Buffett's stock: Wells Fargo posts falling revenue, shares drop
* Q1 EPS 67 cents vs Street view 66 cents
* Revenue falls 5.2 pct to $20.33 bln
* Shares down 4.9 percent (Rewrites to focus on falling revenue, adds investor comment, background on Wells Fargo)
By Philipp Gollner and Clare Baldwin
SAN FRANCISCO/NEW YORK, April 20 (Reuters) - Wells Fargo & Co (
WFC.N), the fourth-largest U.S. bank, posted a decline in revenue, and shares fell 4.9 percent as a bank known for outsmarting rivals turned in an average performance.Net earnings rose 50.5 percent, but gains were driven mainly by setting aside less money to cover bad loans. The bank's loan book shrank as outstanding loans to consumers declined and loans to companies did not grow enough to compensate.
Credit quality improved for the bank, as it did for rivals, but investors are less clear about where future profit growth will come from.
"It's a simple issue of their revenue being weak and their earnings before taxes and provisions being down significantly. I think that's why the stock is down," said Keith Davis, an analyst at Farr, Miller & Washingt
on, with $730 million under management.
Wells Fargo was one of the biggest mortgage lenders in the United States in the years leading up to the housing crisis, but managed to stay profitable during all but two quarters during the financial crunch.
Warren Buffett's Berkshire Hathaway (BRKa.N) (BRKb.N) has long invested in the bank because of the strength of its retail franchise and its skill at selling multiple products to customers.
But some investors now wonder if Wells Fargo's edge is disappearing.
"They're becoming more like every other bank," one hedge fund manager said on Wednesday.
Wells Fargo shares fell $1.46 to $28.61 in early afternoon trading.
The bank's first-quarter net income for common stockholders rose to $3.57 billion, or 67 cents per share, from $2.37 billion, or 45 cents per share, a year earlier. Revenue fell 5 percent to $20.33 billion.
Wells Fargo cut the amount of money it set aside for bad loans to $2.21 billion from $5.33 billion a year earlier. It also released $1 billion, pre-tax, from its reserves.
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