In what’s proving to be a year of growth for the biggest U.S. banks, Wells Fargo & Co.’s (WFC.N) scandal overhang is keeping it from joining the party. Revenue fell more than expected in the fourth quarter, bringing the bank to an annual drop as peers saw increases.

Revenue declined 5 per cent in the fourth quarter, the third decrease in the past year.

Key Insights

-Another drop in both loans and deposits shows that Wells Fargo is still struggling to bounce back from the scandals as it also faces a regulatory asset cap. Total average loans sank 1 per cent, while average deposits fell 3 per cent. Meanwhile, Citigroup Inc. and JPMorgan Chase & Co. showed growth in both metrics in the fourth quarter.

-Provisions for bad loans fell 20 per cent, the ninth consecutive quarterly decline and a sign of strength in the economy even amid rising rates and turbulent markets.

-Efficiency ratio, a measure of profitability, worsened slightly in the quarter and ended the year at 65 per cent. The bank has faced increased costs in recent years, the result of regulatory fines and legal expenses stemming from customer abuses. Sloan is targeting a 55 per cent to 59 per cent ratio in the long term, excluding litigation costs, and has promised US$4 billion in cost reductions by the end of 2019.

Market Reaction

-Wells Fargo shares were down 0.3 per cent at 8:10 a.m. in early trading in New York. They rose 1.2 per cent Monday, and are down 23 per cent in the past year.