- Third quarter revenue of $21.9 billion slightly beat expectations, and net income of $6 billion was 33 percent higher than the same period last year.
- The company's CFO says the bank saw positive trends in the quarter, including growth in customer accounts and increased lending activity.
Wells Fargo & Co.'s third quarter revenue topped expectations as the company revamps its operations for a digital banking age, but it missed on profit forecasts.
Revenue of $21.9 billion slightly beat the average analyst forecast of $21.89 billion in a survey by Refinitiv. Earnings per share were $1.16 for the quarter, excluding costs for redeeming preferred shares. Analysts had expected earnings per share of $1.17, according to Refinitiv.
"These results reflect the transformational changes we've been making at Wells Fargo," said CEO Tim Sloan on a conference call with analysts Friday morning.
Shares of Wells Fargo rose 1.3 percent on Friday.
Net income was $6 billion in the quarter, up 33 percent from last year.
Wells Fargo is working on cutting costs. In September, it announced plans to cut 5 percent to 10 percent of its workforce over the next three years as part of an ongoing turnaround plan. Wells employs 265,000 people. It said changing consumer behavior, including a preference for digital self-service options, is the reason for the cuts.
Executives on a conference call with analysts on Friday said the bank was "on target" to meet its expense reduction goals.
One of the nation's biggest lenders, Wells has operations that span the U.S., though it is cutting branches in several locations. it said it saw positive business trends in the third quarter. John Shrewsberry, the CFO, said those trends included "growth in primary consumer checking customers, increased debit and credit card usage, and higher year-over-year loan originations in auto, small business, home equity and personal loans and lines."
Primary checking accounts customers rose 1.7 percent from last year. But mortgage activity was down as loan applications and originations fell from the second quarter. Executives said the mortgage business was experiencing "overcapacity," and that the bank was trying to figure out ways to do more business but more efficiently. Wells has "got to be able to improve our result based on the environment that we're in," Sloan said.
Car loan originations rose 10 percent from the third quarter last year, and small business loans rose 28 percent.
Wells said its net interest margin ticked up to 2.94 percent from 2.93 percent in the second quarter. With interest rates rising, banks could expect to make more money on lending. Net interest income in the quarter rose 9 percent from last year.
A regulatory enforcement action means it can't grow substantially until it gets its house in order after multiple scandals involving sales practices. Sloan said on a conference call that the company had completed the requirements of a consent order with the Office of the Comptroller of the Currency, its regulator.
Wells is still handling the fallout from a number of regulatory investigations into its sales practices and other issues, and the company has been conducting its own review. Sloan told analysts on Friday that the bank is continuing this internal review but that he's "hopeful that we won't have any new issues."
Wells fell short of Wall Street's expectations for the second quarter, as revenue and net income in the bank's three business lines fell compared with the same period last year.