Wells Fargo says it earned $2 billion in the third quarter, less than half of what it made in the same period last year but a significant improvement from this year’s second quarter, when it posted a loss as the coronavirus swept through the U.S. (All figures are in U.S. dollars.)
The San Francisco bank said Wednesday that it earned 42 cents per share, down from 92 cents per share a year earlier and less than the 44 cents Wall Street analysts were expecting.
Wells reported revenue of $18.86 billion in the quarter, also down from last year’s third quarter when it took in $22 billion. The bank’s revenue for the quarter surpassed Wall Street projections of $18 billion.
Wells set aside $769 million in the third quarter for loan loss provisions, which is the money set aside to cover potentially bad loans. That’s just a fraction of the billions it set aside in the previous quarter when the coronavirus shuttered the economy, forced millions of people out of work and jeopardized the ability of businesses and individuals to make loan and mortgage payments.
Wells Fargo lost $2.4 billion in the second quarter, the first quarterly loss for the bank since the real estate crash of 2008.
Wells Fargo said its net interest income was $9.4 billion, down $2.3 billion from last year’s period. Noninterest income was $9.5 billion, down $891 million from 2019.
As the coronavirus outbreak persists in many areas of the U.S. and with a cold-weather resurgence possible in many others, many fear that potential business closures this fall and winter could throw the U.S. economy into a tailspin similar to last spring.
Charlie Scharf, Wells Fargo’s chief executive officer, acknowledged the boost his bank got from the government’s injection of trillions of dollars in loans and relief into the U.S. economy, giving consumers the power to spend and helping many businesses stay afloat. But with another aid package stalled in Congress, the country’s economic future is cloudy.
“As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of Covid continues and further fiscal stimulus is uncertain,” Scharf said.
On top of the difficulties presented by the virus pandemic, Wells has been in seemingly constant trouble with regulators for years. The nation’s biggest mortgage lender, Wells has been operating under strict federal guidelines due to a series of scandals, limiting its ability to grow.
In 2018, the Fed capped the size of Wells Fargo’s assets beginning in 2016 with the uncovering of millions of fake chequing accounts its employees opened to meet sales quotas. The Fed lifted that cap in April as part of the federal government’s Payroll Protection Program because many of Wells’ small business customers were getting shut out from applying.