Wells Fargo's bottom line is growing despite shrinking deposits and loans

America's fourth-largest bank reported on Friday a 16% jump in first-quarter profits, exceeding Wall Street's expectations. Wells Fargo's (WFC) revenue also fell less than feared.

It's the bank's first earnings report since Tim Sloan stepped down suddenly as CEO late last month. Sloan, a three-decade veteran of Wells Fargo, struggled to move the bank past two-and-a-half years of scandals that have hurt its reputation and its bottom line.

Even as other big banks grow deposits, Wells Fargo reported a 3% decline in total average deposits during the first quarter to $1.3 trillion. The bank blamed lower wholesale banking and a decrease in wealth and investment management deposits.

In a positive sign, however, Wells Fargo's retail banking deposits grew.

Wells Fargo's total average loans stood at $950.1 billion, down very slightly from a year ago. The bank reported quarter-over-quarter declines in auto, credit card and commercial loans.

Shares of Wells Fargo inched higher in premarket trading on Friday as investors breathed a sigh of relief the results weren't worse. JPMorgan shares rose 3% in premarket trading.

Wells Fargo's CEO is out. Here's how the bank can end its crisis

Wells Fargo's results stand in sharp contrast with larger peer JPMorgan Chase (JPM), which revealed record profit and revenue on Friday. While Wells Fargo's deposits slipped, JPMorgan reported a 3% increase in average deposits and 4% growth in core lending.

Wells Fargo will probably face questions from analysts later on Friday about its search for a successor for Sloan. Warren Buffett, Wells Fargo's leading shareholder, has urged the board of directors not to hire someone from Wall Street.

Allen Parker, Wells Fargo's interim CEO, said he's focused on continuing the bank's "transformation."

"We have more work ahead of us, and our strong leadership team is dedicated to making our company the most customer-focused, efficient, and innovative Wells Fargo ever," Parker, the former general counsel, said in a statement.

Wells Fargo has also unloaded several businesses in recent months. Earlier this week, Wells Fargo announced a $1.2 billion deal to sell its institutional retirement and trust business to Principal Financial (PFG).

Let's block ads! (Why?)