Wells Fargo’s Earnings

Published: July 14, 2015

Wells Fargo’s Earnings, Wells Fargo, a bank known for its machine-like ability to increase its profits and beat Wall Street expectations, reported mixed results on Tuesday.

The San Francisco-based bank said its second-quarter profit fell to $5.72 billion from $5.73 billion a year earlier.

On an earnings per share basis, the bank’s profits rose to $1.03 up from $1.01 a year ago. That was in line with a consensus of analysts’ estimates of $1.03 a share, according to Thomson Reuters.

But Wells’ revenue of $21.3 billion came in 1.8 percent lower than the $21.7 billion that analysts had expected.

The middling results from Wells reflect the challenges facing big banks today.

Long gone are the days when mortgage losses and other problems from the financial crisis posed a threat to their balance sheets.

Today’s challenges are more mundane: Large consumer banks are trying to keep their expenses under control while grappling with low interest rates.

At Wells Fargo, some of these challenge were highlighted by the decline in the bank’s net interest margin, which in the second quarter fell to 2.97 percent from 3.15 percent a year earlier.

Net interest margin is the difference between what the bank makes on lending and what it pays to customers with deposits.

The bank said it was able to lower expenses from the first quarter, but some of the decline was offset by increases in legal costs and higher salaries and advertising expenses. The bank’s efficiency ratio, a key measure of the bank’s expenses control measures, rose to 58.5 percent from 57.9 percent a year earlier.

There were other signs that Wells Fargo’s profitability was slipping. The bank’s return on assets and return on equity both fell in the second quarter from a year ago.

In a statement, Wells Fargo’s chief executive and chairman, John Stumpf, said, “Wells Fargo’s second-quarter results reflected continued strength in the fundamental drivers of long term growth. Compared with a year ago, we grew loans, deposits and capital, and our balance sheet remained strong.”


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