Look at what Trump tax overhaul did for Wells Fargo’s profits

Look at what Trump tax overhaul did for Wells Fargo’s profits

CHARLOTTE, NC (Deon Roberts/The Charlotte Observer) - Wells Fargo on Friday reported a 17 percent increase in profit for the last three months of 2017, the bank's latest financial results as it recovers from a scandal over fake accounts.

The bank, whose largest employment hub is in Charlotte, earned $6.2 billion, or $1.16 a share, compared with $5.3 billion, or 96 cents a share, a year earlier. Revenue was flat at $88.4 billion.

Wells Fargo said its higher results were helped in part by the federal tax overhaul passed last month, a move that slashes the corporate tax rate to its lowest level in about 80 years. Wells Fargo said it booked a $3.89 billion benefit because of the legislation.

Also Friday, Wells reported financial results for the full year. The bank said it had $22.2 billion in profit, compared with $21.9 billion in 2016, the year the sales scandal erupted. The 2017 figure was the best since $22.8 billion in 2015.

Friday's results come as investors keep a close watch on how the scandal is impacting Wells Fargo after 2016 revelations that employees for years opened unauthorized accounts to meet high-pressure sales targets.

In a statement Friday, Chief Executive Officer Tim Sloan cited progress the company made over the past year, including higher deposits, loan growth and record client assets in Wells' wealth and investment management business.

"While we faced challenges in 2017, we are a much better company today than we were a year ago, and I am confident that this year Wells Fargo will be even better," he said.

The scandal has cost the third-largest U.S. bank business and driven up its legal expenses. Last year, Wells Fargo shares had the worst performance among the largest U.S. banks, which have been buoyed by expectations of higher interest rates and looser regulations under the Trump administration. Wells' shares rose 10 percent in 2017, but it still lagged peers such as Bank of America and Citigroup, whose stock prices were up about 34 and 25 percent, respectively.

Wells' trailing share performance came as it uncovered 1.4 million additional unauthorized accounts and disclosed problems in other business, such as mortgage lending and auto insurance.

The San Francisco-based bank has taken a growing number of steps to right itself, such as last month's retirement of three long-time board members, including chairman Stephen Sanger.

Starting this month, Betsy Duke, who in August was elevated to replace Sanger, took on her new role – making her the only woman chair among the largest U.S. banks.

Even with such changes, Wells Fargo has remained under scrutiny by regulators, lawmakers and even President Donald Trump.

Last month, Trump took to Twitter to pledge that fines and penalties against Wells Fargo "will not be dropped" for the bank's "bad acts" against its customers.

The tweet came after news reports that the acting head of the Consumer Financial Protection Bureau – former Charlotte-area congressman Mick Mulvaney – was reviewing whether Wells should pay tens of millions of dollars over alleged mortgage abuse.

Investors are also tracking Wells Fargo's progress toward a goal of trimming $4 billion in expenses through the end of 2019.

That comes as Wells remains under investor pressure to improve its efficiency ratio, which shows how much it costs the bank to generate one dollar of revenue. Wells has been unable to restore the ratio to pre-scandal levels.

Wells Fargo on Friday joined New York's JPMorgan Chase in kicking off bank-earnings season. JPMorgan reported profits fell 37 percent to $4.2 billion after accounting for one-time charges related to the federal tax overhaul.

On Wednesday, Charlotte-based Bank of America is scheduled to report results for the last three months of 2017.