Wells Fargo posts surprise revenue rise

Bloomberg

Wells Fargo & Co. hasn’t yet fixed all of its problems, but at least it stopped its revenue slump. The bank posted a surprise increase in revenue, with the figure rising to $21.9 billion in the third quarter, after analysts expected a slight decline. The bank benefited from rising interest rates and saw growth in consumer-lending originations in areas such as auto and personal loans, it said in a statement.
It’s the first time this year revenue has grown and may indicate that Chief Executive Officer Tim Sloan’s efforts to turn Wells Fargo around are paying off. The lender has posted muted results in the wake of a series of consumer scandals that erupted in 2016 when the bank disclosed it may have opened millions of accounts on behalf of customers who didn’t want them, and the Federal Reserve has prohibited Wells Fargo from increasing assets until missteps are fixed to the regulator’s satisfaction.
Wells Fargo “has been able to put a number of the scandals it has been plagued by behind it,” Octavio Marenzi, CEO of capital-markets management consultancy Opimas, said in an email. Third-quarter earnings “look solid overall — good interest margins, and low charge-offs. A cloud on the horizon is the bank’s slip in deposits, which have declined by 3 percent. So far, the bank has been able to keep net interest income increasing.”
Shares of San Francisco-based Wells Fargo climbed 1.6 percent to $52.28 in New York. They have dropped 14 percent this year, compared with a 5.3 percent decline in the KBW Bank Index.
“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,” Chief Financial Officer John Shrewsberry said in the statement.
Still, net income rose less than analysts expected. It climbed to $6 billion, or $1.13 a share, missing the $1.18-a-share average estimate of 28 analysts in a Bloomberg survey.
“All things considered, we thought the quarter was decent given where WFC stands today,” Piper Jaffray analyst Kevin J. Barker, who has a neutral rating on Wells Fargo shares, said in a note to investors.