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Wells Fargo shares slide after fourth-quarter revenue falls short of expectations

A man walks past a Wells Fargo Bank branch on a rainy morning in Washington.

Gary Cameron | Reuters

Wells Fargo on Friday released mixed results for the fourth quarter, sending the bank’s stock lower.

Here’s how the numbers compared with Wall Street expectations:

  • Earnings: 64 cents per share vs. Refinitiv estimate of 60 cents per share
  • Revenue: $17.93 billion vs. $18.127 billion forecast
  • Net interest income: $9.275 billion vs. $9.34 billion FactSet estimate

Shares of Wells Fargo dipped 4.7% before the opening bell.

The bank’s earnings include a $781 million restructuring charge, a $757 million reserve release due to the sale of its student-loan portfolio and a $321 million hit due to the “impact of customer remediation accruals.”

“Although our financial performance improved and we earned $3.0 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us,” CEO Charlie Scharf said in a statement. “With a more consistent broad-based recovery and as we continue to press forward with our agenda, we expect you will see that this franchise is capable of much more.”

The bank’s consumer banking and lending division saw revenue decline by 5% on a year-over-year basis to $8.61 billion from $9.08 billion. Revenue from its commercial banking business came in at $2.388 billion, down 18% from $2.9 billion in the year-earlier period.

Corporate and investment banking revenue dropped 7% year over year to $3.11 billion from $3.329 billion. That includes a 25% slide in equity markets trading revenue. Fixed-income trading revenue was roughly flat from a year earlier.

“We have prioritized and are moving forward on our risk and control buildout,” Scharf said. “We have clarified our strategic priorities and are exiting certain non-strategic businesses; and we have identified and are implementing a series of actions to improve our financial performance.”

Shares of Wells Fargo shares rallied more than 28% in the fourth quarter as the rollout of Covid vaccines and the prospects for more fiscal stimulus raised hope for a strong economic recovery.

Despite the sharp gain, Wells shares still lagged those of JPMorgan Chase, which rose nearly 32% in the same time period. JPMorgan’s quarterly numbers, released earlier Friday, beat estimates on the top and bottom lines. Citigroup‘s earnings were mixed.

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