Wells Fargo & Co. hasn’t yet fixed all of its problems, but at least it stopped its revenue slump.
The bank posted a surprise increase in revenue, with the figure rising to US$21.9 billion in the third quarter, after analysts expected a slight decline. The bank benefited from rising interest rates and saw growth in consumer-lending originations in areas such as auto and personal loans.
It’s the first time this year revenue has grown and may indicate that Chief Executive Officer Tim Sloan’s efforts to turn Wells Fargo around are paying off. The lender has posted muted results in the wake of a series of consumer scandals that erupted in 2016 when the bank disclosed it may have opened millions of accounts on behalf of customers who didn’t want them, and the Federal Reserve has prohibited Wells Fargo from increasing assets until missteps are fixed to the regulator’s satisfaction.
“We saw positive business trends in the third quarter, including growth in primary consumer checking customers, increased debit and credit card usage, and higher year-over-year loan originations in auto, small business, home equity and personal loans and lines,” Chief Financial Officer John Shrewsberry said in the statement.
Shares of San Francisco-based Wells Fargo climbed 2.3 per cent to US$52.60 at 8:27 a.m. in early New York trading. They closed at US$51.44 on Thursday and have dropped 15 per cent this year, compared with a 5.1 per cent decline in the KBW Bank Index.
Still, net income rose less than analysts expected. It climbed to US$6 billion, or US$1.13 a share, missing the US$1.18-a-share average estimate of 28 analysts in a Bloomberg survey.
Total average loans fell to US$939.5 billion, down US$12.9 billion, or 1 per cent, the lowest level in more than two years.
Shrewsberry said at a September investor conference that the drop in loans is related to competition across consumer and commercial categories, not the Fed’s asset cap.
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