After naming a new CEO this week in response to a scandal in its retail-banking operations, Wells Fargo (WFC) said its net income fell about 3% to $5.64 billion in the third quarter, or $1.03 a share, from $5.8 billion, or $1.05, a year earlier.
Total revenue grew nearly 2% to $22.3 billion from Q2’15, and both results topped analysts’ expectations.
The bank said during a presentation Friday that clients opened about 30% fewer consumer checking accounts in September—when it was fined some $185 million by federal authorities—vs. August, according to a Bloomberg report. Also, credit-card applications fell by a similar amount, and visits with branch bankers dropped 14% from the prior month.
“We know that it will take time and a lot of hard work to earn back our reputation,” said Tim Sloan, who replaced John Stumpf as CEO this week, in the statement. “We will work tirelessly to build a stronger and better Wells Fargo.”
The bank said it would expand an internal investigation of its sales practice and include accounts opened in 2009 and 2010 (regulators had focused on those opened since 2011).
“There was clearly something wrong and we’ll make necessary changes to fix it,” Sloan said during the earnings call Friday, according to USA Today. “There’s a lot we need to get right. We get it.”
The bank’s total loans were $961.3 billion as of Sept. 30, up $4.2 billion from three months earlier.
Wells Fargo’s retail operations, had a 9% year-over-year drop in net income to $3.23 billion; sales fell 4% to $12.4 billion. Total branch transactions in September 2016 were 53.8 million, down from 56.2 million in August 2016 and 55.4 million in September 2015.
As for the bank’s wealth-management unit, which includes about 15,100 Wells Fargo advisors, revenue grew 6% from last year to $4.1 billion, while profits jumped 12% to $677 million. Its pretax profit margin was 27%.
Client assets were $1.7 trillion, up 9% from the year-ago period.
“We’ve also seen minimal impacts so far within our wealth- and Investment-management business,” Sloan said during a call with analysts, according The Wall Street Journal.
Client assets were $1.7 trillion, up 9% from the year-earlier period.
When asked what Wells Fargo intended to do to comply with the new Department of Labor fiduciary rules during the call with analysts, CFO John Shrewsberry said the bank aims to “emphasize advisory solutions and continue to offer traditional brokerage for certain clients. That includes self-directed options.”
Average loans in Q3’16 for the unit were $68.4 billion, a gain of 3% from the prior quarter and 12% year over year.
In other news, Wells Fargo’s wealth-management unit says it has changed the way it reports cross-selling, which it now classifies as “referred investment assets,” according to Reuters. The business had $1 billion in such assets as of Q3’16.
— Related on ThinkAdvisor: