Wells Fargo & Co.’s new chief executive vowed Friday to take “the necessary actions to restore our customers’ trust” as the scandal-plagued banking giant posted a 3% drop in third-quarter earnings.
“My immediate and highest priority is to restore trust in Wells Fargo,” Timothy Sloan, who assumed the CEO’s job vacated by John Stumpf only two days earlier, told Wall Street analysts on a conference call. “Make no mistake: I get it and our team is on it.”
But there were signs of a consumer backlash last month in response to the bank’s improper sales practices, and some experts cautioned that the scandal’s full financial impact on Wells Fargo might be yet to come.
“It’s going to take them several quarters to get their arms around this,” independent banking analyst Bert Ely said.
Sloan, a longtime Wells Fargo employee who also remains the bank’s president, took over after Stumpf quit under intense pressure from lawmakers and other critics who were outraged over the bank’s aggressive cross-selling efforts dating back several years.
Wells Fargo employees were found to have created as many as 2 million accounts in customers’ names without their consent, such as new credit card accounts. The tactics were first uncovered by the Los Angeles Times in 2013.
The San Francisco-based bank reached a $185-million agreement with regulators over the issue, including $5 million for repayment to customers, on Sept. 8.
In the three months that ended Sept. 30, Wells Fargo’s net income fell to $5.6 billion, or $1.03 a share, from $5.8 billion, or $1.05 a share, a year earlier. The results topped analysts’ forecasts of $1.01 a share in the latest quarter, according to FactSet Research Systems Inc.
But third-quarter profit at Wells Fargo’s community banking division, which includes the unit responsible for the sales problems, fell 9% from a year earlier to $3.23 billion.