Wells Fargo & Co (NYSE: WFC) the third largest U S Bank by assets has been in news for dealing with multiple lawsuits and a sharp drop in account openings after it settled with the Los angels City Attorney, the US Comptroller of the Currency and the Consumer Financial Protection Bureau in September over charges that its employees created as many as 2 million accounts without customers’ consent.
Wells Fargo made $3.2 million of refunds for potentially unauthorized accounts that incurred fees and charges. The bank agreed in September to pay $185 million in penalties and up to $5 million to customers.
Better than estimated results performance
The company reported net income of $5.3 billion as compared with $5.6 billion in Q4FY15. Revenues for the quarter were at $21.6 billion consistent with the fourth quarter of 2015. Net interest income was at $ 12.4 billion, up 7%. The RoA was at 1.08% and RoE was at 10.94%. Total average loans were at $964.1 billion, up $51.9 billion. Total average deposits were at $1.3 trillion, up 6%.
For FY16, the bank reported net income of $21.9 billion compared with $22.9 billion in 2015. The revenues were at $88.3 billion, up 3% for FY16. Return on assets was at 1.16% and return on equity was at 11.49%. The company returned $12.5 billion to shareholders through common stock dividends and net share repurchase.
Total loans were $967.6 billion at December 31, 2016, up $6.3 billion from the third quarter. The bank said the loan growth was affected by the deconsolidation of certain previously sold reverse mortgage loans, which resulted from the sale of the related servicing and reduced real estate 1-4 family first mortgages by $3.8 billion. The bank noted 2% rise in average deposits for fourth quarter2016 to $1.3 trillion driven by both commercial and consumer growth.
Investment securities were $407.9 billion at December 31, 2016, up $17.1 billion from the third quarter. Net unrealized loans on available for sale securities were $1.8 billion at December 2016 compared with net unrealized gains on available for sale securities of $4.5 billion in third quarter.
Segment wise, Community banking reported revenues of $11.6 billion for the quarter and net income of $2.7 billion. Wholesale banking reported revenues of $7.1 billion and net income of $2.19 billion, up 7% from the third quarter. The Wealth and Investment Management reported revenues of $4 billion par with previous and corresponding quarter while net income from the segment was at $653 million.
Going forward, the bank expects its efficiency initiatives which would reduce expenses by over $2 billion annually by the 2018 year end and would reinvest in business.