Bank of America, Wells Fargo and Other Banks Report Strong Earnings
Morgan Stanley’s profit rose to $3.7 billion with the help of its stock traders, who drove equities revenue up 24 percent. Citigroup, where stock trading was also a bright spot, reported a profit of $4.6 billion. Trading divisions, which were predicted to be laggards, fared better than expected across the board as a lively stock market helped offset a poorer showing from bond trading.
“The recovery from the pandemic continues to drive corporate and consumer confidence,” Jane Fraser, the Citigroup chief executive, said in a statement on Thursday.
At Wells Fargo, which has smaller Wall Street operations than its peers, profit was $5.1 billion, also beating analyst estimates. The lender cut expenses, in part by closing 433 of its branches, or 8 percent, in the last year and reducing its head count 13 percent to a little more than 114,000 employees.
Wells Fargo’s chief executive, Charles W. Scharf, said the bank was still focused on fixing the kinds of problems that had dogged it for several years. Wells Fargo was fined $250 million over its mortgage practices and got a stinging rebuke from a banking regulator last month, which prompted renewed criticism from Senator Elizabeth Warren, Democrat of Massachusetts.
The fine was the latest in a series of penalties the bank has faced for its conduct, including a fake account scandal that spanned more than a decade. Mr. Scharf said in a statement on Thursday that the penalty was “a reminder that the significant deficiencies that existed when I arrived must remain our top priority.”
Wells Fargo’s shares slid 1.5 percent on Thursday as investors focused on continued regulatory punishments, which include a cap on the bank’s growth imposed by the Federal Reserve more than three years ago. Bank of America’s stock rallied 4.5 percent, Morgan Stanley rose 2.5 percent, and Citi climbed a little under 1 percent. JPMorgan, the country’s biggest bank, gained 1.5 percent a day after it also beat expectations with earnings of $11.7 billion.
Included in profits for Bank of America, Wells Fargo and Citigroup were funds released from stockpiles they had built early in the pandemic to guard against a surge in loan defaults that never materialized. Wells Fargo released the most — $1.7 billion — while Citigroup released $1.2 billion and Bank of America released $1.1 billion. Morgan Stanley instead added slightly to its provisions for credit losses.
Goldman Sachs, the last of the major banks to report for the quarter, will release its results on Friday.
Matthew Goldstein contributed reporting.