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The fourth largest bank in the US Friday announced a 16% increase in profits in the first quarter, thanks to reduced spending. It exceeded Wall Street's expectations. Wells Fargo (WFC) revenues also declined less than expected.
Although other large banks are increasing their deposits, Wells Fargo has announced a 3% decline in total average deposits in the first quarter to $ 1.3 trillion. The bank questioned the decline in wholesale banking and a decline in wealth management and investment deposits.
However, Wells Fargo's retail deposits grew, which is a positive sign.
The average total loan size of Wells Fargo was $ 950.1 billion, down slightly from the previous year. The bank recorded quarterly declines in auto loans, credit card loans and commercial loans.
Shares of Wells Fargo rose 2% Friday, investors sighing with relief, the results were not worse. JPMorgan shares jumped 4%.
Wells Fargo was able to increase profits by reducing costs. Non-interest expenses decreased 7% in the first quarter
Wells Fargo's results contrast sharply with those of larger peers JPMorgan Chase (JPM), which revealed record profits and record earnings on Friday. While Wells Fargo's deposits declined, JPMorgan announced a 3% increase in average deposits and 4% in core loans.
Unlike JPMorgan, Wells Fargo is facing unprecedented sanctions from the Federal Reserve that are preventing the bank from developing. Citing "widespread abuse of consumption", the Fed imposed an asset limitation on Wells Fargo in early 2018. The bank has so far failed to convince regulators to lift severe penalties.
Wells Fargo blamed the decline in wholesale bank deposits for the measures taken in the first half of 2018 to "manage the asset ceiling". The bank said that cash deposits and investment management had been affected by the transfer of cash from customers to more profitable alternatives.
Legal issues have had a negative impact on the Wells Fargo stock, which has stagnated since the false accounts scandal in September 2016. Rivals Bank of America (LAC) and Citigroup (C) have seen their shares skyrocket.
Wells Fargo continues to reward shareholders who are disappointed with major redemptions. The bank bought back $ 3.9 billion in the first quarter, up 86% from the previous year. Wells Fargo announced it raised $ 6 billion in shareholders in the first quarter, including dividends.
Wells Fargo will probably have to answer analysts' questions on Friday about his search for a successor for Sloan. Warren Buffett, the main shareholder of Wells Fargo, urged the board of directors not to hire anyone from Wall Street.
Allen Parker, Acting CEO of Wells Fargo, said he was focusing on continuing the "transformation" of the bank.
"We still have work to do and our strong management team is striving to make our company the most innovative, customer-centric, customer-driven Wells Fargo," Parker said. 39, former legal counsel.
Wells Fargo has also unloaded several companies in recent months. Earlier this week, Wells Fargo announced the signing of a $ 1.2 billion contract to sell its institutional retirement and trust business to Financial Principal (PFG).
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