Wells Fargo Announces Losses of $2.4 Billion in Q2, Plans to Cut Dividends
As some of the largest US banks begin to release their second quarter results, investors can anticipate a reduction in earnings as many had to set aside significantly more liquidity in order to cover increasing loan losses. Conversely however, some banks will most likely also see a rise in fee income from the spike in trading activity despite the continuation of the pandemic crisis.
Wells Fargo was one of the banks to release its financials on Tuesday – and according to the numbers, the major bank reported its first ever quarterly loss since the Great Depression. Wells Fargo had amassed a total loss of $2.4 billion, which is a sharp decline compared to the Bank’s $6.2 billion in earnings in the previous year. In addition, Wells Fargo had also foregone $0.66 per share, which is three times more than initially anticipated.
In the meantime, Wells Fargo’s revenues dropped by 18% to a total of $17.8 billion. With growing concerns over the future of the US economy amid the pandemic, the lender had to set aside an additional $8.4 billion in the first quarter in order to cover residential and real estate loan losses.
As a result of the grim financial results, the bank stated it will be cutting back its dividend to only $0.10 per share, dependent on board approval. So far, Wells Fargo is the only major US bank to propose such measures; a stark contrast compared to the 2009 Great Recession, where the bank was experiencing relative strength and was the last of the banks to reduce dividends.
Information for this briefing was found via CNN News and Wells Fargo. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.