Wells Fargo (NYSE:WFC) stock price is in the red, again, after a very bad quarterly report.
“We are extremely disappointed in both our second quarter results and our intent to reduce our dividend. Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter, which drove the $8.4 billion addition to our credit loss reserve in the second quarter.”- said Charlie Scharf, CEO of Wells Fargo
$WFC | Wells Fargo Q2 20 Earnings:— LiveSquawk (@LiveSquawk) July 14, 2020
- Revenue $17.84B, -17% Y/Y
- Reports First Quarterly Loss Since 2008
- To Cut Quarterly Dividend To $0.10 From $0.51 (exp $0.20)
“Wells Fargo reported a $2.4 billion net loss in the second quarter and a diluted loss per share of $0.66. In addition to the higher reserve, net interest income declined linked quarter primarily due to the impact of significantly lower market interest rates. Our second quarter results also included $1.2 billion of operating losses, primarily due to customer remediation accruals. Additionally, we had higher personnel and occupancy expense due to COVID-19.”-added John Shrewsberry. CFO of Wells Fargo.
Wells Fargo share price sank 50% on a year-to-date basis and it seems like the negative trend continues from here.
Second Quarter Loss 2020 vs. First Quarter 2020
|•||Net loss of $2.1 billion, down from net income of $311 million|
|•||Revenue of $6.6 billion, up $746 million, or 13%, driven by higher market sensitive revenue3 and investment banking fees, partially offset by lower net interest income|
|•||Noninterest expense of $4.0 billion increased $200 million, or 5%, predominantly due to higher operating losses reflecting higher litigation accruals|
|•||Provision for credit losses increased $3.7 billion, predominantly due to a $5.5 billion increase in the allowance for credit losses in second quarter 2020, driven by current and forecasted economic conditions due to the COVID-19 pandemic and higher charge-offs in the oil and gas and commercial real estate portfolios|
Second Quarter Income 2020 vs. First Quarter 2020
|•||Net income of $180 million, down $283 million, or 61%|
|•||Revenue of $3.7 billion, down $55 million, or 1%, predominantly due to lower asset-based fees on retail brokerage advisory assets reflecting lower market valuations at March 31, 2020, lower net interest income, and lower brokerage transactional revenue, partially offset by higher net gains from equity securities driven by a $413 million increase in deferred compensation plan investment results (largely offset by higher employee benefits expense)|
|•||Noninterest expense of $3.2 billion increased $50 million, or 2%, predominantly due to higher employee benefits expense driven by a $401 million increase in deferred compensation expense (largely offset in revenue by higher net gains from equity securities) and higher regulatory, risk, and technology expense, partially offset by lower broker commissions, lower other personnel expenses which were seasonally higher in the first quarter, and lower equipment expense related to the continued evaluation of technology projects|
To re-cap the most interesting part of this report:
Wells Fargo & Company (NYSE:WFC) reported a net loss of $2.4 billion, or $0.66 per diluted common share, for second quarter 2020, compared with net income of $6.2 billion, or $1.30 per share, for second quarter 2019, and $653 million, or $0.01 per share, for first quarter 2020.