Wells Fargo quarterly profit slumps as legal costs mount

Wells Fargo quarterly profit slumps as legal costs mount
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(Reuters) – Wells Fargo & Co (WFC.N) reported a 55% slump in fourth-quarter profit on Tuesday, as the fallout from a sales scandal that erupted in 2016 drove the bank to set aside another $1.5 billion toward legal expenses.

Shares of the bank fell about 3% to $50.50 in premarket trading.

The lender is operating under heavy regulatory scrutiny, including an unprecedented cap on its balance sheet by the Federal Reserve, as it tries to rebuild its reputation since it was revealed that the bank had opened potentially millions of bogus accounts.

Since then, the fourth-largest U.S. bank by assets has paid billions of dollars in fines and penalties.

San Francisco-based Wells last year appointed Charles Scharf, a one-time Jamie Dimon protégé, as its new chief executive officer, to help it rebuild its reputation with customers, investors and regulators.

“Wells Fargo is a wonderful and important franchise that has made some serious mistakes, and my mandate is to make the fundamental changes necessary to regain the full trust and respect of all stakeholders,” Scharf said in a statement.

“Our cost structure is too high, and I believe there are many areas where we will be able to increase our rate of growth,” he added.

Net income applicable to common stock fell to $2.55 billion, or 60 cents per share, in the fourth-quarter ended Dec. 31, from $5.71 billion, or $1.21 per share, a year earlier.

Source: Reuters

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