Wells Fargo, a nationwide financial business, is ecstatic as their fourth quarter earnings saw raises from the previous year. And what probably pleases them even more is that their main competitor, JPMorgan Chase, lost a bit of revenue in the same department. John Stumpf, the chief executive of Wells Fargo, believes that the strength of the US economy should not be doubted.
Wells Fargo grossed $5.38 billion in the fourth quarter, a slight leap from their $5.37 billion a year prior. The total was calculated after omitting out dividends for favored stock. Based on the value of individual shares, earnings came to $1.02, matching Wall Street’s expectations. Revenue grew 4 percent to $21.44 billion in the quarter, which barely topped the bank’s predictions.
In a statement in tandem with the results, John Shrewsberry, Wells Fargo’s chief financial officer, said issuing more loans boosted earnings. In total, loans increased by 5 percent to $862.55 billion, although the company’s net interest, which is how much revenue a bank earns over the cost of their business, lowered slightly in the quarter. The net interest margin is attentively watched by their shareholders.
For all of 2014, Wells Fargo’s collective earnings raised 4 percent to $21.82 billion, although revenue climbed by 1 percent to $84.35 billion. Shares of Wells Fargo fell 60 cents, which translates to 1.2 percent, to $51.25. The company, overall, has had a quarter worth being proud of.
Wells Fargo has been a stock-market favorite for many of the larger banks in the past few years. Being the most valuable U.S. bank based on market value, the financial corporation swaggered through the recovery of the nation’s economy to 17 straight quarters of annual profit growth until the third quarter of 2014, as FactSet reported.
Stumpf said that the company is much more confident about the progress they can make this year. “We are not saying we are off to the races, but we are a bit more optimistic in 2015 than we were at this time in 2014,” he answered in an interview. Stumpf also bragged about how the company’s decided to expand their lending services, for both consumer and business clientele. He anticipates to see even more quarterly earning raises for Wells Fargo in the upcoming year.
Shrewsberry hopes that the progress behind Wells continues, pointing out that their interest rates are key. An increase in rates is necessary to boost their earnings significantly, though executives stated Wednesday that the bank could continue to draw profits without dipping into the Federal Reserve. However, the bank has another crucial decision to tackle: energy or oil.
Wells Fargo is a major contributor in the oil industry, financing exploration corporations and other energy-focused companies. Due to lowered oil values, Shrewsberry said Wells was reviewing all of their energy loans to reconsider the risks involved in abandoning oil markets. Shrewsberry said that it was too early to conclude whether they need to reserve funds for possible losses, though it is likely that energy lending would not see raised earnings for Wells Fargo in the coming year.
By Matthew Austin Bowers