By Sohini Podder and Elizabeth Dilts Marshall

(Reuters) -Wells Fargo & Co posted a 21% drop in first-quarter profit but beat Wall Street expectations on Thursday, as the release of funds set aside to cover potential pandemic-related loan losses cushioned a decline in mortgage lending.

The fourth-largest U.S. lender posted a $3.67 billion profit, or 88 cents per share, compared with an average analyst estimate of 80 cents per share, according to Refinitiv data. Total revenue fell 5% to $17.59 billion, compared with estimates of $17.8 billion.

Shares in the bank fell more than 3%. Analysts said that reflected investor worries that the bank’s profits were flattered by the release $1.1 billion in reserves it set aside for pandemic-related losses that did not materialize, while the bank also failed to meet expectations on reducing expenses.

“Total revenue was slightly below expectations, with mixed results,” wrote Edward Jones analyst Kyle Sanders.

Big U.S. banks are unveiling first quarter results as the Federal Reserve moves to hike interest rates to tame surging inflation and as the conflict in Ukraine is causing volatility and uncertainty in the broader global economy. That could start to dampen consumer spending and loan growth, analysts said.

So far, however, the American consumer remains healthy and is spending, and inflation is not currently a credit risk, said Wells Fargo Chief Financial Officer Mike Santomassimo.

Consumer spending has been rising for months as the United States emerges from the COVID-19 pandemic and many make up for lost time traveling, shopping and dining out.

“People come into this in a pretty healthy position to deal with any potential challenges,” he said on a conference call. “Inflation is definitely having an impact on people. But so far that hasn’t translated into any real stress from a credit perspective,” said Santomassimo.

Those factors, along with 3% loan growth and Fed rate hikes, led the bank to raise its guidance for full-year net interest income (NII) to around 15% from 8% last quarter. NII, a closely-watched measure of how much money banks make from lending, rose 5% during the quarter.

Wells Fargo leans heavily on revenue from its consumer and corporate banking business, as it does not have a large capital markets division compared with Citigroup and JPMorgan Chase & Co..

Overall average loans grew 3%, boosted by credit card and auto lending, which rose 6% and 10% respectively. Debit card purchase volumes were up 6%, while credit card point-of-sale volumes grew 33%. Mortgage loans, however, fell 33% from a year ago on lower originations and gains from home sales.

“They had some headwinds from mortgage banking. But loan growth was broad based – in consumer and commercial – and asset quality remains pristine,” said John Mackerey, senior vice president in DBRS Morningstar’s global financial institutions group.

The bank’s non-interest expenses fell 1% on headcount cuts and real estate divestitures. While that was in line with Chief Executive Officer Charles Scharf’s plan to save about $10 billion annually over the long term, analysts were expecting more progress and noted the bank incurred charges related to remediating consumers for past sales practice misconduct.

That may have dented investors’ confidence that the bank can move beyond its scandals and be released from a Federal Reserve asset cap which restricts its loan growth, wrote Sanders.

“While today was a fresh reminder that WFC still has a lot of work to, we expected some setbacks along the way in the long-term turnaround story we see at the company,” Sanders added.

(Reporting by Sohini Podder in Bengaluru and Elizabeth Dilts-Marshall in New York; Editing by Arun Koyyur, Michelle Price, Bernard Orr and Nick Zieminski)

By Krystal Hu and Anirban Sen

(Reuters) – Intel Corp’s Mobileye has tapped investment banks Goldman Sachs Group Inc and Morgan Stanley to lead preparations for the initial public offering of the self-driving car unit, according to three people familiar with the matter.

The stock market flotation, which is set to launch later this year, could value Mobileye at as much as $50 billion, the sources said, cautioning that the timing, valuation and size of the IPO are subject to market conditions.

The amount to be raised in the IPO could not be learned and the sources requested anonymity because details of the IPO preparations are confidential.

Representatives for Intel and Mobileye did not respond to requests for comment. Morgan Stanley and Goldman Sachs declined to comment.

Mobileye’s preparation is coming at a tough time for the IPO market. Stock market volatility triggered by a sell-off in technology stocks and Russia’s invasion of Ukraine has forced several high-profile firms, including GoPuff and Chobani, to postpone their plans to go public this year.

