Wells Fargo’s stock drops after profit falls below expectations, while revenue tops forecasts

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Shares of Wells Fargo & Co. fell 1.8% in premarket trading Wednesday, after the bank reported a third-quarter profit that was less than half what it was last year and was below expectations, while revenue topped forecasts. Net income fell to $1.72 billion, or 42 cents a share, from $4.04 billion, or 92 cents a share, in the year-ago period, to miss the FactSet consensus of 44 cents a share. Total revenue dropped 14% to $18.86 billion, above the FactSet consensus of $17.99 billion, while net interest income declined about 20% to $9.4 billion to miss expectations of $9.7 billion. Net interest margin fell to 2.13% from 2.66%, just below expectations of 2.19%. Provision for credit losses was $556 million, down from $608 million a year ago and down from $3.38 billion in the second quarter, while the FactSet consensus was $1.79 billion. “Our top priority continues to be the implementation of our risk, control, and regulatory work, but we are also taking targeted actions to improve the experience for our customers, clients, communities and employees,” said Chief Executive Charlie Scharf. “As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain, but we remain strong with our capital and liquidity levels well above regulatory minimums.” The stock has tumbled 54.01% year to date through Tuesday, while the SPDR Financial Select Sector ETF has declined 18.7% and the S&P 500 has gained 8.7%.
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