Wells Fargo on Tuesday reported first-quarter earnings that were well below expectations as the company set aside money for credit losses amid the coronavirus pandemic.
The banking giant reported a profit of just 1 cent per share while analysts polled by Refinitiv expected earnings of 33 cents per share. Revenue of $17.717 billion also missed an estimate of $19.284 billion. Wells reported earnings of $1.20 per share in the year-earlier period. Net income dropped 89% to $653 million for the quarter.
Wells noted, however, its results suffered from a "reserve build and an impairment of securities" that resulted in a loss of 73 cents per share.
"Our results were impacted by a $3.1 billion reserve build, which reflected the expected impact these unprecedented times could have on our customers," CFO John Shrewsberry said in a statement.
Net interest income at the bank fell to $11.31 billion in the quarter from about $12.3 billion in the year-earlier period. However, that was above a StreetAccount estimate of $10.91 billion. Credit card fees fell 6% year over year to $892 million.
The company's stock dropped more than 4%.
Wells Fargo's quarterly results were its first since the coronavirus outbreak paralyzed the global economy, with governments pushing people to stay at home to curb the spread.
JPMorgan Chase on Tuesday also posted first-quarter profit that was well below analysts' expectations.
The outbreak led the stock market down from record highs in late February and into a bear market by March. The S&P 500 is down about 20% from its all-time high and 15% for 2020. Bank stocks such as Wells Fargo have fared even worse than the broader market.
The market drop, along with dimming economic prospects, sparked a flurry of stimulus measures from the government. One of those measures is the Paycheck Protection Program, which allocates nearly $350 billion in forgivable loans to small businesses.
However, Wells capped its participation in the program to $10 billion in loans, citing regulatory constraints.
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