Fargo misses earnings estimates

Wells Fargo’s provision for credit losses fell sharply, but net interest income, a measure of profit on loans, also declined.

“We can’t change the economic environment, yet we have worked hard to control the variables we can,” chief executive John Stumpf said in a statement. “The economic recovery has been more sluggish and uneven than anyone anticipated.”

Net income for common shareholders was $3.84bn, or 72 cents a share. Analysts’ average estimate was 73 cents, according to Thomson Reuters. Net income a year earlier was $3.15bn.

The bank’s provision for credit losses fell to $1.81bn from $3.44bn a year earlier. Net interest income was down 5 per cent to $10.54bn, and net interest margin tumbled to 3.84 per cent from 4.25 per cent.

Wells Fargo’s report comes as the industry struggles to hold onto recent profits after having lost tens of billions of dollars in the financial crisis.

Overall, financial company earnings in the third quarter are expected to be up only a fraction of a per cent from a year earlier and still less than half as much as they were five years ago, according to Thomson Reuters Proprietary Research.

Wells Fargo reported what it called “strong growth” in its loan book; commercial loans were up 3 per cent in the quarter. The bank’s overall loan portfolio was up 1.1 per cent to $760bn.