Wells Fargo is the best performing and safest big bank in the world even after this coronavirus story, which is perfect!
Indeed, its leverage of the 2nd quarter has just plunged to… 8.17 despite the financial turmoil of 2020 which is exceptional because no other big bank has been able to achieve this feat!
Document 1:
Amounts in billions of dollars.
Tangible equity is published equity minus preferred stock, goodwill and intangibles,
Document 2:
Balance sheets,
Document 3:
To give a true picture of the actual tangible equity, Treasury stocks must be added back into equity to calculate the true leverage of this bank.
Wells Fargo’s profits for the 2nd quarter of 2021 are $6.040 billion after a loss of $3.846 billion in the 2nd quarter of 2020 due to an increase in provisions for non-payment of its customers (Non Performaing Loans, NPL).
For a turnover of 20.720 billion dollars, the net profitability of this bank is… 29.15% which is low… compared to other banks,
Document 4:
The price of Wells Fargo was abnormally low and it did not reflect the good health of this bank which was strongly undervalued.
This price has risen significantly since early November 2020.
The market capitalization of about $207 billion is now far greater than its tangible equity, which amounts to… $143.6 billion and the stock is currently correctly valued!
Document 5:
Indeed, on the last four quarters’ earnings, Wells Fargo’s Price/Earnings ratio is 13.5 which is normal!
As I wrote previously, the accounting of the American banks gives a faithful image of reality in particular by recording the loans at their fair value, i.e. by respecting the accounting principles that must be applied, which is not done by the European banks that have not correctly evaluated their NPLs!
The true equity of these European banks is actually negative for most of them by accounting for NPLs at their fair value…
Wells Fargo’s expected and provisioned loss rate is 1.78% of total loans.
tor-relations/”>Click here to read Wells Fargo’s latest financial report.
Click here to read my article in French on this bank.
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