Wells Fargo said Friday its profit rose 32 percent during the third quarter of this year from the same period a year ago, as the fourth-largest U.S. bank slashed its expenses while pushing to recover from a series of scandals.
San Francisco-based Wells Fargo, which maintains its biggest employment hub in Charlotte, reported profit of $6 billion compared with $4.5 billion in third quarter of last year. Revenue grew less than 1 percent to $21.9 billion.
Friday’s profit boost came as the bank continued to take aim at its expenses, which it has been seeking to cut by billions of dollars through 2020 under previously disclosed plans.
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Wells Fargo said it reduced expenses in the quarter by more than $580 million, or 4 percent, from the same period last year. Compensation and third-party services were among the areas where expenses fell, the bank said. Part of its strategy to cut costs includes lowering its branch count, which it said shrunk by 88 locations in the quarter.
As it strives to cut costs, the bank also last month announced plans to eliminate thousands of jobs over the next three years.
Wells Fargo reported employment fell by 2,800 in the quarter, bringing its total to 261,700.
On Friday, CEO Tim Sloan touted Wells Fargo’s progress toward cutting costs and rebuilding itself, noting the bank’s focus on risk management, customer service, innovation and other goals.
Sloan, a Wells insider named CEO after a scandal in 2016 over bogus accounts, said on a conference call with analysts that the bank continues to overhaul how it manages risk “so that we have the best risk management in the industry.”
Regulators are pressuring the bank to improve its risk oversight.
In an unprecedented move, the Federal Reserve this year placed a cap on Wells Fargo’s asset growth, citing “widespread consumer abuses” at the bank. Sloan reiterated Friday that his expectations are for the Fed to keep the cap in place through the first half of 2019.
Faced with such challenges, Wells Fargo has lagged its peers on key financial measures.
During the first six months of this year, the bank’s revenue fell about 2 percent from the same period last year, as revenues rose at rivals Bank of America, Citigroup and JPMorgan Chase.
Wells Fargo’s revenue struggle has come amid a stream of disclosures this year of customer harm and new regulatory probes, on top of the 2016 revelations of employees opening accounts without customer approval to meet high-pressure sales goals.
Other areas within Wells Fargo where customers may have experienced harm include foreign exchange, wealth management, auto lending and add-on products like identity theft protection, the bank has previously disclosed.
‘Less bad this quarter’
On Friday, analysts said they were pleased to see the revenue increase at Wells, hopeful that it meant the bank was turning a corner under Sloan. But some said the growth wasn’t enough and questioned whether it was sustainable.
“Wells is less bad this quarter,” said Kyle Sanders, a bank analyst at Edward Jones. He said the bank’s challenge to grow revenue and loans could continue in the near term, as it works to improve its reputation with customers and free itself from the Fed’s cap.
Sanders said positives in the third quarter included well-controlled expenses and continued progress on cleaning up business practices that have come under scrutiny.
Sloan highlighted what he said were other accomplishments in the quarter, including that retention of primary consumer checking account customers reached a five-year high.
Friday’s results “reflect the transformational changes that we’ve been making at Wells Fargo,” Sloan said.
Looming job cuts
Also Friday, Chief Financial Officer John Shrewsberry provided additional details on last month’s plan to slash employment by about 5 to 10 percent over the next three years.
Wells Fargo, which employs about 25,100 workers in the Charlotte metro area, has said those cuts are part of a sweeping initiative to streamline the company and make it more customer-focused.
Shrewsberry, speaking on a conference call with reporters, did not rule out job cuts in the Charlotte region. But he also didn’t provide a number for jobs that might be lost in the metro area.
He said Charlotte will likely see a net increase in Wells Fargo jobs in the next few years, though, as the bank continues to grow employment in the region. Charlotte has a great business climate, he said, adding that Wells Fargo is continually enthusiastic about the area.
Wells Fargo joined New York’s JPMorgan Chase and Citigroup in kicking off third-quarter earnings season for the largest U.S. banks.
Citigroup, the third-largest U.S. bank by assets, said it had profit of about $4.6 billion, up roughly 12 percent from a year earlier. JPMorgan, the largest bank, said its profit rose approximately 24 percent, to about $8.4 billion.
Charlotte-based Bank of America, the nation’s second-biggest bank, is scheduled to report its results on Monday.