Wells Fargo Profit Drops 89% as it Girds for Soured Loans
April 14 2020 - 7:53AM
Dow Jones News
By Ben Eisen
Wells Fargo & Co.'s first-quarter profit sank 89% and the
bank set aside billions of dollars to cover potential loan losses
from the spread of the coronavirus.
The San Francisco-based bank made $653 million in profit
compared with $5.86 billion in the year-earlier period. Earnings
per share were 1 cent. Analysts polled by FactSet had forecast 38
cents.
Revenue of $17.72 billion was down 18% from $21.61 billion a
year ago. That missed analyst expectations of $19.4 billion.
The spread of the coronavirus hit banks hard in the first
quarter as it forced much of the country to stay home and
eliminated millions of jobs. Corporations drew down on bank credit
lines and consumers asked to pause debt payments.
Wells Fargo said it has set aside $3.83 billion to cover
potential loan losses, up more than $3 billion from the previous
quarter.
Before the crisis hit, Wells Fargo was already dealing with a
fake-accounts scandal that has battered its reputation. The bank
last year hired a new chief executive, Charles Scharf, an outsider
tasked with resolving outstanding regulatory issues.
In February, the bank reached a $3 billion settlement with the
Department of Justice and Securities and Exchange Commission,
closing the door on a major portion of its legal problems.
The bank still faces regulatory problems, including a
restriction on its growth. The Federal Reserve temporarily lifted a
piece of that restriction after Wells Fargo said the sanction was
forcing it to limit small-business loans.
Write to Ben Eisen at ben.eisen@wsj.com
(END) Dow Jones Newswires
April 14, 2020 08:38 ET (12:38 GMT)
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