Wells Fargo Profit Falls in Light of Fake Account Scandal
Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.
Wells Fargo reported its fourth straight fall in quarterly profit as it set aside funds for potential legal costs amid an increasingly politicized bogus-account scandal that cost Chief Executive and Chairman John Stumpf his job.
The bank, which faces numerous federal and state investigations into its practices, said noninterest expenses rose due in part to higher litigation accruals and salaries.
Net income applicable to shareholders fell 3.7% to $5.24 billion, or $1.03 per share, from $5.44 billion, or $1.05 per share, a year earlier.
Analysts on average had expected the No. 3 U.S. bank by assets to report earnings of $1.01 per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the figures reported on Friday were comparable.
Stock analysts have cut profit forecasts for the bank for quarters to come following the revelation that bank employees had opened as many as 2 million accounts without customers' knowledge or permission to meet aggressive sales targets.
San Francisco-based Wells Fargo has already agreed to pay $185 million to settle regulatory charges and fired about 5,300 employees in connection with the scandal.
Several big customers, including California and Illinois, have also suspended business relations with the bank.
The scandal is a rare setback for the bank, which emerged from the financial crisis relatively unscathed.