(Businesshala) – Wells Fargo & Co on Thursday reported an increase in third-quarter profit that beat market estimates, as the bank set aside funds to cover soured loans brought on by the pandemic and its years. Reinforced costs associated with secondhand sales. dealing scams.
The fourth-largest US bank has acted since 2018 under consent orders from the Federal Reserve and two other US financial regulators to improve governance and oversight, with the Fed also capping its assets at $1.95 trillion.
The lender, which has paid out more than $5 billion in civil and criminal penalties, reported a $250 million hit after a top US banking regulator for shortcomings in its earlier efforts to pay back those customers. fined those whom he had previously caused damages.
Overall, non-interest spending fell to $13.3 billion from $15.23 billion a year ago.
Bank executives have indicated repeatedly that the worst of the scandal was behind them, and CEO Charlie Scharf has laid the groundwork for his turnaround plan, which aims to save $10 billion annually over the long term.
However issues remain. A federal judge earlier this month rejected the bank’s bid to dismiss a lawsuit that claimed it deceived shareholders about its ability to rebound from scandals.
“The recent OCC (Office of the Comptroller of the Currency) enforcement actions are a reminder that the critical loopholes that exist should remain our top priority upon my arrival,” Scharf said.
Federal Reserve Chairman Jerome Powell said last month that the bank’s asset cap would remain in place until the firm had comprehensively fixed its problems, suggesting that Wells Fargo may have permission to expand. There was a way to go before giving.
The cap reduces the loan and deposit growth required by the bank to boost interest income and cover costs.
Wells Fargo’s average debt fell to $854 million in the quarter, from $931.7 million a year ago. Soft loan demand, combined with lower interest rates, also hurt its net interest income, falling 5%.
Wells Fargo has fewer ways to offset the drop in revenue from lower interest rates because the bank doesn’t have a large capital markets business like rivals.
The lender reported a $1.7 billion reduction in credit deficit allowance in the quarter.
That helped boost its net income to $5.12 billion, or $1.17 per share, for the quarter ended Sept. 30, up from $3.22 billion, or 70 cents per share, a year earlier.
According to Refinitiv estimates, Wells Fargo earned $1.22 per share excluding items, compared to a consensus estimate of 99 cents per share.