Strong quarter at Wells Fargo fails to impress

Strong quarter at Wells Fargo fails to impress
JAN 18, 2013
Wells Fargo & Co. reported strong fourth-quarter earnings Friday, but investors did not appear impressed, sending the stock sharply lower. The company's wealth, brokerage and retirement division posted healthy growth in revenue, net income and client asset balances. Net income of $351 million was up 13% from the comparable quarter last year, while revenue was up 2% to $3.1 billion. Elsewhere, business divisions ranging from capital markets, commercial banking, commercial real estate, corporate banking, credit card and mortgages, posted double-digit revenue growth year-earlier quarter. “This time last year, I said we would benefit from the many opportunities we saw for 2012 — and we did just that,” Wells Fargo chief executive John Stumpf said in a news release. “From growing revenue, making strategic acquisitions and achieving efficiency improvements, I am extremely pleased with our 2012 performance.” Investors were less so. Wells Fargo shares were down 1.4% Friday afternoon. Excluding a one-time gain on the sale of H.D. Vest Financial Services in 2011, and lower gains on investments in deferred-compensation plans, revenue in the wealth unit for the full year was up 9% from the prior year. The company attributed the results to higher asset-based fees and brokerage revenue. Client assets reached $1.4 trillion at the end of 2012, up 7% from the end of 2011. The retail-brokerage unit saw assets increase 8% to $1.2 trillion for the year. The number of advisers in the brokerage unit dropped by 96 through the first nine months of last year, but the company added 247 net new advisers in the fourth quarter, for a year-end total of 15,414. The wealth management unit, which includes the Abbot Downing division that caters to ultrahigh-net-worth families, saw more-modest growth, with client assets up 2% to $204 billion and up 3% from the fourth quarter of 2011. Assets in the retirement unit, which includes institutional retirement and trust services, 401(k) plan management and individual retirement accounts, grew significantly last year. IRA assets totaled $297 billion, up 11% year-over-year, while institutional retirement plan assets grew 13% to $266 billion.

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