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Wells Fargo posts weaker-than-expected fourth quarter earnings despite US tax reform benefit

The NYSE-listed firm reported quarterly net income of US$6.25bn, or US$1.16 a share, up from US$5.27bn, or 96 US cents a share a year earlier, but below the consensus forecast for US$1.23
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Wells Fargo’s fourth quarter revenue fell to US$22.05bn, down from US$22.25bn, also below consensus for US$22.45bn

Wells Fargo & Co. (NYSE:WFC) saw its shares slip back in pre-market trading after the bank posted weaker-than-expected fourth quarter earnings.

The NYSE-listed firm reported quarterly net income of US$6.25bn, or US$1.16 a share, up from US$5.27bn, or 96 US cents a share a year earlier, but below the consensus forecast for US$1.23.

READ: Wells Fargo cleaning house in its forex dealing room

Wells Fargo’s fourth quarter revenue fell to US$22.05bn, down from US$22.25bn, also below consensus for US$22.45bn.

The group's earnings were boosted by a net benefit from the tax reform bill signed into law in December, making Wells Fargo one of the few banks not to take a charge as it has a net deferred tax liability instead of a deferred tax asset.

It said the tax benefit was US$3.35bn, or 67 US cents a share, which was offset by US$3.25bn in pre-tax charges related to litigation costs.

The bank also booked a pre-tax gain of US$848mln related to the sale of Wells Fargo Insurance Services USA.

In pre-market trading in New York, Wells Fargo shares shed 0.7% at US$62.58.

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