The Wells Fargo wealth and investment management (WIM) arm reported assets bleed and fall in profit in Q1 2020 as it was hit by the market turmoil triggered by the Covid-19 pandemic.

Despite that, the division remained the most profitable unit of the bank’s three units.

The WIM unit registered a net income of $463m in Q1 2020. This was a 20% slump from $577m in the prior year.

The division’s total revenue of $3.71bn in Q1 2020 was 9% lower than the previous year. The fall was said to be driven by net losses from equity securities.

Meanwhile, lower market valuations and net outflows correspondent clearing business resulted in a 12% year-on-year reduction in WIM total client assets to $1.6trn.

Client assets at the wealth management business dropped 8% to $213bn.

Advisory assets and IRA assets both dipped 9% to $499bn and $367bn, respectively.

However, total assets under management increased 9% to $518bn.  The firm attributed the growth to higher money market fund inflows.

Wells Fargo CFO John Shrewsberry said: “Our results were impacted by a $3.1 billion reserve build, which reflected the expected impact these unprecedented times could have on our customers. Our results also included an impairment of securities of $950 million driven by economic and market conditions.

“We maintained strong liquidity and capital, and we are committed to using our financial strength to help support the U.S. economy, while still operating in compliance with the asset cap under the Federal Reserve consent order.”

Group performance takes a hit

At a group level, the bank reported an 89% plunge in net income on a year-on-year basis.

The performance was affected by an additional $3.1bn reserve that the bank set aside to cover loan losses and a $950m impairment of securities.