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Home / Business / Wells Fargo's profit rises 32% while cutting costs

Wells Fargo's profit rises 32% while cutting costs




WFC 1.30%

Wells Fargo


WFC 1.30%

& Co. said third-quarter earnings increased 32% as it continued to cut costs and boost its business while trying to overcome regulatory issues.

The stock rose 1.5% after the results

The bank reported a profit of $ 6.01 billion or $ 1

.13 per share. The analysts of Refinitiv had expected a profit of 1.17 dollars per share.

Sales increased from $ 21.85 billion in the same period last year to $ 21.94 billion.

Wells Fargo's return on equity, an important measure of profitability, rose to 12.04% in the third quarter

The San Francisco-based lender is still struggling to overcome its retail bank's sales practices scandal some two years ago , The problems have spread to the other business areas of the bank, and the bank faces numerous regulatory investigations.

For Chief Executive Timothy Sloan, the immediate concerns are growth and cost. In late September, the bank said it plans to cut back to 26,500 jobs over the next three years or up to 10%. if it adapts to the changing consumer behavior.

Wells Fargo also remains under an unprecedented growth cap from the Federal Reserve. In September, CFO John Shrewsberry said the bank expects the US Federal Reserve to top up its capitalization in the first half of 2019.

Wells Fargo was one of the largest banks in terms of rising profits and revenues. However, following the scandal over selling practices, equities lagged behind their competitors.

Since then, the bank has exposed a number of problems in its wealth management business and recent compliance concerns in its wholesale business with corporate clients. [19659007] The sales scandal and other regulatory investigations have increased costs in recent quarters, but costs fell 4% to $ 13.76 billion in the third quarter. However, the bank recorded losses from customer reimbursements of $ 605 million, including $ 241 million related to unfair car loans.

One-off gains of $ 638 million from the sale of Pick-a- Pay mortgage loans.

The profits in Wells Fargo's community banking unit, which includes the unit responsible for the questionable sales tactics of recent years, amounted to $ 2.82 billion, up 50 percent from the $ 1.88 billion Dollars in the Third Quarter of 2017.

The retail banking business is undergoing another major change, and the future looks highly technical, sophisticated, and very urban for major banks. What has changed? Photo: Shaumbre Wright / The Wall Street Journal

Wells Fargo's largest-dollar mortgage business generated fees of $ 846 million in the third quarter, down 19% from $ 1.05 billion a year ago. The bank granted $ 46 billion in mortgage loans between the end of June and the end of September, compared with $ 50 billion in the second quarter of 2018 and $ 59 billion in the third quarter of 2017.

Wells Fargo's credit book shrunk. Total credit at the end of the third quarter was $ 942.3 billion, down $ 951.87 billion in the same period last year. Commercial loans, which represent one of the largest parts of the Bank's total portfolio, were $ 501.89 billion, compared to $ 500.15 billion in the third quarter of 2017.

In spite of the overall credit reduction, the profitability of the lending business increased Bank. Wells Fargo's net interest margin, a measure of how profitable its clients' deposits can be, rose from 2.93% at the end of June to 2.94% and to 3.87% in the third quarter a year ago.

Indeed


WFC 1.30%

Write to Emily Glazer at emily.glazer@wsj.com


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