Wells Fargo (WFC) ranks among the 5 topmost banks in the United State of America. Its rank was third as of mid-2020, following on close heels of JP Morgan Chase and Bank of America.
Company sources claim that the assets of WFC exceed $1.97 trillion. It has a customer base of more than 70 million across the nation and operates with an employee strength of 266,000.
The market capitalization of Well Fargo bank stood at $97.4 billion as of 21st August 2020. The bank has announced a net income of $19.55 billion in earnings for FY2019. It is one of the best-known names in the financial service sector.
Wells Fargo banking products
Wells Fargo has officially divided its operations into 3 broad categories for the convenience of management reporting. Let us find out the areas WFC operates in as far as banking is concerned-
Wholesale Banking: Wells Fargo’s wholesale banking sector takes care of the financial requirements of customers based in the United States as well as spread across the globe.
As many as 13 segments are included in this category of banking services offered by Wells Fargo and these are credit risk, insurance, commercial real estate, business banking, and corporate banking.
You can also find out about Wells Fargo’s financial credit card and risks from the banking personnel.
If you are a small business owner or looking for retail banking services, walk into one such banking division and avail services. Wells Fargo mortgage, loans, dealing with checking, and savings accounts take place in these divisions.
Bank caters to its clients through ATMs or automated teller machines.
Wealth and Investment Management
This segment caters to HNWIs or high-net-worth individuals. They are mainly business clients. Expect wealth management services, products related to retirement, and investments. You can seek the assistance of Wells Fargo advisors to manage your high-end investments and to know about various financial instruments.
Credit, private banking, and financial planning are few other services offered under this category. If you are not able to walk into one of the divisions due to the pandemic, navigate through WellsFargo.com to find out more about your options and how you can get the services delivered without having to go out of your house.
A struggling time
Of late the bank has been struggling to cope up with the “phony account scandal” that shook its reputation. It will be happy to leave behind 2020 that was distressful and look ahead for better times.
Adding to the woes was the economic meltdown due to the pandemic that caused economic upheavals worldwide. So, it found it difficult to generate a handsome profit due to these reasons. Eventually, it slashed down its dividends by as much as 80%.
Come 2021, we are already 3 months into it. What are the 5 things that we can expect Wells Fargo to do in 2021 to cope up with the scandal and also the economic meltdown? Let us check out-
Sell off more business setups
The CEO Charlie Scharf said, “we’re going to continue to exit some things which do not core to the U.S”. So, keeping up with the announcement, the bank announced that the $10 billion student loan portfolio will be bought by a private equity investor and that there would be more of such disposals in 2021.
It will also part with the asset management division that is worth $607 billion in assets. There are yet other reports that indicate that Wells Fargo might also shop its “private-label card business” as well as the corporate trust unit.
There will be a cut in expenses
Earlier, according to Scharf, there are plans to slash $10 billion in expenses annually so that the structure of expenditure is at par with the market peers. As such, the bank has already started restructuring the same by starting layoffs again and also by consolidating many divisions and branches.
The Wells Fargo financial analysts are eager to know what steps it will take to keep to the word.
Revenue will be low but hope for improved profitability
Experts believe and as per the current financial scenario, it is quite likely that Wells Fargo will earn fewer profits in 2021 as compared to 2020. The analysts have worked out a rough estimate of the revenue that will be generated by the bank in 2021 and it is $71.07 billion.
Wells Fargo’s asset cap
Wells Fargo’s asset cap is perhaps one of the worst and costliest punishments that can be imposed on any bank. This will by all means negatively impact the stock prices of the bank. It is hard to say when the asset cap will be removed because February marked the 3rd anniversary of the same.
Since it has a new team at the management level and new directors on the board and simultaneously adhering to the new regulatory guidelines, it is quite likely that it is inching closer to asset cap exit.
It is quite likely that there might be NEWS that Wells Fargo is “pushing” to remove the asset cap towards the end of 2021.
Wells Fargo, just like most of the other banks kept on hold stock buyback plans due to the pandemic. Owing to the restrictions imposed by the Federal government, it had to cut down the quarterly dividend to $0.10 per share from $0.51 per share.
So, if you are planning to invest in Wells Fargo stocks, weigh the pros and cons and take the plunge so that you can play your Wells Fargo financial cards well!