Result Update Of Wells Fargo & Co (NYSE:WFC)
Wells Fargo & Co (NYSE:WFC) is battling difficult times. The Financial services company had to face the difficult situation created by the near government shut-down as well as a not so promising economic condition. The only hope lay in the Federal Tapering and that has managed to push up the economy.
In spite of such adverse conditions, the company managed to beat the analysts’ expectations. Though there was a decline in its main mortgage refinance business, WFC had initiated several cost-cutting measures that resulted in maintaining the profit margins. In difficult times, when revenues are not rising, cost cutting or rather fat shedding can help a company survive the hard times.
Wells Fargo & Co (NYSE:WFC) reported earnings of $5.61 billion for the fourth quarter of 2013, translating to $1.00 per share. The company had reported earnings of $4.86 billion for the fourth quarter of 2012, translating to $0.91 per share. This represents an increase of 1% over the previous year. Analysts had expected Wells Fargo to declare earnings of $0.98 per share. Revenues fell to $20.7 billion from $21.90 billion for the same period last year. This was very much anticipated; in fact analysts were expecting the company to report revenues of $20.69 billion only. Wells Fargo could generate only $50 billion in new mortgages for the last three months, the lowest in many years. The strong growth in loans and deposits however saved it from the blushes.
Cost Cutting Bails Out Wells Fargo:
Profits for the full year were at $21.9 billion an increase of 16% on revenues of $83.8 billion. The results were also helped by dipping into the reserves, this released $1.2 billion as well as from equity-investment gains. A total of 5,300 jobs were cut in the third quarter followed by another 925 in October, 2013. The employee strength has shrunk by almost 2% to 264,900 and the resultant cost savings would be $750 million annually.