Wells Fargo is telling investors to brace for more losses on loans to energy companies.
That, in turn, increases the likelihood that the bank will continue to bolster its reserves to offset those losses, the bank said at its investor day presentation Tuesday in California.
"We built our reserve in the first quarter" correlated with rising stress in the energy sector, Chief Financial Officer John Shrewsberry said.
Further reserves may need to be built in order to offset losses, Wells Fargo said in its presentation. Shrewsberry said that other sectors' credit quality remains strong. The bank has completed what he said was "more than half" of the bank's spring borrowing base redetermination, or its assessment of energy sector borrowers, which is in part based on the value of its reserves.