Wells Fargo Reports Earnings Rose 4%
January 15 2021 - 8:49AM
Dow Jones News
By Ben Eisen
Wells Fargo & Co.'s profit rose 4% in the final three months
of the year.
The San Francisco-based lender said Friday that it made $2.99
billion in the fourth quarter, up from $2.87 billion a year
earlier. Per-share profit totaled 64 cents, compared with analyst
forecasts of 59 cents.
Wells Fargo's results reflect a topsy-turvy year in which the
pandemic-induced recession forced lenders to sock away tens of
billions of dollars to prepare for a wave of soured loans. The bank
released $757 million from its pile of reserves in the fourth
quarter, largely because it sold a book of student loans.
Net charge-offs remained low at $584 million, down almost a
quarter from a year earlier. So far, the government's expanded
unemployment, stimulus checks, small business relief and loan
deferral programs have staved off widespread loan losses, but bank
executives caution they could still be coming.
With banks so far weathering the crisis, regulators at the
Federal Reserve said last month they could start buying back their
own stock again, though total shareholder returns are limited to
the quarterly profit they generated over the past year. Wells Fargo
said its board approved the repurchase of 500 million shares.
The bank posted revenue of $17.93 billion, down almost 10% from
$19.86 billion a year ago. That missed expectations of $18.12
billion.
Wells Fargo came into the coronavirus crisis in weaker financial
shape than its peers, trying to recover from its long-running
sales-practice scandal. Its stock fell 44% last year, by far the
worst performance among the six largest U.S. banks. However, it has
bounced back 15% this year, along with a rise in bank stocks
broadly.
On Friday, Wells Fargo shares fell 2.3% in premarket
trading.
Chief Executive Charles Scharf has gave priority to cost-cutting
in recent months, hoping to make the bank run as efficiently as its
competitors. Noninterest expenses in the fourth quarter totaled
$14.8 billion, down 5% from a year earlier.
Write to Ben Eisen at ben.eisen@wsj.com
(END) Dow Jones Newswires
January 15, 2021 08:34 ET (13:34 GMT)
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