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Wells Fargo Brokerage Profits Up 22 Percent

Wells Fargo Brokerage Profits Up 22 Percent

Wells Fargo’s wealth, brokerage and retirement (WBR) division reported a $550 million profit for the third quarter, up 22 percent from the $450 million reported a year earlier and up just 1 percent sequentially.

Overall, the bank’s third quarter financial performance met analysts’ expectations of $1.02 earnings per share, with a net income of $5.73 billion, up 3 percent from a year ago. Revenues grew 4 percent from the year-ago quarter to $21.2 billion. Analysts polled by Seeking Alpha expected revenue of between $20.74 billion and $21.53 billion.

“We continue to see signs of a steadily improving economy, and I remain optimistic about the opportunities ahead for Wells Fargo,” Chairman and CEO John Stumpf said in a statement Tuesday, adding the bank’s performance “demonstrated strength in the fundamental drivers of our long-term growth.”

In the brokerage unit, advisory fees, commissions and other wealth management fees made up a slightly larger slice—$2.4 billion, or 23 percent—of the firm’s overall noninterest income during the third quarter, compared to 22 percent in July. The brokerage business also cut expenses by $5 million from the prior quarter, driven by lower deferred compensation plan expenses. But the company noted these lower expenses were largely offset by higher broker commissions and non-personnel expenses.

The unit reported revenue of $3.55 billion in the third quarter, up 7 percent from a year ago but flat sequentially. Client assets within the retail brokerage business grew 8 percent from a year ago to about $1.4 trillion.

Wells Fargo Advisors, its St. Louis-based employee retail brokerage unit, reported managed account assets of $409 billion in the third quarter, up 17 percent year-over-year but flat sequentially. The increase was largely driven by increased market valuations and net flows, the company says.

The firm recruited 17 new advisors during the quarter, bringing total headcount to 15,163, up from 15,189 advisors last quarter.

The cross-sell ratio for the wealth, brokerage and retirement business came in at 10.44 products per household during the quarter, up from 10.41 a year ago, according to Wells Fargo. Additionally, the unit had strong loan growth, with average balances up 19 percent from the prior year on growth in first mortgage and security-based lending.

“This was a strong quarter for Wells Fargo and again demonstrated the benefits of our diversified business model,” CEO John Shrewsberry said. 

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