in

Wells Fargo reports $2.4 billion loss for the quarter, slashes dividend to 10 cents


Charles Scharf

Michael Nagle | Bloomberg | Getty Images

Wells Fargo on Tuesday posted its first quarterly loss since the monetary disaster as the financial institution put aside $8.4 billion in mortgage loss reserves tied to the coronavirus pandemic.

The financial institution had a web loss of $2.4 billion in the second quarter, or a loss of $0.66 a share, worse than the 20 cents a share loss anticipated by analysts surveyed by Refinitiv. Revenue of $17.8 billion was additionally weaker than analysts’ $18.4 billion estimate. 

Wells Fargo, the embattled banking big, was extensively anticipated to submit a loss because it had telegraphed its want to put aside billions of {dollars} for soured loans tied to the pandemic. The firm is laboring below a dozen regulatory consent orders tied to its 2016 faux accounts scandal, together with one from the Federal Reserve that caps its asset development. These have made working the financial institution throughout the coronavirus disaster more durable, and CEO Charlie Scharf strongly hinted final month that he would have to lower bills and jobs this yr.

The financial institution’s bleak outlook for income is one cause it was pressured by regulators to lower its dividend from its earlier degree of 51 cents a share.

But on Tuesday the financial institution introduced a brand new quarterly payout of 10 cents a share, a deeper-than-expected discount to its dividend which will point out the financial institution’s pessimism about the coming yr. 

Wells Fargo was the solely financial institution amongst the six largest U.S. lenders to be pressured to lower its dividend after the annual Federal Reserve stress check; all the others are sustaining their quarterly payouts.

The financial institution can also be hamstrung by its construction: Unlike JPMorgan Chase or Citigroup, Wells Fargo lacks a large Wall Street buying and selling division, and that enterprise has been on fireplace this yr amid surging volatility and unprecedented Federal Reserve help.

In half due to the Fed restriction, Wells Fargo has additionally pulled again from swaths of the mortgage and auto market, significantly in riskier merchandise like jumbo dwelling loans.

While financial institution shares have rebounded from their March lows, they’ve underperformed the broader indices, which have been buoyed by the roaring expertise sector.

One issue preserving financial institution shares down: Low rates of interest have pressured web curiosity margin, a key measure of profitability in the banking sector. The business’s mortgage books have additionally begun to shrink, pushed partly by decrease credit-card utilization and the worry of rising defaults

Correction: The preliminary headline misstated the quantity of the financial institution’s dividend lower. 



Source hyperlink

What do you think?

Written by Business Boy

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading…

0

JPMorgan Chase earns $4.7 billion in the quarter, sets aside another $8.9 billion for credit losses

Qantas is set to cancel nearly all its international flights until March 2021 as pandemic batters air travel