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Wells fargo (WFC) – Get the report Performed better than expected in the fourth quarter, but the stock collapsed in pre-market trading after earnings fell below expectations.
The San Francisco-based bank reported net income of $ 2.99 billion, or 64 cents per share, for the fourth quarter, compared to $ 2.87 billion, or 60 cents per share, in the same one-year period earlier. Analysts polled by FactSet were looking for earnings of 58 cents a share.
Revenue was $ 17.93 billion, up from $ 19.86 billion in the fourth quarter of 2019. Analysts polled by FactSet expected revenue of $ 19.347 billion.
Net interest income was $ 9.275 billion, down $ 17 million, while non-interest income was $ 8.65 billion, roughly unchanged. Average deposits were $ 205.8 billion, down 20%.
“Although our financial performance improved and we earned $ 3 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the work required to put aside our significant issues inherited from our legacy, ”CEO Charlie Scharf said in a statement.
Wells Fargo agreed in February 2020 to pay $ 3 billion to settle criminal charges and civil action resulting from the widespread abuse of customers at its community bank over a 14-year period.
A drop in consumer and business lending due to the Covid-19 pandemic and the corresponding economic downturn has been partially offset by an increase in home loans, the bank said.
Personal and small business banking slipped 8% to $ 4.70 billion, from $ 5.1 billion, while home loans rose 2% to nearly $ 2 billion, from $ 2 billion. $ 1.96 billion.
Non-performing assets, meanwhile, rose 9% to $ 8.89 billion from $ 5.65 billion, while non-accrual loans rose to $ 8.73 billion from $ 5. , $ 65 billion “… mainly due to the increase in the portfolios of commercial real estate, residential mortgages and leasing, partially offset by a decrease in the commercial and industrial portfolio,” a indicated the bank.
Net write-offs remained low at $ 584 million, down almost a quarter from the previous year. So far, increased government unemployment, stimulus checks, small business relief and loan deferral programs have averted widespread loan losses, but bank executives warn they could still happen.
Overall, the bank’s earnings included a restructuring charge of $ 781 million, a reserve release of $ 757 million due to the sale of its student loan portfolio, and an impact of $ 321 million in due to “the impact of provisions for customer clean-up”.
Wells Fargo is among several other large U.S. banks that have been given the green light to resume first quarter 2021 share buybacks by the Federal Reserve.
The US central bank has lifted its buyout ban for the most profitable lenders, believing their capital buffers are sufficient to potentially support hundreds of billions of dollars in loan losses linked to the Covid-19 pandemic and the economic downturn .
In this sense, the board of directors of the company approved an increase in the power of the bank to repurchase ordinary shares by an additional 500 million shares, bringing the total authorized amount to 667 million ordinary shares.
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