Wells Fargo (NYSE: WFC) reported positive fourth-quarter earnings before the opening bell Friday. Investors are said to be pleased with the results.
The American multinational financial services company reported earnings of USD1.25 per share, compared to the expected USD1 a share. Revenue amounted to USD20.86 Billion, much higher than analysts anticipated USD18.61 Billion. Net income surged 86% in comparison to the fourth quarter from the previous year. The company’s results were partly contributed to a USD875 Million reserve release as pandemic-related loan losses were not as severe as was anticipated.
Nevertheless, amid the ongoing pandemic and the spread of the omicron variant, big banks are expected to experience a slowdown in consumer spending amid continuous inflation.
“The near term brings uncertainty and some weakness about the path for consumer spending, due to the seasonal slow period and potential omicron effects,” Leon said. “We think this may be transitory if the omicron variant can be put under control, especially as we head into the 2022 spring season.”
Equity capital markets activity rose 19% year over year to USD1.3 trillion in 2021, the best period since records began in 1980, Leon said.
“Equity trading volumes and transaction fees have increased significantly with greater investor participation, with equity inflows and active trading from retail investors,” Leon wrote. “We think investment banks could realize 8%-10% plus growth year over year in debt underwriting fees from new issuances, driven by high yield corporate bond issuances.”