Wachovia reports Q2 losses

by Richard Kilner

Story link: Wachovia reports Q2 losses

In line with forecasts, Wachovia has reported a Q2 loss of $8.9bn, equating to $4.20 per share net loss.

The loss includes a $6.1bn noncash goodwill impairment charge, corresponding to falling assets values and market valuations.

The charge does not, however, have an affect upon the firm’s tangible capital levels, regulatory capital ratios or on liquidity.

With the removal of the charge and other outstanding items from the results, Wachovia would have seen robust revenue growth of $7.5bn.

The solid growth was derived from fees for traditional banking services, in addition to deposits and loans.

Healthy fees for strong fiduciary and asset management coupled with commissions for brokerage corresponded to the acquisition of A.G. Edwards.

Chairman Lanty L. Smith, has described the results as disappointing and unacceptable.

Although stating that the general economic situation did affect the firm’s performance, Smith has expressed his belief that Wachovia itself must accept responsibility for the weak performance.

A pair of immediate measures have been announced. Firstly the quarterly stock dividend has been reduced to five cents per share, saving $700m per quarter.

The second action is to depart the General Bank wholesale mortgage origination channel.

At the same time last year, the firm experienced earnings of $2.34bn, $1.22 per share.