sábado, 16 de julho de 2016

Wells Fargo, maior banco americano por capitalização, também sofre com "provisões cada vez maiores".......Essa é a maior observação no seu balanço publicado ontem

Wells Fargo, maior banco americano por capitalização, também sofre com "provisões cada vez maiores".......Essa é a maior observação no seu balanço publicado ontem

Essa é a maior observação no seu balanço publicado ontem...

Abaixo, um texto resumido, depois da divulgação do balanço.....ressaltei a passagem onde o aumento de provisões é destacado

Crédito: Yahoo Finance

Todo o texto aqui: http://finance.yahoo.com/news/wells-fargo-wfc-q2-earnings-154103851.html

Wells Fargo (WFC) Q2 Earnings Miss Estimate, Expenses Up

Zacks Equity Research July 15, 2016

Impacted by higher expenses, Wells Fargo & Company’s WFC second-quarter 2016 earnings recorded a negative surprise of about 1%. Earnings of $1.01 per share missed the Zacks Consensus Estimate by a penny. Moreover, it compared unfavorably with the prior-year quarter’s earnings of $1.03 per share.

Shares of Wells Fargo decreased more than 1% in the pre-market session, indicating that investors are bearish on the results. The price reaction during the full trading session will give a fair idea about the extent of disappointment.

Wells Fargo witnessed organic growth aided by higher revenues along with strong loans and deposit balances. Moreover, a strong capital position along with returns on assets and equity acted as the primary drivers. However, higher provisions and expenses were a concern.

Notably, reserve build of $150 million was recorded in the quarter driven by loan growth. Second-quarter net income applicable to common stock came in at $5.2 billion, down 3.7% year over year.

The quarter’s total revenue came in at $22.2 billion, in line with the Zacks Consensus Estimate. Revenues inched up around 4.2% on a year-over-year basis.


Loans and Deposits Rises, Costs Surged

Wells Fargo’s net interest income in the quarter came in at $11.7 billion, up 4% on a year-over-year basis. Increased interest income from trading assets and loans drove the results. However, net interest margin decreased 11 basis points year over year to 2.86%.

Non-interest income at Wells Fargo came in at around $10.4 billion, up 4% year over year, mainly due to elevated lease income and net gains from debt securities and trading activities. These positives were partially mitigated by reduced net gains from equity investments, insurance and mortgage banking revenue.

As of Jun 30, 2016, total loans were $957.2 billion, increasing 7.7% on a year-over-year basis. Growth in both the commercial and consumer portfolios contributed to the rise. Total deposits were $1.2 trillion, up 5% from the prior-year quarter.

Non-interest expense at Wells Fargo was $12.9 billion, up 3% from the prior-year quarter. The rise in expenses was primarily due to higher salaries and equipment expenses along with elevated employee benefits.


Credit Quality: A Cause of Concern?

Wells Fargo’s credit quality metrics deteriorated in the quarter. Allowance for credit losses, including the allowance for unfunded commitments, totaled $12.7 billion as of Jun 30, 2016, increasing from $12.6 billion as of Jun 30, 2015.

Provision for credit losses was $1.07 billion, significantly up year over year from $300 million. Net charge-offs were $924 million or 0.39% of average loans in the reported quarter, up from the prior-year quarter net charge-offs of $650 million (0.30%). Non-performing assets fell 9% to $13.1 billion in the quarter from $14.4 billion in the prior-year quarter.

Strong Capital Position

Wells Fargo has maintained a solid capital position. The company purchased 44.8 million shares of its common stock in the second quarter.

Wells Fargo’s Tier 1 common equity under Basel III (fully phased-in) increased to $145.6 billion from $139.9 billion in the prior-year quarter. The Tier 1 common equity to total risk-weighted assets ratio was estimated at 10.6% under Basel III (fully phased-in) as of Jun 30, 2016, in line with the prior quarter.

Book value per share increased to $35.38 from $32.96 in the prior-year quarter.

Our Viewpoint

Though Wells Fargo has reported decent revenue growth, we expect top-line headwinds to persist, given the prolonged economic recovery and further interest rate hike uncertainty. With the thrust of banking regulations, there will be pressure on fees and loan growth. Moreover, rise in expenses and higher provisions were a major drag.

We believe that in the long term, investors will not be disappointed with their investment in Wells Fargo, given its diverse geographic and business mix, which enables it to sustain consistent earnings growth. Going forward, we believe that strategic acquisitions will help the company expand its business and enhance profitability.