Wells Fargo suffers first quarterly loss since the Great Recession
Revenue dropped by a steeper-than-expected 18% to $17.8 billion.
Charlie Scharf, Wells Fargo’s CEO, said in a statement the bank is “extremely disappointed” in both its results and the expected sharp dividend cut.
Investors were also concerned by the move. Wells Fargo’s stock dropped 3% in premarket trading. The stock has lost more than half of its value so far this year.
Worries about the economy forced Wells Fargo to ramp up its allowance for credit losses for loans by $8.4 billion from the first quarter. Much of that was driven by commercial and residential real estate loans.
“Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter,” Scharf said,” which drove the $8.4 billion addition to our credit loss reserve in the second quarter.”