5 of the Worst-Performing Bank Stocks in 2020
The banking sector got hit hard in 2020 mainly due to the coronavirus pandemic, which sent credit costs soaring and ultimately resulted in an ultra-low-rate environment that lowers the revenue outlook for banks. In recent months, the sector has begun to rebound with the majority of bank stocks trading back around tangible book value. Some bank stocks, however, have not been able to regain the confidence of investors and remain at steep discounts. Here are five of the worst-performing bank stocks in 2020.
One of the largest banks in the U.S., Wells Fargo (NYSE: WFC), made plenty of headlines in 2020. The stock is down roughly 45% year to date and traded around $29 per share as of this writing. Since 2018, the bank has been operating under an asset cap that prevents it from exceeding $1.95 trillion in total assets, as punishment for its phony-accounts scandal. The coronavirus pandemic only made matters worse. After taking a $2.4 billion loss in the second quarter, Wells Fargo trimmed its dividend 80%, and revenue looks like it will be challenged going forward.
All that said, it could be a great time to get in at Wells Fargo, with the bank trading at a discount to its tangible book value. CEO Charlie Scharf is looking to cut annual expenses at the bank by $10 billion. The asset cap will have been in place for three years in February, and although it's total speculation, analysts think the bank has a chance of exiting the asset cap in 2021, which would drive the stock price up. After all, Wells Fargo is still one of the most well-known brands in banking.
Source Fool.com
