Summary
Wells Fargo & Company reported a net income of $5.2 billion for the second quarter of 2018, a decrease from $5.9 billion in the same period last year, with diluted earnings per share at $0.98 compared to $1.08 a year ago. This decline was partly due to $481 million in net discrete income tax expense related to state income taxes. Total revenue was $21.6 billion, down 3% from the prior year, with net interest income showing a modest 1% increase while noninterest income declined by 8%. The company continued to return capital to shareholders, repurchasing $4.0 billion in common stock dividends and net share repurchases. Despite an ongoing asset cap imposed by the Federal Reserve, Wells Fargo maintained strong capital and liquidity positions, with its Common Equity Tier 1 ratio at 11.98%, above its internal target. The report highlights the company's ongoing efforts to rebuild trust following past sales practice issues, with substantial remediation accruals and customer outreach programs. Significant consent orders with regulatory bodies, including the Federal Reserve, CFPB, and OCC, are discussed, outlining plans for enhanced governance and operational risk management. The company anticipates operating under the asset cap through early 2019. Despite these challenges, the credit quality remained solid, with net charge-offs at 0.26% of average loans and nonperforming assets at their lowest level since 2008.
Financial Highlights
38 data points| Revenue | $21.55B |
| Interest Expense | $3.47B |
| Net Income | $5.19B |
| EPS (Basic) | $0.98 |
| EPS (Diluted) | $0.98 |
| Shares Outstanding (Basic) | 4.87B |
| Shares Outstanding (Diluted) | 4.90B |
Key Highlights
- 1Net income decreased to $5.2 billion from $5.9 billion in Q2 2017, with EPS falling to $0.98 from $1.08.
- 2Total revenue declined by 3% year-over-year to $21.6 billion, driven by an 8% drop in noninterest income, partially offset by a 1% increase in net interest income.
- 3The Common Equity Tier 1 (CET1) ratio remained strong at 11.98%, exceeding the company's internal target.
- 4Average assets and loans decreased by 2% and 1% respectively compared to the prior year.
- 5The company returned $4.0 billion to shareholders through dividends and share repurchases, marking the 12th consecutive quarter of returning over $3 billion.
- 6Operating losses increased significantly, driven by higher remediation accruals for previously disclosed matters.
- 7Wells Fargo is operating under an asset cap imposed by the Federal Reserve, limiting total consolidated assets to the level as of December 31, 2017, with plans to operate under the cap through early 2019.