Wells Fargo Stock drops as revenues disappoint

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Wells fargo

shares decline after the San Francisco-based bank reported lower than expected and weaker revenue than in the same quarter a year earlier.

Wells Fargo (ticker: WFC) posted profit of $ 3.0 billion, or 64 cents per share, on revenue of $ 17.9 billion. Analysts polled by FactSet expected the bank to post earnings of 59 cents per share, but with revenue of $ 18.1 billion. Profits were slightly higher than in the fourth quarter of 2019, when they stood at $ 2.9 billion, but revenues were lower than the figure of $ 19.9 billion a year earlier.

Stocks fell 4% in pre-market trading.

Well Fargo’s allowance for credit losses decreased by $ 823 million, reflecting a release of $ 757 million of reserves after the sale of its student loan portfolio, as well as lower net bad debt write-offs.

“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 aside our significant legacy issues. of our heritage, ”said Charlie Scharf, CEO of the bank. in a report.

The bank’s efficiency ratio, which outperformed its peers, has been climbing sequentially and year on year. In Q4 2020, the efficiency ratio was 83%, higher than 81% and 79% in Q3 2020 and Q4 2019 respectively. Lower numbers indicate operating expenses represent a lower share of revenue .

“With a more cohesive overall recovery and as we continue to move forward with our program, we hope you will see that this franchise is capable of much more,” said Scharf.

In anticipation of the results, the bank reorganized its business units into banking and consumer lending, commercial banking, corporate and investment banking, and wealth and investment management, to become more efficient.

There were high hopes for Wells Fargo before the results were announced. Wells Fargo has done worse than its peers in 2020 as it continues to recover from its fake accounts scandal. Analysts are increasingly finding that the bank is the one with the most room for improvement.

The bank plans to organize a call with analysts on Friday morning. Wall Street is hoping to know how the bank plans to cut spending after announcing plans to do so in previous quarters.

Citigroup

(C) and

JPMorgan Chase

(JPM) also released results on Friday.

Bank of America

(BAC),

Goldman Sachs

(GS) and

Morgan Stanley (MS)

will release its fourth quarter results next week.

Write to Carleton English at [email protected]