Wells Fargo’s third-quarter earnings report was marked with mixed results on Friday (Oct. 13), as the beleaguered bank — rocked by scandals tied to sales activities and fake account openings, among other practices — missed top-line estimates but beat on earnings per share.
Within those results, however, Wells Fargo showed traction in its credit card and digital banking initiatives. Revenues were down 2 percent year-over-year to $21.9 billion, lower than the $22.4 billion that had been forecast by Wall Street. Adjusted for items, most notably those tied to litigation from fraudulent mortgage-related activities dating back to before the financial crisis, earnings came in at $1.04, a penny better than consensus.
Average loans stood at $952.3 billion, down from $957.5 billion last year. That was driven by lower commercial loans but, within the headline number, consumer loans were up $201 million. Companies said growth in real estate lending might be expected, especially in 1-4 family properties, given some slowdown in the sector as telegraphed by peers such as JPMorgan. Additionally, Wells Fargo said the auto segment was down, hit by tighter underwriting standards. The subsegment saw a $2.5 billion decline on a linked quarter basis and was off $7.4 billion year-over-year.
The average deposits stood at $1.4 trillion, 4 percent better than a year ago.
Despite the headlines swirling about the company — particularly those tied to false account openings, fines and investigations — the latest results showed credit cards were subsequently up $944 million quarter-over-quarter and came in at $1.3 billion, which reflects higher spend per active account.
Active card accounts were flat year-over-year at 7.8 million accounts, up 1 percent sequentially. Spend across credit and debit cards was roughly flat in terms of transaction count, though purchase volume values increased at mid-single-digit percentages.
Turning to more consumer banking detail, the company noted that continued migration to digital banking had some impact on branch and ATM interactions. That total of 374 million in the third quarter was off 6 percent year-over-year and 1 percent subsequently, along with some impact from hurricane-affected areas. Total digital sessions of 1.5 billion were up 5 percent quarter-over-quarter and 6 percent year-over-year.
Speaking specifically to technology-focused initiatives, Wells Fargo’s CEO, Timothy Sloan, said Zelle has seen growth in transactions and in value tied to those transactions, with peer-to-peer (P2P) payments up 46 percent year-over-year. In addition, the recently rolled out card-free access at ATMs has been used 3 million times, Sloan said.
Company-wide, Wells Fargo said it was targeting $4 billion in annual expense reductions by 2019.