Bank Watch

Wells Fargo’s retail banking business suffers fresh hits in January

A Wells Fargo sign is seen on the outside of one of its Miami branches in September 2016.
A Wells Fargo sign is seen on the outside of one of its Miami branches in September 2016. Getty Images

Wells Fargo said Friday its retail banking business slumped in January, as the San Francisco-based company continues to feel effects of a major sales scandal.

The bank reported declines in both consumer checking account openings and consumer credit card applications compared with the same month last year. Customer interactions with bankers also dropped.

It’s the latest in a series of monthly updates Wells has been providing investors since authorities fined it $185 million in September over claims employees potentially opened millions of accounts without customers’ permission to meet high-pressure sales targets.

On a conference call with analysts, Charlotte-based community banking head Mary Mack highlighted steps the bank has made to rebuild trust, such as introduction in January of a new retail banker compensation plan after eliminating product sales goals in October.

“I’m pleased with the progress we’ve made to make things better,” Mack said, “but we still have more work ahead of us.”

In January, Wells Fargo reported a 47 percent drop in consumer credit card applications and a 31 percent drop in consumer checking account openings.

Credit card application declines were larger than December’s 43 percent decrease over December 2015. The drop in checking account openings was an improvement from the 40 percent year-over-year decrease in December.

Customer interactions with tellers and other bankers in branches slid 4 percent in January, though that was an improvement from December’s 6 percent year-over-year decline.

The bank also noted its customer-experience survey scores rose for the third month in a row but trail year-ago levels. Also, its customer loyalty score of 56.9 percent is below all-time high of 62.6 percent in August just before news of the scandal erupted.

Among positives Mack noted Friday was that January saw the opening of more new checking accounts than any month since September.

Friday’s figures are the latest example of fallout the third-largest U.S. bank by assets continues to face in the wake of the scandal, which has led to congressional hearings, new federal probes and cost CEO John Stumpf his job.

Since the scandal, year-over-year declines each month in Wells’ rate of new account openings have raised questions about the bank’s ability to grow future revenues. Wells’ community banking unit, headed since last summer by Mack, generates the largest amount of net income among the company’s three business units.

The sagging activity comes despite Wells Fargo taking various steps to move past the ordeal. In a recent move, Wells announced last month the creation of an ethics office being headed by a Charlotte-based executive.

Deon Roberts: 704-358-5248, @DeonERoberts