A man walks past a Wells Fargo Bank branch on a rainy morning in Washington.
Gary Cameron | Reuters
Wells Fargo on Friday posted mixed results for the fourth quarter, reducing the bank’s shares.
The following compares the figures with Wall Street expectations:
- Profits: 64 cents per share vs. Refinitive estimate of 60 cents per share
- Revenue: $ 17.93 million forecast vs. $ 18,127 million
- Net interest income: $ 9,275 million vs. $ 9.34 billion
Shares of Wells Fargo fell 4.7% before the initial bell.
The bank’s profits include a $ 781 million restructuring charge, a $ 757 million reserve due to the sale of its student loan portfolio and a $ 321 million hit due to “the impact of customer remediation accumulations “.
“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 legal issues.” said CEO Charlie Scharf in a statement. “With a broader and more consistent recovery and as we continue to move forward with our agenda, we hope you see that this franchise is able to do so much more.”
The bank’s consumer banking and lending division recorded a 5% year-over-year decrease in revenue from $ 9.08 billion to $ 8.66 billion. Revenue from its commercial banking business stood at $ 2.388 billion, 18% less than the $ 2.9 billion of the previous period.
Corporate and investment banking revenue fell 7% year-over-year from $ 3,329 million to $ 3,111 million. This includes a 25% drop in trading revenues from equity markets. Fixed income commercial income was almost flat compared to the previous year.
“We have prioritized and advanced our risk accumulation and control,” Scharf said. “We have clarified our strategic priorities and exited certain non-strategic businesses; we have identified and implemented a number of actions to improve our financial performance.”
Shares of Wells Fargo shares rose more than 28% in the fourth quarter, as the rollout of Covid vaccines and prospects for more fiscal stimulus raised hopes for a strong economic recovery.
Despite the sharp rise, Wells shares were still behind those of JPMorgan Chase, which rose nearly 32% in the same time period. JPMorgan’s quarterly figures, released earlier Friday, exceed estimates for the top and bottom lines. The benefits of Citigroup were mixed.
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