Wells Fargo & Company (NYSE: WFC) reported second quarter financial results. The company reported a net loss of USD 2.4 Billion or USD 0.66 per diluted common share compared to net income of USD 6.2 Billion or USD 1.30 per share for the second quarter of 2019. Wells Fargo announced a reduction in its third quarter 2020 common stock dividend to USD 0.10 per share from USD 0.51 per share previously.
Chief Executive Officer Charlie Scharf said, “We are extremely disappointed in both our second quarter results and our intent to reduce our dividend. Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter, which drove the $8.4 billion addition to our credit loss reserve in the second quarter. While the negative impact of the pandemic is unprecedented and many of our business drivers were negatively impacted, our franchise should perform better, and we will make changes to improve our performance regardless of the operating environment. “Though our income performance was weak, our capital and liquidity continues to be extremely strong with both our CET1 ratio and LCR increasing from the end of the prior quarter. However, it is critical in these uncertain times that our common stock dividend reflects current earnings capacity assuming a continued difficult operating environment, evolving regulatory guidance, and protects our capital position if economic conditions were to further deteriorate. Given this, we believe it is prudent to be extremely cautious until we see a clear path to broad economic – 3 – improvement. We are confident that this eventual economic improvement combined with our actions to increase our margins will support a higher dividend in the future,” Scharf added. “I’m proud of the hard work and dedication of our employees through these challenging times to support our customers, communities, and each other. Our regulatory commitments remain our top priority and while we have more work ahead of us, we continue to devote all necessary resources to this effort,” Scharf concluded.
Net interest income amounted to USD 9.9 Billion, a USD 1.4 Billion short fall from the first quarter of 2020.
Written by Danny Abramov.
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