By Liz Moyer
- Wells Fargo’s first-quarter profit rose 5.5 percent.
- Earnings per share of $1.12 beat expectations of $1.06.
- The bank cautions that it’s still in settlement talks with federal regulators.
Wells Fargo‘s earnings beat expectations Friday, but the bank emphasized that the results could be revised depending on the outcome of talks with regulators over a possible $1 billion settlement.
The bank reported a 5.5 percent gain in first-quarter profit. Net income was $5.9 billion, or $1.12 a share beat the average analyst forecast of $1.06 from Thomson Reuters.
Revenue also beat expectations, coming in at $21.93 billion compared with the $21.73 billion forecast.
Shares fell more than 2 percent in morning trading.
The settlement talks with regulators concern sales of certain auto insurance and mortgage products. The company has struggled to overcome a spate of regulatory issues for more than a year after disclosing in 2016 that branch employees had opened millions of accounts without customers’ knowledge. Since then, questions about the bank’s sales tactics have spread to mortgage, auto insurance and wealth management activities.
In February, the Federal Reserve slapped it with sanctions for failing to have adequate risk controls that could have detected issues in its sales practices. It is still talking with the Consumer Finance Protection Bureau and the Office of the Comptroller of the Currency about settling over the auto insurance and mortgage rate lock sales practices.
“I’m confident that our outstanding team will continue to transform Wells Fargo into a better, stronger company; however, we recognize that it will take time to put all of our challenges behind us,” CEO Tim Sloan said in a statement on Friday.
The bank said it is making progress on hitting planned expense savings that aim to cut costs by $4 billion by the end of next year. It expects to cut expenses by $2 billion annually by the end of this year.
Wells Fargo has also significantly increased purchases of its own stock, up 78 percent since last year, to $2.1 billion.