Wells Fargo & Co. (NYSE: WFC) first-quarter lending margins fell below 3% thanks to low interest rates. Lending margins haven’t been this low since the 1990s. The bank, which is the most valuable in the United States, also saw its net income fall 1.5% to $1.04 a share, or $5.8 billion. Just one year earlier, net income was at $5.89 billion, or $1.05 a share.
The year-over-year quarterly decline was a first for the bank since 2008. Analyst Jennifer Thompson at Portales Partners LLC said the interest rate environment has yet to improve, so the economy still remains sluggish.
Wells Fargo CEO John Stumpf is looking for ways to increase revenue and reduce spending until the Federal Reserve boosts interest rates. Economists expect the Reserve to make this move sometime this year. Net interest margin also fell to 2.95%. Since 2010, it’s dropped more than 1 percentage point.
Company stock dropped 1.1% to $53.97 in early morning trading. Over the past 12 months, the stock has declined 1.5%.
Revenue was up 3.2% to $21.3 billion, and total deposits were up $28 billion from the fourth quarter to $1.2 trillion. Stumpf attributed the revenue and deposits increase to the company’s efforts to improve their customer relationships during the quarter.