The Wells Fargo wealth and investment management (WIM) arm reported a 70% plunge in net income in Q2 2020 hit by the Covid-19 pandemic.
The WIM unit reported a net income of $180m for the three-month-period ended 30 June 2020, compared with $602m in the prior year.
The division’s total revenue dropped 10% year-on-year to $3.66bn.
The bank attributed the fall to lower net interest income, asset-based fees, and brokerage transactional revenue.
WIM total client assets dropped 4% to $1.8trn.
Client assets at the wealth management business fell 3% to $224bn.
Advisory assets rose 1% to $569bn, mainly due to higher market valuations. IRA assets remained stable at $415bn.
Despite the fall in profit, WIM was the only business unit of Well Fargo to register a profit in Q2.
Wells Fargo Group swings to loss in Q2 2020
At a group level, Wells Fargo registered a net loss of $2.4bn in Q2 2020, marking its first loss since 2008, as it set aside $9.5bn in credit loss reserves.
In Q2 2019, the banking group posted a net income of $6.2bn.
The bank also announced plans to slash its dividend to 10 cents per share from 51 cents per share.
Wells Fargo CEO Charlie Scharf said: “We are extremely disappointed in both our second quarter results and our intent to reduce our dividend. Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter, which drove the $8.4 billion addition to our credit loss reserve in the second quarter.”
“Though our income performance was weak, our capital and liquidity continues to be extremely strong with both our CET1 ratio and LCR increasing from the end of the prior quarter,” Scharf added.