Wells Fargo beats first quarter estimates

Wells Fargo reported better-than-expected quarterly results despite the downturn in the oil patch.

First quarter net income dropped 7.6% from last year’s level to $5.46bn, sending earnings per share down from $1.04 to $0.99.

Economists had been calling for quarterly EPS of $0.97.

However, in the comparable period of 2015 the San Francisco-based lender – one of the largest lenders to the oil sector - recorded a discrete tax benefit of $359m or seven cents per share.

In parallel, revenues grew by 4.0% to hit $22.2bn (consensus: $21.61bn) while its net interest margin declined from 2.95% to 2.90%

The lender reported a return on equity of 11.75% for the latest three month period, down from the 13.17% achieved over the three months ending on 31 March 2015.

Total average loans increased by 7.0% to $927.2bn in comparison to the first quarter of 2015.

Net charge-offs jumped by $178m to $886m versus the year ago level.

“While challenges in the energy industry and persistent low rates impacted our bottom line, our diversified business model was again beneficial to our results,” chief financial officer John Shrewsberry said in a statement.

As of 13:27 shares in Wells Fargo were lower by 0.67% to $48.70.