Wells Fargo Bruised by Declining Profits

Wells Fargo (NYSE:WFC) on Tuesday said fourth-quarter profits fell as persistent low interest rates and litigation charges weighed on its financial results.

Earnings for the banking behemoth came in at 93 cents per share versus $1.12 per share forecast. Revenue was $19.86 billion versus $20.14 billion forecast.

Quarterly profit at the San Francisco-based bank was $2.87 billion, compared with $6.06 billion in the year-ago period a decline of 53%.

Per-share adjusted earnings were 93 cents, well short of the $1.12 per share forecast.

The bank also took a hit in part related to the retail sales scandal that has plagued Wells Fargo since 2016. The company booked a $1.5-billion charge for legal costs related to litigation stemming from its fake-account problems and others.

The litigation costs pushed non-interest expenses up 17% in the fourth quarter from a year earlier despite efforts to keep costs under control. Wells Fargo also paid out more in salaries.

The results, which reflect the bank’s performance for the three months ended Dec. 31, mark Wells Fargo’s first quarter under new management.
Charles Scharf took over as Wells Fargo’s chief executive in October, replacing Tim Sloan and charged with navigating the bank through a host of regulatory issues that have kept costs elevated.

The nation’s fourth-largest bank, Wells Fargo remains muddled in restructuring and regulatory reforms since 2016. The government crackdown came under former CEO John Stumpf, who presided over a scandal in which Wells Fargo employees created millions of fake bank accounts to meet sales quotas.

Shares slid $1.90, or 3.6%, to $50.21