Wells Fargo & Company reported quarterly financial results that fell short of analyst expectations for both revenue and profit. The company's sales increased by 4.5% compared to the same period last year, while earnings grew by 13%. Despite these gains, the figures came in below projections, as did net interest income.
Jim Cramer, discussing the earnings during a recent episode, stated: "What about today's reports from the other three bigs? Okay, Wells Fargo, which we own for the Charitable Trust, reported a top and bottom-line miss. While sales were up 4.5% year-over-year, and earnings grew by 13%, they still came in light, as did net interest income. It was disappointing. That said, a big chunk of that earnings shortfall came from higher severance expense... Wells Fargo, by the way, laid off a lot of people to cut costs. When you drill down, the business is doing pretty well, just not quite as well as Wall Street, and I were hoping... Efficiency ratio, a key measure of cost, fell from 68% to 64%. Lower, by the way, is better when it comes to that measure... But the analysts spoiled by CEO Charlie Scharf's relentless cost-cutting were looking for 62.5%. Just not good enough."
The company's efficiency ratio, which measures operating costs as a percentage of revenue, improved from 68% to 64%. Analysts had anticipated a ratio of 62.5%.
Wells Fargo provides financial services including banking, lending, investment, and wealth management solutions.