Wells Fargo (WFC) – Get the report it made better-than-expected gains in the fourth quarter, but stocks fell in pre-market trading after earnings fell below forecasts.
The San Francisco-based bank reported a net profit of $ 2.999 billion, or 64 cents a share, during the fourth quarter, compared to $ 2.878 billion, or 60 cents a share, in the comparable period of the year. previous year. Analysts polled by FactSet had been looking for earnings of 58 cents per share.
Revenue was $ 17.93 million, down from $ 19.86 million in the fourth quarter of 2019. Analysts surveyed by FactSet expected revenue of $ 19.347 billion.
Net interest income was $ 9,275 million, down $ 17 million, while interest-free income was $ 8,655 million, roughly unchanged. Average deposits were $ 205.8 billion, down 20%.
“Although our financial performance improved and we earned $ 3 billion in the fourth quarter, our results continued to be affected by the unprecedented operating environment and the work required to leave behind our substantial legacy problems,” he said. say Charlie Scharf CEO in a statement.
Wells Fargo, in February 2020, agreed to pay $ 3 billion to settle criminal charges and civil action arising from widespread customer abuse at the community bank over a 14-year period.
The fall in consumer and business loans due to the Covid-19 pandemic and the corresponding economic recession was partially offset by an increase in home loans, the bank said.
Consumer and small business banking fell 8% from $ 5.17 billion to $ 4.70 million, while home loans rose 2% from $ 1.96 million to nearly $ 2 billion dollars.
Meanwhile, unprofitable assets rose 9% to $ 8.889 billion from $ 5.65 million, while unsecured loans rose to $ 8.73 million from $ 5.65 billion. dollars “… mainly due to increases in financing portfolios of commercial real estate, residential mortgages and leases, partially offset by a decline in the commercial and industrial portfolio,” the bank said.
Net expenses remained low, at $ 584 million, nearly a quarter of the previous year. So far, government expansion, stimulus controls, small business relief, and loan deferral programs have averted widespread loan losses, but bank executives warn they could still come.
Overall, the bank’s profits included a $ 781 million restructuring expense, a $ 757 million reserve release due to the sale of its student loan portfolio and a $ 321 million success due to of “the impact of customer remediation accumulations.”
Wells Fargo is among several other major US banks given the green light to resume share repurchase in the first quarter of 2021 by the Federal Reserve.
The U.S. central bank lifted the repurchase ban for the most profitable lenders, saying its capital buffers are enough to potentially support hundreds of billions of dollars in pandemic and economic recession-related loan losses Covid-19.
In this line, the company’s board approved an increase in the bank’s authority to repurchase ordinary shares for an additional 500 million shares, which raised the total authorized amount to 667 million shares. ordinary.
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