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Wells Fargo Fourth-Quarter Earnings Blow Past Forecasts

Wells Fargo posts fourth-quarter earnings that handily beat analysts’ forecasts amid broader improvement in the economy and net reserves.

Wells Fargo  (WFC) - Get Wells Fargo & Company Report on Friday posted fourth-quarter earnings that handily beat analysts’ forecasts amid broader improvement in the economy and net reserves.

The San Francisco-based bank reported net income of $5.8 billion, or $1.38 a share, for the fourth quarter of 2021, vs. $3.1 billion, or 66 cents a share, in the comparable year-earlier quarter. Analysts polled by FactSet had been looking for earnings of $1.11 cents a share.

Revenue came in at $20.86 billion, up from $18.49 billion in fourth quarter of 2020. Analysts had been expecting revenue of $18.78 billion. Net interest income declined 1% to $9.3 billion while non-interest income jumped 27% to $11.6 billion, driven in part by strong results in the company's venture capital and private equity businesses.

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, provision for credit losses in fourth quarter 2021 included an $875 million decrease in the allowance for credit losses "due to continued improvements in the economic environment, as well as a decrease in net charge-offs," Wells Fargo said.

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CEO Charlie Scharf struck a cautious tone, noting in a statement that the changes Wells Fargo has made to streamline its business through the pandemic as well as  continued strong economic growth prospects "make us feel good about how we are positioned entering 2022."

"But we also remain cognizant that we still have a multi-year effort to satisfy our regulatory requirements – with setbacks likely to continue along the way – and we continue our work to put exposures related to our historical practices behind us,” Scharf said. 

Wells Fargo last fall 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.

At last check, shares of Wells Fargo were up 2.68% at $57.50 in premarket trading. The stock is up more than 61% over the past 12 months.