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A flawless stay
Wells Fargo
& Co. said its third-quarter profit jumped 32 percent as it continued to cut costs and boost operations as it struggled to overcome regulatory problems.
Shares rose about 1.5% after the earnings announcement.
The bank posted a profit of $ 6.01 billion, or $ 1.13 per share. Analysts surveyed by Refinitiv forecast earnings per share of $ 1.17.
Revenues reached 21.94 billion dollars, against 21.85 billion dollars a year ago.
Wells Fargo's return on equity, a key measure of profitability, increased in the third quarter to 12.04%.
The San Francisco-based lender is still struggling to overcome the scandal of business practices that erupted in its retail bank about two years ago. The problems have spread to other business areas of the bank and the bank faces numerous regulatory inquiries.
For Chief Executive Officer Timothy Sloan, the most pressing concerns are growth and costs.
In late September, the bank announced plans to cut up to 26,500 jobs over the next three years, up to 10%, depending on the changing behavior of consumers.
Wells Fargo also remains subject to an unprecedented growth ceiling from the Federal Reserve. In September, Chief Financial Officer John Shrewsberry said the bank was expecting the Fed to raise the asset ceiling in the first half of 2019.
Wells Fargo had been one of the largest stable banks in terms of earnings and earnings growth. But his actions greatly underperformed his peers following the scandal of business practices.
Since then, the bank has revealed a host of problems in its wealth management business and, more recently, compliance issues in its wholesale banking business services division.
The sales scandal and other regulatory investigations have had a positive impact on spending in recent quarters, but costs fell 4% in the third quarter to $ 13.76 billion. However, the bank recorded operating losses of $ 605 million resulting from customer rebates, including $ 241 million related to inappropriate auto loan fees.
It recorded a one-time gain of $ 638 million from the sale of $ 1.7 billion of Pick-a-Pay mortgages.
Wells Fargo's community banking unit, which includes the unit responsible for questionable sales tactics in recent years, was $ 2.82 billion, an increase of 50% over the previous year. $ 88 billion it earned in the third quarter of 2017.
The retail banking sector is undergoing another major change and the future announces high-tech, sophisticated and, for large banks, very urban. So what has changed? Photo: Shaumbé Wright / The Wall Street Journal
Wells Fargo's mortgage business, the largest in the US by volume, generated $ 846 million in third quarter fees, 19% lower than the $ 1.05 billion posted in the same period from the previous year. The bank made $ 46 billion in home loans between the end of June and the end of September, compared with $ 50 billion in the second quarter of 2018 and $ 59 billion in the third quarter of 2017.
The Wells Fargo loan portfolio has been reduced. Total loans at the end of the third quarter reached $ 942.3 billion, down from $ 951.87 billion for the same period last year. Commercial lending, which is one of the largest components of the bank's total portfolio, was $ 501.89 billion compared to $ 500.15 billion in the third quarter of 2017.
Despite the overall decline in lending, the profitability of the bank's lending business has increased. Wells Fargo's net interest margin, which is a strong measure of its ability to lend to its customers' deposits, was 2.94%, compared with 2.93% at the end of June and 2.87% in the third quarter. from the previous year.
A flawless stay
Write to Emily Glazer at [email protected]
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