Wells Fargo, US Bancorp take a hit to profits, split on revenue – Minneapolis / St. Paul Business Journal – The Business Journals

Written by Amanda

The two biggest banks in Minnesota reported a decline in first-quarter earnings compared to a year ago, when bank profits were propelled by the turmoil of the Covid-19 pandemic.

Minneapolis-based U.S. Bancorp (NYSE: USB) reported net income of $1.56 billion, or 99 cents per share, compared with $2.28 billion, or $1.45 per share in the same period last year.

Net revenue rose to nearly $5.6 billion from $5.47 billion.

Analysts had been expecting earnings of 94 cents per share on revenue of $5.5 billion.

“Our results benefited from healthy trends in consumer and business activity,” said CEO Andy Cecere in a statement. “We saw very strong loan growth, which drove solid growth in net interest income. Our fee revenue growth was supported by improving business activity and new business wins.”

Shares of U.S. Bank are up nearly 5% to $53.06.

Meanwhile, San Francisco-based Wells Fargo & Co. posted net income of $3.67 billion, or 88 cents per share, in the first quarter. The results include a $1.1 billion decrease in the allowance for credit losses. That’s compared to net income of $4.64 billion, or $1.02 per share, in the same quarter of 2021.

Revenue in the first quarter came to $17.59 billion, a 5% decrease from a year ago.

Thursday’s results did beat analysts’ income expectations, which averaged 81 cents per share. However, they fell short of the average revenue prediction at $17.81 billion.

Last quarter, Wells Fargo posted an 86% boost in profit with net income of $5.75 billion, or $1.38 per share. Revenue was at $20.86 billion.

Shares of Wells Fargo are down 3.5% to $46.82.

Banks have recovered well in the last year, following sharp profit drops in 2020 when Covid-19 struck. Loan growth is reviving, and rising interest rates are expected to create better margins. The industry is, however, watching for impacts from the war in Ukraine and higher inflation.

“We had broad-based loan growth, growing both consumer and commercial loans from the fourth quarter,” CEO Charlie Scharf said in a statement. “Our internal indicators continue to point towards the strength of our customers’ financial position, but the Federal Reserve has made it clear that it will take actions necessary to reduce inflation and this will certainly reduce economic growth. … Wells Fargo is positioned well to provide support for our clients in a slowing economy.”

Wells Fargo also continues to navigate regulatory challenges stemming from a fake-accounts scandal in 2016. It remains under an asset cap. The bank is investing heavily in risk management and controls, with Scharf characterizing these changes as a top priority. At the same time, he is pushing for billions of dollars in expense reductions in other areas to make operations more efficient.

Scharf said today the bank is confident in its ability to correct the issues “over the next several years.”

Source: bizjournals.com

About the author


Hi there, I am Amanda and I work as an editor at impactinvesting.ai;  if you are interested in my services, please reach me at amanda.impactinvesting.ai