Just in:
HSBC Streamlines Gold Investment for Hong Kong Residents with Tokenized Product // Superland Announced Annual Results for 2023, 2023 Net Profit Increased approximately 39.5% to approximately HK$22.2 million as Compared to the 2022 Adjusted One // Party Nominees Refusing To Contest: Major Perception Threat For BJP // Arvind Kejriwal Was Used By BJP In 2011 Movement To Take On The Congress // Konica Minolta is named ASEAN 2023 Market Leader in Colour Light and Mid Digital Production Printers // Lisboeta Macau’s world first LINE FRIENDS PRESENTS CASA DE AMIGO and BROWN & FRIENDS CAFE & BISTRO has officially opened // Experts come together to support updating the city’s nature conservation masterplan // No running of govt from jail, says Delhi Lt Governor // Meta Earth Official Website Launch: The Pioneer Explorer in the Modular Public Blockchain Domain // Andertoons by Mark Anderson for Thu, 28 Mar 2024 // Sunshine’s Debut Features Leave Tech World Scratching Its Head // Emirates Post Speeds Up Deliveries for GCC with Special Day // Ajman Celebrates Conclusion of Ramadan Activities with Grand Ceremony // Arvind Kejriwal Gets International Heft Against The Deshi Vishwaguru // Hullabaloo About Electoral Bonds May End Up As A Whimper Pre And Post Poll // AI Boost for Galaxy Devices: Samsung Expands One UI 6.1 Update // The World’s First & Wettest Party: “S2O Hong Kong Songkran Music Festival” proudly returns Get an immersive water and music experience on 8-9 June during Dragon Boat Festival long weekend at Central Harbourfront Event Space! // 2024 Lok Sabha Election Is A Historic Battle Against The Advent Of Fascism In India // Sharpening the Focus: Sharjah Health Department Refines Evaluation Criteria for “Healthy Schools Programme” // US reiterates concern over Kejriwal arrest, Cong accounts //
HomeFT SelectWells Fargo sets out plans to close 400 branches

Wells Fargo sets out plans to close 400 branches

edb6a622 d98a 11e6 944b e7eb37a6aa8e

Wells Fargo has laid down plans to close at least 400 branches over the next two years as part of a push to cut costs as the US bank tries to recover from the scandal over sham accounts.

The San Francisco-based lender, which operates more than 6,000 branches across the country, is accelerating closures as it aims to reduce about $2bn in expenses by the end of 2018.

ADVERTISEMENT

The disclosure came as Wells Fargo unveiled a decline in profits for a second year, showing it faces a series of challenges beyond the fake account debacle.

The bank’s retail network is the largest in US, with a branch or cash machine within two miles of about half the households in the country.

Unlike rivals, Wells has so far resisted embarking on an aggressive closure programme. John Stumpf, former chairman and chief executive, told the Financial Times last year that the bank had won customers through branches and “if you shut that down, at least today, you shut down your front engine”.

He lost his job in October after the account scandal erupted.

The bank said on Friday that it shut 84 branches in 2016, mainly in the second half, and plans to axe 200 this year. It said that most of those targeted were located near another branch, and John Shrewsberry, chief financial officer, said that Wells did not expect a “significant” impact on revenue or jobs.

ADVERTISEMENT

Setting out the rationale, Tim Sloan, the new chief executive, said that Wells customers “still want to come into branches — but they also are accessing us via online and mobile, and through ATMs and on the phone”.

He added that plans for en masse closures were not a new “long-term branch strategy” from the bank, however.

While trading and investment banking gave a boost to results on Friday at rivals JPMorgan Chase and Bank of America, retail-focused Wells Fargo unveiled a 5 per cent decline in net income for the final three months and a 4 per cent drop for 2016 as a whole.

The figures cap a difficult period for Wells, which became an investor favourite in the wake of the financial crisis as scandal beset its Wall Street peers. They are a sign of its fall from grace after regulators revealed in September that its staff created as many as 2m fee-generating accounts without consumers’ knowledge.

