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Wells Fargo’s Wealth and Investment Management Segment Delivered in an Uncertain Environment in 4Q15


Jan. 23 2016, Updated 9:06 a.m. ET

About Wells Fargo’s Wealth and Investment Management segment

Wells Fargo & Company’s (WFC) Wealth and Investment Management segment provides a wide range of financial advisory services to high net worth clients ranging from financial planning, private banking, credit, investment management, and fiduciary services. The company’s retirement services business is the largest in the country, providing institutional retirement and trust services for businesses and reinsurance services for insurance companies.

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The 4Q15 earnings review of Wells Fargo’s wealth management segment

Wells Fargo’s wealth management segment reported fourth quarter revenues of $3.9 billion, which represents an increase of 1% over the previous year. This rise was mainly attributable to growth in net interest income, though this was brought down by lower asset-backed fees. Lower staff costs and lower brokerage commissions also led to a 2% decline in non-interest expenses, which came in at $2.9 billion in 4Q15. As a result, segmental net income rose 15% to $595 million.

Operational metrics of Wells Fargo’s wealth management segment

Wells Fargo’s brokerage business suffered due to global weakness, and client assets were down by 2% to $1.4 trillion in 4Q15. Assets under management were down 1% on a YoY (year-over-year) basis at $420 billion. That said, a strong loan growth of 24% was recorded in the non-conforming mortgage loans and security lending sub-segments, whereas client assets managed by the wealth management segment came in flat at $225 billion in 4Q15. Meanwhile, institutional retirement plan assets declined 2% to $334 billion in the same quarter.

Wells Fargo is among the top six banks in the United States, and it is the largest mortgage lender. With a market capitalization of $249 billion as of January 15, it is competing with Bank of America Corporation (BAC), Citigroup (C), JP Morgan Chase & Company (JPM), and Goldman Sachs Group (GS). All these banks are heavily weighted in the Financial Select Sector SPDR ETF (XLF).

Now it’s time to wrap up this series for a discussion of Wells Fargo’s recent stock performance.


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