The IPO freeze followed a record-breaking 2021 in which more than $300 billion was raised through flotations.

Only 21 companies, excluding listings of special purpose acquisition companies, have been listed on U.S. exchanges this year so far, according to Dealogic. Other major IPO hopefuls preparing for a listing this year include SoftBank-owned chip designed Arm and social media platform Reddit.

Intel bought Mobileye for about $15.3 billion in 2017. The Israeli company uses a camera-based system with adaptive cruise control and lane change assistance in driverless cars. Founded in 1999, Mobileye plans to eventually build its own lidar sensor to help its cars map out a three-dimensional view of the road.

Mobileye, which counts BMW, Audi, Volkswagen, Nissan, Honda and General Motors as its clients, has been a bright spot for Intel, which faces stiff competition in the chip-making segment from rivals Nvidia Corp and Qualcomm Inc.

The decision to list Mobileye is part of Intel’s broader strategy under Chief Executive Officer Pat Gelsinger to turn around its core business. Intel expects to receive the majority of the proceeds from the share sale and use some of the funds to build more Intel chip plants, Gelsinger said in December.

Intel has said it will retain a majority stake in Mobileye after the IPO.

(Reporting by Krystal Hu in New York and Anirban Sen in Bengaluru; additional reporting by Echo Wang; Editing by Bernard Orr)

(Reuters) – Tesla Chief Executive Elon Musk has offered to buy Twitter Inc for about $43 billion in cash, days after rejecting a seat on the social media company’s board.

It all started with Musk disclosing a 9.1% stake in Twitter on April 4 and later said he would take a board seat. But, becoming a director would have prevented Musk from becoming a beneficial owner of more than 14.9% of Twitter’s common stock.

Here’s a chronology of developments, including some tweets from Musk and latest comments disclosed in a filing:

Date Tweets and comments from company filing

April 14, 2022 Saudi Arabian Prince Alwaleed bin Talal said that as one

of the major shareholders in Twitter he rejected a

takeover bid by Musk

April 14, 2022 “However, since making my investment I now realize the

company will neither thrive nor serve this societal

imperative in its current form. Twitter needs to be

transformed as a private company,” Musk said in a filing https://www.sec.gov/Archives/edgar/data/0001418091/000110465922045641/tm2212748d1_sc13da.htm

April 14, 2022 “My offer is my best and final offer and if it is not

accepted, I would need to reconsider my position as a

shareholder,” Musk added in the filing

April 14, 2022 “Twitter has extraordinary potential. I will unlock it,”

Musk said in the filing

April 14, 2022 Musk tweeted https://twitter.com/elonmusk/status/1514564966564651008

saying “I made an offer”, with a link to the company

filing

April 12, 2022 Musk was sued by former Twitter shareholders who claim

they missed out on the recent run-up in its stock price

because he waited too long to disclose a 9.2% stake in the

social media company

April 10, 2022 Musk polled followers on Twitter asking whether the

company’s headquarters in San Francisco should be

converted into a homeless shelter. The tweet is now

deleted. Amazon.com founder Jeff Bezos had backed Musk’s

idea

April 10, 2022 Twitter CEO Agrawal shared a note https://twitter.com/paraga/status/1513354622466867201

on Twitter saying that Musk rejected the company’s offer

to join its board. Musk deleted the tweet, where he

responded with an emoticon with a

face-with-hand-over-mouth

April 10, 2022 Musk started a poll asking if “w” should be deleted from

Twitter’s name, leaving two voting options, “yes” and “of

course.” He deleted that too

April 9, 2022 With respect to Twitter’s business model, Musk tweeted

before deleting it: “And no ads. The power of corporations

to dictate policy is greatly enhanced if Twitter depends

on advertising money to survive”

April 9, 2022 Musk tweeted https://twitter.com/elonmusk/status/1512946176244473863,

“Everyone who signs up for Twitter Blue (ie pays

$3/month) should get an authentication checkmark” about

its subscription service that offers “exclusive access to

premium features” on a monthly basis. Later, he deleted

the tweet

April 5, 2022 Agrawal tweeted https://twitter.com/paraga/status/1511320953598357505?s=21&t=Is9i_R_hPKzFuUV5VhxUZQ

