Wells Fargo posted a modest increase in profits in the fourth quarter of the year, as lower credit costs more than offset a 10% drop in revenue.
The bank, the fourth-largest in the United States by assets, reported net income of $ 2.99 billion for the fourth quarter, up about 4% from the same period in 2019. The bank said earnings of 64 cents per share, higher than the 59 cents expected by analysts. in a Bloomberg poll. Revenue for the quarter was $ 17.9 billion, up from $ 19.9 billion a year ago.
“Although our financial performance improved and we earned $ 3 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 issues inherited from our legacy, ”said Charlie Scharf, who pledged to restore the bank’s fortunes after taking over as CEO in September 2019.
Restructuring charges took an additional $ 781 million from fourth quarter earnings. Net interest income fell 17% to $ 9.28 billion from a year earlier. Credit spreads edged up from the third quarter, reflecting a slight increase in US benchmark interest rates, which are still close to their historic lows.
The loan loss charges were a positive. After setting aside more than $ 10 billion in the first nine months of the year, Wells enjoyed a gain of $ 179 million in loan loss provisions in the fourth quarter, largely because he released from reserves tied to a portfolio of student loans that he sells.
Higher-than-expected earnings make it more likely that Wells will buy back shares in the first quarter, as share buybacks are capped by recent bank earnings. Wells said his board approved the buyback of an additional 500 million shares, but did not report any impending plans to go ahead with the plan.
Wells reported 56% drop in net profit third quarter, a sharper drop than their rivals Citigroup, Bank of America and JPMorgan Chase, as lower interest rates squeezed lines of credit while restructuring charges pushed up costs.
Wells has a smaller investment bank than its rivals, so it enjoyed less loot thanks to the trading, trading and fundraising booms of 2020.