Wells Fargo reported a more than 30 per cent decline in profit during its third quarter, as the fourth-largest US bank by assets braced for an economic downturn and booked more losses tied to lingering regulatory issues.
Revenue rose 3.6 per cent to $19.5bn, well above Wall Street expectations, fuelled by higher interest rates and loan balances. However, earnings were dented by nearly $3bn in accruals to cover potential bad loans and additional regulatory fallout from the 2016 fake accounts scandal, which has already cost the bank billions of dollars.
“As we have said several times, we remain at risk of setbacks as we work to complete the work and put these issues behind us, and expenses this quarter reflect our ongoing efforts,” chief executive Charlie Scharf said in a statement on Friday.
Net income at the San Francisco-based lender dropped 31 per cent to $3.53bn from $5.12bn a year ago. Earnings, of 85 cents a share, were down from $1.17 a year ago. Excluding the impact of the regulatory charge, earnings rose to $1.30 a share.
Analysts polled by FactSet had forecast earnings of $1.09 a share on $18.8bn in revenue.
Shares in the bank were up 0.5 per cent to $43.01 in pre-market trading on Friday.