Wells Fargo's new chief pledges more cost cuts as profit slumps

S Signs of JP Morgan Chase Bank Citibank and Wells Fargo & Co. bank are seen in this combination

Boston Partners increased its position in Wells Fargo & Co by 7.2% during the third quarter. Longview Partners Guernsey LTD now owns 26,122,688 shares of the financial services provider's stock worth $1,236,126,000 after purchasing an additional 5,090,670 shares during the last quarter. DNB Asset Management AS boosted its holdings in shares of Wells Fargo & Co by 22.3% in the 4th quarter.

Wells Fargo repurchased 141.1 million shares of stock during the fourth quarter. Parametric Portfolio Associates LLC now owns 12,370,499 shares of the financial services provider's stock worth $623,968,000 after buying an additional 796,884 shares during the last quarter. Finally, EdgePoint Investment Group Inc. raised its position in shares of Wells Fargo & Co by 3.8% during the 2nd quarter. The company has a quick ratio of 0.85, a current ratio of 0.86 and a debt-to-equity ratio of 1.33.

The S&P index recorded 38 new 52-week highs and no new lows, while the Nasdaq recorded 78 new highs and 16 new lows. The stock has a 50-day moving average of $53.76 and a 200-day moving average of $49.88.

Chief Executive Jamie Dimon said despite the "continued high level of complex geopolitical issues" facing the global economy, the "resolution of some trade issues helped support client and market activity towards the end of the year". And that appears to be the case with Wells Fargo in the fourth quarter. Analysts had expected a profit of $1.12 per share, according to Refinitiv data. Wells Fargo & Co had a net margin of 21.67% and a return on equity of 13.01%.

Wells Fargo said Tuesday that it took a $1.5 billion charge in the fourth quarter to cover related costs, cutting its profit in half.

China has pledged to buy almost an additional $US80 billion ($A116 billion) of manufactured goods from the U.S. over the next two years, and over $US50 billion ($A72 billion) more in energy supplies, Reuters reported, citing a source briefed on the trade deal that is expected to be signed on Wednesday.

The biggest challenge could be lower interest rates, as the Fed has signaled it intends to keep rates steady for the foreseeable future.

Several equities analysts have commented on the stock. Wells Fargo's market value, meanwhile, has declined to $209 billion from $251 billion because of significant share repurchases.

Even setting aside the legal issues, things do not look good for Wells Fargo, which is more susceptible to fluctuations in interest rates because of its large consumer banking business. Morgan Stanley lowered their price objective on Wells Fargo & Co from $57.00 to $56.00 and set an "equal weight" rating on the stock in a research note on Monday, December 23rd. Raymond James downgraded shares of Wells Fargo & Co from a "market perform" rating to an "underperform" rating in a research report on Monday, December 2nd.



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