Off The Wire
Wells Fargo profit beats estimates on cost cuts, loan demand
Jan 14 (Reuters) - Wells Fargo & Co on Friday beat analysts' estimates for fourth-quarter profit as a rebound in U.S. economic growth encouraged more customers to take loans and the bank kept a tight lid on costs.
The bank reported a 5% rise in loans in the second half after government stimulus programs kept demand low early in the year.
Wells Fargo's shares rose 2.2% to $57.26 in premarket trading.
Overall, non-interest expenses fell 11% to $13.2 billion, driven by lower personnel costs, as well as lower restructuring charges and operating losses.
Chief Executive Officer Charlie Scharf has made cost cuts a cornerstone of his turnaround plan, targeting $10 billion in savings annually over the long term.
"The changes we've made to the company and continued strong economic growth prospects make us feel good about how we are positioned entering 2022," Scharf said in a statement.
The fourth-largest U.S. bank has been in regulators' penalty box since 2016 when a sales practices scandal came to light and has paid billions in fines and restitution.
Wells Fargo has been also operating under a $1.95-trillion asset cap imposed by the Federal Reserve in 2018, which has crimped its ability to boost interest income by improving loan and deposit growth.
"We also remain cognizant that we still have a multiyear effort to satisfy our regulatory requirements – with setbacks likely to continue along the way – and we continue our work to put exposures related to our historical practices behind us,” Scharf said.
Wells Fargo said profit rose to $5.8 billion, or $1.38 per share, in the three months ended Dec. 31, from $3.09 billion, or 66 cents per share, a year earlier.
The bank's profit got a boost of $943 million from the sale of its corporate trust and asset management units.
Wells Fargo also reported an $875 million decrease in the allowance for credit losses.
According to Refinitiv estimates, Wells Fargo earned $1.25 per share excluding items, compared with analysts' average expectation of $1.13.
Wells Fargo's total revenue rose 13% to $20.9 billion, beating estimates of $18.9 billion.