Wells Fargo & Co shares fell as much as 3 percent on Friday after the bank dialled back its net interest income outlook for this year and reported a decline in total quarterly revenue.
The Federal Reserve has signalled it is unlikely to raise interest rates in 2019 given risks to the U.S. economy from a global slowdown, which investors have feared could pressure net interest income, or the difference between what a bank earns on loans and pays on deposits.
The lowered outlook comes at a time of uncertainty for the fourth-largest U.S. lender following the abrupt departure of former Chief Executive Tim Sloan last month.
The bank has been working to keep a tight grip on costs as it continues to battle the fallout from a wide-ranging sales practices scandal that first erupted in 2016, efforts that helped profit rise in the first quarter even as revenue slipped.
Interim CEO Allen Parker said on Friday he was working on improving relations with regulators and making the bank more efficient but acknowledged “we have more work ahead of us.”
On a call to discuss the results, analysts repeatedly asked why the bank was lowering its net interest income outlook while peers remained more optimistic, and for details on how non-interest-related revenues from fees would shape up.
“If the revenue base keeps splitting down, I’m afraid that some of your loyal shareholders are going to start to exit before you have a new leadership in place,” Bank of America analyst Erika Najarian said.
Parker said Wells Fargo’s board is pressing forward with the CEO search, but has “complete confidence” with current leadership. He did not give a timetable for when a new CEO might be announced…Continue Reading