Wells Fargo Earnings Match Estimates, Revenue Disappoints
Wells Fargo Earnings Match Estimates, Revenue
Disappoints
Wells Fargo on Monday released its fiscal third-quarter results, posting higher profits but lower revenue as the nation's fourth largest bank in terms of assets had fewer problem loans, allowing it to reduce its reserves for troubled loans. The San Francisco-based bank was felt the impact of weak economic condition during the quarter, however, and ultra-low interest rates diminished its earnings from lending.
For the three months ended September 30th, Wells Fargo said it earned $4.06 billion, or 72 cents a share, 21 percent higher than its 3Q 2010 earnings of $3.34 billion, or 60 cents a share. Overall revenue, meanwhile, slipped 4 percent from the year-ago quarter to $19.63 billion. Earnings met expectations while revenue fell short of projections from analysts in a recent FactSet survey, who had forecast profit of 72 cents a share on revenue of $20.24 billion, on average.
The bank's declining revenue underscored a pair of issues affecting the entire banking system, low interest rates and new regulations limiting certain bank fees. Investors are concerned about how Wells Fargo will perform in the next few quarters as interest rates are expected to remain low for the foreseeable future. Unlike the other major US banks like JP Morgan Chase and Bank of America, Wells Fargo doesn't have a large investment banking business and relies almost exclusively on traditional lending, which is closely tied to interest rates.
Wells Fargo on Monday released its fiscal third-quarter results, posting higher profits but lower revenue as the nation's fourth largest bank in terms of assets had fewer problem loans, allowing it to reduce its reserves for troubled loans. The San Francisco-based bank was felt the impact of weak economic condition during the quarter, however, and ultra-low interest rates diminished its earnings from lending.
For the three months ended September 30th, Wells Fargo said it earned $4.06 billion, or 72 cents a share, 21 percent higher than its 3Q 2010 earnings of $3.34 billion, or 60 cents a share. Overall revenue, meanwhile, slipped 4 percent from the year-ago quarter to $19.63 billion. Earnings met expectations while revenue fell short of projections from analysts in a recent FactSet survey, who had forecast profit of 72 cents a share on revenue of $20.24 billion, on average.
The bank's declining revenue underscored a pair of issues affecting the entire banking system, low interest rates and new regulations limiting certain bank fees. Investors are concerned about how Wells Fargo will perform in the next few quarters as interest rates are expected to remain low for the foreseeable future. Unlike the other major US banks like JP Morgan Chase and Bank of America, Wells Fargo doesn't have a large investment banking business and relies almost exclusively on traditional lending, which is closely tied to interest rates.
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