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Wells Fargo has missed revenue and is still paying for past customer scandals

Image Source: Wells Fargo

Wells Fargo missed an analyst’s quote for the fourth quarter, affected by further losses as a result of customer reimbursement for the bank’s past scandals.

Lenders generated $ 3 billion, or $ 0.64 per share, for $ 17.9 billion in revenue. Revenues were slightly higher than the total of $ 2.9 billion in the fourth quarter of 2019, but revenues were lower than the $ 19.8 billion posted on December 31, 2019.

Wells Fargo said consumer loans were down 2%, but deposits were up 18%. Corporate lending fell 4% and trade assets fell 19%.

Banks recorded $ 321 million in charges for what they epicly call “the impact of customer rehabilitation” in the quarter, bringing the total cost of customer reimbursement to $ 2.2 billion in 2020. became.

The fourth quarter also included a $ 757 million release from Wells Fargo’s allowance for doubtful accounts, and the bank said it would involve the sale of its student loan portfolio.

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While banks earned $ 3 billion in the final quarter of 2020, Charlie Schaff said, “The result is an unprecedented business environment and our real legacy problems. I continued to be influenced by the work needed to put it off. “

Wells Fargo began with a 2016 revelation that employees have opened millions of fake bank accounts and continue to operate under the balance sheet caps imposed by regulators as punishment. I had a hard time recovering from the scandal.

Scharf, who became CEO in 2019, said: We are prioritizing and moving forward in building risk and control. The recently completed BSA / AML consent order is just one of many, but it is an important step forward. A new management team has been set up. The areas we use to manage our company are completely different than they were a year ago. Clarify strategic priorities and withdraw from certain non-strategic businesses. We then identify and take action to improve our financial performance. “

Banks are closing about 250 branches, reducing management levels and up to 5 minutes of real estate footprint as part of a plan to cut $ 8 billion in investment spending over the next three to four years, according to the Financial Times. We plan to reduce it to 1.

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Source: Stock News

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