Finance

Wells Fargo sees 59% profit rise in third quarter

Wells Fargo said on 14 October that its third-quarter profit rose 59%, lifted by a release of funds it had set aside for potential loan losses during the pandemic.

The San Francisco-based lender posted earnings of $5.12bn. Per-share earnings of $1.17 topped a forecast of $1.

Big banks are moving beyond the initial shock of last year’s pandemic economic collapse and contending with a new normal. Consumers and businesses have largely continued to pay their loans, prompting Wells Fargo to release $1.65bn of reserves it had stockpiled for those losses.

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But low rates and a fragile economy have curtailed demand for banks’ bread and butter business of making loans. JPMorgan said on 13 October that its total loans were roughly flat compared with three months earlier, but up 6% versus a year ago.

Wells Fargo’s revenue fell 2% to $18.83bn. That beat the $18.27bn expected by analysts polled by FactSet.

The bank’s net interest income, a measure of lending profits, fell 5% to $8.91bn.

Wells Fargo is still trying to work past its five-year-old sales-practice scandal, where it created perhaps millions of phony accounts. In September, Wells Fargo paid a $250m fine to the Office of the Comptroller of the Currency, one of its top regulators, for failing to fix problems in its mortgage business. Another regulator, the Federal Reserve, still has a cap on how much the bank can grow.

Write to Ben Eisen at [email protected] and David Benoit at [email protected]

This article was published by Dow Jones Newswires

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