A man passes a Wells Fargo Bank branch on a rainy morning in Washington.
Gary Cameron | Reuters
Wells Fargo released mixed results for the fourth quarter on Friday, causing the bank’s shares to fall.
Here’s how the numbers compare to Wall Street expectations:
- Profit: 64 cents per share vs. Refinitiv estimate of 60 cents per share
- Revenue: $ 17.93 billion versus forecasted $ 18.127 billion
- Net interest income: $ 9.275 billion versus $ 9.34 billion in the FactSet estimate
Wells Fargo’s shares fell 4.7% before the opening bell.
The bank’s earnings include $ 781 million of restructuring charges, $ 757 million of reserve release due to the sale of its student loan portfolio and $ 321 million due to the “impact of customer remediation provisions”
“Although our financial performance improved and we gained $ 3.0 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. “With a more consistent broad-based recovery and as we continue to move forward with our agenda, we hope you will see that this franchise is capable of much more.”
The consumer banking and loans division had a revenue drop of 5% over the previous year to $ 8.61 billion, from $ 9.08 billion. Revenue from its commercial banking business reached $ 2.388 billion, down 18% from $ 2.9 billion in the same period last year.
Corporate and investment banking revenue fell 7% year-over-year to $ 3.11 billion, from $ 3.329 billion. This includes a 25% drop in trading revenue from the stock markets. Fixed income commercial revenue was practically stable compared to the previous year.
“We prioritize and are making progress in building risk and control,” said Scharf. “We have clarified our strategic priorities and we are closing certain non-strategic businesses; we have identified and are implementing a series of actions to improve our financial performance ”.
Wells Fargo’s shares rose more than 28% in the fourth quarter, as the launch of Covid’s vaccines and the prospect of further fiscal stimulus raised hope for a strong economic recovery.
Despite the strong gain, Wells’ shares were still behind those of JPMorgan Chase, which rose almost 32% in the same period. JPMorgan’s quarterly figures, released early Friday, exceeded estimates on the top and bottom lines. Citigroup’s earnings were mixed.
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