Musk is being appointed to Twitter’s board. “He’s both a

passionate believer and intense critic of the service

which is exactly what we need on

@Twitter, and in the boardroom, to make us stronger in the

long-term”, a follow-on tweet said

April 5, 2022 Twitter CEO Jack Dorsey welcomed Musk to Twitter’s board

in a tweet https://twitter.com/jack/status/1511329369473564677?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1511329369473564677%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Feconomictimes.indiatimes.com%2Fmagazines%2Fpanache%2Fto-celebrate-memelord-elon-musks-twitter-board-entry-netizens-flood-the-internet-with-jokes%2Farticleshow%2F90687616.cms,

added: “Parag and Elon both lead with their hearts, and

they will be an incredible team”

April 4, 2022 Musk posted a Twitter poll asking users if they wanted an

edit button. “Do you want an edit button?” Musk asked in

the tweet, in response to which Agrawal said the

consequences of the poll will be important. “Please vote

carefully,” he tweeted

April 4, 2022 In his first tweet since the disclosure of his stake in

Twitter, he said, “Oh hi lol”

March 26, 2022 Musk said Twitter failing to adhere to free speech

principles fundamentally undermines democracy and asked if

a new platform was needed

(Reporting by Akash Sriram, Eva Mathews, Chavi Mehta, Tiyashi Datta and Yuvraj Malik in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta)

(Reuters) – Elon Musk wants to buy Twitter Inc for $43 billion in cash, and the $16.4 billion he netted from sales of Tesla Inc shares last year could help.

“Musk could look to fund the transaction, if approved, through a combination of debt financing and potentially Tesla shares,” CFRA Research analyst Angelo Zino said.

“Given the size of the transaction, we think it is conceivable that some Tesla shares could be sold given much of his wealth is tied to the company.”

Here’s a look at the string of transactions Musk made as he offloaded about 10% of his stake in the electric car maker to meet to meet tax withholding obligations related to the exercise of stock options.

DATE SHARES ACQUIRED SHARES SOLD GROSS PROCEEDS

NOV. 8 2.2 mln

NOV. 8 934,091 $1.10 bln

NOV. 9 3.1 mln $3.35 bln

NOV. 10 500,000 $527.3 mln

NOV. 11 639,737 $687.3 mln

NOV. 12 1.2 mln $1.24 bln

NOV. 15 2.1 mln

NOV. 15 934,091 $930.7 mln

NOV. 16 2.1 mln

NOV. 16 934,091 $973.4 mln

NOV. 23 2.2 mln

934,091 $1.05 bln

DEC. 2 2.1 mln

934,091 $1.01 bln

Dec.9 2.2 mln

934,091 $963.2 mln

Dec.13 2.1 mln

934,091 $906.5 mln

Dec.16 2.2 mln

934,091 $884.1 mln

Dec.21 2.09 mln

934,091 $853.7 mln

Dec. 22 2.11 mln 934,091 $928.6 mln

Dec. 28 1.6 Mln 934,090 $1.02 bln

Total 22.9 mln 15.7 mln $16.4 bln

Wells Fargo analyst Colin Langan warned of the possibility of more share sales to come.

“There is a risk if he (Musk) decides to sell more Tesla shares to fund the takeover which could put pressure on the stock.”

(Reporting by Hyunjoo Jin in San Franscisco, Uday Sampath, Chavi Mehta and Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty)

By Anisha Sircar and Sruthi Shankar

(Reuters) -European shares rose on Thursday as the ECB kept its policy stance largely unchanged and signalled a steady reduction of stimulus over the coming months, spurring money markets to trim rate hike bets for the year.

The pan-European STOXX 600 index rose 0.7%, broadening a rise of 0.1% from earlier in the day, while euro zone shares advanced 0.6%.

The European Central Bank stuck to its plans of finally ending its stimulus programme in the third quarter, but avoided mentioning a precise schedule, stressing uncertainties around the Ukraine war. Short-dated yields and the euro were driven lower. [GVD/EUR]

“With rate hikes expected to start some time after the end of asset purchases, this sequence provides the ECB flexibility and optionality for the coming months depending on economic developments,” said Adrien Pichoud, chief economist at Syz Bank.

