Wells Fargo’s earnings hit 56% despite epidemic hit subsidy

        Wells Fargo & Company WFC <span>-4.79%</span>


  Its third-quarter profit fell 56% on Wednesday, though the bank indicated it was prepared for a wave of sour loans.

Nevertheless, the results were an improvement from the second quarter, when the bank lost $ 2.38 billion as it set aside money for potential bad loans.

The epidemic has reduced earnings in the banking sector this year, forcing lenders to set aside tens of billions of dollars in preparation for loan defaults. Now, with large-scale stockpiles, banks believe they have been given enough stagnation to stop the press. Profit increased and fell to Citigroup at JPMorgan Chase & Co. from a year ago Inc.

Banks said on Tuesday.

Wells Fargo, one of the nation’s largest consumer lenders, invested an additional $ 751 million in the third quarter for sourcing loans, largely in its consumer bank. This is much smaller than the $ 9.57 billion it set aside in the second quarter and $ 3.83 billion in the first quarter.

Loan losses were low, but the bank said they may be delayed as it offered payment defaults during the epidemic.

Chief Executive Charles Scruff said in a statement, “As we look ahead, the pace of economic recovery is unclear as Kovid’s negative impact continues and further fiscal stimulus is uncertain.”

The bank entered a coronavirus recession in worse shape than its peers, declining revenues and a bloated spending base. It is also trying to step back from the four-year-old fake-accounts scam.

In the third quarter, the bank reported revenue of $ 18.86 billion, down 14% from $ 22.01 billion a year earlier. Analysts had expected revenue of $ 17.99 billion.

Mr. Sherf is now a year in the job. He has said that the bank should cut its annual expenses by $ 10 billion, beginning a process that would go well next year and lay off tens of thousands.

Uninterrupted spending in the third quarter totaled $ 15.23 billion, almost flat from a year earlier. It included restructuring fees of $ 718 million, stating that it was largely obligated to pay for the workforce. The bank cut its employee head count by 1,100 in the third quarter.

The expenses also included a $ 961 million customer remediation payment, resulting in the bank’s efforts to resolve its sales-practices scandal. The process, focusing primarily on areas including auto loans, mortgages and deposit accounts, has continued longer than it had begun, Chief Financial Officer John Shrewsberry said on a call with reporters.

Mr Scharf said on a call from analysts that the bank plans to leave some businesses it deems not important to its customers. An example: The bank has informed customers that it plans to exit the private student loan business, Mr. Shawsberry said.

Rock-bottom interest rates have given banks another setback, reducing the income they can earn from borrowed money. Wells Fargo’s interest income fell 19% to $ 9.37 billion from a year earlier, while its non-income income declined 9% to $ 9.49 billion.

The bank’s shares have fallen by more than 50% this year. They were down 5.3% on Wednesday.

Write [email protected] on Ben Eisen