Wells Fargo & Co. said its second-quarter profit rose 4.5% as the nation's third-largest bank tries to regain its footing and grow again nearly a year after its sales-practices scandal.
The bank reported a profit of $5.81 billion, or $1.07 a share. That compares with $5.56 billion, or $1.01 a share, in the same period of 2016. Analysts polled by Thomson Reuters had expected earnings of $1.01 a share.
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Revenue rose slightly to $22.17 billion, but fell short of the $22.47 billion expected by analysts.
Shares declined 0.8% premarket.
Wells Fargo, led by Chief Executive Timothy Sloan, had been one of the most consistent big banks at growing earnings and revenue. Shares dropped though last year after the bank agreed to a $185 million settlement with two regulators and a city official over opening as many as 2.1 million accounts with fictitious or unauthorized information.
It also continues to face a spate of state and federal investigations that the bank has said it is cooperating with.
While the overall impact of the sales-practices scandal on Wells Fargo's bottom line hasn't yet been dramatic, investors and analysts are pressing the bank to show it can grow. But it has responded that it may take time, and meanwhile in May announced an additional $2 billion in cost cuts by the end of 2018.
Big banks' loan businesses have been helped in recent weeks by higher U.S. interest rates and bond yields. But overall, rates remain low, an environment in which Wells Fargo and its peers don't earn as much money by lending out their vast deposits.
Costs at Wells Fargo increased 5.2% to $13.54 billion from $12.87 billion in the second quarter of 2016. Expenses as a share of revenue in the second quarter was 61.1%, slightly above the new target of 60% to 61% set at an investor presentation in May. That is also higher than the two-year target the bank set last year of 55% to 59%. Beyond the costs associated with the sales scandal, the bank has said its efficiency ratio was also hurt by lower loan growth and higher funding costs.
The bank's shares bounced back following the election, rising 22%. That compares with a 29% jump by the KBW Nasdaq Bank index of large commercial lenders over the same period.
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(END) Dow Jones Newswires
July 14, 2017 08:35 ET (12:35 GMT)