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Wells Fargo (WFC) CFO Hints at Lower Q1 Revenues and Costs

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In the Credit Suisse Financial Service Forum held on Wednesday, Wells Fargo & Company’s (WFC - Free Report) chief financial officer Mike Santomassimo provided some mixed insight on the bank’s performance in the first quarter.

Santomassimo said that mortgage origination has been growing year over year, despite expectations of a slowdown in 2021. He said the trend to be "still pretty robust" so far in the first quarter.

Regarding credit quality, CFO said that the metrics are improving better than expected. However, Santomassimo expects interest revenues to remain flat or decline 4% from the previous quarter.

Also, expenses of $53 billion are expected to be reported for 2021 compared with $57.6 billion recorded in 2020. Also, growth in commercial loans is expected to remain weak and is likely to decline sequentially.

Furthermore, CFO expects a part student loan portfolio divesture deal to close in the first quarter, with the remaining closing in the next quarter. It expects to record an overall gain on the sale.

Notably, the executive informed that the lifting of the asset cap remains a key priority for Wells Fargo. On its removal, he said, "we do think there's going to be demand and the opportunity to grow across a whole range of things."

Recently, Bloomberg reported that Wells Fargo was able to satisfy the Federal Reserve with its proposal for overhauling risk management and governance.

Santomassimo also disclosed that Wells Fargo undertook modest buybacks in the first quarter of 2021. Post approval from Fed for share repurchases in 2021, many Wall Street banks announced their plans for the same along with fourth-quarter 2020 results.

Further, CFO hinted at chances of gradual increase in dividend on improvement in economic conditions. MVB Financial (MVBF - Free Report) , Merchants Bancorp (MBIN - Free Report) and Washington Federal (WAFD - Free Report) are some banks that have hiked their common stock dividends so far in 2021.

Shares of Wells Fargo have gained 59.2% over the past six months compared with 48.5% growth recorded by the industry it belongs to.

 

 

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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