What happened
Actions of Wells Fargo (NYSE: WFC) It fell 4.6% on Tuesday, after the financial services company’s second-quarter results were released.
And that
Wells Fargo’s second-quarter report was disappointing, to say the least. The bank’s revenue fell 18% to $ 17.8 billion, in part due to losses related to the coronavirus pandemic. That did not meet Wall Street’s expectations. Analysts had expected revenue of $ 18.4 billion.
The COVID-19 crisis and the corresponding economic recession are strongly affecting Wells Fargo’s business. Image source: Getty Images.
Wells Fargo also generated a net loss of $ 2.4 billion, or $ 0.66 per share. That was much worse than the loss analyst forecast of $ 0.20.
Now what
Worse yet, management believes there are more losses ahead. “Our view of the duration and severity of the economic recession has deteriorated considerably due to assumptions used in the last quarter, which drove the addition of $ 8.4 billion to our credit loss reserve in the second quarter,” he said. CEO Charlie Scharf in a press release.
The possibility of increasing losses led Wells Fargo to cut its quarterly dividend, from $ 0.51 to $ 0.10 per share. “We are extremely disappointed with our second quarter results and our intention to reduce our dividend,” said Scharf.
To straighten the ship, Scharf promised to improve Wells Fargo operations in the coming quarters. “While the negative impact of the pandemic is unprecedented and many of our business drivers were negatively affected, our franchise should perform better and we will make changes to improve our performance regardless of the operating environment,” he said.
