(Reuters) – Wells Fargo reported a nearly 21% drop in first-quarter profit on Thursday, but beat Wall Street expectations on tight cost controls to cushion a decline in Mortgages.
Average loans rose 3% in the quarter, largely driven by credit cards and auto loans. Mortgages, however, fell 33% from a year earlier as the Federal Reserve raised interest rates to curb runaway inflation.
“Our internal indicators continue to point to the strength of our customers’ financial situation, but the Federal Reserve has made it clear that it will take the necessary measures to reduce inflation, which will certainly reduce economic growth,” the President said. the bank’s chief executive, Charlie Scharf.
“Furthermore, the war in Ukraine adds an additional downward risk,” he warned.
The lower-than-expected impact of the pandemic has also prompted banks to reduce their provisions for credit losses. Wells Fargo withdrew $1.1 billion from its provisions.
The fourth largest bank in the United States recorded a profit of 3.67 billion dollars (3.36 billion euros), or 0.88 dollars per share, for the quarter ended March 31, against 4.64 billion euros. dollars, or $1.02 per share, a year earlier.
Analysts had expected earnings per share of $0.80 per share, according to Refinitiv data.
Net banking income for its part fell by 5% in the first quarter to reach 17.59 billion dollars, while analysts had forecast 17.8 billion dollars.
(Reporting Sohini Podder in Bangalore and Elizabeth Dilts-Marshall in New York; French version Diana Mandiá; Editing by Kate Entringer)
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