Wells Fargo credit card second quarter outstandings were up 14% year-on-year (YOY) to $31.1 billion reflecting new account growth and growth in private label and co-brand outstandings driven by the Dillard’s card portfolio acquisition in the fourth quarter. However, credit card yield declined 40 basis points (bps) to 11.74%.
Credit card household penetration of 42.6%, up 360 bps YOY reflecting the Dillard card portfolio acquisition in 4Q/14 and continued new account growth
Wells reports purchase dollar volume (PDV) up 15% quarter-to quarter (QOQ) and YOY to $17.7 billion. POS transactions up 13% QOQ and 18% YOY.
Net charge-offs rose 2 bps YOY in the second quarter from 3.19% to 3.21%.
WELLS FARGO OUTSTANDINGS
2Q/14: $30.1 billion
3Q/14: $27.7 billion
4Q/14: $29.5 billion
1Q/15: $30.4 billion
2Q/25: $31.1 billion
Source: Wells Fargo; CardData
Community Banking reported net income of $3.4 billion, down $307 million, or 8 percent, from first quarter 2015 primarily due to higher income taxes as first quarter 2015 included a $359 million discrete tax benefit. Revenue of $12.7 billion was $123 million, or 1 percent, lower compared with the prior quarter due to lower market sensitive revenue, mainly gains from trading activities and sale of debt securities, partially offset by higher net interest income, mortgage banking fees, deposit service charges, and card fees. Noninterest expense increased $100 million, or 1 percent, due to higher operating losses, project spending and advertising costs, partially offset by lower personnel, equipment and occupancy expenses. The provision for credit losses decreased $254 million from the prior quarter due to a $190 million higher reserve release as well as a $64 million improvement in net charge offs.
Net income was down $73 million, or 2 percent, from second quarter 2014. Revenue rose slightly from a year ago as higher net interest income, trust and investment fees, and debit and credit card fees, were mostly offset by lower gains from trading activities and lower mortgage banking fees. Noninterest expense increased $144 million, or 2 percent, from a year ago driven by higher personnel expenses and operating losses, partially offset by lower travel, occupancy and advertising expenses. The provision for credit losses increased $84 million from a year ago as the $97 million improvement in net charge-offs was more than offset by a $181 million lower reserve release.
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