Wells Fargo earnings fall short of estimates

13. October 2020.

Wells Fargo reported disappointing earnings for the third quarter as low rates put pressure on the bank’s net interest income, according to a report in CNBC.

“Our third-quarter results reflect the impact of aggressive monetary and fiscal stimulus on the US economy,” Charles Scharf, Wells Fargo CEO said in a statement. “Strong mortgage banking fees, higher equity markets, and declining sequential charge-offs positively impacted our results, while historically low interest rates reduced our net interest income and our expenses continued to remain elevated.”

Here’s how its third-quarter earning results panned out:

  • Stock down 50% for the year at $24.
  • Net interest income fell by 19% to $9.368 billion from the year-earlier period.
  • Earnings reported was 42 cents per share vs. a Refintiv estimate of 45 cents per share.
  • Revenue was $18.86 billion vs. $17.978 billion forecast
  • CET1 ratio rise to 11.4%

The bank set aside $769 million for credit losses in the third quarter, which was well below a FactSet estimate of $1.76 billion, down from the $9.5 billion set aside in the second quarter

The bank’s noninterest income topped analyst expectations, coming in at $9.5 billion, as deposit, card and investment fees all grew on a quarter-over-quarter basis. Mortgage-banking income rose to $1.6 billion from $317 million in the second quarter.

“The trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain, but we remain strong with our capital and liquidity levels well above regulatory minimums,” Scharf said in a statement.

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