Wells Fargo reported lower revenue and profit for the second-quarter, falling short of expectations as it tries to move on from its regulatory issues.
The bank said Friday that earnings per share were 98 cents on a GAAP basis, including a 10 cent per share tax expense. It was unclear whether that compares directly to Wall Street’s $1.12 estimate for the quarter.
Shares of Wells Fargo fell 2.6 percent in premarket trading.
Wall Street had expected revenue of $21.677, according to Thomson Reuters. Net income of $5.19 was also shy of expectations, which called for net income of $5.47 billion.
The bank has been under pressure for several quarters because of multiple probes into its sales practices. But the Federal Reserve gave it the go-ahead last month to buy back $24.5 billion of its stock, more than double the amount it bought last year, and raise its quarterly dividend four cents to 43 cents a share. Earlier this year, the Fed slapped a cap on Wells Fargo’s assets, telling it to improve operational controls.
Revenue and net income in the bank’s three business lines fell compared to the same period last year. In community banking, revenue of $11.8 billion fell 1.2 percent and net income was down 9.7 percent, affected by the state income tax charge, the bank said. Corporate and wholesale banking revenue fell 3.8 percent and net income was down 3.9 percent.
Wealth management revenue fell 6.5 percent and net income was down 37 percent. Wealth management results were affected by an impairment charge related to its majority stake in the investment firm RockCreek Group, which it sold back to the founder, the bank said.
Shares of Wells Fargo are down nearly 8 percent this year.
Wells said it had state income tax charges of $481 million, related to a recent Supreme Court ruling regarding ecommerce sales (South Dakota v. Wayfair) that said states can charge taxes on purchases from out of state sellers even if the seller isn’t located in that state.
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Source: Investment Cnbc
Wells Fargo shares fall after second-quarter revenue misses estimates