Wells Fargo (WFC) – Get report posted better-than-expected profits in the fourth quarter, but stocks plunged in the pre-market after revenue was below forecasts.
The San Francisco-based bank reported net income of $ 2.99 billion, or 64 cents per share, in the fourth quarter, against $ 2.87 billion, or 60 cents per share, in the same period last year. Analysts polled by FactSet had expected earnings of 58 cents per share.
Revenue was $ 17.93 billion, down from $ 19.86 billion in the fourth quarter of 2019. Analysts surveyed by FactSet had expected revenue of $ 19.347 billion.
Net interest income was $ 9.275 billion, down $ 17 million, while non-interest income was $ 8.65 billion, virtually unchanged. Average deposits were $ 205.8 billion, down 20%.
“Although our financial performance improved and we gained $ 3 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the work required to leave behind our substantial legacy problems,” said CEO Charlie Scharf in a statement. communicated.
Wells Fargo in February 2020 agreed to pay $ 3 billion to settle criminal charges and a civil suit stemming from his widespread abuse of customers at his community bank over a 14-year period.
A drop in consumer and business loans due to the Covid-19 pandemic and the corresponding economic slowdown was partially offset by an increase in home loans, the bank said.
Consumer and small business banking fell 8%, from $ 5.1 billion, to $ 4.70 billion, while real estate loans increased 2% from $ 1.96 billion to nearly $ 2 billion.
Delinquent assets, in turn, increased 9% $ 8.89 billion from $ 5.65 billion, while non-accumulated loans increased from $ 5.65 billion to $ 8.73 billion “… predominantly due to increases in portfolios of commercial real estate, residential mortgages and leasing financing, partially offset by a decrease in the commercial and industrial portfolio, “said the bank.
Net casualties remained low at $ 584 million, almost a quarter below the previous year. So far, rising government unemployment, stimulus checks, relief for small businesses and loan deferral programs have prevented widespread loan losses, but bank executives warn that this could still happen.
Overall, the bank’s earnings included a $ 781 million restructuring charge, a $ 757 million reserve release due to the sale of its student loan portfolio and a $ 321 million settlement due to the “impact of customer remediation rollups “
Wells Fargo is among several other major American banks that have been given the green light to resume stock repurchases in the first quarter of 2021 by the Federal Reserve.
The US central bank has lifted its repurchase ban for the most profitable creditors, considering that its capital buffers are sufficient to potentially support hundreds of billions of dollars in loan losses related to the Covid-19 pandemic and the economic crisis.
In line with this, the company’s board approved an increase in the bank’s authority to repurchase common shares for an additional 500 million shares, bringing the total authorized value to 667 million common shares.
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