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Wells Fargo Q4 Profit Rises, Beats View; But Revenues Miss


Wells Fargo & Co. (WFC) on Friday reported an 18 percent increase in profit for the fourth quarter from last year, reflecting a net benefit from the recent U.S. tax reform and a gain on sale of Wells Fargo Insurance Services, in addition to higher revenues. Earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates.

Wells Fargo reported fourth-quarter net income applicable to common stock of $5.74 billion or $1.16 per share, up from $4.87 billion or $0.96 per share a year ago.

The company noted that the latest quarter's results include an after-tax benefit of $0.67 per share from the Tax Cuts & Jobs Act, and a pre-tax gain of $0.11 per share on the sale of Wells Fargo Insurance Services USA.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $1.06 per share. Analysts' estimates typically exclude special items.

Revenue for the quarter grew 2 percent to $22.05 billion from $21.58 billion in the year-ago period. Analysts expected revenue of $22.34 billion for the quarter.

Net interest income for the quarter declined 1 percent from last year to $12.31 billion, while net interest margin edged down to 2.84 percent from 2.87 percent last year. Non-interest income rose 6 percent to $9.74 billion from $9.18 billion a year ago.

Non-interest expense increased 27 percent to $16.80 billion from $13.22 billion in the year-ago period.

Looking ahead, Wells Fargo said it remains committed to its target of $2 billion of expense reductions by the end of 2018, which are being used to support its investments in the business, and an additional $2 billion by the end of 2019.

In addition, by the beginning of 2019, the company expects the amortization of core deposit intangible expense, $769 million in 2018, and the FDIC special assessment to be complete.

Wells Fargo has been marred by a scandal after its retail banking segment employees opened more than two million unauthorized bank and credit card accounts over a period of five years and used those fake accounts to charge extra fees from customers.

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