ECB President Christine Lagarde said the bank will only start raising interest rates “some time” after it has ended its net asset purchases. Money markets trimmed their rate hike bets, pricing in about 65 bps of rate hikes by year-end from 70 bps earlier. [IRPR]

The ECB is facing a tough policy trade-off that is far more complex than in other developed markets, said Anna Stupnytska, global macro economist at Fidelity International.

“As the growth shock becomes more evident, the ECB’s focus will likely shift away from high inflation towards trying to limit economic and market distress… Contrary to market pricing, we do not expect the ECB to hike rates until the fourth quarter of this year or early 2023,” Stupnytska said.

The ECB is lagging most other major central banks, which started raising interest rates last year.

Tech stocks were the only sector in the red, shedding 0.3%, while battered travel and leisure stocks gained the most, with low-cost airline Wizz Air jumping 7.7% on signs of encouraging summer bookings.

Birkin bag maker Hermes gained 2.7% after its quarterly sales beat estimates, lifted by strong appetite for luxury accessories.

Volkswagen fell 1.5% after warning of a cloudy outlook, saying it had started to feel the impact of the Ukraine war on supply chains and raw materials prices in the first quarter.

Worries about rate hikes, a prolonged Ukraine conflict and mixed earnings have investors concerned, causing the STOXX 600 to end the holiday-shortened week 0.2% lower.

European stock markets will be closed on Friday and Monday for Easter holidays.

(Reporting by Sruthi Shankar, Anisha Sircar and Susan Mathew in Bengaluru; Editing by Arun Koyyur, Devika Syamnath and Susan Fenton)

By Balazs Koranyi and Francesco Canepa

FRANKFURT -The European Central Bank confirmed plans on Thursday to end its hallmark stimulus scheme in the third quarter, worried that high inflation could become entrenched, even as the war in Ukraine left the outlook exceptionally uncertain.

The ECB has been unwinding support at a glacial pace, far slower than its peers, worried that growth could quickly crumble as the war, sky-high energy prices and the risk of losing access to Russian gas batter an already fragile economy.

Even on Thursday it maintained a non-committal tone, avoiding any firm pledge beyond the end of bond buys, stressing that policy is flexible and can quickly change.

“The downside risks to the growth outlook have increased substantially as a result of the war in Ukraine,” ECB President Christine Lagarde said.

“We will maintain optionality, gradualism and flexibility in the conduct of our monetary policy,” she said, speaking from home where she is recovering from the coronavirus.

But Lagarde also delivered a stark warning on inflation, noting that longer-term inflation expectations were showing early signs of moving above the ECB’s 2% target.

Such a shift, called de-anchoring in central bank-speak, is a worrisome sign, suggesting markets’ loss of confidence in the bank’s ability to maintain price stability.

“The last thing that we want is to see inflation expectations at the risk of de-anchoring,” Lagarde said, adding that “close monitoring” would be required.

While Lagarde largely avoided discussion of any rate hike, her comments that it could come “a week” or months after the end of bond buys suggest that policymakers could discuss the issue at their late July meeting.

Sources close to the discussion agreed, noting that a July rate move is still on the table but there were divisions in the Governing Council about risks, including on longer-term inflation prospects. [S8N2UQ05X]

JULY?

Economists meanwhile zeroed in on a later move but took note that Lagarde did not rule out a change in the minus 0.5% deposit rate during the summer, just before policymakers leave for their holidays.

“We still believe the ECB is unlikely to hike in July, but Lagarde wanted to make clear that the option was available,” Pictet strategist Frederik Ducrozet said.

The ECB last raised interest rates over a decade ago and has kept its deposit rate in negative territory since 2014.

Markets now price in 63 basis points of rate hikes before the end of the year, a modest retreat compared with 70 basis points priced in prior to the meeting.

The euro meanwhile fell sharply as some expected Lagarde to unveil a more decisive schedule to tighten policy.

Carsten Brzeski, an economist at ING, also saw September as the more likely lift-off date.

