NEW YORK (AP) — Wells Fargo’s profits plunged nearly 90% in the first quarter as the bank had to set aside billion of dollars to cover potentially bad loans due to the coronavirus pandemic.
The company said Tuesday that it boosted its loan loss provisions — or the money set aside to cover potentially bad loans — to $3.83 billion from $845 million a year ago as borrowers face the possibility of going broke because the coronavirus has effectively shut down the U.S. economy and others around the world.
Wells reported first-quarter earnings of $653 million, or 1 cent per share, down 89% from a $5.9 billion profit in last year’s first quarter. The San Francisco-based bank said it had revenue of $17.1 billion in the quarter, down from $21.6 billion for the same period in 2019.
Like its competitors, Wells’ interest income declined as the Federal Reserve cut its benchmark interest rate to near zero because of the virus outbreak. Wells reported interest income of $11.3 billion for the quarter, down nearly $1 billion from 2019’s first quarter.
Wells also said it saw an increase in bad loans to the oil industry due to a sharp declines in oil prices.