- Wells Fargo on Thursday reported net income of $5.1 billion during the quarter ending Sept. 30, a 59% jump from the $3.2 billion in profit the bank reported during last year’s comparable period.
- The San Francisco-based bank said its third-quarter earnings were boosted by a $1.7 billion release in its credit reserves, a financial safety net the bank built up at the start of the pandemic and has slowly started releasing amid a brighter economic outlook.
- "The actions we’re taking to improve operating effectiveness and financial returns are coming through in our results, in addition to the benefits we’re experiencing from the economic recovery," Wells Fargo CEO Charlie Scharf said in a statement. Total revenue at the bank was down 2.5% during the quarter, from $19.3 billion in Q3 2020 to $18.8 billion in Q3 2021.
Despite Thursday’s positive results, the bank is still contending with a troubled past, marred by a series of consumer abuse scandals that first came to light in 2016.
While Scharf called the recent expiration of a Consumer Financial Protection Bureau (CFPB) consent order over the bank’s retail sales practices an important milestone in its progress to correct past practices, he added a recent enforcement action by the Office of the Comptroller of the Currency (OCC) is "a reminder that the significant deficiencies that existed when I arrived must remain our top priority."
The regulator fined the bank $250 million last month over alleged unsafe or unsound practices related to deficiencies in its home lending loss mitigation program and for failure to comply in a timely manner with a 2018 consent order.
The bank’s balance sheet also continues to be limited by a 2018 Federal Reserve order capping assets at $1.95 trillion as a result of the 2016 fake-accounts scandal.
"We are a different company today, and the operational and cultural changes we’ve made are enabling us to execute with significantly greater discipline than we have in the past," Scharf said. "I believe we are making significant progress, and I remain confident in our ability to continue to close the remaining gaps over the next several years, though we may continue to have setbacks along the way."
Scharf highlighted investments the bank continues to make in its risk and regulatory-related work in addition to investments in customer experience.
"These include new digital and mobile capabilities, a new digital infrastructure strategy, and new products with unique value propositions," he said, referring to the bank’s new Wells Fargo Reflect Card.
The card, which the bank launched this month, rewards cardholders for making regular on-time payments, and is the second product related to what the bank is calling its "redesigned portfolio of consumer credit cards," as it looks to become more competitive in the credit card space. The bank in July released its Active Cash Card, which offers 2% cash rewards on purchases with no annual fee.