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Wells Fargo's Wealth Unit Struggled in Q1

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Wells Fargo’s results topped analysts’ estimates for the first quarter of 2019, though its wealth unit continues to struggle.

The bank had net income of $5.9 billion, or $1.20 per share, vs. $5.1 billion, or $0.96 per share, a year ago. It reported revenue of $21.6 billion for the quarter, down from $21.9 billion a year earlier. Analysts had expected EPS of $1.09 and sales of $21.0 billion.

The bank is under a Federal Reserve-mandated asset growth cap after the fake-accounts scandal that began dominating headlines about two and a half years ago.

“We have more work ahead of us … , [and] I want to thank our team members for their continued commitment and tireless efforts,” said interim CEO Allen Parker, in a statement.

Wealth Results

The Wealth & Investment Management unit had 13,828 advisors as of March 31, down 140 from the prior quarter and 571 from a year ago.

Since the bank’s fake-accounts scandal erupted in the fall of 2016 — when it had 15,086 registered reps — the wealth unit has lost 1,258 advisors.

The unit’s net income dropped by nearly 20% from last year and about 15% from the prior quarter to $577 million. Wells Fargo attributed this decline to “lower asset-based fees and higher seasonal personnel expenses.”

Revenue declined year over year to $4.08 billion from $4.42 billion, though it rose slightly from $3.96 billion in the prior quarter.

Assets also weakened; they stand at $1.8 trillion — down 2% from last year and 1% from the earlier period. The bank said this drop was mainly caused by net outflows.

The unit has agreed to sell its retirement-plan services business to Principal Financial Group for $1.2 billion.