Wells Fargo’s quarterly return on equity fell from 11.93 per cent a year ago to 10.94 per cent, the lowest quarterly figure since 2010. Higher expenses and weaker mortgage fee income pushed net income down from $5.6bn a year ago to $5.3bn.

However, Mr Shrewsberry stressed that an accounting hit of $592m had weighed on the results. The red ink was caused by hedging and the recent rise in interest rates, even though, he added, “higher rates mean banks do better” longer term.

Although quarterly earnings declined from $1.02 a year ago to $0.97 on a per-share basis, and fell short of consensus analyst forecasts of $1.00, investors appeared to look past the earnings miss.

Shares in Wells Fargo closed up 1.5 per cent at $55.31 in New York on Friday, helped by the cost-cutting plans.

Wells has scrapped sales goals for branch staff in an effort to prevent such a scandal from happening again. The fallout has had only a limited impact so far: total revenue in the final three months of the year held steady at $21.6bn.

However, Mr Sloan cautioned on Friday that fewer referrals from branch staff would dent results at the bank’s mortgage business at the start of this year.

The episode has also pushed up costs, including fees to lawyers handling a series of lawsuits and investigations. Non-interest expenses rose 5 per cent in the fourth quarter from a year ago.

The annual figures also highlight the pressures that the bank, whose biggest shareholder is Warren Buffett’s Berkshire Hathaway, has been facing even before the accounts scandal erupted.

Shares in Wells have rebounded 20 per cent since the US election, largely because of hopes that higher interest rates will boost lending margins.

There was only limited evidence of an improvement in the fourth quarter, however. The Federal Reserve’s rise in short-term interest rates came too late in the year to give the earnings a significant boost.

Net interest margins came in at 2.87 per cent in the fourth quarter, down from 2.92 per cent a year earlier. Wells has been doing more lending, however, offsetting the pressure on margins to boost net interest income for the quarter by 7 per cent to $12.4bn.

The bank set aside $905m to cover soured loans, $100m more than the previous quarter. Consumer credit losses rose by $64m, driven by bad credit card, car and other revolving and instalment loans.

For the year as a whole, net income fell 4.4 per cent to $21.9bn in 2016 after a 1 per cent decline the previous year.

Via FT

ADVERTISEMENT

ADVERTISEMENT
Just in:
German Job Market Resilience Bodes Well for Economic Recovery // Party Nominees Refusing To Contest: Major Perception Threat For BJP // Meta Earth Official Website Launch: The Pioneer Explorer in the Modular Public Blockchain Domain // Andertoons by Mark Anderson for Thu, 28 Mar 2024 // No running of govt from jail, says Delhi Lt Governor // Court Sides with Coinbase on Wallet Service, But Staking Program Remains in Limbo // Renewables Surge Sets Record, But Global Equity Lags // HSBC Streamlines Gold Investment for Hong Kong Residents with Tokenized Product // Hope for Respite as UAE Endorses UN Plea for Gaza Truce // Experience Ultimate Shopping Freedom at 4.4 Shopee Spree: Don’t Worry, Shop Shopee! // Universal Language for Healthcare: General Authority Embraces Global Coding System // Near Miss at Kolkata Airport: IndiGo Plane Makes Contact with Stationary Air India Express // Emirates Post Speeds Up Deliveries for GCC with Special Day // AI Boost for Galaxy Devices: Samsung Expands One UI 6.1 Update // Ajman Celebrates Conclusion of Ramadan Activities with Grand Ceremony // Lisboeta Macau’s world first LINE FRIENDS PRESENTS CASA DE AMIGO and BROWN & FRIENDS CAFE & BISTRO has officially opened // Sunshine’s Debut Features Leave Tech World Scratching Its Head // Sharpening the Focus: Sharjah Health Department Refines Evaluation Criteria for “Healthy Schools Programme” // Arvind Kejriwal Gets International Heft Against The Deshi Vishwaguru // Konica Minolta is named ASEAN 2023 Market Leader in Colour Light and Mid Digital Production Printers //