{"id":141753,"date":"2021-10-14T13:30:38","date_gmt":"2021-10-14T13:30:38","guid":{"rendered":"https:\/\/precoinnews.com\/?p=141753"},"modified":"2021-10-14T13:30:38","modified_gmt":"2021-10-14T13:30:38","slug":"wells-fargo-beats-profit-expectations-on-reserve-release-boost","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/wells-fargo-beats-profit-expectations-on-reserve-release-boost\/","title":{"rendered":"Wells Fargo beats profit expectations on reserve release boost"},"content":{"rendered":"
(Reuters) -Wells Fargo & Co posted a nearly 60% rise in third-quarter profit that beat market estimates, as it released funds set aside to cover potential loan losses due to the pandemic and reined in costs tied to its years-old sales practices scandal.<\/p> The fourth-largest U.S. bank has been in regulators\u2019 penalty box since 2016 as it looks to improve governance and oversight, with the Federal Reserve also capping its assets at $1.95 trillion.<\/p>\n The lender, which has paid more than $5 billion in civil and criminal penalties, on Thursday reported a $250 million hit for the third quarter after a top U.S. banking regulator fined it for shortcomings in its earlier efforts to pay back previously harmed customers.<\/p>\n Overall, non-interest expenses fell to $13.3 billion from $15.23 billion a year earlier. The bank\u2019s non-personnel expenses declined by $2 billion, or 30%, mainly due to lower restructuring charges and COVID-related costs.<\/p>\n The lender reported a $1.7 billion decrease in the allowance for credit losses. The fall in provisions lifted its 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.<\/p>\n According to Refinitiv estimates, Wells Fargo earned $1.22 per share excluding items, compared with the consensus estimate of 99 cents per share.<\/p>\n Its shares rose 1.3% in pre-market trading.<\/p>\n Bank executives have repeatedly signaled that the worst of the fallout from the scandal was behind them, and Chief Executive Officer Charlie Scharf has made cost cuts a cornerstone of his turnaround plan, targeting $10 billion in savings annually over the long term.<\/p>\n Issues however remain. A federal judge earlier this month rejected the bank\u2019s bid to dismiss a lawsuit claiming it defrauded shareholders about its ability to rebound from the scandals.<\/p>\n \u201cThe recent OCC (Office of the Comptroller of the Currency) enforcement actions are a reminder that the significant deficiencies that existed when I arrived must remain our top priority,\u201d Scharf said in a statement.<\/p>\n \u201cI believe we are making significant progress, and I remain confident in our ability to continue to close the remaining gaps over the next several years, though we may continue to have setbacks along the way.\u201d<\/p>\n Fed Chair Jerome Powell last month said the bank\u2019s asset cap would stay in place until the firm has comprehensively fixed its problems, suggesting Wells Fargo had a ways to go before it would be allowed to expand.<\/p>\n The cap has curtailed the loan and deposit growth needed by the bank to boost interest income and cover costs.<\/p>\n Wells Fargo\u2019s average loans fell 8% to $854 billion, slipping for the fifth straight quarter. Soft loan demand combined with low-interest rates also hurt its net interest income, which dropped 5%.<\/p>\n Average loans in consumer banking dropped 14% in the quarter, while commercial loans slipped 12%.<\/p>\n But credit card point of sale volumes within the consumer and small business banking unit rose nearly 25% to $26.5 billion. Wells Fargo also reported higher consumer and business debit-card transactions, with purchase volumes rising more than 15% to $118.6 billion.<\/p>\n Total revenue fell 2% to $18.8 billion for the bank that has fewer ways to cushion declines in revenue from low-interest rates due to its relatively small capital markets business.<\/p>\nLOAN WEAKNESS<\/h2>\n