Wells Fargo (NYSE:WFC) is still struggling since its fake account scandal unfolded almost two years according to the company’s second quarter financial results.
It’s been almost two years since September of 2016 when federal regulators had revealed that Wells Fargo employees had secretly been creating millions of unauthorized bank and credit card accounts without customers even knowing about them.
Wells Fargo (NYSE:WFC) had been hit with a $185 million fine and had fired over 5,000 employees that had been related to the scandal. The bank even changed leadership due to the severity of the scandal.
The bank’s second quarter financial report has shown that the scandal is still taking a toll on its business.
The company reported that revenue and net income had fallen at each of the bank’s main businesses. This includes community banking, corporate and wholesale banking, and wealth management.
Wells Fargo (NYSE:WFC) also said that it had a lofty tax charge of $481 million that weighed on the results of the community bank.
Second quarter earnings per share was 98 cents on a GAAP basis. Not counting a 10 cent per share tax expense, EPS was $1.08. This was still below the $1.12 that was expected by analysts.
Revenue for the quarter was $21.55 billion compared to the $21.677 billion that analysts were waiting for. Net income at $5.19 billion was below the 5.47 billion that analysts called for as well.
CEO Timothy Sloan who had been appointed to clean up the mess Wells Fargo landed in back in 2016, optimistically stated during the earning’s call, “We’ve committed to transform how we manage risk at Wells Fargo, and our goal is not only to meet, but exceed regulatory expectations so that we have the best risk management in the industry. We have a strong track record of managing many of our risks, and our 2018 CCAR results and credit quality are just two examples. However, we have to improve how we manage other risks, such as compliance and operational risk, to address challenges, such as those we’ll discuss later in the call on our foreign exchange and trust businesses.”
He added, “As I mentioned at Investor Day, we’re pleased that Mandy Norton has started as our new Chief Risk Officer, and she’s already having a positive impact. While we have more work to accomplish, I’m confident we’ll achieve our goal in risk management.”
“The broad-based weakness of Wells Fargo’s results is troubling, with many indicators such as deposits, commercial and consumer lending trending down. It appears that the slew of scandals that Wells Fargo has been involved in are taking their toll,” remarked Octavio Marenzi, the CEO of capital markets management consulting firm Opimas.
“Compared to JPMorgan’s excellent results earlier today, Wells Fargo (NYSE:WFC) is looking rather hapless, unable to get it right.”