Wells Fargo's (WFC) Underwriting Business Suffers A Decline
Zacks Investment Research | May 22, 2017 10:04PM ET
As a consequence of the fake accounts scandal Wells Fargo & Company (NYSE:WFC) was involved in last year, its business in the U.S. municipal bond market has seen a fall, per a report issued by Thomson Reuters.
Last year, Wells Fargo was banned for a one-year period from conducting city business in California. Following this, other states like Chicago, Massachusetts and Ohio also banned the bank.
The bank has underwritten 85 deals totaling nearly $8.13 billion so far in 2017 compared with 134 deals totaling $12.74 billion in the same time span in 2016. With this fall in business, Wells Fargo has dropped to rank six from rank four it held last year.
Further, its ranking for negotiated deals has dropped to eight in a year-to-date period. Wells Fargo has negotiated 45 deals totaling $5.2 billion so far this year compared with 79 deals totaling $9.25 billion in 2016.
Per the report, the bank fell two ranks to five for winning competitive bid issues with 40 deals totaling $2.92 billion so far in 2017 compared with 55 deals worth $3.48 billion same period last year.
Although, the bank’s efforts to alleviate the impact of the scandal remain encouraging, its financials continue to remain under pressure. However, its diverse geographic footprint and solid business mix should keep it afloat.
Wells Fargo’s shares have gained 1.6% in the last six months, underperforming the 5.6% growth for Zacks categorized Banks - Major Regional industry.
Currently, the bank carries Zacks Rank #3 (Hold). You can see .
Stocks worth considering in the same space include M&T Bank Corporation (NYSE:MTB) , Northern Trust Corporation (NASDAQ:NTRS) and The PNC Financial Services Group, Inc. (NYSE:PNC) . All these stocks carry a Zacks Rank #2 (Buy).
M&T Bank witnessed an upward earnings estimate revision of 4.8%, over the past 60 days. Also, its share price gained 34.8% over the last one year.
Northern Trust's earnings estimates moved upward by 1.1% over the past 30 days, for the current year. Its share price increased 20.7%, over the last one year.
PNC Financial’s current-year earnings estimates were revised 3.2% upward, over the past 60 days. Over the last one year, its share price surged 34.2%.
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