Wells Fargo’s allowance for credit losses decreases
Wells fargo announced Friday, Jan.15 as part of its fourth quarter 2020 results that its allowance for credit losses had fallen by $ 823 million. The bank attributed the decline primarily to a release of $ 757 million in reserves due to the announced sale of its student loan portfolio and lower net charges.
“Credit continues to perform well as consumers and businesses have benefited from the adjustments, fiscal and monetary stimulus measures underway, and [an] improving economic outlook ”, CEO Charlie scharf said on a call with analysts.
Wells Fargo reported $ 22.9 billion in credit card point-of-sale (POS) volume in the fourth quarter, down slightly from $ 23.1 billion a year ago. The bank saw increased use of debit cards during the fourth quarter. The volume of debit card purchases at point of sale reached $ 105.3 billion during the period, up from $ 95.2 billion a year ago. It reported 32 million active digital customers (online and mobile) in the fourth quarter, with the inclusion of 26 million active mobile customers. These figures were essentially stable compared to the third quarter.
All in, Wells Fargo reported $ 3 billion in net income (64 cents per diluted share) for the period on $ 17.925 billion in revenue. Its main results did not meet analysts’ expectations for $ 18.13 billion in earnings, but its earnings results exceeded estimates of 60 cents per share.
“The benefits of fiscal and monetary stimulus continue to provide significant support to many people, and the additional $ 900 billion stimulus is an important step in helping those who still need it,” said Scharf. “Overall, our customers continue to be [a] much stronger position than we would have expected at the start of this crisis, but unemployment levels remain high, inventory levels remain below pre-pandemic levels and confidence to invest depends on an effective bridge until ‘so that large-scale vaccination can be accomplished. “
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