Wells Fargo returns to profit after painful second quarter
Wells Fargo returned to profit in the third quarter as the bank followed other US lenders in reporting a sharp drop in bad debt provisions, reflecting an economy in the process of stabilizing.
Provisions for credit losses were $ 769 million, from $ 9.5 billion in the second quarter, helping net income to $ 2 billion, or 42 cents per share. It recorded a loss of $ 2.4 billion in the previous quarter. Analysts were expecting earnings of 45 cents a share.
Revenue, at $ 18.9 billion, was better than expected and up from $ 17.8 billion in the previous quarter. Revenues from Wells’ big mortgage deal hit $ 1.6 billion, from $ 317 million in the second quarter, driven by U.S. homeowners rushing to refinance their homes at lower interest rates.
Charlie Scharf, Managing Director, said “Our third quarter results reflect the impact of aggressive monetary and fiscal stimulus on the US economy. High mortgage bank charges, higher equity markets and declining sequential write-offs positively impacted our results, while historically low interest rates “put pressure on earnings.
Wells shares have lost half of their value this year, lagging behind their peers, as the bank struggled to restructure and cut costs in the wake of the 2016 fake accounts scandal. Shares fell 1.6% in pre-market trading on Wednesday.