Profits Up 25% at Wells Fargo's Wealth Unit
Wells Fargo's second quarter profits rose to $5.7 billion, buoyed in part by a roughly 25% increase in profits at the San Francisco bank's wealth, brokerage and retirement unit.
The wealth unit's profits grew to $544 million for the quarter, up from $434 million from the same period a year earlier.
Revenues rose 9%, increasing to $3.5 billion from $3.2 billion. Expenses excluding taxes also increased but at a slower pace, rising to $2.6 billion from $2.5 billion, a 6% increase.
Managed account assets grew to $409 billion, a 24% year-over-year increase.
"It's a pretty strong quarter overall for Wells Fargo. But what stands out for me is the performance in the managed account assets," says Aite Group analyst Bill Butterfield, who adds that the managed account performance is helping drive the unit's overall growth.
"Clearly, I think it's a good story for Wells Fargo," he says.
The firm's advisor headcount at 15,189 remained virtually unchanged from the previous quarter. Wells Fargo is the third largest wirehouse by advisor headcount, and is the first to report earnings for the second quarter.
Client assets for the division rose 12% quarter-over-quarter to $1.6 trillion.
Net revenues companywide fell by 1% for the quarter, slipping to $21.1 billion from $21.4 billion for the year-ago period.
Profits, however, climbed to $5.7 billion from $5.5 billion due in part to lower expenses, which fell about 0.5%, dropping to $12.2 billion from $12.3 billion.
Diluted earnings per share rose to $1.01 from 98 cents.
Wells Fargo's community banking division continued to be largest profit engine for the company. The unit reported $3.4 billion in profits, up from $3.2 billion.
The wholesale banking unit's profits dropped to $1.9 billion from $2 billion.
Timothy Sloan, previously Wells Fargo CFO, was named head of the wholesale banking unit at the start of the second quarter. John Shrewsberry replaced Sloan as CFO.
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