|Bid||0.00 x 1800|
|Ask||0.00 x 4000|
|Day's Range||45.22 - 46.97|
|52 Week Range||43.02 - 59.53|
|Beta (3Y Monthly)||1.19|
|PE Ratio (TTM)||10.02|
|Earnings Date||Oct 15, 2019|
|Forward Dividend & Yield||1.80 (3.85%)|
|1y Target Est||50.42|
Wells Fargo said expenses for 2019 will be near the "high end" of its previously given estimates as it continues to spend on compliance and risk management.
JPMorgan reported better-than-expected second-quarter earnings early Tuesday, helped by an income tax boost. Goldman Sachs and Wells Fargo also beat.
Shares of Well Fargo & Co. fell Tuesday after yet another disappointing earnings report and conference call with analysts, as downbeat guidance on net interest income and expenses, and still no word on a new chief executive overshadowed profit and revenue beats.
Wells Fargo's (WFC) Q2 results reflect lower expenses and higher fee income, partly offset by reduced net interest income.
Wells Fargo & Co. has more work to do when it comes to reducing operating expenses. Executives addressed this multiple times during Wells Fargo's investor call this morning following the release of its second-quarter earnings report.
The bank’s shares initially traded lower Tuesday morning, but were up 42 cents at $114.32 in mid morning. The early losses came as investors reacted to news that (JPM) reduced its forecast for 2019 net interest income to about $57.5 billion, below the guidance of $58 billion it issued when it disclosed its first-quarter earnings. The scaled-back forecast reflects the impact of anticipated rate cuts by the Federal Reserve.
While the biggest risk ahead is that lower interest rates will pressure banks' bottom lines in the coming months, the squeeze is already beginning. JPMorgan Chase & Co and Wells Fargo & Co both reported drops in net interest margins as they paid more for deposits. JPMorgan, the nation's biggest bank, lowered its outlook for net interest income to "about $57.5 billion" in 2019 from the $58-plus billion it estimated in February. On Monday, Citigroup similarly reported a decline in net interest margin.
(Bloomberg Opinion) -- Heading into this earnings cycle for the biggest U.S. banks, analysts were already plenty worried about net interest income, which is how much the firms make from customers’ loan payments compared with what they pay on deposits. After all, long-term interest rates have plummeted since the end of last year amid signs of slowing global growth and the Federal Reserve indicating it would soon be cutting its benchmark lending rate.It turns out they weren’t quite concerned enough.On Monday, Citigroup Inc. disclosed a net interest margin that disappointed analysts, which raised doubts that JPMorgan Chase & Co. and Wells Fargo & Co. could meet expectations. That’s precisely what happened: JPMorgan, the largest U.S. bank, cut its full-year outlook for net interest income by $500 million. At Wells Fargo, which already lowered its net interest income guidance for the year in April, it fell 4% to $12.1 billion, below even the lowest estimate.JPMorgan Chief Executive Officer Jamie Dimon, in his typical style, brushed off the revised net interest income estimate of $57.5 billion. It could be higher or lower depending on how many times the Fed lowers interest rates (the bank was expecting no cuts during the last round of earnings). Net interest income “is like the wind blowing” Dimon insisted, adding that it’s more useful to focus on long-term measures like the number of accounts and deposit growth.That may be, but it matters to investors when the wind is blowing firmly in one direction. When pressed on a conference call with analysts, JPMorgan Chief Financial Officer Jennifer Piepszak described a range of outcomes that could have the Fed dropping interest rates from one to three times in 2019. If the central bank cuts more than once, net interest income could possibly fall to below $57.5 billion, she said.In more normal times, the Fed beginning a cycle of monetary easing wouldn’t be too painful for banks because they could just lower short-term deposit rates in tandem with long-term rates. But these are far from normal times. Chase Premier Savings interest rates are still next to nothing, for example, just like other big institutions. Simply put, banks got away with keeping deposit rates near zero in recent years because consumers became accustomed to getting paid nothing on their savings in the wake of the financial crisis. That led to blockbuster profits as benchmark U.S. Treasury yields rose to multi-year highs, which in turn boosted the amount earned on loans. But that leaves less flexibility on the way down.It’s worth reiterating this point because the Treasury yield curve is often seen as a clear-cut way to gauge the health of banks, and it steepened recently after Fed officials made clear their plan to lower interest rates later this month. But when deposit rates are far more sticky near zero than the fed funds rate, it all comes down to long-term yields. That means margins are compressing fast.Wells Fargo, for its part, is apparently feeling the squeeze on both sides. The drop in net interest margin from the prior quarter was due to “balance sheet mix and repricing, including the impacts of higher deposit costs and the lower interest rate environment,” the bank said in its statement.Of course, it’s not all bad news for banks if interest rates are falling, provided that the Fed successfully prolongs the longest economic expansion on record. As of now, the consumer remains steadfastly strong: On Tuesday, June retail sales showed a 0.4% monthly gain, easily beating estimates for a 0.2% advance.Earnings from JPMorgan and Wells Fargo tell the same story. JPMorgan’s consumer and community banking unit generated $4.2 billion in net income in the second quarter, a 22% increase compared with the same period in 2018. Wells Fargo’s second-quarter provision for credit losses was just $503 million, compared with estimates for about $773 million, in a signal that it expects resiliency from its clients in the months ahead.Still, this round of bank earnings shows there are few easy-money opportunities for these Wall Street behemoths. Just as they’ve shown they can’t count on traders to deliver large profits when central banks are suppressing volatility (perhaps with the exception of Goldman Sachs Group Inc.), they’re also going to have to prepare for a world awash in lower interest rates.To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Lower costs were a primary driver of earnings in the most recent quarter and were a cornerstone of former CEO Tim Sloan's plan to deliver higher profits while the bank worked on moving past its scandals. Parker was thrust into the job in March when former CEO Tim Sloan resigned abruptly, saying pressure from politicians and regulators had become a distraction in running the scandal-plagued bank.
Wells Fargo & Co.'s expected dividend increase would boost its implied dividend yield to more than double its financial-sector peers and the broader stock market. Wells Fargo said in its second-quarter report that after receiving a "non-objection" to its capital plan submission from the Federal Reserve, the bank expects to raised its quarterly dividend by 13% to 51 cents a share from the current rate of 45 cents a share. Based on current stock prices--down 0.3% at $46.59--the new annual dividend rate of $2.04 would imply a dividend yield of 4.38%. That compares with the current implied dividend yields of 1.94% for the SPDR Financial Select Sector ETF and the S&P 500's implied yield of 1.92%, according to FactSet. Wells' stock has lost 18.1% over the past 12 months, while the financial ETF has gained 2.7% and the S&P 500 has advanced 7.7%.
The bank’s second-quarter earnings per share and revenue topped expectations, although net interest margin slipped. Wells Fargo has yet to find a permanent CEO.
Despite not being allowed to grow in size and a challenging interest rate environment, Wells Fargo delivered a strong second quarter.
San Francisco-based Wells Fargo & Co. exceeded analysts' expectations in its second-quarter earnings report released this morning.
Yahoo Finance's Brian Sozzi and Alexis Christoforous sit down with Keith Bliss from Cuttone & Co. and Barry Knapp of Ironsides Economics around Tuesday's opening bell. The panel discusses bank earnings, manufacturing growth, and more.