Wells Fargo (WFC) - Get Wells Fargo & Company Report on Thursday posted third-quarter earnings that beat analysts forecasts amid broader improvement in the economy and net reserves, even as it set aside $250 million to settle a recent enforcement action.
The San Francisco-based bank reported net income of $5.1 billion, or $1.17 a share, for the third quarter of 2021, vs. $3.2 billion, or 70 cents a share, in the comparable year-earlier quarter. Analysts polled by FactSet had been looking for earnings of 99 cents a share.
Revenue came in at $18.8 billion, down from $19.3 billion in third quarter of 2020. Analysts had been expecting revenue of $18.2 billion. Net interest income declined 5% to $8.9 billion while non-interest income dropped 13% to $9.9 billion.
Improvement in the broader economy, net reserve releases, and strong credit quality helped bolster Wells Fargo's bottom line, the bank said.
At the same time, the numbers included the release of $1.7 billion, or 30 cents a share, in loan-loss reserves, as well as another $250 million, or 5 cents a share, from "...the impact of an operating loss associated with the September 2021 Office of the Comptroller of the Currency (OCC) enforcement action," the bank said.
Wells Fargo last month agreed to pay $37 million to settle claims that it overcharged over 700 commercial customers that used its foreign exchange services, actions the bank itself called “unacceptable.”
Specifically, Wells Fargo allegedly overcharged 771 businesses on foreign-exchange transactions from 2010 through 2017, according to a U.S. Justice Department lawsuit and settlement filed in federal court in New York.
“The actions we’re taking to improve operating effectiveness and financial returns are coming through in our results, in addition to the benefits we’re experiencing from the economic recovery," CEO Charlie Scharf said in a statement accompanying Thursday's earnings announcement.
At last check, shares of Wells Fargo were down 2.17% at $45.02.