Wells Fargo distributions plummet

Wells Fargo has reported net revenues of US$18 billion in Q1 21, compared with US$17.7 billion in the first quarter of 2021, despite a significant fall in structured products activity. The bank distributed a total of 78 structured products during the first quarter of 2021 with sales volume of US$300m, compared with 162 products in Q1 20 worth US$440m, SRP data shows.

The bank’s issuance as a distributor group initially tumbled in the second quarter of 2020 to 85 products valued at US$230m amid the height of the Covid-19 pandemic.

This figure remained steady throughout the year totalling 64 products sold for US$250m in the final quarter.

The bank led by Charlie Scharf (pictured) has remained at the bottom of the SRP league tables in terms of distribution issuance and sales while Morgan Stanley leads the ranks with 1,046 products worth US$6 billion in Q1 21.

Of the 699 live structured products issued by Wells Fargo in the SRP database, 51 (US$290m) are linked to the technology sector while the same number (US$270m) is tied to the pharmaceuticals & biotechnology sector.

Popular single underlyings include Bristol-Myers Squibb (42 products/US$174.6m), Apple (49 products/US$161.8m), AT&T (48 products/US$111.8m), and iShares MSCI Emerging Markets ETF (33/114.9m).

Net income

The bank’s net income currently stands at US$4.7 billion, a significant jump from its figure of US$653m in the previous year.

Net interest income decreased by 22%, due to the impact of lower interest rates which drove a repricing of the balance sheet, as well as unfavourable hedge ineffectiveness accounting results, and higher mortgage-backed securities premium amortization.

Provision for credit losses decreased by US$5.1 billion in Q1 21 due to continued improvements in the economic environment and lower net charge-offs, while the first quarter of 2020 included a US$3.1 billion increase in the allowance for credit losses.

Click here to view the bank’s earnings release.