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Sizing up Wells Fargo’s Wholesale Banking Earnings in 4Q15

Rebecca Keats

Checking in with Wells Fargo's Estimate-Topping 4Q15 Earnings

(Continued from Prior Part)

Wells Fargo’s Wholesale Banking segment

We’ve already discussed the 4Q15 performance of Wells Fargo & Company’s (WFC) Community Banking segment previously in this series (see Part 6). Now let’s analyze the 4Q15 performance of the company’s wholesale banking unit.

The wholesale banking segment of Wells Fargo provides financial services to businesses across the globe and operates under the following sub-segments:

  • middle market commercial banking

  • government and institutional banking

  • corporate banking

  • commercial real estate

  • treasury management

  • commercial mortgage servicing

  • capital finance

  • securities

Segmental earnings for Wells Fargo’s Wholesale Banking segment in 4Q15

Revenues for Wells Fargo’s Wholesale Banking Segment were up by 2% in 4Q15 over the same period last year to $6.6 billion. This rise was due to growth in net interest income related to strong loans and deposit growth. Non-interest income declined due to lower trading revenues, energy portfolio write-downs, and lower investment banking fees.

Net income for this segment was up by $9 million compared to 4Q14, while non-interest expenses were higher by 1% due to higher staff costs. Meanwhile, provisions for credit losses increased by $130 million over the previous year. Loans in this segment increased by 13% compared to 4Q14, while the company’s treasury management revenue increased by 7%.

Wells Fargo’s exposure in XLF compared with peers

Wells Fargo has the highest weight of 8.7% in the Financial Select Sector SPDR ETF (XLF). Competitors like Bank of America Corporation (BAC), Citigroup (C), JP Morgan Chase & Company (JPM), and Goldman Sachs Group (GS) have weights of 5.80%, 0.35%, 8.12%, and 2.78%, respectively.

Continue to the next part of this series for the goods on Wells Fargo’s Wealth and Investment Management performance in 4Q15.

Continue to Next Part

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