Wells Fargo: Costs Production, Overall Market, and Recommendation

Wells Fargo
Student’s Name
Institutional Affiliation
Wells Fargo
Wells Fargo is an American multinational company with its headquarters in San Francisco, California. The company has central services across the United States as one of the largest banks based on total assets. Wells Fargo specializes in the provision of credit cards, insurance, global banking, and other essential financial services. The company works collaboratively with other corporations through the use of a consultative approach to expedite operations. Notably, Wells Fargo has been open bank accounts and issuing credit cards to their customers, even without their consent. However, the top management recognizes and addresses the concerns from customers and take appropriate actions. Although the banking industry is highly competitive, Wells Fargo has emerged as one of the most successful companies in offering effective services under commercial, small businesses, and personal segments.
Costs of Production
Wells Fargo has recorded steady gross profits over the last several years of operations. However, the company has encountered an overall increase in expenses on promotional ads, innovations, and development. Sahagun (2019) argues that the company achieved reliable financial results in 2018 with a total of $22.4 billion in net income or $4.28 per diluted common share as the highest earnings in the history of operations. Wells Fargo attained its expense target in 2018 with a decline in expenses based on lower operation costs and progress in minimizing expenses while reinvesting for the business. Notably, growth in net interest income and a decrease in non-interest income influenced a decline in overall revenue. The credit quality of the company remained stable because of the net-charge rates. The company paid a total of $25.8 billion in the form of dividends to the shareholders.
A financial analysis of Wells Fargo reveals that it has positioned itself with a niche, especially in lending activities. Currently, the company is one of the largest consumer financial institutions with records of $4 billion as of the third quarter of 2011. Notably, Wells Fargo has recorded an increase in overall revenue every year until 2010. Erbas (2019) postulates that the organization attained the highest income rise of $2,655,000 to $12, 275,000 from 2008-2009. Equally, the return on assets is an equally relevant financial health indicator of an organization. The ratio of performance of assets was 0.96 percent in 2008 and increased to 5 percent in 2010. According to statistics, the overall return on assets has been growing steadily from 2009 to date. Notably, the company has maintained an upward trend in financial performance based on rising revenues.
The management team of Wells Fargo invests in shareholder’s equity to generate a higher return on its investments. Arguably, the investment in bonds and common stocks has influenced a tremendous rise in overall assets for the company. The company invests in higher returns on assets to generate higher earnings. The ratio on return on assets rose steadily in 2008-2009 before stabilizing in the following years. Currently, Wells Fargo’s return on equity is high compared to other companies in the banking indu...