Wells Fargo profit beats estimates
Mortgage banking revenue rises, loan-loss provisions improve
Wells Fargo & Co., the lender whose chief executive officer stepped down this week amid a scandal in its branch network, posted third-quarter profit that beat analysts’ estimates as loan-loss provisions improved and revenue from mortgage banking increased.
Net income slid to $5.64 billion, or $1.03 a share, from $5.8 billion, or $1.05, a year earlier, the San Francisco-based company said Friday in a statement. The average estimate of 28 analysts surveyed by Bloomberg was for per-share profit of $1.01. Total revenue increased 1.8 percent to $22.3 billion, exceeding analysts’ expectations.
Last month’s revelation that employees may have opened millions of unauthorized accounts has stained the bank’s reputation and prompted Wednesday’s resignation of Chairman and CEO John Stumpf, 63. The scandal is forcing the firm to scale back its push to sell more products to customers.
Customer visits with branch bankers fell 10 percent in September compared with the previous month, while the number of consumer checking accounts opened dropped about 30 percent, Wells Fargo said Friday in a slide presentation, without giving a cause for the declines. Credit-card applications were down 20 percent from a year earlier.
“We know that it will take time and a lot of hard work to earn back our reputation,” Tim Sloan, 56, who replaced Stumpf as CEO, said in the statement.
Total loans increased less than 1 percent to $961.3 billion from the previous quarter, while mortgage banking revenue climbed 4.9 percent to $1.67 billion, according to the statement. Expenses rose 7 percent to $13.3 billion on higher compensation costs and litigation accruals.
Third-quarter provisions for credit losses declined 25 percent to $805 million from the previous quarter and climbed 15 percent from a year earlier, Wells Fargo said. Net interest income, including the loan-loss provision, increased 3.7 percent to $11.1 billion.
Third-quarter profit from wholesale banking rose 6.3 percent to $2.05 billion from a year earlier, while wealth-management net income gained 12 percent to $677 million, according to the statement.