Wells Fargo (WFC) Q2 2020 Results Are Below Estimates

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Wells Fargo reported disappointing third quarter results on Wednesday as low rates put pressure on the bank’s net interest income.Here’s how the banking giant’s numbers stacked up against Wall Street expectations:

  • Profit: 42 cents per share vs. a Refintiv estimate of 45 cents per share
  • Turnover: $ 18.86 billion vs. $ 17.978 billion forecast

Wells Fargo shares fell 1.9% in the pre-market.

“Our third quarter results reflect the impact of an aggressive monetary and fiscal stimulus on the US economy,” Wells Fargo CEO Charles Scharf said in a statement. “High mortgage bank charges, rising equity markets and lower sequential write-offs positively impacted our results, while historically low interest rates reduced our net interest income and our expenses continued to decline. stay high.

The bank’s net interest income fell 19% to $ 9.368 billion from a year earlier. The sharp drop comes as the Federal Reserve has kept interest rates at historically low levels in response to the coronavirus pandemic.

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

Wells’ report offered positive points for investors. The bank has set aside $ 769 million for third-quarter credit losses. That’s well below a FactSet estimate of $ 1.76 billion and down sharply from the $ 9.5 billion set aside in the second quarter.

The bank’s non-interest income also exceeded analysts’ expectations, reaching $ 9.5 billion, as deposit, card and investing fees all increased quarter over quarter. Mortgage banking income reached $ 1.6 billion, from $ 317 million in the second quarter.

Wells Fargo stocks have been under pressure this year as the company grapples with the economic downturn triggered by the pandemic. Entering Wednesday’s session, Wells is down 54% year-to-date.

The stock also lags shares of rival banks in 2020. JPMorgan Chase is down 27.7% in 2020 and Bank of America is down 29.2% during that time.

Wells is also still reeling from his fake accounts scandal in 2016.

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