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Wells Fargo Sees Q1 Profit Drop on Weaker Bank Results

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Despite a healthy jump in its wealth-management operations, Wells Fargo (WFC) said Tuesday that its net income fell slightly to $5.8 billion, or $1.04 per share, in the first quarter vs. $5.9 billion, or $1.05 per share, a year ago. This beat analysts’ estimates of $0.98 a share.

Total revenue for the San Francisco-based bank was $21.3 billion, a 3% improvement from a year ago.

Its largest business segment, community banking, saw its revenue grow slightly from last year to nearly $12.8 billion, which was a small drop from the fourth quarter. The segment’s net income, though, was about $3.7 billion compared with $3.8 billion a year earlier (and $3.4 billion in the prior quarter).

The wholesale banking unit had total revenue of about $5.9 billion and net income of $1.8 billion vs. year-ago results of $5.6 billion and $1.7 billion, respectively.  

“Our solid first quarter results again reflected the benefit of our diversified business model and the continued focus of our 266,000 team members on serving the needs of consumer and business customers,” said Chairman and CEO John Stumpf, in a statement. “We continued to strengthen our customer relationships in the quarter, as reflected in strong growth in deposits and primary checking customers.”

Wealth Results

The company’s third unit — Wealth, Brokerage and Retirement — reported revenue for Q1 of $3.7 billion, a 6% improvement from $3.5 billion last year. Net income jumped 18% to $561 million from $475 million in the year-ago period.

These operations include 15,314 financial advisors. The retail brokerage operations include $1.4 trillion of client assets under management, of which $455 billion are in managed accounts — a 12% year-over-year increase, representing both net flows and increased market valuations.

The wealth management operations encompass $226 billion in assets, a 4% improvement from Q1’14.

Overall, the unit experienced strong loan growth, the bank says, “with average balances up 23% from [the] prior year largely due to growth in non-conforming mortgages and security-based lending.” According to an investor presentation, the ratio for cross-selling of products by advisors (including mortgages, for instance) was 10.44 products per household as of February vs. 10.42 a year ago.

IRA assets grew 6% year over year to $365 billion, while institutional retirement plan assets expanded 3% from a year ago to $347 billion.

— Check out JPMorgan Profit Rises 12% on Gains From Stock, Bond Trading on ThinkAdvisor.