The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Bank Earnings Season 3Q2015: Wells Fargo stays strong on Return on Assets

Earnings per share at Wells Fargo was $1.05 per share 2 cents higher than in the June quarter, buybacks reducing outstanding shares and Earnings and revenues stable at $5.8 billion and $22 Billion. With a lesser G-SIB charge, they ae also not trying to make more capital at 10.7% Tier I and advisory business is not growing any big leaps and bounds for them as they cut down costs finally to report a 56.7% efficiency, looking like upstaging the leader JP Morgan in another key metric but without any confidence in investors to its betterment in business prospects, giving JP Morgan busy making new reserves another 2-3 quarters before they catch up on the same efficiency

NIMs that we track for the two banks remain dull and insipid under 3% and the firm did well however to increase payouts to now a big 60% more in line with its likely flat balance sheet in the coming few years

The Non interest income for example remains $10.4 billion and the changes in components of that were only from increases in debt hedging (lower rates) lease income, card fee and booked equities gains

The bank has started generating tangible MSR business up to $250 million, and increased income from originations held on the balance sheet at 1.88% while originations overall remained above $50 billion after a cut of $7 billion in business. Card charge offs are sill a high 2.7% and Auto loans loss rates also a higher 0.70% compared to JP Morgan.

Auto lines were assigned to wholesale business at the bank as they carve out their segments to more in line with Wall Street majors on the East coast.


This entry was posted on October 14, 2015 by in Uncategorized.


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