Buy Alert

  • Regular
  • Trading Tips
  • 5 months ago
  • 265

Wells Fargo’s third quarter was a setback for the bank, especially compared with competitors, as a drop-in
loan balances and a relative lack of leverage to rising interest rates took a toll on revenue. However, the
company continued to add deposits, and deposit pricing rose just 15 bps during the year.

• Smart Trend Team could see continued growth bank’s low-cost funding base.

• Expenses were affected by a $1b mortgage-related litigation exercise, and a 19% year-over-year increase in
spending on professional services, much of which was related to the company’s fraudulent-account
remediation effort.

• Otherwise, non-interest expenses, including salaries, experienced modest increases during the year.
Management is targeting $4 billion in expense savings by 2019, and we think the success of cost-cutting
efforts at more troubled peers over the past decade bodes well for Wells Fargo.

• We think a renewed focus on efficiency, combined with a healthy deposit base and solid credit quality, will
provide the base for an eventual return to form.

Source : Smart Trend Team; OCBC

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