(Reuters) – Wells Fargo & Co <WFC.N> posted a quarterly profit that fell short of analysts’ estimates on Friday, as a $13 billion drop in new mortgage borrowing offset the bank’s efforts to cut costs.
Wells Fargo has been struggling to rebuild its reputation with customers after a series of scandals, fines and regulatory probes over the last two years dented its brand.
Rising interest rates, which have brought much-needed relief for banks that were scrambling to boost their profits, have also on the other hand weighed on borrowers’ ability to take out loans, hurting loan growth. Mortgage rates are at a multi-year high.
Total loans at the fourth largest U.S. bank by assets fell 1 percent to $942.3 billion, while net interest margin, a measure of how much a bank earns on its investments, rose to 2.94 percent from 2.86 percent in the year-ago quarter.
Total revenue rose 0.4 percent to $22 billion, with only community banking – the area most closely tied to the 2016 sales scandal – showing growth in revenue.
Total non-interest expenses fell 4.1 percent to $13.7 billion. Chief Financial Officer John Shrewsberry has vowed to reduce about $3 billion in expenses by 2020.
Net income applicable to common stockholders rose to $5.45 billion, or $1.13 per share, in the quarter ended Sept. 30, from $4.13 billion or 83 cents per share a year ago. https://reut.rs/2NCtgK8
On an adjusted basis, the company earned $1.16 per share, missing analysts’ estimates of $1.17, according to I/B/E/S data from Refinitiv.
Peers JPMorgan Chase <JPM.N> reported higher-than-expected quarterly profit on Friday on gains from higher interest rates and a growth in loans, while Citigroup’s <C.N> profit rose 12 percent on lower taxes and a decrease in expenses.
(Reporting By Aparajita Saxena in Bengaluru; Editing by Bernard Orr)