As has been seen with other banks, such as J.P. Morgan, a more sanguine economic environment and view of the consumer led to a reversal of loan loss reserves, which helped boost net income. Wells Fargo reported a pre-tax reduction in the allowance for credit losses of $1.6 billion as part of its first quarter 2021 financial results.
“Our results for the quarter … reflected an improving U.S. economy, continued focus on our strategic priorities, and ongoing support for our customers and our communities,” CEO Charles Scharf said in an earnings press release. “Charge-offs are at historic lows, and we are making changes to improve our operations and efficiency, but low interest rates and tepid loan demand continued to be a headwind for us in the quarter.”
Wells Fargo saw credit card point-of-sale (POS) volume of $21.1 billion in Q1, which was up by approximately 6 percent from $19.9 billion from a year ago. The bank saw heightened debit card usage during Q1. Debit card POS purchase volume hit $108.5 billion during the period, which was up by approximately 20 percent from $90.6 billion a year ago.
Wells Fargo reported 32.9 million active digital customers (online and mobile) in Q1, with the inclusion of 26.7 million mobile active customers. Those figures were essentially flat from Q4.
Wells Fargo reported average loans of $353.1 billion for consumer banking and lending Q1 2021, which were down 8 percent from Q1 2020. The bank also reported $789.4 billion in average deposits in Q1 2021, which were up 21 percent from Q1 2020.
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All in, Wells Fargo reported $4.7 billion in net income ($1.05 per diluted share) for the period on $18.06 billion in revenue. Its bottom-line earnings results exceeded estimates of 70 cents per share, and its top-line results exceeded analyst expectations for $17.5 billion in revenue.
Scharf said in the release that the company is “moving forward with our commitment to simplify the company and focus our resources on our core customers. We announced sales of our Asset Management and Corporate Trust businesses in the quarter, and we are increasing resources dedicated to initiatives to help drive growth in our core franchises.”
