Revenues for the quarter declined to $17.8bn, from $21.6bn in the same period last year
Wells Fargo's headquarters complex in San Francisco, California. (Credit: Wikipedia.org/Laimerpramer.)
American banking giant Wells Fargo has reported a net loss of $2.4bn for the second quarter, compared to a net income of $6.2bn recorded in last year’s second quarter.
For the period, the bank earned a total revenue of $17.8bn in the quarter, down 17% compared to $21.5bn posted in the same quarter a year earlier.
The total interest income in the period was $11.8bn, which was 31% lower compared to that earned in the second quarter of 2019.
The net interest income in the second quarter was $9.9bn, down $2.2bn. The non-interest income for the period was $7.9bn from $9.5bn.
Wells Fargo increases allowance for credit losses (ACL) for loans
The bank increased its allowance for credit losses (ACL) for loans by $8.4bn to deal with the coronavirus (Covid-19) pandemic.
Wells Fargo stated: “The increase in the ACL reflects forecasted credit deterioration due to the COVID-19 pandemic, including a $6.4 billion increase for commercial loans, mainly in the commercial real estate and commercial and industrial portfolios, and a $2.0 billion increase for consumer loans, mainly in the residential real estate portfolio.”
While the average loans advanced by the bank were $971.3bn for the quarter, increasing by $6.2bn from the previous quarter, the period-end loans were $935.2bn for the period, falling $74.7bn from the first quarter.
Commercial loans were down $54.5bn compared to the first quarter, mainly due to the decline in commercial and industrial loans driven by repayment of revolving lines that were drawn in March at the outset of the pandemic.
Consumer loans also decreased by $20.1bn compared to the previous quarter, driven by a decrease in real estate mortgage loans.