Morningstar

Morningstar, Inc.

Equity Bottom-Up

Wide-moat Wells Fargo reported OK second-quarter results, and there were a mix of positives and negatives. The bank guided toward the lower end of its previous net interest income range of negative 2% to negative 5% growth given the worsening interest rate environment. Fortunately, this includes the possibility of one to two rate cuts, depending on timing, therefore we don’t think it will get much worse for 2019. The bank also highlighted that it expects to come in at the higher end of their…

Because of last week’s Dodd-Frank Act stress tests, we weren’t expecting any surprises for the Comprehensive Capital Analysis and Review results. Only one bank ran into issues this time around, which was better than the four in 2018. This year, Credit Suisse received a conditional nonobjection, as the Federal Reserve is “requiring the firm to address certain weaknesses in its capital planning processes.” The Fed also noted that Capital One and JPMorgan had to adjust their capital plans, as both…

Wide-moat Wells Fargo reported OK first-quarter results, but it cut full-year guidance, and several other negatives brought up during the call weighed on results. The bank’s return on tangible equity was 15.2% compared with 12.6% in the first quarter of 2018. This was largely helped by operating losses improving by over $1 billion. Operating losses were $238 billion for the quarter, the best result in over a year. However, management reduced net interest income guidance for the year, and while…

<p>We are not surprised by the general idea behind Wells Fargo’s announcement that Tim Sloan is stepping down as CEO and will retire. However, we are surprised a bit by the abruptness. It has been our view that Sloan, while better than John Stumpf, could not be the leader of the new Wells. Still, we thought he would likely finish out 2019 and retire in 2020. Either way, Sloan eventually had to step down, and this should help the bank move one step further away from its scandal-ridden past. We are…</p>

United States

Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage, leasing, credit cards, and consumer finance.  The Company operates through physical stores, the Internet and other distribution channels across North America and elsewhere internationally.