Wells Fargo profits drop but US banking giant meets expectations

Caitlin Morrison
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The US bank met analysts' expectations (Source: Getty)

US banking giant Wells Fargo has reported a slight drop in profit for the second quarter of 2016 compared with the year before - but still met analsyts' expectations.

The figures

Net income was down to $5.6bn (£4.2bn) in the second quarter, from $5.7bn in the same period of last year.

Earnings per share (EPS) was $1.01, compared with $1.03, which hit expectations right on.

Revenue at the bank rose by four per cent to $22.2bn.

Shares in the company dipped by almost one per cent in pre-open trading.

Wells Fargo Wells Fargo | mobile image

Why it's interesting

The bank's results were weaker year-on-year but showed improvement from the first quarter of the year, when profits and EPS dipped by seven per cent, which the company blamed partly on "significant stress" in its oil and gas portfolio. The oil and gas outlook, while not completely recovered, has improved since then, to the benefit of Wells Fargo.

What Wells Fargo said

Chairman and chief exec John Stumpf said:

Wells Fargo's second quarter results demonstrated our ability to generate consistent performance during periods of economic, capital markets and interest rate uncertainty. Compared with a year ago, we had solid growth in loans, deposits and customers, which are our fundamental drivers of long-term value. We also improved our efficiency ratio while continuing to reinvest in the franchise. We returned more capital to our shareholders in the quarter. We remain well positioned to continue to meet the financial needs of our customers.

In short

Wells Fargo is patting itself on the back for a consistent performance - but this could be tested if the Fed decides to hike interest rates, like it's expected to before the end of this year.

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