Business

Wells Fargo & Co Q4 2017 Earnings Results Miss Estimates

Wells Fargo & Co (NYSE:WFC) released its Q4 2017 earnings results before opening bell this morning. Wells Fargo Q4 2017 earnings came in at $1.16 per share on $22.1 billion in revenue, compared to the consensus estimates of $1.23 per share and $22.45 billion in revenue. In the year-ago quarter, the firm reported earnings of 96 cents per share on $22.24 billion in revenue.

wells fargo q4 2017 earnings
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Wells Fargo Q4 2017 earnings

Wells Fargo’s net interest income slipped $136 million year over year to $12.3 billion, while its net interest margin fell 2 basis points to 2.84%. Total average loans fell $521 million year over year to $951.8 billion. The commercial loan balance stood at $503.4 billion, while the consumer loan balance was $453.4 billion at the end of the fourth quarter. Total average deposits grew $5.2 billion to $1.3 trillion. Allowance for credit losses fell $149 million from the end of September to $12 billion as of the end of December.

Wells Fargo’s community banking revenue rose to $12 billion from $11.7 billion in the year-ago quarter. Wholesale banking revenue ticked down to $7.1 billion from $7.2 billion in the previous year’s quarter. Wealth and investment management revenue rose to $4.3 billion from $4.1 billion a year ago. Total client assets hit a record-high $1.9 trillion. Retail brokerage assets grew 11% to $1.7 trillion, while wealth management client assets increased 7% to $248 billion. Assets under management in Wells Fargo’s asset management division were up 5% to $504 billion.

Charges included in Wells Fargo Q4 2017 earnings

The firm booked a $3.25 billion litigation charge before tax and a $3.35 billion benefit from the tax reform bill after tax, which amounts to 67 cents per share. Wells Fargo estimates its tax benefit at $3.89 billion due to a reduction in deferred income tax liabilities. The firm also took a $173 million tax expense in the fourth quarter for expected repatriation of cash.

In premarket trades following the Wells Fargo Q4 2017 earnings release, the firm’s stock ticked lower to $62.50, a decline of 0.81%.