Wells Fargo ‘s (ticker: WFC) third-quarter results beat expectations thanks to a release of reserves for anticipated soured loans.
The bank posted a 59% jump in profits from the year-ago quarter, with net income hitting $5.1 billion, or $1.17 per share for the third quarter, coming in ahead of the $1 per share forecast by analysts surveyed by FactSet. Revenue totaled $18.8 billion, better than the $18.3 billion analysts expected.
Wells Fargo stock rose 0.9% in premarket trading Thursday to $46.46.
Third-quarter results were helped by a $1.7 billion release of reserves that were set aside last year in anticipation of a wave of defaults spurred by the coronavirus pandemic.
Wells Fargo reported that net interest income—a measure of the difference between the interest banks earn on loans and pay on deposits—fell 5% from last year due to lower loan balances from early payoffs and muted demand for new loans. All banks have had to contend with weaker lending activity over the last year as many potential borrowers found themselves flush with cash during the pandemic.
In addition to Wells Fargo’s financial results, Wall Street is paying close attention to progress the bank is making in rebuilding itself after its fake accounts scandal from five years ago. The bank still operates under a $2 trillion asset cap set by the Federal Reserve. Last month the bank paid a $250 million fine to the Office of the Comptroller of the Currency for lack of progress in addressing problems in its mortgage business.
“I believe we are making significant progress, and I remain confident in our ability to continue to close the remaining gaps over the next several years, though we may continue to have setbacks along the way,” Charlie Scharf, chief executive at Wells Fargo, said in a statement.
Bank of America (BAC), Citigroup (C), and Morgan Stanley (MS) also reported results Thursday. Goldman Sachs (GS) reports results on Friday.
Write to Carleton English at [email protected]