“We expect the ECB to stop net asset purchases in July and start hiking interest rates in September,” he said. The ECB will definitely not get ahead of the central banks’ pack any time soon in terms of policy normalisation. It will be normalisation at a snail’s pace.”

Among the world’s most cautious central banks, the ECB is already lagging far behind nearly all its major peers, many of which started raising rates last year.

In the past two days alone, the central banks of Canada, South Korea and New Zealand have all increased the cost of borrowing. The U.S Federal Reserve is meanwhile expected to raise rates eight times or more over the next two years, leading the world in policy tightening. [TOP/CEN]

Part of the ECB’s caution is that the drivers of high inflation now are likely to weigh on price growth further out.

Energy prices driven higher by the Ukraine war are draining household savings and uncertainty caused by the conflict is halting corporate investment. Banks are also tightening access to credit as they naturally do during wars, potentially exacerbating the downturn.

Since this inflation is almost entirely the result of an external supply shock, price growth is likely to fall on its own over time, some policymakers argue.

In fact, high energy prices sap savings, so the shock will eventually weigh on growth and thus drag inflation back under target, they argue.

(Writing by Mark John; Editing by Toby Chopra, Catherine Evans and Alison Williams)

(Refiles to correct dates in advisory: (There will be no GVD/EUR euro zone government bond market report on Friday, April 15 and Monday, April 18. Reuters will resume publication of the report on Tuesday, April 19.))

By Yoruk Bahceli and Dhara Ranasinghe

LONDON -Short-dated euro zone bond yields and the single currency fell on Thursday as traders pared back rate hike bets after the European Central Bank refrained from switching to a more hawkish stance.

Bond yields have marched higher in recent weeks as investors bet the ECB will raise rates sooner rather than later to curb euro zone inflation which, at 7.5%, is well above the bank’s 2% target.

But the ECB concluded its latest meeting with cautious steps to unwind support and avoiding any firm pledge beyond the end of bond buys it had already laid out in March.

The lack of commitment pushed traders to trim rate hike bets. Money market futures moved to price in just over 60 bps worth of ECB hikes by December, versus the earlier 70 bps.

Futures dated to the ECB’s July meeting price in around 15 bps worth of hikes, down from 20 bps earlier on Thursday.

“Today’s statement makes more than two hikes in 2022 almost impossible, whereas part of the market expected something like end of the (asset purchase programme) in June announced today and consequently possibly three hikes,” said Louis Harreau, ECB watcher at Credit Agricole.

“So the communique kind of removes this extreme pricing.”

That pushed short-dated government bond yields, which are closely aligned with interest rate expectations, sharply lower.

Two-year German bond yields fell as much as 7 bps and briefly turned negative. By 1525 GMT they were down a basis point to 0.06%, versus 0.09% just before the ECB statement.

The reduction of rate hike bets also hurt the euro, which tumbled to a two-year low at $1.07580 and hit its lowest level versus sterling since March 7, at 82.75 pence.

Sources told Reuters following the meeting that the ECB could still hike rates in July but had chosen to keep options open given Ukraine-driven uncertainty.

Longer-dated government bond yields initially dropped less than shorter-dated ones, then rose along with U.S. Treasury yields, which surged after the U.S. session open.

German 10-year yields, the benchmark for the euro area, were last 6 bps higher at 0.83%.

That steepened Germany’s yield curve as measured by the gap between 2- and 10-year yields to around 80 bps, the steepest since January 2019.

The yield curve “reflects that ECB is in no rush to tighten monetary policy despite inflation (being) elevated”, said Piet Christiansen, chief analyst at Danske Bank.

Yield curves flattening in other markets like the United States have been seen as an indication that central banks might choke off growth in their bid to stamp out inflation.

Germany’s 30-year yield rose above 1% for the first time since late 2018.

Italian 10-year yields after their earlier fall were up 11 bps to 2.49%.

That underperformance pushed the risk premium over German debt briefly to around 169 bps, the highest in nearly a week.

In equities, Europe’s broad STOXX 600 index extended gains and was last up 0.7%, also helped by a positive Wall Street open. A sub-index of euro zone banking stocks was almost 0.9% higher.

