Wells Fargo Beats On Q4 Earnings, But Profits Sink

Wells Fargo & Co WFC reported a Q4 net income of $2.85 billion, down 53% Y/Y and 20% sequentially, driven partly by lower mortgage banking.
The company posted an EPS of $0.67, compared with $1.38 a year ago and slightly ahead of the consensus of $0.66.
Revenue declined 5.7% to $19.66 billion, missing the consensus of $19.98 billion.
The bank set aside $957 million for credit losses in the latest period after reducing its provisions by $452 million a year ago.
The bank said that the provision included a $397 million increase in the allowance for credit losses reflecting loan growth and a less favorable economic environment.
Earlier this week, Wells Fargo announced to retrench from the U.S. mortgage market.
“Though the quarter was significantly impacted by previously disclosed operating losses, our underlying performance reflected the progress we are making to improve returns,” CEO Charlie Scharf said. “Rising interest rates drove strong net interest income growth, credit losses have continued to increase slowly, but credit quality remained strong, and we continue to make progress on our efficiency initiatives.”
Home Lending was down 57% on lower mortgage banking income driven by lower originations and gain on sale margins, as well as lower revenue from the resecuritization of loans purchased from securitization pools.
Guidance: For FY23, Wells Fargo expects net interest income to increase around 10% over the 2022 level of $45.0 billion.
The bank currently expects to resume common stock repurchases in 1Q23.
Price Action: WFC shares are up 0.23% at $42.93 on the last check Friday.

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