A little more than a year later, the Federal Reserve capped Wells Fargo's growth, ordering it not to increase assets beyond levels at the end of 2017 until oversight concerns were addressed.
Still the bank's profits beat expectations.
The lender took a financial hit related to the fake-account scandal that has dogged Wells Fargo since 2016. Plus, the bank's third quarter and other recent results left much to be desired. This work is necessary to build the appropriate foundation for us to move forward.
Charles Scharf took over as Wells Fargo's chief executive in October, replacing Tim Sloan and charged with navigating the bank through a host of regulatory issues that have kept costs elevated. Here's what investors need to know.
"There is no reason why we shouldn't have best-in-class efficiency with these businesses at this scale, and that ultimately will be our goal", the new chief executive said on a call with analysts.
Citigroup also reported better-than-expected fourth-quarter profits of $5.0 billion, up 15 percent from the year-ago period.
What's more, this is the adjusted earnings figure; if you include the bank's litigation expenses, EPS drops to just $0.60.
Besides better relations between the United States and China, Mason cited diminished uncertainty on Brexit and progress on a new US-Mexico-Canada Agreement on trade.
"Given record-high equity prices, very low unemployment, a growing economy at about 2%, a stable US dollar, and positive developments in trade, it is not surprising to see the results that are coming in", said Mark Doctoroff, global co-head of the Financial Institutions Group at MUFG. While these numbers are above the generally accepted industry benchmarks of 10% and 1%, respectively, they are significantly lower than the 11.5% ROE and 1.19% ROA the bank generated in 2018. It saw interest revenue fall 8%. It's still early in earnings season, but this is likely to be among the worst in the sector.
The bank's quarterly earnings totaled $2.87 billion, versus $6.06 billion a year earlier. To be clear, this was largely expected given the declining interest rate environment and is likely a big driver of Wells Fargo's lower profitability. Wells Fargo's mortgage operations are based in West Des Moines. Wells Fargo & Co had a net margin of 21.67% and a return on equity of 13.01%.
The company, a giant in U.S. mortgage lending, has been on the back foot since late 2016 following revelations of a fake accounts scandal, one of the regulatory problems that prompted the Federal Reserve to impose a lending cap on the bank.
Plus, keep in mind that it's still very early in Scharf's tenure, so the impact of the leadership change may not be reflected in the bank's numbers just yet.