NEW YORK, Jan 13 — Wells Fargo & Co today reported a 50 per cent decline in profit for the fourth quarter as it paid regulatory penalties and stockpiled money to prepare for soured loans against the backdrop of a weaker economy.
The fourth-largest US lender reported a profit of US$2.9 billion (RM12.6 billion), or 67 cents per share, for the quarter ended Dec. 31, compared to US$5.6 billion, or US$1.40 per share.
Provision for credit losses were US$957 million in the quarter, compared with a US$452 million release a year earlier.
Banks are building up rainy day funds as US Federal Reserve policymakers decide on the future path of interest rates.
After aggressively raising interest rates in an attempt to bring soaring inflation to heel, Fed policymakers say they are encouraged by the recent slowing in jobs and wage growth that could temper inflation.
The outlook for big US banks has been further clouded by the Russia-Ukraine conflict and fading stimulus measures. Higher borrowing costs have also softened demand for mortgages and car loans, crimping banks' revenues.
Meanwhile, a slump in dealmaking has weighed on banks' investment banking businesses, which had a blockbuster 2021.
Wells Fargo is still working to contain the fallout from a six-year-old scandal over its sales practices that led to hefty fines and an asset cap imposed by the Fed on the lender's ability to expand its balance sheet. — Reuters
