Quarterly Earnings at Wells Fargo Drop Following Scandal

On Friday, Well Fargo & Co posted a drop of 6% in profit for the fourth quarter following the highly publicized scandal over bank employees creating up to 2 million accounts that were not authorized by customers.

Earnings for the bank, based in San Francisco, the third largest in the country, came in below estimates as the bank continued dealing with the fallout from the latest controversy that has caused a big drop in how many new accounts are being opened.

Nevertheless, during an analyst’s conference call, CEO Tim Sloan told listeners that he was excited the bank saw what appears to be the inflection point in the effects of the scandal.

He added that the bank was pleased that trends have become stabilized and many other metrics have begun to show significant improvement.

The bank improved the acquisition of new clients during December opening 2% more accounts for checking that during November, but the figure was down over 40% from the same period one year ago.

Applications for credit cards were down 7% during December from November and down over 43% for the same period one year ago.

Profit for the fourth quarter at community banking of Wells Fargo, which included the unit that is responsible for opening the unauthorized accounts was down 14% to just over $2.7 billion from the same time one year ago.

Overall, net income for Wells Fargo was down ending the quarter at $5.3 billion equal to 96 cents a share in comparison to the same period last year of $5.6 billion equal to $1.03 a share.

Revenue for the fourth quarter ended at $21.5 million, which was flat compared to one year ago.

Analysts were expecting per share earnings to be $1.00 on revenue of $22.5 billion. This just ended quarter was the first complete one since the huge scandal broke.

For 2016, profits were down 4% to end the year at $21.9 billion in comparison to 2015. The drop took place despite an increase of 3% in revenue to over $88.3 billion.

Investors took the earnings announcement well on Friday as the stock increased 81 cents and has recovered over 27% since touching a low of 52-weeks during the early part of October.

Two more of the big U.S. banks posted earnings for the fourth quarter Friday that exceeded forecasts. JPMorgan the largest bank in the U.S. by assets said profit was up 24%, while Bank of American the largest consumer bank in the U.S. said its profits jumped 47%.

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