Shares of Wells Fargo fell after the Bank reported a loss and decline in quarterly revenues worse than expected wall Street. The Bank has the necessary reserves for repayment of potential defaults on loans, but were forced to reduce dividends.
The fourth-largest U.S. Bank by assets Wells Fargo (NYSE: WFC) today reported a record loss of $2.4 billion for the second quarter that were worse than management’s expectations and Bank analysts on wall Street.
For the three months ended June 30, loss per share of Wells Fargo amounted to $0,66, or $0,46 worse than analysts ‘ forecast of $0.20 loss per share.
One of the largest U.S. mortgage lenders announced a total quarterly loss of $2.4 billion compared with profit of $6.2 billion in the same quarter last year. This is the first loss since the financial crisis of 2008.
Total quarterly revenue was down 16% to $17.8 billion, also below the average analytical estimates of $18.4 billion to Compare quarterly results of Wells Fargo for the last two years can link.
Wells Fargo also announced plans to sharply reduce its dividend to $0.10 per share from $0.51 per that were paid in the last four quarters. The reduction was significantly more than expected wall street.
Details of the quarterly report
“We are extremely disappointed with both the results of the second quarter, and our intention to reduce our dividend. Our opinion on the duration and severity of the economic downturn has significantly deteriorated compared to the assumptions used in the last quarter,” said CEO Charlie Scarfe.
For the quarter Wells Fargo has given $6.2 billion more loans than in the previous quarter. The balance of total loans at June 30 amounted to $935,2 billion.
At the same time, total deposits also increased by 9% or $117.7 billion, to $1.4 trillion.
Unlike JPMorgan (JPM), Wells Fargo does not have a strong investment units, which could compensate for the loss due to low Central Bank interest rates and negative impacts of the pandemic.
It income investment division brought in the highest revenues to JPMorgan over the past quarter. Read more in the article Marketinfo.pro “JPMorgan reported an increase in quarterly revenues thanks to the power of investment units”.
However, Wells Fargo has raised about $20.4 billion of reserves, preparing for a potential wave of defaults on loans.
At the time of writing, the shares of Wells Fargo fell by 5.1%, from the beginning, they lost of 52.77%.
