Wells Fargo Earnings Marred by $2B Reg Charge
Wells Fargo & Co. set aside an additional $2 billion to resolve a variety of legacy regulatory and legal woes as Chief Executive Officer Charlie Scharf continues wrestling with the costly fallout from scandals he was hired to resolve.
The charge hampered a third quarter that was better than expected on some metrics. Net interest income, for example, rose 36% to $12.1 billion in the three months ended Sept. 30, the San Francisco-based bank said Friday in a statement.
That’s the most since 2019 and better than the 31% average estimate of analysts surveyed by Bloomberg.
“Our top priority remains strengthening our risk and control infrastructure, which includes addressing open historical issues and issues that are identified as we advance this work,” Scharf, 57, said in the statement. “We remain at risk of setbacks as we work to complete the work and put these issues behind us.”
The results, and those also reported Friday by JPMorgan Chase & Co., provide early evidence that U.S. lenders are getting a big boost from higher interest rates. Net interest margin — the difference between what banks earn on loans and what they pay for deposits — expanded to 2.83% at Wells Fargo, up from 2.39% in the preceding quarter.
Investors also are looking for more economic insights from industry executives heading into year-end. In one signal of continued caution, Wells Fargo set aside $784 million in provisions for potential credit losses, more than the $611 million analysts had expected.
