Wells Fargo’s profit jumped 32% in the third quarter, suggesting its cost-cutting efforts are making some headway as it seeks to rebound from its fake accounts scandal.
Wells Fargo took encouragement from the bank’s latest quarterly results, which also showed a beat on revenue. “These results reflect the transformational changes we’ve been making at Wells Fargo,” CEO Tim Sloan said on a conference call with analysts.
CFO John Shrewsberry said the positive trends included “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.”
For the quarter ended Sept. 30, net income rose to $5.45 billion, or $1.13 per share, from $4.13 billion or 83 cents per share a year ago.
Revenue rose 0.4% to $21.9 billion, beating analysts’ estimates of $21.89 billion. But on an adjusted basis, the company earned $1.16 per share, compared to estimates of $1.17.
Wells Fargo shares were up 0.6% at $51.72 on news of the earnings Friday. “While these results were less noisy than previous quarters, more fallout from prior misdeeds cannot be ruled out,” Allen Tischler, senior vice president with Moody’s Investors Service, said.
Since the scandal, Wells Fargo has been revamping its operations with a particular emphasis on cutting costs. Shrewsberry has vowed to reduce about $3 billion in expenses by 2020 and the bank also plans to pare its network by roughly 800 branches and cut up to 10% of its workforce over the next three years.
Non-interest expenses in the third quarter fell 4.1% to $13.8 billion. “Our positive operating leverage reflected the benefit of the transformational changes we are making at Wells Fargo, including our focus on reducing expenses,” Shrewsberry said in a news release.
Community banking, the segment most closely tied to the scandal, posted a 3% increase in revenue to $296 million, while primary consumer checking customers were up 1.7% year-over-year.
The bank “continued to make progress on customer remediation, which is an important step in our efforts to rebuild trust,” Sloan said.