October 12, 2018 12:04 pm
Categorised in: Breaking Financial News
Wells Fargo & Co.‘s third quarter revenue topped expectations as the company revamps its operations for a digital banking age.
Revenue of $21.9 billion slightly beat the average analyst forecast of $21.89 billion. Earnings per share were $1.13 for the quarter compared to the estimate of $1.17, but it wasn’t immediately clear whether there were any one time charges or gains.
Shares of Wells Fargo rose 2 percent in premarket trading.
Net income was $6 billion in the quarter, up 33 percent from the same quarter last year.
Wells Fargo is working on cutting costs. In September, it announced plans to cut 5 percent to 10 percent of its workforce over the next three years as part of an ongoing turnaround plan. Wells employs 265,000 people. It said changing consumer behavior, including a preference for digital self-service options, is the reason for the cuts.
In a statement on Friday, Wells Fargo CFO John Shrewsberry said, “We saw positive business trends in the third quarter, including growth in primary consumer checking customers, increased debit and credit card usage, and higher year-over-year loan originations in auto, small business, home equity and personal loans and lines.”
Primary checking accounts customers rose 1.7 percent from last year. But mortgage activity was down as loan applications and originations both fell from the second quarter. Car loan originations rose 10 percent from the third quarter last year, and small business loans rose 28 percent.
Wells said its net interest margin ticked up to 2.94 percent from 2.93 percent in the second quarter. With interest rates rising, banks could expect to make more money on lending. Net interest income in the quarter rose 9 percent from last year.
A regulatory enforcement action means it can’t grow substantially until it gets its house in order after multiple scandals involving sales practices. Wells fell short of Wall Street’s expectations for the second quarter, as revenue and net income in the bank’s three business lines fell compared with the same period last year.
This is breaking news. Please check back for updates.