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Revenues were lower than in the fourth quarter of 2019.
Justin Sullivan / Getty Images
Fargo fountains
shares slipped after the San Francisco bank reported lower-than-expected earnings and weaker than in the same quarter a year earlier.
Wells Fargo (scorer: WFC) posted earnings of $ 3.0 billion, or 64 cents a share, with revenue of $ 17.9 billion. Analysts surveyed by FactSet expected the bank to earn 59 cents a share, but with revenue of $ 18.1 billion. Profits were slightly higher than in the fourth quarter of 2019, when they totaled $ 2.9 billion, but revenues were lower than the previous year’s $ 19.9 billion.
Shares fell 4% in premarket trading.
Fargo’s provisions for credit losses decreased by $ 823 million, reflecting a reserve release of $ 757 million after the sale of its student loan portfolio, as well as smaller net reductions in non-performing loans.
“Although our financial performance improved and we earned $ 3.0 billion in the fourth quarter, our results continued to be affected by the unprecedented operating environment and the work required to put our substantial legacy problems behind us.” , said Charlie Scharf, executive director of the bank in a statement.
The efficiency ratio of the bank, which was higher than that of its colleagues, increased sequentially, as it did year after year. As of the fourth quarter of 2020, the efficiency ratio was 83%, higher than 81% and 79% in the third quarter of 2020 and the fourth quarter of 2019, respectively. The lower figures indicate that operation represents a smaller share of revenue.
“With a broader recovery on a broad basis and as we continue to pursue our agenda, we expect you to see that this franchise is capable of much more,” Scharf said.
Prior to earnings, the bank reorganized its business units into consumer banking and lending, commercial banking, corporate and investment banking, and wealth and investment management as it works to become more efficient.
There were high hopes for Wells Fargo ahead of the earnings news. Wells Fargo did worse than his colleagues in 2020, as he continues to recover from the fake accounts scandal. Analysts are increasingly finding that the bank is the one with the most room for improvement.
The bank is scheduled to host a call with analysts on Friday morning. Wall Street hopes to find out how the bank intends to cut spending after announcing its intention to do so in previous quarters.
City Group
(C) and
JPMorgan Chase
(JPM) also reported gains on Friday.
Bank of America
(BAC),
Goldman Sachs
(GS) and
Morgan Stanley (MS)
they will report their fourth quarter results next week.
Write to Carleton English at [email protected]