(Reporting by Yoruk Bahceli and Dhara Ranasinghe; Editing by Sujata Rao, Alison Williams and Susan Fenton)

(Reuters) -President Vladimir Putin said on Thursday that Moscow would work to redirect its energy exports eastward as Europe tries to reduce its reliance on them, adding that European nations would not be able to ditch Russian gas immediately.

Russia supplies around 40% of the EU’s natural gas, and western sanctions over what Moscow calls its “special military operation” in Ukraine have hit its energy exports by complicating the financing and logistics of existing deals.

While the EU debates whether to slap sanctions on Russian gas and oil and member states seek supplies from elsewhere, the Kremlin has been forging closer ties with China, the world’s top energy consumer, and other Asian countries.

“The so-called partners from unfriendly countries concede themselves that they won’t be able to make do without Russian energy resources, including without natural gas, for example,” Putin told a televised government meeting.

“There is no rational replacement (for Russian gas) in Europe now.”

Putin also said that Europe, by talking about cutting off energy supplies from Russia, was driving up prices and destabilising the market.

He said Russia, which accounts for around a tenth of global oil production and around a fifth of gas, would need new infrastructure to boost energy supplies to Asia.

He ordered the government to present a plan by June 1 including on “expanding transport infrastructure to countries of Africa, Latin America (and the) Asia Pacific.”

He also sought clarity on the possibility of including two pipelines – China-bound Power of Siberia and the far-eastern Sakhalin-Khabarovsk-Vladivostok in Russian unified system of gas supplies.

Plugging those routes into the wider network may allow Russia, in theory, to switch gas flows from Europe to Asia and visa versa.

Russia launched pipeline gas supplies to China in the end of 2019 and in February agreed a 30-year contract via a new pipeline, yet to be built, with plans to settle sales in euros.

Putin also said that the role of national currencies in exporting deals should rise, amid Russia’s plans to switch to roubles in payments for its gas supplies, mainly to Europe.

Russia has seen a steep decline in production of oil, its key source of revenues, amid difficulties with payments for trading and vessels.

Major global trading houses are planning to reduce crude and fuel purchases from Russia’s state-controlled oil companies as early as May 15, sources said, to avoid falling foul of EU sanctions on Russia.

Putin said the sector’s most acute problems were related to the disruption of energy supply logistics.

(Reporting by Reuters; editing by Guy Faulconbridge and John Stonestreet)

By Victoria Waldersee

BERLIN -Volkswagen on Thursday warned that it had started to feel the impact of the war in Ukraine on supply chains and raw materials prices in the first quarter, with the longer-term effects on its business difficult to predict.

The company indicated an 8.5 billion euro ($9.27 billion)operating profit for the first three months of the year, but noted that 3.5 billion euros of that was attributable to commodity hedges amid soaring raw material prices.

Volkswagen shares were 2.1% lower at 147.9 euros by 1054 GMT.

Its operating return on sales jumped to 13.5% in the first quarter, according to the preliminary figures, from 7.7% in the same period of 2021 when the COVID-19 pandemic and semiconductor shortages were weighing heavily on results.

A spokesperson said in March that the company had long-term measures in place with suppliers to secure raw materials, including an “extensive and forward-looking purchasing and hedging program for important precious metals”.

Nonetheless, Volkswagen warned at its annual results conference last month that the outbreak of war in Ukraine called its annual forecast of an 8-13% boost to revenue with a 5-10% increase in deliveries into question.

Volkswagen Group deliveries were down 21.9% in January to March, totalling just over 1.89 million vehicles, with brand deliveries down 25.6%. Still, deliveries of all-electric vehicles grew 65% to 99,100, with the biggest increase in China.

Carmakers have prioritised their electric line-ups amid a shortage of semiconductors as a way to boost revenue and remain on track to meet tightening European climate regulations.

BMW reported last week that its deliveries in the first quarter had fallen 6.2% while Mercedes-Benz saw a drop of 15% from last year.

Volkswagen is due to publish first-quarter results on May 4.

($1 = 0.9170 euros)

(Reporting by Victoria Waldersee; Editing by Maria Sheahan, Kirsten Donovan)