Wells Fargo exceeds expectations with $ 6 billion 2Q profit




FILE – On this Wednesday, December 19, 2012, a file photo of a man walks past a Wells Fargo store in Philadelphia. Wells Fargo & Co. made a profit of $ 6 billion in the second quarter, after reporting a loss in the same period a year earlier. The San Francisco-based bank said Wednesday, July 14, 2021 that it had a profit of $ 1.38 per share compared to a loss of $ 1.01 per share a year ago.Matt Rourke / AP

SILVER SPRING, Md. (AP) – Wells Fargo had its most profitable quarter in two years, easily beating Wall Street estimates as the global economy continues to improve rapidly in the wake of the virus pandemic.

Wells earned $ 6 billion during the period, or $ 1.38 per share, easily beating analysts’ forecasts of 98 cents per share. Revenue was also well above forecast, with the bank raising $ 20.27 billion in the quarter. Analysts had expected revenue of $ 17.76 billion, according to FactSet. The company lost $ 1.01 per share during the same period last year as the coronavirus pandemic ravaged the global economy.

Wells said its net interest income fell 11%, mainly due to falling interest rates and falling loan balances.

In another sign of improving conditions, the San Francisco bank released $ 1.6 billion from its loan loss reserves, money set aside to cover bad debts.

Expectations were high for banks this earnings season. Banks set aside tens of billions of dollars to guard against customer defaults at the start of the pandemic; some of those billions are now being reallocated to the “right” side of their balance sheets. These releases of loan loss reserves have boosted banks’ financial results over the past two quarters.

As previously announced, Wells plans to increase its third quarter dividend to 20 cents per share, from 10 cents per share, pending board approval. Just over a year ago, its dividend was 51 cents per share.

Wells is trying to break out of strict federal guidelines that set its asset cap at just under $ 2 billion, hampering its ability to grow.

The Federal Reserve capped the size of Wells Fargo’s assets in 2018 after a series of scandals, including the discovery of millions of fake checking accounts opened by its employees to meet sales quotas. The Fed lifted that cap last April as part of the federal government’s wage protection program because many Wells small business customers were barred from applying, but most restrictions remain.



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