Third-quarter weak for wealth division at Wells Fargo

JAN 22, 2012
Wells Fargo & Co. last week reported weak fourth-quarter results for its wealth management division, reflecting the impact of volatile investment markets and reduced customer activity in the firm's giant brokerage business. Overall, the bank reported revenue of $3.1 billion for the wealth, brokerage and retirement division, up 6% from the third quarter. However, excluding a $153 million gain from the recent sale of independent broker- dealer H.D. Vest Financial Services and gains on deferred compensation plan investments, revenue was down 5% from the previous quarter. In the earnings release, the firm attributed the lower revenue to “lower asset-based fees, reduced brokerage transaction revenue and lower securities gains in the brokerage business.” The bank's lack of top-line growth could foreshadow weak results across the brokerage industry as firms report earnings through through this week. Retail-client brokerage assets at the firm were down 3% from the fourth quarter of last year to $1.1 trillion, while fee-based income in the wealth management segment was down 2% to $198 million. Wells Fargo added 75 financial advisers in the quarter, giving it a total of 15,263. The bank as a whole had record net income of $4.1 billion in the quarter. Revenue, however, was $20.6 billion, down 4.1% from a year earlier. For the year, the bank posted revenue of $80.9 billion, down 5% from 2010, and had record profits of $15.9 billion. The earnings results of 73 cents a share topped consensus analyst estimates by a penny. “The fourth quarter of 2011 was a very strong quarter for Wells Fargo, with record earnings, solid linked quarter growth in loans, deposits and capital, and continued strong credit quality,” chief financial officer Tim Sloan said in a statement. [email protected]

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