Wells Fargo Returns to Profitability as Pandemic Hit Subsides -- Update
14 October 2020 - 11:47PM
Dow Jones News
By Ben Eisen
Wells Fargo & Co. said Wednesday that its third-quarter
profit fell 56%.
The San Francisco-based lender said it made $2.04 billion in the
third quarter, down from a profit of $4.61 billion a year earlier.
Per-share earnings were 42 cents. Analysts polled by FactSet had
expected 44 cents.
Still, the results were an improvement from the second quarter,
when the bank lost $2.38 billion as it set aside money for
potential bad loans.
The pandemic has curtailed earnings across the banking sector
this year by forcing lenders to set aside tens of billions of
dollars to prepare for loan defaults. Now, with massive stockpiles
in place, banks believe they have enough stashed away to let them
press pause. Profit rose at JPMorgan Chase & Co. from a year
ago and fell at Citigroup Inc., the banks said Tuesday.
Wells Fargo, one of the nation's largest consumer lenders, put
aside an additional $751 million in the third quarter for sour
loans. That is smaller than the $9.57 billion it set aside in the
second quarter and $3.83 billion in the first quarter.
The bank entered the coronavirus recession in worse shape than
its peers, hobbled by declining revenue and a bloated expense base.
It has also been attempting to claw its way back from a
four-year-old fake-accounts scandal.
In the third quarter, the bank reported revenue of $18.86
billion, down 14% from $22.01 billion a year earlier. Analysts had
expected revenue of $17.99 billion.
Noninterest expenses in the third quarter totaled $15.23
billion, roughly flat from a year earlier.
Wells Fargo CEO Charles Scharf is now a year into the job. He
has said the bank should cut $10 billion from its annual expenses,
beginning a process that is expected to last well into next year
and result in tens of thousands of layoffs.
The bank's shares have fallen by more than 50% so far this year.
They were down 1.7% Wednesday morning in premarket trading.
Write to Ben Eisen at ben.eisen@wsj.com
(END) Dow Jones Newswires
October 14, 2020 08:32 ET (12:32 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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