.9 billion. Analysts polled by FactSet expected the bank to earn revenue of 59 cents per share, but with revenue of $ 18.1 billion. Profit was slightly higher than in the fourth quarter of 2019 when it was $ 2.9 billion, but revenue was lower than the $ 19.9 billion a year earlier.

Shares fell 4% in pre-market trading.

Well Fargo’s provision for credit losses decreased by $ 823 million, reflecting a release of $ 757 million in reserves after selling its student loan portfolio, as well as lower net repayments of bad loans.

“Although our financial performance improved and we earned $ 3.0 billion in the fourth quarter, our results were still affected by the unprecedented operating environment and the work required to address our significant heritage issues,” said Charlie Scharf, CEO head of the bank, said. in a statement.

The bank’s efficiency ratio, which was higher than its peers, has risen steadily as well as year on year. As of the fourth quarter of 2020, the efficiency ratio was 83%, higher than the 81% and 79% respectively in the third quarter of 2020 and the fourth quarter of 2019. Lower figures indicate that operating expenses make up a smaller share of revenue.

“With a more consistent recovery on a broad basis and as we continue with our agenda, we expect you to see that this franchise can do much more,” Scharf said.

Before earnings, the bank reorganized its business units into consumer banking and lending, commercial banking, corporate and investment banking, and wealth and investment management as it became more efficient.

There was great hope for Wells Fargo before the earnings news. Wells Fargo fared worse than peers in 2020 as it continues to recover from its fraudulent scandal. Analysts are increasingly noting that the bank is the one with the most room for improvement.

The bank planned to offer a call with analysts on Friday morning. Wall Street hopes to learn how the bank plans to cut spending after announcing its intention in previous quarters.

Citigroup

(C) and

JPMorgan Chase

(JPM) also reported its earnings on Friday.

Bank of America

(BAC),

Goldman Sachs

(GS) and

Morgan Stanley (MS)

will report their results for the fourth quarter next week.

Write to Carleton Engels by [email protected]