Wells Fargo (NYSE:WFC) shares came under pressure Friday after the bank reported shrinking profits, weighed down by a recent settlement and the need to build-up reserves amid a deteriorating economy.
Earnings proved 67 cents a share, compared with $1.38 a share a year ago
Revenue came in at $19.66 billion, 5.7% lower than a year earlier and lower than the $19.98 billion expected, according to Refinitiv
Wells Fargo’s net income tumbled 50% to $2.86 billion, or 67 cents a share, from $5.75 billion, or $1.38 per share, a year ago. The big decrease was driven in part by lower mortgage banking on fewer originations, the bank said.
In the latest period, the bank set aside $957 million for credit losses after reducing its provisions by $452 billion a year ago. The provision included a $397 million increase in the allowance for credit losses reflecting loan growth and a less favorable economic environment, the bank said.
The disappointing earnings report came after the bank announced earlier this week that it would retrench from the U.S. mortgage market. Meanwhile, Wells Fargo also said last month that it would have a $2.8-billion after-tax operating loss tied to legal and regulatory costs.
The combined impact of the legal, regulatory and customer remediation efforts lowered Well Fargo’s earnings by 70 cents per share.
WFC shares dropped $1.60, or 3.8%, to $41.23.
