October 14 (Hfrance.fr) - Wells Fargo & Co (WFC.N) recorded an increase of almost 60% of its profit in the third quarter, beating market estimates, freeing up funds to cover potential loan losses due to the pandemic and containing costs related to its years-old scandal over sales practices.
The fourth largest US bank has been in the regulator's bench since 2016 as it seeks to improve governance and oversight, with the Federal Reserve also capping its assets at 1.95 trillion of dollars.
The lender, which has paid more than $ 5 billion in civil and criminal penalties, on Thursday reported a hit of $ 250 million for the third quarter after a major U.S. banking regulator fined it for flaws in its earlier efforts to repay thes previously aggrieved customers. learn more
Overall, non-interest spending fell to $ 13.3 billion from $ 15.23 billion a year earlier. Non-staff spending at the bank fell $ 2 billion, or 30%, mainly due to lower restructuring charges and COVID-related costs.
The lender reported a decrease of $ 1.7 billion in the allowance for credit losses. Lower provisions took net income to $ 5.12 billion, or $ 1.17 per share, in the quarter ended Sept. 30, from $ 3.22 billion, or 70 cents per share, a year earlier.
According to Refinitiv estimates, Wells Fargo earned $ 1.22 per share excluding items, compared tothe consensus estimate of 99 cents per share.
Its shares rose 1.3% in pre-market trading.
Bank executives have repeatedly signaled that the worst fallout from the scandal is behind them, and Managing Director Officer Charlie Scharf has made the cutbacks costs the cornerstone of its turnaround plan, targeting $ 10 billion in savings per year over the long term.
Problems remain, however. Earlier this month, a federal judge rejected the bank's offer to dismiss a lawsuit claiming it had defrauded shareholders over its ability to bounce back from the scandals. learn more
"The recent measures of execution of the OCC (Office of the Comptroller of the Currency) are a reminder that the significant gaps that existed when I arrived must remain our top priority "Scharf said in a statement.
" I believe that we are making significant progress, and I remain confident in our ability to continue to fill the remaining gaps over the next few years, although we may continue to have setbacks along the way. "
Fed Chairman Jerome Powell said last month that the The bank's asset cap would remain in place until the company had fully resolved its issues, suggesting that Wells Fargo had some way to go before it was allowed to expand. find out more
The cap reduced thegrowth in loans and deposits needed by the bank to increase interest income and cover costs.
Average Wells Fargo loans have fallen by 8% to $ 854 billion, sliding for the fifth consecutive quarter. Demand for low-interest loans combined with low interest rates also hurt his net interest income, which fell 5%.
Average loans in consumer banking fell 14% in the quarter. , while commercial loans were down 12%.
But credit card volumes at consumer and small business outlets L ness banking unit grew nearly 25% to $ 26.5 billion. Wells Fargo has also reported an increase in personal and business debit card transactions, with purchase volumes up more than 15%to reach $ 118.6 billion.
Total revenue fell 2% to $ 18.8. billion dollars for the bank, which has less means to cushion income cuts from low interest rates due to its relatively small activities in the capital markets. Noor Zainab report Hussain in Bangalore and Michelle Price in Washington; Edited by Aditya Soni and Saumyadeb Chakrabarty
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