Wells Fargo profit plummets 55%

Wells Fargo quarterly profit slumps as legal costs mount

Bank of America 4Q profits fall with lower in...

Wells Fargo spent 78.6 cents for every dollar of revenue it made in Q4, up from 63.6 cents a year earlier, Reuters reported.

The bank's net interest income fell 11% from a year earlier as the US central bank lowered borrowing costs three times last year in a bid to sustain the more than decade-long economic expansion amid the prolonged U.S.

The other headwind Wells Fargo faces is industrywide: an aging workforce.

Wells Fargo Advisors had its "best recruiting year since 2016 with record productivity among new hires", according to Leordeanu.

Other large investors have also recently added to or reduced their stakes in the company. Wells executives said at the time they anticipated "lots of transfers of client books" as a result of demographic changes in wealth management. Sky Investment Group LLC boosted its position in shares of Wells Fargo & Co by 3.2% in the third quarter. The firm fields approximately 1,500 fewer advisors today.

Now, Wells Fargo just released its fourth-quarter results, the first numbers since Charles Scharf took the helm at the bank.

Wells is operating under heavy scrutiny as it tries to rebuild its reputation, including an unprecedented cap on its balance sheet by the Federal Reserve and frequent criticism from prominent US politicians. "We have not effectively addressed our shortcomings", he said.

Wells Fargo & Company, a diversified financial services company, provides retail, commercial, and corporate banking services to individuals, businesses, and institutions.

Many advisors who have left the wirehouse have found new homes at regional broker-dealers such as Stifel, Raymond James and Benjamin F. Edwards.

Wells Fargo has upped its recruiting efforts. A company spokeswoman said the wirehouse had its best recruiting year since 2016.

New recruits in 2019 had an average production of $719,000, up from $565,000 for the prior year, the spokeswoman said.

"Our decline [in headcount] this quarter was based primarily advisors retiring and leaving the industry".

Wells Fargo's wealth and investment management business suffered a significant drop in earnings in the fourth quarter of 2019, largely due to higher employee benefits expenses tied to increased deferred compensation plan costs and higher technology spending. The company blamed lower interest rates and rising costs, including $1.5 billion in legal expenses for ongoing lawsuits over the company's business practices.

Dimon highlighted China as a key growth market, noting that past year it became the first USA bank to be approved for a majority-owned securities business in the country.

Revenues rose 7.3 percent to $18.4 billion.

The bank's quarterly interest income fell more than $900 million year over year, from $17.84 billion to $16.93 billion.

The firm attributed wealth management's net income drop to, in part, "higher equipment expenses". The institutional investor owned 43,482 shares of the financial services provider's stock after buying an additional 6,571 shares during the quarter.

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