Wells Fargo's Wealth Unit Struggled in Q1

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.