Wells Fargo (WFC) earnings for the fourth quarter of 2020 beat estimates, however gross sales fell in need of expectations

A man walks past a Wells Fargo Bank branch on a rainy Washington morning.

Gary Cameron | Reuters

Wells Fargo released mixed fourth quarter results on Friday, which drove the bank’s stocks lower.

Here’s how the numbers compare to Wall Street’s expectations:

  • Result: 64 cents per share compared to a refinitive estimate of 60 cents per share
  • Revenue: $ 17.93 billion versus $ 18.127 billion forecast
  • Net interest income: $ 9.275 billion versus $ 9.34 billion in FactSet estimate

Wells Fargo shares fell 4.7% ahead of the opening bell.

The bank’s earnings include a $ 781 million restructuring fee, a $ 757 million reserve release due to the sale of its student loan portfolio, and a $ 321 million hit due to the “impact of provisions for customer corrections” .

“While our financial performance has improved and we earned $ 3.0 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the work required to move past our major legacy problems,” said CEO Charlie Sharp in a statement. “With a more consistent broad-based recovery, and as we continue to advance our agenda, we expect you will see that this franchise is capable of much more.”

Revenue in the bank’s consumer banking and credit business decreased 5% year over year from $ 9.08 billion to $ 8.61 billion. Business revenue was $ 2.388 billion, down 18% from $ 2.9 billion for the same period last year.

Corporate and investment banking revenue decreased 7% year over year from $ 3.329 billion to $ 3.11 billion. This includes a 25% decrease in trading volume on the stock markets. Income from trading in fixed-income securities remained roughly unchanged from the previous year.

“We have set priorities and are pushing our risk and control development,” said Scharf. “We have clarified our strategic priorities and are leaving certain non-strategic businesses. We have identified and are implementing a number of measures to improve our financial performance.”

Wells Fargo stocks rose more than 28% in the fourth quarter as the introduction of Covid vaccines and the prospect of further fiscal stimulus raised hopes of a strong economic recovery.

Despite the strong gain, Wells shares still lagged JPMorgan Chase, which rose nearly 32% over the same period. JPMorgan’s quarterly results, released on Friday, exceeded estimates in the income statement. Citigroup’s result was mixed.

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