An increase in consumer transactions and auto loans gave Wells Fargo the boost it needed. On Friday, the company released its quarterly earnings report and investors were pleasantly surprised by the results.
Earnings were $1.20 per share which is higher than the anticipated $1.09 per share. And revenue grew to $21.609 billion which is higher than the initial forecast of $21.012 billion.
Credit card transactions, debit card transactions, and auto loans are all up from a year earlier which contributed to the company’s growth. And the bank returned $6 billion to shareholders through dividend payments and buybacks.
Here’s what lies ahead for Wells Fargo
The good news couldn’t come soon enough for Wells Fargo, which has been under close scrutiny for years. And this was exacerbated after CEO Tim Sloan left at the end of March. Sloan, who had been at Wells Fargo for 31 years, soon became a polarizing figure after he stepped into the role of CEO.
The bank has already stated that it will find an external candidate to replace Sloan. This week, Warren Buffett took it a step further and said the candidate shouldn’t come from another Wall Street bank.
This is mostly to avoid further criticism from members of the Senate and U.S. House of Representatives. Buffett owns nearly 10 percent of Wells Fargo’s stock.
It remains to be seen whom Wells Fargo will choose to step in as its next CEO. But in the meantime, the bank has to focus on continuing to improve overall business performance. It also needs to get out from under the regulatory cap on its assets.
The bank’s shares have largely underperformed in comparison to competitors like JP Morgan Chase and Bank of America. And the earnings report, though largely positive, did deliver some bad news.
The company’s non-performing assets reached $7.3 billion and its efficiency rating was higher than forecasted. This indicates Wells Fargo is spending more than its earning.
Allen Parker, who is acting as interim CEO of Wells Fargo, acknowledged that the company has more work to do. Parker said that going forward, the bank is focused on building a strong financial foundation and operational excellence.