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Sales were lower than in the fourth quarter of 2019.
Justin Sullivan / Getty Images
Wells Fargo
stocks are falling after the San Francisco-based bank reported lower-than-expected earnings and weaker than the same quarter a year earlier.
Wells Fargo (ticker: WFC) posted a profit of $ 3.0 billion, or 64 cents a share, on sales of $ 17.9 billion. Analysts polled by FactSet expected the bank to make a profit of 59 cents a share, but sales of $ 18.1 billion. Earnings were slightly higher than in the fourth quarter of 2019, when they totaled $ 2.9 billion, but sales were down from $ 19.9 billion a year earlier.
Shares fell 4% in premarket trading.
Well Fargo’s loan loss provision declined $ 823 million, due to a $ 757 million release of reserves following the sale of its student loan portfolio, as well as lower net bad loan write-offs.
“While our financial performance improved and we earned $ 3.0 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the work required to move beyond our substantial past troubles,” said Charlie Scharf, CEO of the bank. in a statement.
The bank’s efficiency ratio, which was higher than that of its competitors, increased both consecutively and year on year. As of the fourth quarter of 2020, the efficiency ratio was 83%, higher than the 81% and 79% in the third quarter of 2020 and the fourth quarter of 2019, respectively. Lower figures indicate that operating expenses represent a smaller portion of revenue.
“With a more consistent broad recovery and as we continue to advance our agenda, we expect you to see this franchise capable of much more,” said Scharf.
Ahead of earnings, the bank has reorganized its business units into Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking and Wealth and Investment Management, while striving to become more efficient.
There were high hopes for Wells Fargo before the earnings news. Wells Fargo fared worse than peers in 2020 as it continues to recover from its fake accounts scandal. Analysts increasingly notice that the bank is the bank with the most room for improvement.
The bank planned to hold a meeting with analysts on Friday morning. Wall Street hopes to learn how the bank plans to cut costs after announcing its intention in previous quarters.
Citigroup
(C) and
JPMorgan Chase
(JPM) also reported the profit on Friday.
bank of America
(BAC),
Goldman Sachs
(GS) and
Morgan Stanley (MS)
will publish their fourth quarter results next week.
Write to Carleton English at [email protected]