Wells Fargo: Q3 results above expectations

Wells Fargo: Q3 results above expectations

US bank Wells Fargo recorded market results above expectations even after the banks CEO John Stumpf resigned after a scandal at the opening of fictitious accounts. Net income reached $ 5.64 billion, down 2.6% year on year. But the turnover amounted to 22.33 billion dollars, an increase of 2% and higher than expected 22.22 billion. Earnings per share at $ 1.03 are also down, but above expectations of $ 1.01. The bank said that Mr. Stumpf would perceive no bonus for 2016 and waived in the context of his departure to compensation of around $ 41 million.

Wells Fargo also reported that the owner of retail banking, Carrie Toldstedt, had also left the bank and renounced after receiving a compensation of up to $ 19 million. Wells Fargo had allegedly created some two million fictional accounts between 2011 and 2016 that allowed its employees to receive bonuses related to the sale of new products to bank customers. After the discovery of these malpractices, 5300 employees were dismissed and Mr. Stumpf was forced to resign. He was replaced by his number two, Tim Sloan.

Wells Fargo reiterated that an investigation had been opened and entrusted to the firm of Shearman & Sterling lawyers and that it would also be extended to 2009 and 2010. The bank has already paid $ 185 million fine, but may have to raise more money because many regulatory authorities have opened investigations into the scandal. It also repaid $ 2.6 million to customers who have been charged a fee for keeping fictitious accounts and waived pay bonuses to its employees for the sale of new services.

About 2.1 million individual accounts and SMEs were opened without the consent of the holders, that 623,000 credit cards were issued without the agreement of their designated holders and 115 000 accounts were seen removing unjustified costs. Wells Fargo, which now ranks third among US banks in terms of assets and grants a mortgage in five in the US, said that the rate of return on its equity had increased from 12.62% it a year ago to 11.60% during the quarter while US banks have difficulty making money in a low interest rate environment and subdued economic activity.

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