The wealth and investment management (WIM) arm of Wells Fargo has shown resilience in a challenging market, reporting a 157% year-on-year surge in Q4 2020 net income.
Overall, the group recorded a mixed performance, with net income rising 4%, although revenue fell 10%.
The unit’s net income for the quarter to December 2020 stood at $548m, versus $213m in the same quarter of 2019.
However, total revenue at the division dropped 4% to $3.79bn from $3.96bn over the period. The fall was attributed to lower net interest income due to lower interest rates.
Lower operating losses along with lower deferred compensation plan expense led to a 17% slump in noninterest expense from $3.05bn from $3.67bn. Net interest income decreased 19% year-on-year to $715m.
Total client assets grew 6% to $2trn, due to higher market valuations.
The total number of financial and wealth advisers at the end of Q4 2020 was 13,513, compared with 14,414 in the prior year and 13,793 in the previous quarter.
At a group level, the San Francisco-based lender’s net income increased to $2.99bn from $2.87bn. Total revenue however, decreased to $17.92bn from $19.86bn.
The lender, which has been embroiled in a major sales practices scandal for creating accounts on behalf of Wells Fargo clients without their consent, incurred customer remediation expenses of $321m in Q4 2020. This quarter also included restructuring charges of $781m.
Meanwhile, loan loss provisions dropped $823m, driven by a $757m reserve release as a result of its student loan portfolio sale.
Recently, Wells Fargo announced plans to withdraw from its international wealth management business in order to focus its efforts on serving wealthy investors in the US.
The bank is reportedly also eyeing the sale of its asset management business and is in talks with a private equity consortium led by GTCR and Reverence Capital Partners for the sale.
CEO Charlie Scharf said: “Although our financial performance improved and we earned $3.0 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us.”