A man walks past a Wells Fargo Bank branch on a rainy Washington morning.
Gary Cameron | Reuters
Wells Fargo released mixed results for the fourth quarter on Friday, reducing the bank’s shares.
Here’s how numbers compare to Wall Street expectations:
- Earnings: 64 cents per share compared to the final estimate of 60 cents per share
- Revenue: $ 17.93 billion compared to the forecast of $ 18.127 billion
- Net interest income: $ 9.275 billion compared to the FactSet estimate of $ 9.34 billion
Wells Fargo shares fell 4.7% before the opening bell.
The bank’s earnings include a $ 781 million restructuring fee, a $ 757 million reserve release due to the sale of its student loan portfolio and a $ 321 million success due to the “impact of customer remediation accumulations.”
“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 back substantial inheritance issues.” said CEO Charlie Scharf in a statement. “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.”
The bank’s consumer and lending banking division saw a 5% drop in revenue each year to $ 8.61 billion from $ 9.08 billion. Revenue from its commercial banking business amounted to $ 2.388 billion, down 18% from $ 2.9 billion in the previous period.
Corporate and banking investment revenues fell 7% year-over-year to $ 3.11 billion from $ 3.329 billion. This includes a 25% decrease in capital market trading revenues. Fixed income trading revenues were approximately stable compared to the previous year.
“We have given priority and are advancing over the development of our risks and control,” Scharf said. “We have clarified our strategic priorities and are leaving certain non-strategic companies; we have identified and implemented a series of actions to improve our financial performance.”
Shares of Wells Fargo shares rallied more than 28% in the fourth quarter as the launch of Covid vaccines and the prospect of a greater fiscal stimulus raised hopes for a strong economic recovery.
Despite the sharp gain, Wells shares remained with those of JPMorgan Chase, which increased by almost 32% over the same period. JPMorgan’s quarterly numbers, released earlier on Friday, exceeded estimates on the top and bottom lines. Citigroup earnings were mixed.
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