Analysts unimpressed by Wells Fargo's second quarter results
Wells Fargo saw a small rise in profits in the latest three months which the lender attributed to improved net interest income and lower costs, although analysts appeared less than impressed.
Wells Fargo & Co.
$70.24
11:09 31/12/24
One analyst pointed out how a $350m reserve release had also flattered results.
Nevertheless, chief financial officer John Shrewsberry said, “Wells Fargo’s second quarter results once again reflected the benefit of our balanced business model. Our balance sheet remained strong, as evidenced by solid asset quality, liquidity and capital, and we were within our targeted ranges for ROA, ROE and efficiency."
In the second quarter of 2015 net profits slipped 0.2% from the year ago period to reach $5.72bn.
However, earnings per share reached $1.03 on a diluted basis, in comparison to EPS of $1.01 in the second quarter of 2014.
The average forecast from analysts was for EPS of $1.02.
The top line grew 1% to $21.3bn.
Will long-term interest rates head higher?
The US banks’ results came against a backdrop of market commentary highlighting how restrained interest rates have been Stateside, what with the Federal Reserve still on hold. On a more medium-term basis, at least a few observers – but by no means all – were sceptical about how successful Fed Chair Janet Yellen would ultimately be in raising longer term interest rates and steepening the interest rate yield curve.
Return on equity on the other hand fell to 12.71% versus 13.4% a year ago.
By quarter-end, the bank had grown loans by $59.5bn or 7% to $888.5bn.
Net charge-offs fell by $67m to reach $650m.
The lender’s fully phased-in Tier 1 capital ratio under Basel III came in at 10.5%.
The quarterly dividend payable to holders of the bank’s ordinary shares was increased by 7% to 37.5 US cents from 35 cents for the comparable period of a year ago.
As of 13:58 BST shares of the bank were trading 1.48% lower to $55.90.