Wells oiled

14 January 2015 By Daniel Indiviglio

The largest U.S. lender by market value may take some hits from the plunging price of black gold. These should be small. But the extra cash in consumers’ pockets should benefit the bank. Healthier housing and labor markets should help. Outperforming, though, will be harder.

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Wells Fargo reported fourth-quarter earnings on Jan. 14 of $5.38 billion applicable to common stockholders, a slight increase on the $5.37 billion earned in the previous year’s fourth quarter. At $1.02 per share net income met the consensus expectations compiled by Thomson Reuters I/B/E/S. Its quarterly revenue of $21.44 billion just beat expectations of $21.23 billion.

The San Francisco-based lender benefited from its tax expense coming in $123 million lower than expected and from the sale of a student loan portfolio that boosted non-interest income by $217 million.

Its quarter-end loans were up $40.3 billion, or 5 percent, compared to a year earlier to $862.6 billion. Deposits rose by $89.4 billion, or 8 percent, to $1.1 trillion. Although the bank’s net loan charge-offs at $735 million for the quarter declined by $228 million year-over-year, they were 10 percent higher than in the third quarter.

In the fourth quarter, Wells’ return on assets was 1.36 percent and return on equity was 12.84 percent. The bank’s Common Tier 1 equity under Basel III’s fully phased-in rules was 10.44 percent.

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