Wells Fargo beats 4Q profit forecasts

AP News
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Posted: Jan 15, 2016 4:25 PM
Wells Fargo beats 4Q profit forecasts

Retail banking giant Wells Fargo & Co. said its earnings were flat in the fourth quarter, as loan growth and expense reductions were not enough to offset struggling oil and gas loans.

Wells Fargo earned $5.71 billion in the last three months of 2015, unchanged from the same period a year earlier. On a per-share basis, Wells earned $1.03 per share versus $1.02 per share a year earlier. Like many companies, Wells has been buying back its own shares, which makes its per-share results go up even if overall profits are flat.

The company's results were in line with analysts' forecasts, with the average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of $1.02 per share.

Like other banks, Wells has been feeling stress from loans made to energy companies, which have been struggling because of a plunge in the price of oil. That has made extracting oil from the ground significantly less profitable. It has also made it harder for energy companies to pay their debts.

Wells Fargo reported losses of $118 million on loans to oil and gas companies, and now has $114 million in commercial loans that are 90 days or more past due, compared with $47 million a year earlier.

Other larger parts of Wells Fargo held steady. Wells Fargo community banking business earned $3.3 billion in the quarter, mostly unchanged from a year earlier. Mortgage originations slowed to $47 billion, mostly due to seasonality.

The biggest U.S. mortgage lender posted revenue of $21.59 billion in the period, falling short of Street forecasts. Seven analysts surveyed by Zacks expected $21.7 billion.

Wells Fargo shares fell $1.82, or 3.6 percent, to $48.82 amid a broad market downturn.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on WFC at http://www.zacks.com/ap/WFC