Wells Fargo Wealth Unit Raises Profits 41%: Q1 Earnings

CEO John Stumpf points to possible expansion as the group's growth plans are discussed with analysts

Wells Fargo headquarters in San Francisco. (Photo: AP) Wells Fargo headquarters in San Francisco. (Photo: AP)

Wells Fargo (WFC) said early Friday that its net income rose to $5.9 billion, or $1.05 per share, for first quarter 2014, up nearly 14% from $5.2 billion, or $0.92 per share, a year ago—beating analysts’ expectations.

Its wealth-management, though, grew net income 41% year over year to $475 million. Revenues increased 8% from a year ago to about $3.5 billion, thanks to “strong growth in asset-based fees and higher net interest income,” the company says.

On a call with equity analysts, Chairman and CEO John Stumpf was asked about acquisitions that might enhance the bank’s fee-based businesses. “We don't need to do anything. That's the beauty here, but we're always looking at things in an opportunistic way,” he replied.

The bank has surpassed its capital requirements, so it has the resources to make a deal happen, Stumpf added.

One of the questions it is asking itself is, “Is there a way to enhance Wealth, Brokerage and Retirement? Possibly, and that would be interesting to us ...,” the executive shared. "But again, if we don't do anything, that's just, you know, that's also fine.”

Q4 Comparisons

Compared to the four quarter of 2013, the Wealth, Brokerage and Retirement group’s net income actually declined by $16 million, or 3%, though its revenue grew $30 million, or 1%. In Q1’14, higher asset-based fees “were largely offset by lower gains on deferred compensation plan investments,” the bank says.

The retail brokerage had client assets of $1.4 trillion, up 8% from the prior year, and managed-account assets increased $63 billion, or 19% year over year. Average loan balances jumped 23% from a year ago.

Its wealth-management assets were $217 billion, up 6% from Q1 ’13. Average loan balances for this group grew 11% year over year.

The unit’s retirement group reported IRA assets of $344 billion, a 9% year-over-year jump, and institutional retirement plan assets of $310 billion, up 8% from the same period of 2013.

Reprints Discuss this story
This is where the comments go.

Related

12 Best & Worst Broker-Dealers: Q4 Earnings, 2013

Some of Wall Street's major players haven't been able to turn their results around, but others are putting their troubles...