Wells Fargo & Co. said Thursday that it plans to cut an additional $2 billion in expenses by the end of 2019, more than analysts had expected.
The expense savings, announced at Wells Fargo's investor day, come on top of the bank's January announcement to cut $2 billion in costs by the end of 2018.
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Wells Fargo, which has been under pressure since its sales-practices scandal last fall, said the cuts would bolster its bottom line. The bank said it plans to consolidate "similar operational activities" and automate more of its manual processes.
As part of its focus on costs, Wells Fargo said it plans to close about 450 branches in 2017 and 2018. The bank said the closures will be across the country, but will include "saturated markets" and "redundant locations." It also said it would focus the cuts on branches with lower deposit growth and income. Wells Fargo currently has about 6,000 branches.
The bank also said it would apply "industry best practices" to its call centers and reduce physical facilities. Wells Fargo had noninterest expenses of $52.4 billion last year.
Wells Fargo's shares fell around 1.5% in early trading Thursday, more than other big-bank stocks. The bank is under pressure to improve its financial performance following relatively disappointing first-quarter results. The bank's profit was flat from the year-earlier period, while revenue dropped, missing analyst expectations.
Following those results, Chief Executive Timothy Sloan told analysts that expenses are "outside our range." At Thursday's event, Mr. Sloan said the efficiency metrics were "completely unacceptable."
Wells Fargo's efficiency has suffered since its sales scandal. The bank said in presentation materials for its investor day that it expects an efficiency ratio -- expenses as a percent of revenue -- this year of 60% to 61%. That is worse than the two-year target it set last year of 55% to 59%. The bank said its efficiency ratio was also hurt by lower loan growth and higher funding costs.
Last year, Wells Fargo also set two-year targets for return on efficiency and return on assets. The bank said Thursday that it expects to operate at the low end of both target ranges this year, although it left unchanged the two-year goals set last year.
In terms of the scandal, the bank said in presentation materials that its settlement related to sales practices reduced first-quarter loan origination volume by 3%.
Mr. Sloan, finance chief John Shrewsberry and other Wells Fargo executives were due to make presentations throughout Thursday as part of the bank's investor day. The announcement of additional cost cuts was contained in presentation materials for Mr. Shrewsberry the bank posted online ahead of the investor event.
Wells Fargo's stock is the worst performer of the big four U.S. banks since the start of the year. Its shares are down nearly 1%, while shares of J.P. Morgan Chase & Co. and Citigroup Inc. are up around 1%. Bank of America Corp. shares, up about 9% year-to-date, are the only ones of the group that are outperforming the broader market.
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(END) Dow Jones Newswires
May 11, 2017 14:58 ET (18:58 GMT)